Finance Bill (HC Bill 10)

(2) Section 98 of TMA 1970 (penalties: special returns etc) is amended as follows.

(3) After subsection (4E) insert—

“(4F) If a person fails to furnish any information or produce any document or
record in accordance with regulations under section 716B of ITEPA
52003, subsection (1) has effect as if—

(a) for “£300” there were substituted “£3,000”, and

(b) for “£60” there were substituted “£600”.”

(4) In the second column of the Table, at the appropriate place insert “Regulations
under section 716B of ITEPA 2003.”.

(5) 10The amendments made subsections (2) to (4) have effect from such day as the
Treasury may appoint by order made by statutory instrument.

19 Payments by employer on account of tax where deduction not possible

(1) In section 222 of ITEPA 2003 (payments by employer on account of tax where
deduction not possible), in subsection (1)(c), for “beginning with the relevant
15date” substitute “after the end of the tax year in which the relevant date falls”.

(2) The amendment made by this section has effect in relation to payments of
income treated as made on or after 6 April 2014.

20 PAYE obligations of UK intermediary in cases involving non-UK employer

(1) Section 689 of ITEPA 2003 (PAYE: employee of non-UK employer) is amended
20as follows.

(2) After subsection (1A) insert—

“(1B) Subsection (1C) applies if—

(a) the employee worked for the relevant person during the period
under or in consequence of arrangements made between the
25relevant person and a third person,

(b) the third person did not make the payment of, or on account of,
PAYE income of the employee, and

(c) PAYE regulations would apply to the third person if the third
person were to make a payment of, or on account of, PAYE
30income of the employee.

(1C) The third person is to be treated, for the purposes of PAYE regulations,
as making a payment of PAYE income of the employee of an amount
equal to the amount given by subsection (3).”

(3) In subsection (2), for “The” substitute “If subsection (1C) does not apply, the”.

(4) 35The amendments made by this section are treated as having come into force on
6 April 2014.

21 Oil and gas workers on the continental shelf: operation of PAYE

(1) ITEPA 2003 is amended as follows.

(2) In section 222 (payments by employer on account of tax where deduction not
40possible)—

(a) in subsection (1)(a), after “689” insert “, 689A”, and

(b) in subsection (3), after “employer)” insert “or section 689A(3) (deemed
payments of PAYE income of continental shelf workers by person other
than employer)”.

(3) 5In section 421L (persons to whom certain duties to provide information and
returns apply)—

(a) in subsection (3), after paragraph (b) insert—

“(ba) if the employee in question is a continental shelf worker
and PAYE regulations do not apply to the employer in
10question, any person who is a relevant person in relation
to the employee in question,”, and

(b) after subsection (5) insert—

“(5A) In subsection (3)(ba) “continental shelf worker” and “relevant
person” have the meaning given by section 689A(11) (PAYE: oil
15and gas workers on the continental shelf).”

(4) In section 689 (provision about PAYE for employees of non-UK employers),
after subsection (1) insert—

“(1ZA) But this section does not apply if section 689A applies or would apply
but for a certificate issued under regulations made under subsection (7)
20of that section.”

(5) After that section insert—

“689A Oil and gas workers on the continental shelf

(1) This section applies if—

(a) any payment of, or on account of, PAYE income of a continental
25shelf worker in respect of a period is made by a person who is
the employer or an intermediary of the employer or of the
relevant person,

(b) PAYE regulations do not apply to the person making the
payment or, if that person makes the payment as an
30intermediary of the employer or of the relevant person, to the
employer, and

(c) income tax and any relevant debts are not deducted, or not
accounted for, in accordance with PAYE regulations by the
person making the payment or, if that person makes the
35payment as an intermediary of the employer or of the relevant
person, by the employer.

(2) Subject to subsection (5), subsection (1)(a) does not apply in relation to
a payment so far as the sum paid is employment income under Chapter
2 of Part 7A.

(3) 40The relevant person is to be treated, for the purposes of PAYE
regulations, as making a payment of PAYE income of the continental
shelf worker of an amount equal to the amount given by subsection (4).

(4) The amount referred to is—

(a) if the amount of the payment actually made is an amount to
45which the recipient is entitled after deduction of income tax and
any relevant debts under PAYE regulations, the aggregate of

the amount of the payment and the amount of any income tax
due and any relevant debts deductible, and

(b) in any other case, the amount of the payment.

(5) If, by virtue of any of sections 687A and 693 to 700, an employer would
5be treated for the purposes of PAYE regulations (if they applied to the
employer) as making a payment of any amount to a continental shelf
worker, this section has effect as if—

(a) the employer were also to be treated for the purposes of this
section as making an actual payment of that amount, and

(b) 10paragraph (a) of subsection (4) were omitted.

(6) For the purposes of this section a payment of, or on account of, PAYE
income of a continental shelf worker is made by an intermediary of the
employer or of the relevant person if it is made—

(a) by a person acting on behalf of the employer or the relevant
15person and at the expense of the employer or the relevant
person or a person connected with the employer or the relevant
person, or

(b) by trustees holding property for any persons who include, or a
class of persons which includes, the continental shelf worker.

(7) 20PAYE regulations may make provision for, or in connection with, the
issue by Her Majesty’s Revenue and Customs of a certificate to a
relevant person in respect of one or more continental shelf workers—

(a) confirming that, in respect of payments of, or on account of,
PAYE income of the continental shelf workers specified or
25described in the certificate, income tax and any relevant debts
are being deducted, or accounted for, as mentioned in
subsection (1)(c), and

(b) disapplying this section in relation to payments of, or on
account of, PAYE income of those workers while the certificate
30is in force.

(8) Regulations under subsection (7) may, in particular, make provision
about—

(a) applying for a certificate;

(b) the circumstances in which a certificate may, or must, be issued
35or cancelled;

(c) the form and content of a certificate;

(d) the effect of a certificate (including provision modifying the
effect mentioned in subsection (7)(b) or specifying further
effects);

(e) 40the effect of cancelling a certificate.

(9) Subsection (10) applies if—

(a) there is more than one relevant person in relation to a
continental shelf worker, and

(b) in consequence of the same payment within subsection (1)(a),
45each of them is treated under subsection (3) as making a
payment of PAYE income of the worker.

(10) If one of the relevant persons complies with section 710 (notional
payments: accounting for tax) in respect of the payment that person is

treated as making, the other relevant persons do not have to comply
with that section in respect of the payments they are treated as making.

(11) In this section—

• “continental shelf worker” means a person in an employment
  5some or all of the duties of which are performed—

  (a)

  in the UK sector of the continental shelf (as defined in
  section 41), and

  (b)

  in connection with exploration or exploitation activities
  (as so defined);

• 10“employer” means the employer of the continental shelf worker;

• “relevant person”, in relation to a continental shelf worker,
  means—

  (a)

  if the employer has an associated company (as defined
  in section 449 of CTA 2010) with a place of business or
  15registered office in the United Kingdom, the associated
  company, or

  (b)

  in any other case, the person who holds the licence
  under Part 1 of the Petroleum Act 1998 in respect of the
  area of the UK sector of the continental shelf where some
  20or all of the duties of the continental shelf worker’s
  employment are performed.”

(6) In section 690 (employee non-resident etc), in subsection (10)—

(a) after “689”, in the first place it appears, insert “or 689A”, and

(b) after “689”, in the second place it appears, insert “or (as the case may be)
25689A”.

(7) In section 710 (notional payments: accounting for tax), in subsection (2)—

(a) in paragraph (a)—

(i) after “689” insert “, 689A”, and

(ii) for “or 689(3)(a)” substitute “, 689(3)(a) or 689A(4)(a)”, and

(b) 30in paragraph (b), after “689(2)” insert “or 689A(3)”.

(8) In section 689A (inserted by subsection (5)), at the end insert—

“(12) The Treasury may by regulations modify the definitions of “continental
shelf worker” and “relevant person”, as the Treasury thinks
appropriate.

(13) 35Regulations under subsection (12) may—

(a) make different provision for different cases or different
purposes,

(b) make incidental, consequential, supplementary or transitional
provision or savings, and

(c) 40amend this section.”

(9) The amendment made by subsection (5) is treated as having come into force—

(a) on 26 March 2014 for the purposes of making regulations under section
689A(7) of ITEPA 2003, and

(b) on 6 April 2014 for remaining purposes.

(10) 45The amendments made by subsections (2), (4), (6) and (7) are treated as having
come into force on 6 April 2014.

22 Threshold for benefit of loan to be treated as earnings

(1) In section 180 of ITEPA 2003 (threshold for benefit of a loan to be treated as
earnings), in subsections (1)(a) and (b), (2) and (3), for “£5,000” (wherever
occurring) substitute “£10,000”.

(2) 5The amendments made by this section have effect for the tax year 2014-15 and
subsequent tax years (and apply to loans made at any time).

23 Taxable benefits: cars, vans and related benefits

(1) In section 114 of ITEPA 2003 (cars, vans and related benefits), omit subsection
(3) (which prevents a charge by virtue of Chapter 6 of Part 3 of that Act where
10an amount constitutes earnings by virtue of any other provision).

(2) The amendment made by this section has effect for the tax year 2014-15 and
subsequent tax years.

24 Cars: the appropriate percentage

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans and related
15benefits) is amended as follows.

(2) In section 133 (how to determine the appropriate percentage), in subsection
(2)—

(a) at the end of paragraph (a) insert “or”,

(b) omit paragraph (c) and the “or” before it, and

(c) 20for “to 141” substitute “and 140”.

(3) Section 139 (cars with a C0₂ figure: the appropriate percentage) is amended in
accordance with subsections (4) to (6).

(4) In subsection (2) —

(a) in paragraph (a) for “5%” substitute “7%”,

(b) 25in paragraph (aa) for “9%” substitute “11%”, and

(c) in paragraph (b) for “13%” substitute “15%”.

(5) In subsection (3), for “14%” substitute “16%”.

(6) In subsection (7), omit paragraph (a) and the “and” after it.

(7) Section 140 (cars without a C0₂ figure: the appropriate percentage) is amended
30in accordance with subsections (8) to (10).

(8) In subsection (2), in the Table —

(a) for “15%” substitute “16%”, and

(b) for “25%” substitute “27%”.

(9) In subsection (3)(a), for “5%” substitute “7%”.

(10) 35In subsection (5), omit paragraph (a) and the “and” after it.

(11) Omit section 141 (diesel cars: the appropriate percentage).

(12) Section 142 (car first registered before 1st January 1998: the appropriate
percentage) is amended in accordance with subsections (13) and (14).

(13) In subsection (2), in the Table —

(a) for “15%” substitute “16%”,

(b) for “22%” substitute “27%”, and

(c) for “32%” substitute “37%”.

(14) In subsection (3), for “32%” substitute “37%”.

(15) 5In section 170(4) (power to reduce value of appropriate percentage by
regulations), for the words “to 141” substitute “and 140”.

(16) In consequence, section 23(4) and (5)(b) of FA 2013 is repealed.

(17) The amendments made by this section have effect for the tax year 2016-17 and
subsequent tax years.

25 10Cars and vans: payments for private use

(1) In section 144 of ITEPA 2003 (deduction for payments for private use: cars), for
subsection (1)(b) substitute—

“(b) pays that amount in that year.”

(2) In section 158 of that Act (reduction for payments for private use: vans), for
15subsection (1)(b) substitute—

“(b) pays that amount in that year.”

(3) The amendments made by this section have effect for the tax year 2014-15 and
subsequent tax years.

CHAPTER 3 Corporation tax: general

26 20Release of debts: stabilisation powers under Banking Act 2009

(1) Section 322 of CTA 2009 (release of debts: cases where credits not required to
be brought into account) is amended as follows.

(2) In subsection (2), for “condition A, B or C” substitute “any of conditions A to
D”.

(3) 25After subsection (5) insert—

“(5A) Condition D is that the liability is released in consequence of the
exercise of a stabilisation power under Part 1 of the Banking Act 2009.”

(4) The amendments made by this section have effect in relation to releases of
liabilities on or after 26 November 2013.

27 30Holdings treated as rights under loan relationships

(1) CTA 2009 is amended as follows.

(2) In section 465(3) (list of provisions under which certain distributions are not
excluded from Part 5) before paragraph (a) insert—

“(za) section 490(2) (holdings in OEICs, unit trusts and offshore funds
35treated as rights under creditor relationships),”.

(3) In section 490 (holding in an OEIC, unit trust or offshore fund treated as rights

under a creditor relationship) for subsection (2) substitute—

“(2) The Corporation Tax Acts have effect for the accounting period in
accordance with subsection (3) as if—

(a) the relevant holding were rights under a creditor relationship of
5the company, and

(b) any distribution in respect of the relevant holding were not a
distribution (and accordingly is within Part 5).”

(4) Omit section 490(4) and (5) (which are superseded by the new section
490(2)(b)).

(5) 10For section 492 (rules about tax calculations in avoidance cases where holding
comes within section 490) substitute—

“492 Holding coming within section 490: calculation to undo avoidance

(1) Subsection (2) applies if—

(a) section 490 applies for an accounting period of a company to a
15relevant holding held by the company,

(b) a relevant fund enters into any arrangements, or arrangements
are entered into that in whole or part relate to a relevant fund,
and

(c) the main purpose or one of the main purposes of the
20arrangements is to obtain a tax advantage for a person.

(2) The company must make adjustments to counteract any tax advantage
connected in any way with the relevant holding that would (ignoring
this section) be obtained by the company, or any other person, directly
or indirectly in consequence of the arrangements or their being entered
25into.

(3) The arrangements may be ones entered into at a time when the
company does not hold the relevant holding; and any person referred
to in subsection (1)(c) need not be identified when the arrangements are
entered into.

(4) 30The adjustments required by subsection (2) are such as are just and
reasonable.

(5) In this section—

• “arrangements” includes any scheme, arrangement or
  understanding of any kind, whether or not legally enforceable,
  35involving a single transaction or two or more transactions, and

• “relevant fund” means—

  (a)

  the open-ended investment company, unit trust scheme
  or offshore fund in which the relevant holding is held, or

  (b)

  an open-ended investment company, unit trust scheme
  40or offshore fund in which a relevant fund has a
  holding.”

(6) In section 495 (meaning of “qualifying holdings”)—

(a) in subsection (1)—

(i) for “would itself fail” substitute “itself fails”, and

(ii) 45omit “, even on the assumption in subsection (2)”, and

(b) omit subsection (2).

(7) The amendments made by this section have effect in relation to accounting
periods beginning on or after 1 April 2014.

(8) For the purposes of subsection (7), an accounting period beginning before, and
ending on or after, 1 April 2014 is to be treated as if so much of the period as
5falls before that date, and so much of the period as falls on or after that date,
were separate accounting periods.

(9) An apportionment for the purposes of subsection (8) must be made in
accordance with section 1172 of CTA 2010 (time basis) or, if that method
produces a result that is unjust or unreasonable, on a just and reasonable basis.

28 10De-grouping charges (loan relationships etc)

(1) CTA 2009 is amended as follows.

(2) In each of sections 345 and 346 (loan relationships: transferee leaving group)—

(a) in subsection (2), omit “If condition A or B is met,”, and

(b) omit subsections (3) to (5).

(3) 15In each of sections 631 and 632 (derivative contracts: transferee leaving
group)—

(a) in subsection (2), omit “If condition A or B is met,”, and

(b) omit subsections (3) and (4).

(4) An amendment made by this section has effect where the cessation of
20membership of the relevant group occurs on or after 1 April 2014.

29 Disguised distribution arrangements involving derivative contracts

(1) In Chapter 11 of Part 7 of CTA 2009 (derivative contracts: tax avoidance), after
section 695 (but before the following italic heading) insert—

“695A Disguised distribution arrangements involving derivative contracts

(1) 25This section applies if—

(a) a company (“A”) is a party to arrangements involving one or
more derivative contracts (each of which is referred to in this
section as a “specified contract”),

(b) another company (“B”) is also a party to the arrangements
30(whether or not at the same time as A),

(c) A and B are members of the same group,

(d) the arrangements result in what is, in substance, a payment
(directly or indirectly) from A to B of all or a significant part of
the profits of the business of A or of a company which is a
35member of the same group as A or B (or both) (“the profit
transfer”), and

(e) the arrangements are not arrangements of a kind which
companies carrying on the same kind of business as A would
enter into in the ordinary course of that business.

(2) 40No debits in respect of a specified contract, which—

(a) relate to the profit transfer, and

(b) apart from this section, would be brought into account by A or
B for the purposes of this Part,

are to be so brought into account.

(3) Where one or more debits in respect of a specified contract are not
brought into account by virtue of subsection (2), credits arising from the
same contract which—

(a) 5relate to the same profit transfer, and

(b) apart from this section, would be brought into account by A or
B for the purposes of this Part,

are not to be so brought into account to the extent that the total of those
credits does not exceed the total of those debits.

(4) 10Subsection (3) does not apply to any credit which arises directly or
indirectly in consequence of, or otherwise in connection with,
arrangements the main purpose of which, or one of the main purposes
of which, is the securing of a tax advantage for any person.

(5) For the purposes of this section a company is a member of the same
15group as another company if it is (or has been) a member of the same
group at a time when the arrangements mentioned in subsection (1)
have effect.

(6) In this section—

• “arrangements” includes any scheme, arrangement or
  20understanding of any kind, whether or not legally enforceable,
  involving a single transaction or two or more transactions;

• “group” has the meaning given by section 357GD of CTA 2010;

• “tax advantage” has the meaning given by section 1139 of CTA
  2010.”

(2) 25The amendment made by this section has effect in relation to accounting
periods beginning on or after 5 December 2013.

This is subject to subsections (3) to (6).

This is subject to subsections (3) to (6).

(3) In the case of a company which has an accounting period beginning before 5
30December 2013 and ending on or after that date (“the straddling period”), for
the purposes of subsections (2) and (4) so much of the straddling period as falls
before that date, and so much of that period as falls on or after that date, are
treated as separate accounting periods.

(4) The amendment does not have effect in relation to debits, arising from a
35specified contract, which relate to the profit transfer and are or would be
brought into account for an accounting period beginning on or after 5
December 2013 to the extent that the total of those debits does not exceed the
amount (if any) by which—

(a) the total amount of credits arising from that contract which—

(i) 40relate to the profit transfer, and

(ii) are or would be brought into account for the purposes of Part 7
of CTA 2009 for any accounting period ending before 5
December 2013, exceeds

(b) the total amount of debits arising from that contract which relate to the
45profit transfer and are or would be brought into account as mentioned
in paragraph (a)(ii).

(5) In the case of credits to which subsection (6) applies, section 695A of CTA 2009
has effect as if—

(a) subsection (2) of that section applied to credits in respect of a specified
contract as it applies to debits in respect of a specified contract,

(b) subsection (3) of that section were omitted, and

(c) in subsection (4) the reference to subsection (3) were to subsection (2).

(6) 5This subsection applies to credits which, had A or B had an accounting period
beginning with 5 December 2013 and ending with 22 January 2014, would have
been brought into account for that period by A or (as the case may be) B for the
purposes of Part 7 of that Act (ignoring section 695A of CTA 2009).

30 Avoidance schemes involving the transfer of corporate profits

(1) 10In Chapter 1 of Part 20 of CTA 2009 (general calculation rules: restriction on
deductions), after section 1305 insert—

“1305A Avoidance schemes involving the transfer of corporate profits

(1) This section applies if—

(a) two companies (“A” and “B”) are party to any arrangements
15(whether or not at the same time),

(b) A and B are members of the same group,

(c) the arrangements result in what is, in substance, a payment
(directly or indirectly) from A to B of all or a significant part of
the profits of the business of A or of a company which is a
20member of the same group as A or B (or both) (“the profit
transfer”), and

(d) the main purpose or one of the main purposes of the
arrangements is to secure a tax advantage for any person
involving the profit transfer (whether by circumventing section
25695A (disguised distribution arrangements: derivative
contracts) or otherwise).

(2) A’s profits are to be calculated for corporation tax purposes as if the
profit transfer had not occurred.

(3) Accordingly—

(a) 30if (apart from this section) an amount relating to the profit
transfer would be brought into account by A as a deduction in
that calculation, no deduction is allowed in respect of that
amount, and

(b) A’s profits are to be increased by so much of the amount of the
35profit transfer as is not an amount to which paragraph (a)
applies (whether or not the profits transferred would be A’s
profits apart from the arrangements).

(4) For the purposes of this section a company is a member of the same
group as another company if it is (or has been) a member of the same
40group at a time when the arrangements mentioned in subsection (1)
have effect.

(5) Where in relation to arrangements involving one or more derivative
contracts the requirements of section 695A(1)(a) to (e) are met, nothing
in this section applies in relation to any debit in respect of any of those
45contracts.

(6) In this section—

Finance BillPage 30

• “arrangements” includes any scheme, arrangement or
  understanding of any kind, whether or not legally enforceable,
  involving a single transaction or two or more transactions;

• “group” has the meaning given by section 357GD of CTA 2010;

• 5“tax advantage” has the meaning given by section 1139 of CTA
  2010.”

(2) The amendment made by this section has effect in relation to payments made
on or after 19 March 2014.

31 R&D tax credits for small or medium-sized enterprises

(1) 10In section 1058 of CTA 2009 (amount of tax credit), in subsection (1)(a), for
“11%” substitute “14.5%”.

(2) The amendment made by this section has effect in relation to expenditure
incurred on or after 1 April 2014.

32 Film tax relief

(1) 15Chapter 3 of Part 15 of CTA 2009 (film tax relief) is amended as follows.

(2) In section 1198 (UK expenditure), in subsection (1), for “25%” substitute “10%”.

(3) In section 1202 (surrendering of loss and amount of film tax credit), for
subsections (2) and (3) substitute—

“(2) If the company surrenders the whole or part of that loss, the amount of
20the film tax credit to which it is entitled for the accounting period is the
sum of—

(a) 25% of so much of the loss surrendered as does not exceed the
unused 25% band, and

(b) 20% of the remainder of that loss (if any).

(3) 25“The unused 25% band” means £20 million reduced (but not below
zero) by the total amount previously surrendered under subsection (1)
(if any).”

(4) The amendments made by subsections (2) and (3) have effect in relation to
films the principal photography of which is not completed before such day as
30the Treasury may specify by order.

(5) A different day may be specified in relation to the amendments made by each
subsection.

(6) A specified day may be before the day on which the order is made, but may not
be before 1 April 2014.

(7) 35The Treasury may by order amend sections 1198(1) and 1202(2) and (3) of CTA
2009 (as amended and inserted by this section) in connection with an
application for State aid approval.

(8) In this section “State aid approval” means approval that the provision made by
this section, to the extent that it constitutes the granting of aid to which any of
40the provisions of Article 107 or 108 of the Treaty on the Functioning of the
European Union applies, is, or would be, compatible with the internal market,
within the meaning of Article 107 of that Treaty.

(9) An order under subsection (7) may—

(a) make incidental, supplemental, consequential, transitional or saving
provision;

(b) contain provision having effect in relation to films mentioned in
5subsection (4).

33 Television tax relief: activities to be treated as separate trade

(1) Part 15A of CTA 2009 (television production) is amended as follows.

(2) In section 1216A (overview), in subsection (3)(a), for “its” substitute “each
qualifying”.

(3) 10In section 1216B (activities of television production company treated as a
separate trade)—

(a) in subsection (1), after the second “a” insert “qualifying”;

(b) in subsection (2), for “television” substitute “qualifying relevant”;

(c) at the end insert—

“(5) 15In this section “qualifying relevant programme” means a
relevant programme in relation to which the conditions for
television tax relief are met (see section 1216C(2)).”

34 Video games development

(1) Part 15B of CTA 2009 (video games development) is amended as follows.

(2) 20In section 1217A (overview), in subsection (3)(a), for “its” substitute “each
qualifying”.

(3) In section 1217AE—

(a) in the heading, for “UK” substitute “EEA”;

(b) for subsection (1) substitute—

“(1) 25In this Part, “EEA expenditure”, in relation to a video game,
means expenditure on goods or services that are provided from
within the European Economic Area.”;

(c) in subsection (2), for “UK expenditure and non-UK expenditure”
substitute “EEA expenditure and non-EEA expenditure”.

(4) 30In section 1217B (activities of video games development company treated as a
separate trade)—

(a) in subsection (1), after the second “a” insert “qualifying”;

(b) in subsection (2), after the second “other” insert “qualifying”;

(c) at the end insert—

“(5) 35In this section “qualifying video game” means a video game in
relation to which the conditions for video games tax relief are
met (see section 1217C(2)).”

(5) In section 1217CF (additional deduction for qualifying expenditure)—

(a) after subsection (3) insert—

“(3A) 40But if the core expenditure on the video game includes sub-
contractor payments which (in total) exceed £1 million, the
excess is not “qualifying expenditure”.”;

(b) in subsection (4)(a), for “subsection (3)” substitute “subsections (3) and
(3A)”;

(c) at the end insert—

“(5) In this section, “sub-contractor payment” means a payment
5made by the company to another person in respect of work on
design, production or testing of the video game that is
contracted out by the company to the person.”

(6) In the following provisions, for “UK expenditure” substitute “EEA
expenditure”—

(a) 10section 1217C(2)(c);

(b) the heading above section 1217CE;

(c) the heading of section 1217CE;

(d) section 1217CE(1);

(e) section 1217CG(1)(a) and (2)(a);

(f) 15the heading of section 1217EB;

(g) section 1217EB(1)(a) and (b) and (3).

(7) In Schedule 4 to CTA 2009 (index of defined expressions)—

(a) omit the entry for “UK expenditure (in Part 15B)”;

(b) at the appropriate place insert—

(8) The amendments made by this section have effect in relation to accounting
periods beginning on or after the day specified in an order made by the
Treasury under paragraph 3 of Schedule 17 to FA 2013 (and sub-paragraphs (3)
and (4) of that paragraph apply accordingly).

35 25Community amateur sports clubs

(1) Part 6 of CTA 2010 (charitable donations relief: payments to charity) is
amended in accordance with subsections (2) to (7).

(2) In section 189 (relief for charitable donations), in subsection (5), after “subject
to” insert “Chapter 2A of this Part,”.

(3) 30In section 192 (condition as to repayment), in subsection (6), omit the “and” at
the end of paragraph (a) and after that paragraph insert—

“(aa) the repayment is not non-qualifying expenditure for the
purposes of Chapter 9 of Part 13 (see section 661(5)), and”.

(4) In section 200 (company wholly owned by a charity), after subsection (4)
35insert—

“(4A) In the case of a charity which is a registered club, ordinary share capital
of a company is treated as owned by a charity if the charity beneficially
owns that share capital.”

(5) In section 202 (meaning of “charity”), before paragraph (b) insert—

“(aa) 40a registered club,”.

(6) After that section insert—

“202A Registered club”

In this Chapter “registered club” has the meaning given by section
658(6) (clubs registered as community amateur sports clubs).”

(7) 5After Chapter 2 insert—

“CHAPTER 2A Payments to community amateur sports clubs: anti-abuse

202B Restriction on relief for payments to community amateur sports clubs

(1) Subsection (2) applies if—

(a) 10one or more qualifying payments are made by a company to a
registered club (“the club”) in an accounting period (“the
current period”),

(b) the company is wholly owned, or controlled, by the club or by
a number of charities which include the club, for all or part of
15that period, and

(c) inflated member-related expenditure is incurred by the
company in that period.

(2) For the purposes of section 189 (relief for qualifying charitable
donations), the total amount of those qualifying payments is treated as
20reduced (but not below nil) by the total amount of that inflated
member-related expenditure.

(3) Subsection (4) applies if—

(a) the total amount of that expenditure exceeds the total amount of
those payments, and

(b) 25the company made one or more qualifying payments to the club
in an earlier accounting period ending not more than 6 years
before the end of the current period.

(4) For the purposes of section 189, the total amount of the qualifying
payments made in the earlier accounting period is treated as reduced
30(but not below nil) by the amount of the excess.

(5) If subsection (3)(b) applies in relation to more than one earlier
accounting period—

(a) subsection (4) applies to treat amounts paid in later accounting
periods as reduced in priority to amounts paid in earlier ones
35(until the excess is exhausted or all amounts have been reduced
to nil), and

(b) in applying subsection (4) in relation to an accounting period,
the reference to the excess is to be read as a reference to so much
of it as exceeds the total amount of qualifying payments which,
40under that subsection, have previously been reduced to nil by
the excess.

(6) For the purposes of subsections (3) and (4), a reference to the total
amount of qualifying payments made in an earlier accounting period is
to the total amount of those payments after—

(a) any reduction under subsection (2), and

(b) 5any previous reduction under subsection (4).

(7) Such adjustments must be made (whether by way of the making of
assessments or otherwise) as may be required in consequence of
subsections (4) to (6).

(8) Section 200 (company wholly owned by a charity) applies for the
10purposes of this section.

(9) For the purposes of this section, the club controls the company if it has
the power to secure—

(a) by means of the holding of shares or the possession of voting
power in relation to the company or any other company, or

(b) 15as a result of any powers conferred by the articles of association
or other document regulating the company or any other
company,

that the affairs of the company are conducted in accordance with the
club’s wishes.

(10) 20For the purposes of this section two or more charities (including the
club) control the company if, acting together, they have the power to
secure, as mentioned in paragraph (a) or (b) of subsection (9), that the
affairs of the company are conducted in accordance with the wishes of
those charities.

(11) 25In this section—

• “charity” has the same meaning as in Chapter 2,

• “qualifying payment” means a qualifying payment for the
  purposes of Chapter 2, and

• “registered club” has the same meaning as in Chapter 2,

30and any reference to a member of the club includes a reference to a
person connected with a member of the club.

202C “Inflated member-related expenditure”

(1) This section applies for the purposes of section 202B.

(2) “Inflated member-related expenditure” means—

(a) 35employment expenditure incurred in respect of the
employment of a member of the club, by the company, where
that employment is otherwise than on an arm’s length basis, or

(b) expenditure incurred on a supply of goods and services to the
club by—

(i) 40a member of the club, or

(ii) a member-controlled body,

otherwise than on an arm’s length basis.

(3) But if the features of an employment or supply which cause it to be
otherwise than on an arm’s length basis, when taken together, are more
45advantageous to the company than if the employment or supply had
been on an arm’s length basis, any expenditure incurred in respect of

the employment or on the supply is not inflated member-related
expenditure.

(4) A company is “member-controlled” if a member of the club has (or two
or more members acting together have) the power to secure—

(a) 5by means of the holding of shares or the possession of voting
power in relation to that or any other body corporate, or

(b) as a result of any powers conferred by the articles of association
or other document regulating that or any other body corporate,