|
| |
|
(b) | under that law, any repayment of tax, or any payment in respect |
| |
of a credit for tax, is made to a person other than the company, |
| |
| |
(c) | that payment or repayment is directly or indirectly in respect of |
| |
| 5 |
| the local tax shall be treated for the purposes of this Chapter as reduced |
| |
(or further reduced) by the amount of that payment or repayment.”. |
| |
(4) | The amendments made by this section have effect in relation to accounting |
| |
periods of companies resident outside the United Kingdom beginning on or |
| |
| 10 |
(5) | Where an accounting period of a company resident outside the United |
| |
| |
(a) | would, without amendment, have ended on or after 2nd December |
| |
| |
(b) | is amended on or after that date so as to end before that date, |
| 15 |
| an accounting period of the company shall be deemed for the purposes of |
| |
Chapter 4 of Part 17 of ICTA to have ended with 1st December 2004. |
| |
(6) | In this section “accounting period” has the same meaning as in Chapter 4 of |
| |
Part 17 of ICTA (see section 751). |
| |
121 | ADP dividends and double taxation relief |
| 20 |
(1) | Section 801 of ICTA (dividends paid between related companies: relief for UK |
| |
and third country taxes) is amended as follows. |
| |
(2) | In subsection (2A) (restriction on cases where section 799(1)(b) applies for the |
| |
purposes of section 801(2)) after paragraph (a) insert— |
| |
“(aa) | if the overseas company is an ADP controlled foreign company |
| 25 |
as respects any of its accounting periods and the dividend |
| |
mentioned in subsection (1) above is an ADP dividend of that |
| |
company (in which case see also subsection (2B)); or”. |
| |
(3) | After subsection (2A) insert— |
| |
“(2B) | In any case falling within subsection (2A)(aa) above, section 799(1)(b) |
| 30 |
applies for the purposes of subsection (2) above as if for section 799(1A) |
| |
| |
“(1A) The formula is—![equation: cross[over[char[D],plus[num[1.0000000000000000,"1"],minus[char[X]]]],char[X]]](missing.gif) |
| |
| |
| D is the amount of the dividend; and |
| 35 |
| X is the maximum relievable rate, expressed as a decimal |
| |
| |
| and for the purposes of this subsection the maximum relievable rate is |
| |
the rate of corporation tax in force when the dividend was paid.”.”. |
| |
(4) | After subsection (5) insert— |
| 40 |
“(6) | For the purposes of this section— |
| |
(a) | a controlled foreign company is an “ADP controlled foreign |
| |
company” as respects any of its accounting periods if, by virtue |
| |
|
| |
|
| |
|
only of section 748(1)(a), no apportionment under section 747(3) |
| |
falls to be made as respects that accounting period; |
| |
(b) | an “ADP dividend” of a controlled foreign company is a |
| |
dividend by virtue of which the controlled foreign company is |
| |
an ADP controlled foreign company as respects any of its |
| 5 |
| |
| |
“accounting period”, in relation to a controlled foreign company, |
| |
has the same meaning as in Chapter 4 of Part 17 (see section |
| |
| 10 |
“controlled foreign company” has the same meaning as in Chapter |
| |
4 of Part 17 (see section 747(2)).”. |
| |
(5) | The amendments made by this section have effect where the dividend |
| |
mentioned in section 799(1) of ICTA is paid on or after 2nd December 2004 and |
| |
is, or represents, in whole or in part an ADP dividend of an ADP controlled |
| 15 |
| |
122 | Foreign taxation of group as single entity: exclusion of ADP CFCs |
| |
(1) | Section 803A of ICTA is amended as follows. |
| |
(2) | After subsection (1) (company resident in territory outside the UK paying tax |
| |
in respect of one or more other companies resident in that territory) insert— |
| 20 |
| |
(a) | a company is (within the meaning of section 801) an ADP |
| |
controlled foreign company as respects any of its accounting |
| |
| |
(b) | the whole or any part of the profits or gains of that accounting |
| 25 |
period are included in the aggregate profits, or aggregate |
| |
profits or gains, mentioned in subsection (1) above, |
| |
| subsection (2) below shall have effect as if the companies mentioned in |
| |
subsection (1) above did not include that company.”. |
| |
(3) | The amendment made by this section has effect in relation to dividends paid |
| 30 |
on or after 16th March 2005. |
| |
Annual payments and double taxation relief |
| |
123 | Tax avoidance involving annual payments and double taxation relief |
| |
(1) | ICTA is amended as follows. |
| |
(2) | In section 125 (annual payments for non-taxable consideration) in subsection |
| 35 |
(2) (payments to which the section applies) for paragraph (b) substitute— |
| |
“(b) | is made under a liability incurred for consideration in money or |
| |
money’s worth all or any of which— |
| |
(i) | consists of, or of the right to receive, a dividend, or |
| |
(ii) | is not required to be brought into account in computing |
| 40 |
for the purposes of income tax or corporation tax the |
| |
income of the person making the payment.”. |
| |
|
| |
|
| |
|
(3) | As from 2nd December 2004, the title of that section accordingly becomes |
| |
“Annual payments for dividends or non-taxable consideration”. |
| |
(4) | Section 801 (dividends paid between related companies: relief for UK and third |
| |
country taxes) is amended as follows. |
| |
(5) | In subsection (2) (case where overseas company has received a dividend from |
| 5 |
a third company) for “subject to subsections (4) to (4D)” substitute “subject to |
| |
| |
(6) | Subsections (4A) to (4D) (which relate to cases where the amount given by the |
| |
formula in section 799(1) exceeds U in that formula) shall cease to have effect. |
| |
(7) | The amendment made by subsection (2) has effect in relation to any annual |
| 10 |
payment made on or after 2nd December 2004 (whether the contract or other |
| |
arrangement is one made before, on or after that date). |
| |
(8) | The amendments made by subsections (4) to (6) have effect in relation to |
| |
dividends paid on or after 2nd December 2004. |
| |
| 15 |
Corporation tax: miscellaneous |
| |
124 | Intangible fixed assets |
| |
(1) | Schedule 29 to FA 2002 (gains and losses of a company from intangible fixed |
| |
assets) is amended as set out in subsections (2) to (4). |
| |
(2) | In paragraph 92 (transfer between company and related party treated as being |
| 20 |
| |
(a) | in sub-paragraph (1), for “the following two exceptions” substitute “the |
| |
following four exceptions”; |
| |
(b) | after sub-paragraph (4) insert— |
| |
“(4A) | The third exception is where— |
| 25 |
(a) | the asset is transferred from the company at less than |
| |
its market value, or to the company at more than its |
| |
| |
| |
| 30 |
(ii) | is a company in relation to which the asset is |
| |
not a chargeable intangible asset immediately |
| |
after the transfer to it or (as the case may be) |
| |
immediately before the transfer from it, |
| |
| 35 |
(c) | by virtue of any provision of— |
| |
(i) | section 209 of the Taxes Act 1988 (meaning of |
| |
| |
(ii) | Part 3 of the Income Tax (Earnings and |
| |
Pensions) Act 2003 (employment income: |
| 40 |
earnings and benefits etc treated as earnings), |
| |
| the transfer gives rise (or would give rise but for sub- |
| |
paragraph (1)) to an amount to be taken into account |
| |
|
| |
|
| |
|
in computing any person’s income, profits or losses |
| |
| |
(4B) | Where the third exception applies, sub-paragraph (1) does |
| |
not apply, in relation to the computation mentioned in sub- |
| |
paragraph (4A)(c), for the purposes of any such provision as |
| 5 |
| |
(4C) | The fourth exception is where— |
| |
(a) | the asset is transferred to the company, and |
| |
(b) | on a claim for relief under section 165 of the Taxation |
| |
of Chargeable Gains Act 1992 (relief for gifts of |
| 10 |
business assets) in respect of the transfer, a reduction |
| |
is made under subsection (4)(a) of that section. |
| |
(4D) | Where the fourth exception applies— |
| |
(a) | the transfer is treated for the purposes of this |
| |
Schedule as being at market value less the amount of |
| 15 |
| |
(b) | all such adjustments as may be required, by way of |
| |
assessment, amendment of returns or otherwise, may |
| |
be made (notwithstanding any time limit on the |
| |
making of an assessment or the amendment of a |
| 20 |
| |
(3) | In paragraph 95 (meaning of “related party”) for Case Three substitute— |
| |
| |
| C is a close company and P is, or is an associate of— |
| |
(a) | a participator in C, or |
| 25 |
(b) | a participator in a company that has control of, or holds a |
| |
| |
(4) | In paragraph 132 (roll-over relief: transitory interaction with relief on |
| |
replacement of business asset), in sub-paragraph (5) (disapplication for certain |
| |
corporation tax purposes of Classes 4 to 7 in section 155 of TCGA 1992)— |
| 30 |
(a) | for “4 to 7” substitute “4 to 7A”; |
| |
(b) | for “(goodwill and various types of quota)” substitute “(goodwill and |
| |
certain other intangible assets)”. |
| |
(5) | In section 86(2) of FA 1993 (roll-over relief: power to amend section 155 of |
| |
TCGA 1992 by order) for the words after “may make such consequential |
| 35 |
amendments” substitute “of— |
| |
(c) | Schedule 7AB to the Taxation of Chargeable Gains Act 1992, or |
| |
(d) | paragraph 132 of Schedule 29 to the Finance Act 2002, |
| |
| as appear to the Treasury to be appropriate.”. |
| |
(6) | The amendments made by subsection (2) have effect in relation to any transfer |
| 40 |
of an asset made on or after 16th March 2005. |
| |
(7) | The amendment made by subsection (3) has effect, for the purposes of |
| |
paragraph 92 of Schedule 29 to FA 2002 as it applies otherwise than for |
| |
determining the debits or credits to be brought into account under that |
| |
Schedule, in relation to any transfer of an asset made on or after 16th March |
| 45 |
| |
|
| |
|
| |
|
(8) | That amendment has effect, for all other purposes of that Schedule, in relation |
| |
to the debits or credits to be brought into account for accounting periods |
| |
beginning on or after 16th March 2005 (and, in relation to the debits or credits |
| |
to be brought into account for any such period, shall be deemed always to have |
| |
| 5 |
(9) | An accounting period beginning before, and ending on or after, that date is |
| |
treated for the purposes of subsection (8) as if so much of that period as falls |
| |
before that date, and so much of that period as falls on or after that date, were |
| |
separate accounting periods. |
| |
(10) | The amendments made by subsection (4) have effect in relation to any such |
| 10 |
acquisition as is referred to in paragraph 132(5) of Schedule 29 to FA 2002 made |
| |
on or after 22nd March 2005. |
| |
| |
Schedule 9 (which makes provision about insurance companies) has effect. |
| |
| 15 |
| |
Residence, location of assets etc |
| |
126 | Temporary non-residents |
| |
(1) | Section 10A of TCGA 1992 is amended as follows. |
| |
(2) | In subsection (3) (certain gains or losses to be excluded from being treated by |
| 20 |
virtue of subsection (2) as accruing to the taxpayer in year of return)— |
| |
(a) | in paragraph (a), for “he was neither resident nor ordinarily resident in |
| |
the United Kingdom” substitute— |
| |
“(i) | he was neither resident nor ordinarily resident in |
| |
| 25 |
(ii) | he was resident or ordinarily resident in the |
| |
United Kingdom but was Treaty non-resident;”; |
| |
(b) | in paragraph (d), after “152(1)(b)” insert “, 153(1)(b)”. |
| |
(3) | In subsection (8) (definitions) in the definition of “relevant disposal”, after |
| |
“United Kingdom” insert “and was not Treaty non-resident”. |
| 30 |
(4) | For subsection (9) substitute— |
| |
“(9) | For the purposes of this section an individual satisfies the residence |
| |
requirements for a year of assessment if that year of assessment is one— |
| |
(a) | during any part of which he is— |
| |
(i) | resident in the United Kingdom, and |
| 35 |
(ii) | not Treaty non-resident, or |
| |
| |
(i) | ordinarily resident in the United Kingdom, and |
| |
(ii) | not Treaty non-resident. |
| |
|
| |
|
| |
|
(9A) | For the purposes of this section an individual is Treaty non-resident at |
| |
any time if, at that time, he falls to be regarded as resident in a territory |
| |
outside the United Kingdom for the purposes of double taxation relief |
| |
arrangements having effect at that time. |
| |
(9B) | Where this section applies in the case of any individual in |
| 5 |
circumstances in which one or more intervening years would, but for |
| |
paragraph (a)(ii) or (b)(ii) of subsection (9) above, not be an intervening |
| |
year, this section shall have effect in the taxpayer’s case— |
| |
(a) | as if subsection (2)(a) above did not apply in the case of any |
| |
amount treated by virtue of section 87 or 89(2) as an amount of |
| 10 |
chargeable gains accruing to the taxpayer in any such |
| |
| |
(b) | as if any such intervening year were not an intervening year for |
| |
the purposes of subsections (2)(b) and (c) and (6) above.”. |
| |
(5) | After subsection (9B) (as inserted by subsection (4) above) insert— |
| 15 |
“(9C) | Nothing in any double taxation relief arrangements shall be read as |
| |
preventing the taxpayer from being chargeable to capital gains tax in |
| |
respect of any of the chargeable gains treated by virtue of subsection |
| |
(2)(a) above as accruing to the taxpayer in the year of return (or as |
| |
preventing a charge to that tax from arising as a result).”. |
| 20 |
(6) | Omit subsection (10) (section to be without prejudice to right to claim relief |
| |
under double taxation relief agreements). |
| |
(7) | The amendments in subsections (2)(a), (4), (5) and (6) have effect— |
| |
(a) | in any case in which the year of departure is, or (on the assumption that |
| |
the amendment in subsection (4) had always had effect) would be, the |
| 25 |
year 2005-06 or a subsequent year of assessment; and |
| |
(b) | in any case in which— |
| |
(i) | the year of departure is, or (on that assumption) would be, the |
| |
| |
(ii) | at a time in that year on or after 16th March 2005, the taxpayer |
| 30 |
was resident or ordinarily resident in the United Kingdom and |
| |
was not Treaty non-resident (within the meaning given by |
| |
section 10A(9A) of TCGA 1992, as inserted by subsection (4)). |
| |
(8) | The amendment in subsection (2)(b) has effect in relation to relevant disposals |
| |
made on or after 16th March 2005. |
| 35 |
(9) | The amendment in subsection (3) has effect for determining whether a disposal |
| |
of an asset is a relevant disposal for the purposes of section 10A of TCGA 1992 |
| |
in any case in which the person making the disposal acquired the asset on or |
| |
| |
127 | Trustees both resident and non-resident in a year |
| 40 |
(1) | After section 83 of TCGA 1992 insert— |
| |
“83A | Trustees both resident and non-resident in a year of assessment |
| |
(1) | This section applies if a chargeable gain accrues to the trustees of a |
| |
settlement on the disposal by them of an asset in a year of assessment |
| |
| 45 |
|
| |
|
| |
|
(a) | are within the charge to capital gains tax in that year of |
| |
| |
(b) | are non-UK resident at the time of the disposal. |
| |
(2) | Where this section applies, nothing in any double taxation relief |
| |
arrangements shall be read as preventing the trustees from being |
| 5 |
chargeable to capital gains tax (or as preventing a charge to tax arising, |
| |
whether or not on the trustees) by virtue of the accrual of that gain. |
| |
(3) | For the purposes of this section the trustees of a settlement are within |
| |
the charge to capital gains tax in a year of assessment if that year of |
| |
| 10 |
(a) | during any part of which they are— |
| |
(i) | resident in the United Kingdom, and |
| |
(ii) | not Treaty non-resident, or |
| |
(b) | during which they are— |
| |
(i) | ordinarily resident in the United Kingdom, and |
| 15 |
(ii) | not Treaty non-resident. |
| |
(4) | For the purposes of this section the trustees of a settlement are non-UK |
| |
resident at a particular time if, at that time,— |
| |
(a) | they are neither resident nor ordinarily resident in the United |
| |
| 20 |
(b) | they are resident or ordinarily resident in the United Kingdom |
| |
but are Treaty non-resident. |
| |
(5) | For the purposes of this section the trustees of a settlement are Treaty |
| |
non-resident at any time if, at that time, they fall to be regarded as |
| |
resident in a territory outside the United Kingdom for the purposes of |
| 25 |
double taxation relief arrangements having effect at that time.”. |
| |
(2) | The amendment made by this section has effect in relation to disposals made |
| |
on or after 16th March 2005. |
| |
128 | Location of assets etc |
| |
Schedule 10 (which makes provision in relation to the situation of assets for the |
| 30 |
purposes of TCGA 1992 and which makes minor amendments in that Act in |
| |
relation to non-resident companies with United Kingdom permanent |
| |
establishments) has effect. |
| |
| |
129 | Exercise of options etc |
| 35 |
Schedule 11 (which makes provision, for the purposes of the taxation of |
| |
chargeable gains, in relation to options) has effect. |
| |
130 | Notional transfers within a group |
| |
(1) | Section 171A of TCGA 1992 (notional transfers within a group) is amended as |
| |
| 40 |
|
| |
|