Taxation (International and Other Provisions) Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Taxation (International and Other Provisions) Bill

Taxation (International and Other Provisions) Bill
Schedule 6 — UK Representatives of non-UK residents
Part 2 — New Part 7A of TCGA 1992
304

profits or losses is treated for the purposes of section 852 of ITTOIA
2005 as deriving.”
27
After section 271C insert—
“271D
Interpretation of Chapter
In this Chapter—
5
“branch or agency” means any factorship, agency, receivership,
branch or management, and
“non-UK resident” means a person who is not resident in the
United Kingdom.”
28
After section 271D insert—
10
“Chapter 2
Capital gains tax obligations and liabilities imposed on UK
representatives
271E
Introduction to Chapter
(1)
This Chapter applies to the enactments contained in—
15
(a)
this Act,
(b)
the Tax Acts, and
(c)
subordinate legislation made under this Act or the Tax Acts,

so far as they make provision for or in connection with the
assessment, collection and recovery of tax, or of interest on tax.
20
(2)
Those enactments have effect in accordance with section 271F in
relation to amounts in respect of which a branch or agency is to be
treated as the UK representative of a non-UK resident under Chapter
1.
(3)
In this section “subordinate legislation” has the same meaning as in
25
the Interpretation Act 1978.”
29
After section 271E insert—
“271F
Obligations and liabilities of UK representative
(1)
The obligations and liabilities of a non-UK resident are to be treated,
for the purposes of the enactments to which this Chapter applies, as
30
if they were also the obligations and liabilities of the UK
representative of the non-UK resident.
(2)
Subsection (3) applies if—
(a)
the UK representative of a non-UK resident discharges an
obligation or liability imposed by this section that
35
corresponds to one to which the non-UK resident is subject,
or
(b)
a non-UK resident discharges an obligation or liability that
corresponds to one to which the non-UK resident’s UK
representative is subject by virtue of this section.
40
(3)
The corresponding obligation or liability—
(a)
of the non-UK resident (in a case within subsection (2)(a)), or

Taxation (International and Other Provisions) Bill
Schedule 6 — UK Representatives of non-UK residents
Part 2 — New Part 7A of TCGA 1992
305

(b)
of the UK representative (in a case within subsection (2)(b)),

is discharged.
(4)
A non-UK resident is bound, as if they were the non-UK resident’s
own, by acts or omissions of the non-UK resident’s UK
representative in the discharge of the obligations and liabilities
5
imposed on the representative by this section.
(5)
This section is subject to sections 271G and 271H.”
30
After section 271F insert—
“271G
Exceptions: notices and information
(1)
An obligation or liability attaching to a non-UK resident (“X”) by
10
reason of a notice or other document having been given or served on
X does not also attach to the UK representative of X by virtue of
section 271F unless the notice or other document (or a copy of it) has
been given to or served on the representative.
(2)
An obligation or liability attaching to X by reason of a request or
15
demand having been received by X does not also attach to the UK
representative of X by virtue of section 271F unless the
representative has been notified of the request or demand.
(3)
Subsection (4) applies to obligations relating to the provision of
information that are imposed on the UK representative of X by
20
section 271F in a case where the representative is X’s independent
agent.
(4)
The obligations do not require the UK representative to do anything
except so far as it is practicable for the representative to do so.
(5)
For this purpose, the representative must act to the best of the
25
representative’s knowledge and belief after taking all reasonable
steps to obtain the necessary information.
(6)
An obligation of X to provide information is not discharged by virtue
of section 271F in a case where the UK representative of X has
discharged the obligation only so far as required by subsection (4) of
30
this section.
(7)
X is not bound by virtue of section 271F by mistakes in information
provided by the UK representative of X in discharging, so far as
required under subsection (4) of this section, an obligation imposed
on the representative by section 271F unless—
35
(a)
the mistake is the result of an act or omission of X, or
(b)
the mistake is one to which X consented or in which X
connived.
(8)
In this section “information” includes anything contained in a return,
self-assessment, account, statement or report required to be
40
provided to the Commissioners for Her Majesty’s Revenue and
Customs or to any officer of Revenue and Customs.”

Taxation (International and Other Provisions) Bill
Schedule 6 — UK Representatives of non-UK residents
Part 2 — New Part 7A of TCGA 1992
306

31
After section 271G insert—
“271H
Exceptions: criminal offences and penalties etc
(1)
A person is not by virtue of section 271F liable to be proceeded
against for a criminal offence unless the person—
(a)
committed the offence, or
5
(b)
consented to or connived in its commission.
(2)
An independent agent of a non-UK resident is not by virtue of
section 271F liable to any civil penalty or surcharge in respect of an
act or omission if conditions A and B are met.
(3)
Condition A is that the act or omission is not—
10
(a)
an act or omission of the independent agent, or
(b)
an act or omission to which the agent consented or in which
the agent connived.
(4)
Condition B is that the independent agent is able to show that the
amount of the penalty or surcharge will not be recoverable out of the
15
sums mentioned in section 271I(3) (after being indemnified for any
other liabilities under section 271I).”
32
After section 271H insert—
“271I
Indemnities
(1)
An independent agent of a non-UK resident is entitled to be
20
indemnified for the amount of any liability of the non-UK resident
which the agent has discharged by virtue of section 271F.
(2)
An independent agent of a non-UK resident is entitled to retain, from
the sums mentioned in subsection (3), amounts sufficient to meet any
liabilities which by virtue of section 271F the agent has discharged or
25
to which the agent is subject.
(3)
The sums are those which—
(a)
(ignoring subsection (2)) are due from the independent agent
to the non-UK resident, or
(b)
are received by the independent agent on behalf of the non-
30
UK resident.”
33
After section 271I insert—
“271J
Meaning of “non-UK resident” and “independent agent”
(1)
In this Chapter “non-UK resident” means a person who is not
resident in the United Kingdom.
35
(2)
In this Chapter “independent agent”, in relation to a non-UK resident
(“X”), means a person who is the UK representative of X in respect of
any agency in which the person is acting on behalf of X in an
independent capacity.
(3)
For this purpose a person does not act in an independent capacity on
40
behalf of X unless the relationship between them, having regard to
its legal, financial and commercial characteristics, is a relationship
between persons carrying on independent businesses dealing with
each other at arm’s length.”

Taxation (International and Other Provisions) Bill
Schedule 7 — Miscellaneous relocations
Part 1 — Relocation of section 38 of, and Schedule 15 to, FA 1973
307

Schedule 7
Section 371

Miscellaneous relocations
Part 1
Relocation of section 38 of, and Schedule 15 to, FA 1973
Taxes Management Act 1970 (c. 9)
5
1
TMA 1970 is amended as follows.
2
After Part 7 insert—
“Part 7A
Holders of licences under the Petroleum Act 1998
Licence-holders’ liabilities for tax assessed on non-UK residents
10
77B
Pre-conditions for serving secondary-liability notice
(1)
Conditions A to E are the pre-conditions for the purposes of section
77C.
(2)
Condition A is that tax is assessed on a non-UK resident.
(3)
Condition B is that the tax is assessed in reliance on—
15
(a)
section 276 of the 1992 Act,
(b)
section 874 of ITTOIA 2005, or
(c)
section 1313 of CTA 2009.
(4)
Condition C is that the tax assessed is not tax under ITEPA 2003.
(5)
Condition D is that—
20
(a)
there is a licence to which the tax assessed is related (see
section 77J for the meaning of tax related to a licence),
(b)
there is more than one licence to which the tax assessed is
related, or
(c)
there is a licence, or more than one licence, to which part of
25
the tax assessed is related but in addition part of the tax
assessed is not related to any licence.
(6)
Condition E is that the tax is not paid in full within 30 days after it
becomes due and payable.
(7)
In this Part “licence” means a licence under Part 1 of the Petroleum
30
Act 1998.
77C
Secondary-liability notices
(1)
If each of the pre-conditions (see section 77B) is met, an officer of
Revenue and Customs may serve on the holder of the licence
concerned, or on the holder of any of the licences concerned, a
35
notice—
(a)
that states particulars of the assessment,

Taxation (International and Other Provisions) Bill
Schedule 7 — Miscellaneous relocations
Part 1 — Relocation of section 38 of, and Schedule 15 to, FA 1973
308

(b)
that states the amount remaining unpaid and the date when
it became payable,
(c)
that requires the holder to pay, within 30 days of the service
of the notice, the amount for which the holder is liable, and
(d)
that, if the amount for which the holder is liable is given by
5
subsection (3) or section 77G(7), gives particulars of how the
amount was determined.
(2)
For the purposes of subsection (1), the amount for which the holder
is liable is the amount remaining unpaid, together with any interest
on it under sections 86 and 87A, but this is subject to subsection (3)
10
and section 77G(7).
(3)
In a case within section 77B(5)(b) or (c), the amount for which the
holder of the licence is liable is given by—
(4)
In subsection (3)—
A is the amount remaining unpaid,
15
I is any interest due on that amount under sections 86 and 87A,
T is the total amount of the profits or chargeable gains in respect
of which the assessment is made, and
L is so much of that total amount as is profits or chargeable
gains related to the licence.
20
(5)
The power under subsection (1) is subject to section 77E (certain pre-
1974 cases).
(6)
In this Part “secondary-liability notice” means a notice under
subsection (1).
77D
Payments under secondary-liability notices
25
(1)
Any amount which a person is required to pay by a secondary-
liability notice may be recovered from the person as if it were tax due
and duly demanded from the person.
(2)
If a person (“H”) pays any amount which a secondary-liability notice
requires H to pay, H may recover the amount from the person on
30
whom the assessment concerned was made.
(3)
A payment in pursuance of a secondary-liability notice is not
allowed as a deduction in calculating any income, profits or losses
for any tax purposes.
77E
Exception for certain pre-1974 cases
35
(1)
Section 77C(1) does not give power to serve a secondary-liability
notice on the holder of a licence if the profits arose, or the chargeable
gains accrued, to the assessed person in consequence of a contract
made by the holder before 23 March 1973.
(2)
The exception under subsection (1) does not apply if—
40
(a)
the assessed person is connected with the holder, or
(b)
the contract was substantially varied on or after 23 March
1973.

Taxation (International and Other Provisions) Bill
Schedule 7 — Miscellaneous relocations
Part 1 — Relocation of section 38 of, and Schedule 15 to, FA 1973
309

(3)
For the purposes of subsection (2), whether a person is connected
with another is determined in accordance with section 1122 of CTA
2010.”
3
After section 77E insert—
“Exemption certificates
5
77F
Issue, cancellation and effect of exemption certificates
(1)
This section applies if there is a person (“T”) who will or might
become liable to tax which, if unpaid, could be recovered under this
Part from a person (“H”) who is the holder of a licence.
(2)
If an officer of Revenue and Customs, on an application made by T,
10
is satisfied that T will comply with any obligations imposed on T by
the Taxes Acts, the officer may issue to H a certificate exempting H
from section 77C with respect to any tax payable by T.
(3)
If a certificate is issued to H under subsection (2), an officer of
Revenue and Customs may, by notice in writing to H, cancel the
15
certificate from the date specified in the notice.
(4)
The date specified in a notice under subsection (3) may not be earlier
than 30 days after the service of the notice.
(5)
If a certificate is issued to H under subsection (2), section 77C does
not apply to any tax payable by T which becomes due while the
20
certificate is in force.
(6)
If a certificate is issued to H under subsection (2) but is subsequently
cancelled under subsection (3), section 77C also does not apply to
any tax payable by T which—
(a)
becomes due after the certificate is cancelled, but
25
(b)
is in respect of profits arising, or chargeable gains accruing,
while the certificate is in force.
77G
Liabilities for assessments made after exemption certificate cancelled
(1)
Subsection (7) applies if—
(a)
each of conditions A to C is met, and
30
(b)
one of conditions D and E is met.
(2)
Condition A is that, after the cancellation under section 77F(3) of a
certificate issued under section 77F(2) to a person (“H”) who is the
holder of a licence, tax related to the licence is assessed on the
applicant for the certificate.
35
(3)
Condition B is that the tax is assessed in reliance on—
(a)
section 276 of the 1992 Act,
(b)
section 874 of ITTOIA 2005, or
(c)
section 1313 of CTA 2009.
(4)
Condition C is that the tax assessed is not tax under ITEPA 2003.
40
(5)
Condition D is that—

Taxation (International and Other Provisions) Bill
Schedule 7 — Miscellaneous relocations
Part 1 — Relocation of section 38 of, and Schedule 15 to, FA 1973
310

(a)
ignoring section 77F, H could be required by a secondary-
liability notice to pay all of the tax remaining unpaid under
the assessment, and
(b)
the profits or chargeable gains in respect of which the
assessment is made include (but are not limited to) profits
5
arising, or chargeable gains accruing, while the certificate is
in force.
(6)
Condition E is that—
(a)
as a result of section 77C(3), but ignoring section 77F, H could
be required by a secondary-liability notice to pay some, but
10
not all, of the tax remaining unpaid under the assessment,
and
(b)
the profits or chargeable gains that are—
(i)
ones in respect of which the assessment is made, and
(ii)
related to the licence,
15

include (but are not limited to) profits arising, or chargeable
gains accruing, while the certificate is in force.
(7)
If this subsection applies then, for the purposes of section 77C(1), the
amount for which the holder of the licence is liable is the amount
given by—
20

together with a corresponding proportion of any interest due under
sections 86 and 87A on the amount remaining unpaid.
(8)
In subsection (7)—
A is the amount that H could be required to pay as mentioned
in paragraph (a) of whichever of conditions D and E is met
25
(“the operative condition”),
CIF is the amount of the profits or chargeable gains mentioned
in paragraph (b) of the operative condition that are ones
arising, or accruing, while the certificate is in force, and
NIF is the amount of the profits or chargeable gains mentioned
30
in paragraph (b) of the operative condition that are ones
arising, or accruing, while the certificate is not in force.”
4
After section 77G insert—
“Supplementary
77H
Calculations under sections 77C(3) and 77G(7)
35
(1)
Subsection (2) applies for the purposes of calculating any of the
following amounts of profits or chargeable gains—
(a)
L in a calculation under section 77C(3),
(b)
CIF in a calculation under section 77G(7), and
(c)
CIF + NIF in a calculation under section 77G(7) when it is
40
condition E in section 77G that is met.
(2)
The amount is to be calculated as if for the purposes of making a
separate assessment in respect of those profits or chargeable gains on
the person on whom the assessment was made.