Finance Bill (HC Bill 102)

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12 (1) Section 357VB (relevant Northern Ireland IP profits: SMEs) is amended as
follows.

(2) In the heading, at the end, insert “that are Northern Ireland employers”.

(3) In subsection (1)(a), for “SME condition” substitute “SME (Northern Ireland
5employer) condition”.

13 (1) Section 357VC (relevant Northern Ireland IP profits: large companies) is
amended as follows.

(2) In the heading, after “profits:” insert “SMEs that are not Northern Ireland
employers and”.

(3) 10In subsection (1)(a), after “by virtue of” insert “the SME (election) condition
or”.

14 (1) Section 357WA (meaning of “Northern Ireland firm”) is amended as follows.

(2) In subsection (1)(b), for “SME partnership condition” substitute “SME
(Northern Ireland employer) partnership condition, the SME (election)
15partnership condition”.

(3) In subsection (2), for “SME partnership condition” substitute “SME
(Northern Ireland employer) partnership condition”.

(4) After subsection (2) insert—

(2A) The “SME (election) partnership condition” is that—

(a) 20the firm is an SME in relation to the firm’s accounting period,

(b) the firm is not a Northern Ireland employer in relation to that
period,

(c) the firm has a NIRE in that period,

(d) the firm is not a disqualified firm in relation to the period,
25and

(e) an election by the firm for the purposes of this subsection has
effect in relation to that period.”

(5) After subsection (3) insert—

(3A) An election for the purposes of subsection (2A)—

(a) 30must be made by notice to an officer of Revenue and
Customs,

(b) must specify the accounting period in relation to which it is
to have effect (“the specified accounting period”),

(c) must be made before the end of the period of 12 months
35beginning with the end of the specified accounting period,
and

(d) if made in accordance with paragraphs (a) to (c) has effect in
relation to the specified accounting period.”

(6) In subsection (4)—

(a) 40in the opening words, for “to subsections (2) and (3)” substitute “in
relation to a firm”;

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(b) for paragraph (b) substitute—

(b) references to the Northern Ireland workforce
conditions were to the Northern Ireland workforce
partnership conditions (see section 357WBA).”

(7) 5In subsection (5) omit paragraph (c).

15 After section 357WB, insert—

357WBA Northern Ireland workforce partnership conditions

(1) The Northern Ireland workforce partnership conditions, in relation
to a period, are—

(a) 10that 75% or more of the working time that is spent in the
United Kingdom during the period by members of the firm’s
workforce is spent in Northern Ireland, and

(b) that 75% or more of the firm’s workforce expenses that are
attributable to working time spent in the United Kingdom
15during the period by members of the firm’s workforce are
attributable to time spent in Northern Ireland.

(2) References in this section to members of the firm’s workforce are
to—

(a) employees of the firm,

(b) 20externally provided workers in relation to the firm, and

(c) individuals who are partners in the firm.

(3) In subsection (2) “externally provided worker”, in relation to a firm,
has the same meaning as in Part 13 of CTA 2009 (see section 1128 of
that Act).

25In the application of section 1128 of that Act for the purposes of
subsection (2), references to a company are to be read as references
to a firm and references to a director are to be treated as omitted.

(4) References in this section to the working time spent by members of
the firm’s workforce in a place are to the total time spent by those
30persons in that place while providing services to the firm.

(5) References in this section to “the firm’s workforce expenses” are,
where the period is an accounting period of the firm, to the total of
the deductions made by the firm in the period in respect of members
of the firm’s workforce in calculating the profits of the firm’s trade.

(6) 35References in this section to “the firm’s workforce expenses” are,
where the period is not an accounting period of the firm, to the total
of—

(a) the deductions made by the firm in any accounting period
falling wholly within the period, and

(b) 40the appropriate proportion of the deductions made by the
firm in any accounting period falling partly within the
period,

in respect of members of the firm’s workforce in calculating the
profits of the firm’s trade.

(7) 45For the purposes of subsection (6)(b), “the appropriate proportion” is
to be determined by reference to the number of days in the periods
concerned.

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(8) The Commissioners for Her Majesty’s Revenue and Customs may by
regulations specify descriptions of deduction that are, or are not, to
be regarded for the purposes of this section as made in respect of
members of a firm’s workforce.

(9) 5Regulations under this section—

(a) may make different provision for different purposes;

(b) may make incidental, supplemental, consequential and
transitional provision and savings.

(10) Section 357WBB contains supplementary provision applying for the
10purposes of this section.

357WBB Section 357WBA: supplementary

(1) References in section 357WBA or this section to a partner in the firm
include any person entitled to a share of income of the firm.

(2) In determining for the purposes of section 357WBA the amount of
15working time that is spent in any place by a partner in the firm, time
spent by the partner in that place is to be included where—

(a) the time is spent by the partner in providing services to a
person other than the firm (“the third party”), and

(b) condition A or B is met.

(3) 20Condition A is that the provision of the services results in a payment
being made (whether directly or indirectly) to the firm by—

(a) the third party, or

(b) a person connected with the third party.

(4) Condition B is that—

(a) 25the firm holds a right that it acquired (whether directly or
indirectly) from the partner, and

(b) any payment in connection with that right is made (whether
directly or indirectly) to the firm by—

(i) the third party, or

(ii) 30a person connected with the third party.

(5) Section 1122 (connected persons) applies for the purposes of this
section.

(6) References in section 357WBA to deductions made in respect of the
members of the firm’s workforce in calculating profits of the firm’s
35trade include, in relation to a partner in the firm, the appropriate
notional consideration for services provided by the partner (see
subsections (7) and (8)).

(7) For the purposes of subsection (6), “the appropriate notional
consideration for services” provided by a partner is—

(a) 40the amount which the partner would receive in consideration
for services provided to the firm by the partner during the
period in question, were the consideration to be calculated on
the basis mentioned in subsection (8), less

(b) any amount actually received in consideration for such
45services which is not included in the partner’s profit share.

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(8) The consideration mentioned in subsection (7)(a) is to be calculated
on the basis that the partner is not a partner in the firm and is acting
at arm’s length from the firm.

357WBC “Disqualified firm”

(1) 5For the purposes of this Chapter, a firm is a “disqualified firm” in
relation to a period if conditions A and B are met.

(2) Condition A is that the firm has a NIRE in the period as a result of
tax-avoidance arrangements.

(3) Condition B is that—

(a) 1050% or more of the working time that is spent in the United
Kingdom during the period by members of the firm’s
workforce is working time spent by partners otherwise than
in Northern Ireland, or

(b) 50% or more of the firm’s workforce expenses that are
15attributable to working time spent in the United Kingdom
during the period by members of the firm’s workforce are
attributable to working time spent by partners otherwise
than in Northern Ireland.

(4) For the purposes of this section “tax avoidance arrangements” means
20arrangements the sole or main purpose of which is to secure that any
profits or losses of the firm for the period are Northern Ireland
profits or losses.

(5) In subsection (4) “arrangements” includes any agreement,
understanding, scheme, transaction or series of transactions
25(whether or not legally enforceable).

(6) The following provisions apply for the purposes of this section as
they apply for the purposes of section 357WBA (Northern Ireland
workforce partnership conditions)—

(a) subsections (2) to (5) of that section;

(b) 30regulations made under that section;

(c) section 357WBB.”

16 In section 357WC (Northern Ireland profits etc of firm determined under
Chapter 6), in subsection (2), for “SME partnership condition” substitute
SME (Northern Ireland employer) partnership condition”.

17 (1) 35Section 357WD (Northern Ireland profits etc of firm determined under
Chapter 7) is amended as follows.

(2) For subsections (1) to (3) substitute—

(1) This section applies where—

(a) a company (“the corporate partner”) is a partner in a firm at
40any time during an accounting period of the firm (“the firm’s
accounting period”) and is within the charge to corporation
tax in relation to the firm’s trade, and

(b) condition A or B is met.

(2) Condition A is that the firm is a Northern Ireland firm in the firm’s
45accounting period by virtue of the SME (election) partnership
condition or the large partnership condition in section 357WA.

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(3) Condition B is that—

(a) the firm is a Northern Ireland firm in the firm’s accounting
period by virtue of the SME (Northern Ireland employer)
partnership condition in section 357WA, and

(b) 5the corporate partner is not an SME in relation to an
accounting period of the corporate partner which is the same
as, or overlaps (to any extent), the firm’s accounting period.”

(3) In subsection (4), after “losses etc:” insert “SMEs that are not Northern
Ireland employers and”.

18 10In section 357WE (sections 357WC and 357WD: interpretation), omit
subsection (2).

19 (1) Section 357WF (application of section 747 of CTA 2009 to Northern Ireland
firm) is amended as follows.

(2) In paragraph (e)—

(a) 15for “SME condition” substitute “SME (Northern Ireland employer)
condition”;

(b) for “SME partnership condition” substitute “SME (Northern Ireland
employer) partnership condition”.

(3) After paragraph (e) insert—

(ea) 20references to the SME (election) condition in section 357KA
were to the SME (election) partnership condition in section
357WA;”.

20 (1) Section 357WG (application of Part 8A to Northern Ireland firm) is amended
as follows.

(2) 25In paragraph (g)—

(a) for “SME condition” (in the first place it appears) substitute “SME
(Northern Ireland employer) condition”;

(b) for “SME condition” (in the second place it appears) substitute “SME
(Northern Ireland employer) partnership condition”.

(3) 30For paragraph (h) substitute—

(h) references in section 357VC to—

(i) the SME (election) condition in section 357KA were to
the SME (election) partnership condition in section
357WA;

(ii) 35the large company condition in section 357KA were to
the large partnership condition in section 357WA;

(iii) a qualifying trade by virtue of section 357KB(1) were
to a qualifying partnership trade by virtue of section
357WB(1).”

21 40In Schedule 4 (index of defined expressions)—

(a) omit the entry for “SME condition (in Part 8B)”;

(b) at the appropriate places, insert—

“disqualified close company (in Part 8B) section 357KEA

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SME (Northern Ireland employer) condition (in Part 8B) section 357KA”
SME (election) condition (in Part 8B) section 357KA”

Amendments relating to capital allowances

22 CAA 2001 is amended in accordance with paragraphs 23 and 24.

23 (1) 5Section 6A (“NIRE company” and “Northern Ireland SME company”) is
amended as follows.

(2) In the heading, for “Northern Ireland SME company” substitute “SME
(Northern Ireland employer) company”.

(3) In the definition of “NIRE company”, after “by virtue of” insert “the SME
10(election) condition or”.

(4) For “Northern Ireland SME company” substitute “SME (Northern Ireland
employer) company”.

(5) For “SME condition” substitute “SME (Northern Ireland employer)
condition”.

24 15In the following provisions, for “a Northern Ireland SME company”
substitute “an SME (Northern Ireland employer) company”—

(a) section 6C(1)(a) and (c);

(b) section 6D(1);

(c) section 6E(1);

(d) 20section 61(4B)(a);

(e) section 66B(1)(a), (b) and (c);

(f) section 66C(b);

(g) section 66D(1)(a) and (b);

(h) section 66E(b);

(i) 25section 212ZE(b);

(j) Schedule 1.

25 In CT(NI)A 2015, in Schedule 1, in Part 6 (capital allowances: transitional
provision), in paragraphs 20(1)(a) and 21(1)(a), for “a Northern Ireland SME
company” substitute “an SME (Northern Ireland employer) company”.

30Part 2 Minor amendments

26 In section 357IA of CTA 2010 (power of Northern Ireland Assembly to set
Northern Ireland rate), for “Minister of Finance and Personnel” substitute
“Minister of Finance”.

27 35In section 357QB(5)(b) of that Act (tax credit: entitlement) , for “Chapter 2”
substitute “land remediation”.

28 (1) Paragraph 2 of Schedule A1 to CAA 2001 (amount of first-year tax credit) is
amended as follows.

(2) For sub-paragraphs (3A) and (4) substitute—

(4) 40The Treasury may by regulations amend sub-paragraph (1)—

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(a) so as to provide for a different percentage to apply where
the surrenderable loss relates to a qualifying activity that is
an NI rate activity, or

(b) so as to substitute for any percentage for the time being
5specified in that sub-paragraph such other percentage as
the Treasury thinks fit.”

(3) In sub-paragraph (5), for “An order” substitute “Regulations”.

29 In consequence of paragraph 28, in the Corporation Tax (Northern Ireland)
Act 2015, in Schedule 1, omit paragraph 10.

10Part 3 Commencement etc

30 (1) Any power to make regulations under Part 8B of CTA 2010 by virtue of Part
1 or 2 of this Schedule may be exercised on or after the day on which this Act
is passed.

(2) 15Section 4 of CT(NI)A 2015 (power to make consequential amendments) has
effect as if Parts 1 and 2 of this Schedule were contained in that Act.

(3) Section 5(4) to (6) of CT(NI)A 2015 (commencement) has effect as if—

(a) references to Part 8B of CTA 2010 were to that Part as amended by
Parts 1 and 2 of this Schedule, and

(b) 20references to the amendments made by Schedules 1 and 2 to
CT(NI)A 2015 included the amendments made by paragraphs 21 to
24 of this Schedule.

Section 29

SCHEDULE 8 Deemed domicile: income tax and capital gains tax

25Part 1 Application of deemed domicile rule

ICTA

1 (1) In section 266A of ICTA (life assurance premiums paid by employer), after
subsection (8) insert—

(8A) 30Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of subsection (6)(b).”

(2) The amendment made by this paragraph has effect in relation to the tax year
2017-18 and subsequent tax years.

TCGA 1992

2 35TCGA 1992 is amended as follows.

3 (1) Section 16ZA (losses: non-UK domiciled individuals) is amended as follows.

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(2) For subsections (1) to (3) substitute—

(1) An individual may make an election under this section in respect
of—

(a) the first tax year in which section 809B of ITA 2007 (claim for
5remittance basis) applies to the individual, or

(b) the first tax year in which that section applies to the
individual following a period in which the individual has
been domiciled in the United Kingdom.

(2) Where an individual makes an election under this section in respect
10of a tax year, the election has effect in relation to the individual for—

(a) that tax year, and

(b) all subsequent tax years.

(2A) But if after making an election under this section an individual
becomes domiciled in the United Kingdom at any time in a tax year,
15the election does not have effect in relation to the individual for—

(a) that tax year, or

(b) any subsequent tax year.

(2B) Where an election made by an individual under this section in
respect of a tax year ceases to have effect by virtue of subsection (2A),
20the fact that it has ceased to have effect does not prevent the
individual from making another election under this section in
respect of a later tax year.

(3) If an individual does not make an election under this section in
respect of a year referred to in subsection (1)(a) or (b), foreign losses
25accruing to the individual in—

(a) that tax year, or

(b) any subsequent tax year except one in which the individual is
domiciled in the United Kingdom,

are not allowable losses.”

(3) 30After subsection (6) insert—

(7) Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of this section.”

(4) The amendments made by this paragraph have effect in relation to the tax
year 2017-18 and subsequent tax years.

(5) 35Where—

(a) an individual makes an election under section 16ZA of TCGA 1992
as originally enacted for a tax year before the tax year 2017-18, but

(b) after making the election the individual becomes domiciled in the
United Kingdom at any time in a tax year,

40sections 16ZB and 16ZC of that Act do not have effect in relation to the
individual by virtue of that election for that tax year or any subsequent tax
year.

(6) Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of
sub-paragraph (5).

4 (1) 45In section 16ZB (election under section 16ZA: foreign chargeable gains
remitted in the tax year after that in which they accrue), in subsection (1), for

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paragraphs (a) and (b) substitute—

(a) the individual has made an election under section 16ZA in
respect of a tax year before the applicable year,

(aa) the election has effect in relation to the individual for the
5applicable year,

(b) foreign chargeable gains accrued to the individual in or after
the tax year in respect of which the election was made but
before the applicable year, and”.

(2) The amendment made by this paragraph has effect in relation to the tax year
102017-18 and subsequent tax years.

5 (1) In section 16ZC (election under section 16ZA by individual to whom
remittance basis applies), in subsection (1), for paragraphs (a) to (c)
substitute—

(a) the individual has made an election under section 16ZA in
15respect of the tax year or any earlier tax year,

(b) the election has effect in relation to the individual for the tax
year, and

(c) section 809B, 809D or 809E of ITA 2007 (remittance basis)
applies to the individual for the tax year.”

(2) 20The amendment made by this paragraph has effect in relation to the tax year
2017-18 and subsequent tax years.

6 (1) In section 69 (trustees of settlements), after subsection (2E) insert—

(2F) Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of subsection (2B)(c).”

(2) 25The amendment made by this paragraph has effect in relation to a
settlement—

(a) in a case where the settlement arose on the settlor’s death (whether
by will, intestacy or otherwise), where the settlor died on or after 6
April 2017;

(b) 30in any other case, where the settlor made the settlement (or was
treated for the purposes of TCGA 1992 as making the settlement) on
or after 6 April 2017.

7 (1) In section 86 (attribution of gains to settlors with interest in non-resident or
dual resident settlements), after subsection (3) insert—

(3A) 35Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of subsection (1)(c).”

(2) The amendment made by this paragraph has effect in relation to the tax year
2017-18 and subsequent tax years.

8 (1) In section 275 (location of assets), after subsection (3) insert—

(3A) 40Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of subsection (1)(l)(iii).”

(2) The amendment made by this paragraph has effect for the purposes of
determining for the purposes of TCGA 1992 the situation of any asset, or
whether the situation of any asset is in the United Kingdom, at any time on
45or after 6 April 2017 (irrespective of when the asset was acquired by the
person holding it).

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9 (1) In Schedule 5A (settlements with foreign element: information), in
paragraph 3, after sub-paragraph (3) insert—

(3A) Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of sub-paragraph (3).”

(2) 5The amendment made by this paragraph has effect in relation to settlements
created on or after 6 April 2017.

ITEPA 2003

10 (1) ITEPA 2003 is amended as follows.

(2) In section 355 (deductions for corresponding payments by non-domiciled
10employees with foreign employers), in subsection (2), at the end insert “(and
section 835BA of ITA 2007 (deemed domicile) applies for the purposes of this
subsection)”.

(3) In section 373 (non-domiciled employee’s travel costs and expenses where
duties performed in UK), at the end insert—

(7) 15Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of subsection (1).”

(4) In section 374 (non-domiciled employee’s spouse’s etc travel costs and
expenses where duties performed in UK), at the end insert —

(10) Section 835BA of ITA 2007 (deemed domicile) applies for the
20purposes of subsection (1).”

(5) In section 376 (foreign accommodation and subsistence costs and expenses
(overseas employment)), at the end insert —

(6) Section 835BA of ITA 2007 (deemed domicile) applies for the
purposes of subsection (1)(c).”

(6) 25The amendments made by this paragraph have effect in relation to the tax
year 2017-18 and subsequent tax years.

ITA 2007

11 ITA 2007 is amended as follows.

12 (1) In section 476 (how to work out whether settlor meets condition C in section
30475), after subsection (3) insert—

(3A) Section 835BA (deemed domicile) applies for the purposes of
subsections (2)(b) and (3)(b).”

(2) The amendment made by this paragraph has effect—

(a) so far as relating to section 476(2)(b) of ITA 2007, in relation to a
35settlor who dies on or after 6 April 2017;

(b) so far as relating to section 476(3)(b) of ITA 2007, in relation to a
settlement made on or after 6 April 2017.

13 (1) In section 718 (meaning of “person abroad” etc), after subsection (2) insert—

(3) Section 835BA (deemed domicile) applies for the purposes of
40subsection (1)(b).”