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omission of the company itself, or to which the company consented or in which | |
it connived. | |
(6) The UK representative of a non-resident company is not by virtue of this | |
section liable to be proceeded against for a criminal offence unless the | |
representative committed the offence itself, or consented to or connived in its | 5 |
commission. | |
(7) In this section— | |
“enactment” includes an enactment contained in subordinate legislation | |
within the meaning of the Interpretation Act 1978 (c. 30); | |
“information” includes anything contained in a return, self-assessment, | 10 |
account, statement or report required to be provided to the Board or | |
any officer of the Board; | |
“non-resident company” means a company that is not resident in the | |
United Kingdom; and | |
“trade” has the meaning given by section 6(4)(b) of the Taxes Act 1988. | 15 |
(8) This section has effect for accounting periods (of the non-resident company) | |
beginning on or after 1st January 2003. | |
150 Non-resident companies: extent of charge to income tax | |
(1) The income tax chargeable for a year of assessment on the total income of a | |
company that is not resident in the United Kingdom is limited to the sum of the | 20 |
following amounts— | |
(a) the amount of tax that, apart from this section, would be chargeable on | |
that total income if— | |
(i) the amount of that income were reduced by the amount of any | |
income to which this section applies, and | 25 |
(ii) there were disregarded any relief to which that company is | |
entitled by virtue of arrangements having effect under section | |
788 of the Taxes Act 1988 (double taxation relief), and | |
(b) the amount of tax deducted from so much of any income to which this | |
section applies as is income the tax on which is deducted at source. | 30 |
(2) The income to which this section applies is— | |
(a) income chargeable to tax under Case III of Schedule D or Schedule F; | |
(b) income chargeable to tax under Case VI of Schedule D by virtue of | |
section 56 of the Taxes Act 1988 (transactions in deposits); | |
(c) income arising from a transaction carried out through a broker or | 35 |
investment manager in the United Kingdom acting as an agent of | |
independent status in the ordinary course of his business; or | |
(d) income of such other description as the Treasury may by regulations | |
designate for the purposes of this subsection. | |
Regulations under paragraph (d) shall be made by statutory instrument which | 40 |
shall be subject to annulment in pursuance of a resolution of the House of | |
Commons. | |
(3) In subsection (1)(b) above— | |
(a) the reference to tax deducted at source is to tax that is or is treated as | |
deducted, or is treated as paid, or in respect of which there is a tax | 45 |
credit, and | |
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(b) the reference to the amount of tax deducted at source is to the amount | |
that is or is treated as deducted, or is treated as paid, or, as the case may | |
be, to the amount of that credit. | |
(4) This section does not apply to the income tax chargeable for a year of | |
assessment on income of a company as a trustee. | 5 |
(5) This section applies— | |
(a) in relation to the year 2002-03, as regards income arising on or after 1st | |
January 2003, and | |
(b) in relation to the year 2003-04 and subsequent years of assessment. | |
151 Non-resident companies: transactions carried out through broker, investment | 10 |
manager or Lloyd’s agent | |
Schedule 26 to this Act contains provisions supplementing— | |
(a) section 147(3) (meaning of “permanent establishment”: not to include | |
independent agent), and | |
(b) section 150(2)(c) (limit on income tax chargeable on non-resident | 15 |
company: income arising from transactions carried out through | |
independent agent), | |
as regards transactions carried out through a broker, investment manager or | |
Lloyd’s agent. | |
152 General replacement of references to branch or agency of company | 20 |
(1) In the following provisions (which relate only to companies) for “branch or | |
agency” or “branches or agencies”, wherever occurring, substitute “permanent | |
establishment” or “permanent establishments”. | |
The provisions are— | |
(a) in the Taxes Act 1988, sections 115(4)(b), 338B(2)(d) and (4)(b), | 25 |
349B(2)(b) and (7)(b)(ii), 402(3B), 403E(1)(a), (2), (4), (5) and (6), 442(1), | |
444BB(3)(b), 547(6A), 748A(1)(c) and (2), 790(6A)(b), 801(1A)(b), | |
804A(1)(a), 806L(1), (2), (4), and (5), 806M(2) to (5) and 815A(6); in | |
Schedule 15, paragraphs 17(3)(c) and 25(2)(c); in Schedule 19AA, | |
paragraph 5(5)(c); in Schedule 24, paragraphs 1 and 8; and in Schedule | 30 |
25, paragraphs 6(2A) and (2C), 8 and 11(3); | |
(b) in the Taxation of Chargeable Gains Act 1992 (c. 12), sections 140(1), | |
140C(1)(a), 173(3)(b), 175(1A)(b), 185(4) and 213(5A); | |
(c) in the Finance Act 2000 (c. 17), section 107(7); | |
(d) in the Capital Allowances Act 2001 (c. 2), sections 560(2) and 561(1)(c); | 35 |
(e) in the Finance Act 2002 (c. 23), in Schedule 22, paragraph 10(1)(b)(ii); | |
and in Schedule 29, paragraphs 66(5) and (8)(b), 68(2)(b), 86(1)(a), | |
87(1)(a), 109(1)(b) and 110(1)(b). | |
(2) In the following provisions (which relate to companies and other persons), any | |
reference to a branch or agency shall be read, in relation to a company, as a | 40 |
reference to a permanent establishment. | |
The provisions are— | |
(a) in the Taxes Act 1988, sections 606(13), 794(2)(bb), 806K(1), 814(1) and | |
830(4), and in Schedule 23A, paragraphs 3 and 4; | |
(b) in the Taxation of Chargeable Gains Act 1992, sections 25(2), (3) and (5), | 45 |
80(4)(a) and (b) and (7)(b), 199(2) and (4) and 276(7); | |
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(c) in the Finance Act 1999 (c. 16), section 85(2)(a); | |
(d) in the Finance Act 2002, in Schedule 26, paragraph 31(6)(a). | |
(3) Any reference to a branch or agency— | |
(a) in subordinate legislation made under an enactment contained in the | |
Tax Acts or relating to chargeable gains, or | 5 |
(b) that is to be construed as having the same meaning as in any such | |
enactment, | |
shall be read, in relation to a company, as a reference to a permanent | |
establishment. | |
“Subordinate legislation” here has the same meaning as in the Interpretation | 10 |
Act 1978 (c. 30). | |
(4) This section has effect in relation to accounting periods beginning on or after | |
1st January 2003. | |
153 Double taxation relief: profits attributable to overseas permanent | |
establishment | 15 |
(1) In Part 18 of the Taxes Act 1988 (double taxation relief), section 797 (limits on | |
credit: corporation tax) is amended as follows. | |
(2) In subsection (1) for “subsections (2) and (3)” substitute “the following | |
provisions of this section”. | |
(3) In subsection (2) for “subsection (3)” substitute “subsections (2A) and (3)”. | 20 |
(4) After subsection (2) insert— | |
“(2A) The provisions of section 11AA (profits attributable to permanent | |
establishment), and of any regulations made under that section, apply, | |
with the necessary modifications, in determining for the purposes of | |
this section how much of the chargeable profits of a company resident | 25 |
in the United Kingdom is attributable to a permanent establishment of | |
the company outside the United Kingdom.”. | |
(5) The amendments in this section have effect in relation to accounting periods | |
beginning on or after 1st January 2003. | |
154 Consequential amendments | 30 |
(1) Schedule 27 to this Act provides for amendments consequential on the | |
provisions of sections 147 to 152. | |
(2) The amendments made by that Schedule have effect in relation to accounting | |
periods beginning on or after 1st January 2003. | |
155 Overseas life insurance companies | 35 |
(1) The enactments relating to corporation tax have effect in relation to overseas | |
life insurance companies subject to such modifications and exceptions as the | |
Treasury may prescribe by regulations. | |
(2) The power to make regulations under this section includes power to make | |
provision in place of, and in consequence to repeal or revoke, all or any of the | 40 |
enactments relating to corporation tax that on the passing of this Act make | |
provision in relation to overseas life insurance companies. | |
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(3) Regulations under this section— | |
(a) may make different provision for different cases, and | |
(b) may make such consequential amendments of other enactments as | |
appear to the Treasury to be necessary or expedient. | |
(4) Regulations under this section providing for the application to overseas life | 5 |
insurance companies of sections 147 to 153 of this Act, Schedules 26 and 27 to | |
this Act or any enactment amended by those sections or Schedules may be | |
made so as to have effect from 1st January 2003. | |
(5) In this section— | |
“enactment” includes an enactment contained in subordinate legislation | 10 |
within the meaning of the Interpretation Act 1978 (c. 30), and | |
“overseas life insurance company” means an insurance company (as | |
defined in section 431(2) of the Taxes Act 1988) that is not resident in the | |
United Kingdom but carrying on life assurance business (as so defined) | |
through a permanent establishment in the United Kingdom. | 15 |
Chargeable gains | |
156 Life insurance policies and deferred annuity contracts | |
(1) For section 210 of the Taxation of Chargeable Gains Act 1992 (c. 12) | |
substitute— | |
“210 Life insurance and deferred annuities | 20 |
(1) This section has effect in relation to any policy of insurance or contract | |
for a deferred annuity on the life of any person. | |
(2) A gain accruing on a disposal of, or of an interest in, the rights | |
conferred by the policy of insurance or contract for a deferred annuity | |
is not a chargeable gain unless subsection (3) below applies. | 25 |
(3) This subsection applies if— | |
(a) (in the case of a disposal of the rights) the rights or any interest | |
in the rights, or | |
(b) (in the case of a disposal of an interest in the rights) the rights, | |
the interest or any interest from which the interest directly or | 30 |
indirectly derives (in whole or in part), | |
have or has at any time been acquired by any person for actual | |
consideration (as opposed to consideration deemed to be given by any | |
enactment relating to the taxation of chargeable gains). | |
(4) For the purposes of subsection (3) above — | 35 |
(a) (in the case of a policy of insurance) amounts paid under the | |
policy by way of premiums, and | |
(b) (in the case of a contract for a deferred annuity) amounts paid | |
under the contract, whether by way of premiums or as lump | |
sum consideration, | 40 |
do not constitute actual consideration. | |
(5) And for those purposes actual consideration for— | |
(a) a disposal which is made by one spouse to the other or is an | |
approved post-marriage disposal, or | |
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(b) a disposal to which section 171(1) applies, | |
is to be treated as not constituting actual consideration. | |
(6) For the purposes of subsection (5)(a) above a disposal is an approved | |
post-marriage disposal if— | |
(a) it is made in consequence of the dissolution or annulment of a | 5 |
marriage by one person who was a party to the marriage to the | |
other, | |
(b) it is made with the approval, agreement or authority of a court | |
(or other person or body) having jurisdiction under the law of | |
any country or territory or pursuant to an order of such a court | 10 |
(or other person or body), and | |
(c) the rights disposed of were, or the interest disposed of was, held | |
by the person by whom the disposal is made immediately | |
before the marriage was dissolved or annulled. | |
(7) Subsection (8) below applies for the purposes of tax on chargeable gains | 15 |
where— | |
(a) (if that subsection did not apply) a loss would accrue on a | |
disposal of, or of an interest in, the rights conferred by the policy | |
of insurance or contract for a deferred annuity, but | |
(b) if sections 37 and 39 were disregarded, there would accrue on | 20 |
the disposal a loss of a smaller amount, a gain or neither a loss | |
nor a gain. | |
(8) If (disregarding those sections) a loss of a smaller amount would | |
accrue, that smaller amount is to be taken to be the amount of the loss | |
accruing on the disposal; and in any other case, neither a loss nor a gain | 25 |
is to be taken to accrue on the disposal. | |
(9) But subsection (8) above does not affect the treatment for the purposes | |
of tax on chargeable gains of the person who acquired rights, or an | |
interest in rights, on the disposal. | |
(10) The occasion of— | 30 |
(a) the receipt of the sum or sums assured by the policy of | |
insurance, | |
(b) the transfer of investments or other assets to the owner of the | |
policy of insurance in accordance with the policy, or | |
(c) the surrender of the policy of insurance, | 35 |
is for the purposes of tax on chargeable gains an occasion of a disposal | |
of the rights (or of all of the interests in the rights) conferred by the | |
policy of insurance. | |
(11) The occasion of— | |
(a) the receipt of the first instalment of the annuity under the | 40 |
contract for a deferred annuity, or | |
(b) the surrender of the rights conferred by the contract for a | |
deferred annuity, | |
is for the purposes of tax on chargeable gains an occasion of a disposal | |
of the rights (or of all of the interests in the rights) conferred by the | 45 |
contract for a deferred annuity. | |
(12) Where there is a disposal on the occasion of the receipt of the first | |
instalment of the annuity under the contract for a deferred annuity— | |
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(a) in the case of a disposal of the rights conferred by the contract, | |
the consideration for the disposal is the aggregate of the amount | |
or value of the first instalment and the market value at the time | |
of the disposal of the right to receive the further instalments of | |
the annuity, and | 5 |
(b) in the case of a disposal of an interest in the rights, the | |
consideration for the disposal is such proportion of that | |
aggregate as is just and reasonable; | |
and no gain accruing on any subsequent disposal of, or of any interest | |
in, the rights is a chargeable gain (even if subsection (3) above applies). | 10 |
(13) In this section “interest”, in relation to rights conferred by a policy of | |
insurance or contract for a deferred annuity, means an interest as a co- | |
owner of the rights (whether the rights are owned jointly or in common | |
and whether or not the interests of the co-owners are equal).”. | |
(2) This section has effect in relation to disposals on or after 9th April 2003. | 15 |
157 Application of market value rule in case of exercise of option | |
(1) In Chapter 3 of Part 4 of the Taxation of Chargeable Gains Act 1992 (c. 12) | |
(miscellaneous provisions relating to options and other matters), after section | |
144 insert— | |
“144ZA Application of market value rule in case of exercise of option | 20 |
(1) This section applies where— | |
(a) an option is exercised, so that by virtue of section 144(2) or (3) | |
the grant or acquisition of the option and the transaction | |
resulting from its exercise are treated as a single transaction, | |
and | 25 |
(b) section 17(1) (“the market value rule”) applies, or would apply | |
but for this section, in relation to— | |
(i) the grant of the option, | |
(ii) the acquisition of the option (whether directly from the | |
grantor or not) by the person exercising it, or | 30 |
(iii) the transaction resulting from its exercise. | |
(2) If the option binds the grantor to sell— | |
(a) the market value rule does not apply for determining the | |
consideration for the sale, except, where the rule applies for | |
determining the consideration for the option, to that extent (in | 35 |
accordance with section 144(2)(a)); | |
(b) the market value rule does not apply for determining the cost to | |
the person exercising the option of acquiring what is sold, | |
except, where the rule applies for determining the cost of | |
acquiring the option, to that extent (in accordance with section | 40 |
144(3)(a)). | |
(3) If the option binds the grantor to buy— | |
(a) the market value rule does not apply for determining the cost of | |
acquisition incurred by the grantor, but without prejudice to its | |
application (in accordance with section 144(2)(b)) where the | 45 |
rule applies for determining the consideration for the option; | |
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(b) the market value rule does not apply for determining the | |
consideration for the disposal of what is bought, but without | |
prejudice to its application (in accordance with section | |
144(3)(b)) where the rule applies for determining the cost of the | |
option. | 5 |
(4) To the extent that, by virtue of this section, the market value rule does | |
not apply for determining an amount or value, the amount or value to | |
be taken into account is (subject to section 120) the actual amount or | |
value. | |
(5) In this section “option” has the same meaning as in section 144.”. | 10 |
(2) This section applies in relation to the exercise of an option on or after 10th April | |
2003. | |
158 Reporting limits and annual exempt amount | |
(1) The Taxation of Chargeable Gains Act 1992 (c. 12) is amended in accordance | |
with Schedule 28 to this Act. | 15 |
(2) In that Schedule— | |
Part 1 makes provision as to the cases in which a return of information | |
about chargeable gains is required, | |
Part 2 contains minor and consequential amendments of the provisions | |
relating to the annual exempt amount, and | 20 |
Part 3 provides for commencement. | |
159 Taper relief: assets qualifying as business assets | |
(1) In Schedule A1 to the Taxation of Chargeable Gains Act 1992 (taper relief), | |
paragraph 5 (conditions for assets other than shares to qualify as business | |
assets) is amended as follows. | 25 |
(2) In sub-paragraph (1) (application of paragraph), after “in the case of the | |
disposal of any asset” insert “by an individual, the trustees of a settlement or | |
an individual’s personal representatives”. | |
(3) For sub-paragraphs (2) to (5) substitute— | |
“(1A) The asset was a business asset at that time if at that time it was being | 30 |
used, wholly or partly, for the purposes of a trade carried on by— | |
(a) an individual or a partnership of which an individual was at | |
that time a member, or | |
(b) the trustees of a settlement or a partnership whose members | |
at that time included— | 35 |
(i) the trustees of a settlement, or | |
(ii) any one or more of the persons who at that time were | |
the trustees of a settlement (so far as acting in their | |
capacity as trustees), or | |
(c) the personal representatives of a deceased person or a | 40 |
partnership whose members at that time included— | |
(i) the personal representatives of a deceased person, or | |
(ii) any one or more of the persons who at that time were | |
the personal representatives of a deceased person (so | |
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