Finance Bill

House of Commons

Session 2009 - 10
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Finance Bill

Finance Bill
Schedule 1 — Bank payroll tax
Part 2 — Collection and management of tax
49

Information powers
36    (1)
Schedule 36 to FA 2008 (information and inspection powers) has effect as if
the definition of tax in paragraph 63(1) included bank payroll tax.
      (2)
Paragraph 21 of that Schedule (taxpayer notices) applies where a taxable
company has made a bank payroll tax return as it applies where a person has
5
made a company tax return and, in relation to bank payroll tax—
(a)
a reference in that paragraph to a chargeable period is to the
chargeable period within the meaning of this Schedule, and
(b)
a reference in that paragraph to a notice of enquiry is to a notice of
enquiry under paragraph 23 of this Schedule.
10
Penalties
37    (1)
Schedule 24 to FA 2007 (penalties for errors) has effect as if in the Table in
paragraph 1—
(a)
the list of taxes included bank payroll tax, and
(b)
the list of documents included a bank payroll tax return.
15
      (2)
In relation to bank payroll tax, any reference in that Schedule to a tax period
is to the chargeable period within the meaning of this Schedule.
38    (1)
Schedule 55 to FA 2009 (penalties for failure to make returns etc) has effect
as if—
(a)
a bank payroll tax return were specified in the Table in paragraph 1
20
(and bank payroll tax were specified in relation to it), and
(b)
the reference in paragraph 2 to a return falling within certain items
in the Table included a reference to a bank payroll tax return.
      (2)
Schedule 55 to FA 2009 has effect for the purposes of bank payroll tax in
accordance with this paragraph whether or not it has come into force for
25
other purposes.
39    (1)
Schedule 56 to FA 2009 (penalties for failure to make payments on time etc)
has effect for the purposes of bank payroll tax as follows.
      (2)
The part of the Table in paragraph 1 headed “Principal amounts” has effect
as if bank payroll tax were specified in column 2 and, in relation to that tax—
30
(a)
an amount shown (or treated as shown) in a bank payroll tax return
were specified in column 3, and
(b)
31 August 2010 were specified in column 4.
      (3)
The part of that Table headed “Amounts payable in default of a return being
made” has effect as if bank payroll tax were specified in column 2 and, in
35
relation to that tax—
(a)
an amount shown in a determination under paragraph 24 of this
Schedule were specified in column 3, and
(b)
31 August 2010 were specified in column 4.
      (4)
The part of that Table headed “Amount shown to be due in other
40
assessments, determinations, etc” has effect as if—
(a)
bank payroll tax were a tax falling within any of items 1 to 6, 9 or 10,
and
(b)
an amount shown (or treated as shown) in a bank payroll tax return
were an amount falling within any of those items.
45

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
50

      (5)
Paragraph 2 (assessments and determinations in default of return) has effect
as if the reference in paragraph (a) to a return falling within any item in the
Table in Schedule 55 included a reference to a bank payroll tax return.
      (6)
Paragraph 3 (amount of penalty) has effect as if sub-paragraph (1)(a)
included a reference to a payment of bank payroll tax.
5
      (7)
Schedule 56 to FA 2009 has effect for the purposes of bank payroll tax in
accordance with this paragraph whether or not it has come into force for
other purposes.
Miscellaneous
40    (1)
The following provisions of TMA 1970 apply for the purposes of bank
10
payroll tax and this Schedule as they apply for the purposes of corporation
tax and the Taxes Acts—
(a)
section 108 (responsibility of company officers),
(b)
section 112 (loss, destruction or damage to assessments, returns etc),
(c)
section 114 (want of form), and
15
(d)
section 115 (delivery and service of documents).
      (2)
The application of section 115 of TMA 1970 in relation to the delivery of bank
payroll tax returns is subject to any requirements published under
paragraph 19(1) of this Schedule.
41
Chapter 6 of Part 22 of CTA 2010 (collection etc of tax from UK
20
representatives of non-UK resident companies) applies to this Part of this
Schedule as it applies to enactments relating to corporation tax.
42
Section 118(5) to (7) of TMA 1970 (meaning of carelessly etc) applies for the
interpretation of this Part of this Schedule, with references to tax being read
as references to bank payroll tax.
25
Part 3
Definitions
“UK resident bank” and “relevant foreign bank”
43    (1)
“UK resident bank” means a company which—
(a)
is resident in the United Kingdom,
30
(b)
is an authorised person for the purposes of FISMA 2000 (see section
31 of that Act),
(c)
is a person—
(i)
whose activities include the relevant regulated activity
described in the provision mentioned in paragraph 44(1)(a),
35
or
(ii)
which is both a BIPRU 730k firm and a full scope BIPRU
investment firm, whose activities consist wholly or mainly of
any of the relevant regulated activities described in the
provisions mentioned in paragraph 44(1)(b) to (f) and which
40
meets the capital resources condition,
(d)
carries on that relevant regulated activity, or those relevant
regulated activities, wholly or mainly in the course of trade, and
(e)
is not an excluded company.

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
51

      (2)
“UK resident bank” also includes a company which—
(a)
meets the conditions in sub-paragraph (1)(a) and (e), and
(b)
is a member of a partnership which meets the conditions in sub-
paragraph (1)(b) to (d).
      (3)
“Relevant foreign bank” means a company which—
5
(a)
is not resident in the United Kingdom,
(b)
is an authorised person for the purposes of FISMA 2000 (see section
31 of that Act),
(c)
is a person which carries on a trade in the United Kingdom through
a permanent establishment in the United Kingdom and—
10
(i)
whose activities include the relevant regulated activity
described in the provision mentioned in paragraph 44(1)(a),
or
(ii)
which is both a BIPRU 730k firm and a full scope BIPRU
investment firm, whose activities consist wholly or mainly of
15
any of the relevant regulated activities described in the
provisions mentioned in paragraph 44(1)(b) to (f) and which
meets the capital resources condition,
(d)
carries on that relevant regulated activity, or those relevant
regulated activities, wholly or mainly in the course of that trade, and
20
(e)
is not an excluded company.
      (4)
“Relevant foreign bank” also includes a company which—
(a)
meets the conditions in sub-paragraph (3)(a) and (e), and
(b)
is a member of a partnership which meets the conditions in sub-
paragraph (1)(b) to (d).
25
“Relevant regulated activity”, “capital resources condition”, “excluded company”, “asset
management activities”, “linked entity” etc
44    (1)
“Relevant regulated activity” means an activity which is a regulated activity
for the purposes of FISMA 2000 by virtue of any of the following provisions
of the Financial Services and Markets Act 2000 (Regulated Activities) Order
30
2001 (S.I. 2001/544)—
(a)
article 5 (accepting deposits),
(b)
article 14 (dealing in investments as principal),
(c)
article 21 (dealing in investments as agent),
(d)
article 25 (arranging deals in investments),
35
(e)
article 40 (safeguarding and administering investments), and
(f)
article 61 (entering into regulated mortgage contracts).
      (2)
“The capital resources condition” is that the company has a capital resources
requirement of at least £100 million.
      (3)
But if the company is a member of a group, “the capital resources condition”
40
is that the company and—
(a)
any other companies which—
(i)
are members of the group,
(ii)
meet either of the conditions in sub-paragraph (4),
(iii)
are not excluded companies, and
45
(iv)
are not members of any partnership within paragraph (b),
and

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
52

(b)
any partnership—
(i)
the members of which are or include one or more companies
that are members of the group and not excluded companies,
and
(ii)
which meets either of those conditions,
5

have (in aggregate) capital resources requirements of at least that amount.
      (4)
The conditions referred to in sub-paragraph (3) are that the company or
partnership—
(a)
is both a BIPRU 730k firm and a full scope BIPRU investment firm, or
(b)
is a company or partnership which carries on in the United Kingdom
10
activities including the relevant regulated activity described in the
provision mentioned in sub-paragraph (1)(a).
      (5)
For the purposes of sub-paragraphs (2) and (3) the capital resources
requirement of a company or a partnership is that as at the end of the last
period of account of the company or partnership ending no later than the
15
end of the chargeable period.
      (6)
In determining whether the company is a UK resident bank or a relevant
foreign bank by virtue of paragraph 43(2) or (4), the references in sub-
paragraph (2) to the company are to the partnership.
      (7)
If any company or partnership whose capital resources may be material for
20
the purposes of sub-paragraph (2) or (3) prepares its accounts in a currency
other than sterling, the amount of its capital resources at the end of the
period of account mentioned in that sub-paragraph is to be translated into
its sterling equivalent by reference to the average spot rate of exchange on
the day on which that period ends.
25
      (8)
If any company whose capital resources may be material for the purposes of
sub-paragraph (2) or (3) carries on a trade in the United Kingdom through a
permanent establishment in the United Kingdom, its capital resources are to
be determined as they would be for the purposes of corporation tax (see
Chapter 4 of Part 2 of CTA 2009).
30
      (9)
“Excluded company” means a company which is—
(a)
an insurance company or an insurance special purpose vehicle,
(b)
a company which is a member of a group and does not carry on any
relevant regulated activities otherwise than on behalf of an insurance
company or insurance special purpose vehicle which is a member of
35
the same group,
(c)
a company which does not carry on any relevant regulated activities
otherwise than as the manager of a pension scheme,
(d)
an investment trust (within the meaning given by section 1158 of
CTA 2010),
40
(e)
a company which does not carry on any relevant regulated activities
other than asset management activities,
(f)
an exempt BIPRU commodities firm,
(g)
a company which does not carry on any relevant regulated activities
otherwise than for the purpose of trading in commodities or
45
commodity derivatives,
(h)
a company which does not carry on any relevant regulated activities
otherwise than for the purpose of dealing in contracts for differences
as principal with persons all or all but an insignificant proportion of

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
53

whom are retail clients or of dealing in contracts for differences with
another person to enable the company or other person to deal in
contracts for differences as principal with such persons,
(i)
a society incorporated under the Friendly Societies Act 1992,
(j)
a society registered as a credit union under the Industrial and
5
Provident Societies Act 1965 or the Credit Unions (Northern Ireland)
Order 1985 (S.I. 1985/1205 (NI 12)), or
(k)
a building society.
     (10)
“Asset management activities” means activities which consist (or, if they
were carried on in the United Kingdom, would consist) of any or all of the
10
following—
(a)
acting as the operator of a collective investment scheme (within the
meaning of Part 17 of FISMA 2000: see sections 235 and 237 of that
Act),
(b)
acting as a discretionary investment manager for clients none of
15
which is a linked entity, and
(c)
acting as an authorised corporate director.
     (11)
“Linked entity”, in relation to a company (“C”), means—
(a)
a member of the same group as C,
(b)
a company in which a company which is a member of the same
20
group as C has a major interest (within the meaning of Part 15 of CTA
2009: see section 473 of that Act), or
(c)
a partnership the members of which include a company—
(i)
which is a member of the same group as C, and
(ii)
whose share of the profits or losses of a trade carried on by
25
the partnership for an accounting period of the partnership
any part of which falls within the chargeable period is at least
a 40% share (see Part 17 of CTA 2009 for provisions about
shares of partnership profits and losses).
     (12)
The following have the meanings given in the Handbook of Rules and
30
Guidance made by the Financial Services Authority (as that Handbook has
effect from time to time)—
“authorised corporate director”,
“BIPRU 730k firm”,
“capital resources requirement”,
35
“contracts for differences”,
“discretionary investment manager”,
“exempt BIPRU commodities firm”,
“full scope BIPRU investment firm”,
“pension scheme”,
40
“principal”, and
“retail clients”.
     (13)
A company which would be a BIPRU 730k firm and a full scope BIPRU
investment firm by virtue of activities carried on in the United Kingdom but
for the fact that its registered office (or, if it does not have a registered office,
45
its head office) is not in the United Kingdom is to be treated as being one.
     (14)
The Treasury may by order amend this paragraph.

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
54

     (15)
An order under this paragraph may be made so as to have effect in relation
to any time after the beginning of the chargeable period.
     (16)
An order under this paragraph is to be made by statutory instrument.
     (17)
An order under this paragraph may not be made unless a draft of the
instrument containing it has been laid before, and approved by a resolution
5
of, the House of Commons.
“Member of a banking group”
45    (1)
A company is a “member of a banking group” at any time if—
(a)
it is within sub-paragraph (2) at that time, or
(b)
it was within that sub-paragraph immediately before the chargeable
10
period.
      (2)
A company is within this sub-paragraph if—
(a)
it is a member of a group,
(b)
any of conditions A to C is met, and
(c)
the group does not meet the exempt activities test.
15
      (3)
Condition A is that the principal company of the group is a UK resident bank
or a relevant foreign bank.
      (4)
Condition B is that—
(a)
the principal company of the group is a company which is not
resident in the United Kingdom but which (if it were so resident)
20
would be a UK resident bank, or
(b)
the principal company of the group is a company which is not
resident in the United Kingdom, and is a member of a partnership
which is not so resident, but which (if both the company and the
partnership were so resident) would be a UK resident bank,
25

and (in either case) any member of the group is a UK resident bank or a
relevant foreign bank.
      (5)
Condition C is that—
(a)
the principal company is the holding company of another company,
and
30
(b)
if that other company were the principal company of the group,
condition A or B would be met.
      (6)
For the purposes of condition C a company (“H”) is a “holding company” of
another company (“S”) if—
(a)
H is an investment company, and
35
(b)
S is—
(i)
an effective 51% subsidiary of H, and
(ii)
not an effective 51% subsidiary of any company which is not
an investment company.
      (7)
A group meets the exempt activities test if at least 90% of the trading income
40
of the group for the relevant period is derived from exempt activities.
      (8)
For this purpose—
“exempt activities” means—

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
55

(a)
insurance activities, asset management activities and related
activities, and
(b)
activities carried on by a company which is not a financial
trading company (or a company which would be a financial
trading company if it were resident in the United Kingdom)
5
other than lending activities or dealing on own account,
“the relevant period”, in relation to a group, means the last period of
account of the group ending no later than the end of the chargeable
period, and
“the trading income of the group” for the relevant period is to be
10
calculated in accordance with paragraph 46.
      (9)
In sub-paragraph (8)—
“insurance activities” means—
(a)
the effecting or carrying out of contracts of insurance by a
regulated insurer, and
15
(b)
investment business that arises directly from activities falling
within paragraph (a);
“lending activities” means—
(a)
acceptance of deposits or other repayable funds,
(b)
lending of money, including consumer credit, mortgage
20
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,
25
(f)
money transmission services,
(g)
provision of alternative finance arrangements, and
(h)
other activities carried on in connection with activities falling
within any of paragraphs (a) to (g);
“related activities” means—
30
(a)
activities which are ancillary to insurance activities or asset
management activities of any company which is a member of
the group (whether or not the company carrying on the
insurance activities or asset management activities), and
(b)
activities which would not be carried on but for such
35
insurance activities or asset management activities being
carried on,
but does not include dealing on own account.
     (10)
In sub-paragraph (9)—
“activities” includes buying, holding, managing and selling assets;
40
“regulated insurer”, in relation to a group, means a member of the
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 which is so authorised.
45
     (11)
A company which is a member of a banking group ceases to be a member of
a banking group when it ceases to be within sub-paragraph (2), but only if it
ceases to be within that provision as a result of—