Income Tax Bill

House of Commons

Session 2006 - 07
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Income Tax Bill

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
539

140
In section 615(3) (exemption from tax in respect of certain pensions) for
“section 349(1)” substitute “Chapter 6 of Part 15 of ITA 2007 (deduction from
annual payments and patent royalties)”.
141
In section 657(2)(b) (purchased life annuities to which section 656 applies)
after “or 273” insert “of this Act or section 459 of ITA 2007”.
5
142
In section 658(4)(b) (supplementary) omit “(notwithstanding anything in
section 348)”.
143
In section 659E(1) (treatment of income from property investment LLPs) at
the end insert “(see section 1004 of ITA 2007)”.
144
Omit section 660C(3) (nature of charge on settlor).
10
145
Omit sections 685A to 687 (liability of trustees).
146   (1)
Amend section 687A (discretionary payments made by trustees to
companies) as follows.
      (2)
In subsection (1) for paragraph (b) substitute—
“(b)
sections 494 and 495 of ITA 2007 apply in relation to the
15
payment;”.
      (3)
In subsection (2)(a) for “charity” substitute “charitable company”.
      (4)
In subsection (3)—
(a)
in paragraph (a)(iii) for “paragraph 5(1) of Schedule 16” substitute
“section 952 of ITA 2007 (set off of income tax suffered against
20
income tax payable)”, and
(b)
in paragraph (c) for “section 687(2)” substitute “section 494 of ITA
2007”.
      (5)
In the sidenote for “Payments to companies under section 687” substitute
“Discretionary payments by trustees to companies”.
25
147
Omit section 689A (disregard of trustees’ expenses where beneficiary non-
UK resident).
148   (1)
Amend section 689B (order in which trustees’ expenses are to be set against
income) as follows.
      (2)
In subsection (3) for the words from “to which section 1A applies” to the end
30
substitute “of the trustees which is savings income (within the meaning of
section 18 of ITA 2007).”
      (3)
Omit subsection (4).
      (4)
At the end insert—
“(5)
This section applies for corporation tax purposes only.”
35
149
Omit sections 690 to 694.
150
Omit section 698A.
151
In section 699A(4)(b) (untaxed sums comprised in the income of the estate)
for “lower rate” substitute “savings rate”.
152
In section 701(3A) (interpretation of sections 695 to 700) for “lower rate”,
40
wherever it occurs, substitute “savings rate”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
540

153
In the heading for Chapter 1 of Part 17 (cancellation of tax advantages from
certain transactions in securities) for “TAX” substitute “CORPORATION
TAX”.
154   (1)
Amend section 703 (cancellation of tax advantage) as follows.
      (2)
In subsection (1)—
5
(a)
for “person” substitute “company”,
(b)
for “tax”, in both places where it occurs, substitute “corporation tax”,
(c)
for “he” substitute “it”, and
(d)
for “him” substitute “it”.
      (3)
In subsection (2)—
10
(a)
for “tax” substitute “corporation tax”,
(b)
for “person” substitute “company”, and
(c)
for “him” substitute “it”.
      (4)
In subsection (3)—
(a)
for “tax advantage”, in both places where it occurs, substitute
15
“corporation tax advantage”,
(b)
for “person” substitute “company”,
(c)
for “him”, in both places where it occurs, substitute “it”,
(d)
omit “in the case of corporation tax”, and
(e)
for “liability to tax” substitute “liability to corporation tax”.
20
      (5)
Omit subsection (3A).
      (6)
In subsection (9)—
(a)
for “person”, in both places where it occurs, substitute “company”,
(b)
for “him”, wherever it occurs, substitute “it”, and
(c)
for “his” substitute “its”.
25
      (7)
In subsection (10) for “person” substitute “company”.
      (8)
Omit subsection (11).
      (9)
In subsection (12)—
(a)
for “tax advantage”, in both places where it occurs, substitute
“corporation tax advantage”,
30
(b)
for “chargeable period”, in the second place where it occurs,
substitute “accounting period”, and
(c)
for “Tax Acts” substitute “Corporation Tax Acts”.
     (10)
In the sidenote for “tax” substitute “corporation tax”.
155   (1)
Amend section 704 (the prescribed circumstances) as follows.
35
      (2)
After “The circumstances mentioned in section 703(1) are” insert “as follows
(and in this section references to “the section 703(1) company” are references
to the company referred to in that section)”.
      (3)
In paragraph A—
(a)
for “person in question” substitute “section 703(1) company”,
40
(b)
in paragraph (a) for “tax” substitute “corporation tax”, and
(c)
omit from “, or” at the end of paragraph (da) to the end of paragraph
(g).

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
541

      (4)
In paragraph B(1)—
(a)
for “person in question” substitute “section 703(1) company”, and
(b)
for “him”, wherever it occurs, substitute “it”.
      (5)
In paragraph B(2) for “tax advantage” substitute “corporation tax
advantage”.
5
      (6)
In paragraph C(1)—
(a)
for “person in question”, in both places where it occurs, substitute
“section 703(1) company”,
(b)
at the end of sub-paragraph (b) add “or section 687 of ITA 2007”, and
(c)
for “he” substitute “it”.
10
      (7)
In paragraph D(1) for “person in question” substitute “section 703(1)
company”.
      (8)
In paragraph E—
(a)
in sub-paragraph (1) for “person in question” substitute “section
703(1) company”,
15
(b)
in sub-paragraph (2)—
(i)
for “person” substitute “company”,
(ii)
for “tax”, in both places where it occurs, substitute
“corporation tax”, and
(iii)
for “the year” substitute “the accounting period”, and
20
(c)
in the definition of “non-taxable” in sub-paragraph (3)—
(i)
for “person” substitute “section 703(1) company”, and
(ii)
for “tax” substitute “corporation tax”.
156   (1)
Amend section 705 (appeals against Board’s notices under section 703) as
follows.
25
      (2)
In subsection (1)—
(a)
for “person to whom” substitute “company to which”, and
(b)
for “him” substitute “it”.
      (3)
In subsection (2)—
(a)
for “he”, in the first place where it occurs, substitute “the company”,
30
and
(b)
for “he or they” substitute “the company or the Board”.
157   (1)
Amend section 705A (statement of case by tribunal for opinion of High
Court) as follows.
      (2)
In subsections (1) and (2) for “his” substitute “its”.
35
      (3)
In subsection (3) for “he” substitute “that party”.
      (4)
In subsection (5)—
(a)
for “he” and “the party requiring it” substitute “that party”, and
(b)
for “his” substitute “that party’s”.
      (5)
In subsections (10) and (11)(a) and (b) for “tax” substitute “corporation tax”.
40
158
In section 705B(1) (proceedings in Northern Ireland) for the words from “the
Taxes Acts” to “shall have effect” substitute “the Management Act and the
Corporation Tax Acts shall have effect”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
542

159   (1)
Amend section 707 (procedure for clearance in advance) as follows.
      (2)
In subsection (1)—
(a)
for “person”, wherever it occurs, substitute “company”, and
(b)
for “him”, wherever it occurs, substitute “it”.
      (3)
In subsection (3) for “person” substitute “company”.
5
160
In section 708 (power to obtain information)—
(a)
for “person”, in both places where it occurs, substitute “company”,
(b)
for “whom” substitute “which”,
(c)
for “him”, wherever it occurs, substitute “it”, and
(d)
for “his” substitute “its”.
10
161   (1)
Amend section 709 (meaning of “tax advantage” and other expressions) as
follows.
      (2)
In subsection (1) for “tax”, in each place where it occurs, substitute
“corporation tax”.
      (3)
In subsection (4)(a) for “he”, in both places where it occurs, substitute “the
15
recipient”.
      (4)
In subsection (6)(a)—
(a)
for “he”, in both places where it occurs, substitute “the recipient”,
and
(b)
for “him” substitute “the recipient”.
20
      (5)
In the sidenote for ““tax advantage”” substitute ““corporation tax
advantage””.
162
Omit sections 710 to 727A (accrued income scheme).
163   (1)
Amend section 728 (information) as follows.
      (2)
In subsection (1) for “sections 710 to 727A” substitute “Part 12 of ITA 2007
25
(accrued income profits)”.
      (3)
In subsection (2) omit the words from “In relation to transactions before” to
the end.
      (4)
In subsection (5) for “sections 710 to 727A” substitute “Part 12 of ITA 2007
(accrued income profits)”.
30
      (5)
After subsection (8) insert—
“(9)
In this section “securities” has the meaning given by section 619 of
ITA 2007.”
164   (1)
Amend section 730A (treatment of price differential on sale and repurchase
of securities) as follows.
35
      (2)
In subsections (2), (3) and (4) for “Tax Acts” substitute “Corporation Tax
Acts”.
      (3)
In subsection (7)—
(a)
for “tax” substitute “corporation tax”, and
(b)
omit the words from “, 613(4) or” to “Act 2004”.
40
165   (1)
Amend section 730B (interpretation of section 730A) as follows.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
543

      (2)
In subsection (3) for “has the same meaning as in section 737A” substitute
“means United Kingdom equities, United Kingdom securities or overseas
securities”.
      (3)
After subsection (3) insert—
“(3A)
In this section “United Kingdom equities”, “United Kingdom
5
securities” and “overseas securities” have the meanings given by
paragraph 1(1) of Schedule 23A.”
166   (1)
Amend section 730BB (exchange gains and losses on sale and repurchase of
securities) as follows.
      (2)
In subsection (7) for “this section and sections 730A, 737A and 737C”
10
substitute “the excepted provisions specified in subsection (7A) below”.
      (3)
After subsection (7) insert—
“(7A)
The excepted provisions are—
(a)
this section,
(b)
section 730A,
15
(c)
section 737A,
(d)
section 737C,
(e)
Chapter 4 of Part 11 of ITA 2007 (deemed manufactured
payments), and
(f)
Chapter 5 of Part 11 of ITA 2007 (price differences under
20
repos).”
167   (1)
Amend section 731 (application and interpretation of sections 732 to 734) as
follows.
      (2)
In subsection (2A) after “737A(5)” insert “below or section 602(1) of ITA
2007”.
25
      (3)
In subsection (9) in the definition of “securities” for “for the purposes of
sections 710 to 728” substitute “within the meaning of Chapter 2 of Part 12 of
ITA 2007 (accrued income profits)”.
168
Omit section 733(2) (persons entitled to exemptions).
169
In section 734(1) (persons other than dealers in securities) for “section 380 or
30
381” substitute “section 64 or 72 of ITA 2007”.
170
In section 736(4) (company dealing in securities: distribution materially
reducing value of holding) for “section 839 shall have effect in relation to
paragraph (b) above” substitute “, for the purposes of paragraph (b) above,
whether persons are connected is determined in accordance with section
35
839, but”.
171   (1)
Amend section 736B (deemed manufactured payments in the case of stock
lending arrangements) as follows.
      (2)
In subsection (2)—
(a)
after “that Schedule” insert “, and section 97 of the Finance Act 1996
40
(loan relationships: manufactured interest),”, and
(b)
after “apply” insert “for corporation tax purposes”.
      (3)
In subsection (2A)—
(a)
in paragraph (a) omit “income tax or”, and

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
544

(b)
in paragraph (b) omit “total income or, as the case may be,”.
172   (1)
Amend section 736C (deemed interest: cash collateral under stock lending
arrangements) as follows.
      (2)
In subsections (2), (3) and (4) for “Tax Acts” substitute “Corporation Tax
Acts”.
5
      (3)
Omit subsection (8).
      (4)
In subsection (11) in the definition of “tax advantage” for “section 709(1)”
substitute “section 840ZA”.
173   (1)
Amend section 737A (sale and repurchase of securities: deemed
manufactured payments) as follows.
10
      (2)
In subsection (5) —
(a)
after “dividend manufacturing regulations” insert “, and section 97
of the Finance Act 1996 (loan relationships: manufactured interest),”,
and
(b)
after “apply” insert “for corporation tax purposes”.
15
      (3)
In subsection (5A), omit “income tax or”, “total income or” and “Where the
relevant person is a company,”.
174   (1)
Amend section 737C (deemed manufactured payments: further provisions)
as follows.
      (2)
In subsection (7)—
20
(a)
for “Subsection (8)” substitute “Subsection (9)”,
(b)
for “paragraph 3 of Schedule 23A” substitute “section 97 of the
Finance Act 1996”, and
(c)
omit the words from “and in subsection (8) below” to the end.
      (3)
Omit subsection (8).
25
      (4)
For subsection (9) substitute—
“(9)
Where this subsection applies, the repurchase price of the securities
shall be treated, for the purposes of section 730A, as increased by an
amount equal to the amount of the dividend mentioned in section
737A(2)(a) or (2A)(a).”
30
175
In section 737D(1) (power to provide for manufactured payments to be
eligible for relief)—
(a)
after “from” insert “corporation”, and
(b)
omit the words from “, 613(4) or” to “Act 2004”.
176   (1)
Amend section 737E (power to modify sections 727A, 730A, 730BB and 737A
35
to 737C) as follows.
      (2)
In subsections (1) and (2) omit “727A,”.
      (3)
In subsections (4) and (6)(b) omit “or 263D”.
      (4)
In the sidenote omit “727A,”.
177
Omit sections 739 to 746 (transfer of assets abroad).
40

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
545

178
In section 747(4) (imputation of chargeable profits and creditable tax of
controlled foreign companies) omit paragraph (b) and the “and”
immediately before it.
179   (1)
Amend section 761 (offshore income gains) as follows.
      (2)
In subsection (6)—
5
(a)
for “charity” in the first place where it occurs, substitute “charitable
company”,
(b)
for “tax” substitute “corporation tax”, and
(c)
omit the words from “; but” to the end.
      (3)
After that subsection insert—
10
“(6A)
See section 535 of ITA 2007 for an exemption for income tax purposes
for offshore income gains accruing to a charitable trust.
(6B)
If property held on charitable trusts ceases to be subject to charitable
trusts and that property represents directly or indirectly an offshore
income gain, the trustees shall be treated as if they had disposed of
15
and immediately reacquired that property for a consideration equal
to its market value, any gain (calculated in accordance with Schedule
28) accruing being treated as an offshore income gain not accruing to
a charity.
(6C)
In this section “charity” and “charitable company” have the same
20
meaning as in section 506 and “market value” has the same meaning
as in the 1992 Act.”
180
In section 762 (offshore income gains accruing to persons resident or
domiciled abroad)—
(a)
in subsection (5)—
25
(i)
in paragraph (a) for “sections 739 and 740” substitute
“Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad)”,
and
(ii)
in paragraph (b) for “those sections” substitute “that
Chapter”, and
30
(b)
in subsection (6) for “section 739 or 740 above” substitute “Chapter 2
of Part 13 of ITA 2007”.
181
In section 763 (deduction of offshore income gain in determining capital
gain) for subsection (8) substitute—
“(8)
For the purposes of subsection (7)(b) above, whether the person who
35
made the disposal is connected with another person is determined in
accordance with section 839.”
182
Omit section 775 (sale by individual of income derived from his personal
activities).
183
In section 775A(4)(c) (transfer of rights to receive annual payments) for
40
“(annual payments that are not charges on income)” substitute “(certain
annual payments not to form part of the income of a company for
corporation tax purposes)”.
184   (1)
Amend section 776 (transactions in land: taxation of capital gains) as follows.
      (2)
In subsection (1) for “persons” substitute “companies”.
45