|
| |
|
(a) | the total amount of film-related losses made by the individual in the |
| |
trade so far as they are losses for which the individual has made a |
| |
| |
(b) | the amount of any relevant recovered relief. |
| |
(4) | “The amount of any relevant recovered relief” means— |
| 5 |
| |
| |
(5) | Amount A is the total amount of income treated as received by the individual |
| |
under section 725 (recovery of excess relief) as a result of the application of that |
| |
section in relation to claims for relief for losses made by the individual in the |
| 10 |
| |
(6) | Amount B is the total amount of film-related losses within subsection (7) for |
| |
which the individual has made a relevant claim. |
| |
(7) | A loss is within this subsection if it is made by the individual in the trade— |
| |
(a) | in a tax year at a time during which the individual carries on the trade |
| 15 |
as a member of an LLP or as a limited partner, or |
| |
(b) | in an early tax year during which the individual carries on the trade as |
| |
| |
(8) | Expressions used in subsection (7) are to be read as if contained in Chapter 3 of |
| |
| 20 |
(9) | Subsection (10) applies if— |
| |
(a) | the individual has made a relevant claim for a film-related loss made in the |
| |
trade as a partner in a firm, and |
| |
(b) | the firm is carrying on, or has carried on, more than one trade. |
| |
(10) | For the purpose of determining the individual’s claimed film-related losses— |
| 25 |
(a) | apply subsection (3)(a) in relation to each of the trades and then add the results |
| |
| |
(b) | apply subsection (5) as if the reference to the trade were a reference to any of |
| |
| |
(c) | apply subsections (6) and (7) in relation to each of the trades and then add the |
| 30 |
| |
734 | Meaning of “capital contribution” |
| |
(1) | This section applies for the purposes of section 730. |
| |
(2) | The individual’s capital contribution is the amount which the individual has |
| |
contributed to the trade as capital less so much of that amount (if any) as is |
| 35 |
| |
| This is subject to subsection (3). |
| |
(3) | If the individual has made a relevant claim for a film-related loss made in the |
| |
trade as a partner in a firm, the individual’s capital contribution is the amount |
| |
which the individual has contributed to the firm as capital less so much of that |
| 40 |
amount (if any) as is within subsection (6). |
| |
(4) | In particular, the individual’s share of any profits of the firm is to be included |
| |
for the purposes of subsection (3) in the amount which the individual has |
| |
|
| |
|
| |
|
contributed to the firm as capital so far as that share has been added to the |
| |
| |
(5) | In subsection (4) the reference to profits are to profits calculated in accordance |
| |
with generally accepted accounting practice (before any adjustment required |
| |
or authorised by law in calculating profits for income tax purposes). |
| 5 |
(6) | An amount of capital is within this subsection if it is an amount which— |
| |
(a) | the individual has previously drawn out or received back, |
| |
(b) | the individual is entitled to draw out or receive back, |
| |
(c) | another person has reimbursed to the individual, or |
| |
(d) | the individual is entitled to require another person to reimburse to the |
| 10 |
| |
(7) | But if a chargeable event occurs, anything treated for the purposes of section |
| |
730(5)(a) as consideration received by the individual for a relevant disposal is |
| |
not to be treated as capital within subsection (6) in calculating the individual’s |
| |
capital contribution for the purposes of section 730(5)(b). |
| 15 |
| |
(a) | any reference to drawing out, receiving back or reimbursing an amount |
| |
is to doing so directly or indirectly, |
| |
(b) | any reference to drawing out or receiving back an amount does not |
| |
include drawing out or receiving back an amount which, because of its |
| 20 |
being drawn out or received back, is chargeable to income tax as profits |
| |
| |
(c) | any reference to reimbursing an amount includes discharging or |
| |
assuming all or part of a liability of the individual, |
| |
| but the express provision made by paragraph (c) does not affect what counts |
| 25 |
as the receipt back or reimbursement of an amount. |
| |
(9) | This section needs to be read with any regulations made under section 735 |
| |
(specified amounts to be excluded in calculating a partner’s capital |
| |
contribution for the purposes of section 730). |
| |
735 | Exclusion of amounts in calculating capital contribution by a partner |
| 30 |
(1) | This section applies if an individual makes a relevant claim for a film-related |
| |
loss made by the individual in a trade as a partner in a firm. |
| |
(2) | The Commissioners for Her Majesty’s Revenue and Customs may by |
| |
regulations provide that any amount of a specified description is to be |
| |
excluded in calculating the individual’s capital contribution for the purposes |
| 35 |
| |
(3) | “Specified” means specified in the regulations. |
| |
| |
(a) | make provision having retrospective effect, |
| |
(b) | contain incidental, supplemental, consequential and transitional |
| 40 |
provision and savings, and |
| |
(c) | make different provision for different cases or purposes. |
| |
(5) | The provision which may be made as a result of subsection (4)(b) includes |
| |
provision amending or repealing any provision of an Act passed before FA |
| |
| 45 |
|
| |
|
| |
|
(6) | No regulations may be made under this section unless a draft of them has been |
| |
laid before and approved by a resolution of the House of Commons. |
| |
736 | Prohibition against double counting |
| |
(1) | Subsections (2) and (3) apply for the purpose of calculating the amount of |
| |
income received under section 730 on a chargeable event in respect of the |
| 5 |
individual and the trade. |
| |
(2) | If chargeable events have previously occurred in respect of the individual and |
| |
the trade, any consideration taken into account in calculating the amount of |
| |
income received on an earlier chargeable event is left out of account. |
| |
(3) | If chargeable events have previously occurred in respect of the individual and |
| 10 |
the trade, the amount of income received as a result of section 730(5)(b) is |
| |
reduced (but not below nil) by the total amount of income received on earlier |
| |
chargeable events as a result of that provision. |
| |
(4) | In a case to which section 733(10) (cases in which firm is carrying on, or has |
| |
carried on, more than one trade) applies— |
| 15 |
(a) | subsections (2) and (3) of this section have effect as if references to the |
| |
trade were references to any of the firm’s trades, and |
| |
(b) | if chargeable events in respect of the individual and any of the firm’s |
| |
trades occur at the same time, to find the total amount of income |
| |
received under section 730 at that time on those chargeable events— |
| 20 |
(i) | calculate separately the income received on each chargeable |
| |
event ignoring the other chargeable events, |
| |
(ii) | add the results from sub-paragraph (i) together, and |
| |
(iii) | reduce the total amount of income resulting from sub- |
| |
paragraph (ii) so far as necessary to ensure that no amount is |
| 25 |
included more than once in that total. |
| |
Individuals in partnership claiming relief for licence-related trading losses |
| |
737 | Charge to tax on income treated as received under section 738 |
| |
(1) | Income tax is charged on income treated as received by an individual under |
| |
| 30 |
(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. |
| |
738 | Partners claiming relief for licence-related trading losses |
| 35 |
(1) | This section applies if— |
| |
(a) | an individual carries on a trade as a non-active partner during an early |
| |
| |
(b) | the individual makes a loss in the trade in that tax year for which the |
| |
individual claims sideways relief or capital gains relief (a “relevant |
| 40 |
| |
|
| |
|
| |
|
(c) | the loss derives to any extent from expenditure incurred in the trade in |
| |
exploiting a licence acquired in carrying on the trade, and |
| |
(d) | there is a relevant disposal of the licence. |
| |
(2) | For the purposes of this section and section 739 there is a relevant disposal of |
| |
the licence whenever the individual receives non-taxable consideration for— |
| 5 |
(a) | a disposal of the licence, or |
| |
(b) | a disposal of a right to income under an agreement related to or |
| |
| |
(3) | If one or more chargeable events occur in any tax year, the individual is treated |
| |
as receiving an amount of income in the tax year. |
| 10 |
| The income is treated as arising otherwise than as profits of the trade. |
| |
(4) | For the purposes of this section and section 739 a chargeable event occurs |
| |
| |
(a) | there is a relevant disposal of the licence (if by that time the individual |
| |
has made a relevant claim), or |
| 15 |
(b) | the individual makes a relevant claim (if by that time there has been a |
| |
relevant disposal of the licence). |
| |
(5) | For the purposes of this section and section 739 consideration is non-taxable |
| |
| |
(a) | (apart from section 737) it is not chargeable to income tax, and |
| 20 |
(b) | its receipt is not an exit event for the purposes of section 730. |
| |
(6) | For the purposes of this section and section 739 it does not matter— |
| |
(a) | if the individual (or anyone else) is still carrying on the trade when a |
| |
| |
(b) | if the individual receives both non-taxable and taxable consideration |
| 25 |
for a relevant disposal of the licence, or |
| |
(c) | if a relevant disposal of the licence is part of a larger disposal. |
| |
739 | Calculation of amount of income treated as received by the individual |
| |
| The amount of income treated under section 738 as received by the individual |
| |
in the tax year is calculated by taking the following steps. |
| 30 |
| |
| |
| Calculate, at the end of the tax year, the total amount of the claimed losses (so |
| |
far as relating to the licence) made by the individual in the trade in any early |
| |
tax year during which the individual carried on the trade as a non-active |
| 35 |
| |
| |
| |
| Calculate, at the end of the tax year, the total amount of the profits (so far as |
| |
relating to the licence) made by the individual in the trade in any tax year. |
| 40 |
| |
| |
| Deduct the total calculated at Step 2 from the total calculated at Step 1. |
| |
| The result is “the net licence-related loss”. |
| |
| If the net licence-related loss is nil or a negative figure— |
| 45 |
(a) | the income treated as received in the tax year is nil, and |
| |
|
| |
|
| |
|
(b) | ignore Steps 4 and 5. |
| |
| |
| |
| Calculate, at the end of the tax year, the total amount or value of all non-taxable |
| |
consideration received by the individual for relevant disposals (including |
| 5 |
consideration received in previous tax years). |
| |
| |
| |
| |
(a) | the net licence-related loss, or |
| 10 |
(b) | if less, the total calculated at Step 4, |
| |
| the total amount of all income treated under section 738 as received by the |
| |
individual in previous tax years as a result of chargeable events. |
| |
| The result is the amount of the income treated as received in the tax year. |
| |
| (If the result is a negative figure, the income is nil.) |
| 15 |
740 | Supplementary provision relating to calculation in section 739 |
| |
(1) | This section applies for the purposes of section 739. |
| |
(2) | For the purposes of Step 1, the amount of a loss made in a tax year that relates |
| |
to the licence is so much of the loss in the tax year as derives from expenditure |
| |
incurred in the trade in exploiting the licence. |
| 20 |
(3) | The amount of the loss that derives from such expenditure is determined on a |
| |
just and reasonable basis. |
| |
(4) | For the purposes of Step 1, a loss is a claimed loss if the individual has claimed |
| |
sideways relief or capital gains relief for the loss. |
| |
(5) | For the purposes of Step 2, the amount of profits made in a tax year that relates |
| 25 |
to the licence is so much of the individual’s profits from the trade in the tax |
| |
year as derives from income arising from an agreement related to or containing |
| |
| |
(6) | The amount of the profits that derives from such income is determined on a just |
| |
| 30 |
741 | Meaning of “disposal of the licence” etc |
| |
(1) | For the purposes of section 738 any reference to— |
| |
(a) | a disposal of a licence acquired in carrying on a trade, or |
| |
(b) | a disposal of a right to income under an agreement related to or |
| |
containing a licence acquired in carrying on a trade (“a licence-related |
| 35 |
| |
| includes, in particular, any of events A to E. |
| |
(2) | Event A is the revocation of the licence. |
| |
(3) | Event B is the disposal, giving up or loss of— |
| |
(a) | a right under the licence, or |
| 40 |
(b) | a right to income (or any part of any income) under a licence-related |
| |
| |
| by the individual or by a firm in which the individual is a partner. |
| |
|
| |
|
| |
|
| It does not matter if the right is disposed of, given up or lost as part of a larger |
| |
disposal, giving up or loss. |
| |
(4) | Event C is the disposal, giving up or loss of the individual’s interest in a firm |
| |
that has the licence or a right to income under a licence-related agreement |
| |
(including the dissolution of the firm). |
| 5 |
(5) | Event D is a default in the payment of income to which— |
| |
| |
(b) | a firm in which the individual is a partner, |
| |
| has a right under a licence-related agreement. |
| |
(6) | Event E is a change in the individual’s entitlement to any profits or losses |
| 10 |
relating to the licence the effect of which is that— |
| |
(a) | the individual’s share of any profits is reduced (including to nil), or |
| |
(b) | the individual becomes entitled to a share, or a greater share, of any |
| |
losses without becoming entitled to a corresponding share of profits. |
| |
(7) | The changes covered by event E include cases where there is an agreement |
| 15 |
under which the individual is entitled— |
| |
(a) | to a particular share of any profits or losses relating to the licence in a |
| |
period (including a nil share), and |
| |
(b) | to a different share of any such profits or losses in a succeeding period |
| |
| 20 |
(8) | In such cases the change in the individual’s entitlement is treated for the |
| |
purposes of section 738 as occurring at the beginning of the succeeding period. |
| |
(9) | For the purposes of this section— |
| |
(a) | references to any profits relating to the licence are to any profits |
| |
deriving to any extent from income to which the individual has a right |
| 25 |
under a licence-related agreement, and |
| |
(b) | references to any losses relating to the licence are to losses deriving to |
| |
any extent from expenditure incurred in exploiting the licence. |
| |
| |
(1) | References in sections 738 and 739 to an individual carrying on a trade as a non- |
| 30 |
active partner in an early tax year are to be read as if those sections were |
| |
contained in Chapter 3 of Part 4 (see, in particular, section 112). |
| |
(2) | But for that purpose, section 112(1)(b) (which contains a requirement that the |
| |
individual does not carry on the trade as a limited partner at any time during |
| |
the tax year) is treated as if it were omitted. |
| 35 |
(3) | For the purposes of sections 738 to 741 an agreement is related to a licence if the |
| |
agreement and licence are entered into under the same arrangement |
| |
(regardless of when the agreement or licence is entered into). |
| |
(4) | For the purposes of sections 738 to 741 an agreement, or part of an agreement, |
| |
is not prevented from being a licence merely because it imposes an obligation |
| 40 |
to do a thing (rather than merely gives authority to do it). |
| |
| References to exploiting a licence are to be read in that light. |
| |
|
| |
|
| |
|
| |
Income tax liability: miscellaneous rules |
| |
| |
Limits on liability to income tax of non-UK residents |
| |
| 5 |
| |
(1) | This Chapter provides for limits on the liability to income tax of non-UK |
| |
| |
(2) | See sections 744 to 747 in the cases of— |
| |
(a) | a non-UK resident, other than a company, and |
| 10 |
(b) | a non-UK resident company liable as a trustee. |
| |
(3) | See sections 748 and 749 in the case of a non-UK resident company which is |
| |
liable otherwise than as a trustee. |
| |
Limit for non-UK resident individuals, trustees etc |
| |
744 | Limit on liability to income tax of non-UK residents |
| 15 |
(1) | This section applies to income tax to which— |
| |
(a) | a non-UK resident, other than a company, is liable, or |
| |
(b) | a non-UK resident company is liable as a trustee. |
| |
(2) | Subsection (1) is subject to section 745 (case where limit not to apply). |
| |
(3) | The non-UK resident’s liability to income tax for a tax year is limited to the sum |
| 20 |
| |
(4) | Amount A is the sum of— |
| |
(a) | any sums representing income tax deducted from the non-UK |
| |
resident’s disregarded income for the tax year (see section 746), |
| |
(b) | any sums representing income tax that are treated as deducted from or |
| 25 |
paid in respect of that income, and |
| |
(c) | any tax credits in respect of that income. |
| |
(5) | Amount B is the amount that, apart from this section, would be the non-UK |
| |
resident’s liability to income tax for the tax year, if the following were left out |
| |
| 30 |
(a) | the non-UK resident’s disregarded income for the tax year, and |
| |
(b) | any relief mentioned in subsection (6) to which the non-UK resident is |
| |
entitled for the tax year as a result of— |
| |
(i) | section 56(3) or 460(3) of this Act or section 278(2) of ICTA |
| |
(residence etc of claimants), or |
| 35 |
(ii) | double taxation arrangements. |
| |
(6) | The reliefs referred to in subsection (5) are— |
| |
|
| |
|