Income Tax Bill

House of Commons

Session 2006 - 07
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Income Tax Bill

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
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(3)
For the purposes of section 993 “trustee”, in the case of a settlement in relation
to which there would be no trustees apart from this subsection, means any
person—
(a)
in whom the property comprised in the settlement is for the time being
vested, or
5
(b)
in whom the management of that property is for the time being vested.

Section 466(4) does not apply for the purposes of this subsection.
(4)
If any provision of section 993 provides that a person (“A”) is connected with
another person (“B”), it also follows that B is connected with A.
995
Meaning of “control”
10
(1)
This section has effect for the purposes of the provisions of the Income Tax Acts
which apply this section.
(2)
In relation to a body corporate (“company A”), “control” means the power of a
person (“P”) to secure—
(a)
by means of the holding of shares or the possession of voting power in
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relation to that or any other body corporate, or
(b)
as a result of any powers conferred by the articles of association or other
document regulating that or any other body corporate,

that the affairs of company A are conducted in accordance with P’s wishes.
(3)
In relation to a partnership, “control” means the right to a share of more than
20
half the assets, or of more than half the income, of the partnership.
996
Meaning of “farming” and related expressions
(1)
In the Income Tax Acts “farming” means the occupation of land wholly or
mainly for the purposes of husbandry, but does not include market gardening
(see subsection (5)).
25
(2)
In subsection (1) “husbandry” includes—
(a)
hop growing, and
(b)
the breeding and rearing of horses and the grazing of horses in
connection with those activities.
(3)
For the purposes of the Income Tax Acts the cultivation of short rotation
30
coppice is regarded as husbandry and not as forestry.
(4)
In the Income Tax Acts “woodlands” does not include land on which short
rotation coppice is cultivated.
(5)
In the Income Tax Acts “market gardening” means the occupation of land as a
garden or nursery for the purpose of growing produce for sale.
35
(6)
For the purposes of this section “short rotation coppice” means a perennial
crop of tree species planted at high density, the stems of which are harvested
above ground level at intervals of less than 10 years.
(7)
In the application of this section for the purposes of section 192(1) or 303(1) of
this Act or paragraph 16 of Schedule 5 to ITEPA 2003—
40
(a)
both references to the occupation of land, and the reference to land on
which short rotation coppice is cultivated, refer to land in the United
Kingdom, and

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
491

(b)
the reference to the cultivation of such coppice refers to its cultivation
in the United Kingdom.
997
Meaning of “generally accepted accounting practice” and related expressions
(1)
In the Income Tax Acts “generally accepted accounting practice” means UK
generally accepted accounting practice.
5

This is subject to subsection (3).
(2)
In the Income Tax Acts “UK generally accepted accounting practice”—
(a)
means generally accepted accounting practice in relation to accounts of
UK companies (other than IAS accounts) that are intended to give a
true and fair view, and
10
(b)
has the same meaning in relation to—
(i)
individuals,
(ii)
entities other than companies, and
(iii)
companies that are not UK companies,

as it has in relation to UK companies.
15
(3)
In relation to the affairs of a company or other entity that prepares IAS
accounts, in the Income Tax Acts “generally accepted accounting practice”
means generally accepted accounting practice in relation to IAS accounts.
(4)
In the Income Tax Acts “for accounting purposes” means for the purposes of
accounts drawn up in accordance with generally accepted accounting practice.
20
(5)
In the Income Tax Acts “international accounting standards” has the same
meaning as in the Corporation Tax Acts (see section 50(2) and (3) of FA 2004).
(6)
In this section—
“IAS accounts” means accounts prepared in accordance with
international accounting standards, and
25
“UK companies” means companies incorporated or formed under the law
of a part of the United Kingdom.
998
Meaning of “grossing up”
(1)
In the Income Tax Acts references to grossing up by reference to a rate of tax
are to calculating the amount (“the grossed up amount”) which after deduction
30
of income tax at that rate would equal the amount to be grossed up (“the net
amount”).
(2)
The grossed up amount is the sum of the net amount and the tax deducted.
(3)
The grossed up amount may also be expressed as—

where—
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GA is the grossed up amount,

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
492

NA is the net amount, and
R is the percentage rate of tax by reference to which the net amount is to
be grossed up.
999
Meaning of “local authority”
(1)
In the Income Tax Acts “local authority”, in relation to England and Wales,
5
means—
(a)
a billing authority as defined in section 69 of the Local Government
Finance Act 1992 (c. 14),
(b)
a precepting authority as defined in that section,
(c)
a body with power to issue a levy (by virtue of regulations under
10
section 74 of the Local Government Finance Act 1988 (c. 41)),
(d)
a body with power to issue a special levy (by virtue of regulations
under section 75 of that Act),
(e)
a fire and rescue authority in Wales constituted by a scheme under
section 2 of the Fire and Rescue Services Act 2004 (c. 21) or a scheme to
15
which section 4 of that Act applies,
(f)
an authority with power to make or determine a rate, or
(g)
a residuary body established by order under section 22(1) of the Local
Government Act 1992 (c. 19).
(2)
In the Income Tax Acts “local authority”, in relation to Scotland, means—
20
(a)
a council constituted under section 2 of the Local Government etc
(Scotland) Act 1994 (c. 39),
(b)
a joint board or committee within the meaning of the Local
Government (Scotland) Act 1973 (c. 65), or
(c)
an authority with power to requisition any sum from a council such as
25
is mentioned in paragraph (a).
(3)
In the Income Tax Acts “local authority”, in relation to Northern Ireland,
means—
(a)
an authority with power to make or determine a rate, or
(b)
an authority with power to issue a precept, requisition or other demand
30
for the payment of money to be raised out of a rate.
(4)
In this section “rate” means a rate—
(a)
whose proceeds are applicable for public local purposes, and
(b)
which is leviable by reference to the value of land or property.
1000
Meaning of “local authority association”
35
(1)
In the Income Tax Acts “local authority association” means any incorporated
or unincorporated association which meets conditions A and B.
(2)
Condition A is that all of its members are local authorities, groups of local
authorities or local authority associations.
(3)
Condition B is that its purpose, or primary purpose, is to protect and further
40
the general interests of local authorities or any description of local authorities.
(4)
For the purposes of condition A, a local authority, group of local authorities or
local authority association is treated as a member if it has appointed a person
to be a member or is represented by a member.

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(5)
And, in that case, the appointee or representative is treated as not being a
member for the purpose of the condition.
1001
Meaning of “offshore installation”
(1)
In the Income Tax Acts “offshore installation” means a structure which is, is to
be, or has been, put to a relevant use while in water (see subsections (3) and (4)).
5
(2)
But a structure is not an offshore installation if—
(a)
it has permanently ceased to be put to a relevant use,
(b)
it is not, and is not to be, put to any other relevant use, and
(c)
since permanently ceasing to be put to a relevant use, it has been put to
a use which is not relevant.
10
(3)
A use is a relevant use if it is—
(a)
for the purposes of exploiting mineral resources by means of a well,
(b)
for the purposes of exploration with a view to exploiting mineral
resources by means of a well,
(c)
for the storage of gas in or under the shore or the bed of any waters,
15
(d)
for the recovery of gas so stored,
(e)
for the conveyance of things by means of a pipe, or
(f)
mainly for the provision of accommodation for individuals who work
on or from a structure which is, is to be, or has been, put to any of the
above uses while in water.
20
(4)
For the purposes of this section references to a structure being put to a use
while in water are to the structure being put to a use while—
(a)
standing in any waters,
(b)
stationed (by whatever means) in any waters, or
(c)
standing on the foreshore or other land intermittently covered with
25
water.
(5)
In this section “structure” includes a ship or other vessel.
1002
Regulations about the meaning of “offshore installation”
(1)
The Treasury may by regulations make provision as to the meaning of
“offshore installation” in the Income Tax Acts.
30
(2)
The regulations may—
(a)
add to, amend or repeal any provision of section 1001,
(b)
make different provision for different purposes, and
(c)
contain incidental, supplemental, consequential and transitional
provision and savings.
35
1003
Meaning of “oil and gas exploration and appraisal”
(1)
In the Income Tax Acts “oil and gas exploration and appraisal” means activities
carried out for the purpose of—
(a)
searching for petroleum anywhere in an area,
(b)
ascertaining a petroleum-bearing area’s extent or characteristics, or
40
(c)
ascertaining its reserves of petroleum,

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Chapter 1 — Definitions
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so that it may be determined whether the petroleum is suitable for commercial
exploitation.
(2)
In this section “petroleum” has the meaning given by section 1 of the Petroleum
Act 1998 (c. 17).
1004
Meaning of “property investment LLP”
5
(1)
In the Income Tax Acts “property investment LLP” means a limited liability
partnership—
(a)
whose business consists wholly or mainly in the making of investments
in land, and
(b)
the principal part of whose income is derived from investments in land.
10
(2)
Whether a limited liability partnership is a property investment LLP is
determined for each period of account of the partnership.
1005
Meaning of “recognised stock exchange”
(1)
In the Income Tax Acts “recognised stock exchange” means—
(a)
the Stock Exchange, and
15
(b)
any stock exchange outside the United Kingdom which is for the time
being designated as a recognised stock exchange for the purposes of
this section by an order made by the Commissioners for Her Majesty’s
Revenue and Customs.
(2)
An order under this section may designate a stock exchange—
20
(a)
by name, or
(b)
by reference to any class or description of stock exchanges (including
one framed by reference to any authority or approval given in a country
outside the United Kingdom).
(3)
An order under this section may—
25
(a)
contain incidental, supplemental, consequential and transitional
provision and savings, and
(b)
vary or revoke a previous order under this section.
1006
Meaning of “research and development”
(1)
This section has effect for the purposes of the provisions of the Income Tax Acts
30
which apply this section.
(2)
“Research and development” means activities that fall to be treated as research
and development in accordance with generally accepted accounting practice.

This is subject to subsection (3).
(3)
The Treasury may by regulations specify activities which—
35
(a)
are to be treated as being “research and development” for the purposes
of this section, or
(b)
are to be treated as not being “research and development” for the
purposes of this section.
(4)
The regulations may—
40
(a)
make provision by reference to guidelines issued by the Secretary of
State, and

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Chapter 2 — Other Income Tax Acts provisions
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(b)
contain incidental, supplemental, consequential and transitional
provision and savings.
(5)
Unless otherwise expressly provided, “research and development” does not
include oil and gas exploration and appraisal.
1007
Meaning of “unit trust scheme”
5
(1)
In the Income Tax Acts “unit trust scheme” has the meaning given by section
237 of FISMA 2000.

This is subject to subsection (2).
(2)
The Treasury may by regulations provide that a unit trust scheme within the
meaning given by section 237 of FISMA 2000 is not to be a unit trust scheme for
10
the purposes of this section if the scheme is within a specified description.
(3)
The regulations may contain incidental, supplemental, consequential and
transitional provision and savings.
(4)
This section does not apply for the purposes of section 558 (approved
charitable investments).
15
Chapter 2
Other Income Tax Acts provisions
1008
Scotland
(1)
In the application of the Income Tax Acts to Scotland—
“assignment” means an assignation,
20
“estate in land” includes the land, and
“surrender” includes renunciation.
(2)
In the application of the Income Tax Acts to Scotland, any reference to property
or rights being held on trust or on trusts is a reference to the property or rights
being held in trust.
25
1009
Sources of income within the charge to income tax or corporation tax
In the Income Tax Acts a source of income is within the charge to income tax
or corporation tax if that tax—
(a)
is chargeable on the income arising from it, or
(b)
would be so chargeable if there were any income arising from it,
30
and references to a person, or income, being within the charge to income tax or
corporation tax are to be read in the same way.
1010
Application of Income Tax Acts to recognised investment exchanges
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations make provision securing that provisions in the Income Tax Acts
35
which contain references to the Stock Exchange apply—
(a)
in relation to all other recognised investment exchanges (within the
meaning of FISMA 2000), or
(b)
in relation to such of those exchanges as may be prescribed,

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Chapter 2 — Other Income Tax Acts provisions
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for such purposes and subject to such modifications as may be prescribed.
1011
References to married persons, or civil partners, living together
Individuals who are married to, or are civil partners of, each other are treated
for the purposes of the Income Tax Acts as living together unless—
(a)
they are separated under an order of a court of competent jurisdiction,
5
(b)
they are separated by deed of separation, or
(c)
they are in fact separated in circumstances in which the separation is
likely to be permanent.
1012
Relationship between rules on highest part of total income
(1)
This section makes provision about the relationship between rules requiring
10
particular income to be treated as the highest part of a person’s total income.
(2)
It has effect for the purposes of the Income Tax Acts except sections 535 to 537
of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief).
(3)
If more than one of the provisions listed in subsection (4) applies in relation to
a person, a provision mentioned earlier in the list has priority over a provision
15
mentioned later in the list.
(4)
The provisions are—
section 465A of ITTOIA 2005 (gains from contracts for life insurance etc to
be treated as highest part of total income),
section 404A of ITEPA 2003 (payments and other benefits on termination
20
of employment to be treated as highest part of total income), and
section 16 (savings and dividend income to be treated as highest part of
total income).
(5)
The provisions listed in subsection (4) have priority over—
section 619A(2) of ITTOIA 2005 (income treated as highest part of settlor’s
25
total income),
section 768(6) and (7) (income treated as arising under Chapter 3 of Part
13 to be treated as highest part of total income),
section 786(6) and (7) (income treated as arising under Chapter 4 of Part
13 to be treated as highest part of total income), and
30
any other provisions of the Income Tax Acts requiring income of any
description to be treated as the highest part of a person’s total income.
(6)
The effect of one provision having priority over another is that the second
provision has effect subject to the first.
1013
Territorial sea of the United Kingdom
35
The territorial sea of the United Kingdom is treated for the purposes of the
Income Tax Acts as part of the United Kingdom.
1014
Orders and regulations
(1)
This section applies to all powers under the Income Tax Acts of the Treasury
or the Commissioners for Her Majesty’s Revenue and Customs to make orders
40
or regulations, other than excluded powers.