Income Tax Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
523

      (2)
For subsections (1) and (2) substitute—
“(1)
In the Corporation Tax Acts “recognised stock exchange” has the
same meaning as in the Income Tax Acts (see section 939 of ITA
2007).”
      (3)
In subsection (3) for “Tax Acts” substitute “Corporation Tax Acts”.
5
229
In section 842(1) (investment trusts) for “Tax Acts” substitute “Corporation
Tax Acts”.
230
Omit section 842AA (venture capital trusts).
231
In section 842A(1) (meaning of “local authority) for “Tax Acts” substitute
“Corporation Tax Acts”.
10
232   (1)
Amend section 842B (meaning of “investment LLP” and “property
investment LLP”) as follows.
      (2)
In subsection (1)—
(a)
for “this Act” substitute “the Corporation Tax Acts”, and
(b)
omit paragraph (a) and the “and” immediately after it.
15
      (3)
In subsection (2) omit “an investment LLP or”.
      (4)
In the sidenote omit ““investment LLP” and”.
233   (1)
Amend Schedule 14 (provisions ancillary to section 266) as follows.
      (2)
In paragraph 2 after sub-paragraph (1) insert—
   “(1A)
In sub-paragraph (1)(a) “industrial assurance business” means
20
any industrial assurance business within the meaning given by—
(a)
section 1(2) of the Industrial Assurance Act 1923, or
(b)
Article 3(1) of the Industrial Assurance (Northern Ireland)
Order 1979,

which was carried on before 1 December 2001.”
25
      (3)
In paragraph 6(1) for “subsections (6) and (7)” substitute “subsection (7)”.
      (4)
In paragraph 8 after sub-paragraph (3) insert—
   “(3A)
In sub-paragraph (3) “industrial assurance business” means any
industrial assurance business within the meaning given by—
(a)
section 1(2) of the Industrial Assurance Act 1923, or
30
(b)
Article 3(1) of the Industrial Assurance (Northern Ireland)
Order 1979,

which was carried on before 1 December 2001.”
234
In Part 1 of Schedule 15 (qualifying policies for the purposes of section 267)
after paragraph 20 insert—
35
“Meaning of “industrial assurance business”
20A
In this Part of this Schedule “industrial assurance business” means
any industrial assurance business within the meaning given by—
(a)
section 1(2) of the Industrial Assurance Act 1923, or
(b)
Article 3(1) of the Industrial Assurance (Northern Ireland)
40
Order 1979,

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
524


which was carried on before 1 December 2001.”
235
Omit Part 1 of Schedule 15B (venture capital trusts: relief from income tax).
236
Omit Schedule 16 (collection of income tax on company payments).
237
In paragraph 2(b) of Schedule 19B (petroleum extraction activities:
exploration expenditure supplement) after “section 837B” insert “of this Act
5
and section 937 of ITA 2007”.
238   (1)
Amend Schedule 20 (charities: qualifying investments and loans) as follows.
      (2)
In paragraph 8 for the words from “for corporation tax” to the end substitute
“section 56(5)”.
      (3)
In paragraph 9(1) for “charity”, in both places where it occurs, substitute
10
“charitable company”.
      (4)
In paragraph 10(1)—
(a)
in paragraph (b) for “charity”, in both places where it occurs,
substitute “charitable company”, and
(b)
in paragraph (d) for “charity”, in both places where it occurs,
15
substitute “charitable company”.
      (5)
In the heading for “Charities” substitute “Charitable companies”.
239   (1)
Amend Schedule 23A (manufactured dividends and interest) as follows.
      (2)
In paragraph 1(1)—
(a)
omit the definition of “interest manufacturer”,
20
(b)
in the definition of “manufactured dividend”, “manufactured
interest” and “manufactured overseas dividend” omit “,
“manufactured interest”” and “, 3”, and
(c)
after that definition insert—
““manufactured interest” means an amount—
25
(a)
which is representative of a periodical
payment of interest on United Kingdom
securities, and
(b)
which, under a contract or other
arrangements for the transfer of the securities,
30
one of the parties is required to pay to the
other;”.
      (3)
In paragraph 2 (manufactured dividends on UK equities: general)—
(a)
in sub-paragraph (2) before “Tax” insert “Corporation”,
(b)
in sub-paragraph (3)(b) before “Tax” insert “Corporation”,
35
(c)
omit sub-paragraph (3)(c) and the “and” immediately before it,
(d)
in sub-paragraph (6)(a) omit “to which sub-paragraph (3) above
applies”,
(e)
in sub-paragraph (6) after paragraph (a) insert “, and
(aa)
the dividend manufacturer is a non-UK resident
40
company within the charge to corporation tax,”,
and
(f)
in sub-paragraph (7)(c) after “sub-paragraph (3)(b) above” insert “or
section 573(2) of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
525

      (4)
Omit paragraphs 2A to 3A (deductibility of manufactured payment in case
of manufacturer of UK equities; manufactured interest on UK securities:
general; and manufactured interest on gilt-edged securities etc).
      (5)
In paragraph 4 (manufactured overseas dividends)—
(a)
omit sub-paragraphs (2) to (3B),
5
(b)
in sub-paragraph (4)—
(i)
for “sub-paragraph (2) above” substitute “section 855(2) of
ITA 2007 (amount of income tax to be deducted at source)”,
(ii)
for “sub-paragraph (3) above” substitute “section 856 of that
Act (income tax to be accounted for and paid)”,
10
(iii)
for “Tax Acts” substitute “Corporation Tax Acts”,
(iv)
omit the words from “as they apply” to “branch or agency in
the United Kingdom”,
(v)
in paragraph (a) for “persons” substitute “companies”, for
“him” substitute “the recipient” and for “under sub-
15
paragraph (2) above” substitute “under section 855(2) of ITA
2007”, and
(vi)
in paragraph (b) for “persons” substitute “companies” and
for “him” substitute “the recipient”,
(c)
in sub-paragraph (5) omit paragraph (a),
20
(d)
omit sub-paragraph (6),
(e)
omit sub-paragraphs (7) and (7AA), and
(f)
in sub-paragraph (9) before “Tax” insert “Corporation”.
      (6)
In paragraph 7 (irregular manufactured payments)—
(a)
in sub-paragraph (1)—
25
(i)
omit “manufactured interest or”,
(ii)
omit “3 or”,
(iii)
omit “interest or”,
(iv)
omit “, as the case may be” where it occurs for the first time,
(v)
omit “, 3(1)”,
30
(vi)
for “Tax Acts” substitute “Corporation Tax Acts”, and
(vii)
for “paragraphs 2 or 3” substitute “paragraph 2”,
(b)
in sub-paragraph (1A) omit “manufactured interest or”,
(c)
in sub-paragraph (3)—
(i)
for “Tax Acts” substitute “Corporation Tax Acts”,
35
(ii)
omit “3(1) or”,
(iii)
omit “manufactured interest or”, and
(iv)
omit “3 or”, and
(d)
in sub-paragraph (4)(b) omit “or set off” and “income or”.
      (7)
In paragraph 7A(10) for the definition of “tax advantage” substitute—
40
““tax advantage” has the meaning given by section 840ZA;”.
      (8)
In paragraph 8 (dividend manufacturing regulations: general)—
(a)
in sub-paragraph (1)—
(i)
omit “, manufactured interest” in both places where it occurs,
(ii)
omit “, interest manufacturers”,
45
(iii)
for “2 to 4” substitute “2 and 4”, and
(iv)
before “Tax Acts” insert “Corporation”,

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
526

(b)
in sub-paragraph (1A)—
(i)
before “Tax Acts” insert “Corporation”, and
(ii)
omit “or the 1992 Act”,
(c)
in sub-paragraph (2)—
(i)
omit paragraphs (c) and (d),
5
(ii)
omit “or to”, and
(iii)
omit “, manufactured interest or manufactured overseas
dividends”,
(d)
omit sub-paragraph (2A), and
(e)
in sub-paragraph (3)—
10
(i)
in paragraph (a) after “apply” insert “for corporation tax
purposes”, and
(ii)
omit paragraph (b).
240
In Schedule 28AA (provision not at arm’s length) in paragraph 5(7) for
paragraphs (a) and (b) substitute—
15
“(a)
disregarded income within the meaning given by section
746 of ITA 2007 (limits on liability to income tax of non-UK
residents), or
(b)
disregarded company income within the meaning given
by section 749 of that Act.”
20
241
Omit Schedule 28B (venture capital trusts: meaning of “qualifying holding”).
Part 2
Other enactments
Finance Act 1950 (c. 15)
242
Omit sections 39 and 40 of the Finance Act 1950 (treatment of enemy debts
25
etc written off during World War II).
Chevening Estate Act 1959 (c. 49)
243
In section 2(1A)(a) of the Chevening Estate Act 1959 (provisions as to income
tax, estate duty and stamp duty) for “section 505(1A) of the Income and
Corporation Taxes Act 1988” substitute “section 533(2) of the Income Tax Act
30
2007”.
Taxes Management Act 1970 (c. 9)
244
The Taxes Management Act 1970 is amended as follows.
245
In section 6(1) (declarations on taking office) at the end of paragraph (c) add
“or section 637 of ITA 2007”.
35
246
In section 7(6) (notice of liability to income tax and capital gains tax) for
“lower rate” substitute “savings rate”.
247   (1)
Amend section 12AB(1) (partnership return to include partnership
statement) as follows.
      (2)
In paragraph (a)—
40
(a)
insert the word “and” at the end of sub-paragraph (ii), and

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
527

(b)
omit sub-paragraph (iv) and the “and” immediately before it.
      (3)
In paragraph (b) for “tax, credit or charge” substitute “tax or credit”.
248
In section 12B(4A)(a) (records to be kept for purposes of returns) for sub-
paragraph (ii) substitute—
“(ii)
section 495(1) or 908(2) or (4) of ITA 2007 (statements
5
about deduction of income tax),”.
249   (1)
Amend section 17 (interest paid or credited by banks etc without deduction
of income tax or after deduction of income tax) as follows.
      (2)
In subsection (1) after “bank” insert “or building society”.
      (3)
In subsection (1A) for “section 840A of the principal Act” substitute “section
10
925 of ITA 2007”.
      (4)
After subsection (6) insert—
“(7)
In the application of this section in relation to building societies,
references to interest include references to dividends.

For this purpose “dividend” includes any distribution (whether or
15
not described as a dividend).”
      (5)
In the sidenote after “banks” insert “, building societies”.
250
In section 21(5A) (transactions in securities etc) for “Schedule 23A to the
principal Act” substitute “Chapter 2 of Part 11 or Chapter 9 of Part 14 of ITA
2007”.
20
251
In section 24(3A) (power to obtain information as to income from securities)
for “section 840A of the principal Act” substitute “section 925 of ITA 2007”.
252
In section 31C(2)(b) (appeals: appeals to Special Commissioners) for “section
350 of the principal Act” substitute “section 896(3) of ITA 2007.
253
In section 36(3A) (fraudulent or negligent conduct)—
25
(a)
after “section 257BA of the principal Act” insert “or “any of sections
47 to 49 of ITA 2007”, and
(b)
for “(elections as to transfer of married couple’s allowance)”
substitute “(tax reductions for married couples and civil partners:
elections to transfer relief)”.
30
254   (1)
Amend section 37A (effect of assessment where allowances transferred) as
follows.
      (2)
For “income tax reduction or deduction from total income” in both places
where it occurs substitute “deduction from net income or tax reduction”.
      (3)
After “spouse” insert “or civil partner”.
35
      (4)
After “the principal Act” insert “or section 39, 51 or 52 of ITA 2007”.
255
In section 43A(2A) (further assessments: claims etc)—
(a)
in paragraph (a) after “section 257BA of the principal Act” insert “or
any of sections 47 to 49 of ITA 2007”,
(b)
in paragraph (a) for “(election as to transfer of married couple’s
40
allowance)” substitute “(tax reductions for married couples and civil
partners: elections to transfer relief)”, and
(c)
in paragraph (b) for “that Act” substitute “the principal Act”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
528

256   (1)
Amend section 46B (questions to be determined by Special Commissioners)
as follows.
      (2)
In subsection (4)—
(a)
in paragraph (c) for “sections 740 and 743(1) of the principal Act”
substitute “sections 653, 660 and 664 of ITA 2007”, and
5
(b)
in paragraph (d) for “of that Act” substitute “of the principal Act”.
      (3)
In subsection (5) after paragraph (d) insert “, or
(e)
section 947 of ITA 2007,”.
257   (1)
Amend section 46C as follows.
      (2)
In subsection (1)(b) omit “of the principal Act”.
10
      (3)
In subsection (3)—
(a)
omit “of the principal Act”,
(b)
in paragraph (b) after “460” insert “of the principal Act”,
(c)
in paragraph (c) after “467” insert “of the principal Act”,
(d)
in paragraph (d) for “sections 527 and 536 (reliefs in respect of
15
royalties)” substitute “527 of the principal Act (spreading of patent
royalty receipts)”,
(e)
in paragraph (e) after “Part XVIII” insert “of the principal Act”, and
(f)
after that paragraph insert—
“(f)
Part 10 of ITA 2007 (charitable trusts: claims for
20
exemption);
(g)
sections 461 and 841 of ITA 2007 (reliefs in respect of
royalties).”
258
In section 55(1) (recovery of tax not postponed)—
(a)
omit paragraph (c), and
25
(b)
in paragraph (d) for “that Act” substitute “the principal Act”.
259
For section 87 (interest on income tax on company payments) substitute—
“87
Interest on overdue income tax deducted at source
(1)
Income tax which is assessable under Chapter 15 of Part 14 of ITA
2007 carries interest at the rate applicable under section 178 of the
30
Finance Act 1989 from the date when it was due under section 884 of
ITA 2007 until payment.
(2)
Subsection (1) applies—
(a)
whether or not an assessment is made, and
(b)
whether or not income tax which is assessed has been paid
35
when the assessment is made.
(3)
Subsection (1) applies even if the date when the income tax should
have been paid is a non-business day as defined by section 92 of the
Bills of Exchange Act 1882.
(4)
Subsection (5) applies to any income tax which—
40
(a)
was payable under Chapter 15 of Part 14 of ITA 2007
(collection: deposit-takers, building societies and certain
companies) in respect of payments within section 879 of that
Act made in a return period,

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
529

(b)
was not paid on the date when it was due under section 884
of that Act, and
(c)
has subsequently been discharged or repaid under section
886 of that Act because the person who made the payments
received payments on which it suffered income tax by
5
deduction in a later return period.
(5)
The income tax carries interest under subsection (1) from the date
when it was due under section 884 of ITA 2007 until the earliest of—
(a)
the date when the income tax was paid,
(b)
the date when the person delivered a return for the later
10
return period, and
(c)
the expiry of 14 days after the end of that period,

but subsection (1) does not otherwise apply to the income tax.
(6)
In this section “return period” means a period for which a return is
required to be made under Chapter 15 of Part 14 of ITA 2007.”
15
260
In section 91(3)(c) (effect on interest of reliefs) for “lower rate” substitute
“savings rate”.
261   (1)
Amend section 98 (special returns etc) as follows.
      (2)
In subsection (4A)(a) for “section 350(1) of, or Schedule 16 to, the principal
Act” substitute “Chapter 15 or 16 of Part 14 of ITA 2007”.
20
      (3)
In subsection (4B) for paragraphs (a) to (d) substitute—
“(a)
the payment is made by a company, local authority or
qualifying partnership (within the meaning of section 865 of
ITA 2007) without an amount representing income tax on the
payment being deducted from it,
25
(b)
at the time the payment is made, the company, authority or
partnership—
(i)
does not believe that the payment is an excepted
payment for the purposes of Chapter 11 of Part 14 of
ITA 2007 (payments between companies etc:
30
exception from duties to deduct), or
(ii)
if it does so believe, cannot reasonably do so,
(c)
the payment is one from which tax is deductible under Part
14 of ITA 2007 unless the company, authority or partnership
reasonably believes that it is an excepted payment for the
35
purposes of Chapter 11 of that Part, and
(d)
the payment is not an excepted payment at the time the
payment is made.”
      (4)
Omit subsection (4C).
      (5)
For subsection (4D) substitute—
40
“(4D)
A payment is within this subsection if—
(a)
it is a payment from which a sum representing income tax
must be deducted under Chapter 6 (deduction from annual
payments and patent royalties) or 7 (deduction from other
payments connected with intellectual property) of Part 14 of
45
ITA 2007,