|
| |
|
| |
| |
Residence, location of assets etc |
| |
32 | Temporary non-residents |
| |
(1) | Section 10A of TCGA 1992 is amended as follows. |
| 5 |
(2) | In subsection (3) (certain gains or losses to be excluded from being treated by |
| |
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 |
| 10 |
| |
(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 |
| 15 |
“United Kingdom” insert “and was not Treaty non-resident”. |
| |
(4) | For subsection (9) substitute— |
| |
“(9) | For the purposes of this section an individual satisfies the residence |
| |
requirements for a year of assessment— |
| |
(a) | if, during any part of that year of assessment, he is resident in |
| 20 |
the United Kingdom and not Treaty non-resident, or |
| |
(b) | if he is ordinarily resident in the United Kingdom during that |
| |
year of assessment, unless he is Treaty non-resident during that |
| |
| |
(9A) | For the purposes of this section an individual is Treaty non-resident at |
| 25 |
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 |
| |
circumstances in which one or more intervening years would, but for |
| 30 |
his being Treaty non-resident during some or all of that year or those |
| |
years, not be an intervening year, this section shall have effect in the |
| |
| |
(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 |
| 35 |
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— |
| 40 |
“(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).”. |
| |
(6) | Omit subsection (10) (section to be without prejudice to right to claim relief |
| |
under double taxation relief arrangements). |
| |
(7) | The amendments in subsections (2)(a), (4), (5) and (6) have effect— |
| 5 |
(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 |
| |
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 |
| 10 |
| |
(ii) | at a time in that year on or after 16th March 2005, the taxpayer |
| |
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)). |
| 15 |
(8) | The amendment in subsection (2)(b) has effect in relation to relevant disposals |
| |
made on or after 16th March 2005. |
| |
(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 |
| 20 |
| |
33 | Trustees both resident and non-resident in a year of assessment |
| |
(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 |
| 25 |
settlement on the disposal by them of an asset in a year of assessment |
| |
| |
(a) | are within the charge to capital gains tax in that year of |
| |
| |
(b) | are non-UK resident at the time of the disposal. |
| 30 |
(2) | Where this section applies, nothing in any double taxation relief |
| |
arrangements shall be read as preventing the trustees from being |
| |
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 |
| 35 |
the charge to capital gains tax in a year of assessment— |
| |
(a) | if, during any part of that year of assessment, they are resident |
| |
in the United Kingdom and not Treaty non-resident, or |
| |
(b) | if they are ordinarily resident in the United Kingdom during |
| |
that year of assessment, unless they are Treaty non-resident |
| 40 |
during that year of assessment. |
| |
(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 |
| |
| 45 |
|
| |
|
| |
|
(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 |
| 5 |
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. |
| |
34 | Location of assets etc |
| |
Schedule 4 (which makes provision in relation to the situation of assets for the |
| 10 |
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. |
| |
| |
35 | Exercise of options etc |
| 15 |
Schedule 5 (which makes provision, for the purposes of the taxation of |
| |
chargeable gains, in relation to options) has effect. |
| |
36 | Notional transfers within a group |
| |
(1) | Section 171A of TCGA 1992 (notional transfers within a group) is amended as |
| |
| 20 |
(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, |
| 25 |
| 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.”. |
| 30 |
(3) | The amendment made by this section has effect in relation to disposals made |
| |
on or after 16th March 2005. |
| |
| |
| |
Accounting practice and related matters |
| 35 |
37 | Accounting practice and related matters |
| |
| Schedule 6 (accounting practice and related matters) has effect. |
| |
|
| |
|
| |
|
| |
38 | 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 |
| 5 |
other annual payments that meet the conditions in section 338B) shall cease to |
| |
| |
(3) | In section 125(1) 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 |
| 10 |
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 |
| |
| |
(6) | The amendment made by subsection (4) has effect for accounting periods |
| 15 |
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 |
| |
| |
| 20 |
(a) | an accounting period of a company begins before, and ends on or after, |
| |
| |
(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 |
| |
(c) | the payment is deductible as a charge on income for the purposes of |
| 25 |
| |
| |
(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), |
| |
| 30 |
(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— |
| |
(a) | a payment in respect of an annuity or other annual payment is made by |
| 35 |
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 |
| |
| |
(a) | would not be deductible under section 75 of ICTA, or |
| 40 |
(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. |
| |
|
| |
|
| |
|
(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 |
| |
| |
| for the accounting period in which the payment is made. |
| 5 |
(13) | In this section “the commencement date” means 16th March 2005. |
| |
39 | Avoidance involving financial arrangements |
| |
| Schedule 7 (which makes provision in relation to tax avoidance involving |
| |
financial arrangements) has effect. |
| |
Financing of companies etc |
| 10 |
40 | Transfer pricing and loan relationships |
| |
Schedule 8 (which amends Schedule 28AA to ICTA and Schedule 9 to FA 1996) |
| |
| |
| |
41 | Intangible fixed assets |
| 15 |
(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 |
| |
| |
(a) | in sub-paragraph (1), for “the following two exceptions” substitute “the |
| 20 |
following four exceptions”; |
| |
(b) | after sub-paragraph (4) insert— |
| |
“(4A) | The third exception is where— |
| |
(a) | the asset is transferred from the company at less than |
| |
its market value, or to the company at more than its |
| 25 |
| |
| |
| |
(ii) | is a company in relation to which the asset is |
| |
not a chargeable intangible asset immediately |
| 30 |
after the transfer to it or (as the case may be) |
| |
immediately before the transfer from it, |
| |
| |
(c) | by virtue of any provision of— |
| |
(i) | section 209 of the Taxes Act 1988 (meaning of |
| 35 |
| |
(ii) | Part 3 of the Income Tax (Earnings and |
| |
Pensions) Act 2003 (employment income: |
| |
earnings and benefits etc treated as earnings), |
| |
| the transfer gives rise (or would give rise but for sub- |
| 40 |
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— |
| |
(a) | Schedule 7AB to the Taxation of Chargeable Gains Act 1992, or |
| |
(b) | 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. |
| |
| |
42 | Insurance companies etc |
| |
Schedule 9 (which makes provision about insurance companies etc) has effect. |
| 15 |
| |
43 | Implementation of the amended Parent/Subsidiary Directive |
| |
(1) | Section 801 of ICTA (dividends paid between related companies: relief for UK |
| |
and third country taxes) is amended as follows. |
| |
(2) | After subsection (5) (meaning of one company being related to another) |
| 20 |
| |
“(5A) | For the purposes of subsections (2) and (3) above (including any |
| |
determination of the extent to which underlying tax paid by the third, |
| |
fourth or subsequent company in question would be taken into account |
| |
under this Part if the conditions specified for the purpose in subsection |
| 25 |
(2) above were satisfied) a company is also related to another company |
| |
| |
(a) | controls directly or indirectly, or |
| |
(b) | is a subsidiary of a company which controls directly or |
| |
| 30 |
| not less than 10% of the ordinary share capital of the first-mentioned |
| |
| |
(3) | The amendment made by this section has effect where the dividend mentioned |
| |
in section 799(1) of ICTA is paid on or after 1st January 2005. |
| |
44 | Territories with a lower level of taxation: reduction of amount of local tax |
| 35 |
(1) | Section 750 of ICTA (controlled foreign companies: territories with a lower |
| |
level of taxation) is amended as follows. |
| |
(2) | In subsection (1), after “if” insert “, after giving effect to subsections (1A) and |
| |
| |
|
| |
|