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
443

      (8)
After subsection (6) insert—
“(7)
In this section “the relevant year of assessment”, in relation to an
amount deemed to have been paid to a company as income for an
accounting period by virtue of this section, means the year of
assessment for which the amount would have been deemed to have
5
been paid as income if references to accounting periods in
subsections (2) and (3) were references to years of assessment.”
285   (1)
Amend section 696 (absolute interests in residue) as follows.
      (2)
In subsection (1) for “person who” substitute “company which”.
      (3)
In subsection (2)—
10
(a)
for “person”, wherever it occurs, substitute “company”, and
(b)
at the end add “; and references to the residuary income of a
company for an accounting period are to be construed in accordance
with subsection (8)”.
      (4)
In subsection (3)—
15
(a)
for “all tax” substitute “corporation tax”,
(b)
for “person” substitute “company”, and
(c)
for “year of assessment” substitute “accounting period”.
      (5)
In subsection (3A)—
(a)
for “person”, in both places where it occurs, substitute “company”,
20
(b)
at the end of paragraph (b) insert “(whether or not the company was
a company liable to corporation tax at the time of payment)”, and
(c)
for “year of assessment” substitute “accounting period”.
      (6)
In subsection (3B) for—
(a)
“person”, in both places where it occurs,
25
(b)
“year of assessment”, in both places where it occurs,
(c)
“years of assessment”,
(d)
“each year”,
(e)
“his”, in both places where it occurs, and
(f)
“that year”, wherever it occurs in paragraph (a) and (b),
30

substitute “company”, “accounting period”, “accounting periods”, “each
accounting period”, “its” and “that accounting period” respectively.
      (7)
In subsection (4) for “person”, “any year” and “that year” substitute
“company”, “any accounting period” and “that accounting period”
respectively.
35
      (8)
In subsection (5) for—
(a)
“person”, in both places where it occurs, and
(b)
“year of assessment”,

substitute “company” and “accounting period” respectively.
      (9)
In subsection (6)—
40
(a)
for “person” substitute “company”,
(b)
for “year” substitute “accounting period”, and
(c)
omit the words from “and shall” to the end of the subsection.
     (10)
In subsection (7) for—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
444

(a)
“person”,
(b)
“income tax for any year”,
(c)
“that year”, and
(d)
“him”, in both places where it occurs,

substitute “company”, “corporation tax for any accounting period”, “the
5
relevant year of assessment” and “it” respectively.
     (11)
In subsection (8) omit the words from the beginning to “this section”.
     (12)
After subsection (8) insert—
“(9)
In subsection (7) “the relevant year of assessment”, in relation to an
amount deemed to have been paid to a company as income for an
10
accounting period by virtue of this section, means the year of
assessment for which the amount would have been deemed to have
been paid as income if references in subsections (3) to (6) to
accounting periods were references to years of assessment.”
286   (1)
Amend section 697 (supplementary provisions as to absolute interests in
15
residue) as follows.
      (2)
In subsection (2)—
(a)
for “person”, in both places, substitute “company”, and
(b)
for “his”, in both places where it occurs, substitute “its”.
      (3)
In subsection (4), omit the words from “, and the residuary income” to the
20
end of the subsection.
      (4)
After that subsection insert—
“(5)
If the amount resulting from the computation mentioned in
subsection (4) is greater than the total amount of the reduction which
can be made under subsection (2), the share of the residuary income
25
of the estate of the last previous holder of the interest for the last year
in which that person had that interest is to be reduced, and so on.”
287   (1)
Amend section 698 (special provisions as to certain interests in residue) as
follows.
      (2)
In subsection (1B)(c)(ii) for “year of assessment” substitute “accounting
30
period”.
      (3)
In subsection (2)(b) for “year” substitute “accounting period”.
      (4)
In subsection (3)—
(a)
for “all tax” substitute “corporation tax”, and
(b)
for “year of assessment” substitute “accounting period”.
35
      (5)
After subsection (3) insert—
“(4)
Subsection (5) applies in any case where—
(a)
successively during the administration period there are
different persons with absolute interests in the residue of the
estate of a deceased person, or in parts of such a residue, and
40
(b)
some, but not all are companies liable to corporation tax in
respect of income within this Part.
(5)
References in this section—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
445

(a)
to sums deemed to be paid as income for an accounting
period to a person who is not such a company,
(b)
to the residuary income for any accounting period of such a
person, or
(c)
to amounts deemed to be paid to such a person as income,
5

are references to sums that would be so deemed, to the income that
would be such residuary income or, as the case may be, to the
amounts that would be so deemed if the assumptions in subsection
(6) were made.
(6)
The assumptions are—
10
(a)
that each of the persons who is not a company liable to
corporation tax in respect of income within this Part is such a
company, and
(b)
that in the case of each person who is not a company, the
person’s accounting periods correspond with years of
15
assessment.”
288   (1)
Amend section 698A (taxation of income of beneficiaries at lower rate or at
rates applicable to Schedule F income) as follows.
      (2)
In subsection (1) for “Schedule F” substitute “Chapter 3 of Part 4 of ITTOIA
2005 (dividends etc. from UK resident companies etc.)”.
20
      (3)
In subsection (2)—
(a)
for “Schedule F”, in the first place where it occurs, substitute
“dividend”, and
(b)
for “Schedule F”, in the second place where it occurs, substitute
“Chapter 3 of Part 4 of ITTOIA 2005”.
25
      (4)
In subsection (3)—
(a)
after “section 698(3)” insert “above or of section 662 of ITTOIA 2005
read with section 656(3) or 657(4) of that Act”,
(b)
for “Schedule F”, in the first place where it occurs, substitute
“dividend”,
30
(c)
for “Schedule F”, in the second place where it occurs, substitute
“Chapter 3 of Part 4 of ITTOIA 2005”,
(d)
for “Schedule F”, in the third place where it occurs, substitute
“dividend”, and
(e)
for “Schedule F”, in the fourth place where it occurs, substitute
35
“Chapter 3 of Part 4 of ITTOIA 2005”.
      (5)
In the side-note for “Schedule F” substitute “distribution”.
289
Omit section 699 (relief from higher rate tax for inheritance tax on accrued
income).
290   (1)
Amend section 699A (untaxed sums comprised in the income of the estate)
40
as follows.
      (2)
In subsection (1)(a) for “sections 249(5), 421(2) and 547(1)(c)” substitute
“paragraphs (c) to (e) of section 701(8) below”.
      (3)
In subsection (1A)—
(a)
in paragraph (a) for “Schedule F” substitute “Chapter 3 of Part 4 of
45
ITTOIA 2005 (dividends etc. from UK resident companies etc.)”, and

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

(b)
omit paragraph (b) and the word “or” immediately preceding it.
      (4)
In subsection (4)—
(a)
in paragraph (a) for “section 249(5) or 421(2), at the Schedule F”
substitute “section 701(8)(c) or (d), at the dividend”,
(b)
in paragraph (b) for “section 547(1)(c)” substitute “section 701(8)(e)”,
5
and
(c)
in paragraph (c) for “Schedule F” substitute “dividend”.
      (5)
Omit subsection (6).
291   (1)
Amend section 700 (adjustments and information) as follows.
      (2)
In subsection (1)—
10
(a)
for “person” substitute “company”,
(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”,
15
(e)
for “tax” substitute “corporation tax”, and
(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”,
20
(c)
for “him”, wherever it occurs, substitute “it”,
(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”.
25
      (5)
In subsection (4) after “this Part” insert “or Chapter 6 of Part 5 of ITTOIA
2005”.
      (6)
In subsection (5)—
(a)
in paragraph (a) for “a year of assessment” substitute “an accounting
period”,
30
(b)
omit “and” at the end of paragraph (a),
(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
35
income tax for a year of assessment, and”,
(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
40
(g)
for “paragraphs (a) and (b)” substitute “paragraphs (a) to (b)”.
292   (1)
Amend section 701 (interpretation) as follows.
      (2)
In subsection (3A) for “Schedule F”, wherever it occurs, substitute
“dividend”.

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

      (3)
In subsection (8)—
(a)
omit “and” at the end of paragraph (a),
(b)
after paragraph (b) insert—
“(c)
any amount of income treated as arising to the
personal representatives under section 410(4) of
5
ITTOIA 2005 (stock dividends) that would be charged
to income tax under Chapter 5 of Part 4 of that Act if
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
10
(release of loans to participator in close company:
debts due from personal representatives), the amount
that would be charged to income tax under Chapter 6
of Part 4 apart from that section; and
(e)
any amount that would have been treated as income
15
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
(c)
omit the second sentence.
20
      (4)
In subsection (9) after “year of assessment” insert “or accounting period”.
      (5)
In subsection (10) after “year of assessment” insert “or accounting period”.
293
In section 703(3) (cancellation of tax advantage) after “being chargeable”
insert “in the case of corporation tax”.
294   (1)
Amend section 710 (meaning of “securities”, transfer etc. for purposes of
25
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”,
(b)
after paragraph (c) insert—
30
“(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
Act”,
35
(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
security for the purposes of Chapter 8 of Part
40
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
deeply discounted securities) would apply subject to the rules in
45
sections 454 to 456 of that Act (see section 453(2) and (3) of that Act).”
      (4)
In subsection (5)—

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

(a)
omit “and” at the end of paragraph (a), and
(b)
at the end of paragraph (b) insert “and
(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.”
5
295   (1)
Amend section 714 (treatment of deemed sums and reliefs) as follows.
      (2)
In subsection (2)—
(a)
for “annual profits or gains whose amount” substitute “income of an
amount which”,
(b)
for “the profits or gains” substitute “the income”,
10
(c)
omit “under Case VI of Schedule D”, and
(d)
for “they are” substitute “it is”.
      (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.
15
(2B)
The person liable for any tax so charged shall be the person treated
as receiving the income.”
296
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
20
remittance basis)”.
297   (1)
Amend section 716 (transfer of unrealised interest) as follows.
      (2)
In subsection (3)—
(a)
for “annual profits or gains” substitute “income”,
(b)
for “the profits or gains” substitute “the income”,
25
(c)
omit “under Case VI of Schedule D”, and
(d)
for “they are” substitute “it is”.
      (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.
30
(3B)
The person liable for any tax so charged shall be the person treated
as receiving the income.”
298   (1)
Amend section 720 (transfers of securities: nominees, trustees etc.) as
follows.
      (2)
In subsection (5)—
35
(a)
for “Annual profits or gains” substitute “Income”, and
(b)
for “are treated” substitute “is treated”.
      (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
40
gains” substitute “income or income”, and

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

(c)
for “Chapters 1A, 1B and 1C of Part XV” substitute “Chapter 5 of Part
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
      (5)
In subsection (8)(a) for “Chapter 1A of Part XV (see section 660G(1) and (2))”
substitute “Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)”.
299   (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
10
(b)
for “the profits or gains” substitute “that income”.
      (3)
In subsection (4) for “under Case VI of Schedule D on the amount” substitute
“on the full amount”.
300   (1)
Amend section 730 (transfers of income arising from securities) as follows.
      (2)
In subsection (2)—
15
(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”.
      (3)
In subsection (4)—
(a)
for “tax by virtue of section 18(3B)” substitute “income tax under
20
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
interest shall be charged to income tax.
(4A)
The income tax chargeable by virtue of subsection (4) above
25
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
subsection (4) above is the owner or beneficiary, but he shall
be entitled to credit for any tax which the interest is shown to
30
have borne.”
      (4)
In subsection (5)—
(a)
for “For the purposes of subsection (4) above” substitute “But”,
(b)
for “chargeable under Case IV or V of Schedule D” substitute
“relevant foreign income”, and
35
(c)
for “the tax under Case VI” substitute “the income tax chargeable by
virtue of subsection (4) above”.
      (5)
In subsection (8)—
(a)
after “charged to” insert “income tax under Chapter 13 of Part 4 of
ITTOIA 2005 or to corporation”, and
40
(b)
after “section 18(3B)” insert “of this Act”.
301
Omit section 730C (exchanges of gilts: traders etc.).
302
In section 731 (application and interpretation of sections 732 to 734: purchase
and sale of securities)—