S.C.H.

Amendment Paper as at
Tuesday 20th June 2000

STANDING COMMITTEE H

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Mr Graham Allen That the Committee, at its rising on Tuesday 20th June, do adjourn till Thursday 22nd June at One o'clock.

New Amendments handed in are marked thus *

FINANCE BILL
(Except Clauses 1, 12, 30, 31, 59, 102 and 113)

NOTE

The Amendments have been arranged in accordance with the Order of the Committee [4th May] as follows:

Clauses 2 to 6, Schedule 1, Clauses 7 to 11, Clauses 13 to 15, Clause 28, Clauses 16 and 17, Schedule 2, Clauses 18 to 22, Schedule 3, Clause 23, Schedule 4, Clause 24, Schedule 5, Clauses 25 to 27, Clause 29, Schedules 6 and 7, Clauses 32 to 47, Schedule 8, Clause 48, Schedule 9, Clauses 49 to 55, Clause 134, Clause 56, Schedule 10, Clauses 57 and 58, Schedule 11, Schedule 12, Clause 60, Schedule 13, Clause 61, Schedule 14, Clause 62, Schedules 15 and 16, Clause 63, Schedule 17, Clause 64, Schedule 18, Clauses 65 to 67, Schedule 19, Clause 68, Schedules 20 and 21, Clauses 69 to 81, Schedule 22, Clauses 82 to 86, Schedule 23, Clauses 87 to 90, Schedule 24, Clause 91, Schedules 25 and 26, Clauses 92 to 96, Schedule 27, Clause 97, Schedule 28, Clauses 98 to 101, Schedule 29, Schedule 30, Clause 103, Schedule 31, Clauses 104 to 112, Clauses 114 and 115, Schedule 32, Clause 116, Schedule 33, Clauses 117 to 127, Schedule 34, Clauses 128 to 131, Schedule 35, Clause 132, Schedule 36, Clause 133, Clauses 135 to 138, Schedule 37, Clause 139, Schedule 38, Clauses 140 to 144, Schedule 39, Clauses 145 to 149, New Clauses, New Schedules, Clauses 150 and 151, Schedule 40, Clause 152.

   

Mr Andrew Smith

369

Schedule     30,     page     505,     line     26,     leave out '"subsections" substitute "subsection"' and insert '"subsections shall be treated as inserted after that subsection" substitute "subsection shall be treated as inserted after subsection (2) of section 794"'.

   

Mr Andrew Smith

370

Schedule     30,     page     505,     line     34,     after '793' insert 'of the Taxes Act 1988'.

   

Mr Andrew Smith

371

Schedule     30,     page     506,     line     4,     leave out 'This paragraph has' and insert 'Subsections (1) and (2) of the section inserted by sub-paragraph (1) have'.

   

Mr Andrew Smith

372

Schedule     30,     page     506,     line     5,     at end insert—

    '(3) Subsection (3) of the section inserted by sub-paragraph (1) has effect in relation to arrangements made on or after 21st March 2000.'.

   

Mr Andrew Smith

373

Schedule     30,     page     507,     line     24,     at beginning insert 'if—

    (i) the overseas company and the third company are not resident in the same territory, or

    (ii) in such cases as may be prescribed by regulations made by the Treasury, those companies are resident in the same territory,'.

   

Mr Andrew Smith

374

Schedule     30,     page     507,     line     42,     leave out '1st July 2000' and insert '31st March 2001'.

   

Mr Andrew Smith

397

Schedule     30,     page     508,     line     31,     at end insert—

'UK insurance companies trading overseas: repeal of section 802

     11A.—(1) Section 802 of the Taxes Act 1988 shall cease to have effect.

    (2) This paragraph has effect in relation to accounting periods beginning on or after 1st April 2000.'.

   

Mr Andrew Smith

375

Schedule     30,     page     508,     line     43,     leave out from 'to' to 'as' in line 44 and insert 'another company ("the recipient company"),'.

   

Mr Andrew Smith

376

Schedule     30,     page     508,     line     50,     leave out 'UK' and insert 'recipient'.

   

Mr Andrew Smith

377

Schedule     30,     page     508,     line     52,     leave out 'UK' and insert 'recipient'.

   

Mr Andrew Smith

398

Schedule     30,     page     509,     line     13,     at end insert—

'Life assurance companies with overseas branches: restriction of credit

     12A.—(1) Amend section 804A of the Taxes Act 1988 (overseas life assurance business: restriction of credit) as follows.

    (2) For subsection (1) (application of subsection (2)) substitute—

    "(1) Subsection (2) below applies where credit for tax—
(a) which is payable under the laws of a territory outside the United Kingdom in respect of insurance business carried on by a company through a branch or agency in that territory, and
(b) which is computed otherwise than wholly by reference to profits arising in that territory,

    is to be allowed (in accordance with this Part) against corporation tax charged under Case I or Case VI of Schedule D in respect of the profits, computed in accordance with the provisions applicable to Case I of Schedule D, of life assurance business or any category of life assurance business carried on by the company in an accounting period (in this section referred to as "the relevant profits").

    (1A) For the purposes of paragraph (b) of subsection (1) above, the cases where tax payable under the laws of a territory outside the United Kingdom is "computed otherwise than wholly by reference to profits arising in that territory" are those cases where the charge to tax in that territory falls within subsection (1B) below.

    (1B) A charge to tax falls within this subsection if it is such a charge made otherwise than by reference to profits as (by disallowing their deduction in computing the amount chargeable) to require sums payable and other liabilities arising under policies to be treated as sums or liabilities falling to be met out of amounts subject to tax in the hands of the company."

    (3) In subsection (3) (the shareholders' share of the overseas tax) for the definition of A (the amount of profits chargeable under section 441) substitute—

"A is an amount equal to the amount of the relevant profits before making any deduction authorised by subsection (5) below;".

    (4) In subsection (5) (relaxation of rule in section 795(2)(a) against deducting foreign tax in computing the profits of the overseas life assurance business) for "the profits of the overseas life assurance business" substitute "the relevant profits".

    (5) In consequence of the amendments made by this paragraph, the sidenote to the section becomes "Life assurance companies with overseas branches etc: restriction of credit."

    (6) This paragraph has effect in relation to accounting periods beginning on or after 1st April 2000.'.

   

Mr Andrew Smith

399

Schedule     30,     page     509,     line     13,     at end insert—

'Allocation of foreign tax to different categories of insurance business

     12B.—(1) After section 804A of the Taxes Act 1988 insert—

"Insurance companies carrying on more than one category of business: restriction of credit.

804B.—(1) Where— (a) an insurance company carries on more than one category of business in an accounting period, and (b) there arises to the company in that period any income or gain ("the relevant income") in respect of which credit for foreign tax falls to be allowed under any arrangements, subsection (2) below shall have effect.     (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is allowable against corporation tax in respect of so much of the relevant income as is referable (in accordance with the provisions of sections 432ZA to 432E) to a particular category of business must not exceed the fraction of the foreign tax which, in accordance with the following provisions of this section, is attributable to that category of business.     (3) Where the relevant income arises from an asset— (a) which is linked solely to a category of business (other than overseas life assurance business), or (b) which is an asset of the company's overseas life assurance fund,     the whole of the foreign tax is attributable to the category mentioned in paragraph (a) above or, as the case may be, to the company's overseas life assurance business, unless the case is one where subsection (7) below applies in relation to the category of business in question.     (4) Where subsection (3) above does not apply and the category of business in question is— (a) basic life assurance and general annuity business, or (b) long term business which is not life assurance business,     the fraction of the foreign tax that is attributable to that category of business is the fraction whose numerator is the part of the relevant income which is referable to that category by virtue of any provision of section 432A and whose denominator is the whole of the relevant income.     (5) Subsections (6) and (7) below apply where the category of business in question is neither— (a) basic life assurance and general annuity business; nor (b) long term business which is not life assurance business.     (6) Where— (a) subsection (3) above does not apply, and (b) some or all of the relevant income is taken into account in accordance with section 83 of the Finance Act 1989 in an account in relation to which the provisions of section 432C or 432D apply,     the fraction of the foreign tax that is attributable to the category of business in question is the fraction whose numerator is the part of the relevant income which is referable to that category by virtue of any provision of section 432C or 432D and whose denominator is the whole of the relevant income.     (7) Where some or all of the relevant income falls to be taken into account in determining in accordance with section 83(2) of the Finance Act 1989 the amount referred to in section 432E(1) as the net amount, the fraction of the foreign tax that is attributable to the category of business in question is the fraction— (a) whose numerator is the part of that net amount which is referable by virtue of section 432E to that category; and (b) whose denominator is the whole of that net amount.     (8) No part of the foreign tax is attributable to any category of business except as provided by subsections (3) to (7) above.     (9) Where for the purposes of this section an amount of foreign tax is attributable to a category of life assurance business other than basic life assurance and general annuity business, credit in respect of the foreign tax so attributable shall be allowed only against corporation tax in respect of profits chargeable under Case VI of Schedule D arising from carrying on that category of business."

    (2) This paragraph has effect in relation to accounting periods beginning on or after 1st April 2000.'.

Prepared 20 Jun 2000