Finance Act 2012

Unilateral relief

7Before Schedule 1 insert—

“SCHEDULE A1Betting duties: double taxation relief

Introduction

1This Schedule sets out the rules for determining whether credit is allowed under section 5E or 8ZA for qualifying foreign tax paid by P.

Definitions

2(1)This Schedule is to be read as follows.

(2)“The applicable class”—

(a)in the case of section 5E, has the meaning given in that section, and

(b)in the case of section 8ZA, means dutiable pool bets.

(3)A “reconciliation period” is—

(a)if P has monthly accounting periods, a period consisting of 12 consecutive accounting periods,

(b)if P has quarterly accounting periods, a period consisting of 4 consecutive accounting periods, and

(c)if P has any other length of accounting period, a period consisting of such number of consecutive accounting periods as would produce a period as near as possible to 365 days.

(4)In relation to an accounting period, a reference to “the reconciliation period” is to the reconciliation period in which that accounting period falls.

Credit allowed

3(1)To determine whether credit is allowed for an accounting period—

(a)calculate the notional UK liability and the notional foreign liability for the accounting period, and

(b)compare the two figures.

(2)No credit is allowed if either figure is nil or both figures are nil.

(3)Subject to that, credit is allowed of an amount equal to the smaller of the two figures (or, if they are the same, of an amount equal to that figure).

Notional UK liability

4The notional UK liability for an accounting period is calculated as follows—

• Step 1

  If the applicable class is a class to which a provision of sections 2 to 4 applies, calculate P’s net stake receipts for the period in accordance with section 5 but by reference to eligible bets (rather than bets of the applicable class).

  If the applicable class is the class to which section 5AB applies, calculate the commission charges in accordance with that section relating to eligible bets determined in the period (rather than bets to which that section applies).

  If the applicable class is dutiable pool bets, calculate P’s net pool betting receipts for the period in accordance with section 7A but by reference to eligible bets (rather than dutiable pool bets).

  In calculating P’s net stake receipts or net pool betting receipts for the purposes of this Step, do not carry forward to the period any losses in respect of eligible bets that arose in an accounting period before the start of the reconciliation period.

• Step 2

  If the amount calculated under Step 1 is nil or a negative amount, the notional UK liability for the period is nil.

  Otherwise, apply the appropriate rate to the amount calculated under Step 1. The result is the notional UK liability for the period.

  “The appropriate rate” is the percentage specified in whichever of section 2(3), 3(3)(a), 3(3)(b), 4(3), 5AB(4) or 7(2) applies to the applicable class, as in force for the accounting period in question.

Notional foreign liability

5The notional foreign liability for an accounting period is calculated as follows—

• Step 1

  Calculate the amount of qualifying foreign tax that would be payable by P for the accounting period if the tax were charged solely in respect of eligible bets and accounted for by reference to periods corresponding to P’s accounting periods.

  Any apportionment needed for this calculation is to be done on a just and reasonable basis.

  If the law under which the qualifying foreign tax is imposed provides for losses to be carried forward, do not carry forward to the period any losses (in respect of eligible bets) that arose before the start of the reconciliation period.

• Step 2

  If the amount calculated under Step 1 is nil, the notional foreign liability for the period is nil.

  Otherwise, calculate the sterling equivalent of the amount calculated under Step 1. The result is the notional foreign liability for the period.

  The sterling equivalent is to be calculated using the London closing exchange rate for the last day of the accounting period.

Clawback

6(1)This paragraph applies if in respect of the applicable class of bets—

(a)P receives a repayment under section 5E or 8ZA for one or more accounting periods in a reconciliation period, and

(b)the amount calculated under Step 1 in paragraph 4 for the final accounting period in that reconciliation period is a negative amount.

(2)P is liable to repay all or part of the repayment or repayments received.

(3)The amount that P is liable to repay is the smallest of—

(a)the loss multiplied by the rate at which the qualifying foreign tax is charged in respect of eligible bets,

(b)the loss multiplied by the appropriate rate (as defined in paragraph 4) for the applicable class of bets, and

(c)the repayment (or the sum of the repayments) made to P for the reconciliation period.

(4)“The loss” means the negative amount mentioned in sub-paragraph (1)(b) but expressed as a positive number.

(5)If there is more than one rate at which the qualifying foreign tax is charged in respect of eligible bets, each rate is to be applied to an appropriate portion of the loss in order to arrive at the amount under sub-paragraph (3)(a).

(6)If all or part of the qualifying foreign tax is calculated other than on a net receipts basis, sub-paragraph (3) has effect as if paragraph (a) were omitted.

(7)Any amount due from P under this paragraph is to be treated as if it were an amount of unpaid general betting duty or, as the case may be, pool betting duty.

Breach of return obligations

7The Commissioners are not required to make a repayment under section 5E or 8ZA if P is in breach of any obligation to deliver a return with respect to—

(a)general betting duty,

(b)pool betting duty,

(c)bingo duty,

(d)remote gaming duty,

(e)gaming duty, or

(f)lottery duty.

Reduction etc in foreign tax paid

8(1)Sub-paragraphs (2) to (4) apply if any of the following events take place—

(a)the way in which a qualifying foreign tax is charged or calculated is changed retrospectively,

(b)a tax authority waives or refunds all or part of an amount of qualifying foreign tax due from P, or

(c)as a result of being liable to pay an amount of qualifying foreign tax, P or a connected person is entitled to any kind of tax deduction or relief calculated by reference to the amount of qualifying foreign tax.

(2)P must notify the Commissioners of the event on becoming aware of it.

(3)If the event is a retrospective change in the way in which the qualifying foreign tax is charged or calculated, the amount for which credit is allowed under section 5E or 8ZA is to be recalculated in accordance with this Schedule.

(4)In any other case, the amount for which credit is allowed under section 5E or 8ZA is to be reduced by a just and reasonable sum to reflect the amount of tax waived or refunded or the deduction or relief given.

(5)If it transpires (on account of this paragraph or otherwise) that a repayment or part of a repayment under section 5E or 8ZA should not have been made, P is liable for the amount that should not have been repaid, as if it were unpaid general betting duty or, as the case may be, pool betting duty.

(6)Section 1122 of the Corporation Tax Act 2010 (connected persons) applies for the purposes of sub-paragraph (1)(c).”