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House of Commons

Monday 26 October 2015

Consideration of Bill (Report Stage)

New Amendments handed in are marked thus

Amendments which will comply with the required notice period at their next appearance

Finance Bill

Note

This document includes all amendments tabled to date and includes any

withdrawn amendments at the end. The amendments have been arranged in

accordance with the Finance Bill Programme (No. 2) Motion to be proposed by Mr

Chancellor of the Exchequer.

New Clauses Standing in the name of a Minister of the Crown

Mr Chancellor of the Exchequer

NC4

To move the following Clause—

“EIS, VCTs etc: excluded activities

(1)    

In section 192 of ITA 2007 (excluded activities for the purposes of sections 181

and 189 (and, by virtue of section 257HF(2), Part 5A)), in subsection (1)—

(a)    

in paragraph (kb), omit the final “and”;

(b)    

after paragraph (kb) insert—

“(kc)    

making reserve electricity generating capacity

available (or, where such capacity has been made

available, using it to generate electricity), and”.

(2)    

In section 303 of ITA 2007 (excluded activities for the purposes of sections 290

and 300), in subsection (1)—

(a)    

in paragraph (kb), omit the final “and”;

(b)    

after paragraph (kb) insert—

“(kc)    

making reserve electricity generating capacity

available (or, where such capacity has been made

available, using it to generate electricity), and”.

(3)    

The amendment made by subsection (1) has effect in relation to shares issued on

or after 30 November 2015.

Consideration of Bill (Report Stage): 26 October 2015      

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Finance Bill, continued

(4)    

The amendment made by subsection (2) has effect in relation to relevant holdings

issued on or after 30 November 2015.”

Mr Chancellor of the Exchequer

NC5

To move the following Clause—

“Corporation tax instalment payments

(1)    

The Corporation Tax (Instalment Payments) (Amendment) Regulations 2014

(S.I. 2014/2409) are to be treated as always having had effect as if in regulation

1(2) (commencement) “ending” were substituted for “beginning”.

(2)    

Consequently, for the purposes of the application of regulations 2(2) and 3(5B)

of the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175)

to accounting periods beginning before, and ending on or after, 1 April 2015—

(a)    

sections 279F and 279G of CTA 2010 are taken to have effect in relation

to such periods, and

(b)    

paragraph 22 of Schedule 1 to FA 2014 is to be disregarded accordingly.”

Mr Chancellor of the Exchequer

NC6

To move the following Clause—

“Carried interest and disguised investment management fees: “arise”

(1)    

In ITA 2007, after section 809EZD insert—

“809EZDA 

    Sums arising to connected persons other than companies

(1)    

This section applies in relation to an individual (“A”) if—

(a)    

a sum arises to a person (“B”) who is connected with A,

(b)    

B is not a company,

(c)    

income tax is not charged on B in respect of the sum by virtue of

this Chapter,

(d)    

capital gains tax is not charged on B in respect of the sum by

virtue of Chapter 5 of Part 3 of TCGA 1992, and

(e)    

the sum does not arise to A apart from this section.

(2)    

The sum referred to in subsection (1)(a) arises to A for the purposes of

this Chapter.

(3)    

Where a sum arises to A by virtue of this section, it arises to A at the time

the sum referred to in subsection (1)(a) arises to B.

(4)    

Section 993 (meaning of “connected”) applies for the purposes of this

section, but as if—

(a)    

subsection (4) of that section were omitted, and

Consideration of Bill (Report Stage): 26 October 2015      

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Finance Bill, continued

(b)    

partners in a partnership in which A is also a partner were not

“associates” of A for the purposes of sections 450 and 451 of

CTA 2010 (“control”).

809EZDB 

    Sums arising to connected company or unconnected person

(1)    

This section applies in relation to an individual (“A”) if—

(a)    

a sum arises to—

(i)    

a company connected with A, or

(ii)    

a person not connected with A,

(b)    

any of the enjoyment conditions is met, and

(c)    

the sum does not arise to A apart from this section.

(2)    

The enjoyment conditions are—

(a)    

the sum, or part of the sum, is in fact so dealt with by any person

as to be calculated at some time to enure for the benefit of A or a

person connected with A;

(b)    

the arising of the sum operates to increase the value to A or a

person connected with A of any assets which—

(i)    

A or the connected person holds, or

(ii)    

are held for the benefit of A or the connected person;

(c)    

A or a person connected with A receives or is entitled to receive

at any time any benefit provided or to be provided out of the sum

or part of the sum;

(d)    

A or a person connected with A may become entitled to the

beneficial enjoyment of the sum or part of the sum if one or more

powers are exercised or successively exercised (and for these

purposes it does not matter who may exercise the powers or

whether they are exercisable with or without the consent of

another person);

(e)    

A or a person connected with A is able in any manner to control

directly or indirectly the application of the sum or part of the

sum.

In this subsection, in a case where the sum referred to in subsection (1)(a)

arises to a company connected with A, references to a person connected

with A do not include that company.

(3)    

There arises to A for the purposes of this Chapter—

(a)    

the sum referred to in subsection (1)(a), or

(b)    

if the enjoyment condition in subsection (2)(a), (c), (d) or (e) is

met in relation to part of the sum, that part of that sum, or

(c)    

if the enjoyment condition in subsection (2)(b) is met, such part

of that sum as is equal to the amount by which the value of the

assets referred to in that condition is increased.

(4)    

Where a sum (or part of a sum) arises to A by virtue of this section, it

arises to A at the time it arises to the person referred to in subsection

(1)(a)(i) or (ii) (whether the enjoyment condition was met at that time or

at a later date).

(5)    

In determining whether any of the enjoyment conditions is met in relation

to a sum or part of a sum—

(a)    

regard must be had to the substantial result and effect of all the

relevant circumstances, and

Consideration of Bill (Report Stage): 26 October 2015      

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Finance Bill, continued

(b)    

all benefits which may at any time accrue to a person as a result

of the sum arising as specified in subsection (1)(a) must be taken

into account, irrespective of—

(i)    

the nature or form of the benefits, or

(ii)    

whether the person has legal or equitable rights in

respect of the benefits.

(6)    

The enjoyment condition in subsection (2)(b), (c) or (d) is to be treated as

not met if it would be met only by reason of A holding shares or an

interest in shares in a company.

(7)    

The enjoyment condition in subsection (2)(a) or (e) is to be treated as not

met if the sum referred to in subsection (1)(a) arises to a company

connected with A and—

(a)    

the company is liable to pay corporation tax in respect of its

profits and the sum is included in the computation of those

profits, or

(b)    

paragraph (a) does not apply but—

(i)    

the company is a CFC and the exemption in Chapter 14

of Part 9A of TIOPA 2010 applies for the accounting

period in which the sum arises, or

(ii)    

the company is not a CFC but, if it were, that exemption

would apply for that period.

In this subsection “CFC” has the same meaning as in Part 9A of TIOPA

2010.

(8)    

But subsections (6) and (7) do not apply if the sum referred to in

subsection (1)(a) arises to the company referred to in subsection (1)(a)(i)

or the person referred to in subsection (1)(a)(ii) as part of arrangements

where—

(a)    

it is reasonable to assume that in the absence of the arrangements

the sum or part of the sum would have arisen to A or an

individual connected with A, and

(b)    

it is reasonable to assume that the arrangements have as their

main purpose, or one of their main purposes, the avoidance of a

liability to pay income tax, capital gains tax, inheritance tax or

corporation tax.

(9)    

The condition in subsection (8)(b) is to be regarded as met in a case where

the sum is applied directly or indirectly as an investment in a collective

investment scheme.

(10)    

Section 993 (meaning of “connected”) applies for the purposes of this

section, but as if—

(a)    

subsection (4) of that section were omitted, and

(b)    

partners in a partnership in which A is also a partner were not

“associates” of A for the purposes of sections 450 and 451 of

CTA 2010 (“control”).”

(2)    

In ITA 2007, in section 809EZA(3)(c), omit “directly or indirectly”.

(3)    

The amendments made by this section have effect in relation to—

(a)    

sums other than carried interest arising on or after 22 October 2015,

(whenever the arrangements under which the sums arise were made), and

(b)    

carried interest arising on or after 22 October 2015 under any

arrangements, unless the carried interest arises in connection with the

Consideration of Bill (Report Stage): 26 October 2015      

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Finance Bill, continued

disposal of an asset or assets of a partnership or partnerships before that

date.

(4)    

In subsection (3), “arise”, “arrangements” and “carried interest” have the same

meanings as in Chapter 5E of Part 13 of ITA 2007.”

Mr Chancellor of the Exchequer

NC8

To move the following Clause—

“Restitution interest payments

(1)    

CTA 2010 is amended as follows.

(2)    

In section 1 (overview of Act), in subsection (3), after paragraph (ac) insert—

“(ad)    

restitution interest (see Part 8C),”.

(3)    

After Part 8B insert—

“Part 8C

Restitution interest

Chapter 1

Amounts taxed as restitution interest

357YA

 Charge to corporation tax on restitution interest

The charge to corporation tax on income applies to restitution interest

arising to a company.

357YB

 Restitution interest chargeable as income

(1)    

Profits arising to a company which consist of restitution interest are

chargeable to tax as income under this Part (regardless of whether the

profits are of an income or capital nature).

(2)    

In this Part references to “profits” are to be interpreted in accordance with

section 2(2) of CTA 2009.

357YC

 Meaning of “restitution interest”

(1)    

In this Part “restitution interest” means profits in relation to which

Conditions A to C are met.

(2)    

Condition A is that the profits are interest paid or payable by the

Commissioners in respect of a claim by the company for restitution with

regard to either of the following matters (or alleged matters)—

(a)    

the payment of an amount to the Commissioners under a mistake

of law relating to a taxation matter, or

(b)    

the unlawful collection by the Commissioners of an amount in

respect of taxation.

(3)    

Condition B is that—

(a)    

a court has made a final determination that the Commissioners

are liable to pay the interest, or

Consideration of Bill (Report Stage): 26 October 2015      

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Finance Bill, continued

(b)    

the Commissioners and the company, have in final settlement of

the claim, entered into an agreement under which the company is

entitled to be paid, or is to retain, the interest.

(4)    

Condition C is that the interest determined to be due, or agreed upon, as

mentioned in subsection (3) is not limited to simple interest at a statutory

rate (see section 357YU).

(5)    

Subsection (4) does not prevent so much of an amount of interest

determined to be due, or agreed upon, as represents or is calculated by

reference to simple interest at a statutory rate from falling within the

definition of “restitution interest”.

(6)    

For the purposes of subsection (2) it does not matter whether the interest

is paid or payable—

(a)    

pursuant to a judgment or order of a court,

(b)    

as an interim payment in court proceedings,

(c)    

under an agreement to settle a claim, or

(d)    

in any other circumstances.

(7)    

For the purposes of this section—

(a)    

“interest” includes an amount equivalent to interest, and

(b)    

an amount paid or payable by the Commissioners as mentioned

in subsection (2) is “equivalent to interest” so far as it is an

amount determined by reference to the time value of money.

(8)    

For the purposes of this section a determination made by a court is “final”

if the determination cannot be varied on appeal (whether because of the

absence of any right of appeal, the expiry of a time limit for making an

appeal without an appeal having been brought, the refusal of permission

to appeal, the abandonment of an appeal or otherwise).

(9)    

Any power to grant permission to appeal out of time is to be disregarded

for the purposes of subsection (8).

357YD

 Further provision about amounts included, or not included, in

“restitution interest”

(1)    

Interest paid to a company is not restitution interest for the purposes of

this Part if—

(a)    

Condition B was not met in relation to the interest until after the

interest was paid, and

(b)    

the amount paid was limited to simple interest at a statutory rate

(2)    

Subsection (1) does not prevent so much of a relevant amount of interest

determined to be due, agreed upon or otherwise paid as represents or is

calculated by reference to simple interest at a statutory rate from falling

within the definition of “restitution interest”.

(3)    

In subsection (2) “relevant amount of interest” means an amount of

interest the whole of which was paid before Condition B was met in

relation to it.

(4)    

Section 357YC(7) applies in relation to this section as in relation to

section 357YC.