Finance Bill (HL Bill 123)

continued    Part 9 continued    

(a)a reference to the individual being solely liable for that amount
(where no other individual is given a joint liability notice in respect
of it), or

(b)a reference to the individual being jointly and severally liable for that
5amount with each other individual who is given a joint liability
notice in respect of it.

(2)The tax liability at a particular time of a company which no longer exists at
that time is treated for the purposes of this Schedule as being whatever it
was immediately before the company ceased to exist.

10Application to limited liability partnerships

18(1)This paragraph has effect for the purposes of this Schedule as it applies in
relation to a limited liability partnership.

(2)A reference to a director or shadow director of a company, or a participator
in it, is to be read as a reference to a member or shadow member of the
15limited liability partnership.

(3)A reference in paragraph 8 to the Insolvency Act 1986 or the Insolvency
(Northern Ireland) Order 1989 is to that Act or Order as applied or
incorporated by regulations under section 14 of the Limited Liability
Partnerships Act 2000.

(4)20A reference in paragraph 8 to the Companies Act 2006 is to that Act as
applied or incorporated by regulations under section 15 of the Limited
Liability Partnerships Act 2000.

Interpretation

19In this Schedule—

• 25“authorised HMRC officer” means an officer of Revenue and Customs
  who is, or is a member of a class of officers who are, authorised by
  the Commissioners for Her Majesty’s Revenue and Customs for the
  purpose of this Schedule;

• “company” has the meaning given by paragraph 1(3);

• 30“contract settlement” means an agreement in connection with a
  person’s liability to make a payment to HMRC under or by virtue of
  an enactment;

• “creditors’ voluntary winding up” has the meaning given by—

  (a)

  section 90 of the Insolvency Act 1986 (“the 1986 Act”) (in
  35relation to England and Wales and Scotland), or

  (b)

  Article 76 of the Insolvency (Northern Ireland) Order 1989
  (S.I. 1989/2405 (N.I. 19)) (“the 1989 Order”) (in relation to
  Northern Ireland);

• “director” has the meaning given by section 250 of the Companies Act
  402006;

• “joint liability notice” has the meaning given by paragraph 1(2);

• “HMRC” means Her Majesty’s Revenue and Customs;

• “insolvency procedure” has the meaning given by paragraph 8;

• “limited liability partnership” means a body incorporated under the
  45Limited Liability Partnerships Act 2000;

• “member”, in relation to a limited liability partnership, has the same
  meaning as in the Limited Liability Partnerships Act 2000 (see
  section 4 of that Act);

• “members’ voluntary winding up” has the meaning given by—

  (a)

  5section 90 of the 1986 Act (in relation to England and Wales
  and Scotland), or

  (b)

  Article 76 of the 1989 Order (in relation to Northern Ireland);

• “notice” means notice in writing;

• “notify” means notify in writing;

• 10“the official rate”, in relation to interest, means the rate payable under
  section 189 of the 1986 Act or (as the case may be) Article 160 of the
  1989 Order;

• “participator” has the meaning given by section 454 of CTA 2010;

• “relevant conditions” has the meaning given by paragraph 10(2);

• 15“shadow director” has the meaning given by section 251 of the
  Companies Act 2006;

• “shadow member”, in relation to a limited liability partnership, means
  a person in accordance with whose directions or instructions the
  members of the partnership are accustomed to act (except that a
  20person is not treated as a shadow member by reason only that the
  members of the partnership act on advice given by the person in a
  professional capacity);

• “tax-avoidance arrangements” has the meaning given by paragraph 6;

• “tax-evasive conduct” has the meaning given by paragraph 7;

• 25“tax liability”, in relation to a company, means any amount payable to
  the Commissioners for Her Majesty’s Revenue and Customs by the
  company under or by virtue of an enactment or under a contract
  settlement;

• “unsecured creditor” has the meaning given by—

  (a)

  30section 248 of the 1986 Act (in relation to England and Wales
  and Scotland);

  (b)

  Article 5(1) of the 1989 Order (in relation to Northern
  Ireland).

Section 101

Schedule 14 35Amendments relating to the operation of the GAAR

Introduction

1Part 5 of FA 2013 (the general anti-abuse rule) is amended as follows.

Protecting adjustments under the GAAR before time limits expire

2In section 209 (counteracting the tax advantage), for subsection (6)
40substitute—

“(6)But—

(a)the effect of adjustments made by an officer of Revenue and
Customs by virtue of this section is suspended until the

procedural requirements of Schedule 43, 43A or 43B have
been complied with, and

(b)the power to make adjustments by virtue of this section is
subject to any time limit imposed by or under any enactment
5other than this Part.

The provision made by this subsection needs to be read with sections
209AA to 209AC and has no effect on adjustments so far as made
otherwise than by virtue of this section.”

3After section 209 insert—

“209AA 10   Protective GAAR notices

(1)An officer of Revenue and Customs may give a written notice (a
“protective GAAR notice”) to a person stating that the officer
considers—

(a)that a tax advantage might have arisen to the person from tax
15arrangements that are abusive, and

(b)that, on the assumption that the advantage does arise from
tax arrangements that are abusive, it ought to be
counteracted under section 209.

(2)The protective GAAR notice must be given within the ordinary
20assessing time limit applicable to the proposed adjustments.

(3)But if—

(a)a tax enquiry is in progress into a return made by the person,
and

(b)the return relates to the tax in respect of which the specified
25adjustments under the protective GAAR notice are made,

the protective GAAR notice must instead be given no later than the
time when the enquiry is completed.

(4)The protective GAAR notice must—

(a)specify the arrangements and the tax advantage, and

(b)30specify the adjustments that, on the assumption that the
advantage does arise from tax arrangements that are abusive,
the officer proposes ought to be made.

(5)The adjustments specified in the protective GAAR notice have effect
as if they are made by virtue of section 209.

(6)35Notice of appeal may be given against the adjustments specified in
the protective GAAR notice (whether or not the adjustments are also
made otherwise than by virtue of section 209).

(7)Any appeal against the specified adjustments (whether made by
virtue of section 209 or otherwise) is, as a result of this subsection,
40stayed—

(a)for a period of 12 months beginning with the day on which
the protective GAAR notice is given, or

(b)if a final GAAR counteraction notice is given before the end
of that period, for a period ending with the day on which the
45final GAAR counteraction notice is given.

(8)If, in the case of the specified adjustments (whether made by virtue
of section 209 or otherwise)—

(a)notice of appeal is not given or notice of appeal is given but
the appeal is subsequently withdrawn or determined by
agreement, and

(b)no final GAAR counteraction notice is given,

5the protective GAAR notice has effect for all purposes (other than the
purposes of section 212A) as if it had been given as a final GAAR
counteraction notice (and, accordingly, as if the GAAR procedural
requirements had been complied with).

(9)In any case not falling within subsection (8)—

(a)10the specified adjustments have no effect (so far as they are
made by virtue of section 209) unless they (or lesser
adjustments) are subsequently specified in a final GAAR
counteraction notice, but

(b)the giving of the protective GAAR notice is treated as
15meeting the requirements of section 209(6)(b) in the case of
that final GAAR counteraction notice.”

4After section 209AA (as inserted by paragraph 3) insert—

“209AB   Adjustments under section 209: notices under Schedule 43 or 43A

(1)This section applies in the case of any particular adjustments in
20respect of a particular period or matter (“the adjustments
concerned”) if—

(a)a person is given a notice under paragraph 3 of Schedule 43
or a pooling notice or notice of binding under Schedule 43A
(“the Schedule 43 or 43A notice”) that specifies the
25adjustments concerned (whether or not other adjustments
are specified),

(b)the Schedule 43 or 43A notice is given within the relevant
time limit applicable to the adjustments concerned, and

(c)the adjustments concerned have not been specified in a
30provisional counteraction notice under section 209A, or a
protective GAAR notice under section 209AA, given before
the time at which the Schedule 43 or 43A notice is given.

(2)The Schedule 43 or 43A notice is given within the relevant time limit
if—

(a)35it is given within the ordinary assessing time limit applicable
to the adjustments concerned, or

(b)if a tax enquiry is in progress into a return made by the
person and the particular adjustments concerned relate to the
matters contained in the return, it is given no later than the
40time when the enquiry is completed.

(3)The adjustments concerned have effect as if they are made by virtue
of section 209.

(4)If, in the case of the specified adjustments (whether made by virtue
of section 209 or otherwise)—

(a)45notice of appeal is not given or notice of appeal is given but
the appeal is subsequently withdrawn or determined by
agreement, and

(b)no final GAAR counteraction notice is given,

the Schedule 43 or 43A GAAR notice has effect for all purposes (other
than the purposes of section 212A) as if it had been given as a final
GAAR counteraction notice (and, accordingly, as if the GAAR
procedural requirements had been complied with).

(5)5In any case not falling within subsection (4)—

(a)the adjustments concerned have no effect (so far as they are
made by virtue of section 209) unless they (or lesser
adjustments) are subsequently specified in a final GAAR
counteraction notice, but

(b)10the giving of the Schedule 43 or 43A notice is treated as
meeting the requirements of section 209(6)(b) in the case of
that final GAAR counteraction notice.”

5After section 209AB (as inserted by paragraph 4) insert—

“209AC   Sections 209AA and 209AB: definitions

(1)15In sections 209AA and 209AB—

• “final GAAR counteraction notice” means a notice given
  under—

  (a)

  paragraph 12 of Schedule 43,

  (b)

  paragraph 8 or 9 of Schedule 43A, or

  (c)

  20paragraph 8 of Schedule 43B,

• “GAAR procedural requirements” means the procedural
  requirements of Schedule 43, 43A or 43B,

• “lesser adjustments” means adjustments specified in the final
  GAAR counteraction notice which assume a smaller tax
  25advantage than was assumed in the protective GAAR notice
  or (as the case may be) the Schedule 43 or 43A notice, and

• “ordinary assessing time limit”, in relation to any adjustments,
  means the time limit imposed by or under any enactment
  other than this Part for the making of the adjustments.

(2)30Expressions which are used in section 202 of FA 2014 (“tax enquiry”,
and its being “in progress”, and “return”) have the same meaning in
sections 209AA and 209AB as they have in that section (and
references to completing a tax enquiry are to be read accordingly).”

6Omit sections 209A to 209F (provisional counteraction notices).

735In section 214(1) (interpretation of Part 5 of FA 2013), omit—

(a)the definition of “notified adjustments”, and

(b)the definition of “provisional counteraction notice”.

Minor amendments

8In paragraph 11 of Schedule 43A (meaning of “equivalent arrangements”),
40omit “For the purposes of paragraph 1,”.

9In paragraph 5 of Schedule 43C (penalty under section 212A), for sub-
paragraphs (5) and (6) substitute—

“(5)An assessment of a penalty under this paragraph must be made
before the end of the period of 12 months beginning with the date
45(or the latest of the dates) on which the counteraction mentioned

in section 212A(1)(d) becomes final (within the meaning of section
210(8)).”

Commencement

10The amendment made by paragraph 2 has effect in relation to adjustments
5made by an officer of Revenue and Customs by virtue of section 209 of FA
2013 on or after the commencement date.

11The amendment made by paragraph 3 has effect in relation to notices given
under section 209AA of FA 2013 on or after the commencement date
(whenever the arrangements are entered into) but no notice may be given
10under that section in relation to any adjustments if a provisional
counteraction notice has been given under section 209A of that Act before
that date in respect of those adjustments.

12The amendment made by paragraph 4 has effect in relation to notices given
under Schedule 43 or 43A to FA 2013 on or after the commencement date
15(whenever the arrangements are entered into).

13The amendment made by paragraph 6 does not affect the operation of
sections 209A to 209F of FA 2013 in relation to provisional counteraction
notices given under section 209A of that Act before the commencement date.

14The amendment made by paragraph 9 has effect in relation to cases where a
20person becomes liable to a penalty under section 212A of FA 2013 on or after
the commencement date.

15In paragraphs 10 to 14 “the commencement date” means the date on which
this Act is passed.

Section 102

Schedule 15 25Tax relief for scheme payments etc

Introductory

1(1)This Schedule provides for the following in respect of qualifying
payments—

(a)an exemption from income tax, and

(b)30an exemption from capital gains tax.

(2)This Schedule also provides for a relief from inheritance tax in respect of
qualifying payments (but see paragraph 5(4), which contains an excepted
case).

Qualifying payments

2(1)35In this Schedule “qualifying payment” means a payment within any of sub-
paragraphs (2) to (5).

(2)A payment is within this sub-paragraph if it is a payment under the
Windrush Compensation Scheme.

(3)A payment is within this sub-paragraph if—

(a)it is made otherwise than under the Windrush Compensation
Scheme,

(b)it is made to, or in respect of, a person who made a claim under that
Scheme (which the person was eligible to make),

(c)5it is made in connection with the same circumstances as gave rise to
that person’s eligibility to make that claim, and

(d)it is made by or on behalf of—

(i)the government of the United Kingdom,

(ii)the government of a part of the United Kingdom, or

(iii)10a local or other public authority in the United Kingdom.

(4)A payment is within this sub-paragraph if it is a payment under the Troubles
Permanent Disablement Payment Scheme established by the Victims’
Payments Regulations 2020 (S.I. 2020/103) (as that scheme is amended from
time to time).

(5)15A payment is within this sub-paragraph if—

(a)it is a compensation payment of a description specified in regulations
made by the Treasury by statutory instrument, and

(b)it is a payment made by or on behalf of—

(i)the government of the United Kingdom,

(ii)20the government of a part of the United Kingdom,

(iii)the government of any other country or territory,

(iv)a local or other public authority in the United Kingdom, or

(v)a local or other public authority of a territory outside the
United Kingdom.

(6)25Regulations under sub-paragraph (5) may provide that a compensation
payment of a description specified in the regulations is a qualifying payment
only for the purposes of particular provisions of this Schedule.

(7)A statutory instrument containing regulations under sub-paragraph (5) is
subject to annulment in pursuance of a resolution of the House of Commons.

(8)30In this paragraph “the Windrush Compensation Scheme” means the scheme
published by the Home Office on 3 April 2019 which provides compensation
for certain categories of persons in recognition of difficulties arising out of
an inability to demonstrate lawful immigration status (as that scheme is
amended from time to time).

35Exemption from income tax

3(1)No liability to income tax arises in respect of a qualifying payment.

(2)A qualifying payment is to be ignored for all other income tax purposes.

(3)This paragraph has effect in relation to qualifying payments within
paragraph 2(2) or (3) that are received on or after 3 April 2019.

(4)40This paragraph has effect in relation to qualifying payments within
paragraph 2(4) that are received on or after 29 May 2020.

(5)This paragraph has effect in relation to qualifying payments within
paragraph 2(5) that are received on or after such date as is specified in the
regulations concerned (which may be a date before the regulations are
45made).

Exemptions from capital gains tax

4(1)A gain accruing on a disposal is not a chargeable gain if it accrues on—

(a)a disposal arising as a result of the forfeiture or surrender of rights,
or as a result of refraining from exercising rights, in return for a
5qualifying payment,

(b)a disposal of the right to receive the whole or any part of a qualifying
payment, or

(c)a disposal of an interest in any such right.

(2)In sub-paragraph (1)(c) “interest”, in relation to a right, means an interest as
10a co-owner of the right (whether it is owned jointly or in common and
whether or not the interests of the co-owners are equal).

(3)This paragraph has effect—

(a)in a case where the qualifying payment concerned is within
paragraph 2(2) or (3), in relation to disposals made on or after 3 April
152019, and

(b)in a case where the qualifying payment concerned is within
paragraph 2(4), in relation to disposals made on or after 29 May 2020.

(c)in a case where the qualifying payment concerned is within
paragraph 2(5), in relation to disposals made on or after such date as
20is specified in the regulations concerned (which may be a date before
the regulations are made).

Relief from inheritance tax

5(1)This paragraph applies where a qualifying payment is at any time received
by a person or the personal representatives of a person (but see sub-
25paragraph (4)).

(2)The inheritance tax chargeable on the value transferred by the transfer made
on the person’s death is to be reduced by an amount equal to—

(a)the relevant percentage of the amount of the payment, or

(b)if lower, the amount of inheritance tax that would, apart from this
30paragraph, be chargeable on the value transferred.

(3)The “relevant percentage” means the percentage in the last row of the third
column of the Table in Schedule 1 to IHTA 1984.

(4)This paragraph does not apply in a case where—

(a)the qualifying payment is within paragraph 2(3),

(b)35the payment is made after the death of the person mentioned in
paragraph (b) of paragraph 2(3), and

(c)the payment is made otherwise than to the personal representatives
of that person.

(5)This paragraph has effect, in a case where the qualifying payment is within
40paragraph 2(2) or (3), in relation to deaths occurring on or after 3 April 2019.

(6)This paragraph has effect, in a case where the qualifying payment is within
paragraph 2(4), in relation to deaths occurring on or after 29 May 2020.

(7)This paragraph has effect, in a case where the qualifying payment is within
paragraph 2(5), in relation to deaths occurring on or after such date as is

specified in the regulations concerned (which may be a date before the
regulations are made).

Section 106

Schedule 16 Taxation of coronavirus support payments

5Accounting for coronavirus support payments referable to a business

1(1)This paragraph applies if a person carrying on, or who carried on, a business
(whether alone or in partnership) receives a coronavirus support payment
that is referable to the business.

(2)So much of the coronavirus support payment as is referable to the business
10is a receipt of a revenue nature for income tax or corporation tax purposes
and is to be brought into account in calculating the profits of that business—

(a)under the applicable provisions of the Income Tax Acts, or

(b)under the applicable provisions of the Corporation Tax Acts.

(3)Subject to paragraph 2(5), sub-paragraph (2) does not apply to an amount of
15a coronavirus support payment if—

(a)the business to which the amount is referable is no longer carried on
by the recipient of the amount, and

(b)the amount is not referable to activities of the business undertaken at
a time when it was being carried on by the recipient of the amount.

(4)20If an amount of the coronavirus support payment is referable to more than
one business or business activity, the amount is to be allocated between
those businesses or activities on a just and reasonable basis.

(5)Paragraph 3 contains provision about when, in certain cases, an amount of a
coronavirus support payment is, or is not, referable to a business for the
25purposes of this paragraph and paragraph 2.

(6)In this Schedule “business” includes—

(a)a trade, profession or vocation;

(b)a UK property business or an overseas property business;

(c)a business consisting wholly or partly of making investments.

30Amounts not referable to activities of a business which is being carried on

2(1)This paragraph applies if a person who carried on a business (whether alone
or in partnership) receives a coronavirus support payment that—

(a)is referable to the business, and

(b)is not wholly referable to activities of the business undertaken while
35the business was being carried on by the recipient of the payment.

(2)So much of the coronavirus support payment as is referable to the business
but which is not referable to activities of the business undertaken while the
business was being carried on by the recipient of the payment is to be treated
as follows.

(3)40An amount referable to a trade, profession or vocation is to be treated as a
post-cessation receipt for the purposes of Chapter 18 of Part 2 of ITTOIA

2005 or Chapter 15 of Part 3 of CTA 2009 (trading income: post-cessation
receipts), and—

(a)in the application of Chapter 18 of Part 2 of ITTOIA 2005 to that
amount, section 243 (extent of charge to tax) is omitted, and

(b)5in the application of Chapter 15 of Part 3 of CTA 2009 to that amount,
section 189 (extent of charge to tax) is omitted.

(4)An amount referable to a UK property business or an overseas property
business is to be treated (in either case) as a post-cessation receipt from a UK
property business for the purposes of Chapter 10 of Part 3 of ITTOIA 2005 or
10Chapter 9 of Part 4 of CTA 2009 (property income: post- cessation receipts),
and—

(a)in the application of Chapter 10 of Part 3 of ITTOIA 2005 to that
amount, section 350 (extent of charge to tax) is omitted, and

(b)in the application of Chapter 9 of Part 4 of CTA 2009 to that amount,
15section 281 (extent of charge to tax) is omitted.

(5)In any other case, for the purposes of paragraph 1(3)—

(a)the recipient of the amount is to be treated as if carrying on the
business to which the amount is referable to at the time of the receipt
of the amount, and

(b)20the amount is to be treated as if it were referable to activities
undertaken by the business at that time.

(6)Where the recipient of the amount has incurred expenses that—

(a)are referable to the amount, and

(b)would be deductible in calculating the profits of the business if it
25were being carried on at the time of receipt of the amount,

the amount brought into account under paragraph 1(2) by virtue of sub-
paragraph (5) is to be reduced by the amount of those expenses.

(7)But sub-paragraph (6) does not apply to expenses of a person that arise
directly or indirectly from the person ceasing to carry on business.

30Amounts referable to businesses in certain cases

3(1)An amount of a coronavirus support payment made under an employment-
related scheme—

(a)is referable to the business of the person entitled to the payment as
an employer (even if the person is not for other purposes the
35employer of the employees to whom the payment relates), and

(b)is not referable to any other business (and no deduction for any
expenses in respect of the same employment costs which are the
subject of the payment is allowed in calculating the profits of any
other business or in calculating the liability of any other person to tax
40charged under section 242 or 349 of ITTOIA 2005 or section 188 or 280
of CTA 2009 (post-cessation receipts)).

(2)A coronavirus support payment made under the self-employment income
support scheme is referable to the business of the individual to whom the
payment relates.

(3)45Where an amount of a coronavirus support payment made under the self-
employment income support scheme is brought into account under
paragraph 1(2), the whole of the amount is to be treated as a receipt of a