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Finance Bill


Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

26

 

34      

Schemes etc designed to increase double taxation relief

(1)   

Section 804ZA of ICTA (schemes and arrangements designed to increase relief)

is amended as follows.

(2)   

In subsection (8)(c), omit “resident in a territory outside the United Kingdom”.

(3)   

After subsection (11) insert—

5

“(11A)   

In this section “foreign tax” includes any tax which for the purpose of

allowing credit under any arrangements against corporation tax is

treated by section 801 as if it were tax payable under the law of any

territory outside the United Kingdom.”

(4)   

The amendments made by this section have effect in relation to a credit for

10

foreign tax which relates to—

(a)   

a payment of foreign tax on or after 6th December 2006, or

(b)   

income received on or after that date in respect of which foreign tax has

been deducted at source,

   

but see also subsections (6) and (7).

15

(5)   

In subsection (4)—

(a)   

references to foreign tax are to be construed in accordance with section

804ZA(11A) of ICTA (as inserted by subsection (3) above), and

(b)   

the reference to tax deducted at source is to tax deducted (or treated as

deducted) from income or treated as paid in respect of income.

20

(6)   

The DTR anti-avoidance provisions have effect in relation to any action (or

failure to act) that occurs under any scheme or arrangement on or after 6th

December 2006 (as well as in relation to the cases mentioned in section 87(3) of

FA 2005 or subsection (4) above).

(7)   

“The DTR anti-avoidance provisions” means section 804ZA of ICTA (as

25

amended by this section), sections 804ZB and 80ZC of that Act and Schedule

28AB to that Act.

Capital allowances

35      

Industrial and agricultural buildings allowances

(1)   

No balancing adjustment is to be made under Part 3 of CAA 2001 (industrial

30

buildings allowances) if—

(a)   

the qualifying expenditure in question is not qualifying enterprise zone

expenditure for the purposes of that Part, and

(b)   

the balancing event in question is a post-commencement balancing

event,

35

   

and in paragraph (b) “post-commencement balancing event” means any

balancing event for the purposes of that Part which occurs on or after 21st

March 2007, but does not include an event which occurs before 1st April 2011

in pursuance of a relevant pre-commencement contract (see subsection (7)).

(2)   

For the purposes of section 311 of that Act (calculation of allowance after sale

40

of relevant interest) the amount of the residue of qualifying expenditure

immediately after a post-commencement relevant event is taken to be the

amount of the residue of qualifying expenditure immediately before that

event.

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

27

 

(3)   

In subsection (2)—

“qualifying expenditure” does not include any expenditure which is

qualifying enterprise zone expenditure for the purposes of that Part,

and

“post-commencement relevant event” means any relevant event within

5

the meaning of section 311 of that Act which occurs on or after 21st

March 2007, but does not include an event which occurs before 1st

April 2011 in pursuance of a relevant pre-commencement contract.

(4)   

No balancing adjustment is to be made under Part 4 of that Act (agricultural

buildings allowances) if the balancing event in question is a post-

10

commencement balancing event.

(5)   

For the purposes of section 376 of that Act (calculation of allowance after

acquisition) the amount of the residue of qualifying expenditure immediately

after a post-commencement balancing event is taken to be the amount of the

residue of qualifying expenditure immediately before that event.

15

(6)   

In subsections (4) and (5) “post-commencement balancing event” means any

balancing event under section 381 of that Act (as a result of an election made in

accordance with section 382 of that Act) which occurs on or after 21st March

2007, but does not include an event which occurs before 1st April 2011 in

pursuance of a relevant pre-commencement contract.

20

(7)   

For the purposes of this section a contract is “a relevant pre-commencement

contract” if—

(a)   

the contract is a contract in writing made before 21st March 2007,

(b)   

the contract is unconditional or its conditions have been satisfied before

that date,

25

(c)   

no terms remain to be agreed on or after that date, and

(d)   

the contract is not varied in a significant way on or after that date.

36      

Temporary increase in first-year capital allowances for small enterprises

(1)   

The amount of a first-year allowance under section 44 of CAA 2001

(expenditure incurred by small or medium-sized enterprises) is to be

30

determined, in the case of expenditure to which this subsection applies, as if

the percentage specified in the entry relating to that section in the Table in

section 52(3) of that Act were 50%.

(2)   

Subsection (1) applies to expenditure incurred by a small enterprise (within the

meaning of section 44 of that Act) in the period of 12 months beginning with—

35

(a)   

1st April 2007, if the small enterprise is within the charge to corporation

tax, or

(b)   

6th April 2007, if the small enterprise is within the charge to income tax.

(3)   

Accordingly, in section 52(3) of CAA 2001, in the sentence following the Table,

insert at the end—

40

“(c)   

section 36 of the Finance Act 2007 (substitution of 50% in the

case of expenditure incurred by a small enterprise in 2007-08 or

financial year 2007).”

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

28

 

Insurance and friendly societies

37      

Insurance companies: gross roll-up business etc

(1)   

Part 1 of Schedule 7 contains provisions relating to gross roll-up business,

capital redemption business and miscellaneous minor matters relating to

insurance companies.

5

(2)   

The amendments made by that Part of that Schedule have effect—

(a)   

for the purposes of corporation tax, for periods of account of insurance

companies beginning on or after 1st January 2007, and

(b)   

for the purposes of income tax, for the tax year 2007-08 and subsequent

tax years.

10

(3)   

Subsection (2) is subject to the transitional provisions in Part 2 of that Schedule.

38      

Insurance companies: basis of taxation etc

(1)   

Part 1 of Schedule 8 contains provision about the basis of taxation of insurance

companies and related matters.

(2)   

The amendments made by that Part of that Schedule have effect for periods of

15

account of insurance companies beginning on or after 1st January 2007.

(3)   

Subsection (2) is subject to the transitional provisions in Part 2 of that Schedule.

39      

Insurance companies: transfers etc

Schedule 9 contains provision about transfers by insurance companies and

related matters.

20

40      

Insurance companies: miscellaneous

Schedule 10 contains miscellaneous provisions relating to insurance

companies.

41      

Technical provisions made by general insurers

Schedule 11 contains provision in relation to technical provisions made by

25

general insurers.

42      

Lloyd’s: cessation of business by corporate members

(1)   

In FA 1994, after section 227A (inserted by section 32) insert—

“227B   

 Transfer of underwriting business without change of ownership

(1)   

This section applies where, in accordance with the rules or practice of

30

Lloyd’s, a corporate member (“the successor”) has taken up the

syndicate capacity of another corporate member (“the predecessor”).

(2)   

Section 343 of the Taxes Act 1988 (company reconstructions without a

change of ownership) applies as if—

(a)   

the trade mentioned in that section were the underwriting

35

business of the predecessor,

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

29

 

(b)   

the predecessor ceases to carry it on, and the successor begins to

carry it on, at the end of the first underwriting year in which

profits or losses of the predecessor’s last active underwriting

year are declared, and

(c)   

subsections (8) to (10) and (12) were omitted.

5

(3)   

For the purposes of subsection (1) above the successor has taken up the

predecessor’s syndicate capacity if it has taken up the rights to

participate in syndicates which were (or otherwise would be) offered to

the predecessor.

(4)   

In subsection (2)(b) above “last active underwriting year” has the same

10

meaning as in section 227A above (see subsections (2) to (4) of that

section).”

(2)   

The amendment made by subsection (1) has effect in any case where the first

underwriting year in which profits or losses of the predecessor’s final

underwriting year are declared is 2007 or a later underwriting year.

15

43      

Transfers of business by friendly societies to insurance companies etc

Schedule 12 contains provisions about transfers of business by friendly

societies to insurance companies etc.

44      

Tax exempt business of friendly societies

(1)   

Section 462 of ICTA (conditions for tax exempt business) is amended as

20

follows.

(2)   

For subsection (1) substitute—

“(1)   

Subject to subsections (2) to (4) below, section 460 does not afford any

exemption from corporation tax in relation to so much of the profits

arising to a friendly society or insurance company from any business as

25

is attributable to a policy which—

(a)   

is not a qualifying policy (by virtue of sub-paragraph (2) of

paragraph 6(2) of Schedule 15) and is not an excluded policy,

and

(b)   

would not be a qualifying policy (by virtue of that sub-

30

paragraph) if all excluded policies were left out of account.

(1A)   

For the purposes of subsection (1) above a policy is an excluded policy

if—

(a)   

it is a policy held otherwise than with the friendly society or

insurance company, or

35

(b)   

the person who has the contract effecting the policy acquired

the rights under it on an assignment (or, in Scotland,

assignation) otherwise than for money or money’s worth.”

(3)   

In subsection (2), for “under section 460(1) for profits arising from any part of

a life or endowment” substitute “in relation to profits arising from any part of

40

a”.

(4)   

In subsection (3), for the words after “section” substitute “460 does not afford

any exemption from corporation tax in relation to so much as is attributable to

that policy of the profits of the friendly society or insurance company

concerned.”

45

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

30

 

(5)   

In section 462A(8)(b) of ICTA (election to tax exempt business), for

““societies”” substitute ““policies””.

(6)   

The amendments made by this section are deemed to have come into force on

1st January 2007.

45      

Purchased life annuities: self-assessment

5

(1)   

In section 437(1C) of ICTA (general annuity business), omit paragraphs (c)(i)

and (d)(i).

(2)   

In section 656 of that Act (purchased life annuities other than retirement

annuities), omit subsections (5) and (6).

(3)   

In section 658 of that Act (supplementary), omit subsections (1) and (4) to (6).

10

(4)   

In section 828(4) of that Act (parliamentary procedure for orders and

regulations), omit “658(3)”.

(5)   

In section 717 of ITTOIA 2005 (exemption for part of purchased life annuity

payment), omit subsection (3).

(6)   

Omit section 723 of that Act (officer of Revenue and Customs to determine

15

certain questions).

(7)   

In section 724 of that Act (regulations)—

(a)   

in subsection (1)(a), for “723” substitute “722”, and

(b)   

omit subsection (2).

(8)   

In section 873(3) of that Act (parliamentary procedure for orders and

20

regulations), omit paragraph (b).

(9)   

The amendments made by subsections (1) to (3) and (5) to (7) come into force

on such day as the Treasury may by order appoint; and different days may be

appointed for different purposes.

Repos

25

46      

Sale and repurchase of securities

(1)   

Schedule 13 contains provision for corporation tax purposes about the sale and

repurchase of securities.

(2)   

Schedule 14 contains minor and consequential amendments in relation to the

sale and repurchase of securities.

30

(3)   

The Treasury may by order make such other amendments (including repeals

and revocations) of enactments or instruments as may appear appropriate in

consequence of, or otherwise in connection with, those Schedules.

(4)   

Schedule 13, and the amendments made by Schedule 14, have effect in

accordance with provision made by the Treasury by order.

35

(5)   

Any order under this section—

(a)   

may make different provision for different purposes, and

(b)   

may contain transitional provision and savings.

 
 

 
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