Finance (No. 2) Bill (HL Bill 156)

(a) there is an arrangement (“the arrangement”) in connection with
the relevant trade to which T is a party or which otherwise
(wholly or partly) covers or relates to T, and

(b) it is reasonable to suppose that, in essence—

(i) 5the arrangement, or

(ii) the arrangement so far as it covers or relates to T,

is (wholly or partly) a means of providing, or is otherwise
concerned with the provision of, relevant benefits.

(4) Condition C is that—

(a) 10a relevant benefit arises to T, or a person who is or has been
connected with T, in pursuance of the arrangement, or

(b) a relevant benefit arises to any other person in pursuance of the
arrangement and any of the enjoyment conditions (see section
23F) is met in relation to the relevant benefit.

(5) 15Condition D is that it is reasonable to suppose that the relevant benefit
(directly or indirectly) represents, or has arisen or derives from, or is
otherwise connected with, the whole or part of a qualifying third party
payment.

(6) Condition E is that it is reasonable to suppose that a tax advantage
20would be obtained by T, or a person who is or has been connected with
T, as a result of the arrangement.

(7) For the purposes of subsection (3) in particular, all relevant
circumstances are to be taken into account in order to get to the essence
of the matter.

(8) 25In this section and sections 23B to 23H, “this group of sections” means
this section and those sections.

(9) The provisions of this group of sections apply to professions and
vocations as they apply to trades.

(10) See Schedule 18 to FA 2017 for provision about the application of this
30group of sections in relation to loans and quasi-loans that are
outstanding on 5 April 2019.

23B Meaning of “relevant benefit”

(1) The following provisions apply for the purposes of this group of
sections.

(2) 35“Relevant benefit” means any payment (including a payment by way of
a loan), a transfer of money’s worth, or any other benefit.

(3) The assumption of a liability of T by another person is to be treated as
the provision of a relevant benefit to T.

(4) The assumption, by a person other than T, of a liability of a person (“C”)
40who is or has been connected with T, is to be treated as the provision of
a relevant benefit to C.

(5) “Loan” includes—

(a) any form of credit;

(b) a payment that is purported to be made by way of a loan.

23C Meaning of “qualifying third party payment”

(1) The following provisions apply for the purposes of this group of
sections.

(2) A payment is a “third party payment” if it is made (by T or another
5person) to—

(a) T acting as trustee, or

(b) any person other than T.

(3) A third party payment is a “qualifying third party payment” if the
deduction condition or the trade connection condition is met in relation
10to the payment.

(4) The “deduction condition” is met in relation to a payment if—

(a) a deduction for the payment is made in calculating the profits of
the relevant trade, or

(b) where the relevant trade is or has been carried on in
15partnership, a deduction for the payment is made in calculating
the amount on which T is liable to income tax in respect of the
profits of the trade.

(5) The “trade connection condition” is met in relation to a payment if it is
reasonable to suppose that in essence—

(a) 20the payment is by way of consideration for goods or services
provided in the course of the relevant trade, or

(b) there is some other connection (direct or indirect) between the
payment and the provision of goods or services in the course of
the relevant trade.

(6) 25For the purposes of subsection (5) in particular, all relevant
circumstances are to be taken into account in order to get to the essence
of the matter.

23D Other definitions

(1) The following provisions apply for the purposes of this group of
30sections.

(2) “Arrangement” includes any agreement, understanding, scheme,
settlement, trust, transaction or series of transactions (whether or not
legally enforceable).

(3) A “tax advantage” includes—

(a) 35relief or increased relief from tax,

(b) repayment or increased repayment of tax,

(c) avoidance or reduction of a charge to tax or an assessment to
tax,

(d) avoidance of a possible assessment to tax,

(e) 40deferral of a payment of tax or advancement of a repayment of
tax, and

(f) avoidance of an obligation to deduct or account for tax.

(4) Section 993 of ITA 2007 (meaning of “connected” persons) applies for
the purposes of this group of sections as if subsection (4) of that section
45993 were omitted.

23E Tax treatment of relevant benefits

(1) Where this section applies (see section 23A), the relevant benefit
amount is to be treated for income tax purposes as profits of the
relevant trade for—

(a) 5the tax year in which the relevant benefit arises, or

(b) if T has ceased to carry on the relevant trade in a tax year (the
“earlier tax year”) before the tax year referred to in paragraph
(a), the earlier tax year.

(2) For the purposes of this section, “the relevant benefit amount” means—

(a) 10if the relevant benefit is a payment otherwise than by way of a
loan, an amount equal to the amount of the payment,

(b) if the relevant benefit is a payment by way of loan, an amount
equal to the principal amount lent, or

(c) in any other case, an amount equal to the value of the relevant
15benefit.

(3) For the purposes of subsection(2)(c), the value of a relevant benefit is—

(a) its market value at the time it arises, or

(b) if higher, the cost of providing it.

(4) In subsection (3) “market value” has the same meaning as it has for the
20purposes of TCGA 1992 by virtue of Part 8 of that Act.

23F Relevant benefits: persons other than T

(1) For the purposes of section 23A(4), the enjoyment conditions are—

(a) that the relevant benefit, or part of it, is in fact so dealt with by
any person as to be calculated at some time to enure for the
25benefit of T;

(b) that the arising of the relevant benefit operates to increase the
value to T of any assets—

(i) which T holds, or

(ii) which are held for the benefit of T;

(c) 30that T receives, or is entitled to receive, at any time any benefit
provided or to be provided out of, or deriving or to be derived
from, the relevant benefit (or part of it);

(d) where the relevant benefit is the payment of a sum of money
(including a payment by way of loan), that T may become
35entitled 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) 40where the relevant benefit is the payment of a sum of money
(including a payment by way of loan), that T is able in any
manner to control directly or indirectly the application of the
sum or part of the sum.

(2) Where an enjoyment condition is met in relation to part only of a
45relevant benefit, that part is to be treated as a separate benefit for the
purposes of section 23A(4).

(3) In subsection (1) references to T include references to a person who is
or has been connected with T.

(4) In determining whether any of the enjoyment conditions is met in
relation to a relevant benefit, regard must be had to the substantial
5result and effect of all the relevant circumstances.

23G Anti-avoidance

(1) In determining whether section 23E applies in relation to a relevant
benefit, no regard is to be had to any arrangements the main purpose,
or one of the main purposes, of which is to secure that section 23E does
10not apply in relation to the whole, or any part, of—

(a) the relevant benefit, or

(b) the relevant benefit and one or more other relevant benefits
(whether or not all arising to the same person).

(2) Where arrangements are disregarded under subsection (1), and a
15relevant benefit (or part of it)—

(a) would, if the arrangements were not disregarded, arise before 6
April 2017, but

(b) would, when the arrangements are disregarded, arise on or
after that date,

20the relevant benefit (or part) is to be regarded for the purposes of this
group of sections as arising on the date on which it would arise apart
from the arrangements.

23H Double taxation

(1) This section applies where—

(a) 25income tax is charged on an individual by virtue of the
application of section 23E in relation to a relevant benefit
amount, and

(b) at any time, a tax (whether income tax or another tax) is charged
on the individual or another person otherwise than by virtue of
30the application of section 23E in relation to the relevant benefit
concerned.

(2) In order to avoid a double charge to tax, the individual may make a
claim for one or more consequential adjustments to be made in respect
of the tax charged as mentioned in subsection (1)(b).

(3) 35On a claim under this section an officer of Revenue and Customs must
make such of the consequential adjustments claimed (if any) as are just
and reasonable.

(4) The value of any consequential adjustments must not exceed the lesser
of—

(a) 40the income tax charged on the individual as mentioned in
subsection (1)(a), and

(b) the tax charged as mentioned in subsection (1)(b).

(5) Consequential adjustments may be made—

(a) in respect of any period,

(b) 45by way of an assessment, the modification of an assessment, the
amendment of a claim, or otherwise, and

(c) despite any time limit imposed by or under any enactment.””

(3) In section 7(2) (income charged: profits of a tax year) at the end insert
“(including amounts treated as profits of the tax year under section 23E(1)).”

(4) The amendments made by this section have effect in relation to relevant
5benefits arising on or after 6 April 2017.

(5) Schedule 18 contains provision about the application of new sections 23A to
23H of ITTOIA 2005 in relation to loans and quasi-loans that are outstanding
on 5 April 2019.

50 Disguised remuneration schemes: restriction of income tax relief

(1) 10Section 38 of ITTOIA 2005 (restriction of deductions: employee benefit
contributions) is amended in accordance with subsections (2) to (5).

(2) After subsection (1) insert—

“(1A) No deduction is allowed under this section in respect of employee
benefit contributions for a period of account which starts more than 5
15years after the end of the period of account in which the contributions
are made.””

(3) After subsection (2) insert—

“(2AA) Subsection (2) is subject to subsections (1A) and (2AB).

(2AB) Where subsection (3C) applies, no deduction is allowed for an amount
20in respect of the contributions for the period except so far as the amount
is a qualifying amount (see subsection (3D)).””

(4) After subsection (3) insert—

“(3A) Subsection (3) is subject to subsections (1A) and (3B).

(3B) Where subsection (3C) applies, an amount disallowed under
25subsection (2) is allowed as a deduction for a subsequent period only so
far as it is a qualifying amount.

(3C) This subsection applies where the provision of qualifying benefits out
of, or by way of, the contributions gives rise both to an employment
income tax charge and to an NIC charge.

(3D) 30An amount in respect of employee benefit contributions is a “qualifying
amount” if the relevant tax charges are paid before the end of the
relevant period (and are not repaid).

(3E) For the purposes of subsection (3D)—

(a) the “relevant tax charges”, in relation to an amount, are the
35employment income tax charge and the NIC charge arising in
respect of benefits which are provided out of, or by way of, that
amount, and

(b) the “relevant period” is the period of 12 months immediately
following the end of the period of account for which the
40deduction for the employee benefit contributions would (apart
from this section) be allowable.

(3F) For the purposes of subsections (3C) and (3E),“employment income tax
charge” and “NIC charge” have the meaning given by section 40(7).””

(5) After subsection (3F) (inserted by subsection (4)) insert—

“(3G) Subsection (3H) applies where—

(a) a deduction would, apart from this section, be allowable for an
amount (the “remuneration amount”) in respect of employees’
5remuneration, and

(b) in consequence of the payment of the employees’ remuneration,
employee benefit contributions are made, or are to be made, in
respect of the remuneration amount.

(3H) In calculating for income tax purposes the profits of a trade, the
10deduction referred to in subsection (3G)(a) is to be treated as a
deduction in respect of employee benefit contributions made or to be
made (and is to be treated as not being a deduction in respect of
employees’ remuneration).””

(6) Section 866 of ITTOIA 2005 (employee benefit contributions: non-trades and
15non-property businesses) is amended in accordance with subsections (7) to
(10).

(7) After subsection (2) insert—

“(2A) No deduction is allowed under this section in respect of employee
benefit contributions for a period of account which starts more than 5
20years after the end of the period of account in which the contributions
are made.””

(8) After subsection (3) insert—

“(3A) Subsection (3) is subject to subsections (2A) and (3B).

(3B) Where subsection (4C) applies, no deduction is allowed for an amount
25in respect of the contributions for the period except so far as the amount
is a qualifying amount (see subsection (4D)).””

(9) After subsection (4) insert—

“(4A) Subsection (4) is subject to subsections (2A) and (4B).

(4B) Where subsection (4C) applies, an amount disallowed under
30subsection (3) is allowed as a deduction for a subsequent period only so
far as it is a qualifying amount.

(4C) This subsection applies where the provision of qualifying benefits out
of, or by way of, the contributions gives rise both to an employment
income tax charge and to an NIC charge.

(4D) 35An amount in respect of employee benefit contributions is a “qualifying
amount” if the relevant tax charges are paid before the end of the
relevant period (and are not repaid).

(4E) For the purposes of subsection (4D)—

(a) the “relevant tax charges”, in relation to an amount, are the
40employment income tax charge and the NIC charge arising in
respect of benefits which are provided out of, or by way of, that
amount, and

(b) the “relevant period” is the period of 12 months immediately
following the end of the period of account for which the

deduction for the employee benefit contributions would (apart
from this section) be allowable.

(4F) For the purposes of subsections (4C) and (4E), “employment income tax
charge” and “NIC charge” have the meaning given by section 40(7).””

(10) 5After subsection (4F) (inserted by subsection (9)) insert—

“(4G) Subsection (4H) applies where—

(a) a deduction would, apart from this section, be allowable for an
amount (the “remuneration amount”) in respect of employees’
remuneration, and

(b) 10in consequence of the payment of the employees’ remuneration,
employee benefit contributions are made, or are to be made, in
respect of the remuneration amount.

(4H) In calculating for income tax purposes a person’s profits or other
income, the deduction referred to in subsection (4G)(a) is to be treated
15as a deduction in respect of employee benefit contributions made or to
be made (and is to be treated as not being a deduction in respect of
employees’ remuneration).””

(11) The amendments made by subsections (2) to (4) and (7) to (9) have effect in
relation to employee benefit contributions made, or to be made, on or after 6
20April 2017.

(12) The amendments made by subsections (5) and (10) have effect in relation to
remuneration paid on or after 6 April 2017.

51 Disguised remuneration schemes: restriction of corporation tax relief

(1) Section 1290 of CTA 2009 (restriction of deductions: employee benefit
25contributions) is amended in accordance with subsections (2) to (5).

(2) After subsection (1) insert—

“(1A) No deduction is allowed under this section in respect of employee
benefit contributions for a period of account which starts more than 5
years after the end of the period of account in which the contributions
30are made.””

(3) After subsection (2) insert—

“(2A) Subsection (2) is subject to subsections (1A) and (2B).

(2B) Where subsection (3C) applies, no deduction is allowed for an amount
in respect of the contributions for the period except so far as the amount
35is a qualifying amount (see subsection (3D)).””

(4) After subsection (3) insert—

“(3A) Subsection (3) is subject to subsections (1A) and (3B).

(3B) Where subsection (3C) applies, an amount disallowed under
subsection (2) is allowed as a deduction for a subsequent period only so
40far as it is a qualifying amount.

(3C) This subsection applies where the provision of qualifying benefits out
of, or by way of, the contributions gives rise both to an employment
income tax charge and to an NIC charge.

(3D) An amount in respect of employee benefit contributions is a “qualifying
amount” if the relevant tax charges are paid before the end of the
relevant period (and are not repaid).

(3E) For the purposes of subsection (3D)—

(a) 5the “relevant tax charges”, in relation to an amount, are the
employment income tax charge and the NIC charge arising in
respect of benefits which are provided out of, or by way of, that
amount, and

(b) the “relevant period” is the period of 12 months immediately
10following the end of the period of account for which the
deduction for the employee benefit contributions would (apart
from this section) be allowable.

(3F) For the purposes of subsections (3C) and (3E), “employment income tax
charge” and “NIC charge” have the meaning given by section 1292(7).””

(5) 15After subsection (3F) (inserted by subsection (4)) insert—

“(3G) Subsection (3H) applies where—

(a) a deduction would, apart from this section, be allowable for an
amount (the “remuneration amount”) in respect of employees’
remuneration, and

(b) 20in consequence of the payment of the employees’ remuneration,
employee benefit contributions are made, or are to be made, in
respect of the remuneration amount.

(3H) In calculating for corporation tax purposes the profits of a company, the
deduction referred to in subsection (3G)(a) is to be treated as a
25deduction in respect of employee benefit contributions made or to be
made (and is to be treated as not being a deduction in respect of
employees’ remuneration).””

(6) The amendments made by subsections (2) to (4) have effect in relation to
employee benefit contributions made, or to be made, on or after 1 April 2017.

(7) 30The amendment made by subsection (5) has effect in relation to remuneration
paid on or after 1 April 2017.

Capital allowances

52 First-year allowance for expenditure on electric vehicle charging points

(1) CAA 2001 is amended as follows.

(2) 35In section 39 (first-year qualifying expenditure) after the entry for section 45E
insert—

(3) After section 45E insert—

“45EA Expenditure on plant or machinery for electric vehicle charging point

(1) Expenditure is first-year qualifying expenditure if—

(a) it is incurred in the relevant period,

(b) 5it is expenditure on plant or machinery for an electric vehicle
charging point where the plant or machinery is unused and not
second-hand, and

(c) it is not excluded by section 46 (general exclusions).

(2) For the purposes of this section expenditure on plant or machinery for
10an electric vehicle charging point is expenditure on plant or machinery
installed solely for the purpose of charging electric vehicles.

(3) The “relevant period” is the period beginning with 23 November 2016
and ending with—

(a) in the case of expenditure incurred by a person within the
15charge to corporation tax, 31 March 2019, and

(b) in the case of expenditure incurred by a person within the
charge to income tax, 5 April 2019.

(4) The Treasury may by regulations amend subsection (3) so as to extend
the relevant period.

(5) 20In this section—

• “electric vehicle” means a road vehicle that can be propelled by
  electrical power (whether or not it can also be propelled by
  another kind of power);

• “electric vehicle charging point” means a facility for charging an
  25electric vehicle.””

(4) In section 46 (general exclusions), in subsection (1) after the entry for section
45E insert—

• ““section 45EA (expenditure on plant or machinery for electric
  vehicle charging point)”.”

(5) 30In section 52 (amount of first-year allowances)—

(a) in the table in subsection (3), after the entry for expenditure qualifying
under section 45E insert—

(b) after subsection (3) insert—

“(3A) Subsection (3B) applies where the Treasury make regulations
under section 45EA(4) (power to extend relevant period).

(3B) The regulations may amend the amount specified in column 2
40of the Table in subsection (3) for expenditure qualifying under
section 45EA, but only in relation to expenditure incurred after
the date on which the relevant period would have ended but for
the regulations.””

Transactions in UK land

53 Disposals concerned with land in United Kingdom

(1) The FA 2016 amendments have effect (so far as they would not otherwise have
effect) in relation to—

(a) 5amounts that are recognised in GAAP accounts drawn up for any
period of account beginning on or after 8 March 2017, or

(b) in the case of a straddling period, amounts that would be recognised in
GAAP accounts drawn up for a period of account beginning on 8
March 2017 and ending when the straddling period ends.

(2) 10In subsection (1)—

• “the FA 2016 amendments” means—

  (a)

  the amendments made by sections 76, 77 and 80 of FA 2016
  (corporation tax treatment of certain profits and gains realised
  from disposals concerned with land in the United Kingdom), or

  (b)

  15the amendments made by sections 78 and 79 of that Act
  (corresponding rules for income tax purposes),

• “GAAP accounts” means accounts drawn up in accordance with generally
  accepted accounting practice,

• “recognised” means recognised as an item of profit or loss, and

• 20“straddling period” means a period of account beginning before 8 March
  2017 and ending on or after that date.

Co-ownership authorised contractual schemes

54 Co-ownership authorised contractual schemes: capital allowances

In Part 2 of CAA 2001 (plant and machinery), in Chapter 20 (supplementary
25provisions), after the Chapter heading insert—

““Co-ownership authorised contractual schemes

262AA Co-ownership schemes: carrying on qualifying activity

(1) This section applies where the participants in a co-ownership
authorised contractual scheme together carry on a qualifying activity.

(2) 30Each participant in the scheme is for the purposes of this Part to be
regarded as carrying on the qualifying activity.

(3) Subsection (2) applies in relation to a participant only to the extent that
the profits or gains arising to the participant from the qualifying
activity are, or (if there were any) would be, chargeable to tax.

(4) 35But in determining for the purposes of subsection (1) whether or to
what extent the participants in a co-ownership authorised contractual
scheme together carry on a qualifying activity, assume that profits or
gains arising to all participants from the qualifying activity are, or (if
there were any) would be, chargeable to tax.