Finance (No. 2) Bill

House of Commons

Session 2010 - 11
Internet Publications
Other Bills before Parliament

Finance (No. 2) Bill

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
8

(3)
After subsection (5) insert—
“(6)
In this section—
“EEA-resident earnings” means section 15 or 27 earnings for a
period—
(a)
in which the employee is resident for tax purposes in an
5
EEA State (other than the United Kingdom), and
(b)
which falls within a tax year in which the employee is
not ordinarily UK resident,
“resident for tax purposes” means liable, under the law of the EEA
State, to tax there by reason of domicile or residence,
10
“section 15 earnings” means general earnings to which section 15
applies, and
“section 27 earnings” means general earnings to which section 27
applies.”
(4)
The amendments made by this section have effect for the tax year 2011-12 and
15
subsequent tax years but only in relation to eligible periods beginning on or
after 6 April 2011.
5
Venture capital schemes
Schedule 2 contains provision about venture capital schemes.
6
Enterprise management incentives
20
(1)
Schedule 5 to ITEPA 2003 (enterprise management incentives) is amended as
follows.
(2)
In paragraph 8 (qualifying companies: introduction), omit the “and” at the end
of the entry relating to “number of employees” and after the entry relating to
“trading activities” insert “, and
25
UK permanent establishment (see paragraph 14A).”
(3)
After paragraph 14 insert—
“The UK permanent establishment requirement
14A   (1)
The UK permanent establishment requirement is met if condition A
or B is met.
30
      (2)
Condition A is that the company has a permanent establishment in
the United Kingdom.
      (3)
Condition B is that—
(a)
the company is a parent company, and
(b)
any other member of the group—
35
(i)
meets the conditions in paragraph 14(1)(a) (trading
activities requirement), and
(ii)
has a permanent establishment in the United
Kingdom.”
(4)
In paragraph 15(1) (meaning of “qualifying trade”), omit paragraph (a)
40
(requirement that trade be carried on wholly or mainly in United Kingdom).

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
9

(5)
The amendments made by this section have effect in relation to options
granted on or after the day on which this Act is passed.
7
Settlor to return excess repayment to trustees etc
(1)
Section 646 of ITTOIA 2005 (adjustments between settlor and trustees etc) is
amended as follows.
5
(2)
For subsection (4) substitute—
“(4)
Subsection (5) applies if a settlor chargeable to tax under section 624 or
629 obtains a repayment by reason of the payment of the tax by—
(a)
any trustee, or
(b)
any other person to whom the income is payable by virtue of or
10
as a result of the settlement.”
(3)
In subsection (5), for “excess” substitute “repayment”.
(4)
After subsection (6) insert—
“(6A)
For the purpose of subsection (5), the settlor may require an officer of
Revenue and Customs to provide the settlor with a certificate
15
specifying—
(a)
that the settlor has obtained a repayment as mentioned in
subsection (4), and
(b)
the amount of the repayment.
(6B)
A certificate provided under subsection (6A) is conclusive evidence of
20
the facts stated in it.”
(5)
In subsection (7), for “Any” substitute “Subject to subsections (6A) and (6B),
any”.
(6)
The amendments made by this section have effect in relation to repayments of
tax for the tax year 2010-11 or any subsequent tax year.
25
8
Collection of income tax where sum deducted by payer
In Chapter 16 of Part 15 of ITA 2007, after section 963 (collection of income tax
on certain payments by other persons) insert—
“963A
Power to make regulations modifying section 963
(1)
The Commissioners for Her Majesty’s Revenue and Customs may by
30
regulations modify, replace or supplement any provision of section
963(2) to (4).
(2)
Regulations under this section may only be made for the purpose of
regulating the time at and manner in which persons making payments
within section 963(1)(a) or (b) are to account for and pay income tax
35
which is to be collected from them in respect of those payments.
(3)
In particular, regulations under this section may, in relation to income
tax for which a person is liable to account—
(a)
modify any provision of Parts 2 to 6 of TMA 1970, or
(b)
apply any such provision with or without modifications.
40
(4)
Regulations under this section may—

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
10

(a)
make different provision for different kinds of payer,
(b)
make different provision for different circumstances, and
(c)
authorise the Commissioners for Her Majesty’s Revenue and
Customs, if they think there are special circumstances justifying
it, to make special arrangements in relation to income tax for
5
which a person is liable to account.
(5)
Regulations under this section may contain incidental, supplemental,
consequential and transitional provision and savings.
(6)
The Commissioners for Her Majesty’s Revenue and Customs must not
make any regulations under this section unless a draft of them has been
10
laid before and approved by a resolution of the House of Commons.
(7)
References in this Act and in any other enactment to any of the
provisions of section 963(2) to (4) are to be read as references to those
provisions as modified, replaced or supplemented by provision made
by regulations under this section.”
15
9
Company distributions
Schedule 3 contains provision about company distributions.
10
REITs: stock dividends
Schedule 4 contains provision about the issue of stock dividends by a company
UK REIT or the principal company of a group UK REIT.
20
11
Financing costs and income of group companies
Schedule 5 contains—
(a)
amendments of Part 7 of TIOPA 2010 (tax treatment of financing costs
and income of companies that are members of a group) and
consequential amendments of other provisions of that Act, and
25
(b)
provision enabling a group, by election, to defer the application in
relation to it of certain amendments contained in the Schedule.
12
Consortium claims for group relief
Schedule 6 contains provision about claims for group relief from corporation
tax made by companies which are members of, or owned by, a consortium.
30
13
R&D relief for SMEs: removal of intellectual property condition
(1)
Part 13 of CTA 2009 (additional relief for expenditure on research and
development) is amended as follows.
(2)
In section 1052 (qualifying expenditure on in-house direct R&D)—
(a)
in subsection (1), for “conditions A to E” substitute “conditions A, B, D
35
and E”, and
(b)
omit subsection (4) (condition C: intellectual property created as result
of research and development to which expenditure is attributable to be
vested in company).
(3)
In section 1053 (qualifying expenditure on contracted out R&D)—
40

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
11

(a)
in subsection (1)(b), for “conditions A to D” substitute “conditions A, C
and D”, and
(b)
omit subsection (3) (condition B: same intellectual property condition).
(4)
In section 1071 (subsidised qualifying expenditure on in-house direct R&D)—
(a)
in subsection (1), for “conditions A to E” substitute “conditions A to C
5
and E”, and
(b)
omit subsection (5) (condition D: same intellectual property condition).
(5)
In section 1072 (subsidised qualifying expenditure on contracted out R&D)—
(a)
in subsection (1)(b), for “conditions A to F” substitute “conditions A to
D and F”, and
10
(b)
omit subsection (6) (condition E: same intellectual property condition).
(6)
Omit section 1139 (meaning of “intellectual property”).
(7)
In Schedule 4 to CTA 2009 (index of defined expressions), omit the entry
relating to “intellectual property (in Part 13)”.
(8)
The amendments made by this section have effect in relation to expenditure
15
incurred by a company in an accounting period ending on or after 9 December
2009.
14
Film tax credit: unused losses
(1)
Section 1201 of CTA 2009 (film tax credit claimable where company has
surrenderable loss) is amended as follows.
20
(2)
In subsection (2)—
(a)
for “any period” substitute “an accounting period”, and
(b)
in paragraph (a), for “the company’s loss” substitute “the company’s
available loss”.
(3)
After that subsection insert—
25
“(2A)
The company’s available loss for an accounting period is given by—

where—
L is the amount of the company’s loss for the period in the
separate film trade, and
RUL is the amount of any relevant unused loss of the company.
30
(2B)
The “relevant unused loss” of a company is so much of any available
loss of the company for the previous accounting period as has not
been—
(a)
surrendered under section 1202(1), or
(b)
carried forward under section 45 of CTA 2010 and set against
35
profits of the separate film trade.”
(4)
In subsection (4), in the definition of “S”, for “surrendered in previous periods”
substitute “previously surrendered”.
(5)
After that subsection insert—
“(5)
If a period of account of the separate film trade does not coincide with
40
an accounting period, any necessary apportionments are to be made by
reference to the number of days in the periods concerned.”

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
12

(6)
In section 1202(4) of that Act (company’s loss reduced by amount
surrendered), for “loss in the separate film trade” substitute “available loss”.
(7)
The amendments made by this section have effect in relation to accounting
periods ending on or after 9 December 2009.
(8)
In relation to those accounting periods the amendments, and corresponding
5
amendments of paragraphs 6 and 11 of Schedule 5 to FA 2006, are to be treated
as always having had effect.
15
Insurance business transfer schemes: non-profit fund transferred assets
(1)
Chapter 1 of Part 12 of ICTA (insurance companies etc) is amended as follows.
(2)
Section 444AB (transfer schemes: charge on transferor in respect of relevant
10
non-transferred assets and retained assets) is amended as follows.
(3)
In subsection (1)(b), for “or condition” substitute “, AA or”.
(4)
In subsection (2), for the words after “business transfer” substitute “scheme—
(a)
if the transferee is an insurance company or an insurance special
purpose vehicle, are not, immediately after their transfer, assets
15
of the transferee’s long-term insurance fund, or
(b)
if the transferee is not an insurance company, an insurance
special purpose vehicle or a friendly society, would not,
immediately after their transfer, be assets of the transferee’s
long-term insurance fund if the transferee were an insurance
20
company with permission under Part 4 of the Financial Services
and Markets Act 2000 to effect or carry out contracts of
insurance,

(“non long-term fund transferred assets”).”
(5)
After that subsection insert—
25
“(2A)
Condition AA is met if—
(a)
the transferee is not an insurance company, an insurance special
purpose vehicle or a friendly society, and
(b)
any of the assets of the transferor’s long-term insurance fund
which are transferred from the transferor to the transferee by
30
the insurance business transfer scheme would, immediately
after their transfer, be assets of a non-profit fund of the
transferee if the transferee were an insurance company with
permission under Part 4 of the Financial Services and Markets
Act 2000 to effect or carry out contracts of insurance (“non-
35
profit fund transferred assets”).”
(6)
In subsection (4), for “relevant non-transferred assets or retained assets (or
both)” substitute “non long-term fund transferred assets, non-profit fund
transferred assets or retained assets”.
(7)
In subsection (5), for “relevant non-transferred assets;” substitute “non long-
40
term fund transferred assets, section 444ABAA makes provision for its
calculation in relation to non-profit fund transferred assets”.
(8)
In subsection (8), for “paragraph (2)(a)” substitute “subsection (2)(a) and (b)”.
(9)
In subsection (1) of section 444ABA (relevant amount in relation to relevant
non-transferred assets), for “relevant non-transferred assets” substitute “non
45

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
13

long-term fund transferred assets”; and for the heading of that section
substitute “Non long-term fund transferred assets”.
(10)
After that section insert—
“444ABAA
Non-profit fund transferred assets
(1)
For the purposes of section 444AB the relevant amount in relation to
5
assets that are non-profit fund transferred assets is—
where—
FVA is the fair value of the assets on the transfer date,
ABTO is any amount brought into account in respect of the assets
as a business transfer-out and shown (or treated as shown) in
10
line 32 of Form 40 in the periodical return of the transferor for
the period of account of the transferor including the transfer
date, and
TL is the amount of any non-profit fund transferred liabilities
which are shown (or treated as shown) in any of lines 17, 21 to
15
23 and 31 to 38, but not in line 61, in Form 14 in the periodical
return for the period of account of the transferor ending (or
treated as ending by section 444AA) immediately before the
transfer date or, if there is no period of account of the transferor
so ending (or treated as so ending), the amount of any liabilities
20
which would be so shown if one did.
(2)
In subsection (1) “non-profit fund transferred liabilities” means such of
the liabilities of the transferor’s long-term insurance fund as are
transferred from the transferor to the transferee by the insurance
business transfer scheme and were, immediately before their transfer,
25
liabilities of a non-profit fund of the transferor.
(3)
See section 444AA for the meaning of “the transfer date” in this
section.”
(11)
The amendments made by this section have effect in relation to transfers of
business taking place on or after 22 June 2010.
30
Chargeable gains
16
Capital gains tax private residence relief: adult placement carers
(1)
In section 223(8) of TCGA 1992 (amount of relief), before the “and” at the end
of paragraph (a) insert—
“(aa)
section 225D (private residence of adult placement carer),”.
35
(2)
In section 224 of that Act (amount of relief: further provisions), insert at the
end—
“(4)
This section is subject to section 225D (private residence of adult
placement carer).”

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax
14

(3)
In that Act, after section 225C insert—
“225D
Private residence of adult placement carer
(1)
This section applies where a gain to which section 222 applies accrues
to an individual (“A”) and, at any time during A’s period of ownership,
part of the dwelling-house was occupied by another person (“B”)—
5
(a)
in England and Wales, pursuant to an adult placement scheme,
(b)
in Scotland, pursuant to arrangements which constitute or form
part of an adult placement service involving the provision of
accommodation for B, or
(c)
in Northern Ireland, pursuant to arrangements made with an
10
adult placement agency for the provision of accommodation for
B.
(2)
For the purposes of this Part, in determining the periods during which
the dwelling-house, or any part of the dwelling-house, was A’s only or
main residence, B’s occupation of part of the dwelling-house pursuant
15
to the scheme or arrangement is to be disregarded.
(3)
For the purposes of section 224, the occupation of the part of the
dwelling-house by B pursuant to the scheme or arrangement does not
amount to the use of that part of the dwelling-house by A exclusively
for the purpose of a trade, business, profession or vocation.
20
(4)
In this section—
“adult placement agency” means an organisation or
undertaking—
(a)
that arranges for the provision of care and support
(including accommodation) for persons in need, and
25
(b)
in respect of which a requirement to register arises
under Article 12 of the Health and Personal Social
Services (Quality, Improvement and Regulation)
(Northern Ireland) Order 2003,
“adult placement scheme” means a scheme—
30
(a)
under which an individual agrees with the person
carrying on the scheme to provide care and support
(including accommodation) to an adult who is in need of
it, and
(b)
in respect of which a requirement to register arises
35
under section 11 of the Care Standards Act 2000, and
“adult placement service” has the meaning given by paragraph 11
of schedule 12 to the Public Services Reform (Scotland) Act
2010.”
(4)
The amendments made by this section have effect in relation to disposals made
40
on or after 9 December 2009.
(5)
Until the coming into force of paragraph 11 of schedule 12 to the Public
Services Reform (Scotland) Act 2010, the reference to that provision in section
225D(4) of TCGA 1992 is to section 2(16) of the Regulation of Care (Scotland)
Act 2001.
45