Finance Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 2 — Income tax rates
Part 2 — Amendments of other Acts
72

“dividend additional rate
section 8(3) (as applied by

section 989)”.

      (5)
After the entry relating to “higher rate” insert—

“higher rate limit
section 10 (as applied by section

989)”.

5
Part 2
Amendments of other Acts
FA 2004
10
Part 4 of FA 2004 (pension schemes etc) is amended as follows.
11
In section 192 (relief for pension contributions at source), for subsection (4)
10
substitute—
“(4)
If (apart from this section) income tax at the higher rate or the
additional rate is chargeable in respect of any part of the individual’s
total income for the tax year, on the making of a claim the basic rate
limit and the higher rate limit for the tax year in the individual’s case
15
are increased by the amount of the contribution.”
12
In section 208 (unauthorised payments charge), for subsection (6)
substitute—
“(6)
The Treasury may by order amend subsection (5) so as to vary the
rate of the unauthorised payments charge.
20
(6A)
An order under subsection (6) may make provision for there to be
different rates in different circumstances.”
13
In section 209 (unauthorised payments surcharge), for subsection (7)
substitute—
“(7)
The Treasury may by order amend subsection (6) so as to vary the
25
rate of the unauthorised payments surcharge.
(8)
An order under subsection (7) may make provision for there to be
different rates in different circumstances.”
14
In section 215 (amount of lifetime allowance charge), after subsection (2)
insert—
30
“(2A)
The Treasury may by order amend subsection (2) so as to vary the
rates of the lifetime allowance charge.
(2B)
An order under subsection (2A) may make provision for there to be
different rates in different circumstances.”
15
In section 227 (annual allowance charge), after subsection (5) insert—
35
“(5A)
The Treasury may by order amend subsection (4) so as to vary the
rate of the annual allowance charge.

Finance Bill
Schedule 2 — Income tax rates
Part 2 — Amendments of other Acts
73

(5B)
An order under subsection (5A) may make provision for there to be
different rates in different circumstances.”
16
In section 240 (amount of scheme sanction charge), after subsection (3)
insert—
“(3A)
The Treasury—
5
(a)
may by order amend subsection (1) so as to vary the rate of
the scheme sanction charge, and
(b)
may by order amend subsection (3)(a) so as to vary the
percentage mentioned there.
(3B)
An order under subsection (3A) may make provision for there to be
10
different rates or percentages in different circumstances.”
17
In section 242 (de-registration charge), insert at the end—
“(5)
The Treasury may by order amend subsection (4) so as to vary the
rate of the de-registration charge.
(6)
An order under subsection (5) may make provision for there to be
15
different rates in different circumstances.”
18    (1)
Section 282 (orders and regulations) is amended as follows.
      (2)
After subsection (1) insert—
“(1A)
No order may be made under section 208(6), 209(7), 215(2A),
227(5A), 240(3A) or 242(5) unless a draft of the statutory instrument
20
containing it has been laid before, and approved by a resolution of,
the House of Commons.”
      (3)
In subsection (2), after “Part” insert “, if made without a draft having been
approved by a resolution of the House of Commons,”.
ITTOIA 2005
25
19
ITTOIA 2005 is amended as follows.
20
In section 640(6)(b) (grossing-up of deemed income)—
(a)
omit the “and” at the end of sub-paragraph (i), and
(b)
insert at the end “up to and including the year 2009-2010, and
(iii)
50%, if the relevant tax year is the year 2010-
30
2011 or any subsequent tax year.”
21
In section 669(3) (reduction in residuary income: inheritance tax on accrued
income)—
(a)
in paragraph (a), after “charged at” insert “the additional rate or”,
and
35
(b)
in paragraph (b), after “charged at” insert “the dividend additional
rate or”.
22
In section 685A(3) (settlor-interested settlements), for “higher rate”
substitute “additional rate”.
23    (1)
Part 2 of Schedule 4 (index of defined expressions) is amended as follows.
40
      (2)
After the entry relating to “acquisition expenditure (in Chapter 9 of Part 2)”
insert—

Finance Bill
Schedule 3 — VAT: supplementary charge and orders changing rate
Part 1 — Supplementary charge to VAT
74

“additional rate
section 6(2) of ITA 2007 (as

applied by section 989 of that

Act)”.

      (3)
After the entry relating to “distribution” insert—

“the dividend additional rate
section 8(3) of ITA 2007 (as

5

applied by section 989 of that

Act)”.

F(No.2)A 2005
24
In section 7(5) of F(No.2)A 2005 (charge to income tax on social security
pension lump sum)—
10
(a)
in paragraph (d), after “basic rate limit for that year” insert “but does
not exceed the higher rate limit for that year”, and
(b)
after that paragraph insert—
“(e)
if P’s Step 3 income for that year of assessment
exceeds the higher rate limit for that year, the
15
additional rate for that year.”
Part 3
Commencement
25    (1)
The powers conferred by the amendments made by this Schedule may be
exercised at any time on or after the day on which this Act is passed but not
20
so as to make provision having effect before the tax year 2010-11.
      (2)
Subject to that, the amendments made by this Schedule have effect for the
tax year 2010-11 and subsequent tax years.
Schedule 3
Section 9

VAT: supplementary charge and orders changing rate
25
Part 1
Supplementary charge to VAT
The charge
1     (1)
There is a supplementary charge on a supply of goods or services that is
treated as taking place on or after 25 November 2008 if—
30
(a)
the supply spans the date of the VAT change,
(b)
it is subject to VAT at the rate in force under section 2 of VATA 1994,
(c)
the person to whom the supply is made is not entitled under VATA
1994 to credit for, or the repayment or refund of, all of the VAT on
the supply, and
35

Finance Bill
Schedule 3 — VAT: supplementary charge and orders changing rate
Part 1 — Supplementary charge to VAT
75

(d)
a relevant condition is met.
      (2)
In this Schedule “the date of the VAT change” means 1 January 2010.
      (3)
For the cases in which a supply, other than the grant of a right to goods or
services, spans the date of the VAT change and the relevant conditions in
relation to such a supply, see paragraph 2.
5
      (4)
For the cases in which a supply consisting of the grant of a right to goods or
services spans the date of the VAT change and the relevant conditions in
relation to such a supply, see paragraph 3.
      (5)
Sub-paragraph (1) has effect subject to the exceptions made by or under Part
2 of this Schedule.
10
      (6)
In this Schedule—
Part 3 contains provision about liability for, and the amount of, a
supplementary charge under this Schedule,
Part 4 contains special provision about listed supplies, and
Part 5 contains provision about administration and interpretation.
15
      (7)
A supplementary charge under this Schedule is to be treated for all purposes
as if it were value added tax charged in accordance with VATA 1994.
Supply spanning the date of the VAT change
2     (1)
For the purposes of this Schedule, a supply of goods or services spans the
date of the VAT change where—
20
(a)
by virtue of the issue of a VAT invoice or the receipt of a payment by
the person making the supply (“the supplier”), the supply is treated
as taking place before the date of the VAT change, but
(b)
the basic time of supply (see paragraph 4) is on or after the date of the
VAT change.
25
      (2)
The relevant conditions are—
(a)
in relation to a supply that is within sub-paragraph (1)(a) by virtue
of the issue of a VAT invoice, conditions A to D, and
(b)
in relation to a supply that is within sub-paragraph (1)(a) by virtue
of the receipt of a payment, conditions A to C.
30
      (3)
Condition A is that the supplier and the person to whom the supply is made
are connected with each other at any time in the period—
(a)
beginning with the day on which the supply is treated as taking
place, and
(b)
ending on the date of the VAT change.
35
      (4)
Paragraph 5 modifies condition A in cases involving a series of supplies.
      (5)
Condition B is that the aggregate of the following is more than £100,000—
(a)
the relevant consideration for the supply, and
(b)
the relevant consideration for every related supply of goods or
services (including every related grant of a right to goods or services)
40
that spans the date of the VAT change (see paragraph 6).
      (6)
Condition C is that a prepayment in respect of the supply is financed by the
supplier or a person connected with the supplier (see paragraph 7).

Finance Bill
Schedule 3 — VAT: supplementary charge and orders changing rate
Part 1 — Supplementary charge to VAT
76

      (7)
In sub-paragraph (6) “prepayment”, in respect of a supply, means a payment
that is received by the supplier before the basic time of supply.
      (8)
Condition D is that full payment of the amount shown on the VAT invoice
referred to in sub-paragraph (1)(a) is not due before the end of the period of
6 months beginning with the date on which the invoice is issued.
5
      (9)
This paragraph does not apply in relation to a supply consisting of the grant
of a right to goods or services (see paragraph 3).
Grant of right spanning the date of the VAT change
3     (1)
For the purposes of this Schedule, a supply consisting of the grant by a
person (“the grantor”) of a right to goods or services spans the date of the
10
VAT change where—
(a)
that supply is treated as taking place before the date of the VAT
change,
(b)
the goods or services are to be supplied at a discount or free of
charge, and
15
(c)
the basic time of supply for the supply of some or all of the goods or
services (see paragraph 4) is on or after the date of the VAT change.
      (2)
In relation to the grant of the right, the relevant conditions are conditions A
to C.
      (3)
Condition A is that the grantor and the person to whom the right is granted
20
are connected with each other at any time in the period—
(a)
beginning with the day on which the supply consisting of the grant
of the right is treated as taking place, and
(b)
ending on the date of the VAT change or, if the right is exercised
(entirely or partly) on a later date, that date (or, if more than one, the
25
first of those dates).
      (4)
Paragraph 5 modifies condition A in cases involving a series of supplies.
      (5)
Condition B is that the aggregate of the following is more than £100,000—
(a)
the relevant consideration for the grant of the right, and
(b)
the relevant consideration for every related supply of goods or
30
services (including every related grant of a right to goods or services)
that spans the date of the VAT change (see paragraph 6).
      (6)
Condition C is that the payment made in respect of the grant of the right is
financed by the grantor or a person connected with the grantor (see
paragraph 7).
35
      (7)
In this Schedule references to a right to goods or services include—
(a)
any right or option with respect to such goods or services, and
(b)
any interest deriving from such a right or option.
“Basic time of supply”
4     (1)
In this Schedule the “basic time of supply” is the time given by subsection (2)
40
or (3) of section 6 of VATA 1994 (disregarding subsections (4) to (14) of that
section).
      (2)
Sub-paragraph (1) does not apply in relation to listed supplies (see Part 4 of
this Schedule).

Finance Bill
Schedule 3 — VAT: supplementary charge and orders changing rate
Part 1 — Supplementary charge to VAT
77

Series of supplies
5     (1)
This paragraph applies where—
(a)
the supply or grant of a right referred to in paragraph 2 or 3 (“the
affected supply or grant”) is one of a series of supplies of, or grants
of a right to, the same or substantially the same goods or services,
5
and
(b)
each of the supplies, and the grants of a right, in the series was or will
be made in the expectation that the affected supply or grant would
or will take place.
      (2)
In condition A in paragraphs 2 and 3, the references to the supplier and the
10
grantor include any person who makes one of the supplies or grants one of
the rights in the series.
“Relevant consideration” and “related” supplies
6     (1)
This paragraph applies for the purposes of condition B in paragraphs 2 and
3.
15
      (2)
“Relevant consideration” means—
(a)
in relation to a supply that is within paragraph 2(1) by virtue of the
issue of a VAT invoice, the amount shown on that invoice,
(b)
in relation to a supply that is within paragraph 2(1) by virtue of the
receipt of a payment, the amount of that payment, and
20
(c)
in relation to a grant of a right to goods or services within paragraph
3(1), the consideration for the grant of the right,

but does not include any amount in respect of VAT.
      (3)
A supply within paragraph 2(1), or a grant of a right within paragraph 3(1),
is related to another such supply or grant if they are both made as part of the
25
same scheme.
      (4)
“Scheme” includes any arrangements, transaction or series of transactions.
Financing
7     (1)
This paragraph applies for the purposes of condition C in paragraphs 2 and
3.
30
      (2)
A payment is financed by a person if, directly or indirectly, the person—
(a)
provides funds to enable the person to whom the supply is made to
make the whole or part of the payment (whether the funds are
provided before or after the payment is made),
(b)
procures the provision of such funds by another person,
35
(c)
provides funds for discharging (in whole or in part) any liability that
has been or may be incurred by any person for or in connection with
raising funds to enable the person to whom the supply is made to
make the payment, or
(d)
procures that any such liability is or will be discharged (in whole or
40
in part) by another person.
      (3)
In sub-paragraph (2) the references to providing funds for a purpose are to—
(a)
making a loan of funds that are or are to be used for that purpose,
(b)
providing a guarantee or other security in relation to such a loan,

Finance Bill
Schedule 3 — VAT: supplementary charge and orders changing rate
Part 2 — Exceptions
78

(c)
providing consideration for the issue of shares or other securities
issued wholly or partly for raising those funds,
(d)
providing consideration for the acquisition by any person of any
such shares or securities, or
(e)
any other transfer of assets or value as a consequence of which any
5
of those funds are made available for that purpose.
Connected persons
8
Section 839 of ICTA (connected persons) applies for the purposes of this
Schedule.
Receipt of payments
10
9
In this Schedule a reference to receipt of a payment by the person making a
supply or granting a right (however expressed) includes a reference to
receipt by a person to whom a right to receive it has been assigned.
Power to change relevant conditions
10    (1)
The Treasury may by order amend this Part of this Schedule by adding,
15
modifying or omitting relevant conditions.
      (2)
An order under this paragraph—
(a)
may make different provision for different cases, and
(b)
may make incidental or consequential amendments of this Schedule.
Supplies treated as taking place before 31 March 2009
20
11
In relation to supplies treated as taking place before 31 March 2009, this
Schedule has effect as if—
(a)
paragraphs 2(5), 3(5) and 6 (condition B) and all references to
condition B were omitted,
(b)
in paragraph 2(6) (condition C), the words “or a person connected
25
with the supplier” were omitted, and
(c)
in paragraph 3(6) (condition C), the words “or a person connected
with the grantor” were omitted.
Part 2
Exceptions
30
Letting etc of assets
12    (1)
This paragraph applies in relation to a supply within paragraph 2 which
arises from the letting, hiring or rental of assets.
      (2)
There is no supplementary charge under this Schedule if—
(a)
the period to which the VAT invoice or payment referred to in
35
paragraph 2(1) relates does not exceed 12 months, and
(b)
the VAT invoice is issued, or the payment is received, in accordance
with normal commercial practice in relation to the letting, hiring or
rental of such assets.