Finance Bill (HC Bill 57)

paragraph 1 insert—

““1ZA. Any sum chargeable under section 269DA of that Act
(surcharge on banking companies).””

CTA 2010

4 5CTA 2010 is amended as follows.

5 In section 269A (overview of Part 7A), at the end insert—

“(4) Chapter 4 contains provision for a surcharge on banking
companies.””

6 In Schedule 4 to CTA 2010 (index of defined expressions), at the appropriate
10places insert—

TIOPA 2010

7 Part 9A of TIOPA 2010 (controlled foreign companies) is amended as
follows.

8 35In section 371BC (charging the CFC charge), at step 5 in subsection (1), for
“and 371BH” substitute “to 371BI”.

9 After section 371BH insert—

“371BI Banking companies

(1) In relation to a chargeable company that is a banking company for
the relevant corporation tax accounting period, step 5 in section
5371BC(1) is to be taken in accordance with this section.

(2) The amount given by paragraph (a) at step 5 is to be increased by an
amount equal to—

(3) Subsection (5) applies in relation to the chargeable company if—

(a) there are arrangements that result in a relevant transfer, and

(b) the main purpose, or one of the main purposes, of the
20arrangements is to avoid, or reduce, a sum being charged on
the chargeable company at step 5 in section 371BC(1) in
consequence of subsection (2).

(4) There is a “relevant transfer” if there is, in substance—

(a) a transfer (directly or indirectly) of all or a significant part of
25the chargeable profits of the CFC, for the CFC’s accounting
period, to a non-banking company, or

(b) a transfer (directly or indirectly) of a loss or deductible
amount to the CFC, for the CFC’s accounting period, from a
non-banking company, resulting in the elimination or
30significant reduction of the CFC’s chargeable profits for that
period.

(5) For the purposes of subsection (2), the CFC’s chargeable profits are
to be taken to be what they would have been had the relevant
transfer not taken place.

(6) 35In this section—

• “arrangements” includes any agreement, understanding,
  scheme, transaction or series of transactions (whether or not
  legally enforceable);

• “available surcharge allowance” means available surcharge
  40allowance under section 269DD or (as the case may be) 269DI
  of CTA 2010;

• “banking company” has the same meaning as in Part 7A of CTA
  2010 (see section 269B of that Act);

• “deductible amount” means—

  (a)

  45an expense of a trade, other than an amount treated as
  such an expense by section 450(a) of CAA 2001
  (research and development allowances treated as
  expenses in calculating profits of a trade),

  Finance BillPage 92

  (b)

  an expense of a UK property business or overseas
  property business,

  (c)

  an expense of management of a company’s
  investment business within the meaning of section
  51219 of CTA 2009,

  (d)

  a non-trading debit within the meaning of Parts 5 and
  6 of CTA 2009 (loan relationships and relationships
  treated as such) (see section 301(2) of that Act), or

  (e)

  a non-trading debit within the meaning of Part 8 of
  10CTA 2009 (intangible fixed assets) (see section 746 of
  that Act);

• “company tax return” has the same meaning as in Schedule 18
  to FA 1998;

• “non-banking company” means a company that, at any time
  15when the arrangements mentioned in subsection (3) have
  effect, is neither—

  (a)

  a banking company, nor

  (b)

  a CFC in relation to which a banking company is a
  chargeable company.

(7) 20Sections 269DD(6) and 269DI(5) of CTA 2010 contain restrictions on
the amount of available surcharge allowance that can be specified
and section 269DJ of that Act makes provision about what happens
if those restrictions are exceeded.””

10 After section 371UB insert—

“371UBA 25 Payments in respect of a charge on a banking company:
information to be provided

(1) This section applies if—

(a) a sum is charged on a chargeable company at step 5 in section
371BC(1),

(b) 30the chargeable company is a banking company (within the
meaning of Part 7A of CTA 2010) for the relevant corporation
tax accounting period, and

(c) a payment is made (whether or not by the chargeable
company) that is wholly or partly in respect of the sum
35charged on the chargeable company as mentioned in
paragraph (a).

(2) The responsible company must notify an officer of Revenue and
Customs in writing, on or before the date the payment is made, of the
amount of the payment that is in respect of the sum charged on the
40chargeable company as mentioned in subsection (1)(a).

(3) “The responsible company” is—

(a) if the chargeable company is party to relevant group
payment arrangements, the company that is, under those
arrangements, to discharge the liability of the chargeable
45company to pay corporation tax for the relevant corporation
tax accounting period, and

(b) otherwise, the chargeable company.

(4) “Relevant group payment arrangements” means arrangements
under section 59F(1) of TMA 1970 (arrangements for paying of tax on
behalf of group members) that relate to the relevant corporation tax
accounting period.

(5) 5The requirement in subsection (2) is to be treated, for the purposes of
Part 7 of Schedule 36 to FA 2008 (information and inspection powers:
penalties), as a requirement in an information notice.

(6) This section is subject to any provision to the contrary in regulations
under section 59E of TMA 1970 (further provision as to when
10corporation tax is due and payable).

(7) In this section “relevant corporation tax accounting period” has the
meaning given by section 371BC(3).””

FA 2015

11 Part 3 of FA 2015 (diverted profits tax) is amended as follows.

12 (1) 15Section 79 (charge to tax) is amended as follows.

(2) In subsection (2), for “The” substitute “Subject to subsections (3) and (3A),
the”.

(3) In subsection (3), for “But if” substitute “If”.

(4) After subsection (3) insert—

“(3A) 20If, and to the extent that, the taxable diverted profits are banking
surcharge profits or notional banking surcharge profits, subsection
(2)(a) has effect in relation to those profits as if the rate specified were
33% rather than 25%.””

(5) In subsection (5)—

(a) 25after the definition of “adjusted ring fence profits” insert—

• “““banking surcharge profits” means surcharge profits
  within the meaning of Chapter 4 of Part 7A of that Act
  (see section 269DA(2) of that Act);”;”

(b) after the definition of “notional adjusted ring fence profits” insert—

• 30“““notional banking surcharge profits”, in relation to the
  company, means the total of—

  (a)

  profits within section 85(5)(a) or 91(5)(a), to
  the extent that (assuming they were profits of
  the company chargeable to corporation tax)
  35they would have been banking surcharge
  profits, and

  (b)

  any amounts of relevant taxable income of a
  company (“CC”) within section 85(4)(b) or
  (5)(b) or 91(4)(b) or (5)(b), to the extent that
  40(assuming those amounts were profits of CC
  chargeable to corporation tax) they would
  have been banking surcharge profits of CC.””

13 In section 107 (meaning of “effective tax mismatch outcome”), in the

definition of “relevant tax” in subsection (8), after paragraph (a) insert—

“(aa) a sum chargeable under section 269DA of CTA 2010
(surcharge on banking companies) as if it were an amount of
corporation tax,”.”

5Part 3 Commencement

Surcharge

14 (1) The amendments made by paragraphs 1 and 4 to 6 of this Schedule have
effect for accounting periods beginning on or after the commencement date.

(2) 10Where a company has an accounting period beginning before the
commencement date and ending on or after that date (“the straddling
period”), sub-paragraphs (3) to (10) apply.

(3) For the purposes of determining whether the surcharge is chargeable on the
company for the straddling period and, if so, in what amount—

(a) 15so much of the straddling period as falls before the commencement
date, and so much of that period as falls on or after that date, are to
be treated as separate accounting periods, and

(b) where it is necessary to apportion an amount for the straddling
period to the two separate accounting periods, it is to be
20apportioned—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) if that method would produce a result that is unjust or
unreasonable, on a just and reasonable basis.

(4) Accordingly, the surcharge chargeable on the company for the straddling
25period (if any) is equal to the surcharge that would be chargeable on the
company, in accordance with sub-paragraph (3), for the separate accounting
period beginning with the commencement date.

(5) Sub-paragraphs (6) to (8) apply where—

(a) the surcharge is chargeable on the company for the straddling
30period, and

(b) under the Instalment Payment Regulations, one or more instalment
payments, in respect of the total liability of the company for the
straddling period, were treated as becoming due and payable before
the commencement date (“pre-commencement instalments”).

(6) 35The surcharge chargeable on the company for the straddling period is to be
ignored for the purposes of determining the amount of any pre-
commencement instalment.

(7) The first instalment, in respect of the total liability of the company for the
straddling period, which under the Instalment Payment Regulations is
40treated as becoming due and payable on or after the commencement date is
to be increased by the adjustment amount.

(8) “The adjustment amount” is the difference between—

(a) the aggregate amount of the pre-commencement instalments
determined in accordance with sub-paragraph (6), and

(b) the aggregate amount of those instalments determined ignoring sub-
paragraph (6) (and so taking into account the surcharge chargeable
on the company for the straddling period).

(9) In the Instalment Payment Regulations—

(a) 5in regulations 6(1)(a), 7(2), 8(1)(a) and (2)(a), 9(5), 10(1), 11(1) and 13,
references to regulation 4A, 4B, 4C, 4D, 5, 5A or 5B of those
Regulations are to be read as including a reference to sub-paragraphs
(5) to (8) (and in regulation 7(2) “the regulation in question”, and in
regulation 8(2) “that regulation”, are to be read accordingly), and

(b) 10in regulation 9(3), the reference to those Regulations is to be read as
including a reference to sub-paragraphs (5) to (8).

(10) In section 59D of TMA 1970 (general rule as to when corporation tax is due
and payable), in subsection (5), the reference to section 59E of that Act is to
be read as including a reference to sub-paragraphs (5) to (9).

(11) 15For the purposes of sections 269DE to 269DH of CTA 2010, if a nominated
company has an accounting period beginning before and ending on or after
the commencement date, so much of that period as falls before that date, and
so much of that period as falls on or after that date, are to be treated as
separate accounting periods.

(12) 20For the purposes of section 269DM of CTA 2010, it does not matter whether
arrangements of the kind mentioned in subsection (1) of that section are
entered into before or after this Act is passed.

(13) In this paragraph “the surcharge” means a sum chargeable under section
269DA of CTA 2010 as if it were an amount of corporation tax.

15 25The amendment made by paragraph 3 has effect for accounting periods
ending on or after the commencement date.

CFCs

16 (1) The amendments made by paragraphs 7 to 10 of this Schedule (and the
amendment made by paragraph 1 of this Schedule, so far as it relates to those
30amendments) have effect for accounting periods of CFCs beginning on or
after the commencement date.

(2) Sub-paragraph (3) applies where a CFC has an accounting period beginning
before the commencement date and ending on or after that date (“the
straddling period”).

(3) 35For the purposes of calculating the sum charged on any chargeable company
at step 5 of section 371BC(1) of TIOPA 2010 in relation to the straddling
period—

(a) so much of the straddling period as falls before the commencement
date, and so much of that period as falls on or after that date, are to
40be treated as separate accounting periods, and

(b) where it is necessary to apportion an amount for the straddling
period to the two separate accounting periods, it is to be
apportioned—

(i) on a time basis according to the respective lengths of the
45separate accounting periods, or

(ii) if that method would produce a result that is unjust or
unreasonable, on a just and reasonable basis.

(4) The sum charged on each chargeable company at step 5 in section 371BC(1)
of TIOPA 2010 is the aggregate of the sums that would be charged on that
company by taking that step, in accordance with sub-paragraph (3), in
relation to each of the separate accounting periods.

(5) 5Sub-paragraphs (6) to (8) apply where—

(a) an amount is charged on a company at step 5 in section 371BC(1) of
TIOPA 2010 as if were an amount of corporation tax for a relevant
corporation tax accounting period,

(b) that relevant corporation tax accounting period begins before, but
10ends on or after, the commencement date, and

(c) under the Instalment Payment Regulations, one or more instalment
payments, in respect of the total liability of the company for the
relevant corporation tax accounting period, were treated as
becoming due and payable before the commencement date (“pre-
15commencement instalments”).

(6) The amendments made by paragraphs 7 to 10 of this Schedule are to be
ignored for the purposes of determining the amount of any pre-
commencement instalment.

(7) The first instalment, in respect of the total liability of the company for the
20relevant corporation tax accounting period, which under the Instalment
Payment Regulations is treated as becoming due and payable on or after the
commencement date is to be increased by the adjustment amount.

(8) “The adjustment amount” is the difference (if any) between—

(a) the aggregate amount of the pre-commencement instalments
25determined in accordance with sub-paragraph (6), and

(b) the aggregate amount of those instalments determined ignoring sub-
paragraph (6) (and so taking into account any amount charged on the
company at step 5 in section 371BC(1) of TIOPA 2010 for the relevant
corporation tax accounting period as a result of the amendments
30made by paragraphs 7 to 10 of this Schedule).

(9) In the Instalment Payment Regulations—

(a) in regulations 6(1)(a), 7(2), 8(1)(a) and (2)(a), 9(5), 10(1), 11(1) and 13,
references to regulation 4A, 4B, 4C, 4D, 5, 5A or 5B of those
Regulations are to be read as including a reference to sub-paragraphs
35(5) to (8) (and in regulation 7(2) “the regulation in question”, and in
regulation 8(2) “that regulation”, are to be read accordingly), and

(b) in regulation 9(3), the reference to those Regulations is to be read as
including a reference to sub-paragraphs (5) to (8).

(10) In section 59D of TMA 1970 (general rule as to when corporation tax is due
40and payable), in subsection (5), the reference to section 59E of that Act is to
be read as including a reference to sub-paragraphs (5) to (9).

(11) For the purposes of section 371BI of TIOPA 2010, it does not matter whether
arrangements of the kind mentioned in subsection (3) of that section are
entered into before or after this Act is passed.

(12) 45In this paragraph—

• “accounting period”, “CFC” and “chargeable company” have the same
  meaning as in Part 9A of TIOPA 2010 (see section 371VA of that Act);

Finance BillPage 97

• “relevant corporation tax accounting period” has the meaning given by
  section 371BC(3) of that Act.

Diverted profits tax

17 (1) The amendments made by paragraphs 11 to 13 of this Schedule have effect
5in relation to accounting periods beginning on or after the commencement
date.

(2) For the purposes of sub-paragraph (1), if an accounting period of a company
begins before, and ends on or after, the commencement date (“the straddling
period”)—

(a) 10so much of the straddling period as falls before that date and so
much of that period as falls on or after that date are to be treated as
separate accounting periods, and

(b) where it is necessary to apportion an amount for the straddling
period to the two separate accounting periods, it is to be apportioned
15on a just and reasonable basis.

(3) Subsections (1) to (5) of section 113 of FA 2015 (meaning of “accounting
period”) have effect for the purposes of this paragraph as they have effect for
the purposes of Part 3 of that Act.

Interpretation

18 20In this Part of this Schedule—

• “the commencement date” means 1 January 2016;

• “the Instalment Payment Regulations” means the Corporation Tax
  (Instalment Payments) Regulations 1998 (S.I. 1998/3175S.I. 1998/3175);

and references to the total liability of a company for an accounting period are
25to be read in accordance with regulation 2(3) of the Instalment Payment
Regulations.

Section 23

SCHEDULE 4 Pensions: annual allowance

Part 1 30Alignment of pension input periods with tax years

1 Part 4 of FA 2004 is amended as follows.

2 In section 238 (pension input periods)—

(a) in the title, after “period” insert “: arrangement commencing before 9
July 2015”, and

(b) 35in subsection (1), after “In the case of an arrangement under a
registered pension scheme” insert “where the relevant
commencement date is before 9 July 2015, but subject to section
238ZA,”.

3 After section 238 insert—

“238ZA Pension input periods from 9 July 2015 for existing arrangement

(1) If the relevant commencement date in the case of an arrangement
under a registered pension scheme is before 9 July 2015, section
5238(1) and (3) to (6) apply in relation to the arrangement subject to
the following.

(2) If a pension input period for the arrangement—

(a) begins with 8 July 2015 or an earlier day, and

(b) but for this subsection would end with 9 July 2015 or a later
10day,

it ends with 8 July 2015.

(3) If a pension input period for the arrangement ends with 8 July 2015
(whether or not because of subsection (2)), the subsequent pension
input periods for the arrangement are—

(a) 15the period beginning with 9 July 2015 and ending with 5
April 2016, and

(b) the tax year 2016-17 and each subsequent tax year.

(4) No nominations for the purposes of section 238(3) may be made on
or after 9 July 2015.

(5) 20“The relevant commencement date” has the meaning given by
section 238(2).

238ZB Pension input periods for arrangement commencing after 8 July 2015

(1) In the case of an arrangement under a registered pension scheme
where the relevant commencement date is 9 July 2015 or later, the
25following are pension input periods—

(a) the period beginning with the relevant commencement date
and ending with the first 5 April after the relevant
commencement date (or, if the relevant commencement date
is itself 5 April, that date), and

(b) 30each tax year beginning after the end of that period.

(2) “The relevant commencement date” has the meaning given by
section 238(2).

(3) Once the individual has become entitled to all the benefits which
may be provided to the individual under the arrangement, the last
35pension input period in the case of the arrangement is that in which
that was first so.””

4 (1) Omit section 227E (pension input periods ending in, but before the end of, a
tax year).

(2) In consequence—

(a) 40in section 227B(3)(c) (amounts required to be included by section
227E(3) etc)—

(i) omit “227E(3) or”,

(ii) for “but before” substitute “and contain”, and

(iii) omit “or that end in the year and contain that day”,

(b) in section 227C(2) omit paragraph (a) (which refers to section
227E(2)) and the “and” following it,

(c) in section 227C(2)(b), for “that day” substitute “the day on which
rights are first flexibly accessed”, and

(d) 5omit section 227D(6) (cases where section 227E(2) applies).

(3) The amendments made by this paragraph have effect for the post-alignment
tax year (see the section 228C(2) inserted by this Schedule) and subsequent
tax years.

5 In section 280(2) (index of defined expressions), in the entry for “pension
10input period”, for “section 238” substitute “sections 238 to 238ZB”.

Part 2 Annual allowance for, and carry-forward from, 2015-16

6 In Part 4 of FA 2004, after section 228B insert—

“228C Annual allowance for, and carry-forward from, 2015-16

(1) 15The provisions relating to the annual allowance charge (whether
provisions contained in or made under this or any other Act) have
effect subject to the following rules.

2015-16 split into two tax years for annual allowance purposes

(2) For the purposes of those provisions but subject to subsection (3), the
20tax year 2015-16 is to be treated as consisting of two tax years as
follows—

(a) one beginning with 6 April 2015 and ending with 8 July 2015
(“the pre-alignment tax year”), and

(b) one beginning with 9 July 2015 and ending with 5 April 2016
25(“the post-alignment tax year”).

(3) Despite subsection (2)—

(a) separate annual allowance charges for each of the pre-
alignment and post-alignment tax years cannot arise, but a
single annual allowance charge for the tax year 2015-16 arises
30if the individual has a chargeable amount for either or each of
the pre-alignment and post-alignment tax years, and

(b) that single annual allowance charge is calculated as if—

(i) in section 227(4) the reference to the chargeable
amount were a reference to the sum of the chargeable
35amounts for the pre-alignment and post-alignment
tax years, and

(ii) in section 227(4A) to (4C) each reference to the tax
year were to the tax year 2015-16.

Double allowances allocated to earlier part of 2015-16

(4) 40For the pre-alignment tax year—

(a) the amount specified in section 228(1) (annual allowance for
tax year) is treated as being £80,000, and

(b) in each of sections 227ZA(1)(b) and 227B(2), the reference to
£10,000 is treated as a reference to £20,000.