Income Tax (Trading and Other Income) Bill

House of Commons

Session 2004 - 05
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Income Tax (Trading and Other Income) Bill

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
488

(a)
in sub-paragraph (1) omit “Subject to paragraph 12(2) below,”,
(b)
in sub-paragraph (3) for “under Case VI of Schedule D” substitute “to
income tax”, and
(c)
in sub-paragraph (3) at the end insert “, and the person shall be liable
for any tax so chargeable”.
5
      (4)
Omit paragraphs 12 and 13.
472
In paragraph 26 of Schedule 24 (vesting in successor company of the British
Railways Board of liability for loans to that Board not to affect directions by
the Treasury under section 581 of ICTA) for “section 581 of the Taxes Act
1988” substitute “section 755 of the Income Tax (Trading and Other Income)
10
Act 2005”.
Coal Industry Act 1994 (c. 21)
473
In paragraph 17(1) of Schedule 4 to the Coal Industry Act 1994 (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 1988 Act”
15
substitute “section 755 of the Income Tax (Trading and Other Income) Act
2005”.
Finance Act 1995 (c. 4)
474
The Finance Act 1995 is amended as follows.
475
Omit section 56 (foreign life policies etc).
20
476
In section 73(1)(a) (venture capital trusts: regulations) after “1992” insert “or
Chapter 5 of Part 6 of the Income Tax (Trading and Other Income) Act 2005”.
477
In section 123 (prevention of exploitation of transitional provisions) for “2(2)
and (4), 4(2) and 6(2)(a) and (4) of Schedule 20 to the Finance Act 1994”
substitute “52 and 53 of Schedule 2 to the Income Tax (Trading and Other
25
Income) Act 2005”.
478   (1)
Amend section 126 (UK representatives of non-residents) as follows.
      (2)
In subsections (6) and (7) for “the deemed trade or profession from which the
non-resident’s share in the partnership’s profits or losses is treated for the
purposes of section 111 or 114 of the Taxes Act 1988 as deriving” substitute
30
“the notional or deemed trade or profession”.
      (3)
After subsection (7) insert—
“(7A)
In subsections (6) and (7) “the notional or deemed trade or
profession” means—
(a)
the notional trade from which the non-resident’s share in the
35
partnership’s profits or losses is treated for the purposes of
section 852 of the Income Tax (Trading and Other Income)
Act 2005 as deriving, or
(b)
the deemed trade or profession from which that share is
treated for the purposes of section 114 of the Taxes Act as
40
deriving.”
479
In section 128(3) (limit on income chargeable on non-residents: income tax)
for paragraphs (a) and (b) substitute—
“(a)
it—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
489

(i)
is chargeable to income tax under Chapter 2, 7, 8, 10
or 11 of Part 4 of the Income Tax (Trading and Other
Income) Act 2005 (interest, purchased life annuity
payments, profits from deeply discounted securities,
distributions from unauthorised unit trusts and
5
transactions in deposits), section 579 of that Act so far
as it relates to annual payments (royalties etc. from
intellectual property), Chapter 4 of Part 5 of that Act
so far as it relates to annual payments (certain
telecommunication rights: non-trading income) or
10
Chapter 7 of Part 5 of that Act (annual payments not
otherwise charged); and
(ii)
is not relevant foreign income;
(aa)
it is chargeable to tax under Chapter 3 of Part 4 of that Act
(dividends etc. from UK resident companies etc.);”.
15
480   (1)
Amend section 154 (short rotation coppice) as follows.
      (2)
In subsection (1) at the beginning insert “Subject to subsection (1A),”.
      (3)
After subsection (1) insert—
“(1A)
Subsection (1) does not apply for the purposes of the Income Tax
(Trading and Other Income) Act 2005 (in relation to which section
20
876(3) and (4) makes corresponding provision).”
481
In section 157(7) (certificates of tax deposit) for “Case III of Schedule D”
substitute “Chapter 2 of Part 4 of the Income Tax (Trading and Other
Income) Act 2005 (interest)”.
482
In paragraph 3(4) of Schedule 18 (deceased persons’ estates) after
25
“Schedule)” insert “and sections 652, 660 and 665 of the Income Tax (Trading
and Other Income) Act 2005”.
483   (1)
Amend Schedule 22 (prevention of exploitation of transitional provisions to
facilitate self-assessment) as follows.
      (2)
Omit paragraph 2.
30
      (3)
In paragraph 3—
(a)
in sub-paragraph (1)(a) for “paragraph 2(4) of Schedule 20 to the
Finance Act 1994” substitute “paragraph 52 of Schedule 2 to the
Income Tax (Trading and Other Income) Act 2005 (“ITTOIA 2005”)”,
(b)
in sub-paragraph (2) for “the said paragraph 2(4)” substitute
35
“paragraph 52 of that Schedule”,
(c)
in sub-paragraph (4), in the definition of “the transitional overlap
period”, after “1996-97” insert “(determined in accordance with
paragraph 1 of Schedule 20 to the Finance Act 1994 despite the repeal
by ITTOIA 2005 of that paragraph)” and after “that year” insert “(as
40
so determined)”, and
(d)
in sub-paragraph (4), in the definition of “the transitional overlap
profit”, for “the said paragraph 2(4)” substitute “paragraph 52(2) of
Schedule 2 to ITTOIA 2005”.
      (4)
Omit paragraph 4.
45
      (5)
In paragraph 5—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
490

(a)
in sub-paragraph (1) for “paragraph 2(4) of Schedule 20 to the
Finance Act 1994” substitute “paragraph 52 of Schedule 2 to ITTOIA
2005”,
(b)
in sub-paragraph (3) for “the said paragraph 2(4)” substitute
“paragraph 52 of Schedule 2 to ITTOIA 2005”, and
5
(c)
in sub-paragraph (5), in the definition of “the transitional overlap
profit”, for “the said paragraph 2(4)” substitute “paragraph 52(2) of
Schedule 2 to ITTOIA 2005”.
      (6)
Omit paragraph 6.
      (7)
In paragraph 7—
10
(a)
in sub-paragraph (1) for “paragraph 6(4) of Schedule 20 to the
Finance Act 1994” substitute “paragraph 53 of Schedule 2 to ITTOIA
2005”,
(b)
in sub-paragraph (2) for “the said paragraph 6(4)” substitute
“paragraph 53 of that Schedule”,
15
(c)
in sub-paragraph (4), in the definition of “the transitional overlap
period”, after “1996-97” insert “(determined in accordance with
paragraph 1 of Schedule 20 to the Finance Act 1994 despite the repeal
by ITTOIA 2005 of that paragraph)” and after “that year” insert “(as
so determined)”, and
20
(d)
in sub-paragraph (4), in the definition of “the transitional overlap
profit”, for “the said paragraph 6(4)” substitute “paragraph 53(3) of
Schedule 2 to ITTOIA 2005”.
      (8)
Omit paragraphs 8 to 10.
      (9)
In paragraph 14(1) for “paragraphs 1, 3, 6 and 7” substitute “paragraphs 1, 3
25
and 7”.
     (10)
In paragraph 15(1) for “paragraphs 1, 3, 6 and 7” substitute “paragraphs 1, 3
and 7”.
     (11)
Omit paragraphs 18 to 20.
     (12)
In the heading for “SCHEDULE 20 TO FINANCE ACT 1994” substitute
30
“SCHEDULE 2 TO ITTOIA 2005 (SO FAR AS RELATING TO OVERLAP
PROFIT)”.
Finance Act 1996 (c. 8)
484
The Finance Act 1996 is amended as follows.
485
In section 92(1) (convertible securities etc: creditor relationships) for
35
paragraph (d) substitute—
“(d)
the asset is not a deeply discounted security for the purposes
of Chapter 8 of Part 4 of the Income Tax (Trading and Other
Income) Act 2005 (see section 430) or an excluded indexed
security within the meaning of section 433 of that Act;”.
40
486
Omit section 102 (discounted securities: income tax provisions).
487   (1)
Amend section 154 (FOTRA securities) as follows.
      (2)
In subsection (2)—
(a)
for “(3) to” substitute “(3) and”, and

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
491

(b)
at the end insert—

“This does not apply to any charge to income tax (but see
sections 714 and 715 of the Income Tax (Trading and Other
Income) Act 2005 for exemptions from income tax charges).”
      (3)
Omit subsection (4).
5
      (4)
In subsection (6) omit “income tax or”.
488   (1)
Amend Schedule 9 (loan provisions: special computational provisions) as
follows.
      (2)
In the italic cross-heading before paragraph 17 for “Discounted” substitute
“Deeply discounted”.
10
      (3)
In paragraph 17(1)(a) for “relevant” substitute “deeply”.
      (4)
For paragraph 17(4) substitute—
    “(4)
In this paragraph “deeply discounted security” has the same
meaning as in Chapter 8 of Part 4 of the Income Tax (Trading and
Other Income) Act 2005 (see section 430); and the provisions of
15
that Chapter shall apply for the purposes of this paragraph for
determining the difference between the issue price of a security
and the amount payable on redemption as they apply for the
purposes of section 430 of that Act.”
      (5)
In paragraph 17(8) and (8A) for “relevant” substitute “deeply”.
20
      (6)
In the italic cross-heading before paragraph 18 for “Discounted” substitute
“Deeply discounted”.
      (7)
In paragraph 18(1)(a), (2C) and (2D) for “relevant” substitute “deeply”.
      (8)
For paragraph 18(3) substitute—
    “(3)
In this paragraph “deeply discounted security” has the same
25
meaning as in Chapter 8 of Part 4 of the Income Tax (Trading and
Other Income) Act 2005 (see section 430); and the provisions of
that Chapter shall apply for the purposes of this paragraph for
determining the difference between the issue price of a security
and the amount payable on redemption as they apply for the
30
purposes of section 430 of that Act.”
      (9)
In paragraph 19(13) for “relevant” substitute “deeply”.
489
Omit Schedule 13 (discounted securities: income tax provisions).
490   (1)
Amend Schedule 15 (loan relationships: savings and transitional provisions)
as follows.
35
      (2)
In paragraph 26(2) for the definition of “relevant discounted security”
substitute—
““deeply discounted security” has the same meaning as in
Chapter 8 of Part 4 of the Income Tax (Trading and Other
Income) Act 2005 (see section 430)”.
40
      (3)
In paragraph 28(b) for “Schedule 13 to this Act” and “relevant” substitute
respectively “Chapter 8 of Part 4 of the Income Tax (Trading and Other
Income) Act 2005 (profits from deeply discounted securities)” and “deeply”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
492

      (4)
In paragraph 30(1)(c) for “relevant” substitute “deeply”.
Finance Act 1997 (c. 16)
491
The Finance Act 1997 is amended as follows.
492
In section 79 (payments under certain life insurance policies)—
(a)
in subsection (1)(a) for “the purposes of the Tax Acts” substitute
5
“corporation tax purposes”, and
(b)
in subsection (3) after “Tax Acts” insert “other than the Income Tax
(Trading and Other Income) Act 2005”.
493   (1)
Amend Schedule 12 (leasing arrangements: finance leases and loans) as
follows.
10
      (2)
In paragraph 11—
(a)
in sub-paragraph (9) after “1992” insert “or section 135, 138, 139 or
140 of ITTOIA 2005”,
(b)
in sub-paragraph (10)(b) after “1992” insert “or section 134(2) of
ITTOIA 2005”,
15
(c)
in sub-paragraph (11)(a) after “Taxes Act 1988” insert “or section 170
of ITTOIA 2005”, and
(d)
in sub-paragraph (11)(b) for “of that Act” substitute “of the Taxes Act
1988 or section 165 or 168 of ITTOIA 2005”.
      (3)
In paragraph 30—
20
(a)
in sub-paragraph (1) before the definition of “lease” insert—
““ITTOIA 2005” means the Income Tax (Trading and Other
Income) Act 2005;”, and
(b)
in sub-paragraph (2)(b) for “Case I or II of Schedule D” substitute
“Part 2 of ITTOIA 2005”.
25
Finance Act (No.2) 1997 (c. 58)
494
The Finance (No.2) Act 1997 is amended as follows.
495
In section 30 (tax credits)—
(a)
in subsection (9) after “above” insert “and rewritten in section 397(3)
of the Income Tax (Trading and Other Income) Act 2005”, and
30
(b)
in subsection (10)(a) for “section 231 of the Taxes Act 1988” substitute
“section 397 of the Income Tax (Trading and Other Income) Act
2005”.
496
In section 37(7) (interest to be paid gross) for “sections 722A(5) and 730C(9),
and in paragraph 3A(2)(a) of Schedule 23A, (which all” substitute “section
35
722A(5), and in paragraph 3A(2)(a) of Schedule 23A, (which”.
497
In section 48(1) (relief for expenditure on production or acquisition of films)
after “, section 41 above or this section” insert “or by virtue of any provision
of Chapter 9 of Part 2 of ITTOIA 2005”.
Finance Act 1998 (c. 39)
40
498
The Finance Act 1998 is amended as follows.
499
In section 42 (computation of profits of trade, profession or vocation)—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
493

(a)
omit subsection (4), and
(b)
in subsection (5) for “Tax Acts” substitute “Corporation Tax Acts”.
500
Omit section 43 (barristers and advocates in early years of practice).
501   (1)
Amend section 46 (minor and consequential provisions about
computations) as follows.
5
      (2)
In subsection (1) for “Tax Acts” substitute “Corporation Tax Acts”.
      (3)
In subsection (2) for “any purpose of the Tax Acts” substitute “corporation
tax purposes”.
502
In section 76(3) (power to make regulations for non-UK residents who have
made investments under individual investment plans to be treated as UK
10
resident for the purpose of tax credits) for “section 333 of the Taxes Act 1988”
substitute “Chapter 3 of Part 6 of the Income Tax (Trading and Other
Income) Act 2005”.
503
In section 123(7)—
(a)
for “both” substitute “more”,
15
(b)
in paragraph (a) for the words from “(regulations” onwards
substitute “(investment plan regulations)”, and
(c)
at the end of paragraph (b) add “and
(c)
Chapter 3 of Part 6 of the Income Tax (Trading and
Other Income) Act 2005 (income from individual
20
investment plans),”.
Finance Act 1999 (c. 16)
504
The Finance Act 1999 is amended as follows.
505
In section 63(1) (treatment of transfer fees under existing contracts) at the
end insert “or, as the case may be, under Chapter 2 of Part 2 of the Income
25
Tax (Trading and Other Income) Act 2005”.
506   (1)
Amend section 65 (relevant discounted securities) as follows.
      (2)
Omit subsections (1) to (6).
      (3)
In subsection (8) for “subsections (1) to (7) above have” substitute
“subsection (7) above has”.
30
      (4)
In subsections (9) and (10) for “subsections (1) to (7)”, “have effect” and “do
not affect” substitute “subsection (7)”, “has effect” and “does not affect”
respectively.
      (5)
In subsections (11) and (12) for “subsections (1) to (7) above have” substitute
“subsection (7) above has”.
35
507
In section 85(7)(b) (advance pricing agreements etc.) after “Taxes Act 1988”
insert “or section 16(1) of the Income Tax (Trading and Other Income) Act
2005”.
508   (1)
Amend Schedule 6 (tax treatment of receipts by way of reverse premium) as
follows.
40
      (2)
In paragraph 1(1) (application of Schedule)—
(a)
for “a person receives” substitute “a company receives”,

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
494

(b)
for “him or a person connected with him” substitute “the company
or a person connected with the company”, and
(c)
for “the person receiving the payment or other benefit, or as the case
may be the person connected with him” substitute “the company
receiving the payment or other benefit, or as the case may be the
5
person connected with the company”.
      (3)
In paragraph 2 (tax treatment of receipts by way of reverse premium)—
(a)
for “the purposes of the Tax Acts” substitute “corporation tax
purposes”,
(b)
for “the person receiving the reverse premium”, in both places where
10
it occurs, substitute “the company receiving the reverse premium”,
(c)
for “that person” substitute “that company”,
(d)
for “tax” substitute “corporation tax”, and
(e)
for “him” substitute “the company”.
      (4)
In paragraph 3(3) (arrangements not at arm’s length)—
15
(a)
for “the person receiving” substitute “the company receiving”,
(b)
for “by him but which he” substitute “by the company but which it”,
and
(c)
for “he carries” substitute “the company carries”.
      (5)
Omit paragraph 6 (exclusion of transaction relating to individual’s only or
20
main residence) and the italic cross-heading before it.
Commonwealth Development Corporation Act 1999 (c. 20)
509   (1)
Amend paragraph 6 of Schedule 3 to the Commonwealth Development
Corporation Act 1999 (distributions by the Commonwealth Development
Corporation) as follows.
25
      (2)
In sub-paragraph (2)(b) after “section 231 of that Act” insert “or section 397
of the Income Tax (Trading and Other Income) Act 2005 (tax credits for
qualifying distributions: UK residents and eligible non-UK residents)”.
      (3)
In sub-paragraph (3) for “corporation tax and income tax” substitute
“income tax as dividends of a non-UK resident company chargeable under
30
Chapter 4 of Part 4 of the Income Tax (Trading and Other Income) Act 2005
(and accordingly as relevant foreign income for the purposes of that Act),
and for the purposes of corporation tax”.
      (4)
Omit sub-paragraph (4).
Finance Act 2000 (c. 17)
35
510
The Finance Act 2000 is amended as follows.
511   (1)
Amend section 44 (gifts to charity from certain trusts) as follows.
      (2)
Omit subsections (1) to (3).
      (3)
In subsection (4)—
(a)
for “UK trust” substitute “trust the trustees of which are resident in
40
the United Kingdom (a “UK trust”)”, and
(b)
for “subsection (1) above” substitute “section 628(1) or 630(1) of
ITTOIA 2005”.