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(b) otherwise carried on in, or in connection with, the provision by the contractor of a relevant offshore service.
(3) The contractor provides a “relevant offshore service” if the contractor provides, operates or uses a relevant asset in, or in connection with, the carrying on of exploration or exploitation activities in a relevant offshore area by the contractor or any other associated person.
(4) “Exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of the seabed and subsoil and their natural resources.
(5) “Relevant offshore area” means—
(a) the territorial sea of the United Kingdom;
(b) the areas designated by Order in Council under section 1(7) of the Continental Shelf Act 1964.
(1) In this Part “relevant asset” means an asset within subsection (2) in respect of which conditions A and B are met.
(2) An asset is within this subsection if it is a structure that—
(a) can be moved from place to place (whether or not under its own power) without major dismantling or modification, and
(i) drill for the purposes of searching for, or extracting, oil, or
(ii) provide accommodation for individuals who work on or from another structure used in a relevant offshore area for, or in connection with, exploration or exploitation activities (“offshore workers”).
(3) But an asset is not within subsection (2)(b)(ii) if it is reasonable to suppose that its use to provide accommodation for offshore workers is unlikely to be more than incidental to another use, or other uses, to which the asset is likely to be put.
“oil” means any substance capable of being won under the authority of a licence granted under Part 1 of the Petroleum Act 1998 or the Petroleum (Production) Act (Northern Ireland) 1964;
“structure” includes a ship or other vessel.
(5) Condition A is that the asset, or any part of the asset, is leased (whether by the contractor or not) from an associated person other than the contractor.
(6) Condition B is that the asset is of the requisite value.
(7) The asset is of the “requisite value” if its market value is £2,000,000 or more.
(8) The Treasury may by regulations modify the meaning of “requisite value”.
(9) Regulations under subsection (8) may—
(b) make different provision for different cases or different purposes, and
(c) make incidental, consequential, supplementary or transitional provision or savings.
(1) For the purposes of this Part each of the following is an “associated person”—
(b) any person who is, or has been, connected with the contractor,
(c) any person who has acted, acts or is to act, together with the contractor to provide a service, and
(d) any person who is connected with a person falling within paragraph (b) or (c).
(2) A person does not act together with the contractor to provide a service by reason only of leasing an asset, to any person, which is provided, operated or used in the service.
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In this Part “lease” has the meaning given by section 868 and “leased” and “leasing” are to be construed accordingly.
356LD “Contractor’s ring fence profits”
In this Part the “contractor’s ring fence profits”, in relation to an accounting period, means the contractor’s income arising from oil contractor activities for that period.
Chapter 3
Deemed separate trade
356M Oil contractor activities treated as separate trade
If the contractor carries on oil contractor activities as part of a trade, those activities are treated for the purposes of the charge to corporation tax on income as a separate trade, distinct from all other activities carried on by the contractor as part of the trade.
Chapter 4
Calculation of profits
356N Restriction on hire etc of relevant assets to be brought into account
(1) This section applies if the contractor makes, or is to make, one or more payments under a lease of—
(2) The total amount that may be brought into account in respect of the payments for the purposes of calculating the contractor’s ring fence profits in an accounting period is limited to the hire cap.
(3) The “hire cap” is an amount equal to the relevant percentage of TC for the accounting period, subject to subsection (4).
(4) If payments in relation to which subsection (2) or section 285A(2) (restriction on hire for company carrying on a ring fence trade under Part 8) applies are also made, or to be made, by one or more other companies in respect of the relevant asset or part, the “hire cap” is to be such proportion of the amount mentioned in subsection (3) as is just and reasonable, having regard (in particular) to the amounts of the payments made, or to be made, by the contractor and each other company.
(5) Subject to subsection (7), the “relevant percentage” is—
UROS is the number of days in the accounting period that the relevant asset is provided, operated or used in a relevant offshore service, and
TU is the number of days in the accounting period that the relevant asset is provided, operated or used (whether or not in a relevant offshore service).
(6) Accordingly, the relevant percentage is zero if the relevant asset is not provided, operated or used in the accounting period.
(7) If the accounting period is less than 12 months, the relevant percentage is to be proportionally reduced.
OC + CE
(9) Unless subsection (11) applies, OC is the sum of—
(a) any consideration given for the acquisition of the relevant asset or part when it was first acquired by an associated person, and
(b) any expenses incurred by an associated person in connection with that acquisition (other than the costs of financing the acquisition).
This is subject to subsections (12) and (13).
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(10) Subsection (11) applies if the relevant asset or part—
(a) is leased by an associated person from a person who is not an associated person, and
(b) has never been owned by an associated person.
(a) the consideration that it is reasonable to suppose would have been given for the acquisition of the relevant asset or part, if it had been acquired by an associated person by way of a bargain at arm’s length at the time it was first leased as mentioned in subsection (10)(a), and
(b) the expenses (other than the costs of financing the acquisition) that it is reasonable to suppose would have been incurred by an associated person in connection with such an acquisition.
This is subject to subsections (12) and (13).
(12) If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned in subsection (10)(a), before the beginning of the accounting period, OC does not include any part of the consideration mentioned in subsection (9)(a) or (as the case may be) (11)(a) that it is reasonable to attribute to anything that no longer forms part of the relevant asset or part at the beginning of the accounting period.
(13) If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned in subsection (10)(a), in the accounting period, OC for the accounting period is—
D is the total number of days in the accounting period,
DBA is the number of days in the accounting period before the day on which the relevant asset or part was first acquired or first leased, and
OC is the amount given by subsection (9) or (as the case may be) (11).
(14) CE is capital expenditure on the relevant asset or part (other than capital expenditure in respect of its acquisition or the acquisition of a lease of it) incurred by an associated person—
(a) after it was first acquired by an associated person or (as the case may be) was first leased as mentioned in subsection (10)(a), and
(b) before the end of the accounting period.
This is subject to subsections (15) and (16).
(15) CE does not include any capital expenditure mentioned in subsection (14) that is—
(a) incurred before the beginning of the accounting period, and
(b) not reflected in the state or nature of the relevant asset or part at the beginning of the accounting period.
(16) If any capital expenditure mentioned in subsection (14) is incurred on a day in the accounting period, the amount of CE for the accounting period in respect of that capital expenditure is—
D is the total number of days in the accounting period,
DBI is the number of days in the accounting period before the day on which that capital expenditure is incurred, and
CEA is the amount of that capital expenditure.
356NA Restriction on hire: further provision
(1) The Treasury may by regulations modify the “relevant percentage” for the purposes of section 356N or 285A.
(2) Regulations under subsection (1) may—
(a) amend section 356N or section 285A,
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(b) make different provision for different cases or different purposes, and
(c) make incidental, consequential, supplementary or transitional provision or savings.
(3) To the extent that, by virtue of section 356N, payments within subsection (1) of that section cannot be brought into account for the purposes of calculating the contractor’s ring fence profits in an accounting period, the payments may be—
(a) allowed as a deduction from the contractor’s total profits for the accounting period, or
(b) treated as a surrenderable amount of the contractor for the accounting period for the purposes of Part 5 (group relief) (see section 99(7)) as if they were a trading loss,
(4) No deduction may be made by virtue of subsection (3) from total profits so far as they are contractor’s ring fence profits or ring fence profits for the purposes of Part 8.
(5) If an associated person enters into arrangements the main purpose or one of the main purposes of which is to secure that section 356N(2) does not apply in relation to one or more payments to any extent, that provision applies in relation to the payments to the extent it would not otherwise do so.
(6) In subsection (5) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
356NB Restriction on debits to be brought into account
(1) Debits may not be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the contractor’s loan relationships in any way that results in a reduction of what would otherwise be the contractor’s ring fence profits, but this is subject to subsections (2) to (4).
(2) Subsection (1) does not apply so far as a loan relationship is in respect of money borrowed by the contractor which has been—
(a) used to meet expenditure incurred by the contractor in carrying on oil contractor activities, or
(b) appropriated to meeting expenditure to be so incurred by the contractor.
(3) Subsection (1) does not apply, in the case of debits falling to be brought into account as a result of section 329 of CTA 2009 (pre-loan relationship and abortive expenses) in respect of a loan relationship that has not been entered into, so far as the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned in subsection (2).
(4) Subsection (1) does not apply, in the case of debits in respect of a loan relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies, so far as—
(a) the payment of interest under the relationship is expenditure incurred as mentioned in subsection (2)(a), or
(b) the exchange loss arising from the relationship is in respect of a money debt on which the interest payable (if any) is, or would be, such expenditure.
(a) falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of a loan relationship of the contractor, but
(b) as a result of this section cannot be brought into account in a way that results in any reduction of what would otherwise be the contractor’s ring fence profits,
the debit is to be brought into account for those purposes as a non-trading debit despite anything in section 297 of that Act.
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(6) References in this section to a loan relationship, in relation to the borrowing of money, do not include a relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies.
356NC Restriction on credits to be brought into account
(1) Credits in respect of exchange gains from the contractor’s loan relationships may not be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in any way that results in an increase of what would otherwise be the contractor’s ring fence profits, but this is subject to subsections (2) to (4).
(2) Subsection (1) does not apply so far as a loan relationship is in respect of money borrowed by the contractor which has been—
(a) used to meet expenditure incurred by the contractor in carrying on oil contractor activities, or
(b) appropriated to meeting expenditure to be so incurred by the contractor.
(3) Subsection (1) does not apply, in the case of credits falling to be brought into account as a result of section 329 of CTA 2009 (pre-loan relationship and abortive expenses) in respect of a loan relationship that has not been entered into, so far as the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned in subsection (2).
(4) Subsection (1) does not apply, in the case of credits in respect of a loan relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies, so far as—
(a) the payment of interest under the relationship is expenditure incurred as mentioned in subsection (2)(a), or
(b) the exchange gain arising from the relationship is in respect of a money debt on which the interest payable (if any) is, or would be, such expenditure.
(a) falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of a loan relationship of the contractor, but
(b) as a result of this section cannot be brought into account in a way that results in any increase of what would otherwise be the contractor’s ring fence profits,
the credit is to be brought into account for those purposes as a non-trading credit despite anything in section 297 of that Act.
(6) Section 356NB(6) applies for the purposes of this section.
No deduction under section 1219 of CTA 2009 (expenses of management of a company’s investment business) is to be allowed from the contractor’s ring fence profits.
Relief in respect of a loss incurred by the contractor may not be given under section 37 (relief for trade losses against total profits) against the contractor’s ring fence profits except so far as the loss arises from oil contractor activities.
(1) On a claim for group relief made by a claimant company in relation to a surrendering company, group relief may not be allowed against the claimant company’s contractor’s ring fence profits except so far as the claim relates to losses incurred by the surrendering company that arose from oil contractor activities.
(2) In section 105 (restriction on surrender of losses etc within section 99(1)(d) to (g)) the references to the surrendering company’s gross profits of the surrender period do not include the company’s relevant contractor’s ring fence profits for that period.
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(3) The company’s “relevant contractor’s ring fence profits” for that period are—
(a) if for that period there are no qualifying charitable donations made by the company that are allowable under Part 6 (charitable donations relief), the company’s contractor’s ring fence profits for that period, or
(b) otherwise, so much of the contractor’s ring fence profits of the company for that period as exceeds the amount of the qualifying charitable donations made by the company that are allowable under section 189 for that period.
(4) In this section “claimant company” and “surrendering company” are to be read in accordance with Part 5 (group relief) (see section 188).
A capital allowance may not to any extent be given effect under section 259 or 260 of CAA 2001 (special leasing) by deduction from the contractor’s ring fence profits.”
5 In Schedule 4 (index of defined expressions), insert the following entries at the appropriate places—
Commencement etc
6 This Schedule is to be treated as having come into force on 1 April 2014 (“the commencement date”).7 Section 356L of CTA 2010 has effect in relation to activities carried out on or after the commencement date.
8 (1) If, on the commencement date, a company was carrying on a trade that consisted of, or included, carrying out oil contractor activities, an accounting period ends (if it would not otherwise do so) with 31 March 2014.
(2) Sub-paragraph (3) applies if—
(a) but for sub-paragraph (1), a company would have had an accounting period that began before the commencement date and ended on or after that date (“the split accounting period”), and
(b) the company’s accounting period beginning with 1 April 2014 ends when the split accounting period would have ended but for that sub-paragraph.
(3) For the purposes of Chapter 4 of Part 22 of CTA 2010 (surrender of tax refund within group)—
(a) the company is to be treated as having the split accounting period,
(b) any tax refund due to the company for—
(i) the accounting period ending with 31 March 2014, or
(ii) the accounting period beginning with 1 April 2014,
is to be treated as if it were a tax refund due to the company for the split accounting period, and
(c) if the company surrenders a tax refund that is so treated (or part of such a refund), the references in section 964(6) of CTA 2010 to the date on which corporation tax became due and payable are to be treated as references to the date on which corporation tax would have become due and payable had the company had the split accounting period.
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9 (1) A company may be given relief under section 45 of CTA 2010 (carry forward of trade loss against subsequent trade profits) for a loss made in an accounting period ending before the commencement date against profits of a ring fence trade so far as (and only so far as) the loss would have been a loss of the ring fence trade had section 356L of that Act had effect in relation to activities carried out before the commencement date and Part 8ZA therefore applied.
(2) In sub-paragraph (1) “ring fence trade” means oil contractor activities that constitute a separate trade (whether by virtue of section 356M of that Act or otherwise).”—(Mr Gauke.)
Brought up, and added to the Bill.
“General Block Exemption Regulation
1 CAA 2001 is amended as follows.2 (1) Section 45DB (exclusions from allowances under section 45DA) is amended as follows.
(2) In subsection (3)(a), for “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)” substitute “an undertaking in difficulty for the purposes of the General Block Exemption Regulation”.
(3) In subsection (4)(a), for “Council Regulation (EC) No 104/2000” substitute “Regulation (EU) No 1379/2013 of the European Parliament and of the Council”.
(4) In subsection (11), in the definition of “General Block Exemption Regulation”, for “(EC) No 800/2008” substitute “(EU) No 651/2014”.
(5) In subsection (12), for paragraph (c) substitute—
“(c) Regulation (EU) No 1379/2013 of the European Parliament and of the Council,”.
3 In section 45K (expenditure on plant and machinery for use in designated assisted areas), after subsection (8) insert—
“(8A) Condition C is met by virtue of subsection (8)(c) only if the amount of the expenditure exceeds the amount by which the relevant plant or machinery is depreciated in the period of 3 years ending immediately before the beginning of the chargeable period in which the expenditure is incurred.
(8B) “Relevant plant or machinery” means the plant or machinery being used at the end of the period of 3 years mentioned in subsection (8A) for the purposes of the product, process or service mentioned in subsection (8)(c).”
4 (1) Section 45M (exemptions from allowances under section 45K) is amended as follows.
(2) In subsection (1), for “(6) or (7)” substitute “(7) or (7A)”.
(3) In subsection (3)(a), for “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)” substitute “an undertaking in difficulty for the purposes of the General Block Exemption Regulation”.
(a) in paragraph (a), for “Council Regulation (EC) No 104/2000” substitute “Regulation (EU) No 1379/2013 of the European Parliament and of the Council”, and
(b) after paragraph (b) insert—
“(ba) in the transport sector or related infrastructure,
(bb) relating to energy generation, distribution or infrastructure,
(bc) relating to the development of broadband networks,”.
(5) After that subsection insert—
“(4A) Expressions used in subsection (4)(b), (ba), (bb) or (bc) and in the General Block Exemption Regulation have the same meaning as in that Regulation.”
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(7) After subsection (7) insert—
“(7A) Expenditure is within this subsection if—
(a) the area by reference to which the condition in section 45K(1)(a) is met is not an area which falls within Article 107(3)(a) of the Treaty on the Functioning of the European Union,
(b) the condition in section 45K(8)(a) is not met in relation to the expenditure, and
(c) at the time the expenditure is incurred the company is not an SME for the purposes of the General Block Exemption Regulation.”
(a) in the first definition, for the words from ““coal” to “have” substitute “has”, and
(b) in the definition of “General Block Exemption Regulation”, for “(EC) No 800/2008” substitute “(EU) No 651/2014”.
(9) In subsection (15), for paragraph (c) substitute—
“(c) Regulation (EU) No 1379/2013 of the European Parliament and of the Council,”.
5 (1) Section 45N (effect of plant or machinery subsequently being primarily for use outside designated assisted areas) is amended as follows.
(a) for “designated assisted area within the meaning of section 45K” substitute “relevant area”, and
(b) for “such a designated assisted” substitute “a relevant”.
(3) After subsection (3) insert—
(a) in relation to expenditure which would be within subsection (7A) of section 45M if paragraph (a) of that subsection were omitted, a designated assisted area within the meaning of section 45K which falls within Article 107(3)(a) of the Treaty on the Functioning of the European Union, and
(b) in relation to any other expenditure, a designated assisted area within the meaning of section 45K.”
6 In section 212T(6) (cap on first-year allowances: zero-emission goods vehicles), in the definition of “undertaking”, for “(EC) No 800/2008” substitute “(EU) No 651/2014”.7 In section 212U(5) (cap on first-year allowances: expenditure on plant and machinery for use in designated assisted areas), in the definition of “single investment project”, for “(EC) No 800/2008” substitute “(EU) No 651/2014”.”8 The amendments made by this Schedule have effect in relation to expenditure incurred on or after the day on which this Act is passed.”—
(Mr Gauke.)
Brought up, and added to the Bill.
Taxation of co-operative societies etc
Taxation of Chargeable Gains Act 1992 (c. 12)
1 In section 217D of TCGA 1992 (disposal of assets on union, amalgamation or transfer of engagements), in subsection (3), after paragraph (a) insert—
“(aa) a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)),”.
Co-operative and Community Benefit Societies Act 2014 (c. 14)
2 Schedule 4 to the Co-operative and Community Benefit Societies Act 2014 (consequential amendments) is amended as follows.3 In paragraph 47 (which amends section 140E of TCGA 1992)—
2 July 2014 : Column 1002
(a) in sub-paragraph (2), after “Co-operative and Community Benefit Societies Act 2014” insert “or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969”, and
(b) in sub-paragraph (3), after “Co-operative and Community Benefit Societies Act 2014” insert “, a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969”.
4 In paragraph 48 (which amends section 140F of TCGA 1992) after “Co-operative and Community Benefit Societies Act 2014” insert “or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969”.5 In paragraph 49 (which amends section 140G of TCGA 1992) after “Co-operative and Community Benefit Societies Act 2014” insert “or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969”.6 In paragraph 50 (which amends section 170 of TCGA 1992)—
(a) in sub-paragraph (2), for “within the meaning of the Co-operative and Community Benefits Societies Act 2014” substitute “(see section 1119 of that Act)”, and
(b) in sub-paragraph (3), for “within the meaning of the Co-operative and Community Benefits Societies Act 2014” substitute “(see section 1119 of CTA 2010)”.
7 In paragraph 53 (which amends Schedule 7AC of TCGA 1992) for “within the meaning of the Co-operative and Community Benefits Societies Act 2014” substitute “(see section 1119 of that Act)”.8 In paragraph 82 (which amends paragraph 28 of Schedule 2 to ITEPA 2003), in the sub-paragraph (5) substituted by sub-paragraph (3)—
(a) omit the “or” following paragraph (b), and
(b) at the end of paragraph (c) insert “, or
(d) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society.”.
9 In paragraph 94 (which amends section 379 of ITTOIA 2005), in the definition of “registered society” inserted by sub-paragraph (4)—
(a) omit the “or” following paragraph (a), and
(b) after paragraph (b) insert—
“(c) a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or
“(d) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.
10 In paragraph 105 (which amends section 151 of ITA 2007), in the definition of “registered society” inserted by sub-paragraph (3)—
(a) omit the “or” following paragraph (a), and
(b) at the end of paragraph (b) insert “or
(c) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.
11 In paragraph 110 (which amends section 887 of ITA 2007), in the subsection (5) substituted by sub-paragraph (5)—
(a) omit the “or” following paragraph (a), and
(b) after paragraph (b) insert—
“(c) a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or
“(d) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society.”.
2 July 2014 : Column 1003
12 In paragraph 158 (which amends section 90 of CTA 2010), in the definition of “registered society” inserted by sub-paragraph (3)—
(a) omit the “or” following paragraph (a), and
(b) at the end of paragraph (b) insert “or
(c) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.
13 In paragraph 168 (which amends section 1119 of CTA 2010), in the definition of “registered society” inserted by sub-paragraph (3), for paragraph (c) and the “or” before it substitute—
“(c) a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or
(d) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society,”.
14 In paragraph 171 (which amends section 118 of TIOPA 2010)—
(a) in sub-paragraph (2), after “Co-operative and Community Benefit Societies Act 2014” insert “or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969”, and
(b) in sub-paragraph (3), after “Co-operative and Community Benefit Societies Act 2014” insert “, a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969”.
Commencement
The amendments made by this Schedule come into force on 1 August 2014.”—
(Mr Gauke.)
Brought up, and added to the Bill.
Tax relief for theatrical production
Part 1
Amendments of CTA 2009
1 Before Part 16 of CTA 2009 insert—
Part 15C
theatrical productions
‘(1) This Part contains provision about tax relief for production companies in respect of their theatrical productions.
(2) Sections 1217FA to 1217FC define “production company” and “theatrical production”.
(3) Section 1217G sets out the conditions a production company must meet to qualify for relief in relation to its theatrical production.
(4) Section 1217H provides for relief by way of additional deductions in respect of certain expenditure (and section 1217J is about the amount of the additional deduction).
(5) This Part also contains provision—
(a) for a company that claims relief to be treated as carrying on a separate trade relating to the theatrical production (see section 1217H(3)), and
(b) about the calculation of the profits and losses of that trade (see sections 1217I to 1217IF).
(a) provide for relief by way of payments (called “theatre tax credits”) to be made on the company’s surrender of certain losses of that trade, and
2 July 2014 : Column 1004
(b) set out an upper limit on relief, in connection with State aid legislation.
(7) Sections 1217LA and 1217LB are about certain cases involving tax avoidance arrangements or arrangements entered into otherwise than for genuine commercial reasons.
(8) Sections 1217M to 1217MC contain provision about the use of losses of the separate trade (including provision about relief for terminal losses).
(9) Sections 1217N and 1217NA are concerned with the provisional nature of relief given for periods preceding the period in which the company ceases to carry on the separate theatrical trade.
1217FA “Theatrical production”
‘(1) In this Part “theatrical production” means a dramatic production or a ballet (and any ballet is therefore a theatrical production, whether or not it is also a dramatic production).
(2) “Dramatic production” means a production of a play, opera, musical, or other dramatic piece (whether or not involving improvisation) in relation to which the following conditions are met—
(a) the actors, singers, dancers or other performers are to give their performances wholly or mainly through the playing of roles,
(b) each performance in the proposed run of performances is to be live, and
(c) the presentation of live performances is the main object, or one of the main objects, of the company’s activities in relation to the production.
(3) “Dramatic piece” may also include, for example, a show that is to be performed by a circus.
(4) For the purposes of this section a performance is “live” if it is to an audience before whom the performers are actually present.
1217FB Productions not regarded as theatrical
‘(1) A dramatic production or ballet is not regarded as a theatrical production if—
(a) the main purpose, or one of the main purposes, for which it is made is to advertise or promote any goods or services,
(b) the performances are to consist of or include a competition or contest,
(c) a wild animal is to be used in any performance,
(d) the production is of a sexual nature (see subsection (3)), or
(e) the making of a relevant recording is the main object, or one of the main objects, of the company’s activities in relation to the production.
(2) For the purposes of subsection (1)(c) an animal is used in a performance if the animal performs, or is shown, in the course of the performance.
(3) A production is of a sexual nature for the purposes of subsection (1)(d) if the performances are to include any content the nature of which is such that, ignoring financial gain, it would be reasonable to assume the content to be included solely or principally for the purpose of sexually stimulating any member of the audience (whether by verbal or other means).
(4) “Relevant recording” means a recording of a performance—
(a) as a film (or part of a film) for exhibition to the paying general public at the commercial cinema, or
(b) for broadcast to the general public.
“broadcast” means broadcast by any means (including television, radio or the internet);
“film” has the same meaning as in Part 15 (see section 1181);
2 July 2014 : Column 1005
“wild animal” means an animal of a kind which is not commonly domesticated in the British Islands (and in this definition “animal” has the meaning given by section 1(1) of the Animal Welfare Act 2006).
‘(1) A company is the production company in relation to a theatrical production if the company (acting otherwise than in partnership)—
(a) is responsible for producing, running and closing the theatrical production,
(b) is actively engaged in decision-making during the production, running and closing phases,
(c) makes an effective creative, technical and artistic contribution to the production, and
(d) directly negotiates for, contracts for and pays for rights, goods and services in relation to the production.
(2) No more than one company can be the production company in relation to a theatrical production.
(3) If more than one company meets the conditions in subsection (1) in relation to a theatrical production, the company that is most directly engaged in the activities mentioned in subsection (1) is the production company.
(4) If there is no company meeting the conditions in subsection (1), there is no production company in relation to the production.
Companies qualifying for relief
1217G How a company qualifies for relief
‘(1) A company qualifies for relief in relation to a theatrical production if—
(a) it is the production company in relation to the production, and
(b) the commercial purpose condition (see section 1217GA) and the EEA expenditure condition (see section 1217GB) are met.
(2) There is further provision relating to subsection (1) in section 1217LA (tax avoidance arrangements).
1217GA The commercial purpose condition
‘(1) The “commercial purpose condition” is that at the beginning of the production phase the company intends that all, or a high proportion of, the live performances that it proposes to run will be—
(a) to paying members of the general public, or
(b) provided for educational purposes.
(2) The reference in subsection (1) to “live performances” is to be read in accordance with section 1217FA(4).
(3) A performance is not regarded as provided for educational purposes if the production company is, or is associated with, a person who—
(a) has responsibility for the beneficiaries, or
(b) is otherwise connected with the beneficiaries (for instance, by being their employer).
(4) For the purposes of subsection (3), a production company is associated with a person (“P”) if—
(a) P controls the production company, or
(b) P is a company which is controlled by the production company or by a person who also controls the production company.
“the beneficiaries” means persons for whose benefit the performance will or may be provided;
“control” has the same meaning as in Part 10 of CTA 2010 (see section 450 of that Act).
1217GB The EEA expenditure condition
‘(1) The “EEA expenditure condition” is that at least 25% of the core expenditure on the theatrical production incurred by the company is EEA expenditure.
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(2) In this Part “EEA expenditure” means expenditure on goods or services that are provided from within the European Economic Area.
(3) Any apportionment of expenditure as between EEA and non-EEA expenditure for the purposes of this Part is to be made on a just and reasonable basis.
(4) The Treasury may by regulations—
(a) amend the percentage specified in subsection (1);
(5) See also sections 1217N and 1217NA (which are about the giving of relief provisionally on the basis that the EEA expenditure condition will be met).
‘(1) In this Part “core expenditure”, in relation to a theatrical production, means expenditure on the activities involved in—
(a) producing the production, and
(2) The reference in subsection (1)(a) to “expenditure on the activities involved in producing the production”—
(a) does not include expenditure on any matters not directly involved in producing the production (for instance, financing, marketing, legal services or storage);
(b) does not include expenditure on the ordinary running of the production; but expenditure incurred on or after the date of the first performance of the production to the paying general public may fall within subsection (1)(a) (for instance, if it is incurred in connection with a substantial recasting or a substantial redesign of the set).
Claim for additional deduction
1217H Claim for additional deduction
‘(1) A company which qualifies for relief in relation to a theatrical production may claim an additional deduction in relation to the production.
(2) A claim under subsection (1) is made with respect to an accounting period.
(See Schedule 18 to FA 1998, and in particular, Part 9D, for provision about the procedure for making claims.)
(3) Where a company has made a claim under subsection (1)—
(a) the company’s activities in relation to the theatrical production are treated for corporation tax purposes as a trade separate from any other activities of the company (including activities in relation to any other theatrical production), and
(b) the company is entitled to make an additional deduction, in accordance with section 1217J, in calculating the profit or loss of the separate trade for the accounting period concerned.
(4) The company is treated as beginning to carry on the separate trade—
(a) when the production phase begins, or
(b) if earlier, at the time of the first receipt by the company of any income from the theatrical production.
(5) Where the company tax return in which a claim under subsection (1) is made is for an accounting period later than that in which the company begins to carry on the separate trade, the company must make any amendments of company tax returns for earlier periods that may be necessary.
(6) Any amendment or assessment necessary to give effect to subsection (5) may be made despite any limitation on the time within which an amendment or assessment may normally be made.
(7) If the company ceases at any time to meet the conditions in section 1217FC(1) (meaning of “production company”) in relation to the production, it is treated as ceasing to carry on the separate trade at that time.
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1217I Introduction to sections 1217IA to 1217IF
‘(none) Where a company is treated under section 1217H(3)(a) as carrying on a separate trade (“the separate theatrical trade”), the profits or losses of the trade are calculated for corporation tax purposes in accordance with sections 1217IA to 1217IF.
1217IA Calculation of profits or losses of separate theatrical trade
‘(1) For the first period of account during which the separate theatrical trade is carried on, the following are brought into account—
(a) as a debit, the costs of the theatrical production incurred (and represented in work done) to date;
(b) as a credit, the proportion of the estimated total income from the production treated as earned at the end of that period.
(2) For subsequent periods of account the following are brought into account—
(a) as a debit, the difference between the amount (“C”) of the costs of the theatrical production incurred (and represented in work done) to date and the amount corresponding to C for the previous period, and
(b) as a credit, the difference between the proportion (“PI”) of the estimated total income from the production treated as earned at the end of that period and the amount corresponding to PI for the previous period.
(3) The proportion of the estimated total income treated as earned at the end of a period of account is—
C is the total to date of costs incurred (and represented in work done);
T is the estimated total cost of the theatrical production;
I is the estimated total income from the theatrical production.
1217IB Income from the production
‘(1) References in this Part to income from a theatrical production are to any receipts by the company in connection with the making or exploitation of the production.
(a) receipts from the sale of tickets or of rights in the theatrical production;
(b) royalties or other payments for use of aspects of the theatrical production (for example, characters or music);
(c) payments for rights to produce merchandise;
(d) receipts by the company by way of a profit share agreement.
(3) Receipts that (apart from this subsection) would be regarded as being of a capital nature are treated as being of a revenue nature.
1217IC Costs of the production
‘(1) References in this Part to the costs of a theatrical production are to expenditure incurred by the company on—
(a) the activities involved in developing, producing, running and closing the production, or
(b) activities with a view to exploiting the production.
(2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.
(3) Expenditure which, apart from this subsection, would be regarded as being of a capital nature only because it is incurred on the creation of an asset (i.e. the theatrical production) is treated as being of a revenue nature.
1217ID When costs are taken to be incurred
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‘(1) For the purposes of this Part, the costs that have been incurred on a theatrical production at a given time—
(a) are those costs of the production that are represented in the state of completion of the work in progress, but
(b) do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.
(2) In accordance with subsection (1)(a)—
(a) payments in advance of work to be done are ignored until the work has been carried out;
(b) deferred payments are recognised to the extent that the goods or services in question are represented in the state of completion of the work in progress (but this is subject to subsection (1)(b)).
(3) Where an obligation to pay an account is linked to income being earned from the theatrical production, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1217IA.
(4) In determining for the purposes of this Part the amount of costs incurred on a theatrical production at the end of a period of account, any amount that has not been paid 4 months after the end of that period is to be ignored.
1217IE Pre-trading expenditure
‘(1) This section applies if, before the company begins to carry on the separate theatrical trade, it incurs expenditure on activities falling within section 1217IC(1)(a).
(2) The expenditure may be treated as expenditure of the separate theatrical trade and as if incurred immediately after the company begins to carry on that trade.
(3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.
(4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.
Estimates for the purposes of section 12171A must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.
Amount of additional deduction
1217J Amount of additional deduction
‘(1) The amount of an additional deduction to which a company is entitled as a result of a claim under section 1217H is calculated as follows.
(2) For the first period of account during which the separate theatrical trade is carried on, the amount of the additional deduction is E, where—
(a) so much of the qualifying expenditure incurred to date as is EEA expenditure, or(b) if less, 80% of the total amount of qualifying expenditure incurred to date.
(3) For any period of account after the first, the amount of the additional deduction is—
E – P
(a) so much of the qualifying expenditure incurred to date as is EEA expenditure, or(b) if less, 80% of the total amount of qualifying expenditure incurred to date, and
P is the total amount of the additional deductions given for previous periods.
(4) The Treasury may by regulations amend the percentage specified in subsection (2) or (3).
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1217JA “Qualifying expenditure”
‘(1) In this Part “qualifying expenditure”, in relation to a theatrical production, means core expenditure (see section 1217GC) on the theatrical production that—
(a) falls to be taken into account under sections 1217IA to 1217IF in calculating the profit or loss of the separate theatrical trade for tax purposes, and
(b) is not excluded by subsection (2).
(2) The following expenditure is excluded—
(a) expenditure in respect of which the company is entitled to an R&D expenditure credit under Chapter 6A of Part 3;
(b) expenditure in respect of which the company has obtained relief under Part 13 (additional relief for expenditure on research and development).
1217K Theatre tax credit claimable if company has surrenderable loss
(a) is treated under section 1217H(3) as carrying on a separate trade during the whole or part of an accounting period, and
(b) has a surrenderable loss in that period,
may claim a theatre tax credit for that accounting period.
(2) Section 1217KA sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.
(3) A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.
(4) The amount of the theatre tax credit to which a company making a claim is entitled for the accounting period is—
(a) 25% of the amount of the loss surrendered if the theatrical production is a touring production, or
(b) 20% of the amount of the loss surrendered if the theatrical production is not a touring production.
(5) The company’s available loss for the accounting period (see section 1217KA(2)) is reduced by the amount surrendered.
(6) A theatrical production is a “touring production” only if the company intends at the beginning of the production phase—
(a) that it will present performances of the production in 6 or more separate premises, or
(b) that it will present performances of the production in at least two separate premises and that the number of performances will be at least 14.
(7) See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims under subsection (1).
1217KA Amount of surrenderable loss
‘(1) The company’s surrenderable loss in the accounting period is—
(a) the company’s available loss for the period in the separate theatrical trade (see subsections (2) and (3)), or
(b) if less, the available qualifying expenditure for the period (see subsections (4) and (5)).
(2) The company’s available loss for an accounting period is—
L is the amount of the company’s loss for the period in the separate theatrical trade, and
RUL is the amount of any relevant unused loss of the company (see subsection (3)).
(3) 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 1217K, or
(b) carried forward under section 45 of CTA 2010 and set against profits of the separate theatrical trade.
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(4) For the first period of account during which the separate theatrical trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1217J(2).
(5) For any period of account after the first, the available qualifying expenditure is—
E – S
E is the amount that is E for that period for the purposes of section 1217J(3), and
S is the total amount previously surrendered under section 1217K.
(6) If a period of account of the separate theatrical trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.
1217KB Payment in respect of theatre tax credit
(a) is entitled to a theatre tax credit for an accounting period, and
the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company.
(2) An amount payable in respect of—
(b) interest on a theatre tax credit under section 826 of ICTA,
may be applied in discharging any liability of the company to pay corporation tax.
To the extent that it is so applied the Commissioners’ liability under subsection (1) is discharged.
(3) If the company’s company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of a theatre tax credit for that period need be made before the Commissioners’ enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).
In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate.
(4) No payment need be made in respect of a theatre tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period—
(b) under section 966 of ITA 2007 (visiting performers), or
(c) in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
(5) A payment in respect of a theatre tax credit is not income of the company for any tax purpose.
‘(1) The total amount of any theatre tax credits payable under section 1217KB in the case of any undertaking is not to exceed 50 million euros per year.
(2) In this section “undertaking” has the same meaning as in the General Block Exemption Regulation.
(3) In this section “the General Block Exemption Regulation” means any regulation that—
(a) is for the time being in force under Article 1 of Council Regulation (EC) No 994/98, and
(b) makes, in relation to aid in favour of culture and heritage conservation, the declaration provided for by that Article.
1217LA Tax avoidance arrangements
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‘(1) A company does not qualify for relief in relation to a theatrical production if there are any tax avoidance arrangements relating to the production.
(2) Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;
“tax advantage” has the meaning given by section 1139 of CTA 2010.
1217LB Transactions not entered into for genuine commercial reasons
‘(1) A transaction is to be ignored for the purpose of determining a relief mentioned in subsection (2) so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.
(2) The reliefs mentioned in subsection (1) are—
(a) any additional deduction which a company may make under this Part, and
(b) any theatre tax credit to be given to a company.
(3) In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1217LA.
1217M Application of sections 1217MA to 1217MC
‘(1) Sections 1217MA to 1217MC apply to a company that is treated under section 1217H(3) as carrying on a separate trade in relation to a theatrical production.
“the completion period” means the accounting period in which the company ceases to carry on the separate theatrical trade;
“loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax.
1217MA Restriction on use of losses before completion period
‘(1) Subsection (2) applies if a loss is made by the company in the separate theatrical trade in an accounting period preceding the completion period.
(2) The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 of CTA 2010 to be set against profits of the separate theatrical trade in a subsequent period.
1217MB Use of losses in the completion period
‘(1) Subsection (2) applies if a loss made in the separate theatrical trade is carried forward under section 45 of CTA 2010 to the completion period.
(2) So much (if any) of the loss as is not attributable to relief under section 1217H (see subsection (4)) may be treated for the purposes of loss relief as if it were a loss made in the completion period.
(3) If a loss is made in the separate theatrical trade in the completion period, the amount of the loss that may be—
(a) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or
(b) surrendered as group relief under Part 5 of that Act,
is restricted to the amount (if any) that is not attributable to relief under section 1217H.
(4) The amount of a loss in any period that is attributable to relief under section 1217H is found by—
(a) calculating what the amount of the loss would have been if there had been no additional deduction under that section in that or any earlier period, and
(b) deducting that amount from the total amount of the loss.
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(5) This section does not apply to loss surrendered, or treated as carried forward, under section 1217MC (terminal losses).
(a) the company ceases to carry on the separate theatrical trade, and
(b) if the company had not ceased to carry on the separate theatrical trade, it could have carried forward an amount under section 45 of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”).
Below in this section the company is referred to as “company A” and the separate theatrical trade is referred to as “trade 1”.
(a) is treated under section 1217H(3) as carrying on a separate theatrical trade in relation to another theatrical production (“trade 2”), and
(b) is carrying on trade 2 when it ceases to carry on trade 1,
company A may (on making a claim) elect to transfer the terminal loss (or a part of it) to trade 2.
(3) If company A makes an election under subsection (2), the terminal loss (or part of the loss) is treated as if it were a loss brought forward under section 45 of CTA 2010 to be set against the profits of trade 2 of the first accounting period beginning after the cessation and so on.
(4) Subsection (5) applies if—
(a) another company (“company B”) is treated under section 1217H(3) as carrying on a separate theatrical trade (“company B’s trade”) in relation to another theatrical production,
(b) company B is carrying on that trade when company A ceases to carry on trade 1, and
(c) company B is in the same group as company A for the purposes of Part 5 of CTA 2010 (group relief).
(5) Company A may surrender the loss (or part of it) to company B.
(6) On the making of a claim by company B the amount surrendered is treated as if it were a loss brought forward by company B under section 45 of CTA 2010 to be set against the profits of company B’s trade of the first accounting period beginning after the cessation and so on.
(7) The Treasury may by regulations make administrative provision in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6).
(8) “Administrative provision” means provision corresponding, subject to such adaptations or other modifications as appear to the Treasury to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).
Provisional entitlement to relief
1217N Provisional entitlement to relief
‘(1) In relation to a company that has made a claim under section 1217H in relation to a theatrical production, “interim accounting period” means any accounting period that—
(a) is one in which the company carries on the separate theatrical trade, and
(b) precedes the accounting period in which it ceases to do so.
(2) A company is not entitled to relief under any of the relieving provisions for an interim accounting period unless—
(a) its company tax return for the period states the amount of planned core expenditure on the theatrical production that is EEA expenditure, and
(b) that amount is such as to indicate that the EEA expenditure condition (see section 1217GB) will be met in relation to the production.
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If those requirements are met, the company is provisionally treated in relation to that period as if the EEA expenditure condition were met.
(3) In this section “the relieving provisions” means—
(a) section 1217H (additional deduction),
(b) section 1217K (theatre tax credits), and
(c) section 1217MC (terminal losses).
1217NA Clawback of provisional relief
‘(1) If a statement is made under section 1217N(2) but it subsequently appears that the EEA expenditure condition will not be met on the company’s ceasing to carry on the separate theatrical trade, the company—
(a) is not entitled to relief under any of the relieving provisions for any period for which its entitlement depended on such a statement, and
(b) must amend its company tax return for any such period accordingly.
(2) When a company which has made a claim under section 1217H ceases to carry on the separate theatrical trade, the company’s company tax return for the period in which that cessation occurs must—
(a) state that the company has ceased to carry on the separate theatrical trade, and
(b) be accompanied by a final statement of the amount of the core expenditure on the theatrical production that is EEA expenditure.
(3) If that statement shows that the EEA expenditure condition is not met—
(a) the company is not entitled to relief under any of the relieving provisions for any period,
(b) the company is treated for corporation tax purposes as if section 1217H(3)(a) (treatment as a separate trade) did not apply in relation to the theatrical production for any period, and
(c) accordingly, sections 1217MA and 1217MB (provisions about use of losses) do not apply in relation to the theatrical production for any period.
(4) Where subsection (3) applies, the company must amend its company tax return for any period in which (or in any part of which) it was treated as carrying on a separate trade relating to the theatrical production.
(5) Any amendment or assessment necessary to give effect to this section may be made despite any limitation on the time within which an amendment or assessment may normally be made.
(6) In this section “the relieving provisions” has the same meaning as in section 1217N.
1217O Activities involved in developing, producing, running or closing a production
‘(none) The Treasury may by regulations amend section 1217GC (core expenditure) or 1217IC (costs of production) for the purpose of providing that activities of a specified description are, or are not, to be regarded as activities involved in developing or (as the case may be) producing, running or closing—
(a) a theatrical production, or
(b) a theatrical production of a specified description.
‘(none) In this Part “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1) of that Schedule).
“commercial purpose condition” has the meaning given by section 1217GA;
“company tax return” has the meaning given by section 1217OA;
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“core expenditure” has the meaning given by section 1217GC;
“costs”, in relation to a theatrical production, has the meaning given by section 1217IC;
“EEA expenditure” has the meaning given by section 1217GB;
“EEA expenditure condition” has the meaning given by section 1217GB;
references to “income from a theatrical production” are to be read in accordance with section 1217IB;
“production company” has the meaning given by section 1217FC;
“qualifying expenditure” has the meaning given by section 1217JA;
references to the “separate theatrical trade” are to be read in accordance with section 1217I;
“theatrical production” has the meaning given by section 1217FA (read with section 1217FB).”
Part 2
Consequential amendments
ICTA
2 (1) Section 826 of ICTA (interest on tax overpaid) is amended as follows.
(2) In subsection (1), after paragraph (fb) insert—
“(fc) a payment of theatre tax credit falls to be made to a company; or”.
(3) In subsection (3C), for “or video game tax credit” substitute “, video game tax credit or theatre tax credit”.
(a) in paragraph (a) for “or (f)” substitute “(f), (fa), (fb) or (fc)”, and
(b) in paragraph (b)(ii), after “video game tax credit” insert “or theatre tax credit”.
(5) In subsection (8BA), after “video game tax credit” (in both places) insert “or theatre tax credit”.
FA 1998
3 Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.4 In paragraph 10 (other claims and elections to be included in return), in sub-paragraph (4)—
(a) before “claims” insert “certain”;
(b) for “or 15B” substitute “, 15B or 15C”.
5 (1) Paragraph 52 (recovery of excessive overpayments etc) is amended as follows.
(2) In sub-paragraph (2), after paragraph (bf) insert—
(bg) theatre tax credit under Part 15C of that Act,”.
(a) after paragraph (ah) insert—
(ai) an amount of theatre tax credit paid to a company for an accounting period,”;
(b) in the words after paragraph (b), after “(ah)” insert “, (ai)”.
6 (1) Part 9D (certain claims for tax relief) is amended as follows.
(2) In paragraph 83S (introduction), after paragraph (c) insert—
(d) an additional deduction under Part 15C of CTA 2009,
(b) a theatre tax credit under that Part of that Act.”
(3) The heading of that Part becomes “”.
CAA 2001
7 In Schedule A1 to CAA 2001 (first-year tax credits), in paragraph 11(4), omit the “and” at the end of paragraph (d) and after paragraph (e) insert “, and
(f) section 1217K of that Act (theatre tax credits).”
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FA 2007
8 In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (meaning of “corporation tax credit”), omit the “or” at the end of sub-paragraph (ivb) and after that sub-paragraph insert—a theatre tax credit under section 1217K of that Act, or”.
(ivc) a theatre tax credit under section 1217K of that Act, or”.
CTA 2009
9 In section 104BA of CTA 2009 (R&D expenditure credits: restrictions on claiming other tax reliefs), after subsection (3) insert—
“(4) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under section 1217H or 1217K (theatrical productions: additional deduction or theatre tax credit), see section 1217JA(2).”
10 In Part 8 of CTA 2009 (intangible fixed assets), in Chapter 10 (excluded assets), before section 809 insert—
“808C Assets representing expenditure incurred in course of separate theatrical trade
(1) This Part does not apply to an intangible fixed asset held by a theatrical production company so far as the asset represents expenditure on a theatrical production that is treated under Part 15C as expenditure of a separate trade (see particularly sections 1217H and 1217IE).
“theatrical production” has the same meaning as in Part 15C (see section 1217FA);
“theatrical production company” means a company which, for the purposes of that Part, is the production company in relation to a theatrical production (see section 1217FC).”
11 In section 1040ZA of CTA 2009 (additional relief for expenditure on research and development), after subsection (3) insert—
“(4) For provision prohibiting relief being given under this Part and under section 1217H or 1217K (theatrical productions: additional deduction or theatre tax credit), see section 1217JA(2).”
12 In section 1310 of CTA 2009 (orders and regulations), in subsection (4), after paragraph (ej) insert—
“(ek) section 1217GB(4) (EEA expenditure condition),
(el) section 1217J(4) (amount of additional deduction),
(em) section 1217O (activities involved in developing, producing, running or closing a production),”.
13 In Schedule 4 to CTA 2009 (index of defined expressions) at the appropriate place insert—
FA 2009
14 In Schedule 54A to FA 2009 (which is prospectively inserted by F(No. 3)A 2010 and contains provision about the recovery of certain amounts of interest paid by HMRC), in paragraph 2—
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(a) in sub-paragraph (2), omit the “or” at the end of paragraph (f) and after paragraph (g) insert “, or
(h) a payment of theatre tax credit under section 1217K of CTA 2009 for an accounting period.”;
(b) in sub-paragraph (4), for “(e)” substitute “(h)”.
CTA 2010
15 (1) Section 357CG of CTA 2010 (profits arising from the exploitation of patents etc: adjustments in calculating profits of trade) is amended as follows.
(2) In subsection (3), omit the “and” at the end of paragraph (c) and after paragraph (d) insert “, and
(e) the amount of any additional deduction for the accounting period obtained by the company under Part 15C of CTA 2009 in respect of qualifying expenditure on a theatrical production.”
(a) in the definition of “qualifying expenditure”, omit the “and” at the end of paragraph (a) and after paragraph (b) insert “, and
(i) in relation to a company that is the production company (as defined in section 1217FC of that Act) in relation to a theatrical production, has the same meaning as in Part 15C of that Act,”;
(b) omit the “and” at the end of the definition of “television production company” and after that definition insert—
““theatrical production” has the same meaning as in Part 15C of CTA 2009 (see section 1217FA of that Act), and”.
Part 3
Commencement
16 (1) Any power to make regulations conferred on the Treasury by virtue of this Schedule comes into force on the day on which this Act is passed.
(2) So far as not already brought into force by sub-paragraph (1), the amendments made by this Schedule come into force in accordance with provision contained in an order made by the Treasury.
(3) An order under sub-paragraph (2) may make different provision for different purposes.
17 (1) The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 September 2014.
(2) Sub-paragraph (3) applies where a company has an accounting period beginning before 1 September 2014 and ending on or after that date (“the straddling period”).
(3) For the purposes of Part 15C of CTA 2009—
(a) so much of the straddling period as falls before 1 September 2014, and so much of that period as falls on or after that date, are treated as separate accounting periods, and
(b) any amounts brought into account for the purposes of calculating for corporation tax purposes the profits of a trade for the straddling period are apportioned to the two separate accounting periods on such basis as is just and reasonable.”—(Mr Gauke.)
Brought up, and added to the Bill.
Appeal against a section 201 penalty
Amendments made: 1, page 138, line 23, at end insert—
‘(2A) The grounds on which an appeal under subsection (1) may be made include in particular—
(a) that Condition A, B or D in section197was not met in relation to the follower notice,
2 July 2014 : Column 1017
(b) that the judicial ruling specified in the notice is not one which is relevant to the chosen arrangements,
(c) that the notice was not given within the period specified in subsection (6) of that section, or
(d) that it was reasonable in all the circumstances for P not to have taken the necessary corrective action (see section201(4)) in respect of the denied advantage.”
Amendment 2, page 138, line 43, at end insert—
‘(8A) The cancellation under subsection (7) of HMRC’s decision on the ground specified in subsection (2A)(d) does not affect the validity of the follower notice, or of any accelerated payment notice or partner payment notice under Chapter 3 related to the follower notice.”—(Mr Gauke.)
Follower notices and partnerships
Amendment made: 3, page 535, line 45, at end insert—
‘(7A) Section 207(2A) applies to an appeal by virtue of sub-paragraph (7)(a) as it applies to an appeal under section 207(1).”—(Mr Gauke.)
Removal of limitation period restriction for EU cases
Amendment made: 4, page 199, leave out lines 23 to 29.—(Mr Gauke.)
Air passenger duty: adjustments to Part 3 of Schedule 5A to FA 1994
Amendments made: 5, page 61, line 18, leave out “as follows” and insert
“in accordance with subsections (2) to (10)”.
Amendment 6, page 62, line 9, at end insert—
‘( ) Accordingly, in section 1 of the Air Passenger Duty (Setting of Rate) Act (Northern Ireland) 2012 (setting of rate of air passenger duty)—
(i) omit “(3)(a) and (b), (4)(a) and (b),”, and
(ii) for “(5A)(a), (b) and (c)” substitute “(5A)(c)”, and
(b) omit subsections (2) to (5), (8) and (9).”—(Mr Gauke.)
Employment-related securities etc
Amendments made: 7, page 311, line 41, at end insert—
“9A (1) Section 428 (restricted securities: amount of charge) is amended as follows.
(2) In subsection (7), after paragraph (ba) insert—
“(bb) any amount that was charged to non-UK income tax in respect of the acquisition of the employment-related securities, but only so far as that amount exceeds any amount within paragraph (b) or (ba),”.
(3) After subsection (7) insert—
(7A) In subsection (7)(b) and (ba) the references to an amount of exempt income, in a case in which the amount that constituted, or was treated as, earnings in respect of the acquisition was not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applied, includes any amount that would have been an amount of exempt income if any of those charging provisions had applied.
2 July 2014 : Column 1018
(7B) In subsection (7)(bb) “non-UK income tax” means a tax chargeable on income under the law of a territory outside the United Kingdom that corresponds to United Kingdom income tax.
(7C) A tax is not outside the scope of subsection (7B) by reason only that it—
(a) is chargeable under the law of a province, state or other part of a country, or
(b) is levied by or on behalf of a municipality or other local body.””
Amendment 8, page 312, line 8, at end insert—
11A In section 446T (securities acquired for less than market value: amount of notional loan), after subsection (3) insert—
(3A) In subsection (3)(b) and (ba) the references to an amount of exempt income, in a case in which the amount that constitutes, or is treated as, earnings in respect of the acquisition is not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applies, includes any amount that would be an amount of exempt income if any of those charging provisions were to apply.”
Amendment 9, page 312, line 10, at end insert—
12A In section 480 (securities options: deductible amounts), after subsection (5) insert—
(5A) In subsection (5)(a) the reference to an amount of exempt income, in a case in which the amount that constituted earnings in respect of the acquisition was not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 applied, includes any amount that would have been an amount of exempt income if any of those charging provisions had applied.”
Amendment 10, page 313, line 26, at end insert—
23A In section 149AA (restricted and convertible employment-related securities and employee shareholder shares), in subsection (7)—
(b) in a case in which the amount that constituted, or was treated as, earnings was not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 of ITEPA 2003 applied, any amount that would have been an amount of such exempt income if any of those charging provisions had applied.””—(Mr Gauke.)
Employee share schemes
Amendments made: 11, page 273, line 29, at end insert—
139A (1) Section 94A of ITTOIA 2005 (costs of setting up SAYE option scheme or CSOP scheme) is amended as follows.
(a) in paragraph (a) omit “that is approved by an officer of Revenue and Customs”, and
(b) omit paragraph (b) and the “and” before it.
(a) at the beginning of paragraph (a) insert “Schedule 3”,
(b) at the beginning of paragraph (b) insert “Schedule 4”, and
(4) In subsection (4) for “approval is given” (in both places) substitute “relevant date falls”.
(5) After subsection (4) insert—
(4A) In subsection (4) “the relevant date”—
(a) in relation to a Schedule 3 SAYE option scheme, has the meaning given in paragraph 40A(6) of Schedule 3 to ITEPA 2003, and
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(b) in relation to a Schedule 4 CSOP scheme, has the meaning given in paragraph 28A(6) of Schedule 4 to ITEPA 2003.””
Amendment 12, page 276, line 42, after “under” insert
“section 94A of ITTOIA 2005 or”.
Amendment 13, page 294, line 48, leave out “paragraph 141” and insert “paragraphs 139A and 141”.
Amendment 14, page 295, line 1, after “under” insert “section 94A of ITTOIA 2005 or”.—(Mr Gauke.)
Tax relief for social investments
Amendments made: 15, page 328, line 20, after “charity,” insert—
“() an accredited social impact contractor (see section 257JD),”
Amendment 16, page 330, line 33, after “Part” insert “(except section 257JD)”.
Amendment 17, page 330, line 34, at end insert—
257JD
“257JD Accreditation as a social impact contractor
(1) In this Part “accredited social impact contractor” means a company limited by shares that is accredited under this section as a social impact contractor.
(2) Applications for accreditation as a social impact contractor must be made to a Minister of the Crown in the form and manner specified by a Minister of the Crown.
(3) A Minister of the Crown is to accredit a company if, but only if, that Minister is satisfied that—
(a) the company has entered into a social impact contract (see section 257JE),
(b) the company is, and at all times since its incorporation has been, established—
(i) for the purpose of entering into and carrying out a social impact contract, or for that purpose and purposes incidental to it, but
(ii) for no other purpose, and
(c) the activities of the company in carrying out that contract will not consist wholly, or as to a substantial part, in excluded activities (see section 257MQ).
(4) If a Minister of the Crown is satisfied that the condition in subsection (3)(b) or (c) has ceased to be met in relation to a company that is an accredited social impact contractor, that Minister is to withdraw the company’s accreditation with effect from the time the condition ceased to be met or a later time.
257JE Meaning of “social impact contract”
(1) In this Part “social impact contract” means a contract that meets such criteria as may be specified in regulations made by the Treasury.
(2) The criteria which may be specified under subsection (1) include, in particular, criteria as to a party to the contract other than the company seeking accreditation.
(3) Criteria may be specified in regulations under subsection (1) by reference to material published by, or on behalf of, a Minister of the Crown after the making of the regulations (as well as by reference to material published before the making of the regulations).
(4) Regulations under subsection (1) may make different provision for different cases or circumstances or in relation to different areas.
257JF Accreditations: supplementary provisions
(1) An accreditation must be made so as to be conditional on compliance with—
2 July 2014 : Column 1020
(a) any requirements imposed by or under regulations, and
(b) any other requirements considered appropriate by the Minister of the Crown who is accrediting the company concerned.
(2) The requirements that may be imposed by virtue of subsection (1) include requirements relating to the provision of information.
(a) make further provision about applications for accreditation,
(b) make provision for the variation of an accreditation (including its provisions as to its duration),
(c) make provision which, in a case where a company is or has been an accredited social impact contractor, imposes or authorises the imposition of requirements on the company, or on any other party to the social impact contract concerned, to provide information,
(d) make provision about the consequences of a failure to comply with any requirement of an accreditation imposed by virtue of subsection (1) or with any requirement imposed by virtue of paragraph (c), including in particular—
(i) provision for the withdrawal of the accreditation concerned with effect from the time of the failure or a later time, and
(ii) provision for the imposition of penalties,
(e) make provision for publication of information about an accreditation or accredited social impact contractor, and
(f) make provision for reviews of, or for appeals to the tribunal against, any of the following—
(i) a refusal to grant or vary an accreditation,
(ii) the imposition of a requirement under subsection (1)(b),
(iii) the withdrawal of an accreditation (whether under section 257JD(4) or by virtue of provision made under paragraph (d)(i)), and
(iv) the imposition or amount of a penalty imposed by virtue of provision made under paragraph (d)(ii).
(4) Regulations under subsection (1) or (3) may—
(a) make provision for the making of decisions by a Minister of the Crown as to any matter required to be decided for the purposes of the regulations,
(b) be framed by reference to material published by, or on behalf of, a Minister of the Crown after the making of the regulations (as well as by reference to material published before the making of the regulations),
(c) make different provision for different cases or circumstances or in relation to different areas, and
(d) contain incidental, supplemental, consequential and transitional provision and savings.
“accreditation” means accreditation under section 257JD, and
“regulations” means regulations made by the Treasury.
257JG Period of accreditation as a social impact contractor
(1) An accreditation under section 257JD has effect for a period—
(a) beginning with the day specified in the accreditation, and
(b) of a length specified in, or determined in accordance with, the accreditation.
(2) The day specified under subsection (1)(a) in an accreditation may not be earlier than 6 April 2014 but subject to that—
(a) may be, or be earlier than, the day it is decided to grant the accreditation (and in particular may be, or be earlier than, the day the application for the accreditation is made), and
2 July 2014 : Column 1021
(b) may be earlier than the day section 257JD comes into force.
(3) This section has effect subject to sections 257JD(4) and 257JF(3)(d)(i) (withdrawal of accreditations).
257JH Functions of Ministers of the Crown under sections 257JD to 257JG
(1) A Minister of the Crown may delegate any function given to a Minister of the Crown by or under sections 257JD to 257JG other than a power of the Treasury to make regulations.
(2) In those sections and this section “Minister of Crown” has the meaning given by section 8(1) of the Ministers of the Crown Act 1975.”
Amendment 18, page 331, line 1, at end insert—
( ) Subsection (1)(b) is subject to the provisions in sections 257LB and 257MJ to 257MN which provide for conditions set out in those sections not to apply where the social enterprise is an accredited social impact contractor.”
Amendment 19, page 334, line 44, at end insert—
( ) Subsections (2) to (4) do not apply if the social enterprise is an accredited social impact contractor.”
Amendment 20, page 335, line 12, after “257MJ(2)(c)” insert
“or is a parent company that is an accredited social impact contractor”.
Amendment 21, page 339, line 23, at end insert—
257M
“257M The continuing to be a social enterprise requirement
The social enterprise must be a social enterprise throughout the shorter applicable period.”
Amendment 22, page 343, line 11, after “period” insert
“, but this does not apply if the social enterprise is an accredited social impact contractor”.
Amendment 23, page 343, line 15, after “business” insert “—
Amendment 24, page 343, line 17, leave out “non-qualifying” and insert
(ii) does not consist wholly, or as to a substantial part, in the carrying-on of excluded”.
Amendment 25, page 344, line 14, at end insert
“non-trade activities” means activities which are neither of the following—
(a) activities carried on in the course of a trade, and(b) activities carried on in the course of preparing to carry on a trade.”
Amendment 26, page 345, line 26, at end insert—
( ) This section does not apply if the social enterprise is an accredited social impact contractor.”
Amendment 27, page 346, line 19, at end insert—
( ) If the social enterprise is an accredited social impact contractor, the preceding provisions of this section apply with the following modifications—
(a) in subsection (1), for “28 months” substitute “24 months”,
(b) in that subsection, for “the funded purpose” substitute “the carrying out of the social impact contract concerned”, and
(c) omit subsections (2), (3), (5) and (6).”
Amendment 28, page 347, line 7, at end insert—
( ) This section does not apply if the social enterprise is an accredited social impact contractor.”
2 July 2014 : Column 1022
Amendment 29, page 347, line 20, at end insert “257JD,”
Amendment 30, page 353, line 10, at end insert—
( ) If the social enterprise is an accredited social impact contractor, subsection (1) applies with the omission of its paragraph (a).”
Amendment 31, page 354, line 8, at end insert—
( ) If the social enterprise is an accredited social impact contractor, subsection (3) applies with the omission of its paragraph (a).”
Amendment 32, page 355, line 8, at end insert—
( ) An order under this section may make different provision for different cases or purposes.”
Amendment 33, page 372, line 31, leave out “257MA” and insert “257M”.
Amendment 34, page 373, line 24, after “sections” insert “257M,”.
Amendment 35, page 374, line 13, at end insert—7
(7) If the event mentioned in subsection (1) is one whose occurrence results in the requirement in section 257M not being met in respect of the investment, the references in subsections (2) and (3) to the social enterprise are to—
(a) the body concerned even though it has ceased to be a social enterprise, or
(b) the body into which the social enterprise has been converted.”
Amendment 36, page 376, line 11, after “prevent” insert
Amendment 37, page 376, line 12, at end insert—
“(b) disclosure to a Minister of the Crown for the purposes of functions of a Minister of the Crown under sections 257JD to 257JG, or
(c) disclosure to a person for the purposes of functions delegated to the person under section 257JH(1).”
Amendment 38, page 376, line 18, after “Information” insert
“originally disclosed in reliance on subsection (2)(a)”.
Amendment 39, page 376, line 19, at end insert—
(5) Information originally disclosed in reliance on subsection (2)(b) or (c) may be disclosed in reliance on subsection (3)(a) only for the purposes of—
(a) functions of a Minister of the Crown under sections 257JD to 257JG, or
(b) functions delegated to a person under section 257JH(1).
(6) If, in contravention of subsections (3) to (5), any revenue and customs information relating to a person is disclosed and the identity of the person—
(a) is specified in the disclosure, or
section 19 of the Commissioners for Revenue and Customs Act 2005 (offence of wrongful disclosure) applies as it applies in relation to a disclosure of such information in contravention of section 20(9) of that Act.
(7) In subsection (6) “revenue and customs information relating to a person” has the meaning given by section 19(2) of that Act.
(8) Subject to subsections (3) and (5), no obligation as to confidentiality or other restriction on disclosure, whether imposed by an enactment or otherwise, prevents disclosure of relevant information—
2 July 2014 : Column 1023
(a) to a Minister of the Crown for the purposes of functions of a Minister of the Crown under sections 257JD to 257JG,
(b) to a person for the purposes of functions delegated to the person under section 257JH(1), or
(c) to an officer of Revenue and Customs for the purpose of assisting Her Majesty’s Revenue and Customs to discharge their functions under the Income Tax Acts so far as relating to matters arising under this Part.
(9) In subsection (8) “relevant information” means information obtained—
(a) by a Minister of the Crown, or
(b) by a person to whom functions have been delegated under section 257JH(1),
in the course of discharging functions under sections 257JD to 257JG.
(10) In this section “Minister of the Crown” has the meaning given by section 8(1) of the Ministers of the Crown Act 1975.”
Amendment 40, page 381, line 20, leave out “by way of, or amounts” and insert
“not by way of, and does not amount”.—(
Mr Gauke.
>)
Investments in social enterprises: capital gains
Amendment made: 41, page 387, line 5, at end insert—
(8) A reference in this paragraph to a social enterprise is a reference to a body that is a social enterprise for the purposes of Part 5B of ITA 2007 (see section 257J of that Act).”—(Mr Gauke.)
Business premises renovation allowances
Amendments made: 42, page 52, line 12, leave out “(EC) No 800/2008” and insert “(EU) No 651/2014”
Amendment 43, page 52, line 41, at end insert—
‘( ) In the application of section 360L of CAA 2001 in relation to expenditure incurred before the day on which this Act is passed, the definition of “General Block Exemption Regulation” in subsection (6) of that section is to be treated as referring to Commission Regulation (EC) No 800/2008.”—(Mr Gauke.)
Companies owned by employee-ownership trusts
Amendments made: 44, page 559, line 35, leave out “(see sections 236J to 236L)” and insert
“at the time of the disposal and continues to meet that requirement for the remainder of the tax year in which that time falls (see sections 236J to 236L and subsection (4A) of this section)”.
Amendment 45, page 560, line 1, leave out “but does meet it at the end of that year” and insert
(i) it meets that requirement at the end of that tax year, and
(ii) if it met the requirement at an earlier time in that tax year (whether before or after the time of the disposal) it continued to meet it throughout the remainder of that tax year,”
Amendment 46, page 560, line 7, at end insert—
‘(4A) For the purposes of subsection (4)(b)—
(a) unless the settlement met the all-employee benefit requirement by virtue of section 236L (cases in which all-employee benefit requirement treated as met) at the time of the disposal, that section does not apply
2 July 2014 : Column 1024
for the purposes of determining whether the settlement continues to meet that requirement after the disposal, and
(b) if, at the time of the disposal, the settlement met that requirement by virtue of section 236L and later continues to meet it otherwise than by virtue of that section, it may not again meet the requirement by virtue of that section.”
Amendment 47, page 560, line 19, at end insert—
‘(7) Section 236NA makes provision about events which prevent a claim being made under this section and circumstances in which a claim is revoked.”
Amendment 48, page 563, line 46, leave out
“is treated as meeting that requirement”
“at any time is treated as meeting that requirement at that time”.
Amendment 49, page 564, line 9, leave out
“day of the disposal mentioned in section 236H(1)”
and insert “time in question”.
Amendment 50, page 566, line 10, at end insert—
‘(A1) The limited participation requirement is met if Conditions A and B are met.”
Amendment 51, page 566, line 11, leave out
“The limited participation requirement is met if”
and insert “Condition A is that”.
Amendment 52, page 566, line 15, at end insert—
‘(1A) Condition B is that the participator fraction does not exceed 2/5 at any time in the period beginning with that disposal and ending at the end of the tax year in which it occurs.”
Amendment 53, page 566, line 18, after “(1)(b)” insert “and (1A)”
Amendment 54, page 567, line 7, at end insert—
“236NA No section 236H relief if disqualifying event in next tax year
(1) This section applies where—
(a) a disposal is made in circumstances where paragraphs (a) and (b) of section 236H(1) are satisfied, and
(b) one or more disqualifying events occur in relation to the disposal in the tax year following the tax year in which the disposal occurs.
(2) A “disqualifying event” occurs in relation to the disposal if and when—
(a) C ceases to meet the trading requirement,
(b) the settlement ceases to meet the all-employee benefit requirement,
(c) the settlement ceases to meet the controlling interest requirement,
(d) the participator fraction exceeds 2/5, or
(e) the trustees act in a way which the trusts, as required by the all-employee benefit requirement, do not permit.
(3) No claim for relief under section 236H may be made in respect of the disposal on or after the day on which the disqualifying event (or, if more than one, the first of them) occurs.
(4) Any claim for relief under section 236H made in respect of the disposal before that day is revoked, and the chargeable gains and allowable losses of any person for any chargeable period are to be calculated as if that claim had never been made.
(5) Such adjustments must be made in relation to any person, whether by the making of assessments or otherwise, as are required to give effect to subsection (4) (regardless of any limitation on the time within which any adjustment may be made).
(6) Section 236H(4A) (restrictions on application of section 236L) applies for the purposes of subsection (2)(b).
2 July 2014 : Column 1025
(7) Section 236N(2) applies for the purposes of subsection (2)(d) as it applies in relation to section 236N(1)(b) and (1A).”
Amendment 55, page 567, line 11, after “occasion” insert
“, after the end of the tax year following the tax year in which the acquisition occurs, when”.
Amendment 56, page 567, leave out lines 13 to 25 and insert—
‘(2) A “disqualifying event” occurs in relation to the acquisition if and when—
(a) C ceases to meet the trading requirement,
(b) the settlement ceases to meet the all-employee benefit requirement,
(c) the settlement ceases to meet the controlling interest requirement,
(d) the participator fraction exceeds 2/5, or
(e) the trustees act in a way which the trusts, as required by the all-employee benefit requirement, do not permit.”
Amendment 57, page 567, line 26, leave out “after” and insert “before”.
Amendment 58, page 567, line 34, leave out “(2)(b)(i)” and insert “(2)(b)”.
Amendment 59, page 567, leave out lines 44 to 48.
Amendment 60, page 568, line 1, leave out
“(2)(b)(ii) as it applies in relation to section 236N(1)(b)”
“(2)(b) as it applies in relation to section 236N(1)(b) and (1A)”.
Amendment 61, page 568, line 36, at end insert—
‘(7) Section 236PA makes provision about events which prevent a claim being made under this section and circumstances in which a claim is revoked.”
Amendment 62, page 568, line 36, at end insert—
“236PA No section 236P relief if disqualifying event in next tax year
(1) This section applies where—
(a) a deemed disposal arises in circumstances where paragraphs (a) to (c) of section 236P(1) are satisfied, and
(b) one or more disqualifying events occur in relation to the disposal in the tax year following the tax year in which the deemed disposal arises.
(2) No claim for relief under section 236P may be made in respect of the deemed disposal on or after the day on which the disqualifying event (or, if more than one, the first of them) occurs.
(3) Any claim for relief under section 236P made in respect of the deemed disposal before that day is revoked, and the chargeable gains and allowable losses of any person for any chargeable period are to be calculated as if that claim had never been made.
(4) Such adjustments must be made in relation to any person, whether by the making of assessments or otherwise, as are required to give effect to subsection (3) (regardless of any limitation on the time within which any adjustment may be made).
(5) “Disqualifying event” is to be construed in accordance with subsections (2), (6) and (7) of section 236NA except that—
(a) references in those subsections to the disposal are to be read as references to the deemed disposal, and
(b) in applying sections 236I to 236O and 236R for this purpose—
(i) references in those provisions to the settlement are to be read as references to the acquiring settlement (within the meaning of section 236P(1)), and
2 July 2014 : Column 1026
(ii) references in those provisions to C are to be read as references to the company mentioned in section 236P(1)(b).”
Amendment 63, page 570, line 17, leave out “The” and insert
“Subject to paragraph 2A, the”.
Amendment 64, page 570, line 18, at end insert—
2A In relation to disposals made on or after 6 April 2014 but before 26 June 2014, TCGA 1992 has effect as if—
(a) in section 236H— in section 236N—
(i) in subsection (4)(b), for the words from “at the time of the disposal” to the end there were substituted “(see sections 236J to 236L)”,
(ii) subsection (4)(c)(ii) (and the “and” before it) were omitted, and
(iii) subsections (4A) and (7) were omitted,
(iv) in subsection (A1), for “Conditions A and B are” there were substituted “Condition A is”, and
(v) subsection (1A) were omitted,
(b) section 236NA were omitted,
(i) in subsection (1) the words “, after the end of the tax year following the tax year in which the acquisition occurs, when” were omitted,
(ii) for subsection (2) there were substituted—
“(2) A “disqualifying event” occurs in relation to the acquisition if and when—
(a) at any time after that tax year—
(i) C ceases to meet the trading requirement, or(ii) the settlement ceases to meet the controlling interest requirement, or
(b) at any time after the acquisition—
(i) the settlement ceases to meet the all-employee benefit requirement,(ii) the participator fraction exceeds 2/5, or(iii) the trustees act in a way which the trusts, as required by the all-employee benefit requirement, do not permit.”,
(iii) in subsection (3) for “before” there were substituted “after”,
(d) section 236P(7) were omitted, and
(e) section 236PA were omitted.”
Amendment 65, page 575, line 36, leave out
“day of the disposal mentioned in section 236H(1)”
and insert “time in question”.
Amendment 66, page 582, line 9, leave out
“date of the disposal mentioned in section 236H(1)”
and insert “time in question”—(Mr Gauke.)
6.2 pm
Mr Gauke: I beg to move, That the Bill be now read a Third time.
I will keep my remarks brief, but I would like to remind the House once more of the important provisions before us. Finance Bill 2014 delivers measures that will help British businesses invest and create jobs, help British households work and save, and help to ensure that everyone in Britain pays their fair share of tax. The Bill builds on the strong foundations that we have secured in the past four years, safeguarding our economic stability, creating a fairer more efficient and simpler tax system, and driving through reforms to unleash the private sector enterprise and ambition that is critical to our recovery.
2 July 2014 : Column 1027
Let me focus first on growth and competitiveness. When this Government took office, we inherited an economy in crisis. We have had to make some tough choices, but we have delivered our economic plan. As a result, the UK economy is finally getting back on track. The deficit is shrinking, employment is at record levels and the our economy grew faster than that of any other advanced economy over the past year. To support the recovery, it is vital that the UK tax system attracts investment to this country and does everything possible to ensure that UK businesses can compete in the global race. That is why, in the corporate tax road map in 2010, we set out our ambition to give the UK the most competitive tax regime in the G20.
In my conversations with financial directors and tax advisers I am told again and again of the importance of a low headline rate and the signal it sends. I am proud to say that, as a result of this Government’s actions, the main rate of corporation tax will fall to 20% by 2015-16—not only significantly lower than the uncompetitive rate of 28% we inherited from Labour, but the lowest of any major economy in the world. It is vital for our national interest that we continue to have that low competitive rate. Altogether, by 2016, our corporation tax cuts for small and large businesses will be saving businesses £9.5 billion every year. These reforms have been a central plank of the Government’s economic strategy, and that strategy is working.
Competitiveness is not just about the rate of corporation tax. That is why this Bill will raise the annual investment allowance to £500,000 with effect from April 2014 to December 2015. This doubles the amount of investment on which firms can get up-front tax relief. More than 4.9 million firms will benefit, the vast majority of which will be small and medium-sized enterprises.
The Bill will also reduce business and household energy costs by freezing the carbon price support rate to £18 in 2016-17. The Government have also committed to maintain the freeze until the end of the decade, which will save businesses £4 billion by 2018-19. The Bill includes measures to give targeted support to the innovative sectors that will drive growth in the 21st century. We will legislate further to increase the generosity of the research and development tax relief for small businesses, with an increased rate of support for loss makers of 14.5%. This demonstrates the Government’s commitment to supporting research-intensive SMEs and start-ups and could support up to £1 billion of investment over the next five years. We will support social enterprise with a 30% tax relief, unlocking up to £500 million in additional investment over the next five years, and we are making permanent our successful seed enterprise investment scheme to support investment in start-ups and early-stage firms. Let me mention again the new theatre tax relief, which we have just debated, that recognises the unique cultural value that the theatre sector brings to the whole of the UK.
With low corporation tax rates, support for innovation and help for small business, Finance Bill 2014 sends the clearest possible message that Britain is open to multinational companies, open to entrepreneurs, open to investors: Britain is open for business.
Let me deal with fairness. While the Bill supports businesses, it also provides for individuals and helps families with the cost of living. We are delivering our
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coalition commitment to raise the income tax personal allowance to £10,000 and we are going further to increase it to £10,500 in 2015-16. By April 2015, a typical basic rate taxpayer will be more than £500 better off than under the previous Government’s plans. Taken with previous increases, the Government will have lifted over 3.2 million people out of income tax altogether. That is real help for hard-working people.
The Finance Bill rewards those who want to save for the future. We recognise that people who rely on their savings income have seen low returns in recent years. From April 2015, the 10% starting rate of tax on savings will be abolished, and a 0% rate will be extended to the first £5,000 of savings income above the personal allowance. This will benefit 1.5 million people, over 1 million of whose total incomes will be below £15,500 a year. They will pay no tax on their savings income at all.
We are delivering our promise to recognise marriage in the tax system by introducing a new transferable tax allowance for married couples and civil partners, allowing spouses in households where neither partner is a higher or additional rate taxpayer and where one partner has not used up the full allowance, to pay tax on up to £1,050 less of their income from 2015-16.
Let me deal with some of the measures we are taking to tackle avoidance. The vast majority of individuals and businesses pay the tax that they owe, but there are some who continue to pursue unacceptable ways of reducing and delaying their tax bill. This Government are determined radically to reduce both the incentives and the opportunities for individuals and businesses to engage in abusive behaviour. This Government have taken unprecedented steps to tackle avoidance and abuse. Since 2010 we have legislated to close more than 40 tax avoidance loopholes, and we have made major strategic reforms such as introducing the United Kingdom’s first anti-abuse rule. As a result, the market for tax avoidance schemes is shrinking. The number of disclosures of tax avoidance schemes fell by nearly 50% between 2011-12 and 2012-13.
However, we are not complacent. That is why the Bill introduces a new requirement for users of avoidance schemes which have already been struck down by the courts, which fall within the scope of the DOTAS rules, or which are being counteracted by the general anti-abuse rule to pay the disputed tax up front. That will generate nearly £5 billion of revenue over the next five years, and ensures that those who knowingly enter avoidance schemes will not be able to hold on to the disputed tax. They will have to pay up front like most other taxpayers. We are also cracking down on high-risk promoters of tax avoidance schemes by imposing minimum standards of behaviour, supported by onerous information powers and stiff penalties for those who do not comply. Those measures demonstrate the Government’s continued commitment to swift, effective and targeted action to tackle avoidance and aggressive tax planning.
The Bill may be substantial, but it contains a number of provisions to clarify or simplify the tax system. It contains proposals to simplify the tax rules and administrative procedures for employee share schemes, and to merge the main and small-profits rates of corporation tax. Those changes will make it easier for small businesses to meet their tax obligations, and will give them greater certainty that their tax affairs are in order. The Bill also
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follows a longer, more thorough process of policy development. In December 2013 we published more than 300 pages in draft legislation for comment, and we received more than 300 responses, which have improved the final legislation.
The Bill once again delivers on the Government’s commitment to unprecedented levels of consultation and scrutiny in the development of new tax proposals. It has also undergone 31 hours of scrutiny in the Public Bill Committee. Let me take this opportunity to thank and pay tribute to the Members on both sides of the House who served tirelessly on the Committee, as I did not have a chance to put all my thanks on record at the end of the Committee stage.
I particularly thank the Whips: my hon. Friend the Member for Hastings and Rye (Amber Rudd) provided invaluable help, and I also thank the hon. Member for Scunthorpe (Nic Dakin). I thank my hon. Friend the Member for Gosport (Caroline Dinenage) for her assistance in ensuring that inspiration flowed readily. I thank the members of the Opposition Front-Bench team, who probed diligently. We did not necessarily agree, and Ministers certainly did not accede to any of their endless requests for reports and reviews, but they put their case in, for the most part, reasonable terms.
I thank the hon. Members for Birmingham, Ladywood (Shabana Mahmood), for Kilmarnock and Loudoun (Cathy Jamieson) and for Newcastle upon Tyne North (Catherine McKinnell)—not forgetting, of course, the hon. Member for Nottingham East (Chris Leslie), who at least was there at the beginning and is here at the end. That is half the skill of dealing with a Finance Bill, as far as I can see.
I thank the Financial Secretary to the Treasury and the Economic Secretary to the Treasury for their help in setting out the Government’s case. I also thank my hon. Friends on the Back Benches, whose contributions were generally both valuable and brief: I am grateful for that.
I fear that my time is almost up, Mr Deputy Speaker, so I shall draw my remarks to a close. The 2014 Finance Bill rewards hard work, and restores our private sector’s competitiveness. It encourages investment, tackles avoidance, and helps those on low incomes. This is a Bill that takes difficult steps but delivers real change, and I commend it to the House.