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Finance (No. 2) Bill


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

64

 

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).

(6)   

In this section—

5

“section 45DA allowance” means a first-year allowance in

respect of expenditure that is first-year qualifying

expenditure under section 45DA;

“undertaking” means—

(a)   

an autonomous enterprise, or

10

(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

15

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

20

(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

25

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 “—

30

(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

35

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

40

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

 
 

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

65

 

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—

(a)   

any interest in land,

(b)   

any building or part of a building,

5

(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

10

(f)   

any aircraft.”

      (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

15

or under section 26 in such circumstances, to such extent and

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

20

Commissioners to be necessary or expedient.”

      (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.

25

      (9)  

For the purposes of sub-paragraph (8), the VAT “incurred” by a person in

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,

30

(c)   

VAT on the acquisition by the person from another member State of

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,

35

acquisition or importation in question.

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

40

3     (1)  

In paragraph 5 of Schedule 4 to VATA 1994 (matters to be treated as supply

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,

45

 
 

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

66

 

(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 or fittings or otherwise),

5

(e)   

any ship, boat or other vessel, or

(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

10

1 January 2011.

      (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

15

extent that, the asset is used or to be used for that person’s private use or the

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

20

paragraph 5(4A) of Schedule 4 to VATA 1994 (as inserted by sub-

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;

25

           

and references to the VAT “incurred” by a person in respect of an asset are

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

30

has been allowed credit under sections 25 and 26 of VATA 1994 for

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

35

or would not be a paragraph 5(4) supply, and

(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.

40

      (3)  

But sub-paragraph (2) does not confer on the person allowed credit as

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

45

the claim is satisfied by one or more of the following—

 
 

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

67

 

(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

5

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

10

business which are put to private use etc);

“predecessor” has the same meaning as in paragraph 5 of that Schedule.

      (6)  

This paragraph is to be treated as having always had effect.

Schedule 9

Section 25

 

Interest

15

Part 1

Corporation tax

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

20

subsection (2)(a).

3     (1)  

Section 102 (repayment interest on sums to be paid by HMRC) is amended

as follows.

      (2)  

Omit subsection (2)(a).

      (3)  

In subsection (4), before paragraph (a) insert—

25

“(za)   

Part A1 makes special provision as to the amount of

corporation tax on which repayment interest is calculated,”.

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

30

payment interest and repayment interest.”

5          

In section 104(1), for “103” substitute “103A (and Schedules 53 to 54A)”.

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),

35

 
 

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

68

 

after paragraph 2 insert—

“Carry back of losses etc

2A    (1)  

This paragraph applies where—

(a)   

a company has profits arising in an accounting period

(“the earlier period”),

5

(b)   

there is for a later accounting period (“the later period”) a

non-trading deficit on the company’s loan relationships,

(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

10

(d)   

if the claim had not been made, there would be an amount

or an additional amount of corporation tax for the earlier

period which would carry late payment interest.

      (2)  

For the purposes of section 101, the amount mentioned in sub-

paragraph (1)(d) is to be taken to be an amount that is due and

15

payable as corporation tax for the earlier period.

      (3)  

But late payment interest which is payable by virtue of sub-

paragraph (2) runs only until the day following the expiry of 9

months from the end of the later period.

2B    (1)  

This paragraph applies where—

20

(a)   

a company has profits arising in an accounting period

(“the earlier period”),

(b)   

the company incurs a loss in a later accounting period (“the

later period”),

(c)   

on a claim under section 37 of CTA 2010, the whole or any

25

part of the loss incurred in the later period has been set off

(whether under section 37 or 42 of that Act) for the

purposes of corporation tax against the profits of the

earlier period,

(d)   

the earlier period does not fall wholly within the period of

30

12 months immediately preceding the later period, and

(e)   

if the claim had not been made, there would be an amount

or additional amount of corporation tax for the earlier

period which would carry late payment interest.

      (2)  

For the purposes of section 101, the amount mentioned in sub-

35

paragraph (1)(e) is to be taken to be an amount that is due and

payable as corporation tax for the earlier period.

      (3)  

But late payment interest which is payable by virtue of sub-

paragraph (2) runs only until the day following the expiry of 9

months from the end of the later period.

40

2C    (1)  

This paragraph applies where—

(a)   

a company is liable to corporation tax for an accounting

period (“the earlier period”),

(b)   

in a later accounting period of the company (“the later

period”), an excess arises as described in section 72 of

45

TIOPA 2010 (amounts of unrelieved foreign tax),

 
 

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

69

 

(c)   

on a claim under section 77 of that Act, credit for the whole

or any part of the excess is allowed against corporation tax

in respect of the earlier period, and

(d)   

if the claim had not been made, there would be an amount

or additional amount of corporation tax for the earlier

5

period which would carry late payment interest.

      (2)  

For the purposes of section 101, the amount mentioned in sub-

paragraph (1)(d) is to be taken to be an amount that is due and

payable as corporation tax for the earlier period.

      (3)  

But late payment interest which is payable by virtue of sub-

10

paragraph (2) runs only until the day following the expiry of 9

months from the end of the later period.

      (4)  

This paragraph does not apply where paragraph 2D applies.

2D    (1)  

This paragraph applies where—

(a)   

a company carrying on a trade has profits (of whatever

15

description) arising in an accounting period (“the middle

period”),

(b)   

the company incurs a loss in a later accounting period (“the

later period”),

(c)   

on a claim under section 37 of CTA 2010, the whole or any

20

part of the loss incurred in the later period has been set off

(whether under section 37 or 42 of that Act) for the

purposes of corporation tax against the profits of the

middle period,

(d)   

the middle period does not fall wholly within the period of

25

12 months immediately preceding the later period,

(e)   

as a result of the claim under section 37, an excess or

increased excess arises in the middle period as described in

section 72 of TIOPA 2010 (amounts of unrelieved foreign

tax),

30

(f)   

on a claim under section 77 of that Act, credit for the whole

or any part of the excess is allowed against corporation tax

in respect of an accounting period before the middle

period (“the earlier period”), and

(g)   

if the claim had not been made, there would be an amount

35

or additional amount of corporation tax for the earlier

period which would carry late payment interest.

      (2)  

For the purposes of section 101, the amount mentioned in sub-

paragraph (1)(g) is to be taken to be an amount that is due and

payable as corporation tax for the earlier period.

40

      (3)  

But late payment interest which is payable by virtue of sub-

paragraph (2) runs only until the day following the expiry of 9

months from the end of the later period.”

8          

In Part 2 (special provision as to late payment interest start date), after

 
 

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

70

 

paragraph 6 insert—

“Payment of corporation tax by persons other than company assessed

6A    (1)  

This paragraph applies to any amount of corporation tax assessed

or treated as assessed by virtue of any of the following provisions

(which enable unpaid corporation tax assessed on a company to be

5

assessed on other persons in certain circumstances)—

(a)   

section 137(4), 139(7) or 190 of TCGA 1992,

(b)   

paragraph 75A(2) of Schedule 18 to FA 1998,

(c)   

section 795(2) of CTA 2009, and

(d)   

Chapter 7 of Part 22 of CTA 2010.

10

      (2)  

The late payment interest start date in respect of that amount is the

date when it became due and payable by the company.”

Amendments of Schedule 54

9          

Schedule 54 to FA 2009 (repayment interest) is amended as follows.

10         

Insert at the beginning—

15

“Part A1

Special provision as to amount carrying repayment interest

Carry back of losses etc

A1    (1)  

This paragraph applies where—

(a)   

a company has profits arising in an accounting period

20

(“the earlier period”),

(b)   

there is for a later accounting period (“the later period”) a

non-trading deficit on the company’s loan relationships,

(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

25

period is set off against the profits of the earlier period, and

(d)   

a repayment falls to be made of corporation tax for the

earlier period or of income tax in respect of a payment

received by the company in that period.

      (2)  

So much of the repayment mentioned in sub-paragraph (1)(d) as

30

falls to be made as a result of the claim under section 389(1) or

459(1)(b) does not carry repayment interest.

      (3)  

But sub-paragraph (2) does not apply (and, accordingly, the

amount mentioned in that sub-paragraph carries repayment

interest) after the expiry of 9 months from the end of the later

35

period.

A2    (1)  

This paragraph applies where—

(a)   

a company carrying on a trade has profits (of whatever

description) arising in an accounting period (“the earlier

period”),

40

(b)   

the company incurs a loss in a later accounting period (“the

later period”),

 
 

 
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