|
| |
|
3 (1) | Section 41 (tax treatment of participants in offshore funds) is amended as |
| |
| |
(2) | In subsection (2), omit the definition of “offshore fund” (and the “and” |
| |
| |
(3) | Omit subsections (3) to (9). |
| 5 |
4 (1) | Section 42 (regulations under section 41: supplementary) is amended as |
| |
| |
(2) | In subsection (2), for paragraphs (a) and (b) substitute— |
| |
“(a) | an offshore fund comprising a part of umbrella |
| |
| 10 |
(b) | an offshore fund comprising arrangements relating to a class |
| |
of interest in other arrangements (see section 40D).” |
| |
(3) | In subsection (3), for the words from “may” to the end substitute “, in |
| |
| |
(a) | repeal Chapter 5 of Part 17 of ICTA (offshore funds), and |
| 15 |
(b) | make provision consequential on the repeal of provisions of |
| |
| |
(4) | In subsection (4)(e), insert at the end “and savings”. |
| |
(5) | For subsection (5) substitute— |
| |
“(5) | Regulations under section 41 may, in particular, provide for |
| 20 |
provisions to have effect in relation to the tax year, or accounting |
| |
periods, current on the day on which the regulations are made.” |
| |
(6) | In subsection (6), for “and “offshore fund” have” substitute “has”. |
| |
5 | After that section insert— |
| |
“42A | Regulations: procedure |
| 25 |
(1) | Regulations under this group of sections are to be made by statutory |
| |
| |
(2) | The following regulations may not be made unless a draft of the |
| |
instrument containing them has been laid before, and approved by a |
| |
resolution of, the House of Commons— |
| 30 |
(a) | regulations under section 40B(6), |
| |
(b) | regulations under section 40G(1), and |
| |
(c) | the first regulations under section 41(1). |
| |
(3) | A statutory instrument containing any other regulations under this |
| |
group of sections is subject to annulment in pursuance of a resolution |
| 35 |
of the House of Commons, unless a draft of the instrument has been |
| |
laid before, and approved by a resolution of, the House of |
| |
| |
Restriction on regulation-making power under section 41 of FA 2008 |
| |
6 (1) | Regulations under section 41 of FA 2008 may not make provision about the |
| 40 |
treatment of a person in respect of any rights in an affected offshore fund |
| |
that are acquired by the person— |
| |
|
| |
|
| |
|
(a) | before 1 December 2009, or |
| |
(b) | in accordance with sub-paragraph (2), |
| |
| (but see sub-paragraph (4)). |
| |
(2) | Rights are acquired in accordance with this sub-paragraph if— |
| |
(a) | the rights are acquired by the participant in accordance with a legally |
| 5 |
enforceable agreement in writing that was entered into by the |
| |
participant before 30 April 2009, |
| |
(b) | if the agreement was conditional, the conditions are satisfied before |
| |
| |
(c) | the agreement is not varied on or after that date. |
| 10 |
(3) | Rights of a person in a fund are rights in an affected offshore fund if— |
| |
(a) | the fund is an offshore fund within the meaning of section 40A of FA |
| |
| |
(b) | on the date on which the person acquired them, the fund was not an |
| |
offshore fund within the meaning of Chapter 5 of Part 17 of ICTA. |
| 15 |
(4) | Sub-paragraph (1) does not prevent regulations under section 41 of FA 2008 |
| |
| |
(a) | provision for a person to elect to be treated in accordance with the |
| |
regulations in respect of rights referred to in that sub-paragraph, or |
| |
(b) | provision that does not increase the person’s liability to tax in respect |
| 20 |
| |
| |
Application of TCGA 1992 to offshore funds |
| |
| |
7 | TCGA 1992 is amended as follows. |
| 25 |
8 | In Chapter 3 of Part 3 (collective investment schemes), insert at the end— |
| |
“103A | Application of Act to certain offshore funds |
| |
(1) | This Act applies in relation to a relevant offshore fund as if— |
| |
(a) | the fund were a company, and |
| |
(b) | the rights of the participants in the fund were shares in the |
| 30 |
| |
(2) | An offshore fund is a relevant offshore fund if— |
| |
(a) | it is not constituted by a company, and |
| |
(b) | it is not a unit trust scheme (see section 99). |
| |
(3) | In this section “offshore fund” and “participant”, in relation to a |
| 35 |
fund, have the meanings given in section 40A of the Finance Act |
| |
| |
9 | Accordingly, in the title of Part 3 and in the title of Chapter 3 of that Part, |
| |
| |
10 | In section 288(1) (interpretation), in the definition of “company”, for “section |
| 40 |
99” substitute “sections 99 and 103A”. |
| |
|
| |
|
| |
|
| |
| |
(a) | section 25(9) (issuing houses, stockbrokers, auctioneers, etc), and |
| |
(b) | section 28(2) (non-resident companies and trusts), |
| |
| after “sections 99” insert “, 103A”. |
| 5 |
(2) | In section 842(4) of ICTA (investment trusts), after “sections 99” insert |
| |
| |
| |
(a) | in section 149(4) (taxation of amounts taken to reserves), at the end of |
| |
paragraph (b) (before the “and”) insert— |
| 10 |
“(ba) | rights of participants in certain offshore funds to |
| |
which TCGA 1992 applies as a result of section 103A |
| |
| |
(b) | in section 150(8) (conversion etc of securities held as circulating |
| |
capital), after paragraph (c) insert— |
| 15 |
“(ca) | rights of participants in certain offshore funds to |
| |
which TCGA 1992 applies as a result of section 103A |
| |
| |
(4) | In section 834(5) of the Companies Act 2006 (investment company: condition |
| |
as to holdings in other companies), in the definition of “company” and |
| 20 |
“shares”, after “sections 99” insert “, 103A”. |
| |
(5) | In section 332 of ITA 2007 (venture capital trusts: minor definitions), in the |
| |
| |
(a) | for “section 99” substitute “sections 99 and 103A”, and |
| |
(b) | after “schemes” insert “and certain offshore funds”. |
| 25 |
| |
12 (1) | The amendments made by this Part of this Schedule have effect in relation |
| |
to the acquisition, holding and disposal of rights in a relevant offshore fund |
| |
on or after the commencement day, subject to paragraphs 13 and 15. |
| |
(2) | In this paragraph and paragraphs 15 to 18, “the commencement day” |
| 30 |
| |
(a) | in relation to the acquisition, holding and disposal of rights by a |
| |
person subject to the charge to capital gains tax, 1 December 2009, |
| |
| |
(b) | in relation to the acquisition, holding and disposal of rights by a |
| 35 |
person subject to the charge to corporation tax, such day as the |
| |
Treasury may by order appoint. |
| |
Commencement: certain consequential amendments |
| |
13 (1) | The amendment made by sub-paragraph (1)(a) of paragraph 11 comes into |
| |
force on 1 December 2009 (and has effect as if section 103A of TCGA 1992 |
| 40 |
had effect from that date in relation to the issue, placing, acquisition, holding |
| |
and disposal of rights in relevant offshore funds by any person). |
| |
(2) | The amendments made by sub-paragraphs (2), (4) and (5) of paragraph 11 |
| |
come into force in accordance with an order made by the Treasury. |
| |
|
| |
|
| |
|
| |
14 (1) | An order under paragraph 12(2)(b) or 13(2)— |
| |
(a) | may make different provision for different cases or different |
| |
| |
(b) | may include transitional provision and savings. |
| 5 |
(2) | Section 828(3) of ICTA, section 287(3) of TCGA 1992 and section 1014(4) of |
| |
ITA 2007 (orders etc subject to annulment) do not apply in relation to such |
| |
| |
Election modifying commencement |
| |
15 (1) | This paragraph applies if a person makes an election— |
| 10 |
(a) | for capital gains tax purposes, in respect of a relevant tax year, or |
| |
(b) | for corporation tax purposes, in respect of a relevant accounting |
| |
| |
(2) | The amendments made by this Part of this Schedule (other than the |
| |
amendments made by paragraph 11(1)(a), (2), (4) and (5)) have effect, and |
| 15 |
are to be treated as always having had effect, in relation to the acquisition, |
| |
holding and disposal by the person of rights in a relevant offshore fund on |
| |
or after the first day of that tax year or accounting period (“the election |
| |
| |
(3) | Sub-paragraph (4) applies if, in respect of any time on or after the election |
| 20 |
day but before the commencement day, the relevant offshore fund was not |
| |
certified as a distributing fund under Part 3 of Schedule 27 to ICTA |
| |
(distributing funds: certification procedure). |
| |
(4) | The acquisition, holding or disposal by the person of rights in the fund at |
| |
that time is to be treated as the acquisition, holding or disposal of rights in |
| 25 |
an offshore fund that is so certified. |
| |
(5) | In this paragraph and paragraph 16— |
| |
“relevant accounting period” means an accounting period beginning |
| |
on or after 1 April 2003 but before the day appointed under |
| |
| 30 |
“relevant tax year” means the tax year 2003-04 and any subsequent tax |
| |
year up to and including the tax year 2009-2010. |
| |
| |
16 (1) | An election under paragraph 15 must be made— |
| |
(a) | for capital gains tax purposes, by being included in a relevant return |
| 35 |
| |
(b) | for corporation tax purposes, by being included in a relevant |
| |
| |
(2) | A return under TMA 1970 is relevant if it is for— |
| |
(a) | the tax year in respect of which the election is made, or |
| 40 |
(b) | a subsequent relevant tax year. |
| |
(3) | A company tax return is relevant if it is for— |
| |
(a) | the accounting period in respect of which the election is made, or |
| |
|
| |
|
| |
|
(b) | a subsequent relevant accounting period. |
| |
(4) | The references in sub-paragraph (1) to an election being included in a return |
| |
include an election being included by virtue of an amendment of the return. |
| |
(5) | An election under paragraph 15 is irrevocable. |
| |
Giving effect to elections |
| 5 |
17 | If, in order to give effect to an election under paragraph 15, any adjustments |
| |
are required, whether by the discharge or repayment of tax, the making of |
| |
assessments or otherwise— |
| |
(a) | the adjustments must be made, and |
| |
(b) | any time limit for making the adjustments is to be disregarded. |
| 10 |
Modification of acquisition cost |
| |
18 (1) | This paragraph applies where a participant in a relevant offshore fund— |
| |
(a) | holds rights in a relevant offshore fund immediately before the |
| |
| |
(b) | disposes of those rights on or after that date. |
| 15 |
(2) | For the purposes of TCGA 1992, the participant is to be treated as if the |
| |
acquisition cost for those rights were the pre-commencement acquisition |
| |
| |
(3) | “The effective date” means— |
| |
(a) | if the participant has made an election under paragraph 15, the |
| 20 |
| |
(b) | otherwise, the commencement day. |
| |
(4) | “Acquisition cost” means the total of the consideration, costs and |
| |
expenditure described in section 38(1)(a) and (b) of TCGA 1992 (acquisition |
| |
| 25 |
(5) | “Pre-commencement acquisition cost” means the total of the consideration, |
| |
costs and expenditure that would have been allowable as a deduction under |
| |
section 38(1)(a) and (b) of TCGA 1992 if the participant had disposed of the |
| |
rights immediately before the effective date. |
| |
| 30 |
| |
| |
Transfer from non technical account not to be receipt |
| |
1 (1) | In section 83 of FA 1989 (receipts to be taken into account), after subsection |
| |
| |
“(2AZA) | No amount shown as transfer from non technical account in line 32 |
| 35 |
of Form 58 in respect of the whole of the company’s long-term |
| |
business in the periodical return for a period of account is to be taken |
| |
into account as a receipt of the period of account.” |
| |
|
| |
|
| |
|
(2) | The amendment made by sub-paragraph (1) has effect in relation to periods |
| |
of account ending on or after 22 April 2009. |
| |
(3) | But, in relation to a period of account of a company beginning before that |
| |
date, that amendment has effect only insofar as the amount shown as |
| |
transfer from non technical account in line 32 of Form 58 covering the whole |
| 5 |
of the company’s long-term business in the periodical return for the period |
| |
of account is attributable to transfers made on or after that date. |
| |
No deduction for capital allocations to with-profits policy holders |
| |
2 (1) | In section 82 of FA 1989 (calculation of profits), after subsection (2) insert— |
| |
“(2A) | But amounts are not allowed as such a deduction if they— |
| 10 |
(a) | are allocated to holders of policies under which they are |
| |
eligible to participate in surplus, |
| |
(b) | are of a capital nature, and |
| |
(c) | are not funded from amounts brought into account as part of |
| |
total income in line 19 of the revenue account prepared for |
| 15 |
the purposes of Chapter 9 of the Prudential Sourcebook |
| |
(Insurers) in respect of the whole of the company’s long-term |
| |
| |
(2B) | For the purposes of subsection (2A) above payments made in |
| |
connection with the reattribution of inherited estate are to be |
| 20 |
regarded as being of a capital nature.” |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to amounts |
| |
allocated on or after 22 April 2009 to holders of policies under which they are |
| |
eligible to participate in surplus. |
| |
Limits on loss relief for addition to non-profit funds |
| 25 |
3 (1) | In ICTA, after section 434A insert— |
| |
“434AZA | Reduced loss relief for additions to non-profit funds |
| |
(1) | Where this section applies in the case of a company carrying on life |
| |
assurance business, relief allowable under section 393A or Chapter 4 |
| |
of Part 10 in respect of losses incurred by the company in the life |
| 30 |
assurance business in an accounting period is reduced in accordance |
| |
| |
(2) | This section applies in the case of a company where— |
| |
(a) | there has been a relevant addition to one or more non-profit |
| |
funds in a period of account ending no later than the |
| 35 |
accounting period (“the relevant period of account”) (see |
| |
| |
(b) | the company is not a non-profit company in relation to the |
| |
relevant period of account and has not elected under |
| |
subsection (9) of section 83YA of the Finance Act 1989 to be |
| 40 |
treated for the purposes of that section as if it were, and |
| |
(c) | condition A or B is met, |
| |
| and, if the relevant period of account is not the period of account |
| |
ending with the accounting period (“the current period of account”), |
| |
| 45 |
|
| |
|
| |
|
(3) | For the purposes of subsection (2), there is a relevant addition to a |
| |
non-profit fund in the relevant period of account if an amount is |
| |
shown as a transfer from non-technical account in line 32 of the Form |
| |
58 of the non-profit fund in the periodical return for that period of |
| |
| 5 |
(4) | Condition A is that there is a relevant book value election in relation |
| |
to assets of a non-profit fund of the company. |
| |
(5) | For the purposes of subsection (4), there is a relevant book value |
| |
election in relation to assets of a non-profit fund if an amount is |
| |
shown in relation to the non-profit fund as the excess of the value of |
| 10 |
net admissible assets in line 51 of the Form 14 of the non-profit fund |
| |
in the periodical return for the current period of account. |
| |
(6) | Condition B is that the company is party to arrangements the main |
| |
purpose, or one of the main purposes, of which is to reduce the |
| |
relevant admissible value of assets of a non-profit fund of the |
| 15 |
company, other than any structural assets. |
| |
(7) | For the purposes of subsection (6) (and section 434AZB), the |
| |
“relevant admissible value” means the value reflected in line 89 of |
| |
Form 13 of the periodical return for the current period of account. |
| |
(8) | Condition C is that the surplus arising since the last valuation shown |
| 20 |
in line 34 of the Form 58 of the non-profit fund, or any of the non- |
| |
profit funds, in relation to which condition A or B is met in the |
| |
periodical return for the current period of account is a negative |
| |
| |
434AZB | Additions to non-profit funds: amount of loss reduction |
| 25 |
(1) | The amount of the relief allowable as mentioned in section |
| |
434AZA(1) is reduced by whichever of the following is the least— |
| |
(a) | the amount of the loss, |
| |
(b) | the amount specified in subsection (2), and |
| |
(c) | the amount specified in subsection (4). |
| 30 |
(2) | The amount mentioned in subsection (1)(b) is— |
| |
(a) | where only condition A in section 434AZA is met, the |
| |
relevant amount relating to the non-profit fund in relation to |
| |
which it is met or (where it is met in relation to more than one |
| |
non-profit fund) the sum of the relevant amounts relating to |
| 35 |
| |
(b) | where only condition B is met, the amount of the relevant |
| |
reduction relating to the non-profit fund in relation to which |
| |
it is met or (where it is met in relation to more than one non- |
| |
profit fund) the sum of the relevant reductions relating to |
| 40 |
| |
(c) | where both condition A and condition B are met, the |
| |
aggregate of the amounts in paragraphs (a) and (b). |
| |
| |
(a) | “relevant amount”, in relation to a non-profit fund, means the |
| 45 |
amount shown in relation to the non-profit fund as the excess |
| |
of the value of net admissible assets in line 51 of the Form 14 |
| |
of the non-profit fund in the periodical return for the current |
| |
|
| |
|