Finance Bill (HL Bill 123)

Part 2 continued    

“UK companies” here means companies incorporated or formed under the law
of a part of the United Kingdom.

(4)“Acceptable overseas GAAP” means the generally accepted accounting
practice and principles of any of the following—

• 5Canada;

• China;

• Japan;

• South Korea;

• the United States of America.

(5)10“IAS” means—

(a)International Accounting Standards,

(b)International Financial Reporting Standards, and

(c)related interpretations,

issued or adopted, from time to time, by the International Accounting
15Standards Board.

(6)In subsection (2)(c), “specified” means specified in a notice published by
HMRC.

Supplementary

65 Anti-avoidance

(1)20Any tax advantage that would (apart from this section) arise from relevant
avoidance arrangements is to be counteracted by the making of such
adjustments as are just and reasonable.

(2)The adjustments (whether or not made by an officer of Revenue and Customs)
may be made by way of an assessment, the modification of an assessment,
25amendment or disallowance of a claim, or otherwise.

(3)Arrangements are “relevant avoidance arrangements” if their main purpose, or
one of their main purposes, is to enable a person to obtain a tax advantage.

(4)But arrangements are not “relevant avoidance arrangements” if the obtaining
of any tax advantage that would (apart from this section) arise from them can
30reasonably be regarded as consistent with—

(a)any principles on which the provisions of this Part that are relevant to
the arrangements are based (whether express or implied), and

(b)the policy objectives of those provisions.

(5)In this section—

• 35“arrangements” include any agreement, understanding, scheme,
  transaction or series of transactions (whether or not legally
  enforceable);

• “tax” means digital services tax (and “tax advantage” is to be construed
  accordingly);

• 40“tax advantage” includes—

  (a)

  avoidance or reduction of a charge to tax or an assessment to
  tax,

  (b)

  repayment or increased repayment of tax,

  (c)

  avoidance of a possible assessment to tax, and

  Finance BillPage 51

  (d)

  deferral of a payment of tax or advancement of a repayment of
  tax.

66 Notice requiring payment from other group members

(1)This section applies where any DST liability relating to a group for an
5accounting period is unpaid at the end of the period of 3 months after the
relevant date.

(2)A designated officer may give a notice (a “payment notice”) to a relevant
person requiring that person, within 30 days of the giving of the notice, to pay
all unpaid DST liabilities relating to the group for the accounting period.

(3)10A payment notice must state—

(a)the amount of any digital services tax or penalty that remains unpaid,

(b)the date any digital services tax or penalty first became payable, and

(c)the relevant person’s right of appeal.

(4)A payment notice may not be given more than 3 years and 6 months after the
15relevant date.

(5)If the DST liability arose because of a determination under Part 5 of Schedule
8, the relevant date is the date on which the notice of determination is issued.

(6)If the DST liability arose because of a self-assessment, the relevant date is the
later of—

(a)20the date on which the tax becomes due and payable;

(b)in a case where the DST return is delivered after the filing date, the date
on which the return is delivered;

(c)if notice of enquiry is given, the date on which the enquiry is
completed;

(d)25if more than one notice of enquiry is given, the date on which the last
notice is given;

(e)if as a result of such an enquiry the DST return is amended, the date on
which the notice of the amendment is issued;

(f)if there is an appeal against such an amendment, the date on which the
30appeal is finally determined.

(7)If the DST liability arose because of an assessment under Part 6 or 7 of Schedule
8, the relevant date is—

(a)if there is no appeal against the assessment, the date on which the notice
of assessment is issued, or

(b)35if there is such an appeal, the date on which the appeal is finally
determined.

(8)If the DST liability arose because of a penalty, the relevant date is the date on
which the notice of the penalty is issued.

(9)A payment notice may be given anywhere in the world, to any relevant person
40(whether or not resident in the United Kingdom).

(10)Schedule 9 makes further provision about payment notices.

(11)In this section—

• “designated officer” means an officer of Revenue and Customs who has
  been designated by the Commissioners for the purposes of this Part;

• “DST liability”, in relation to a group for an accounting period, means—

  (a)

  a liability of a relevant person to digital services tax in respect of
  that period, or

  (b)

  a liability of a person to a penalty for anything done (or not
  5done) in respect of the accounting period;

• “the filing date” has the same meaning as in Schedule 8 (see paragraph
  1(1));

• “relevant person” means any person who was a member of the group in
  the accounting period.

(12)10The reference in subsection (6) to a self-assessment includes a reference to a
self-assessment that supersedes a determination (see paragraph 18 of Schedule
8).

(13)In this section references to “digital services tax” include references to interest
on digital services tax.

67 15Interest on overdue DST

(1)Digital services tax carries interest at the applicable rate from the date when the
tax becomes due and payable until payment.

(2)This applies even if the date when the tax becomes due and payable is—

(a)a Saturday or Sunday,

(b)20Good Friday, Christmas day, a bank holiday or other public holiday, or

(c)a day specified in an order made under section 2 of the Banking and
Financial Dealings Act 1971 (power to suspend financial dealings).

(3)In this section “the applicable rate” means the rate applicable under section 178
of FA 1989.

68 25Interest on overpaid DST etc

(1)Where a payment in respect of a person’s digital services tax liability for an
accounting period is made before the due date, the payment carries interest at
the applicable rate from the later of—

(a)the date the payment is made, and

(b)306 months and 13 days from the start of the accounting period,

until the due date.

(2)Where a repayment of digital services tax paid by a person for an accounting
period falls to be made, the repayment carries interest at the applicable rate—

(a)from the due date or, if later, the date the digital services tax was paid,
35and

(b)until the order for repayment is issued.

(3)Where a repayment of digital services tax is a repayment of tax paid by a
person on different dates, it is to be treated so far as possible as a repayment of
tax paid on a later (rather than an earlier) date among those dates.

(4)40Where—

(a)interest has been paid to a person under this section,

(b)there is a change in the person’s assessed liability,

(c)the change does not correct (wholly or in part) an error made by an
officer of Revenue and Customs, and

(d)as a result of the change (and in particular not as a result of an error in
the calculation of interest) it appears to an officer of Revenue and
Customs that some or all of the interest ought not to have been paid,

the interest that ought not to have been paid may be recovered from the person.

(5)5For the purposes of subsection (4)(b) there is a change in a person’s assessed
liability if (and only if)—

(a)an assessment, or an amendment of an assessment, of the amount of
digital services tax payable by the person for the accounting period in
question is made, or

(b)10an HMRC determination of that amount is made,

whether or not any previous assessment or determination has been made.

(6)In this section—

• “the applicable rate” has the same meaning as in section 67;

• “the due date”, in relation to an accounting period, means the date digital
  15services tax for the accounting period becomes due and payable;

• “error” includes—

  (a)

  any computational error, and

  (b)

  the allowance of a claim that ought not to have been allowed;

• “HMRC determination” means a determination under Part 5 of Schedule
  208.

69 Recovery of DST liability

(1)Any amount due by way of DST liability is recoverable as a debt due to the
Crown.

(2)In this section “DST liability” has the same meaning as in section 66.

70 25Minor and consequential amendments

Schedule 10 contains minor and consequential amendments.

71 Review of DST

(1)The Treasury must, before the end of 2025, conduct a review of digital services
tax and prepare a report of the review.

(2)30The Treasury must lay a copy of the report before Parliament.

General

72 Interpretation of Part

In this Part—

• “accounting period” has the meaning given by section 61;

• 35“the applicable accounting standards” has the meaning given by section
  64;

• “the Commissioners” has the meaning given by section 39;

• “company” has the meaning given by section 1121(1) of CTA 2010;

• “digital services activity” has the meaning given by section 43;

• 40“digital services revenues” has the meaning given by section 40;

• “group” has the meaning given by section 57;

• “group’s accounts” has the meaning given by section 61;

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

• “IAS” has the meaning given by section 64;

• 5“member” has the meaning given by section 57;

• “parent” has the meaning given by section 57;

• “the responsible member” has the meaning given by section 52;

• “subsidiary” has the meaning given by section 57;

• “the threshold conditions” has the meaning given by section 46;

• 10“UK digital services revenues” has the meaning given by section 41;

• “UK user” has the meaning given by section 44;

• “user” has the meaning given by section 44.

Part 3 Other taxes

15Inheritance tax

73 Excluded property etc

(1)IHTA 1984 is amended as follows.

(2)In section 48 (excluded property)—

(a)in subsection (3)(a), for “settlement was made” substitute “property
20became comprised in the settlement (but see also subsection (3F))”,

(b)in subsection (3A)(a), for “settlement was made” substitute “property
became comprised in the settlement (but see also subsection (3F))”,

(c)in subsection (3E), for “settlement is made” substitute “property
became comprised in the settlement (but see also subsection (3F))”, and

(d)25after subsection (3E) insert—

“(3F)If—

(a)an amount is payable in respect of property (“the
existing property”) comprised in a settlement, and

(b)the amount represents an accumulation of income
30which (once accumulated) becomes comprised in the
settlement,

subsections (3)(a), (3A)(a) and (3E) have effect, in the case of the
amount, as if any reference to the time it became comprised in
the settlement were to the time the existing property became
35comprised in the settlement.”

(3)After section 48 insert—

“48A Commencement of settlement

In this Act any reference to the commencement of a settlement is to the
time when property first becomes comprised in it.”

(4)40Omit section 60 (meaning of commencement of settlement for purposes of
Chapter).

(5)In section 64 (charge at ten-year anniversary)—

(a)in subsection (1B)—

(i)after “settlor of” insert “property comprised in”,

(ii)for “settlement was made” substitute “property became
comprised in the settlement (but see also subsection (1BA))”,
5and

(iii)after “income of the settlement” insert “that arose (directly or
indirectly) from the property”, and

(b)after that subsection insert—

“(1BA)If—

(a)10an amount is payable in respect of property (“the
existing property”) comprised in a settlement, and

(b)the amount represents an accumulation of income
which (once accumulated) becomes comprised in the
settlement,

15subsection (1B) has effect, in the case of the amount, as if any
reference to the time it became comprised in the settlement were
to the time the existing property became comprised in the
settlement.”

(6)In section 65 (charge at other times)—

(a)20in subsection (7A), for “settlement made” substitute “property became
comprised in settlement”,

(b)in subsection (8)—

(i)after “settlor of” insert “property comprised in”,

(ii)for “settlement was made” substitute “property became
25comprised in the settlement (but see also subsection (8A))”, and

(iii)for “property comprised in the settlement” substitute “the
property”, and

(c)after that subsection insert—

“(8A)If—

(a)30an amount is payable in respect of property (“the
existing property”) comprised in a settlement, and

(b)the amount represents an accumulation of income
which (once accumulated) becomes comprised in the
settlement,

35subsection (8) has effect, in the case of the amount, as if any
reference to the time it became comprised in the settlement were
to the time the existing property became comprised in the
settlement.”

(7)In section 74A (arrangements involving acquisition of interest in settled
40property etc)—

(a)in subsection (2)(a), for “settlement was made” substitute “relevant
settled property became comprised in the settlement”, and

(b)in subsection (3)(a), for “settlement was made” substitute “relevant
settled property became comprised in the settlement”.

(8)45In section 157(3) (non-residents’ bank accounts), for “he made” substitute “the
settled property became comprised in”.

(9)In section 237(1)(b) (imposition of charge), for “the chargeable transfer is made
by the making of a settlement or” substitute “property becomes comprised in a
settlement by virtue of the chargeable transfer or the chargeable transfer”.

(10)In section 272 (general interpretation)—

(a)5before the definition of “conditionally exempt transfer” insert—

• ““commencement” of a settlement has the meaning given
  by section 48A;”, and

(b)in the definition of “foreign-owned”, in paragraph (b)(ii), at the end
insert “(and section 64(1BA) applies for the purposes of this sub-
10paragraph as it applies for the purposes of section 64(1B))”.

(11)In relation to any chargeable transfer made on or after the day on which this
Act is passed, the amendments made by this section are treated as always
having been in force.

Section 2(3) of IHTA 1984 applies for the purposes of this subsection.

74 15Transfers between settlements etc

(1)IHTA 1984 is amended as follows.

(2)After section 81A insert—

“81B Excluded property: property to which section 80 applies

(1)This section applies to property to which section 80 (initial interest of
20settlor etc) applies.

(2)If the property would apart from this section be excluded property by
virtue of section 48(3)(a) or (3A)(a), the property is at any time in a tax
year to be regarded as excluded property for the purposes of this
Chapter, except sections 78 and 79, only if Conditions A and B are met.

(3)25Section 65(8) has effect in relation to the property only if Condition A is
met (in addition to any condition mentioned in that provision).

(4)Condition A is that the actual settlor was not domiciled in the United
Kingdom at the time of the occasion first referred to in section 80(1).

(5)Condition B is that the actual settlor is not a formerly domiciled
30resident for the tax year.

(6)In this section “the actual settlor” means the person who is the settlor of
the property in relation to the settlement first mentioned in section
80(1).

(7)Where the occasion first referred to in section 80(1) occurred before the
35day on which the Finance Act 2020 was passed, this section has effect
as if, in subsection (2), “or (3A)(a)” were omitted.”

(3)In section 82 (excluded property)—

(a)in subsection (1), omit “80 or”,

(b)in subsection (2)—

(i)40omit “80 or”, and

(ii)for “settlement was made” substitute “property became
comprised in the settlement”,

(c)in subsection (3), omit paragraph (a),

(d)in subsection (4), omit paragraph (a),

(e)after that subsection insert—

“(5)This section does not apply in relation to a case to which section
82A applies.”, and

(f)5in the heading at the end insert “: property to which section 81 applies
(old cases)”.

(4)After section 82 insert—

“82A Excluded property: property to which section 81 applies (new cases)

(1)This section—

(a)10applies where, at any time on or after the day on which the
Finance Act 2020 is passed, property ceases to be comprised in
a settlement (“the first settlement”) but is treated as a result of
section 81 as remaining comprised in that settlement for the
purposes of this Chapter, and

(b)15applies whether or not at any subsequent time the property is
comprised in the first settlement without regard to that section.

(2)If the property would apart from this section be excluded property by
virtue of section 48(3)(a) or (3A)(a), the property is to be regarded as
excluded property for the purposes of this Chapter, except sections 78
20and 79, at any time only if the non-domicile condition is met in relation
to each qualifying transfer occurring on or before that time.

(3)Section 65(8) has effect in relation to the property at any time only if (in
addition to the condition mentioned there) the non-domicile condition
is met in relation to each qualifying transfer occurring on or before that
25time; but, for the purposes of this subsection, the non-domicile
condition has effect with the omission of subsection (6)(a)(ii).

(4)For the purposes of this section each of the following is a “qualifying
transfer”—

(a)the occasion on which section 81 applies to the property; and

(b)30any subsequent occasion on which the property would, if the
effect of section 81 were ignored, become comprised in a
settlement to which this Chapter applies (including the first
settlement).

(5)But a qualifying transfer does not occur as a result of—

(a)35an assignment by a beneficiary of an interest in a settlement, or

(b)an exercise of a general power of appointment,

unless the time of the assignment or exercise of the power falls on or
after the day on which the Finance Act 2020 is passed.

(6)For the purposes of this section “the non-domicile condition” is—

(a)40in a case where a qualifying transfer occurs as a result of an
assignment by a beneficiary of an interest in a settlement or an
exercise of a general power of appointment, that the beneficiary
or the person exercising the power—

(i)was not domiciled in the United Kingdom at the time of
45the assignment or exercise of the power, and

(ii)is not a formerly domiciled resident for the tax year in
which the time mentioned in subsection (2) falls;

(b)in a case in which section 81 applies which is not within
paragraph (a), that the person who was the settlor of the
property in relation to the first settlement was not domiciled in
the United Kingdom immediately before the time when the
5property ceased to be comprised in the first settlement;

(c)in any other case, that the person who was the settlor of the
property in relation to the first settlement was not domiciled in
the United Kingdom immediately before the time of the
subsequent occasion.

(7)10If—

(a)the settlor mentioned in subsection (6)(b) or (c) has died before
the time mentioned there, and

(b)the death does not give rise to a qualifying transfer,

the non-domicile condition is treated as met.

(8)15In this section any reference to a qualifying transfer occurring as a
result of—

(a)an assignment by a beneficiary of an interest in a settlement, or

(b)an exercise of a general power of appointment,

includes the transfer occurring partly as a result of the assignment or
20exercise of the power.

(9)In this section any reference to an assignment includes an assignation.”

(5)In relation to any chargeable transfer made on or after the day on which this
Act is passed, the amendments made by subsections (2) and (3) are treated as
always having been in force.

25Section 2(3) of IHTA 1984 applies for the purposes of this subsection.

75 Relief for payments to victims of persecution during Second World War era

(1)IHTA 1984 is amended as follows.

(2)In section 153ZA (inheritance tax relief for payments to victims of persecution
during Second World War era: qualifying payments) after subsection (8)
30insert—

“(8A)Regulations under this section may have effect in relation to deaths
occurring before the regulations are made.”

(3)In Schedule 5A (inheritance tax relief for payments to victims of persecution
during Second World War era), in Part 1 (compensation payments), after
35paragraph 9 insert—

“10A one-off payment of a fixed amount from the Kindertransport Fund
established by the Government of the Federal Republic of Germany”.

(4)The amendment made by subsection (3) has effect in relation to deaths
occurring on or after 1 January 2019.

Stamp duty land tax

76 Exceptional circumstances preventing disposal of interest in three year period

(1)In FA 2003, Schedule 4ZA (stamp duty land tax: higher rates for additional
dwellings etc) is amended as follows.

(2)5In paragraph 3 (single dwelling transactions)—

(a)in sub-paragraph (7)(b) for “the period of three years beginning with
the day after the effective date of the transaction concerned” substitute
“a permitted period”;

(b)after sub-paragraph (7) insert—

“(7A)10For the purposes of sub-paragraph (7)(b), the permitted
periods are—

(a)the period of three years beginning with the day after
the effective date of the transaction concerned, or

(b)if HMRC are satisfied that the purchaser or the
15purchaser’s spouse or civil partner would have
disposed of the major interest in the sold dwelling
within that three year period but was prevented from
doing so by exceptional circumstances that could not
reasonably have been foreseen, such longer period as
20HMRC may allow in response to an application made
in accordance with sub-paragraph (7B).

(7B)An application for the purposes of sub-paragraph (7A)(b)
must—

(a)be made within the period of 12 months beginning
25with the effective date of the transaction disposing of
the major interest in the sold dwelling, and

(b)be made in such form and manner, and contain such
information, as may be specified by HMRC.

(7C)Schedule 11A (claims not included in returns) does not apply
30in relation to an application made in accordance with sub-
paragraph (7B).”

(3)In paragraph 8 (further provision in connection with paragraph 3(6) and (7))—

(a)in sub-paragraph (3), after “paragraph 3(7)” insert “by virtue of
paragraph 3(7A)(a)”;

(b)35in sub-paragraph (4), after “paragraph 3(7)” insert “by virtue of
paragraph 3(7A)(a)”;

(c)after sub-paragraph (4) insert—

“(5)Where HMRC grant an application made in accordance with
paragraph 3(7B)—

(a)40the land transaction return in respect of the
transaction concerned is treated as having been
amended to take account of the application of
paragraph 3(7) by virtue of paragraph 3(7A)(b), and

(b)HMRC must notify the purchaser accordingly.”

(4)45The amendments made by this section have effect in a case where the effective
date of the transaction concerned is on or after 1 January 2017.