House of Commons Amendments

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

Public Bill Committee: 19th June 2008
462

Finance Bill, continued

    (5)
If section 87A applies for a tax year by virtue of section 762(3) of

the Taxes Act (offshore income gains), it applies for that year by

virtue of that provision before it applies for that year by virtue of

this paragraph.’.

Jane Kennedy

457

Schedule  7,  page  201,  line  3,  at end insert—

‘122A
After paragraph 8A insert—

“Attribution of gains: remittance basis

8AA
Section 87B (remittance basis) applies in relation to chargeable

gains treated under paragraph 8 as accruing as it applies in relation

to chargeable gains treated under section 87 as accruing.”’.

Jane Kennedy

458

Schedule  7,  page  201,  line  5,  leave out paragraph 124 and insert—

‘124
For paragraph 9 (and the heading before it) substitute—

“Attribution of gains: disregard of certain capital payments

9    (1)
For the purposes of paragraph 8 (and section 87A as it applies for

the purposes of that paragraph), no account is to be taken of a

capital payment to which any of sub-paragraphs (2) to (4) applies

(or a part of a capital payment to which sub-paragraph (4) applies).

      (2)
This sub-paragraph applies to a capital payment received before the

tax year preceding the tax year in which the original transfer is

made.

      (3)
This sub-paragraph applies to a capital payment that—

(a)
is received by a beneficiary of a settlement from the

trustees in a tax year during the whole of which the

trustees—

(i)
are resident and ordinarily resident in the United

Kingdom, and

(ii)
are not Treaty non-resident,

(b)
was made before any transfer of value to which Schedule

4B applies was made, and

(c)
was not made in anticipation of the making of any such

transfer of value or of chargeable gains accruing under that

Schedule.

      (4)
This sub-paragraph applies to a capital payment if (and to the extent

that) it is received (or treated as received) in a tax year from the

trustees by a company that—

(a)
is not resident in the United Kingdom in that year, and

(b)
would be a close company if it were resident in the United

Kingdom,


(and is not treated under any of subsections (3) to (5) of section 96

as received by another person).

124A
In paragraph 10 (residence of trustees from whom capital payment received)—

Public Bill Committee: 19th June 2008
463

Finance Bill, continued

(a)
in sub-paragraph (1) for “sub-paragraph (2) below” substitute

“paragraph 9(3)”, and

(b)
omit sub-paragraphs (2) and (3).’.

Jane Kennedy

459

Schedule  7,  page  201,  line  43,  at end insert—

‘129A
For the purposes of paragraph 8 of Schedule 4C to TCGA 1992 (and section

87A of that Act as it applies for the purposes of that paragraph), no account is

to be taken of any capital payment received before 21 March 2000.

129B
A capital payment received before 6 April 2008 is not within paragraph 9(4)

of Schedule 4C to TCGA 1992 (if it otherwise would be).

129C
Paragraph 110 applies in relation to chargeable gains treated under paragraph

8 of Schedule 4C to TCGA 1992 as accruing as it applies in relation to

chargeable gains treated under section 87 as accruing.

129D (1)
This paragraph applies for the tax year 2008-09 or any subsequent tax year

(“the relevant tax year”) if—

(a)
an individual who was resident or ordinarily resident, but not

domiciled, in the United Kingdom in the tax year 2007-08 received a

capital payment from the trustees of a settlement on or after 12 March

2008 but before 6 April 2008, and

(b)
the individual is resident or ordinarily resident, but not domiciled, in

the United Kingdom in the relevant tax year.

      (2)
For the purposes of paragraph 8 of Schedule 4C to TCGA 1992 as it applies

for the relevant tax year (and section 87A of that Act as it applies for those

purposes), no account is to be taken of the capital payment.’.

Jane Kennedy

460

Schedule  7,  page  202,  line  3,  after ‘2008’ insert ‘(“existing Schedule 4C pools”)’.

Jane Kennedy

461

Schedule  7,  page  202,  line  3,  after ‘7B’ insert ‘and 9(2)’.

Jane Kennedy

462

Schedule  7,  page  202,  line  3,  at end insert—

‘130A
Any reduction in the amount of a capital payment has effect for the purposes

of Schedule 4C to TCGA 1992 as it applies in relation to existing Schedule 4C

pools (as well as for other purposes).

130B (1)
If all of a capital payment ceases (in the tax year 2008-09 or any subsequent

tax year) to be available, the amount of the capital payment is reduced to nil.

      (2)
If part of a capital payment ceases (in the tax year 2008-09 or any subsequent

tax year) to be available, the amount of the capital payment is reduced by the

amount of that part.

      (3)
A capital payment “ceases to be available” in a tax year if and to the extent that,

by reason of the capital payment, chargeable gains are treated under paragraph

8 of Schedule 4C to TCGA 1992 (as it has effect in relation to existing

Schedule 4C pools) as accruing in that year to the recipient.

      (4)
If—

Public Bill Committee: 19th June 2008
464

Finance Bill, continued

(a)
chargeable gains are treated under paragraph 8 of Schedule 4C to

TCGA 1992 (as it has effect in relation to existing Schedule 4C pools)

as accruing in a tax year,

(b)
more than one capital payment that the beneficiary has received is

taken into account for the purposes of determining the amount of

chargeable gains treated as accruing to the beneficiary, and

(c)
the amount of the chargeable gains is less than the total amount of

capital payments taken into account,


sub-paragraph (3) applies in relation to earlier capital payments before later

ones.

130C
In any tax year—

(a)
Schedule 4C to TCGA 1992 (as amended by paragraphs 114 to 128)

applies in relation to a settlement before that Schedule (as it has effect

without those amendments) applies in relation to the settlement, and

(b)
that Schedule (as it has effect without those amendments) applies in

relation to the settlement before section 87 or 89(2) of that Act applies

in relation to the settlement.’.

Jane Kennedy

469

Schedule  7,  page  202,  line  7,  leave out ‘, and’.

Jane Kennedy

470

Schedule  7,  page  202,  leave out lines 23 to 29 and insert—

‘(2)
Treat the accrued income profits as relevant foreign income of the

individual.’.

Mr Philip Hammond

Mr Mark Hoban

Mr David Gauke

Justine Greening

495

Schedule  7,  page  202,  line  30,  after ‘809Q’, insert ‘and 809S’.

Jane Kennedy

471

Schedule  7,  page  202,  line  41,  leave out ‘any’.

Jane Kennedy

472

Schedule  7,  page  203,  line  3,  at end insert—

‘135A
In section 46B(4)(c) of TMA 1970 (questions to be determined by Special

Commissioners), for “sections 720, 727 and 731” substitute “any provision of

Chapter 2 of Part 13”.

135B
In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”),

after paragraph (h) insert “, and

(i)
sections 726, 730 and 735 of that Act (transfer of assets

abroad: foreign deemed income).”’.

Public Bill Committee: 19th June 2008
465

Finance Bill, continued

Jane Kennedy

473

Schedule  7,  page  203,  leave out lines 19 to 26 and insert—

‘(3)
Treat the foreign deemed income as relevant foreign income of the

individual.’.

Jane Kennedy

474

Schedule  7,  page  203,  line  27,  leave out ‘those sections’ and insert ‘sections 809K

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

Jane Kennedy

475

Schedule  7,  page  204,  leave out lines 4 to 11 and insert—

‘(3)
Treat the foreign deemed income as relevant foreign income of the

individual.’.

Jane Kennedy

476

Schedule  7,  page  204,  line  12,  leave out ‘those sections’ and insert ‘sections 809K

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

Jane Kennedy

477

Schedule  7,  page  204,  leave out lines 31 to 38 and insert—

‘(3)
Treat the foreign deemed income as relevant foreign income of the

individual.’.

Jane Kennedy

478

Schedule  7,  page  204,  line  39,  leave out ‘those sections’ and insert ‘sections 809K

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

Jane Kennedy

479

Schedule  7,  page  205,  line  8,  leave out from ‘order’ to end of line 9 and insert

‘determined under subsection (3),’.

Jane Kennedy

480

Schedule  7,  page  205,  line  23,  at end insert—

‘(3)
The order referred to in subsection (1)(c) is arrived at by taking the

following steps.


Step 1


Find the relevant income for the earliest tax year (of the tax years

referred to in subsection (1)(c)).


Step 2


Place so much of that income as is not foreign in the order in which it

arose (starting with the earliest income to arise).


Step 3

Public Bill Committee: 19th June 2008
466

Finance Bill, continued


After that, place so much of that income as is foreign in the order in

which it arose (starting with the earliest income to arise).


Step 4


Repeat Steps 1 to 3.


For this purpose, read references to the relevant income for the earliest

tax year as references to the relevant income for the first tax year after

the last tax year in relation to which those Steps have been undertaken.

(4)
For the purposes of subsection (3) relevant income is “foreign” where

it would be relevant foreign income if it were the individual’s.

(5)
Subsection (1)(d) does not apply if the income may not be taken into

account because the individual has been charged to income tax under

section 731 by reason of the income.’.

Jane Kennedy

481

Schedule  7,  page  205,  line  24,  leave out ‘137’ and insert ‘135A’.

Mr Philip Hammond

Mr Mark Hoban

Mr David Gauke

Justine Greening

402

Schedule  7,  page  205,  line  25,  at end insert—

‘Cost of administering domicile regime

144(1)
The Treasury must lay before the House of Commons annually a report setting

out the cost of administering the domicile regime.

      (2)
Each report made under subsection (4) must identify the level of unremitted

foreign income and gains at which the revenue raised exceeds both the cost of

collection by HMRC and the cost of compliance by the taxpayers.’.

New ClauseS

Gifts inter vivos

Jane Kennedy

NC6

To move the following Clause:—

‘(1)
Omit section 82(5) and (9) of FA 1985 (adjudication of certain gifts inter vivos).

(2)
Accordingly, omit paragraph 9 of Schedule 14 to FA 1999.

(3)
The amendments made by this section have effect in relation to instruments

executed on or after 13 March 2008, other than instruments effecting a land

transaction (within the meaning of paragraph 22 of Schedule 32).

(4)
For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be

given in evidence etc unless stamped in accordance with the law in force at the

time of first execution), the law in force at the time of execution of such an

Public Bill Committee: 19th June 2008
467

Finance Bill, continued

instrument shall be deemed to be the law as varied in accordance with this

section.’.

Abandonment expenditure: deductions from ring fence income

Jane Kennedy

NC7

To move the following Clause:—

‘(1)
FA 1991 is amended as follows.

(2)
Section 64 (relief for expenditure incurred by a participator in meeting defaulter’s

abandonment expenditure) is amended as follows.

(3)
In subsection (1)(a)—

(a)
omit “(as set out in section 107 of this Act)”, and

(b)
for “sub-paragraph (1)(a)” substitute “sub-paragraph (2)”.

(4)
In subsection (1)(b)—

(a)
for “sub-paragraph (4)” substitute “sub-paragraph (2)”, and

(b)
for “qualifying” substitute “contributing”.

(5)
In subsections (2), (3), (4) and (5) (in each place), for “qualifying” substitute

“contributing”.

(6)
Section 65 (reimbursement by defaulter in respect of certain abandonment

expenditure) is amended as follows.

(7)
In subsection (1)(a)—

(a)
omit “(as set out in section 107 of this Act)”, and

(b)
for “sub-paragraph (1)(a)” substitute “sub-paragraph (2)”.

(8)
In subsection (1)(b), for “sub-paragraph (4)” substitute “sub-paragraph (2)”.

(9)
In subsections (1) (in each place), (4), (5) (in each place), (6), (7) (in each place)

and (8), for “qualifying” substitute “contributing”.

(10)
The amendments made by this section have effect in relation to expenditure

incurred after 30 June 2008.’.

Qualifying expenditure: R&D relief and vaccine research relief

Jane Kennedy

NC8

To move the following Clause:—

‘(1)
Paragraph 5 of Schedule 20 to FA 2000 (R&D tax relief: staffing costs) is

amended as follows.

(2)
In sub-paragraph (1)(b), after “company;” insert—

“(ba)
the compulsory contributions paid by the company in respect

of benefits for directors or employees of the company under

the social security legislation of an EEA State (other than the

United Kingdom) or Switzerland;”.

Public Bill Committee: 19th June 2008
468

Finance Bill, continued

(3)
Before sub-paragraph (1A) insert—

“(1ZB)
In sub-paragraph (1)(ba) “social security legislation” means

legislation relating to any of the branches of social security listed in

Article 3(1) of Regulation (EC) No 883/2004 of the European

Parliament and of the Council of 29 April 2004 on the co-ordination

of social security systems (as amended from time to time).”

(4)
Schedule 13 to FA 2002 (vaccine research relief) is amended as follows.

(5)
In paragraph 2 (qualifying expenditure)—

(a)
in sub-paragraph (1)(a), at the end insert “or”,

(b)
omit sub-paragraph (1)(c) (and the “or” before it), and

(c)
omit sub-paragraph (4).

(6)
In paragraph 6 (qualifying expenditure on sub-contracted research and

development), omit—

(a)
in sub-paragraph (1), the second sentence, and

(b)
sub-paragraph (3) (expenditure on research sub-contracted to a charity, a

university or a scientific research organisation).

(7)
Omit paragraph 12 (qualifying expenditure on contributions to independent

research and development).

(8)
Omit paragraph 25 (refunds of qualifying expenditure on contributions to

independent research and development).

(9)
Accordingly, in paragraph 3 of Schedule 8 to this Act (changes to rates of vaccine

research relief), omit sub-paragraphs (2)(e) and (3)(d).

(10)
The amendments made by this section have effect in relation to expenditure

incurred on or after such day as the Treasury may by order appoint.

(11)
Paragraph 10(4) of Schedule 13 to FA 2002 (time limit for giving notice of

election for connected persons treatment) does not apply to a notice of an election

under that paragraph in relation to sub-contractor payments if—

(a)
the sub-contractor falls within paragraph 6(3) of that Schedule (repealed

by this section) (charity, university or scientific research organisation),

and

(b)
the notice is given before the end of the period of 12 months beginning

with the day appointed under subsection (10).’.

Small business rates relief

Mr Jeremy Browne

Dr Vincent Cable

Mr Colin Breed

Dr John Pugh

John Thurso

NC1

To move the following Clause:—

‘(1)
A small business with a rateable value of less than £25,000 may claim a business

rate allowance.

(2)
The Treasury shall, by regulations, define the level of business rate allowance and

the circumstances in which that allowance may be claimed.

(3)
Regulations under subsection (2) shall be made by statutory instrument.