Finance Bill (HL Bill 123)

(b)TR is the total amount found under step 1.

Step 4

40For each specified category of revenues, calculate the operating margin.

“The operating margin” is—

where—

(a)R has the same meaning as in step 3, and

(b)E is the amount of relevant operating expenses of the group that are
recognised in the accounting period (as to which, see section 49).

5If R does not exceed E, the operating margin is nil.

Step 5

For each specified category of revenues, the taxable amount is 0.8 x the
operating margin x the net revenues.

For any other category of revenues, the taxable amount is 2% of the net
10revenues.

Step 6

Add together the taxable amounts calculated under step 5.

The result is “the group amount”.

Step 7

15The relevant person’s liability to digital services tax in respect of the
accounting period is the appropriate proportion of the group amount.

(5)If the duration of the accounting period is less than a year, the sum mentioned
in step 3 of subsection (4) is proportionately reduced.

(6)In this section—

• 20“the appropriate proportion” has the meaning given by section 47;

• “relevant person” has the same meaning as in section 47;

• “specified”, in relation to a category of revenues, means a category of
  revenues specified in the election.

49 Section 48: meaning of “relevant operating expenses”

(1)25This section supplements section 48.

(2)The “relevant operating expenses” of a group, in relation to a specified
category of revenues, means any expenses of a member of the group
attributable to the earning of UK digital services revenues within the specified
category, except excluded expenses.

(3)30“Excluded expenses” means any expenses—

(a)in respect of interest (or anything equivalent, from a commercial
perspective, to interest),

(b)attributable to the acquisition of a business or part of a business,

(c)occurring otherwise than in the normal course of business,

(d)35resulting from a change in the valuation of any tangible or intangible
asset, or

(e)in respect of any tax (arising under the law of any territory).

(4)Where expenses are attributable to—

(a)the earning of UK digital services revenues within the specified
40category, and

(b)anything else,

the expenses are to be treated as relevant operating expenses to such extent as
is just and reasonable.

(5)In this section “specified” has the meaning given by section 48.

50 Relief for certain cross-border transactions

(1)This section applies if a claim under this section in respect of an accounting
period has been included in the group’s DST return for that period (whether as
originally made or by amendment).

(2)5For the purposes of step 1 in section 47(3) or 48(4), disregard 50% of any UK
digital services revenues arising to a member of the group in the accounting
period in connection with a relevant cross-border transaction.

(3)For the purposes of step 4 in section 48(4), disregard 50% of any relevant
operating expenses of a member of the group recognised in the accounting
10period that result from a relevant cross-border transaction.

(4)“Relevant cross-border transaction” means a marketplace transaction where—

(a)the online marketplace is provided by a member of the group,

(b)a foreign user is a party to the transaction, and

(c)all or part of any revenues arising to a member of the group in
15connection with the transaction are (or would be) subject to a foreign
DST charge.

(5)In this section—

• “foreign user” means a user who it is reasonable to assume—

  (a)

  in the case of an individual, is normally in a territory outside the
  20United Kingdom;

  (b)

  in any other case, is established in a territory outside the United
  Kingdom,

  and a reference to the foreign user’s “territory” is to be read
  accordingly;

• 25“foreign DST charge” means a charge (known by any name) under the law
  of the foreign user’s territory which is similar to digital services tax;

• “marketplace transaction” has the meaning given by section 41;

• “relevant operating expenses” has the meaning given by section 49.

51 When DST is due and payable

30Digital services tax in respect of an accounting period is due and payable on
the day following the end of 9 months from the end of the accounting period.

Duty to submit returns etc

52 Meaning of “the responsible member”

(1)In this Part any reference to “the responsible member” of a group, at any time,
35is a reference to the following person—

(a)if at that time a nomination under subsection (2) is in force, the person
nominated;

(b)otherwise, the parent of the group.

(2)The parent of a group may nominate a person to be “the responsible member”
40of the group if—

(a)the person is a member of the group,

(b)the person is a company, and

(c)the parent agrees in writing to provide the person with everything the
person may reasonably require in order to comply with—

(i)any obligation imposed by or under this Part, or

(ii)any other obligation imposed on the person in connection with
5any digital services tax liability of any member of the group.

(3)A nomination is in force from the time it is made until any of the following
events occurs—

(a)the parent nominates another person;

(b)the person nominated ceases to be a member of the group or ceases to
10be a company;

(c)an officer of Revenue and Customs or the parent revokes the
nomination.

(4)An officer of Revenue and Customs may revoke a nomination only if the officer
has reason to believe that the person nominated—

(a)15is not being provided with something the person reasonably requires in
order to comply with an obligation of a kind mentioned in subsection
(2)(c), or

(b)is not complying with any such obligation.

(5)An officer of Revenue and Customs revokes a nomination by notifying the
20parent and the nominated person of the revocation.

The revocation has effect when the notification is issued.

(6)Any nomination, or revocation of a nomination, must be in writing.

53 Continuity of obligations etc where change in the responsible member

(1)This section applies if at any time (“the relevant time”) a person (“the new
25responsible member”) becomes the responsible member of a group in place of
another person (“the old responsible member”).

(2)The relevant obligations and liabilities of the new responsible member include
any relevant obligations and liabilities of the old responsible member as
respects the group.

(3)30Anything done as respects the group by or in relation to the old responsible
member, before the relevant time, is treated as having been done by or in
relation to the new responsible member.

(4)Accordingly, a penalty may be imposed on the new responsible member in
respect of anything done before the relevant time if, at that time, a penalty
35could have been imposed on the old responsible member in respect of the thing
done.

(5)Anything done by HMRC in relation to the old responsible member as respects
the group, before the end of the day the change is notified, is treated for all
relevant purposes as done by or in relation to the new responsible member.

(6)40Anything (including any proceedings) relating to the group that, at any time
during the period beginning with the relevant time and ending with the day
the change is notified, is in the process of being done in relation to the old
responsible member may be continued in relation to the new responsible
member.

(7)Accordingly, any reference in an enactment or other instrument to the
responsible member of the group is to be read, so far as necessary for the
purposes of giving effect to any of subsections (2) to (6), as being or including
a reference to the new responsible member.

(8)5In this section—

(a)any reference to an act includes an omission;

(b)any reference to the day the change is notified is to the day on which an
officer of Revenue and Customs receives notification, in accordance
with section 55, that the new responsible member has become the
10responsible member of the group;

(c)“relevant obligations and liabilities” means any obligations or other
liabilities relating to digital services tax;

(d)“relevant purposes” means any purposes relating to digital services tax.

(9)Nothing in this section—

(a)15prevents HMRC or anyone else, after the relevant time, from imposing
a penalty, exercising any other power, or doing anything else, in
relation to the old responsible member in respect of anything done
before the relevant time, or

(b)affects the validity of anything done before the relevant time.

54 20Duty to notify HMRC when threshold conditions are met

(1)This section applies—

(a)in relation to the first accounting period of a group in respect of which
the threshold conditions are met, and

(b)where a direction under section 56 has been given in respect of a group,
25in relation to the first relevant accounting period in respect of which the
threshold conditions are met.

In paragraph (b) “relevant accounting period” means the accounting period
specified in the direction or any subsequent accounting period.

(2)The responsible member must provide specified information to HMRC.

(3)30The information must be provided in the specified way.

(4)The information must be provided before the end of the period of 90 days from
the end of the accounting period.

(5)In subsections (2) and (3) “specified” means specified in a notice published by
HMRC.

55 35Duty to notify HMRC of change in relevant information

(1)This section applies where section 54 applies or has applied in relation to a
group.

(2)If at any relevant time there is a change in relevant information relating to the
group, the responsible member must notify HMRC of that change.

(3)40The notification must be given in the specified way.

(4)The notification must be given before the end of the period of 90 days
beginning with the day on which the change occurs.

(5)In subsection (3) “specified” means specified in a notice published by HMRC.

(6)In this section—

• “relevant information” means information of a kind specified under
  section 54(2);

• “relevant time” means any time—

  (a)

  5after the time when the information is provided under section
  54 or (if earlier) the last time by which the information may be
  provided in accordance with that section, and

  (b)

  before the giving of a direction under section 56 in relation to
  the group.

56 10Duty to file returns

(1)This section applies where the threshold conditions are met in relation to a
group for an accounting period.

(2)The responsible member must deliver a DST return—

(a)for the accounting period, and

(b)15for each subsequent accounting period, subject to subsection (3).

(3)An officer of Revenue and Customs may, on the application of the responsible
member, direct that the duty to deliver a DST return does not apply in relation
to an accounting period specified in the direction or subsequent accounting
periods.

(4)20Such a direction may be given only if it appears to the officer that the threshold
conditions will not be met in relation to the group for any accounting period
beginning with the specified accounting period.

(5)Nothing in a direction under subsection (3) prevents the further application of
this section to the group, in any subsequent accounting period in which the
25threshold conditions are met.

(6)Schedule 8 contains provision about DST returns, enquiries, assessments etc.

Groups, parents and members

57 Meaning of “group”, “parent” etc

(1)In this Part “group” means—

(a)30any entity which—

(i)is a relevant entity (see section 58), and

(ii)meets condition A or B (see subsections (2) and (3)), and

(b)each subsidiary (if any) of the entity mentioned in paragraph (a).

(2)Condition A is that the entity—

(a)35is a member of a GAAP group, and

(b)is not a subsidiary of an entity that—

(i)is a relevant entity, and

(ii)itself meets condition A.

(3)Condition B is that the entity is not a member of a GAAP group.

(4)40In this Part—

(a)references to the “parent” of a group are to the entity mentioned in
subsection (1)(a);

(b)references to a “member” of a group are to an entity mentioned in
subsection (1)(a) or (b);

(c)5“subsidiary” has the meaning given by the applicable accounting
standards.

(5)In this section “GAAP group” means a group within the meaning of the
applicable accounting standards.

(6)For the meaning of “the applicable accounting standards” see section 64.

58 10Section 57: meaning of “relevant entity”

(1)In section 57 “relevant entity” means—

(a)a company, or

(b)an entity the shares or other interests in which are listed on a recognised
stock exchange and are sufficiently widely held.

(2)15Shares or other interests in an entity are “sufficiently widely held” if no
participator in the entity holds more than 10% by value of all the shares or other
interests in the entity.

(3)The following are not relevant entities—

(a)the Crown;

(b)20a Minister of the Crown;

(c)a government department;

(d)a Northern Ireland department;

(e)a foreign sovereign power.

(4)In this section—

(a)25“participator” has the meaning given by section 454 of CTA 2010;

(b)“recognised stock exchange” has the meaning given by section 1137 of
CTA 2010;

(c)the reference to shares or other interests being listed on a recognised
stock exchange is to be read in accordance with section 1137 of CTA
302010.

(5)For the meaning of “company” see section 72.

59 Continuity of a group over time

(1)In this Part, this section applies for the purpose of determining whether a
group at any time (Time 2) is the same group as a group at any earlier time
35(Time 1).

(2)The group at Time 2 is the same group as the group at Time 1 if and only if the
entity that is the parent of the group at Time 2—

(a)was the parent of the group at Time 1, and

(b)was the parent of a group at all times between Time 1 and Time 2.

60 40Treatment of stapled entities

(1)This section applies where two or more entities—

(a)would, apart from this section, be the parent of a group, and

(b)are stapled to each other.

(2)This Part applies as if—

(a)the entities were subsidiaries of another entity (the “deemed parent”),
5and

(b)the deemed parent were within section 57(1)(a) (conditions for being
the parent of a group).

(3)For the purpose of this section, an entity (A) is “stapled” to another entity (B)
if, in consequence of the nature of the rights attaching to the shares or other
10interests in A (including any terms or conditions attaching to the right to
transfer the interests), it is necessary or advantageous for a person who has,
disposes of or acquires shares or other interests in A also to have, dispose of or
acquire shares or other interests in B.

Accounting periods, accounts etc

61 15Accounting periods and meaning of “a group’s accounts”

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

(2)A group’s first accounting period—

(a)begins with 1 April 2020, and

(b)ends with the first accounting reference date to occur after that date or,
20if earlier, with 31 March 2021.

This is subject to subsection (4) (rule for groups coming into existence after 1
April 2020).

(3)Any other accounting period of a group—

(a)begins immediately after the end of the previous accounting period,
25and

(b)ends with the first accounting reference date to occur after it begins or,
if earlier, one year after it begins.

(4)In the case of a group formed after 1 April 2020, its first accounting period—

(a)begins with the date on which it is formed, and

(b)30ends with the first accounting reference date to occur after that date or,
if earlier, one year after it begins.

(5)In this section “accounting reference date” means the date to which the group’s
accounts are made up.

(6)Any reference to a group’s accounts is to—

(a)35the consolidated accounts of the group’s parent and its subsidiaries, or

(b)the parent’s accounts (if the parent is the only member of the group
throughout the period in question).

62 Apportionment of revenues or expenses to accounting period

(1)This section applies if a group’s period of account does not coincide with an
40accounting period.

(2)The revenues or expenses of a period of account may be apportioned to the
parts of that period falling within different accounting periods.

(3)The apportionment must be made by reference to the number of days in the
periods concerned.

63 Meaning of revenues arising, or expenses recognised, in a period

(1)In this Part any reference to revenues arising to members of a group in a period,
5or to expenses of members of a group recognised in a period, is to be
interpreted as follows.

(2)For any period of account of the group for which the group’s accounts are
produced in accordance with the applicable accounting standards, the
reference is to—

(a)10revenues (however described) or expenses recognised in the income
statement (or in profit and loss) for that period, or

(b)if any consolidation exemption applies, to revenues (however
described) or expenses that would be recognised in the income
statement (or in profit and loss) for that period if no consolidation
15exemption were applicable.

(3)For any period of account of the group not falling within subsection (2), the
reference is to revenues or expenses that would be recognised in the income
statement (or in profit and loss) in the group’s accounts produced in
accordance with IAS for the period if such accounts were produced (and no
20consolidation exemption was applicable).

(4)If the group does not produce accounts for any period (“the relevant period”)
in an accounting period, the reference is to revenues or expenses that would be
recognised in the income statement (or in profit and loss) in the group’s
accounts produced in accordance with IAS for the relevant period if such
25accounts were produced (and no consolidation exemption was applicable).

(5)In this section “consolidation exemption” means any exemption in the
applicable accounting standards from a requirement to consolidate revenues.

64 Meaning of “the applicable accounting standards” etc

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

(2)30“The applicable accounting standards”, in relation to a group, means—

(a)for any period for which the group’s accounts are produced in
accordance with UKGAAP, UKGAAP;

(b)for any period for which the group’s accounts are produced in
accordance with acceptable overseas GAAP, acceptable overseas
35GAAP;

(c)for any period for which the group’s accounts are produced in
accordance with a specified standard, that standard;

(d)otherwise, IAS.

(3)“UKGAAP”—

(a)40means generally accepted accounting practice in relation to accounts of
UK companies (other than accounts prepared in accordance with IAS)
that are intended to give a true and fair view, and

(b)has the same meaning in relation to persons other than companies, and
companies that are not UK companies, as it has in relation to UK
45companies.