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Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
145
Page 294 [Schedule 13], leave out lines 15 and 16.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
146
Page 294, line 18 [Schedule 13], at end add—
'(3) Subsection (1) shall not prevent the approval of the scheme which contains no requirement to purchase an annuity by a certain age.'.
Mr Chancellor of the Exchequer
85
Page 310, line 24 [Schedule 13], at end insert—
'except that, in a case falling within subsection (6) of section 632B of the Taxes Act 1988, the contributions required to be repaid shall be determined in accordance with that subsection (and their repayment shall have the like consequence).'.
Mr Chancellor of the Exchequer
86
Page 310, line 47 [Schedule 13], leave out 'section 632A' and insert 'sections 632A and 632B'.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
144
Page 313, line 34 [Schedule 14], at end add 'Where an option does not qualify by reason of an error in the scheme pursuant to which it has been granted, but would otherwise have been capable of being a qualifying option pursuant to paragraphs 9 to 17 inclusive of this Schedule, then that error may be corrected and be deemed to have been always corrected from the date of grant of the option.'.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
143
Page 314, line 24 [Schedule 14], at end add—
'(4) In the event of the requirements of this Schedule being found not to be met in relation to an option, whether upon enquiry by the Inland Revenue or following an appeal, there shall be no right of action in tort or contract either in favour of or against the relevant company or any employer company.'.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
142
Page 316, line 2 [Schedule 14], leave out from beginning to end of line 3 and insert 'At any one time there may not be qualifying options in respect of shares in the relevant company over shares with a total value of more than £1,500,000. For the purposes of this paragraph shares shall be valued according to their market value at the time that the option granted over them is granted.'.
Mr Chancellor of the Exchequer
61
Page 321, line 8 [Schedule 14], leave out 'at some time in the qualification period relating to the relevant shares'.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
141
Page 328, line 21 [Schedule 14], at end insert—
'(4) Where pursuant to any provision of this Schedule an individual becomes liable to income tax then notwithstanding any other provision of the Taxes Act 1988, the tax due shall be paid in five equal instalments as follows—
(a) the first shall be due and payable when, but for the operation of this sub-paragraph and ignoring the operation of Chapter V of Part V of the Taxes Act 1988 (PAYE), that tax would otherwise have been due and payable ("the first payment date");
(b) the second shall be due and payable on the first anniversary of the first payment date;
(c) the third shall be due and payable on the second anniversary of the first payment date;
(d) the fourth shall be due and payable on the third anniversary of the first payment date; and
(e) the fifth shall be due and payable on the fourth anniversary of the first payment date.'.
Mr Chancellor of the Exchequer
62
Page 332, line 10 [Schedule 14], leave out 'not'.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
139
Page 332, line 28 [Schedule 14], leave out 'within 40 days' and insert 'before the first anniversary'.
Mr Chancellor of the Exchequer
63
Page 332, line 36 [Schedule 14], at end insert—
'This is subject to sub-paragraph (3).
(3) Paragraphs 44 to 46 and sub-paragraph (2) of this paragraph do not apply if the amount chargeable under section 135 of the Taxes Act 1988 on the exercise of the option would, in the absence of those provisions, be less than the amount so chargeable by virtue of those provisions.'.
Mr David Heathcoat-Amory
Mr Richard Ottaway
Mr Howard Flight
140
Page 333, line 29 [Schedule 14], leave out 'within 40 days' and insert 'before the first anniversary'.
Mr Chancellor of the Exchequer
99
Page 432, line 32 [Schedule 22], at end insert '; and
(f) the profits of the overseas company out of which the distribution is paid are subject to a tax on profits (in the country of residence of the company or elsewhere, or partly in that country and partly elsewhere).'.
Mr Chancellor of the Exchequer
90
Page 482, line 5 [Schedule 26], leave out ', in subsections (1), (3)(a), (4), (5), (7) and (8), after "sections 86A to 96"' and insert '—
(a) in subsections (1), (3)(a), (4) and (7), after "sections 86A to 96", and
(b) in subsections (5) and (8), after "sections 86A to 90",'.
Mr Chancellor of the Exchequer
103
Page 513, line 11 [Schedule 30], at end insert—
'Restriction of relief for underlying tax
7A.—(1) Amend section 799 of the Taxes Act 1988 (computation of underlying tax) as follows.
(2) In subsection (1) (underlying tax to be taken into account to be so much of the foreign tax on the relevant profits as is attributable to the proportion represented by the dividend) after "as" insert "(a)" and at the end of the subsection add ", and
(b) does not exceed the amount calculated by applying the formula set out in subsection (1A) below."
(3) After subsection (1) insert—
(4) In subsection (3) (profits by reference to which underlying tax to be taken into account is calculated)—
(a) at the end of paragraph (a) insert "and";
(b) omit paragraph (b); and
(c) in paragraph (c), for "paid neither for a specified period nor out of specified profits" substitute "not paid for a specified period".
(5) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.
(6) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
Mr Chancellor of the Exchequer
104
Page 513, line 35 [Schedule 30], leave out from beginning to end of line 26 on page 514 and insert—
'Restriction of relief for underlying tax: dividends paid between related companies
10.—(1) Amend section 801 of the Taxes Act 1988 as follows.
(2) After subsection (2) (cases where the overseas company receives a dividend from a related third company) insert—
"(2A) Section 799(1)(b) applies for the purposes of subsection (2) above only—
(a) if the overseas company and the third company are not resident in the same territory; or
(b) in such other cases as may be prescribed by regulations made by the Treasury."
(3) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.
(4) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
Mr Chancellor of the Exchequer
105
Page 515, line 9 [Schedule 30], at end insert—
'Separate streaming of dividend so far as representing an ADP dividend of a CFC
11A.—(1) After section 801B of the Taxes Act 1988 insert—
| "Separate streaming of dividend so far as representing an ADP dividend of a CFC. | 801C.—(1) This section applies in any case where—
(2) A dividend falls within this subsection if, for the purposes of Part I of Schedule 25, the whole or any part of it falls to be treated by virtue of paragraph 4 of that Schedule as paid by the controlled foreign company to a United Kingdom resident.
(3) If, in a case where this section applies,—
(a) an initial dividend is paid to a company resident outside the United Kingdom, and
(b) that company, or any other company which is related to it, pays an intermediate dividend which for the purposes of paragraph 4 of Schedule 25 to any extent represents that initial dividend,
subsection (4) below shall have effect in relation to the UK recipient concerned.
(4) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to that UK recipient—
(a) that, instead of the intermediate dividend, the dividends described in subsection (5) below had been paid and the circumstances had been as described in subsection (6) or (7) below, as the case may be; and
(b) that any tax paid under the law of any territory in respect of the intermediate dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
(5) The dividends mentioned in subsection (4)(a) above are—
(a) as respects each of the initial dividends which are, for the purposes of paragraph 4 of Schedule 25, to any extent represented by the intermediate dividend, a separate dividend (an "ADP dividend") representing, and of an amount equal to, so much of that initial dividend as is for those purposes represented by the intermediate dividend; and
(b) a further separate dividend (a "residual dividend") representing, and of an amount equal to, the remainder (if any) of the intermediate dividend.
(6) As respects each of the ADP dividends, the intermediate company is to be treated as if it were a separate company whose distributable profits are of a constitution corresponding to, and an amount equal to, that of the ADP dividend.
(7) As respects the residual dividend (if any), the relevant profits out of which it is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding accordingly so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid.
(8) If, in a case where this section applies, an intermediate company also pays a dividend which is not an intermediate dividend (an "independent dividend") and either—
(a) that dividend is paid to a United Kingdom resident, or
(b) if it is not so paid, a dividend which to any extent represents it is paid by a company which is related to that company and resident outside the United Kingdom to a United Kingdom resident,
subsection (9) below shall have effect in relation to the United Kingdom resident.
(9) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to the United Kingdom resident—
(a) that the relevant profits out of which the independent dividend is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid; and
(b) that any tax paid under the law of any territory in respect of the independent dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
(10) For the purposes of this section—
(a) a controlled foreign company is an "ADP controlled foreign company" as respects any of its accounting periods if the condition in paragraph (a) of subsection (1) above is satisfied as respects that accounting period;
(b) an "initial dividend" (subject to subsection (14) below) is any of the dividends mentioned in paragraph (b) of subsection (1) above paid by an ADP controlled foreign company; and
(c) a "subsequent dividend" is any dividend which, in relation to one or more initial dividends, is the subsequent dividend for the purposes of paragraph 4 of Schedule 25.
(11) In this section—
"distributable profits" means a company's profits available for distribution, determined in accordance with section 799(6);
"intermediate company" means any company resident outside the United Kingdom which pays an intermediate dividend;
"intermediate dividend" means any dividend which is paid by a company resident outside the United Kingdom and which—
(a) for the purposes of paragraph 4 of Schedule 25, to any extent represents one or more initial dividends paid by other companies; and
(b) either is the subsequent dividend in the case of those initial dividends or is itself to any extent represented for those purposes by a subsequent dividend;
"the UK recipient" means the United Kingdom resident to whom a subsequent dividend is paid.
(12) Where—
(a) one company pays a dividend ("dividend A") to another company, and
(b) that other company, or a company which is related to it, pays a dividend ("dividend B") to another company,
then, for the purposes of this section, dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
(13) Sub-paragraph (2) of paragraph 4 of Schedule 25 (related companies) shall apply for the purposes of this section as it applies for the purposes of that paragraph.
(14) Where an intermediate company which is an ADP controlled foreign company pays a dividend—
(a) by virtue of which (whether taken alone or with other dividends) the condition in subsection (1)(a) above is satisfied as regards an accounting period of the company, but
(b) which also for the purposes of paragraph 4 of Schedule 25 to any extent represents one or more initial dividends paid by other ADP controlled foreign companies,
the dividend shall not be regarded for the purposes of this section as an initial dividend paid by the company, to the extent that it so represents initial dividends paid by other ADP controlled foreign companies."
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(2) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.
(3) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
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