Finance Bill

House of Commons

Session 2006 - 07
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Finance Bill

Finance Bill
Schedule 2 — Climate change levy: reduced-rate supplies etc
89

7
For paragraph 44 substitute—
“44   (1)
For the purposes of this Schedule, a taxable supply is a reduced-
rate supply if—
(a)
the taxable commodity is supplied to a facility specified in
a certificate given by the Secretary of State to the
5
Commissioners as a facility which is to be taken as being
covered by a climate change agreement for a period
specified in the certificate, and
(b)
the supply is made at a time falling in that period.
      (2)
Sub-paragraph (1) has effect subject to paragraph 45.
10
      (3)
The Commissioners may by regulations make provision for giving
effect to sub-paragraph (1).
      (4)
Regulations under this paragraph may, in particular, include
provision for determining whether any taxable commodity is
supplied to a facility.
15
      (5)
The provision that may be made by virtue of sub-paragraph (4)
includes, in particular, provision for a taxable commodity of any
description specified in the regulations to be taken as supplied to
a facility only if the commodity is delivered to the facility.”
8     (1)
Paragraph 45 (reduced-rate supplies: variation of notices under paragraph
20
44) is amended as follows.
      (2)
Omit sub-paragraphs (2) to (4).
      (3)
In sub-paragraph (5)—
(a)
in paragraph (b), for “the variation notice is published” substitute
“the variation certificate is given”, and
25
(b)
for the words following that paragraph substitute “the original
certificate has effect as if the facility had never been specified in it”.
      (4)
In sub-paragraph (6)—
(a)
in paragraph (b), for “the variation notice is published” substitute
“the variation certificate is given”, and
30
(b)
for the words following that paragraph substitute “the original
certificate has effect as if the last day of the period specified for the
facility in the original certificate were the day on which the variation
certificate is given”.
      (5)
In sub-paragraph (7), for the words from “the original notice” to the end
35
substitute “the original certificate has effect as if the last day of the period
specified for the facility in the original certificate were the later of—
(a)
the day on which the variation certificate is given, and
(b)
the day specified in the variation certificate.”
      (6)
The italic heading before that paragraph accordingly becomes “Reduced-rate
40
supplies: variation of certificates under paragraph 44”.
9
After that paragraph insert—
“Reduced-rate supplies: deemed supply
45A   (1)
This paragraph applies where—

Finance Bill
Schedule 2 — Climate change levy: reduced-rate supplies etc
90

(a)
a taxable supply has been made to any person (“the
recipient”),
(b)
the supply was made on the basis that it was a reduced-
rate supply, and
(c)
it is later determined that the supply was not a reduced-
5
rate supply.
      (2)
For the purposes of this Schedule—
(a)
the recipient is deemed to make a taxable supply to itself of
the taxable commodity, and
(b)
the amount payable by way of levy on that deemed supply
10
is 80 per cent. of the amount that would be payable if the
supply were not a reduced-rate supply.”
10
In paragraph 147 (interpretation), in the definition of “reduced-rate
supply”—
(a)
for “44(3)” substitute “44(1)”, and
15
(b)
for “44(4)” substitute “44(2)”.
Notifications and certificates
11    (1)
Paragraph 11 (exemption: supply not for burning in UK) is amended as
follows.
      (2)
In sub-paragraph (1)—
20
(a)
omit “has, before the supply is made, notified the supplier”, and
(b)
omit “that he” (in both places).
      (3)
In sub-paragraph (3)—
(a)
omit “has, before the supply is made, notified the supplier that”, and
(b)
omit “he”.
25
12    (1)
Paragraph 101 (civil penalties: incorrect notifications etc) is amended as
follows.
      (2)
Omit sub-paragraph (1).
      (3)
In sub-paragraph (2)—
(a)
after “paragraphs” insert “11,” and
30
(b)
after “the certificate is” insert “(or becomes)”.
      (4)
In sub-paragraph (3)—
(a)
for “sub-paragraph (1) or (2)” substitute “this paragraph”, and
(b)
omit “notification or”.
      (5)
In sub-paragraph (4)—
35
(a)
for “notification or certificate” substitute “certificate (or not revoking
or varying it)”,
(b)
for “the person who gave it” substitute “the person concerned”, and
(c)
for the words from “there is” to the end substitute “the person has a
reasonable excuse”.
40
      (6)
In sub-paragraph (5)—
(a)
for “notification or certificate” substitute “certificate (or not revoking
or varying it)”, and

Finance Bill
Schedule 3 — Managed service companies
Part 1 — Amendments of ITEPA 2003
91

(b)
for “the giving of the notification or certificate” substitute “that”.
      (7)
The italic heading before paragraph 101 accordingly becomes “Civil penalties:
incorrect certificates”.
Commencement
13    (1)
Paragraphs 2 to 10 come into force on such day as the Treasury may by order
5
made by statutory instrument appoint.
      (2)
But any power to make regulations under any provision inserted or
amended by any of those paragraphs may be exercised at any time after this
Act is passed.
      (3)
The power to make an order under sub-paragraph (1)—
10
(a)
may be exercised so as to bring a provision into force only in such
cases as may be described in the order,
(b)
may be exercised so as to make different provision for different cases
or descriptions of case,
(c)
includes power to make incidental, consequential, supplemental or
15
transitional provision or savings.
Schedule 3
Section 25

Managed service companies
Part 1
Amendments of ITEPA 2003
20
1
ITEPA 2003 is amended as follows.
2
In section 7(5) (meaning of “employment income” etc), for paragraph (a)
substitute—
“(a)
Chapters 7 to 9 of this Part (agency workers, workers under
arrangements made by intermediaries, and workers
25
providing services through managed service companies),”.
3
In section 48(2) (workers under arrangements made by intermediaries:
scope of Chapter) for “or” at the end of paragraph (a) substitute—
“(aa)
applies to services provided by a managed service company
(within the meaning of Chapter 9 of this Part), or”.
30
4
After section 61 insert—
“Chapter 9
Managed service companies
Application of this Chapter
61A
Scope of this Chapter
35
(1)
This Chapter has effect with respect to the provision of services by a
managed service company.

Finance Bill
Schedule 3 — Managed service companies
Part 1 — Amendments of ITEPA 2003
92

(2)
Nothing in this Chapter—
(a)
affects the operation of Chapter 7 of this Part (agency
workers), or
(b)
applies to payments or transfers to which section 966(3) or (4)
of ITA 2007 applies (visiting performers: duty to deduct and
5
account for sums representing income tax).
61B
Meaning of “managed service company”
(1)
A company is a “managed service company” if—
(a)
its business consists wholly or mainly of providing (directly
or indirectly) the services of an individual to other persons,
10
(b)
payments are made (directly or indirectly) to the individual
(or associates of the individual) of an amount equal to the
greater part or all of the consideration for the provision of the
services,
(c)
the way in which those payments are made would result in
15
the individual (or associates) receiving payments of an
amount (net of tax and national insurance) exceeding that
which would be received (net of tax and national insurance)
if every payment in respect of the services were employment
income of the individual, and
20
(d)
a person who carries on a business of promoting or
facilitating the use of companies to provide the services of
individuals (“an MSC provider”) is involved with the
company.
(2)
An MSC provider is “involved with the company” if the MSC
25
provider or an associate of the MSC provider—
(a)
benefits financially on an ongoing basis from the provision of
the services of the individual,
(b)
influences or controls the provision of those services,
(c)
influences or controls the way in which payments to the
30
individual (or associates of the individual) are made,
(d)
influences or controls the company’s finances or any of its
activities, or
(e)
gives or promotes an undertaking to make good any tax loss.
(3)
A person does not fall within subsection (1)(d) merely by virtue of
35
providing legal or accountancy services in a professional capacity.
(4)
A person does not fall within subsection (1)(d) merely by virtue of
carrying on a business consisting only of placing individuals with
persons who wish to obtain their services (including by contracting
with companies which provide their services).
40
(5)
Subsection (4) does not apply if the person or an associate of the
person—
(a)
does anything within subsection (2)(c) or (e), or
(b)
does anything within subsection (2)(d) other than influencing
the company’s finances or activities by doing anything
45
within subsection (2)(b).