Office of Public Sector Information
SCHEDULE 1 continued PART 2 continued
(7C) No recommendation may be made to Her Majesty in Council to make an order under subsection (7B) unless a draft of the order has been laid before and approved by a resolution of the House of Commons.”
341 After section 285 insert—
(1) The following rules about European Economic Interest Groupings apply for the purposes of charging tax in respect of chargeable gains—
Rule 1
A grouping is treated as acting as the agent of its members.
Rule 2
The activities of a grouping are treated as those of its members acting jointly.
Rule 3
Each member of a grouping is treated as having a share of the grouping’s property, rights and liabilities.
Rule 4
Any trade or profession carried on by the grouping is treated as carried on in partnership by members of the grouping.
Rule 5
A person is to be regarded as acquiring or disposing of a share of the assets of the grouping not only where there is an acquisition or disposal of assets by the grouping while he is a member of it, but also where he becomes or ceases to be a member of a grouping or there is a change in his share of the property of the grouping.
(2) For the purposes of Rule 3, a member’s share of any property, rights or liabilities of a grouping is determined according to the contract under which the grouping is established.
(3) If the contract does not provide for this, the member’s share is determined by reference to the share of the profits of the grouping to which the member is entitled under the contract.
(4) If the contract does not provide for this either, the members are treated as having equal shares of the property, rights and liabilities of the grouping.
(5) “European Economic Interest Grouping” means a European Economic Interest Grouping formed under Council Regulation (EEC) No 2137/85 of 25th July 1985, whether registered in Great Britain, Northern Ireland or elsewhere.”
342 (1) Amend section 288 (interpretation) as follows.
(2) In subsection (1)—
(a) in the definition of “allowable loss” after “16” insert “, 261B, 261D”,
(b) after the definition of “ITTOIA 2005” insert—
““ITA 2007” means the Income Tax Act 2007;”,
(c) in the definition of “local authority” for “section 842A of the Taxes Act” substitute “section 999 of ITA 2007”,
(d) after the definition of “the Management Act” insert—
““net income” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007);”,
(e) in the definition of “period of account” for “section 832(1) of the Taxes Act” substitute “section 989 of ITA 2007”,
(f) in the definition of “property investment LLP” for “section 842B of the Taxes Act” substitute “section 1004 of ITA 2007”,
(g) in the definition of “recognised stock exchange” for “section 841 of the Taxes Act” substitute “section 1005 of ITA 2007”,
(h) in the definition of “venture capital trust” for “the meaning given by section 842AA of the Taxes Act” substitute “the same meaning as in Part 6 of ITA 2007”, and
(i) in the definition of “year of assessment” for the words from ““1992-93”” to the end substitute ““year of assessment 1992-93” means the year of assessment beginning on 6th April 1992 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way)”.
(3) In subsection (2) for “section 833(2) of the Taxes Act” substitute “section 989 of ITA 2007”.
(4) In subsection (3) for “section 282 of the Taxes Act” substitute “section 1011 of ITA 2007”.
343 In paragraph 22(1) of Schedule A1 (application of taper relief) in the definition of “ordinary share capital” for “section 832(1) of the Taxes Act” substitute “section 989 of ITA 2007”.
344 In paragraph 14 of Schedule 4A (deemed disposal of underlying assets where disposal of interest in settled property: exception) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property)”.
345 (1) Amend Schedule 5B (enterprise investment scheme: re-investment) as follows.
(2) In paragraph 1(2) (application of Schedule)—
(a) in paragraph (e) after “that Act)” insert “, or the requirements of section 183 of ITA 2007,”, and
(b) in paragraph (g) after “Taxes Act” insert “or section 175(3) of ITA 2007”.
(3) In paragraph 1A (failure of conditions of application)—
(a) in sub-paragraph (4A) after “Taxes Act” insert “or section 175(3) of ITA 2007”,
(b) in sub-paragraph (5) for “or section 310(2) of the Taxes Act” substitute “, section 310(2) of the Taxes Act or section 241(3) of ITA 2007”, and
(c) in sub-paragraph (7) after “Taxes Act” insert “or section 236(1) of ITA 2007”.
(4) In paragraph 4 (gains accruing on chargeable event)—
(a) in sub-paragraph (4) after “Taxes Act” insert “or Part 5 of ITA 2007” and after “that Chapter”, in each place where it occurs, insert “or that Part”,
(b) in sub-paragraph (4A) after “Taxes Act” insert “or Part 5 of ITA 2007”, after “that Chapter” insert “or that Part” and for “that Act” substitute “the Taxes Act or section 245 of ITA 2007”, and
(c) in sub-paragraph (4C) after “Taxes Act” insert “or Part 5 of ITA 2007”.
(5) In paragraph 6 (claims)—
(a) in sub-paragraph (1) after “Taxes Act” insert “or sections 202(1), 203(1) and 204 to 207 of ITA 2007” and for “that Act in respect of eligible shares” substitute “the Taxes Act or Part 5 of ITA 2007 in respect of eligible or relevant shares”,
(b) in sub-paragraph (2) for “That section” substitute “Section 306”, and
(c) after that sub-paragraph insert—
“(3) Sections 202(1), 203(1) and 204 to 207 of ITA 2007, as they so apply, shall have effect as if any reference to the requirements for the relief were a reference to the conditions for the application of this Schedule.”
(6) In paragraph 7(1) (reorganisations)—
(a) after “the Taxes Act” insert “or Part 5 of ITA 2007”, and
(b) after “that Chapter” insert “or that Part”.
(7) In paragraph 8 (acquisition of share capital by new company)—
(a) in sub-paragraph (1)(e)(ii) for “subsection (2) of section 306 of the Taxes Act” substitute “section 306(2) of the Taxes Act or section 203(1) of ITA 2007” and for “that section” substitute “section 306 of the Taxes Act or sections 204 and 205 of ITA 2007”,
(b) in sub-paragraph (5)(a) after “Taxes Act” insert “or section 203(1) of ITA 2007”, and
(c) in sub-paragraph (7) after “Taxes Act” insert “or section 185 of ITA 2007”.
(8) In paragraph 9 (other reconstructions and amalgamations)—
(a) in sub-paragraph (1) after “Taxes Act” insert “or Part 5 of ITA 2007”,
(b) in sub-paragraph (3) after “Taxes Act” insert “or Part 5 of ITA 2007”, and
(c) in sub-paragraph (4)(b) for “subsection (2) of section 306 of the Taxes Act” substitute “section 306(2) of the Taxes Act or section 203(1) of ITA 2007” and for “that section” substitute “section 306 of the Taxes Act or sections 204 and 205 of ITA 2007”.
(9) In paragraph 11(5) (pre-arranged exits)—
(a) after “trading group” insert “(a)”, and
(b) at the end insert “, or
(b) is a reference to a company that meets the trading requirement in section 181(2)(b) of ITA 2007.”
(10) In paragraph 13(5) (value received by investor) after “Taxes Act” insert “or Chapter 2 of Part 5 of ITA 2007”.
(11) In paragraph 13C (provision supplemental to paragraph 13B)—
(a) in sub-paragraph (3) for “Sub-paragraph (4) below” substitute “This sub-paragraph”, and
(b) for sub-paragraph (4) substitute—
“(4) Where either of the following applies—
(a) sub-paragraph (3) above, and
(b) section 223(3) of ITA 2007 (which makes corresponding provision in relation to EIS relief under Part 5 of that Act),
the person who subscribes for the shares shall not by virtue of his subscription for those shares or any other shares in the same issue be treated as making a qualifying investment for the purposes of this Schedule.”
(12) In paragraph 14(3) (value received by other persons)—
(a) after “Taxes Act”, in the first place where it occurs, insert “or Part 5 of ITA 2007”,
(b) for “that Act” substitute “the Taxes Act or section 209 or 216(2)(a) of ITA 2007”, and
(c) after “section 300 of the Taxes Act” insert “or 214 of ITA 2007”.
(13) In paragraph 16 (information)—
(a) in sub-paragraph (4)—
(i) after “Taxes Act”, in the first place where it occurs, insert “or section 203(1) of ITA 2007”, and
(ii) after “Taxes Act”, in the second place where it occurs, insert “or section 175(3) of ITA 2007”,
(b) in sub-paragraph (4A) after “Taxes Act” insert “or section 175(3) of ITA 2007”,
(c) in sub-paragraph (6) after “Taxes Act” insert “or section 176(4)(b) or (5)(b), 182(2) or (4), 183(6), 185(1), 190(1)(e) or 191(2)(c), (3), (4) or (5) of ITA 2007”,
(d) in sub-paragraph (7)—
(i) in paragraph (a) after “Taxes Act” insert “or section 182(2) or (4) of ITA 2007”,
(ii) in paragraph (aa) after “Taxes Act” insert “or section 176(4)(b) or (5)(b), 183(6) or 191(3), (4) or (5) of ITA 2007”, and
(iii) in paragraph (c) after “Taxes Act” insert “or section 185(1), 190(1)(e) or 191(2)(c) of ITA 2007”, and
(e) in sub-paragraph (7A)—
(i) after “Taxes Act” insert “and subsections (3), (4) and (5) of section 191 of ITA 2007”, and
(ii) for “that Act” substitute “the Taxes Act or section 190(2) of ITA 2007”.
(14) In paragraph 19(1) (interpretation)—
(a) in the definition of “eligible shares” for “that Act” substitute “the Taxes Act or means shares that meet the requirement in section 173 (2) of ITA 2007”,
(b) in the definition of “ordinary share capital” for “the same meaning as in the Taxes Act” substitute “the meaning given by section 989 of ITA 2007”,
(c) in the definition of “qualifying business activity” after “Taxes Act” insert “or section 179 of ITA 2007”,
(d) for the definition of “qualifying company” substitute—
““qualifying company”, in relation to any eligible shares, means a company which, in relation to those shares, is—
(a) a qualifying company for the purposes of Chapter 3 of Part 7 of the Taxes Act (except that for the purposes of this Schedule the reference in section 293(1B)(b)(i) of that Act to section 304A of that Act shall be read as a reference to paragraph 8 above), or
(b) a qualifying company for the purposes of Part 5 of ITA 2007 (except that for the purposes of this Schedule the reference in section 184(1)(c)(i) of that Act to section 247 of that Act shall be read as a reference to paragraph 8 above).”
(e) in the definition of “the relevant period” for “that Act” insert “the Taxes Act or section 159(2) of ITA 2007”, and
(f) in the definition of “termination date” after “Taxes Act” insert “or section 256 of ITA 2007”.
(15) In paragraph 19(3) omit the “and” immediately before paragraph (c) and after that paragraph insert “; and
(d) references to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued on or after 6th April 2007”.
346 In paragraph 1(1)(a) of Schedule 5BA (enterprise investment scheme: application of taper relief) after “Taxes Act” insert “or Part 5 of ITA 2007”.
347 In paragraph 3(1)(f) of Schedule 5C (VCTs: deferred charge on re-investment) for “section 842AA(8) of the Taxes Act” substitute “section 281(3) of ITA 2007”.
348 (1) Amend Schedule 7C (reliefs for transfers to approved share plans) as follows.
(2) In paragraph 2(6) (conditions relating to the disposal), in the definition of “ordinary share capital” for “section 832(1) of the Taxes Act” substitute “section 989 of ITA 2007”.
(3) In paragraph 7(1) and (3) (shares: special provision) after “Taxes Act” insert “or Part 5 of ITA 2007”.
349 In Schedule 8 (leases), in paragraph 5(6) for “any amount chargeable to tax under section 348 or 349 of the Taxes Act” substitute “any amount from which a sum representing income tax is required to be deducted under Part 15 of ITA 2007”.
350 In section 28(1)(a) of the Finance (No. 2) Act 1992 (powers of inspection) after “1988” insert “or under Part 10 of the Income Tax Act 2007”.
351 In paragraph 39(c) of Part 1 of Schedule 1 to the Tribunals and Inquiries Act 1992 (tribunals under direct supervision of Council) at the end insert “or Chapter 1 of Part 13 of the Income Tax Act 2007”.
352 In section 3(6) of the Judicial Pensions and Retirement Act 1993 (the appropriate annual rate) for “section 279(1) of the Finance Act 2004” substitute “section 4 of the Income Tax Act 2007”.
353 In section 25A(1) and (2) of the Charities Act 1993 (meaning of terms relating to Scotland and Northern Ireland) after “1988” insert “or Part 10 of the Income Tax Act 2007”.
354 The Finance Act 1993 is amended as follows.
355 Omit section 80 (transitional relief for charities etc).
356 Omit section 118 (Scottish trusts).
357 (1) Amend section 176 (ancillary trust funds) as follows.
(2) In subsection (3) for paragraph (a) substitute—
“(a) section 636 of ITA 2007 (exception where there is a transfer to a legatee);”.
(3) In subsection (4) for “sections 710 to” substitute “Part 12 of ITA 2007 and section”.
358 (1) Amend section 180 (underwriting profits to be earned income) as follows.
(2) In subsection (1) for paragraph (b) substitute—
“(b) accordingly, shall constitute—
(i) for the purposes of Part 4 of the Finance Act 2004, relevant UK earnings within section 189(2)(b) of that Act, and
(ii) income in relation to which the treatment in section 836(2) of ITA 2007 does not apply.”
(3) In the sidenote for “earned income” substitute “relevant UK earnings etc”.
359 In section 182(1)(ca)(ii) (Lloyd’s underwriters: regulations) for the words from “section 737E(2) and (8)” to the end substitute “section 569 (repos) or 613 (redemption arrangements) of ITA 2007;”.
360 In section 212 (interpretation) at the end insert “, and “ITA 2007” means the Income Tax Act 2007”.
361 (1) Amend Schedule 20A (Lloyd’s underwriters: conversion to limited liability underwriting) as follows.
(2) In paragraph 2—
(a) in sub-paragraph (2) for “The carry-forward provision” substitute “Section 83 of ITA 2007”, and
(b) omit sub-paragraphs (3) and (4).
(3) In paragraph 5(1), in the definition of “ordinary share capital”, for “section 832(1) of the Taxes Act 1988” substitute “section 989 of ITA 2007”.
(4) In paragraph 7(2) for “Section 385 of the Taxes Act 1988” substitute “Section 83 of ITA 2007”.
362 In paragraph 22(2) of Schedule 2 to the Agriculture Act 1993 (tax provisions relating to the carrying out of approved scheme of reorganisation) for “section 469 of the Income and Corporation Taxes Act 1988” substitute “the Tax Acts”.
363 (1) Amend paragraph 11 of Schedule 20 to the Finance Act 1994 (changes for facilitating self-assessment etc) as follows.
(2) In sub-paragraph (3) for the words from “be treated” to “excess” substitute “be chargeable for that year to an amount of income tax equal to the excess”.
(3) Omit sub-paragraph (7).
364 The Finance Act 1995 is amended as follows.
365 Omit section 73 (venture capital trusts: regulations).
366 Omit section 90 (relief for post-cessation expenditure).
367 (1) Amend section 127 (persons not treated as UK representatives) as follows.
(2) In subsection (5)(b) for the words from “section 128” to “excluded income” substitute “Chapter 1 of Part 14 of the Income Tax Act 2007 (limits on liability to income tax of non-UK residents) would fall (apart from the requirements of section 819 of that Act) to be treated as disregarded income (see section 813 of that Act)”.
(3) In subsection (17) for “section 839 of the Taxes Act 1988” substitute “section 993 of the Income Tax Act 2007”.
368 Omit section 128 (limit on income chargeable on non-residents: income tax).
369 (1) Amend section 154 (short rotation coppice) as follows.
(2) In subsection (1)—
(a) omit “Subject to subsection (1A),”, and
(b) for “Tax Acts” substitute “Corporation Tax Acts”.
(3) Omit subsection (1A).
370 (1) Amend Schedule 22 (prevention of exploitation of Schedule 2 to ITTOIA 2005 (so far as relating to overlap profit)) as follows.
(2) In paragraph 5(1)(b) for the words from “section 353” to “provision)” substitute “section 383 of the Income Tax Act 2007 (relief for interest payments)”.
(3) In paragraph 17—
(a) in sub-paragraph (2) for “section 839” to the end substitute “section 993 of the Income Tax Act 2007 (but as if, in subsection (4) of that section, the words from “But this subsection” to the end were omitted).”, and
(b) in sub-paragraph (6)(a), in paragraph (ii) of the definition of “control”, for “section 840 of that Act” substitute “section 995 of the Income Tax Act 2007”.
371 The Finance Act 1996 is amended as follows.
372 In section 88A(1) (loan relationships: accounting method where rate of interest is reset) for “of Chapter 1 of Part 17” substitute “given by section 840ZA”.
373 In section 91D(11) (loan relationships: condition 2 for section 91B(6)(b)) for “section 709(1)” substitute “section 840ZA”.
374 (1) Amend section 97 (manufactured interest) as follows.
(2) For subsection (4) substitute—
“(4) See sections 736B(2) and 737A(5) of the Taxes Act 1988 for cases in which there is deemed to be a payment of an amount representative of interest for the purposes of this section.”
(3) In subsection (4A) for “subsection (4) above” substitute “subsection (2) of that section”.
375 (1) Amend section 103 (interpretation of Chapter 2 of Part 4: loan relationships) as follows.
(2) In subsection (1), in the definition of “retail prices index”, for “section 833(2) of the Taxes Act 1988” substitute “section 989 of the Income Tax Act 2007”.
(3) In subsection (3B) for “section 709(1)” substitute “section 840ZA”.
376 In paragraph 13 of Schedule 9 (loan relationships for unallowable purposes) for sub-paragraph (6) substitute—
“(6) In this paragraph “tax advantage” has the meaning given by section 840ZA of the Taxes Act 1988.”
377 The Finance (No.2) Act 1997 is amended as follows.
378 Omit section 29 (unauthorised unit trusts).
379 In section 35(3)(a) (transitional relief for charities etc) for “charity” substitute “charitable company”.
380 The Finance Act 1998 is amended as follows.
381 In section 56(4) (transitional provision in connection with section 55 (construction workers supplied by agencies)) for “section 385 of the Taxes Act 1988” substitute “section 83 of the Income Tax Act 2007”.
382 In section 134(5) (transfer of company’s assets to VCT) for “section 842AA of the Taxes Act 1988” substitute “Part 6 of the Income Tax Act 2007”.
383 In section 135(5) (transfer within group to VCT) for “section 842AA of the Taxes Act 1988” substitute “Part 6 of the Income Tax Act 2007”.
384 In section 161(2)(a) (non-FOTRA securities) for the words from “sections 711” to “receiving” substitute “Chapter 2 of Part 12 of the Income Tax Act 2007 (accrued income profits) in relation only to accrued income profits which a person is treated as making under section 628(5) or 630(2) of that Act”.
385 (1) Amend Schedule 18 (company tax returns, assessments and related matters) as follows.
(2) In paragraph 3 after sub-paragraph (4) insert—
“(5) Sub-paragraph (1)(b) has effect as if the reference to the Corporation Tax Acts included a reference to sections 911, 912, 914 and 915 of the Income Tax Act 2007.”
(3) In paragraph 20 after sub-paragraph (3) insert—
“(4) In the application of this paragraph to an error relating to information required in a return by virtue of paragraph 3(5), this paragraph has effect as if—
(a) the reference in sub-paragraph (1) to a tax-related penalty were a reference to an amount not exceeding £3,000, and
(b) sub-paragraphs (2) and (3) were omitted.”
(4) In paragraphs 22(3)(a) and 23(3)(a) for sub-paragraph (ii) substitute—
“(ii) section 495(1) or 975(2) or (4) of the Income Tax Act 2007 (statements about deduction of income tax),”.
386 The Greater London Authority Act 1999 is amended as follows.
387 In section 157(4) (restriction on exercise of certain powers except through a company)—
(a) in paragraph (a) omit “income tax and” and “and” at the end, and
(b) after that paragraph insert—
“(aa) section 838 of the Income Tax Act 2007 (exemption of local authorities from income tax); and”.
388 In section 419(2) (taxation: certain bodies treated as a local authority)—
(a) in paragraph (a) for “income and corporation taxes” substitute “corporation tax”, and omit “and” at the end, and
(b) after that paragraph insert—
“(aa) section 838 of the Income Tax Act 2007 (exemption of local authorities from income tax); and”.
389 The Finance Act 2000 is amended as follows.
390 In section 38(4) (payroll deduction scheme) in the definition of “charity” for “that Act” in the first place where it occurs substitute “the Taxes Act 1988”.
391 In section 44 (which makes provision about expenses of trustees) for subsections (4) and (5) substitute—
“(5A) This section applies if—
(a) in a year of assessment qualifying income arises under a UK settlement,
(b) the qualifying income consists of charitable income and non-charitable income, and
(c) expenses of the trustees are to be used to reduce the charitable income for the purpose of calculating a beneficiary’s liability to corporation tax.
(5B) The amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income.
(5C) The amount of the expenses allocated to the charitable income is determined by apportioning them rateably between the charitable income and the non-charitable income.
(5D) In this section—
“charitable income” means income within section 628(1) or 630(1) of ITTOIA 2005,
“non-charitable income” means income which is not charitable income, and
“qualifying income” and “UK settlement” have the same meaning as in section 628 of ITTOIA 2005.”
392 (1) Amend section 46 (exemption for small trades etc) as follows.
(2) In subsection (1)—
(a) omit paragraph (a) and the “or” at the end of that paragraph, and
(b) for “charity” substitute “charitable company”.
(3) In subsection (2) omit paragraph (a) and the “or” at the end of that paragraph.
(4) In subsection (2A)—
(a) in paragraph (a) for “, 790 or 804” substitute “or 790”,
(b) at the end of paragraph (b) insert “and”, and
(c) omit paragraph (c) and the “and” at the end of that paragraph.
(5) In subsection (3)—
(a) for “a chargeable” substitute “an accounting”,
(b) for “charity”, in both places where it occurs, substitute “charitable company”,
(c) in paragraph (a) for “charity's” substitute “charitable company's”, and
(d) in that paragraph for “chargeable” substitute “accounting”.
(6) In subsection (4)(b)—
(a) for “charity's” substitute “charitable company's”, and
(b) for “chargeable” substitute “accounting”.
(7) In subsection (5) for “a chargeable” substitute “an accounting”.
(8) In subsection (6)—
(a) in the appropriate place insert—
““charitable company” means any body of persons established for charitable purposes only;”,
(b) omit the definition of “charity”,
(c) in the definition of “gross income”, for “charity” substitute “charitable company”, and
(d) in the definition of “income”—
(i) for “charity” substitute “charitable company”, and
(ii) omit paragraph (a) and the “or” at the end of that paragraph.
(9) In subsection (7) omit the words from “for the year” to “companies,”.
393 In section 155 (interpretation) at the end insert “and “ITA 2007” means the Income Tax Act 2007”.
394 (1) Amend Schedule 15 (the corporate venturing scheme) as follows.
Income Tax Act 2007