Part 1Charges, rates, thresholds etc

Income tax

1Charge and rates for 2007-08

Income tax is charged for the tax year 2007-08; and for that tax year—

(a)the starting rate is 10%,

(b)the basic rate is 22%, and

(c)the higher rate is 40%.

Corporation tax

2Charge and main rates for financial year 2008

(1)Corporation tax is charged for the financial year 2008; and for that year the rate of corporation tax is—

(a)28% on profits of companies other than ring fence profits, and

(b)30% on ring fence profits of companies.

(2)In this section “ring fence profits” has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).

3Small companies' rates and fractions for financial year 2007

(1)For the financial year 2007 the small companies' rate is—

(a)20% on profits of companies other than ring fence profits, and

(b)19% on ring fence profits of companies.

(2)For the financial year 2007 the fraction mentioned in section 13(2) of ICTA is—

(a)1/40th in relation to profits of companies other than ring fence profits (“the standard fraction”), and

(b)11/400ths in relation to ring fence profits of companies (“the ring fence fraction”).

(3)If—

(a)a company makes a claim under subsection (2) of section 13 of ICTA in respect of any accounting period any part of which falls in the financial year 2007, and

(b)its profits for that accounting period consist of both ring fence profits and other profits,

that subsection applies with the following modification.

(4)The corporation tax charged on its basic profits for that period is reduced by the aggregate of—

(a)the sum equal to the ring fence fraction of the ring fence amount, and

(b)the sum equal to the standard fraction of the remaining amount.

(5)For the purposes of subsection (4)(a) “the ring fence amount” is the amount given by the formula—

and the appropriate fraction is the fraction of the profits for the accounting period that consist of ring fence profits.

(6)For the purposes of subsection (4)(b) “the remaining amount” is the amount given by the formula—

and the appropriate fraction is the fraction of the profits for the accounting period that do not consist of ring fence profits.

(7)In this section “ring fence profits” has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).

Inheritance tax

4Rates and rate bands for 2010-11

(1)For the Table in Schedule 1 to IHTA 1984 substitute—

(2)The amendment made by subsection (1) has effect in relation to chargeable transfers made on or after 6th April 2010.

(3)That amendment does not affect the application of section 8 of IHTA 1984 (indexation) by virtue of the difference between the retail prices index for September 2009, or September in any later year, and that for September in the following year.

(4)But that section does not have effect by virtue of the difference between the retail prices index for September 2008 and that for September 2009.

Alcohol and tobacco

5Rates of duty on alcoholic liquor

(1)The Alcoholic Liquor Duties Act 1979 (c. 4) is amended as follows.

(2)In section 36(1AA)(a) (standard rate of duty on beer), for “£13.26” substitute “£13.71”.

(3)In section 62(1A) (rates of duty on cider)—

(a)in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for “£166.70” substitute “£172.33”,

(b)in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for “£38.43” substitute “£39.73”, and

(c)in paragraph (c) (rate of duty per hectolitre in any other case), for “£25.61” substitute “£26.48”.

(4)For Part 1 of the Table in Schedule 1 substitute—

“Part 1Wine and made-wine of a strength not exceeding 22 per cent

(5)The amendments made by this section are deemed to have come into force on 26th March 2007.

6Rates of tobacco products duty

(1)For the Table in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—

(2)The amendment made by subsection (1) is deemed to have come into force at 6 p.m. on 21st March 2007.

Gambling

7Rates of gaming duty

(1)For the Table in section 11(2) of FA 1997 substitute—

(2)In section 11(3) of that Act, for “40 per cent” substitute “50 per cent”.

(3)The amendments made by this section have effect in relation to accounting periods beginning on or after 1st April 2007.

8Remote gaming duty

(1)Schedule 1 contains amendments of and relating to Part 2 of BGDA 1981 (gaming duties) imposing a remote gaming duty.

(2)The amendments made by Schedule 1 have effect in respect of the provision of facilities on or after a date appointed by the Commissioners for Her Majesty’s Revenue and Customs by order made by statutory instrument.

9Amusement machine licence duty

(1)Section 23 of BGDA 1981 (amount of duty payable on amusement machine licence) is amended as follows.

(2)In subsection (3), in the definition of “Category C”, in paragraph (ii)(b) for “£25” substitute “£35”.

(3)After subsection (6) insert—

“(7)The Commissioners may by order substitute for a sum for the time being specified in subsection (3) such higher sum as they consider appropriate.”

(4)Subsection (2) is deemed to have come into force on 22nd March 2007.

Environment

10Fuel duty rates and rebates

(1)The Hydrocarbon Oil Duties Act 1979 (c. 5) is amended as follows.

(2)In section 6(1A) (hydrocarbon oil: rates of duty)—

(a)in paragraph (a) (ultra low sulphur petrol), for “£0.4835” substitute “£0.5035”,

(b)in paragraph (aa) (sulphur-free petrol), for “£0.4835” substitute “£0.5035”,

(c)in paragraph (b) (light oil other than ultra low sulphur petrol and sulphur-free petrol), for “£0.5768” substitute “£0.6007”,

(d)in paragraph (c) (ultra low sulphur diesel), for “£0.4835” substitute “£0.5035”,

(e)in paragraph (ca) (sulphur-free diesel), for “£0.4835” substitute “£0.5035”, and

(f)in paragraph (d) (heavy oil other than ultra low sulphur diesel and sulphur-free diesel), for “£0.5468” substitute “£0.5694”.

(3)In section 6AA(3) (biodiesel), for “£0.2835” substitute “£0.3035”.

(4)In section 6AD(3) (bioethanol), for “£0.2835” substitute “£0.3035”.

(5)In section 8(3) (road fuel gas)—

(a)in paragraph (a) (natural road fuel gas), for “£0.1081” substitute “£0.1370”, and

(b)in paragraph (b) (other road fuel gas), for “£0.1221” substitute “£0.1649”.

(6)In section 11(1) (rebate on heavy oil)—

(a)in paragraph (a) (fuel oil), for “£0.0729” substitute“£0.0929”,

(b)in paragraph (b) (gas oil which is not ultra low sulphur diesel), for “£0.0769” substitute “£0.0969”, and

(c)in paragraph (ba) (ultra low sulphur diesel), for “£0.0769” substitute “£0.0969”.

(7)In section 13A(1) (rebate on unleaded petrol), for “£0.0617” substitute “£0.0642”.

(8)In section 14(1) (rebate on light oil for use as furnace oil), for “£0.0729” substitute “£0.0929”.

(9)The amendments made by this section come into force on 1st October 2007.

11Rates of vehicle excise duty

(1)Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.

(2)In paragraph 1 (general)—

(a)in sub-paragraph (2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder capacity not exceeding 1,549cc), for “£175” substitute “£180”, and

(b)in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£110” substitute “£115”.

(3)Paragraph 1B (graduated rates for light passenger vehicles) is amended as follows.

(4)For the words from “Table A” to “date,” substitute “the following table”.

(5)For “, or is liable to the standard rate or the premium” substitute “or is liable to the standard”.

(6)For Tables A and B substitute—

(7)For paragraphs 1D and 1E substitute—

“The standard rate

1DA vehicle is liable to the standard rate of duty if it does not qualify for the reduced rate of duty.”

(8)In paragraph 1J (light goods vehicles)—

(a)in sub-paragraph (a) (vehicle which is not lower-emission van), for “£170” substitute “£175”, and

(b)in sub-paragraph (b) (lower-emission van), for “£110” substitute “£115”.

(9)In paragraph 2(1) (motorcycles)—

(a)in paragraph (b) (motorbicycle and engine’s cylinder capacity more than 150cc but not more than 400cc), for “£31” substitute “£32”,

(b)in paragraph (c) (motorbicycle and engine’s cylinder capacity more than 400cc but not more than 600cc), for “£46” substitute “£47”, and

(c)in paragraph (d) (any other case), for “£62” substitute “£64”.

(10)The amendments made by this section have effect in relation to licences taken out on or after 22nd March 2007.

12Rates of air passenger duty

(1)Section 30 of FA 1994 (rates of air passenger duty) is amended as follows.

(2)In subsection (3A) (destinations in EEA States and qualifying territories etc)—

(a)in paragraph (a) (standard class travel), for “£5” substitute “£10”, and

(b)in paragraph (b) (any other case), for “£10” substitute “£20”.

(3)In subsection (4) (other destinations)—

(a)in paragraph (a) (standard class travel), for “£20” substitute “£40”, and

(b)in paragraph (b) (any other case), for “£40” substitute “£80”.

(4)The amendments made by this section have effect in relation to any carriage of a passenger on an aircraft which begins on or after 1st February 2007.

(5)But if the amount of duty due from any operator in the accounting period ending before 21st March 2007 increased as a result of those amendments, the operator is to pay the amount of that increase as if it became due in the first accounting period ending after that day.

(6)Expressions which are used in subsection (5) and in the Air Passenger Duty Regulations 1994 (S.I. 1994/1738) have the same meaning in that subsection as in those regulations.

13Rates of climate change levy

(1)For the Table in paragraph 42(1) of Schedule 6 to FA 2000 substitute—

(2)The amendment made by subsection (1) has effect in relation to supplies treated as taking place on or after 1st April 2008.

14Rate of aggregates levy

(1)In section 16(4) of FA 2001 (rate of aggregates levy), for “£1.60” substitute “£1.95”.

(2)The amendment made by subsection (1) has effect in relation to aggregate subjected to commercial exploitation on or after 1st April 2008.

15Rates of landfill tax

(1)Section 42 of FA 1996 (amount of landfill tax) is amended as follows.

(2)In—

(a)subsection (1)(a) (the standard rate), and

(b)subsection (2) (reference to the standard rate taken to be £2 in cases of disposals of qualifying material),

for “£21” substitute “£24”.

(3)The amendments made by subsection (2) have effect in relation to disposals made (or treated as made) on or after 1st April 2007 (but before 1st April 2008).

(4)In subsection (1)(a), for “£24” substitute “£32” and, in subsection (2), for “£24 were to £2” substitute “£32 were to £2.50”.

(5)The amendments made by subsection (4) come into force on 1st April 2008 and have effect in relation to disposals made (or treated as made) on or after that date.

16Emissions trading: charges for allocations

(1)The Treasury may impose charges by providing for Community tradeable emissions allowances to be allocated in return for payment.

(2)The Treasury must by regulations make provision for and in connection with allocations of allowances in return for payment.

(3)The regulations must provide for allocations to be overseen by an independent person appointed by the Treasury.

(4)The regulations may make any other provision about allocations which the Treasury consider appropriate, including (in particular)—

(a)provision as to the imposition of fees, and as to the making and forfeiting of deposits, in connection with participation in allocations,

(b)provision as to the persons by whom allocations are to be conducted,

(c)provision for the imposition and recovery of penalties for failure to comply with the terms of a scheme made under subsection (5),

(d)provision for and in connection with the recovery of payments due in respect of allowances allocated (including provision as to the imposition and recovery of interest and penalties), and

(e)provision conferring rights of appeal against decisions made in allocations, the forfeiting of deposits and the imposition of penalties (including provision specifying the person, court or tribunal to hear and determine appeals).

(5)The Treasury may make schemes about the conduct and terms of allocations (to have effect subject to any regulations under this section); and schemes may in particular include provision about—

(a)who may participate in allocations,

(b)the allowances to be allocated, and

(c)where and when allocations are to take place.

(6)“Community tradeable emissions allowances” are transferable allowances which—

(a)relate to the making of emissions of greenhouse gases, and

(b)are allocated as part of a system made for the purpose of implementing any Community obligation of the United Kingdom relating to such emissions;

and “greenhouse gases” means carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

(7)Regulations under this section are to be made by statutory instrument.

(8)A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons unless a draft of the regulations has been laid before, and approved by a resolution of, that House.

Part 2Environment

Energy-saving: houses

17Corporation tax deduction for expenditure on energy-saving items

(1)In ICTA, after section 31 insert—

“31ZADeduction for expenditure on energy-saving items

(1)This section applies if—

(a)a company carries on a Schedule A business in relation to land which consists of or includes a dwelling-house,

(b)the company incurs expenditure in acquiring and installing an energy-saving item in the dwelling-house or in a building containing the dwelling-house (see subsections (5) to (7)),

(c)the expenditure is incurred before 1st April 2015,

(d)a deduction for the expenditure is not prohibited by the wholly and exclusively rule but would otherwise be prohibited by the capital prohibition rule (see subsection (8)), and

(e)no allowance under the Capital Allowances Act may be claimed in respect of the expenditure.

(2)In calculating the profits of the Schedule A business, a deduction for the expenditure is allowed.

(3)But any deduction is subject to—

(a)section 31ZB (restrictions on the relief), and

(b)any provision made by regulations under section 31ZC.

(4)If, on a just and reasonable apportionment of any expenditure, part of the expenditure would qualify for the relief (but the remainder would not), a deduction is allowed for that part.

(5)“Energy-saving item” means an item of an energy-saving nature of such description as is for the time being specified in regulations made by the Treasury.

(6)The Treasury may by regulations provide for an item to be an energy-saving item only if it satisfies such conditions as may be—

(a)specified in, or

(b)determined in accordance with,

the regulations.

(7)The conditions may include conditions imposed by reference to information or documents issued by any body, person or organisation.

(8)In this section—

• “the capital prohibition rule” means the rule in section 74(1)(f) or (g) (capital expenditure), as applied by section 21A, and

• “the wholly and exclusively rule” means the rule in section 74(1)(a) or (e) (expenses not wholly and exclusively for trade and unconnected losses), as applied by section 21A.

31ZBRestrictions on relief

(1)This section restricts deductions that would otherwise be allowable under section 31ZA.

(2)No deduction is allowed if, when the energy-saving item is installed, the dwelling-house—

(a)is in the course of construction, or

(b)is comprised in land in which the company does not have an interest or is in the course of acquiring an interest or further interest.

(3)No deduction is allowed in respect of expenditure in an accounting period if—

(a)the Schedule A business consists of or includes the commercial letting of furnished holiday accommodation for the purposes of section 503, and

(b)the dwelling-house constitutes some or all of that accommodation for the accounting period.

(4)No deduction is allowed in respect of expenditure treated by section 401 (as applied by section 21B) as incurred on the date on which the company starts to carry on the Schedule A business unless the expenditure was incurred not more than 6 months before that date.

(5)No deduction is allowed in respect of expenditure incurred in acquiring and installing the energy-saving item in a building containing the dwelling-house in so far as the expenditure is not for the benefit of the dwelling-house.

31ZCRegulations

(1)In relation to any deduction under section 31ZA, the Treasury may make regulations for—

(a)restricting or reducing the amount of expenditure for which the deduction is allowable,

(b)excluding entitlement to the deduction in such cases as may be specified in, or determined in accordance with, the regulations,

(c)determining who is (and is not) entitled to the deduction if different persons have different interests in land that consists of or includes the whole or part of a building containing one or more dwelling-houses,

(d)making apportionments if the Schedule A business is carried on by persons in partnership or an interest in land is beneficially owned by persons jointly or in common.

(2)The apportionments that may be made include apportionments to persons within the charge to income tax.

(3)Regulations under this section may—

(a)make different provision for different cases, and

(b)contain incidental, supplemental, consequential and transitional provision and savings (including provision as to appeals in relation to apportionments mentioned in subsection (1)(d)).”

(2)The amendment made by subsection (1) has effect in relation to expenditure incurred on or after such day as the Treasury may by order appoint.

18Extension of income tax deduction for expenditure on energy-saving items

(1)Section 312 of ITTOIA 2005 (deduction for expenditure on energy-saving items) is amended as follows.

(2)In subsection (1)(b) (expenditure incurred in acquiring and installing energy-saving item in dwelling-house), for “in the dwelling-house an energy-saving item” substitute “an energy-saving item in the dwelling-house or in a building containing the dwelling-house”.

(3)In subsection (1)(c) (expenditure incurred before 6th April 2009), for “2009” substitute “2015”.

(4)In section 313 of that Act (restrictions on relief), insert at the end—

“(6)No deduction is allowed in respect of expenditure incurred in acquiring and installing the energy-saving item in a building containing the dwelling-house in so far as the expenditure is not for the benefit of the dwelling-house.”

(5)In section 314 of that Act (regulations), insert at the end—

“(3)Regulations under this section may—

(a)make different provision for different cases, and

(b)contain incidental, supplemental, consequential and transitional provision and savings (including provision as to appeals in relation to apportionments mentioned in subsection (1)(d)).”

(6)The amendments made by subsections (2) and (4) have effect in relation to expenditure incurred on or after 6th April 2007.

(7)The amendment made by subsection (5) is deemed always to have had effect.

(8)Regulations under section 314 of ITTOIA 2005 made on or after the day on which this Act is passed but before 31st December 2007 may include provision having effect in relation to expenditure incurred on or after 6th April 2007.

19SDLT relief for new zero-carbon homes

(1)In FA 2003, after section 58A insert—

“58BRelief for new zero-carbon homes

(1)The Treasury may make regulations granting relief on the first acquisition of a dwelling which is a “zero-carbon home”.

(2)In subsection (1) “first acquisition of a dwelling” means the acquisition of a building which—

(a)has been constructed for use as a single dwelling, and

(b)has not previously been occupied.

(3)For the purpose of subsection (2) land occupied or enjoyed with a dwelling as a garden or grounds is part of the dwelling.

(4)The regulations shall define “zero-carbon home” by reference to specified aspects of the energy efficiency of a building; for which purpose “energy efficiency” includes—

(a)consumption of energy,

(b)conservation of energy, and

(c)generation of energy.

(5)The relief may take the form of—

(a)exemption from charge, or

(b)a reduction in the amount of tax chargeable.

(6)Regulations under this section shall not have effect in relation to acquisitions on or after 1st October 2012.

(7)The Treasury may by order—

(a)substitute a later date for the date in subsection (6);

(b)make transitional provision, or provide savings, in connection with the effect of subsection (6).

58CRelief for new zero-carbon homes: supplemental

(1)Regulations under section 58B—

(a)shall include provision about the method of claiming relief (including documents or information to be provided), and

(b)in particular, shall include provision about the evidence to be adduced to show that a building satisfies the definition of “zero-carbon home”.

(2)Regulations made by virtue of subsection (1)(b) may, in particular—

(a)refer to a scheme or process established by or for the purposes of an enactment about building;

(b)establish or provide for the establishment of a scheme or process of certification;

(c)specify, or provide for the approval of, one or more schemes or processes for certifying energy efficiency.

(3)In defining “zero-carbon home” regulations under section 58B may include requirements which may be satisfied in relation to a building either—

(a)by features of the building itself, or

(b)by other installations or utilities.

(4)Regulations under section 58B may modify the effect of section 108, or another provision of this Part about linked transactions, in relation to a set of transactions of which at least one is the first acquisition of a dwelling which is a zero-carbon home.

(5)In determining whether section 116(7) applies, and in the application of section 116(7), a transaction shall be disregarded if or in so far as it involves the first acquisition of a dwelling which is a zero-carbon home.

(6)Regulations under section 58B—

(a)may provide for relief to be wholly or partly withdrawn if a dwelling ceases to be a zero-carbon home, and

(b)may provide for the reduction or withholding of relief where a person acquires more than one zero-carbon home within a specified period.

(7)Regulations under section 58B may include provision for relief to be granted in respect of acquisitions occurring during a specified period before the regulations come into force.”

(2)In section 114 of FA 2003 (stamp duty land tax: orders and regulations), insert at the end—

“(5)The first set of regulations under section 58B (new zero-carbon homes) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

(6)An order or regulations under this Part—

(a)may make provision having effect generally or only in specified cases or circumstances,

(b)may make different provision for different cases or circumstances, and

(c)may include incidental, consequential or transitional provision or savings.”

Domestic microgeneration

20Income tax exemption for domestic microgeneration

(1)In ITTOIA 2005, after section 782 insert—

“782ADomestic microgeneration

(1)No liability to income tax arises in respect of income arising to an individual from the sale of electricity generated by a microgeneration system if—

(a)the system is installed at or near domestic premises occupied by the individual, and

(b)the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.

(2)In subsection (1)—

• “domestic premises” means premises used wholly or mainly as a separate private dwelling, and

• “microgeneration system” has the same meaning as in section 4 of the Climate Change and Sustainable Energy Act 2006.”

(2)The amendment made by subsection (1) has effect for the tax year 2007-08 and subsequent tax years.

21Renewables obligation certificates for domestic microgeneration

(1)In ITTOIA 2005, after section 782A (inserted by section 20) insert—

“782BRenewables obligation certificates for domestic microgeneration

(1)No liability to income tax arises in respect of the receipt by an individual of a renewables obligation certificate if—

(a)the individual receives the certificate in connection with the generation of electricity by a microgeneration system,

(b)the system is installed at or near domestic premises occupied by the individual, and

(c)the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.

(2)In subsection (1)—

• “domestic premises” and “microgeneration system” have the same meaning as in section 782A, and

• “renewables obligation certificate” means a certificate issued under section 32B of the Electricity Act 1989 or Article 54 of the Energy (Northern Ireland) Order 2003.”

(2)In TCGA 1992, after section 263 insert—

“263AZARenewables obligation certificates for domestic microgeneration

(1)A gain accruing to an individual on a disposal of a renewables obligation certificate is not a chargeable gain if—

(a)the individual acquired the certificate in connection with the generation of electricity by a microgeneration system,

(b)the system is installed at or near domestic premises occupied by the individual, and

(c)the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.

(2)In subsection (1)—

• “domestic premises” means premises used wholly or mainly as a separate private dwelling,

• “microgeneration system” has the same meaning as in section 4 of the Climate Change and Sustainable Energy Act 2006, and

• “renewables obligation certificate” means a certificate issued under section 32B of the Electricity Act 1989 or Article 54 of the Energy (Northern Ireland) Order 2003.”

(3)The amendment made by subsection (1) has effect for the tax year 2007-08 and subsequent tax years.

(4)The amendment made by subsection (2) has effect in relation to disposals on or after 6th April 2007.

Other measures

22Aggregates levy: exemption for aggregate removed from railways etc

(1)Section 17(3) of FA 2001 (exempt aggregate) is amended as follows.

(2)Omit “or” at the end of paragraph (d).

(3)After that paragraph insert—

“(da)it consists wholly of aggregate won by being removed from the ground along the line or proposed line of any railway, tramway or monorail or proposed railway, tramway or monorail and in the course of excavations carried out—

(i)for the purpose of improving or maintaining the railway, tramway or monorail or of constructing the proposed railway, tramway or monorail; and

(ii)not for the purpose of extracting that aggregate;”.

(4)Insert “or” at the end of paragraph (e).

(5)The amendment made by subsection (3) comes into force on such day as the Treasury may by order made by statutory instrument appoint.

23Climate change levy: reduced-rate supplies etc

Schedule 2 contains amendments of Schedule 6 to FA 2000 in relation to reduced-rate supplies and other matters.

24Landfill tax: bodies concerned with the environment

(1)In section 53(4) of FA 1996 (credit: bodies concerned with the environment), after paragraph (c) insert—

“(ca)provision for an environmental body to be and remain approved only if it complies with conditions imposed from time to time by the regulatory body or for the regulatory body to be and remain approved only if it complies with conditions imposed from time to time by the Commissioners (including provision for the variation or revocation of such conditions);”.

(2)The amendment made by subsection (1) is deemed to have come into force on 22nd March 2007.

Part 3Income tax, corporation tax and capital gains tax

Anti-avoidance

25Managed service companies

(1)Schedule 3 contains provision about managed service companies.

(2)That Schedule is deemed to have come into force on 6th April 2007.

26Restrictions on trade loss relief for partners

Schedule 4 contains provision restricting reliefs for losses made by individuals carrying on trades in partnership.

27Extension of restrictions on allowable capital losses

(1)TCGA 1992 is amended as follows.

(2)In section 8 (company’s total profits to include chargeable gains)—

(a)in subsection (2), for the words from “does not include—” to the end substitute “does not include a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it.”, and

(b)omit subsections (2A) to (2C).

(3)After section 16 insert—

“16ARestrictions on allowable losses

(1)For the purposes of this Act, “allowable loss” does not include a loss accruing to a person if—

(a)it accrues to the person directly or indirectly in consequence of, or otherwise in connection with, any arrangements, and

(b)the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage.

(2)For the purposes of subsection (1)—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

• “tax advantage” means—

  (a)

  relief or increased relief from tax,

  (b)

  repayment or increased repayment of tax,

  (c)

  the avoidance or reduction of a charge to tax or an assessment to tax, or

  (d)

  the avoidance of a possible assessment to tax,

  and for the purposes of this definition “tax” means capital gains tax, corporation tax or income tax.

(3)For the purposes of subsection (1) it does not matter—

(a)whether the loss accrues at a time when there are no chargeable gains from which it could otherwise have been deducted, or

(b)whether the tax advantage is secured for the person to whom the loss accrues or for any other person.”

(4)In section 288(1) (interpretation), in the definition of “allowable loss”, after “16” insert “, 16A”.

(5)In section 834(1) of ICTA (interpretation of the Corporation Tax Acts), in the definition of “allowable loss”, for the words from “or a loss” to the end substitute “or a loss accruing to a company in the circumstances mentioned in section 16A of the 1992 Act”.

(6)The amendments made by this section have effect in relation to losses accruing on disposals made on or after 6th December 2006.

28Restriction on expenses of management

(1)Section 75 of ICTA (expenses of management: companies with investment business) is amended as follows.

(2)After subsection (2) insert—

“(2A)A deduction is not to be allowed under that subsection for any particular expenses of management if any part of those expenses is incurred directly or indirectly in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure the allowance of a deduction (or increased deduction) under that subsection or any other tax advantage.

(2B)Subsection (2A) above does not apply if, as a result of paragraph 7A of Schedule 23A (manufactured payments under arrangements having an unallowable purpose), the company incurring the expenses is not entitled to a relevant tax relief (within the meaning of that paragraph) in respect of, or referable to, the whole or any part of the expenses.

(2C)The reference in subsection (2A) above to expenses of management includes amounts treated by any provision as deductible under this section.”

(3)After subsection (5) insert—

“(5A)For the purposes of subsection (5)(a) above investments are not held for a business or other commercial purpose if they are held directly or indirectly in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure the allowance of a deduction (or increased deduction) under subsection (1) above or any other tax advantage.”

(4)After subsection (10) insert—

“(11)In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

• “tax advantage” has the meaning given by section 840ZA.”

(5)The amendments made by this section have effect in relation to accounting periods beginning on or after 20th June 2007, but have no effect in any case where the particular management expenses in question were paid before that date.

(6)In the case of an accounting period of a company beginning before, and ending on or after, that date, those amendments have effect as if, for determining the amounts that are deductible for the period under section 75(1) of ICTA, so much of the period as falls before that date, and the rest of it, were separate accounting periods.

29Life policies etc: effect of rebated or reinvested commission

(1)In ICTA, after section 548 insert—

“548AEffect of rebated or reinvested commission in certain cases

(1)This section applies if—

(a)a relevant chargeable event occurs in respect of a policy or contract,

(b)commission in respect of the policy or contract has at any time been rebated or reinvested, and

(c)condition A or B is met.

(2)For the purposes of performing the calculation under section 541(1)(b) or (c) or 543(1)(a) or (b) for the chargeable event, the total amount paid under the policy or contract by way of premiums in any period is to be reduced by the total amount of commission attributable to those premiums that has been rebated or reinvested.

(3)Condition A is that the total amount paid under the policy or contract by way of premiums in a relevant period exceeds £100,000.

(4)Condition B is that—

(a)at a time when the policy or contract was the taxable person's, the taxable person’s policies and contracts exceeded the relevant threshold as respects a relevant period, and

(b)payments under the policy or contract by way of premiums were made in that relevant period.

(5)In subsection (4)(a) “taxable person” means the person whose policy or contract the policy or contract is, immediately before the chargeable event.

(6)For the purposes of subsection (4)(a) a person’s policies and contracts “exceed the relevant threshold” as respects a relevant period if the total amount of payments under them by way of premiums in that relevant period exceeds the sum specified in subsection (3).

(7)In this section “relevant chargeable event” means a chargeable event within—

(a)any of sub-paragraphs (ii) to (iv) of section 540(1)(a) (including those sub-paragraphs as they apply in relation to a qualifying policy),

(b)section 542(1)(a) or (b), or

(c)section 545(1)(a) to (c).

(8)In this section “relevant period” means—

(a)the period beginning with the beginning of the year of assessment in which the chargeable event occurs and ending with the chargeable event, or

(b)any of the 3 preceding years of assessment.

(9)References in this section to a premium include, in relation to a contract for a life annuity, lump sum consideration.

(10)The Treasury may by order—

(a)substitute another sum for the sum for the time being specified in subsection (3);

(b)amend the definition of “relevant period”.

548BSection 548A: further definitions

(1)This section supplements section 548A.

(2)“Commission”, in relation to a policy or contract, includes any passing of value to or for the benefit of an intermediary, or a person connected with an intermediary, that can reasonably be taken to represent a reward in respect of the policy or contract.

(3)Commission in respect of a policy or contract is “reinvested” if, as a result of a waiver of an entitlement to it, there is an increase in the total value of a relevant person’s policies and contracts.

(4)The amount of commission reinvested is the amount of the increase.

(5)Commission in respect of a policy or contract is “rebated” if—

(a)value passes (directly or indirectly) from an intermediary, or a person connected with an intermediary, to or for the benefit of a relevant person (and the passing of value does not amount to the reinvestment of the commission), and

(b)the passing of value can reasonably be taken to be in respect of the commission.

(6)The amount of commission rebated is the amount of value passed.

(7)A policy or contract is a person’s policy or contract if a gain arising in connection with it would be—

(a)a gain for which the person, or (if the person is an individual) the person’s spouse or civil partner, would be liable to tax under Chapter 9 of Part 4 of ITTOIA 2005, or

(b)treated by virtue of section 547(1) above as forming part of the person’s income.

(8)Any necessary apportionment is to be made (on a just and reasonable basis) as regards—

(a)commission which is attributable to two or more premiums, and

(b)any part of such commission that has been rebated or reinvested.

(9)Commission which is in respect of one or more policies or contracts (but is not attributable to particular premiums) is to be attributed to such premiums as is just and reasonable.

(10)In subsections (3) and (5), “relevant person” means—

(a)any of the policyholders (including any of the persons who hold the contract),

(b)a person who beneficially owns the rights under the policy or contract,

(c)if those rights are held on trust, any of the trustees, or

(d)a person connected (within the meaning of section 839) with a person within any of paragraphs (a) to (c).

(11)In subsections (8) and (9), references to a premium include, in relation to a contract for a life annuity, lump sum consideration.”

(2)In section 552 of that Act (information: duty of insurers), after subsection (12) insert—

“(13)For the purposes of this section, no account is to be taken of the effect of section 548A above or section 541A of ITTOIA 2005.”

(3)In ITTOIA 2005, after section 541 insert—

“Rebated or reinvested commission

541AEffect of rebated or reinvested commission in certain cases

(1)This section applies if—

(a)a chargeable event within section 484(1)(a)(i) to (iii), (c) or (e) occurs in respect of a policy or contract,

(b)commission in respect of the policy or contract has at any time been rebated or reinvested, and

(c)condition A or B is met.

(2)For the purposes of performing the calculation in section 494 (total allowable deductions) for the chargeable event, the total amount of premiums under the policy or contract paid in the period mentioned in section 494(1) or (2)(b) is to be reduced by the total amount of commission attributable to those premiums that has been rebated or reinvested.

(3)Condition A is that the total amount of premiums under the policy or contract paid in a relevant period exceeds £100,000.

(4)Condition B is that—

(a)at a time when the policy or contract was the taxable person's, the taxable person’s policies and contracts exceeded the relevant threshold as respects a relevant period, and

(b)premiums under the policy or contract were paid in that relevant period.

(5)In subsection (4)(a) “taxable person” means the person whose policy or contract the policy or contract is, immediately before the chargeable event.

(6)For the purposes of subsection (4)(a) a person’s policies and contracts “exceed the relevant threshold” as respects a relevant period if the total amount of premiums under them paid in that relevant period exceeds the sum specified in subsection (3).

(7)In this section “relevant period” means—

(a)the period beginning with the beginning of the tax year in which the chargeable event occurs and ending with the chargeable event, or

(b)any of the 3 preceding tax years.

(8)The Treasury may by order—

(a)substitute another sum for the sum for the time being specified in subsection (3);

(b)amend the definition of “relevant period”.

541BSection 541A: further definitions

(1)This section supplements section 541A.

(2)“Commission”, in relation to a policy or contract, includes any passing of value to or for the benefit of an intermediary, or a person connected with an intermediary, that can reasonably be taken to represent a reward in respect of the policy or contract.

(3)Commission in respect of a policy or contract is “reinvested” if, as a result of a waiver of an entitlement to it, there is an increase in the total value of a relevant person’s policies and contracts.

(4)The amount of commission reinvested is the amount of the increase.

(5)Commission in respect of a policy or contract is “rebated” if—

(a)value passes (directly or indirectly) from an intermediary, or a person connected with an intermediary, to or for the benefit of a relevant person (and the passing of value does not amount to the reinvestment of the commission), and

(b)the passing of value can reasonably be taken to be in respect of the commission.

(6)The amount of commission rebated is the amount of value passed.

(7)A policy or contract is a person’s policy or contract if a gain arising in connection with it would be—

(a)a gain for which the person, or (if the person is an individual) the person’s spouse or civil partner, would be liable to tax under this Chapter, or

(b)treated by virtue of section 547(1) of ICTA as forming part of the person’s income.

(8)Any necessary apportionment is to be made (on a just and reasonable basis) as regards—

(a)commission which is attributable to two or more premiums, and

(b)any part of such commission that has been rebated or reinvested.

(9)Commission which is in respect of one or more policies or contracts (but is not attributable to particular premiums) is to be attributed to such premiums as is just and reasonable.

(10)In subsections (3) and (5), “relevant person” means—

(a)any of the policyholders (including any of the persons who hold the contract),

(b)a person who beneficially owns the rights under the policy or contract,

(c)if those rights are held on trust, any of the trustees, or

(d)a person connected with a person within any of paragraphs (a) to (c).”

(4)The amendments made by this section have effect in relation to a policy or contract if—

(a)it is made on or after 21st March 2007, or

(b)on or after that date, any of its terms are varied, or a right under it is exercised, so as to increase the benefits under it.

30Avoidance involving financial arrangements

Schedule 5 contains provision in relation to tax avoidance involving financial arrangements.

31Companies carrying on business of leasing plant or machinery

Schedule 6 contains provision in relation to companies carrying on a business of leasing plant or machinery.

32Restrictions on companies buying losses or gains: tax avoidance schemes

(1)TCGA 1992 is amended as follows.

(2)In section 184A(2) (losses accruing on disposals of pre-change assets not deductible from gains unless gains accrue on disposals of pre-change assets), omit “unless the gains accrue to the company on a disposal of a pre-change asset”.

(3)In section 184B(2) (losses not deductible from gains accruing on disposals of pre-change assets unless losses accrue on disposals of pre-change assets), omit “unless the loss accrues to the company on a disposal of a pre-change asset”.

(4)Section 70 of FA 2006 (which inserted sections 184A to 184F of TCGA 1992) is amended as follows.

(5)In subsection (9) (special provision for qualifying changes of ownership and disposals before 5th December 2005)—

(a)for “The following subsection applies” substitute “Subsections (10) to (12) apply”,

(b)in paragraph (a), omit “or 184B”,

(c)in paragraph (c), for “at all subsequent times,” substitute “immediately afterwards,”,

(d)after that paragraph insert—

“(ca)no qualifying change of ownership occurs at any time in relation to the principal company of that group for the purposes of section 184A of TCGA 1992 directly or indirectly in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure a tax advantage falling within subsection (1)(d) of that section, and”,

(e)omit paragraph (d) (together with the “and” following it), and

(f)in paragraph (e), omit “, or a qualifying gain for the purposes of section 184B of that Act,”.

(6)For subsections (10) and (11) substitute—

“(10)Subsection (2) of that section has effect in relation to that qualifying loss subject to the following modifications.

(11)That subsection has effect as if there were inserted at the end of it “unless the gains accrue to the company on a disposal of a pre-change asset”.

(12)That subsection (modified as mentioned above) has effect as if the reference to a pre-change asset included an asset held before the relevant time by any company—

(a)which, immediately before that time, was a member of the same group of companies as the relevant company, and

(b)which, throughout the period beginning with that time and ending immediately after the making of the disposal referred to in that subsection, has remained under the control of the company which was the principal company of that group at the relevant time.

(13)Expressions which are used in subsections (9) to (12) have the same meaning as in sections 184A and 184C of TCGA 1992.”

(7)The amendment made by subsection (2) has effect in relation to gains accruing on disposals made on or after 21st March 2007.

(8)The amendment made by subsection (3) has effect in relation to losses accruing on disposals made on or after that date.

(9)The amendments made by subsections (5) and (6) have effect in relation to disposals made on or after that date; but the amendment made by subsection (5)(d) has no effect in relation to disposals made before 9th May 2007.

33Lloyd’s corporate members: restriction of group relief

(1)In FA 1994, after section 227 insert—

“227ARestriction of group relief

(1)Losses of the last active underwriting year of a corporate member are not eligible for surrender by the corporate member as group relief to another company unless the group-relief continuity condition is satisfied.

(2)In this section “last active underwriting year”, in relation to a corporate member, means—

(a)if the corporate member writes insurance business in only one underwriting year, that underwriting year, and

(b)otherwise, the last underwriting year in which the corporate member writes insurance business.

(3)Where in an underwriting year—

(a)the corporate member writes an amount of insurance business which is insignificant when compared with that written by it in the preceding underwriting year, or

(b)the only insurance business written by the corporate member consists of the acceptance of reinsurance to close premiums,

the underwriting year is not to be regarded for the purposes of subsection (2)(b) above as an underwriting year in which the corporate member writes insurance business.

(4)In subsection (3)(b) above “reinsurance to close premium” means a premium or other consideration under a contract in pursuance of which, in accordance with the rules or practice of Lloyd's, one underwriting member agrees with another to meet liabilities arising from the latter’s underwriting business in an underwriting year so that the accounts of the business for that year may be closed.

(5)The group-relief continuity condition is satisfied if the corporate member (as the surrendering company) and the other company (as the claimant company) meet the conditions in section 402(2) or (3) of the Taxes Act 1988 throughout the period—

(a)beginning with the last day of the last active underwriting year of the corporate member, and

(b)ending with the first day of the first underwriting year in which losses of the last active underwriting year are declared.”

(2)The amendment made by subsection (1) has effect in relation to any case where the corporate member (as the surrendering company) and the other company (as the claimant company) first meet the conditions in section 402(2) or (3) of ICTA on or after 21st March 2007.

34Employee benefit contributions

(1)Schedule 24 to FA 2003 (restriction on deductions for employee benefit contributions) is amended as follows.

(2)In paragraph 1 (restriction of deductions), for sub-paragraphs (1) and (2) substitute—

“(1)This Schedule applies if, in calculating for corporation tax purposes the profits of a person (“the employer”) for a period, a deduction would otherwise be allowable for the period in respect of employee benefit contributions made or to be made (but see paragraph 8).

(2)For the purposes of this Schedule, an “employee benefit contribution” is made if, as a result of any act or omission—

(a)property is held, or may be used, under an employee benefit scheme, or

(b)there is an increase in the total value of property that is so held or may be so used (or a reduction in any liabilities under an employee benefit scheme).”

(3)In paragraph 3, for “the third party” substitute “a scheme manager”.

(4)In paragraph 4—

(a)in sub-paragraphs (1) and (2), for “the third party” (in both places) substitute “a scheme manager”, and

(b)in sub-paragraph (3), for “third party” substitute “scheme manager”.

(5)In paragraph 5, for “the third party” (in both places) substitute “a scheme manager”.

(6)In paragraph 9(1) (interpretation)—

(a)after the definition of “relevant migrant member” insert—

““scheme manager” means a person who administers an employee benefit scheme (acting in that capacity);”, and

(b)omit the definition of “the third party”.

(7)Part 2 of ITTOIA 2005 (trading income) is amended as follows.

(8)In section 38 (restriction of deductions for employee benefit contributions), for subsection (1) substitute—

“(1)This section applies if, in calculating for income tax purposes the profits of a trade of a person (“the employer”) for a period, a deduction would otherwise be allowable for the period in respect of employee benefit contributions made or to be made (but see subsection (4)).”

(9)In section 39 (making of “employee benefit contributions), for subsection (1) substitute—

“(1)For the purposes of section 38, an “employee benefit contribution” is made if, as a result of any act or omission—

(a)property is held, or may be used, under an employee benefit scheme, or

(b)there is an increase in the total value of property that is so held or may be so used (or a reduction in any liabilities under an employee benefit scheme).”

(10)In section 41 (timing and amount of certain benefits), for “the third party” (in both places) substitute “a scheme manager”.

(11)In section 42 (provision or payment out of employee benefit contributions)—

(a)in subsection (1), for “the third party”, in the first place, substitute “a scheme manager” and, in the second place, substitute “the scheme manager”,

(b)in subsection (3), for “the third party”, in the first place, substitute “a scheme manager” and, in the second place, substitute “the scheme manager”, and

(c)in subsection (5), for “third party” substitute “scheme manager”.

(12)In section 44(1) (interpretation), for the definition of “the third party” substitute—

““scheme manager” means a person who administers an employee benefit scheme (acting in that capacity).”

(13)The amendments made by this section have effect in relation to employee benefit contributions made on or after 21st March 2007.

35Schemes etc designed to increase double taxation relief

(1)Section 804ZA of ICTA (schemes and arrangements designed to increase relief) is amended as follows.

(2)In subsection (8)(c), omit “resident in a territory outside the United Kingdom”.

(3)After subsection (11) insert—

“(11A)In this section “foreign tax” includes any tax which for the purpose of allowing credit under any arrangements against corporation tax is treated by section 801 as if it were tax payable under the law of any territory outside the United Kingdom.”

(4)The amendments made by this section have effect in relation to a credit for foreign tax which relates to—

(a)a payment of foreign tax on or after 6th December 2006, or

(b)income received on or after that date in respect of which foreign tax has been deducted at source,

but see also subsections (6) and (7).

(5)In subsection (4)—

(a)references to foreign tax are to be construed in accordance with section 804ZA(11A) of ICTA (as inserted by subsection (3) above), and

(b)the reference to tax deducted at source is to tax deducted (or treated as deducted) from income or treated as paid in respect of income.

(6)The DTR anti-avoidance provisions have effect in relation to any action (or failure to act) that occurs under any scheme or arrangement on or after 6th December 2006 (as well as in relation to the cases mentioned in section 87(3) of FA 2005 or subsection (4) above).

(7)“The DTR anti-avoidance provisions” means section 804ZA of ICTA (as amended by this section), sections 804ZB and 80ZC of that Act and Schedule 28AB to that Act.

Capital allowances

36Industrial and agricultural buildings allowances

(1)No balancing adjustment is to be made under Part 3 of CAA 2001 (industrial buildings allowances) if—

(a)the qualifying expenditure in question is not qualifying enterprise zone expenditure for the purposes of that Part, and

(b)the balancing event in question is a post-commencement balancing event,

and in paragraph (b) “post-commencement balancing event” means any balancing event for the purposes of that Part which occurs on or after 21st March 2007, but does not include an event which occurs before 1st April 2011 in pursuance of a relevant pre-commencement contract (see subsection (7)).

(2)For the purposes of section 311 of that Act (calculation of allowance after sale of relevant interest) the amount of the residue of qualifying expenditure immediately after a post-commencement relevant event is taken to be the amount of the residue of qualifying expenditure immediately before that event.

(3)In subsection (2)—

• “qualifying expenditure” does not include any expenditure which is qualifying enterprise zone expenditure for the purposes of that Part, and

• “post-commencement relevant event” means any relevant event within the meaning of section 311 of that Act which occurs on or after 21st March 2007, but does not include an event which occurs before 1st April 2011 in pursuance of a relevant pre-commencement contract.

(4)No balancing adjustment is to be made under Part 4 of that Act (agricultural buildings allowances) if the balancing event in question is a post-commencement balancing event.

(5)For the purposes of section 376 of that Act (calculation of allowance after acquisition) the amount of the residue of qualifying expenditure immediately after a post-commencement balancing event is taken to be the amount of the residue of qualifying expenditure immediately before that event.

(6)In subsections (4) and (5) “post-commencement balancing event” means any balancing event under section 381 of that Act (as a result of an election made in accordance with section 382 of that Act) which occurs on or after 21st March 2007, but does not include an event which occurs before 1st April 2011 in pursuance of a relevant pre-commencement contract.

(7)For the purposes of this section a contract is “a relevant pre-commencement contract” if—

(a)the contract is a contract in writing made before 21st March 2007,

(b)the contract is unconditional or its conditions have been satisfied before that date,

(c)no terms remain to be agreed on or after that date, and

(d)the contract is not varied in a significant way on or after that date.

37Temporary increase in first-year capital allowances for small enterprises

(1)The amount of a first-year allowance under section 44 of CAA 2001 (expenditure incurred by small or medium-sized enterprises) is to be determined, in the case of expenditure to which this subsection applies, as if the percentage specified in the entry relating to that section in the Table in section 52(3) of that Act were 50%.

(2)Subsection (1) applies to expenditure incurred by a small enterprise (within the meaning of section 44 of that Act) in the period of 12 months beginning with—

(a)1st April 2007, if the small enterprise is within the charge to corporation tax, or

(b)6th April 2007, if the small enterprise is within the charge to income tax.

(3)Accordingly, in section 52(3) of CAA 2001, in the sentence following the Table, insert at the end—

“(c)section 37 of the Finance Act 2007 (substitution of 50% in the case of expenditure incurred by a small enterprise in 2007-08 or financial year 2007).”

Insurance and friendly societies

38Insurance companies: gross roll-up business etc

(1)Part 1 of Schedule 7 contains provisions relating to gross roll-up business, capital redemption business and miscellaneous minor matters relating to insurance companies.

(2)The amendments made by that Part of that Schedule have effect—

(a)for the purposes of corporation tax, for periods of account of insurance companies beginning on or after 1st January 2007, and

(b)for the purposes of income tax, for the tax year 2007-08 and subsequent tax years.

(3)Subsection (2) is subject to the transitional provisions in Part 2 of that Schedule.

39Insurance companies: basis of taxation etc

(1)Part 1 of Schedule 8 contains provision about the basis of taxation of insurance companies and related matters.

(2)The amendments made by that Part of that Schedule have effect for periods of account of insurance companies beginning on or after 1st January 2007.

(3)Subsection (2) is subject to the transitional provisions in Part 2 of that Schedule.

40Insurance companies: transfers etc

Schedule 9 contains provision about transfers by insurance companies and related matters.

41Insurance companies: miscellaneous

Schedule 10 contains miscellaneous provisions relating to insurance companies.

42Technical provisions made by general insurers

Schedule 11 contains provision in relation to technical provisions made by general insurers.

43Lloyd's: cessation of business by corporate members

(1)In FA 1994, after section 227A (inserted by section 33) insert—

“227BTransfer of underwriting business without change of ownership

(1)This section applies where, in accordance with the rules or practice of Lloyd's, a corporate member (“the successor”) has taken up the syndicate capacity of another corporate member (“the predecessor”).

(2)Section 343 of the Taxes Act 1988 (company reconstructions without a change of ownership) applies as if—

(a)the trade mentioned in that section were the underwriting business of the predecessor,

(b)the predecessor ceases to carry it on, and the successor begins to carry it on, at the end of the first underwriting year in which profits or losses of the predecessor’s last active underwriting year are declared, and

(c)subsections (8) to (10) and (12) were omitted.

(3)For the purposes of subsection (1) above the successor has taken up the predecessor’s syndicate capacity if it has taken up the rights to participate in syndicates which were (or otherwise would be) offered to the predecessor.

(4)In subsection (2)(b) above “last active underwriting year” has the same meaning as in section 227A above (see subsections (2) to (4) of that section).”

(2)The amendment made by subsection (1) has effect in any case where the first underwriting year in which profits or losses of the predecessor’s final underwriting year are declared is 2007 or a later underwriting year.

44Transfers of business by friendly societies to insurance companies etc

Schedule 12 contains provisions about transfers of business by friendly societies to insurance companies etc.

45Tax exempt business of friendly societies

(1)Section 462 of ICTA (conditions for tax exempt business) is amended as follows.

(2)For subsection (1) substitute—

“(1)Subject to subsections (2) to (4) below, section 460 does not afford any exemption from corporation tax in relation to so much of the profits arising to a friendly society or insurance company from any business as is attributable to a policy which—

(a)is not a qualifying policy (by virtue of sub-paragraph (2) of paragraph 6 of Schedule 15) and is not an excluded policy, and

(b)would not be a qualifying policy (by virtue of that sub-paragraph) if all excluded policies were left out of account.

(1A)For the purposes of subsection (1) above a policy is an excluded policy if—

(a)it is a policy held otherwise than with the friendly society or insurance company, or

(b)the person who has the contract effecting the policy acquired the rights under it on an assignment (or, in Scotland, assignation) otherwise than for money or money’s worth.”

(3)In subsection (2), for “under section 460(1) for profits arising from any part of a life or endowment” substitute “in relation to profits arising from any part of a”.

(4)In subsection (3), for the words after “section” substitute “460 does not afford any exemption from corporation tax in relation to so much as is attributable to that policy of the profits of the friendly society or insurance company concerned.”

(5)In section 462A(8)(b) of ICTA (election to tax exempt business), for ““societies”” substitute ““policies””.

(6)The amendments made by this section are deemed to have come into force on 1st January 2007.

46Purchased life annuities: self-assessment

(1)In section 437(1C) of ICTA (general annuity business), omit paragraphs (c)(i) and (d)(i).

(2)In section 656 of that Act (purchased life annuities other than retirement annuities), omit subsections (5) and (6).

(3)In section 658 of that Act (supplementary), omit subsections (1) and (4) to (6).

(4)In section 828(4) of that Act (parliamentary procedure for orders and regulations), omit “658(3)”.

(5)In section 717 of ITTOIA 2005 (exemption for part of purchased life annuity payment), omit subsection (3).

(6)Omit section 723 of that Act (officer of Revenue and Customs to determine certain questions).

(7)In section 724 of that Act (regulations)—

(a)in subsection (1)(a), for “723” substitute “722”, and

(b)omit subsection (2).

(8)In section 873(3) of that Act (parliamentary procedure for orders and regulations), omit paragraph (b).

(9)The amendments made by subsections (1) to (3) and (5) to (7) come into force on such day as the Treasury may by order appoint; and different days may be appointed for different purposes.

Repos

47Sale and repurchase of securities

(1)Schedule 13 contains provision for corporation tax purposes about the sale and repurchase of securities.

(2)Schedule 14 contains minor and consequential amendments in relation to the sale and repurchase of securities.

(3)The Treasury may by order make such other amendments (including repeals and revocations) of enactments or instruments as may appear appropriate in consequence of, or otherwise in connection with, those Schedules.

(4)Schedule 13, and the amendments made by Schedule 14, have effect in accordance with provision made by the Treasury by order.

(5)Any order under this section—

(a)may make different provision for different purposes, and

(b)may contain transitional provision and savings.

CFCs

48Controlled foreign companies

Schedule 15 contains provision in relation to controlled foreign companies.

R&D

49Vaccine research relief: amount of deduction for SMEs

(1)Part 2 of Schedule 13 to FA 2002 (manner of giving effect to vaccine research relief: small and medium-sized companies) is amended as follows.

(2)In paragraph 14 (deduction in computing profits of trade), for sub-paragraph (2) substitute—

“(2)The appropriate deduction is 50% of the qualifying expenditure.”

(3)In paragraph 15 (alternative treatment of pre-trading expenditure: deemed trading loss)—

(a)in sub-paragraph (2)(b), for the words from “not” to the end substitute “non-Schedule 20 expenditure.”, and

(b)after sub-paragraph (6) insert—

“(7)Qualifying expenditure is “non-Schedule 20 expenditure” if the company is not entitled to relief under Schedule 20 to the Finance Act 2000 in respect of it.”

(4)In paragraph 16 (entitlement to tax credit), for sub-paragraph (3) substitute—

“(3)The amount of the surrenderable loss is equal to the lower of A and B where—

• A is so much of the trading loss referred to in sub-paragraph (2) as is unrelieved, and

• B is—

  (a)

  if paragraph 14 applies, the sum of the amount deductible under that paragraph and so much of the qualifying expenditure mentioned in that paragraph as is non-Schedule 20 expenditure;

  (b)

  if paragraph 15 applies, the total deemed trading loss under that paragraph.”

(5)After sub-paragraph (5) of that paragraph insert—

“(6)Paragraph 15(7) (meaning of “non-Schedule 20 expenditure”) applies for the purposes of sub-paragraph (3).”

(6)The amendments made by this section have effect in relation to expenditure incurred on or after 1st April 2007.

50Research and development tax relief: definition of SME etc

(1)In Part 1 of Schedule 20 to FA 2000 (entitlement to R&D tax relief), paragraph 2(1) (meaning of “small or medium-sized enterprise”) is amended as follows.

(2)Before Qualification 1 insert—

• “Qualification A1

  In Article 2(1) of the Annex the references to 250 persons, 50 million euros and 43 million euros are to be read as references to 500 persons, 100 million euros and 86 million euros (respectively).”

(3)In Qualification 1—

(a)after “micro, small or medium-sized enterprise” insert “(or would be if the Annex were read as set out in Qualification A1)”;

(b)at the end insert “(read as set out in Qualification A1)”.

(4)Part 2 of Schedule 13 to FA 2002 (giving effect to VRR tax relief) is amended as follows.

(5)After paragraph 15 insert—

“Paragraphs 14 and 15: modifications for larger SMEs claiming R&D tax credits

15A(1)This paragraph applies in relation to a company for an accounting period if—

(a)the company is a larger SME in the accounting period, and

(b)it claims a tax credit under paragraph 15 of Schedule 20 to the Finance Act 2000 (R&D tax credit) for the accounting period.

(2)The appropriate deduction under paragraph 14 above is 50% of so much of the qualifying expenditure as is non-Schedule 20 expenditure (as defined by paragraph 15(7)).

(3)Paragraph 15 above has effect as if sub-paragraph (2)(a) were omitted.

(4)In this paragraph “larger SME” means a company which qualifies as a small or medium-sized enterprise by virtue of Qualification A1 in paragraph 2(1) of Schedule 20 to the Finance Act 2000.”

(6)After paragraph 16 insert—

“Entitlement to tax credit: modification for larger SMEs

16A(1)Paragraph 16(3) has effect in relation to a larger SME as if for the definition of “B” there were substituted—

“B is 150% of so much of the qualifying expenditure mentioned in paragraph 14 or 15 as is non-Schedule 20 expenditure.”

(2)“Larger SME” has the same meaning as in paragraph 15A.”

(7)The amendments made by this section have effect in relation to expenditure incurred on or after such day as the Treasury may by order appoint.

(8)A day before the day on which this Act is passed may be appointed, but not one before 1st April 2007.

(9)For the purpose of determining, in relation to expenditure incurred on or after the appointed day, whether a company is a small or medium-sized enterprise, the amendments are to be treated as always having had effect.

Venture capital schemes etc

51Venture capital schemes etc

Schedule 16 contains provision about venture capital schemes (and provision consequential on such provision).

REITs

52Real Estate Investment Trusts

(1)Schedule 17 contains provisions about Real Estate Investment Trusts.

(2)The amendments made by that Schedule have effect in respect of—

(a)an accounting period, of a company to which Part 4 of FA 2006 (REITs) applies, which begins on or after 1st January 2007,

(b)an accounting period, of the principal company of a group to which that Part applies, which begins on or after 1st January 2007, and

(c)a distribution to which section 121 of FA 2006 applies and which is received on or after 1st January 2007.

Alternative finance

53Alternative finance investment bond

(1)In FA 2005, after section 48 insert—

“48AAlternative finance arrangements: alternative finance investment bond: introduction

(1)Subject to section 52, arrangements fall within this section if—

(a)the arrangements provide for one person (“the bond-holder”) to pay a sum of money (“the capital”) to another (“the bond-issuer”),

(b)the arrangements identify assets, or a class of assets, which the bond-issuer will acquire for the purpose of generating income or gains directly or indirectly (“the bond assets”),

(c)the arrangements specify a period at the end of which they cease to have effect (“the bond term”),

(d)the bond-issuer undertakes under the arrangements—

(i)to dispose at the end of the bond term of any bond assets which are still in the bond-issuer’s possession,

(ii)to make a repayment of the capital (“the redemption payment”) to the bond-holder during or at the end of the bond-term (whether or not in instalments), and

(iii)to pay to the bond-holder other payments on one or more occasions during or at the end of the bond term (“additional payments”),

(e)the amount of the additional payments does not exceed an amount which would be a reasonable commercial return on a loan of the capital,

(f)under the arrangements the bond-issuer undertakes to arrange for the management of the bond assets with a view to generating income sufficient to pay the redemption payment and additional payments,

(g)the bond-holder is able to transfer the rights under the arrangements to another person (who thereby becomes the bond-holder),

(h)the arrangements are a listed security on a recognised stock exchange (within the meaning of section 1005 of ITA 2007), and

(i)the arrangements are wholly or partly treated in accordance with international accounting standards as a financial liability of the bond-issuer (or would be if the bond-issuer applied those standards).

(2)For the purposes of subsection (1)—

(a)the bond-issuer may acquire bond assets before or after the arrangements take effect,

(b)bond assets may be property of any kind, including rights in relation to property owned by someone other than the bond-issuer,

(c)the identification of the bond assets mentioned in subsection (1)(b) and the undertakings mentioned in subsection (1)(d) and (f) may (but need not) be described as, or accompanied by a document described as, a declaration of trust,

(d)a reference to the management of assets includes a reference to disposal,

(e)the bond-holder may (but need not) be entitled under the arrangements to terminate them, or participate in terminating them, before the end of the bond term,

(f)the amount of the additional payments may be—

(i)fixed at the beginning of the bond term,

(ii)determined wholly or partly by reference to the value of or income generated by the bond assets, or

(iii)determined in some other way,

(g)if the amount of the additional payments is not fixed at the beginning of the bond term, the reference in subsection (1)(e) to the amount of the additional payments is a reference to the maximum amount of the additional payments,

(h)the amount of the redemption payment may (but need not) be subject to reduction in the event of a fall in the value of the bond assets or in the rate of income generated by them, and

(i)entitlement to the redemption payment may (but need not) be capable of being satisfied (whether or not at the option of the bond-issuer or the bond-holder) by the issue or transfer of shares or other securities.

(3)An order under section 1005 of ITA 2007 (recognised stock exchanges: designation) may designate a stock exchange for the purposes of that section in its application for the purposes of this section only.

48BAlternative finance arrangements: alternative finance investment bond: effects

(1)Additional payments under arrangements falling within section 48A are alternative finance return for the purpose of this Chapter (subject to the provisions in section 51A about the treatment of discount).

(2)For the purposes of an enactment about any tax (and irrespective of the position for other purposes)—

(a)a bond-holder shall not be treated as having a legal or beneficial interest in the bond assets,

(b)the bond-issuer shall not be treated as a trustee of the bond assets,

(c)profits and gains accruing to the bond-issuer in connection with the bond assets are profits and gains of the bond-issuer and not of the bond-holder (and do not arise to the bond-issuer in a fiduciary or representative capacity),

(d)payments made by the bond-issuer by way of redemption payment or additional payment are not made in a fiduciary or representative capacity, and

(e)a bond-holder shall not be entitled to relief for capital expenditure in connection with bond assets.

(3)Arrangements falling within section 48A are securities for the purposes of an enactment about any tax (including Chapters 1 to 5 of Part 7 of ITEPA 2003); for which purpose—

(a)a reference to redemption shall be taken as a reference to making the redemption payment,

(b)a reference to interest shall be taken as a reference to alternative finance return, and

(c)for the purposes of section 84 the bond issuer shall be treated as being party as debtor to a capital market arrangement.

(4)Arrangements falling within section 48A are a corporate bond, issued on the date on which the arrangements are entered into, for the purposes of section 117 of TCGA 1992 (qualifying corporate bonds) if—

(a)the capital is expressed in sterling,

(b)the arrangements do not include provision for the redemption payment to be in a currency other than sterling,

(c)entitlement to the redemption payment is not capable of conversion (directly or indirectly) into an entitlement to the issue of securities apart from other arrangements falling within section 48A, and

(d)the additional payments are not determined wholly or partly by reference to the value of the bond assets;

and section 117(2) shall have effect for the purposes of this subsection as for the purposes of section 117(1).

(5)Arrangements falling within section 48A shall not be treated—

(a)as a unit trust scheme for the purposes of TCGA 1992,

(b)as a unit trust scheme for the purposes of section 469 of ICTA or section 1007 of ITA 2007 (distributions),

(c)as an offshore fund for the purposes of Chapter 5 of Part 17 of ICTA (offshore funds), or

(d)as a relevant holding for the purposes of paragraph 4 of Schedule 10 to FA 1996 (loan relationships: collective investment schemes).

(6)A bond-issuer is not a securitisation company for the purposes of section 83 (unless it is one by virtue of arrangements which do not fall within section 48A).

(7)For the purposes of section 417 of ICTA (close companies)—

(a)a bond-holder is a loan creditor in respect of the bond-issuer;

(b)arrangements falling within section 48A shall be disregarded in the application of section 417(1)(d).

(8)For the purposes of Schedule 18 to ICTA (group relief)—

(a)a bond-holder is a loan creditor in respect of the bond-issuer;

(b)paragraph 1(5)(b) shall be disregarded in determining whether a person is an equity holder by virtue of arrangements falling within section 48A.”

(2)Chapter 5 of Part 2 of FA 2005 (alternative finance arrangements) is amended as follows.

(3)In section 46 (introduction)—

(a)in subsection (1), after “47A,” insert “48A,”, and

(b)in subsection (2), after paragraph (d) (before “or” at the end) insert—

“(da)a bond-issuer within the meaning of section 48A below, but only in relation to any bond assets which are rights under arrangements falling within section 47 or 47A,”.

(4)In section 50(1) (treatment of alternative finance arrangements: companies), for “or 47A” substitute “, 47A or 48A”.

(5)After section 51 insert—

“51ADiscount

(1)This section applies where part of the additional payments in respect of arrangements falling within section 48A equates in substance to discount (“the discount element”).

(2)The discount element shall not be treated as alternative finance return for the purposes of income tax.

(3)The discount element shall be treated—

(a)in accordance with section 381 of ITTOIA 2005, or

(b)where the arrangements falling within section 48A are deeply discounted securities for the purpose of Chapter 8 of Part 4 of ITTOIA 2005, in accordance with that Chapter.”

(6)In section 52 (provision not at arm’s length)—

(a)in subsection (1), after “47A,” insert “48A,”,

(b)in subsection (3), after “47A,” insert “48A,”, and

(c)in subsection (4), for “or 47A” substitute “, 47A or 48A”.

(7)In section 53 (sale and purchase of asset)—

(a)in subsection (1) (and in the heading), for “or 47A” substitute “, 47A or 48A”, and

(b)in subsection (3), after “47A” insert “or 48A”.

(8)In section 54 (return not to be treated as distribution)—

(a)the existing provision becomes subsection (1),

(b)after that subsection insert—

“(2)Neither additional payments nor any part of the redemption payment under arrangements falling within section 48A are to be treated by virtue of section 209(2)(e)(iii) of ICTA as being a distribution for the purposes of the Corporation Tax Acts.”, and

(c)the heading accordingly becomes “Return not to be treated as distribution”.

(9)In Schedule 2 (supplementary provision), in paragraph 1(b) (definition of “relevant arrangements”), after “section” insert “48A,”.

(10)In section 117 of TCGA 1992 (qualifying corporate bonds), after subsection (6C) insert—

“(6D)Section 48B(4) of the Finance Act 2005 (alternative finance arrangements) provides for certain arrangements falling within section 48A to be a corporate bond for the purposes of this section.”

(11)In section 127(1)(ca) of FA 1995 (persons not treated as UK representatives), for “subsection (5) of section 47” substitute “Chapter 5 of Part 2”.

(12)In section 148(5A) of FA 2003 (meaning of “permanent establishment”), for “subsection (5) of section 47” substitute “Chapter 5 of Part 2”.

(13)Section 56 of FA 2005 (commencement and transitional) shall have effect in relation to the commencement of this section—

(a)as if references to Chapter 5 of Part 2 of that Act were references to this section,

(b)as if references to 6th April 2005 were references to—

(i)1st April 2007 in relation to corporation tax, and

(ii)6th April 2007 in relation to income tax and capital gains tax, and

(c)as if references to section 49 were references to sections 48A and 48B.

(14)But—

(a)for the purposes of income tax and capital gains tax in relation to the disposal after 6th April 2007 of arrangements to which new section 48A applies (whenever entered into) that section and new section 48B shall be treated as always having had effect, and

(b)an order made after the passing of this Act under section 1005 of ITA 2007 (recognised stock exchanges: designation) and by virtue of new section 48A(3) may be expressed—

(i)to have effect as from 1st April 2007 for the purposes of arrangements entered into on or after that date, and

(ii)for the purposes mentioned in paragraph (a), as always having had effect.

54Profit share agency

In section 49A(3) of FA 2005 (profit share agency: principal not treated as entitled to agent’s share of profits), insert at the end “(and the agent is treated as entitled to the profits specified in subsection (1)(c) and (d))”.

Trusts

55Trust income

(1)In section 686A(2)(a) of ICTA (receipts to be treated as income subject to special rate of tax: payment by company), after “made” insert “by way of qualifying distribution”.

(2)In Type 1(b) in section 482 of ITA 2007 (types of amount to be charged at special rates for trustees), after “made” insert “by way of qualifying distribution”.

(3)The amendments made by this section have effect in respect of payments made to the trustees of a settlement on or after 6th April 2006.

56Trust gains on contracts for life insurance

(1)Section 498 of ITA 2007 (trustees' tax pool) is amended as follows.

(2)In subsection (1)—

(a)in Type 1, for “2 or 3” substitute “2, 3 or 3A”, and

(b)after Type 3 insert—

• “Type 3A

  The amount of tax at the nominal rate on any amount in respect of which—

  1.

  the trustees are liable to income tax under section 467 of ITTOIA 2005 (gains from contracts for life insurance etc),

  2.

  the trustees are liable to income tax at the trust rate by virtue of section 482 above, and

  3.

  tax at the savings rate is treated as having been paid by virtue of section 530 of ITTOIA 2005 (life insurance).”

(3)After subsection (2) insert—

“(2A)In relation to Type 3A, the reference to the nominal rate is a reference to a rate equal to the difference between the trust rate and the savings rate.”

(4)The amendments made by this section have effect in relation to gains arising to the trustees of a settlement on or after 6th April 2007.

Other corporation tax measures

57Offshore funds

(1)In section 396 of ICTA (corporation tax: setting off of Case VI losses), in subsection (2) (losses to which subsection (1) does not apply), insert at the end “or on a disposal to which Chapter 5 of Part 17 applies.”

(2)In section 756A of ICTA (definition of “offshore fund”), for subsection (3) substitute—

“(3)In this section “collective investment scheme” means any arrangements which are a collective investment scheme for the purposes of Part 17 of the Financial Services and Markets Act 2000 (see section 235 of that Act and orders made under subsection (5) of that section) or would be if the words “, within a period appearing to him to be reasonable,” were omitted from section 236(3)(a) of that Act.

(4)But the reference to offshore funds in section 760(3)(a) does not include any arrangements which are not a collective investment scheme for the purposes of that Part of that Act.”

(3)In section 842 of ICTA (investment trusts), after subsection (3) insert—

“(3A)References in this section to income do not include income treated as arising under section 761(1)(a).”

(4)In Schedule 27 to ICTA (distributing funds), in sub-paragraph (1)(c) of paragraph 6 (investments of offshore fund in other offshore funds which could, apart from that paragraph, be certified as distributing funds not to count towards limit in section 760(3)(a)), omit “without regard to the provisions of this paragraph,”.

(5)In section 152 of ITA 2007 (losses from miscellaneous transactions), in subsection (8), insert at the end “except that income on which income tax is charged under section 761(1)(b)(i) of ICTA is not “section 1016 income” for the purposes of subsection (2)(a)”.

(6)The amendment made by subsection (1) has effect in relation to disposals on or after 1st April 2007.

(7)The amendment made by subsection (3) has effect in relation to accounting periods beginning on or after the day on which this Act is passed.

(8)The amendment made by subsection (4) has effect in relation to account periods (within the meaning of Chapter 5 of Part 17 of ICTA) beginning on or after 1st January 2007.

(9)The amendment made by subsection (5) has effect in relation to transactions on or after 6th April 2007.

58Election out of special film rules for film production companies

(1)In section 32 of FA 2006 (meaning of “film production company”), insert at the end—

“(7)A company may elect to be regarded as a company which does not meet the description in subsection (3) or (4).

(8)The election—

(a)must be made by the company by being included in its company tax return for an accounting period (and may be included in the return originally made or by amendment), and

(b)may be withdrawn by the company only by amending its company tax return for that accounting period.

(9)The election has effect in relation to films which commence principal photography in that or any subsequent accounting period.

(10)“Company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1)).”

(2)In paragraph 10 of Schedule 18 to FA 1998 (other claims and elections to be included in company tax return), insert at the end—

“(5)An election under section 32(7) of the Finance Act 2006 (election not to be a film production company) can only be made by being included in a company tax return (see section 32(8)(a) of that Act).”

59Securitisation companies

(1)Section 83 of FA 2005 (continued application of old UK GAAP to securitisation companies during transitional period) is amended as follows.

(2)In subsection (1)(b) (old UK GAAP to apply to periods of account ending before 1st January 2008), insert at the beginning “(subject to subsection (7A)(a))”.

(3)After subsection (7) insert—

“(7A)The Treasury may by regulations—

(a)make provision for subsection (1) to apply in relation to periods of account ending on or after 1st January 2008 but before a date specified by the regulations, and

(b)make provision modifying any provision of, or made under, the Corporation Tax Acts in relation to the first period of account of securitisation companies in the case of which subsection (1) does not apply (whether by virtue of that subsection itself or regulations under paragraph (a)).

(7B)Regulations under subsection (7A)(a) may, in particular—

(a)specify a date only in relation to specified descriptions of company,

(b)specify different dates in relation to different descriptions of company, and

(c)include provision for a company to elect that the regulations are to apply to it or provision for a company to elect that they are not to apply to it.”

(4)Section 84 of FA 2005 (power to make provision as to application of Corporation Tax Acts in relation to securitisation companies) is amended as follows.

(5)In subsection (3)(d), for “to that effect is made,” substitute “that they are to apply is made or that the regulations do not apply to a company if an election that they are not to apply is made,”.

(6)For subsection (5) substitute—

“(5)The regulations—

(a)may make incidental, supplementary, consequential or transitional provision or savings (including provision amending any provision of, or made under, the Taxes Acts (within the meaning of section 118(1) of TMA 1970)), and

(b)may include provision having effect (in the case of provision relating to corporation tax) from the beginning of periods of account current when the regulations are made or (in the case of provision relating to income tax or capital gains tax) in relation to times before the regulations are made.”

Other income tax measures

60Gift aid: limits

(1)In section 418 of ITA 2007 (donations to charity by individuals: limits)—

(a)in subsection (2)(c), for “2.5%” substitute “5%”, and

(b)in subsection (3), for “£250” substitute “£500”.

(2)In section 339 of ICTA (donations to charity)—

(a)in subsection (3B)(b), for “£250” substitute “£500”, and

(b)in subsection (3DA)(c), for “2.5 per cent” substitute “5 per cent”.

(3)The amendment made by subsection (1) has effect in relation to gifts made on or after 6th April 2007.

(4)The amendment made by subsection (2) has effect in relation to gifts made in an accounting period ending on or after 6th April 2007.

61Enterprise management incentives: excluded activities

(1)In Part 3 of Schedule 5 to ITEPA 2003 (enterprise management incentives: qualifying companies), in paragraph 19 (excluded activities: receipt of royalties or licence fees)—

(a)in sub-paragraph (4), for paragraphs (a) and (b) substitute—

“(a)by the relevant company, or

(b)by a company which was a qualifying subsidiary of the relevant company throughout a period during which it created the whole or greater part (in terms of value) of the intangible asset.”, and

(b)after sub-paragraph (7) insert—

“(8)If—

(a)the relevant company acquired all the shares (“old shares”) in another company (“the old company”) at a time when the only shares issued in the relevant company were subscriber shares, and

(b)the consideration for the old shares consisted wholly of the issue of shares in the relevant company,

references in sub-paragraph (4) to the relevant company include the old company.”

(2)The amendments made by subsection (1) have effect in relation to options granted on or after 6th April 2007.

(3)They also have effect in relation to a qualifying option within subsection (4), for the purpose of determining at any time on or after that date whether an activity is an excluded activity.

(4)An option is within this subsection if it was granted before 6th April 2007 and, immediately before that date—

(a)it had not been exercised, and

(b)no disqualifying event had occurred in relation to it.

(5)Subsection (6) applies in respect of an option within subsection (4) if—

(a)immediately before 6th April 2007—

(i)the right to exploit an intangible asset (“the asset”) was vested in the relevant company or a subsidiary of it (in either case, alone or jointly with others), and

(ii)the asset was a relevant intangible asset,

(b)at any time on or after that date, an activity carried on by the relevant company or a subsidiary of it would be an excluded activity by reason only of the receipt of royalties or licence fees attributable to the exploitation of the asset, and

(c)the activity would not be an excluded activity if the amendments made by subsection (1) had not been made.

(6)The activity is to be treated, in relation to the option, as not being an excluded activity at that time.

62Benefits code: whether employment is “lower-paid employment”

(1)In section 219 of ITEPA 2003 (exclusion of lower-paid employments from parts of benefits code: extra amounts to be added in connection with a car), omit subsections (5) and (6).

(2)The repeal made by subsection (1) has effect for the tax year 2007-08 and subsequent tax years.

63Armed forces redundancy schemes

(1)In section 411 of ITEPA 2003 (exception for payments and benefits for forces), the existing provision becomes subsection (1) and after that subsection insert—

“(2)This Chapter does not apply to a payment or other benefit provided under a scheme established by an order under section 1(1) of the Armed Forces (Pensions and Compensation) Act 2004.”

(2)The amendments made by subsection (1) have effect for the tax year 2006-07 and subsequent tax years.

64Armed forces: the Operational Allowance

(1)In ITEPA 2003, after section 297 insert—

“297AArmed forces: the Operational Allowance

(1)No liability to income tax arises in respect of payments to members of the armed forces of the Crown of the Operational Allowance.

(2)The Operational Allowance is an allowance designated as such by the Secretary of State.”

(2)The amendment made by subsection (1) has effect in relation to payments whenever made.

65Service charge income

(1)Section 480 of ITA 2007 (meaning of “accumulated or discretionary income”) is amended as follows.

(2)In subsection (3)(c) (income from service charges held on trust by relevant housing body), for the words after “charges” substitute “which are paid in respect of dwellings in the United Kingdom and are held on trust.”

(3)For subsections (5) and (6) substitute—

“(5)In subsection (3)(c) “service charges” has the meaning given by section 18 of the Landlord and Tenant Act 1985 (but as if that section also applied in relation to dwellings in Scotland and Northern Ireland).”

(4)The amendments made by this section have effect for the tax year 2007-08 and subsequent tax years.

66Charge on benefits received by former owner of property: late elections

(1)In paragraph 23 of Schedule 15 to FA 2004 (charge to income tax on benefits received by former owner of property), for sub-paragraphs (3) and (4) substitute—

“(3)The election must be made on or before—

(a)the relevant filing date, or

(b)such later date as an officer of Revenue and Customs may, in a particular case, allow.”

(2)The amendment made by subsection (1) is deemed to have come into force on 21st March 2007.

67Unpaid remuneration and employee benefit contributions

(1)Section 31 of ITTOIA 2005 (relationship between rules prohibiting and allowing deductions: trading income) is amended as follows.

(2)In subsection (1) (priority of relevant permissive rules over relevant prohibitive rules), in paragraph (b) (sections to which that priority rule is subject), for “sections 48 (car or motor cycle hire) and” substitute “section 36 (unpaid remuneration), section 38 (employee benefit contributions), section 48 (car or motor cycle hire) and section”.

(3)In subsection (3) (meaning of “relevant prohibitive rule”), after “sections” insert “36, 38,”.

(4)Section 274 of ITTOIA 2005 (provision corresponding to section 31 of that Act in case of property income) is amended as follows.

(5)In subsection (1)(b), for “sections 48 (car or motor cycle hire) and” substitute “section 36 (unpaid remuneration), section 38 (employee benefit contributions), section 48 (car or motor cycle hire) and section”.

(6)In subsection (3), after “sections” insert “36, 38,”.

(7)The amendments made by this section have effect for the tax year 2007-08 and subsequent tax years.

Part 4Pensions

68Abolition of contributions relief for life assurance premium contributions

Schedule 18 contains provisions denying relief for contributions made by or on behalf of members in respect of life assurance premiums.

69Alternatively secured pensions etc

Schedule 19 contains provisions about alternatively secured pensions and transfer lump sum death benefit etc.

70Miscellaneous

Schedule 20 contains miscellaneous provisions about registered pension schemes and employer-financed retirement benefits schemes.

Part 5SDLT, stamp duty and SDRT

SDLT: anti-avoidance provisions

71Anti-avoidance

(1)In FA 2003, after section 75 insert (in place of the section inserted by the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (S.I. 2006/ 3237))—

“75AAnti-avoidance

(1)This section applies where—

(a)one person (V) disposes of a chargeable interest and another person (P) acquires either it or a chargeable interest deriving from it,

(b)a number of transactions (including the disposal and acquisition) are involved in connection with the disposal and acquisition (“the scheme transactions”), and

(c)the sum of the amounts of stamp duty land tax payable in respect of the scheme transactions is less than the amount that would be payable on a notional land transaction effecting the acquisition of V’s chargeable interest by P on its disposal by V.

(2)In subsection (1) “transaction” includes, in particular—

(a)a non-land transaction,

(b)an agreement, offer or undertaking not to take specified action,

(c)any kind of arrangement whether or not it could otherwise be described as a transaction, and

(d)a transaction which takes place after the acquisition by P of the chargeable interest.

(3)The scheme transactions may include, for example—

(a)the acquisition by P of a lease deriving from a freehold owned or formerly owned by V;

(b)a sub-sale to a third person;

(c)the grant of a lease to a third person subject to a right to terminate;

(d)the exercise of a right to terminate a lease or to take some other action;

(e)an agreement not to exercise a right to terminate a lease or to take some other action;

(f)the variation of a right to terminate a lease or to take some other action.

(4)Where this section applies—

(a)any of the scheme transactions which is a land transaction shall be disregarded for the purposes of this Part, but

(b)there shall be a notional land transaction for the purposes of this Part effecting the acquisition of V’s chargeable interest by P on its disposal by V.

(5)The chargeable consideration on the notional transaction mentioned in subsections (1)(c) and (4)(b) is the largest amount (or aggregate amount)—

(a)given by or on behalf of any one person by way of consideration for the scheme transactions, or

(b)received by or on behalf of V (or a person connected with V within the meaning of section 839 of the Taxes Act 1988) by way of consideration for the scheme transactions.

(6)The effective date of the notional transaction is—

(a)the last date of completion for the scheme transactions, or

(b)if earlier, the last date on which a contract in respect of the scheme transactions is substantially performed.

(7)This section does not apply where subsection (1)(c) is satisfied only by reason of—

(a)sections 71A to 73, or

(b)a provision of Schedule 9.

75BAnti-avoidance: incidental transactions

(1)In calculating the chargeable consideration on the notional transaction for the purposes of section 75A(5), consideration for a transaction shall be ignored if or in so far as the transaction is merely incidental to the transfer of the chargeable interest from V to P.

(2)A transaction is not incidental to the transfer of the chargeable interest from V to P—

(a)if or in so far as it forms part of a process, or series of transactions, by which the transfer is effected,

(b)if the transfer of the chargeable interest is conditional on the completion of the transaction, or

(c)if it is of a kind specified in section 75A(3).

(3)A transaction may, in particular, be incidental if or in so far as it is undertaken only for a purpose relating to—

(a)the construction of a building on property to which the chargeable interest relates,

(b)the sale or supply of anything other than land, or

(c)a loan to P secured by a mortgage, or any other provision of finance to enable P, or another person, to pay for part of a process, or series of transactions, by which the chargeable interest transfers from V to P.

(4)In subsection (3)—

(a)paragraph (a) is subject to subsection (2)(a) to (c),

(b)paragraph (b) is subject to subsection (2)(a) and (c), and

(c)paragraph (c) is subject to subsection (2)(a) to (c).

(5)The exclusion required by subsection (1) shall be effected by way of just and reasonable apportionment if necessary.

(6)In this section a reference to the transfer of a chargeable interest from V to P includes a reference to a disposal by V of an interest acquired by P.

75CAnti-avoidance: supplemental

(1)A transfer of shares or securities shall be ignored for the purposes of section 75A if but for this subsection it would be the first of a series of scheme transactions.

(2)The notional transaction under section 75A attracts any relief under this Part which it would attract if it were an actual transaction (subject to the terms and restrictions of the relief).

(3)The notional transaction under section 75A is a land transaction entered into for the purposes of or in connection with the transfer of an undertaking or part for the purposes of paragraphs 7 and 8 of Schedule 7, if any of the scheme transactions is entered into for the purposes of or in connection with the transfer of the undertaking or part.

(4)In the application of section 75A(5) no account shall be taken of any amount paid by way of consideration in respect of a transaction to which any of sections 60, 61, 63, 64, 65, 66, 67, 69, 71, 74 and 75, or a provision of Schedule 6A or 8, applies.

(5)In the application of section 75A(5) an amount given or received partly in respect of the chargeable interest acquired by P and partly in respect of another chargeable interest shall be subjected to just and reasonable apportionment.

(6)Section 53 applies to the notional transaction under section 75A.

(7)Paragraph 5 of Schedule 4 applies to the notional transaction under section 75A.

(8)For the purposes of section 75A—

(a)an interest in a property-investment partnership (within the meaning of paragraph 14 of Schedule 15) is a chargeable interest in so far as it concerns land owned by the partnership, and

(b)where V or P is a partnership, Part 3 of Schedule 15 applies to the notional transaction as to the transfer of a chargeable interest from or to a partnership.

(9)For the purposes of section 75A a reference to an amount of consideration includes a reference to the value of consideration given as money’s worth.

(10)Stamp duty land tax paid in respect of a land transaction which is to be disregarded by virtue of section 75A(4)(a) is taken to have been paid in respect of the notional transaction by virtue of section 75A(4)(b).

(11)The Treasury may by order provide for section 75A not to apply in specified circumstances.

(12)An order under subsection (11) may include incidental, consequential or transitional provision and may make provision with retrospective effect.”

(2)The amendment made by subsection (1) has effect in respect of disposals and acquisitions if the disposal mentioned in new section 75A(1)(a) (inserted by that subsection) takes place on or after 6th December 2006.

(3)But—

(a)the transitional provisions of sub-paragraphs (2) to (5) of paragraph 1 of the Schedule to the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (S.I. 2006/3237) continue to have effect in relation to this section as in relation to that paragraph, and

(b)a provision of new section 75C (inserted by subsection (1) above) shall not have effect where the disposal mentioned in new section 75A(1)(a) took place before the day on which this Act is passed, if or in so far as the provision would make a person liable for a higher amount of tax than would have been charged in accordance with those regulations.

72Partnerships

(1)Schedule 15 to FA 2003 (stamp duty land tax: partnerships) is amended as follows.

(2)A reference in this section to a provision of that Schedule is to the provision as it had effect before variation by the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006.

(3)In Step Two of paragraph 12(1) (transfer to partnership: how to calculate the “sum of the lower proportions”)—

(a)in paragraph (b), for “or is connected with the relevant owner” substitute “or is an individual connected with the relevant owner”, and

(b)insert at the end—

“(If there is no relevant owner with a corresponding partner, the sum of the lower proportions is nil.)”

(4)In paragraph 12, after sub-paragraph (2) insert—

“(3)For the purpose of paragraph (b) of Step 2 a company is to be treated as an individual connected with the relevant owner in so far as it—

(a)holds property as trustee, and

(b)is connected with the relevant owner only because of section 839(3) of the Taxes Act 1988.”

(5)Omit paragraph 13 (transfer to partnership where all partners are companies).

(6)In paragraph 14 (transfer of interest in property-investment partnership)—

(a)omit sub-paragraphs (1)(b) and (4), and

(b)insert at the end—

“(9)An interest in respect of the transfer of which this paragraph applies shall be treated as a chargeable interest for the purposes of paragraph 3(1) of Schedule 7 to the extent that the relevant partnership property consists of a chargeable interest.”,

and in the italic cross-heading before it, omit “for consideration”.

(7)In Step Two of paragraph 20(1) (transfer from partnership: how to calculate the “sum of the lower proportions”)—

(a)in paragraph (b), for “or was connected with the relevant owner” substitute “or was an individual connected with the relevant owner”, and

(b)insert at the end—

“(If there is no relevant owner with a corresponding partner, the sum of the lower proportions is nil.)”

(8)In paragraph 20, after sub-paragraph (2) insert—

“(3)For the purpose of paragraph (b) of Step 2 a company is to be treated as an individual connected with the relevant owner in so far as it—

(a)holds property as trustee, and

(b)is connected with the relevant owner only because of section 839(3) of the Taxes Act 1988.”

(9)After paragraph 27 insert—

“27A(1)This paragraph applies where in calculating the sum of the lower proportions in relation to a transaction (in accordance with paragraph 12)—

(a)a company (“the connected company”) would have been a corresponding partner of a relevant owner (“the original owner”) but for the fact that paragraph (b) of Step Two includes connected persons only if they are individuals, and

(b)the connected company and the original owner are members of the same group.

(2)The charge in respect of the transaction shall be reduced to the amount that would have been payable had the connected company been a corresponding partner of the original owner for the purposes of calculating the sum of the lower proportions.

(3)The provisions of Part 1 of Schedule 7 apply to group relief under sub-paragraph (2) above as to group relief under paragraph 1(1) of Schedule 7, but—

(a)with the omission of paragraph 2(2)(a),

(b)with the substitution for “the purchaser” in paragraph 3(1)(a) of “a partner who was, at the effective date of the transaction, a partner and a member of the same group as the transferor (“the relevant partner”)”, and

(c)with the other modifications specified in paragraph 27(3) to (6) above.”

(10)For paragraph 36 substitute—

“36For the purposes of this Part of this Schedule, where a person acquires or increases a partnership share there is a transfer of an interest in the partnership (to that partner and from the other partners).”

(11)In paragraph 39 (“connected persons”), insert at the end—

“(3)As applied by sub-paragraph (1) for the purposes of paragraph 12 or 20, that section has effect with the omission of subsection (3)(c) (trustee connected with settlement).”

(12)In Schedule 16 to FA 2003 (trusts and powers)—

(a)in paragraph 3(1) (bare trust), after “a chargeable interest” insert “or an interest in a partnership”, and

(b)in paragraph 4 (trustees of settlement), after “a chargeable interest” insert “or an interest in a partnership”.

(13)The amendments made by subsections (1) to (11) have effect in respect of transfers occurring on or after the day on which this Act is passed.

(14)But the amendments made by subsections (6) and (10) do not have effect in respect of anything done in respect of a property-investment partnership established before the day on which this Act is passed if—

(a)the partnership does not acquire a chargeable interest on or after that day, and

(b)stamp duty land tax was paid in respect of each chargeable interest acquired before that day, by reference to chargeable consideration of not less than the market value.

(15)The amendment made by subsection (12) has effect in respect of acquisitions occurring on or after the day on which this Act is passed.

(16)An amendment made by this section replaces, to the extent provided for by subsections (13) to (15), any variation made by the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (S.I. 2006/3237).

(17)Despite subsections (13) to (16), the transitional provisions of sub-paragraphs (8) to (10) of paragraph 2 of the Schedule to the Stamp Duty Land Tax (Variation of the Finance Act 2003) Regulations 2006 (S.I. 2006/3237) continue to have effect in relation to the amendments made by this section as in relation to that paragraph.

Reliefs in relation to shares etc

73Exemptions: intermediaries, repurchases etc

Schedule 21 contains provision in relation to exemptions from stamp duty and stamp duty reserve tax in cases involving intermediaries, repurchases, stock lending or recognised investment exchanges.

74Acquisition relief: disregard of company holding own shares

(1)In section 75 of FA 1986 (relief on acquisition of undertaking of company in pursuance of scheme for reconstruction of that company), after subsection (5) insert—

“(5A)If immediately before the acquisition the target company or the acquiring company holds any of its own shares, the shares are to be treated for the purposes of subsections (4) and (5) as having been cancelled before the acquisition (and, accordingly, the company is to be treated as if it were not a shareholder of itself).”

(2)In section 77 of that Act (relief on acquisition of target company’s share capital), after subsection (3) insert—

“(3A)If immediately before the acquisition the target company or the acquiring company holds any of its own shares, the shares are to be treated for the purposes of subsection (3) as having been cancelled before the acquisition (and, accordingly, the company is to be treated as if it were not a shareholder of itself).”

(3)In Part 2 of Schedule 7 to FA 2003 (SDLT: reconstruction and acquisition reliefs), in paragraph 7 (reconstruction relief) after sub-paragraph (5) insert—

“(5A)If immediately before the acquisition the target company or the acquiring company holds any of its own shares, the shares are to be treated for the purposes of sub-paragraphs (2) and (4) as having been cancelled before the acquisition (and, accordingly, the company is to be treated as if it were not a shareholder of itself).”

(4)The amendments made by subsections (1) and (2) have effect in relation to any instrument executed on or after the day on which this Act is passed.

(5)The amendment made by subsection (3) has effect in relation to any land transaction of which the effective date is on or after that day.

Other reliefs etc

75SDLT: alternative finance arrangements

(1)In FA 2003, after section 73A insert—

“73BExempt interests

(1)An interest held by a financial institution as a result of the first transaction within the meaning of section 71A(1)(a), 72(1)(a) or 72A(1)(a) is an exempt interest for the purposes of stamp duty land tax.

(2)That interest ceases to be an exempt interest if—

(a)the lease or agreement mentioned in section 71A(1)(c), 72(1)(b) or 72A(1)(b) ceases to have effect, or

(b)the right under section 71A(1)(d), 72(1)(c) or 72A(1)(c) ceases to have effect or becomes subject to a restriction.

(3)Subsection (1) does not apply if the first transaction is exempt from charge by virtue of Schedule 7.

(4)Subsection (1) does not make an interest exempt in respect of—

(a)the first transaction itself, or

(b)a further transaction or third transaction within the meaning of section 71A(4), 72(4) or 72A(4).”

(2)In section 48 of that Act (stamp duty land tax: exempt interests), after subsection (3) insert—

“(3A)Section 73B makes additional provision about exempt interests in relation to alternative finance arrangements.”

(3)For the text of sections 71A(8), 72(7), 72A(8) and 73(5)(a) of that Act (alternative finance arrangements: meaning of “financial institution”), substitute “In this section “financial institution” has the meaning given by section 46 of the Finance Act 2005 (alternative finance arrangements).”

(4)The amendments made by this section—

(a)have effect in relation to anything that would, but for the exemption provided by new section 73B inserted by subsection (1) above, be a land transaction with an effective date on or after 22nd March 2007, and

(b)apply, in accordance with paragraph (a), to interests irrespective of the date of their creation.

76SDLT: exchanges

(1)In section 47(1) of FA 2003 (exchanges), insert at the end “(and they are not linked transactions within the meaning of section 108)”.

(2)In section 108 of that Act (linked transactions), insert at the end—

“(4)This section is subject to section 47(1).”

(3)The amendments made by this section have effect in relation to a set of land transactions if the effective date of any of them is on or after the day on which this Act is passed.

77SDLT: shared ownership trusts

(1)In Schedule 9 to FA 2003 (right to buy and shared ownership leases), insert at the end—

“Shared ownership trust: introduction

7(1)In this Schedule “shared ownership trust” means a trust of land, within the meaning of section 1 of the Trusts of Land and Appointment of Trustees Act 1996, which satisfies the following conditions.

(2)Condition 1 is that the trust property is—

(a)a dwelling, and

(b)in England or Wales.

(3)Condition 2 is that one of the beneficiaries (“the social landlord”) is a qualifying body (within the meaning of paragraph 5(2)).

(4)Condition 3 is that the terms of the trust—

(a)provide for one or more of the individual beneficiaries (“the purchaser”) to have exclusive use of the trust property as the only or main residence of the purchaser,

(b)require the purchaser to make an initial payment to the social landlord (“the initial capital”),

(c)require the purchaser to make additional payments to the social landlord by way of compensation under section 13(6)(a) of the Trusts of Land and Appointment of Trustees Act 1996 (“rent-equivalent payments”),

(d)enable the purchaser to make other additional payments to the social landlord (“equity-acquisition payments”),

(e)determine the initial beneficial interests of the social landlord and of the purchaser by reference to the initial capital,

(f)specify a sum, equating or relating to the market value of the dwelling, by reference to which the initial capital was calculated, and

(g)provide for the purchaser’s beneficial interest in the trust property to increase, and the social landlord’s to diminish (or to be extinguished), as equity-acquisition payments are made.

(5)Section 118 (meaning of “market value”) does not apply to this paragraph.

(6)In Condition 1 “dwelling” includes—

(a)a building which is being constructed or adapted for use as a dwelling,

(b)land which is to be used for the purpose of the construction of a dwelling, and

(c)land which is, or is to become, the garden or grounds of a dwelling.

Shared ownership trust: “purchaser”

8For the purposes of the application of stamp duty land tax in relation to a shared ownership trust, the person (or persons) identified as the purchaser in accordance with paragraph 7, and not the social landlord or any other beneficiary, is (or are) to be treated as the purchaser of the trust property.

Shared ownership trust: election for market value treatment

9(1)This paragraph applies where—

(a)a shared ownership trust is declared, and

(b)the purchaser elects for tax to be charged in accordance with this paragraph.

(2)An election must be included in—

(a)the land transaction return for the declaration of the shared ownership trust, or

(b)an amendment of that return.

(3)An election may not be revoked.

(4)Where this paragraph applies—

(a)the chargeable consideration for the declaration of the shared ownership trust shall be taken to be the amount stated in accordance with paragraph 7(4)(f), and

(b)no account shall be taken for the purposes of stamp duty land tax of rent-equivalent payments.

(5)The transfer to the purchaser of an interest in the trust property upon the termination of the trust is exempt from charge if—

(a)an election was made under this paragraph, and

(b)any tax chargeable in respect of the declaration of the shared ownership trust has been paid.

Shared ownership trust: treatment of staircasing transaction

10(1)An equity-acquisition additional payment under a shared ownership trust, and the consequent increase in the purchaser’s beneficial interest, shall be exempt from charge if—

(a)an election was made under paragraph 9, and

(b)any tax chargeable in respect of the declaration of trust has been paid.

(2)An equity-acquisition additional payment under a shared ownership trust, and the consequent increase in the purchaser’s beneficial interest, shall also be exempt from charge if following the increase the purchaser’s beneficial interest does not exceed 80% of the total beneficial interest in the trust property.

Shared ownership trust: treatment of additional payments where no election made

11Where no election has been made under paragraph 9 in respect of a shared ownership trust—

(a)the initial capital shall be treated for the purposes of stamp duty land tax as chargeable consideration other than rent, and

(b)any rent-equivalent additional payment by the purchaser shall be treated for the purposes of stamp duty land tax as a payment of rent.”

(2)The amendment made by subsection (1) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed.

78SDLT: shared ownership lease

In paragraph 2 of Schedule 9 to FA 2003 (stamp duty land tax: shared ownership lease), after sub-paragraph (4) insert—

“(4A)Where this paragraph applies no account shall be taken for the purposes of stamp duty land tax of the rent mentioned in sub-paragraph (2)(d).”

79Certain transfers of school land

(1)In Chapter 7 of Part 2 of the School Standards and Framework Act 1998 (c. 31) (“the 1998 Act”) (new framework for maintained schools), omit sections 79 and 79A (no stamp duty or SDLT payable in respect of certain transfers).

(2)The repeal of—

(a)section 79A of the 1998 Act, and

(b)section 79 of that Act as it applies for the purposes of section 79A,

has effect in relation to any land transaction of which the effective date is on or after the day on which this Act is passed.

(3)Subject to that, the repeal of section 79 of the 1998 Act has effect in relation to any instrument executed on or after that day.

SDLT: administration

80Payment of tax

(1)FA 2003 is amended as follows.

(2)In section 76(3) (payment to accompany land transaction return), omit paragraph (b).

(3)In section 80(2) (adjustment for change of circumstance: payment to accompany return), for paragraph (d) substitute—

“(d)the tax or additional tax payable must be paid not later than the filing date for the return.”

(4)In section 81 (withdrawal of relief: further return)—

(a)in subsection (2), omit paragraph (b), and

(b)after that subsection insert—

“(2A)Tax payable must be paid not later than the filing date for the return.”

(5)In section 81A(1) (later linked transaction: return), for paragraph (d) substitute—

“(d)the tax or additional tax payable must be paid not later than the filing date for the return.”

(6)In section 86 (payment of tax)—

(a)in subsection (1), for “at the same time that a land transaction return is made in respect of the transaction.” substitute “not later than the filing date for the land transaction return relating to the transaction.”, and

(b)in subsection (2), for “at the same time that a return is made in respect of the withdrawal” substitute “not later than the filing date for the return relating to the withdrawal”.

(7)In paragraph 2 of Schedule 10 (payment to accompany land transaction return), omit sub-paragraph (2)(b).

(8)For each of paragraphs 3(3)(d), 4(3)(d) and 8(3)(d) of Schedule 17A (leases) substitute—

“(d)the tax or additional tax payable must be paid not later than the filing date for the return.”

(9)The amendments made by this section have effect as follows—

(a)the amendment made by subsection (2) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed,

(b)the amendment made by subsection (3) has effect in relation to returns where the event as a result of which the return is required occurs on or after the day on which this Act is passed,

(c)the amendment made by subsection (4) has effect in relation to returns where the disqualifying event occurs on or after the day on which this Act is passed,

(d)the amendment made by subsection (5) has effect in relation to returns where the effective date of the later transaction is on or after the day on which this Act is passed,

(e)the amendment made by subsection (6) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed,

(f)the amendment made by subsection (7) has effect in relation to land transactions with an effective date on or after the day on which this Act is passed, and

(g)the amendment made by subsection (8) has effect in respect of requirements to deliver a return or further return which arise on or after the day on which this Act is passed.

81Self-certificate declarations

(1)Schedule 11 to FA 2003 (self-certificates) is amended as follows.

(2)After paragraph 2 insert—

“Declaration by agent

2A(1)The requirement in paragraph 2(1)(c) shall be deemed to be met where—

(a)the purchaser (or each of them) authorises an agent to complete a self-certificate,

(b)the purchaser (or each of them) makes a declaration that, with the exception of the effective date, the information provided in the self-certificate is to the best of the purchaser’s knowledge correct and complete, and

(c)the self-certificate includes a declaration by the agent that the effective date provided in the self-certificate is to the best of the agent’s knowledge correct.

(2)Sub-paragraph (1) applies only where the self-certificate is in a form specified by Her Majesty’s Revenue and Customs for the purposes of that sub-paragraph.

(3)Nothing in this paragraph affects the liability of the purchaser (or each of them) under this Part of this Act.

Declaration by the relevant Official Solicitor

2B(1)The requirement in paragraph 2(1)(c) shall be deemed to be met where—

(a)the purchaser (or any of them) is a person under a disability,

(b)the Official Solicitor is acting for the purchaser (or any of them), and

(c)the self-certificate includes a declaration by the Official Solicitor that the self-certificate is correct and complete to the best of the Official Solicitor’s knowledge.

(2)Sub-paragraph (1) applies only where the self-certificate is in a form specified by Her Majesty’s Revenue and Customs for the purposes of that sub-paragraph.

(3)Nothing in this paragraph affects the liability of the purchaser (or each of them) under this Part of this Act.

(4)In this paragraph “the Official Solicitor” means the Official Solicitor to the Supreme Court of England and Wales or the Official Solicitor to the Supreme Court of Northern Ireland.”

(3)In paragraph 3(1), for “person” substitute “purchaser”.

(4)The amendments made by this section have effect in relation to transactions with an effective date on or after the day on which this Act is passed.

Part 6Investigation, administration etc

Investigation etc

82Criminal investigations: powers of Revenue and Customs

(1)Section 114 of the Police and Criminal Evidence Act 1984 (c. 60) (application of Act to customs and excise) is amended as follows.

(2)In paragraph (a) of subsection (2)—

(a)for “investigations conducted by officers of Customs and Excise of offences which relate to assigned matters, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “investigations conducted by officers of Revenue and Customs”, and

(b)for “persons detained by officers of Customs and Excise;” substitute “persons detained by officers of Revenue and Customs;”.

(3)In the opening words of paragraph (b) of that subsection, for “investigations of offences conducted by officers of Customs and Excise” substitute “investigations of offences conducted by officers of Revenue and Customs”.

(4)In sub-paragraph (i) of that paragraph, for “section” substitute “sections”.

(5)In the section 14A deemed to be inserted by that sub-paragraph—

(a)for “and which relates to an assigned matter, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “and which relates to a matter in relation to which Her Majesty’s Revenue and Customs have functions,” and

(b)in the heading, for “Customs and Excise” substitute “Revenue and Customs”.

(6)After that section insert—

“14BRevenue and Customs: restriction on other powers to apply for production of documents

(1)An officer of Revenue and Customs may make an application for the delivery of, or access to, documents under a provision specified in subsection (3) only if the condition in subsection (2) is satisfied.

(2)The condition is that the officer thinks that an application under Schedule 1 would not succeed because the material required does not consist of or include special procedure material.

(3)The provisions are—

(a)section 20BA of, and Schedule 1AA to, the Taxes Management Act 1970 (serious tax fraud);

(b)paragraph 11 of Schedule 11 to the Value Added Tax Act 1994 (VAT);

(c)paragraph 4A of Schedule 7 to the Finance Act 1994 (insurance premium tax);

(d)paragraph 7 of Schedule 5 to the Finance Act 1996 (landfill tax);

(e)paragraph 131 of Schedule 6 to the Finance Act 2000 (climate change levy);

(f)paragraph 8 of Schedule 7 to the Finance Act 2001 (aggregates levy);

(g)Part 6 of Schedule 13 to the Finance Act 2003 (stamp duty land tax).”

(7)In paragraph (c) of subsection (2)—

(a)for “customs detention” substitute “Revenue and Customs detention”, and

(b)for “an officer of Customs and Excise” substitute “an officer of Revenue and Customs”.

(8)After that paragraph insert—

“(d)that where an officer of Revenue and Customs searches premises in reliance on a warrant under section 8 of, or paragraph 12 of Schedule 1 to, this Act (as applied by an order under this subsection) the officer shall have the power to search persons found on the premises—

(i)in such cases and circumstances as are specified in the order, and

(ii)subject to any conditions specified in the order; and

(e)that powers and functions conferred by a provision of this Act (as applied by an order under this subsection) may be exercised only by officers of Revenue and Customs acting with the authority (which may be general or specific) of the Commissioners for Her Majesty’s Revenue and Customs.”

(9)After that subsection insert—

“(2A)A certificate of the Commissioners that an officer of Revenue and Customs had authority under subsection (2)(e) to exercise a power or function conferred by a provision of this Act shall be conclusive evidence of that fact.”

(10)For subsection (3) substitute—

“(3)An order under subsection (2)—

(a)may make provision that applies generally or only in specified cases or circumstances,

(b)may make different provision for different cases or circumstances,

(c)may, in modifying a provision, in particular impose conditions on the exercise of a function, and

(d)shall not be taken to limit a power under section 164 of the Customs and Excise Management Act 1979.”

(11)The heading of section 114 accordingly becomes “Application of Act to Revenue and Customs”.

83Northern Ireland criminal investigations

(1)Article 85 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)) (application of Order to customs and excise) is amended as follows.

(2)In sub-paragraph (a) of paragraph (1)—

(a)for “investigations conducted by officers of Customs and Excise of offences which relate to assigned matters, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “investigations conducted by officers of Revenue and Customs”, and

(b)for “persons detained by officers of Customs and Excise;” substitute “persons detained by officers of Revenue and Customs;”.

(3)In the opening words of sub-paragraph (b) of that paragraph, for “investigations of offences conducted by officers of Customs and Excise” substitute “investigations of offences conducted by officers of Revenue and Customs”.

(4)In paragraph (i) of that sub-paragraph, for “Article” substitute “Articles”.

(5)In the Article 16A deemed to be inserted by that paragraph—

(a)for “and which relates to an assigned matter, as defined in section 1 of the Customs and Excise Management Act 1979,” substitute “and which relates to a matter in relation to which Her Majesty’s Revenue and Customs have functions,” and

(b)in the heading, for “Customs and Excise” substitute “Revenue and Customs”.

(6)After that Article insert—

“16BRevenue and Customs: restriction on other powers to apply for production of documents

(1)An officer of Revenue and Customs may make an application for the delivery of, or access to, documents under a provision specified in paragraph (3) only if the condition in paragraph (2) is satisfied.

(2)The condition is that the officer thinks that an application under Schedule 1 would not succeed because the material required does not consist of or include special procedure material.

(3)The provisions are—

(a)section 20BA of, and Schedule 1AA to, the Taxes Management Act 1970 (serious tax fraud);

(b)paragraph 11 of Schedule 11 to the Value Added Tax Act 1994 (VAT);

(c)paragraph 4A of Schedule 7 to the Finance Act 1994 (insurance premium tax);

(d)paragraph 7 of Schedule 5 to the Finance Act 1996 (landfill tax);

(e)paragraph 131 of Schedule 6 to the Finance Act 2000 (climate change levy);

(f)paragraph 8 of Schedule 7 to the Finance Act 2001 (aggregates levy);

(g)Part 6 of Schedule 13 to the Finance Act 2003 (stamp duty land tax).”

(7)After sub-paragraph (b) of paragraph (1) insert—

“(c)that where an officer of Revenue and Customs searches premises in reliance on a warrant under Article 10 of, or paragraph 9 of Schedule 1 to, this Order (as applied by an order under this paragraph) the officer shall have the power to search persons found on the premises—

(i)in such cases and circumstances as are specified in the order, and

(ii)subject to any conditions specified in the order; and

(d)that powers and functions conferred by a provision of this Order (as applied by an order under this paragraph) may be exercised only by officers of Revenue and Customs acting with the authority (which may be general or specific) of the Commissioners for Her Majesty’s Revenue and Customs.”

(8)After that paragraph insert—

“(1A)A certificate of the Commissioners that an officer of Revenue and Customs had authority under paragraph (1)(d) to exercise a power or function conferred by a provision of this Order shall be conclusive evidence of that fact.”

(9)For paragraph (2) substitute—

“(2)An order under paragraph (1)—

(a)may, in modifying a provision, in particular impose conditions on the exercise of a function, and

(b)shall not be taken to limit a power under section 164 of the Customs and Excise Management Act 1979.”

(10)The heading of Article 85 accordingly becomes “Application of Order to Revenue and Customs”.

84Sections 82 and 83: supplementary

(1)In Schedule 2 to CRCA 2005 (restrictions on the exercise of functions), omit—

(a)paragraph 7 (Police and Criminal Evidence Act 1984 (c. 60)), and

(b)paragraph 9 (Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12))).

(2)Nothing in section 6 or 7 of CRCA 2005 (initial functions) restricts the functions in connection with which officers of Revenue and Customs may exercise a power under—

(a)the Police and Criminal Evidence Act 1984 by virtue of section 114 of that Act (as amended by section 82 above), or

(b)the Police and Criminal Evidence (Northern Ireland) Order 1989 by virtue of Article 85 of that Order (as amended by section 83 above).

(3)But neither an order under section 114 of the Police and Criminal Evidence Act 1984 nor an order under Article 85 of the Police and Criminal Evidence (Northern Ireland) Order 1989 has effect in relation to a matter specified in section 54(4)(b) or (f) of, or in paragraphs 3, 7, 10, 13 to 15, 19 or 24 to 29 of Schedule 1 to, CRCA 2005 (former Inland Revenue matters).

(4)Schedule 22 contains amendments and repeals consequential on extension of police powers to Revenue and Customs.

(5)Sections 82 and 83 and this section come into force in accordance with provision made by the Treasury by order.

(6)The power to make an order under subsection (5) is exercisable by statutory instrument.

85Criminal investigations: Scotland

Schedule 23 contains provision for Scotland about the investigation of offences by Her Majesty’s Revenue and Customs.

86Search warrants

In section 8 of the Police and Criminal Evidence Act 1984, after subsection (6) insert—

“(7)Section 4 of the Summary Jurisdiction (Process) Act 1881 (execution of process of English courts in Scotland) shall apply to a warrant issued on the application of an officer of Revenue and Customs under this section by virtue of section 114 below.”

87Cross-border exercise of powers

(1)This section relates to the Criminal Justice and Public Order Act 1994 (c. 33).

(2)Sections 136 to 139 (execution of warrants and powers of arrest and search) shall apply to an officer of Revenue and Customs as they apply to a constable; and for that purpose—

(a)a reference to a constable (including a reference to a constable of a police force in England and Wales, a constable of a police force in Scotland or a constable of a police force in Northern Ireland) shall be treated as a reference to an officer of Revenue and Customs, and

(b)a reference to a police station, or a designated police station, includes a reference to an office of Revenue and Customs or (in England and Wales and Northern Ireland) a designated office of Revenue and Customs.

(3)In the application of section 138 to an officer of Revenue and Customs—

(a)in subsection (2)—

(i)the reference to subsections (2) to (8) of section 14 of the Criminal Procedure (Scotland) Act 1995 (c. 46) (“the 1995 Procedure Act”) shall be treated as a reference to subsections (2) to (7) of section 24 of the Criminal Law (Consolidation) (Scotland) Act 1995 (c. 39) (“the 1995 Consolidation Act”), and

(ii)the reference to subsections (1), (2) and (4) to (6) of section 15 of the 1995 Procedure Act shall be treated as a reference to subsections (1) to (4) of section 25 of the 1995 Consolidation Act, and

(b)in subsection (6)—

(i)the references to section 14 of the 1995 Procedure Act shall be treated as references to section 24 of the 1995 Consolidation Act,

(ii)the references to section 15 of the 1995 Procedure Act shall be treated as references to section 25 of the 1995 Consolidation Act,

(iii)in paragraph (a), sub-paragraph (ii) shall not apply, and

(iv)paragraph (b) shall not apply.

(4)An officer of Revenue and Customs may exercise a power under sections 136 to 139 only in the exercise of a function relating to tax (including duties and tax credits).

(5)In subsection (2)—

• “office of Revenue and Customs” means premises wholly or partly occupied by Her Majesty’s Revenue and Customs, and

• “designated office of Revenue and Customs” has the meaning given by an order under section 114 of the Police and Criminal Evidence Act 1984 (c. 60) (power to extend provisions to HMRC) or, in Northern Ireland, by an order under Article 85 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)) (power to extend Order to HMRC).

(6)In section 136, after subsection (8) insert—

“(9)Powers under this section and sections 137 to 139 may be exercised by an officer of Revenue and Customs in accordance with section 87 of the Finance Act 2007.”

Filing dates

88Personal tax returns

(1)Section 8 of TMA 1970 (personal tax return) is amended as follows.

(2)In subsection (1)(a), omit “, on or before the day mentioned in subsection (1A) below”.

(3)Omit subsection (1A).

(4)After subsection (1C) insert—

“(1D)A return under this section for a year of assessment (Year 1) must be delivered—

(a)in the case of a non-electronic return, on or before 31st October in Year 2, and

(b)in the case of an electronic return, on or before 31st January in Year 2.

(1E)But subsection (1D) is subject to the following two exceptions.

(1F)Exception 1 is that if a notice in respect of Year 1 is given after 31st July in Year 2 (but on or before 31st October), a return must be delivered—

(a)during the period of 3 months beginning with the date of the notice (for a non-electronic return), or

(b)on or before 31st January (for an electronic return).

(1G)Exception 2 is that if a notice in respect of Year 1 is given after 31st October in Year 2, a return (whether electronic or not) must be delivered during the period of 3 months beginning with the date of the notice.

(1H)The Commissioners—

(a)shall prescribe what constitutes an electronic return, and

(b)may make different provision for different cases or circumstances.”

89Trustee’s tax return

(1)Section 8A of TMA 1970 (trustee’s tax return) is amended as follows.

(2)In subsection (1)(a), omit “, on or before the day mentioned in subsection (1A) below”.

(3)Omit subsection (1A).

(4)After subsection (1AA) insert—

“(1B)A return under this section for a year of assessment (Year 1) must be delivered—

(a)in the case of a non-electronic return, on or before 31st October in Year 2, and

(b)in the case of an electronic return, on or before 31st January in Year 2.

(1C)But subsection (1B) is subject to the following two exceptions.

(1D)Exception 1 is that if a notice in respect of Year 1 is given after 31st July in Year 2 (but on or before 31st October), a return must be delivered—

(a)during the period of 3 months beginning with the date of the notice (for a non-electronic return), or

(b)on or before 31st January (for an electronic return).

(1E)Exception 2 is that if a notice in respect of Year 1 is given after 31st October in Year 2, a return (whether electronic or not) must be delivered during the period of 3 months beginning with the date of the notice.

(1F)The Commissioners—

(a)shall prescribe what constitutes an electronic return, and

(b)may make different provision for different cases or circumstances.”

90Partnership tax returns

(1)In section 12AA of TMA 1970, for subsection (4) (partnership return: filing date) substitute—

“(4)In the case of a partnership which includes one or more individuals, a notice under subsection (2) or (3) above may specify different days depending on whether a return in respect of a year of assessment (Year 1) is electronic or non-electronic.

(4A)The day specified for a non-electronic return must not be earlier than 31st October of Year 2.

(4B)The day specified for an electronic return must not be earlier than 31st January of Year 2.

(4C)But subsections (4A) and (4B) are subject to the following two exceptions.

(4D)Exception 1 is that if the notice is given after 31st July in Year 2 (but on or before 31st October)—

(a)the day specified for a non-electronic return must be after the end of the period of three months beginning with the date of the notice, and

(b)the day specified for an electronic return must not be earlier than 31st January.

(4E)Exception 2 is that if the notice is given after 31st October in Year 2, the day specified for a return (whether or not electronic) must be after the end of the period of three months beginning with the date of the notice.”

(2)For subsection (5) of that section (partnership return where a company is a partner: filing date) substitute—

“(5)In the case of a partnership which includes one or more companies, a notice may specify different dates depending on whether a notice in respect of a relevant period is electronic or non-electronic.

(5A)The day specified for a non-electronic return must not be earlier than the end of the period of nine months beginning at the end of the relevant period.

(5B)The day specified for an electronic return must not be earlier than the first anniversary of the end of the relevant period.

(5C)But where the notice is given more than nine months after the end of the relevant period, the day specified for a return (whether or not electronic) must be after the end of the period of three months beginning with the date of the notice.

(5D)For the purposes of this section “relevant period” means the period in respect of which the return is required.

(5E)The Commissioners—

(a)shall prescribe what constitutes an electronic return for the purposes of this section, and

(b)may make different provision for different cases or circumstances.”

91Consequential amendments

(1)In section 9(2) of TMA 1970 (returns to include self-assessment)—

(a)in paragraph (a), for “30th September” substitute “31st October”, and

(b)in paragraph (b), for “31st July” substitute “31st August”.

(2)In section 9ZA of TMA 1970 (amendment of personal or trustee return), for subsection (3) substitute—

“(3)In this section “the filing date”, in respect of a return for a year of assessment (Year 1), means—

(a)31st January of Year 2, or

(b)if the notice under section 8 or 8A is given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice.”

(3)In section 9A(6) of TMA 1970 (notice of enquiry: “the filing date”), for the words from “means” to the end substitute “means, in relation to a return, the last day for delivering it in accordance with section 8 or 8A.”

(4)In section 12ABA of TMA 1970 (amendment of partnership return by taxpayer), for subsection (4) substitute—

“(4)In this section “the filing date” means—

(a)in the case of a partnership which includes one or more individuals, in respect of a return for a year of assessment (Year 1)—

(i)31st January of Year 2, or

(ii)if the notice under section 12AA is given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice, and

(b)in the case of a partnership which includes one or more companies, the end of the period specified in section 12AA(5B) or (5C).”

(5)In section 28C of TMA 1970 (determination of tax where no return delivered), for subsection (6) substitute—

“(6)In this section “the filing date” in respect of a return for a year of assessment (Year 1) means either—

(a)31st January of Year 2, or

(b)if the notice under section 8 or 8A was given after 31st October of Year 2, the last day of the period of three months beginning with the day on which the notice is given.”

(6)In section 33A of TMA 1970 (error in partnership return)—

(a)in subsection (1), insert at the end “for a year of assessment (Year 1), or for a relevant period which ends in Year 1”,

(b)in subsection (2), for “five years after the filing date” substitute “31st January of Year 6”,

(c)in subsection (9), omit the definition of “filing date”, and

(d)in that subsection, after the definition of “relevant partner” insert—

““relevant period” means a period in respect of which a return is required.”

(7)In section 93(10) of TMA 1970 (penalty for failure to make individual or trustee return), for the definition of “filing date” substitute—

““the filing date” in respect of a return for a year of assessment (Year 1) means—

(a)31st January of Year 2, or

(b)if the notice under section 8 or 8A was given after 31st October of Year 2, the last day of the period of three months beginning with the day on which the notice is given.”

(8)In section 93A of TMA 1970 (failure to make partnership return), after subsection (7) insert—

“(7A)For the purposes of this section the filing date for a year of assessment (Year 1) in the case of a partnership which includes one or more individuals is—

(a)31st January of Year 2, or

(b)if the notice under section 12AA was given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice.

(7B)For the purposes of this section the filing date for a year of assessment (Year 1) in the case of a partnership which includes one or more companies is—

(a)the first anniversary of the period for which the return is required, or

(b)where the notice is given more than nine months after the end of the period for which the return is required, the last day of the period of three months beginning with the date of the notice.”

(9)In subsection (8) of section 93A, omit the definition of “the filing date”.

(10)In paragraph 4 of Schedule 15 to FA 2006 (accountancy change: spreading of adjustment)—

(a)in sub-paragraph (1), after “a tax year” insert “(Year 1)”, and

(b)in sub-paragraph (2), for “normal self-assessment filing date for the tax year.” substitute “31st January of Year 2.”

92Commencement

(1)Sections 88 to 91 have effect—

(a)in relation to a return under section 8 or 8A of TMA 1970, or a return under section 12AA of that Act for a partnership which includes one or more individuals, in respect of a return for a year of assessment beginning on or after 6th April 2007, and

(b)in relation to a return under section 12AA of that Act for a partnership which includes one or more companies, in respect of a return for a relevant period beginning on or after 6th April 2007.

(2)In subsection (1)(b) “relevant period” means a period in respect of which a return is required.

Other administration

93Mandatory electronic filing of returns

(1)Section 135 of FA 2002 (mandatory electronic filing) is amended as follows.

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

“(ba)to specify other consequences of contravention of, or failure to comply with, the regulations (which may include disregarding a return delivered otherwise than by the use of electronic communications);”.

(3)In subsection (10), for the definition of “taxation matter” substitute—

““taxation matter” means any matter relating to a tax (or duty) for which the Commissioners are responsible.”

(4)Section 76 of VATA 1994 (assessment) is amended as follows.

(5)In subsection (1), after paragraph (c) insert— “or

(d)a penalty under regulations made under section 135 of the Finance Act 2002 (mandatory electronic filing of returns) in connection with VAT,”.

(6)In that subsection, before “may have ceased” insert “or the regulations”.

(7)In subsection (3), insert at the end— “; and

(f)in the case of a penalty under regulations made under section 135 of the Finance Act 2002, the relevant period is the prescribed accounting period in respect of which the contravention of, or failure to comply with, the regulations occurred.”

(8)In section 83 of VATA 1994 (appeals), after paragraph (zb) insert—

“(zc)a decision of the Commissioners about the application of regulations under section 135 of the Finance Act 2002 (mandatory electronic filing of returns) in connection with VAT (including, in particular, a decision as to whether a requirement of the regulations applies and a decision to impose a penalty);”.

(9)In section 84 of VATA 1994 (appeals), after subsection (6A) insert—

“(6B)Nothing in section 83(zc) shall be taken to confer on a tribunal any power to vary an amount assessed by way of penalty except in so far as it is necessary to reduce it to the amount which is appropriate under regulations made under section 135 of the Finance Act 2002.”

94Mandatory electronic payment

(1)Section 204 of FA 2003 (mandatory electronic payment by large employers) is amended as follows.

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

“(1)The Commissioners for Her Majesty’s Revenue and Customs may make regulations requiring a person to use electronic means in making specified payments under legislation relating to a tax (or duty) for which the Commissioners are responsible.

(2)The regulations may provide for exceptions.”

(3)In subsection (5)(b), for “the Inland Revenue” substitute “Her Majesty’s Revenue and Customs”.

(4)In subsection (6)(a), for “the Inland Revenue” substitute “Her Majesty’s Revenue and Customs”.

(5)In subsection (8)—

(a)in paragraph (a), for “a contravention of, or any failure to comply with,” substitute “a contravention by a large employer of, or any failure by a large employer to comply with,”, and

(b)in paragraph (b), for “taxation matter within the care and management of the Commissioners” substitute “matter relating to a tax (or duty) for which the Commissioners are responsible”.

(6)In subsection (12)—

(a)for the definition of “the Inland Revenue” substitute—

““Her Majesty’s Revenue and Customs” includes a person acting under the authority of the Commissioners in relation to payment by electronic means;”, and

(b)after that definition insert—

““large employer” means a person paying PAYE income to 250 or more recipients (and regulations under this section may make provision as to the date or period by reference to which this is to be determined and the circumstances in which a person is to be treated as paying PAYE income to a recipient);”.

(7)The heading accordingly becomes “Mandatory electronic payment”.

(8)In section 205(1) of FA 2003 (application of section 204 for other purposes)—

(a)after “taxation” insert “(or duty)”, and

(b)for “the Commissioners of Inland Revenue” substitute “the Commissioners for Her Majesty’s Revenue and Customs”.

95Payment by cheque

(1)The Commissioners may make regulations providing for a payment to HMRC made by cheque to be treated as made when the cheque clears, as defined in the regulations.

(2)Section 70A of TMA 1970 (payment by cheque treated as made on receipt by HMRC) is subject to regulations under subsection (1).

(3)Regulations under subsection (1)—

(a)may make provision generally or only for specified purposes,

(b)may make different provision for different purposes, and

(c)may include incidental, consequential or transitional provision.

(4)Regulations under subsection (1)—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of the House of Commons.

(5)In this section—

(a)“the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs, and

(b)“HMRC” means Her Majesty’s Revenue and Customs.

(6)In section 204 of FA 2003 (electronic payment), insert at the end—

“(13)Regulations under section 95(1) of the Finance Act 2007 (payment by cheque) may, in particular, provide for a payment which is made by cheque in contravention of regulations under this section to be treated as made when the cheque clears, as defined in the regulations under that section.”

(7)In section 70A of TMA 1970 (payments by cheque), insert at the end—

“(3)This section is subject to regulations under section 95(1) of the Finance Act 2007 (payment by cheque).”

(8)In VATA 1994, after section 58A insert—

“58BPayment by cheque

Regulations under section 95(1) of the Finance Act 2007 (payment by cheque) may, in particular, provide for a payment which is made by cheque in contravention of regulations under section 25(1) above to be treated as made when the cheque clears, as defined in the regulations under section 95(1) of that Act.”

96Enquiry into returns

(1)In section 9A(2)(a) of TMA 1970 (period during which HMRC can open enquiry into return), for “after the filing date;” substitute “after the day on which the return was delivered;”.

(2)In section 12AC(2)(a) of TMA 1970 (period during which HMRC can open enquiry into partnership return), for “after the filing date;” substitute “after the day on which the return was delivered;”.

(3)In paragraph 24(2) of Schedule 18 to FA 1998 (period during which HMRC can open enquiry into company tax return), for “from the filing date.” substitute “from the day on which the return was delivered (subject to sub-paragraph (6)).”

(4)In paragraph 24 of that Schedule, insert at the end—

“(6)In the case of a company which is a member of a group other than a small group, the 12-month period in sub-paragraph (2) shall start not from the day on which the return was delivered but from the filing date.

(7)In sub-paragraph (6) “group” and “small group” have the same meaning as in sections 383(2) and 474(1) of the Companies Act 2006 (or, until their commencement, as in the provisions that they replicate).”

(5)The amendments made by subsections (1) and (2) apply to returns which relate to the tax year 2007-08 or a later tax year.

(6)The amendments made by subsections (3) and (4) apply to returns which relate to accounting periods ending after 31st March 2008.

97Penalties for errors

(1)Schedule 24 contains provisions imposing penalties on taxpayers who—

(a)make errors in certain documents sent to HMRC, or

(b)unreasonably fail to report errors in assessments by HMRC.

(2)That Schedule comes into force in accordance with provision made by the Treasury by order.

(3)An order—

(a)may commence a provision generally or only for specified purposes,

(b)may make different provision for different purposes, and

(c)may include incidental, consequential or transitional provision.

(4)The power to make an order is exercisable by statutory instrument.

Part 7Miscellaneous

Value added tax and insurance premium tax

98VAT: joint and several liability of traders in supply chain where tax unpaid

(1)In section 77A of VATA 1994 (joint and several liability of traders in supply chain where tax unpaid), for subsection (9) substitute—

“(9)The Treasury may by order amend subsection (1) above.

(9A)The Treasury may by order amend this section in order to extend or otherwise alter the circumstances in which a person shall be presumed to have reasonable grounds for suspecting matters to be as mentioned in subsection (2)(b) above.

(9B)Any order under this section may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.”

(2)In section 97(4) of that Act (orders ceasing to have effect unless approved by House of Commons), after paragraph (ea) insert—

“(eb)an order under section 77A(9) or (9A);”.

99VAT: non-business use etc of business goods

(1)Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services) is amended as follows.

(2)In paragraph 5 (non-business use etc of business goods), omit sub-paragraph (4A) (exception to rule in case of interests in land and buildings etc that non-business use of business assets treated as supply of services).

(3)In paragraph 9 (application of paragraphs 5 to 8 where land forms part of assets of business), insert at the end—

“(4)In this paragraph “grant” includes surrender.”

(4)Paragraph 7 of Schedule 6 to VATA 1994 (valuation of supply of services otherwise than for consideration by virtue of paragraph 5(4) of Schedule 4 etc) is amended as follows.

(5)The existing provision becomes sub-paragraph (1) and after that sub-paragraph insert—

“(2)Regulations may, in relation to a supply of services by virtue of paragraph 5(4) of Schedule 4 (but otherwise than for a consideration), make provision for determining how the full cost to the taxable person of providing the services is to be calculated.

(3)The regulations may, in particular, make provision for the calculation to be made by reference to any prescribed period.

(4)The regulations may make—

(a)different provision for different circumstances;

(b)such incidental, supplementary, consequential or transitional provision as the Commissioners think fit.”

(6)The amendment made by subsection (2) comes into force on 1st September 2007.

(7)The amendment made by subsection (3) has effect in relation to surrenders on or after 21st March 2007.

100VAT: transfers of going concerns

(1)Section 49 of VATA 1994 (transfers of going concern) is amended as follows.

(2)In subsection (1) (transferor’s supplies treated as transferee’s supplies for purposes of registration and transferor’s records to be kept by transferee after transfer)—

(a)after “Where a business” insert “, or part of a business,”,

(b)after “on the business” insert “or part of the business”, and

(c)omit paragraph (b) (together with the “and” before it).

(3)In subsection (2) (regulations for securing continuity of Act in case of transfers of going concerns), after “a business” insert “, or part of a business,”.

(4)After that subsection insert—

“(2A)Regulations under subsection (2) above may, in particular, provide for the duties under this Act of the transferor to preserve records relating to the business or part of the business for any period after the transfer to become duties of the transferee unless the Commissioners, at the request of the transferor, otherwise direct.”

(5)In subsection (3) (provision which may be made by regulations), in paragraph (a), after “the transferor” insert “(other than the duties mentioned in subsection (2A) above)”.

(6)After that subsection insert—

“(4)Subsection (5) below applies where—

(a)a business, or part of a business, carried on by a taxable person is transferred to another person as a going concern, and

(b)the transferor continues to be required under this Act to preserve for any period after the transfer any records relating to the business or part of the business.

(5)So far as is necessary for the purpose of complying with the transferee’s duties under this Act, the transferee (“E”) may require the transferor—

(a)to give to E, within such time and in such form as E may reasonably require, such information contained in the records as E may reasonably specify,

(b)to give to E, within such time and in such form as E may reasonably require, such copies of documents forming part of the records as E may reasonably specify, and

(c)to make the records available for E’s inspection at such time and place as E may reasonably require (and permit E to take copies of, or make extracts from, them).

(6)Where a business, or part of a business, carried on by a taxable person is transferred to another person as a going concern, the Commissioners may disclose to the transferee any information relating to the business when it was carried on by the transferor for the purpose of enabling the transferee to comply with the transferee’s duties under this Act.”

(7)In section 94(6) of VATA 1994 (meaning of “business” etc)—

(a)after “a business” insert “, or part of a business,”, and

(b)for “its assets or liabilities” substitute “the assets or liabilities of the business or part of the business”.

(8)In paragraph 1(2) of Schedule 1 to that Act (registration in respect of taxable supplies), after “Where a business” insert “, or part of a business,”.

(9)In paragraph 8(2)(b) of Schedule 4 to that Act (matters to be treated as supply of goods or services), after “a business” insert “, or part of a business,”.

(10)The amendments made by this section have effect in relation to transfers pursuant to contracts entered into on or after 1st September 2007.

101IPT: meaning of “premium”

(1)In section 72 of FA 1994 (interpretation: “premium”), after subsection (1A) insert—

“(1B)Where—

(a)an amount is charged (to the insured or any other person) in respect of the acquisition of a right (whether of the insured or any other person) to require the insurer to provide, or offer to provide, any of the cover included in a taxable insurance contract, and

(b)any payment in respect of that amount is not regarded as a payment received under that contract by the insurer by virtue of subsection (1A) above,

the payment is to be regarded as a payment received under that contract by the insurer unless it is chargeable to tax at the higher rate by virtue of section 52A above.”

(2)The amendment made by subsection (1) has effect in relation to amounts charged on or after 22nd March 2007.

Petroleum revenue tax

102Abolition of PRT for fields recommissioned after earlier decommissioning

(1)Section 185 of FA 1993 (abolition of PRT for oil fields with development consents on or after 16th March 1993) is amended as follows.

(2)In subsection (1) (meaning of “non-taxable field” and “taxable field”), after paragraph (b) insert “or an oil field which does not meet the conditions in paragraphs (a) and (b) above but which does meet the conditions in subsection (1A) below”.

(3)After that subsection insert—

“(1A)An oil field meets the conditions in this subsection if—

(a)the Secretary of State has at any time approved one or more abandonment programmes under Part 4 of the Petroleum Act 1998 (or Part 1 of the Petroleum Act 1987) in relation to all assets of the field which are relevant assets;

(b)those programmes have been carried out to the satisfaction of the Secretary of State;

(c)a development decision is made in relation to the field; and

(d)that decision is made on or after 16th March 1993 and after those programmes have been so carried out.

(1B)For the purposes of subsection (1A)(a) above, an asset is a relevant asset of an oil field if—

(a)it has at any time been a qualifying asset (within the meaning of the 1983 Act) in relation to any participator in the field; and

(b)it has at any time been used for the purpose of winning oil from the field.

(1C)For the purposes of subsection (1A)(c) and (d) above, a development decision is made in relation to an oil field when—

(a)consent for development is granted to a licensee by the Secretary of State in respect of the whole or part of the field; or

(b)a programme of development is served on a licensee or approved by the Secretary of State for the whole or part of the field.”

(4)In subsection (7) (meaning of “development” etc), for “subsections (1) and (2)” substitute “this section”.

(5)An oil field which meets the conditions in subsection (1A) of section 185 of FA 1993 (as inserted by subsection (3) above) becomes a non-taxable field for the purposes of any enactment relating to petroleum revenue tax—

(a)in any case where the development decision is made before 1st July 2007, on that date, and

(b)in any other case, on the date on which the development decision is made.

103Tax-exempt tariffing receipts

(1)Section 6A of the Oil Taxation Act 1983 (c. 56) (tax-exempt tariffing receipts) is amended as follows.

(2)In subsection (4), insert at the end “or

(c)use in relation to a UK recommissioned field (see subsection (5) below) or oil won from such a field.”

(3)In subsection (5), insert at the end—

““UK recommissioned field” means any oil field which is not a new field or qualifying existing field but as respects which the conditions in section 185(1A) of the Finance Act 1993 are satisfied (fields recommissioned after earlier decommissioning).”

(4)The amendments made by this section are deemed to have come into force on 1st July 2007.

104Allowance of unrelievable loss from abandoned field

(1)In section 6 of the Oil Taxation Act 1975 (c. 22) (allowance of unrelievable loss from abandoned field), after subsection (4) insert—

“(4A)For the purposes of this section and Schedule 8 to this Act, the winning of oil from an oil field shall not be regarded as having permanently ceased until all the oil wells in the field have been permanently abandoned.”

(2)The amendment made by subsection (1) is deemed to have come into force on 1st July 2007.

Other miscellaneous measures

105Amendments connected with Gambling Act 2005

Schedule 25 contains amendments that are consequential on, or otherwise connected with, the Gambling Act 2005 (c. 19).

106VED: exempt vehicles

(1)In section 5 of VERA 1994 (exempt vehicles), after subsection (2) insert—

“(3)The Secretary of State may by order amend Schedule 2 in order to make provision about the descriptions of—

(a)tractors, and

(b)vehicles used for purposes relating to agriculture, horticulture or forestry,

that are to be exempt vehicles.

(4)An order under subsection (3) may in particular repeal any of paragraphs 20A to 20D of Schedule 2.”

(2)In section 60(3) of that Act (orders subject to affirmative procedure), after “under” insert “section 5(3) or”.

107Limitation period in old actions for mistake of law relating to direct tax

(1)Section 32(1)(c) of the Limitation Act 1980 (c. 58) (extended period for bringing action in case of mistake) does not apply in relation to any action brought before 8th September 2003 for relief from the consequences of a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue.

(2)Subsection (1) has effect regardless of how the grounds on which the action was brought were expressed and of whether it was also brought otherwise than for such relief.

(3)But subsection (1) does not have effect in relation to an action, or so much of an action as relates to a cause of action, if—

(a)the action, or cause of action, has been the subject of a judgment of the House of Lords given before 6th December 2006 as to the application of section 32(1)(c) in relation to such relief, or

(b)the parties to the action are, in accordance with a group litigation order, bound in relation to the action, or cause of action, by a judgment of the House of Lords in another action given before that date as to the application of section 32(1)(c) in relation to such relief.

(4)If the judgment of any court was given on or after 6th December 2006 but before the day on which this Act is passed, the judgment is to be taken to have been what it would have been had subsections (1) to (3) been in force at all times since the action was brought (and any defence of limitation which would have been available had been raised).

(5)And any payment made to satisfy a liability under the judgment which (in consequence of subsection (4)) is to be taken not to have been imposed is repayable (with interest from the date of the payment).

(6)In this section—

• “group litigation order” means an order of a court providing for the case management of actions which give rise to common or related issues of fact or law, and

• “judgment” includes order (and “given” includes made).

108Disclosure of tax avoidance schemes

(1)Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as follows.

(2)After section 306 insert—

“306ADoubt as to notifiability

(1)HMRC may apply to the Special Commissioners for an order that—

(a)a proposal is to be treated as notifiable, or

(b)arrangements are to be treated as notifiable.

(2)An application must specify—

(a)the proposal or arrangements in respect of which the order is sought, and

(b)the promoter.

(3)On an application the Special Commissioners may make the order only if satisfied that HMRC—

(a)have taken all reasonable steps to establish whether the proposal or arrangements are notifiable, and

(b)have reasonable grounds for suspecting that the proposal or arrangements may be notifiable.

(4)Reasonable steps under subsection (3)(a) may (but need not) include taking action under section 313A or 313B.

(5)Grounds for suspicion under subsection (3)(b) may include—

(a)the fact that the relevant arrangements fall within a description prescribed under section 306(1)(a);

(b)an attempt by the promoter to avoid or delay providing information or documents about the proposal or arrangements under or by virtue of section 313A or 313B;

(c)the promoter’s failure to comply with a requirement under or by virtue of section 313A or 313B in relation to another proposal or other arrangements.

(6)Where an order is made under this section in respect of a proposal or arrangements, the prescribed period for the purposes of section 308(1) or (3) in so far as it applies by virtue of the order—

(a)shall begin after a date prescribed for the purpose, and

(b)may be of a different length than the prescribed period for the purpose of other applications of section 308(1) or (3).

(7)An order under this section in relation to a proposal or arrangements is without prejudice to the possible application of section 308, other than by virtue of this section, to the proposal or arrangements.”

(3)In section 307 (“promoter”), insert at the end—

“(6)In the application of this Part to a proposal or arrangements which are not notifiable, a reference to a promoter is a reference to a person who would be a promoter under subsections (1) to (5) if the proposal or arrangements were notifiable.”

(4)After section 308 insert—

“308ASupplemental information

(1)This section applies where—

(a)a promoter (P) has provided information in purported compliance with section 308(1) or (3), but

(b)HMRC believe that P has not provided all the prescribed information.

(2)HMRC may apply to the Special Commissioners for an order requiring P to provide specified information about, or documents relating to, the notifiable proposal or arrangements.

(3)The Special Commissioners may make an order under subsection (2) in respect of information or documents only if satisfied that HMRC have reasonable grounds for suspecting that the information or documents—

(a)form part of the prescribed information, or

(b)will support or explain the prescribed information.

(4)A requirement by virtue of subsection (2) shall be treated as part of P’s duty under section 308(1) or (3).

(5)In so far as P’s duty under section 308(1) or (3) arises out of a requirement by virtue of subsection (2) above, the prescribed period shall begin after a date prescribed for the purpose.

(6)In so far as P’s duty under section 308(1) or (3) arises out of a requirement by virtue of subsection (2) above, the prescribed period—

(a)may be of a different length than the prescribed period for the purpose of other applications of section 308(1) or (3), and

(b)may be extended by HMRC by direction.”

(5)After section 313 insert—

“313APre-disclosure enquiry

(1)Where HMRC suspect that a person (P) is the promoter of a proposal or arrangements which may be notifiable, they may by written notice require P to state—

(a)whether in P’s opinion the proposal or arrangements are notifiable by P, and

(b)if not, the reasons for P’s opinion.

(2)A notice must specify the proposal or arrangements to which it relates.

(3)For the purpose of subsection (1)(b)—

(a)it is not sufficient to refer to the fact that a lawyer or other professional has given an opinion,

(b)the reasons must show, by reference to this Part and regulations under it, why P thinks the proposal or arrangements are not notifiable by P, and

(c)in particular, if P asserts that the arrangements do not fall within any description prescribed under section 306(1)(a), the reasons must provide sufficient information to enable HMRC to confirm the assertion.

(4)P must comply with a requirement under or by virtue of subsection (1) within—

(a)the prescribed period, or

(b)such longer period as HMRC may direct.

313BReasons for non-disclosure: supporting information

(1)Where HMRC receive from a person (P) a statement of reasons why a proposal or arrangements are not notifiable by P, HMRC may apply to the Special Commissioners for an order requiring P to provide specified information or documents in support of the reasons.

(2)P must comply with a requirement under or by virtue of subsection (1) within—

(a)the prescribed period, or

(b)such longer period as HMRC may direct.

(3)The power under subsection (1)—

(a)may be exercised more than once, and

(b)applies whether or not the statement of reasons was received under section 313A(1)(b).”

(6)After section 314 insert—

“314AOrder to disclose

(1)HMRC may apply to the Special Commissioners for an order that—

(a)a proposal is notifiable, or

(b)arrangements are notifiable.

(2)An application must specify—

(a)the proposal or arrangements in respect of which the order is sought, and

(b)the promoter.

(3)On an application the Special Commissioners may make the order only if satisfied that section 306(1)(a) to (c) applies to the relevant arrangements.”

(7)After section 317 insert—

“317ASpecial Commissioners: procedure

Sections 56B to 56D of the Taxes Management Act 1970 (procedure) shall apply (with any necessary modifications) to applications under this Part as to appeals.”

(8)In section 318(1) (interpretation)—

(a)after the definition of “corporation tax” insert—

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

(b)after the definition of “reference number” insert—

““the Special Commissioners” has the meaning given by section 4 of the Taxes Management Act 1970;”.

(9)In section 98C of TMA 1970 (notifications under Part 7 of FA 2004)—

(a)in subsection (2), at the end insert— “, and

(e)sections 313A and 313B (duty of promoter to respond to inquiry).”, and

(b)after that subsection insert—

“(2A)Where a failure to comply with a provision mentioned in subsection (2) concerns a proposal or arrangements in respect of which an order has been made under section 306A of the Finance Act 2004 (doubt as to notifiability), the amount specified in subsection (1)(b) above shall be increased to the prescribed sum.

(2B)Where a failure to comply with a provision mentioned in subsection (2) concerns a proposal or arrangements in respect of which an order has been made under section 314A of the Finance Act 2004 (order to disclose), the amount specified in subsection (1)(b) above shall be increased to the prescribed sum in relation to days falling after the prescribed period.

(2C)In subsection (2A) and (2B)—

(a)“the prescribed sum” means a sum prescribed by the Treasury by regulations, and

(b)“the prescribed period” means a period beginning with the date of the order under section 314A and prescribed by the Commissioners by regulations.

(2D)The making of an order under section 314A of that Act does not of itself mean that, for the purposes of section 118(2) of this Act, a person either did or did not have a reasonable excuse for non-compliance before the order was made.

(2E)Where an order is made under section 314A of that Act then for the purposes of section 118(2) of this Act—

(a)the person identified in the order as the promoter of the proposal or arrangements cannot, in respect of any time after the end of the period mentioned in subsection (2B), rely on doubt as to notifiability as an excuse for failure to comply with section 308 of that Act, and

(b)any delay in compliance with that section after the end of that period is unreasonable unless attributable to something other than doubt as to notifiability.

(2F)Regulations under subsection (2C)—

(a)may include incidental or transitional provision,

(b)shall be made by statutory instrument,

(c)in the case of regulations under subsection (2C)(a), shall not be made unless a draft has been laid before and approved by resolution of the House of Commons, and

(d)in the case of regulations under subsection (2C)(b), shall be subject to annulment in pursuance of a resolution of the House of Commons.”

(10)The amendments made by this section come into force on the passing of this Act; and—

(a)regulations made under section 56B of TMA 1970 (Special Commissioners: procedure) before the passing of this Act apply (with any necessary modifications) to applications under Part 7 of FA 2004 as amended by this section as they apply to appeals (but subject to any regulations made after the passing of this Act), and

(b)a power under Part 7 of FA 2004 as amended by this section may be exercised in relation to, or by virtue of, matters arising wholly or partly before the passing of this Act.

109Meaning of “recognised stock exchange” etc

Schedule 26 contains—

(a)new definitions of “recognised stock exchange” for the purposes of the Tax Acts and TCGA 1992,

(b)provision for the valuation for the purposes of TCGA 1992 of certain shares or securities listed on recognised stock exchanges,

(c)provision for the valuation for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 of strips and securities exchanged for strips, and

(d)minor and consequential amendments in relation to stock exchanges.

110Mergers Directive: regulations

(1)The Treasury may by regulations make provision about—

(a)the tax consequences of a merger to form an SE or SCE,

(b)the tax consequences of a merger where—

(i)each party to the merger is resident in a member State, and

(ii)the parties are not all resident in the same member State,

(c)the tax consequences of a transfer between companies of a business or part of a business, where—

(i)each party to the transfer is resident in a member State, and

(ii)the parties are not all resident in the same member State,

(d)the tax consequences of a share exchange to which section 135 of TCGA 1992 (exchange of securities) applies where companies A and B are resident in different member States,

(e)the residence of an SE or SCE.

(2)Regulations may, in particular, make provision—

(a)about the taxation of chargeable gains (including conferring relief from taxation in relation to transfers or mergers which satisfy specified conditions),

(b)conferring relief from taxation on a distribution of a company which satisfies specified conditions,

(c)about the treatment of securities issued on a transfer or merger,

(d)about the treatment of loan relationships,

(e)about the treatment of derivative contracts,

(f)about the treatment of intangible fixed assets, and

(g)about capital allowances.

(3)Regulations may make provision only if the Treasury think it necessary or expedient for the purposes of complying with the United Kingdom’s obligations under the Mergers Directive.

(4)In this section—

• “the Mergers Directive” means Council Directive 90/434/EEC,

• “SCE” means an SCE formed in accordance with Council Regulation (EC) 1435/2003 on the Statute for a European Cooperative Society, and

• “SE” means an SE formed in accordance with Council Regulation (EC) 2157/2001 on the Statute for a European Company.

(5)Regulations under this section may—

(a)amend the Taxes Acts,

(b)make incidental or consequential amendments of enactments other than the Taxes Acts,

(c)make provision having retrospective effect,

(d)make provision generally or only for specified cases or circumstances,

(e)make different provision for different cases or circumstances,

(f)make incidental, consequential or transitional provision.

(6)In this section “the Taxes Acts” has the meaning given by section 118(1) of TMA 1970.

111Excise duties: small consignment relief

(1)The Excise Duties (Small Non-Commercial Consignments) Relief Regulations 1986 (S.I. 1986/938) are revoked.

(2)The revocation made by subsection (1) does not apply in relation to goods consigned before the day on which this Act is passed.

112Updating references to Standing Committees

(1)In section 1(4)(b) of the Provisional Collection of Taxes Act 1968 (c. 2) (circumstances in which a resolution affecting income tax etc ceases to have effect), for “Standing Committee” substitute “Public Bill Committee”.

(2)In section 50(2)(a) of FA 1973 (corresponding provision for stamp duty), for “Standing Committee” substitute “Public Bill Committee”.

Part 8Final provisions

113Interpretation

(1)In this Act—

• “BGDA 1981” means the Betting and Gaming Duties Act 1981 (c. 63),

• “CAA 2001” means the Capital Allowances Act 2001 (c. 2),

• “CEMA 1979” means the Customs and Excise Management Act 1979 (c. 2),

• “CRCA 2005” means the Commissioners for Revenue and Customs Act 2005 (c. 11),

• “ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),

• “IHTA 1984” means the Inheritance Tax Act 1984 (c. 51),

• “ITA 2007” means the Income Tax Act 2007 (c. 3),

• “ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1),

• “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5),

• “TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),

• “TMA 1970” means the Taxes Management Act 1970 (c. 9),

• “VATA 1994” means the Value Added Tax Act 1994 (c. 23), and

• “VERA 1994” means the Vehicle Excise and Registration Act 1994 (c. 22).

(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.

114Repeals

Schedule 27 contains repeals.

115Short title

This Act may be cited as the Finance Act 2007.

SCHEDULES

Section 8

SCHEDULE 1Remote gaming duty

Part 1Imposition of duty

1The sections set out below are to be inserted in Part 2 of BGDA 1981 (gaming duties) before section 26A (which is renumbered 26N).

2Those sections are—

“Remote gaming duty

26AInterpretation

(1)For the purposes of remote gaming duty “remote gaming” means gaming in which persons participate by the use of—

(a)the internet,

(b)telephone,

(c)television,

(d)radio, or

(e)any other kind of electronic or other technology for facilitating communication.

(2)For the purposes of remote gaming duty the expressions listed below shall be construed (for the whole of the United Kingdom) in accordance with the Gambling Act 2005.

(3)In relation to remote gaming duty “P” means a person who provides facilities for remote gaming.

(4)The Treasury may by order amend the definition of “remote gaming” in subsection (1) (and an order may include incidental, consequential or transitional provision).

26BThe duty

A duty of excise to be known as remote gaming duty shall be charged on the provision of facilities for remote gaming if—

(a)the facilities are provided in reliance on a remote operating licence, or

(b)at least one piece of remote gambling equipment used in the provision of the facilities is situated in the United Kingdom (whether or not the facilities are provided for use wholly or partly in the United Kingdom).

26CThe rate

(1)Remote gaming duty is chargeable at the rate of 15% of P’s remote gaming profits for an accounting period.

(2)P’s remote gaming profits for an accounting period are—

(a)the amount of P’s remote gaming receipts for the period (calculated in accordance with section 26E), minus

(b)the amount of P’s expenditure for the period on remote gaming winnings (calculated in accordance with section 26F).

26DAccounting periods

(1)The following are accounting periods for the purposes of remote gaming duty—

(a)the period of three months beginning with 1st January,

(b)the period of three months beginning with 1st April,

(c)the period of three months beginning with 1st July, and

(d)the period of three months beginning with 1st October.

(2)The Commissioners may agree with P for specified periods to be treated as accounting periods, instead of those described in subsection (1), for purposes of remote gaming duty relating to P.

(3)The Commissioners may by direction make transitional arrangements for the periods to be treated as accounting periods where—

(a)P becomes registered, or ceases to be registered, under section 26J, or

(b)an agreement under subsection (2) begins or ends.

26ERemote gaming receipts

(1)The amount of P’s remote gaming receipts for an accounting period is the aggregate of—

(a)amounts falling due to P in that period in respect of entitlement to use facilities for remote gaming provided by P, and

(b)amounts staked, or falling due to be paid, in that period by a user of facilities for remote gaming provided by P, if or in so far as responsibility for paying any amount won by the user falls on P (or a person with whom P is connected or has made arrangements).

(2)Amounts in respect of VAT shall be ignored for the purposes of subsection (1).

(3)The Treasury may by order provide that where a person who uses facilities (U) relies on an offer which waives payment or permits payment of less than the amount which would have been required to be paid without the offer, U is to be treated for the purposes of this section as having paid that amount.

26FRemote gaming winnings

(1)The amount of P’s expenditure on remote gaming winnings for an accounting period is the aggregate of the value of prizes provided by P in that period which have been won (at any time) by persons using facilities for remote gaming provided by P.

(2)Prizes provided by P to one user on behalf of another are not to be treated as prizes provided by P.

(3)A reference to providing a prize to a user (U) includes a reference to crediting money in respect of gaming winnings by U to an account if U is notified that—

(a)the money is being held in the account, and

(b)U is entitled to withdraw it on demand.

(4)The return of a stake is to be treated as the provision of a prize.

(5)Where P participates in arrangements under which a number of persons who provide facilities for remote gaming contribute towards a fund which is wholly used to provide prizes in connection with the use of those facilities (sometimes described as arrangements for “linked progressive jackpot games ”)—

(a)the making by P of a contribution which relates to the provision by P of facilities for remote gaming shall be treated as the provision of a prize, and

(b)the award of a prize from the fund shall not be treated as the provision of a prize by P.

(6)Where P credits the account of a user of facilities provided by P (otherwise than as described in subsection (3)), the credit shall be treated as the provision of a prize; but the Commissioners may direct that this subsection shall not apply in a specified case or class of cases.

(7)Subsections (2) to (6) of section 20 shall apply (with any necessary modifications) for the purpose of remote gaming duty as for the purpose of bingo duty.

26GLosses

Where the calculation of P’s remote gaming profits for an accounting period produces a negative amount, it may be carried forward in reduction of the profits of one or more later accounting periods.

26HExemptions

(1)Remote gaming duty shall not be charged in respect of the provision of facilities for remote gaming if and in so far as—

(a)the provision is charged with another gambling tax, or

(b)the use of the facilities is charged with another gambling tax.

(2)Remote gaming duty shall not be charged in respect of the provision of facilities for remote gaming if and in so far as—

(a)the provision would be charged with another gambling tax but for an express exception, or

(b)the use of the facilities would be charged with another gambling tax but for an express exception.

(3)In this section “gambling tax” means—

(a)amusement machine licence duty,

(b)bingo duty,

(c)gaming duty,

(d)general betting duty,

(e)lottery duty, and

(f)pool betting duty.

(4)The Treasury may by order—

(a)confer an exemption from remote gaming duty, or

(b)remove or vary (whether or not by textual amendment) an exemption under this section.

(5)In calculating P’s remote gaming profits for an accounting period, no account shall be taken of amounts or prizes if, or in so far as, they relate to the provision of facilities to which an exemption applies under or by virtue of this section.

26ILiability to pay

(1)P is liable for any remote gaming duty charged on P’s remote gaming profits for an accounting period.

(2)If P is a body corporate, P and P’s directors are jointly and severally liable for any remote gaming duty charged on P’s remote gaming profits for an accounting period.

(3)The Commissioners may make regulations about payment of remote gaming duty; and the regulations may, in particular, make provision about—

(a)timing;

(b)instalments;

(c)methods of payment;

(d)when payment is to be treated as made;

(e)the process and effect of assessments by the Commissioners of amounts due.

(4)Subject to regulations under subsection (3), section 12 of the Finance Act 1994 (assessment) shall apply in relation to liability to pay remote gaming duty.

26JRegistration