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Public Bill Committee: 19th June 2008                  

450

 

Finance Bill, continued

 
 

Jane Kennedy

 

408

 

Schedule  7,  page  188,  line  33,  leave out ‘those sections’ and insert ‘sections 809K

 

to 809Q of ITA 2007 (meaning of “remitted to the United Kingdom” etc)’.

 

Jane Kennedy

 

409

 

Schedule  7,  page  188,  line  45,  at end insert—

 

‘90A      

In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”),

 

after paragraph (a) insert—

 

“(aa)    

section 762ZB(2) of ICTA (offshore income gains),”.

 

90B      

In section 734 of ITA 2007 (reduction in amount charged: previous capital

 

gains tax charge), after subsection (4) insert—

 

“(5)    

References in this section to chargeable gains treated as accruing to an

 

individual include offshore income gains treated as arising to the

 

individual (see section 762 of ICTA).”’.

 

Jane Kennedy

 

410

 

Schedule  7,  page  189,  line  1,  leave out ‘90’ and insert ‘90B’.

 

Jane Kennedy

 

411

 

Schedule  7,  page  189,  line  2,  at end insert—

 

‘91A      

Paragraph 108 or 108A applies in relation to offshore income gains as if—

 

(a)    

references to section 2(2) amounts were to OIG amounts,

 

(b)    

references to chargeable gains were to offshore income gains,

 

(c)    

Step 1 of paragraph 108(2) provided that OIG amounts are to be

 

calculated in accordance with—

 

(i)    

section 762(2) of ICTA (the reference in the second sentence

 

of that Step to section 87(4) of TCGA 1992 being read as a

 

reference to section 762(2) of ICTA), or

 

(ii)    

section 87(5) of TCGA 1992 as applied by section 762(3) of

 

ICTA.

 

91B(1)  

This paragraph applies if—

 

(a)    

by virtue of section 87 or 89(2) of, or Schedule 4C to, TCGA 1992 as

 

applied by section 762 of ICTA, income is treated under section 761

 

of ICTA as arising to an individual in the tax year 2008-09 or any

 

subsequent tax year, and

 

(b)    

the individual is not domiciled in the United Kingdom in that year.

 

      (2)  

The individual is not charged to income tax on the income if and to the extent

 

that it is treated as arising by reason of—

 

(a)    

a capital payment received (or treated as received) by the individual

 

before 6 April 2008, or

 

(b)    

the matching of any capital payment with the OIG amount for the tax

 

year 2007-08 or any earlier tax year.

 

91C(1)  

This paragraph applies if—

 

(a)    

the trustees of a settlement have made an election under paragraph

 

112(1) (re-basing election),

 

(b)    

income is treated under section 761 of ICTA as arising to an individual

 

in the tax year 2008-09 or any subsequent tax year (“the relevant tax


 
 

Public Bill Committee: 19th June 2008                  

451

 

Finance Bill, continued

 
 

year”) by reason of the matching, under section 87A of TCGA 1992

 

as applied by section 762 of ICTA, of an OIG amount with a capital

 

payment received by the individual from the trustees, and

 

(c)    

the individual is resident or ordinarily resident, but not domiciled, in

 

the United Kingdom in the relevant tax year.

 

      (2)  

The individual is not charged to income tax on so much of the income as

 

exceeds the relevant proportion of that income.

 

      (3)  

Sub-paragraphs (7) to (16) of paragraph 112 (meaning of “the relevant

 

proportion”) apply for the purposes of sub-paragraph (2) above as if—

 

(a)    

references to section 2(2) amounts were to OIG amounts,

 

(b)    

references to chargeable gains were to offshore income gains,

 

(c)    

references to allowable losses were omitted, and

 

(d)    

references to anything accruing were to it arising (and similar

 

references were read accordingly).

 

91D(1)  

This paragraph applies if—

 

(a)    

in the tax year 2008-09 or any subsequent tax year, the trustees of a

 

settlement (“the transferor settlement”) transfer all or part of the

 

settled property to the trustees of another settlement (“the transferee

 

settlement”),

 

(b)    

section 90 of TCGA 1992 applies in relation to the transfer,

 

(c)    

the trustees of the transferor settlement have made an election under

 

paragraph 112(1),

 

(d)    

by virtue of the matching (under section 87A of TCGA 1992 as

 

applied by section 762 of ICTA) of a capital payment with an OIG

 

amount of the transferee settlement, income is treated under section

 

761 of ICTA as arising to an individual in a tax year (“the relevant tax

 

year”), and

 

(e)    

the individual is resident or ordinarily resident, but not domiciled, in

 

the United Kingdom in the relevant tax year.

 

      (2)  

If paragraph 91C applies in relation to the transferee settlement, paragraph

 

112(7) as applied by paragraph 91C(3) has effect as if the reference there to

 

relevant assets included relevant assets within the meaning of paragraph

 

113(4) (as modified by sub-paragraph (4)(b) below).

 

      (3)  

If paragraph 91C does not apply in relation to the transferee settlement, the

 

individual is not charged to income tax on so much of the income mentioned

 

in sub-paragraph (1)(d) above as exceeds the relevant proportion of that

 

income.

 

      (4)  

Sub-paragraphs (3) to (6) of paragraph 113 (meaning of “the relevant

 

proportion”) apply for the purposes of sub-paragraph (3) above as if—

 

(a)    

references section 2(2) amounts were to OIG amounts,

 

(b)    

references to chargeable gains were to offshore income gains, and

 

(c)    

references to anything accruing were to it arising.’.

 

Mr Philip Hammond

 

Mr Mark Hoban

 

Mr David Gauke

 

Justine Greening

 

390

 

Schedule  7,  page  189,  line  17,  leave out from ‘12’ to end of line 18.


 
 

Public Bill Committee: 19th June 2008                  

452

 

Finance Bill, continued

 
 

Mr Philip Hammond

 

Mr Mark Hoban

 

Mr David Gauke

 

Justine Greening

 

494

 

Schedule  7,  page  189,  line  36,  at end insert—

 

    ‘(5)  

In computing gains to which this section applies, those gains shall, if the

 

company so elects, be calculated by reference to the value of the asset

 

concerned at 6 April 2008.

 

      (6)  

An election under subsection (5) is irrevocable and shall be made within two

 

years of the end of the first accounting period ending after 5 April 2008.

 

      (7)  

An election under subsection (5) shall be made in the way and form specified

 

by the Commissioners for Her Majesty’s Revenue and Customs.’.

 

Mr Philip Hammond

 

Mr Mark Hoban

 

Mr David Gauke

 

Justine Greening

 

391

 

Schedule  7,  page  189,  line  36,  at end insert—

 

‘93A (1)  

The following provisions apply to a company if—

 

(a)    

section 13 of TCGA 1992 applies to the company for the tax year

 

2008-09, and

 

(b)    

the directors of the company have not opted out from the provisions

 

within this paragraph.

 

      (2)  

An election to opt out from the provisions within this paragraph may only be

 

made on or before the anniversary of the first 31 January to occur after the end

 

of the first tax year (beginning with the tax year 2008-09) in which chargeable

 

gains are attributed under section 13 of TCGA 1992 to a participant in the

 

offshore company.

 

      (3)  

An election under sub-paragraph (2) is irrevocable and must be made in the

 

way and form specified by the Commissioners for Her Majesty’s Revenue and

 

Customs.

 

      (4)  

The only information that need be provided in the course of making the

 

election is the name of the offshore company and the name of the director

 

making the election.

 

      (5)  

Sub-paragraph (7) applies if—

 

(a)    

chargeable gains are treated under section 13 of TCGA 1992 as

 

accruing to an individual in a tax year, and

 

(b)    

the individual is resident, but not domiciled, in the United Kingdom in

 

that year.

 

      (6)  

The individual is not charged to capital gains tax on so much of the aggregate

 

chargeable gains attributed to him in the tax year as exceeds the relevant

 

proportion of the gains.

 

      (7)  

The relevant proportion is A/B where—

 

  A is the portion of the gain that would what have been treated as accruing

 

to the participator, if immediately before 6 April 2008 every relevant

 

asset had been sold by the directors and immediately re-acquired by them

 

at the market value at that time; and

 

  B is the actual gain attributed to the individual.

 

      (8)  

For the purposes of sub-paragraph (7) an asset is a “relevant asset” if—

 

(a)    

by reason of the asset, a chargeable gain or allowable loss accrues to

 

the trustees in the relevant tax year, and


 
 

Public Bill Committee: 19th June 2008                  

453

 

Finance Bill, continued

 
 

(b)    

the asset has been comprised in the company from the beginning of 6

 

April 2008 until the time of the event giving rise to the chargeable gain

 

or allowable loss.’.

 

Jane Kennedy

 

412

 

Schedule  7,  page  190,  line  18,  leave out ‘tax year’ and insert ‘settlement for a tax

 

year for which this section applies to the settlement’.

 

Jane Kennedy

 

413

 

Schedule  7,  page  190,  line  19,  after ‘trustees’ insert ‘of the settlement’.

 

Jane Kennedy

 

414

 

Schedule  7,  page  190,  line  25,  at end insert—

 

‘(5)    

The section 2(2) amount for a settlement for a tax year for which this

 

section does not apply to the settlement is nil.

 

(6)    

For the purposes of this section a settlement arising under a will or

 

intestacy is treated as made by the testator or intestate at the time of

 

death.’.

 

Jane Kennedy

 

415

 

Schedule  7,  page  191,  line  21,  leave out from second ‘year’ to end of line 25 and

 

insert ‘—

 

(a)    

which is before the last tax year for which Steps 1 to 4 have

 

been undertaken, and

 

(b)    

for which the section 2(2) amount is not nil.’.

 

Jane Kennedy

 

416

 

Schedule  7,  page  191,  line  31,  leave out ‘to which section 87 applies to the

 

settlement’.

 

Jane Kennedy

 

417

 

Schedule  7,  page  191,  line  33,  leave out from ‘(2)’ to end of line 36 and insert ‘is to

 

be taken into account in any subsequent application of this section.’.

 

Jane Kennedy

 

418

 

Schedule  7,  page  191,  line  38,  leave out from ‘applies’ to end of line 39 and insert

 

‘if—

 

(a)    

chargeable gains are treated under section 87 as accruing to an

 

individual in a tax year,

 

(b)    

section 809B, 809C or 809D (remittance basis) applies to the

 

individual for that year, and

 

(c)    

the individual is not domiciled in the United Kingdom in that

 

year.’.


 
 

Public Bill Committee: 19th June 2008                  

454

 

Finance Bill, continued

 
 

Jane Kennedy

 

419

 

Schedule  7,  page  192,  leave out lines 41 to 44.

 

Jane Kennedy

 

420

 

Schedule  7,  page  193,  line  15,  leave out from ‘transfer)’ to ‘as’ in line 16.

 

Jane Kennedy

 

421

 

Schedule  7,  page  193,  leave out lines 41 to 43 and insert—

 

‘(9)    

When calculating the market value of property for the purposes of this

 

section or section 90A in a case where the property is subject to a debt,

 

reduce the market value by the amount of the debt.’.

 

Jane Kennedy

 

422

 

Schedule  7,  page  194,  line  2,  at end insert—

 

‘90A  

Section 90: transfers made for consideration in money or money’s

 

worth

 

(1)    

Section 90 does not apply to a transfer of settled property made for

 

consideration in money or money’s worth if the amount (or value) of

 

that consideration is equal to or exceeds the market value of the

 

property transferred.

 

(2)    

The following provisions apply if—

 

(a)    

section 90 applies to a transfer of settled property made for

 

consideration in money or money’s worth, and

 

(b)    

the amount (or value) of that consideration is less than the

 

market value of the property transferred.

 

(3)    

If the transfer is of all of the settled property, for the purposes of

 

section 90 treat the transfer as being of part only of the settled

 

property.

 

(4)    

Deduct the amount (or value) of the consideration from the amount of

 

the market value referred to in section 90(4)(a).’.

 

Jane Kennedy

 

423

 

Schedule  7,  page  194,  line  23,  after ‘1998,’ insert ‘section 130(1) and (4), and’.

 

Jane Kennedy

 

424

 

Schedule  7,  page  194,  line  32,  leave out paragraph (a).

 

Jane Kennedy

 

425

 

Schedule  7,  page  194,  line  40,  at end insert—

 

‘106A (1)  

This paragraph applies if—

 

(a)    

section 87 of TCGA 1992 applies to a settlement for the tax year 2008-

 

09 or any subsequent tax year (“the tax year”),


 
 

Public Bill Committee: 19th June 2008                  

455

 

Finance Bill, continued

 
 

(b)    

the settlement was made before 17 March 1998,

 

(c)    

none of the settlors fulfilled the residence requirements when the

 

settlement was made, and

 

(d)    

none of the settlors fulfils the residence requirements in the tax year.

 

      (2)  

For the purposes of that section as it applies to the settlement for the tax year,

 

no account is to be taken of—

 

(a)    

any gains or losses accruing to the trustees of the settlement before 17

 

March 1998, or

 

(b)    

any capital payments received before that date.

 

      (3)  

A settlor “fulfils the residence requirements” when the settlor is—

 

(a)    

resident or ordinarily resident in the United Kingdom, and

 

(b)    

domiciled in any part of the United Kingdom.’.

 

Jane Kennedy

 

426

 

Schedule  7,  page  195,  leave out lines 1 to 6 and insert ‘section 87 or 89(2) of TCGA

 

1992 applied to it for the tax year 2007-08 or any earlier tax year.’.

 

Jane Kennedy

 

427

 

Schedule  7,  page  195,  line  8,  leave out ‘or any earlier tax year’ and insert ‘and

 

earlier tax years’.

 

Jane Kennedy

 

428

 

Schedule  7,  page  195,  line  11,  leave out from ‘for’ to end of line 12 and insert ‘the

 

settlement for the tax year 2007-08 and earlier tax years.’.

 

Jane Kennedy

 

429

 

Schedule  7,  page  195,  line  12,  at end insert—

 

         

‘For this purpose, references in section 87(4) and (5) of TCGA 1992 (as

 

substituted) to section 87 of that Act applying to a settlement for a tax year are

 

to be read as references to section 87 of that Act (as it had effect before that

 

substitution) applying to a settlement for a tax year.’.

 

Jane Kennedy

 

430

 

Schedule  7,  page  195,  leave out lines 18 to 20 and insert—

 

            

‘Find the earliest tax year for which the section 2(2) amount is not nil.

 

            

If the section 2(2) amount for that year is less than or equal to the total deemed

 

gains, reduce that section 2(2) amount to nil.’.

 

Jane Kennedy

 

431

 

Schedule  7,  page  195,  leave out lines 28 to 31 and insert—

 

         

‘For this purpose, read references to the earliest tax year for which the section

 

2(2) amount is not nil as references to the earliest tax year—

 

(a)    

which is after the last tax year for which Steps 3 and 4 have been

 

undertaken, and

 

(b)    

for which the section 2(2) amount is not nil.’.


 
 

Public Bill Committee: 19th June 2008                  

456

 

Finance Bill, continued

 
 

Jane Kennedy

 

432

 

Schedule  7,  page  195,  line  31,  at end insert—

 

    ‘(3)  

If, before 6 April 2008, the trustees of the settlement made a transfer of value

 

to which Schedule 4B to TCGA 1992 applied, sub-paragraph (2) has effect

 

subject to such modifications as are just and reasonable on account of Schedule

 

4C to that Act having applied in relation to the settlement.

 

      (4)  

This paragraph does not apply if section 90 of TCGA 1992 applied to a transfer

 

of settled property by or to the trustees of the settlement that was made before

 

6 April 2008 (see paragraph 108A).

 

108A (1)  

If section 90 of TCGA 1992 (as originally enacted) applied to a transfer of

 

settled property made before 6 April 2008, this paragraph applies in relation to

 

the transferor settlement and the transferee settlement.

 

      (2)  

In this paragraph “the year of transfer” means the tax year in which the transfer

 

occurred.

 

      (3)  

The following steps are to be taken for the purpose of calculating the section

 

2(2) amount for the transferor and transferee settlements for the tax year 2007-

 

08 and earlier tax years.

 

            

Step 1

 

            

Take the steps in paragraph 108(2) for the purpose of calculating the section

 

2(2) amount (at the end of the year of transfer) for the transferor settlement for

 

the year of transfer and earlier tax years.

 

            

For this purpose, read references there to the tax year 2007-08 as references to

 

the year of transfer.

 

            

Step 2

 

            

Take the steps in paragraph 108(2) for the purpose of calculating the section

 

2(2) amount (before the year of transfer) for the transferee settlement for the

 

tax year before the year of transfer and earlier tax years.

 

            

For this purpose, read references there to the tax year 2007-08 as references to

 

the tax year before the year of transfer.

 

            

Step 3

 

            

Calculate the section 2(2) amount for the transferee settlement for the year of

 

transfer.

 

            

Step 4

 

            

Treat the section 2(2) amount for the transferee settlement for the year of

 

transfer or any earlier tax year (as calculated under Step 2 or 3) as increased

 

by—

 

(a)    

the section 2(2) amount for the transferor settlement for that year (as

 

calculated under Step 1), or

 

(b)    

if part only of the settled property was transferred, the relevant

 

proportion of the amount mentioned in paragraph (a).

 

            

“The relevant proportion” here has the same meaning as in section 90(4) of

 

TCGA 1992 (as substituted by this Schedule).

 

            

Step 5

 

            

Treat the section 2(2) amount for the transferor settlement for any tax year as

 

reduced by the amount by which the section 2(2) amount for the transferee

 

settlement for that year is increased under Step 4.

 

            

Step 6

 

            

Take the steps in paragraph 108(2) for the purpose of calculating the section

 

2(2) amount for the transferor settlement for the tax year 2007-08 and earlier

 

tax years.

 

            

For this purpose—


 
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