|
| |
|
(b) | the individual is also treated as having income as a result of Chapter 3 |
| |
| |
| only a just and reasonable proportion of each capital amount treated as |
| |
occupation income is to be treated as the highest part of the individual’s total |
| |
| 5 |
(8) | See section 946 for the relationship between— |
| |
(a) | the rules in subsections (6) and (7), and |
| |
(b) | other rules requiring particular income to be treated as the highest part |
| |
of a person’s total income. |
| |
720 | Recovery of tax: certificates of tax paid etc |
| 10 |
(1) | For the purposes of section 719(3), an officer of Revenue and Customs must, if |
| |
requested to do so, produce a certificate specifying— |
| |
(a) | the amount of income in respect of which tax has been paid, and |
| |
(b) | the amount of tax paid. |
| |
(2) | The certificate is conclusive evidence of any facts stated in it. |
| 15 |
(3) | See also section 877 (under which directions may be given for payments within |
| |
this Chapter to non-UK residents to be subject to a duty to deduct income tax). |
| |
Power to obtain information |
| |
721 | Power to obtain information |
| |
(1) | An officer of Revenue and Customs may by notice require any person to |
| 20 |
provide the officer within such period as the officer may direct with such |
| |
particulars as the officer may reasonably require for the purposes of this |
| |
| |
(2) | That period must be at least 30 days. |
| |
(3) | The particulars which a person must provide under this section, if required to |
| 25 |
do so by such a notice, include particulars about— |
| |
(a) | transactions or arrangements with respect to which the person is or was |
| |
acting on behalf of others, |
| |
(b) | transactions or arrangements which in the opinion of the officer should |
| |
properly be investigated for the purposes of this Chapter, although in |
| 30 |
the person’s opinion no liability to tax arises under this Chapter, and |
| |
(c) | whether the person has taken or is taking any part and, if so, what part |
| |
in transactions or arrangements of a description specified in the notice. |
| |
(4) | Subsection (3) is subject to subsection (5). |
| |
(5) | In relation to anything done by a solicitor on behalf of a client who does not |
| 35 |
consent to the provision of information required to be provided by a notice |
| |
under subsection (1), the solicitor may not be compelled under this section to |
| |
| |
(a) | state that the solicitor was acting on behalf of a client, and |
| |
(b) | give the name and address of the client. |
| 40 |
|
| |
|
| |
|
(6) | A solicitor is not treated as having taken part in a transaction or arrangement |
| |
for the purposes of subsection (3)(c) merely because of giving professional |
| |
advice to a client about it. |
| |
| |
| 5 |
| |
“company” includes any body corporate, and |
| |
| |
| |
Avoidance involving trading losses |
| 10 |
| |
| |
(1) | This Chapter imposes charges to income tax on— |
| |
(a) | individuals who are treated as receiving income under section 725 |
| |
(individuals in partnership claiming excess relief), |
| 15 |
(b) | individuals who are treated as receiving income under section 730 |
| |
(individuals claiming relief for film-related trading losses), and |
| |
(c) | individuals who are treated as receiving income under section 738 |
| |
(individuals in partnership claiming relief for licence-related trading |
| |
| 20 |
(2) | The charges apply if (among other things) the individual makes a loss in a |
| |
trade for which the individual claims sideways relief or capital gains relief. |
| |
(3) | For the purposes of this Chapter sideways relief is— |
| |
(a) | trade loss relief against general income (see sections 64 to 70), or |
| |
(b) | early trade losses relief (see sections 72 to 74). |
| 25 |
(4) | For the purposes of this Chapter— |
| |
(a) | capital gains relief is, in relation to a loss, the treatment of the loss as an |
| |
allowable loss by virtue of section 261B of TCGA 1992 (use of trading |
| |
| |
(b) | capital gains relief is claimed for a loss when a claim under that section |
| 30 |
is made in relation to the loss. |
| |
(5) | References in this Chapter to a firm are to be read in the same way as references |
| |
to a firm in Part 9 of ITTOIA 2005 (which contains special provision about |
| |
| |
|
| |
|
| |
|
Individuals in partnership: recovery of excess relief |
| |
724 | Charge to tax on income treated as received under section 725 |
| |
(1) | Income tax is charged on income treated as received by an individual under |
| |
| |
(2) | Tax is charged under this section on the amount of the income treated as |
| 5 |
received in the tax year. |
| |
(3) | The person liable for any tax charged under this section is the individual |
| |
treated as receiving the income. |
| |
725 | Partners claiming excess sideways or capital gains relief |
| |
(1) | This section applies if— |
| 10 |
(a) | an individual carrying on a trade (“the relevant trade”) as a partner in |
| |
a firm makes post-1 December 2004 losses in the relevant trade for |
| |
which the individual claims relief within subsection (2), |
| |
(b) | any of sections 104, 107 and 110 applies in relation to the relief (whether |
| |
or not any of those sections restricts the amount of the relief), and |
| 15 |
(c) | after the individual makes the claim or claims, a chargeable event |
| |
| |
(2) | The relief within this subsection is— |
| |
(a) | sideways relief but only if the whole or part of the relief is claimed |
| |
against income of the individual apart from profits of the relevant |
| 20 |
| |
(b) | capital gains relief. |
| |
(3) | A chargeable event occurs whenever— |
| |
(a) | the amount of the individual’s contribution to the firm is reduced as a |
| |
result of the application of regulations made under section 114, and |
| 25 |
(b) | that reduction in the individual’s contribution to the firm immediately |
| |
| |
(i) | the total amount of trade losses claimed (less any reclaimed |
| |
relief) becoming greater than the contribution, or |
| |
(ii) | an increase in the amount by which the total amount of trade |
| 30 |
losses claimed (less any reclaimed relief) exceeds the |
| |
| |
(4) | The individual is treated as receiving an amount of income every time a |
| |
| |
| The income is treated as arising otherwise than as profits of a trade. |
| 35 |
(5) | The amount of the income is calculated in accordance with section 726. |
| |
| |
(a) | the firm is carrying on, or has carried on, more than one trade, and |
| |
(b) | subsection (1)(a) and (b) applies in relation to losses made by the individual in |
| |
one or more of those trades as a partner in the firm, |
| 40 |
| the firm’s trades are taken together for the purpose of determining whether a chargeable |
| |
event occurs at any time after a claim in relation to any of those losses has been made |
| |
and, if one does occur, the amount of income treated as received by the individual at |
| |
| |
|
| |
|
| |
|
| See section 727(6) for modifications giving effect to this. |
| |
(7) | References in this section to an individual being a partner in a firm include a |
| |
reference to an individual being a limited partner within the meaning of |
| |
section 106 as a result of subsection (1)(c) of that section. |
| |
(8) | And, accordingly, in the case of an individual who is such a limited partner, in |
| 5 |
this section and in sections 726 to 728 references to the individual’s firm are |
| |
references to the relationship between the individual and the other persons |
| |
mentioned in section 106(3)(a). |
| |
726 | Calculating the amount of income treated as received |
| |
(1) | The amount of income treated as received by the individual under section 725 |
| 10 |
when the chargeable event occurs is the lowest of amounts A to C. |
| |
(2) | Amount A is the amount by which the individual’s contribution to the firm is |
| |
reduced as a result of the application of regulations made under section 114. |
| |
(3) | Amount B is the amount given by— |
| |
(a) | taking, at the time immediately after the chargeable event occurs, the |
| 15 |
total amount of trade losses claimed that are post-1 December 2004 |
| |
| |
(b) | reducing that amount (but not below nil) by any reclaimed relief. |
| |
(4) | Amount C is the amount given by— |
| |
(a) | taking the amount by which, at the time immediately after the |
| 20 |
chargeable event occurs, the total amount of trade losses claimed |
| |
exceeds the individual’s contribution to the firm, and |
| |
(b) | reducing that amount (but not below nil) by any reclaimed relief. |
| |
727 | Meaning of “the total amount of trade losses claimed” etc |
| |
(1) | In sections 725 and 726 “the total amount of trade losses claimed” means the |
| 25 |
total amount of losses within subsection (2) for which the individual has |
| |
claimed sideways relief or capital gains relief. |
| |
(2) | The losses within this subsection are losses made by the individual in the |
| |
| |
(a) | in a tax year at a time during which the individual carries on the |
| 30 |
relevant trade as a limited partner or as a member of an LLP, or |
| |
(b) | in an early tax year during which the individual carries on the relevant |
| |
trade as a non-active partner. |
| |
| Expressions used in this subsection are to be read as if contained in Chapter 3 |
| |
| 35 |
(3) | In sections 725 and 726 “reclaimed relief” means the total amount of income |
| |
treated as received by the individual under section 725 as a result of that |
| |
section being previously applied in relation to claims for relief for losses made |
| |
by the individual in the relevant trade. |
| |
(4) | In sections 725 and 726 “the individual’s contribution to the firm” at any time |
| 40 |
means the individual’s contribution to the firm or the LLP (as the case may be) |
| |
at that time as calculated for the purposes of the relevant restriction provision. |
| |
(5) | The “relevant restriction provision” means— |
| |
|
| |
|
| |
|
(a) | whichever of sections 104, 107 and 110 applied as mentioned in section |
| |
| |
(b) | if more than one of those sections applied as mentioned in section |
| |
725(1)(b), the section which so applied to the amount of relief which |
| |
could be given for the loss most recently made by the individual in the |
| 5 |
| |
(6) | In a case to which section 725(6) applies, for the purpose of determining the total |
| |
amount of trade losses claimed, the amount of the reclaimed relief and the relevant |
| |
| |
(a) | apply subsections (1) and (2) in relation to each of the trades that the firm is |
| 10 |
carrying on, or has carried on, and then add the results together, and |
| |
(b) | apply subsections (3) and (5)(b) as if references to the relevant trade were |
| |
references to any of the trades that the firm is carrying on, or has carried on. |
| |
| But if a trade is of the kind mentioned in section 110(8), do not apply subsection (2)(b) |
| |
| 15 |
728 | Meaning of “post-1 December 2004 loss” |
| |
(1) | For the purposes of sections 725 and 726 a “post-1 December 2004 loss” |
| |
| |
(a) | any loss made by an individual in a trade in a tax year the basis period |
| |
for which begins on or after 2 December 2004, or |
| 20 |
(b) | the post-1 December 2004 part of any loss made by an individual in a |
| |
trade in a tax year the basis period for which includes 2 December 2004 |
| |
(but begins before that date). |
| |
(2) | The “post-1 December 2004 part” of any loss made by an individual in a trade |
| |
means the individual’s share of any losses made by the relevant firm in the |
| 25 |
| |
(a) | beginning with 2 December 2004, and |
| |
(b) | ending with the end of the basis period for the tax year concerned. |
| |
(3) | For this purpose “the relevant firm” means the firm in which the individual |
| |
carried on the trade, and— |
| 30 |
(a) | the losses of that firm are calculated as if that period were one for which |
| |
profits and losses had to be calculated for the purposes of section 849 of |
| |
ITTOIA 2005 (calculation of firm’s profits or losses), and |
| |
(b) | the individual’s share of the losses is determined in accordance with |
| |
the individual’s interest in the firm during that period. |
| 35 |
(4) | In this section “basis period”, in relation to an individual with a notional trade, |
| |
means the basis period for the notional trade (within the meaning of Part 9 of |
| |
| |
Individuals claiming relief for film-related trading losses |
| |
729 | Charge to tax on income treated as received under section 730 |
| 40 |
(1) | Income tax is charged on income treated as received by an individual under |
| |
| |
(2) | Tax is charged under this section on the amount of the income treated as |
| |
received in the tax year. |
| |
|
| |
|
| |
|
(3) | The person liable for any tax charged under this section is the individual |
| |
treated as receiving the income. |
| |
730 | Individuals claiming sideways or capital gains relief for film-related losses |
| |
(1) | This section applies if— |
| |
(a) | an individual makes a film-related loss (see section 733) in a trade for |
| 5 |
which the individual claims sideways relief or capital gains relief (a |
| |
| |
(b) | there is a disposal of a right of the individual to profits arising from the |
| |
trade (a “relevant disposal”) (see section 732), and |
| |
(c) | an exit event occurs. |
| 10 |
(2) | An exit event occurs whenever— |
| |
(a) | the individual receives any non-taxable consideration (see section 731) |
| |
for a relevant disposal, or |
| |
(b) | an increase in the individual’s claimed film-related losses (see section |
| |
733) or a decrease in the individual’s capital contribution (see section |
| 15 |
| |
(i) | those losses becoming greater than that contribution, or |
| |
(ii) | an increase in the amount by which those losses exceed that |
| |
| |
(3) | The individual is treated as receiving an amount of income every time a |
| 20 |
| |
| The income is treated as arising otherwise than as profits of the trade. |
| |
(4) | A chargeable event occurs whenever— |
| |
(a) | the individual makes a relevant claim (if by that time a relevant |
| |
disposal and an exit event have occurred), |
| 25 |
(b) | a relevant disposal occurs (if by that time an exit event has occurred and |
| |
the individual has made a relevant claim), or |
| |
(c) | an exit event occurs (if by that time a relevant disposal has occurred and |
| |
the individual has made a relevant claim). |
| |
(5) | The amount of income treated as received when a chargeable event occurs is |
| 30 |
| |
(a) | the total amount or value of all non-taxable consideration received by |
| |
the individual for relevant disposals, and |
| |
(b) | the amount (if any) by which the individual’s claimed film-related |
| |
losses exceed the individual’s capital contribution. |
| 35 |
| The calculation in this subsection is made immediately after the chargeable |
| |
event occurs and is subject to section 736. |
| |
(6) | For the purposes of this section it does not matter— |
| |
(a) | if the individual (or anyone else) is still carrying on the trade when a |
| |
chargeable event occurs, or |
| 40 |
(b) | if the individual receives both non-taxable and taxable consideration |
| |
| |
731 | Meaning of “non-taxable consideration” etc |
| |
(1) | This section applies for the purposes of section 730. |
| |
|
| |
|
| |
|
(2) | Consideration is non-taxable if (apart from section 729) it is not chargeable to |
| |
| |
(3) | Non-taxable consideration from which a deduction within subsection (4) is |
| |
made is treated as received free of the deduction. |
| |
(4) | A deduction is within this subsection if it is in consideration of any person’s |
| 5 |
agreeing to, or facilitating, any relevant disposal or exit event. |
| |
732 | Meaning of “disposal of a right of the individual to profits” etc |
| |
(1) | For the purposes of section 730 any reference to a disposal of a right of an |
| |
individual to profits arising from a trade includes, in particular, any of events |
| |
| 10 |
(2) | Event A is the disposal, giving up or loss by— |
| |
| |
(b) | a firm in which the individual is a partner, |
| |
| of a right arising from the trade to income (or any part of any income). |
| |
| It does not matter if the right is disposed of, given up or lost as part of a larger |
| 15 |
disposal, giving up or loss. |
| |
(3) | Event B is the disposal, giving up or loss of the individual’s interest in a firm |
| |
that carries on the trade (including the dissolution of the firm). |
| |
(4) | Event C is a default in the payment of income to which— |
| |
| 20 |
(b) | a firm in which the individual is a partner, |
| |
| has a right arising from the trade. |
| |
(5) | Event D is a change in the individual’s entitlement to any profits or losses |
| |
arising from the trade the effect of which is that— |
| |
(a) | the individual’s share of any profits is reduced (including to nil), or |
| 25 |
(b) | the individual becomes entitled to a share, or a greater share, of any |
| |
losses without becoming entitled to a corresponding share of profits. |
| |
(6) | The changes covered by event D include cases where there is an agreement |
| |
under which the individual is entitled— |
| |
(a) | to a particular share of any profits or losses arising from the trade in a |
| 30 |
period (including a nil share), and |
| |
(b) | to a different share of any such profits or losses in a succeeding period |
| |
| |
(7) | In such cases the change in the individual’s entitlement is treated for the |
| |
purposes of section 730 as occurring at the beginning of the succeeding period. |
| 35 |
733 | Meaning of “film-related losses” etc |
| |
(1) | This section applies for the purposes of sections 730, 734 and 735. |
| |
(2) | A loss is a “film-related loss” if the calculation of profits or losses that it results |
| |
from is made in accordance with any provision of Chapter 9 of Part 2 of ITTOIA |
| |
| 40 |
(3) | “The individual’s claimed film-related losses” means— |
| |
|
| |
|