Finance Bill (HC Bill 47)

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(c) the employment intermediary is not a managed service
company.

(6) In determining for the purposes of subsection (4) or (5) whether the
conditions in section 51, 52 or 53 are or would be met in relation to the
5employment intermediary—

(a) in section 51(1)—

(i) disregard “either” in the opening words, and

(ii) disregard paragraph (b) (and the preceding or), and

(b) read references to the intermediary as references to the
10employment intermediary.

(7) Subsection (8) applies if—

(a) the client or a relevant person provides the employment
intermediary (whether before or after the worker begins to
provide the services) with a fraudulent document which is
15intended to constitute evidence that, by virtue of subsection (3),
this section does not or will not apply in relation to the services,

(b) that section is taken not to apply in relation to the services, and

(c) in consequence, the employment intermediary does not under
PAYE regulations deduct and account for an amount that
20would have been deducted and accounted for under those
regulations if this section had been taken to apply in relation to
the services.

(8) For the purpose of recovering the amount referred to in subsection
(7)(c) (“the unpaid tax”)—

(a) 25the worker is to be treated as having an employment with the
client or relevant person who provided the document, the
duties of which consist of the services, and

(b) the client or relevant person is under PAYE regulations to
account for the unpaid tax as if it arose in respect of earnings
30from that employment.

(9) In subsections (7) and (8) “relevant person” means a person, other than
the client, the worker or a person connected with the employment
intermediary, who—

(a) is resident, or has a place of business, in the United Kingdom,
35and

(b) is party to a contract with the employment intermediary or a
person connected with the employment intermediary under or
in consequence of which—

(i) the services are provided, or

(ii) 40the employment intermediary, or a person connected
with the employment intermediary, makes payments in
respect of the services.

(10) In determining whether this section applies, no regard is to be had to
any arrangements the main purpose, or one of the main purposes, of
45which is to secure that this section does not to any extent apply.

(11) In this section—

  • “arrangements” includes any scheme, transaction or series of
    transactions, agreement or understanding, whether or not
    enforceable, and any associated operations;

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  • “employment intermediary” means a person, other than the
    worker or the client, who carries on a business (whether or not
    with a view to profit and whether or not in conjunction with any
    other business) of supplying labour;

  • 5“engagement” means any such provision of service as is
    mentioned in subsection (1)(a);

  • “excluded services” means services provided wholly in the client’s
    home;

  • “managed service company” means a company which—

    (a)

    10is a managed service company within the meaning
    given by section 61B, or

    (b)

    would be such a company disregarding subsection (1)(c)
    of that section.”

(2) In section 688A of ITEPA 2003 (managed service companies: recovery from
15other persons), in subsection (5), in the definition of “managed service
company”, after “section 61B” insert “but for the purposes of section 339A has
the meaning given by subsection (11) of that section”.

(3) After section 688A of ITEPA 2003 insert—

688B Travel expenses of workers providing services through
20intermediaries: recovery of unpaid tax

(1) PAYE regulations may make provision for, or in connection with, the
recovery from a director or officer of a company, in such circumstances
as may be specified in the regulations, of amounts within any of
subsections (2) to (5).

(2) 25An amount within this subsection is an amount that the company is to
account for in accordance with PAYE regulations by virtue of section
339A(7) to (9) (persons providing fraudulent documents).

(3) An amount within this subsection is an amount which the company is
to deduct and pay in accordance with PAYE regulations by virtue of
30section 339A in circumstances where—

(a) the company is an employment intermediary,

(b) on the basis that section 339A does not apply by virtue of
subsection (3) of that section, the company has not deducted
and paid the amount, but

(c) 35the company has not been provided by any other person with
evidence from which it would be reasonable in all the
circumstances to conclude that subsection (3) of that section
applied (and the mere assertion by a person that the manner in
which the worker provided the services was not subject to (or to
40the right of) supervision, direction or control by any person is
not such evidence).

(4) An amount within this subsection is an amount that the company is to
deduct and pay in accordance with PAYE regulations by virtue of
section 339A in a case where subsection (4) of that section applies
45(services provided under arrangements made by intermediaries).

(5) An amount within this subsection is any interest or penalty in respect
of an amount within any of subsections (2) to (4) for which the company
is liable.

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(6) In this section—

  • “company” includes a limited liability partnership;

  • “director” has the meaning given by section 67;

  • “employment intermediary” has the same meaning as in section
    5339A;

  • “officer”, in relation to a company, means any manager, secretary
    or other similar officer of the company, or any person acting or
    purporting to act as such”

(4) In Part 4 of the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682S.I. 2003/2682)
10(payments, returns and information), after Chapter 3A insert—

“CHAPTER 3B Certain debts of companies under section 339A of ITEPA (travel
expenses of workers providing services through employment
intermediaries)
97ZG Interpretation of Chapter 3B: “relevant PAYE debt” and “relevant
15date”

(1) In this Chapter “relevant PAYE debt”, in relation to a company means
an amount within any of paragraphs (2) to (5).

(2) An amount within this paragraph is an amount that the company is to
account for in accordance with these Regulations by virtue of section
20339A(7) to (9) of ITEPA (persons providing fraudulent documents).

(3) An amount within this paragraph is an amount which a company is to
deduct and pay  in accordance with these Regulations by virtue of
section 339A of ITEPA in circumstances where—

(a) the company is an employment intermediary,

(b) 25on the basis that section 339A of ITEPA does not apply by virtue
of subsection (3) of that section the company has not deducted
and paid the amount, but

(c) the company has not been provided by any other person with
evidence from which it would be reasonable in all the
30circumstances to conclude that subsection (3) of that section
applied (and the mere assertion by a person that the manner in
which the worker provided the services was not subject to (or to
the right of) supervision, direction or control by any person is
not such evidence).

(4) 35An amount within this paragraph is an amount that the company is to
deduct and pay in accordance with these Regulations by virtue of
section 339A of ITEPA in a case where subsection (4) of that section
applies (services provided under arrangements made by
intermediaries).

(5) 40An amount within this paragraph is any interest or penalty in respect
of an amount within any of paragraphs (2) to (4) for which the company
is liable.

(6) In this Chapter “the relevant date” in relation to a relevant PAYE debt
means the date on which the first payment is due on which PAYE is not
45accounted for.

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97ZH Interpretation of Chapter 3B: general

In this Chapter—

  • “company” includes a limited liability partnership;

  • “director” has the meaning given by section 67 of ITEPA;

  • 5“personal liability notice” has the meaning given by regulation
    97ZI(2);

  • “the specified amount” has the meaning given by regulation
    97ZI(2)(a).

97ZI Liability of directors for relevant PAYE debts

(1) 10This regulation applies in relation to an amount of relevant PAYE debt
of a company if the company does not deduct that amount by the time
by which the company is required to do so.

(2) HMRC may serve a notice (a “personal liability notice”) on any person
who was, on the relevant date, a director of the company—

(a) 15specifying the amount of relevant PAYE debt in relation to
which this regulation applies (“the specified amount”), and

(b) requiring the director to pay to HMRC

(i) the specified amount, and

(ii) specified interest on that amount.

(3) 20The interest specified in the personal liability notice—

(a) is to be at the rate applicable under section 178 of the Finance
Act 1989 for the purposes of section 86 of TMA, and

(b) is to run from the date the notice is served.

(4) A director who is served with a personal liability notice is liable to pay
25to HMRC the specified amount and the interest specified in the notice
within 30 days beginning with the day the notice is served.

(5) If HMRC serve personal liability notices on more than one director of
the company in respect of the same amount of relevant PAYE debt, the
directors are jointly and severally liable to pay to HMRC the specified
30amount and the interest specified in the notices.

97ZJ Appeals in relation to personal liability notices

(1) A person who is served with a personal liability notice in relation to an
amount of relevant PAYE debt of a company may appeal against the
notice.

(2) 35A notice of appeal must—

(a) be given to HMRC within 30 days beginning with the day the
personal liability notice is served, and

(b) specify the grounds of the appeal.

(3) The grounds of appeal are —

(a) 40that all or part of the specified amount does not represent an
amount of relevant PAYE debt, of the company, to which
regulation 97ZI applies, or

(b) that the person was not a director of the company on the
relevant date.

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(4) But a person may not appeal on the ground mentioned in paragraph
(3)(a) if it has already been determined, on an appeal by the company,
that—

(a) the specified amount is a relevant PAYE debt of the company,
5and

(b) the company did not deduct, account for, or (as the case may be)
pay the debt by the time by which the company was required to
do so.

(5) Subject to paragraph (6), on an appeal that is notified to the tribunal, the
10tribunal is to uphold or quash the personal liability notice.

(6) In a case in which the ground of appeal mentioned in paragraph (3)(a)
is raised, the tribunal may also reduce or increase the specified amount
so that it does represent an amount of relevant PAYE debt, of the
company, to which regulation 97ZI applies.

97ZK 15Withdrawal of personal liability notices

(1) A personal liability notice is withdrawn if the tribunal quashes it.

(2) An officer of Revenue and Customs may withdraw a personal liability
notice if the officer considers it appropriate to do so.

(3) If a personal liability notice is withdrawn, HMRC must give notice of
20that fact to the person upon whom the notice was served.

97ZL Recovery of sums due under personal liability notice: application of
Part 6 of TMA

(1) For the purposes of this Chapter, Part 6 of TMA (collection and
recovery) applies as if—

(a) 25the personal liability notice were an assessment, and

(b) the specified amount, and any interest on that amount under
regulation 97ZI(2)(b)(ii), were income tax charged on the
director upon whom the notice is served,

and that Part of that Act applies with the modification in paragraph (2)
30and any other necessary modifications.

(2) Summary proceedings for the recovery of the specified amount, and
any interest on that amount under regulation 97ZI(2)(b)(ii), may be
brought in England and Wales or Northern Ireland at any time before
the end of the period of 12 months beginning with the day after the day
35on which the personal liability notice is served.

97ZM Repayment of surplus amounts

(1) This regulation applies if—

(a) one or more personal liability notices are served in respect of an
amount of relevant PAYE debt of a company, and

(b) 40the amounts paid to HMRC (whether by directors upon whom
notices are served or the company) exceed the aggregate of the
specified amount and any interest on it under regulation
97ZI(2)(b)(ii).

(2) HMRC is to repay the difference on a just and equitable basis and
45without unreasonable delay.

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(3) HMRC is to pay interest on any sum repaid.

(4) The interest—

(a) is to be at the rate applicable under section 178 of the Finance
Act 1989 for the purposes of section 824 of ICTA, and

(b) 5is to run from the date the amounts paid to HMRC come to
exceed the aggregate mentioned in subsection (1)(b).”

(5) The amendment made by subsection (4) is to be treated as having been made
by the Commissioners for Her Majesty’s Revenue and Customs in exercise of
the power conferred by section 688B of ITEPA 2003 (inserted by subsection (3)).

(6) 10The amendment made by subsection (1) has effect in relation to the tax year
2016-17 and subsequent tax years.

(7) The amendment made by subsection (4) has effect in relation to relevant PAYE
debts that are to be deducted, accounted for or paid on or after 6 April 2016.

15 Taxable benefits: PAYE

15In section 684 of ITEPA 2003 (PAYE regulations), in subsection (2), in item
1ZA(a), for “Chapters 3 and 5 to 10” substitute “Chapters 3 to 10”.

Employment income: other provision

16 Employee share schemes

Schedule 3 contains miscellaneous minor amendments relating to employee
20share schemes.

17 Securities options

(1) In section 418 of ITEPA 2003 (provisions related to Part 7 of ITEPA 2003), in
subsection (1), omit “(but not securities options)”.

(2) In that section, after subsection (1) insert—

(1A) 25But Chapters 1 and 10 of Part 3 do not have effect in relation to—

(a) the acquisition of employment-related securities options
(within the meaning of Chapter 5 of Part 7), or

(b) chargeable events (within the meaning given by section 477)
occurring in relation to such options.”

(3) 30In section 227 of that Act (scope of Part 4), in subsection (4), before paragraph
(a) insert—

(za) section 418(1A) (acquisition of, and chargeable events occurring
in relation to, employment-related securities options);”.

(4) The amendments made by this section come into force on 6 April 2016.

18 35Employment income provided through third parties

(1) Part 7A of ITEPA 2003 (employment income provided through third parties) is
amended in accordance with subsections (2) and (3).

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(2) In section 554Z2 (value of relevant step to count as employment income) after
subsection (1) insert—

(1A) Where the value of a relevant step would (apart from this subsection)
count as employment income of more than one person—

(a) 5the value of the relevant step is to be apportioned between each
of those persons on a just and reasonable basis, and

(b) subsection (1) applies as if the reference to the value of the
relevant step in relation to A were a reference to so much of the
value of the relevant step that is apportioned to A.”

(3) 10In section 554Z8 (cases where consideration given for relevant step) in
subsection (5), omit “and” at the end of paragraph (b) and after paragraph (c)
insert , and

(d) there is no connection (direct or indirect) between the payment
and a tax avoidance arrangement.”

(4) 15Paragraph 59 of Schedule 2 to FA 2011 (transitional provision relating to Part
7A of ITEPA 2003) is amended in accordance with subsections (5) to (7).

(5) In sub-paragraph (2) for the words from “the earnings” to the end substitute—

(a) where sub-paragraph (2A) or (2B) applies, the earnings
mentioned in sub-paragraph (1)(f)(i) or any return on those
20earnings mentioned in sub-paragraph (1)(f)(ii), and

(b) in any other case, the earnings mentioned in sub-paragraph
(1)(f)(i).”

(6) After sub-paragraph (2) insert—

(2A) This sub-paragraph applies where—

(a) 25the agreement mentioned in sub-paragraph (1)(d)(i) is made
before 1 December 2016, and

(b) A or B pays, or otherwise accounts for, any tax as mentioned
in sub-paragraph (1)(e) in accordance with that agreement.

(2B) This sub-paragraph applies where—

(a) 30the decision mentioned in sub-paragraph (1)(d)(ii) is made
before 1 December 2016, and

(b) A or B pays, or otherwise accounts for, any tax as mentioned
in sub-paragraph (1)(e) before 1 December 2016.”

(7) At the end insert—

(5) 35For the purposes of sub-paragraph (1)(e), a person is not to be regarded
as having paid, or otherwise accounted for, any tax by reason only of
making—

(a) a payment on account of income tax,

(b) a payment that is treated as a payment on account under section
40223(3) of FA 2014 (accelerated payments), or

(c) a payment pending determination of an appeal made in
accordance with section 55 of TMA 1970.”

(8) In Schedule 2 to FA 2011, omit paragraph 64 (power to make provision dealing
with interactions etc.).

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(9) The amendment made by subsection (3) has effect in relation to payments
made on or after 16 March 2016 by way of consideration for a relevant step (as
defined in section 554A(2) of ITEPA 2003) taken on or after that date.

(10) The amendment made by subsection (7) has effect in relation to chargeable
5steps (as defined in paragraph 59(1)(a) of Schedule 2 to FA 2011) taken on or
after 16 March 2016.

Pensions

19 Standard lifetime allowance from 2016-17

(1) Section 218 of FA 2004 (pension schemes etc: lifetime allowance) is amended in
10accordance with subsections (2) to (4).

(2) For subsections (2) and (3) (standard lifetime allowance is £1,250,000 but may
be increased by Treasury order) substitute—

(2) The standard lifetime allowance for the tax years 2016-17 and 2017-18
is £1,000,000.

(2A) 15The standard lifetime allowance for any later tax year (“the subsequent
tax year”) is the same as the standard lifetime allowance for the tax year
immediately preceding the subsequent tax year, unless subsection (2C)
provides for it to be higher.

(2B) Subsection (2C) applies if—

(a) 20the consumer prices index for the month of September in any
tax year (“the prior tax year”) is higher than it was for the
previous September, and

(b) the prior tax year is the tax year 2017-18 or a later tax year.

(2C) The standard lifetime allowance for the tax year following the prior tax
25year is the standard lifetime allowance for the prior tax year—

(a) increased by the percentage increase in the index, and

(b) if the result is not a multiple of £100, rounded up to the nearest
amount which is such a multiple.

(2D) The Treasury must before the tax year 2018-19, and before each
30subsequent tax year, make regulations specifying the amount given by
subsections (2A) to (2C) as the standard lifetime allowance for the tax
year concerned.”

(3) After subsection (5BB) insert—

(5BC) Where the operation of a lifetime allowance enhancement factor is
35provided for by any of sections 220, 222, 223 and 224 and the time
mentioned in the definition of SLA in the section concerned fell within
the period consisting of the tax year 2014-15 and the tax year 2015-16,
subsection (4) has effect as if the amount to be multiplied by LAEF were
£1,250,000 if that is greater than SLA.

(5BD) 40Where more than one lifetime allowance enhancement factor operates,
subsection (5BC) does not apply if any of subsections (5A), (5B) and
(5BA) applies.”

(4) After subsection (5D) insert—

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(5E) Where benefit crystallisation event 7 occurs on or after 6 April 2016 by
reason of the payment of a relevant lump sum death benefit in respect
of the death of the individual during the period consisting of the tax
year 2014-15 and the tax year 2015-16, the standard lifetime allowance
5at the time of the benefit crystallisation event is £1,250,000.”

(5) In section 280 of FA 2004 (abbreviations and general index for Part 4), in the
entry for “standard lifetime allowance” for “and (3)” substitute “to (2C)”.

(6) In section 282 of FA 2004 (orders and regulations under Part 4), after subsection
(2) (negative procedure applies to instruments not approved in draft) insert—

(3) 10Subsection (2) does not apply to an instrument containing only
regulations under section 218(2D).”

(7) The amendments made by subsections (2) to (4) have effect for the tax year
2016-17 and subsequent tax years.

(8) Schedule 4 contains transitional and connected provision (including provision
15for “fixed protection 2016” and “individual protection 2016”).

20 Pensions bridging between retirement and state pension

(1) In Part 1 of Schedule 28 to FA 2004 (registered pension schemes: the pension
rules), paragraph 2 (meaning of “scheme pension”) is amended in accordance
with subsections (2) to (4).

(2) 20In sub-paragraph (4) (which specifies circumstances in which amount of
scheme pension may go down and gives power to specify additional
circumstances) omit paragraph (c) (reduction by reference to state retirement
pensions for persons reaching pensionable age before 6 April 2016).

(3) Omit sub-paragraphs (4B), (5) and (5A) (interpretation of sub-paragraph
25(4)(c)).

(4) In sub-paragraph (8) (regulations under certain sub-paragraphs may make
back-dated provision) omit “or (5)”.

(5) In consequence of the amendments made by subsections (2) and (3)—

(a) in FA 2006, in Schedule 23 omit paragraph 20(2) and (3), and

(b) 30in FA 2013, omit section 51(2).

(6) Regulations under paragraph 2(4)(h) of Schedule 28 to FA 2004 (power to
prescribe permitted reductions of scheme pensions, and to do so with back-
dated effect) may provide for the coming into force of the amendments made
by subsections (2) to (5), and—

(a) 35those amendments have effect in accordance with regulations under
paragraph 2(4)(h) of that Schedule, and

(b) paragraph 2(8) of that Schedule (back-dating) applies for the purposes
of regulations bringing the amendments into force only so as to permit
the amendments to be given effect in relation to times not earlier than 6
40April 2016.

21 Dependants’ scheme pensions

(1) Part 2 of Schedule 28 to Part 4 of FA 2004 (pension death benefit rules) is
amended as follows.

(2) In paragraph 16A (dependants’ scheme pension: when limits in paragraphs

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16B and 16C apply), after sub-paragraph (1) insert—

(1A) Sub-paragraph (1) is subject to paragraphs 16AA and 16AB.”

(3) After paragraph 16A insert—

16AA 5Paragraphs 16B and 16C do not apply if—

(a) each benefit crystallisation event that has occurred in relation
to the member by reference to arrangements relating to the
member under the scheme is benefit crystallisation event 5B
(having unused funds under a money purchase arrangement
10at age 75), or

(b) paragraph 12 of Schedule 36 (enhanced protection by
reference to pre-6 April 2006 rights) applies in the case of the
member immediately before the member’s death.

16AB (1) Paragraph 16B does not apply if, at all times in the post-death year
15(as defined in that paragraph), the payable annual rate is less than
the limit.

(2) Paragraph 16C does not apply in relation to a period of 12 months
within paragraph (a) or (b) of paragraph 16C(1) if, at all times in that
period of 12 months, the payable annual rate is less than the limit.

(3) 20“The payable annual rate”, at any time, is arrived at as follows—

(a) identify each dependants’ scheme pension payable in respect
of the member under the scheme to which a dependant of the
member is actually entitled at that time, and

(b) identify the annual rate at which each pension identified at
25paragraph (a) is payable at that time, and

(c) if only one pension is identified at paragraph (a), the payable
annual rate is the annual rate identified at paragraph (b), and

(d) if two or more pensions are identified at paragraph (a), the
payable annual rate is the total of the annual rates identified
30at paragraph (b).

(4) “The limit”, at any time, is—

(a) the general limit at that time (see paragraph 16AC), or,

(b) if higher, the personal limit at that time (see paragraph
16AD).

16AC (1) 35 This paragraph applies for the purposes of paragraph 16AB(4).

(2) “The general limit” at a time in the tax year 2016-17 is £25,000.

(3) “The general limit” at a time in a later tax year (“year T”)—

(a) is given by—


40where G is the general limit at times in the tax year (“year P”)
that precedes year T, or

(b) if the amount given by paragraph (a) is not a multiple of £100,
is that amount rounded up to the nearest amount that is such
a multiple.

(4) 45See paragraph 16AE for the meaning of U%.