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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

457

 

(3)   

An amount arising to a person who is not resident in the United

Kingdom is chargeable to tax only if it is from a source in the United

Kingdom.

(4)   

References in this section to amounts which are from a source in the

United Kingdom include, in the case of any amount which does not

5

have a source, references to amounts which have a comparable

connection to the United Kingdom.

(5)   

This section is subject to any express or implied provision to the

contrary in any provision of the Income Tax Acts.

(6)   

This section does not apply for the purposes of corporation tax.”

10

334   (1)  

Amend section 828 (orders and regulations made by the Treasury or the

Board) as follows.

      (2)  

In subsection (4) omit “324,”.

      (3)  

In subsection (5)—

(a)   

after “section 717 of ITEPA 2003” insert “or section 873 of ITTOIA

15

2005”,

(b)   

after “under ITEPA 2003” insert “or ITTOIA 2005”, and

(c)   

for “that Act” substitute “either of those Acts”.

335        

In section 830(3) (territorial sea and designated areas) omit “income tax or”.

336        

In section 831(3) (interpretation of ICTA) after the entry relating to “ITEPA

20

2003” insert—

““ITTOIA 2005” means the Income Tax (Trading and Other

Income) Act 2005;”.

337        

In section 832(1) (interpretation of the Tax Acts)—

(a)   

for the definition of “overseas property business” substitute—

25

““overseas property business”—

(a)   

for the purposes of income tax, has the

meaning given by Chapter 2 of Part 3 of

ITTOIA 2005;

(b)   

for the purposes of corporation tax, has the

30

meaning given by section 70A(4);”,

(b)   

in the appropriate place insert—

““relevant foreign income” has the meaning given by

subsections (1) to (3) of section 830 of ITTOIA 2005 but

also includes, for any purpose mentioned in any

35

provision listed in subsection (4) of that section,

income treated as relevant foreign income for that

purpose by that provision;”.

(c)   

in the definition of “Schedule A business” for “income tax” substitute

“corporation tax”,

40

(d)   

in the definitions of “the Schedule F ordinary rate”, “the Schedule F

trust rate” and “the Schedule F upper rate” for “Schedule F”

substitute “dividend”,

(e)   

for the definition of “tax credit” substitute—

““tax credit” means—

45

(a)   

a tax credit under section 231 for the purposes

of corporation tax; and

 

 

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

458

 

(b)   

a tax credit under section 397(1) of ITTOIA

2005 for the purposes of income tax;”,

(f)   

in the appropriate place insert—

““UK property business” has the meaning given by

Chapter 2 of Part 3 of ITTOIA 2005;”, and

5

(g)   

omit the definition of “Ulster Savings Certificates”.

338   (1)  

Amend section 833 (interpretation of Income Tax Acts) as follows.

      (2)  

In subsection (3)—

(a)   

for “section 550” substitute “sections 535 to 537 of ITTOIA 2005”, and

(b)   

in paragraph (b)—

10

(i)   

for “547(1)(a)” substitute “465 of ITTOIA 2005”, and

(ii)   

for “547(5)” substitute “530 of that Act”.

      (3)  

In subsection (4)—

(a)   

for “and” in the first place where it occurs substitute “to”, and

(b)   

in paragraph (c) for the words from “under” to “D” substitute “under

15

Part 2 of ITTOIA 2005 (trading income)”.

      (4)  

In subsection (5) for “income which is earned income by virtue of section

529” substitute “—

(a)   

income to which subsection (5A) applies, and

(b)   

income to which subsection (5B) applies.”

20

      (5)  

After that subsection insert—

“(5A)   

This subsection applies to income arising to the individual if—

(a)   

it is charged to tax under section 583 of ITTOIA 2005 (income

from disposals of know-how), and

(b)   

the individual, alone or jointly, devised the know-how in

25

question.

(5B)   

This subsection applies to income arising to the individual if—

(a)   

it is patent income, and

(b)   

the individual, alone or jointly, devised the invention for

which the patent in question was granted.

30

   

This is subject to subsection (5C).

(5C)   

If—

(a)   

any part of the rights in respect of the patent, or of any rights

out of which they were granted, has at any time belonged to

any other person, and

35

(b)   

any part of the income is properly attributable to the rights

which have belonged to that other person,

   

subsection (5B) does not apply to that part of the income (and so it is

not earned income).

(5D)   

In subsection (5B) “patent income” means—

40

(a)   

royalties or other sums paid in respect of the use of a patent

charged to tax under section 579 of ITTOIA 2005,

(b)   

amounts on which tax is payable under section 587 or 593 of

ITTOIA 2005, and

(c)   

amounts on which tax is payable under—

45

 

 

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

459

 

(i)   

section 472(5) of the Capital Allowances Act (patent

allowances: balancing charges), or

(ii)   

paragraph 100 of Schedule 3 to that Act (balancing

charges in respect of pre-1st April 1986 expenditure

on the purchase of patent rights).

5

(5E)   

References in subsection (5C) to the rights in respect of the patent are

to any right to do or authorise the doing of anything which would,

but for the right, be an infringement of the patent.”

339        

In section 835(6)(a) (“total income” in the Income Tax Acts) for “Schedule F”

substitute “Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK

10

resident companies etc.)”.

340        

After section 836A insert—

“836B   

  Table of provisions to which this section applies

(1)   

In the Tax Acts references to any provision to which this section

applies are references to any provision listed in the following table so

15

far as it relates to income tax (but subject to any applicable limitation

in subsections (3) to (5)).

(2)   

This is the table—

PART 1

 

Provisions of this Act

Description

 

20

 

Section 214(1)(ab)

Chargeable payments

 
  

connected with exempt

 
  

distributions

 
 

Section 571(1)

Cancellation of certificates:

 
  

schemes for rationalising

 

25

  

industry

 
 

Section 591C(1)

Cessation of approval

 
  

(retirement benefits scheme)

 
 

Section 598(1)

Repayment of employee’s

 
  

contribution

 

30

 

Section 599(1) or (1B)

Commutation of entire

 
  

pension in special

 
  

circumstances

 
 

Section 599A(2)

Payment out of surplus funds

 
 

Section 601(2) (as read with

Payments to employers

 

35

 

section 602(1)(a)) or 601(5)

(retirement benefits scheme)

 
 

Section 648B(1)

Return of contributions after

 
  

pension date (approved

 
  

personal pension scheme)

 
 

Section 650A(1)

Withdrawal of approval from

 

40

  

arrangements (approved

 
  

personal pension scheme)

 
 

 

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

460

 
 

Provisions of this Act

Description

 
 

Section 714(2)

Transfer of securities within

 
  

accrued income scheme with

 
  

or without accrued interest

 
 

Section 716(3)

Transfer of securities with

 

5

  

unrealised interest where

 
  

settlement day follows last

 
  

interest period

 
 

Section 723(4)

Proceeds of transfer of foreign

 
  

securities within the accrued

 

10

  

income scheme ceasing to be

 
  

unremittable

 
 

Section 730(4)

Transfers of income arising

 
  

from securities

 
 

Section 740(2)(a) or (b)

Transfer of assets abroad

 

15

  

(liability of non-transferors)

 
 

Section 743(1)

Transfer of assets abroad

 
  

(liability of transferors)

 
 

Section 761(1)(b)(i)

Offshore income gains

 
 

Section 774(1)

Transactions between dealing

 

20

  

company and associated

 
  

company

 
 

Section 775(2A)

Sale by individual of income

 
  

derived from his personal

 
  

activities

 

25

 

Section 776(3A)(a)

Transactions in land

 
 

Section 780(3A)(a)

Sale and lease-back (taxation

 
  

of consideration received)

 
 

Section 781(1)

Assets leased to traders and

 
  

others

 

30

 

Section 786(5)(a)

Transactions associated with

 
  

loans or credit

 
 

Section 804(5B)(a)

Double taxation relief

 
 

PART 2

 

Provision of ITTOIA 2005

Description

 

35

 

Chapter 18 of Part 2

Post-cessation receipts: trades,

 
  

professions and vocations

 
 

 

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

461

 
 

Provision of ITTOIA 2005

Description

 
 

Chapter 8 of Part 3

Rent receivable in connection

 
  

with a UK section 12(4)

 
  

concern

 
 

Chapter 9 of Part 3

Rent receivable for UK

 

5

  

electric-line wayleaves

 
 

Chapter 10 of Part 3

Post-cessation receipts: UK

 
  

property businesses

 
 

Chapter 2 of Part 4

Interest

 
 

Chapter 9 of Part 4

Gains from contracts for life

 

10

  

insurance etc.

 
 

Chapter 11 of Part 4

Transactions in deposits

 
 

Chapter 12 of Part 4

Disposals of futures and

 
  

options involving guaranteed

 
  

returns

 

15

 

Section 579

Royalties and other income

 
  

from intellectual property

 
 

Section 583

Income from disposals of

 
  

know-how

 
 

Section 587

Income from sales of patent

 

20

  

rights

 
 

Chapter 3 of Part 5

Films and sound recordings:

 
  

non-trade businesses

 
 

Chapter 4 of Part 5

Certain telecommunication

 
  

rights: non-trading income

 

25

 

Chapter 5 of Part 5

Settlements: amounts treated

 
  

as income of settlor

 
 

Section 682(3)

Adjustments after the

 
  

administration period

 
 

Chapter 8 of Part 5

Income not otherwise charged

 

30

 

Section 844(4)

Withdrawal of relief for

 
  

unremittable foreign income

 
  

after source ceases

 
 

PART 3

 

Other provisions

Description

 

35

 

Paragraph 8(2)(b)(i) of

Occupational pension schemes

 
 

Schedule 3 to the Finance Act

(refunds of contributions and

 
 

1971

commutation payments)

 
 

 

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

462

 
 

Other provisions

Description

 
 

Section 68(2) of the Finance Act

Employee share ownership

 
 

1989

trust (chargeable event)

 
 

Section 71(4) of the Finance Act

Employee share ownership

 
 

1989

trust (borrowing)

 

5

 

Paragraph 11(3) of Schedule 20

Self-assessment transitional

 
 

to the Finance Act 1994

  
 

Section 258(4) of the Capital

Special leasing

 
 

Allowances Act

  
 

Section 479(4) of the Capital

Persons having qualifying

 

10

 

Allowances Act

non-trade expenditure

 
 

Section 394(2) of ITEPA 2003

Charge on administrator of

 
  

non-approved pension scheme

 
 

Section 476(5) of ITEPA 2003

Charge on occurrence of

 
  

chargeable event

 

15

 

Section 583 of ITEPA 2003

certain pension income

 
  

(approved retirement benefits

 
  

schemes: unauthorised

 
  

payments)

 
 

Section 623 of ITEPA 2003

certain pension income (return

 

20

  

of surplus employee AVCs)

 
 

Section 119(4) of the Finance

Individuals benefited by film

 
 

Act 2004

relief

 
 

Section 127(2) of the Finance

Losses derived from exploiting

 
 

Act 2004

licence: individuals in

 

25

  

partnership

 
 

(3)   

For the purposes of this section the reference to section 743 of this Act

does not include that section so far as relating to income falling

within subsection (1A) of that section.

(4)   

For the purposes of this section—

30

(a)   

any reference to any provision of ITTOIA 2005 does not

include that provision so far as relating to relevant foreign

income,

(b)   

the reference to Chapter 2 of Part 4 of ITTOIA 2005 is a

reference to that Chapter only so far as relating to interest

35

falling within section 582(2)(b)(ii) of this Act (funding bonds

issued in respect of interest on certain debts),

(c)   

the reference to Chapter 9 of Part 4 of ITTOIA 2005 is a

reference to that Chapter only so far as relating to gains—

(i)   

which are from a policy or contract specified in

40

section 531(3) of that Act, and

(ii)   

which do not fall within section 532 or 534 of that Act,

 

 

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

463

 

(d)   

the reference to section 579 of ITTOIA 2005 does not include

that section so far as relating to any annual payment,

(e)   

the reference to Chapter 4 of Part 5 of ITTOIA 2005 does not

include that Chapter so far as relating to any annual

payment, and

5

(f)   

the reference to Chapter 5 of Part 5 of ITTOIA 2005 does not

include that Chapter so far as relating to income which falls

within section 619(3) of that Act.

(5)   

For the purposes of this section the reference to section 583 of ITEPA

2003 is a reference to that section only where the paying scheme (see

10

subsection (3) of that section) is a pilots’ benefit fund (see section 587

of that Act).”

341        

In section 839(3) (connected persons) 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)”.

15

342        

Omit Schedule 4A (creative artists: relief for fluctuating profits).

343   (1)  

Amend Schedule 5 (treatment of farm animals etc for the purposes of Case I

of Schedule D) as follows.

      (2)  

In paragraph 1—

(a)   

after “profits” insert “chargeable to corporation tax”, and

20

(b)   

for “his” substitute “its”.

      (3)  

In paragraph 2—

(a)   

in sub-paragraph (1) for “he” substitute “the farmer”,

(b)   

omit sub-paragraphs (3)(a), (4)(a) and (5), and

(c)   

in sub-paragraph (6), omit the definitions of “commencement year”

25

and “qualifying year of assessment”.

      (4)  

In paragraph 3—

(a)   

in sub-paragraph (1) after “profits” insert “chargeable to corporation

tax”,

(b)   

in sub-paragraph (3)(b) for “him” substitute “the farmer”,

30

(c)   

in sub-paragraph (9)(a) for “his” substitute “the seller’s”, and

(d)   

in sub-paragraph (10)(b) for “him” substitute “the farmer”.

      (5)  

In paragraph 4—

(a)   

for “him” substitute “the farmer”, and

(b)   

for “he” substitute “the farmer”.

35

      (6)  

In paragraph 5(1) after “profits” insert “chargeable to corporation tax”.

      (7)  

In paragraph 6—

(a)   

in sub-paragraph (1)—

(i)   

for “his” substitute “its”, and

(ii)   

for “him” substitute “the farmer”,

40

(b)   

omit sub-paragraphs (2)(a), and (3)(a), and

(c)   

in sub-paragraph (4), omit the definition of “qualifying year of

assessment”.

      (8)  

In paragraph 8—

(a)   

for “him”, in each place it occurs, substitute “the farmer”,

45

 

 

 
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