Finance Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
56

(a)
an arm’s length transaction undertaken for wholly commercial
purposes, or
(b)
following a recommendation of a relevant regulatory body.
     (12)
For the purposes of sub-paragraph (11) obtaining a tax advantage is not a
commercial purpose.
5
     (13)
“Tax advantage” means—
(a)
a relief from tax or increased relief from tax (relief here including a
tax credit),
(b)
a repayment of tax or increased repayment of tax,
(c)
the avoidance or reduction of a charge to tax or an assessment to tax
10
(obtained in any way), or
(d)
the avoidance of a possible assessment to tax (so obtained),

and, for this purpose, “tax” includes bank payroll tax and any other tax.
     (14)
In sub-paragraph (11) “relevant regulatory body” means—
(a)
the Financial Services Authority, or
15
(b)
a body discharging functions under the law of a country or territory
outside the United Kingdom corresponding to functions discharged
by the Financial Services Authority.
     (15)
In this paragraph “dealing on own account” has the same meaning as in
Directive 2004/39/EC of the European Parliament and of the Council of 21
20
April 2004 on markets in financial instruments (see Article 4(1)(6)).
“The trading income of the group” for the relevant period
46    (1)
This paragraph applies for calculating the “trading income of the group” for
the relevant period for the purposes of paragraph 45.
      (2)
The trading income for the group for the relevant period is the aggregate
25
of—
(a)
the gross income calculated in accordance with sub-paragraph (3),
and
(b)
the net income calculated in accordance with sub-paragraph (4).
      (3)
The income referred to in sub-paragraph (2)(a) is the gross income—
30
(a)
arising from the activities of the group (other than net-basis
activities), and
(b)
disclosed as such in the financial statements of the group,

without taking account of any deductions (whether for expenses or
otherwise).
35
      (4)
The income referred to in sub-paragraph (2)(b) is the net income arising from
the net-basis activities of the group that—
(a)
is accounted for as such under international accounting standards or
in accordance with practice which is generally accepted accounting
practice in the territory in which the principal company of the group
40
is resident, or
(b)
would be accounted for as such if income arising from such activities
were accounted for under such standards or in accordance with such
practice.

Finance Bill
Schedule 1 — Bank payroll tax
Part 3 — Definitions
57

      (5)
In this paragraph “net-basis activities” means activities normally reported
on a net basis in financial statements prepared in accordance with such
standards or practice.
“Investment company” etc
47    (1)
“Investment company”—
5
(a)
means a company whose business consists wholly or mainly of, and
the principal part of whose income is derived from, the making of
investments, and
(b)
also includes any savings bank or other bank for savings.
      (2)
“UK resident investment company” means an investment company which is
10
resident in the United Kingdom.
“Financial trading company” etc
48    (1)
“Financial trading company” means a company which—
(a)
is an authorised person for the purposes of FISMA 2000 (see section
31 of that Act), or
15
(b)
is not within paragraph (a) but carries on a trade consisting wholly
or partly in dealing in securities.
      (2)
“UK resident financial trading company” means a financial trading
company which is resident in the United Kingdom.
      (3)
“Relevant foreign financial trading company” means a company which
20
meets conditions A and B.
      (4)
Condition A is that the company—
(a)
is not resident in the United Kingdom, and
(b)
carries on a trade in the United Kingdom through a permanent
establishment in the United Kingdom.
25
      (5)
Condition B is that, disregarding any activities of the company other than
those carried on through that permanent establishment, the company is a
financial trading company.
      (6)
In this paragraph “securities” includes—
(a)
shares,
30
(b)
rights of unit holders in unit trust schemes to which TCGA 1992
applies as a result of section 99 of that Act, and
(c)
in the case of a company with no share capital, interests in the
company possessed by members of the company.
Other interpretative provisions
35
49    (1)
In this Schedule—
“arrangements” includes any agreement, understanding, scheme,
transaction or series of transactions (whether or not legally
enforceable);
“benefit” includes a facility of any kind;
40
“building society” means a building society within the meaning of the
Building Societies Act 1986;

Finance Bill
Schedule 2 — Landline duty
58

“the Commissioners” means the Commissioners of Her Majesty’s
Revenue and Customs;
“contract of insurance” has the meaning given by section 431(2) of
ICTA;
“control” has the meaning given by section 995 of ITA 2007;
5
“employment”, “employee” and “employer” have the same meaning as
in the employment income Parts of ITEPA 2003 (see sections 4 and 5
of that Act);
“enactment” includes an enactment or instrument (whenever passed or
made);
10
“HMRC” means Her Majesty’s Revenue and Customs;
“insurance company” and “insurance special purpose vehicle” have the
meaning given by section 431(2) of ICTA;
“market value” has the same meaning it has for the purposes of TCGA
1992 by virtue of Part 8 of that Act;
15
“money’s worth” has the meaning given by section 62(3) of ITEPA 2003;
“partnership” includes—
(a)
a limited liability partnership, and
(b)
an entity established under the law of a territory outside the
United Kingdom of a similar character to a partnership (and
20
“member”, in relation to a partnership, is to be read
accordingly);
“period of account” and “permanent establishment” have the meaning
given by section 1119 of CTA 2010;
“the tax year 2009-10” has the same meaning as in the Income Tax Acts
25
(see section 989 of ITA 2007).
      (2)
Section 170(2) to (11) of TCGA 1992 (“group”, “principal company”,
“effective 51% subsidiary”, “company” etc) has effect for the interpretation
of this Schedule as for the interpretation of sections 171 to 181 of that Act.
      (3)
Section 993 of ITA 2007 (meaning of “connected” persons) applies for the
30
purposes of this Schedule.
      (4)
For the purposes of this Schedule the territory in which a company is
resident is to be determined as for the purposes of the Corporation Tax Acts.
Schedule 2
Section 23

Landline duty
35
The duty
1     (1)
A duty to be known as landline duty is charged in accordance with this
Schedule.
      (2)
Landline duty is charged in respect of the making available of a local loop
with a view to its being used.
40
      (3)
Landline duty is payable by the owner of the local loop.
      (4)
Landline duty becomes due at the end of the accounting period in which the
local loop is made available.

Finance Bill
Schedule 2 — Landline duty
59

      (5)
A “local loop” is a single physical circuit connecting a network termination
point to a public electronic communications network.
      (6)
“Physical circuit” means a circuit used for the provision of electronic
communications services.
      (7)
A physical circuit is a “single” physical circuit if it consists of—
5
(a)
a single twisted metallic pair,
(b)
a single co-axial cable,
(c)
a single fibre-optic cable,
(d)
a single twisted metallic pair and a single co-axial cable, or
(e)
a single twisted metallic pair and a single fibre-optic cable.
10
      (8)
A “network termination point”, in relation to a public electronic
communications network, is the point at which an end-user is provided with
access to the public electronic communications network.
      (9)
Landline duty is payable whether or not the local loop is actually used.
     (10)
In this paragraph—
15
“electronic communications service” has the same meaning as in the
Communications Act 2003 (see section 32 of that Act);
“end-user” and “public electronic communications network” have the
same meaning as in Chapter 1 of Part 2 of that Act (see section 151(1)
of that Act).
20
     (11)
This paragraph may be amended by order.
Rate of duty
2
Landline duty in respect of a local loop is charged at the rate of £0.50 for each
month, or part of a month, for which the local loop is made available with a
view to its being used.
25
Exceptions
3     (1)
Landline duty is not charged in respect of the making available of a local
loop which, in accordance with an order made under section 65 of the
Communications Act 2003 (obligations to be secured by universal service
conditions), is made available to a subscriber who is on a low income or has
30
special social needs on a tariff, or as part of a package, that departs from
those provided under normal commercial conditions.
      (2)
Landline duty is not charged in respect of the making available of a local
loop with a view to its being used only for television programme services or
radio programme services (or both); and for this purpose—
35
“television programme service” has the meaning it would have in Part
3 of the Communications Act 2003 (see section 362 of that Act) if
subsection (4) of that section were omitted;
“radio programme service” has the same meaning as in that Part of that
Act (see that section).
40
      (3)
An order may make provision specifying other circumstances in which
landline duty is not chargeable.

Finance Bill
Schedule 2 — Landline duty
60

Administration
4     (1)
Landline duty is a duty of excise.
      (2)
The Commissioners are responsible for the collection and management of
landline duty.
Registration of owners of local loops
5
5     (1)
The Commissioners must keep a register of owners of local loops.
      (2)
An owner of local loops becomes liable to be registered on making a local
loop available with a view to its being used.
      (3)
A person who has become liable to be registered ceases to be so liable if the
Commissioners are satisfied at any time that the person no longer makes
10
local loops available with a view to their being used.
      (4)
A person who is not registered and has not given notice under this sub-
paragraph must, on becoming liable to be registered at any time, give
written notice of that fact to the Commissioners not later than the end of the
prescribed period beginning with that time.
15
      (5)
The notice must—
(a)
be in such form,
(b)
be given in such manner, and
(c)
contain such information,

as may be specified.
20
      (6)
Regulations may make provision as to the information to be included in, and
the correction of, the register.
      (7)
In particular, regulations may provide—
(a)
for the inclusion in the register of persons who have not given notice
but appear to the Commissioners to be liable to be registered,
25
(b)
for persons who are liable to be registered not to be included in, or to
be removed from, the register in prescribed circumstances,
(c)
for the removal from the register of persons who have ceased to be
liable to be registered, and
(d)
for the time from which an entry in the register is to be effective
30
(which may be earlier than the time when the entry is first made in
the register).
Accounting for and payment of duty
6     (1)
Regulations may require owners of local loops who are registered or liable
to be registered to make returns in respect of landline duty—
35
(a)
by reference to such periods as may be prescribed or as may be
allowed by the Commissioners, in relation to a particular owner of
local loops, in accordance with regulations, and
(b)
at such time, and in such manner and form, as may be prescribed or
specified.
40
      (2)
Any person from whom landline duty is due must pay the duty at such time
and in such manner as may be prescribed or specified.

Finance Bill
Schedule 2 — Landline duty
61

Offence
7     (1)
A person who is knowingly concerned—
(a)
in the fraudulent evasion (by any person) of landline duty, or
(b)
in taking steps with a view to such fraudulent evasion,

is guilty of an offence.
5
      (2)
A person guilty of an offence under sub-paragraph (1) is liable—
(a)
on summary conviction, to a fine not exceeding—
(i)
the statutory maximum, or
(ii)
if greater, 300% of the amount of the landline duty evaded or
sought to be evaded, or
10

to imprisonment for a term not exceeding 12 months, or to both, or
(b)
on conviction on indictment, to a fine or to a term of imprisonment
not exceeding 7 years, or to both.
      (3)
The reference to 12 months in sub-paragraph (2)(a) is to be read as a
reference to 6 months—
15
(a)
in relation to England and Wales, in the case of an offence committed
before the coming into force of section 154(1) of the Criminal Justice
Act 2003, and
(b)
in relation to Northern Ireland.
Penalties
20
8     (1)
A failure by a person to comply with paragraph 5(4) attracts a penalty under
section 9 of FA 1994.
      (2)
Schedule 41 to FA 2008 (failure to notify etc) is amended as follows.
      (3)
In the Table in paragraph 1, after the entry relating to air passenger duty
insert—
25

“Landline duty
Obligation under paragraph

5(4) of Schedule 2 to FA 2010

(obligation to give notice of

liability to register)”.

      (4)
In paragraph 7(9) (potential lost revenue), for “or air passenger duty,”
30
substitute “, air passenger duty or landline duty,”.
      (5)
In the Table in paragraph 1 of Schedule 24 to FA 2007 (penalties for errors),
after the entry relating to air passenger duty insert—

“Landline duty
Return under regulations under

paragraph 6 of Schedule 2 to FA

35

2010”.

Finance Bill
Schedule 2 — Landline duty
62

Application of CEMA 1979
9
CEMA 1979 (apart from section 116) has effect for the purposes of this
Schedule in relation to any person who is or is liable to be registered as in
relation to revenue traders.
Appeals
5
10    (1)
In Schedule 5 to FA 1994 (decisions subject to review and appeal), after
paragraph 9A insert—
“The Finance Act 2010
9B
Any decision under regulations made by virtue of paragraph 5 of
Schedule 2 to the Finance Act 2010 (landline duty) to register, or
10
not to register, any person in the register kept under that
paragraph or to remove a person from that register.”
      (2)
An appeal which relates to landline duty is not to be entertained under
section 16 of FA 1994 at any time if any return for an accounting period to
which the appeal relates which the appellant is required to make by
15
regulations made by virtue of paragraph 6 has not at that time been made.
Regulations and orders
11    (1)
In this Schedule “regulations” means regulations made by the
Commissioners and “order” means an order made by the Treasury.
      (2)
Regulations and orders—
20
(a)
may make different provision for different cases,
(b)
may include consequential, incidental, supplementary or
transitional provisions or savings, and
(c)
may include amendments of any enactment (including an enactment
contained in this Schedule).
25
      (3)
Regulations and orders are to be made by statutory instrument.
      (4)
No order may be made under paragraph 1(11) unless a draft of a statutory
instrument containing it has been laid before, and approved by a resolution
of, the House of Commons.
      (5)
A statutory instrument containing—
30
(a)
regulations under this Schedule, or
(b)
an order under this Schedule of which a draft has not been approved
by a resolution of the House of Commons,

is subject to annulment in pursuance of a resolution of the House of
Commons.
35
Interpretation
12
In this Schedule—
“accounting period” means any period prescribed or allowed for the
purposes of paragraph 6;
“the Commissioners” means the Commissioners for Her Majesty’s
40
Revenue and Customs;