Finance Bill (HC Bill 57)

113 Paragraph 48 has effect where the scheme was effected, or the arrangements
were made, on or after the day on which this Act is passed.

Transitional adjustments relating to loan relationships

114 (1) This paragraph applies to a loan relationship of a company if—

(a) 5amounts relating to the matters mentioned in section 306A(1) of CTA
2009 (as inserted by paragraph 3) in respect of the loan relationship
have in accordance with generally accepted accounting practice been
recognised in the company’s accounts as items of other
comprehensive income,

(b) 10those amounts have not subsequently been transferred to become
items of profit or loss in an accounting period beginning before 1
January 2016, and

(c) those amounts have been brought into account for corporation tax
purposes in an accounting period beginning before 1 January 2016.

(2) 15There is to be made an overall transitional adjustment of such amount as is
just and reasonable in the circumstances having regard to the amounts
which would otherwise be brought into account twice by the company for
those purposes as credits or debits.

(3) The overall transitional adjustment must be made by making transitional
20adjustments in accordance with paragraph 115.

(4) In determining what amounts fall within sub-paragraph (1), it is to be
assumed that the accounting policy applied in drawing up the company’s
accounts for the last accounting period of the company beginning before 1
January 2016 (“the pre-commencement period”) was also applied in
25previous accounting periods.

(5) But if the company’s accounts for the pre-commencement period are in
accordance with generally accepted accounting practice drawn up on an
assumption as to the accounting policy in previous accounting periods
which differs from that mentioned in sub-paragraph (4), that different
30assumption applies in determining what amounts fall within sub-paragraph
(1).

115 (1) If paragraph 114 applies in relation to a loan relationship of a company, then
for each relevant accounting period a credit or debit of an amount equal to
the transitional adjustment for the period must be brought into account for
35the purposes of Part 5 of CTA 2009 in the same way as a credit or debit which
is brought into account in determining the company’s profit or loss for the
period in accordance with generally accepted accounting practice.

(2) The relevant accounting periods are—

(a) the first accounting period of the company beginning on or after 1
40January 2016, and

(b) each subsequent accounting period all or part of which falls within
the transitional years.

(3) The transitional years are the 5 years beginning with the first day of the first
accounting period of the company beginning on or after 1 January 2016.

(4) 45The transitional adjustment for each relevant accounting period is calculated
as follows.

(5) Allocate a percentage of the overall transitional adjustment (determined
under paragraph 114) to each of the 5 transitional years as follows—

(6) If a transitional year coincides with an accounting period, the transitional
adjustment for the accounting period is the amount allocated to that year.

(7) 10In any other case—

(a) apportion the amount allocated to each transitional year between
accounting periods according to the number of days in the
transitional year which fall within each period, and

(b) the transitional adjustment for an accounting period is the total of the
15amounts apportioned to that period.

116 Paragraphs 114 and 115 do not require an amount to be brought into account
if it has already been brought into account under regulations under—

(a) section 151E of TCGA 1992 (exchange gains and losses from loan
relationships: regulations), or

(b) 20section 328 of CTA 2009 (exchange gains and losses).

117 (1) This paragraph applies if either of the following provisions of CTA 2009
applies in relation to the first accounting period of a company beginning on
or after 1 January 2016—

(a) section 316 (change of accounting policy involving change of value),
25as substituted by paragraph 10, and

(b) section 318 (change of accounting policy following cessation of loan
relationship), as amended by paragraph 12.

(2) The overall transitional adjustment required by paragraphs 114 and 115 is to
be calculated and applied before calculating any credit or debit required by
30section 316 or 318 of CTA 2009.

118 (1) This paragraph applies if—

(a) an overall transitional adjustment is required by paragraph 114 in
respect of a loan relationship of a company, and

(b) before the end of the 5 years mentioned in paragraph 115(3), the
35company—

(i) ceases to be within the charge to corporation tax, or

(ii) starts to be wound up.

(2) The company must bring into account for the purposes of Part 5 of CTA 2009
in the accounting period ending with the event within sub-paragraph (1)(b)
40a credit or debit of an amount equal to so much of the overall transitional
adjustment as has not previously been brought into account.

(3) For the purposes of this paragraph a company starts to be wound up—

(a) when the company passes a resolution for the winding up of the
company,

(b) when a petition for the winding up of the company is presented, if
the company has not already passed such a resolution and a winding
5up order is made on the petition, or

(c) when an act is done in relation to the company for a similar purpose,
if the winding up is not under the Insolvency Act 1986.

Transitional adjustments relating to derivative contracts

119 (1) This paragraph applies to a derivative contract of a company if—

(a) 10amounts relating to the matters mentioned in section 594A(1) of CTA
2009 (as inserted by paragraph 61) in respect of the derivative
contract have in accordance with generally accepted accounting
practice been recognised in the company’s accounts as items of other
comprehensive income,

(b) 15those amounts have not subsequently been transferred to become
items of profit or loss in an accounting period beginning before 1
January 2016, and

(c) those amounts have been brought into account for corporation tax
purposes in an accounting period beginning before 1 January 2016.

(2) 20There is to be made an overall transitional adjustment of such amount as is
just and reasonable in the circumstances having regard to the amounts
which would otherwise be brought into account twice by the company for
those purposes as credits or debits.

(3) The overall transitional adjustment must be made by making transitional
25adjustments in accordance with paragraph 120.

(4) In determining what amounts fall within sub-paragraph (1), it is to be
assumed that the accounting policy applied in drawing up the company’s
accounts for the last accounting period of the company beginning before 1
January 2016 (“the pre-commencement period”) was also applied in
30previous accounting periods.

(5) But if the company’s accounts for the pre-commencement period are in
accordance with generally accepted accounting practice drawn up on an
assumption as to the accounting policy in previous accounting periods
which differs from that mentioned in sub-paragraph (4), that different
35assumption applies in determining what amounts fall within sub-paragraph
(1).

120 (1) If paragraph 119 applies in relation to a derivative contract of a company,
then for each relevant accounting period a credit or debit of an amount equal
to the transitional adjustment for the period must be brought into account
40for the purposes of Part 7 of CTA 2009 in the same way as a credit or debit
which is brought into account in determining the company’s profit or loss
for the period in accordance with generally accepted accounting practice.

(2) The relevant accounting periods are—

(a) the first accounting period of the company beginning on or after 1
45January 2016, and

(b) each subsequent accounting period all or part of which falls within
the transitional years.

(3) The transitional years are the 5 years beginning with the first day of the first
accounting period of the company beginning on or after 1 January 2016.

(4) The transitional adjustment for each relevant accounting period is calculated
as follows.

(5) 5Allocate a percentage of the overall transitional adjustment (determined
under paragraph 119) to each of the 5 transitional years as follows—

(6) If a transitional year coincides with an accounting period, the transitional
adjustment for the accounting period is the amount allocated to that year.

(7) In any other case—

(a) 15apportion the amount allocated to each transitional year between
accounting periods according to the number of days in the
transitional year which fall within each period, and

(b) the transitional adjustment for an accounting period is the total of the
amounts apportioned to that period.

121 20Paragraphs 119 and 120 do not require an amount to be brought into account
if it has already been brought into account under regulations under section
606 of CTA 2009 (exchange gains and losses).

122 (1) This paragraph applies if either of the following provisions of CTA 2009
applies in relation to the first accounting period of a company beginning on
25or after 1 January 2016—

(a) section 614 (change of accounting policy involving change of value),
as substituted by paragraph 76, and

(b) section 615 (change of accounting policy after ceasing to be a party to
derivative contract), as amended by paragraph 77.

(2) 30The overall transitional adjustment required by paragraphs 119 and 120 is to
be calculated and applied before calculating any credit or debit required by
section 614 or 615 of CTA 2009.

123 (1) This paragraph applies if—

(a) an overall transitional adjustment is required by paragraph 119 in
35respect of a derivative contract of a company, and

(b) before the end of the 5 years mentioned in paragraph 120(3), the
company—

(i) ceases to be within the charge to corporation tax, or

(ii) starts to be wound up.

(2) 40The company must bring into account for the purposes of Part 5 of CTA 2009
in the accounting period ending with the event within sub-paragraph (1)(b)
a credit or debit of an amount equal to so much of the overall transitional
adjustment as has not previously been brought into account.

(3) For the purposes of this paragraph a company starts to be wound up—

(a) when the company passes a resolution for the winding up of the
company,

(b) when a petition for the winding up of the company is presented, if
5the company has not already passed such a resolution and a winding
up order is made on the petition, or

(c) when an act is done in relation to the company for a similar purpose,
if the winding up is not under the Insolvency Act 1986.

Straddling accounting periods treated as split for certain purposes

124 10If a company has an accounting period which begins before and ends on or
after 1 January 2016 (“the straddling period”), 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 for the purposes of each of the following provisions as
separate accounting periods—

• 15paragraph 20(4), so far as relating to section 328(3C) of CTA 2009, and

• paragraph 68(4), so far as relating to section 606(3C) of that Act.

Transitional provision relating to abolition of “fairly represents” test

125 If in an accounting period beginning before 1 January 2016, subsection (3) of
section 307 of CTA 2009 prevents a company from bringing into account for
20the purposes of Part 5 of that Act a credit or debit that it would otherwise
bring into account, no debit or credit is to be brought into account for those
purposes under section 307 as amended by paragraph 4 in an accounting
period beginning on or after 1 January 2016 to the extent that the debit or
credit represents a reversal (in whole or part) of the debit or credit
25previously excluded.

126 If in an accounting period beginning before 1 January 2016, subsection (3) of
section 595 of CTA 2009 prevents a company from bringing into account for
the purposes of Part 7 of that Act a credit or debit that it would otherwise
bring into account, no debit or credit is to be brought into account for those
30purposes under section 595 as amended by paragraph 62 in an accounting
period beginning on or after 1 January 2016 to the extent that the debit or
credit represents a reversal (in whole or part) of the debit or credit
previously excluded.

Transitional provision relating to fixed capital asset or project

127 35If in an accounting period of a company beginning before 1 January 2016
credits or debits relating to a fixed capital asset or project were as a result of
section 320 of CTA 2009 brought into account for the purposes of Part 5 of
that Act, the condition in subsection (1)(c) of section 320 as amended by
paragraph 13 is to be taken to be met in relation to that fixed capital asset or
40project in subsequent accounting periods.

128 If in an accounting period of a company beginning before 1 January 2016
credits or debits relating to a fixed capital asset or project were as a result of
section 604 of CTA 2009 brought into account for the purposes of Part 7 of
that Act, the condition in subsection (1)(c) of section 604 as amended by
45paragraph 65 is to be taken to be met in relation to that fixed capital asset or
project in subsequent accounting periods.

Section 47

SCHEDULE 8 Enforcement by deduction from accounts

Part 1 Scheme for enforcement by deduction from accounts

5Introduction

1 This Part of this Schedule contains provision about the collection of amounts
due and payable to the Commissioners by the making of deductions from
accounts held with deposit-takers.

“Relevant sum”

2 (1) 10In this Part of this Schedule “relevant sum”, in relation to a person, means a
sum that is due and payable by the person to the Commissioners—

(a) under or by virtue of an enactment, or

(b) under a contract settlement,

and in relation to which Conditions A to C are met.

(2) 15Condition A is that the sum is at least £1,000.

(3) Condition B is that the sum is—

(a) an established debt (see sub-paragraph (5)),

(b) due under section 223 of, or paragraph 6 of Schedule 32 to, FA 2014
(accelerated payment notice or partner payment notice), or

(c) 20the disputed tax specified in a notice under section 221(2)(b) of FA
2014 (accelerated payment of tax: notice given pending appeal).

(4) Condition C is that HMRC is satisfied that the person is aware that the sum
is due and payable by the person to the Commissioners.

(5) A sum that is due and payable to the Commissioners is an “established debt”
25if there is no possibility that the sum, or any part of it, will cease to be due
and payable to the Commissioners on appeal.

(6) For the purposes of sub-paragraph (5) it does not matter whether the reason
that there is no such possibility is—

(a) that there is no right of appeal in relation to the sum,

(b) 30that a period for bringing an appeal has expired without an appeal
having been brought, or

(c) that an appeal which was brought has been finally determined or
withdrawn;

and any power to grant permission to appeal out of time is to be
35disregarded.

Information notice

3 (1) This paragraph applies if it appears to HMRC that—

(a) a person has failed to pay a relevant sum, and

(b) that person holds one or more accounts with a deposit-taker.

(2) HMRC may give the deposit-taker a notice under this paragraph (an
“information notice”) requiring the deposit-taker to provide HMRC with—

(a) prescribed information about accounts held by the person with the
deposit-taker,

(b) 5in relation to any joint account held by the person with the deposit-
taker, prescribed information about the other holder or holders of the
account, and

(c) any other prescribed information.

(3) HMRC may exercise the power under sub-paragraph (2) only for the
10purposes of determining whether to give a hold notice to the deposit-taker
in respect of the person concerned (see paragraph 4).

(4) Where a deposit-taker is given an information notice, it must comply with
the notice as soon as reasonably practicable and, in any event, within the
period of 10 working days beginning with the day on which the notice is
15given to it.

(5) An information notice must explain the effect of—

(a) sub-paragraph (4), and

(b) paragraph 13 (penalties).

Hold notice

4 (1) 20If it appears to HMRC that—

(a) a person (“P”) has failed to pay a relevant sum, and

(b) P holds one or more accounts with a deposit-taker,

HMRC may give the deposit-taker a notice under this paragraph (a “hold
notice”).

(2) 25The hold notice must—

(a) specify P’s name and last known address,

(b) specify as the “specified amount” an amount that meets the
conditions in sub-paragraph (4),

(c) specify as the “safeguarded amount” an amount that meets the
30requirements set out in sub-paragraphs (6) to (8),

(d) set out any rules which are to apply for the purposes of paragraph
6(5)(b) (priority of accounts subject to a hold notice), and

(e) explain the effect of—

(i) paragraphs 5 to 12 (effect of hold notice, duty to notify
35account holders etc),

(ii) paragraph 13 (penalties), and

(iii) any regulations under paragraph 19(2)(c) or (d) (powers to
restrict the accounts or amounts in relation to which a hold
notice may have effect, in addition to the powers to make
40provision in the hold notice under sub-paragraph (3)(b) and
(c)).

For provision about the particular relevant sums to which a hold notice
relates see paragraph 7(6)(a)(ii) and (7) (notice to be given by HMRC to P).

(3) The hold notice may—

(a) 45specify any other information which HMRC considers might assist
the deposit-taker in identifying accounts which P holds with it;

(b) specify an account, or description of account, which is to be treated
for the purposes of the hold notice and this Part of this Schedule as
not being an account held by P with the deposit-taker;

(c) require that an amount specified in the notice is to be treated for the
5purposes of the hold notice and this Part of this Schedule as if it were
not an amount standing to the credit of a specified account held by P.

(4) The amount specified as the specified amount in the hold notice (“the
current hold notice”) must not exceed so much of the notified sum (see
paragraph 7(6) to (8)) as remains after deducting—

(a) 10the amount specified as the “specified amount” in any hold notice
which relates to the same debts as the current hold notice (see sub-
paragraph (5)) and is given to another deposit-taker on the same day
as that notice, and

(b) the amount specified as the “specified amount” in any hold notice
15which relates to the same debts as the current hold notice and is
given to a deposit-taker on an earlier day, (unless HMRC has
received a notification under paragraph 7(4) in relation to that earlier
hold notice).

(5) For the purposes of this paragraph, any two hold notices given in respect of
20the same person “relate to the same debts” if at least one relevant sum
specified in relation to one of those notices by virtue of paragraph 7(7)(a) is
the same debt as a relevant sum so specified in relation to the other notice.

(6) The amount specified in the hold notice as the safeguarded amount must be
at least £5,000; but this is qualified by sub-paragraphs (7) and (8).

(7) 25The safeguarded amount must be nil if—

(a) HMRC has previously given a deposit-taker a hold notice (“the
earlier hold notice”) relating to the same debts as the hold notice
mentioned in sub-paragraph (2) (“the new hold notice”), and

(b) within the period of 30 days ending with the day on which the new
30hold notice is given to the deposit-taker, HMRC has received a notice
under paragraph 7 which states that there is a held amount as a result
of the earlier hold notice.

(8) HMRC may (in a case not falling within sub-paragraph (7)) determine that
an amount less than £5,000 (which may be nil) is to be the safeguarded
35amount if HMRC considers it appropriate to do so having regard to the
value (or aggregate value) in sterling at the relevant time of any amounts
which at that time stand to the credit of a qualifying non-sterling account or
accounts.

(9) In sub-paragraph (8) “qualifying non-sterling account” means an account
40which, but for paragraph 5(6)(b) (account not denominated in sterling),
would be a relevant account in relation to the hold notice.

(10) For the purposes of sub-paragraph (8), the value in sterling of any amount is
to be determined in the prescribed manner; and regulations for the purposes
of this sub-paragraph may specify circumstances in which the exchange rate
45is to be determined in accordance with a notice published by the
Commissioners.

(11) In sub-paragraph (8) “the relevant time” means the time when the
Commissioners determine the amount to be specified as the “safeguarded
amount” under sub-paragraph (2)(c).

(12) HMRC must not on any one day give to a single deposit-taker more than one
hold notice relating to the same debts.

Effect of hold notice

5 (1) A deposit-taker to whom a hold notice is given under paragraph 4 must, for
5each relevant account (see sub-paragraph (6))—

(a) determine whether or not there is a held amount (greater than nil) in
relation to that account, and

(b) if there is such a held amount in relation to that account, take the first
or second type of action (see sub-paragraph (3)) in respect of that
10account.

See paragraph 6 for how to determine the held amount in relation to any
relevant account.

(2) The deposit-taker must comply with sub-paragraph (1) as soon as is
reasonably practicable and, in any event, within the period of 5 working
15days beginning with the day on which the hold notice is given.

(3) In relation to each affected account (see sub-paragraph (7))—

(a) the first type of action is to put in place such arrangements as are
necessary to ensure that the deposit-taker does not do anything, or
permit anything to be done, that would reduce the amount standing
20to the credit of that account below the held amount in relation to that
account;

(b) the second type of action is to—

(i) transfer an amount equal to the held amount from the
affected account into an account created by the deposit-taker
25for the sole purpose of containing that transferred amount (a
“suspense account”), and

(ii) put in place such arrangements as are necessary to ensure
that the deposit-taker does not do anything, or permit
anything to be done, that would reduce the amount standing
30to the credit of that suspense account below the amount that
is the held amount in relation to the affected account.

(4) The deposit-taker must maintain any arrangements made under sub-
paragraph (3) until the hold notice ceases to be in force.

(5) A hold notice ceases to be in force when—

(a) 35the deposit-taker is given a notice cancelling it under paragraph 8(1)
or 10 or the hold notice is cancelled under paragraph 11, or

(b) the deposit-taker is given a deduction notice in relation to the hold
notice (see paragraph 12).

(6) In this Part of this Schedule “relevant account”, in relation to a hold notice,
40means an account held with the deposit-taker by P, but not including—

(a) an account excluded under paragraph 4(3)(b) or by regulations
under paragraph 19(2)(c),

(b) an account not denominated in sterling, or

(c) any suspense account.

(7) 45For the purposes of this Part of this Schedule, a relevant account is an
“affected account” if, as a result of the hold notice, an amount is the held
amount in relation to that account (see paragraph 6(1) and (2)).

Determination of held amounts

6 (1) If there is only one relevant account (see paragraph 5(6)) in existence at the
time the deposit-taker complies with paragraph 5(1), “the held amount” in
relation to that account is—

(a) 5if the available amount in respect of the account (see sub-paragraph
(3)) exceeds the safeguarded amount, so much of the amount of the
excess as does not exceed the specified amount, and

(b) if the available amount does not exceed the safeguarded amount, nil.

For the meaning of “the safeguarded amount” and “the specified amount”
10see paragraph 22(1).

(2) If there is more than one relevant account in existence at the time the
deposit-taker complies with paragraph 5(1), “the held amount” in relation to
each relevant account is determined as follows—

Step 1

15Determine the available amount in respect of each relevant account.

Step 2

Determine the total of the available amounts in respect of all of the relevant
accounts.

If that total does not exceed the safeguarded amount, the held amount in
20relation to each relevant account is nil (and no further steps are to be taken).

In any other case, go to Step 3.

Step 3

Match the safeguarded amount against the available amounts in respect of
the relevant accounts, taking those accounts in reverse priority order (see
25sub-paragraph (6)).

Step 4

Match the specified amount against what remains of the available amounts
in respect of the relevant accounts by taking each relevant account in priority
order (see sub-paragraph (5)) and matching the specified amount (or, as the
30case may be, what remains of the specified amount) against the available
amount for each account until either—

(a) the specified amount has been fully matched, or

(b) what remains of the available amounts is exhausted.

35Where this sub-paragraph applies, “the held amount”, in relation to a
relevant account—

(i) is so much of the amount standing to the credit of the account as is
matched against the specified amount under Step 4, and

(ii) accordingly, is nil if no amount standing to the credit of the account
40is so matched against the specified amount.

(3) In this paragraph “the available amount” means—

(a) in the case of an account other than a joint account, the amount
standing to the credit of that account at the time the deposit-taker
complies with paragraph 5(1), or

(b) 45in the case of a joint account, the appropriate fraction of the amount
standing to the credit of that account at that time;

so, if no amount stands to the credit of an account at that time, “the available
amount” is nil.