Amendments proposed to the Finance Bill - continued House of Commons

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Restricted securities with artificially depressed value

   

Mr Paul Boateng

NC3

To move the following Clause:—

    '(1)   Section 446E of the Income Tax (Earnings and Pensions) Act 2003 (c.1) (employee securities with artificially depressed market value: charge on restricted securities) is amended as follows.

    (2)   In subsection (1), after "on restricted securities)," insert—

          "(aa) immediately before the employment-related securities are disposed of (in circumstances which do not constitute such an event) or are cancelled without being disposed of,".

          (3)   For subsections (3) to (6) substitute—

              "(3)   "The relevant period" is the period beginning—

              (a) if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applied in relation to the employment-related securities, 7 years before the acquisition, and

              (b) in any other case, 7 years before the relevant date,

            and ending with the relevant date.

              (4)   "The relevant date" is—

              (a) in a case within subsection (1)(a), the date on which the chargeable event concerned occurs,

              (b) in a case within subsection (1)(aa), the date on which the disposal or cancellation concerned occurs, and

              (c) in a case within subsection (1)(b), the 5th April concerned.

              (5)    Where this section applies in a case within subsection (1)(aa) or (b), a chargeable event within section 427(3)(a) (lifting of restrictions) is to be treated as occurring in relation to the employment-related securities on the relevant date.

              (6)   In every case where this section applies, subsection (1) of section 428 (amount of charge on restricted securities) applies as if the reference in subsection (2) of that section to what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions were to what would be their market value at the appropriate time but for the matters to be disregarded.

              (7)   "The appropriate time" is—

              (a) in a case within subsection (1)(a) or (b), the time immediately after the chargeable event concerned, and

              (b) in a case within subsection (1)(aa), the time immediately before the chargeable event concerned.

              (8)   "The matters to be disregarded" are—

              (a) any restrictions,

              (b) the things done as mentioned in subsection (2), and

              (c) if the employment-related securities are about to be disposed of or cancelled, that fact.

              (9)   Where this section applies in a case within subsection (1)(aa), section 428(1) applies with the omission of the reference to OP.

              (10)   Where this section applies in a case within subsection (1)(a) and the chargeable event concerned is within section 427(3)(c) (disposal for consideration), section 428 applies with the omission of subsection (9) (case where consideration is less than actual market value)."

              (4)   This section applies on and after 7th May 2004.

              (5)   But if the employment-related securities were acquired before that date, section 446E does not apply by virtue of the amendment made by subsection (2) of this section unless their market value would be artificially low immediately before the disposal or cancellation if the date on which the relevant period began were the later of—

              (a) that on which it did begin, and

              (b) 7th May 2004.'.


      Relationship with chargeable gains

         

      Mr Paul Boateng

      NC12

      To move the following Clause:—

          '(1)   Subsection (3) below applies if—

          (a) section 125 applies as a result of a receipt on or after 17 March 2004, by a company that is or has been a member of a partnership, of any consideration for a disposal on or after that date of all or any of its interest in the partnership ("the section 125 disposal");

          (b) a chargeable gain accrues to the company on a relevant disposal; and

          (c) the total amount of chargeable gains accruing to the company on relevant disposals exceeds the total amount of any allowable losses accruing to it on such disposals.

          (2)   References in this section to a "relevant disposal" are to any disposal of an asset that, alone or together with other disposals of assets, constitutes the section 125 disposal; and references in this subsection to a disposal of an asset are to be construed in accordance with the 1992 Act.

          (3)   Where this subsection applies—

          (a) any chargeable gain accruing to the company on a relevant disposal must be excluded in computing, for the purposes of section 8(1) of the 1992 Act, the total amount of chargeable gains accruing to the company in the accounting period in which that gain accrued;

          (b) the relevant net gain (defined by subsection (4) below) must be included in computing for those purposes the total amount of chargeable gains accruing to the company in the accounting period in which the receipt mentioned in subsection (1) above occurred; and

          (c) any allowable loss accruing to the company on a relevant disposal must be excluded in computing for the purposes of section 8(1) of the 1992 Act the amount of any allowable losses.

          (4)   To find "the relevant net gain" for the purposes of this section—

          (a) take the amount by which the total amount of chargeable gains accruing to the company on relevant disposals exceeds the total amount of allowable losses accruing to it on such disposals; and

          (b) reduce it (but not below nil) by an amount equal to the chargeable amount.

          (5)   Where section 125 applies as mentioned in subsection (1)(a) above, in computing any chargeable gain or allowable loss accruing to the company on a relevant disposal—

          (a) neither the chargeable amount, nor any amount taken into account in computing it, shall be excluded by section 37(1) of the 1992 Act (exclusions from consideration); and

          (b) an amount that has been taken into account in computing the chargeable amount shall not by reason of that fact be excluded by section 39(1) of that Act (exclusions from allowable deductions).

          (6)   If section 125 and this section apply more than once as a result of two or more receipts by a company of consideration relating to the same section 125 disposal—

          (a) subsection (3)(b) above does not apply in relation to any of the receipts after the first; and

          (b) in relation to the first receipt, the amount to be deducted under subsection (4)(b) above is an amount equal to the total of the chargeable amounts found in relation to the receipts.

          (7)   Subsection (8) below applies if subsection (3) above prevents an allowable loss that accrued to a company otherwise than on a relevant disposal from being deductible from a chargeable gain accruing to the company on a relevant disposal.

          (8)   That loss (to the extent that it has not been deducted from any other chargeable gain) shall instead be deductible from the total amount of chargeable gains accruing to the company in the accounting period in which the receipt mentioned in subsection (1) above occurred.

          (9)   But if, in any case where subsection (3) above applies, there are one or more allowable losses—

          (a) that are losses to which section 18(3) of the 1992 Act applies, and

          (b) that accrued to the company otherwise than on a relevant disposal and are prevented by subsection (3) above from being deductible from a chargeable gain accruing to the company on a relevant disposal,

        the total amount deducted under subsection (8) above in respect of those losses must not exceed the relevant net gain.

          (10)   In this section—

      "the 1992 Act" means the Taxation of Chargeable Gains Act 1992 (c.12);"the chargeable amount" means the amount found under section 125 in relation to the receipt mentioned in subsection (1) above; andreferences to chargeable gains, or allowable losses, accruing on disposals are to be construed in accordance with the 1992 Act.'.


Valuation assumptions

   

Mr Paul Boateng

NC16

To move the following Clause:—

    'For the purposes of this Part the valuation assumptions in relation to a person and any benefits are—

      (a) if the person has not reached such age (if any) as must have been reached to avoid any reduction in the benefits on account of age, that the person reached that age on the date, and

      (b) that the person's right to receive the benefits had not been occasioned by physical or mental impairment.'.


Premium bonds

   

Mr Paul Boateng

NC17

To move the following Clause:—

    'Regulations under section 11 of the National Debt Act 1972 (c.65) (power of Treasury to make regulations as to raising of money under auspices of Director of Savings) may repeal any provision contained in section 54 of, or Schedule 18 to, the Finance Act 1968 (c.44) (terms of issue of premium savings bonds).'.


Partnerships exploiting films

   

Mr Paul Boateng

NC18

To move the following Clause:—

    'After section 118ZK of the Taxes Act 1988 (inserted by section 119) there is inserted—

"Partnerships exploiting films

    118ZL Partnerships exploiting films    (1)   Where (apart from this section) an amount may be given to an individual under section 380 or 381 in respect of a loss ("the loss in question") sustained by him—

      (a) in a trade consisting of or including the exploitation of films, and

      (b) in an affected year of assessment,

    none of that amount may be given otherwise than against income consisting of profits arising from the trade; but this is subject to subsection (4).

    (2)   An "affected year of assessment" means a year of assessment at any time during which the individual carried on the trade in partnership which is also—

      (a) the year of assessment in which the trade is first carried on by him or any of the next three years of assessment,

      (b) a year of assessment in which he did not devote a significant amount of time to the trade, and

      (c) a year of assessment at any time during which there existed a relevant agreement guaranteeing him an amount of income.

    (3)   For the purposes of subsection (2)(c)—

      (a) "a relevant agreement" means—

      (i) an agreement that was made with a view to the individual's carrying on the trade or in the course of his carrying it on (including any agreement under which he is or may be required to contribute an amount to the trade), or

      (ii) an agreement related to an agreement falling within sub-paragraph (i),

      (b) an agreement "guarantees" the individual an amount of income if the agreement, or any part of it, is designed to secure the receipt by the individual of that amount (or at least that amount) of income, and

      (c) it is immaterial when the amount of income would be received under the agreement.

    (4)   If the loss in question derives to any extent from exempt expenditure, amounts that (apart from this section) may be given under section 380 or 381 in respect of the loss otherwise than against income consisting of profits arising from the trade may be so given to the extent that the total of the amounts so given does not exceed the exempt part of the loss.

    (5)   The exempt part of the loss is so much of the loss in question as derives from exempt expenditure.

    (6)   Expenditure is exempt expenditure for the purposes of this section if it is—

      (a) expenditure incurred before 26 March 2004 in a case where this paragraph applies, or

      (b) expenditure that, for the purposes of the computation required by section 111(2), was deducted under section 41 or 42 of the Finance (No. 2) Act 1992, or

      (c) incidental expenditure that, although deductible apart from section 41 or 42 of that Act, was incurred in connection with the production or acquisition of a film in relation to which expenditure was deducted under either of those sections.

    (7)   Subsection (6)(a) applies where the individual carried on the trade before 26 March 2004.

    118ZM Partnerships exploiting films: supplementary    (1)   In section 118ZL and this section any reference to a film is to be construed in accordance with paragraph 1 of Schedule 1 to the Films Act 1985.

    (2)   Section 118ZH (meaning of "a significant amount of time" etc) applies for the purposes of section 118ZL as it applies for the purposes of section 118ZE.

    (3)   For the purposes of section 118ZL(3) agreements are related if they are entered into in pursuance of the same arrangement (regardless of the date on which either agreement is entered into).

    (4)   The reference in section 118ZL(6) to the acquisition of a film is a reference to the acquisition of the master negative or any master tape or master disc of the film; and this subsection is to be construed in accordance with section 43(1) and (2)(b) of the Finance (No. 2) Act 1992.

    (5)   In section 118ZL(6) "incidental expenditure" means expenditure on management, administration or obtaining finance.

    (6)   The part of the loss in question that derives from exempt expenditure shall be determined on such basis as is just and reasonable.

    (7)   The extent to which any expenditure falls within section 118ZL(6)(c) shall be determined on such basis as is just and reasonable.

    (8)   In any case where sections 380 and 381 have effect as mentioned in section 118ZD(2) or 118ZI(3) (cases where sections 380 and 381 have effect as if loss carried forward from earlier year sustained in subsequent year), section 118ZL also has effect as mentioned in section 118ZD(2) or (as the case may be) section 118ZI(3)."'.


 
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