|
| |
|
(b) | so far as relating to income tax, have effect for the tax year 2008-09 |
| |
and subsequent tax years. |
| |
(2) | The amendments made by paragraph 3 to 5 also have effect in relation to |
| |
deemed surrenders under paragraph 6(1) of Schedule 13. |
| |
| |
| |
| |
| |
| |
1 | ITTOIA 2005 is amended as follows. |
| |
2 | After section 172 insert— |
| |
| |
| |
Trade profits: changes in trading stock |
| |
| |
172A | Meaning of “trading stock” |
| |
(1) | In this Chapter “trading stock”, in relation to a trade, means anything |
| |
(whether land or other property)— |
| |
(a) | which is sold in the ordinary course of trade, or |
| |
(b) | which would be so sold if it were mature or its manufacture, |
| |
preparation or construction were complete. |
| |
| |
(a) | materials used in the manufacture, preparation or |
| |
construction of any such thing, |
| |
(b) | any services performed in the ordinary course of the trade, or |
| |
(c) | any article produced, or any material used, in the |
| |
performance of any such services. |
| |
Transfers of trading stock between trade and trader |
| |
172B | Trading stock appropriated by trader |
| |
(1) | This section applies if trading stock of a person’s trade is |
| |
appropriated by the person for any other purpose. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the amount which the stock appropriated would have |
| |
realised if sold in the open market at the time of the |
| |
appropriation is brought into account as a receipt, and |
| |
(b) | the value of anything in fact received for it is left out of |
| |
| |
|
| |
|
| |
|
(3) | The receipt is treated as arising on the date of the appropriation. |
| |
172C | Trading stock supplied by trader |
| |
(1) | This section applies if something that— |
| |
(a) | belongs to a person carrying on a trade, but |
| |
(b) | is not trading stock of the trade, |
| |
| becomes trading stock of the trade. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the cost of the stock is taken to be the amount which it would |
| |
have realised if sold in the open market at the time it became |
| |
trading stock of the trade, and |
| |
(b) | the value of anything in fact given for it is left out of account. |
| |
(3) | The cost is treated as being incurred on the date it became trading |
| |
| |
Other disposals not made in the course of trade |
| |
172D | Disposals not made in the course of trade |
| |
(1) | This section applies if— |
| |
(a) | trading stock of a trade is disposed of otherwise than in the |
| |
| |
(b) | section 172B does not apply. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the amount which the stock disposed of would have realised |
| |
if sold in the open market at the time of the disposal is |
| |
brought into account as the receipt, and |
| |
(b) | any consideration obtained for it is left out of account. |
| |
(3) | The receipt is treated as arising on the date of the disposal. |
| |
(4) | This section is subject to section 172F. |
| |
172E | Acquisitions not made in the course of trade |
| |
(1) | This section applies if— |
| |
(a) | trading stock of a trade has been acquired otherwise than in |
| |
| |
(b) | section 172C does not apply. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the cost of the stock is taken to be the amount which it would |
| |
have realised if sold in the open market at the time of the |
| |
| |
(b) | the value of anything in fact given for it is left out of account. |
| |
(3) | The cost is treated as being incurred on the date of the acquisition. |
| |
(4) | This section is subject to section 172F. |
| |
|
| |
|
| |
|
Relationship with transfer pricing rules |
| |
172F | Transfer pricing rules to take precedence |
| |
(1) | Section 172D or 172E does not apply if the relevant consideration— |
| |
(a) | falls to be adjusted for tax purposes under Schedule 28AA to |
| |
| |
(b) | falls within that Schedule without falling to be so adjusted. |
| |
(2) | For the purposes of subsection (1)(b), the relevant consideration falls |
| |
within Schedule 28AA to ICTA without falling to be adjusted under |
| |
| |
(a) | the conditions in paragraph 1(1) of that Schedule are met, but |
| |
| |
(i) | the actual provision does not differ from the arm’s |
| |
| |
(ii) | the exception in paragraph 8, 10 or 13 of that Schedule |
| |
| |
(3) | In this section “relevant consideration” means— |
| |
(a) | in relation to section 172D, the consideration for the disposal |
| |
| |
(b) | in relation to section 172E, the consideration for the |
| |
acquisition of the trading stock.” |
| |
3 | In the heading of Chapter 12 of Part 2, insert at the end insert “on cessation |
| |
| |
4 | In Schedule 4, in the table in Part 2, after the entry relating to “trade” insert— |
| |
| “trading stock (in relation to a trade) (in |
| | | | | | | | |
|
| |
| |
| |
5 (1) | This Part applies for the purposes of corporation tax. |
| |
(2) | In this Part “trading stock”, in relation to a trade, means anything (whether |
| |
| |
(a) | which is sold in the ordinary course of trade, or |
| |
(b) | which would be so sold if it were mature or its manufacture, |
| |
preparation or construction were complete. |
| |
| |
(a) | materials used in the manufacture, preparation or construction of |
| |
| |
(b) | any services performed in the ordinary course of the trade, or |
| |
(c) | any article produced, or any material used, in the performance of any |
| |
| |
|
| |
|
| |
|
Transfers of trading stock between trade and trader |
| |
6 (1) | This paragraph applies if trading stock of a person’s trade is appropriated |
| |
by the person for any other purpose. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the amount which the stock appropriated would have realised if sold |
| |
in the open market at the time of the appropriation is brought into |
| |
account as a receipt, and |
| |
(b) | the value of anything in fact received for it is left out of account. |
| |
(3) | The receipt is treated as arising on the date of the appropriation. |
| |
7 (1) | This paragraph applies if something that— |
| |
(a) | belongs to a person carrying on a trade, but |
| |
(b) | is not trading stock of the trade, |
| |
| becomes trading stock of the trade. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the cost of the stock is taken to be the amount which it would have |
| |
realised if sold in the open market at the time it became trading stock |
| |
| |
(b) | the value of anything in fact given for it is left out of account. |
| |
(3) | The cost is treated as being incurred on the date it became trading stock of |
| |
| |
Other disposals not made in the course of trade |
| |
8 (1) | This paragraph applies if— |
| |
(a) | trading stock of a trade is disposed of otherwise than in the course of |
| |
| |
(b) | paragraph 6 does not apply. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the amount which the stock disposed of would have realised if sold |
| |
in the open market at the time of the disposal is brought into account |
| |
| |
(b) | any consideration obtained for it is left out of account. |
| |
(3) | The receipt is treated as arising on the date of the disposal. |
| |
(4) | This paragraph is subject to paragraph 10. |
| |
9 (1) | This paragraph applies if— |
| |
(a) | trading stock of a trade has been acquired otherwise than in the |
| |
| |
(b) | paragraph 7 does not apply. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the cost of the stock is taken to be the amount which it would have |
| |
realised if sold in the open market at the time of the acquisition, and |
| |
(b) | the value of anything in fact given for it is left out of account. |
| |
(3) | The cost is treated as being incurred on the date of the acquisition. |
| |
(4) | This paragraph is subject to paragraph 10. |
| |
|
| |
|
| |
|
Relationship with transfer pricing rules |
| |
10 (1) | Paragraph 8 or 9 does not apply if the relevant consideration— |
| |
(a) | falls to be adjusted for tax purposes under Schedule 28AA to ICTA, |
| |
| |
(b) | falls within that Schedule without falling to be so adjusted. |
| |
(2) | For the purposes of sub-paragraph (1)(b), the relevant consideration falls |
| |
within Schedule 28AA to ICTA without falling to be adjusted under that |
| |
| |
(a) | the conditions in paragraph 1(1) of that Schedule are met, but |
| |
| |
(i) | the actual provision does not differ from the arm’s length |
| |
| |
(ii) | the exception in paragraph 8, 10 or 13 of that Schedule |
| |
| |
(3) | In this paragraph “relevant consideration” means— |
| |
(a) | in relation to paragraph 8, the consideration for the disposal of the |
| |
| |
(b) | in relation to paragraph 9, the consideration for the acquisition of the |
| |
| |
| |
| |
Non-residents: investment managers |
| |
| |
Eligibility to be UK representative |
| |
1 | In section 127 of FA 1995 (persons not treated as UK representatives), in |
| |
| |
(a) | at the end of paragraph (d), insert “and”, and |
| |
(b) | omit paragraph (f) (and the word “and” preceding it). |
| |
2 (1) | In section 127 of FA 1995, for subsections (12) and (13) substitute— |
| |
“(12) | In this section “investment transaction” means any transaction of a |
| |
description specified for the purposes of this section in regulations |
| |
made by the Commissioners for Her Majesty’s Revenue and |
| |
| |
(13) | Provision made in regulations under subsection (12) may, in |
| |
particular, have effect in relation to the tax year current on the day on |
| |
which the regulations are made.” |
| |
(2) | In section 1014(2) of ITA 2007 (orders and regulations under the Income Tax |
| |
Acts: excluded powers), after paragraph (b) insert— |
| |
“(ba) | section 127(12) of FA 1995,”. |
| |
|
| |
|
| |
|
| |
Eligibility to be agent of independent status |
| |
| |
3 (1) | In Schedule 26 of FA 2003 (non-resident companies: transactions through |
| |
broker, investment manager or Lloyd’s agent), for paragraph 3(3) and (4) |
| |
| |
“(3) | In sub-paragraph (1) “investment transaction” means any |
| |
transaction of a description specified for the purposes of this |
| |
paragraph in regulations made by the Commissioners for Her |
| |
Majesty’s Revenue and Customs. |
| |
(4) | Provision made in regulations under sub-paragraph (3) may, in |
| |
particular, have effect in relation to accounting periods current on |
| |
the day on which the regulations are made.” |
| |
(2) | In section 828(2) of ICTA (orders and regulations), after “Finance Act 1989” |
| |
insert “or paragraph 3(3) of Schedule 26 to the Finance Act 2003”. |
| |
| |
4 | ITA 2007 is amended as follows. |
| |
5 (1) | Section 827 (meaning of “investment transaction”) is amended as follows. |
| |
(2) | For subsections (2) and (3) substitute— |
| |
“(2) | In this section “investment transaction” means any transaction of a |
| |
description specified for the purposes of this section in regulations |
| |
made by the Commissioners for Her Majesty’s Revenue and |
| |
| |
(3) | Provision made in regulations under subsection (2) may, in |
| |
particular, have effect in relation to the tax year current on the day on |
| |
which the regulations are made.” |
| |
6 (1) | Section 1014(2) (orders and regulations under the Income Tax Acts: |
| |
excluded powers) is amended as follows. |
| |
(2) | In paragraph (g)(iia), omit “and”. |
| |
(3) | After paragraph (g)(iia) insert— |
| |
“(iib) | section 827(2) (meaning of “investment transaction”), |
| |
| |
| |
Non-residents liable to tax: disregarded investment income or profits |
| |
| |
7 | FA 2003 is amended as follows. |
| |
8 (1) | Section 152 (non-resident companies: transactions carried out through |
| |
broker, investment manager or Lloyd’s agent) is amended as follows. |
| |
|
| |
|
| |
|
(2) | The existing provision of section 152 becomes subsection (1) of that section. |
| |
(3) | After subsection (1) insert— |
| |
“(2) | Schedule 26 also contains provision about disregarding profits of |
| |
certain investment transactions carried out on behalf of non-resident |
| |
companies when attributing profits under section 11AA of the Taxes |
| |
| |
9 (1) | Schedule 26 (non-resident companies: transactions through broker, |
| |
investment manager or Lloyd’s agent) is amended as follows. |
| |
| |
(a) | at the end of paragraph (d), insert “and”, and |
| |
(b) | omit paragraph (f) (and the “and” before it). |
| |
| |
(4) | After paragraph 5 insert— |
| |
“Profits attributable to permanent establishment: disregard of profits of certain |
| |
| |
5A (1) | This paragraph applies if— |
| |
(a) | an investment manager carries out one or more investment |
| |
transactions (“relevant investment transactions”) on behalf |
| |
of a non-resident company (whether or not the investment |
| |
manager also carries out other transactions of any kind on |
| |
behalf of the company), and |
| |
(b) | as regards the non-resident company, the investment |
| |
manager is not regarded as an agent of independent status |
| |
acting in the ordinary course of his business (whether |
| |
because conditions in paragraph 3 are not met in relation |
| |
to relevant investment transactions or otherwise). |
| |
(2) | In determining under section 11AA of the Taxes Act 1988 the |
| |
amount of the profits attributable to the permanent establishment |
| |
represented by the investment manager acting as an agent on |
| |
behalf of the non-resident company, chargeable profits that derive |
| |
from a relevant investment transaction are to be disregarded in |
| |
either of the following cases. |
| |
(3) | The first case is where the conditions in paragraph 3 are met in |
| |
relation to the transaction. |
| |
(4) | The second case is where the conditions in paragraph 3, except for |
| |
the requirements of the 20% rule, are met in relation to the relevant |
| |
| |
(5) | But, in the second case, the chargeable profits are to be |
| |
disregarded only to the extent that they do not represent relevant |
| |
excluded income of the company to which the investment |
| |
manager or a person connected with the investment manager has |
| |
or has had any beneficial entitlement. |
| |
(6) | Expressions used in this paragraph and in paragraph 3 or 4 have |
| |
the same meaning in this paragraph as in paragraph 3 or 4.” |
| |
|
| |
|