Finance (No.2) Bill

House of Commons

Session 2010 - 11
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Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
58

45DB
Exclusions from allowances under section 45DA
(1)
Expenditure incurred by a person is not first-year qualifying
expenditure under section 45DA if it is within subsection (2), (4) or
(6).
(2)
Expenditure is within this subsection if, at the time a claim is made
5
under section 3 for a section 45DA allowance in respect of the
expenditure, the person who incurred the expenditure is, or forms
part of, an undertaking within subsection (3).
(3)
An undertaking is within this subsection if one or both of the
following conditions are met—
10
(a)
it is reasonable to assume that the undertaking would be
regarded as a firm in difficulty for the purposes of the
Community Guidelines on State Aid for Rescuing and
Restructuring Firms in Difficulty (2004/C 244/02);
(b)
the undertaking is subject to an outstanding recovery order
15
made by virtue of Article 108(2) of the Treaty on the
Functioning of the European Union (Commission Decision
declaring aid illegal and incompatible with the common
market).
(4)
Expenditure is within this subsection if it is incurred for the purposes
20
of a qualifying activity—
(a)
in the fishery or aquaculture sector, as covered by Council
Regulation (EC) No 104/2000, or
(b)
relating to the management of waste of undertakings.
(5)
In subsection (4)(b) the reference to waste of undertakings does not
25
include waste of the person who incurred the expenditure or of any
other person forming part of the same undertaking as that person.
(6)
Expenditure is within this subsection to the extent that it is taken into
account for the purposes of a relevant grant, or relevant payment,
made towards that expenditure.
30
(7)
A grant or payment is relevant if it is—
(a)
a notified State aid, other than an allowance under this Part,
or
(b)
a grant or subsidy, other than a notified State aid, which the
Treasury by order declares to be relevant for the purposes of
35
the withholding of a section 45DA allowance.
(8)
If a relevant grant or relevant payment towards the expenditure is
made after the making of a section 45DA allowance, the allowance is
to be withdrawn to that extent.
(9)
All such assessments and adjustments of assessments are to be made
40
as are necessary to give effect to subsection (8).
(10)
Any such assessment or adjustment is not out of time if it is made
within 3 years of the end of the chargeable period in which the grant
or payment was made.
(11)
In this section—
45

Finance (No.2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
59

“General Block Exemption Regulation” means Commission
Regulation (EC) No. 800/2008 (General block exemption
Regulation);
“management” and “waste” have the meaning given by Article
1 of Directive 2006/12/EC of the European Parliament and of
5
the Council;
“notified State aid” means a State aid notified to and approved
by the European Commission;
“section 45DA allowance” means a first year allowance in
respect of expenditure that is first-year qualifying
10
expenditure under section 45DA;
“undertaking” means—
(a)
an autonomous enterprise, or
(b)
an enterprise (not within paragraph (a)) and its
partner enterprises (if any) and its linked enterprises
15
(if any),
and for this purpose “enterprise”, “autonomous enterprise”,
“partner enterprises” and “linked enterprises” have the
meaning given by Annex 1 to the General Block Exemption
Regulation.
20
(12)
The Treasury may by order make such provision amending this
section as appears to them appropriate for the purpose of giving
effect to any future amendments of or instrument replacing—
(a)
the General Block Exemption Regulation,
(b)
the Community Guidelines on State Aid for Rescuing and
25
Restructuring Firms in Difficulty (2004/C 244/02),
(c)
Council Regulation (EC) No 104/2000,
(d)
Directive 2006/12/EC of the European Parliament and of the
Council, or
(e)
the Treaty on the Functioning of the European Union.”
30
4
In section 46 (general exclusions applying to first-year qualifying
expenditure), in subsection (1), at the appropriate place in the list insert—

“section 45DA
(expenditure on zero-emission goods

vehicles),”.

5     (1)
Section 52 (first-year allowances) is amended as follows.
35
      (2)
In subsection (3), at the appropriate place in the Table insert—

“Expenditure qualifying under section 45DA
100%”.

(expenditure on zero-emission goods vehicles)

      (3)
In subsection (5)—
(a)
omit the “and” at the end of the entry for section 210, and
40
(b)
after that entry insert—
“ section 212T (cap on first-year allowances: zero-
emission goods vehicles), and”.

Finance (No.2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
60

6
After section 212S insert—
“Chapter 16B
Cap on first-year allowances: zero-emission goods vehicles
212T
Cap on first-year allowances: zero-emission goods vehicles
(1)
A section 45DA allowance is not available in respect of expenditure
5
(“the current expenditure”) incurred by a person (“the investor”)—
(a)
if section 45DA allowances have previously been made in
respect of undertaking expenditure of 85 million euros, or
(b)
(where paragraph (a) does not apply) if, and to the extent
that, the aggregate of—
10
(i)
the undertaking expenditure in respect of which
section 45DA allowances have previously been made,
and
(ii)
the current expenditure,

exceeds 85 million euros.
15
(2)
“Undertaking expenditure” means—
(a)
expenditure incurred by the investor,
(b)
if the investor is a partnership, expenditure incurred (at any
time) by a person who is a partner enterprise forming part of
the investor at the time the current expenditure is incurred,
20
and
(c)
if the investor and one or more other persons together form,
or have at any time formed, an undertaking, expenditure
which is—
(i)
incurred by that undertaking, or
25
(ii)
incurred by any of those other persons at a relevant
time.
(3)
Expenditure is incurred by a person at a “relevant time” if it is
incurred—
(a)
at a time when the investor and the person are part of the
30
same undertaking, or
(b)
at a time before the investor and the person became part of
the same undertaking (or, if they became part of the same
undertaking on more than one occasion, before the last time).
(4)
For the purposes of subsection (1), expenditure incurred in a
35
currency other than the euro is to be converted into its equivalent in
euros using the spot rate of exchange for the day on which the
expenditure is incurred.
(5)
The Treasury may by regulations increase the amount specified in
subsection (1)(a) and (b).
40
(6)
In this section—
“section 45DA allowance” means a first-year allowance in
respect of expenditure that is first-year qualifying
expenditure under section 45DA;
“undertaking” means—
45
(a)
an autonomous enterprise, or

Finance (No.2) Bill
Schedule 8 — Value added tax: non-business use of business assets etc
61

(b)
an enterprise (not within paragraph (a)) and its
partner enterprises (if any) and its linked enterprises
(if any),

and “enterprise”, “autonomous enterprise”, “partner enterprise” and
“linked enterprise” have the meaning given by Annex 1 to the
5
Commission Regulation (EC) No. 800/2008 (General block
exemption Regulation).”
7
The amendments made by this Schedule have effect—
(a)
for the purposes of corporation tax, for chargeable periods ending on
or after 1 April 2010, and
10
(b)
for the purposes of income tax, for chargeable periods ending on or
after 6 April 2010.
Schedule 8
Section 19

Value added tax: non-business use of business assets etc
Input tax
15
1     (1)
Section 24 of VATA 1994 (input tax and output tax) is amended as follows.
      (2)
Omit subsection (3) (accommodation used for domestic purposes by
company director etc).
      (3)
In subsection (5) (goods or services used partly for business purposes), for
the words after “other purposes” substitute “—
20
(a)
VAT on supplies, acquisitions and importations shall be
apportioned so that so much as is referable to the taxable
person’s business purposes is counted as that person’s input
tax, and
(b)
the remainder of that VAT (“the non-business VAT”) shall
25
count as that person’s input tax only to the extent (if any)
provided for by regulations under subsection (6)(e).”
      (4)
After that subsection insert—
“(5A)
For the purposes of subsections (1) and (5), a relevant asset held for
the purposes of a business carried on or to be carried on by a taxable
30
person is not, in any circumstances, to be regarded as used or to be
used for the purposes of the business if, and to the extent that, it is
used or to be used for that person’s private use or the private use of
that person’s staff.
(5B)
In subsection (5A) “relevant asset” means—
35
(a)
any interest in land,
(b)
any building or part of a building,
(c)
any civil engineering work or part of such a work,
(d)
any goods incorporated or to be incorporated in a building or
civil engineering work (whether by being installed as fixtures
40
or fittings or otherwise),
(e)
any ship, boat or other vessel, or
(f)
any aircraft.”

Finance (No.2) Bill
Schedule 8 — Value added tax: non-business use of business assets etc
62

      (5)
In subsection (6) (powers to make regulations), after paragraph (d) insert—
“(e)
in cases where an apportionment is made under subsection
(5), for the non-business VAT to be counted as the taxable
person’s input tax for the purposes of any provision made by
or under section 26 in such circumstances, to such extent and
5
subject to such conditions as may be prescribed.”
      (6)
After that subsection insert—
“(6A)
Regulations under subsection (6) may contain such supplementary,
incidental, consequential and transitional provisions as appear to the
Commissioners to be necessary or expedient.”
10
      (7)
Omit subsection (7) (definition of “director” etc).
      (8)
The amendments made by sub-paragraphs (2), (4) and (7) come into force on
1 January 2011 and apply in relation to VAT incurred by a taxable person on
or after that date.
      (9)
For the purposes of sub-paragraph (8), the VAT “incurred” by a person in
15
respect of an asset is—
(a)
VAT on the supply to the person of the asset,
(b)
VAT on the supply to the person of any goods or services the
expenditure on which constitutes expenditure related to the asset,
(c)
VAT on the acquisition by the person from another member State of
20
the asset or anything comprised in it, and
(d)
VAT paid or payable by the person on the importation of the asset or
anything comprised in it from a place outside the member States;

and VAT within paragraphs (a) to (d) is incurred at the time of the supply,
acquisition or importation in question.
25
2
In section 26 of VATA 1994 (input tax allowable under section 25), in
subsection (4) for “and supplementary” substitute “, supplementary,
consequential and transitional”.
Non-business use of certain assets not to be treated as supply of services
3     (1)
In paragraph 5 of Schedule 4 to VATA 1994 (matters to be treated as supply
30
of goods or services), after sub-paragraph (4) (non-business use of business
asset treated as supply of services) insert—
   “(4A)
Sub-paragraph (4) does not apply (despite paragraph 9(1)) to—
(a)
any interest in land,
(b)
any building or part of a building,
35
(c)
any civil engineering work or part of such a work,
(d)
any goods incorporated or to be incorporated in a building
or civil engineering work (whether by being installed as
fixtures or fittings or otherwise),
(e)
any ship, boat or other vessel, or
40
(f)
any aircraft.”
      (2)
This paragraph comes into force on 1 January 2011.
      (3)
This paragraph does not apply in relation to an asset in respect of which the
person in question or any of that person’s predecessors incurred VAT before
1 January 2011.
45

Finance (No.2) Bill
Schedule 8 — Value added tax: non-business use of business assets etc
63

      (4)
But, where VAT is incurred by such a person before that date in respect of
the asset, VAT incurred by such a person on or after that date in respect of
the asset is not to be treated as referable to that person’s business purposes
by virtue of paragraph 5(4) and (6) of Schedule 4 to VATA 1994 if, and to the
extent that, the asset is used or to be used for that person’s private use or the
5
private use of that person’s staff, or more generally for purposes other than
those of that person’s business.
      (5)
For the purposes of this paragraph—
“asset” means anything falling within any of paragraphs (a) to (f) of
paragraph 5(4A) of Schedule 4 to VATA 1994 (as inserted by sub-
10
paragraph (1) above);
“the person in question” means the person carrying on the business
referred to in paragraph 5(4) of that Schedule;
“predecessor” has the same meaning as in paragraph 5 of that Schedule;

and references to the VAT “incurred” by a person in respect of an asset are
15
to be construed in accordance with paragraph 1(9).
Output tax charge where credit attributable to purported paragraph 5(4) supply
4     (1)
Sub-paragraph (2) applies where—
(a)
a person carrying on a business or any of that person’s predecessors
has been allowed credit under sections 25 and 26 of VATA 1994 for
20
input tax on the basis that the input tax is attributable to a thing done
or to be done which is or would be a paragraph 5(4) supply,
(b)
some or all of that credit was allowed before 22 January 2010,
(c)
disregarding sub-paragraph (2), the thing done or to be done is not
or would not be a paragraph 5(4) supply, and
25
(d)
the credit allowed as mentioned in paragraph (a) is not reversed in
full.
      (2)
The thing done or to be done is to be treated for the purposes of VATA 1994
as if it were or would be a paragraph 5(4) supply.
      (3)
But sub-paragraph (2) does not confer on the person allowed credit as
30
mentioned in sub-paragraph (1)(a) any entitlement to that credit under
sections 25 and 26 of that Act.
      (4)
For the purposes of sub-paragraph (1) credit for input tax is “allowed” under
sections 25 and 26 of VATA 1994 to the extent that the credit is claimed, and
the claim is satisfied by one or more of the following—
35
(a)
the deduction of input tax under section 25(2) of that Act from any
output tax that is due to the Commissioners;
(b)
a payment by the Commissioners in respect of the credit under
section 25(3) of that Act;
(c)
the setting off of the credit against a sum payable to the
40
Commissioners, whether under section 81(3) of that Act or section
130 of FA 2008 or otherwise.
      (5)
In this paragraph—
“paragraph 5(4) supply” means a supply under paragraph 5(4) of
Schedule 4 to VATA 1994 (goods held or used for the purposes of a
45
business which are put to private use etc);
“predecessor” has the same meaning as in paragraph 5 of that Schedule.

Finance (No.2) Bill
Schedule 9 — Interest
Part 1 — Corporation tax
64

      (6)
This paragraph is to be treated as having always had effect.
Schedule 9
Section 25

Interest
Part 1
Corporation tax
5
Amendments of sections 101 to 104
1
FA 2009 is amended as follows.
2
In section 101 (late payment interest on sums due to HMRC), omit
subsection (2)(a).
3     (1)
Section 102 (repayment interest on sums to be paid by HMRC) is amended
10
as follows.
      (2)
Omit subsection (2)(a).
      (3)
In subsection (4), before paragraph (a) insert—
“(za)
Part A1 makes special provision as to the amount of
corporation tax on which repayment interest is calculated,”.
15
4
After section 103 insert—
“103A
Further provision as to late payment interest and repayment interest
Schedule 54A makes special provision as to certain amounts of late
payment interest and repayment interest.”
5
In section 104(1), for “103” substitute “103A (and Schedules 53 to 54A)”.
20
Amendments of Schedule 53
6
Schedule 53 to FA 2009 (late payment interest) is amended as follows.
7
In Part 1 (special provision as to amount carrying late payment interest),
after paragraph 2 insert—
“Carry back of losses etc
25
2A    (1)
This paragraph applies where—
(a)
a company has profits arising in an accounting period
(“the earlier period”),
(b)
there is for a later accounting period (“the later period”) a
non-trading deficit on the company’s loan relationships,
30
(c)
as a result of a claim under section 389(1) or 459(1)(b) of
CTA 2009, the whole or part of the deficit for the later
period is set off against the profits of the earlier period, and
(d)
if the claim had not been made, there would be an amount
or an additional amount of corporation tax for the earlier
35
period which would carry late payment interest.