Finance Bill

House of Lords

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 43 — General anti-abuse rule: procedural requirements
496

      (4)
If no representations were made in accordance with paragraph 4, the
designated HMRC officer—
(a)
may provide the GAAR Advisory Panel with comments on any
representations made under this paragraph, and
(b)
if comments are provided, must at the same time send a copy of them
5
to the taxpayer.
Decision of GAAR Advisory Panel and opinion notices
10    (1)
If the matter is referred to the GAAR Advisory Panel, the Chair must arrange
for a sub-panel consisting of 3 members of the GAAR Advisory Panel (one
of whom may be the Chair) to consider it.
10
      (2)
The sub-panel may invite the taxpayer or the designated HMRC officer (or
both) to supply the sub-panel with further information within a period
specified in the invitation.
      (3)
Invitations must explain the effect of sub-paragraph (4) or (5) (as
appropriate).
15
      (4)
If the taxpayer supplies information to the sub-panel under this paragraph,
the taxpayer must at the same time send a copy of the information to the
designated HMRC officer.
      (5)
If the designated HMRC officer supplies information to the sub-panel under
this paragraph, the officer must at the same time send a copy of the
20
information to the taxpayer.
11    (1)
Where the matter is referred to the GAAR Advisory Panel, the sub-panel
must produce—
(a)
one opinion notice stating the joint opinion of all the members of the
sub-panel, or
25
(b)
two or three opinion notices which taken together state the opinions
of all the members.
      (2)
The sub-panel must give a copy of the opinion notice or notices to—
(a)
the designated HMRC officer, and
(b)
the taxpayer.
30
      (3)
An opinion notice is a notice which states that in the opinion of the members
of the sub-panel, or one or more of those members—
(a)
the entering into and carrying out of the tax arrangements is a
reasonable course of action in relation to the relevant tax
provisions—
35
(i)
having regard to all the circumstances (including the matters
mentioned in subsections (2)(a) to (c) and (3) of section 207),
and
(ii)
taking account of subsections (4) to (6) of that section, or
(b)
the entering into or carrying out of the tax arrangements is not a
40
reasonable course of action in relation to the relevant tax provisions
having regard to those circumstances and taking account of those
subsections, or
(c)
it is not possible, on the information available, to reach a view on that
matter,
45

and the reasons for that opinion.

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
497

      (4)
For the purposes of the giving of an opinion under this paragraph, the
arrangements are to be assumed to be tax arrangements.
      (5)
In this Part, a reference to any opinion of the GAAR Advisory Panel about
any tax arrangements is a reference to the contents of any opinion notice
about the arrangements.
5
Notice of final decision after considering opinion of GAAR Advisory Panel
12    (1)
A designated HMRC officer who has received a notice or notices under
paragraph 11 must, having considered any opinion of the GAAR Advisory
Panel about the tax arrangements, give the taxpayer a written notice setting
out whether the tax advantage arising from the arrangements is to be
10
counteracted under the general anti-abuse rule.
      (2)
If the notice states that a tax advantage is to be counteracted, it must also set
out—
(a)
the adjustments required to give effect to the counteraction, and
(b)
if relevant, any steps that the taxpayer is required to take to give
15
effect to it.
Notices may be given on assumption that tax advantage does arise
13    (1)
A designated HMRC officer may give a notice, or do anything else, under
this Schedule where the officer considers that a tax advantage might have
arisen to the taxpayer.
20
      (2)
Accordingly, any notice given by a designated HMRC officer under this
Schedule may be expressed to be given on the assumption that the tax
advantage does arise (without agreeing that it does).
Schedule 44
Section 216

Trusts with vulnerable beneficiary
25
Inheritance Tax Act 1984
1
IHTA 1984 is amended as follows.
2     (1)
Section 71A (trusts for bereaved minors) is amended as follows.
      (2)
For subsection (3)(c)(ii) substitute—
“(ii)
if any of the income arising from any of the settled
30
property is applied for the benefit of a beneficiary, it
is applied for the benefit of the bereaved minor.”
      (3)
In subsection (4), before paragraph (a) insert—
“(za)
the trustees’ having powers that enable them to apply
otherwise than for the benefit of the bereaved minor amounts
35
(whether consisting of income or capital, or both) not
exceeding the annual limit,”.

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
498

      (4)
After subsection (4) insert—
“(4A)
For the purposes of this section and section 71B, the “annual limit” is
whichever is the lower of the following amounts—
(a)
£3,000, and
(b)
3% of the amount that is the maximum value of the settled
5
property during the period in question.
(4B)
For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.
(4C)
The Treasury may by order made by statutory instrument—
(a)
specify circumstances in which subsection (4)(za) is, or is not,
10
to apply in relation to a trust, and
(b)
amend the definition of “the annual limit” in subsection (4A).
(4D)
An order under subsection (4C) may—
(a)
make different provision for different cases, and
(b)
contain transitional and saving provision.
15
(4E)
A statutory instrument containing an order under subsection (4C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.”
3     (1)
Section 71B (charge to tax on property to which section 71A applies) is
amended as follows.
20
      (2)
In subsection (1), after “(2)” insert “, (2B)”.
      (3)
After subsection (2) insert—
“(2A)
Subsection (2B) applies in a case in which—
(a)
an amount is paid or applied otherwise than for the benefit of
the bereaved minor, and
25
(b)
the exemptions provided by subsection (2) of this section and
subsections (3) and (4) of section 70 do not apply.
(2B)
In such a case, tax is not charged under this section in respect of
whichever is the lower of the following amounts—
(a)
the amount paid or applied, and
30
(b)
the annual limit.”
4     (1)
Section 71D (age 18-to-25 trusts) is amended as follows.
      (2)
For subsection (6)(c)(ii) substitute—
“(ii)
if any of the income arising from any of the settled
property is applied for the benefit of a beneficiary, it
35
is applied for the benefit of B.”
      (3)
After that subsection insert—
“(6A)
Where the income arising from the settled property is held on trusts
of the kind described in section 33 of the Trustee Act 1925 (protective
trusts), paragraphs (b) and (c) of subsection (6) have effect as if for
40
“living and under the age of 25,” there were substituted “under the
age of 25 and the income arising from the settled property is held on
trust for B,”.

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
499

      (4)
In subsection (7), before paragraph (a) insert—
“(za)
the trustees’ having powers that enable them to apply
otherwise than for the benefit of B amounts (whether
consisting of income or capital, or both) not exceeding the
annual limit,”.
5
      (5)
After that subsection insert—
“(7A)
For the purposes of this section and section 71E, the “annual limit” is
whichever is the lower of the following amounts—
(a)
£3,000, and
(b)
3% of the amount that is the maximum value of the settled
10
property during the period in question.
(7B)
For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.
(7C)
The Treasury may by order made by statutory instrument—
(a)
specify circumstances in which subsection (7)(za) is, or is not,
15
to apply in relation to a trust, and
(b)
amend the definition of “the annual limit” in subsection (7A).
(7D)
An order under subsection (7C) may—
(a)
make different provision for different cases, and
(b)
contain transitional and saving provision.
20
(7E)
A statutory instrument containing an order under subsection (7C)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.”
5     (1)
Section 71E (charge to tax on property to which section 71D applies) is
amended as follows.
25
      (2)
In subsection (1), for “(4)” substitute “(4A)”.
      (3)
After subsection (4) insert—
“(4A)
If an amount is paid or applied otherwise than for the benefit of B
and the exemptions provided by subsections (2) to (4) do not apply,
tax is not charged under this section in respect of whichever is the
30
lower of the following amounts—
(a)
the amount paid or applied, and
(b)
the annual limit.”
6     (1)
Section 89 (trusts for disabled persons) is amended as follows.
      (2)
For subsection (1)(b) substitute—
35
“(b)
which secure that, if any of the settled property or income
arising from it is applied during the disabled person’s life for
the benefit of a beneficiary, it is applied for the benefit of the
disabled person.”
      (3)
For subsection (3) substitute—
40
“(3)
The trusts on which the settled property is held are not to be treated
as falling outside subsection (1) by reason only of—
(a)
the trustees’ having powers that enable them to apply
otherwise than for the benefit of the disabled person amounts

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
500

(whether consisting of income or capital, or both) not
exceeding the annual limit,
(b)
the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),
(c)
the trustees’ having those powers but free from, or subject to
5
a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,
(d)
the trustees’ having the powers conferred by section 33 of the
Trustee Act (Northern Ireland) 1958 (corresponding
provision for Northern Ireland),
10
(e)
the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or
(f)
the trustees’ having powers to the like effect as the powers
mentioned in any of paragraphs (b) to (e).
15
(3A)
For the purposes of this section, the “annual limit” is whichever is the
lower of the following amounts—
(a)
£3,000, and
(b)
3% of the amount that is the maximum value of the settled
property during the period in question.
20
(3B)
For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.
(3C)
The Treasury may by order made by statutory instrument—
(a)
specify circumstances in which subsection (3)(a) is, or is not,
to apply in relation to a trust, and
25
(b)
amend the definition of “the annual limit” in subsection (3A).
(3D)
An order under subsection (3C) may—
(a)
make different provision for different cases, and
(b)
contain transitional and saving provision.
(3E)
A statutory instrument containing an order under subsection (3C)
30
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.”
      (4)
In subsection (4), for the words following “into settlement,” substitute “was
a disabled person”.
      (5)
For subsections (5) and (6) substitute—
35
“(4A)
In this section “disabled person” has the meaning given by Schedule
1A to the Finance Act 2005.”
7     (1)
Section 89A (self-settlement by person with condition expected to lead to
disability) is amended as follows.
      (2)
In subsection (1)(b), for the words following “A becoming” substitute “a
40
person falling within any paragraph of the definition of “disabled person” in
paragraph 1 of Schedule 1A to the Finance Act 2005”.
      (3)
In subsection (2), after “settled property” insert “or income arising from it”.
      (4)
For subsections (5) and (6) substitute—
“(5)
For the purposes of subsection (1)(b), assume—
45

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
501

(a)
that A will meet any conditions as to residence or presence
that are required to establish entitlement to the allowance,
payment or increased pension in question,
(b)
that there will be no provision made by regulations under
any of the following—
5
(i)
sections 67(1) and (2), 72(8), 104(3) and 113(2) of
SSCBA 1992,
(ii)
sections 67(1) and (2), 72(8), 104(3) and 113(2) of
SSCB(NI)A 1992, and
(iii)
sections 85 and 86 of WRA 2012 and the
10
corresponding provision having effect in Northern
Ireland, and
(c)
that A will not be prevented from receiving the allowance,
payment or increased pension in question by any of the
following—
15
(i)
section 113(1) of SSCBA 1992,
(ii)
section 113(1) of SSCB(NI)A 1992,
(iii)
section 87 of WRA 2012 and the corresponding
provision having effect in Northern Ireland,
(iv)
articles 61 and 64 of the Personal Injuries (Civilians)
20
Scheme 1983 (S.I. 1983/686),
(v)
article 53 of the Naval, Military and Air Forces etc.
(Disablement and Death) Service Pensions Order
2006 (S.I. 2006/606), and
(vi)
article 42 of the Armed Forces and Reserve Forces
25
(Compensation Scheme) Order 2011 (S.I. 2011/517).”
      (5)
Before subsection (7) insert—
“(6A)
The trusts on which the settled property is held are not to be treated
as falling outside subsection (2) by reason only of—
(a)
the trustees’ having powers that enable them to apply
30
otherwise than for the benefit of the disabled person amounts
(whether consisting of income or capital, or both) not
exceeding the annual limit,
(b)
the trustees’ having the powers conferred by section 32 of the
Trustee Act 1925 (powers of advancement),
35
(c)
the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
proviso (a) of subsection (1) of that section,
(d)
the trustees’ having the powers conferred by section 33 of the
Trustee Act (Northern Ireland) 1958 (corresponding
40
provision for Northern Ireland),
(e)
the trustees’ having those powers but free from, or subject to
a less restrictive limitation than, the limitation imposed by
subsection (1)(a) of that section, or
(f)
the trustees’ having powers to the like effect as the powers
45
mentioned in any of paragraphs (b) to (e).
(6B)
For the purposes of this section, the “annual limit” is whichever is the
lower of the following amounts—
(a)
£3,000, and

Finance Bill
Schedule 44 — Trusts with vulnerable beneficiary
502

(b)
3% of the amount that is the maximum value of the settled
property during the period in question.
(6C)
For those purposes the annual limit applies in relation to each period
of 12 months that begins on 6 April.
(6D)
The Treasury may by order made by statutory instrument—
5
(a)
specify circumstances in which subsection (6A)(a) is, or is
not, to apply in relation to a trust, and
(b)
amend the definition of “the annual limit” in subsection (6B).
(6E)
An order under subsection (6D) may—
(a)
make different provision for different cases, and
10
(b)
contain transitional and saving provision.
(6F)
A statutory instrument containing an order under subsection (6D)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, the House of Commons.”
      (6)
For subsection (8) substitute—
15
“(8)
In this section—
“SSCBA 1992” means the Social Security Contributions and
Benefits Act 1992,
“SSCB(NI)A 1992” means the Social Security Contributions and
Benefits (Northern Ireland) Act 1992, and
20
“WRA 2012” means the Welfare Reform Act 2012.”
      (7)
In the heading, for the words following “person” substitute “expected to fall
within the definition of “disabled person””.
8     (1)
Section 89B (meaning of “disabled person’s interest”) is amended as follows.
      (2)
For subsection (2) substitute—
25
“(2)
In subsection (1)(c) “disabled person” has the meaning given by
Schedule 1A to the Finance Act 2005.”
      (3)
After that subsection insert—
“(2A)
Where the income arising from the settled property is held on trusts
of the kind described in section 33 of the Trustee Act 1925 (protective
30
trusts), subsection (1)(d)(v) has effect as if for “A’s life” there were
substituted “the period during which the income from the property
is held on trust for A”.”
9     (1)
The amendments made by paragraphs 2 to 8 have effect in relation to
property transferred into settlement on or after 8 April 2013.
35
      (2)
Nothing in paragraphs 6 to 8 is to be read as preventing property transferred
into a relevant settlement on or after 8 April 2013 from being property to
which section 89 or 89A of IHTA 1984 applies.
10    (1)
In section 89B (meaning of “disabled person’s interest”), in subsection (1)(c)
after “2006” insert “if the trusts on which the settled property is held secure
40
that, if any of the settled property is applied during the disabled person’s life
for the benefit of a beneficiary, it is applied for the benefit of the disabled
person”.