Finance Bill (HC Bill 47)

Finance BillPage 540

(ii) where relief is withdrawn under paragraph 16(3), the
first time mentioned in paragraph 16(3)(a) or (b) at
which the portfolio test was not met.”

(5) In subsection (4), after paragraph (b) insert—

(ba) 5in relation to the withdrawal of PAIF seeding relief—

(i) the purchaser ceasing to be a property AIF as
mentioned in paragraph 5 of Schedule 7A,

(ii) a person making a relevant disposal of units as
mentioned in paragraph 7 of that Schedule, or

(iii) 10the grant of permission to a non-qualifying individual
to occupy a dwelling as mentioned in paragraph 8 of
that Schedule;

(bb) in relation to the withdrawal of COACS seeding relief—

(i) the purchaser ceasing to be a co-ownership
15authorised contractual scheme as mentioned in
paragraph 13 of Schedule 7A,

(ii) a person making a relevant disposal of units as
mentioned in paragraph 17 of that Schedule, or

(iii) the grant of permission to a non-qualifying individual
20to occupy a dwelling as mentioned in paragraph 18 of
that Schedule;”.

8 In section 86 (payment of tax), in subsection (2)—

(a) omit “or” at the end of paragraph (b), and

(b) after paragraph (b) insert—

(ba) 25Part 1 of Schedule 7A (PAIF seeding relief),

(bb) Part 2 of Schedule 7A (COACS seeding relief), or”.

9 (1) Section 87 (interest on unpaid tax) is amended as follows.

(2) In subsection (3)—

(a) in paragraph (a)—

(i) 30omit “or” at the end of sub-paragraph (ii), and

(ii) after sub-paragraph (ii) insert—

(“iia) paragraph 5, 7 or 8 of Schedule 7A
(PAIF seeding relief),

(iib) paragraph 13, 17 or 18 of Schedule 7A
35(COACS seeding relief), or”;

(b) after paragraph (aza) insert—

(azb) in the case of an amount payable under paragraph
6(3) of Schedule 7A (PAIF seeding relief: portfolio
test), the first time mentioned in paragraph 6(3)(a) or
40(b) at which the portfolio test was not met;

(azc) in the case of an amount payable under paragraph
14(1) of Schedule 7A (COACS seeding relief: genuine
diversity of ownership condition) because the
genuine diversity of ownership condition was not
45met at a time mentioned in paragraph 14(1)(b) or (c),
the first time mentioned in paragraph 14(1)(b) or (c) at
which that condition was not met;

(azd) in the case of an amount payable under paragraph
16(3) of Schedule 7A (COACS seeding relief: portfolio

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test), the first time mentioned in paragraph 16(3)(a) or
(b) at which the portfolio test was not met;”.

(3) In subsection (4), for “means—” to the end substitute “has the same meaning
as in section 81(4).”

10 5In section 118 (market value)—

(a) the existing text becomes subsection (1), and

(b) after subsection (1) insert—

(2) This is subject to paragraphs 7(7) and 17(7) of Schedule 7A
(which define “market value” for certain purposes of PAIF
10seeding relief and COACS seeding relief).”

11 In section 122 (index of defined expressions), at the appropriate place
insert—

“COACS seeding relief Schedule 7A, paragraph
10(1)”
“co-ownership authorised
contractual scheme
15section 102A”
“operator (in relation to a
co-ownership authorised
contractual scheme)
section 102A”

“PAIF seeding relief 20Schedule 7A, paragraph
1(1)”.

12 In Schedule 4A (SDLT: higher rate for certain transactions), in paragraph
2(6)—

(a) omit “and” at the end of paragraph (d),

(b) 25after paragraph (d) insert—

(da) Schedule 7A (PAIF seeding relief and COACS
seeding relief), and”, and

(c) in paragraph (e), for “(d)” substitute “(da)”.

13 In Schedule 6B (transfers involving multiple dwellings), in paragraph
302(4)(b), after “Schedule 7” insert “, Schedule 7A”.

14 (1) In Schedule 17A (further provisions relating to leases), paragraph 11 (cases
where assignment of lease treated as grant of lease) is amended as follows.

(2) In sub-paragraph (3), after paragraph (b) insert—

(ba) Part 1 or 2 of Schedule 7A (PAIF seeding relief and COACS
35seeding relief);”.

(3) In sub-paragraph (4), after “acquisition relief” insert “, PAIF seeding relief,
COACS seeding relief”.

(4) In sub-paragraph (5), after paragraph (b) insert—

(ba) in relation to the withdrawal of PAIF seeding relief—

(i) 40the purchaser ceasing to be a property AIF as
mentioned in paragraph 5 of Schedule 7A,

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(ii) a person making a relevant disposal of units as
mentioned in paragraph 7 of that Schedule, or

(iii) the grant of permission to a non-qualifying individual
to occupy a dwelling as mentioned in paragraph 8 of
5that Schedule;

(bb) in relation to the withdrawal of COACS seeding relief—

(i) the purchaser ceasing to be a co-ownership
authorised contractual scheme as mentioned in
paragraph 13 of Schedule 7A,

(ii) 10a person making a relevant disposal of units as
mentioned in paragraph 17 of that Schedule, or

(iii) the grant of permission to a non-qualifying individual
to occupy a dwelling as mentioned in paragraph 18 of
that Schedule;”.

(5) 15After sub-paragraph (5) insert—

(6) This paragraph also does not apply where the relief in question is
PAIF seeding relief or COACS seeding relief and is withdrawn as
a result of a requirement not being met at a time which is before
the effective date of the assignment of the lease.

(7) 20For the purposes of sub-paragraph (6), the reference to a
requirement not being met is a reference to—

(a) in relation to the withdrawal of PAIF seeding relief under
paragraph 6 of Schedule 7A, the portfolio test not being
met (see paragraph 6(7));

(b) 25in relation to the withdrawal of COACS seeding relief
under paragraph 14 of Schedule 7A, the genuine diversity
of ownership condition not being met (see paragraph 15);

(c) in relation to the withdrawal of COACS seeding relief
under paragraph 16 of Schedule 7A, the portfolio test not
30being met (see paragraph 16(7)).”

Part 4 Commencement

15 (1) The amendments made by Parts 2 and 3 of this Schedule have effect in
relation to any land transaction of which the effective date is, or is after, the
35date on which this Act is passed.

(2) But those amendments do not have effect in relation to a transaction if—

(a) the transaction is effected in pursuance of a contract entered into and
substantially performed before the date on which this Act is passed,
or

(b) 40the transaction is effected in pursuance of a contract entered into
before that date and is not excluded by sub-paragraph (3).

(3) A transaction effected in pursuance of a contract entered into before the date
on which this Act is passed is excluded by this sub-paragraph if—

(a) there is any variation of the contract, or assignment of rights under
45the contract, on or after that date,

(b) the transaction is effected in consequence of the exercise on or after
that date of any option, right of pre-emption or similar right, or

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(c) on or after that date there is an assignment, subsale or other
transaction relating to the whole or part of the subject-matter of the
contract as a result of which a person other than the purchaser under
the contract becomes entitled to call for a conveyance.

(4) 5In this paragraph—

  • “purchaser” has the same meaning as in Part 4 of FA 2003 (see section
    43(4) of that Act);

  • “substantially performed”, in relation to a contract, has the same
    meaning as in that Part (see section 44(5) of that Act).

10SCHEDULE 17 Section 152 Aqua methanol etc

Part 1 Aqua methanol

Introductory

1 15HODA 1979 is amended as follows.

Definition

2 After section 2AB insert—

2AC Aqua methanol

In this Act “aqua methanol” means a liquid fuel which meets each of
20the following conditions—

(a) the amount of water it contains is not less than 4.7 per cent
and not more than 5.3 per cent by volume,

(b) the amount of methanol it contains is not less than 96 per cent
by volume of the remainder of the substance, and

(c) 25at a temperature of 15°C and under a pressure of 1013.25
millibars, it has a density of not less than 0.81 g/ml and not
more than 0.82 g/ml.”

3 In section 2A (power to amend definitions), in subsection (1), after
paragraph (b) insert—

(ba) 30aqua methanol;”.

Charging of excise duty

4 After section 6AF insert—

6AG Excise duty on aqua methanol

(1) A duty of excise shall be charged on the setting aside for a chargeable
35use by any person, or (where it has not already been charged under
this section) on the chargeable use by any person, of aqua methanol.

(2) In subsection (1) “chargeable use” means use—

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(a) as fuel for any engine, motor or other machinery, or

(b) as an additive or extender in any substance so used.

(3) The rate of duty under this section is—

(a) in the case of a chargeable use within subsection (2)(a), £0.079
5a litre;

(b) in the case of a chargeable use within subsection (2)(b), the
rate prescribed by order made by the Treasury.

(4) In exercising their power under subsection (3)(b), the Treasury shall
so far as practicable secure that aqua methanol set aside for use or
10used as an additive or extender in any substance is charged with
duty at the same rate as the substance in which it is an additive or
extender.

(5) The power of the Treasury to make an order under this section shall
be exercisable by statutory instrument subject to annulment in
15pursuance of a resolution of the House of Commons.

(6) An order under this section—

(a) may make different provision for different cases, and

(b) may prescribe the rate of duty under subsection (3)(b) by
reference to the rate of duty under this Act in respect of any
20other substance.

6AH Application to aqua methanol of provisions relating to hydrocarbon
oil

(1) The Commissioners may by regulations provide for—

(a) references in this Act, or specified references in this Act, to
25hydrocarbon oil to be construed as including references to
aqua methanol;

(b) references in this Act, or specified references in this Act, to
duty on hydrocarbon oil to be construed as including
references to duty under section 6AG above;

(c) 30aqua methanol to be treated for the purposes of such of the
following provisions of this Act as may be specified as if it fell
within a specified description of hydrocarbon oil.

(2) Where the effect of provision made under subsection (1) above is to
extend any power to make regulations, provision made in exercise of
35the power as extended may be contained in the same statutory
instrument as the provision extending the power.

(3) In this section “specified” means specified by regulations under this
section.

(4) Regulations under this section may make different provision for
40different cases.

(5) Paragraph (b) of subsection (1) above shall not be taken as
prejudicing the generality of paragraph (a) of that subsection.”

5 In section 6A (fuel substitutes), in subsection (1)—

(a) omit the “or” after paragraph (d), and

(b) 45after paragraph (e) insert , or

(f) aqua methanol.”

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Mixing of aqua methanol

6 (1) For the italic heading before section 20A substitute “Mixing”.

(2) After section 20AAB insert—

20AAC Prohibition on mixing of aqua methanol

(1) 5Aqua methanol on which duty under section 6AG(3)(a) of this Act
has been charged must not be mixed with any relevant substance.

(2) In subsection (1) “relevant substance” means biodiesel, bioethanol,
bioblend, bioethanol blend or hydrocarbon oil.

(3) A person commits an offence under this subsection if—

(a) 10the person intentionally uses aqua methanol in contravention
of subsection (1) above, or

(b) the person supplies aqua methanol, intending that it will be
used in contravention of subsection (1) above.

(4) A person guilty of an offence under subsection (3) above shall be
15liable—

(a) on summary conviction in England and Wales—

(i) to imprisonment for a term not exceeding 12 months
(or 6 months, if the offence was committed before the
commencement of section 154(1) of the Criminal
20Justice Act 2003), or

(ii) to a fine not exceeding £20,000 or (if greater) 3 times
the value of the aqua methanol in question,

or both;

(b) on summary conviction in Scotland—

(i) 25to imprisonment for a term not exceeding 12 months,
or

(ii) to a fine not exceeding the statutory maximum or (if
greater) 3 times the value of the aqua methanol in
question,

30or both;

(c) on summary conviction in Northern Ireland—

(i) to imprisonment for a term not exceeding 6 months,
or

(ii) to a fine not exceeding the statutory maximum or (if
35greater) 3 times the value of the aqua methanol in
question,

or both;

(d) on conviction on indictment, to imprisonment for a term not
exceeding 7 years or a fine, or both.

(5) 40Any aqua methanol, or any mixture containing aqua methanol, in
respect of which an offence under subsection (3) above has been
committed shall be liable to forfeiture.

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20AAD Mixing of aqua methanol in contravention of prohibition:
adjustment of duty

(1) A duty of excise shall be charged on a mixture which is produced by
mixing aqua methanol on which duty under section 6AG(3)(a) of this
5Act has been charged with a relevant substance.

(2) In subsection (1) “relevant substance” means biodiesel, bioethanol,
bioblend, bioethanol blend or hydrocarbon oil.

(3) The rate of duty on a mixture under subsection (1) shall be the rate of
duty specified in section 6(1A)(c) (general rate for heavy oil).

(4) 10The person liable to pay duty charged under this section on
production of a mixture is the person producing the mixture.

(5) Where it appears to the Commissioners—

(a) that a person (“P”) has produced a mixture on which duty is
charged under this section, and

(b) 15that P is the person liable to pay the duty,

they may assess the amount of duty due from P to the best of their
judgment and notify that amount to P or P’s representative.

(6) An assessment under subsection (5) above shall be treated as if it
were an assessment under section 12(1) of the Finance Act 1994.

(7) 20Where duty under a provision of this Act has been paid on an
ingredient of a mixture, the duty charged under this section shall be
reduced by the amount of any duty which the Commissioners are
satisfied has been paid on the ingredient (but not to a negative
amount).

(8) 25The Commissioners may exempt a person from liability to pay duty
under this section in respect of production of a mixture of a kind
described in subsection (1) if satisfied that—

(a) the liability was incurred accidentally, and

(b) in the circumstances the person should be exempted.

Powers to allow reliefs”.

30Enforcement

7 (1) Section 22 (prohibition on use of petrol substitutes on which duty has not
been paid) is amended as follows.

(2) After subsection (1AB) insert—

(1AC) Where any person—

(a) 35puts any aqua methanol to a chargeable use (within the
meaning of section 6AG above), and

(b) knows or has reasonable cause to believe that there is duty
charged under section 6AG above on that aqua methanol
which has not been paid and is not lawfully deferred,

40his putting the aqua methanol to that use shall attract a penalty
under section 9 of the Finance Act 1994 (civil penalties), and any
goods in respect of which a person contravenes this section shall be
liable to forfeiture.”

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(3) In subsection (1A), for “or (1AB)” substitute “, (1AB) or (1AC)”.

(4) For the heading substitute “Prohibition on use of fuel substitutes on which
duty has not been paid”.

Consequential amendments

8 5In section 23C (warehousing), in subsection (4), after paragraph (d) insert—

(da) aqua methanol,”.

9 In section 27(1) (interpretation), before the definition of “aviation gasoline”
insert—

  • ““aqua methanol” has the meaning given by section 2AC
    10above;”.

10 In section 16 of FA 1994 (appeals to a tribunal), in subsection (6)(c), before
“section 23(1)” insert “or (1AC)”.

11 In paragraph 3 of Schedule 41 to FA 2008 (penalties for putting product to
use that attracts higher duty), in the Table in sub-paragraph (1), at the
15appropriate place insert—

HODA 1979 section
20AAD(5)
Mixtures containing aqua
methanol.”

Part 2 Hydrocarbon oils: miscellaneous amendments

20HODA 1979

12 In section 20AAA of HODA 1979 (mixing of rebated oil), in subsection (4)(a),
for “section 6A(1A)(c)” substitute “section 6(1A)(c)”.

FA 1994

13 In section 16 of FA 1994 (appeals to a tribunal), in subsection (6)(c), after
25“section 22(1)” insert “(1AA), (1AB)”.

Part 3 Commencement

14 The amendments made by this Schedule come into force—

(a) so far as they confer a power to make regulations or an order, on the
30day on which this Act is passed, and

(b) for all other purposes, on 1 October 2016.

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SCHEDULE 18 Section 158 Serial tax avoidance

Part 1 Contents of Schedule

1 5In this Schedule—

(a) Part 2 provides for HMRC to give warning notices to persons who
incur relevant defeats and includes—

(i) provision about the duration of warning periods under
warning notices (see paragraph 3), and

(ii) 10definitions of “relevant defeat” and other key terms;

(b) Part 3 contains provisions about persons to whom a warning notice
has been given, and in particular—

(i) imposes a duty to give information notices, and

(ii) allows the Commissioners to publish information about such
15persons in certain cases involving repeated relevant defeats;

(c) Part 4 contains provision about the restriction of reliefs;

(d) Part 5 imposes liability to penalties on persons who incur relevant
defeats in relation to arrangements used in warning periods;

(e) Part 6 contains provisions about corporate groups, associated
20persons and partnerships;

(f) Part 7 contains definitions and other supplementary provisions.

Part 2 Entry into the regime and basic concepts

Duty to give warning notice

2 (1) 25This paragraph applies where a person incurs a relevant defeat in relation to
any arrangements.

(2) HMRC must give the person a written notice (a “warning notice”).

(3) The notice must be given within the period of 90 days beginning with the
day on which the relevant defeat is incurred.

(4) 30The notice must—

(a) set out when the warning period begins and ends (see paragraph 3),

(b) specify the relevant defeat to which the notice relates, and

(c) explain the effect of paragraphs 3 and 17 to 46.

(5) A warning notice given by virtue of paragraph 49 must also explain the
35effect of paragraph 51 (information in certain cases involving partnerships).

(6) In this Schedule “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).

(7) For the meaning of “relevant defeat” and provision about when a relevant
40defeat is incurred see paragraph 11.

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Warning period

3 (1) If a person is given a warning notice with respect to a relevant defeat (and
sub-paragraph (2) does not apply) the period of 5 years beginning with the
day after the day on which the notice is given is a “warning period” in
5relation to that person.

(2) If a person incurs a relevant defeat in relation to arrangements during a
period which is a warning period in relation to that person, the warning
period is extended to the end of the 5 years beginning with the day after the
day on which the relevant defeat occurs.

(3) 10In relation to a warning period which has been extended under this
Schedule, references in this Schedule (including this paragraph) to the
warning period are to be read as references to the warning period as
extended.

Meaning of “tax”

4 15In this Schedule “tax” includes any of the following taxes—

(a) income tax,

(b) corporation tax, including any amount chargeable as if it were
corporation tax or treated as if it were corporation tax,

(c) capital gains tax,

(d) 20petroleum revenue tax,

(e) diverted profits tax,

(f) apprenticeship levy,

(g) inheritance tax,

(h) stamp duty land tax,

(i) 25annual tax on enveloped dwellings,

(j) VAT, and

(k) national insurance contributions.

Meaning of “tax advantage” in relation to VAT

5 (1) In this Schedule “tax advantage”, in relation to VAT, is to be read in
30accordance with sub-paragraphs (2) to (4).

(2) A taxable person obtains a tax advantage if—

(a) in any prescribed accounting period, the amount by which the
output tax accounted for by the person exceeds the input tax
deducted by the person is less than it would otherwise be,

(b) 35the person obtains a VAT credit when the person would not
otherwise do so, or obtains a larger VAT credit or obtains a VAT
credit earlier than would otherwise be the case,

(c) in a case where the person recovers input tax as a recipient of a
supply before the supplier accounts for the output tax, the period
40between the time when the input tax is recovered and the time when
the output tax is accounted for is greater than would otherwise be the
case, or

(d) in any prescribed accounting period, the amount of the person’s non-
deductible tax is less than it would otherwise be.