|
| |
| |
(i) is attributable (directly or indirectly) to matters outside the | |
control of the investment manager and persons connected | |
with him, and | |
(ii) does not result from a failure by him or any of those persons | |
to take such steps as may be reasonable for mitigating the | 5 |
effect of those matters in relation to the fulfilment of that | |
intention. | |
(2) A “qualifying period” means— | |
(a) the accounting period in which the transaction in question is carried | |
out, or | 10 |
(b) a period of not more than five years comprising two or more | |
complete accounting periods including that one. | |
(3) The “relevant excluded income” of a non-resident company for a qualifying | |
period is the aggregate of such of the chargeable profits of the company for | |
the accounting periods comprised in the qualifying period as derive from | 15 |
transactions carried out by the investment manager on the company’s behalf | |
in relation to which the manager does not (apart from the requirements of | |
the 20% rule) fall to be treated as a permanent establishment of the company. | |
(4) A person has a “beneficial entitlement” to relevant excluded income if he has | |
or may acquire a beneficial entitlement by virtue of— | 20 |
(a) an interest of his (whether or not an interest giving a right to an | |
immediate payment of a share in the profits or gains) in property in | |
which the whole or any part of that income is represented, or | |
(b) an interest of his in or other rights in relation to the non-resident | |
company, | 25 |
that is or would be attributable to that income. | |
(5) In the case of a transaction in relation to which the conditions in paragraph | |
3 are met except for the requirements of the 20% rule, this Schedule has effect | |
as if the requirements of that rule were met in relation to so much of the | |
chargeable profits of the non-resident company deriving from the | 30 |
transaction as do not represent relevant excluded income of the company to | |
which the investment manager or a person connected with him has or has | |
had any beneficial entitlement. | |
Investment managers: application of 20% rule to collective investment schemes | |
5 (1) This paragraph applies where amounts arise or accrue to the non-resident | 35 |
company as a participant in a collective investment scheme. | |
(2) The requirements of the 20% rule need not be met in relation to a transaction | |
carried out for the purposes of the scheme if the scheme is such that, if the | |
following assumptions applied— | |
(a) that all transactions carried out for the purposes of the scheme were | 40 |
carried out on behalf of a company constituted for the purposes of | |
the scheme and resident outside the United Kingdom, and | |
(b) that the participants did not have any rights in respect of the | |
amounts arising or accruing in respect of those transactions other | |
than the rights that, if they held shares in the company on whose | 45 |
behalf the transactions are assumed to be carried out, would be their | |
rights as shareholders, | |
| |
| |
|
| |
| |
the assumed company would not, in relation to the accounting period in | |
which the transaction was carried out, be regarded for tax purposes as | |
carrying on a trade in the United Kingdom. | |
(3) Where on those assumptions the assumed company would be regarded for | |
tax purposes as carrying on a trade in the United Kingdom, paragraph 4 has | 5 |
effect with the following modifications in relation to a transaction carried | |
out for the purposes of the scheme— | |
(a) for references to the non-resident company substitute references to | |
the assumed company; | |
(b) for references to the non-resident company’s relevant excluded | 10 |
income substitute references to the aggregate of the amounts that | |
would for accounting periods comprised in the qualifying period, be | |
chargeable to tax on the assumed company as profits deriving from | |
the transactions carried out by the investment manager and assumed | |
to be carried out on behalf of the company. | 15 |
(4) In this paragraph “collective investment scheme” has the meaning given by | |
section 235 of the Financial Services and Markets Act 2000 (c. 8), and | |
“participant”, in relation to such a scheme, shall be construed in accordance | |
with that section. | |
Lloyd’s agents | 20 |
6 (1) Where a non-resident company is a member of Lloyd’s and the transaction | |
is carried out in the course of the company’s underwriting business, a | |
person who acts on behalf of the company in relation to the transaction is | |
regarded as an independent agent acting in the ordinary course of his | |
business if he acts as members’ agent or as managing agent of the syndicate | 25 |
in question. | |
(2) In sub-paragraph (1)— | |
(a) the reference to the non-resident company being a member of | |
Lloyd’s is to its being a corporate member within the meaning of | |
Chapter 5 of Part 4 of the Finance Act 1994 (c. 9); and | 30 |
(b) the references to a members’ agent and to a managing agent shall be | |
construed in accordance with section 230 of that Act. | |
General supplementary provisions | |
7 (1) For the purposes of this Schedule a person is regarded as carrying out a | |
transaction on behalf of another where he undertakes the transaction | 35 |
himself, whether on behalf of or to the account of that other, and also where | |
he gives instructions for it to be so carried out by another. | |
(2) For the purposes of this Schedule a person is regarded as acting in an | |
independent capacity on behalf of a company only if the relationship | |
between them, having regard to its legal, financial and commercial | 40 |
characteristics, is a relationship between persons carrying on independent | |
businesses that deal with each other at arm’s length. | |
(3) Section 839 of the Taxes Act 1988 (connected persons) applies for the | |
purposes of this Schedule. | |
(4) This Schedule has effect in the case of a person who acts as a broker or | 45 |
provides investment services as part only of a business as if that part were a | |
separate business. | |
| |
| |
|
| |
| |
Schedule 27 | |
Section 154 | |
Permanent establishment etc: consequential amendments | |
Taxes Act 1988 | |
1 (1) The Taxes Act 1988 is amended as follows. | |
(2) In section 606 (persons responsible in case of default of administrator of | 5 |
retirement benefits scheme), for subsection (13) substitute— | |
“(13) References in this section to the employer include, where the | |
employer is not resident in the United Kingdom, any person who is | |
treated as UK representative of the employer under section 126 of the | |
Finance Act 1995 or section 149 of the Finance Act 2003.”. | 10 |
(3) In section 806L (carry forward or carry back of unrelieved foreign tax), for | |
subsection (7) substitute— | |
“(7) In this section— | |
“overseas permanent establishment” means a permanent | |
establishment through which a company carries on a trade in | 15 |
a territory outside the United Kingdom; and | |
“permanent establishment”— | |
(a) if there are arrangements having effect under section | |
788 in relation to the territory concerned that define | |
the expression, has the meaning given by those | 20 |
arrangements, and | |
(b) if there are no such arrangements, or if they do not | |
define the expression, has the meaning given by | |
section 147 of the Finance Act 2003.”. | |
(4) In Schedule 15 (qualifying policies), in paragraph 24 (policies issued by non- | 25 |
resident companies), in sub-paragraph (3)(b) (twice) and (c) for “branch” | |
substitute “permanent establishment”. | |
Taxation of Chargeable Gains Act 1992 | |
2 (1) The Taxation of Chargeable Gains Act 1992 (c. 12) is amended as follows. | |
(2) In section 10 (non-resident with United Kingdom branch or agency)— | 30 |
(a) omit subsection (3); and | |
(b) in subsection (4), omit “or corporation tax”. | |
(3) In sections 13(5)(d), 25(7)(b), 106(10), 139(1A), 140A(2), 159(4)(b), 171(1A), | |
175(2AA), 179(1A), 190(2)(b) and (3)(b), 199(6)(b) and 228(6)(b), and in | |
Schedule 7A, paragraph 1(3A), for “10(3)” substitute “10B”. | 35 |
Finance Act 1993 | |
3 (1) In sections 93 and 93A of the Finance Act 1993 (c. 34) (use of currency other | |
than sterling) for “branch”, wherever occurring, substitute “permanent | |
establishment”. | |
(2) The provisions in which the above amendment is to be made are— | 40 |
(a) in section 93, subsection (2)(b) and the definition of “return of | |
accounts” in subsection (7) (twice); | |
| |
| |
|
| |
| |
(b) in section 93A, subsections (2)(b), (3)(b) and (7)(b). | |
Finance Act 1995 | |
4 (1) Section 126 of the Finance Act 1995 (c. 4) (UK representatives of non- | |
residents) is amended as follows. | |
(2) In subsection (1), omit the words “, corporation tax”. | 5 |
(3) In subsection (2)— | |
(a) after paragraph (b) insert “and”; | |
(b) in paragraph (c) omit the words from “or fall” to “non-resident”; and | |
(c) omit sub-paragraph (d) and the word “and” preceding it. | |
(4) For subsection (8) substitute— | 10 |
“(8) In this section, “branch or agency” means any factorship, agency, | |
receivership, branch or management.”. | |
(5) In subsection (9), omit paragraph (b) and the word “and” preceding it. | |
(6) After subsection (9) insert— | |
“(10) This section does not apply in relation to income tax chargeable on | 15 |
income of a company otherwise than as a trustee.”. | |
5 (1) Section 127 of the Finance Act 1995 (c. 4) (persons not treated as UK | |
representatives) is amended as follows. | |
(2) In subsection (1) for “(a) to (d)” substitute “(a) to (c)”. | |
(3) In subsection (5)(b) omit “or 129”. | 20 |
(4) In subsection (17), in the definition of “branch or agency” for “the | |
Management Act” substitute “section 126 above”. | |
(5) In subsection (19) omit paragraph (b) and the word “and” preceding it. | |
6 In section 128 of the Finance Act 1995 (limit on income chargeable on non- | |
residents: income tax), after subsection (11) insert— | 25 |
“(12) This section does not apply in relation to income tax chargeable on | |
income of a company otherwise than as a trustee.”. | |
7 Omit section 129 of the Finance Act 1995 (limit on income chargeable on non- | |
residents: corporation tax). | |
Finance Act 1996 | 30 |
8 In Schedule 15 to the Finance Act 1996 (c. 8) (loan relationships: transitional | |
provisions), in paragraph 8(6)(c)— | |
(a) for “10(3)” substitute “10B”, and | |
(b) for “on a disposal by a branch or agency” substitute “attributable to | |
a permanent establishment”. | 35 |
Finance Act 2000 | |
9 In Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme), | |
in paragraph 79(5) (gain accruing on chargeable event), for “section 10” | |
substitute “section 10B”. | |
| |
| |
|
