Income Tax (Trading and Other Income) Bill

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Income Tax (Trading and Other Income) Bill

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
446

(b)
for “year of assessment” substitute “accounting period”,
(c)
for “him”, wherever it occurs, substitute “it”,
(d)
for “that year”, wherever it occurs, substitute “that accounting
period”,
(e)
for “tax” substitute “corporation tax”, and
5
(f)
for “he” substitute “it”.
      (3)
In subsection (2)—
(a)
for “person”, in both places where it occurs, substitute “company”,
(b)
for “year of assessment” substitute “accounting period”,
(c)
for “him”, wherever it occurs, substitute “it”,
10
(d)
for “that year”, wherever it occurs, substitute “that accounting
period”, and
(e)
for “tax” substitute “corporation tax”.
      (4)
In subsection (3) for “year of assessment” substitute “accounting period”.
      (5)
In subsection (4) after “this Part” insert “or Chapter 6 of Part 5 of ITTOIA
15
2005”.
      (6)
In subsection (5)—
(a)
in paragraph (a) for “a year of assessment” substitute “an accounting
period”,
(b)
omit “and” at the end of paragraph (a),
20
(c)
after paragraph (a) insert—
“(aa)
the amount treated as estate income under Chapter 6
of Part 5 of ITTOIA 2005 in respect of that interest or
the exercise of that discretion for which he is liable to
income tax for a year of assessment, and”,
25
(d)
in paragraph (b) after “paragraph (a)” insert “or (aa)”,
(e)
for “any year of assessment” substitute “any accounting period
under this Part or treated as estate income under that Chapter”,
(f)
after “the purposes of this Part” insert “or that Chapter”, and
(g)
for “paragraphs (a) and (b)” substitute “paragraphs (a) to (b)”.
30
291   (1)
Amend section 701 (interpretation) as follows.
      (2)
In subsection (3A) for “Schedule F”, wherever it occurs, substitute
“dividend”.
      (3)
In subsection (8)—
(a)
omit “and” at the end of paragraph (a),
35
(b)
after paragraph (b) insert—
“(c)
any amount of income treated as arising to the
personal representatives under section 410(4) of
ITTOIA 2005 (stock dividends) that would be charged
to income tax under Chapter 5 of Part 4 of that Act if
40
income arising to personal representatives were so
charged (see section 413 of that Act);
(d)
in a case where section 419(2) of that Act applies
(release of loans to participator in close company:
debts due from personal representatives), the amount
45
that would be charged to income tax under Chapter 6
of Part 4 apart from that section; and

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
447

(e)
any amount that would have been treated as income
of the personal representatives as such under section
466 of that Act if the condition in section 466(2) had
been met (gains from contracts for life insurance);”,
and
5
(c)
omit the second sentence.
      (4)
In subsection (9) after “year of assessment” insert “or accounting period”.
      (5)
In subsection (10) after “year of assessment” insert “or accounting period”.
292
In section 703(3) (cancellation of tax advantage) after “being chargeable”
insert “in the case of corporation tax”.
10
293   (1)
Amend section 710 (meaning of “securities”, transfer etc. for purposes of
sections 711 to 728) as follows.
      (2)
In subsection (3)—
(a)
after “Ulster Savings Certificates” insert “, as defined in section
693(7) of ITTOIA 2005”,
15
(b)
after paragraph (c) insert—
“(ca)
uncertificated eligible debt security units
within the meaning of section 552(2) of that
Act;”,
(c)
in paragraph (d) for “section 56(5)” substitute “section 552(2) of that
20
Act”,
(d)
in paragraph (da) for the words from “fulfils” to “of it” substitute “is
a right falling within section 552(1)(c) of that Act”, and
(e)
for paragraph (f) substitute—
“(f)
any security that is a deeply discounted
25
security for the purposes of Chapter 8 of Part
4 of ITTOIA 2005 (see section 430 of that Act).”
      (3)
After subsection (3) insert—
“(3A)
Paragraph (f) of subsection (3) does not apply to a security on the
transfer of which Chapter 8 of Part 4 of ITTOIA 2005 (profits from
30
deeply discounted securities) would apply subject to the rules in
sections 454 to 456 of that Act (see section 453(2) and (3) of that Act).”
      (4)
In subsection (5)—
(a)
omit “and” at the end of paragraph (a), and
(b)
at the end of paragraph (b) insert “and
35
(c)
does not include any transfer of a security to which
Chapter 8 of Part 4 of ITTOIA 2005 applies subject to
the rules in sections 454 to 456 of that Act.”
294   (1)
Amend section 714 (treatment of deemed sums and reliefs) as follows.
      (2)
In subsection (2)—
40
(a)
for “annual profits or gains whose amount” substitute “income of an
amount which”,
(b)
for “the profits or gains” substitute “the income”,
(c)
omit “under Case VI of Schedule D”, and
(d)
for “they are” substitute “it is”.
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
448

      (3)
After subsection (2) insert—
“(2A)
Income tax chargeable by virtue of subsection (2) shall be charged on
the full amount of the income treated as received.
(2B)
The person liable for any tax so charged shall be the person treated
as receiving the income.”
5
295
In section 715(1)(j) (exceptions from sections 713 and 714) for the words from
“chargeable” to “United Kingdom” substitute “charged in accordance with
section 832 of ITTOIA 2005 (relevant foreign income charged on the
remittance basis)”.
296   (1)
Amend section 716 (transfer of unrealised interest) as follows.
10
      (2)
In subsection (3)—
(a)
for “annual profits or gains” substitute “income”,
(b)
for “the profits or gains” substitute “the income”,
(c)
omit “under Case VI of Schedule D”, and
(d)
for “they are” substitute “it is”.
15
      (3)
After subsection (3) insert—
“(3A)
Income tax chargeable by virtue of subsection (3) shall be charged on
the full amount of the income treated as received.
(3B)
The person liable for any tax so charged shall be the person treated
as receiving the income.”
20
297   (1)
Amend section 720 (transfers of securities: nominees, trustees etc.) as
follows.
      (2)
In subsection (5)—
(a)
for “Annual profits or gains” substitute “Income”, and
(b)
for “are treated” substitute “is treated”.
25
      (3)
In subsection (6)—
(a)
in paragraph (a) for “annual profits or gains” substitute “income”,
(b)
in paragraph (b) for “annual profits or gains or annual profits or
gains” substitute “income or income”, and
(c)
for “Chapters 1A, 1B and 1C of Part XV” substitute “Chapter 5 of Part
30
5 of ITTOIA 2005 (settlements: amounts treated as income of settlor)
and Chapter 1C of Part 15 of this Act (liability of trustees)”.
      (4)
In subsection (7) for “Chapters 1A, 1B and 1C of Part XV” substitute
“Chapter 5 of Part 5 of ITTOIA 2005 and Chapter 1C of Part 15 of this Act”.
      (5)
In subsection (8)(a) for “Chapter 1A of Part XV (see section 660G(1) and (2))”
35
substitute “Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)”.
298   (1)
Amend section 723 (foreign securities: delayed remittances) as follows.
      (2)
In subsection (2)—
(a)
for “any annual profits or gains” substitute “any income”, and
(b)
for “the profits or gains” substitute “that income”.
40
      (3)
In subsection (4) for “under Case VI of Schedule D on the amount” substitute
“on the full amount”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
449

299   (1)
Amend section 730 (transfers of income arising from securities) as follows.
      (2)
In subsection (2)—
(a)
after “chargeable to” insert “income tax under Chapter 13 of Part 4 of
ITTOIA 2005 or to corporation”, and
(b)
after “section 18(3B)” insert “of this Act”.
5
      (3)
In subsection (4)—
(a)
for “tax by virtue of section 18(3B)” substitute “income tax under
Chapter 13 of Part 4 of ITTOIA 2005 (sales of foreign dividend
coupons)”, and
(b)
for “then the owner or beneficiary” to the end substitute “then that
10
interest shall be charged to income tax.
(4A)
The income tax chargeable by virtue of subsection (4) above
shall, subject to subsection (5) below, be charged on the full
amount of the interest arising in the year of assessment.
(4B)
The person liable for any tax chargeable by virtue of
15
subsection (4) above is the owner or beneficiary, but he shall
be entitled to credit for any tax which the interest is shown to
have borne.”
      (4)
In subsection (5)—
(a)
for “For the purposes of subsection (4) above” substitute “But”,
20
(b)
for “chargeable under Case IV or V of Schedule D” substitute
“relevant foreign income”, and
(c)
for “the tax under Case VI” substitute “the income tax chargeable by
virtue of subsection (4) above”.
      (5)
In subsection (8)—
25
(a)
after “charged to” insert “income tax under Chapter 13 of Part 4 of
ITTOIA 2005 or to corporation”, and
(b)
after “section 18(3B)” insert “of this Act”.
300
Omit section 730C (exchanges of gilts: traders etc.).
301
In section 731 (application and interpretation of sections 732 to 734: purchase
30
and sale of securities)—
(a)
in subsection (7) after “set up and commenced” insert “, or when a
trade is subject to a relevant change,”, and
(b)
after that subsection insert—
“(7A)
For the purposes of subsection (7) above a trade is subject to
35
a relevant change—
(a)
when there is a change in the persons carrying on the
trade which involves all of the persons carrying it on
before the change permanently ceasing to carry it on,
or
40
(b)
when a company starts to be within the charge to
income tax under Chapter 2 of Part 2 of ITTOIA 2005
in respect of the trade.”
302
In section 732(1A) (dealers in securities) for the words from “by virtue of” to

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
450

the end substitute “either—
(a)
by virtue of section 366(1) of ITTOIA 2005 in computing
profits chargeable to income tax under Chapter 2 of Part 2 of
that Act, or
(b)
by virtue of section 95(1) of this Act in computing profits
5
chargeable to corporation tax in accordance with the
provisions of this Act applicable to Case I or II of Schedule
D.”
303   (1)
Amend section 740 (liability of non-transferors) as follows.
      (2)
In subsection (2)—
10
(a)
in paragraph (a) after “for that year” insert “and be charged to
income tax on that individual for that year”, and
(b)
in paragraph (b) after “his income for the next following year” insert
“and be charged to income tax on him for that year”.
      (3)
Omit subsection (4).
15
      (4)
In subsection (5) for the words from “; and subsections (6) to (9)” to the end
substitute “; and sections 833 and 834 of ITTOIA 2005 shall apply for the
purposes of this subsection as they would apply for the purposes of section
832 (remittance basis) of that Act if the benefit were relevant foreign
income.”
20
304   (1)
Amend section 743 (transfer of assets abroad: supplemental provision) as
follows.
      (2)
In subsection (1) for “Schedule F” substitute “dividend” and for “income tax
so chargeable shall be charged” to the end substitute “income to which
section 739 applies shall be charged to income tax.”
25
      (3)
After subsection (1) insert—
“(1ZA)
The charge to income tax under subsection (1) above operates on
income falling within subsection (1A) below by treating the income
as if it were income to which section 1A applies by virtue of
subsection (2)(b) of that section.”
30
      (4)
In subsection (1A) for paragraphs (a) to (g) substitute—
“(a)
income chargeable under Chapter 3 of Part 4 of ITTOIA 2005
(dividends etc. from UK resident companies etc.);
(b)
income chargeable under Chapter 4 of that Part (dividends
from non-UK resident companies);
35
(c)
income chargeable under Chapter 5 of that Part (stock
dividends from UK resident companies);
(d)
income chargeable under Chapter 6 of that Part (release of
loan to participator in close company); or
(e)
a relevant foreign distribution chargeable under Chapter 8 of
40
Part 5 of that Act (income not otherwise charged).”
      (5)
After that subsection insert—
“(1B)
In subsection (1A) “relevant foreign distribution” means any
distribution of a company not resident in the United Kingdom
which—
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
451

(a)
is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005,
but
(b)
would be chargeable under Chapter 3 of that Part if the
company were resident in the United Kingdom.”
305
In section 745(6) (transfer of assets abroad: information powers) for “section
5
660G(1) and (2)” substitute “section 620 of ITTOIA 2005”.
306   (1)
Amend section 746 (persons resident in the Republic of Ireland) as follows.
      (2)
Renumber the existing text as subsection (1).
      (3)
In that subsection for “any provision of section 34, 35 or 36” substitute “the
lease premium rules”.
10
      (4)
After that subsection insert—
“(2)
Corporation tax chargeable by virtue of subsection (1)(b) above shall
be charged under Case VI of Schedule D.
(3)
In this section “the lease premium rules” means any provision of
sections 277 to 285 of ITTOIA 2005 or sections 34 to 36 of this Act.”
15
307   (1)
Amend section 761 (charge to income tax or corporation tax of offshore
income gain) as follows.
      (2)
In subsection (1) for the words from “of that gain shall be treated for all” to
the end substitute “of that gain—
(a)
shall be treated for all the purposes of the Tax Acts as income
20
arising at the time of the disposal to the person making the
disposal, and
(b)
shall be charged—
(i)
to income tax for the year of assessment in which the
disposal is made, or
25
(ii)
to corporation tax as a profit or gain under Case VI of
Schedule D for the accounting period in which the
disposal is made.”
      (3)
After that subsection insert—
“(1A)
The income tax charged by virtue of subsection (1)(b)(i) above shall
30
be charged on the full amount of the income treated as arising in the
year of assessment.”
308
In section 762(6) (offshore income gains accruing to persons resident or
domiciled abroad)—
(a)
after “740” insert “above”, and
35
(b)
for “Part XV” substitute “Chapter 5 of Part 5 of ITTOIA 2005”.
309
In section 774(1) (transactions between dealing company and associated
company)—
(a)
after “shall be chargeable” insert “to tax”, and
(b)
for “under Case VI of Schedule D” substitute “(in the case of
40
corporation tax, under Case VI of Schedule D)”.
310   (1)
Amend section 775 (sale by individual of income derived from his personal
activities) as follows.
      (2)
In subsection (2) omit the words from “, and which is” to the end.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
452

      (3)
After subsection (2) insert—
“(2A)
Any such earned income shall be charged to income tax on the
individual and the tax so charged shall be charged on the full amount
of the earned income treated as arising in the year of assessment.”
311   (1)
Amend section 776 (transactions in land: taxation of capital gains) as follows.
5
      (2)
In subsection (3)(a) omit the words from “, and which constitutes” to “period
in which the gain is realised”.
      (3)
After subsection (3) insert—
“(3A)
The gain treated as income shall be charged—
(a)
to income tax for the year of assessment in which the gain is
10
realised, or
(b)
to corporation tax as profits or gains under Case VI of
Schedule D for the accounting period in which the gain is
realised.
(3B)
The income tax charged by virtue of subsection (3A)(a) shall be
15
charged on the full amount of the income treated as arising in the
year of assessment; and the person liable for any tax so charged is the
person whose income it is.”
      (4)
In subsection (6)—
(a)
in paragraph (a) after “the profits under” insert “Part 2 of ITTOIA
20
2005 or”, and
(b)
in paragraph (b) for “subsections (2) and (3) of section 99” substitute
“section 158 of ITTOIA 2005 or (as the case may be) subsections (2)
and (3) of section 99 above”.
      (5)
In subsection (7) after “the treatment under” insert “Part 2 of ITTOIA 2005
25
or”.
312   (1)
Amend section 777 (tax avoidance: provisions supplementary to sections
775 and 776) as follows.
      (2)
In subsection (9) after “tax under” insert “Chapter 7 of Part 5 of ITTOIA 2005
(annual payments not otherwise charged) or”.
30
      (3)
In subsection (10) for “Part XV” substitute “Chapter 5 of Part 5 of ITTOIA
2005 (settlements: amounts treated as income of settlor)”.
313   (1)
Amend section 779 (sale and lease-back: limitation on tax reliefs) as follows.
      (2)
In subsection (10)—
(a)
after “include references to” insert “—
35

(a)”,
(b)
after “section 37” insert “or under section 37A”,
(c)
after “87” insert “or 87A”,
(d)
after “comprised in the lease,” insert “and
(b)
expenses which the tenant under the lease is treated
40
as incurring in respect of the land subject to the lease
under sections 61 to 67 or 292 to 297 of ITTOIA 2005,”,
and
(e)
at end insert “and such expenses shall be treated for those purposes
as having been paid as soon as they have been incurred.”
45