Finance Bill (HL Bill 71)

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

4 (1) Section 357KE (Northern Ireland workforce conditions) is amended as
follows.

(2) 5In subsection (2)—

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

(b) at the end of paragraph (c) insert “, and

“(d) in the case of a close company, or of a company which would
be a close company if it were UK resident, individuals who
10are participators in the company.”

(3) After subsection (7) insert—

“(7A) In this section “participator” has the same meaning as in sections
1064 to 1067 (see sections 1068 and 1069).

(7B) In determining for the purposes of this section the amount of
15working time that is spent in any place by a participator in the
company, time spent by the participator in that place is to be
included where—

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

(b) 20condition A or B is met.

(7C) Condition A is that the provision of the services results in a payment
being made (whether directly or indirectly) to the company by—

(a) the third party, or

(b) a person connected with the third party.

(7D) 25Condition B is that—

(a) the company holds a right that it acquired (whether directly
or indirectly) from the participator, and

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

(i) 30the third party, or

(ii) a person connected with the third party.

(7E) Section 1122 (connected persons) applies for the purposes of this
section.”

5 After section 357KE insert—

35“Meaning of “disqualified close company”

357KEA “Disqualified close company”

(1) A company is a “disqualified close company” in relation to a period
if—

(a) the company is a close company, or would be a close
40company if it were UK resident, at any time in the period, and

(b) conditions A and B are met.

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

(3) Condition B is that—

(a) 50% or more of the working time that is spent in the United
Kingdom during the period by members of the company’s
workforce is working time spent by participators in the
5company otherwise than in Northern Ireland, or

(b) 50% or more of the company’s workforce expenses that are
attributable to working time spent in the United Kingdom
during the period by members of the company’s workforce
are attributable to working time spent by participators in the
10company otherwise than in Northern Ireland.

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

(5) 15In subsection (4) “arrangements” includes any agreement,
understanding, scheme, transaction or series of transactions
(whether or not legally enforceable).

(6) The following provisions apply for the purposes of this section as
they apply for the purposes of section 357KE (Northern Ireland
20workforce conditions)—

(a) subsections (2) to (5) and (7A) to (7E) of that section;

(b) regulations made under that section.

(7) In its application by virtue of subsection (6), subsection (5) of section
357KE has effect as if the reference in it to subsection (1)(b) of that
25section were to subsection (3)(b) of this section.”

6 In the heading of Chapter 6 of Part 8B, at the end insert “that are Northern
Ireland employers”.

7 In section 357M (Chapter 6: introductory), in subsection (1), for “SME
condition” substitute “SME (Northern Ireland employer) condition”.

8 30In the heading of Chapter 7 of Part 8B, after “losses etc:” insert “SMEs that
are not Northern Ireland employers and”.

9 In section 357N (Chapter 7: introductory), in subsection (1), after “by virtue
of” insert “the SME (election) condition or”.

10 (1) Section 357OB (Northern Ireland intangibles credits and debits: SMEs) is
35amended 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
employer) condition”.

11 (1) Section 357OC (Northern Ireland intangibles credits and debits: large
40companies) is amended as follows.

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

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