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

Post-commencement receipts etc from pre-commencement general or pool betting

3 (1) In this paragraph “new accounting period” means an accounting period
beginning on or after 1 December 2014.

(2) Where a bet to which section 2(1) of BGDA 1981 (general bets with
5bookmaker in the United Kingdom) applies is made with a bookmaker
before 1 December 2014, amounts in respect of the bet which fall due to the
bookmaker in a new accounting period are to be included among the
amounts aggregated at Step 1 in section 124 of this Act in calculating the
bookmaker’s ordinary profits in respect of general bets for that period.

(3) 10Where—

(a) a bet to which section 3(1) of BGDA 1981 (spread bets with
bookmaker in the United Kingdom) applies is made with a
bookmaker before 1 December 2014, and

(b) the bet is a financial spread bet for the purposes of section 3 of BGDA
151981,

amounts in respect of the bet which fall due to the bookmaker in a new
accounting period are to be included among the amounts aggregated at Step
1 in section 124 of this Act in calculating the bookmaker’s ordinary profits in
respect of financial spread bets for that period.

(4) 20Where—

(a) a bet to which section 3(1) of BGDA 1981 (spread bets with
bookmaker in the United Kingdom) applies is made with a
bookmaker before 1 December 2014, and

(b) the bet is not a financial spread bet for the purposes of section 3 of
25BGDA 1981,

amounts in respect of the bet which fall due to the bookmaker in a new
accounting period are to be included among the amounts aggregated at Step
1 in section 124 of this Act in calculating the bookmaker’s ordinary profits in
respect of non-financial spread bets for that period.

(5) 30Where a bet by way of pool betting to which section 4(1) of BGDA 1981
applies is made before 1 December 2014 by means of facilities provided by a
person, amounts in respect of the bet which fall due to the person in a new
accounting period are to be included among the amounts aggregated under
section 130(a) of this Act in calculating the person’s profits for that period in
35respect of ordinary Chapter 1 pool bets.

(6) Where a dutiable pool bet (as defined by section 7B of BGDA 1981) is made
before 1 December 2014, amounts in respect of the bet which in accordance
with section 7D of BGDA 1981 fall due—

(a) to the operator of the totalisator by means of which the bet is made,
40or

(b) to the promoter,

in a new accounting period are to be included among the amounts
aggregated under section 139(a) of this Act in calculating that person’s
profits for that period in respect of ordinary Chapter 2 pool bets.

(7) 45Section 5(2), (4) and (5) of BGDA 1981 (amounts due: timing and calculation)
apply for the purposes of sub-paragraphs (2) to (5).

Post-commencement winnings paid on pre-commencement general or pool betting

4 (1) In this paragraph “transitional accounting period” means an accounting
period—

(a) beginning on or after 1 December 2014, and

(b) 5ending on or before 30 November 2018.

(2) Where a bet to which section 2(1) of BGDA 1981 (general bets with
bookmaker in the United Kingdom) applies is made with a bookmaker
before 1 December 2014, amounts paid by the bookmaker in a transitional
accounting period by way of winnings to the person who made the bet are
10to be included among the amounts aggregated at Step 2 in section 124 of this
Act in calculating the bookmaker’s ordinary profits in respect of general bets
for that period.

(3) Where—

(a) a bet to which section 3(1) of BGDA 1981 (spread bets with
15bookmaker in the United Kingdom) applies is made with a
bookmaker before 1 December 2014, and

(b) the bet is a financial spread bet for the purposes of section 3 of BGDA
1981,

amounts paid by the bookmaker in a transitional accounting period by way
20of winnings to the person who made the bet are to be included among the
amounts aggregated at Step 2 in section 124 of this Act in calculating the
bookmaker’s ordinary profits in respect of financial spread bets for that
period.

(4) Where—

(a) 25a bet to which section 3(1) of BGDA 1981 (spread bets with
bookmaker in the United Kingdom) applies is made with a
bookmaker before 1 December 2014, and

(b) the bet is not a financial spread bet for the purposes of section 3 of
BGDA 1981,

30amounts paid by the bookmaker in a transitional accounting period by way
of winnings to the person who made the bet are to be included among the
amounts aggregated at Step 2 in section 124 of this Act in calculating the
bookmaker’s ordinary profits in respect of non-financial spread bets for that
period.

(5) 35Where a bet by way of pool betting to which section 4(1) of BGDA 1981
applies is made before 1 December 2014 by means of facilities provided by a
person (“the provider”), amounts paid by the provider in a transitional
accounting period by way of winnings to the person who made the bet are
to be included among the amounts aggregated under section 130(b) of this
40Act in calculating the provider’s profits for that period in respect of ordinary
Chapter 1 pool bets.

(6) Where a dutiable pool bet (as defined by section 7B of BGDA 1981) is made
before 1 December 2014, amounts paid—

(a) by the operator of the totalisator by means of which the bet is made,
45or

(b) by the promoter,

in a transitional accounting period by way of winnings to the person who
made the bet are to be included among the amounts aggregated under
section 139(b) of this Act in calculating the profits of the operator, or (as the

case may be) the promoter, for that period in respect of ordinary Chapter 2
pool bets.

(7) Section 5(6) of BGDA 1981 (meaning of “paid”) applies for the purposes of
sub-paragraphs (2) to (5).

(8) Section 7F of BGDA 1981 (meaning of “paid”) applies for the purposes of
5sub-paragraph (6).

Post-commencement receipts & winnings etc in the case of pre-commencement remote gaming

5 (1) This paragraph applies where—

(a) a person (“the provider”) provides facilities for playing a game of
chance,

(b) 10the playing of the game is remote gaming for the purposes of remote
gaming duty charged by BGDA 1981,

(c) the provision of the facilities by the provider is not exempt by virtue
of section 26H of BGDA 1981, and

(d) the game is begun to be played before 1 December 2014.

(2) 15In this paragraph—

• “new accounting period” means any accounting period beginning on or
  after 1 December 2014;

• “transitional accounting period” means an accounting period—

  (a)

  beginning on or after 1 December 2014, and

  (b)

  20ending on or before 30 November 2018.

(3) Amounts due to the provider in a new accounting period in respect of
entitlement to use the facilities to play the game are to be included among
the amounts aggregated under section 150(1)(a) of this Act in calculating the
provider’s profits in respect of ordinary gaming.

(4) 25Amounts in respect of the game that—

(a) are within section 26E(1)(b) of BGDA 1981 as it applies in relation to
the provider, and

(b) are staked, or fall due to be paid, in a new accounting period,

are also to be included among the amounts aggregated under section
30150(1)(a) of this Act in calculating the provider’s profits in respect of
ordinary gaming.

(5) In the case of each prize in the game that is a prize—

(a) provided in a transitional accounting period by the provider, and

(b) won by a person using the facilities to play the game,

35the value of the prize is to be included among the amounts aggregated under
section 150(2) of this Act in calculating the provider’s profits for the period
in respect of ordinary gaming.

(6) Section 26F(2) to (7) of BGDA 1981 (provision and value of prizes) apply for
the purposes of sub-paragraph (5).

40Post-commencement relief for unrelieved pre-commencement losses

6 (1) In this paragraph “new accounting period” means an accounting period
beginning on or after 1 December 2014.

(2) Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative
amount of net stake receipts for an accounting period ending on 30
November 2014 in respect of bets to which section 2(1) of BGDA 1981
applies, the amount may be carried forward in reduction of the person’s
5profits on general bets for one or more new accounting periods.

(3) Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative
amount of net stake receipts for an accounting period ending on 30
November 2014 in respect of bets—

(a) to which section 3(1) of BGDA 1981 applies, and

(b) 10which are financial spread bets for the purposes of section 3 of BGDA
1981,

the amount may be carried forward in reduction of the person’s profits on
financial spread bets for one or more new accounting periods.

(4) Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative
15amount of net stake receipts for an accounting period ending on 30
November 2014 in respect of bets—

(a) to which section 3(1) of BGDA 1981 applies, and

(b) which are not financial spread bets for the purposes of section 3 of
BGDA 1981,

20the amount may be carried forward in reduction of the person’s profits on
non-financial spread bets for one or more new accounting periods.

(5) Where under section 5 or 5AA(3) of BGDA 1981 a person has a negative
amount of net stake receipts for an accounting period ending on 30
November 2014 in respect of bets by way of pool betting to which section
254(1) of BGDA 1981 applies, the amount may be carried forward in reduction
of the person’s profits on Chapter 1 pool bets for one or more new
accounting periods.

(6) Where under section 7ZA(3) or 7A of BGDA 1981 a person has a negative
amount of net pool betting receipts for an accounting period ending on 30
30November 2014, the amount may be carried forward in reduction of the
person’s profits on Chapter 2 pool bets for one or more new accounting
periods.

(7) Where the amount of a person’s remote gaming profits (see section 26C(2) of
BGDA 1981) for an accounting period ending on or before 30 November
352014 is a negative amount then that amount, so far as it has not been carried
forward under section 26G of BGDA 1981 in reduction of the profits of one
or more later accounting periods ending on or before 30 November 2014,
may be carried forward in reduction of the person’s profits on remote
gaming (see section 148(4) of this Act) for one or more new accounting
40periods.

Post-commencement winnings on non-dutiable pre-commencement general or pool betting

7 (1) In this paragraph “transitional accounting period” means an accounting
period—

(a) beginning on or after 1 December 2014, and

(b) 45ending on or before 30 November 2018.

(2) For the purposes of this paragraph, a bet is “non-dutiable” if—

(a) neither of sections 2(1) and 3(1) of BGDA 1981 applies to it,

(b) it is not a bet by way of pool betting on which general betting duty is
charged under section 4(1) of BGDA 1981, and

(c) it is not a dutiable pool bet as defined by section 7B of BGDA 1981.

(3) Where—

(a) 5a non-dutiable bet is made with a bookmaker before 1 December
2014, and

(b) the bet is a general bet as defined by section 119 of this Act,

amounts paid by the bookmaker in a transitional accounting period by way
of winnings to the person who made the bet may be included among the
10amounts aggregated at Step 2 in section 124 of this Act in calculating the
bookmaker’s ordinary profits in respect of general bets for that period.

(4) Where—

(a) a non-dutiable bet is made with a bookmaker before 1 December
2014, and

(b) 15the bet is a financial spread bet as defined by section 121 of this Act,

amounts paid by the bookmaker in a transitional accounting period by way
of winnings to the person who made the bet may be included among the
amounts aggregated at Step 2 in section 124 of this Act in calculating the
bookmaker’s ordinary profits in respect of financial spread bets for that
20period.

(5) Where—

(a) a non-dutiable bet is made with a bookmaker before 1 December
2014, and

(b) the bet is a non-financial spread bet as defined by section 121 of this
25Act,

amounts paid by the bookmaker in a transitional accounting period by way
of winnings to the person who made the bet may be included among the
amounts aggregated at Step 2 in section 124 of this Act in calculating the
bookmaker’s ordinary profits in respect of non-financial spread bets for that
30period.

(6) Where—

(a) a non-dutiable bet is made with a bookmaker before 1 December
2014, and

(b) the bet is a Chapter 1 pool bet as defined by section 127 of this Act,

35amounts paid by the bookmaker in a transitional accounting period by way
of winnings in respect of the bet may be included among the amounts
aggregated under section 130(b) of this Act in calculating the bookmaker’s
profits for that period in respect of ordinary Chapter 1 pool bets.

(7) Where—

(a) 40a non-dutiable bet is made with a bookmaker before 1 December
2014, and

(b) the bet is a Chapter 2 pool bet as defined by section 136 of this Act,

amounts paid by or on behalf of the bookmaker in a transitional accounting
period by way of winnings in respect of the bet may be included among the
45amounts aggregated under section 139(b) of this Act in calculating the
bookmaker’s profits for that period in respect of ordinary Chapter 2 pool
bets.

(8) Section 133 of this Act (meaning of “winnings”) applies for the purposes of
sub-paragraphs (3) to (6).

(9) Section 142 of this Act (meaning of “winnings”) applies for the purposes of
sub-paragraph (7).

5Post-commencement winnings on non-dutiable pre-commencement remote gaming

8 (1) In this paragraph “transitional accounting period” means an accounting
period—

(a) beginning on or after 1 December 2014, and

(b) ending on or before 30 November 2018.

(2) 10Sub-paragraph (3) applies where—

(a) under arrangements between a chargeable person (as defined by
section 148(2)) and another person (“the provider”), the chargeable
person participates in playing a game of chance,

(b) the game is begun to be played before 1 December 2014,

(c) 15the chargeable person’s participation in playing the game under the
arrangements is remote gaming (as defined by section 147(1)) which
is ordinary gaming (as defined by section 147(3)),

(d) remote gaming duty under section 26B of BGDA 1981 is not charged
on the provision of any facilities—

(i) 20used by the chargeable person to play the game, and

(ii) provided by the provider, and

(e) the condition in paragraph (d) is not met only by virtue of section
26H of BGDA 1981 (exemptions).

(3) The value of any prize—

(a) 25provided by or on behalf of the provider in a transitional accounting
period, and

(b) won by the chargeable person as a result of participating in playing
the game under the arrangements,

may be included among the values aggregated under section 150(2) in
30calculating the provider’s expenditure for the period on prizes in respect of
ordinary gaming.

(4) Section 153 (provision and value of prizes) applies for the purposes of sub-
paragraph (3).

Saving for amendments and repeals made by Schedule 24

9 (1) 35The amendments and repeals made by Schedule 24 do not affect—

(a) the operation on and after 1 December 2014 of any enactment
amended or repealed by that Schedule, as the enactment stood
immediately before that date, for the purposes of accounting periods
for general betting duty, pool betting duty or remote gaming duty
40that end before that date, or for the purposes of entitlement to double
taxation relief for such accounting periods,

(b) the operation on and after that date of any regulations or orders
made, directions given or notices published under BGDA 1981
before that date so far as they relate to any of those duties (but see
45paragraph (c)),

(c) the exercise on and after that date of any power of the
Commissioners or the Treasury under BGDA 1981 as saved by
paragraph (a), including (in particular) any such power to make,
amend, revoke, publish, revise or replace regulations, orders,
5directions or notices,

(d) the charges under sections 2(1), 3(1) and 4(1) of BGDA 1981 on bets
made before that date,

(e) the charge under section 5AB of BGDA 1981 so far as relating to bets
determined before that date,

(f) 10the charge under section 7 of BGDA 1981 so far as relating to net pool
betting receipts for accounting periods ending before that date, or

(g) the charges under sections 17 and 26B of BGDA 1981 so far as
relating to games of chance that began to be played before that date.

(2) Sub-paragraph (1)—

(a) 15has effect subject to the preceding provisions of this Schedule, and

(b) does not prejudice the generality of section 16(1) of the Interpretation
Act 1978.

Section 202

SCHEDULE 26 Section 201 penalty: value of the denied advantage

20Introduction

1 This Schedule applies for the purposes of calculating penalties under section
202.

Value of denied advantage: normal rule

2 (1) The value of the denied advantage is the additional amount due or payable
25in respect of tax as a result of counteracting the denied advantage.

(2) The reference in sub-paragraph (1) to the additional amount due or payable
includes a reference to—

(a) an amount payable to HMRC having erroneously been paid by way
of repayment of tax, and

(b) 30an amount which would be repayable by HMRC if the denied
advantage were not counteracted.

(3) The following are ignored in calculating the value of the denied advantage—

(a) group relief, and

(b) any relief under section 458 of CTA 2010 (relief in respect of
35repayment etc of loan) which is deferred under subsection (5) of that
section.

(4) This paragraph is subject to paragraphs 3 and 4.

Value of denied advantage: losses

3 (1) To the extent that the denied advantage has the result that a loss is wrongly
40recorded for purposes of direct tax and the loss has been wholly used to

reduce the amount due or payable in respect of tax, the value of the denied
advantage is determined in accordance with paragraph 2.

(2) To the extent that the denied advantage has the result that a loss is wrongly
recorded for purposes of direct tax and the loss has not been wholly used to
reduce the amount due or payable in respect of tax, the value of the denied
5advantage is—

(a) the value under paragraph 2 of so much of the denied advantage as
results from the part (if any) of the loss which is used to reduce the
amount due or payable in respect of tax, plus

(b) 10% of the part of the loss not so used.

(3) 10Sub-paragraphs (1) and (2) apply both—

(a) to a case where no loss would have been recorded but for the denied
advantage, and

(b) to a case where a loss of a different amount would have been
recorded (but in that case sub-paragraphs (1) and (2) apply only to
15the difference between the amount recorded and the true amount).

(4)
To the extent that a denied advantage creates or increases an aggregate loss
recorded for a group of companies—

(a) the value of the denied advantage is calculated in accordance with
this paragraph, and

(b) 20in applying paragraph 2 in accordance with sub-paragraphs (1) and
(2), group relief may be taken into account (despite paragraph 2(3)).

(5) To the extent that the denied advantage results in a loss, the value of it is nil
where, because of the nature of the loss or P’s circumstances, there is no
reasonable prospect of the loss being used to support a claim to reduce a tax
25liability (of any person).

Value of denied advantage: deferred tax

4 (1) To the extent that the denied advantage is a deferral of tax, the value of that
advantage is—

(a) 25% of the amount of the deferred tax for each year of the deferral, or

(b) 30a percentage of the amount of the deferred tax, for each separate
period of deferral of less than a year, equating to 25% per year,

or, if less, 100% of the amount of the deferred tax.

(2) This paragraph does not apply to a case to the extent that paragraph 3
applies.

Section 208

35SCHEDULE 27 Follower notices and partnerships

Introduction

1 This Schedule makes special provision about the application of Chapter 2 to
partners and partnerships.

Interpretation

2 (1) This paragraph applies for the purposes of this Schedule.

(2) “Partnership follower notice” means a follower notice given by reason of—

(a) a tax enquiry being in progress into a partnership return, or

(b) 5an appeal having been made in relation to an amendment of a
partnership return or against a conclusion stated by a closure notice
in relation to a tax enquiry into a partnership return.

(3)
“Partnership return” means a return in pursuance of a notice under section
12AA(2) or (3) of TMA 1970.

(4) 10“The representative partner”, in relation to a partnership return, means the
person who was required by a notice served under or for the purposes of
section 12AA(2) or (3) of TMA 1970 to deliver the return.

(5) “Relevant partner”, in relation to a partnership return, means a person who
was a partner in the partnership to which the return relates at any time
15during the period in respect of which the return was required.

(6) References to a “successor”, in relation to the representative partner are to be
construed in accordance with section 12AA(11) of TMA 1970.

Giving of follower notices in relation to partnership returns

3 (1) If the representative partner in relation to a partnership return is no longer
20available, then, for the purposes of section 197 the return, or an appeal in
respect of the return, is to be regarded as made by the person who is for the
time being the successor of that partner (if that would not otherwise be the
case).

(2) Where, at any time after a partnership follower notice is given to P, P is no
25longer available, any reference in this Chapter (other than section 197 and
this sub-paragraph) to P is to be read as a reference to the person who is, for
the time being, the successor of the representative partner.

(3) For the purposes of Condition B in section 197 a partnership return, or
appeal in respect of a partnership return, is made on the basis that a
30particular tax advantage results from particular tax arrangements if—

(a) it is made on the basis that an increase or reduction in one or more of
the amounts mentioned in section 12AB(1) of TMA 1970 (amounts in
the partnership statement in a partnership return) results from those
tax arrangements, and

(b) 35that increase or reduction results in that tax advantage for one or
more of the relevant partners.

(4) For the purposes of Condition D in section 197—

(a) a notice given to a person in the person’s capacity as the
representative partner of a partnership, or a successor of that
40partner, and a notice given to that person otherwise than in that
capacity are not to be treated as given to the same person, and

(b) all notices given to the representative partner and successors of that
partner, in that capacity, are to be treated as given to the same
person.

(5) In this paragraph references to a person being “no longer available” have the
same meaning as in section 12AA(11) of TMA 1970.

Penalty if corrective action not taken in response to partnership follower notice

4 (1) Section 201 applies, in relation to a partnership follower notice, in
5accordance with this paragraph.

(2) Subsection (2) applies as if the reference to P were to each relevant partner.

(3) References to the denied advantage are to be read as references to the
increase or reduction in an amount in the partnership statement mentioned
in paragraph 3(3) which is denied by the application of the principles laid
10down or the reasoning given in the judicial ruling identified in the
partnership follower notice under section 199(a) or, if only part of any
increase or reduction is so denied, that part.

(4) In subsection (6)(b) the words from “and (where different)” to the end are to
be ignored, and accordingly subsection (7) does not apply.

15Calculation of penalty etc

5 (1) This paragraph applies in relation to a partnership follower notice.

(2) Section 202 applies subject to the following modifications—

(a) the total amount of the penalties under section 201(2) for which the
relevant partners are liable is 20% of the value of the denied
20advantage,

(b) the amount of the penalty for which each relevant partner is liable is
that partner’s appropriate share of that total amount, and

(c) the value of the denied advantage for the purposes of calculating the
total amount of the penalties is—

(i) 25in the case of a notice given under section 197(2)(a), the net
amount of the amendments required to be made to the
partnership return to counteract the denied advantage, and

(ii) in the case of a notice given under section 197(2)(b), the net
amount of the amendments that have been made to the
30partnership return to counteract the denied advantage,

(and, accordingly, Schedule 26 does not apply).

(3) For the purposes of sub-paragraph (2), a relevant partner’s appropriate
share is—

(a) the same share as the share in which any profits or loss for the period
35to which the return relates would be apportioned to that partner in
accordance with the firm’s profit-sharing arrangements, or

(b) if HMRC do not have sufficient information from P to establish that
share, such share as is determined for the purposes of this paragraph
by an officer of HMRC.

(4) 40Where—

(a) the relevant partners are liable to pay a penalty under section 201(2)
(as modified by this paragraph),

(b) the penalties have not yet been assessed, and

(c) P has co-operated with HMRC,