|
| |
|
28 | Notices under sections 24 and 26 |
| |
(1) | Subsection (2) applies if the Commissioners for Her Majesty’s Revenue and |
| |
Customs give a notice to a company under section 24 or 26 before the company |
| |
has made its company tax return for the accounting period specified in the |
| |
| 5 |
(2) | If the company makes its return for that period before the end of the period of |
| |
90 days beginning with the day on which the notice is given, it may— |
| |
(a) | make a return that disregards the notice, and |
| |
(b) | at any time after making the return and before the end of the period of |
| |
90 days, amend the return for the purpose of complying with the |
| 10 |
provision referred to in the notice. |
| |
(3) | If a company has made a company tax return for an accounting period, the |
| |
Commissioners may only give the company a notice under section 24 or 26 in |
| |
relation to that period if a notice of enquiry has been given to the company in |
| |
respect of its return for that period. |
| 15 |
(4) | After any enquiries into the return for that period have been completed, the |
| |
Commissioners may only give the company a notice under section 24 or 26 if |
| |
the requirements in subsections (5) and (7) are satisfied. |
| |
(5) | The first requirement is that at the time the enquiries into the return were |
| |
completed, the Commissioners could not have been reasonably expected, on |
| 20 |
the basis of information made available to them or to an officer of Revenue and |
| |
Customs before that time, to have been aware that the circumstances were such |
| |
that a notice under section 24 or 26 could have been given to the company in |
| |
| |
(6) | Paragraph 44(2) and (3) of Schedule 18 to FA 1998 (information made available) |
| 25 |
applies for the purposes of subsection (5) as it applies for the purposes of |
| |
| |
(7) | The second requirement is that— |
| |
(a) | the company was requested to produce or provide information during |
| |
an enquiry into the return for that period, and |
| 30 |
(b) | if the company had duly complied with the request, the Commissioners |
| |
could reasonably have been expected to give the company a notice |
| |
under section 24 or 26 in relation to that period. |
| |
(8) | If a company is given a notice under section 24 or 26 in relation to an |
| |
accounting period after having made a company tax return for that period, the |
| 35 |
company may amend the return for the purpose of complying with the |
| |
provision referred to in the notice at any time before the end of the period of 90 |
| |
days beginning with the day on which the notice is given. |
| |
(9) | If the notice under section 24 or 26 is given to the company after it has been |
| |
given a notice of enquiry in respect of its return for the period, no closure notice |
| 40 |
may be given in relation to the company’s tax return until— |
| |
(a) | the end of the period of 90 days beginning with the day on which the |
| |
notice under section 24 or 26 is given, or |
| |
(b) | the earlier amendment of the company tax return for the purpose of |
| |
complying with the provision referred to in the notice. |
| 45 |
(10) | If the notice under section 24 or 26 is given to the company after any enquiries |
| |
into the return for the period are completed, no discovery assessment may be |
| |
|
| |
|
| |
|
made as regards the income or chargeable gain to which the notice relates |
| |
| |
(a) | the end of the period of 90 days beginning with the day on which the |
| |
notice under section 24 or 26 is given, or |
| |
(b) | the earlier amendment of the company tax return for the purpose of |
| 5 |
complying with the provision referred to in the notice. |
| |
(11) | Subsections (2)(b) and (8) do not prevent a company tax return for a period |
| |
| |
(a) | a notice under section 24 or 26 is given to the company in relation to |
| |
| 10 |
(b) | the return is not amended in accordance with subsection (2)(b) or (8) for |
| |
the purpose of complying with the provision referred to in the notice, |
| |
| |
(c) | the return ought to have been so amended. |
| |
| 15 |
“closure notice” means a notice under paragraph 32 of Schedule 18 to FA |
| |
| |
“company tax return” means the return required to be delivered pursuant |
| |
to a notice under paragraph 3 of Schedule 18 to FA 1998, as read with |
| |
paragraph 4 of that Schedule; |
| 20 |
“discovery assessment” means an assessment under paragraph 41 of |
| |
| |
“notice of enquiry” means a notice under paragraph 24 of Schedule 18 to |
| |
| |
29 | Amendments relating to company tax returns |
| 25 |
(1) | In Schedule 18 to FA 1998 (company tax returns, assessments, etc), in |
| |
paragraph 25(1) (scope of enquiry) after “relief)” insert “or a notice under |
| |
section 24 or 26 of the Finance (No. 2) Act 2005 (avoidance involving tax |
| |
| |
(2) | In paragraph 42 of that Schedule (restrictions on power to make discovery |
| 30 |
assessment etc), in sub-paragraph (2A), after “1988” insert “or section 24 or 26 |
| |
of the Finance (No. 2) Act 2005”. |
| |
| |
(1) | For the purposes of this Chapter— |
| |
(a) | references to a scheme are references to any scheme, arrangements or |
| 35 |
understanding of any kind whatever, whether or not legally |
| |
enforceable, involving a single transaction or two or more transactions; |
| |
(b) | it shall be immaterial in determining whether any transactions have |
| |
formed or will form part of a series of transactions or scheme that the |
| |
parties to any of the transactions are different from the parties to |
| 40 |
another of the transactions; and |
| |
(c) | the cases in which any two or more transactions are to be taken as |
| |
forming part of a series of transactions or scheme shall include any case |
| |
in which it would be reasonable to assume that one or more of them— |
| |
(i) | would not have been entered into independently of the other or |
| 45 |
| |
|
| |
|
| |
|
(ii) | if entered into independently of the other or others, would not |
| |
have taken the same form or been on the same terms. |
| |
(2) | For the purposes of this Chapter, a scheme achieves a UK tax advantage for a |
| |
person if in consequence of the scheme the person is in a position to obtain, or |
| |
| 5 |
(a) | a relief or increased relief from income tax or corporation tax, |
| |
(b) | a repayment or increased repayment of income tax or corporation tax, |
| |
| |
(c) | the avoidance or reduction of a charge to income tax or corporation tax. |
| |
(3) | In subsection (2)(a) the reference to relief includes a reference to a tax credit. |
| 10 |
(4) | For the purposes of subsection (2)(c) avoidance or reduction may in particular |
| |
| |
(a) | receipts accruing in such a way that the recipient does not pay or bear |
| |
| |
(b) | a deduction in computing profits or gains. |
| 15 |
| |
(1) | The deduction cases provisions have effect in relation to accounting periods of |
| |
a company beginning on or after 16th March 2005. |
| |
(2) | Where an accounting period of a company begins before, and ends on or after |
| |
16th March 2005, it shall be assumed for the purposes of the deduction cases |
| 20 |
provisions (and subsection (1) of this section) that that accounting period (“the |
| |
straddling period”) consists of two separate accounting periods— |
| |
(a) | the first beginning with the straddling period and ending with the 15th |
| |
| |
(b) | the second beginning with 16th March 2005 and ending with the |
| 25 |
| |
| and the company’s profits and losses shall be computed accordingly for tax |
| |
| |
(3) | The deduction cases provisions do not have effect so far as regards a |
| |
transaction to which a company is party on 16th March 2005 and which on that |
| 30 |
date forms part of a scheme, if— |
| |
(a) | the company is not on 16th March 2005 connected with a person who is |
| |
on that date also party to, or concerned in, the scheme, and |
| |
(b) | the scheme ceases to exist before 31st August 2005. |
| |
| Section 839 of ICTA applies for the purposes of this subsection. |
| 35 |
(4) | The receipts cases provisions have effect in relation to any contribution to the |
| |
capital of a company resident in the United Kingdom that is made on or after |
| |
| |
| |
“the deduction cases provisions” means— |
| 40 |
(a) | sections 24 and 25 and Schedule 3, and |
| |
(b) | sections 28 to 30 so far as relating to the provisions in paragraph |
| |
| |
“the receipts cases provisions” means— |
| |
(a) | sections 26 and 27, and |
| 45 |
|
| |
|
| |
|
(b) | sections 28 to 30 so far as relating to the provisions in paragraph |
| |
| |
| |
| |
Residence, location of assets etc |
| 5 |
32 | 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 |
| |
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 |
| 10 |
the United Kingdom” substitute— |
| |
“(i) | he was neither resident nor ordinarily resident in |
| |
| |
(ii) | he was resident or ordinarily resident in the |
| |
United Kingdom but was Treaty non-resident;”; |
| 15 |
(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”. |
| |
(4) | For subsection (9) substitute— |
| |
“(9) | For the purposes of this section an individual satisfies the residence |
| 20 |
requirements for a year of assessment— |
| |
(a) | if, during any part of that year of assessment, he is resident in |
| |
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 |
| 25 |
| |
(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. |
| 30 |
(9B) | Where this section applies in the case of any individual in |
| |
circumstances in which one or more intervening years would, but for |
| |
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 |
| |
| 35 |
(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 |
| |
chargeable gains accruing to the taxpayer in any such |
| |
| |
(b) | as if any such intervening year were not an intervening year for |
| 40 |
the purposes of subsections (2)(b) and (c) and (6) above.”. |
| |
|
| |
|
| |
|
(5) | After subsection (9B) (as inserted by subsection (4) above) insert— |
| |
“(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 |
| 5 |
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— |
| |
(a) | in any case in which the year of departure is, or (on the assumption that |
| 10 |
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 |
| |
| 15 |
(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)). |
| |
(8) | The amendment in subsection (2)(b) has effect in relation to relevant disposals |
| 20 |
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 |
| |
| 25 |
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 |
| |
settlement on the disposal by them of an asset in a year of assessment |
| 30 |
| |
(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 |
| 35 |
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 |
| |
the charge to capital gains tax in a year of assessment— |
| 40 |
(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 |
| |
during that year of assessment. |
| 45 |
|
| |
|
| |
|
(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 |
| |
| |
(b) | they are resident or ordinarily resident in the United Kingdom |
| 5 |
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 |
| |
double taxation relief arrangements having effect at that time.”. |
| 10 |
(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 |
| |
purposes of TCGA 1992 and which makes minor amendments in that Act in |
| 15 |
relation to non-resident companies with United Kingdom permanent |
| |
establishments) has effect. |
| |
| |
35 | Exercise of options etc |
| |
Schedule 5 (which makes provision, for the purposes of the taxation of |
| 20 |
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 |
| |
| |
(2) | After subsection (3) insert— |
| 25 |
“(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, |
| |
| the asset or part deemed to be transferred to B by A is to be treated for |
| 30 |
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.”. |
| |
(3) | The amendment made by this section has effect in relation to disposals made |
| 35 |
on or after 16th March 2005. |
| |
|
| |
|
| |
|
| |
| |
Accounting practice and related matters |
| |
37 | Accounting practice and related matters |
| |
| Schedule 6 (accounting practice and related matters) has effect. |
| 5 |
| |
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 |
| 10 |
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 |
| 15 |
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 |
| 20 |
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 |
| |
| |
| 25 |
(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 |
| 30 |
| |
| |
(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), |
| |
| 35 |
(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— |
| |
|
| |
|