Legalize / United Kingdom / Public General Act

Finance Act 2014

Type Public General Act

Publication 2014-07-17

Last updated 2024-11-18

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(b) a person who falls within the case described in paragraph 3 of Schedule 33A by virtue of acting under the instruction or guidance of the monitored promoter.

(2) A person to whom a notice is given under subsection (1) must, for each relevant period, give the officer who gave the notice the information set out in subsection (7) in respect of each person who was its client with reference to that relevant period (see subsections (5) to (6)).

(3) Each of the following is a “relevant period”—

(a) the calendar quarter in which the notice under subsection (1) was given but not including any time before the person to whom the notice is given was first notified under section 250, 251 or 252 of the promoter reference number of the monitored promoter,

(b) the period (if any) beginning with the date of the notification under section 250, 251 or 252 and ending immediately before the beginning of the period described in paragraph (a), and

(c) each calendar quarter after the period described in paragraph (a) but not including any time after the monitoring notice mentioned in subsection (1) ceases to have effect.

(4) Information required as a result of a notice under subsection (1) must be given—

(a) within the period of 30 days beginning with the end of the relevant period concerned, or

(b) in the case of a relevant period within subsection (3)(b), within the period of 30 days beginning with the day on which the notice under subsection (1) was given if that period would expire at a later time than the period given by paragraph (a).

(5) A person (“C”) is a client of the person to whom the notice under subsection (1) is given (“R”) with reference to a relevant period if during that period—

(a) R communicated information to C about a monitored proposal in the course of a business, and

(b) the communication was made with a view to C, or any other person, entering into transactions forming part of the proposed arrangements.

(6) But a person is not a client of R with reference to a relevant period if—

(a) the person has previously been a client of R with reference to a different relevant period,

(b) R complied with the duty in subsection (2) in respect of the person for that relevant period, and

(7) The information mentioned in subsection (2) is—

(a) the person's name and address, and

(b) such other information about the person as may be prescribed.

Enquiry following provision of client information

261

(1) This section applies where—

(a) a person (“the notifying person”) has provided information under section 259 or 260 about a person who was a client of the notifying person with reference to a relevant period (within the meaning of the section concerned) in connection with a particular relevant proposal or particular relevant arrangements, and

(b) an authorised officer suspects that a person in respect of whom information has not been provided under section 259 or 260—

(i) has at any time been, or is likely to be, a party to transactions implementing the proposal, or

(ii) is a party to a transaction forming (in whole or in part) particular relevant arrangements.

(2) The authorised officer may by notice in writing require the notifying person to provide prescribed information in relation to any person whom the notifying person might reasonably be expected to know—

(a) has been, or is likely to be, a party to transactions implementing the proposal, or

(b) is a party to a transaction forming (in whole or in part) the relevant arrangements.

(3) But a notice under subsection (2) does not impose a requirement on the notifying person to provide information which the notifying person has already provided to an authorised officer under section 259 or 260.

(4) The notifying person must comply with a requirement under subsection (2) within—

(a) 10 days of the notice, or

(b) such longer period as the authorised officer may direct.

Information required for monitoring compliance with conduct notice

262

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty to notify HMRC of address

263

If, on the last day of a calendar quarter, a monitoring notice has effect in relation to a person (“the monitored promoter”) the monitored promoter must within 30 days of the end of the calendar quarter inform an authorised officer of its current address.

Failure to provide information: application to tribunal

264

(1) This section applies where—

(a) a person (“P”) has provided information or produced a document in purported compliance with section 255, 257, 258, 259, 260, 261 or 262, but

(b) an authorised officer suspects that P has not provided all the information or produced all the documents required under the section concerned.

(2) The authorised officer, or an officer of Revenue and Customs with the approval of the authorised officer, may apply to the tribunal for an order requiring P to—

(a) provide specified information about persons who are its clients for the purposes of the section to which the application relates,

(b) provide specified information, or information of a specified description, about a monitored proposal or monitored arrangements,

(3) The tribunal may make an order under subsection (2) in respect of information or documents only if satisfied that the officer has reasonable grounds for suspecting that the information or documents—

(a) are required under section 255, 257, 258, 259, 260, 261 or 262 (as the case may be), or

(b) will support or explain information required under the section concerned.

(4) A requirement by virtue of an order under subsection (2) is to be treated as part of P's duty under section 255, 257, 258, 259, 260, 261 or 262 (as the case may be).

(5) Information or a document required as a result of subsection (2) must be provided, or the document produced, within the period of 10 days beginning with the day on which the order under subsection (2) was made.

(6) An authorised officer may, by direction, extend the 10 day period mentioned in subsection (5).

Duty to provide information to monitored promoter

265

(1) This section applies where a person has been notified of a promoter reference number—

(a) under section 250 by reason of being a person falling within subsection (2)(b) of that section, or

(b) under section 251 or 252.

(2) The person notified (“C”) must within 10 days notify the person whose promoter reference number it is of—

(a) C's national insurance number (if C has one), and

(b) C's unique tax reference number (if C has one).

(3) If C has neither a national insurance number nor a unique tax reference number, C must within 10 days inform the person whose promoter reference number it is of that fact.

(4) A unique tax reference number is an identification number allocated to a person by HMRC.

(5) Subsection (2) or (3) does not impose a duty on C to provide information which C has already provided to the person whose promoter reference number it is.

Obtaining information and documents: appeals

Appeals against notices imposing information etc requirements

266

(1) This section applies where a person is given a notice under section 255, 257, 258, 259, 260, 261 or 262.

(2) The person to whom the notice is given may appeal against the notice or any requirement under the notice.

(3) Subsection (2) does not apply—

(a) to a requirement to provide any information or produce any document that forms part of the person's statutory records, or

(b) if the tribunal has approved the giving of the notice under section 256.

(4) For the purposes of this section, information or a document forms part of a person's statutory records if it is information or a document which the person is required to keep and preserve under or by virtue of—

(a) the Taxes Acts, or

(b) any other enactment relating to a tax.

(5) Information and documents cease to form part of a person's statutory records when the period for which they are required to be preserved by the enactments mentioned in subsection (4) has expired.

(6) Notice of appeal must be given—

(a) in writing to the officer who gave the notice, and

(b) within the period of 30 days beginning with the day on which the notice was given.

(7) The notice of appeal must state the grounds of the appeal.

(8) On an appeal that is notified to the tribunal, the tribunal may—

(a) confirm the notice or a requirement under the notice,

(b) vary the notice or such a requirement, or

(9) Where the tribunal confirms or varies the notice or a requirement, the person to whom the notice was given must comply with the notice or requirement—

(a) within such period as is specified by the tribunal, or

(b) if the tribunal does not specify a period, within such period as is reasonably specified in writing by an officer of Revenue and Customs following the tribunal's decision.

(10) A decision of the tribunal on an appeal under this section is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).

(11) Subject to this section, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to an appeal under this section.

Obtaining information and documents: supplementary

Form and manner of providing information

267

(1) The Commissioners may specify the form and manner in which information required to be provided or documents required to be produced by sections 255 to 264 must be provided or produced if the provision is to be complied with.

(2) The Commissioners may specify that a document must be produced for inspection—

(a) at a place agreed between the person and an officer of Revenue and Customs, or

(b) at such place (which must not be a place used solely as a dwelling) as an officer of Revenue and Customs may reasonably specify.

(3) The production of a document in compliance with a notice under this Part is not to be regarded as breaking any lien claimed on the document.

Production of documents: compliance

268

(1) Where the effect of a notice under section 255, 257 or 262 is to require a person to produce a document, the person may comply with the requirement by producing a copy of the document, subject to any conditions or exceptions that may be prescribed.

(2) Subsection (1) does not apply where—

(a) the effect of the notice is to require the person to produce the original document, or

(b) an authorised officer, or an officer of Revenue and Customs with the approval of an authorised officer, subsequently makes a request in writing to the person for the original document.

(3) Where an officer requests a document under subsection (2)(b), the person to whom the request is made must produce the document—

(a) within such period, and

(b) at such time and by such means,

as is reasonably requested by the officer.

Exception for certain documents or information

269

(1) Nothing in this Part requires a person to provide or produce—

(a) information that relates to the conduct of a pending appeal relating to tax or any part of a document containing such information,

(b) journalistic material (as defined in section 13 of the Police and Criminal Evidence Act 1984) or information contained in such material, or

(c) personal records (as defined in section 12 of the Police and Criminal Evidence Act 1984) or information contained in such records (but see subsection (2)).

(2) A notice under this Part may require a person—

(a) to produce documents, or copies of documents, that are personal records, omitting any information whose inclusion (whether alone or with other information) makes the original documents personal records (“personal information”), and

(b) to provide any information contained in such records that is not personal information.

Limitation on duty to produce documents

270

Nothing in this Part requires a person to produce a document—

(a) which is not in the possession or power of that person, or

(b) if the whole of the document originates more than 6 years before the requirement to produce it would, if it were not for this section, arise.

Legal professional privilege

271

(1) Nothing in this Part requires any person to disclose to HMRC any privileged information.

(2) “Privileged information” means information with respect to which a claim to legal professional privilege by the person who would (ignoring the effect of this section) be required to disclose it, could be maintained in legal proceedings.

(3) In the case of legal proceedings in Scotland, the reference in subsection (2) to legal professional privilege is to be read as a reference to confidentiality of communications.

Tax advisers

272

(1) This section applies where a notice is given under section 258(4) or (5) and the person to whom the notice is given is a tax adviser.

(2) The notice does not require a tax adviser—

(a) to provide information about relevant communications, or

(b) to produce documents which are the tax adviser's property and consist of relevant communications.

(3) Subsection (2) does not have effect in relation to—

(a) information explaining any information or document which the person to whom the notice is given has, as tax accountant, assisted any person in preparing for, or delivering to, HMRC, or

(b) a document which contains such information.

(4) But subsection (2) is not disapplied by subsection (3) if the information in question has already been provided, or a document containing the information has already been produced, to an officer of Revenue and Customs.

(5) In this section—

“relevant communications” means communications between the tax adviser and—a person in relation to whose tax affairs the tax adviser has been appointed, orany other tax adviser of such a person,the purpose of which is the giving or obtaining of advice about any of those tax affairs, and

“tax adviser” means a person appointed to give advice about the tax affairs of another person (whether appointed directly by that person or by another tax adviser of that person).

Confidentiality

273

(1) No duty of confidentiality or other restriction on disclosure (however imposed) prevents the voluntary disclosure by a relevant client or a relevant intermediary to HMRC of information or documents about—

(za) a person subject to a stop notice,

(zb) arrangements or proposals for arrangements of a description specified in a stop notice in relation to which a person subject to a stop notice is a promoter,

(a) a monitored promoter, or

(b) relevant proposals or relevant arrangements in relation to which a monitored promoter is a promoter.

(2) “Relevant client” , in relation to a person mentioned in paragraph (za), (zb), (a) or (b) of subsection (1), means a person in relation to whom the person so mentioned—

(a) has made a firm approach in relation to an applicable proposal with a view to making the proposal available for implementation by that person or another person;

(b) has made an applicable proposal available for implementation by that person;

(3) “Relevant intermediary” means a person who is an intermediary in relation to an applicable proposal in relation to which the person mentioned in paragraphs (za), (zb), (a) or (b) of subsection (1) is a promoter.

(4) The applicable proposal or applicable arrangements mentioned in subsection (2) or (3) need not be the applicable proposals or applicable arrangements to which the disclosure relates.

(5) Nothing in this section authorises a disclosure of information that would contravene the data protection legislation (but in determining whether a disclosure would do so, take into account this section).

(6) For the purposes of this section, a person mentioned in subsection (1)(za) or (zb) is a promotor of arrangements or a proposal for arrangements if the person would be a promoter of those arrangements or proposal if those arrangements or that proposal were relevant arrangements or a relevant proposal (see section 235(2) to (6) and any regulations made under section 235(6)).

(7) In this section—

“applicable arrangements” means—in relation to a disclosure falling within subsection (1)(za) or (zb), arrangements falling within the description specified in the stop notice to which the disclosure relates, orin relation to a disclosure falling within subsection (1)(a) or (b), relevant arrangements;

“applicable proposal” means—in relation to a disclosure falling within subsection (1)(za) or (zb), a proposal for arrangements falling within the description specified in the stop notice to which the disclosure relates, orin relation to a disclosure falling within subsection (1)(a) or (b), a relevant proposal;

“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3(9) of that Act).

Penalties

274

Schedule 35 contains provision about penalties for failure to comply with provisions of this Part.

Failure to comply with Part 7 of the Finance Act 2004

275

In section 98C of TMA 1970 (notification under Part 7 of FA 2004), after subsection (2E) insert—

(2EA) Where a person fails to comply with— (a) section 309 of that Act and the promoter for the purposes of that section is a monitored promoter for the purposes of Part 5 of the Finance Act 2014, or (b) section 310 of that Act and the arrangements for the purposes of that section are arrangements of such a monitored promoter, then for the purposes of section 118(2) of this Act legal advice which the person took into account is to be disregarded in determining whether the person had a reasonable excuse, if the advice was given or procured by that monitored promoter. (2EB) In determining for the purpose of section 118(2) of this Act whether or not a person who is a monitored promoter within the meaning of Part 5 of the Finance Act 2014 had a reasonable excuse for a failure to do anything required to be done under a provision mentioned in subsection (2), reliance on legal advice is to be taken automatically not to constitute a reasonable excuse if either— (a) the advice was not based on a full and accurate description of the facts, or (b) the conclusions in the advice that the person relied on were unreasonable.

Limitation of defence of reasonable care

276

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extended time limit for assessment

277

(1) In section 36 of TMA 1970 (loss of tax brought about carelessly or deliberately), in subsection (1A)—

(a) omit the “or” following paragraph (b), and

(b) at the end of paragraph (c) insert

or (d) attributable to arrangements which were expected to give rise to a tax advantage in respect of which the person was under an obligation to notify the Commissioners for Her Majesty's Revenue and Customs under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so,

(2) In paragraph 12B of Schedule 2 to OTA 1975 (extended time limits for assessment of petroleum revenue tax)—

(a) in sub-paragraph (1), after “sub-paragraph (2)” insert “ and (2A) ”,

(b) after sub-paragraph (2) insert—

(2A) In a case involving a relevant situation brought about by arrangements which were expected to give rise to a tax advantage in respect of which a participator (or a person acting on behalf of a participator) was under an obligation to notify the Board under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so, an assessment (or an amendment of an assessment) on the participator may be made at any time not more than 20 years after the end of the relevant chargeable period.

(d) in sub-paragraph (6), for “or (2)” substitute “ , (2) or (2A) ”.

(3) In section 240 of IHTA 1984 (underpayments)—

(a) in subsection (3) for “and (5)” substitute “ to (5A) ”,

(b) in subsection (5), for “those dates” substitute “ the dates in subsection (2)(a) and (b) ”,

(5A) Proceedings in a case involving a loss of tax attributable to arrangements which were expected to give rise to a tax advantage in respect of which a person liable for the tax was under an obligation to make a report under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so, may be brought at any time not more than 20 years after the later of the dates in subsection (2)(a) and (b).

, and

(d) in subsection (8), for “, (5) and (6)” substitute “ to (6) ”.

(4) In paragraph 46 of Schedule 18 to FA 1998 (general time limits for assessments to corporation tax), in sub-paragraph (2A)—

(a) omit the “or” following paragraph (b), and

(b) at the end of paragraph (c) insert

or (d) attributable to arrangements which were expected to give rise to a tax advantage in respect of which the company was under an obligation to notify the Commissioners for Her Majesty's Revenue and Customs under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so,

(5) In paragraph 31 of Schedule 10 to FA 2003 (time limit for assessment of stamp duty land tax), in sub-paragraph (2A)—

(a) omit the “or” following paragraph (b), and

(b) at the end of paragraph (c) insert

or (d) attributable to arrangements which were expected to give rise to a tax advantage in respect of which the person was under an obligation to notify the Commissioners for Her Majesty's Revenue and Customs under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so,

(6) In paragraph 25 of Schedule 33 to FA 2013 (time limit for assessment: annual tax on enveloped dwellings), in sub-paragraph (4)—

(a) omit the “or” following paragraph (b), and

(b) at the end of paragraph (c) insert

, or (d) attributable to arrangements which were expected to give rise to a tax advantage in respect of which the person was under an obligation to notify the Commissioners for Her Majesty's Revenue and Customs under section 253 of FA 2014 (duty to notify Commissioners of promoter reference number) but failed to do so.

Offences

Offence of concealing etc documents

278

(1) A person is guilty of an offence if—

(a) the person is required to produce a document by a notice given under section 255,

(b) the tribunal approved the giving of the notice under section 256, and

(c) the person conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, that document.

(2) Subsection (1) does not apply if the person acts after the document has been produced to an officer of Revenue and Customs in accordance with section 255, unless the officer has notified the person in writing that the document must continue to be available for inspection (and has not withdrawn the notification).

(3) Subsection (1) does not apply, in a case to which section 268(1) applies, if the person acts after the end of the expiry of 6 months beginning with the day on which a copy of the document was produced in accordance with that section unless, before the expiry of that period, an officer of Revenue and Customs makes a request for the original document under section 268(2)(b).

Offence of concealing etc documents following informal notification

279

(1) A person is guilty of an offence if the person conceals, destroys or otherwise disposes of, or arranges for the concealment, destruction or disposal of, a document after an officer of Revenue and Customs has informed the person in writing that—

(a) the document is, or is likely, to be the subject of a notice under section 255, and

(b) the officer of Revenue and Customs intends to seek the approval of the tribunal to the giving of the notice.

(2) A person is not guilty of an offence under this section if the person acts after—

(a) at least 6 months has expired since the person was, or was last, informed as described in subsection (1), or

(b) a notice has been given to the person under section 255, requiring the document to be produced.

Penalties for offences

280

(1) A person who is guilty of an offence under section 277A, 278 or 279 is liable—

(a) on summary conviction, to—

(i) in England and Wales, a fine, or

(ii) in Scotland or Northern Ireland, a fine not exceeding the statutory maximum, or

(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine or both.

(2) In relation to an offence committed before section 85(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force, subsection (1)(a)(i) has effect as if the reference to “a fine” were a reference to “a fine not exceeding the statutory maximum”.

Supplemental

Partnerships

281

Schedule 36 contains provision about the application of this Part to partnerships.

Regulations under this Part

282

(1) Regulations under this Part are to be made by statutory instrument.

(2) Apart from an instrument to which subsection (3) applies, a statutory instrument containing regulations made under this Part is subject to annulment in pursuance of a resolution of the House of Commons.

(3) A statutory instrument containing (whether alone or with other provision) regulations made under—

(a) section 238(7),

(b) paragraph 14 of Schedule 34,

(ba) paragraph 31 of Schedule 34A,

(d) paragraph 21 of Schedule 36,

may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

(4) Regulations under this Part—

(a) may make different provision for different purposes;

(b) may include transitional provision and savings.

Interpretation of this Part

283

(1) In this Part—

“arrangements” has the meaning given by section 234(4);

“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

“calendar quarter” means a period of 3 months beginning with 1 January, 1 April, 1 July or 1 October;

“conduct notice” means a notice of the description in section 238 that is given under—section 237(7) or (7A), section 237A(8), section 237B(1),section 245(7), orparagraph 8(2) or (3) or 10(3)(a) or (4)(a) of Schedule 36;

“contract settlement” means an agreement in connection with a person's liability to make a payment to the Commissioners under or by virtue of an enactment;

“defeat” , in relation to arrangements, has the meaning given by paragraph 10 of Schedule 34A;

“defeat notice” has the meaning given by section 241A(7);

“double defeat notice” has the meaning given by section 241A(7);

“final” , in relation to a judicial ruling, is to be interpreted in accordance with section 237D(6);

“HMRC” means Her Majesty's Revenue and Customs;

“firm approach” has the meaning given by section 235(4);

“judicial ruling” means a ruling of a court or tribunal on one or more issues;

“look-forward period”, in relation to a defeat notice, has the meaning given by section 241A(10);

“monitored promoter” has the meaning given by section 244(5);

“monitored proposal” and “monitored arrangements” have the meaning given by section 254;

“monitoring notice” means a notice given under section 244(1) or paragraph 9(2) or (3) or 10(3)(b) or (4)(b) of Schedule 36;

“the original monitoring notice” has the meaning given by paragraph 11(2) of Schedule 36;

“prescribed” means prescribed, or of a description prescribed, in regulations made by the Commissioners;

“promoter reference number” has the meaning given by section 250(5);

“promotion structure” is to be construed in accordance with section 235(1A) and Schedule 33A;

“provisional” , in relation to a conduct notice given under section 237A(8), is to be interpreted in accordance with section 237C;

“related” , in relation to arrangements, is to be interpreted in accordance with paragraph 2 of Schedule 34A;

“relevant arrangements” has the meaning given by section 234(2);

“relevant defeat” , in relation to a person, is to be interpreted in accordance with Schedule 34A;

“relevant proposal” has the meaning given by section 234(1);

“relies on a Case 3 relevant defeat” is to be interpreted in accordance section 237B(5);

“replacement conduct notice” has the meaning given by paragraph 11(1) of Schedule 36;

“replacement monitoring notice” has the meaning given by paragraph 11(1) of Schedule 36;

“single defeat notice” has the meaning given by section 241A(7).

“stop notice” means a notice given under section 236A(1);

“subject to a stop notice” , in relation to a person, is to be construed in accordance with section 236B(2);

“tax” (except in provisions to which section 281A applies) means—income tax,capital gains tax,corporation tax,petroleum revenue tax, apprenticeship levy, inheritance tax,stamp duty land tax,stamp duty reserve tax, orannual tax on enveloped dwellings;

“tax advantage” has the meaning given by section 234(3) (but see also section 281A);

“Taxes Acts” has the same meaning as in TMA 1970 (see section 118(1) of that Act);

“the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

(2) A reference in a provision of this Part to an authorised officer is to an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for the purposes of that provision.

(3) A reference in a provision of this Part to meeting a threshold condition is to meeting one of the conditions described in paragraphs 2 to 12 of Schedule 34.

(4) Any reference in this Part to a person's activities as a promoter includes—

(a) if the person falls within the case described in paragraph 2 of Schedule 33A, the activities carried out by the person and other persons by virtue of which the person falls within the case,

(b) if the person falls within the case described in paragraph 3 of that Schedule, activities carried out under the instruction or guidance of a person who carries on business as a promoter,

(c) if the person falls within the case described in paragraph 4 of that Schedule, the activities of the body corporate or partnership that the person controls, and

(d) if the person falls within the case described in paragraph 5 by virtue of sub-paragraph (1)(b) of that paragraph, the activities of the body corporate or partnership that the person controls.

PART 6 — Other provisions

Anti-avoidance

Disclosure of tax avoidance schemes: information powers

284

(1) Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as set out in subsections (2) to (4).

(2) After section 310 insert—

(310A) (1) This section applies where— (a) a person has provided the prescribed information about notifiable proposals or arrangements in compliance with section 308, 309 or 310, or (b) a person has provided information in purported compliance with section 309 or 310 but HMRC believe that the person has not provided all the prescribed information. (2) HMRC may require the person to provide— (a) further specified information about the notifiable proposals or arrangements (in addition to the prescribed information under section 308, 309 or 310); (b) documents relating to the notifiable proposals or arrangements. (3) Where HMRC impose a requirement on a person under this section, the person must comply with the requirement within— (a) the period of 10 working days beginning with the day on which HMRC imposed the requirement, or (b) such longer period as HMRC may direct. (310B) (1) This section applies where HMRC— (a) have required a person to provide information or documents under section 310A, but (b) believe that the person has failed to provide the information or documents required. (2) HMRC may apply to the tribunal for an order requiring the person to provide the information or documents required. (3) The tribunal may make an order under subsection (2) only if satisfied that HMRC have reasonable grounds for suspecting that the information or documents will assist HMRC in considering the notifiable proposals or arrangements. (4) Where the tribunal makes an order under subsection (2), the person must comply with it within— (a) the period of 10 working days beginning with the day on which the tribunal made the order, or (b) such longer period as HMRC may direct.

(3) In section 316(2) (meaning of the “information provisions”), after “310,” insert “ 310A, ”.

(4) In section 318(1) (interpretation of Part 7), at the end insert—

“working day” means a day which is not a Saturday or a Sunday, Christmas Day, Good Friday or a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.

(5) Section 98C of TMA 1970 (notification under Part 7 of FA 2004) is amended as set out in subsections (6) to (10).

(6) In subsection (1)(a)(i), for “or (c)” substitute “ , (c) or (ca) ”.

(7) In subsection (2), after paragraph (c) insert—

(ca) section 310A (duty to provide further information requested by HMRC),

(8) In subsection (2ZA), at the end of the table add—

A failure to comply with section 310A	The first day after the end of the period within which the person must comply with section 310A.

(9) In subsection (2ZB)—

(a) in paragraph (a)—

(i) for “person's” substitute “promoter's”;

(ii) after “(3)” insert “ or section 310A ”;

(iii) for “person” substitute “ promoter ”;

(b) in paragraph (b)—

(i) before “person's” insert “ relevant ”;

(ii) for “or 310” substitute “ , 310 or 310A ”;

(iii) before “person” insert “ relevant ”.

(10) After subsection (2ZB) insert—

(2ZBA) In subsection (2ZB)— (a) “promoter” has the same meaning as in Part 7 of the Finance Act 2004, and (b) “relevant person” means a person who enters into any transaction forming part of notifiable arrangements within the meaning of that Part.

(11) Section 310A of FA 2004 applies to a person who provides the prescribed information about notifiable proposals or arrangements in compliance or purported compliance with section 308, 309 or 310 on or after the day on which this Act is passed.

Code of Practice on Taxation for Banks

The Code of Practice on Taxation for Banks: HMRC to publish reports

285

(1) No later than the end of the calendar year in which a reporting period ends, the Commissioners for Her Majesty's Revenue and Customs must publish a report on the operation during the period of the Code of Practice on Taxation for Banks as published by the Commissioners on 31 May 2013 (“the Code”).

(2) If the Commissioners determine that a group or entity which was a participating group or entity (see section 286) during some or all of a reporting period breached the Code at a time during the period, the Commissioners may name the group or entity in a report under this section.

This subsection is subject to section 287.

(3) If—

(a) the Commissioners determine that there has been a breach of the Code, but

(b) it was not reasonably practicable for information relating to the breach to be included in the report for the reporting period in which the breach occurred,

the information may be included in the first subsequent report in which it is reasonably practicable for the information to be included.

(4) The report for a reporting period must list—

(a) the groups or entities which were participating groups or entities during some or all of the reporting period,

(b) the groups or entities appearing to the Commissioners—

(i) not to be covered by paragraph (a), and

(ii) to be groups or entities in relation to which the bank levy is charged in a case where the chargeable period ends in the reporting period (or would be charged in such a case if it is assumed that any period of account beginning before or in, but ending after, the reporting period ends at the end of the reporting period instead), and

(i) not to be covered by paragraph (a) or (b), and

(ii) to be entities which fell within subsection (2)(b) or (c) of section 991 of ITA 2007 (subject to subsection (3) of that section) during some or all of the reporting period.

(5) In a case where the bank levy is (or would be) charged in relation to a relevant non-banking group (as defined in paragraph 11 of Schedule 19 to FA 2011), any list prepared under subsection (4)(b) is to refer to the group only so far as it consists (or would consist) of—

(a) relevant UK banking sub-groups (as defined in paragraph 19(5) of that Schedule), and

(b) so far as not covered by paragraph (a)—

(i) UK resident banks (as defined in paragraph 80 of that Schedule), and

(ii) relevant foreign banks (as defined in paragraph 78 of that Schedule).

(6) For the purposes of subsection (4)(b)(ii) it does not matter if the amount of the bank levy is (or would be) nil in the case of a group or entity.

(7) The first “reporting period” is the period beginning with 5 December 2013 and ending with 31 March 2015.

(8) After that, each year beginning with 1 April is a “reporting period”.

(9) The report for the first reporting period must list the groups or entities which were participating groups or entities on 5 December 2013.

(10) Subsection (9) does not require the inclusion in the report of any information which has previously been published by the Commissioners, so long as the report makes reference to the previous publication.

(11) If, on or after 31 May 2013, the Commissioners publish a document which states that only Part 1 of the Code is to apply in the case of a group or entity of a specified description, in the case of such a group or entity references to the Code are to be read as references to Part 1 of the Code.

The Code of Practice on Taxation for Banks: “participating” groups or entities

286

(1) This section applies for the purposes of section 285.

(2) A group or entity becomes a “ participating ” group or entity if, on or after 31 May 2013, it notifies the Commissioners in writing that it is unconditionally committed to complying with the Code.

(3) A group or entity ceases to be a “participating” group or entity if it notifies the Commissioners in writing that it is no longer unconditionally committed to complying with the Code.

(4) A group or entity which ceases to be a “participating” group or entity in accordance with subsection (3) becomes a “ participating ” group or entity again if it gives a further written notice of the kind mentioned in subsection (2) (subject to what follows).

(5) Subsections (6) and (7) apply if a group or entity is named in a report under section 285 under subsection (2) of that section.

(6) If the group or entity is a “participating” group or entity immediately before the publication of the report, it ceases to be so on the publication of the report.

(7) In any case, the group or entity cannot be a “participating” group or entity after the publication of the report unless and until—

(a) it gives the Commissioners a further written notice of the kind mentioned in subsection (2), and

(b) the Commissioners are satisfied that it is unconditionally committed to complying with the Code.

The Code of Practice on Taxation for Banks: operation & breaches of the Code

287

(1) The Commissioners must—

(a) publish a protocol, to be called “the Governance Protocol”, setting out how the Commissioners are going to operate the Code and section 285(2), and

(b) follow the Governance Protocol when operating the Code and section 285(2).

(2) The Governance Protocol must require the Commissioners, before determining for the purposes of section 285(2) whether a group or entity has breached the Code at a time during a reporting period, to commission a person (an “independent reviewer”) who is independent of the Commissioners and the group or entity to report on—

(a) whether the group or entity has breached the Code, and

(b) whether the group or entity should be named in a report under section 285 were the Commissioners to determine that the group or entity has breached the Code.

(3) The independent reviewer—

(a) must give the group or entity a reasonable opportunity to make representations about the matters being considered by the independent reviewer,

(b) subject to subsection (8), must have regard to the group or entity's representations and may have regard to any other matter which the independent reviewer considers to be relevant,

(d) must otherwise follow the Governance Protocol but only so far as it is relevant to the independent reviewer's functions.

(4) The Governance Protocol may provide that, in the case of any conduct of a group or entity to which subsection (5) or (5A) applies, the independent reviewer is to assume that the conduct constitutes a breach of the Code and, accordingly, is to report only on the matter mentioned in subsection (2)(b).

(5) This subsection applies to any conduct—

(a) in relation to which there has been given—

(i) an opinion notice under paragraph 11(3)(b) of Schedule 43 to FA 2013 (GAAR advisory panel: opinion that conduct unreasonable) stating the joint opinion of all the members of a sub-panel arranged under paragraph 10 of that Schedule, or

(ii) one or more such notices stating the opinions of at least two members of such a sub-panel, and

(b) in relation to which there has been given a notice under paragraph 12 of that Schedule or paragraph 8 or 9 of Schedule 43A to that Act (HMRC final decision on tax advantage) stating that a tax advantage is to be counteracted.

(5A) This subsection applies to any conduct—

(a) in relation to which there has been given—

(i) an opinion notice under paragraph 6(4)(b) of Schedule 43B to FA 2013 (GAAR advisory panel: opinion that such conduct unreasonable) stating the joint opinion of all the members of a sub-panel arranged under that paragraph, or

(ii) one or more such notices stating the opinions of at least two members of such a sub-panel, and

(b) in relation to which there has been given a notice under paragraph 8 of that Schedule (HMRC final decision on tax advantage) stating that a tax advantage is to be counteracted.

(5B) For the purposes of subsection (5), any opinions of members of the GAAR advisory panel which must be considered before a notice is given under paragraph 8 or 9 of Schedule 43A to FA 2013 (opinions about the lead arrangements) are taken to relate to the conduct to which the notice relates.

(6) The Governance Protocol must make provision—

(a) for the Commissioners, in determining whether a group or entity has breached the Code or should be named in a report under section 285—

(i) to have regard to the independent reviewer's report, and

(ii) to give the group or entity a reasonable opportunity to make representations about the matters being considered by the Commissioners,

(b) for the Commissioners to notify the group or entity in writing of their determination,

(c) if the Commissioners' determination is different from the independent reviewer's determination, for the Commissioners to include in the notification of their determination to the group or entity their reasons for making a different determination, and

(d) if the Commissioners determine that the group or entity should be named in a report under section 285, for the Commissioners to hold off including in a report under that section any information relating to the breach of the Code—

(i) until the notification of the determination is given to the group or entity, and

(ii) for at least 90 days after the day on which that notification is given.

(7) The Governance Protocol must make provision for the independent reviewer and the Commissioners, in determining whether a group or entity should be named in a report under section 285, to have regard to—

(a) any action taken by the group or entity to remedy the breach of the Code or otherwise to mitigate its effect, and

(b) any exceptional circumstances which might justify not naming the group or entity.

(8) In determining whether a group or entity has breached the Code or should be named in a report under section 285, the independent reviewer and the Commissioners—

(a) may have regard to any conduct of the group or entity occurring on or after 5 December 2013, but

(b) must not have regard to any conduct of the group or entity occurring before that date or at a time when the group or entity is not a participating group or entity.

(9) Subsection (10) applies if the independent reviewer determines—

(a) that a group or entity has not breached the Code, or

(b) that a group or entity should not be named in a report under section 285.

(10) The Commissioners may make a determination which is different from the independent reviewer's determination only if—

(a) the independent reviewer's determination is flawed when considered in the light of the principles applicable in proceedings for judicial review, or

(b) there are other compelling reasons for making a different determination.

(11) If the Commissioners make a different determination in a case where subsection (10) applies—

(a) their reasons notified under subsection (6)(c) must set out (in particular) why the independent reviewer's determination is flawed or (as the case may be) the other compelling reasons,

(b) in any proceedings in which an issue arises as to whether it was lawful for them to make the different determination it is for them to show that it was lawful for them to make the different determination, and

(c) subsection (12) applies in relation to any proceedings for judicial review of the different determination instituted by a member of the group or by the entity.

(12) If the proceedings are instituted no later than the end of the 90 day period mentioned in subsection (6)(d)(ii)—

(a) they are to be treated as having been instituted within any applicable time limit (if that would not otherwise be the case),

(b) the court must give permission or leave for the proceedings to proceed (if the court's permission or leave is required), unless that would lead to multiple proceedings dealing with the same issues, and

(c) any hearing (including any hearing on appeal) must be held in private, unless (having regard to the risk that holding the hearing in public might undermine to any extent the purpose of the instituting of the proceedings) the court is satisfied that there are exceptional circumstances requiring the hearing to be held in public.

(13) If a determination of the Commissioners is different from the independent reviewer's determination, they must mention that fact—

(a) in the report under section 285 for the reporting period in question, or

(b) if it was not reasonably practicable for that fact to be mentioned in that report, in the first subsequent report under section 285 in which it is reasonably practicable for that fact to be mentioned.

(14) In determining for the purposes of section 285(3) or subsection (13)(b) of this section when it is reasonably practicable for any information to be included in a report under section 285, regard must be had (in particular) to the requirements of subsections (1) to (12) of this section.

(15) The Commissioners must disclose to an independent reviewer such information held by them as they consider appropriate to enable the independent reviewer to carry out the independent reviewer's functions.

(16) If the Commissioners disclose information to an independent reviewer under subsection (15), section 18 of CRCA 2005 (confidentiality) applies in relation to the independent reviewer's holding and use of the information as if the independent reviewer were an officer of Revenue and Customs and the independent reviewer's functions were functions of the independent reviewer as such an officer.

The Code of Practice on Taxation for Banks: documents relating to the Code

288

(1) The Commissioners may publish a relevant document, or revoke or modify a relevant document previously published by them, only after—

(a) consultation with such persons as they consider appropriate, and

(b) consideration of any representations made to them in the course of the consultation.

(2) When publishing a relevant document or a modified relevant document or when revoking a relevant document, the Commissioners must also publish—

(a) an account of the representations mentioned in subsection (1)(b), and

(b) their responses to those representations.

(3) In this section “relevant document” means—

(a) the Governance Protocol, or

(b) any document of the kind mentioned in section 285(11).

(4) This section does not apply in relation to the first publication of the Governance Protocol.

(5) This section does not affect any document of the kind mentioned in section 285(11) published before the passing of this Act except where it is to be revoked or modified after the passing of this Act.

Offshore funds

Undertakings for collective investment in transferable securities and alternative investment funds

289

(1) Section 363A of TIOPA 2010 (residence of offshore funds which are undertakings for collective investment in transferable securities) is amended as follows.

(2) For subsections (1) and (2) substitute—

(1) This section applies to— (a) a UCITS which is authorised in a foreign country or territory pursuant to Article 5 of the UCITS Directive, and (b) an AIF which is authorised or registered in a foreign country or territory, or is not authorised or registered but has its registered office in a foreign country or territory, unless the UCITS or AIF is an excluded entity. (2) If the UCITS or AIF is a body corporate which (apart from this section) would be treated as resident in the United Kingdom for the purposes of any enactment (within the meaning of section 354) relating to income tax, corporation tax or capital gains tax, the body corporate is instead to be treated as if it were not resident in the United Kingdom. (2A) A UCITS or AIF is “an excluded entity” if it— (a) is a unit trust scheme the trustees of which are UK resident, (b) is resident in the United Kingdom by virtue of section 14 of CTA 2009, (c) is, or has been, an investment trust with respect to an accounting period, or (d) is or has been— (i) a company UK REIT in relation to an accounting period, or (ii) a member of a group of companies at a time when the group is or was a group UK REIT in relation to an accounting period. (2B) The Treasury may, by regulations, modify this section so as to— (a) add a description of UCITS or AIF as an excluded entity, (b) provide that a description of UCITS or AIF is no longer an excluded entity, or (c) vary a description of an excluded entity.

(3) In subsection (3), for “offshore fund” substitute “ UCITS or AIF ”.

(4) In subsection (4), for the words after “section” substitute

— AIF” has the meaning given in regulation 3 of the Alternative Investment Fund Managers Regulations 2013, “foreign country or territory” means a country or territory outside the United Kingdom, “investment trust with respect to an accounting period” is to be construed in accordance with section 1158 of CTA 2010, “UCITS” means an undertaking for collective investment in transferable securities, “the UCITS Directive” means Directive 2009/65/EC of the European Parliament and of the Council, “company UK REIT in relation to an accounting period” and “group UK REIT in relation to an accounting period” are to be construed in accordance with section 527 of CTA 2010.

(5) Accordingly, in TIOPA 2010—

(a) in section 1 (overview of Act), in subsection (1)(e) after “funds” insert “ etc ”,

(b) in the heading for Part 8, after “FUNDS” insert “ ETC ”, and

(c) for the heading of section 363A substitute “ Residence of undertakings for collective investment in transferable securities and alterative investment funds ”.

(6) The amendments made by this section are treated as having come into force on 5 December 2013.

Employee-ownership trusts

Companies owned by employee-ownership trusts

290

Schedule 37 contains provision about tax reliefs in connection with companies owned by employee-ownership trusts.

Trusts

Trusts with vulnerable beneficiary: meaning of “disabled person”

291

(1) Schedule 1A to FA 2005 (meaning of “disabled person”) is amended as follows.

(2) In paragraph 1—

(a) for paragraph (c) substitute—

(c) a person in receipt of a disability living allowance by virtue of entitlement to— (i) the care component at the highest or middle rate, or (ii) the mobility component at the higher rate,”, and

(b) in paragraph (d), omit “by virtue of entitlement to the daily living component”.

(3) In paragraph 3, after “rate” insert “ , or to the mobility component at the higher rate, ”.

(4) In paragraph 4, omit “by virtue of entitlement to the daily living component”.

(5) The amendments made by this section have effect—

(a) for the purposes of sections 89, 89A and 89B of IHTA 1984, in relation to property transferred into settlement on or after 6 April 2014, and

(b) for all other purposes, for the tax year 2014-15 and subsequent tax years.

International matters

Amounts allowed by way of double taxation relief

292

(1) TIOPA 2010 is amended as follows.

(2) For section 34(1)(b) (reduction in credit: payment by reference to foreign tax) substitute—

(b) a tax authority makes a payment by reference to that tax, and that payment— (i) is made to P or a person connected with P, or (ii) is made to some other person directly or indirectly in consequence of a scheme that has been entered into.

(3) In section 34, after subsection (3) insert—

(4) In subsection (1)(b)(ii) “scheme” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.

(4) For section 112(3)(b) (deduction from income for foreign tax (instead of credit against UK tax)) substitute—

(b) a tax authority makes a payment by reference to that tax, and that payment— (i) is made to P or a person connected with P, or (ii) is made to some other person directly or indirectly in consequence of a scheme that has been entered into,

(5) In section 112, after subsection (7) insert—

(8) In subsection (3)(b)(ii) “scheme” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.

(6) In section 42(4) (provisions relating to the limit imposed by section 42(2) on credit against corporation tax) for the “and” after “(as defined in section 44),” substitute— “ section 49B, which requires subsection (2) to be applied separately to certain non-trading credits, and ”.

(7) After section 49A insert—

(49B) (1) Subsection (2) applies for the purposes of section 42(2) if— (a) the company has a non-trading credit relating to an item, and (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax. (2) Credit for the foreign tax in respect of that item must not exceed— $$R × ( NTC – D )$where—R has the same meaning as in section 42(2),NTC is the amount of the non-trading credit, andD is the amount given by subsection (3).$ (3) D in the formula in subsection (2) is calculated as follows— - Step 1 Calculate the total amount (“TNTD”) of the non-trading debits which are to be brought into account by the company— 1. in the same accounting period, and 2. in respect of the same loan relationship, derivative contract or intangible fixed asset, - Step 2 Calculate the total (“A”) of the amounts which, as amount D, have already been deducted under subsection (2) from other non-trading credits which are to be brought into account in the same period and in respect of the same relationship, contract or asset. - Step 3 Calculate the amount given by—$TNTD – A$ - Step 4 If the amount calculated at step 3 is greater than or equal to NTC, then D equals NTC. Otherwise, D is the amount calculated at step 3. (4) In this section— - “intangible fixed asset” has the same meaning as in Part 8 of CTA 2009, - “non-trading credit” means— 1. a non-trading credit for the purposes of Part 5 of CTA 2009 (which is about loan relationships but also has application in relation to deemed loan relationships and derivative contracts), or 2. a non-trading credit for the purposes of Part 8 of CTA 2009 (intangible fixed assets), and - “non-trading debit” means— 1. a non-trading debit for the purposes of Part 5 of CTA 2009, or 2. a non-trading debit for the purposes of Part 8 of CTA 2009.

(8) The amendments made by subsections (2), (3), (4) and (5) have effect in relation to payments made by a tax authority on or after 5 December 2013.

(9) The amendments made by subsections (6) and (7) have effect in relation to accounting periods beginning on or after 5 December 2013.

(10) For the purposes of subsection (9), an accounting period beginning before, and ending on or after, 5 December 2013 is to be treated as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.

Controlled foreign companies: qualifying loan relationships (1)

293

(1) In Chapter 9 of Part 9A of TIOPA 2010 (controlled foreign companies: qualifying loan relationships) in section 371IH (exclusions from definition of “qualifying loan relationship”) after subsection (9) insert—

(9A) Subsection (9B) applies to a creditor relationship of a CFC if— (a) a creditor relationship (“the UK creditor relationship”) of a UK connected company is made where the debtor is a non-UK resident company connected with the UK connected company, (b) subsequently, an arrangement (“the relevant arrangement”) is made directly or indirectly in connection with the UK creditor relationship, and (c) the main purpose, or one of the main purposes, of the relevant arrangement is to secure that— (i) the relevant UK credits of a UK connected company for a corporation tax accounting period of the company are lower than they would be if the relevant arrangement had not been made, or (ii) the relevant UK debits of a UK connected company for a corporation tax accounting period of the company are greater than they would be if the relevant arrangement had not been made. (9B) The CFC's creditor relationship cannot be a qualifying loan relationship if it is, or is connected (directly or indirectly) to, the relevant arrangement. (9C) Subsection (9D) applies for the purposes of subsection (9A)(c)(i) and (ii) in determining what the relevant UK credits or debits of a UK connected company for a corporation tax accounting period would be if the relevant arrangement had not been made. (9D) Assume that, at all times after the relevant time, the UK creditor relationship remains in place on the same terms as it had at the relevant time. (9E) In subsections (9A) to (9D)— - “corporation tax accounting period” means an accounting period for corporation tax purposes, - “the relevant time” means the time immediately before— 1. the time when the relevant arrangement is made, or 2. if earlier, the time when the UK creditor relationship ends, - “relevant UK credits”, in relation to a UK connected company, means credits which the company has under Part 5 or 7 of CTA 2009, - “relevant UK debits”, in relation to a UK connected company, means debits which the company has under Part 5 or 7 of CTA 2009, and - “UK connected company” means a UK resident company which— 1. is connected with the CFC, or 2. was connected with a company with which the CFC is connected.

(2) The amendment made by this section has effect for cases in which the relevant arrangement is made on or after 5 December 2013.

Controlled foreign companies: qualifying loan relationships (2)

294

(1) In Chapter 9 of Part 9A of TIOPA 2010 (controlled foreign companies: qualifying loan relationships) in section 371IH (exclusions from definition of “qualifying loan relationship”) in subsection (10)(c) for “wholly or mainly used” substitute “ used to any extent (other than a negligible one) ”.

(2) The amendment made by this section has effect for accounting periods of CFCs beginning on or after 5 December 2013.

(3) The following subsections apply in relation to a qualifying loan relationship of a CFC if—

(a) profits of the qualifying loan relationship (“the relevant profits”) would, apart from those subsections, be included in the CFC's qualifying loan relationship profits for an accounting period of the CFC (“the straddling period”) which begins before 5 December 2013 but ends on or after that date, and

(b) the creditor relationship in question would not be a qualifying loan relationship for the straddling period were the amendment made by this section to have effect for accounting periods of CFCs beginning before 5 December 2013.

(4) Apportion the relevant profits between the part of the straddling period falling before 5 December 2013 and the part falling on or after that date—

(a) in accordance with section 1172 of CTA 2010 (time basis), or

(b) if that method produces a result that is unjust or unreasonable, on a just and reasonable basis.

(5) The relevant profits are to be excluded from the CFC's qualifying loan relationship profits for the straddling period so far as they are apportioned to the part of the straddling period falling on or after 5 December 2013.

Financial sector regulation

Tax consequences of financial sector regulation

295

(1) Section 221 of FA 2012 (tax consequences of financial sector regulation) is amended as follows.

(2) In subsection (1) after “imposed” insert “ , or which appears to the Treasury likely to be imposed, ”.

(3) After subsection (4) insert—

(4A) Where regulations under this section make provision about the tax consequences of any regulatory requirement which appears to the Treasury likely to be imposed by any EU legislation or enactment— (a) the regulations may be made (and, accordingly, may have effect) before the proposed legislation or enactment is adopted, passed or made, and (b) failure after the regulations are made to adopt, pass or make the proposed legislation or enactment does not affect the validity of the regulations.

Scotland

Scottish basic, higher and additional rates of income tax

296

Schedule 38 contains provision about the Scottish basic, higher and additional rates of income tax.

Report on administration of the Scottish rate of income tax

297

(1) In Chapter 2 of Part 4A of the Scotland Act 1998, after section 80H insert—

(80HA) (1) The Comptroller and Auditor General must for each financial year prepare a report on the matters set out in subsection (2). (2) Those matters are— (a) the adequacy of any of HMRC's rules and procedures put in place, in consequence of the Scottish rate provisions, for the purpose of ensuring the proper assessment and collection of income tax charged at rates determined under those provisions, (b) whether the rules and procedures described in paragraph (a) are being complied with, (c) the correctness of the sums brought to account by HMRC which relate to income tax which is attributable to a Scottish rate resolution, and (d) the accuracy and fairness of the amounts which are reimbursed to HMRC under section 80H (having been identified by it as administrative expenses incurred as a result of the charging of income tax as mentioned in paragraph (a)). (3) The “Scottish rate provisions” are— (a) any provision made by or under this Chapter, and (b) any provision made by or under the Income Tax Acts relating to the Scottish basic rate, the Scottish higher rate or the Scottish additional rate. (4) A report under this section may also include an assessment of the economy, efficiency and effectiveness with which HMRC has used its resources in carrying out relevant functions. (5) “Relevant functions” are functions of HMRC in the performance of which HMRC incurs administrative expenses which are reimbursed to HMRC under section 80H (having been identified by it as administrative expenses incurred as a result of the charging of income tax as mentioned in subsection (2)(a)). (6) HMRC must give the Comptroller and Auditor General such information as the Comptroller and Auditor General may reasonably require for the purposes of preparing a report under this section. (7) A report prepared under this section must be laid before the Scottish Parliament not later than 31 January of the financial year following that to which the report relates. (8) In this section “HMRC” means Her Majesty's Revenue and Customs.

(2) The amendment made by this section has effect in relation to the financial year ending on 31 March 2015 and subsequent financial years.

Co-operative societies etc

298

Schedule 39 makes provision about the tax treatment of co-operative, community benefit and industrial and provident societies and credit unions.

Limitation periods

Removal of limitation period restriction for EU cases

299

(1) In section 107 of FA 2007 (limitation period in old actions for mistake of law relating to direct tax), after subsection (5) insert—

(5A) Subsection (1) also does not have effect in relation to an action, or so much of an action as relates to a cause of action, if the consequences of a mistake of law to which the action, or cause of action, relates is the charging of tax contrary to EU law.

(2) The amendment made by this section has effect in relation to actions brought, and causes of action arising, before, on or after the day on which this Act is passed.

Local loans

Increase in limit for local loans

300

(1) In section 4(1) of the National Loans Act 1968 (local loans granted by the Public Works Loan Commissioners)—

(a) for “£55,000 million” substitute “ £85 billion ”, and

(b) for “£70,000 million” substitute “ £95 billion ”.

(2) The Local Loans (Increase of Limit) Order 2008 (S.I. 2008/3004) is revoked.

(3) This section comes into force on such day as the Treasury may by order made by statutory instrument appoint.

PART 7 — Final provisions

Power to update indexes of defined terms

301

(1) The Treasury may by order amend any index of defined expressions contained in an Act relating to taxation, so as to make amendments consequential on any enactment.

(2) In this section—

“enactment” means any provision made by or under an Act (whether before or after the passing of this Act);

“index of defined expressions” means a provision contained in an Act relating to taxation which lists where expressions used in the Act, or in a particular part of the Act, are defined or otherwise explained.

(3) The power to make an order under this section is exercisable by statutory instrument.

(4) An order under this section is subject to annulment in pursuance of a resolution of the House of Commons.

Interpretation

302

(1) In this Act—

“ALDA 1979” means the Alcoholic Liquor Duties Act 1979,

“BGDA 1981” means the Betting and Gaming Duties Act 1981,

“CAA 2001” means the Capital Allowances Act 2001,

“CEMA 1979” means the Customs and Excise Management Act 1979,

“CRCA 2005” means the Commissioners for Revenue and Customs Act 2005,

“CTA 2009” means the Corporation Tax Act 2009,

“CTA 2010” means the Corporation Tax Act 2010,

“F(No.3)A 2010” means the Finance (No. 3) Act 2010,

“IHTA 1984” means the Inheritance Tax Act 1984,

“ITA 2007” means the Income Tax Act 2007,

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003,

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005,

“OTA 1975” means the Oil Taxation Act 1975,

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992,

“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010,

“TMA 1970” means the Taxes Management Act 1970,

“TPDA 1979” means the Tobacco Products Duty Act 1979,

“VATA 1994” means the Value Added Tax Act 1994, and

“VERA 1994” means the Vehicle Excise and Registration Act 1994.

(2) In this Act—

“FA”, followed by a year, means the Finance Act of that year, and

“F(No.2)A”, followed by a year, means the Finance (No. 2) Act of that year.

Short title

303

This Act may be cited as the Finance Act 2014.

SCHEDULE 1

PART 1 — Abolition of small profits rate for non-ring fence profits

1

CTA 2010 is amended as follows.

2

In section 1 (overview of Act), in subsection (2)—

(a) for “Parts 3” substitute “ Parts 4 ”, and

(b) omit paragraph (a).

3

For section 3 (corporation tax rates) substitute—

(3) (1) Corporation tax is charged at the rate set by Parliament for the financial year as the main rate. (2) Subsection (1) is subject to any provision of the Corporation Tax Acts which provides for corporation tax to be charged at a different rate.

4

Omit Part 3 (companies with small profits).

5

(1) Part 8 (oil activities) is amended as follows.

(2) In section 270 (overview of Part 8), after subsection (3) insert—

(3A) Chapter 3A makes provision about the rates at which corporation tax is charged on ring fence profits.

(3) After Chapter 3 insert—

(279A) (1) Corporation tax is charged on ring fence profits at the main ring fence profits rate. (2) But subsection (3) provides for tax to be charged at the small ring fence profits rate instead of the main ring fence profits rate in certain circumstances. (3) Corporation tax is charged at the small ring fence profits rate on a company's ring fence profits of an accounting period if— (a) the company is UK resident in the accounting period, and (b) its augmented profits of the accounting period do not exceed the lower limit. (4) In this Act— - “the main ring fence profits rate” means 30%, and - “the small ring fence profits rate” means 19%. (279B) (1) This section applies if— (a) a company is UK resident in an accounting period, (b) its augmented profits of the accounting period— (i) exceed the lower limit, but (ii) do not exceed the upper limit, and (c) its augmented profits of that period consist exclusively of ring fence profits. (2) The corporation tax charged on the company's taxable total profits of the accounting period is reduced by an amount equal to— $$R × ( U − A ) × ( N A )$where—R is the marginal relief fraction,U is the upper limit,A is the amount of the augmented profits, andN is the amount of the taxable total profits.$ (3) In this Chapter “the marginal relief fraction” means 11/400ths. (279C) (1) This section applies if— (a) a company is UK resident in an accounting period, (b) its augmented profits of the accounting period— (i) exceed the lower limit, but (ii) do not exceed the upper limit, and (c) its augmented profits of that period consist of both ring fence profits and other profits. (2) The corporation tax charged on the company's taxable total profits of the accounting period is reduced by the sum equal to the marginal relief fraction of the ring fence amount. (279D) (1) In section 279C “the ring fence amount” means the amount given by the formula— $( UR − AR ) × ( NR AR )$ (2) In this section— $$AR A$UR is the amount given by multiplying the upper limit by—AR is the total amount of any ring fence profits that form part of the augmented profits of the accounting period,NR is the total amount of any ring fence profits that form part of the taxable total profits of the accounting period, andA is the amount of the augmented profits of the accounting period.$ (279E) (1) This section gives the meaning in this Chapter of “the lower limit” and “the upper limit” in relation to an accounting period of a company (“A”). (2) If no company is a related 51% group company of A in the accounting period— (a) the lower limit is £300,000, and (b) the upper limit is £1,500,000. (3) If one or more companies are related 51% group companies of A in the accounting period— (a) the lower limit is— $£ 300,000 ( 1 + N )$ and (b) the upper limit is— $$£ 1, 500,000 ( 1 + N )$where N is the number of those related 51% group companies.$ (4) For an accounting period of less than 12 months the lower limit and the upper limit are proportionately reduced. (279F) (1) For the purposes of this Chapter a company (“B”) is a related 51% group company of another company (“A”) in an accounting period if for any part of the accounting period— (a) A is a 51% subsidiary of B, (b) B is a 51% subsidiary of A, or (c) both A and B are 51% subsidiaries of the same company. (2) The rule in subsection (1) applies to each of two or more related 51% group companies even if they are related 51% group companies for different parts of the accounting period. (3) But a related 51% group company is ignored for the purposes of section 279E if— (a) it has not carried on a trade or business at any time in the accounting period, or (b) it was a related 51% group company for part only of the accounting period and has not carried on a trade or business at any time in that part of the accounting period. (4) Subsection (3) is subject to subsections (5) to (9). (5) Subsection (6) applies if a company carries on a business of making investments in an accounting period and throughout the period the company— (a) carries on no trade, (b) has one or more 51% subsidiaries, and (c) is a passive company. (6) The company is treated for the purposes of subsection (3) as not carrying on a business at any time in the accounting period. (7) A company is a passive company throughout an accounting period only if the following requirements are met— (a) it has no assets in that period, other than shares in companies which are its 51% subsidiaries, (b) no income arises to it in that period other than dividends, (c) if income arises to it in that period in the form of dividends— (i) the redistribution condition is met (see subsection (8)), and (ii) the dividends are franked investment income received by it, (d) no chargeable gains accrue to it in that period, (e) no expenses of management of the business mentioned in subsection (5) are referable to that period, and (f) no qualifying charitable donations are deductible from the company's total profits of that period. (8) The redistribution condition is that— (a) the company pays dividends to one or more of its shareholders in the accounting period, and (b) the total amount paid in the form of those dividends is at least equal to the amount of the income arising to the company in the form of dividends in that period. (9) If income arises to a company in an accounting period in the form of a dividend and the requirement in subsection (7)(c) is met in respect of the income— (a) neither the dividend nor any asset representing it is treated as an asset of the company in that accounting period for the purposes of subsection (7)(a), and (b) no right of the company to receive the dividend is treated as an asset of the company for the purposes of subsection (7)(a) in that period or any earlier accounting period. (279G) (1) For the purposes of this Chapter a company's augmented profits of an accounting period are— (a) the company's adjusted taxable total profits of that period, plus (b) any franked investment income received by the company that is not excluded by subsection (3). (2) A company's “adjusted taxable total profits” of a period are what would have been the company's taxable total profits of the period in the absence of sections 1(2A), 2B and 8(4A) of TCGA 1992 and section 2(2A) of CTA 2009 (certain gains on relevant high value disposals by companies etc chargeable to capital gains tax not corporation tax). (3) This subsection excludes any franked investment income which the company (“the receiving company”) receives from a company which is— (a) a 51% subsidiary of— (i) the receiving company, or (ii) a company of which the receiving company is a 51% subsidiary, or (b) a trading company or relevant holding company that is a quasi-subsidiary of the receiving company. (4) For the purposes of subsection (3)(b) a company is a quasi-subsidiary of the receiving company if— (a) it is owned by a consortium of which the receiving company is a member, (b) it is not a 75% subsidiary of any company, and (c) no arrangements of any kind (whether in writing or not) exist by virtue of which it could become a 75% subsidiary of any company. (279H) (1) For the purposes of section 279G(3)(a), a company (“A”) is a 51% subsidiary of another company (“B”) only at times when— (a) B would be beneficially entitled to more than 50% of any profits available for distribution to equity holders of A, and (b) B would be beneficially entitled to more than 50% of any assets of A available for distribution to its equity holders on a winding up. (2) The requirement in subsection (1) is in addition to the requirements of section 1154(2) (meaning of 51% subsidiary). (3) In determining for the purposes of section 279G(3)(a) whether or not a company is a 51% subsidiary of another company (“C”), C is treated as not being the owner of share capital if— (a) it owns the share capital indirectly, (b) the share capital is owned directly by a company (“D”), and (c) a profit on the sale of the shares would be a trading receipt for D. (4) In section 279G(3)(b) and this section— - “trading company” means a company whose business consists wholly or mainly of carrying on a trade or trades, and - “relevant holding company” means a company whose business consists wholly or mainly of holding shares in or securities of trading companies that are its 90% subsidiaries. (5) For the purposes of section 279G(4), a company is owned by a consortium if at least 75% of the company's ordinary share capital is beneficially owned by two or more companies each of which— (a) beneficially owns at least 5% of that capital, (b) would be beneficially entitled to at least 5% of any profits available for distribution to equity holders of the company, and (c) would be beneficially entitled to at least 5% of any asset of the company available for distribution to its equity holders on a winding up. (6) The companies meeting those conditions are called the members of the consortium. (7) Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of subsections (1) and (5) as it applies for the purposes of section 151(4)(a) and (b).

PART 2 — Amendments consequential on Part 1 of this Schedule

Finance Act 1998

6

In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), in paragraph 8 (calculation of tax payable), in subsection (1), for “section 19, 20 or 21 of the Corporation Tax Act 2010 (marginal relief for companies with small profits)” substitute “ Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small ring fence profits etc) ”.

Finance Act 2000

7

In Schedule 22 to FA 2000 (tonnage tax), in paragraph 57 (exclusion of relief or set-off against tax liability), in sub-paragraph (6), for paragraph (a) substitute—

(a) any reduction under Chapter 3A of Part 8 of CTA 2010 (marginal relief for companies with small ring fence profits), or

Capital Allowances Act 2001

8

In section 99 of CAA 2001 (long-life assets: the monetary limit)—

(a) in subsection (4)—

(i) for “If, in a chargeable period, a company has one or more associated companies” substitute “ In the case of a company (“C”), if, in a chargeable period, one or more companies are related 51% group companies of C ”, and

(ii) for “number of associated” substitute “ number of related 51% group ”, and

(b) omit subsection (5).

9

In Part 2 of Schedule 1 to that Act (defined expressions), at the appropriate place insert—

related 51% group company	section 279F of CTA 2010 (as applied by 1119 of that Act).

Corporation Tax Act 2009

10

In section 104N of CTA 2009 (payment of R&D expenditure credit) in subsection (3), in the definition of “Amount A”, in paragraph (b), after “main rate” insert “ (or, in the case of ring fence profits, the main ring fence profits rate) ”.

11

In section 1114 of that Act (calculation of total R&D aid for the purposes of the cap), after “aid is calculated” insert “ (or, in the case of a ring fence trade (within the meaning of section 277 of CTA 2010) the main ring fence profits rate at that time) ”.

12

In Schedule 4 to that Act (index of defined expressions), at the appropriate place, insert—

main ring fence profits rate	section 279A(4) (as applied by 1119 of CTA 2010)

Corporation Tax Act 2010

13

(1) Chapter 3 of Part 8A of CTA 2010 (profits arising from the exploitation of patents etc: relevant IP profits) is amended as follows.

(2) In section 357CL (companies eligible to elect for small claims treatment)—

(a) in subsection (5) for “the company has no associated company” substitute “ no other company is a related 51% group company of the company ”,

(b) in subsection (6)—

(i) for “the company has one or more associated companies” substitute “ one or more other companies are related 51% group companies of the company, ” and

(ii) for “those associated” substitute “ those related 51% group ”, and

(3) In section 357CM (small claims amount)—

(a) in subsection (5) for “the company has no associated company” substitute “ no other company is a related 51% group company of the company ”,

(b) in subsection (6)—

(i) for “the company has one or more associated companies” substitute “ one or more other companies are related 51% group companies of the company, ” and

(ii) for “those associated” substitute “ those related 51% group ”, and

14

(1) Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.

(2) In section 534 (tax treatment of profits), omit subsection (3).

(3) In section 535 (tax treatment of gains), omit subsection (6).

(4) In section 543 (profit: financing-cost ratio), omit subsection (5).

(5) In section 551 (tax consequences of distribution to holder of excessive rights), omit subsection (6).

(6) In section 552 (“the section 552 amount”), in subsection (2), for “rate of corporation tax mentioned in section 534(3) (rate determined without reference to sections 18 to 23)” substitute “ main rate of corporation tax ”.

(7) In section 564 (breach of condition as to distribution of profits), omit subsection (4).

15

(1) Part 13 of CTA 2010 (other special types of company etc) is amended as follows.

(2) In section 614 (open-ended investment companies: applicable corporation tax rate), omit “(and sections 18 and 19 (relief for companies with small profits) do not apply)”.

(3) In section 618 (authorised unit trusts: applicable corporation tax rate), omit “(and sections 18 and 19 (relief for companies with small profits) do not apply)”.

(4) In section 627 (companies in liquidation etc: meaning of “rate of corporation tax” in case of companies with small profits)—

(a) for subsections (1) and (2) substitute—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.