Finance Bill (HC Bill 1)

(4) Omit sub-paragraph (3).

Part 3 Other amendments: Union and non-Union schemes

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

12 (1) 5Section 3A (supply of electronic services in member States: special
accounting scheme) is amended as follows.

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

(3) After subsection (1) insert—

“(1A) 10Schedule 3BA—

(a) establishes a special accounting scheme for use by persons
established in the UK and supplying electronically supplied
services, telecommunication services or broadcasting
services in other member States, and

(b) 15makes provision about corresponding schemes in other
member States.”

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

13 In section 76 (assessment of amounts due by way of penalty, interest or
20surcharge)—

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

(b) after subsection (3) insert—

“(3A) In the case of a surcharge under paragraph 16F of Schedule
253B 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
respect of which the person is in default and in respect of
which the surcharge arises.”;

(c) 30in subsection (5), after each “(3)” insert “or (3A)”.

14 After section 76 insert—

“76A Section 76: cases involving special accounting schemes

(1) References 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
35purposes 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) References in section 77 to a prescribed accounting period are to be
read accordingly.

(3) 40In 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 In 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
5Schedule 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
10under 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.

(2) 15In the Table, after the second entry relating to VAT insert—

(3) Before sub-paragraph (5) insert—

“(4A) 20In 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) a special accounting return under paragraph 11 of
Schedule 3B;

(b) 25a 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
substituted by Article 5(11) of the Amending Directive);

(c) a value added tax return submitted under any provision of
30the 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) A value added tax return mentioned in paragraph (b) or (c) of sub-
paragraph (4A) is regarded for the purposes of sub-paragraph (1)
35as given to HMRC when it is submitted to the authority to whom
it is required to be submitted.

(4C) In sub-paragraph (4A)—

• “the VAT Directive” means Directive 2006/112/EC;

• “the Amending Directive” means Council Directive 2008/8/
  40EC.”

20 (1) FA 2009 is amended as follows.

(2) In section 101 (late payment interest on sums due to HMRC), after

subsection (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
5scheme;

(b) amounts 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) 10expressions used in paragraph (a) have the meaning given
by 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
15scheme).”

(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
20Act”.

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) 25after 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) 30in the words inserted by sub-paragraph (4), after item 7A, insert—

(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
40FA 2009, which provides for penalties for failure to make payments) is
amended as follows.

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

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

(4) In 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,
406BB,”.

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

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
5after 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
10effect 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)
15as 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.

(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
20the 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
that date.

Section 106

SCHEDULE 19 SDLT: charities relief

1 25Schedule 8 to FA 2003 (stamp duty land tax: charities relief) is amended as
follows.

2 In 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) 30after sub-paragraph (3) insert—

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

(a) for use in furtherance of the charitable purposes of
35C or another charity, or

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

3 After paragraph 3 insert—

“Joint purchasers: partial relief

3A (1) 40Sub-paragraphs (3) to (5) apply in any case where—

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

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

(c) 5at least one of them is, and at least one of them is not, a
qualifying charity, and

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

(2) 10A charity (“C”) that is a purchaser under a land transaction is a
“qualifying charity” in relation to the transaction if C intends to
hold 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
15amount of the relief under sub-paragraph (4).

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

(5) The “relevant proportion”, in the case of a qualifying charity, is the
20lower 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
the transaction (in aggregate);

Withdrawal of relief given under paragraph 3A

3B (1) 25This paragraph applies where—

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

(b) a disqualifying event occurs in relation to a qualifying
charity (“C”) which was a purchaser under the transaction,
30and

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

(2) The disqualifying event must occur—

(a) before the end of the period of 3 years beginning with the
35effective date of the transaction, or

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

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

(a) 40was 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) C 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) 5C’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
10relief.

(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—

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

20

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

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

(10) 25In 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
event, and

(b) 30the 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) This 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) 5C 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
10charitable 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
15under 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
20part of the chargeable interest acquired by C under the
relevant transaction;

(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”)
25applies for the purposes of sub-paragraph (3)(b) as it applies for
the 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
30of the transaction;

(b) paragraph 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
35“Immediately before”;

(b) in 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) 40in paragraph (a), for the words from “references” to “are to”
substitute “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) 45in paragraph (c) for the words from “reference” to “is” substitute
“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

SCHEDULE 20 5Abolition of stamp duty and SDRT: securities on recognised growth markets

Part 1 Stamp duty reserve tax

“Chargeable securities”

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

2 10In 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
other market.

(4C) 15In subsection (4B), “listed” and “recognised growth market” are to be
construed in accordance with section 99A.”

3 After that section insert—

“99A Section 99(4B): “listed” and “recognised growth market”

(1) This section applies for the purposes of section 99(4B).

(2) 20Section 1005(3) to (5) of the Income Tax Act 2007 (meaning of “listed”
etc) applies as it applies in relation to the Income Tax Acts.

(3) “Recognised growth market” means a market recognised as a growth
market by the Commissioners for Her Majesty’s Revenue and
Customs.

(4) 25On an application made by a market, the market is to be recognised
by the Commissioners as a growth market if, and only if, the
Commissioners are satisfied, on the basis of evidence provided by
the market, that the market qualifies for recognition.

(5) A market qualifies for recognition at any time (“the relevant time”) if
30it is a recognised stock exchange which meets one or both of the
following conditions—

(a) a majority of the companies whose stock or marketable
securities are admitted to trading on the market are
companies with market capitalisations of less than £170
35million;

(b) the Commissioners are satisfied that the admission
requirements of the market include provision requiring
companies to demonstrate compounded annual growth in
gross revenue or employment of at least 20% over the last

three periods of account preceding admission (“the pre-
admission periods”).

(6) In subsection (5)—

• “period of account” of a company means a period for which the
  5company draws up accounts;

• “recognised stock exchange” has the meaning given by section
  1005(1) of the Income Tax Act 2007.

(7) For the purposes of subsection (5)(a) a company’s market
capitalisation at the relevant time is the average of the closing market
10capitalisations of the company on the last trading day of each
calendar month (or part of a calendar month) in the qualifying
period.

(8) “The qualifying period” means whichever is the shorter of—

(a) the last three calendar years preceding the relevant time, or

(b) 15the period beginning with the day on which the company is
admitted to trading on the market and ending at the end of
the last calendar year preceding the relevant time.

(9) For the purposes of subsection (5)(a), a company is to be disregarded
if it is admitted to trading on the market in the calendar year in which
20the relevant time falls.

(10) In the case of a company with a market capitalisation in a currency
other than sterling, the closing market capitalisation for the last
trading day of any calendar month is to be taken, for the purposes of
subsection (7), to be the sterling equivalent of that capitalisation
25(calculated by reference to the spot rate of exchange for that last
trading day).

(11) For the purposes of subsection (5)(b), the percentage of the
compounded annual growth in gross revenue over the pre-
admission periods is calculated by applying the formula—

30

(12) For those purposes, the percentage of the compounded annual
growth in employment over the pre-admission periods is calculated
by applying the formula—