Income Tax Bill

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
558

      (8)
In paragraph 9 (other reconstructions and amalgamations)—
(a)
in sub-paragraph (1) after “Taxes Act” insert “or Part 5 of ITA 2007”,
(b)
in sub-paragraph (3) after “Taxes Act” insert “or Part 5 of ITA 2007”,
and
(c)
in sub-paragraph (4)(b) for “subsection (2) of section 306 of the Taxes
5
Act” substitute “section 306(2) of the Taxes Act or section 203(1) of
ITA 2007” and for “that section” substitute “section 306 of the Taxes
Act or sections 204 and 205 of ITA 2007”.
      (9)
In paragraph 11(5) (pre-arranged exits)—
(a)
after “trading group” insert “(a)”, and
10
(b)
at the end insert “, or
(b)
is a reference to a company that meets the trading
requirement in section 181(2)(b) of ITA 2007.”
     (10)
In paragraph 13(5) (value received by investor) after “Taxes Act” insert “or
Chapter 2 of Part 5 of ITA 2007”.
15
     (11)
In paragraph 13C (provision supplemental to paragraph 13B)—
(a)
in sub-paragraph (3) for “Sub-paragraph (4) below” substitute “This
sub-paragraph”, and
(b)
for sub-paragraph (4) substitute—
    “(4)
Where either of the following applies—
20
(a)
sub-paragraph (3) above, and
(b)
section 223(3) of ITA 2007 (which makes
corresponding provision in relation to EIS relief
under Part 5 of that Act),

the person who subscribes for the shares shall not by virtue
25
of his subscription for those shares or any other shares in
the same issue be treated as making a qualifying
investment for the purposes of this Schedule.”
     (12)
In paragraph 14(3) (value received by other persons)—
(a)
after “Taxes Act”, in the first place where it occurs, insert “or Part 5
30
of ITA 2007”,
(b)
for “that Act” substitute “the Taxes Act or section 209 or 216(2)(a) of
ITA 2007”, and
(c)
after “section 300 of the Taxes Act” insert “or 214 of ITA 2007”.
     (13)
In paragraph 16 (information)—
35
(a)
in sub-paragraph (4)—
(i)
after “Taxes Act”, in the first place where it occurs, insert “or
section 203(1) of ITA 2007”, and
(ii)
after “Taxes Act”, in the second place where it occurs, insert
“or section 175(3) of ITA 2007”,
40
(b)
in sub-paragraph (4A) after “Taxes Act” insert “or section 175(3) of
ITA 2007”,
(c)
in sub-paragraph (6) after “Taxes Act” insert “or section 176(4)(b) or
(5)(b), 182(2) or (4), 183(6), 185(1), 190(1)(e) or 191(2)(c), (3), (4) or (5)
of ITA 2007”,
45
(d)
in sub-paragraph (7)—
(i)
in paragraph (a) after “Taxes Act” insert “or section 182(2) or
(4) of ITA 2007”,

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
559

(ii)
in paragraph (aa) after “Taxes Act” insert “or section 176(4)(b)
or (5)(b), 183(6) or 191(3), (4) or (5) of ITA 2007”, and
(iii)
in paragraph (c) after “Taxes Act” insert “or section 185(1),
190(1)(e) or 191(2)(c) of ITA 2007”, and
(e)
in sub-paragraph (7A)—
5
(i)
after “Taxes Act” insert “and subsections (3), (4) and (5) of
section 191 of ITA 2007”, and
(ii)
for “that Act” substitute “the Taxes Act or section 190(2) of
ITA 2007”.
     (14)
In paragraph 19(1) (interpretation)—
10
(a)
in the definition of “eligible shares” for “that Act” substitute “the
Taxes Act or means shares that meet the requirement in section 173
(2) of ITA 2007”,
(b)
in the definition of “ordinary share capital” for “the same meaning as
in the Taxes Act” substitute “the meaning given by section 923 of ITA
15
2007”,
(c)
in the definition of “qualifying business activity” after “Taxes Act”
insert “or section 179 of ITA 2007”,
(d)
for the definition of “qualifying company” substitute—
““qualifying company”, in relation to any eligible
20
shares, means a company which, in relation to those
shares, is—
(a)
a qualifying company for the purposes of
Chapter 3 of Part 7 of the Taxes Act (except
that for the purposes of this Schedule the
25
reference in section 293(1B)(b)(i) of that Act to
section 304A of that Act shall be read as a
reference to paragraph 8 above), or
(b)
a qualifying company for the purposes of Part
5 of ITA 2007 (except that for the purposes of
30
this Schedule the reference in section
184(1)(c)(i) of that Act to section 247 of that Act
shall be read as a reference to paragraph 8
above).”
(e)
in the definition of “the relevant period” for “that Act” insert “the
35
Taxes Act or section 159(2) of ITA 2007”, and
(f)
in the definition of “termination date” after “Taxes Act” insert “or
section 256 of ITA 2007”.
     (15)
In paragraph 19(3) omit the “and” immediately before paragraph (c) and
after that paragraph insert “; and
40
(d)
references to Part 5 of ITA 2007 or any provision of that
Part are to a Part or provision that applies only in relation
to shares issued on or after 6th April 2007”.
345
In paragraph 1(1)(a) of Schedule 5BA (enterprise investment scheme:
application of taper relief) after “Taxes Act” insert “or Part 5 of ITA 2007”.
45
346
In paragraph 3(1)(f) of Schedule 5C (VCTs: deferred charge on re-
investment) for “section 842AA(8) of the Taxes Act” substitute “section
281(3) of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
560

347   (1)
Amend Schedule 7C (reliefs for transfers to approved share plans) as
follows.
      (2)
In paragraph 2(6) (conditions relating to the disposal), in the definition of
“ordinary share capital” for “section 832(1) of the Taxes Act” substitute
“section 923 of ITA 2007”.
5
      (3)
In paragraph 7(1) and (3) (shares: special provision) after “Taxes Act” insert
“or Part 5 of ITA 2007”.
348
In Schedule 8 (leases), in paragraph 5(6) for “any amount chargeable to tax
under section 348 or 349 of the Taxes Act” substitute “any amount from
which a sum representing income tax is required to be deducted under Part
10
14 of ITA 2007”.
Finance (No. 2) Act 1992 (c. 48)
349
In section 28(1)(a) of the Finance (No. 2) Act 1992 (powers of inspection) after
“1988” insert “or under Part 10 of the Income Tax Act 2007”.
Tribunals and Inquiries Act 1992 (c. 53)
15
350
In paragraph 39(c) of Part 1 of Schedule 1 to the Tribunals and Inquiries Act
1992 (tribunals under direct supervision of Council) at the end insert “or
Chapter 1 of Part 12 of the Income Tax Act 2007”.
Judicial Pensions and Retirement Act 1993 (c. 8)
351
In section 3(6) of the Judicial Pensions and Retirement Act 1993 (the
20
appropriate annual rate) for “section 279(1) of the Finance Act 2004”
substitute “section 4 of the Income Tax Act 2007”.
Charities Act 1993 (c. 10)
352
In section 25A(1) and (2) of the Charities Act 1993 (meaning of terms relating
to Scotland and Northern Ireland) after “1988” insert “or Part 10 of the
25
Income Tax Act 2007”.
Finance Act 1993 (c. 34)
353
The Finance Act 1993 is amended as follows.
354
Omit section 80 (transitional relief for charities etc).
355
Omit section 118 (Scottish trusts).
30
356   (1)
Amend section 180 (underwriting profits to be earned income) as follows.
      (2)
In subsection (1) for paragraph (b) substitute—
“(b)
accordingly, shall constitute—
(i)
for the purposes of Part 4 of the Finance Act 2004,
relevant UK earnings within section 189(2)(b) of that
35
Act, and
(ii)
income in relation to which the treatment in section
769(2) of ITA 2007 does not apply.”
      (3)
In the sidenote for “earned income” substitute “relevant UK earnings etc”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
561

357
In section 182(1)(ca)(ii) (Lloyd’s underwriters: regulations) for the words
from “section 737E(2) and (8)” to the end substitute “section 569 (repos) or
613 (redemption arrangements) of ITA 2007;”.
358
In section 212 (interpretation) at the end insert “, and “ITA 2007” means the
Income Tax Act 2007”.
5
359   (1)
Amend Schedule 20A (Lloyd’s underwriters: conversion to limited liability
underwriting) as follows.
      (2)
In paragraph 2—
(a)
in sub-paragraph (2) for “The carry-forward provision” substitute
“Section 83 of ITA 2007”, and
10
(b)
omit sub-paragraphs (3) and (4).
      (3)
In paragraph 5(1), in the definition of “ordinary share capital”, for “section
832(1) of the Taxes Act 1988” substitute “section 923 of ITA 2007”.
      (4)
In paragraph 7(2) for “Section 385 of the Taxes Act 1988” substitute “Section
83 of ITA 2007”.
15
Agriculture Act 1993 (c. 37)
360
In paragraph 22(2) of Schedule 2 to the Agriculture Act 1993 (tax provisions
relating to the carrying out of approved scheme of reorganisation) for
“section 469 of the Income and Corporation Taxes Act 1988” substitute “the
Tax Acts”.
20
Finance Act 1994 (c. 9)
361   (1)
Amend paragraph 11 of Schedule 20 to the Finance Act 1994 (changes for
facilitating self-assessment etc) as follows.
      (2)
In sub-paragraph (3) for the words from “be treated” to “excess” substitute
“be chargeable for that year to an amount of income tax equal to the excess”.
25
      (3)
Omit sub-paragraph (7).
Finance Act 1995 (c.4)
362
The Finance Act 1995 is amended as follows.
363
Omit section 73 (venture capital trusts: regulations).
364
Omit section 90 (relief for post-cessation expenditure).
30
365   (1)
Amend section 127 (persons not treated as UK representatives) as follows.
      (2)
In subsection (5)(b) for the words from “section 128” to “excluded income”
substitute “Chapter 1 of Part 13 of the Income Tax Act 2007 (limits on liability
to income tax of non-UK residents) would fall (apart from the requirements
of section 752 of that Act) to be treated as disregarded income (see section
35
746 of that Act)”.
      (3)
In subsection (17) for “section 839 of the Taxes Act 1988” substitute “section
927 of the Income Tax Act 2007”.
366
Omit section 128 (limit on income chargeable on non-residents: income tax).

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
562

367   (1)
Amend section 154 (short rotation coppice) as follows.
      (2)
In subsection (1)—
(a)
omit “Subject to subsection (1A),”, and
(b)
for “Tax Acts” substitute “Corporation Tax Acts”.
      (3)
Omit subsection (1A).
5
368   (1)
Amend Schedule 22 (prevention of exploitation of Schedule 2 to ITTOIA
2005 (so far as relating to overlap profit)) as follows.
      (2)
In paragraph 5(1)(b) for the words from “section 353” to “provision)”
substitute “section 383 of the Income Tax Act 2007 (relief for interest
payments)”.
10
      (3)
In paragraph 17—
(a)
in sub-paragraph (2) for “section 839” to the end substitute “section
927 of the Income Tax Act 2007 (but as if, in subsection (4) of that
section, the words from “but this subsection” to the end were
omitted).”, and
15
(b)
in sub-paragraph (6)(a), in paragraph (ii) of the definition of
“control”, for “section 840 of that Act” substitute “section 929 of the
Income Tax Act 2007”.
Finance Act 1996 (c.8)
369
The Finance Act 1996 is amended as follows.
20
370
In section 88A(1) (loan relationships: accounting method where rate of
interest is reset) for “of Chapter 1 of Part 17” substitute “given by section
840ZA”.
371
In section 91D(11) (loan relationships: condition 2 for section 91B(6)(b)) for
“section 709(1)” substitute “section 840ZA”.
25
372   (1)
Amend section 97 (manufactured interest) as follows.
      (2)
For subsection (4) substitute—
“(4)
See sections 736B(2) and 737A(5) of the Taxes Act 1988 for cases in
which there is deemed to be a payment of an amount representative
of interest for the purposes of this section.”
30
      (3)
In subsection (4A) for “subsection (4) above” substitute “subsection (2) of
that section”.
373   (1)
Amend section 103 (interpretation of Chapter 2 of Part 4: loan relationships)
as follows.
      (2)
In subsection (1), in the definition of “retail prices index”, for “section 833(2)
35
of the Taxes Act 1988” substitute “section 923 of the Income Tax Act 2007”.
      (3)
In subsection (3B) for “section 709(1)” substitute “section 840ZA”.
374
In paragraph 13 of Schedule 9 (loan relationships for unallowable purposes)
for sub-paragraph (6) substitute—
“(6)
In this paragraph “tax advantage” has the meaning given by section
40
840ZA of the Taxes Act 1988.”

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
563

Finance (No.2) Act 1997 (c. 58)
375
The Finance (No.2) Act 1997 is amended as follows.
376
Omit section 29 (unauthorised unit trusts).
377
In section 35(3)(a) (transitional relief for charities etc) for “charity” substitute
“charitable company”.
5
Finance Act 1998 (c. 36)
378
The Finance Act 1998 is amended as follows.
379
In section 56(4) (transitional provision in connection with section 55
(construction workers supplied by agencies)) for “section 385 of the Taxes
Act 1988” substitute “section 83 of the Income Tax Act 2007”.
10
380
In section 134(5) (transfer of company’s assets to VCT) for “section 842AA of
the Taxes Act 1988” substitute “Part 6 of the Income Tax Act 2007”.
381
In section 135(5) (transfer within group to VCT) for “section 842AA of the
Taxes Act 1988” substitute “Part 6 of the Income Tax Act 2007”.
382   (1)
Amend Schedule 18 (company tax returns, assessments and related matters)
15
as follows.
      (2)
In paragraph 3 after sub-paragraph (4) insert—
    “(5)
Sub-paragraph (1)(b) has effect as if the reference to the
Corporation Tax Acts included a reference to sections 844, 845, 847
and 848 of the Income Tax Act 2007.”
20
      (3)
In paragraph 20 after sub-paragraph (3) insert—
    “(4)
In the application of this paragraph to an error relating to
information required in a return by virtue of paragraph 3(5), this
paragraph has effect as if—
(a)
the reference in sub-paragraph (1) to a tax-related penalty
25
were a reference to an amount not exceeding £3,000, and
(b)
sub-paragraphs (2) and (3) were omitted.”
      (4)
In paragraphs 22(3)(a) and 23(3)(a) for sub-paragraph (ii) substitute—
“(ii)
section 495(1) or 908(2) or (4) of the Income Tax Act
2007 (statements about deduction of income tax),”.
30
Greater London Authority Act 1999 (c.29)
383
The Greater London Authority Act 1999 is amended as follows.
384
In section 157(4) (restriction on exercise of certain powers except through a
company)—
(a)
in paragraph (a) omit “income tax and” and “and” at the end, and
35
(b)
after that paragraph insert—
“(aa)
section 771 of the Income Tax Act 2007 (exemption of
local authorities from income tax); and”.
385
In section 419(2) (taxation: certain bodies treated as a local authority)—

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
564

(a)
in paragraph (a) for “income and corporation taxes” substitute
“corporation tax”, and omit “and” at the end, and
(b)
after that paragraph insert—
“(aa)
section 771 of the Income Tax Act 2007 (exemption of
local authorities from income tax); and”.
5
Finance Act 2000 (c.17)
386
The Finance Act 2000 is amended as follows.
387
In section 38(4) (payroll deduction scheme) in the definition of “charity” for
“that Act” in the first place where it occurs substitute “the Taxes Act 1988”.
388
In section 44 (which makes provision about expenses of trustees) for
10
subsections (4) and (5) substitute—
“(5A)
This section applies if—
(a)
in a year of assessment qualifying income arises under a UK
settlement,
(b)
the qualifying income consists of charitable income and non-
15
charitable income, and
(c)
expenses of the trustees are to be used to reduce the
charitable income for the purpose of calculating a
beneficiary’s liability to corporation tax.
(5B)
The amount of those expenses which can used for that purpose is
20
limited to the amount allocated to the charitable income.
(5C)
The amount of the expenses allocated to the charitable income is
determined by apportioning them rateably between the charitable
income and the non-charitable income.
(5D)
In this section—
25
“charitable income” means income within section 628(1) or
630(1) of ITTOIA 2005,
“non-charitable income” means income which is not charitable
income, and
“qualifying income” and “UK settlement” have the same
30
meaning as in section 628 of ITTOIA 2005.”
389   (1)
Amend section 46 (exemption for small trades etc) as follows.
      (2)
In subsection (1)—
(a)
omit paragraph (a) and the “or” at the end of that paragraph, and
(b)
for “charity” substitute “charitable company”.
35
      (3)
In subsection (2) omit paragraph (a) and the “or” at the end of that
paragraph.
      (4)
In subsection (2A)—
(a)
in paragraph (a) for “, 790 or 804” substitute “or 790”,
(b)
at the end of paragraph (b) insert “and”, and
40
(c)
omit paragraph (c) and the “and” at the end of that paragraph.
      (5)
In subsection (3)—
(a)
for “a chargeable” substitute “an accounting”,