|
| |
|
(ii) | the contract is one made on or after that date and the |
| |
effecting and carrying out of the business also |
| |
constitutes business within paragraphs I, II or III of |
| |
Part II of Schedule 1 to the Financial Services and |
| |
Markets Act (Regulated Activities) Order 2001.” |
| |
(2) | The amendment made by sub-paragraph (1) has effect for periods of account |
| |
beginning on or after 1 January 2007. |
| |
Transfers of exempt “other” business |
| |
3 (1) | After section 461C insert— |
| |
“461D | Transfers of other business |
| |
| |
(a) | at any time a friendly society (“the transferee”) acquires by |
| |
way of transfer of engagements or amalgamation from |
| |
another friendly society (“the transferor”) any business, other |
| |
than life or endowment business, consisting of business |
| |
which relates to contracts made before that time, and |
| |
(b) | immediately before that time the transferor was exempt from |
| |
corporation tax on profits arising from that business, |
| |
| the transferee is so exempt after that time. |
| |
(2) | But if during an accounting period of the transferee there is an |
| |
increase in the scale of benefits which it undertakes to provide in the |
| |
course of carrying on that business, the transferee shall not be |
| |
exempt from corporation tax by virtue of subsection (1) above for |
| |
that or any subsequent accounting period. |
| |
| |
(a) | at any time a friendly society (“the transferee”) acquires by |
| |
way of transfer of engagements or amalgamation from |
| |
another friendly society (“the transferor”) any business, other |
| |
than life or endowment business, consisting of business |
| |
which relates to contracts made before that time, and |
| |
(b) | immediately before that time the transferor was not exempt |
| |
from corporation tax on profits arising from that business, |
| |
| the transferee is not so exempt after that time. |
| |
(4) | The Treasury may by regulations provide that, where any business |
| |
of a friendly society is exempt from corporation tax by virtue of |
| |
subsection (1) above, or not so exempt by virtue of subsection (3) |
| |
above, the Corporation Tax Acts have effect subject to such |
| |
modifications (or exceptions) as the Treasury consider appropriate. |
| |
(5) | Regulations under subsection (4) above— |
| |
(a) | may make different provision for different cases, |
| |
(b) | may include any incidental, supplementary, consequential or |
| |
transitional provisions which the Treasury consider |
| |
| |
(c) | may include retrospective provision. |
| |
|
| |
|
| |
|
(2) | The amendment made by sub-paragraph (1) has effect in relation to transfers |
| |
of engagements and amalgamations taking place on or after the day on |
| |
which this Act is passed. |
| |
| |
4 | In subsection (1) of section 463 (application of Corporation Tax Acts to life or |
| |
endowment business carried on by friendly societies), for “the life or |
| |
endowment” substitute “long-term”; and, accordingly, in the title of that |
| |
section, for “Life or endowment” substitute “Long-term”. |
| |
Repeal of obsolete provisions |
| |
| |
(a) | section 462(3) and (4) (tax exempt business: insurances made in 1984- |
| |
| |
(b) | section 462A (election relating to profits attributable to pre-1991 |
| |
contracts expressed not to be part of tax exempt business). |
| |
(2) | In section 462(1), for “subsections (2) to (4)” substitute “subsection (2)”. |
| |
(3) | In consequence of sub-paragraph (1), omit— |
| |
(a) | paragraph 2 of Schedule 9 to FA 1991, |
| |
(b) | paragraph 9 of Schedule 9 to F(No.2)A 1992, and |
| |
(c) | section 45(4) and (5) of FA 2007. |
| |
| |
| |
Reduction of basic rate of income tax: transitional relief for gift aid charities |
| |
Payment of gift aid supplement |
| |
1 (1) | A charity is entitled to be paid an amount by the Commissioners (referred to |
| |
in this Schedule as a payment of “gift aid supplement”) if the following |
| |
| |
(2) | Condition A is that a gift aid donation is made to the charity in a transitional |
| |
| |
(3) | Condition B is that the charity makes a claim for the donation to be exempt |
| |
| |
(a) | section 505(1)(c)(ii) of ICTA (charitable companies), |
| |
(b) | section 521(4) of ITA 2007 (charitable trusts), or |
| |
(c) | paragraph 5(1)(c) of Schedule 18 to FA 2002 (community amateur |
| |
| |
(4) | Condition C is that the claim is made within the period of two years |
| |
beginning immediately after the end of— |
| |
(a) | the accounting period to which the claim relates (in a case falling |
| |
within sub-paragraph (3)(a) or (c)), or |
| |
(b) | the tax year to which the claim relates (in a case falling within sub- |
| |
| |
|
| |
|
| |
|
(5) | Condition D is that the claim is allowed. |
| |
Amount of gift aid supplement |
| |
2 (1) | The amount of gift aid supplement that a charity is entitled to be paid in |
| |
respect of a gift aid donation is—![equation: plus[times[char[D],char[G],char[N]],minus[times[char[D],char[G],char[A]]]]](missing.gif) |
| |
| |
DGN is the amount of the gift aid donation grossed up by reference to |
| |
the notional basic rate for the transitional tax year, and |
| |
DGA the amount of the gift aid donation grossed up by reference to the |
| |
actual basic rate of income tax for the transitional tax year. |
| |
(2) | A charity is not entitled to be paid gift aid supplement in respect of a gift aid |
| |
donation if the amount determined in accordance with sub-paragraph (1) is |
| |
| |
The “notional basic rate” |
| |
3 (1) | The “notional basic rate” for a transitional tax year is calculated by adding |
| |
| |
(a) | the actual basic rate of income tax for that year, and |
| |
(b) | the transitional supplement for that year. |
| |
(2) | But if the rate calculated for a transitional tax year by adding those two |
| |
things together is more than 22%, the notional basic rate for that year is 22%. |
| |
(3) | The “transitional supplement” for each transitional tax year is 2%. |
| |
(4) | Section 998 of ITA 2007 applies to the grossing up of an amount by reference |
| |
to a notional basic rate as if the notional basic rate were an actual rate of tax. |
| |
Errors in connection with payment of gift aid supplement |
| |
4 (1) | This paragraph applies if an officer of Revenue and Customs discovers that |
| |
payment or set-off of an amount of gift aid supplement— |
| |
(a) | ought not to have been made, or |
| |
(b) | is or has become excessive. |
| |
(2) | The relevant amount of gift aid supplement may be recovered as if it were |
| |
an amount of income tax wrongly repaid to the charity (and, in particular, |
| |
section 30 of TMA 1970 and paragraph 52 of Schedule 18 to FA 1998 apply |
| |
| |
(3) | An amount to be recovered in accordance with sub-paragraph (2) is liable to |
| |
interest as if it were an amount of income tax wrongly repaid to the charity. |
| |
(4) | In this paragraph “relevant amount of gift aid supplement” means the |
| |
payment or set-off of the amount of gift aid supplement, to the extent that |
| |
| |
(a) | ought not to have been made, or |
| |
(b) | is or has become excessive. |
| |
|
| |
|
| |
|
(5) | For the purposes of this paragraph income tax is “wrongly repaid” to a |
| |
charity if it is an amount repaid to the charity which ought not to have been |
| |
| |
(6) | For the purposes of this paragraph it does not matter if a charity is within the |
| |
charge to income tax or the charge to corporation tax. |
| |
| |
5 | Gift aid supplement is not— |
| |
(a) | income for the purposes of income tax, or |
| |
(b) | profits for the purposes of corporation tax. |
| |
6 | Any expenditure incurred by the Commissioners under this Schedule is to |
| |
be paid out of money provided by Parliament. |
| |
| |
“charity” has the same meaning as in Chapter 2 of Part 8 of ITA 2007 |
| |
| |
“the Commissioners” means the Commissioners for Her Majesty’s |
| |
| |
“gift aid donation” means a gift which is a qualifying donation for the |
| |
purposes of Chapter 2 of Part 8 of ITA 2007; |
| |
“gift aid supplement” has the meaning given in paragraph 1(1); |
| |
“transitional tax year” means each of the tax years 2008-09, 2009-10 and |
| |
| |
| |
8 | In section 25 of FA 1990 (donations to charities by individuals), after |
| |
| |
“(10A) | Schedule 19 to the Finance Act 2008 contains provision for |
| |
transitional payments to charitable companies in respect of gifts |
| |
made in the tax years 2008-09 to 2010-11.” |
| |
9 | In section 521 of ITA 2007 (gifts entitling donor to gift aid relief: income tax |
| |
liability and exemption of charity), after subsection (6) insert— |
| |
“(7) | Schedule 19 to the Finance Act 2008 contains provision for |
| |
transitional payments to charitable trusts in respect of gifts made in |
| |
the tax years 2008-09 to 2010-11.” |
| |
| |
| |
Leases of plant or machinery |
| |
Capital received in respect of lease to be treated as income |
| |
1 (1) | In Chapter 6 of Part 17 of ICTA (tax avoidance: miscellaneous), after section |
| |
| |
“785B | Plant and machinery leases: capital receipts to be treated as income |
| |
(1) | This section applies if— |
| |
|
| |
|
| |
|
(a) | there is an unconditional obligation, under a lease of plant or |
| |
machinery or a relevant arrangement, to make a relevant |
| |
capital payment (at any time), or |
| |
(b) | a relevant capital payment is made under such a lease or |
| |
arrangement otherwise than in pursuance of such an |
| |
| |
(2) | The lessor is treated for corporation tax purposes as receiving income |
| |
attributable to the lease of an amount equal to the amount of the |
| |
| |
(3) | The income is treated— |
| |
(a) | if subsection (1)(a) applies, as income for the period of |
| |
account in which there is first an obligation of the kind |
| |
| |
(b) | if subsection (1)(b) applies, as income for the period of |
| |
account in which the payment is made. |
| |
785C | Section 785B: interpretation |
| |
(1) | The expressions used in section 785B and this section are to be |
| |
| |
(2) | “Capital payment” means any payment except one which, if made to |
| |
| |
(a) | would fall to be included in a calculation of the lessor’s |
| |
income for corporation tax purposes, or |
| |
(b) | would fall to be included in such a calculation but for section |
| |
502B (rental earnings under long funding finance lease). |
| |
| |
| |
(b) | the letting of a ship or aircraft on charter or the letting of any |
| |
| |
| and “lessor” and “lessee” are to be read accordingly. |
| |
(4) | “Lease of plant or machinery” includes a lease of plant or machinery |
| |
and other property but does not include— |
| |
(a) | a lease where the income attributable to the lease received by |
| |
the lessor (if any) would be chargeable to tax under Schedule |
| |
| |
(b) | a lease of plant or machinery where the lessor has incurred |
| |
what would (but for section 34A of the Capital Allowances |
| |
Act) be qualifying expenditure (within the meaning of Part 2 |
| |
of that Act) on the plant or machinery. |
| |
(5) | “Relevant arrangement” means any agreement or arrangement |
| |
relating to a lease of plant or machinery, including one made before |
| |
the lease is entered into or after it has ended (and, accordingly, |
| |
“lessor” and lessee” include prospective and former lessors and |
| |
| |
(6) | A capital payment, in relation to a lease or relevant arrangement, is |
| |
“relevant” if condition A or B is met (but this is subject to subsection |
| |
| |
|
| |
|
| |
|
(7) | Condition A is that the capital payment is payable (or paid), directly |
| |
or indirectly, by (or on behalf of) the lessee to (or on behalf of) the |
| |
lessor in connection with— |
| |
(a) | the grant, assignment, novation or termination of the lease, or |
| |
(b) | any provision of the lease or relevant arrangement (including |
| |
the variation or waiver of any such provision). |
| |
(8) | Condition B is that rentals payable under the lease are less than (or |
| |
payable later than) they might reasonably be expected to be if there |
| |
were no obligation to make the capital payment (and the capital |
| |
| |
(9) | A capital payment is not “relevant” if or to the extent that— |
| |
(a) | the capital payment reduces (or would but for section 536 of |
| |
the Capital Allowances Act reduce) the amount of |
| |
expenditure incurred by the lessor for the purposes of the |
| |
Capital Allowances Act in respect of the plant or machinery |
| |
| |
(b) | the capital payment is compensation for loss resulting from |
| |
damage to, or damage caused by, the plant or machinery in |
| |
| |
(c) | the capital payment would fall (or falls) to be brought into |
| |
account by the lessor as a disposal receipt within the meaning |
| |
of Part 2 of the Capital Allowances Act (see section 60(1) of |
| |
| |
(10) | References to payment include the provision of value by any means |
| |
other than the making of a payment, and accordingly— |
| |
(a) | references to the making of a payment include the passing of |
| |
value (by any other means), and |
| |
(b) | references to the amount of the payment include the value |
| |
| |
785D | Section 785B: lease of plant and machinery and other property |
| |
(1) | This section applies if section 785B applies in relation to a lease of |
| |
plant or machinery and other property (see section 785C(4)). |
| |
(2) | The relevant capital payment is to be apportioned, on a just and |
| |
reasonable basis, between— |
| |
(a) | the plant and machinery, and |
| |
| |
(3) | If the income (if any) received by the lessor that is attributable to any |
| |
of the plant or machinery is chargeable to tax under Schedule A, treat |
| |
that plant or machinery as falling within subsection (2)(b) (and not |
| |
| |
(4) | Section 785B(2) has effect as if the reference to the amount of the |
| |
capital payment were to such amount as is apportioned under |
| |
subsection (2) in respect of the plant or machinery within subsection |
| |
| |
785E | Section 785B: expectation that relevant capital payment will not be |
| |
| |
(1) | This section applies for corporation tax purposes if— |
| |
|
| |
|
| |
|
(a) | section 785B applies by virtue of subsection (1)(a) of that |
| |
| |
(b) | at any time, the lessor reasonably expects that the relevant |
| |
capital payment will not be paid (or will not be paid in full). |
| |
(2) | For the purposes of calculating the profits of the lessor, a deduction |
| |
is allowed for the period of account which includes that time. |
| |
(3) | The amount of the deduction is equal to the amount reasonably |
| |
| |
(4) | No other deduction is allowed in respect of the matters mentioned in |
| |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to— |
| |
(a) | cases where there is first an obligation of the kind mentioned in |
| |
subsection (1)(a) of section 785B of ICTA on or after 13 December |
| |
| |
(b) | capital payments within subsection (1)(b) of that section made on or |
| |
| |
(3) | In relation to a case where the condition in paragraph (a) or (b) of section |
| |
785B(1) of ICTA was met before 12 March 2008, sections 785B to 785E of that |
| |
| |
(a) | for section 785C(4) there were substituted— |
| |
“(4) | “Lease of plant or machinery”— |
| |
(a) | includes an equipment lease within the meaning of |
| |
Chapter 14 of Part 2 of the Capital Allowances Act, |
| |
| |
(b) | subject to that, does not include a lease of plant or |
| |
machinery and other property.”, and |
| |
(b) | section 785D were omitted. |
| |
2 (1) | In ITA 2007, after section 809 insert— |
| |
| |
Avoidance involving leases of plant and machinery |
| |
809ZA | Plant and machinery leases: capital receipts to be treated as income |
| |
(1) | This section applies if— |
| |
(a) | there is an unconditional obligation, under a lease of plant or |
| |
machinery or a relevant arrangement, to make a relevant |
| |
capital payment (at any time), or |
| |
(b) | a relevant capital payment is made under such a lease or |
| |
arrangement otherwise than in pursuance of such an |
| |
| |
(2) | The lessor is treated for income tax purposes as receiving income |
| |
attributable to the lease of an amount equal to the amount of the |
| |
| |
(3) | The income is treated— |
| |
|
| |
|