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Finance (No. 2) Bill
Schedule 5 — Section 804ZA: prescribed schemes and arrangements

124

 

Schedule 5

Section 87

 

Section 804ZA: prescribed schemes and arrangements

          

After Schedule 28AA to ICTA insert—

“Schedule 28AB

Section 804ZA: prescribed schemes and arrangements

5

Introductory

1     (1)  

A scheme or arrangement, other than a scheme or arrangement

falling within sub-paragraph (3), is a prescribed scheme or

arrangement if one or more of paragraphs 2 to 6 apply to it.

      (2)  

A scheme or arrangement falling within sub-paragraph (3) is a

10

prescribed scheme or arrangement if one or more of paragraphs 2

to 6 would, on the assumption in sub-paragraph (4), apply to it.

      (3)  

A scheme or arrangement falls within this sub-paragraph if its

main purpose, or one of its main purposes, is to cause an amount

of underlying tax allowable in respect of a dividend paid by a

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body corporate resident in a territory outside the United Kingdom

to be taken into account in the case of a person.

      (4)  

The assumption is that the body corporate is resident in the United

Kingdom.

      (5)  

Nothing in sub-paragraph (4) requires it to be assumed that there

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is any change in the place or places at which the body corporate

carries on its activities.

Attribution of foreign tax

2          

This paragraph applies to a scheme or arrangement if the scheme

or arrangement enables a person who is party to, or concerned in,

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the scheme or arrangement to pay, in respect of a source of income

or chargeable gain, an amount of foreign tax all or part of which is

properly attributable to another source of income or chargeable

gain (or to more than one such other source).

Effect of paying foreign tax

30

3     (1)  

This paragraph applies to a scheme or arrangement if, under the

scheme or arrangement, sub-paragraph (2) is satisfied in relation

to a person who has claimed, or is in a position to claim, for a

chargeable period an allowance under any arrangements by way

of credit for foreign tax (“the claimant”).

35

      (2)  

This sub-paragraph is satisfied if—

(a)   

an amount of foreign tax is paid by the claimant, and

(b)   

at the time when the claimant entered into the scheme or

arrangement, it could reasonably be expected that the

effect of the payment of that amount of foreign tax on the

40

foreign tax total would be to increase it by less than the

 

 

Finance (No. 2) Bill
Schedule 5 — Section 804ZA: prescribed schemes and arrangements

125

 

amount allowable to the claimant as a credit in respect of

the payment of that amount of foreign tax.

      (3)  

The foreign tax total is the amount found by—

(a)   

aggregating the amounts of foreign tax paid or payable in

respect of the transaction or transactions forming part of

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the scheme or arrangement by persons party to, or

concerned in, the scheme or arrangement, and

(b)   

taking into account any reliefs, deductions, reductions or

allowances against or in respect of any tax that arise to the

persons party to, or concerned in, the scheme or

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arrangement (including any reliefs, deductions, reductions

or allowances arising to any one or more of those persons

as a consequence of the payment by the claimant of that

amount of foreign tax).

Effect of claim, election or other arrangement

15

4     (1)  

This paragraph applies to a scheme or arrangement if under the

scheme or arrangement—

(a)   

a step is taken by a person who is party to, or concerned in,

the scheme or arrangement, or

(b)   

a step that could have been taken by such a person is not

20

taken,

           

and that action or that failure to act has the effect of increasing a

claim made by a person who is party to, or concerned in, the

scheme or arrangement for an allowance by way of credit in

accordance with this Part or of giving rise to such a claim.

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      (2)  

The steps mentioned in sub-paragraph (1) are steps that may be

made—

(a)   

under the law of any territory, or

(b)   

under arrangements made in relation to any territory.

      (3)  

The steps mentioned in sub-paragraph (1) include—

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(a)   

claiming, or otherwise securing the benefit of, reliefs,

deductions, reductions or allowances;

(b)   

making elections for tax purposes.

Effect attributable to scheme or arrangement

5     (1)  

This paragraph applies to a scheme or arrangement if, under the

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scheme or arrangement, sub-paragraph (2) is satisfied in relation

to a person who has claimed, or is in a position to claim, for a

chargeable period an allowance under any arrangements by way

of credit for foreign tax.

      (2)  

This sub-paragraph is satisfied if amount A is less than amount B.

40

      (3)  

Amount A is the amount of United Kingdom taxes payable by the

person in respect of income and chargeable gains arising in the

chargeable period.

      (4)  

Amount B is the amount of United Kingdom taxes that would be

payable by the person in respect of income and chargeable gains

45

arising in the chargeable period if, in determining that amount, the

 

 

Finance (No. 2) Bill
Schedule 6 — Capital allowances: renovation of business premises in disadvantaged areas
Part 1 — New Part 3A of the Capital Allowances Act 2001

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transactions forming part of the scheme or arrangement were

disregarded.

Tax deductible payments

6     (1)  

This paragraph applies to a scheme or arrangement if the scheme

or arrangement includes—

5

(a)   

the making by a person (“A”) of a relevant payment or

payments, and

(b)   

the giving, in respect of that payment or payments, of

consideration that satisfies the requirements of sub-

paragraph (3).

10

      (2)  

A payment made by A is a relevant payment if all or part of it may

be brought into account in computing A’s income for the purposes

of United Kingdom taxes.

      (3)  

Consideration given in respect of a payment or payments made by

A satisfies the requirements of this sub-paragraph if—

15

(a)   

all or part of it consists of a payment or payments made to

A or a person connected with A, and

(b)   

tax is chargeable in respect of the payment or payments

under the law of a territory outside the United Kingdom.

      (4)  

In this paragraph references to a payment include references to a

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transfer of money’s worth.

      (5)  

Section 839 applies for the purposes of this paragraph.”

Schedule 6

Section 92

 

Capital allowances: renovation of business premises in disadvantaged areas

Part 1

25

New Part 3A of the Capital Allowances Act 2001

1          

After Part 3 of CAA 2001 insert—

“PART 3A

BUSINESS PREMISES RENOVATION ALLOWANCES

CHAPTER 1

30

INTRODUCTION

360A    

 Business premises renovation allowances

(1)   

Allowances are available under this Part if a person incurs qualifying

expenditure in respect of a qualifying building.

(2)   

Allowances under this Part are made to the person who—

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(a)   

incurred the expenditure, and

 

 

Finance (No. 2) Bill
Schedule 6 — Capital allowances: renovation of business premises in disadvantaged areas
Part 1 — New Part 3A of the Capital Allowances Act 2001

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(b)   

has the relevant interest in the qualifying building.

CHAPTER 2

QUALIFYING EXPENDITURE

360B    

Meaning of “qualifying expenditure”

(1)   

In this Part “qualifying expenditure” means capital expenditure

5

incurred before the expiry date on, or in connection with—

(a)   

the conversion of a qualifying building into qualifying

business premises,

(b)   

the renovation of a qualifying building if it is or will be

qualifying business premises, or

10

(c)   

repairs to a qualifying building or, where the qualifying

building is part of a building, to the building of which the

qualifying building forms part, to the extent that the repairs

are incidental to expenditure within paragraph (a) or (b).

(2)   

In subsection (1) “the expiry date” means—

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(a)   

the fifth anniversary of the day appointed under section 92 of

the Finance Act 2005, or

(b)   

such later date as the Treasury may prescribe by regulations.

(3)   

Expenditure is not qualifying expenditure if it is incurred on or in

connection with—

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(a)   

the acquisition of land or rights in or over land,

(b)   

the extension of a qualifying building (except to the extent

required for the purpose of providing a means of getting to

or from qualifying business premises),

(c)   

the development of land adjoining or adjacent to a qualifying

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building, or

(d)   

the provision of plant and machinery, other than plant or

machinery which is or becomes a fixture as defined by section

173(1).

(4)   

For the purposes of this section, expenditure incurred on repairs to a

30

building is to be treated as capital expenditure if it is not expenditure

that would be allowed to be deducted in calculating the profits of a

property business, or of a trade, profession or vocation, for tax

purposes.

(5)   

The Treasury may by regulations make further provision as to

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expenditure which is, or is not, qualifying expenditure.

CHAPTER 3

QUALIFYING BUILDINGS AND QUALIFYING BUSINESS PREMISES

360C    

Meaning of “qualifying building”

(1)   

In this Part “qualifying building”, in relation to any conversion or

40

renovation work, means any building or structure, or part of a

building or structure, which—

 

 

Finance (No. 2) Bill
Schedule 6 — Capital allowances: renovation of business premises in disadvantaged areas
Part 1 — New Part 3A of the Capital Allowances Act 2001

128

 

(a)   

is situated in an area which, on the date on which the

conversion or renovation work began, was a disadvantaged

area,

(b)   

was unused throughout the period of one year ending

immediately before that date,

5

(c)   

on that date, had last been used—

(i)   

for the purposes of a trade, profession or vocation, or

(ii)   

as an office or offices (whether or not for the purposes

of a trade, profession or vocation),

(d)   

on that date, had not last been used as, or as part of, a

10

dwelling, and

(e)   

in the case of part of a building or structure, on that date had

not last been occupied and used in common with any other

part of the building or structure other than a part—

(i)   

as respects which the condition in paragraph (b) is

15

met, or

(ii)   

which had last been used as a dwelling.

(2)   

In this section “disadvantaged area” means—

(a)   

an area designated as a disadvantaged area for the purposes

of this section by regulations made by the Treasury, or

20

(b)   

if no regulations are made under paragraph (a), an area for

the time being designated as a disadvantaged area for the

purposes of Schedule 6 to the Finance Act 2003 (stamp duty

land tax: disadvantaged areas relief).

(3)   

Regulations under subsection (2)(a) may—

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(a)   

designate specified areas as disadvantaged areas, or

(b)   

provide for areas of a description specified in the regulations

to be designated as disadvantaged areas.

(4)   

If regulations under subsection (2)(a) so provide, the designation of

an area as a disadvantaged area shall have effect for such period as

30

may be specified in or determined in accordance with the

regulations.

(5)   

Regulations under subsection (2)(a) may—

(a)   

make different provision for different cases, and

(b)   

contain such incidental, supplementary, consequential or

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transitional provision as appears to the Treasury to be

necessary or expedient.

(6)   

Where a building or structure (or part of a building or structure)

which would otherwise be a qualifying building is on the date

mentioned in subsection (1)(a) situated partly in a disadvantaged

40

area and partly outside it, only so much of the expenditure incurred

in accordance with section 360B as, on a just and reasonable

apportionment, is attributable to the part of the building or structure

located in the disadvantaged area is to be treated as qualifying

expenditure.

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(7)   

The Treasury may by regulations make further provision as to the

circumstances in which a building or structure or part of a building

or structure is, or is not, a qualifying building.

 

 

 
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Revised 6 April 2005