Income Tax (Trading and Other Income) Bill

House of Commons

Session 2004 - 05
Internet Publications
Other Bills before Parliament

Income Tax (Trading and Other Income) Bill

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
467

363
In section 12AB(5) (partnership return to include partnership statement) in
the definition of “tax credit” after “applies” insert “in the case of corporation
tax and section 397(1) of ITTOIA 2005 applies in the case of income tax”.
364
In section 12AE(2) (choice between different Cases of Schedule D) omit
paragraph (a).
5
365   (1)
Amend section 18 (interest paid without deduction of income tax) as
follows.
      (2)
In subsection (3E)(b) for “relevant” substitute “deeply”.
      (3)
For subsection (3F) substitute—
“(3F)
In subsection (3E)(b) above “deeply discounted security” has the
10
same meaning as in Chapter 8 of Part 4 of ITTOIA 2005 (profits from
deeply discounted securities) (see section 430 of that Act).”
366   (1)
Amend section 19 (information for purposes of Schedule A) as follows.
      (2)
In subsection (1) after “profits or gains chargeable to tax” insert “under
Chapter 3 of Part 3 of ITTOIA 2005 as the profits of a UK property business
15
or”.
      (3)
In the side-note after “for purposes of” insert “charge on profits of UK
property businesses or under”.
367
In section 27(2) (settled property) for “section 660G(1) and (2) of the principal
Act” substitute “section 620 of ITTOIA 2005”.
20
368
In section 30 (recovery of overpayment of tax, etc.) omit subsection (4).
369
In section 30A(2) (assessing procedure) for “Schedule” substitute “Part or
Chapter of ITEPA 2003 or ITTOIA 2005”.
370
In section 31(3) (appeals: right of appeal) omit “9D or”.
371
In section 42(7) (procedure for making claims etc.) omit the “and” before
25
paragraph (d) and after that paragraph insert “and
(e)
sections 111(1), 126(2), 129(2), 143, 185, 194 and 326 of ITTOIA
2005.”
372   (1)
Amend section 46B (questions to be determined by Special Commissioners)
as follows.
30
      (2)
In subsection (4)—
(a)
omit “of the principal Act”,
(b)
in paragraph (a) for “Chapter 1A or 1B of Part XV” substitute
“Chapter 5 of Part 5 of ITTOIA 2005”,
(c)
omit paragraph (b),
35
(d)
in paragraph (c) after “743(1)” insert “of the principal Act”, and
(e)
in paragraph (d) after “747(4)(a)” insert “of that Act”.
      (3)
After subsection (4) insert—
“(4A)
Any question as to the application of—
(a)
Part XVI of the principal Act (administration of estates:
40
corporation tax), or

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
468

(b)
Chapter 6 of Part 5 of ITTOIA 2005 (administration of estates:
income tax),

is a question to be determined by the Special Commissioners.”
      (4)
In subsection (5) after paragraph (c) insert “or
(d)
section 874 of ITTOIA 2005,”.
5
373
In section 46C (jurisdiction of Special Commissioners over certain claims
included in returns) omit subsection (3)(a).
374
In section 58(3)(b) (proceedings in tax cases in Northern Ireland) before
“section 11 of or paragraph 22” insert “section 186 of ITTOIA 2005,”.
375
In section 59A(8)(b) (payments on account of income tax) for “section 231 of
10
the principal Act” substitute “section 397(1) of ITTOIA 2005”.
376   (1)
Amend section 59B (payment of income tax and capital gains tax) as follows.
      (2)
In subsection (1)—
(a)
omit “233(1),” and “, 249(4), 421(1) or 547(5)”, and
(b)
for “or section 626 of ITEPA 2003” substitute “, section 626 of ITEPA
15
2003 or section 399(2), 400(2), 414(1), 421(1) or 530(1) of ITTOIA
2005”.
      (3)
In subsection (2)(b) (payment of income tax and capital gains tax) for
“section 231 of that Act” substitute “section 397(1) of ITTOIA 2005”.
377
In section 90(1)(b) (disallowance of relief for interest on tax) for “any tax
20
purposes” substitute “any corporation tax purpose (but see also sections 54
and 869 of ITTOIA 2005 for corresponding rule for income tax purposes)”.
378   (1)
Amend section 98 (special returns, etc) as follows.
      (2)
In subsection (4DA)(c) for “section 98 of the Finance Act 2004” substitute
“section 758 of ITTOIA 2005”.
25
      (3)
In the first column of the Table—
(a)
omit the entry relating to regulations under section 326C of ICTA,
(b)
omit the entry relating to section 660F of ICTA, and
(c)
at the end insert—
“Section 75(5) of ITTOIA 2005.
30
Section 128 of ITTOIA 2005
Section 305 of ITTOIA 2005.
Section 647 of ITTOIA 2005.
Regulations under Chapter 3 of Part 6 of ITTOIA 2005.”
      (4)
In the second column of the Table—
35
(a)
omit the entry relating to regulations under section 326C of ICTA,
and
(b)
at the end insert—
“Section 75(4) of ITTOIA 2005.
Regulations under Chapter 3 of Part 6 of ITTOIA 2005.”
40
379
In section 118(1) (interpretation) after the definition of “ITEPA 2003” insert—
““ITTOIA 2005” means the Income Tax (Trading and Other
Income) Act 2005,”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
469

380
In Schedule 1A (claims etc. not included in returns), in paragraph 10(b), for
“(administration of estates)” substitute “(administration of estates:
corporation tax), or Chapter 6 of Part 5 of ITTOIA 2005 (administration of
estates: income tax)”.
381   (1)
Amend Schedule 1B (claims for relief involving two or more years) as
5
follows.
      (2)
In paragraph 1—
(a)
in sub-paragraph (2) for the words from “are any of the following” to
“and the same” substitute “is a claim to which this Schedule applies
and the same”, and
10
(b)
in sub-paragraph (3) for “includes—” to the end substitute “includes
a reference to amendments and revocations to which paragraph 4
below applies.”
      (3)
In paragraph 3(1)—
(a)
for “a trade of farming or market gardening claims that subsection
15
(2) or (3) of section 96 of the principal Act” substitute “a qualifying
trade, profession or vocation (within the meaning of Chapter 16 of
Part 2 of ITTOIA 2005) claims that Chapter 16 of Part 2 of ITTOIA
2005”, and
(b)
after “that trade” insert “, profession or vocation”.
20
      (4)
In paragraph 4(1)—
(a)
in paragraph (a) for “claims that subsection (2) or (3) of section 96 of
the principal Act” substitute “claims that Chapter 16 of Part 2 of
ITTOIA 2005”, and
(b)
in paragraph (b) for “subsection (9) of that section” substitute
25
“section 224(4) of that Act”.
      (5)
In the italic cross-heading before paragraph 4 for “section 96(9)” substitute
“section 224(4) of ITTOIA 2005”.
      (6)
In paragraph 5—
(a)
in sub-paragraph (1)—
30
(i)
for “section 108 of the principal Act” substitute “section 257
of ITTOIA 2005”, and
(ii)
for the words from “the date” to “change of basis took place”
substitute “the date of the cessation”, and
(b)
in sub-paragraph (5) for “section 105 of the principal Act” substitute
35
“section 254 of ITTOIA 2005”.
382
In paragraph 10 of Schedule 3 (rules for assigning proceedings to General
Commissioners) after “of the principal Act” insert “, section 186 of ITTOIA
2005”.
383
In paragraph 2(4) of Schedule 3A (electronic lodgement of tax returns, etc.)
40
after “ITEPA 2003” insert “or ITTOIA 2005”.
Finance Act 1971 (c. 68)
384
The Finance Act 1971 is amended as follows.
385
In paragraph 8(2)(b) of Schedule 3 (taxation of refunds of contributions and
certain other payments) for “to tax on the amount of the payment under
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
470

Case VI of Schedule D” substitute “—
(i)
to income tax on the full amount of the payment
arising in the year of assessment; or
(ii)
to corporation tax on the amount of the payment
under Case VI of Schedule D”.
5
Finance Act 1973 (c. 51)
386
The Finance Act 1973 is amended as follows.
387
In Schedule 15 (territorial extension of charge to tax: supplementary
provisions), in paragraphs 2(a) and 4(1), for “or section 830 of the Taxes Act
1988” substitute “, section 830 of the Taxes Act 1988 or section 874 of the
10
Income Tax (Trading and Other Income) Act 2005”.
Biological Standards Act 1975 (c. 4)
388
The Biological Standards Act 1975 is amended as follows.
389   (1)
Amend section 2 (exemption of the National Biological Standards Board
from income tax and corporation tax) as follows.
15
      (2)
In subsection (4)—
(a)
for paragraph (a) substitute—
“(a)
under Chapter 3 of Part 3 of the Income Tax (Trading
and Other Income) Act 2005 (“ITTOIA 2005”) in
respect of the profits of a UK property business or
20
under Schedule A;”,
(b)
in paragraph (b) at the beginning insert “under the provisions of
ITTOIA 2005 specified in subsection (4A) in respect of the income
charged under those provisions received by the Board or”, and
(c)
in paragraph (c) for “under Schedule F” substitute “under Chapter 3
25
of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies
etc.)”.
      (3)
After that subsection insert—
“(4A)
The provisions are—
(a)
Chapter 2 of Part 4 (interest) so far as the income is yearly
30
interest or public revenue dividends (as defined in section
505(1A) of the Income and Corporation Taxes Act 1988),
(b)
Chapter 7 of that Part (purchased life annuity payments),
(c)
Chapter 10 of that Part (distributions from unauthorised unit
trusts),
35
(d)
Chapter 13 of that Part (sales of foreign dividend coupons) so
far as the income arises from foreign holdings within section
571(1)(a) (meaning of “foreign holdings” in that Chapter),
(e)
Chapter 2 of Part 5, so far as it relates to annual payments
(receipts from intellectual property),
40
(f)
Chapter 4 of that Part, so far as it relates to annual payments
(certain telecommunication rights: non-trading income), and
(g)
Chapter 7 of that Part (annual payments not otherwise
charged).”

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
471

Oil Taxation Act 1975 (c. 22)
390
The Oil Taxation Act 1975 is amended as follows.
391
In section 3(2) (allowance of expenditure (other than expenditure on long-
term assets and abortive exploration expenditure))—
(a)
in the first sentence—
5
(i)
after “section 579 of the Taxes Act” insert “or under section 77
of the Income Tax (Trading and Other Income) Act 2005
(“ITTOIA 2005”)”,
(ii)
after “under that subsection” insert “or that section”, and
(iii)
omit “less the amount of the rebate recoverable (within the
10
meaning of that subsection)”, and
(b)
in the second sentence—
(i)
after “section 492 of the Taxes Act” insert “or by virtue of
section 16 of ITTOIA 2005”,
(ii)
after “paragraph (a) or (b) of that subsection” insert “or
15
within the definition of “oil-related activities” in section 16(2)
of ITTOIA 2005”, and
(iii)
after “if that subsection” insert “or section”.
Inheritance Tax Act 1984 (c. 51)
392
The Inheritance Tax Act 1984 is amended as follows.
20
393
In section 6(3) (excluded property), in paragraph (e)—
(a)
for “certified contractual savings scheme” substitute “certified SAYE
savings arrangement”, and
(b)
for “section 326 of the Taxes Act 1988” substitute “section 703(1) of
the Income Tax (Trading and Other Income) Act 2005”.
25
394
In section 21(3) (normal expenditure out of income)—
(a)
for “section 657 of the Taxes Act 1988” substitute “section 423 of the
Income Tax (Trading and Other Income) Act 2005”, and
(b)
for “, for the purposes” to “annuity” substitute “exempt from income
tax under section 717 of that Act”.
30
395
In section 174(1) (liabilities for which allowance is to be made in determining
the value of an estate) in paragraph (b)—
(a)
for “Schedule 13 to the Finance Act 1996 (discounted securities)”
substitute “Chapter 8 of Part 4 of the Income Tax (Trading and Other
Income) Act 2005 (deeply discounted securities)”, and
35
(b)
for “paragraph 4(2) of that Schedule” substitute “section 437(2) of
that Act”.
Films Act 1985 (c. 21)
396
The Films Act 1985 is amended as follows.
397
In section 6(1) (certification of master negatives, tapes and discs) after “1992”
40
insert “or Chapter 9 of Part 2 of the Income Tax (Trading and Other Income)
Act 2005”.
398   (1)
Amend Schedule 1 (certification in case of British films) as follows.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
472

      (2)
In paragraph 2(1) (applications for certification of master negatives, tapes or
discs) after “1992” insert “, or Chapter 9 of Part 2 of the Income Tax (Trading
and Other Income) Act 2005,”.
      (3)
In paragraph 3(1) (certification by Secretary of State of master negatives,
tapes or discs) at the end insert “or, as the case may be, Chapter 9 of Part 2 of
5
the Income Tax (Trading and Other Income) Act 2005”.
Finance Act 1988 (c. 39)
399
The Finance Act 1988 is amended as follows.
400   (1)
Amend section 38 (maintenance payments under existing obligations: 1989-
90 onwards) as follows.
10
      (2)
In subsection (1) for paragraph (c) substitute—
“(c)
is (apart from this section) within a charge to tax under
Chapter 7 of Part 5 of the Income Tax (Trading and Other
Income) Act 2005 (annual payments not otherwise charged)
and is not, by virtue of Chapter 5 of that Part (settlements),
15
treated for any purpose as the income of the person making
it.”
      (3)
In subsection (9) for the words from “65(1)(b)” to “1988” substitute “839 of
the Income Tax (Trading and Other Income) Act 2005 (annual payments
payable out of relevant foreign income)”.
20
401
In section 73(2) (consideration for certain restrictive undertakings)—
(a)
for “person” substitute “company”, and
(b)
for “tax” substitute “corporation tax”.
402
In Schedule 6 (commercial woodlands) in paragraph 3(2) for “person”
substitute “company”.
25
403
In Schedule 12 (building societies: change of status) for paragraph 7
substitute—
“Certified SAYE savings arrangements
7
Section 702 of the Income Tax (Trading and Other Income) Act
2005 (interest under certified SAYE savings arrangements to be
30
exempt from income tax) shall have effect in relation to any
interest (or bonus) payable after the transfer under a savings
arrangement which immediately before the transfer was a
certified SAYE savings arrangement (within the meaning of
section 703(1) of that Act) in relation to the society despite the fact
35
that it ceased to be such an arrangement by reason of the transfer.”
Water Act 1989 (c. 15)
404
In section 95(11) of the Water Act 1989 (vesting in successor company of
liability for loans not to affect directions by the Treasury under section 581
of ICTA) for “section 581 of the Income and Corporation Taxes Act 1988”
40
substitute “section 755 of the Income Tax (Trading and Other Income) Act
2005”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
473

Finance Act 1989 (c. 26)
405
The Finance Act 1989 is amended as follows.
406
In section 68(2) (principal charges to tax: employee share ownership
trusts)—
(a)
in paragraph (a) for “annual profits or gains whose amount”
5
substitute “income of an amount that”, and
(b)
for paragraph (b) and the word “and” at the end of it substitute—
“(b)
that income shall be chargeable to income tax for the
year of assessment in which the event occurs,
(ba)
the tax so chargeable shall be charged on the full
10
amount of the income the trustees are treated as
receiving in the year of assessment,
(bb)
the trustees are liable for any tax so chargeable, and”.
407
In section 71(4) (further charges to tax: borrowing)—
(a)
in paragraph (a) for “annual profits or gains whose amount”
15
substitute “income of an amount that”, and
(b)
for paragraph (b) and the word “and” at the end of it substitute—
“(b)
that income shall be chargeable to income tax for the
year of assessment at the end of which the further
event occurs,
20
(ba)
the tax so chargeable shall be charged on the full
amount of the income the trustees are treated as
receiving in the year of assessment,
(bb)
the trustees are liable for any tax so chargeable, and”.
408   (1)
Amend section 76 (non-approved retirement benefits schemes) as follows.
25
      (2)
In subsection (1) after “Schedule D” insert “or under Part 2 of the Income Tax
(Trading and Other Income) Act 2005”.
      (3)
In subsection (4)(a) after “Schedule D” insert “or under Part 2 of the Income
Tax (Trading and Other Income) Act 2005”.
      (4)
In subsection (6C)(a) omit “of the Taxes Act 1988”.
30
409
Omit sections 112 and 113 (security: trades etc.).
410
In section 151(2) (assessment of trustees etc) in each of paragraphs (a) and (b)
for “Chapter II of Part XIII of the Taxes Act” substitute “Chapter 9 of Part 4
of the Income Tax (Trading and Other Income) Act 2005”.
411
In paragraph 1 of Schedule 12 (close companies: administrative
35
provisions)—
(a)
omit the word “and” at the end of paragraph (a), and
(b)
after paragraph (b) insert—
“(c)
section 397 of the Income Tax (Trading and Other
Income) Act 2005, and
40
(d)
Chapter 6 of Part 4 of that Act.”
Electricity Act 1989 (c. 29)
412
In paragraph 10 of Schedule 11 to the Electricity Act 1989 (vesting in
successor company of liability for loans not to affect directions by the