Finance Bill (HL Bill 123)

Part 1 continued    

(2)In this Part “fungible assets” means assets of a nature to be dealt in
without identifying the particular assets involved.

900K Fungible assets: pre-FA 2002 assets and restricted assets

(1)For the purposes of section 900J—

(a)5pre-FA 2002 assets,

(b)restricted assets, and

(c)standard intangible fixed assets,

are to be regarded as assets of different kinds.

(2)If section 900J applies (whether or not it is a case where subsection (1)
10of this section has effect)—

(a)a single asset comprising pre-FA 2002 assets is treated as itself
being a pre-FA 2002 asset,

(b)a single asset comprising restricted assets is treated as itself
being a restricted asset, and

(c)15a single asset comprising standard intangible fixed assets is
treated as itself being a standard intangible fixed asset.

900L Realisation of fungible assets: pre-FA 2002 assets and restricted assets

(1)This section applies if—

(a)a company realises a fungible asset, and

(b)20apart from subsection (1) of section 900K, the asset would be
treated as part of a single asset comprising more than one of the
kinds of asset referred to in that subsection.

(2)The realisation is treated—

(a)as diminishing a single asset of the company comprising pre-FA
252002 assets in priority to diminishing a single asset of the
company comprising restricted assets or a single asset of the
company comprising standard intangible fixed assets, and

(b)as diminishing a single asset of the company comprising
restricted assets in priority to diminishing a single asset of the
30company comprising standard intangible fixed assets.

900M Acquisition of fungible assets: pre-FA 2002 assets and restricted assets

(1)Fungible assets acquired by a company that would not otherwise be
treated as pre-FA 2002 assets are so treated so far as they are identified,
in accordance with the following rules, with pre-FA 2002 assets realised
35by the company.

(2)Fungible assets acquired by a company that would not otherwise be
treated as pre-FA 2002 assets or restricted assets are to be treated as
restricted assets so far as they are identified, in accordance with the
following rules, with restricted assets realised by the company.

(3)40Rule 1 is that assets acquired are identified with pre-FA 2002 assets or
restricted assets of the same kind realised by the company within the
period beginning 30 days before and ending 30 days after the date of
the acquisition.

(4)The reference in subsection (3) to assets “of the same kind” is to assets
45that are, or but for section 900K(1) would be, treated as part of a single
asset because of section 900J.

(5)Rule 2 is that assets realised earlier are identified before assets realised
later.

(6)Rule 3 is that assets acquired earlier are identified before assets
acquired later.

900N 5Debits in respect of a single asset comprising restricted assets

(1)This section applies in respect of a single asset of a company that
comprises restricted assets (and is itself treated as a restricted asset by
reason of section 900K(2)(b)).

(2)The relevant Chapters of this Part have effect as if the company
10acquired the single asset for the sum of the amounts for which the
company would have been treated for the purposes of those Chapters
as having acquired each of the restricted assets that comprises the
single asset.

(3)In this section “the relevant Chapter of this Part” has the meaning given
15by section 900E(6).

900O Interpretation

In this Chapter—

• “restricted asset” has the same meaning as in Chapter 16A, and

• “standard intangible fixed asset” means an intangible fixed asset
  20that is neither a pre-FA 2002 asset nor a restricted asset.”

(14)The amendments made by this section have effect in relation to accounting
periods beginning on or after 1 July 2020.

(15)For the purposes of subsection (14), an accounting period beginning before,
and ending on or after, 1 July 2020 is to be treated as if so much of the
25accounting period as falls before that date, and so much of the accounting
period as falls on or after that date, were separate accounting periods.

Miscellaneous measures affecting companies

32 Non-UK resident companies carrying on UK property businesses etc

Schedule 6 makes minor amendments (which arise in consequence of the
30provision made by Schedule 1 or 5 to FA 2019) in relation to non-UK resident
companies that carry on UK property businesses or have other income relating
to land in the United Kingdom.

33 Surcharge on banking companies: transferred-in losses

(1)Chapter 4 of Part 7A of CTA 2010 (surcharge on banking companies) is
35amended as follows.

(2)In section 269D (overview of Chapter), after subsection (4) insert—

“(4A)Section 269DCA defines “non-banking transferred-in loss relief” for the
purposes of calculating a company’s surcharge profits.”

(3)In section 269DA (surcharge on banking companies), in subsection (2)
40(calculation of “surcharge profits”)—

(a)in the formula, after “NBPLR +” insert “NBTILR +”;

(b)after the definition of “NBPLR” insert—

• ““NBTILR” is the amount (if any) of non-banking
  transferred-in loss relief (see section 269DCA);”.

(4)In section 269DC (meaning of “non-banking or pre-2016 loss relief”)—

(a)5in subsection (13) (meaning of “a non-banking or pre-2016 carried-
forward capital loss”)—

(i)in paragraph (a), omit “or as a result of a non-banking loss
transfer”;

(ii)in paragraph (b), for “8(1)(b)” substitute “2A(1)(b)”;

(b)10omit subsections (14) and (15) (meaning of “non-banking loss transfer”
and “non-banking company”).

(5)After section 269DC insert—

“269DCA  Meaning of “non-banking transferred-in loss relief”

(1)In section 269DA(2), “non-banking transferred-in loss relief” means the
15sum of any amounts that are deducted under section 2A of TCGA 1992
in determining the taxable total profits of the company of the
chargeable accounting period in respect of an allowable loss, or any
part of an allowable loss, that accrued to the company as a result of a
non-banking loss transfer.
20A “non-banking loss transfer” is a transfer to the company of the whole
or any part of an allowable loss, by an election under section 171A of
TCGA 1992 (reallocation within group), from a non-banking company.

(3)In this section “non-banking company” means a company that is not a
banking company at the time that the allowable loss, or such part of it
25as the election transfers, is treated as accruing by virtue of the election
(see, in particular, section 171B(3) of TCGA 1992).”

(6)The amendments made by this section have effect in relation to an allowable
loss, or any part of an allowable loss, deducted from a chargeable gain accruing
on a disposal made on or after 11 March 2020.

34 30CT payment plans for tax on certain transactions with EEA residents

Schedule 7 makes provision for the deferral of the payment of corporation tax
arising in connection with certain transactions involving companies resident in
an EEA state.

35 Changes to accounting standards affecting leases

(1)35Schedule 14 to FA 2019 (leases: changes to accounting standards etc) is
amended as follows.

(2)In paragraph 13 (cases where asset first recognised for period of account
beginning on or after 1 January 2019), for sub-paragraph (1) substitute—

“(1)This paragraph applies if the first period of account for which the
40right-of-use asset falls (or would fall) to be recognised for accounting
purposes in the accounts of the lessee begins on or after 1 January
2019 (referred to in the following provisions of this paragraph as “the
first period of account”).”

(3)For paragraph 14 (cases where asset first recognised for a period of account
beginning before 1 January 2019) substitute—

“14 (1) This paragraph applies if the first period of account for which the
right-of-use asset falls (or would fall) to be recognised for accounting
5purposes in the accounts of the lessee begins before 1 January 2019.

(2)The change of basis provisions and this Part of this Schedule have
effect—

(a)as if there were a change of accounting policy with respect of
the accounts of the lessee for the first period of account
10beginning on or after 1 January 2019, and

(b)as if that period of account were the first period of account for
which the right-of-use asset falls (or would fall) to be
recognised for accounting purposes in the accounts of the
lessee.”

(4)15Schedule 14 to FA 2019 has effect, and is to be deemed always to have had
effect, with the amendments made by this section.

Investments

36 Enterprise investment scheme: approved investment fund as nominee

(1)Section 251 of ITA 2007 (EIS: approved investment fund as nominee) is
20amended as follows.

(2)In subsection (1)—

(a)in the opening words, for “Subsection (2) applies” substitute “This
section applies”,

(b)in paragraph (a), for “an approved fund” substitute “an approved
25knowledge-intensive fund”,

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

(d)in paragraph (c), for “90%” substitute “50%”,

(e)after that paragraph insert—

“(d)the amounts which the managers have, as nominee for
30the individual, subscribed for shares issued within 24
months after the closing of the fund represent at least
90% of the individual’s investment in the fund,

(e)within that 24 month period at least 80% of the
individual’s investment in the fund is represented by
35shares in companies which are knowledge-intensive
companies at the time the shares are issued, and

(f)the managers have met such conditions with respect to
the provision of information to HMRC Commissioners
as the Commissioners consider appropriate for the
40purposes of this section.”, and

(f)omit the second sentence.

(3)After that subsection insert—

“(1A)In this section “the managers of an approved knowledge-intensive
fund” means the person or persons having the management of an
45investment fund—

(a)which is, in the opinion of HMRC Commissioners, a fund
established for the purpose of investing wholly, or substantially
wholly, in shares in companies which are knowledge-intensive
companies at the time the shares are issued, and

(b)5which is, having met such other conditions as HMRC
Commissioners consider appropriate for the purposes of this
section, approved by them for those purposes.”

(4)In subsection (2), omit “In any case where this subsection applies,”.

(5)After that subsection insert—

“(2A)10Accordingly, in a case where section 158 has effect with the
modifications in subsection (2), the reference in section 158(4) to the
issue of the shares in the preceding tax year is to the issue of the shares
in the tax year preceding the tax year in which the fund closes (and
references elsewhere in this Part to the issue of shares in a previous tax
15year are to be read accordingly).”

(6)In subsection (4), in the opening words, for “an approved fund” substitute “an
approved knowledge-intensive fund”.

(7)In subsection (5)(b), for “the Commissioners for Her Majesty’s Revenue and
Customs” substitute “HMRC Commissioners”.

(8)20In subsection (6), for “an approved fund” substitute “an approved knowledge-
intensive fund”.

(9)In subsection (7), for “an approved fund” substitute “an approved knowledge-
intensive fund”.

(10)After that subsection insert—

“(8)25In this section “HMRC Commissioners” means the Commissioners for
Her Majesty’s Revenue and Customs.”

(11)In the title, for “investment fund” substitute “knowledge-intensive fund”.

(12)The amendments made by this section are treated as having come into force on
6 April 2020 in relation to funds that close on or after that date.

37 30Gains from contracts for life insurance etc: top slicing relief

(1)In Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance
etc), sections 535 to 537 (top slicing relief) are amended as follows.

(2)In section 535 (top slicing relief), at the end insert—

“(8)For the purposes of the calculations mentioned in subsection (1)—

(a)35section 25(2) of ITA 2007 (deductions of reliefs and allowances
in most beneficial way for taxpayer) does not apply, and

(b)reliefs and allowances are available for deduction from an
amount that, for the purposes of those calculations, is the
highest part of the individual’s total income for the tax year
40only so far as they cannot be deducted from other amounts.”

(3)In section 536(1) (top slicing relieved liability: one chargeable event), in
paragraph (a) of step 2—

(a)omit the “and” at the end of sub-paragraph (i), and

(b)after the “and” at the end of sub-paragraph (ii) insert—

“(iii)in determining the amount of the individual’s
personal allowance under section 35 of ITA 2007
(but not the amount of any other relief or
5allowance), it is assumed that the gain from the
chargeable event is equal to the amount of the
annual equivalent, and”.

(4)In section 537 (top slicing relieved liability: two or more chargeable events), in
paragraph (a) of step 2—

(a)10omit the “and” at the end of sub-paragraph (i), and

(b)after the “and” at the end of sub-paragraph (ii) insert—

“(iii)in determining the amount of the individual’s
personal allowance under section 35 of ITA 2007
(but not the amount of any other relief or
15allowance), it is assumed that the total gains
from the chargeable events are equal to the
amount of the total annual equivalent, and”.

(5)The amendments made by this section have effect in relation to the tax year
2019-20 and subsequent tax years (but see subsection (6) for an exception in the
20case of the tax years 2019-20 and 2020-21).

(6)Those amendments do not have effect in relation to the tax year 2019-20 or
2020-21 in the case of an individual who is only liable to tax under Chapter 9 of
Part 4 of ITTOIA 2005 for the year in question—

(a)on a gain from one chargeable event that occurs before 11 March 2020,
25or

(b)on gains from chargeable events each of which occurs before that day.

38 Losses on disposal of shares: abolition of requirement to be UK business

(1)The following provisions are repealed—

(a)section 134(5) of ITA 2007 (which provides that a company is a
30qualifying trading company for the purposes of income tax relief under
Chapter 6 of Part 4 of that Act only if it carries on its business in the
United Kingdom), and

(b)section 78(5) of CTA 2010 (which makes corresponding provision for
the purposes of corporation tax relief under Chapter 5 of Part 4 of that
35Act).

(2)In consequence of the repeals made by subsection (1)—

(a)in ITA 2007—

(i)in section 134(1), for “D” substitute “C”,

(ii)in section 147(8), at the end of paragraph (a) insert “or” and omit
40paragraph (c) together with the “or” before it,

(iii)in section 150(1), omit the entry relating to section 134(5)(a), and

(iv)in paragraph 38(2) of Schedule 2, in the opening words, for “(2)
to (5)” substitute “(2) to (4)”, and omit the substituted section
134(5) of ITA 2007, and

(b)45in CTA 2010—

(i)in section 75(8), at the end of paragraph (a) insert “or” and omit
paragraph (c) together with the “or” before it,

(ii)in section 78(1), for “D” substitute “C”,

(iii)in section 89(1), omit the entry relating to section 78(5)(a), and

(iv)in paragraph 28(4) of Schedule 2, in the opening words, for “(2)
to (5)” substitute “(2) to (4)”, and omit the substituted section
78(5) of CTA 2010.

(3)5The amendments made by this section have effect in relation to disposals made
on or after 24 January 2019.

Part 2 Digital services tax

Introduction

39 10Digital services tax: introduction

(1)A tax (to be known as “digital services tax”) is charged in accordance with this
Part on UK digital services revenues arising to a person in an accounting
period.

(2)The Commissioners for Her Majesty’s Revenue and Customs (in this Part
15referred to as “the Commissioners”) are responsible for the collection and
management of digital services tax.

(3)In this Part—

(a)sections 40 to 45 define “UK digital services revenues” and other key
expressions;

(b)20sections 46 to 51 contain the charge to digital services tax;

(c)sections 52 to 56 impose a duty to file returns and other reporting
requirements;

(d)sections 57 to 60 define groups and related concepts;

(e)sections 61 to 64 define accounting periods, the meaning of revenues
25arising, and other accounts-related concepts;

(f)sections 65 to 72 contain supplementary and general provisions.

Digital services revenues, UK digital services revenues etc

40 Meaning of “digital services revenues”

(1)This section applies for the purposes of this Part.

(2)30The “digital services revenues” of a group for a period are the total amount of
revenues arising to members of the group in that period in connection with any
digital services activity of any member of the group.

(3)Where revenues arise in connection with a digital services activity and
anything else, the revenues are to be treated as arising in connection with the
35activity to such extent as is just and reasonable.

41 Meaning of “UK digital services revenues”

(1)This section applies for the purposes of this Part.

(2)A group’s “UK digital services revenues” for a period are so much of its digital
services revenues for that period as are attributable to UK users.

(3)Revenues are attributable to UK users if—

(a)they are within Case 1, 2 or 3, or

(b)5they are within Case 4 or 5 and, where subsection (9) applies, they are
allocated to UK users under that subsection.

This is subject to subsection (10).

(4)Case 1 is where—

(a)the revenues are online marketplace revenues,

(b)10they arise in connection with a marketplace transaction, and

(c) a UK user is a party to the transaction.

(5)Case 2 is where—

(a)the revenues are online marketplace revenues, and

(b)they arise in connection with particular accommodation or land in the
15United Kingdom (see section 42).

(6)Case 3 is where—

(a)the revenues are online marketplace revenues,

(b)they arise in connection with online advertising for particular services,
goods or other property, and

(c)20the advertising is paid for by a UK user.

(7)Case 4 is where—

(a)the revenues are online advertising revenues,

(b)they are not within any of Cases 1 to 3, and

(c)the advertising is viewed or otherwise consumed by UK users.

(8)25Case 5 is where—

(a)the revenues are not within any of Cases 1 to 4, and

(b)they arise in connection with UK users.

(9)For the purposes of subsection (3)(b), revenues are to be allocated to UK users
to such extent as is just and reasonable where they are—

(a)30online advertising revenues within Case 4 and the advertising in
question is viewed or otherwise consumed by UK users and others;

(b)revenues within Case 5 and they arise in connection with UK users and
others.

(10)Online marketplace revenues are treated as not attributable to UK users if—

(a)35where they arise in connection with a marketplace transaction—

(i)they arise in connection with particular accommodation or land
outside the United Kingdom (see section 42), and

(ii)the only UK user who is a party to the transaction is a provider
or seller of the thing to which the transaction relates;

(b)40in any other case, they arise in connection with particular
accommodation or land outside the United Kingdom (see section 42).

(11)In this section—

• “marketplace transaction” means a transaction on the online marketplace
  between users;

• “online advertising revenues” means revenues arising in connection with
  the provision or facilitation of online advertising;

• “online marketplace revenues” means revenues arising in connection
  with an online marketplace.

(12)5For the purpose of the definition of “marketplace transaction”, “transaction on
the online marketplace” includes the placing on the marketplace of an order
that results in an agreement, even if the agreement between the users is made
otherwise than through the marketplace.

42 UK digital services revenues: accommodation and land

(1)10This section, which supplements section 41 (meaning of a group’s UK digital
services revenues), applies for the purpose of determining when online
marketplace revenues arise in connection with accommodation or land.

(2)The revenues are treated as arising in connection with accommodation if they
arise in connection with—

(a)15the provision of accommodation, or

(b)the provision of services, goods or other property in relation to
accommodation, in connection with the provision of the
accommodation on the online marketplace.

(3)The revenues are treated as arising in connection with land if they arise in
20connection with—

(a)the sale of an estate, interest or right in or over land, or

(b)the provision of services, goods or other property in relation to land, in
connection with the sale of an estate, interest or right in or over the land
on the online marketplace.

(4)25In this section—

(a)any reference to providing or selling anything includes offering to
provide or sell it;

(b)any reference to providing goods or other property includes providing
it temporarily;

(c)30“online marketplace revenues” means revenues arising in connection
with an online marketplace.

43 Meaning of “digital services activity” etc

(1)This section applies for the purposes of this Part.

(2)“Digital services activity” means providing—

(a)35a social media service,

(b)an internet search engine, or

(c)an online marketplace.

(3)“Social media service” means an online service that meets the following
conditions—

(a)40the main purpose, or one of the main purposes, of the service is to
promote interaction between users (including interaction between
users and user-generated content), and

(b)making content generated by users available to other users is a
significant feature of the service.

(4)“Internet search engine” does not include a facility on a website that merely
enables a person to search—

(a)the material on that website, or

(b)the material on that website and on closely related websites.

(5)5“Online marketplace” means an online service that meets the following
conditions—

(a)the main purpose, or one of the main purposes, of the service is to
facilitate the sale by users of particular things, and

(b)the service enables users to sell particular things to other users, or to
10advertise or otherwise offer particular things for sale to other users.

(6)In subsection (5)—

(a)“thing” means any services, goods or other property;

(b)any reference to the sale of a thing includes hiring it.

(7)Any reference to providing a social media service, internet search engine or
15online marketplace includes carrying on an associated online advertising
service; and any reference to a social media service, internet search engine or
online marketplace is to be read accordingly.

(8)In this section “associated online advertising service” means an online service
that—

(a)20facilitates online advertising, and

(b)derives significant benefit from its association with the social media
service, internet search engine or online marketplace.

(9)Where an associated online advertising service derives significant benefit from
its association with more than one type of digital services activity, revenues
25arising from the service are to be treated as attributable to each of the types of
digital services activity in question to such extent as is just and reasonable.

(10)See also section 45 (exclusion for online financial marketplaces).

44 Meaning of “user” and “UK user”

(1)This section applies for the purposes of this Part.

(2)30Any reference to a user, in relation to a digital services activity of a person (the
“provider”), does not include—

(a)the provider or a member of the same group as the provider, or

(b)an employee of a person within paragraph (a), acting in the course of
that person’s business.

(3)35“UK user” means any user who it is reasonable to assume—

(a)in the case of an individual, is normally in the United Kingdom;

(b)in any other case, is established in the United Kingdom.

45 Exclusion for online financial marketplaces

(1)In this Part any reference to an online marketplace excludes one that is for the
40time being an online financial marketplace.

(2)An online marketplace is an “online financial marketplace” for a relevant
accounting period if more than half of the revenues arising to the provider in
the accounting period in connection with the online marketplace arise in