Finance (No.2) Bill

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House of Commons

Session 2005 - 06
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Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill

[NOT AMENDED IN THE COMMITTEE AND AS AMENDED IN STANDING COMMITTEE A]

The Bill is divided into two volumes. Volume I contains the Clauses and Schedules
1 to 9 to the Bill. Volume II contains Schedules 10 to 26 to the Bill.
Contents
Part 1
Excise duties
Tobacco products duty
1
Rates of tobacco products duty
2
Tobacco products duty: evasion
Alcoholic liquor duties
3
Rate of duty on beer
4
Rates of duty on wine and made-wine
5
Repeal of provisions of ALDA 1979 of no practical utility etc
Hydrocarbon oil duties
6
Rates until 1st September 2006
7
Rates from 1st September 2006
8
Road vehicles
Betting and gaming duties
9
General betting duty: gaming machines
10
Rates of gaming duty
Amusement machine licence duty
11
Definition of “gaming machine”
12
Classes of machine and rates of duty
Vehicle excise duty
13
Rates
14
Reduced pollution certificates
15
Late renewal supplement

Bill 197
54/1

Finance (No.2) Bill
ii

Part 2
Value added tax
Gaming machines
16
Gaming machines
Land
17
Buildings and land
Imported works of art etc
18
Value of imported works of art etc: auctioneer’s commission
Avoidance and fraud
19
Missing trader intra-community fraud
20
Power to inspect goods
21
Directions to keep records where belief VAT might not be paid
22
Treatment of credit vouchers
Part 3
Income tax, corporation tax and capital gains tax
Chapter 1
Income tax and corporation tax: charge and rate bands
Income tax
23
Charge and rates for 2006-07
Corporation tax
24
Charge and main rate for financial year 2007
25
Small companies’ rate and fraction for financial year 2006
26
Abolition of corporation tax starting rate and non-corporate distribution rate
Chapter 2
Reliefs for business
Group relief
27
Group relief where surrendering company not resident in UK
Research and development
28
Relief for research and development: subjects of clinical trials
29
Claims for relief for research and development

Finance (No.2) Bill
iii

Capital allowances
30
Temporary increase in amount of first-year allowances for small enterprises
Chapter 3
Films and sound recordings
Introductory
31
Meaning of “film” and related expressions
32
Meaning of “film production company”
33
Meaning of “film-making activities” etc
34
Meaning of “production expenditure” and related expressions
35
Meaning of “UK expenditure”
36
Meaning of “qualifying co-production” and “co-producer”
Taxation of activities of film production company
37
Taxation of activities of film production company
Film tax relief
38
Films qualifying for film tax relief
39
Conditions of relief: intended theatrical release
40
Conditions of relief: British film
41
Conditions of relief: UK expenditure
42
Film tax relief: further provisions
Film losses
43
Films: restriction on use of losses while film in production
44
Films: use of losses in later periods
45
Films: terminal losses
Films: withdrawal of existing reliefs
46
Films: withdrawal of existing reliefs (corporation tax)
47
Films: withdrawal of existing reliefs (income tax)
Corporation tax treatment of sound recordings
48
Sound recordings: revenue nature of expenditure
49
Sound recordings: allocation of expenditure
50
Sound recordings: interpretation
Supplementary provisions
51
Corporation tax: films and sound recordings as intangible fixed assets
52
Films: application of provisions to certain films already in production
53
Films and sound recordings: commencement and power to alter dates

Finance (No.2) Bill
iv

Chapter 4
Charities
54
Transactions with substantial donors
55
Non-charitable expenditure
56
Trade profits
57
Gift aid relief for companies wholly owned by one or more charities
58
Extension of restrictions on gift aid payments by close companies
Chapter 5
Personal taxation
Cars
59
Cars with a CO2 emissions figure
Mobile telephones and computers
60
Mobile telephones
61
Computer equipment
Eye care
62
Exemption for employees’ eye tests and special glasses
Vouchers and tokens
63
Power to exempt use of vouchers or tokens to obtain exempt benefits
Holocaust victims
64
Payments to or in respect of victims of National-Socialist persecution
Chapter 6
The London Olympic Games and Paralympic Games
65
London Organising Committee
66
Section 65 : supplementary
67
International Olympic Committee
68
Competitors and staff
Chapter 7
Chargeable gains
Capital losses
69
Restriction on a company’s allowable losses
70
Restrictions on companies buying losses or gains
71
Other avoidance involving losses accruing to companies
72
Repeal of s.106 of TCGA 1992

Finance (No.2) Bill
v

Insurance policies and annuities
73
Policies of insurance and non-deferred annuities
Capital gains tax
74
Exception to “bed and breakfasting” rules etc
Chapter 8
Avoidance: miscellaneous
Film partnerships
75
Interest relief: film partnership
Financial instruments
76
Avoidance involving financial arrangements
Intangible fixed assets
77
Treating assets as “existing assets” etc
International matters
78
Controlled foreign companies and treaty non-resident companies
79
Transfer of assets abroad
Pre-owned assets
80
Restriction of exemption from charge to income tax
Chapter 9
Miscellaneous provisions
Leasing of plant or machinery
81
Leases of plant or machinery
Sale of lessors
82
Sale etc of lessor companies etc
83
Restrictions on use of losses etc: leasing partnerships
84
Disposal of plant or machinery subject to lease where income retained
85
Restrictions on effect of elections under section 266 of CAA 2001
Insurance companies and policyholders
86
Insurance companies
87
Qualifying policies: altering method for calculating benefits

Finance (No.2) Bill
vi

Settlements
88
Settlements, etc: chargeable gains
89
Settlements, etc: income
90
Special trusts tax rates not to apply to social landlords’ service charge income
Investment reliefs
91
Venture capital schemes
Employment-related securities
92
Avoidance using options etc
93
Corporation tax relief for shares acquired under EMI option
PAYE
94
PAYE: retrospective notional payments
Alternative finance arrangements
95
Profit share agency
96
Diminishing shared ownership
97
Beneficial loans to employees
98
Regulations
Nuclear decommissioning
99
Amendment of section 29 of the Energy Act 2004
100
Amendment of section 30 of the Energy Act 2004
Accounting practice
101
Securitisation companies
102
Accountancy change: spreading of adjustment
Part 4
Real Estate Investment Trusts
Introduction
103
Real Estate Investment Trusts
104
Property rental business
105
Other key concepts
106
Conditions for company
107
Conditions for tax-exempt business
108
Conditions for balance of business
Entering Real Estate Investment Trust Regime
109
Notice
110
Duration
111
Effects of entry
112
Entry charge

Finance (No.2) Bill
vii

Assets etc
113
Ring-fencing of tax-exempt business
114
Maximum shareholding
115
Profit: financing-cost ratio
116
Minor or inadvertent breach
117
Cancellation of tax advantage
118
Funds awaiting re-investment
Profits
119
Corporation tax
120
Calculation of profits
121
Distributions: liability to tax
122
Distributions: deduction of tax
123
Attribution of distributions
Capital gains
124
Corporation tax
125
Movement of assets out of ring-fence
126
Movement of assets into ring-fence
127
Interpretation
Leaving Real Estate Investment Trust Regime
128
Termination by notice: company
129
Termination by notice: Commissioners
130
Automatic termination for breach of requirement
131
Effects of cessation
132
Early exit by notice
133
Early exit
Groups
134
Group Real Estate Investment Trusts
135
Transfer within group
136
Availability of group reliefs
Miscellaneous
137
Insurance companies
138
Joint ventures
139
Manufactured dividends
140
Penalties for failure to give notice, etc
141
Effect of deemed disposal and re-acquisition
142
Interpretation
143
Housing investment trusts: repeal
General
144
Regulations
145
Commencement

© Parliamentary copyright 2006
Revised 23 June 2006