Finance Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 2 — Anti-avoidance and revenue protection
17

Remittance basis
34
“Relevant person”
(1)
Section 809M of ITA 2007 (remittance basis: meaning of “relevant person”) is
amended as follows.
(2)
In subsection (2)(f), insert at the end “or a company which is a 51% subsidiary
5
of such a company,”.
(3)
In subsection (3)(ca), for “Act),” substitute “Act) and, in relation to a company
that would be a close company if it were resident in the United Kingdom,
means a person who would be such a participator if it were a close company,”.
(4)
The amendments made by this section are treated as having come into force on
10
6 April 2010.
35
Foreign currency bank accounts
Schedule 10 contains provision about foreign currency bank accounts.
Other international matters
36
Penalties: offshore income etc
15
(1)
Schedule 11 contains provision about penalties in respect of offshore income
etc.
(2)
Schedule 11 comes into force on such day as the Treasury may by order
appoint.
(3)
An order under subsection (2)—
20
(a)
may make different provision for different purposes, and
(b)
may include transitional provisions and savings.
(4)
The Treasury may by order make any incidental, supplemental, consequential,
transitional or transitory provision or saving that appears appropriate in
consequence of, or otherwise in connection with, Schedule 11.
25
(5)
An order under subsection (4) may—
(a)
make different provision for different purposes, and
(b)
make provision amending, repealing or revoking an enactment or
instrument (whenever passed or made).
(6)
An order under this section is to be made by statutory instrument.
30
(7)
A statutory instrument containing an order under subsection (4) is subject to
annulment in pursuance of a resolution of the House of Commons.
37
Reliefs and reductions for foreign tax
Schedule 12 contains provision about activities designed to increase the
amount allowed by way of credit or reduction in respect of foreign tax.
35

Finance Bill
Part 2 — Anti-avoidance and revenue protection
18

38
Asset transfer to non-resident company: recovery of postponed charge
(1)
In section 140 of TCGA 1992 (postponement of charge on transfer of assets to
non-resident company)—
(a)
in subsection (4), for “the consideration received by it on the disposal
shall be treated as increased by” substitute “there shall be deemed to
5
accrue to the transferor company as a chargeable gain on that
occasion”, and
(b)
after that subsection insert—
“(4A)
A chargeable gain which is deemed to accrue under subsection
(4) is in addition to any gain or loss that actually accrues to the
10
transferor company on the disposal of the securities.”
(2)
In Schedule 7AC to that Act (exemption for disposals by companies with
substantial shareholding), omit paragraph 35 (recovery of charge postponed
on transfer of asset to non-resident company).
(3)
The amendments made by this section have effect in relation to disposals of
15
securities on or after 6 January 2010.
Securities etc
39
Transactions in securities
Schedule 13 contains provision about transactions in securities.
40
Approved CSOP schemes: eligible shares
20
(1)
In Part 4 of Schedule 4 to ITEPA 2003 (shares to which approved CSOP
schemes can apply), omit paragraph 17(1)(c) (shares in a company which is
under the control of a listed company).
(2)
Accordingly, in that Schedule—
(a)
in paragraph 17—
25
(i)
after sub-paragraph (1)(a) insert “or”,
(ii)
omit “or” at the end of sub-paragraph (1)(b), and
(iii)
omit sub-paragraph (2), and
(b)
omit paragraph 20(3)(c) (and the “or” before it).
(3)
The amendments made by this section—
30
(a)
come into force on 24 September 2010, and
(b)
have effect in relation to options granted on or after that day.
(4)
If—
(a)
during the period beginning with 24 March 2010 and ending with 23
September 2010 (“the transitional period”), a share option is granted to
35
an individual in accordance with the provisions of an approved CSOP
scheme, and
(b)
the shares which may be acquired by the exercise of the option are
shares in a company which is under the control of a listed company,
other than shares of a class listed on a recognised stock exchange,
40

the share option is to be treated for the purposes of the CSOP code as not
having been granted in accordance with the provisions of an approved CSOP
scheme.

Finance Bill
Part 2 — Anti-avoidance and revenue protection
19

(5)
An alteration made to a scheme during the transitional period in order to meet
the amended paragraph 17 requirement is to be regarded as an alteration made
in a key feature of the scheme for the purposes of paragraph 30 of Schedule 4
to ITEPA 2003 (withdrawal of approval).
(6)
Where the amended paragraph 17 requirement is not met in respect of an
5
approved CSOP scheme at the end of the transitional period, the requirement
is to be treated for the purposes of paragraph 30(2)(a) of that Schedule
(disqualifying events) as ceasing to be met immediately after that time.
(7)
Where, by virtue of subsection (6), approval is withdrawn from a scheme
under Part 7 of that Schedule, that withdrawal has effect (from the time
10
determined in accordance with paragraph 30(1) of that Schedule) in relation to
options granted on or after 24 September 2010 only.
(8)
In subsections (3) to (7) references to options having been granted include new
share options granted under the terms of a provision included in a scheme
under paragraph 26 of Schedule 4 to ITEPA 2003 (exchange of shares on
15
company reorganisation); but paragraph 27(5) of that Schedule (new share
options treated as granted at same time as old share options) does not apply for
the purposes of those subsections.
(9)
In this section—
“the amended paragraph 17 requirement” means the requirement of
20
paragraph 17 of Schedule 4 to ITEPA 2003 as amended by this section;
“approved” and “CSOP scheme” have the meaning given by section 521
of that Act;
“control” and “listed company” have the same meaning as in paragraph
17 of Schedule 4 to that Act.
25
41
Unauthorised unit trusts
Schedule 14 contains provision about unauthorised unit trusts.
42
Index-linked gilt-edged securities
Schedule 15 contains provision about index-linked gilt-edged securities.
43
Approved share incentive plans
30
(1)
Paragraph 84(1) of Schedule 2 to ITEPA 2003 (approved share incentive plans)
is amended as follows.
(2)
For paragraph (d) substitute—
“(d)
an alteration being made—
(i)
in the share capital of a company any of whose shares
35
are subject to the plan trust, or
(ii)
in the rights attaching to any shares of such a
company,

that materially affects the value of shares that are subject to
the plan trust;”.
40
(3)
In paragraph (e), for “have been awarded to participants” substitute “are
subject to the plan trust”.

Finance Bill
Part 2 — Anti-avoidance and revenue protection
20

(4)
Section 989 of CTA 2009 (deduction for contribution to plan trust) is amended
as follows.
(5)
In subsection (1), after paragraph (a) insert—
“(aa)
the payment is not made pursuant to tax avoidance
arrangements,”.
5
(6)
After subsection (6) insert—
“(6A)
For the purposes of this section the payment mentioned in subsection
(1)(a) is made pursuant to tax avoidance arrangements if—
(a)
it is made pursuant to arrangements entered into by the paying
company, and
10
(b)
the main purpose, or one of the main purposes, of the paying
company in entering into the arrangements was to obtain a
deduction or an increased deduction.
(6B)
In subsection (6A) “arrangements” includes any arrangements, scheme
or understanding of any kind, whether or not legally enforceable,
15
involving a single transaction or two or more transactions.”
(7)
The amendments made by subsections (1) to (3) have effect in relation to events
taking place on or after 24 March 2010.
(8)
The amendments made by subsections (4) to (6) have effect in relation to
payments made on or after that day.
20
Loan relationships and derivative contracts
44
Close companies: release of loans to participators etc
(1)
In CTA 2009, after section 321 insert—
“321A
Restriction on debits resulting from release of loans to participators
etc
25
(1)
This section applies if—
(a)
a loan gives rise to a charge to tax under section 455 of CTA 2010
(including a charge by virtue of section 459 or 460 of that Act),
and
(b)
the whole or a part of the debt in respect of the loan is released
30
or written off.
(2)
No debit is to be brought into account for the purposes of this Part in
respect of the release or writing off.”
(2)
The amendment made by subsection (1) has effect in relation to debts (or parts
of debts) released or written off on or after 24 March 2010.
35
45
Connected companies: releases of debts
Schedule 16 contains provision about releases of debts in cases involving
connected companies.
46
Relationships treated as loan relationships etc: repos
(1)
In paragraph 4 of Schedule 13 to FA 2007 (ignoring effect on borrower of sale
40

Finance Bill
Part 2 — Anti-avoidance and revenue protection
21

of securities), in sub-paragraph (4) omit the “and” at the end of paragraph (a)
and after that paragraph insert—
“(aa)
an amount representative of income payable in respect of the
securities is not to be ignored as a result of sub-paragraph (3)(b)
if it is, in accordance with generally accepted accounting
5
practice, so recognised or taken into account, and”.
(2)
In section 550 of CTA 2009 (ignoring effect on borrower of sale of securities)—
(a)
in subsection (4), for “and (6)” substitute “to (6)”, and
(b)
after subsection (5) insert—
“(5A)
For the purposes of the charge to corporation tax, an amount
10
representative of income payable in respect of the securities is
not to be ignored as a result of subsection (3)(b) if—
(a)
it is, in accordance with generally accepted accounting
practice, recognised in determining the borrower’s
profit or loss for that or any other period, or
15
(b)
it is taken into account in calculating the amounts which
are so recognised.”
(3)
The amendments made by this section are treated as always having had effect.
47
Risk transfer schemes
Schedule 17 contains provision about risk transfer schemes.
20
Insurance companies
48
Apportionment of asset value increases
(1)
In Chapter 1 of Part 12 of ICTA (insurance companies etc), after section 432C
insert—
“432CA
Apportionment of asset value increase where line 51 amount
25
decreases
(1)
This section applies where—
(a)
an insurance company is not a non-profit company in relation
to a period of account (“the current period of account”),
(b)
in the case of any business with which an account of the
30
company for the current period of account is concerned (“the
relevant business”), an amount is a relevant brought into
account amount for that period of account (see subsection (2)),
(c)
section 432C applies for determining the extent to which the
relevant brought into account amount is referable to life
35
assurance business or to gross roll-up business, and
(d)
the line 51 reduction condition is met (see subsection (3)).
(2)
An amount is a relevant brought into account amount for a period of
account if—
(a)
it is brought into account as mentioned in subsection (2)(b) of
40
section 83 of the Finance Act 1989 (increases in value of non-
linked assets) for that period,

Finance Bill
Part 2 — Anti-avoidance and revenue protection
22

(b)
it is deemed to be brought into account for that period by
subsection (2B) of that section in consequence of the transfer of
non-linked assets, or
(c)
it is taken into account under subsection (2) of that section for
that period by virtue of section 444AB as being the relevant
5
amount in relation to non-linked assets.
(3)
The line 51 reduction condition is met if—
(a)
the amount shown in column 1 of line 51 of Form 14 of the
company’s periodical return in respect of the relevant business
for the current period of account, is less than
10
(b)
the amount so shown for the period of account immediately
before it;

and the amount of the difference is “the relevant reduction”.
(4)
Section 432C applies in relation to so much of the relevant brought into
account amount as does not exceed the relevant reduction (“the
15
affected amount”) as if it were brought into account as an increase in the
value of assets in the case of the relevant business for the applicable
appropriate period of account of the company.
(5)
A period of account is an “appropriate period of account” if it ended
before the current period of account and—
20
(a)
the amount shown in column 1 of line 51 of Form 14 of the
company’s periodical return in respect of the relevant business
for it, was more than
(b)
the amount so shown for the period of account immediately
before it;
25

and the amount of the difference is “the relevant increase.”
(6)
The “applicable” appropriate period of account is the one which ended
most recently (“the most recent appropriate period of account”).
(7)
But if the relevant increase in the case of the most recent appropriate
period of account is less than the affected amount, the most recent
30
appropriate period of account is the applicable appropriate period of
account in relation to only so much of the affected amount as does not
exceed that relevant increase.
(8)
In that case, the appropriate period of account which ended most
recently before the most recent appropriate period of account is the
35
applicable appropriate period of account in relation to so much of the
remainder as does not exceed the relevant increase in the case of that
appropriate period of account (and, where necessary, so on until the
applicable appropriate period of account is established in relation to all
of the affected amount or there are no more appropriate periods of
40
account).
(9)
If the current period of account is not the first in relation to which this
section has applied in the case of the business concerned, the amount of
the relevant increase in the case of any appropriate period of account
(“the period in question”) is to be treated as reduced by the relevant
45
aggregate.
(10)
The “relevant aggregate” is the aggregate of so much of the affected
amount for any period or periods of account earlier than the current
period of account as was an amount to which section 432C applied as if

Finance Bill
Part 2 — Anti-avoidance and revenue protection
23

it were brought into account as mentioned in subsection (4) for the
period in question.
(11)
For the purposes of this section an insurance company which has
elected under section 83YA(9) of the Finance Act 1989 (changes in value
of assets brought into account: non-profit companies) to be treated as a
5
non-profit company in relation to a period of account is to be regarded
as a non-profit company in relation to the period of account.”
(2)
The amendment made by subsection (1) has effect if the current period of
account is a period of account beginning on or after 9 December 2009.
(3)
No period of account beginning before that date counts as an appropriate
10
period of account for the purposes of section 432CA of ICTA.
(4)
But where the operation of that section does not establish the applicable
appropriate period of account in relation to all or any of the affected amount
(“the unallocated amount”), section 432C of ICTA applies in relation to the
unallocated amount as if it were brought into account as an increase in the
15
value of assets in the case of the relevant business for the last period of account
beginning before 9 December 2009.
Pensions
49
Extension of special annual allowance charge
(1)
Schedule 35 to FA 2009 (special annual allowance charge) is amended as
20
follows.
(2)
In paragraph 1(2) (high-income individual)—
(a)
in the first sentence, for “£150,000” substitute “£130,000”, and
(b)
insert at the end—

“Paragraph 16A makes special provision about cases in
25
which the individual’s relevant income for the tax year 2009-
10 is less than £150,000.”
(3)
In paragraph 2 (calculation of relevant income)—
(a)
in the last sentence of sub-paragraph (1),
(b)
in sub-paragraph (2) (in each place), and
30
(c)
in sub-paragraph (3) (in both places),

for “£150,000” substitute “£130,000”.
(4)
After sub-paragraph (5) of that paragraph insert—
   “(5A)
If—
(a)
the individual’s relevant income for the tax year (whether
35
that is the tax year 2009-10 or a later tax year) would (apart
from this sub-paragraph) be less than £130,000 if the
reference in sub-paragraph (5) to a scheme made on or after
22 April 2009 were to a scheme made on or after 9 December
2009, and
40
(b)
the individual’s relevant income for the tax year 2009-10 is
less than £150,000,

the individual’s relevant income for the tax year is to be assumed to
be less than £130,000.”