Finance Bill

House of Lords

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 46 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
594

      (2)
In paragraph 2A(4)—
(a)
in paragraph (a), for “become on or after 17th March 1998 neither
resident nor ordinarily resident” substitute “cease on or after 17
March 1998 to be resident”, and
(b)
in paragraph (b), omit “and ordinarily resident”.
5
      (3)
In paragraph 9(4)—
(a)
in paragraph (a), for “become on or after 19th March 1991 neither
resident nor ordinarily resident” substitute “cease on or after 19
March 1991 to be resident”, and
(b)
in paragraph (b), omit “and ordinarily resident”.
10
      (4)
The amendments made by this paragraph apply to changes in the residence
status of trustees on or after 6 April 2013.
109   (1)
Schedule 5A (settlements with foreign element: information) is amended as
follows.
      (2)
In paragraph 2(1)—
15
(a)
in paragraph (c), for “neither resident nor ordinarily resident”
substitute “not resident”, and
(b)
in paragraph (d), omit “and ordinarily resident”.
      (3)
In paragraph 3—
(a)
in sub-paragraph (1)—
20
(i)
in paragraph (a), for “neither resident nor ordinarily
resident” substitute “not resident”, and
(ii)
in paragraph (b), omit “and ordinarily resident”, and
(b)
in sub-paragraph (3), for “either resident or ordinarily resident”
substitute “resident”.
25
      (4)
In paragraph 4—
(a)
in sub-paragraph (1)—
(i)
in paragraph (a), for “neither resident nor ordinarily
resident” substitute “not resident”, and
(ii)
in paragraph (b), omit “and ordinarily resident”, and
30
(b)
in sub-paragraph (3), for “either resident or ordinarily resident”
substitute “resident”.
      (5)
In paragraph 5(1)—
(a)
in paragraph (a), for the words from “become” to “ordinarily
resident” substitute “cease at any time (the relevant time) on or after
35
the commencement day to be resident”, and
(b)
in paragraph (b), omit “and ordinarily resident”.
      (6)
The amendments made by this paragraph apply as follows—
(a)
the amendments made by sub-paragraph (2) apply in relation to
transfers of property made on or after 6 April 2013,
40
(b)
the amendments made by sub-paragraphs (3) and (4) apply in
relation to settlements created on or after that date, and
(c)
the amendments made by sub-paragraph (5) apply to changes in the
residence status of trustees on or after that date.
110   (1)
Schedule 5B (enterprise investment scheme: re-investment) is amended as
45
follows.

Finance Bill
Schedule 46 — Ordinary residence
Part 4 — Other amendments
595

      (2)
In paragraph 1—
(a)
in sub-paragraph (1)(d), omit “or ordinarily resident”, and
(b)
in sub-paragraph (4)(a), omit “or ordinarily resident”.
      (3)
In paragraph 3(3)(b), omit “or ordinarily resident”.
      (4)
In paragraph 19(1), in the definition of “non-resident”, for “neither resident
5
nor ordinarily resident” substitute “not resident”.
      (5)
The amendments made by this paragraph apply in cases where the accrual
time is on or after 6 April 2013 (even if the qualifying investment was made
before that date).
111
In Schedule 7C (reliefs for transfers to approved share plans), in paragraph
10
8, for paragraph (a) substitute—
“(a)
the claimant would be chargeable to capital gains tax
under section 2(1) (persons and gains chargeable to capital
gains tax) in respect of the gain, or”.
Commencement
15
112   (1)
The amendments made by this Part of this Schedule have effect in relation
to a person’s liability to capital gains tax for the tax year 2013-14 or any
subsequent tax year.
      (2)
Sub-paragraph (1) is without prejudice to any provision in this Part of this
Schedule about the application of a particular amendment.
20
Part 4
Other amendments
FA 1916
113
In FA 1916, omit section 63 (exemption from taxation of municipal securities
issued in America).
25
F(No.2)A 1931
114   (1)
In section 22 of F(No.2)A 1931 (provisions in cases where Treasury has
power to borrow money), in subsection (1)(a) and (b), omit “ordinarily”.
      (2)
Nothing in sub-paragraph (1) limits the power conferred by section 60(1) of
FA 1940.
30
      (3)
Subject to sub-paragraph (5), the amendment made by sub-paragraph (1)
does not affect a pre-commencement security (nor the availability of the
relevant exemption).
      (4)
Sub-paragraph (5) applies to a person who becomes the beneficial owner of
a pre-commencement security (or an interest in such a security) on or after 6
35
April 2013.
      (5)
If obtaining the relevant exemption is conditional on being not ordinarily
resident in the United Kingdom, any enactment conferring the exemption is
to have effect (in relation to a person to whom this sub-paragraph applies)
as if obtaining the exemption were conditional instead on being not resident
40
in the United Kingdom.

Finance Bill
Schedule 46 — Ordinary residence
Part 4 — Other amendments
596

      (6)
In this paragraph—
“pre-commencement security” means a FOTRA security (as defined in
section 713 of ITTOIA 2005) issued before the day on which this Act
is passed;
“the relevant exemption”, in relation to a pre-commencement security,
5
means the exemption for which provision is made in the exemption
condition (as defined in that section).
TMA 1970
115
TMA 1970 is amended as follows.
116   (1)
In section 98 (special returns etc), in subsection (4E)(d), omit “ordinarily”.
10
      (2)
The amendment made by this paragraph takes effect on the coming into
force of regulations made under section 17(3) of F(No.2)A 2005 (authorised
investment funds) by virtue of the amendment made by paragraph 136.
117
In Schedule 1A (claims etc not included in returns), in paragraph 2(6), omit
“or not ordinarily resident”.
15
IHTA 1984
118   (1)
Section 157 of IHTA 1984 (non-residents’ bank accounts) is amended as
follows.
      (2)
For subsection (2) substitute—
“(2)
This section applies to a person who is not domiciled and not
20
resident in the United Kingdom immediately before his death.”
      (3)
In subsection (3), for “, resident or ordinarily resident” substitute “or
resident”.
      (4)
In subsection (4)—
(a)
in paragraph (a), omit “or ordinarily resident”, and
25
(b)
in paragraph (b), omit “or ordinarily resident” and “and ordinarily
resident”.
      (5)
The amendments made by this paragraph do not apply if the person dies
before 6 April 2013.
FA 2004
30
119
Part 4 of FA 2004 (pension schemes etc) is amended as follows.
120
In section 185G (disposal by person holding directly), in subsection (3)(a),
omit “, ordinarily resident”.
121
In section 205 (short service refund lump sum charge), in subsection (3), omit
“, ordinarily resident”.
35
122
In section 205A (serious ill-health lump sum charge), in subsection (3), omit
“, ordinarily resident”.
123
In section 206 (special lump sum death benefits charge), in subsection (3),
omit “, ordinarily resident”.

Finance Bill
Schedule 46 — Ordinary residence
Part 4 — Other amendments
597

124
In section 207 (authorised surplus payments charge), in subsection (3), omit
“, ordinarily resident”.
125
In section 208 (unauthorised payments charge), in subsection (4), omit “,
ordinarily resident”.
126
In section 209 (unauthorised payments surcharge), in subsection (5), omit “,
5
ordinarily resident”.
127
In section 217 (persons liable to lifetime allowance charge), in subsection (5),
omit “, ordinarily resident”.
128
In section 237A (liability of individual to annual allowance charge), in
subsection (2), omit “, ordinarily resident”.
10
129
In section 237B (liability of scheme administrator), in subsection (8), omit “,
ordinarily resident”.
130
In section 239 (scheme sanction charge), in subsection (4), omit “, ordinarily
resident”.
131
In section 242 (de-registration charge), in subsection (3), omit “, ordinarily
15
resident”.
132
The amendments of Part 4 of FA 2004 made by this Part of this Schedule
have effect in relation to the tax year 2013-14 and any subsequent tax year.
FA 2005
133   (1)
In section 30 of FA 2005 (qualifying trust gains: special capital gains tax
20
treatment), in subsection (1), for paragraph (c) substitute—
“(c)
the trustees are resident in the United Kingdom during any
part of the tax year, and”.
      (2)
The amendment made by this paragraph has effect in relation to the tax year
2013-14 and any subsequent tax year.
25
F(No.2)A 2005
134
F(No.2)A 2005 is amended as follows.
135   (1)
In section 7 (charge to income tax on lump sum), in subsection (3), omit “,
ordinarily resident”.
      (2)
The amendment made by this paragraph has effect in relation to the tax year
30
2013-14 and any subsequent tax year.
136
In section 18 (section 17(3): specific powers), in subsection (1)(f) and (g), omit
“ordinarily”.
CTA 2009
137
CTA 2009 is amended as follows.
35
138   (1)
In section 900 (which relates to roll-over relief for disposals of pre-FA 2002
assets), in subsection (2), omit “or ordinarily UK resident”.
      (2)
The amendment made by this paragraph applies in relation to gains
accruing or treated as accruing on or after 6 April 2013.

Finance Bill
Schedule 46 — Ordinary residence
Part 4 — Other amendments
598

139   (1)
In section 936 (meaning of “UK estate” and “foreign estate”), in subsection
(3), omit “or not ordinarily UK resident”.
      (2)
The amendment made by this paragraph applies if the tax year in question
begins on or after 6 April 2013.
140   (1)
In section 947 (aggregate income of the estate), in subsection (2)(b)(i), omit
5
“who was ordinarily UK resident”.
      (2)
The amendment made by this paragraph applies if the tax year in question
begins on or after 6 April 2013.
141   (1)
In section 1009 (conditions relating to employee’s income tax position), in
subsection (5)(a), omit “and ordinarily UK resident”.
10
      (2)
The amendment made by this paragraph applies in relation to shares
acquired on or after 6 April 2013.
142   (1)
In section 1017 (condition relating to employee’s income tax position), in
subsection (4)(a), omit “and ordinarily UK resident”.
      (2)
The amendment made by this paragraph applies in relation to options
15
obtained on or after 6 April 2013.
143   (1)
In section 1025 (additional relief available if shares acquired are restricted
shares), in subsection (5)(a), omit “and ordinarily UK resident”.
      (2)
The amendment made by this paragraph applies in relation to restricted
shares acquired on or after 6 April 2013.
20
144   (1)
In section 1032 (meaning of “chargeable event”), in subsection (5)(a), omit
“and ordinarily UK resident”.
      (2)
The amendment made by this paragraph applies in relation to convertible
shares acquired on or after 6 April 2013.
CTA 2010
25
145   (1)
Section 1034 of CTA 2010 (purchase by unquoted trading company of own
shares: requirements as to residence) is amended as follows.
      (2)
In subsections (1) and (2), omit “and ordinarily resident”.
      (3)
In subsection (3), omit “and ordinary residence” in both places.
      (4)
Omit subsection (4).
30
      (5)
The amendments made by this paragraph do not apply in relation to a
purchase by an unquoted trading company of its own shares if the purchase
takes place before 6 April 2013.
TIOPA 2010
146
In section 363A of TIOPA 2010 (residence of offshore funds which are
35
undertakings for collective investment in transferable securities), in
subsection (3), for “neither resident nor ordinarily resident” substitute “not
resident”.

Finance Bill
Schedule 47 — Controlled foreign companies
599

Constitutional Reform and Governance Act 2010
147   (1)
In section 41 of the Constitutional Reform and Governance Act 2010 (tax
status of MPs and members of the House of Lords), in subsection (2), omit “,
ordinarily resident”.
      (2)
The amendment made by this paragraph has effect for the purposes of a
5
member’s liability to income tax or capital gains tax for the tax year 2013-14
or any subsequent tax year.
Schedule 47
Section 220

Controlled foreign companies
Relevant finance leases etc
10
1
Part 9A of TIOPA 2010 (controlled foreign companies) is amended as
follows.
2
Chapter 5 (the CFC charge gateway: non-trading finance profits) is amended
as follows.
3
In section 371ED (arrangements in lieu of dividends) in subsection (1) omit
15
“(other than a relevant finance lease)”.
4     (1)
Section 371EE (leases to UK resident companies etc) is amended as follows.
      (2)
In subsection (2)(b)(i) for “which is the subject of the lease” substitute “(“the
relevant asset”) which is the subject of the lease or making (directly or
indirectly) an arrangement which would fall within subsection (3)”.
20
      (3)
After subsection (2) insert—
“(3)
An arrangement would fall within this subsection if—
(a)
the arrangement would meet one or both of the following
requirements—
(i)
it would not be a relevant finance lease;
25
(ii)
it would not involve the CFC, and
(b)
under the arrangement the other company would (directly or
indirectly) purchase rights to use the relevant asset.”
5
Chapter 22 (supplementary provision) is amended as follows.
6
In section 371VA (definitions) for the definition of “relevant finance lease”
30
substitute—
““relevant finance lease” is to be read in accordance with section
371VIA,”.
7     (1)
Section 371VG (finance profits) is amended as follows.
      (2)
In subsection (1) for paragraph (b) substitute—
35
“(b)
which are included in the CFC’s assumed total profits for the
accounting period in question and which—
(i)
arise from a relevant finance lease, but
(ii)
are not trading profits.”

Finance Bill
Schedule 47 — Controlled foreign companies
600

      (3)
In subsection (4)(b) omit “an arrangement which would be”.
8     (1)
Section 371VH (interests in companies) is amended as follows.
      (2)
In subsection (9) omit the second sentence.
      (3)
After subsection (10) insert—
“(10A)
For the purposes of subsection (9), if for any relevant period accounts
5
for a loan creditor are not prepared in accordance with international
accounting standards or UK generally accepted accounting practice,
any question relating to generally accepted accounting practice is to
be determined in relation to the loan creditor for that period by
reference to generally accepted accounting practice in relation to
10
accounts prepared in accordance with international accounting
standards.”
9
After section 371VI insert—
“371VIA
Relevant finance leases
(1)
In this Part “relevant finance lease” means an arrangement falling
15
within subsection (2) or (3).

(An arrangement which is a loan relationship of any company does
not fall within either of those subsections.)
(2)
An arrangement falls within this subsection if—
(a)
it provides for an asset to be leased or otherwise made
20
available by a person (“the lessor”) to another person, and
(b)
in accordance with generally accepted accounting practice, it
falls (or would fall) to be treated in the accounts of the lessor,
or of a person connected with the lessor, as a finance lease or
a loan.
25
(3)
A hire-purchase, conditional sale or other arrangement relating to an
asset falls within this subsection if it does not fall within subsection
(2) but is of a similar character to an arrangement which would fall
within that subsection.
(4)
If for any relevant period accounts for a person are not prepared in
30
accordance with international accounting standards or UK generally
accepted accounting practice, any question relating to generally
accepted accounting practice is to be determined for the purposes of
this section in relation to that person for that period by reference to
generally accepted accounting practice in relation to accounts
35
prepared in accordance with international accounting standards.
(5)
In this section “accounts”, in relation to a company, includes
accounts relating to two or more companies of which that company
is one.”
Limit on double taxation relief in cases involving qualifying loan relationships of CFCs
40
10
Part 2 of TIOPA 2010 (double taxation relief) is amended as follows.
11
Chapter 2 (double taxation relief by way of credit) is amended as follows.
12
In section 42 (limit on credit against corporation tax) after subsection (4)