Finance Bill

House of Commons

Session 2004 - 05
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 15 — Miscellaneous
108

(2)
After subsection (3) insert—
“(3ZA)
In a case where B—
(a)
is not resident in the United Kingdom, but
(b)
is carrying on a trade in the United Kingdom through a
permanent establishment there,
5

the asset or part deemed to be transferred to B by A is to be treated for
the purposes of subsections (2)(c) and (3) above as having been
acquired by B for use by or for the purposes of the permanent
establishment; but that shall not be taken to affect the question whether
or not the asset or part is situated in the United Kingdom at any time.”.
10
(3)
The amendment made by this section has effect in relation to disposals made
on or after 16th March 2005.
Chapter 15
Miscellaneous
Capital allowances
15
131
Capital allowances: renovation of business premises in disadvantaged areas
Schedule 12 (capital allowances in respect of expenditure on the conversion or
renovation of qualifying business premises in disadvantaged areas) has effect
in relation to expenditure incurred on or after such day as the Treasury may by
order appoint.
20
Financial avoidance etc
132
Charges on income for the purposes of corporation tax
(1)
Section 338A of ICTA (meaning of “charges on income” for the purposes of
corporation tax) is amended as follows.
(2)
In subsection (2) (what are charges on income), paragraph (a) (annuities or
25
other annual payments that meet the conditions in section 338B) shall cease to
have effect.
(3)
In section 125 of ICTA (annual payments for non-taxable consideration) for
“income tax,” substitute “income tax and”.
(4)
In section 434A(2)(a) of ICTA (loss resulting to insurance company from
30
computation in accordance with Case I of Schedule D: reduction by specified
amounts), omit sub-paragraph (i) (which relates to charges on income).
(5)
The side-note to section 494 of ICTA (charges on income) becomes “Loan
relationships etc.”.
(6)
The amendment made by subsection (4) has effect for accounting periods
35
beginning on or after 1st April 2004.
(7)
The other amendments made by this section have effect in relation to payments
made on or after the commencement date in respect of annuities or other
annual payments.

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 15 — Miscellaneous
109

(8)
Where—
(a)
an accounting period of a company begins before, and ends on or after,
the commencement date,
(b)
a payment in respect of an annuity or other annual payment is made by
the company in that period but before the commencement date, and
5
(c)
the payment is deductible as a charge on income for the purposes of
corporation tax,

subsection (9) applies.
(9)
In any such case, so much of any amount as represents that payment—
(a)
is not deductible under section 75 of ICTA (expenses of management),
10
and
(b)
is not to be brought into account under section 76 of that Act (expenses
of insurance companies) as expenses payable,

for that or any subsequent accounting period.
(10)
Subsection (12) applies in any case where—
15
(a)
a payment in respect of an annuity or other annual payment is made by
the company on or after the commencement date, and
(b)
the condition in subsection (11) is satisfied.
(11)
The condition is that the payment represents an amount which (apart from
subsection (12))—
20
(a)
would not be deductible under section 75 of ICTA, or
(b)
would not fall to be brought into account under section 76 of that Act,

by reason only of section 337A(1)(b) of that Act ( company’s income from any
source to be computed without any deduction in respect of charges on income)
as it applies by virtue of section 338A(2)(a) of that Act.
25
(12)
In any such case, the amount represented by the payment—
(a)
is deductible under section 75 of ICTA, or
(b)
falls to be brought into account under section 76 of that Act as expenses
payable,

for the accounting period in which the payment is made.
30
(13)
In this section “the commencement date” means 16th March 2005.
133
Avoidance involving financial arrangements

Schedule 13 (which makes provision in relation to tax avoidance involving
financial arrangements) has effect.
Financing of companies etc
35
134
Transfer pricing and loan relationships
Schedule 14 (which amends Schedule 28AA to ICTA and Schedule 9 to FA
1996) has effect.

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 15 — Miscellaneous
110

Self-assessment amendments
135
Self-assessment amendments
(1)
In section 9A of TMA 1970 (notice of enquiry), in subsection (4) (matters to
which an enquiry extends) after paragraph (b) insert—
“(c)
consideration of whether to give the taxpayer a notice under
5
section 804ZA of the principal Act (schemes and arrangements
designed to increase relief),”.
(2)
In section 29 of TMA 1970 (assessment where loss of tax discovered), after
subsection (7) insert—
“(7A)
The requirement to fulfil one of the two conditions in subsections (4)
10
and (5) does not apply so far as regards any income or chargeable gains
of the taxpayer in relation to which the taxpayer has been given, after
any enquiries have been completed into the taxpayer’s return, a notice
under section 804ZA of the Taxes Act 1988.”
(3)
In Schedule 18 to FA 1998 (company tax returns, assessments, etc), in
15
paragraph 25(1) (scope of enquiry) after “medium-sized enterprise)” insert “, a
notice under section 804ZA of the Taxes Act 1988 (schemes and arrangements
designed to increase relief) or a notice under section 104 or 106 of the Finance
Act 2005 (avoidance involving tax arbitrage)”.
(4)
In paragraph 42 of that Schedule (restrictions on power to make discovery
20
assessment etc), after sub-paragraph (2) insert—
   “(2A)
The requirement to comply with paragraphs 43 and 44 does not
apply so far as regards any income or chargeable gains of the
company in relation to which the company has been given, after any
enquiries have been completed into the return, a notice under section
25
804ZA of the Taxes Act 1988 or section 104 or 106 of the Finance Act
2005.”
(5)
The following amendments have effect in accordance with section 119(3)—
(a)
the amendments in subsections (1) and (2), and
(b)
the amendments in subsections (3) and (4) so far as regards a notice
30
under section 804ZA of the Taxes Act 1988 (as inserted by section 119).
(6)
The amendments in subsections (3) and (4) have effect in accordance with
section 110 so far as regards a notice under section 104 or 106.
Tonnage tax
136
Tonnage tax
35
Schedule 15 (which makes provision amending Schedule 22 to FA 2000) has
effect.

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 15 — Miscellaneous
111

Miscellaneous
137
Lloyd’s underwriters: assessment and collection of tax
(1)
Omit section 173 of, and Schedule 19 to, FA 1993 (Lloyd’s underwriters:
assessment and collection of tax).
(2)
In section 182 of that Act (regulations) in subsection (1)(a) (power of Board to
5
make regulations providing for assessment and collection of tax charged in
accordance with section 171 of FA 1993, so far as not provided for by Schedule
19 to that Act) omit “(so far as not provided for by Schedule 19 to this Act)”.
(3)
In that section, at the end insert—
“(6)
Any power to make regulations conferred by this section includes
10
power to make—
(a)
different provision for different cases or different purposes, and
(b)
incidental, supplemental or transitional provision and
savings.”.
(4)
Omit section 221 of FA 1994 (Lloyd’s underwriters: corporations etc:
15
assessment and collection of tax).
(5)
Renumber section 229 of that Act (regulations) as subsection (1) of that section.
(6)
In subsection (1) of that section (as amended by subsection (5) above), in
paragraph (a) (power of Board to make regulations providing for assessment
and collection of tax charged in accordance with section 219 of FA 1994, so far
20
as not provided for by Schedule 19 to FA 1993 as applied by section 221 of FA
1994) omit “(so far as not provided for by Schedule 19 to the 1993 Act as applied
by section 221 above)”.
(7)
In that section, at the end insert—
“(2)
Any power to make regulations conferred by this section includes
25
power to make—
(a)
different provision for different cases or different purposes, and
(b)
incidental, supplemental or transitional provision and
savings.”.
(8)
For the purpose of enabling the making of any regulations under—
30
(a)
section 182(1)(a) of FA 1993 (as amended by subsection (2)), or
(b)
section 229(1)(a) of FA 1994 (as amended by subsection (6)),

subsections (1) to (7) come into force on the day on which this Act is passed.
(9)
Subject to that, those subsections come into force in accordance with provision
made by the Treasury by order.
35
(10)
Section 828(3) of ICTA shall not apply in relation to an order under subsection
(9).
(11)
The Board may by regulations make such amendments, repeals or revocations
in any enactment (including an enactment amended by this section) as appear
to them to be appropriate in consequence of any one or more of the following—
40
(a)
any amendment made by this section;
(b)
the exercise by them of the power in section 182(1)(a) of FA 1993 (as
amended by subsection (2));

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 15 — Miscellaneous
112

(c)
the exercise by them of the power in section 229(1)(a) of FA 1994 (as
amended by subsection (6)).
(12)
Any power conferred by this section to make an order or regulations includes
power to make—
(a)
different provision for different cases or different purposes, and
5
(b)
incidental, supplemental or transitional provision and savings.
(13)
In this section—
“enactment” includes an enactment comprised in subordinate legislation;
“subordinate legislation” has the same meaning as in the Interpretation
Act 1978 (c. 30) (see section 21 of that Act).
10
138
Energy Act 2004 and Health Protection Agency Act 2004
(1)
This section provides for certain enactments to cease to have effect which relate
to—
(a)
the United Kingdom Atomic Energy Authority (“UKAEA”),
(b)
the National Radiological Protection Board (“NRPB”), or
15
(c)
pension schemes run by UKAEA.
(2)
In ICTA the following provisions shall cease to have effect—
(a)
section 349B(3)(g) (no deduction of tax from certain payments to
UKAEA);
(b)
section 349B(3)(h) (no deduction of tax from certain payments to
20
NRPB);
(c)
section 512(1) and (3) (certain exemptions from income tax and
corporation tax for UKAEA and NRPB);
(d)
section 512(2) (treatment of certain income of pension schemes run by
UKAEA).
25
(3)
In section 271(7) of TCGA 1992 (miscellaneous exemptions from tax in respect
of chargeable gains)—
(a)
for “Memorial Fund, the” substitute “Memorial Fund and the”;
(b)
omit “, the United Kingdom Atomic Energy Authority”;
(c)
omit “and the National Radiological Protection Board”;
30
(d)
omit from “; and for the purposes” to the end of the subsection
(treatment of gains accruing to pension schemes run by UKAEA).
(4)
In subsection (2)—
(a)
paragraph (a) has effect in relation to payments made on or after 1st
April 2005;
35
(b)
paragraph (b) has effect in relation to payments made after 1st April
2005;
(c)
paragraph (c), so far as relating to UKAEA, has effect on and after 1st
April 2005;
(d)
paragraph (c), so far as relating to NRPB, has effect after 1st April 2005;
40
(e)
paragraph (d) has effect in relation to income arising on or after 1st
April 2005.
(5)
In subsection (3)—
(a)
paragraphs (a) and (c) have effect in relation to gains accruing after 1st
April 2005;
45

Finance Bill
Part 4 — Stamp taxes
113

(b)
paragraphs (b) and (d) have effect in relation to gains accruing on or
after 1st April 2005.
(6)
The repeal of subsection (3)(g) of section 349B of ICTA does not affect the
application of any other provision of that section in relation to UKAEA.
(7)
Nothing in this section affects—
5
(a)
any accounting period of UKAEA ending before 1st April 2005, or
(b)
any accounting period of NRPB ending on or before 1st April 2005.
Part 4
Stamp taxes
Stamp duty land tax
10
139
E-conveyancing
(1)
In section 9(1) of the Public Finance and Accountability (Scotland) Act 2000
(asp 1) (Keeper of the Registers of Scotland: financial arrangements) after
“Sums” insert “(other than payments of stamp duty land tax)”.
(2)
In section 79(1) of FA 2003 (registration of land transactions) after “in relation
15
to the transaction” insert “or such information about compliance as the
Commissioners for Her Majesty’s Revenue and Customs may specify in
regulations.”
(3)
In section 119(1) of FA 2003 (land transactions: effective date) for “the date of
completion” substitute—
20
“(a)
the date of completion, or
(b)
such alternative date as the Commissioners for Her Majesty’s
Revenue and Customs may prescribe by regulations.”
(4)
After paragraph 7(1) of Schedule 10 to FA 2003 (land transaction returns:
correction of errors) insert—
25
   “(1A)
The power under sub-paragraph (1) may, in such circumstances as
the Commissioners for Her Majesty’s Revenue and Customs may
specify in regulations, be exercised—
(a)
in relation to England and Wales, by the Chief Land
Registrar;
30
(b)
in relation to Scotland, by the Keeper of the Registers of
Scotland;
(c)
in relation to Northern Ireland, by the Registrar of Titles or
the registrar of deeds;
(d)
in any case, by such other persons with functions relating to
35
the registration of land as the regulations may specify.”
(5)
The Commissioners for Her Majesty’s Revenue and Customs—
(a)
may make regulations conferring administrative functions on a land
registrar in connection with stamp duty land tax, and
(b)
may make payments to land registrars in respect of the exercise of those
40
functions.
(6)
In subsection (5) “land registrar” means—

Finance Bill
Part 4 — Stamp taxes
114

(a)
in relation to England and Wales, the Chief Land Registrar,
(b)
in relation to Scotland, the Keeper of the Registers of Scotland,
(c)
in relation to Northern Ireland, the Registrar of Titles or the registrar of
deeds, and
(d)
in any case, such other persons with functions relating to the
5
registration of land as regulations under subsection (5) may specify.
(7)
Regulations under subsection (5)—
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of the House
of Commons.
10
140
Alternative property finance
Schedule 16 (which makes amendments of Part 4 of FA 2003 relating to
alternative property finance) has effect.
141
Disclosure of information contained in land transaction returns
(1)
After section 78 of FA 2003 insert—
15
“78A
Disclosure of information contained in land transaction returns
(1)
Relevant information contained in land transaction returns delivered
(whether before or after the commencement of this section) to the
Inland Revenue under section 76 is to be available for use—
(a)
by listing officers appointed under section 20 of the Local
20
Government Finance Act 1992, for the purpose of facilitating the
compilation and maintenance by them of valuation lists in
accordance with Chapter 2 of Part 1 of that Act,
(b)
as evidence in an appeal by virtue of section 24(6) of that Act to
a valuation tribunal established under Schedule 11 to the Local
25
Government Finance Act 1988,
(c)
by the Commissioner of Valuation for Northern Ireland, for the
purpose of maintaining a valuation list prepared, and from time
to time altered, by him in accordance with Part 3 of the Rates
(Northern Ireland) Order 1977, and
30
(d)
by such other persons or for such other purposes as the
Treasury may by regulations prescribe.
(2)
In this section, “relevant information” means any information of the
kind mentioned in paragraph 1(4) of Schedule 10 (information
corresponding to particulars required under previous legislation).
35
(3)
The Treasury may by regulations amend the definition of relevant
information in subsection (2).”
(2)
In section 245 of FA 1994 (production of documents: supplementary) for
subsection (2) substitute—
“(2)
The information contained in any document produced to the
40
Commissioners under section 244(2) above shall be available for use by
the Commissioner of Valuation for Northern Ireland.”
(3)
For the heading to Part 6 of FA 1994 substitute “Stamp duty”.