rs1970507.773-778

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

773

House of Commons

Wednesday 5th July 2006

Report Stage Proceedings

Finance (No. 2) Bill [Lords], As Amended

Mr Chancellor of the Exchequer

Agreed to  18

Page  22,  line  6  [Clause  19],  at beginning insert ‘An order under this subsection

may confer power on the Commissioners to make regulations or exercise any other

function,’.

Mr Chancellor of the Exchequer

Agreed to  19

Page  22,  line  40  [Clause  19],  at end insert—

‘(2A)
In section 65 of VATA 1994 (inaccuracies in EC sales statements)—

(a)
at the end insert—

“(7)
This section applies in relation to a statement which is required

to be submitted to the Commissioners in accordance with

regulations under paragraph 2(3A) of Schedule 11 as it applies in

relation to an EC sales statement.”, and

(b)
in consequence of the amendment made by paragraph (a) the heading

becomes “Inaccuracies in EC sales statements or in statements relating to

section 55A”.

(2B)
In section 66 of VATA 1994 (failure to submit EC sales statements)—

(a)
at the end insert—

“(10)
This section applies in relation to a statement which is required

to be submitted to the Commissioners in accordance with

regulations under paragraph 2(3A) of Schedule 11 as it applies in

relation to an EC sales statement.”, and

(b)
in consequence of the amendment made by paragraph (a) the heading

becomes “Failure to submit EC sales statement or statement relating to

section 55A”.

(2C)
In section 69 of VATA 1994 (breaches of regulatory provisions), in subsection

(1) (failure to comply with a requirement imposed under provisions mentioned in

the paragraphs in that subsection), after paragraph (b) insert—

“(ba)
paragraph 2(3B) of Schedule 11; or”.’.

Mr Chancellor of the Exchequer

Agreed to  20

Page  22,  line  44  [Clause  19],  at end insert—

Report Stage Proceedings: 5th July 2006
774

Finance (N–[ [], continued

‘(3A)
In Schedule 11 to VATA 1994 (administration, collection and enforcement), in

paragraph 2 (accounting for VAT and payment of VAT), after sub-paragraph (3)

insert—

“(3A)
Regulations under this paragraph may require the submission to the

Commissioners by taxable persons, at such times and intervals, in such

cases and in such form and manner as may be—

(a)
specified in the regulations, or

(b)
determined by the Commissioners in accordance with powers

conferred by the regulations,


of statements containing such particulars of supplies to which section

55A(6) applies in which the taxable persons are concerned, and of the

persons concerned in those supplies, as may be prescribed.

    (3B)
Regulations under this paragraph may make provision, in relation to

the first occasion on which a person makes a supply of goods to which

section 55A(6) applies, for requiring the person to give to the

Commissioners such notification of the supply at such time and in

such form and manner as may be specified in the regulations.”.’

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Agreed to  121

Page  23,  line  3  [Clause  19],  at end insert—

‘But no order may be made under this subsection on or after 22nd March 2009.’.

Mr Alex Salmond

Stewart Hosie

Angus Robertson

Pete Wishart

Mr Mike Weir

Mr Angus MacNeil

Not selected  63

Page  25,  line  37  [Clause  24],  at end insert—

‘(2)
The Chancellor of the Exchequer shall bring forward proposals in his pre-budget

report to allow the Scottish Parliament, the National Assembly for Wales and the

Northern Ireland Assembly to introduce a variation of the main rate of

corporation tax.’.

Report Stage Proceedings: 5th July 2006
775

Finance (N–[ [], continued

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Withdrawn  122

Page  155,  line  21  [Schedule  1],  leave out from second ‘the’ to end of line 22 and

insert ‘earlier of—

(a)
two years after the end of the accounting period; or

(b)
the deadline for filing corporate tax returns in the EEA territory

concerned.’.

Mrs Theresa Villiers

Mr Mark Francois

Mr Mark Hoban

Mr Paul Goodman

Andrew Selous

Not called  15

Page  155,  line  21  [Schedule  1],  leave out ‘immediately after the end of the currrent

period’ and insert ‘when the claim for group relief was made’.

Mr Chancellor of the Exchequer

Agreed to  98

Page  171,  line  40  [Schedule  5],  leave out ‘partly’ and insert ‘mainly’.

Julia Goldsworthy

Negatived on division  126

Page  46,  line  29,  leave out Clause 61.

Mr Chancellor of the Exchequer

Agreed to  99

Page  181,  line  2  [Schedule  6],  at end insert—

‘Repeal of rent factoring provisions

A1  (1)
Sections 43A to 43G of ICTA (rent factoring) shall cease to have effect.

      (2)
The amendment made by this paragraph has effect in relation to transactions

entered into on or after 6th June 2006.’.

Report Stage Proceedings: 5th July 2006
776

Finance (N–[ [], continued

Mr Chancellor of the Exchequer

Agreed to  16

Page  185,  line  8  [Schedule  6],  at end insert—

‘Multiple holders of securities subject to sale and repurchase agreement: no relief for

deemed manufactured payments

3A  (1)
Section 737A of ICTA (sale and repurchase of securities: deemed

manufactured payments) is amended as follows.

      (2)
In subsection (5) (application of Schedule 23A and dividend manufacturing

regulations), after “apply” insert “, subject to subsection (5A) below,”.

      (3)
After that subsection insert—

“(5A)
If the relevant person is not the person to whom the transferor agreed

to sell the securities, the relevant person is not entitled, by virtue of

anything in Schedule 23A or any provision of dividend manufacturing

regulations, or otherwise—

(a)
to any deduction in computing profits or gains for the

purposes of income tax or corporation tax, or

(b)
to any deduction against total income or total profits,


by virtue of subsection (5) above.


Where the relevant person is a company, an amount may not be

surrendered by way of group relief if a deduction in respect of it is

prohibited by this subsection.”.

      (4)
In subsection (6) (interpretation), for—

(a)
“subsection (5) above”, and

(b)
“that subsection”,


substitute “this section”.

      (5)
The amendments made by this paragraph have effect in relation to securities

if—

(a)
the agreement to sell them was made on or after 27th June 2006, or

(b)
a person other than the person to whom the transferor agreed to sell

them became the relevant person in consequence of any other

agreement made on or after that date.’.



Mr Chancellor of the Exchequer

Agreed to  100

Page  185,  line  8  [Schedule  6],  at end insert—

‘Structured finance arrangements: factoring of income receipts etc

3B  (1)
After section 774 of ICTA (transactions between dealing company and

associated company) insert—

“Factoring of income receipts etc

774A
Meaning of “structured finance arrangement” for purposes of s.774B

(1)
For the purposes of section 774B an arrangement is a structured

finance arrangement in relation to a person (“the borrower”) if the

following condition is met in relation to the borrower.

(2)
The condition is that—

Report Stage Proceedings: 5th July 2006
777

Finance (N–[ [], continued

(a)
under the arrangement the borrower receives from another

person (“the lender”) any money or other asset (“the

advance”) in any period,

(b)
in accordance with generally accepted accounting practice the

accounts of the borrower for that period record a financial

liability in respect of the advance,

(c)
the borrower, or a person connected with the borrower, makes

a disposal of an asset (“the security”) under the arrangement

to or for the benefit of the lender or a person connected with

the lender,

(d)
the lender, or a person connected with the lender, is entitled

under the arrangement to payments in respect of the security,

and

(e)
in accordance with generally accepted accounting practice

those payments reduce the amount of the financial liability in

respect of the advance recorded in the accounts of the

borrower.

(3)
For the purposes of this section, in any case where the borrower is a

partnership, references to the accounts of the borrower include the

accounts of any member of the partnership.

(4)
For the purposes of this section and section 774B—

(a)
references to a person connected with the borrower do not

include the lender, and

(b)
references to a person connected with the lender do not

include the borrower.

774B
Disregard of intended effects of arrangement involving disposals of

assets

(1)
If—

(a)
an arrangement is a structured finance arrangement in relation

to a person (“the borrower”), and

(b)
the arrangement would (disregarding this section) have had

the relevant effect (see subsections (2) and (3)),


the arrangement is not to have that effect.

(2)
If the borrower is a person other than a partnership, the relevant effect

is that—

(a)
an amount of income on which the borrower, or a person

connected with the borrower, would otherwise have been

charged to tax is not so charged,

(b)
an amount which would otherwise have been brought into

account in calculating for tax purposes any income of the

borrower, or of a person connected with the borrower, is not

so brought into account, or

(c)
the borrower, or a person connected with the borrower,

becomes entitled to an income deduction.

(3)
If the borrower is a partnership, the relevant effect is that—

(a)
an amount of income on which a member of the partnership

would otherwise have been charged to tax is not so charged,

Report Stage Proceedings: 5th July 2006
778

Finance (N–[ [], continued

(b)
an amount which would otherwise have been brought into

account in calculating for tax purposes any income of a

member of the partnership is not so brought into account, or

(c)
a member of the partnership becomes entitled to an income

deduction.

(4)
If—

(a)
a person in relation to whom the structured finance

arrangement would otherwise have had the relevant effect is a

person within the charge to income tax, and

(b)
in accordance with generally accepted accounting practice the

accounts of the person record an amount as a finance charge

in respect of the advance,


that person may treat the amount for income tax purposes as interest

payable on a loan.

(5)
If a person in relation to whom the structured finance arrangement

would otherwise have had the relevant effect is a company within the

charge to corporation tax—

(a)
the advance is to be treated, in relation to the company, for the

purposes of Chapter 2 of Part 4 of the Finance Act 1996 as a

money debt owed by the company,

(b)
the arrangement is to be treated, in relation to the company,

for the purposes of that Chapter as a loan relationship of the

company (as a debtor relationship), and

(c)
any amount which, in accordance with generally accepted

accounting practice, is recorded in the accounts of the

company as a finance charge in respect of the advance is to be

treated as interest payable under that relationship.

(6)
For the purposes of this section, in any case where the borrower is a

partnership,—

(a)
references to accounts include the accounts of the partnership,

and

(b)
any deemed interest is treated as payable by the partnership

(whether or not the finance charge is recorded in the accounts

of the partnership).

(7)
For the purpose of determining when any deemed interest in respect of

the advance is paid—

(a)
the payments mentioned in section 774A(2)(d) are treated as

consisting of amounts for repaying the advance and amounts

(“the interest elements”) in respect of interest on the advance,

and

(b)
the interest elements of those payments are treated as paid

when those payments are paid,


and the deemed interest in respect of the advance is treated as paid at

the times when the interest elements are treated as paid.

(8)
In this section “deemed interest” means any amount which is treated

as interest as a result of subsection (4) or (5).

(9)
This section is subject to the exceptions contained in section 774E.