Office of Public Sector Information
PART III continued
Schedule 10 to this Act (which, for purposes connected with the sharing of pensions between ex-spouses, makes provision with respect to pensions and annuities) shall have effect.
Section 657(2) of the Taxes Act 1988 (annuities not treated as purchased life annuities within section 656) shall have effect, and shall be deemed always to have had effect, with the substitution of the following paragraph for the “or” at the end of paragraph (d)—
“(da) to any annuity purchased under or for the purposes of a scheme approved by virtue of section 591 or in pursuance of any obligation imposed, or offer or invitation made, under or in connection with any such scheme;”.
(1) This section applies for the purposes of corporation tax in relation to the disposal by a company (“the relevant company”) of any asset where—
(a) the asset is one acquired by the relevant company from an insurance company at a time when the relevant company and that insurance company were both members of the same group of companies;
(b) there was an occasion before the disposal (whether the occasion of the transfer of the asset to the relevant company or the occasion of an earlier transfer of the asset) in relation to which the non-statutory arrangements for groups of insurance companies were applied in the case of the transferring company;
(c) the application of those arrangements in relation to that occasion had the effect of preventing the cost of the asset’s acquisition by the transferring company (“the previous acquisition”) from being brought into account for tax purposes; and
(d) there has not, between that occasion and the making of the disposal, been any relevant event by reference to which the cost of the previous acquisition has been brought into account in computing the profits or losses of any company for tax purposes.
(2) Subject to subsection (5) below, where the computation of the relevant company’s profits or losses from any trade requires the cost of the acquisition of the asset by that company to be brought into account in the accounting period in which the disposal takes place, that cost shall be brought into account in that period as if it were an amount equal to the cost of the previous acquisition.
(3) Subject to subsections (4) and (5) below, where—
(a) the asset disposed of represents a creditor relationship,
(b) the disposal is such that paragraph 6 of Schedule 15 to the [1996 c. 8.] Finance Act 1996 (adjustment for pre-commencement trading relationships) would require an amount to be brought into account in the accounting period in which the disposal takes place in any case in which there is, for that relationship, a difference such as is mentioned in sub-paragraph (1) of that paragraph, and
(c) the cost of the previous acquisition is less than the amount which for the purposes of paragraph 5(2) of that Schedule would (apart from this subsection) be the notional closing value of the relationship on 31st March 1996,
the question whether an amount falls to be brought into account in accordance with paragraph 6(2) or (3) of that Schedule, and the amount (if any) falling to be so brought into account, shall be determined as if the notional closing value of the relationship on 31st March 1996 had been equal to the cost of the previous acquisition.
(4) In any case where the asset represents a creditor relationship in relation to which an election under paragraph 6(4) of Schedule 15 to the [1996 c. 8.] Finance Act 1996 has effect—
(a) subsection (3) above and paragraphs (b) and (c) below shall be disregarded in determining the amounts falling to be brought into account under paragraph 6(4) to (7) of that Schedule;
(b) paragraph 6(1) and (2) of that Schedule shall be treated as applying, notwithstanding paragraph 6(4)(a), if, in the case of that relationship, the amount referred to in subsection (3)(c) above exceeds the cost of the previous acquisition; and
(c) the amount falling by virtue of paragraph (b) above to be brought into account in accordance with paragraph 6(2) of that Schedule shall be determined as if the excess referred to in paragraph 6(2)(a) were the excess mentioned in paragraph (b) above.
(5) Where—
(a) there are two or more occasions such as are mentioned in paragraph (b) of subsection (1) above, and
(b) paragraph (d) of that subsection is satisfied in relation to each of them,
subsections (2) to (4) above shall have effect as if the references to the previous acquisition were references to the acquisition which is the previous acquisition in relation to the earliest of those occasions.
(6) In subsection (1)(d) above “relevant event”, in relation to any asset, means—
(a) a disposal of the asset; or
(b) any event by reference to which the conditions of the non-statutory arrangements for groups of insurance companies has required the cost of the previous acquisition to be brought into account in computing the profits or losses of any company for tax purposes.
(7) Section 170 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (meaning of groups etc.) shall apply for construing references in the preceding provisions of this section to a group of companies as it applies for the purposes of sections 171 to 181 of that Act.
(8) In the preceding provisions of this section—
“creditor relationship” has the same meaning as in Chapter II of Part IV of the Finance Act 1996; and
“insurance company” means an insurance company within the meaning of Chapter I of Part XII of the Taxes Act 1988.
(9) References in this section to an asset shall be construed as if section 473 of the Taxes Act 1988 (cases where different assets are treated as the same) applied for the purposes of this section as it applies for the purposes of that Act; and paragraph 12(2) of Schedule 9 to the [1996 c. 8.] Finance Act 1996 (cases where different companies are treated as the same) shall apply for the purposes of this section as it applies for the purposes of Chapter II of Part IV of that Act of 1996.
(10) In this section any reference to the non-statutory arrangements for groups of insurance companies is a reference to so much of any arrangements made by the Board otherwise than by virtue of an enactment as—
(a) in relation to an accounting period beginning before 1st January 2000—
(i) provided for a single assessment of the trading profits of a group of insurance companies to be made on the principal company of the group; and
(ii) excluded trading profits on intra-group transfers of investments from the group assessment;
or
(b) contains transitional provision, in connection with the withdrawal of any arrangements falling within paragraph (a) above, for allowing trading profits on intra-group transfers to be excluded from assessments of members of groups of insurance companies that relate to accounting periods beginning on or after 1st January 1999 and before 1st January 2000.
(11) This section—
(a) shall not be construed as requiring any amount representing a gain on the disposal of the asset to be brought into account for tax purposes in so far as an amount representing that gain is or has already been brought into account, as an attributed gain, under any regulations made by virtue of Schedule 16 to the [1993 c. 34.] Finance Act 1993 (Forex transitional provisions); and
(b) shall be without prejudice to any power of the Board apart from this section to enforce any conditions subject to which any relief in accordance with the non-statutory arrangements for groups of insurance companies has been allowed.
(12) This section applies in relation to disposals by the relevant company made in accounting periods beginning on or after 1st January 1999.
(1) This section applies where a member has entered into a members' agent pooling arrangement (“the arrangement”).
(2) Subsections (3) to (9) below shall apply for the purpose of determining any liability of the member’s to capital gains tax that may arise from transactions effected in pursuance of the arrangement.
(3) The syndicate rights held by the member under the arrangement shall be treated as a single asset acquired by him at the time when he entered into the arrangement; but, subject to subsection (9) below, he shall not be treated as disposing of the asset (in whole or in part) except as mentioned in subsection (6) below.
(4) The member shall be treated as having given, wholly and exclusively for the acquisition of the asset, consideration equal to any amount paid by him on entering into the arrangement.
(5) Any other amount paid by the member under the arrangement shall, on a disposal of the asset, be treated as expenditure incurred wholly and exclusively on the asset for the purpose of enhancing its value and reflected in its state or nature at the time of the disposal.
(6) If an amount is paid to the member at any time under the arrangement, he shall be treated as disposing of the whole asset or, as the case may be, part of the asset at that time for a consideration equal to that amount.
(7) If syndicate rights held by the member otherwise than under the arrangement become at any time rights held by him under the arrangement, he shall be treated as disposing of those rights at that time for a consideration equal to their market value at that time.
(8) If syndicate rights held by the member under the arrangement become at any time rights held by him otherwise than under the arrangement, he shall be treated as acquiring those rights at that time for a consideration equal to their market value at that time.
(9) Nothing in subsection (3) above shall affect the operation of section 24(1) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (disposals where assets extinguished etc.) in relation to the asset.
(10) Subject to subsection (11) below this section applies to arrangements entered into on or after 6th April 1999 or subsisting on that date.
(11) In the case of arrangements subsisting on 6th April 1999, this section has effect—
(a) as if the time mentioned in subsection (3) above were the earliest time (“the notional time of acquisition”) at which the member acquired any of the syndicate rights held by him under the arrangement immediately before 6th April 1999;
(b) as if the consideration referred to in subsection (4) above were the consideration, in money or money’s worth, given by him wholly and exclusively for the acquisition of such of those rights as he acquired at the notional time of acquisition; and
(c) in relation to times before 6th April 1999, as if the amount mentioned in subsection (5) above were the amount of any consideration, in money or money’s worth, given by him wholly and exclusively for the acquisition, after the notional time of acquisition, of rights such as are mentioned in paragraph (a) above;
and the incidental costs of any acquisition falling within paragraph (b) or (c) above shall be taken to be incidental costs of the acquisition of the asset.
(1) In section 82 above and this section, except where the context otherwise requires—
“member” means an individual who is an underwriting member of Lloyd's;
“members' agent”, in relation to a member, means a person registered as a members' agent at Lloyd’s who is acting as such an agent for the member;
“members' agent pooling arrangement”, in relation to a member, means an arrangement—
under which a members' agent arranges for the member’s participation in syndicates; and
which satisfies the conditions set out in subsection (2) below;
“syndicate” has the same meaning as in Chapter III of Part II of the [1993 c. 34.] Finance Act 1993; and
“syndicate rights”, in relation to a member, means rights under a syndicate in which the member participates.
(2) The conditions mentioned in paragraph (ii) of the above definition of “members' agent pooling arrangement” are that under the arrangement—
(a) the member must participate in each of the syndicates to which the arrangement relates; and
(b) the extent to which the member participates in each such syndicate is determined—
(i) by the members' agent; or
(ii) according to a formula provided for in the arrangement.
(3) References in section 82 above to the payment of an amount are references to the payment of an amount in money or money’s worth; and to the extent that an amount mentioned in subsection (4), (5) or (6) of that section is paid in money’s worth, the amount of the consideration or expenditure there referred to shall be calculated by reference to the market value of the money’s worth at the time of the payment mentioned in that subsection.
(4) Section 82 above and this section have effect in relation to a Scottish partnership which is an underwriting member of Lloyd’s as they have effect in relation to a member, but as if the reference in section 82(2) to any liability of the member’s to capital gains tax that may arise from transactions effected in pursuance of the arrangement were a reference to any such liability of members of the partnership that may so arise.
(1) In section 155 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (classes of assets for the purposes of roll-over relief), after Class 7 there shall be inserted—
Rights of a member of Lloyd’s under a syndicate within the meaning of Chapter III of Part II of the [1993 c. 34.] Finance Act 1993.
An asset which a member of Lloyd’s is treated as having acquired by virtue of section 82 of the Finance Act 1999.”
(2) This section applies to—
(a) assets (or interests in them) disposed of on or after 6th April 1999;
(b) assets (or interests in them) acquired on or after that date.
(1) This section applies in relation to any chargeable period where—
(a) the Board have made a written agreement with any person (“the taxpayer”);
(b) the agreement relates to one or more of the matters mentioned in subsection (2) below and to that chargeable period;
(c) the agreement is one made as a consequence of an application by the taxpayer to the Board for the clarification by agreement of the effect in the taxpayer’s case of provisions by reference to which questions relating to any one or more of those matters fall, or might fall, to be determined; and
(d) the agreement contains a declaration that it is an agreement made for the purposes of this section.
(2) Those matters are—
(a) the attribution of income to a branch or agency through which the taxpayer has been carrying on a trade in the United Kingdom, or is proposing so to carry on a trade;
(b) the attribution of income to any permanent establishment of the taxpayer (wherever situated) through which he has been carrying on, or is proposing to carry on, any business;
(c) the extent to which income which has arisen or may arise to the taxpayer is to be taken for any purpose to be income arising in a country or territory outside the United Kingdom;
(d) the treatment for tax purposes of any provision made or imposed (whether before or after the date of the agreement) as between the taxpayer and any associate of his;
(e) the treatment for tax purposes of any provision made or imposed (whether before or after the date of the agreement) as between a ring fence trade carried on by the taxpayer and any other activities so carried on.
(3) Subject to the following provisions of this section and to section 86 below, the Tax Acts shall have effect in the taxpayer’s case as if questions relating to the matters mentioned in subsection (2) above were, to the extent provided for in the agreement, to be determined in accordance with the agreement, and without reference to the provisions in accordance with which they would otherwise have fallen to be determined.
(4) In the case of so much of any question as—
(a) relates to any matter mentioned in paragraph (d) or (e) of subsection (2) above, and
(b) is not comprised in a question falling within another paragraph of that subsection,
the provisions reference to which is capable of being excluded under subsection (3) above by an agreement made for the purposes of this section shall be confined to those contained in Schedule 28AA to the Taxes Act 1988 (transfer pricing rules).
(5) Any such application to the Board as is mentioned in subsection (1)(c) above must set out—
(a) the taxpayer’s understanding of what would, in his case, be the effect, in the absence of any agreement, of the provisions in relation to which clarification is sought;
(b) the respects in which it appears to the taxpayer that clarification is required in relation to those provisions; and
(c) how the taxpayer proposes that matters should be clarified in a manner consistent with the understanding mentioned in paragraph (a) above.
(6) For the purposes of this section two persons are associates, in relation to provision made or imposed as between them if, within the meaning of Schedule 28AA to the Taxes Act 1988—
(a) one of them is directly or indirectly participating, at the time of the making or imposition of the provision, in the management, control or capital of the other; or
(b) the same person or persons is or are, at that time, directly or indirectly participating in the management, control or capital of each of the two persons;
and, in the case of provision made or imposed by or in relation to the terms of any sale of oil (within the meaning of paragraph 9 of that Schedule), two persons shall also be treated as associates for the purposes of this section wherever sub-paragraph (2) of that paragraph would require them for the purposes of that Schedule to be treated in relation to that provision as falling within paragraph (b) above.
(7) In this section “ring fence trade”, in relation to the taxpayer, means any activities which—
(a) are carried on by the taxpayer as, or as part of, a trade; and
(b) in accordance with section 492(1) of the Taxes Act 1988 (tax treatment of oil extraction activities), either—
(i) fall to be treated for tax purposes as a separate trade, distinct from all other activities carried on by the taxpayer; or
(ii) would so fall if the taxpayer did carry on any other activities as part of that trade.
(8) This section applies in relation to any chargeable period ending on or after the day on which this Act is passed but only if the agreement is one made on or after that day and in relation to that period.
(1) The chargeable periods in relation to which provision may be made by a section 85 agreement include periods ending before the making of the agreement.
(2) An agreement shall not have effect in accordance with section 85(3) above in relation to any determination of a question which—
(a) relates to a time after a time as from which an officer of the Board has revoked the agreement in accordance with its terms;
(b) relates to a time after or in relation to which there has been a failure by a party to the agreement to comply with any provision of the agreement compliance with which is, under the terms of the agreement, to be a condition of its having effect; or
(c) relates to any matter as respects which any other conditions which, by the terms of the agreement, are to be conditions of its having effect have not been, or are no longer, satisfied.
(3) Where—
(a) there is a section 85 agreement between the Board and any person, and
(b) there is a mutual agreement made under and for the purposes of any double taxation arrangements which is not consistent with the terms of the section 85 agreement,
it shall be the duty of the Board to ensure that all such modifications of the section 85 agreement are made (whether in exercise of powers conferred on the Board by that agreement or otherwise) as may be necessary for enabling effect to be given to the mutual agreement in relation to the subject-matter of the section 85 agreement.
(4) It shall be the duty of any person who is a party to a section 85 agreement to provide the Board from time to time with all such reports and other information as he may be required to provide under the agreement or by virtue of any request made by an officer of the Board in accordance with the terms of the agreement.
(5) Where—
(a) the Board and any person have purported to enter into a section 85 agreement at any time,
(b) before that time, that person fraudulently or negligently provided the Board with information which was false or misleading,
(c) that information was so provided for or in connection with the application to the Board for the making of the agreement or otherwise in connection with its preparation, and
(d) the Board have notified that person that the agreement is nullified by reason of the misrepresentation,
the agreement shall be deemed never to have been made.
(6) Any provision of a section 85 agreement that provides for the modification or revocation of that agreement by the Board, or by an officer of the Board, may provide for the modification or revocation to take effect as from such time (including a time before the modification is made or the agreement revoked) as the Board or officer may determine.
(7) Where a section 85 agreement—
(a) relates to a chargeable period beginning or ending before the making of the agreement, and
(b) provides for the manner in which adjustments are to be made for tax purposes in consequence of that agreement,
the adjustments shall be made for those purposes in the manner provided for in the agreement.
(8) A person shall be liable to a penalty not exceeding £10,000 if he fraudulently or negligently makes any false or misleading statement to the Board or an officer of the Board either—
(a) for or in connection with any application to the Board for them to enter into a section 85 agreement; or
(b) otherwise in connection with the preparation of such an agreement.
(9) In section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties in connection with returns etc.), in the second column of the table, after the final entry there shall be inserted the following entry—
| “Section 86(4) of the Finance Act 1999.” |
(10) In this section—
“double taxation arrangements” means any arrangements having effect under or by virtue of section 788 of the Taxes Act 1988 (double taxation agreements); and
“section 85 agreement” means an agreement made for the purposes of section 85 above.
(1) This section applies where—
(a) any agreement made for the purposes of section 85 above has effect in relation to any provision (“the actual provision”) made or imposed as between any person (“the taxpayer”) and another (“the other party”); and
(b) section 85(3) above has the effect in the taxpayer’s case of requiring a question relating to the actual provision to be determined in accordance with the agreement rather than by reference to rules which would otherwise be applicable by virtue of Schedule 28AA to the Taxes Act 1988.
(2) Paragraphs 6 and 7 of Schedule 28AA to the Taxes Act 1988 (relief from double counting in the case of disadvantaged persons) shall have effect in the other party’s case on the assumption that any question falling within subsection (3) below is to be determined, to the same extent as in the taxpayer’s case, by reference to the agreement.
(3) Those questions are—
(a) whether the taxpayer is a person on whom a potential advantage in relation to United Kingdom taxation is conferred by the actual provision; and
(b) what constitutes the arm’s length provision in relation to the actual provision.
(4) Subsection (2) above shall have effect subject to any agreement made for the purposes of section 85 above between the Board and the other party.
(5) Section 111 of the [1998 c. 36.] Finance Act 1998 (notice to persons who may be entitled to claim as disadvantaged persons) shall have effect as if the assumptions referred to in subsection (1)(b) of that section included any assumptions falling to be made by virtue of the agreement.
(1) In Schedule 25 to the Taxes Act 1988 (cases where section 747(3) does not apply), after sub-paragraph (1A) of paragraph 2 (acceptable distribution policy) there shall be inserted the following sub-paragraph—
“(1B) A dividend paid by a company shall not fall within sub-paragraph (1)(d) above if, and to the extent that, the profits which are the relevant profits in relation to the dividend derive from dividends or other distributions paid to the company at any time which are dividends or other distributions—
(a) to which section 208 applied; or
(b) to which that section would have applied if the company had been resident in the United Kingdom at that time.
Subsections (3) and (4) of section 799 (double taxation relief: computation of underlying tax) apply for the purposes of this sub-paragraph as they apply for the purposes of subsection (1) of that section.”
(2) Subsection (1) above applies for the purpose of determining whether dividends paid on or after 9th March 1999 for accounting periods ending on or after that date fall within sub-paragraph (1)(d) of paragraph 2 of that Schedule.
(1) In the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to provide information, produce documents etc.), in the first column, after the entry for Part III of the Taxes Management Act 1970 insert “regulations under section 59E of this Act;”.
(2) In section 102(5)(a) of the [1989 c. 26.] Finance Act 1989 (surrender of company tax refund within group), for “section 10 of the Taxes Act 1988” substitute “section 59D or 59E of the Taxes Management Act 1970”.
(3) This section has effect in relation to accounting periods ending on or after 1st July 1999.
(1) In section 826(4) of the Taxes Act 1988 (interest on tax overpaid)—
(a) for “the repayment of, or of the part in question of, the loan or advance mentioned in section 419(4) was made” substitute “the event giving rise to entitlement to relief under section 419(4) occurred”; and
(b) in paragraph (a)(i) of that subsection, after “repayment” insert “, or the release or writing off,”.
(2) This section has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.
(1) Schedule 16 to the Taxes Act 1988 (collection of income tax on company payments) is amended as follows.
(2) In paragraph 4 (payment of tax), omit—
(a) in sub-paragraph (1), the words “Subject to sub-paragraph (3) below,”; and
(b) sub-paragraph (3).
(3) In paragraph 8 (items included in return or claim in error)—
(a) for “should have been included in a return under Schedule 13” substitute “should not have been so included”; and
(b) for “been included in the right return” substitute “not been included in the return or claim in question”.
(4) In section 32(6) of the [1998 c. 36.] Finance Act 1998 (meaning of “unrelieved surplus advance corporation tax”), for “paragraph 11” substitute “paragraph 12”.
(5) Subsections (1) to (3) above have effect—
(a) in relation to periods for which a return is required under paragraph 2 of Schedule 16 to the Taxes Act 1988 beginning on or after 6th April 1999; and
(b) in relation to accounting periods beginning on or after that date.
(6) The amendment made by subsection (4) above shall be deemed always to have had effect.
(1) Part VIII of Schedule 18 to the Finance Act 1998 (claims for group relief) is amended as follows.
(2) In paragraph 75 (reduction in amount available for surrender by way of group relief)—
(a) in sub-paragraph (1), for “amount available for relief” substitute “total amount available for surrender”; and
(b) in sub-paragraphs (2) and (4), before “amount available for surrender” insert “total”.
(3) After that paragraph insert—
75A (1) This paragraph applies where, after the surrendering company has given notice of consent to surrender, a claimant company (“the chargeable company”) has become liable to tax in consequence of receiving—
(a) notice of the withdrawal of consent, or a copy of a new notice of consent, under paragraph 75(3), or
(b) a copy of a notice containing directions by the Inland Revenue under paragraph 75(4).
(2) If any of the tax is unpaid six months after the chargeable company’s time limit for claims, the Inland Revenue may make an assessment to tax in the name of the chargeable company on any other company that has obtained group relief as a result of the surrender.
(3) The assessment may not be made more than two years after that time limit.
(4) The amount of the assessment must not exceed—
(a) the amount of the unpaid tax, or
(b) if less, the amount of tax which the other company saves by virtue of the surrender.
(5) A company assessed to an amount of tax under sub-paragraph (2) is entitled to recover from the chargeable company—
(a) a sum equal to that amount, and
(b) any interest on that amount which it has paid under section 87A of the [1970 c. 9.] Taxes Management Act 1970 (interest on unpaid corporation tax).
(6) For the purposes of this paragraph the chargeable company’s time limit for claims is the last of the dates mentioned in paragraph 74(1) on which the chargeable company could make or withdraw a claim for group relief for the accounting period for which the claim in question is made.”
(4) In paragraph 76 (assessments to recover excessive group relief), after sub-paragraph (2) add—
“(3) If an assessment under this paragraph is made because a claimant company fails, or is unable, to amend its company tax return under paragraph 75(6), the assessment is not out of time if it is made within one year from—
(a) the date on which the surrendering company gives notice of the withdrawal of consent, or (if later) sends a copy of a new notice of consent, to the claimant company under paragraph 75(3), or
(b) the date on which the Inland Revenue send the claimant company a copy of a notice containing their directions under paragraph 75(4).”
(5) In section 87A(3) of the Taxes Management Act 1970 (interest on unpaid corporation tax assessed on other persons), for “section 96(8) of the [1990 c. 29.] Finance Act 1990” substitute “paragraph 75A(2) of Schedule 18 to the [1998 c. 36.] Finance Act 1998”.
(6) Section 96 of the Finance Act 1990 shall cease to have effect.
(7) This section has effect in relation to accounting periods ending on or after 1st July 1999.
Finance Act 1999