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Finance (No. 2) Bill (HC Bill 193)

Finance (No. 2) BillPage 230

(2) Determine the number of balancing days (see paragraph 16(2)) in
the relevant ownership period.

(3) The balancing gain or loss on the disposal is equal to the balancing
fraction of the amount of the gain or (as the case may be) loss
5determined under Step 1 of paragraph 14(3).

(4) “The balancing fraction” is—


where—

“BD” is the number of balancing days in the relevant ownership
10period;

(5) In this paragraph “relevant ownership period” has the same
meaning as in paragraph 14.

19 (1) The amount of the balancing gain or loss on a relevant high value
disposal to which paragraph 15 applies is found by adding—

(a) 15the amount of the balancing gain or loss belonging to the
notional post-April 2016 gain or loss,

(b) the amount of the balancing gain or loss belonging to the
notional pre-April 2016 gain or loss, and

(c) if P held the disposed of interest on 5 April 2015, the
20amount of the notional pre-April 2015 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain
on the relevant high value disposal.

(2) 25The balancing gain or loss belonging to the notional post-April
2016 gain or loss is equal to the balancing fraction of the notional
post-April 2016 gain or loss.

(3) The balancing gain or loss belonging to the notional pre-April 2016
gain or loss is equal to the balancing fraction of the notional pre-
30April 2016 gain or loss.

(4) “The balancing fraction” is—


where—

“BD” is the number of balancing days (see paragraph 16(2)) in the
35appropriate ownership period;

(5) The appropriate ownership period is—

Finance (No. 2) BillPage 231

(a) for the purpose of computing the balancing gain or loss
belonging to the notional post-April 2016 gain or loss, the
relevant ownership period mentioned in paragraph
15(4)(a);

(b) 5for the purpose of computing the balancing gain or loss
belonging to the notional pre-April 2016 gain or loss, the
relevant ownership period mentioned in paragraph
15(4)(b).

(6) In this paragraph—

(a) 10“notional post-April 2016 gain or loss” and “notional pre-
April 2016 gain or loss” mean the same as in paragraph 15;

(b) “notional pre-April 2015 gain or loss” means the gain or
loss which would have accrued on 5 April 2015 if the
disposed of interest had been disposed of for a
15consideration equal to the market value of that interest on
that date.

Where relevant high value disposal and “other” disposal are comprised in the disposal
of land

20 (1) This paragraph applies where the disposals comprised in the
20disposal of land (see paragraph 12(3)) include a disposal (the
“non-ATED related disposal”) which is not a relevant high value
disposal.

(2) This Part of this Schedule (apart from this paragraph) applies in
relation to the non-ATED related disposal as if it were a relevant
25high value disposal.

(3) Sub-paragraph (4) applies if there has, at any time in the relevant
ownership period, been mixed use of the subject matter of the
disposed of interest.

(4) The amount of any NRCGT gain or loss on the non-ATED related
30disposal computed under this Part of this Schedule is taken to be
the appropriate fraction of the amount that it would otherwise be.

(5) In sub-paragraph (4) “the appropriate fraction” means the fraction
that is, on a just and reasonable apportionment, attributable to the
dwelling or dwellings.

(6) 35In this paragraph “the relevant ownership period” means, as
applicable—

(a) the post-commencement ownership period, as defined in
paragraph 13(5),

(b) the relevant ownership period, as defined in paragraph
4014(5), or

(c) the relevant ownership period as defined in paragraph
15(4).

Finance (No. 2) BillPage 232

Interest subsisting under contract for off-plan purchase

21 (1) Sub-paragraph (2) applies where the non-resident CGT disposal
made by P as mentioned in paragraph 12(1) is a disposal of a UK
residential property interest only because of the second condition
5in paragraph 1 of Schedule B1 (interest subsisting under a contract
for the acquisition of land that consists of, or includes, a building
that is to be constructed for use as a dwelling etc).

(2) The land that is the subject of the contract concerned is treated for
the purposes of this Part of this Schedule as consisting of (or, as the
10case requires, including) a dwelling throughout P’s period of
ownership of the interest in UK land.

Part 5 Special rules for companies

22 This Part of this Schedule applies where the person making the
15non-resident CGT disposal is a company.

Indexation

23 The following amounts are computed as if the computation were
for corporation tax purposes—

(a) the notional post-April 2015 gain or loss for the purposes
20of paragraphs 6 and 7;

(b) the notional pre-April 2015 gain or loss for the purposes of
paragraphs 6 and 7;

(c) the gain or loss determined under Step 1 of paragraph 9(2);

(d) the notional post-April 2015 gain or loss for the purposes
25of paragraph 13;

(e) the gain or loss determined under Step 1 of paragraph
14(3);

(f) the notional post-April 2016 gain or loss for the purposes
of paragraph 15;

(g) 30the notional pre-April 2016 gain or loss for the purposes of
paragraph 15;

(h) the notional post-April 2015 gain or loss, the notional pre-
April 2015 gain or loss and the notional pre-April 2013 gain
or loss for the purposes of paragraph 17;

(i) 35the notional post-April 2016 gain or loss, the notional pre-
April 2016 gain or loss and the notional pre-April 2015 gain
or loss for the purposes of paragraph 19.

Part 6 Miscellaneous provisions
40Wasting assets

24 (1) Sub-paragraph (2) applies where it is necessary, for the purposes
of a relevant computation, to determine whether or not the asset

Finance (No. 2) BillPage 233

which is the subject of the disposal in question is a wasting asset
(as defined for the purposes of Chapter 2 of Part 2).

(2) The assumption (which operates for the purposes of that
computation) that the asset was acquired on 5 April 2015 or, as the
5case may be, 5 April 2016 is to be ignored in determining that
question.

(3) In sub-paragraph (1) “relevant computation” means a
computation of—

(a) the notional post-April 2015 gain or loss accruing to a
10person on a non-resident CGT disposal in accordance with
paragraph 5(2)(a),

(b) the notional post-April 2015 gain or loss accruing to a
person on a relevant high value disposal in accordance
with paragraph 13(3),

(c) 15the notional post-April 2016 gain or loss accruing to a
person on a relevant high value disposal in accordance
with paragraph 15(5), or

(d) the notional pre-April 2016 gain or loss accruing to a
person on a disposal in accordance with paragraph 15(7).

20Capital allowances

25 (1) Sub-paragraph (2) applies where it is to be assumed for the
purpose of computing—

(a) the notional post-April 2015 gain or loss accruing to a
person on a non-resident CGT disposal in accordance with
25paragraph 5(2)(a),

(b) the notional post-April 2015 gain or loss accruing to a
person on a relevant high value disposal in accordance
with paragraph 13(3),

(c) the notional post-April 2016 gain or loss accruing to a
30person on a relevant high value disposal in accordance
with paragraph 15(5), or

(d) the notional pre-April 2016 gain or loss accruing to a
person on a disposal in accordance with paragraph 15(7),

that an asset was acquired by a person on 5 April 2015 or (as the
35case may be) 5 April 2016 (“the deemed acquisition date”) for a
consideration equal to its market value on that date.

(2) For the purposes of that computation, sections 41 (restriction of
losses by reference to capital allowances and renewals allowances)
and 47 (wasting assets qualifying for capital allowances) are to
40apply in relation to any capital allowance or renewals allowance
made in respect of the expenditure actually incurred by the person
in acquiring or providing the asset as if that allowance were made
in respect of the expenditure treated as incurred by the person on
the deemed acquisition date as mentioned in sub-paragraph (1).

45Part 7 Interpretation

26 In this Schedule—

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  • “chargeable interest” has the same meaning as in Part 3 of the
    Finance Act 2013 (annual tax on enveloped dwellings) (see
    section 107 of that Act);

  • “dwelling” has the meaning given by paragraph 4 of
    5Schedule B1;

  • “subject matter”, in relation to an interest in UK land (or a
    chargeable interest) means the land to which the interest
    relates.

40 In Schedule 4C (transfers of value: attribution of gains etc), in paragraph 4,
10after sub-paragraph (2) insert—

(3) Where any of the disposals which the trustees are treated as
having made as mentioned in sub-paragraph (2) is a non-resident
CGT disposal—

(a) any chargeable gain or allowable loss accruing on that
15disposal, other than an NRCGT gain chargeable to, or an
NRCGT loss allowable for the purposes of, capital gains
tax by virtue of section 14D, is to be treated for the
purposes of sub-paragraph (2) as if it were a chargeable
gain or (as the case requires) allowable loss falling to be
20taken into account in calculating the chargeable amount,
and

(b) that disposal is otherwise to be disregarded for the
purpose of calculating the chargeable amount.

Part 2 25Other amendments

41 TMA 1970 is amended in accordance with paragraphs 41 to 55.

42 After section 7 insert—

7A Disregard of certain NRCGT gains for purposes of section 7

(1) This section applies where—

(a) 30a person (“P”) is the taxable person in relation to an NRCGT
return relating to a tax year (“year X”) which is made and
delivered to an officer of Revenue and Customs before the
end of the notification period and contains an advance self-
assessment,

(b) 35the return is in respect of a non-resident CGT disposal on
which an NRCGT gain accrues, and

(c) P would (apart from this section) be required to give a notice
under section 7 with respect to year X.

(2) For the purpose of determining whether or not P is required to give
40such a notice (and only for that purpose), P is regarded as not being
chargeable to capital gains tax in respect of the NRCGT gain
mentioned in subsection (1)(b).

(3) The reference in subsection (1) to the tax year to which an NRCGT
return “relates” is to be interpreted in accordance with section
4512ZB(7).

(4) In this section—

    Finance (No. 2) BillPage 235

  • “advance self-assessment” has the meaning given by section
    12ZE(1);

  • “the notification period” has the meaning given by section
    7(1C);

  • 5the “taxable person”, in relation to a non-resident CGT disposal,
    means the person who would be chargeable to capital gains
    tax in respect of any chargeable NRCGT gain accruing on the
    disposal (were such a gain to accrue).

(5) See—

  • 10section 14B of the 1992 Act for the meaning of “non-resident
    CGT disposal”;

  • section 57B of, and Schedule 4ZZB to, the 1992 Act for the
    meaning of “NRCGT gain”.

43 Before section 12AA (and the italic heading before it) insert—

15NRCGT returns

12ZA Interpretation of sections 12ZB to 12ZN

(1) In sections 12ZA to 12ZN—

  • “advance self-assessment” is to be interpreted in accordance
    with section 12ZE(1);

  • 20“amount notionally chargeable” is to be interpreted in
    accordance with section 12ZF(1);

  • “filing date”, in relation to an NRCGT return, is to be
    interpreted in accordance with section 12ZB(8);

  • “interest in UK land” has the same meaning as in Schedule B1 to
    25the 1992 Act (see paragraph 2 of that Schedule);

  • the “taxable person”, in relation to a non-resident CGT disposal,
    means the person who would be chargeable to capital gains
    tax in respect of any chargeable NRCGT gain (see section 57B
    of, and Schedule 4ZZB to, the 1992 Act) accruing on the
    30disposal (were such a gain to accrue).

(2) In those sections, references to the tax year to which an NRCGT
return “relates” are to be interpreted in accordance with section
12ZB(7).

(3) For the purposes of those sections the “completion” of a non-resident
35CGT disposal is taken to occur—

(a) at the time of the disposal, or

(b) if the disposal is under a contract which is completed by a
conveyance, at the time when the asset is conveyed.

(4) For the meaning in those sections of “non-resident CGT disposal” see
40section 14B of the 1992 Act (and see also section 12ZJ).

(5) For the meaning of “NRCGT group” in those sections see section
288(1) of the 1992 Act.

(6) In this section “conveyance” includes any instrument (and
“conveyed” is to be construed accordingly).

Finance (No. 2) BillPage 236

12ZB NRCGT return

(1) Where a non-resident CGT disposal is made, the appropriate person
must make and deliver to an officer of Revenue and Customs, on or
before the filing date, a return in respect of the disposal.

(2) 5In subsection (1) the “appropriate person” means—

(a) the taxable person in relation to the disposal, or

(b) if the disposal is made by a member of an NRCGT group, the
relevant members of the group.

(3) A return under this section is called an “NRCGT return”.

(4) 10An NRCGT return must—

(a) contain the information prescribed by HMRC, and

(b) include a declaration by the person making it that the return
is to the best of the person’s knowledge correct and complete.

(5) Subsection (1) does not apply to a non-resident CGT disposal to
15which section 188C of the 1992 Act applies (transfers within NRCGT
group).

(6) For the purposes of subsection (2)(b), the “relevant members” of the
NRCGT group are—

(a) the companies which are members of that group when the
20disposal is made, and

(b) any other companies which are, at any time before the time of
the disposal in the tax year to which the return relates,
members of that group.

(7) An NRCGT return “relates to” the tax year in which any gains on the
25non-resident CGT disposal would accrue.

(8) The “filing date” for an NRCGT return is the 30th day following the
day of the completion of the disposal to which the return relates.

But see also section 12ZJ(5).

12ZC Single return in respect of two or more non-resident CGT disposals

30Where—

(a) a person is required to make and deliver an NRCGT return
with respect to two or more non-resident CGT disposals,

(b) the date of the completion of each of the disposals is the same,
and

(c) 35any gains accruing on the disposals would accrue in the same
tax year,

the person is to make and deliver a single return with respect to all
those disposals.

12ZD NRCGT returns: grant and exercise of options

(1) 40This section applies where—

(a) by virtue of section 144(2) of the 1992 Act, the grant of an
option binding the grantor to sell an interest in UK land is, on
the exercise of the option, treated as the same transaction as
the sale, and

Finance (No. 2) BillPage 237

(b) both the grant of the option and the transaction entered into
by the grantor in fulfilment of the grantor’s obligations under
the option (“the sale”) would be non-resident CGT disposals
(were they not treated as a single transaction).

(2) 5On completion of the sale—

(a) the grantor is to be subject to the same obligations under
sections 12ZB, 12ZE and 59AA (duties relating to returns and
payments on account) in relation to the grant of the option as
the grantor would be subject to were the option never to be
10exercised, and

(b) the consideration for the option is to be disregarded (despite
section 144(2) of the 1992 Act) in calculating, under section
12ZF the amount of capital gains tax notionally chargeable at
the completion date of the single transaction mentioned in
15subsection (1)(a).

(3) In this section “sell” is to be interpreted in accordance with section
144(6) of the 1992 Act.

12ZE NRCGT return to include advance self-assessment

(1) An NRCGT return (“the current return”) relating to a tax year (“year
20Y”) which a person (“P”) is required to make in respect of one or
more non-resident CGT disposals (“the current disposals”) must
include an assessment (an “advance self-assessment”) of—

(a) the amount notionally chargeable at the filing date for the
current return (see section 12ZF), and

(b) 25if P has made (or is to make) a prior NRCGT return, the
amount of any increase in the amount notionally chargeable
for year Y.

But see the exceptions in section 12ZG.

(2) In a case falling within subsection (1)(b)—

(a) 30there is an “increase in the amount notionally chargeable” for
year Y if the amount notionally chargeable at the filing date
for the current return exceeds the corresponding amount for
the prior NRCGT return (or the prior NRCGT return which
has the most recent filing date, if there is more than one), and

(b) 35the amount of that increase is the amount of the excess.

(3) “Prior NRCGT return” means an NRCGT return which—

(a) relates to year Y, and

(b) is in respect of a non-resident CGT disposal (or disposals) the
completion date of which is earlier than that of the current
40disposals.

12ZF The “amount notionally chargeable”

(1) The “amount notionally chargeable” at the filing date for an NRCGT
return (“the current return”) is the amount of capital gains tax to
which the person whose return it is (“P”) would be chargeable under
45section 14D or 188D of the 1992 Act for the year to which the return
relates (“year Y”), as determined—

(a) on the assumption in subsection (2),

(b) in accordance with subsection (3), and

Finance (No. 2) BillPage 238

(c) if P is an individual, on the basis of a reasonable estimate of
the matters set out in subsection (4).

(2) The assumption mentioned in subsection (1)(a) is that in year Y no
NRCGT gain or loss accrues to P on any disposal the completion of
5which occurs after the day of the completion of the disposals to
which the return relates (“day X”).

(3) In the determination of the amount notionally chargeable—

(a) all allowable losses accruing to P in year Y on disposals of
assets the completion of which occurs on or before day X
10which are available to be deducted under paragraph (a) or (b)
of section 14D(2) or (as the case may be) section 188D(2) of the
1992 Act are to be so deducted, and

(b) any other relief or allowance relating to capital gains tax
which is required to be given in P’s case is to be taken into
15account, so far as the relief would be available on the
assumption in subsection (2).

(4) The matters mentioned in subsection (1)(c) are—

(a) whether or not income tax will be chargeable at the higher
rate or the dividend upper rate in respect of P’s income for
20year Y (see section 4(4) of the 1992 Act), and

(b) (if P estimates that income tax will not be chargeable as
mentioned in paragraph (a)) what P’s Step 3 income will be
for year Y.

(5) An advance self-assessment must, in particular, give particulars of
25any estimate made for the purposes of subsection (1)(c).

(6) A reasonable estimate included in an NRCGT return in accordance
with subsection (5) is not regarded as inaccurate for the purposes of
Schedule 24 to the Finance Act 2007 (penalties for errors).

(7) Where P is the relevant body of an NRCGT group—

(a) 30the references to P in subsections (2) and (3)(a) are to be read
as references to any member of the NRCGT group;

(b) the reference to P in subsection (3)(b) is to be read as
including any member of the NRCGT group.

(8) For the purposes of this section—

  • 35an estimate is “reasonable” if it is made on a basis that is fair and
    reasonable, having regard to the circumstances in which it is
    made;

  • “Step 3 income”, in relation to an individual, has the same
    meaning as in section 4 of the 1992 Act.

(9) 40In this section, references to the “relevant body” of an NRCGT group
are to be interpreted in accordance with section 188D(4) of the 1992
Act.

(10) Section 989 of ITA 2007 (the definitions) applies for the purposes of
this section as it applies for income tax purposes.

(11) 45For the meaning of “NRCGT gain” and “NRCGT loss” see section 57B
of, and Schedule 4ZZB to, the 1992 Act.

Finance (No. 2) BillPage 239

12ZG Cases where advance self-assessment not required

(1) Where a person (“P”) is required to make and deliver an NRCGT
return relating to a tax year (“year Y”), section 12ZE(1) (requirement
to include advance self-assessment in return) does not apply if
5condition A, B or C is met.

(2) Condition A is that P (or, if P is the trustees of a settlement, any
trustee of the settlement) has been given, on or before the day on
which the NRCGT return is required to be delivered, a notice under
section 8 or 8A with respect to—

(a) 10year Y, or

(b) the previous tax year,

and that notice has not been withdrawn.

(3) Condition B is that P has been given, on or before the day on which
the NRCGT return is required to be delivered, a notice under
15paragraph 3 of Schedule 18 to the Finance Act 1998 (notice requiring
delivery of a company tax return) specifying a period which includes
the whole or part of—

(a) year Y, or

(b) the previous tax year,

20and that notice has not been withdrawn.

(4) Condition C is that an annual tax on enveloped dwellings return has
been delivered by P (or a representative partner acting instead of P)
for the preceding chargeable period.

(5) In subsection (4)—

  • 25“the preceding chargeable period” means the chargeable period
    (as defined in section 94(8) of the Finance Act 2013) which
    ends with the 31 March preceding year Y;

  • “representative partner” has the meaning given by section
    167(6) of the Finance Act 2013.

(6) 30The Treasury may by regulations prescribe further circumstances in
which section 12ZE(1) is not to apply.

(7) Regulations under subsection (6)—

(a) may make different provision for different purposes;

(b) may include incidental, consequential, supplementary or
35transitional provision.

12ZH NRCGT returns and annual self-assessment: section 8

(1) This section applies where a person (“P”) (other than the relevant
trustees of a settlement)—

(a) is not required to give a notice under section 7 with respect to
40a tax year (“year X”), and

(b) would be required to give such a notice in the absence of
section 7A (which removes that duty in certain cases where
the person has made an NRCGT return that includes an
advance self-assessment).

(2) 45In this section, “the relevant NRCGT return” means—