House of Commons Amendments

Session 2010 - 12
Internet Publications
Other Bills before Parliament

Public Bill Committee: 17 May 2011
85

Finance (No. 3) continued

554Z18
Provision of security

(1)
B takes a step within this section if B provides security for the

performance of the relevant undertaking.

(2)
For the purposes of this Part, the sum of money or asset which is the

subject of the step is to be taken to be—

(a)
any sums of money which, as at the time the step is taken, are

the subject of the security, and

(b)
any assets which, as at that time, are the subject of the

security,


and references to the sum of money or asset which is the subject of a

relevant step are to be read accordingly.

(3)
If, when the step is taken, the security covers other undertakings as

well as the relevant undertaking, the sums of money and assets within

subsection (2)(a) and (b) are to be apportioned between the relevant

undertaking and the other undertakings on a just and reasonable basis.

(4)
Subsections (2) and (3) are subject to section 554Z19(7).

(5)
Section 554P does not apply in any case in which the relevant step

mentioned in section 554P(2)(a) would be a step within this section

taken by B.

(6)
Section 554Q(3) does not apply in any case in which the relevant step

mentioned in section 554Q(3)(a) would be a step within this section

taken by B.

(7)
In this Chapter references to providing security for the performance of

an undertaking are references to providing such security in any way,

however informal.

554Z19
Valuation of step within section 554Z18

(1)
This section applies if, by virtue of section 554Z16, Chapter 2 applies

by reason of a step taken by B within section 554Z18.

(2)
Section 554Z2 has effect as if subsections (3) and (4) below were

substituted for subsections (1) to (6) of that section.

(3)
The value of the relevant step is—

(a)
the amount to be paid as a contribution under the relevant

undertaking determined, as at the time the step is taken, on a

just and reasonable basis assuming that any condition to be

met before any payment is made will be met, or

(b)
if lower, the value of the security.

(4)
For the purposes of subsection (3)(b) the value of the security—

(a)
consists of—

(i)
the total amount of the sums of money included in the

subject of the step (see section 554Z18(2)(a)), and

(ii)
the total market value, as at the time the step is taken,

of the assets included in the subject of the step (see

section 554Z18(2)(b)), but

(b)
is to be subject to a just and reasonable reduction to take

account of any term of the security which limits the total

amount which may be made available under the security for

Public Bill Committee: 17 May 2011
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Finance (No. 3) continued

the performance of the relevant undertaking to an amount

which is lower than the amount determined under paragraph

(a).

(5)
The following subsections apply if, as at the end of the day of an

anniversary of the taking of the step (“the anniversary day”), B

continues to provide the security for the performance of the relevant

undertaking.

(6)
This Part has effect as if B’s continuing to provide the security were a

new step (“the anniversary step”) within section 554Z18—

(a)
which is taken by B at the end of the anniversary day, and

(b)
by reason of which Chapter 2 is to apply by virtue of section

554Z16 (subject only to section 554A(4)).

(7)
If the total amount of the sums of money which are the subject of the

security (“the security sums”) varies from time to time, for the purpose

of determining the sums of money included in the subject of the

anniversary step, in section 554Z18(2)(a) the reference to the time the

step is taken is to be read as a reference to the time during the

preceding year at which the total amount of the security sums is at its

highest.

(8)
For the purposes of subsection (4)(a)(ii) the market value of any asset

included in the subject of the anniversary step may be determined as

at any time during the preceding year (so long as the asset is the subject

of the security, or one of the assets which is the subject of the security,

as at that time).

(9)
In subsections (7) and (8) “the preceding year” means the year ending

with the anniversary day.

554Z20
Relief for earmarking or security not followed by contribution or

relevant benefit

(1)
This section applies if, by virtue of section 554Z16, Chapter 2 applies

by reason of a step taken by B within section 554Z17 or 554Z18.

(2)
Section 554Z13 has effect in relation to the step with the following

modifications.

(3)
Subsection (1)(b) has effect as if for “not a relevant step in relation to

a relevant sum or asset” there were substituted “neither the payment of

the relevant contribution (or any part of it) nor the provision of any

relevant benefit”.

(4)
Subsection (1)(c) has effect as if for the words from “no further

relevant step” to “any relevant sum or asset” there were substituted

“the relevant contribution (or any part of it) will not be paid or a

relevant benefit will not be provided”.

(5)
Subsection (1) has effect as if subsection (6) below were substituted

for subsection (3).

(6)
In subsection (1)—

(a)
“the relevant contribution” means the contribution to be paid

under the relevant undertaking (within the meaning of

Chapter 3), and

Public Bill Committee: 17 May 2011
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Finance (No. 3) continued

(b)
“relevant benefit” means a relevant benefit to be provided out

of the relevant contribution as mentioned in section

554Z15(2)(b) and (c).”’.

David Gauke

106

Schedule  2,  page  111,  line  5,  at end insert—

‘57A (1)
This paragraph applies if—

(a)
B takes a step within section 554Z18 of ITEPA 2003 before 6 April

2011 by providing security (“the early security”) for the performance

of an undertaking (“the early undertaking”),

(b)
on or after 6 April 2011 at a time when B is continuing to provide the

early security, there is a change in the terms of the early undertaking

which does not amount to the giving of a new undertaking, and

(c)
as a result of the change, the amount to be paid as a contribution (“the

early contribution”) under the early undertaking increases, or will

increase.

      (2)
Chapter 3 of Part 7A of ITEPA 2003 has effect—

(a)
as if the change in the terms of the early undertaking were a new

undertaking to pay a contribution covering the increase in the amount

of the early contribution as determined on a just and reasonable basis,

and

(b)
as if B, in continuing to provide the early security, provides security

for the performance of the new undertaking at the time of the change

in the terms.

      (3)
Section 554Z16(7) of ITEPA 2003 applies for the purposes of this paragraph

as it applies for the purposes of Chapter 3 of Part 7A of that Act.’.

David Gauke

94

Schedule  2,  page  111,  line  18,  leave out from ‘earnings’ to end of line 28 and insert

‘of A from A’s employment with B within Chapter 1 of Part 3 of ITEPA 2003 for the pre-

6 April 2011 tax year, or

(ii)
the tax payable by A for the pre-6 April 2011 tax year was

otherwise decided on the basis that the pre-6 April 2011 step

was to be treated as giving rise to earnings of A from A’s

employment with B within Chapter 1 of Part 3 of ITEPA 2003

for that tax year,

(e)
before the chargeable step is taken, A or B has paid, or otherwise

accounted for, any tax which A or B is required to pay or otherwise

account for as a consequence of—

(i)
the agreement mentioned in paragraph (d)(i), or

(ii)
the tax payable by A for the pre-6 April 2011 tax year having

otherwise been decided on the basis mentioned in paragraph

(d)(ii), and

(f)
after any reductions under sections 554Z3 to 554Z7 of ITEPA 2003, it

is determined on a just and reasonable basis that the value of the

chargeable step represents (or still represents after any such

reductions) to any extent—

(i)
the earnings treated as arising from the pre-6 April 2011 step

as mentioned in paragraph (d)(i) or (ii), or

Public Bill Committee: 17 May 2011
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Finance (No. 3) continued

(ii)
any return on those earnings since the taking of the pre-6 April

2011 step (whether income or capital, direct or indirect or

realised or unrealised).

      (2)
After any reductions under sections 554Z3 to 554Z7 of ITEPA 2003, the value

of the chargeable step is to be reduced (but not below nil) by an amount

reflecting the extent to which, as determined under sub-paragraph (1)(f), that

value represents (or still represents) the earnings mentioned in sub-paragraph

(1)(f)(i) or any return on those earnings mentioned in sub-paragraph (1)(f)(ii).

      (3)
In sub-paragraph (1)(f)(ii) “return” does not include any return so far as, it is

reasonable to suppose, the return exceeds the return which might have been

expected applying the assumption that all relevant connected persons are

acting at arm’s length of each other.

      (4)
In sub-paragraph (3) “relevant connected person” means a person with a

connection (direct or indirect) to an arrangement (within the meaning of Part

7A of ITEPA 2003) by virtue of which the return arises.’.

David Hanson

Kerry McCarthy

96

Clause  27,  page  19,  line  3,  at end add—

‘(2)
The Treasury shall prepare a report by 1 January 2012 on the impact of Schedule

3 on charities and community amateur sports clubs.’.

David Gauke

107

Clause  31,  page  20,  leave out lines 14 and 15 and insert—

‘(c)
subsection (2) may operate to prevent subsection (1) applying by virtue

of paragraph (b), unless subsection (2AB) applies.

(2AB)
This subsection applies if company A’s ceasing to be a member of the first group

at the same time as one or more associated companies forms part of arrangements

the main purpose, or one of the main purposes, of which is the avoidance of a

liability to corporation tax.’

David Gauke

113


Schedule  7,  page  157,  line  2,  at end insert—

‘Amendments of ICTA


In Schedule 24 to ICTA (assumptions for calculating chargeable profits,

creditable tax and corresponding United Kingdom tax of foreign companies),

in paragraph 4 (reliefs under Corporation Tax Acts dependent upon the making

of a claim or election), after sub-paragraph (2) insert—



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