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Finance (No. 2) BillPage 490

the person is regarded as telling HMRC about that for the
purposes of paragraph 9 of Schedule 24 to the Finance Act 2007.

16N Set-offs

Where a participant in a special scheme is liable to pay UK VAT to
5the tax authorities for the administering member State in
accordance with the scheme, the UK VAT is regarded for the
purposes of section 130(6) of the Finance Act 2008 (set-off:
England, Wales and Northern Ireland) as payable to the
Commissioners.

9 (1) 10Part 4 of the Schedule (application of provisions relating to VAT) is amended
as follows.

(2) Paragraph 17 (registration under VATA 1994) is renumbered as sub-
paragraph (1) of that paragraph.

(3) In that paragraph, after sub-paragraph (1) (as renumbered), insert—

(2) 15Where a participant in the special scheme (“the scheme
participant”) makes relevant supplies, it is to be assumed for all
purposes of this Act relating to the determination of—

(a) whether or not VAT is chargeable under this Act on those
supplies,

(b) 20how much VAT is chargeable under this Act on those
supplies,

(c) the time at which those supplies are treated as taking place,
and

(d) any other matter that the Commissioners may specify by
25regulations,

that the scheme participant is registered under this Act.

(3) Supplies of scheme services made by the scheme participant are
“relevant supplies” if—

(a) the value of the supplies must be accounted for in a special
30scheme return, and

(b) the supplies are treated as made in the United Kingdom.

(4) In paragraph 18 (de-registration), in paragraph (b), for “Article 26c,”
substitute “Section 2 of Chapter 6 of Title XII of the VAT Directive,”.

(5) After paragraph 18 insert—

35Value of supplies to connected persons

18A In paragraph 1 of Schedule 6 (valuation: supply to connected
person at less than market value) the reference to a supply made
by a taxable person is to be read as including a supply of scheme
services that is made by a participant in the special scheme (and is
40treated as made in the United Kingdom).

(6) In paragraph 20 (appeals)—

(a) in sub-paragraph (1), for paragraphs (b) and (c) substitute—

(b) a refusal to make a repayment under paragraph 16I
(overpayments), or a decision by the

Finance (No. 2) BillPage 491

Commissioners as to the amount of the repayment
due under that provision;

(c) a refusal to make a repayment under paragraph
16K(4) (decrease in consideration);

(d) any liability to a surcharge under paragraph 16F
5(default surcharge).

(b) after sub-paragraph (2) insert—

(3) Where the Commissioners have made an assessment
under section 73 in reliance on paragraph 16 or 16A—

(a) section 83(1)(p)(i): (appeals against assessments
10under section 73(1) etc) applies as if the relevant
special scheme return were a return under this Act,
and

(b) the references in section 84(3) and (5) to the matters
mentioned in section 83(1)(p) are to be read
15accordingly.

(7) Omit paragraph 21 (payments on account of non-UK VAT to other member
States) and the heading before it (but see paragraph 7(7) of this Schedule).

(8) For the title substitute—

10 (1) In Part 5 of the Schedule (supplementary), paragraph 23 (interpretation) is
20amended as follows.

(2) In sub-paragraph (1)—

(a) for the words from ““Article 26c” to the end of the definition of “the
Controller” substitute—

(b) 30for the definition of “participant in the special scheme”, substitute—

(c) after the definition of “registration request” insert—

(d) after the definition of “reporting period” insert—

(e) after the definition of “special accounting return” insert—

(3) In sub-paragraph (2)(a), for the words from “virtue” to “2002 VAT
Directive),” substitute “paragraph 15 of Schedule 4A (place of supply of
electronic, telecommunication and broadcasting services),”.

(4) Omit sub-paragraph (3).

35Part 3 Other amendments: Union and non-Union schemes

11 VATA 1994 is amended in accordance with paragraphs 12 to 16.

12 (1) Section 3A (supply of electronic services in member States: special
accounting scheme) is amended as follows.

(2) 40In subsection (1), after “services” insert “, telecommunication services or
broadcasting services”.

(3) After subsection (1) insert—

(1A) Schedule 3BA—

(a) establishes a special accounting scheme for use by persons
45established in the UK and supplying electronically supplied

Finance (No. 2) BillPage 493

services, telecommunication services or broadcasting
services in other member States, and

(b) makes provision about corresponding schemes in other
member States.

(4) For the heading substitute “Supplies of electronic, telecommunication and
5broadcasting services: special accounting schemes
.”

13 In section 76 (assessment of amounts due by way of penalty, interest or
surcharge)—

(a) in subsection (1)(a), for “or 59A,” substitute “, section 59A, paragraph
16F of Schedule 3B or paragraph 26 of Schedule 3BA,”;

(b) 10after subsection (3) insert—

(3A) In the case of a surcharge under paragraph 16F of Schedule
3B or paragraph 26 of Schedule 3BA, the assessment under
this section is of an amount due in respect of “the relevant
period”, that is to say, the tax period (see section 76A) in
15respect of which the person is in default and in respect of
which the surcharge arises.;

(c) in subsection (5), after each “(3)” insert “or (3A)”.

14 After section 76 insert—

76A Section 76: cases involving special accounting schemes

(1) 20References in section 76 to a prescribed accounting period are to be
read as including a tax period so far as that is necessary for the
purposes of the references in section 76(1)(a) to paragraph 16F of
Schedule 3B and paragraph 26 of Schedule 3BA (assessment of
surcharge in certain cases involving special accounting schemes).

(2) 25References in section 77 to a prescribed accounting period are to be
read accordingly.

(3) In this section and section 76 “tax period” means a tax period as
defined in paragraph 23(1) of Schedule 3B or paragraph 38(1) of
Schedule 3BA, as the case requires.

15 30In section 77 (assessment: time limits and supplementary assessments)—

(a) in subsection (2), after “subsection (3)” insert “or (3A)”;

(b) in subsection (3) after “subsection (3)” insert “or (3A)”.

16 In section 80 (repayment of overpaid VAT etc), in subsection (7), after “this
section” insert “(and paragraph 16I of Schedule 3B and paragraph 29 of
35Schedule 3BA)”.

17 In section 84(6) (appeals: variation of amounts assessed by way of surcharge
etc), after “70,” insert “or (as the case requires) paragraph 26 of Schedule 3BA
or paragraph 16F of Schedule 3B”.

18 In paragraph 12 of Schedule 1A to VATA 1994 (cancellation of registration
40under that Schedule)—

(a) after “Schedule 3B” insert “and paragraph 16 of Schedule 3BA”;

(b) for “that Schedule etc” substitute “the Schedule concerned”.

19 (1) Paragraph 1 of Schedule 24 to FA 2007 (penalties for errors) is amended as
follows.

Finance (No. 2) BillPage 494

(2) In the Table, after the second entry relating to VAT insert—

VAT Return under
a special
5scheme.

(3) Before sub-paragraph (5) insert—

(4A) In this paragraph “return under a special scheme” means any of
the following, so far as relating to supplies of services treated as
made in the United Kingdom—

(a) 10a special accounting return under paragraph 11 of
Schedule 3B;

(b) a value added tax return submitted under any provision of
the law of a member State other than the United Kingdom
which implements Article 364 of the VAT Directive (as
15substituted by Article 5(11) of the Amending Directive);

(c) a value added tax return submitted under any provision of
the law of a member State other than the United Kingdom
which implements Article 369f of the VAT Directive (as
inserted by Article 5(15) of the Amending Directive).

(4B) 20A value added tax return mentioned in paragraph (b) or (c) of sub-
paragraph (4A) is regarded for the purposes of sub-paragraph (1)
as given to HMRC when it is submitted to the authority to whom
it is required to be submitted.

(4C) In sub-paragraph (4A)—

20 (1) FA 2009 is amended as follows.

(2) In section 101 (late payment interest on sums due to HMRC), after
30subsection (9) insert—

(10) The reference in subsection (1) to amounts payable to HMRC
includes—

(a) amounts of UK VAT payable under a non-UK special
scheme;

(b) 35amounts of UK VAT payable under a special scheme;

and references in Schedule 53 to amounts due or payable to
HMRC are to be read accordingly.

(11) In subsection (10)—

(a) expressions used in paragraph (a) have the meaning given
40by paragraph 23(1) of Schedule 3B to VATA 1994 (non-
Union scheme);

(b) expressions used in paragraph (b) have the meaning given
by paragraph 38(1) of Schedule 3BA to VATA 1994 (Union
scheme).

Finance (No. 2) BillPage 495

(3) In section 108 (suspension of penalties during currency of agreement for
deferred payment), in the Table in subsection (5), in the entry relating to
value added tax, in the second column, after “1994” insert, “or under
paragraph 16F of Schedule 3B, or paragraph 26 of Schedule 3BA, to that
5Act”.

21 (1) Schedule 10 to F(No.3)A 2010 (which prospectively amends Schedule 55 to
FA 2009, which provides for penalties for failure to make returns) is
amended as follows.

(2) In paragraph 2—

(a) 10after sub-paragraph (2) insert—

(2A) In sub-paragraph (4), in the definition of “filing date”, at
the end insert “(or, in the case of a return mentioned in
item 7AA or 7AB of the Table, to the tax authorities to
whom the return is required to be delivered)”.;

(b) 15in the words inserted by sub-paragraph (4), after item 7A, insert—

7AA Value added tax Relevant non-UK return (as defined
in paragraph 20(3) of Schedule 3BA
20to VATA 1994)
7AB Value added tax Relevant special scheme return (as
defined in paragraph 16(3) of
25Schedule 3B to VATA 1994).

(3) In paragraph 7, in the inserted paragraph 13A(1), for “7A, 7B” substitute “7A
to 7B”.

22 (1) Schedule 11 to F(No.3)A 2010 (which prospectively amends Schedule 56 to
FA 2009, which provides for penalties for failure to make payments) is
30amended as follows.

(2) In paragraph 2(7), in the inserted words, after item 6B insert—

6BA Value added
tax
35Amount payable under
relevant special scheme
return (as defined in
paragraph 16(3) of
Schedule 3B to VATA
401994) (except an amount
falling within item 13A,
13AA, 13AB, 23 or 24)
The date by which the
amount must be paid
45under the law of the
member State which has
established the special
scheme
6BB 50Value added
tax
Amount payable under
relevant non-UK return
(as defined in paragraph
5520(3) of Schedule 3BA to
VATA 1994) (except an
amount falling within
item 13A, 13AA, 13AB, 23
or 24)
60The date by which the
amount must be paid
under the law of the
member State which has
established the non-UK
65special scheme

(3) In paragraph 2(9), in the inserted words, after item 13A insert—

13AA Value added
tax
70Amount assessed under
section 73(1) of VATA
1994, by virtue of
paragraph 16 of Schedule
3B to that Act, in the
75absence of a value added
tax return (as defined in
paragraph 23(1) of that
Schedule)
The date by which the
80amount would have
been required to be paid
under the law of the
member State under
whose law the return
85was required
13AB Value added
tax
Amount assessed under
90section 73(1) of VATA
1994, by virtue of
paragraph 20 of Schedule
3BA to that Act, in the
absence of a relevant non-
95UK return (as defined in
paragraph 38(1) of that
Schedule)
The date by which the
amount would have
100been required to be paid
under the law of the
member State under
whose law the return
was required

(4) 105In paragraph 2(13)(a), in the substituted words, after “6A,” insert “6BA,
6BB,”.

(5) In paragraph 2(14)(a), in the substituted words, after “6A,” insert “6BA,
6BB,”.

(6) In paragraph 7, in the inserted paragraph 8A(1), after “6A,” insert “6BA,
1106BB,”.

Part 4 Commencement

23 (1) The amendments made by this Schedule (except the amendments made by
paragraphs 20(2), 21 and 22) have effect in relation to supplies made on or
115after 1 January 2015 (but see also paragraphs 24 and 25).

(2) Sub-paragraph (1) does not apply in relation to—

(a) the amendment made by paragraph 6(3)(b);

(b) any amendment so far as it confers power to make regulations.

24 (1) No registration under Schedule 3BA (inserted by paragraph 1) may take
120effect before 1 January 2015.

(2) A request for registration under Schedule 3BA that is made before 1 October
2014 is to be treated for the purposes of Article 57d of Implementing
Regulation (EU) No 282/2011 (as amended by Council Regulation (EU) No
967/2012) (registration to have effect from first day of subsequent quarter)
125as if it were made on that date.

25 (1) No registration under Schedule 3B that is to be made in reliance on the
amendments made by paragraph 4 may take effect before 1 January 2015.

Finance (No. 2) BillPage 496

(2) A request for registration under Schedule 3B that is made before 1 October
2014 in reliance on the amendments made by paragraph 4 is to be treated for
the purposes of Article 57d of Implementing Regulation (EU) No 282/2011
(as amended by Council Regulation (EU) No 967/2012) as if it were made on
5that date.

Section 106

SCHEDULE 19 SDLT: charities relief

1 Schedule 8 to FA 2003 (stamp duty land tax: charities relief) is amended as
follows.

2 10In paragraph 1 (conditions for charities relief)—

(a) in sub-paragraph (2), omit the words from “that is” to the end;

(b) in sub-paragraph (3), for “not been” substitute “been”;

(c) after sub-paragraph (3) insert—

(3A) For the purposes of this Schedule, a charity (“C”) holds a
15chargeable interest for qualifying charitable purposes if it
holds it—

(a) for use in furtherance of the charitable purposes of
C or another charity, or

(b) as an investment from which the profits are applied
20to the charitable purposes of C.

3 After paragraph 3 insert—

Joint purchasers: partial relief

3A (1) Sub-paragraphs (3) to (5) apply in any case where—

(a) there are two or more purchasers under a land transaction,

(b) 25the purchasers acquire the subject-matter of the
transaction as tenants in common (or, in Scotland, as
owners in common),

(c) at least one of them is, and at least one of them is not, a
qualifying charity, and

(d) 30no purchaser enters into the transaction for the purpose of
the avoidance of tax under this Part (whether by that
purchaser or another person).

(2) A charity (“C”) that is a purchaser under a land transaction is a
“qualifying charity” in relation to the transaction if C intends to
35hold its undivided share of the subject-matter of the transaction
for qualifying charitable purposes.

(3) The tax chargeable in respect of the transaction is reduced by the
amount of the relief under sub-paragraph (4).

(4) The relief is equal to the relevant proportion of the tax that would
40have been chargeable in respect of the transaction without this
Schedule.

Finance (No. 2) BillPage 497

(5) The “relevant proportion”, in the case of a qualifying charity, is the
lower of P1 and P2, where—

P1 is the proportion of the subject-matter of the transaction that is
acquired by all the qualifying charities that are purchasers under
5the transaction (in aggregate);

Withdrawal of relief given under paragraph 3A

3B (1) This paragraph applies where—

(a) relief has been given under paragraph 3A in respect of a
transaction (“the relevant transaction”),

(b) 10a disqualifying event occurs in relation to a qualifying
charity (“C”) which was a purchaser under the transaction,
and

(c) the disqualifying event occurs in the circumstances
required by sub-paragraphs (2) and (3).

(2) 15The disqualifying event must occur—

(a) before the end of the period of 3 years beginning with the
effective date of the transaction, or

(b) in pursuance of, or in connection with, arrangements made
before the end of that period.

(3) 20At the time of the disqualifying event C must hold a chargeable
interest that—

(a) was acquired by C under the relevant transaction, or

(b) is derived from an interest so acquired.

(4) There is a “disqualifying event” in relation to C if —

(a) 25C ceases to be established for charitable purposes only, or

(b) the chargeable interest acquired by C under the
transaction, or any interest or right derived from that
interest, is used or held by C otherwise than for qualifying
charitable purposes.

(5) 30C’s portion of the relief mentioned in sub-paragraph (1)(a), or an
appropriate proportion of C’s portion of that relief, is withdrawn
and tax is chargeable in accordance with this paragraph.

(6) The amount chargeable is equal to C’s portion of the relief or, as
the case may be, the appropriate proportion of C’s portion of the
35relief.

(7) C’s portion of the relief depends on whether P1 or P2 was lower in
the calculation under paragraph 3A(5).

(8) If P1 was lower, C’s portion of the relief is equal to—


Finance (No. 2) BillPage 498

where—

p1 is the proportion of the subject-matter of the transaction that
was acquired by C under the transaction;

P1 has the same meaning as in paragraph 3A(5);

(9) 5If P2 was lower, C’s portion of the relief is equal to—


where—

p2 is the proportion of chargeable consideration for the
transaction that was given by C;

10P2 has the same meaning as in paragraph 3A(5);

(10) In sub-paragraphs (5) and (6) “appropriate proportion” means an
appropriate proportion having regard to—

(a) what was acquired by C under the relevant transaction
and what is held by C at the time of the disqualifying
15event, and

(b) the extent to which what is held by C at that time becomes
used or held for purposes other than qualifying charitable
purposes.

Partial relief: charity not fully meeting the “qualifying charity” condition

3C (1) 20This paragraph applies where—

(a) a charity (“C”) is one of two or more purchasers acquiring
the subject-matter of a land transaction (“the relevant
transaction”) as tenants in common (or, in Scotland, as
owners in common),

(b) 25C is not a qualifying charity in relation to the transaction,

(c) paragraph 3A(3) to (5) would apply if C were a qualifying
charity, and

(d) C intends to hold the greater part of its undivided share of
the subject-matter of the transaction for qualifying
30charitable purposes.

(2) In such a case—

(a) paragraph 3A has effect as if C were a qualifying charity,
but

(b) for the purposes of paragraph 3B (withdrawal of relief
35under paragraph 3A) “disqualifying event” includes any
additional disqualifying transaction.

(3) The following are “additional disqualifying transactions” if they
are not made in furtherance of the charitable purposes of C—

(a) any transfer by C of a major interest in the whole or any
40part of the chargeable interest acquired by C under the
relevant transaction;

Finance (No. 2) BillPage 499

(b) any grant by C at a premium of a low-rental lease of the
whole or any part of that chargeable interest.

(4) Paragraph 3(3) (meaning of “at a premium” and “low-rental”)
applies for the purposes of sub-paragraph (3)(b) as it applies for
5the purposes of paragraph 3(2)(b)(ii).

(5) In relation to a transaction that, by virtue of this paragraph, is a
disqualifying event for the purposes of paragraph 3B—

(a) the date of the event for those purposes is the effective date
of the transaction;

(b) 10paragraph 3B has effect with the modifications in sub-
paragraph (6).

(6) The modifications to paragraph 3B are—

(a) in sub-paragraph (3), for “At the time of” substitute
“Immediately before”;

(b) 15in sub-paragraph (10)(a), for “at the time of” substitute
“immediately before and immediately after”;

(c) omit sub-paragraph (10)(b).

4 In paragraph 4(3) (charitable trusts)—

(a) in paragraph (a), for the words from “references” to “are to”
20substitute “references in paragraph 1(3A) to the charitable purposes
of C are to those of”;

(b) in paragraph (b), for “reference” substitute “references” and for “is”
substitute “, and to C in paragraph 3B(4)(a), are”;

(c) in paragraph (c) for the words from “reference” to “is” substitute
25“references in paragraphs 3(2)(b) and 3C(3) to the charitable
purposes of C are”.

5 The amendments made by this section have effect in relation to any
transaction of which the effective date (within the meaning of Part 4 of FA
2003) is on or after the day on which this Act is passed.

Section 108

30SCHEDULE 20 Abolition of stamp duty and SDRT: securities on recognised growth markets

Part 1 Stamp duty reserve tax

“Chargeable securities”

1 35Part 4 of FA 1986 (stamp duty reserve tax) is amended as follows.

2 In section 99 (interpretation), after subsection (4A) insert—

(4B) Chargeable securities” does not include securities falling within
paragraph (a), (b) or (c) of subsection (3) which are admitted to
trading on a recognised growth market but not listed on that or any
40other market.

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