House of Commons Amendments

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

47

House of Commons

Notices of Amendments

given on

Thursday 4 June 2009

For other Amendment(s) see the following page(s):

Finance Bill Committee 34-37 and 39-45

Public Bill Committee

Finance Bill

(Except Clauses 7, 8, 9, 11, 14, 16, 20 and 92)

Mr Stephen Timms

89

Clause  39,  page  19,  line  43,  at end insert—

‘(3A)
Accordingly, in section 367 of ITTOIA 2005 (priority between Chapters within

Part 4), in subsection (3)—

(a)
in paragraph (a), after “dividends)” insert “, 378A (offshore fund

distributions)”, and

(b)
in paragraph (b), insert at the end “or Chapter 4 (or both)”.’.

Mr Stephen Timms

90

Schedule  13,  page  131,  line  28,  after ‘treated’ insert ‘under subsection (5)’.

Mr Stephen Timms

91

Schedule  13,  page  131,  leave out lines 30 to 34 and insert ‘The liability mentioned in

subsection (7)’.

Mr Stephen Timms

92

Schedule  14,  page  134,  line  1,  leave out ‘any amount determined by reference to’.

Mr Stephen Timms

93

Schedule  14,  page  135,  line  17,  leave out ‘any amount determined by reference to’.

Notices of Amendments: 4 June 2009
48

Finance Bill, continued

Mr Stephen Timms

94

Schedule  14,  page  136,  line  30,  leave out ‘apart from’ and insert ‘otherwise than by

virtue of’.

Mr Stephen Timms

95

Schedule  14,  page  136,  line  33,  leave out from beginning to ‘is’ in line 34 and

insert ‘Any other dividend’.

Mr Stephen Timms

96

Schedule  14,  page  137,  line  14,  leave out ‘apart from’ and insert ‘otherwise than by

virtue of’.

Mr Stephen Timms

97

Schedule  14,  page  137,  line  17,  leave out from beginning to ‘is’ in line 18 and

insert ‘Any other dividend’.

Mr Stephen Timms

98

Schedule  14,  page  138,  line  18,  leave out from ‘that’ to end of line 20 and insert

‘does not fall into an exempt class by virtue of section 930E but would, apart from this

section, fall into an exempt class otherwise than by virtue of that section.’.

Mr Stephen Timms

99

Schedule  14,  page  138,  line  46,  at end insert—

‘930MA
  Schemes involving distributions for which deductions are given

(1)
This section applies to a dividend or other distribution that would,

apart from this section, fall into an exempt class.

(2)
The distribution does not fall into an exempt class if—

(a)
the distribution is made as part of a tax advantage scheme, and

(b)
the following condition is met.

(3)
The condition is that a deduction is allowed to a resident of any

territory outside the United Kingdom under the law of that territory in

respect of an amount determined by reference to the distribution.’.

Mr Stephen Timms

100

Schedule  14,  page  143,  line  9,  leave out sub-paragraphs (2) and (3) and insert—

      ‘()
In subsection (3) (as it has effect as amended by paragraph 8 of Schedule 30 to

FA 2000)—

(a)
before paragraph (a), insert—

“(za)
if the dividend is received in an accounting period of

the recipient in which the recipient is not a small

company, and the dividend is a relevant dividend, the

profits in respect of which the dividend is paid;’,

(b)
in paragraph (a), at the beginning, insert “in a case not falling under

paragraph (za),”, and

Notices of Amendments: 4 June 2009
49

Finance Bill, continued

(c)
in paragraph (c), at the beginning, insert “in a case not falling under

paragraph (za),”.

      ()
After subsection (3) insert—

“(3A)
For the purposes of subsection (3)—

(a)
“small company” has the same meaning as in Part 9A of CTA

2009 (company distributions),

(b)
“relevant dividend” means a dividend that, for the purposes of

section 930H of that Act (dividends derived from transactions

not designed to reduce tax), is treated as paid in respect of

profits other than relevant profits (see subsection (4) of that

section), and

(c)
the profits in respect of which a dividend is paid are the profits

in respect of which the dividend is treated as paid for the

purposes of that section.”’.

Mr Stephen Timms

101

Schedule  14,  page  144,  line  24,  leave out from beginning to ‘modification’ in line

32 and insert ‘modification.

  (3B)
The’.

Mr Stephen Timms

102

Schedule  14,  page  145,  line  36,  leave out from ‘following’ to ‘modification’ in line

44 and insert ‘modification.

  (4B)
The’.

Mr Stephen Timms

103

Schedule  14,  page  148,  line  28,  leave out ‘apart from’ and insert ‘otherwise than by

virtue of’.

Mr Stephen Timms

104

Schedule  14,  page  148,  line  37,  leave out ‘apart from’ and insert ‘otherwise than by

virtue of’.

Mr Stephen Timms

105

Schedule  15,  page  149,  line  20,  at end insert—

  ‘(4A)
Part 5A contains rules connected with tax avoidance.’.

Mr Stephen Timms

106

Schedule  15,  page  150,  line  1,  at end insert—

  ‘(1A)
But a period of account that is within sub-paragraph (1) is not a period of

account to which this Schedule applies if the worldwide group is a qualifying

financial services group in that period (see paragraph 6A).’.

Mr Stephen Timms

107

Schedule  15,  page  151,  line  10,  leave out ‘finance income payable’ and insert

Notices of Amendments: 4 June 2009
50

Finance Bill, continued

‘liabilities’.

Mr Stephen Timms

108

Schedule  15,  page  151,  line  19,  leave out ‘finance income receivable in respect of’

and insert ‘net investments, or net cash investments, in’.

Mr Stephen Timms

109

Schedule  15,  page  151,  line  38,  leave out ‘finance income payable’ and insert

‘liabilities’.

Mr Stephen Timms

110

Schedule  15,  page  152,  line  28,  at end insert—

‘Qualifying financial services groups

6A  (1)
The worldwide group is a qualifying financial services group in a period of

account if the trading income condition—

(a)
is met in relation to that period, or

(b)
is not met in relation to that period, but only because of losses incurred

by the group in respect of activities that are normally reported on a net

basis in financial statements prepared in accordance with international

accounting standards.

      (2)
The trading income condition is met in relation to a period of account if—

(a)
all or substantially all of the UK trading income of the worldwide

group for that period, or

(b)
all or substantially all of the worldwide trading income of the

worldwide group for that period,


is derived from qualifying activities (see paragraph 6B).

      (3)
In this Part, in relation to a period of account of the worldwide group—

“UK trading income” means the sum of the trading income for that period

of each company that was a relevant group company at any time during

that period (see paragraph 6F);

“worldwide trading income” means the trading income for that period of the

worldwide group (see paragraph 6G).

Qualifying activities

6B
In this Part “qualifying activities” means—

(a)
lending activities and activities that are ancillary to lending activities

(see paragraph 6C),

(b)
insurance activities and insurance-related activities (see paragraph

6D), and

(c)
relevant dealing in financial instruments (see paragraph 6E).

Lending activities and activities ancillary to lending activities

6C  (1)
In this Part “lending activities” means any of the following activities—

(a)
acceptance of deposits or other repayable funds;

Notices of Amendments: 4 June 2009
51

Finance Bill, continued

(b)
lending of money, including consumer credit, mortgage credit,

factoring (with or without recourse) and financing of commercial

transactions (including forfeiting);

(c)
finance leasing (as lessor);

(d)
issuing and administering means of payment;

(e)
provision of guarantees or commitments to provide money;

(f)
money transmission services;

(g)
provision of alternative finance arrangements;

(h)
other activities carried out in connection with activities falling within

any of paragraphs (a) to (g).

      (2)
Activities that are ancillary to lending activities are not qualifying activities for

the purposes of this Part if the income derived from the ancillary activities

forms a significant part of the total of—

(a)
that income,

(b)
the income derived from lending activities of the worldwide group in

the period of account.

      (3)
In sub-paragraph (2) “income” means the gross income or net income that

would be taken into account for the purposes of paragraph 6A in calculating

the UK or worldwide trading income of the worldwide group for the period of

account.

      (4)
The Commissioners may by order—

(a)
amend sub-paragraph (1), and

(b)
make other amendments of this paragraph in consequence of any

amendment of sub-paragraph (1).

      (5)
In sub-paragraph (1)(h), and in the references to ancillary activities in this

paragraph and paragraph 6B(a), “activities” includes buying, holding,

managing and selling assets.

      (6)
In this paragraph “alternative finance arrangements” has the same meaning as

in Chapter 6 of Part 6 of CTA 2009.

Insurance activities and insurance related activities

6D  (1)
In this Part “insurance activities” means—

(a)
the effecting or carrying out of contracts of insurance by a regulated

insurer, and

(b)
investment business that arises directly from activities falling within

paragraph (a).

      (2)
In this Part “insurance-related activities” means—

(a)
activities that are ancillary to insurance activities, and

(b)
activities that—

(i)
are of the same kind as activities carried out for the purposes

of insurance activities,

(ii)
are not actually carried out for those purposes, and

(iii)
would not be carried out but for insurance activities being

carried out.

      (3)
Sub-paragraph (2) is subject to sub-paragraph (4).

      (4)
Activities that fall within sub-paragraph (2)(a) or (b) (“the relevant activities”)

are not insurance-related activities if the income derived from the relevant

activities forms a significant part of the total of—

(a)
that income,

Notices of Amendments: 4 June 2009
52

Finance Bill, continued

(b)
the income derived from insurance activities of the worldwide group

in the period of account.

      (5)
In sub-paragraph (4) “income” means the gross income or net income that

would be taken into account for the purposes of paragraph 6A in calculating

the UK or worldwide trading income of the worldwide group for the period of

account.

      (6)
In this paragraph—

“activities” includes buying, holding, managing and selling assets;

“contract of insurance” has the same meaning as in Chapter 1 of Part 12 of

ICTA;

“regulated insurer” means a member of the worldwide group that—

(a)
is authorised under the law of any territory to carry on insurance

business, or

(b)
is a member of a body or organisation that is so authorised.

Relevant dealing in financial instruments

6E  (1)
In this Part “financial instrument” means anything that is a financial instrument

for any purpose of the FSA Handbook.

      (2)
For the purposes of this Part, a dealing in a financial instrument is a “relevant

dealing” if—

(a)
it is a dealing other than in the capacity of a broker, and

(b)
profits or losses on the dealing form part of the trading profits or losses

of a business.

      (3)
In this paragraph “broker” includes any person offering to sell securities to, or

purchase securities from, members of the public generally.

UK trading income of the worldwide group

6F  (1)
This paragraph applies in relation to paragraph 6A for calculating the UK

trading income of the worldwide group for a period of account.

      (2)
The trading income for that period of a relevant group company is the

aggregate of—

(a)
the gross income calculated in accordance with sub-paragraph (3), and

(b)
the net income calculated in accordance with sub-paragraph (4).

      (3)
The income referred to in sub-paragraph (2)(a) is the gross income—

(a)
arising from the activities of the relevant group company (other than

net-basis activities), and

(b)
accounted for as such under generally accepted accounting practice,


without taking account of any deductions (whether for expenses or otherwise).

      (4)
The income referred to in sub-paragraph (2)(b) is the net income arising from

the net-basis activities of the relevant group company that—

(a)
is accounted for as such under generally accepted accounting practice,

or

(b)
would be accounted for as such if income arising from such activities

were accounted for under generally accepted accounting practice.

      (5)
Sub-paragraphs (3) and (4) are subject to sub-paragraph (6).

      (6)
In a case where a proportion of an accounting period of a relevant group

company does not fall within the period of account of the worldwide group, the

gross income or net income for that accounting period of the company is to be

reduced, for the purposes of this paragraph, by that proportion.

Notices of Amendments: 4 June 2009
53

Finance Bill, continued

      (7)
Gross income or net income is to be disregarded for the purposes of sub-

paragraph (2) if the income arises in respect of an amount payable by another

member of the worldwide group that is either a UK group company or a

relevant group company.

      (8)
In this paragraph “net-basis activity” means activity that is normally reported

on a net basis in financial statements prepared in accordance with generally

accepted accounting practice.

Worldwide trading income of the worldwide group

6G  (1)
This paragraph applies in relation to paragraph 6A for calculating the

worldwide trading income of the worldwide group for a period of account.

      (2)
The trading income for that period of the worldwide group is the aggregate

of—

(a)
the gross income calculated in accordance with sub-paragraph (3), and

(b)
the net income calculated in accordance with sub-paragraph (4).

      (3)
The income referred to in sub-paragraph (2)(a) the gross income—

(a)
arising from the activities of worldwide group (other than net-basis

activities), and

(b)
disclosed as such in the financial statements of the worldwide group,


without taking account of any deductions (whether for expenses or otherwise).

      (4)
The income referred to in sub-paragraph (2)(b) is the net income arising from

the net-basis activities of the worldwide group that—

(a)
is accounted for as such under international accounting standards, or

(b)
would be accounted for as such if income arising from such activities

were accounted for under international accounting standards.

      (5)
In this paragraph “net-basis activity” means activity that is normally reported

on a net basis in financial statements prepared in accordance with international

accounting standards.

      (6)
For provision about references in this Schedule to financial statements of the

worldwide group, and amounts disclosed in financial statements, see

paragraphs 69 to 72.’.

Mr Stephen Timms

111

Schedule  15,  page  152,  line  39,  after first ‘currency’ insert ‘(“the relevant foreign

currency”)’.

Mr Stephen Timms

112

Schedule  15,  page  152,  line  40,  after ‘applies’ insert ‘—

(a)
’.

Mr Stephen Timms

113

Schedule  15,  page  152,  line  42,  leave out from ‘the’ to end of line 43 and insert

‘relevant foreign currency, and—

(b)
for the purposes of determining under paragraph 3 the net debt amount

of a company, the reference in sub-paragraph (3) of that paragraph to

£3 million is to be read as a reference to the relevant amount.

      (4)
For this purpose “the relevant amount” means the average of—

(a)
£3 million expressed in the relevant foreign currency, translated by

reference to the spot rate of exchange for the company’s start date, and