Finance Bill (HC Bill 57)

(a) TP was, at the time of the relevant actions, connected with the
company mentioned in section 133A(1) or (if different) the
company in respect of whose conduct the compensation is paid
or payable, or

(b) 5in taking one or more of the relevant actions, TP was acting
under arrangements with the company mentioned in
paragraph (a) or (as the case may be) either of the companies
mentioned in paragraph (a).

(4) In this section “the relevant actions” means the actions as a result of
10which the loss or damage is wholly or mainly attributable to TP (and
references to actions or the taking of actions include failures to act).

(5) Section 1122 of CTA 2010 (meaning of “connected persons”) applies for
the purposes of this section, but subject to the following modification.

(6) Section 1122 has effect as if after subsection (8) there were inserted—

“(9) 15A person (“A”) is connected with any person who is an
employee of A or by whom A is employed.

(10) For the purposes of this section any director or other officer of a
company is to be treated as employed by that company.””

133E Meaning of “banking company”

(1) 20For the purposes of sections 133A, a company is a “banking
company”—

(a) at a time when it meets conditions A to D,

(b) at a time when it meets condition A and is a member of a
partnership which meets conditions B to D, or

(c) 25if it is a building society.

In subsections (2) to (6), “the relevant entity” means the company or
partnership.

(2) Condition A is that the company is not an excluded company (see
section 133F).

(3) 30Condition B—

(a) in relation to any time on or after 1 December 2001, is that the
relevant entity is an authorised person for the purposes of
FISMA 2000 (see section 31 of that Act);

(b) in relation to any time before that date, is that the relevant
35entity—

(i) was at that time an authorised person under Chapter 3
of Part 1 of the Financial Services Act 1986 (persons
authorised to carry on investment business),

(ii) was authorised under the Banking Act 1987, or

(iii) 40was entitled by virtue of the Banking Co-ordination
(Second Council Directive) Regulations 1992 (S.I. 1992/
3218) to accept deposits (within the meaning of the
Banking Act 1987) in the United Kingdom.

(4) Condition C is that—

(a) 45the relevant entity’s activities include the relevant regulated
activity described in the provision mentioned in section
133G(1)(a), or

(b) the relevant entity is an investment bank (see section 133H)
whose activities consist wholly or mainly of any of the relevant
regulated activities described in the provisions mentioned in
section 133G(1)(b) to (f).

(5) 5Condition D is that the relevant entity carries on that relevant regulated
activity, or those relevant regulated activities, wholly or mainly in the
course of trade.

(6) Where the relevant entity carries on activities outside the United
Kingdom, Condition B is met—

(a) 10in relation to any time on or after 1 December 2001, if the
relevant entity would be required to be an authorised person for
the purposes of FISMA 2000 (see section 31 of that Act) in order
to carry on any of those activities in the United Kingdom at that
time;

(b) 15in relation to any time before that date, if in order to carry on
those activities in the United Kingdom at that time the relevant
entity—

(i) would have been required to be an authorised person
under Chapter 3 of Part 1 of the Financial Services Act
201986 (persons authorised to carry on investment
business), or

(ii) would have been required either to be authorised under
the Banking Act 1987 or to be entitled by virtue of the
Banking Co-ordination (Second Council Directive)
25Regulations 1992 (S.I. 1992/3218S.I. 1992/3218) to accept deposits
(within the meaning of the Banking Act 1987) in the
United Kingdom.

(7) In this section “partnership” includes—

(a) a limited liability partnership, and

(b) 30an entity established under the law of a territory outside the
United Kingdom of a similar character to a partnership,

and “member”, in relation to a partnership, is to be read accordingly.

(8) For the meaning of “relevant regulated activity”, see section 133G.

133F “Excluded company”

(1) 35This section gives the meaning of “excluded company” for the purposes
of section 133E.

(2) A company is an “excluded company” at any time (in an accounting
period) when the company is—

(a) an insurance company or an insurance special purpose vehicle;

(b) 40a company which is a member of a group and does not carry on
any relevant regulated activities otherwise than on behalf of an
insurance company or an insurance special purpose vehicle
which is a member of the group;

(c) a company which does not carry on any relevant regulated
45activities otherwise than as the manager of a pension scheme;

(d) an investment trust;

(e) a company which does not carry on any relevant regulated
activities other than asset management activities;

(f) an exempt commodities firm;

(g) a company which does not carry on any relevant regulated
activities otherwise than for the purpose of trading in
commodities or commodity derivatives;

(h) 5a company which does not carry on any relevant regulated
activities otherwise than for the purpose of dealing in contracts
for differences—

(i) as principal with persons all or all but an insignificant
proportion of whom are retail clients, or

(ii) 10with any other person to enable the company or that
other person to deal in contracts for differences as
principal with persons all or all but an insignificant
proportion of whom are retail clients;

(i) a friendly society;

(j) 15a society registered as a credit union under the Co-operative
and Community Benefit Societies Act 2014 or the Credit Unions
(Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)S.I. 1985/1205 (N.I. 12));

(k) a building society.

(3) In this section “asset management activities” means activities which
20consist (or, if they were carried on in the United Kingdom, would
consist) of any or all of the following—

(a) acting as the operator of a collective investment scheme (see
subsection (5)),

(b) managing investments on a discretionary basis for clients none
25of which is a linked entity (see subsection (6)), and

(c) acting as an authorised corporate director.

(4) In subsection (2)(f) “exempt commodities firm” means—

(a) in relation to a time on or after 1 January 2014, an exempt IFPRU
commodities firm, as defined by the FCA Handbook at that
30time,

(b) in relation to a time on or after 1 April 2013 but before 1 January
2014, an exempt BIPRU commodities firm, as defined by the
PRA Handbook at that time,

(c) in relation to a time on or after 1 January 2007 but before 1 April
352013, an exempt BIPRU commodities firm, as defined by the
Handbook of the Financial Services Authority at that time, and

(d) in relation to a time before 1 January 2007, an exempt BIPRU
commodities firm as defined by the Handbook of the Financial
Services Authority as in force on 1 January 2007.

(5) 40In subsection (3)(a) “operator of a collective investment scheme”—

(a) in relation to times on and after 25 February 2001, has the same
meaning as in Part 17 of FISMA 2000 (see sections 235 and 237
of that Act);

(b) in relation to times before that date, has the same meaning as in
45the Financial Services Act 1986.

(6) In subsection (3)(b) “linked entity”, in relation to a company (“C”),
means—

(a) a member of the same group as C;

(b) a company in which a company which is a member of the same
group as C has a major interest, or

(c) a partnership the members of which include an entity—

(i) which is a member of the same group as C, and

(ii) 5whose share of the profits or losses of a trade carried on
by the partnership for an accounting period of the
partnership any part of which falls within the
accounting period mentioned in the opening words of
subsection (2) is at least a 40% share (see Part 17 for
10provisions about shares of partnership profits and
losses).

(7) In this section—

• “authorised corporate director”—

  (a)

  in relation to any time on or after 1 April 2013, has the
  15meaning given by the FCA Handbook at that time;

  (b)

  in relation to any time before 1 April 2013, has the
  meaning given by the FCA Handbook as in force on 1
  April 2013;

• “contract for differences” has the meaning given by section 582;

• 20“the FCA Handbook” means the Handbook made by the Financial
  Conduct Authority under FISMA 2000;

• “friendly society” means a registered friendly society or an
  incorporated friendly society;

• “group” has the same meaning as in Part 7A of CTA 2010 (see
  25section 269BD of that Act);

• “incorporated friendly society” means a society incorporated
  under the Friendly Societies Act 1992;

• “insurance company” has the meaning given by section 133I;

• “insurance special purpose vehicle” has the meaning given by
  30section 139 of FA 2012;

• “major interest” has the same meaning as in Part 5 (see section
  473);

• “partnership” has the same meaning as in section 133E;

• “the PRA Handbook”, means the Handbook made by the
  35Prudential Regulation Authority under FISMA 2000;

• “registered friendly society” has the same meaning as in the
  Friendly Societies Act 1992 (and includes any society that as a
  result of section 96(2) of the Friendly Societies Act 1992 is
  treated as a registered friendly society);

• 40“relevant regulated activity” has the meaning given by section
  133G;

• “retail client”—

  (a)

  in relation to any time on or after 1 April 2013, has the
  meaning given by the FCA Handbook at that time;

  (b)

  45in relation to any time before 1 April 2013, has the
  meaning given by the FCA Handbook as in force on 1
  April 2013.

133G Meaning of “relevant regulated activity”

(1) In sections 133E and 133F “relevant regulated activity” means an
50activity which is a regulated activity for the purposes of FISMA 2000 by

virtue of any of the following provisions of the Financial Services and
Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544S.I. 2001/544)—

(a) article 5 (accepting deposits);

(b) article 14 (dealing in investments as principal);

(c) 5article 21 (dealing in investments as agent);

(d) article 25 (arranging deals in investments);

(e) article 40 (safeguarding and administering investments);

(f) article 61 (regulated mortgage contracts).

(2) In determining whether an activity carried on at any time before 1
10December 2001 was at that time a relevant regulated activity, it is to be
assumed that FISMA 2000 and the order mentioned in subsection (1)
were in force in the form in which they had effect on 1 December 2001.

133H Investment bank

(1) This section gives the meaning of “investment bank” for the purposes
15of section 133E; and in this section “the relevant entity” has the same
meaning as in subsections (2) to (6) of that section.

(2) At any time on or after 1 January 2014, the relevant entity is an
investment bank if—

(a) it is both an IFPRU 730k firm and a full scope IFPRU investment
20firm, or

(b) it is designated by the Prudential Regulation Authority under
article 3 of the Financial Services and Markets Act 2000 (PRA-
regulated Activities) Order 2013 (S.I. 2013/556S.I. 2013/556) (dealing in
investments as principal: designation by PRA).

(3) 25At any time on or after 1 January 2007 but before 1 January 2014, the
relevant entity was an investment bank if it was both a BIPRU 730k firm
and a full scope BIPRU investment firm.

(4) At any time before 1 January 2007, the relevant entity was an
investment bank if it would have been both a BIPRU 730k firm and a
30full scope BIPRU investment firm if the Handbook of the Financial
Services Authority in force on 1 January 2007 had been in force at that
earlier time.

(5) In subsections (2) to (4)—

• “IFPRU 730k firm” and “full scope IFPRU investment firm” have
  35the meaning given by the FCA Handbook at the time in
  question;

• “BIPRU 730k firm” and “full scope BIPRU investment firm”—

  (a)

  in relation to any time on or after 1 April 2013 have the
  meaning given by the PRA Handbook at that time;

  (b)

  40in relation to any time on or after 1 January 2007 but
  before 1 April 2013, have the meaning given by the
  Handbook of the Financial Services Authority at that
  time;

  (c)

  in relation to any time before 1 January 2007, have the
  45meaning given by the Handbook of the Financial
  Services Authority as in force on 1 January 2007.

(6) If the relevant entity would at any time be an investment bank under
subsection (2)(a), (3) or (4) by virtue of activities carried on in the United

Kingdom but for the fact that its registered office (or, if it does not have
a registered office, its head office) is not in the United Kingdom, the
relevant entity is to be treated for the purposes of section 133E as being
an investment bank.

(7) 5In this section—

• “the FCA Handbook” means the Handbook made by the Financial
  Conduct Authority under FISMA 2000;

• “the PRA Handbook” means the Handbook made by the
  Prudential Regulation Authority under FISMA 2000.

133I 10Meaning of “insurance company”

(1) For the purposes of section 133F a person who carries on the activity of
effecting or carrying out contracts of insurance is an “insurance
company” if—

(a) the person has permission under Part 4A of FISMA 2000 to
15carry on that activity,

(b) the person is of the kind mentioned in paragraph 5(d) or (da) of
Schedule 3 to FISMA 2000 (EEA passport rights) and carries on
that activity in the United Kingdom through a permanent
establishment there, or

(c) 20the person qualifies for authorisation under Schedule 4 to
FISMA 2000 (Treaty rights) and carries on that activity in the
United Kingdom through a permanent establishment there.

(2) In relation to times in the period beginning with 1 December 2001 and
ending with 31 March 2013, the reference in subsection (1)(a) to Part 4A
25of FISMA 2000 is to be read as a reference to Part 4 of that Act

(3) In relation to times before 1 December 2001, this section has effect as if
the following were substituted for subsection (1)—

“(1) For the purposes of section 133F a person who carries on the activity
of effecting or carrying out contracts of insurance is an “insurance
30company” if the person is—

(a) authorised under section 3 or 4 of the Insurance Companies
Act 1982, or

(b) an EC company within the meaning of the Insurance
Companies Act 1982 which, by virtue of paragraph 1 or 8 of
35Schedule 2F to that Act, was able to carry on direct insurance
business through a branch in the United Kingdom or provide
insurance in the United Kingdom.””

133J Meaning of “customer”

(1) For the purposes of section 133A, a person (“P”) is a “customer” in
40relation to a company (“company A”) if—

(a) P uses, has used or may have contemplated using a financial
service provided by company A, or

(b) has relevant rights or interests in relation to a financial service
provided by company A.

(2) 45In subsection (1) “financial service” means a service provided—

(a) in carrying on regulated activities,

(b) in communicating, or approving the communication by others
of, invitations or inducements to engage in investment activity,
or

(c) in providing relevant ancillary services (if company A is an
5investment firm or credit institution).

(3) P has a “relevant right or interest” in relation to any service if P has a
right or interest—

(a) which is derived from, or is otherwise attributable to, the use of
the service by another person, or

(b) 10which may be adversely affected by the use of the service by
persons acting on P’s behalf or in a fiduciary capacity in relation
to P.

(4) If company A is providing a service as a trustee, the persons who are,
have been, or may have been, beneficiaries of the trust are to be treated
15as persons who use, have used, or may have contemplated using, the
service.

(5) A person who deals with company A in the course of company A
providing a service is to be treated as using the service.

(6) In this section—

• 20“credit institution” has the meaning given by section 1H(8) of
  FISMA 2000;

• “engage in investment activity” has the meaning given in section
  21 of FISMA 2000;

• “investment firm” has the same meaning as in FISMA 2000 (see
  25section 424A of that Act);

• “regulated activities” has the same meaning as in FISMA 2000 (see
  section 22 of that Act);

• “relevant ancillary services” means has the meaning given by
  section 1H(8) of FISMA 2000.

133K 30“Compensation” and related expressions

(1) In sections 133A to 133D references to compensation which is paid or
payable “in respect of” relevant conduct include compensation which
is paid (or to be paid)—

(a) in connection with a claim by the customer for compensation in
35respect of the conduct, or

(b) in circumstances where there is reason to suspect that company
A may (or might in the absence of the payment) be or become
liable to pay compensation in respect of relevant conduct—

(i) to the customer, or

(ii) 40in one or more of a class of cases which includes the
customer’s case.

(2) In sections 133A to 133D and this section “compensation” includes any
form of redress, whether monetary or non-monetary, and accordingly
includes interest.

45References in those sections to “payment” are to be interpreted
accordingly.

(3) In subsection (1)—

Finance BillPage 27

• “claim” includes any claim or request, however made;

• “customer” has the meaning given by section 133J;

• “relevant conduct” is to be interpreted in accordance with section
  133A(6).

133L 5 Associated companies

(1) For the purposes of section 133A a company (“company B”) is
associated with another company (“company A”) at a time (“the
relevant time”) if any of the following 5 conditions is met.

(2) The first condition is that the financial results of company A and
10company B, for a period that includes the relevant time, meet the
consolidation condition.

(3) The second condition is that there is a connection between company A
and company B for the accounting period of company A in which the
relevant time falls.

(4) 15The third condition is that, at the relevant time, company A has a major
interest in company B or company B has a major interest in company A.

(5) The fourth condition is that—

(a) the financial results of company A and a third company, for a
period that includes the relevant time, meet the consolidation
20condition (see subsection (7)), and

(b) at the relevant time the third company has a major interest in
company B.

(6) The fifth condition is that—

(a) there is a connection (see subsection (9)) between company A
25and a third company for the accounting period of company A in
which the relevant time falls, and

(b) at the relevant time the third company has a major interest in
company B.

(7) In this section, the financial results of any two companies for any period
30meet the “consolidation condition” if—

(a) they are required to be comprised in group accounts,

(b) they would be required to be comprised in group accounts but
for the application of an exemption, or

(c) they are in fact comprised in such accounts.

(8) 35In subsection (7), “group accounts” means accounts prepared under—

(a) section 399 of the Companies Act 2006, or

(b) any corresponding provision of the law of a territory outside the
United Kingdom.

(9) Sections 466 to 471 (companies connected for accounting period) apply
40for the purposes of this section.

(10) In this section “major interest” has the same meaning as in Part 5 (see
section 473).

133M Application of sections 133A and 133B in relation to corporate partner

(1) If a firm carries on a trade and any partner in the firm (“the corporate
45partner”) is within the charge to corporation tax, this section applies in

determining the profits of the trade, in relation to the corporate partner,
in accordance with section 1259(3) or (4).

(2) No deduction is allowed for expenses incurred by the firm if and so far
as section 133A would prevent the expenses from being deductible if
5the firm were, and at all relevant times had been, a company.

(3) In its application for the purposes of subsection (2), section 133A is to
be read subject to subsections (4) to (6).

(4) Section 133A(3)(b) is to be disregarded.

(5) Conduct of the firm is “relevant conduct” if the conduct occurs—

(a) 10on or after 29 April 1988, and

(b) at a time when—

(i) the corporate partner is for the purposes of section 133A
a banking company, and

(ii) the firm does not fall within any of paragraphs (a) to (h)
15of section 133F(2) (reading references in those
paragraphs to companies as including references to
firms).

(6) The disclosure condition in section 133C may be met by a relevant
document relating to the liability of the corporate partner (as well as by
20a relevant document relating to the liability of the firm).

(7) Where in any accounting period of the firm (as defined by section 1261)
the firm incurs expenses which but for section 133A (as read with
subsections (2) to (6)) would be deductible in calculating the profits of
the trade, the profits of the firm’s trade are to be determined as if the
25references in section 133B to a company were a reference to the firm.

133N Powers to amend

(1) The Treasury may by regulations make such amendments of sections
133A to 133L as they consider appropriate in consequence of—

(a) any change made to, or replacement of, the Financial Services
30and Markets Act 2000 (Regulated Activities) Order 2001 (S.I.
2001/544) or the Financial Services and Markets Act 2000 (PRA-
regulated Activities) Order 2013 (S.I. 2013/556S.I. 2013/556) (or any
replacement);

(b) any change made to, or replacement of, the FCA Handbook or
35the PRA Handbook (or any replacement);

(c) any regulatory requirement, or change to any regulatory
requirement, imposed by EU legislation, or by or under any Act
(whenever adopted, enacted or made).

(2) The Treasury may by regulations—

(a) 40amend sections 133A(1) and 133C for the purpose of varying the
class of expenses to which section 133A(1) applies;

(b) amend section 133D for the purpose of adding cases to those for
the time being listed in subsection (1) of that section;

(c) amend section 133D for any other purpose;

(d) 45amend any of sections 133E to 133I;

(e) amend section 133M.

(3) Regulations under this section may include transitional provision.

(4) A statutory instrument containing only regulations under subsection
(1) or (2)(b) is subject to annulment in pursuance of a resolution of the
House of Commons.

(5) 5Any other statutory instrument containing regulations under this
section may not be made unless a draft of the instrument has been laid
before and approved by a resolution of the House of Commons.

(6) In this section—

• “the FCA Handbook” means the Handbook made by the Financial
  10Conduct Authority under FISMA 2000 (as that Handbook has
  effect from time to time);

• “the PRA Handbook” means the Handbook made by the
  Prudential Regulation Authority under FISMA 2000 (as that
  Handbook has effect from time to time).””

(2) 15The amendment made by this section has effect in relation to accounting
periods beginning on or after the commencement date.

(3) “The commencement date” means—

(a) except for the purposes of section 133M of CTA 2009, 8 July 2015;

(b) for the purposes of that section, 15 July 2015.

(4) 20Subsection (5) applies where a company has an accounting period beginning
before the commencement date and ending on or after that date (“the
straddling period”).

(5) For the purposes of sections 133A to 133N of CTA 2009—

(a) so much of the straddling accounting period as falls before the
25commencement date and so much of that period as falls on or after that
date, are treated as separate accounting periods, and

(b) any amounts brought into account for the purposes of calculating for
corporation tax purposes the profits of a trade for the straddling
accounting period are apportioned to the two separate accounting
30periods on such basis as is just and reasonable.

19 Banks established under Savings Bank (Scotland) Act 1819: loss allowance

(1) In Part 7A of CTA 2010 (banking companies), in section 269CN (definitions), in
the definition of “building society”, at the end insert “except that it also
includes a bank established under the Savings Bank (Scotland) Act 1819”.

(2) 35The amendment made by this section is treated as having come into force on 1
April 2015.

20 Definitions relating to banks

(1) Schedule 19 to FA 2011 (the bank levy) is amended in accordance with
subsections (2) to (7).

(2) 40In paragraph 12—

(a) in sub-paragraph (8)(a)(iv)—

(i) after “relevant” insert “regulated”;