Finance Bill

House of Commons

Session 2003 - 04
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Finance Bill

Finance Bill
Schedule 11 — Conditions for registration for gross payment
Part 4 — Supplementary provisions
323

      (7)
There must be reason to expect that the company will, in respect of periods
ending after the end of the qualifying period, comply with—
(a)
all such obligations as are referred to in paragraphs 10 and 11 and
sub-paragraphs (1) to (6), and
(b)
such requests as are referred to in sub-paragraph (1).
5
      (8)
Subject to sub-paragraphs (2) and (3), a company is not to be taken for the
purposes of this paragraph to have complied with any such obligation or
request as is referred to in sub-paragraphs (1) to (6) if there has been a
contravention of a requirement as to—
(a)
the time at which, or
10
(b)
the period within which,

the obligation or request was to be complied with.
Part 4
Supplementary provisions
Power to amend conditions for registration for gross payment
15
13    (1)
The Treasury may by order made by statutory instrument amend this
Schedule by—
(a)
adding,
(b)
varying, or
(c)
removing,
20

a condition for registration for gross payment.
      (2)
No statutory instrument containing an order under this paragraph shall be
made unless a draft of the instrument has been laid before and approved by
a resolution of the House of Commons.
“Qualifying period”
25
14
In this Schedule “the qualifying period” means the period of 12 months
ending with the date of the application in question.
Regulations under this Schedule
15
Any power under this Schedule to make regulations prescribing the
evidence required for establishing what is likely to happen at any time
30
includes power to provide for such matters to be presumed (whether
conclusively or unless the contrary is shown in the manner provided for in
the regulations) from evidence of what has previously happened.
16
Regulations under paragraph 3(1), 7(1) or 11(1) prescribing the evidence
required for establishing the amount by way of relevant payments likely to
35
be received by a person may make different provision according to
whether—
(a)
the person is applying for registration for gross payment, or
(b)
the Board of Inland Revenue are considering whether to make a
determination under section 66(1)(a) cancelling the person’s
40
registration for gross payment.

Finance Bill
Schedule 12 — Construction industry scheme: consequential amendments
324

Schedule 12
Section 76

Construction industry scheme: consequential amendments
Records to be kept for purposes of returns
1     (1)
Section 12B of the Taxes Management Act 1970 (c. 9) is amended as follows.
      (2)
In subsection (4A) (records in respect of which duty to preserve records may
5
not be satisfied by preservation of information contained in them) for
paragraph (b) substitute—
“(b)
any record (however described) which is required by
regulations under section 70(1)(c) of the Finance Act 2004 to
be given to a sub-contractor (within the meaning of section 58
10
of that Act) on the making of a payment to which section 61
of that Act (deductions on account of tax) applies;”.
General rule as to when corporation tax is due and payable
2     (1)
Section 59D of the Taxes Management Act 1970 (c. 9) is amended as follows.
      (2)
In subsection (4)(d) (amounts taken into account in determining whether
15
repayment is due under subsection (2)) for “by virtue of regulations under
section 559A of the principal Act” substitute “by virtue of regulations under
section 62 of the Finance Act 2004”.
Claim for repayment in advance of liability being established
3     (1)
Section 59DA of the Taxes Management Act 1970 is amended as follows.
20
      (2)
In subsection (7) (deductions under section 559 of the Taxes Act 1988 to be
disregarded in considering whether amount paid by company exceeds its
probable tax liability, where claim made before delivering return) for
“section 559 of the principal Act” substitute “section 61 of the Finance Act
2004”.
25
Priority of claim for tax
4     (1)
Section 62 of the Taxes Management Act 1970 is amended as follows.
      (2)
In subsection (1A)(b) (goods or chattels of person in default not to be taken
in execution etc unless person seeking execution pays to collector sums due
from person in default in respect of deductions under section 559 of the
30
Taxes Act 1988) for “section 559 of the principal Act” substitute “section 61
of the Finance Act 2004”.
Recovery of tax in Scotland
5     (1)
Section 63 of the Taxes Management Act 1970 is amended as follows.
      (2)
In subsection (3)(b) (application for summary warrant relating to sums due
35
in respect of deductions required to be made under section 559 of the Taxes
Act 1988: no requirement to state that 14 days have elapsed since demand)
for “section 559 of the principal Act” substitute “section 61 of the Finance Act
2004”.

Finance Bill
Schedule 12 — Construction industry scheme: consequential amendments
325

Priority of claim for tax in Scotland
6     (1)
Section 64 of the Taxes Management Act 1970 is amended as follows.
      (2)
In subsection (1A)(b) (moveable goods and effects of person in default not to
be taken by diligence etc unless person proceeding to take goods and effects
pays to collector sums due from person in default in respect of deductions
5
under section 559 of the Taxes Act 1988) for “section 559 of the principal Act”
substitute “section 61 of the Finance Act 2004”.
Special returns etc
7     (1)
Section 98 of the Taxes Management Act 1970 is amended as follows.
      (2)
In the first column of the Table, omit the entry relating to section 561(8) of
10
the Income and Corporation Taxes Act 1988.
      (3)
In the second column of the Table, omit the entry relating to regulations
under section 566(1), (2) or (2A) of that Act.
      (4)
In the first column of the Table, insert at the appropriate place—

“Regulations under section 70(3) of the Finance Act 2004.”.
15
      (5)
In the second column of the Table, insert at the appropriate place—

“Regulations under section 65(2), 69(1), 70(1)(a) or (c) or 71 of the
Finance Act 2004.”.
Special penalties in the case of certain returns
8     (1)
Section 98A of the Taxes Management Act 1970 (c. 9) is amended as follows.
20
      (2)
In subsection (1) (regulations which may provide for section 98A to apply)
for “section 566(1) (sub-contractors) of the principal Act” substitute “section
70(1)(a) or 71 of the Finance Act 2004 (sub-contractors)”.
      (3)
In subsection (2)(b) (penalty for failure to make return continuing beyond 12
months)—
25
(a)
after “not exceeding” insert—
“(i)
in the case of a provision of PAYE
regulations,”, and
(b)
at the end insert “, or
(ii)
in the case of a provision of regulations under
30
section 70(1)(a) or 71 of the Finance Act 2004,
£3,000.”.
      (4)
In subsection (4)(a) (penalty for fraudulently or negligently making
incorrect return) after “year of assessment” insert “(in the case of a provision
of PAYE regulations) or period (in the case of a provision of regulations
35
under section 70(1)(a) or 71 of the Finance Act 2004)”.
Sub-contractors in the construction industry
9     (1)
The Taxes Act 1988 is amended as follows.
      (2)
In Part 13, omit Chapter 4.
Designated international organisations: miscellaneous exemptions
40
10    (1)
Section 582A of the Taxes Act 1988 is amended as follows.

Finance Bill
Schedule 12 — Construction industry scheme: consequential amendments
326

      (2)
In subsection (6) (organisation designated for purposes of this subsection
not to be person to whom section 560(2) applies) for “section 560(2)”
substitute “section 59 of the Finance Act 2004”.
Application of Income Tax Acts to public departments etc
11    (1)
Section 829 of the Taxes Act 1988 is amended as follows.
5
      (2)
In subsection (2A) (subsections (1) and (2) to have effect in relation to
Chapter 4 of Part 13 of the Taxes Act 1988 as if whole deduction under
section 559 were deduction of income tax)—
(a)
for “Chapter 4 of Part 13 of this Act” substitute “Chapter 3 of Part 3
of the Finance Act 2004”, and
10
(b)
for “section 559” substitute “section 61 of that Act”.
Provisions for securing payment by company of outstanding tax
12    (1)
Section 130 of the Finance Act 1988 (c. 39) is amended as follows.
      (2)
In subsection (7)(d) (references to tax payable by company to include
amounts it is liable to pay under section 559(4) of the Taxes Act 1988) for
15
“section 559(4) of that Act” substitute “section 61 of the Finance Act 2004”.
Supplementary provisions relating to contributions
13    (1)
Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) is
amended as follows.
      (2)
In paragraph 7 (special penalties in case of certain returns) in sub-paragraph
20
(1) (paragraph 7 to apply to certain returns made at the same time as a return
made under regulations under section 566(1) of the Taxes Act 1988 etc) in
paragraph (a) for “section 566(1) (sub-contractors) of the Income and
Corporation Taxes Act 1988” substitute “section 70(1)(a) or 71 (sub-
contractors) of the Finance Act 2004”.
25
Supplementary provisions relating to contributions
14    (1)
Schedule 1 to the Social Security Contributions and Benefits (Northern
Ireland) Act 1992 (c. 7) is amended as follows.
      (2)
In paragraph 7 (special penalties in case of certain returns) in sub-paragraph
(1) (paragraph 7 to apply to certain returns made at the same time as a return
30
made under regulations under section 566(1) of the Taxes Act 1988 etc) in
paragraph (a) for “section 566(1) (sub-contractors) of the Income and
Corporation Taxes Act 1988” substitute “section 70(1)(a) or 71 (sub-
contractors) of the Finance Act 2004”.
Transitional provisions concerning construction workers supplied by agencies
35
15    (1)
Section 56 of the Finance Act 1998 (c. 36) is amended as follows.
      (2)
In subsection (8) (meaning of “construction trade”) for “Chapter 4 of Part 13
of the Taxes Act 1988” substitute “section 74 of the Finance Act 2004”.
Company tax returns, assessments and related matters
16    (1)
Schedule 18 to the Finance Act 1998 is amended as follows.
40

Finance Bill
Schedule 13 — Childcare and childcare vouchers
327

      (2)
In paragraph 22 (preservation of information instead of original records) in
sub-paragraph (3) (records in respect of which duty to preserve records may
not be satisfied by preservation of information contained in them) for
paragraph (b) substitute—
“(b)
any record (however described) which is required by
5
regulations under section 70(1)(c) of the Finance Act 2004
to be given to a sub-contractor (within the meaning of
section 58 of that Act) on the making of a payment to which
section 61 of that Act (deductions on account of tax)
applies;”.
10
Calculation of deemed employment payment
17    (1)
Section 54 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) is
amended as follows.
      (2)
In subsection (2) (intermediary to be treated, in calculating the deemed
employment payment, as if amounts received subject to deduction under
15
section 559 of the Taxes Act 1988 had been received without deduction) for
“section 559 of ICTA” substitute “section 61 of the Finance Act 2004”.
Schedule 13
Section 78

Childcare and childcare vouchers
Childcare
20
1
In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003
(miscellaneous exemptions), for section 318 (care for children) substitute—
“318   Childcare: exemption for employer-provided care
(1)
No liability to income tax arises by virtue of Chapter 10 of Part 3
(taxable benefits: residual liability to charge) in respect of the
25
provision for an employee of care for a child if conditions A to D are
met.

For the meaning of “care” and “child”, see section 318B.
(2)
If those conditions are met only as respects part of the provision, no
such liability arises in respect of that part.
30
(3)
Condition A is that the child—
(a)
is a child or stepchild of the employee and is maintained
(wholly or partly) at the employee’s expense,
(b)
is resident with the employee, or
(c)
is a person in respect of whom the employee has parental
35
responsibility.

For the meaning of “parental responsibility”, see section 318B.
(4)
Condition B is that—
(a)
the premises on which the care is provided are not used
wholly or mainly as a private dwelling, and
40
(b)
any applicable registration requirement is met.

Finance Bill
Schedule 13 — Childcare and childcare vouchers
328

(5)
The registration requirements are—
(a)
in England and Wales, that under Part 10A of the Children
Act 1989;
(b)
in Scotland, that under the Regulation of Care (Scotland) Act
2001;
5
(c)
in Northern Ireland, that under Part XI of the Children
(Northern Ireland) Order 1995.
(6)
Condition C is that—
(a)
the premises on which the care is provided are made
available by the scheme employer alone, or
10
(b)
the partnership requirements are met.

In this section “scheme employer” means the employer operating the
scheme under which the care is provided (who need not be the
employer of the employee).
(7)
The partnership requirements are—
15
(a)
that the care is provided under arrangements made by
persons who include the scheme employer,
(b)
that the premises on which it is provided are made available
by one or more of those persons, and
(c)
that under the arrangements the scheme employer is wholly
20
or partly responsible for financing and managing the
provision of the care.
(8)
Condition D is that the care is provided under a scheme that is
open—
(a)
to the scheme employer’s employees generally, or
25
(b)
generally to those of the scheme employer’s employees at a
particular location,

and that the employee to whom it is provided is either an employee
of the scheme employer or is an employee working at the same
location as employees of the scheme employer to whom the scheme
30
is open.
318A   Childcare: limited exemption for other care
(1)
If conditions A to C are met in relation to the provision for an
employee of care for a child, liability to income tax by virtue of
Chapter 10 of Part 3 (taxable benefits: residual liability to charge)
35
arises only in respect of so much of the cash equivalent of the benefit
as exceeds the exempt amount.

For the meaning of “care” and “child”, see section 318B.
(2)
If those conditions are met only as respects part of the provision,
subsection (1) applies in respect of that part.
40
(3)
Condition A is that the child—
(a)
is a child or stepchild of the employee and is maintained
(wholly or partly) at the employee’s expense, or
(b)
is resident with the employee and is a person in respect of
whom the employee has parental responsibility.
45

For the meaning of “parental responsibility”, see section 318B.
(4)
Condition B is that the care is qualifying child care.

Finance Bill
Schedule 13 — Childcare and childcare vouchers
329


For the meaning of “qualifying child care”, see section 318C.
(5)
Condition C is that the care is provided under a scheme that is
open—
(a)
to the employer’s employees generally, or
(b)
generally to those at a particular location.
5
(6)
For the purposes of this section the “exempt amount”, in any tax
year, is £50 for each qualifying week in that year.
(7)
A “qualifying week” means a tax week in which care is provided for
a child in circumstances in which conditions A to C are met.

A “tax week” means one of the successive periods in a tax year
10
beginning with the first day of that year and every seventh day after
that (so that the last day of a tax year or, in the case of a tax year
ending in a leap year, the last two days is treated as a separate week).
(8)
An employee is only entitled to one exempt amount even if care is
provided for more than one child.
15

But it does not matter that another person may also be entitled to an
exempt amount in respect of the same child.
(9)
An employee is not entitled to an exempt amount under this section
and under section 270A (limited exemption for childcare vouchers)
in respect of the same tax week.
20
318B   Childcare: meaning of “care”, “child” and “parental responsibility”
(1)
For the purposes of sections 318 and 318A (exemptions for employer-
provided or employer-contracted childcare) “care” means any form
of care or supervised activity that is not provided in the course of the
child’s compulsory education.
25
(2)
For the purposes of those sections a person is a “child” until the last
day of the week in which falls the 1st September following the child’s
fifteenth birthday (or sixteenth birthday if the child is disabled).
(3)
For the purposes of subsection (2) a child is disabled if—
(a)
a disability living allowance is payable in respect of him, or
30
has ceased to be payable solely because he is a patient,
(b)
he—
(i)
is registered as blind in a register compiled by a local
authority under section 29 of the National Assistance
Act 1948 (welfare services),
35
(ii)
has been certified as blind in Scotland and in
consequence is registered as blind in a register
maintained by or on behalf of a local authority in
Scotland, or
(iii)
has been certified as blind in Northern Ireland and in
40
consequence is registered as blind in a register
maintained by or on behalf of a Health and Social
Services Board, or
(c)
he ceased to be so registered as blind within the previous 28
weeks.
45
(4)
In subsection (3)(a) “patient” means a person (other than a person
who is serving a sentence imposed by a court in a prison or youth