118 Penalties for failure to make returns etc or pay tax: consequential provision
(1) Schedule 27 contains amendments that are consequential on Schedules 24 to 26.
(2) Schedule 27 comes into force on such day as the Treasury may by regulations appoint.
(3) Different days may be appointed for different purposes.
(4) The Treasury may by regulations make transitional, transitory or saving provision in connection with the coming into force of any provision in Schedule 27.
(5) The Treasury may by regulations make provision that is consequential on Schedules 24 to 26.
(6) Regulations under subsection (5) may—
(a) include provision amending, repealing or revoking any provision of an Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it);
(b) make supplementary, incidental, transitional, transitory or saving provision.
(7) In subsection (6) “subordinate legislation” has the same meaning as in the Interpretation Act 1978.
(8) The power to make regulations under subsection (4) or (5) includes power to make different provision for different purposes.
(9) Regulations under this section are to be made by statutory instrument.
(10) A statutory instrument containing (whether alone or with other provision) regulations under subsection (5) that amend or repeal provision made by an Act is subject to annulment in pursuance of a resolution of the House of Commons.
Schedule 28 makes provision in relation to penalties to which a person may be liable after a follower notice has been given under Chapter 2 of Part 4 of FA 2014.
120 Late payment interest and repayment interest: VAT
(1) Schedule 29 contains amendments of FA 2009 relating to late payment interest, repayment interest and VAT.
(2) Schedule 29 comes into force on such day as the Treasury may by regulations appoint.
(3) Different days may be appointed for different purposes.
(4) The Treasury may by regulations make transitional, transitory or saving provision in connection with the coming into force of any provision in Schedule 29.
(5) The Treasury may by regulations make provision that is consequential on Schedule 29.
(6) Regulations under subsection (5) may—
(a) include provision amending, repealing or revoking any provision of an Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it);
(b) make supplementary, incidental, transitional, transitory or saving provision.
(7) In subsection (6) “subordinate legislation” has the same meaning as in the Interpretation Act 1978.
(8) The power to make regulations under subsection (4) or (5) includes power to make different provision for different purposes.
(9) Regulations under this section are to be made by statutory instrument.
(10) A statutory instrument containing (whether alone or with other provision) regulations under subsection (5) that amend or repeal provision made by an Act is subject to annulment in pursuance of a resolution of the House of Commons.
(1) Part 5 of FA 2014 (promoters of tax avoidance schemes) is amended in accordance with Schedule 30.
(2) Part 1 of that Schedule contains—
(a) amendments about “stop notices”, which prohibit the promotion of arrangements of a description specified in the notice, and
(b) amendments about the application of Schedule 36 to FA 2008 (information and inspection powers) in connection with Part 5 of FA 2014.
(3) Part 2 of that Schedule contains amendments in connection with providing for persons (whether or not they carry on a business) to be treated as carrying on business as a promoter as a result of their connection to other persons.
(4) Part 3 of that Schedule contains amendments about powers to give a person a conduct notice or monitoring notice as a result of the transfer of a business, a part of a business, or property of a business to that person.
(5) Part 4 of that Schedule contains miscellaneous amendments of Part 5 of FA 2014.
(6) The amendments made by that Schedule, other than the amendments made by paragraphs 20, 21 and 27 of that Schedule, have effect—
(a) from the day on which this Act is passed, and
(b) for the purposes of determining whether a person meets a threshold condition (within the meaning of Part 5 of FA 2014), or a condition in subsections (11) to (13) of Section 237A of FA 2014, in a period of three years ending on or after that day.
123 Penalties for enablers of defeated tax avoidance
(1) Schedule 16 to F(No.2)A 2017 (penalties for enablers of defeated tax avoidance) is amended as follows.
(2) In paragraph 21 (special provision about assessment for multi-user schemes)—
(a) in sub-paragraph (1)(c), for “, the required percentage of relevant defeats has not been reached” substitute “ (other than a tribunal or court defeat), neither condition 1 nor condition 2 has been met ”;
(b) in sub-paragraph (2), for “the required percentage of relevant defeats is reached” substitute “ condition 1 or condition 2 is met ”;
(c) after sub-paragraph (2) insert—
(2A) Condition 1 is that a defeat that is a tribunal or court defeat is incurred in the case of at least one of the number of related arrangements implementing the proposal.
(2B) Condition 2 is that the required number or percentage of relevant defeats is reached.
(2C) For the purposes of this paragraph, a defeat incurred in respect of arrangements is a “tribunal or court defeat” if—
(a) condition A (in paragraph 5) is met and the adjustments mentioned in paragraph 5(2) have been confirmed by a tribunal or court, or
(b) condition B (in paragraph 6) is met and the assessment mentioned in paragraph 6(2) has been confirmed by a tribunal or court.
(2D) An adjustment or assessment (as the case may be) has been confirmed by a tribunal or court if the First-tier Tribunal, the Upper Tribunal or a court has determined in proceedings before it that the adjustment or assessment in question should not be varied.
(2E) For the purposes of sub-paragraph (2D), disregard variations that do not substantively alter the basis of the adjustment or assessment in question.
;
(d) in sub-paragraph (3)—
(i) after “required” insert “ number or ”;
(ii) for the words from “defeats have” to the end of the sub-paragraph substitute
—
(a) the number of related arrangements implementing the proposal is fewer than 21 and defeats have been incurred in the case of 50% or more of those arrangements;
(b) the number of related arrangements implementing the proposal is more than 20 but fewer than 44 and defeats have been incurred in the case of 11 or more of those arrangements;
(c) the number of related arrangements implementing the proposal is more than 43 but fewer than 200 and defeats have been incurred in the case of 25% or more of those arrangements;
(d) the number of related arrangements implementing the proposal is 200 or more and defeats have been incurred in the case of 50 or more of those arrangements.
(3) In paragraph 22 (time limit for assessment)—
(a) in sub-paragraph (3)—
(i) in paragraph (a), for “the required percentage of defeats was reached” substitute “ condition 1 or condition 2 was met ”;
(ii) for paragraph (b) substitute—
(b) condition 1 or condition 2 has been met,
;
(iii) in paragraph (ii) for “that required percentage was reached” substitute “ the first of condition 1 or condition 2 was met ”;
(b) in sub-paragraph (4), in the words after paragraph (b), for “the required percentage of relevant defeats is reached” substitute “ condition 1 or condition 2 is met ”.
(4) In paragraph 40 (information and inspection powers: application of Schedule 36 to FA 2008)—
(a) for sub-paragraph (1) substitute—
(1) Schedule 36 to FA 2008 (information and inspection powers) applies for the purpose of—
(a) checking a relevant person's position as regards liability for a penalty under paragraph 1 in relation to particular tax arrangements;
(b) ascertaining the identity of any other person who has or may have enabled those arrangements,
as it applies for the purpose of checking a person's tax position, subject to the modifications in paragraphs 41 to 43.
;
(b) in sub-paragraph (2), in the definition of “relevant person”, at the end of the definition insert “ (or will become or may become so liable if T incurs a defeat) ”;
(c) after sub-paragraph (2) insert—
(3) References in this paragraph and paragraphs 41 and 42 to a person who has or may have enabled particular tax arrangements are to be read in accordance with Part 4 of this Schedule (persons who “enabled” the arrangements), save that—
(a) references in that Part to the arrangements mentioned in paragraph 1 (however expressed) are to be read as references to the particular tax arrangements, and
(b) references in that Part to “T” are to be read as references to the person who entered into the particular tax arrangements.
(5) In paragraph 41 (general modifications of Schedule 36 to FA 2008 as applied)—
(a) in the words before sub-paragraph (a), for “the purpose” substitute “ a purpose ”;
(b) in sub-paragraph (d), for the words from “the investigation” to the end of the sub-paragraph substitute
—
(i) the investigation of the relevant person's position as regards liability for a penalty under paragraph 1 in relation to particular tax arrangements, or (as the case may be)
(ii) the identification of any other person who has or may have enabled those arrangements, and
.
(6) In paragraph 42 (specific modifications of Schedule 36 to FA 2008 as applied)—
(a) in sub-paragraph (1)—
(i) for “the purpose” substitute “ a purpose ”;
(ii) for “(2)” substitute “ (1A) ”;
(b) after sub-paragraph (1) insert—
(1A) Paragraph 1 (taxpayer notices) has effect as if the reference to checking the taxpayer's tax position (as modified by paragraph 41 of this Schedule) included a reference to ascertaining the identity of any other person who has or may have enabled the particular tax arrangements in relation to which the relevant person's position as regards liability to a penalty under paragraph 1 is to be checked.
(1B) Paragraph 10 (power to inspect business premises etc) has effect as if the reference to checking that person's tax position (as modified by paragraph 41 of this Schedule) included a reference to ascertaining the identity of any other person who has or may have enabled the particular tax arrangements in relation to which the relevant person's position as regards liability to a penalty under paragraph 1 is to be checked.
;
(c) after sub-paragraph (2) insert—
(2A) Paragraph 25 (tax advisers) is treated as omitted.
(7) In paragraph 43 (exclusion of paragraphs 50 and 51 of Schedule 36 to FA 2008), for “the purpose” substitute “ a purpose ”.
(8) In paragraph 48 (restrictions on power to publish information about persons who have incurred a penalty)—
(a) in sub-paragraph (1), omit paragraph (c);
(b) in sub-paragraph (2), for “(1)(c) and (d)” substitute “ (1)(d) ”;
(c) omit sub-paragraph (3).
(9) The amendments made by subsections (2) and (3) do not have effect in relation to a person who is liable to a penalty under paragraph 1 of Schedule 16 to F(No.2)A 2017 solely by reason of actions of the person carried out before the day on which this Act is passed.
(10) Where the amendments made by subsections (2) and (3) have effect, in determining whether condition 1 or 2 is met in relation to particular tax arrangements, account may be taken of defeats incurred in the case of other related arrangements before the day on which this Act is passed.
(11) For the purposes of subsection (10), “condition 1”, “condition 2”, “defeat” and “related arrangements” have the same meanings as in paragraph 21 of Schedule 16 to F(No.2)A 2017 (as amended by subsection (2)).
(12) The amendments made by subsections (4) to (7) have effect for a purpose mentioned in paragraph (a) or (b) of paragraph 40(1) of Schedule 16 to F(No.2)A 2017 (as substituted by subsection (4)(a)) in relation to tax arrangements whenever entered into (whether before or after the passing of this Act).
(13) The amendments made by subsection (8) do not have effect in relation to a person who incurs a penalty under paragraph 1 of Schedule 16 to F(No.2)A 2017 whose liability to the penalty arose solely by reason of actions of the person carried out before the day on which this Act is passed.
(1) Schedule 32 makes provision about the operation of the general anti-abuse rule in relation to partnerships.
(2) The amendments made by the Schedule have effect in relation to tax arrangements (within the meaning of Part 5 of FA 2013) entered into at any time (whether before or after the passing of this Act).
125 Licensing authorities: requirements to give or obtain tax information
(1) Schedule 33 contains provision requiring licensing authorities, before considering an application for an authorisation to which that Schedule applies—
(a) in the case of a first-time application, to give the applicant information relating to tax compliance, and
(b) in the case of any other application, to obtain from HMRC confirmation that the applicant has given HMRC information relating to tax compliance.
(2) Schedule 33 has effect in relation to applications made on or after 4 April 2022.
(1) Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
(2) After paragraph 4 insert—
Power to obtain information and documents from financial institutions
4A (1) An officer of Revenue and Customs may by notice in writing require a financial institution—
(a) to provide information, or
(b) to produce a document,
if conditions A and B are met.
(2) Condition A is that the information or document is, in the reasonable opinion of the officer giving the notice, of a kind that it would not be onerous for the institution to provide or produce.
(3) Condition B is that the information or document is reasonably required by the officer—
(a) for the purpose of checking the tax position of another person whose identity is known to the officer (“the taxpayer”), or
(b) for the purpose of collecting a tax debt of the taxpayer.
(4) In this Schedule, “financial institution notice” means a notice under this paragraph.
(5) A financial institution notice may be given by an officer of Revenue and Customs only if—
(a) the officer is an authorised officer of Revenue and Customs, or
(b) an authorised officer of Revenue and Customs has agreed to the giving of the notice.
(6) A financial institution notice must name the taxpayer to whom it relates.
(7) An officer of Revenue and Customs—
(a) must give a copy of a financial institution notice to the taxpayer to whom it relates, and
(b) must give the taxpayer a summary of the reasons why an officer of Revenue and Customs requires the information and documents.
(8) An application (without notice) may be made to the tribunal by, or with the agreement of, an authorised officer of Revenue and Customs to disapply any of the requirements under sub-paragraph (6) or (7).
(9) The tribunal must grant the application to disapply the requirement under sub-paragraph (6) if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or collection of tax.
(10) The tribunal must grant the application to disapply a requirement under sub-paragraph (7) if it is satisfied that complying with the requirement might prejudice the assessment or collection of tax.
(3) In paragraph 6 (notices)—
(a) in sub-paragraph (1), after “2,” insert “ 4A, ”;
(b) in sub-paragraph (4), after “4” insert “ , 4A ”.
(4) After paragraph 61 insert—
Financial institution
61ZA (1) In this Schedule “financial institution” means—
(a) a financial institution under the CRS other than one which is such an institution because (and only because) it is an investment entity within section VIII (A)(6)(b) of the CRS, or
(b) a person who issues credit cards.
(2) In this paragraph “the CRS” means the common reporting standard for automatic exchange of financial account information developed by the Organisation for Economic Co-operation and Development, as that standard has effect from time to time.
(5) As soon as reasonably practicable after the end of each financial year, the Commissioners for Her Majesty's Revenue and Customs must provide the Treasury with—
(a) information about the number of financial institution notices given during that financial year, and
(b) such other information (if any) relating to financial institution notices as the Treasury may reasonably require.
(6) Information received under subsection (5) must be included in a report laid before the House of Commons by the Treasury.
(7) The report mentioned in subsection (6) must be laid not later than 31 January following the end of the financial year to which the information relates.
(8) For the purposes of subsections (5) to (7)—
“financial institution notice” means a notice under paragraph 4A of Schedule 36 to FA 2008;
each of the following is a “financial year”—
the period beginning with the date on which this Schedule comes into force and ending with 31 March 2022, and
each successive period of 12 months.
(9) The amendments made by subsections (2) to (4) have effect—
(a) for the purpose of checking the tax position of a taxpayer as regards periods or tax liabilities whenever arising, or
(b) for the purpose of collecting a tax debt of a taxpayer whenever arising.
(1) Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
(2) In paragraph 1(1) (taxpayer notices), at the end insert “ or for the purpose of collecting a tax debt of the taxpayer ”.
(3) In paragraph 2(1) (third party notices), at the end insert “ or for the purpose of collecting a tax debt of the taxpayer ”.
(4) In paragraph 5(2) (persons whose identities are not known), after “tax position of” insert “ or for the purpose of collecting a tax debt of ”.
(5) In paragraph 5A (persons whose identity can be ascertained)—
(a) in sub-paragraph (2), at the end insert “ or for the purpose of collecting a tax debt of the taxpayer ”, and
(b) in sub-paragraph (7), after “tax position of”, in both places, insert “ , or for the purpose of collecting a tax debt of, ”.
(6) After paragraph 63 insert—
Tax debts: collection
63A (1) In this Schedule a reference to collecting a tax debt of a person is a reference to taking any steps for, or in connection with, the recovery of—
(a) an amount of tax due from the person, or
(b) any other amount due from the person in connection with any tax.
(2) It does not matter whether or not another person is, or has been, at any time liable to pay the tax or other amount.
(7) After paragraph 63A (inserted by subsection (6)) insert—
Tax debts: extended meaning of “relevant foreign tax”
63B Where this Schedule applies for the purpose of collecting a tax debt of a person, “relevant foreign tax” is to be taken to include (in addition to what is mentioned in paragraph 63(4)) any tax or duty which is covered by the provisions for the exchange of information under Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures (as it had effect immediately before IP completion day).
(8) The amendments made by this section have effect for the purpose of collecting a tax debt of a person whenever arising.
130 Unauthorised removal or disposal of seized goods
(1) In Schedule 3 to CEMA 1979 (provisions relating to forfeiture), after paragraph 17 insert—
Unauthorised removal or disposal: penalties etc
18 (1) This paragraph applies where a thing is seized as liable to forfeiture and, with the agreement of a person within sub-paragraph (2) (“the responsible person”), the thing remains at the place where it is first seized.
(2) A person is within this sub-paragraph if the person is—
(a) the person whose offence or suspected offence occasioned the seizure,
(b) the owner or any of the owners of the thing seized or any servant or agent of such an owner,
(c) a person who has (or appears to have) possession or control over the thing being seized,
(d) in the case of any thing seized on a ship or aircraft, the master or commander,
(e) in the case of any thing seized on any other vehicle, the vehicle operator, or
(f) a person whom the person who seizes the thing reasonably believes to be a person within any of paragraphs (a) to (e).
(3) Where the thing is deemed to be seized as liable to forfeiture under paragraph 2(3) of Schedule 2A—
(a) the offence or suspected offence that occasioned its detention is to be treated, for the purpose of sub-paragraph (2)(a), as having occasioned its seizure, and
(b) sub-paragraph (2)(f) has effect as if the reference to the person who seizes the thing were a reference to any officer of Revenue and Customs.
(4) If the responsible person fails to prevent the unauthorised removal or disposal of the thing from the place where it is seized, that failure attracts a penalty under section 9 of the Finance Act 1994 (civil penalties).
(5) The removal or disposal of the thing is unauthorised unless it is done with the permission of a proper officer of Revenue and Customs.
(6) Where any duty of excise is payable in respect of the thing—
(a) the penalty is to be calculated by reference to the amount of that duty (whether it has been paid or not), and
(b) section 9 of the Finance Act 1994 has effect as if in subsection (2)(a) the words “5 per cent of” were omitted.
(7) If no duty of excise is payable in respect of the thing, that section has effect as if the penalty provided for by subsection (2)(b) of that section were whichever is the greater of—
(a) the value of the thing at the time when it was first seized, or
(b) £250.
19 (1) This paragraph applies where—
(a) a thing is seized at a revenue trader's premises,
(b) the thing is liable to forfeiture under the customs and excise Acts, and
(c) without the permission of a proper officer of Revenue and Customs, the thing is removed from the trader's premises, or otherwise disposed of, by any person.
(2) The Commissioners may seize as liable to forfeiture goods of equivalent value to the thing from the revenue trader's stock.
(3) For the purposes of this paragraph, a revenue trader's premises include any premises used to hold or store anything for the purposes of the revenue trader's trade, regardless of who owns or occupies the premises.
(2) The amendments made by this section have effect in relation to a thing seized as liable to forfeiture on or after the day on which this Act is passed.
131 Temporary approvals etc pending review or appeal
(1) In Chapter 2 of Part 1 of FA 1994 (customs and excise: appeals and penalties), after section 16 insert—
Temporary approvals etc pending review or appeal: eligibility
16A (1) Section 16B applies where HMRC notify P of an approval decision and—
(a) HMRC are required to review the decision under section 15C or 15E, or
(b) the decision, or the decision on a review under that section, has been appealed to an appeal tribunal under section 16.
(2) An approval decision is a decision as to whether or not, and in which respects, any person or place (as the case may be) is to be or is to continue to be—
(a) approved under section 92 of CEMA 1979 (warehousekeepers and owners of warehouses goods regime: approval of excise warehouses);
(b) approved and registered under section 100G of CEMA 1979 by virtue of—
(i) regulation 3 of the Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (S.I. 1999/1278) (authorized warehousekeepers);
(ii) regulation 5 of those Regulations (registered owners);
(iii) regulation 6 of those Regulations (duty representatives);
(iv) regulation 4 of the Hydrocarbon Oil (Registered Dealers in Controlled Oil) Regulations 2002 (S.I. 2002/3057) (registered dealers in controlled oil);
(c) approved and registered to carry on a controlled activity under section 88C ALDA 1979 (alcohol wholesalers registration scheme);
(d) approved to carry on a controlled activity under section 8L of TPDA 1979 (raw tobacco scheme);
(e) approved and registered under section 49 F(No.2)A 2017 (fulfilment houses due diligence scheme);
(f) licensed to carry out a regulated activity under the Tobacco Products Manufacturing Machinery (Licensing Scheme) Regulations 2018 (S.I. 2018/75) (tobacco machinery scheme).
(3) The Commissioners may by regulations made by statutory instrument amend subsection (2) so as to add, vary or remove a paragraph of that subsection.
(4) A statutory instrument containing regulations under subsection (3) is subject to annulment in pursuance of a resolution of the House of Commons.
Temporary approvals etc pending review or appeal: process
16B (1) On an application by P, HMRC may grant temporary approval if they are satisfied that—
(a) P has demonstrated that if temporary approval were not granted the review or appeal in respect of the approval decision, or the appeal from a decision on review of that decision, would be rendered nugatory by virtue of P being unable to continue as a going concern or otherwise, and
(b) it is appropriate in all the circumstances to grant temporary approval (despite the approval decision).
(2) In determining whether it would be appropriate to grant temporary approval, HMRC must have regard to—
(a) the prospect of the review or appeal in respect of the approval decision, or appeal from a decision on review of that decision, being determined in P's favour;
(b) any alternative steps available to, and taken by, P to protect P's position pending the final determination of the review or appeal;
(c) whether P has acted expeditiously in requiring the review or in bringing and progressing the appeal.
(3) Subject to any provision made in regulations under section 16C, temporary approval has effect as an approval, registration or licence (as the case may be) under the relevant provision listed in section 16A(2) that—
(a) commences on the day on which the application for temporary approval is granted,
(b) expires on the day determined in accordance with subsection (4), and
(c) is subject to any conditions or restrictions imposed on the temporary approval.
(4) The day on which a temporary approval expires is—
(a) in a case where the approval decision is cancelled on a review, the day on which it is cancelled;
(b) in a case where the approval decision is upheld on a review, the last day on which an appeal could be brought against that decision (ignoring any possibility of an appeal brought out of time with permission), unless paragraph (4)(c) applies;
(c) in a case where an appeal (other than an appeal brought out of time with permission) is brought in respect of an approval decision or a decision on a review of that decision, the day on which the appeal is finally determined.
(5) HMRC may revoke a temporary approval, or vary the conditions or restrictions to which it is subject, if they are satisfied that a change in circumstances justifies doing so.
(6) HMRC may by notice published in such form as HMRC considers appropriate make provision about the timing, form, content and determination of applications under subsection (1).
(7) Subsection (8) applies if HMRC—
(a) refuse an application under subsection (1),
(b) grant an application under that subsection subject to conditions or restrictions,
(c) vary the conditions or restrictions to which a temporary approval is subject, or
(d) revoke a temporary approval, and
the approval decision, or the decision on a review of that decision under section 15C or 15E, has been appealed to an appeal tribunal under section 16.
(8) If, on an application by P, the appeal tribunal decides that HMRC should not have (as the case may be)—
(a) refused the application,
(b) granted the application subject to particular conditions or restrictions,
(c) varied the conditions or restrictions to which the temporary approval is subject, or
(d) revoked the temporary approval,
the appeal tribunal may order HMRC to make any decision that it would have been open to HMRC to make under this section.
(9) If the appeal tribunal makes an order under subsection (8), HMRC or P may apply to the appeal tribunal to vary or revoke that order.
(10) HMRC must notify P of any decision to grant or revoke a temporary approval or to vary the conditions or restrictions to which such approval is subject.
Temporary approvals etc pending review or appeal: modifications
16C (1) The Commissioners may by regulations make such provision as they consider appropriate in consequence of provision made in sections 16A and 16B (including by virtue of regulations under section 16A(3)).
(2) Regulations under this section may amend, repeal, revoke or otherwise modify any enactment.
(3) Regulations under this section are to be made by statutory instrument.
(4) A statutory instrument containing regulations under this section which amend, repeal or modify the application of an Act of Parliament must be laid before the House of Commons after being made and, unless approved by that House before the end of the period of 28 days beginning with the date on which the instrument is made, ceases to have effect at the end of that period.
(5) Any other statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(6) The fact that a statutory instrument ceases to have effect as a result of subsection (4) does not affect—
(a) anything previously done under the instrument, or
(b) the making of a new instrument.
(7) In calculating the period of 28 days mentioned in subsection (4), no account is to be taken of any time—
(a) during which Parliament is dissolved or prorogued, or
(b) during which the House of Commons is adjourned for more than four days.
(8) In this section “enactment” includes an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978.
(2) In section 16A(1) of FA 1994 (inserted by subsection (1) of this section), the reference to HMRC notifying P of an approval decision includes a reference to HMRC having notified P of such a decision before the coming into force of this section.
(3) This section comes into force on such day as the Commissioners may by regulations made by statutory instrument appoint.
132 Replacement of LIBOR with incremental borrowing rate
(1) In section 70O of CAA 2001 (funding leases: the lease payments test)—
(a) in subsection (4)(b), for “1% above LIBOR” substitute “ the incremental borrowing rate ”;
(b) for subsection (5) substitute—
(5) For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(6) The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.
(2) In section 228MB of CAA 2001 (plant or machinery leases: present value of asset)—
(a) in subsection (3), for “1% above LIBOR” substitute “ the incremental borrowing rate ”;
(b) for subsection (4) substitute—
(4) For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(5) The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.
(3) In section 437C of CTA 2010 (plant or machinery lease: present value of lease)—
(a) in subsection (6), for “1% above LIBOR” substitute “ the incremental borrowing rate ”;
(b) for subsection (7) substitute—
(7) For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(7A) The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.
(4) Subsection (1) has effect in relation to leases the inception of which (within the meaning of section 70YI of CAA 2001) is on or after 1 January 2022.
(5) Subsection (2) has effect in relation to leases entered into on or after 1 January 2022.
(6) Subsection (3) has effect in cases where the relevant time for the purposes of section 437C of CTA 2010 is on or after 1 January 2022.
133 Tax consequences of reform etc of LIBOR and other reference rates
(1) The Treasury may by regulations make provision about the tax consequences of things done in anticipation of or in connection with—
(a) the reform or discontinuance of LIBOR, or
(b) the reform or discontinuance of another reference rate.
(2) Regulations under this section may, for example, make provision—
(a) changing the tax treatment of transactions (including by disregarding a transaction or treating a transaction as taking place at a different time or to a different extent);
(b) changing the tax treatment of amounts (including by disregarding an amount or treating an amount as larger or smaller than it actually is).
(3) Regulations under this section may include retrospective provision.
(4) Where regulations under this section do so—
(a) they must include provision conferring power on a person to make an election for no provision of the regulations to have retrospective effect in the person's case;
(b) they may include provision conferring power on a person to make such other election limiting the retrospective effect of the regulations in the person's case as is specified in the regulations.
(5) Regulations that include provision for an election mentioned in subsection (4)—
(a) must include provision about how the election is to be made, and
(b) may include provision for a time limit within which the election is to be made.
(6) Regulations under this section may—
(a) apply an enactment (with or without modifications) or disapply an enactment, or
(b) amend, repeal or revoke an enactment.
(7) Regulations under this section may—
(a) make different provision for different cases or purposes, and
(b) include incidental, consequential, supplementary or transitional provision.
(8) Regulations under this section are to be made by statutory instrument.
(9) No regulations may be made under this section unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of the House of Commons.
(10) In this section—
“enactment” includes an enactment contained in subordinate legislation (within the meaning of the Interpretation Act 1978);
“reference rate” means a published rate used to set interest rates for financial instruments;
“tax” includes stamp duty.
(11) The power conferred by this section is not exercisable after 31 December 2023, except for the purpose of revoking regulations made under it on or before that date.
134 Powers of the Treasury to amend legislation relating to banks
(1) In section 133N of CTA 2009 (powers to amend provisions relating to banking companies), after subsection (3) insert—
(3A) Regulations under this section made on or before 30 June 2022 may have retrospective effect in relation to any time on or after 1 January 2022.
(2) Chapter 2 of Part 7A of CTA 2010 (banking companies: key definitions) is amended as follows.
(3) For the italic heading before section 269BE (power to make consequential changes) substitute “ Powers to amend ”.
(4) In section 269BE—
(a) for the heading substitute “ Powers to amend ”;
(b) after subsection (1) insert—
(1A) The Treasury may by regulations—
(a) amend sections 269B to 269BD;
(b) amend other provisions of this Part in consequence of provision made under paragraph (a).
(1B) Regulations under this section may include transitional provision.
(1C) Regulations under this section made on or before 30 June 2022 may have retrospective effect in relation to any accounting period ending on or after 1 January 2022.
(1D) A statutory instrument containing (whether alone or with other provision) regulations under subsection (1A) may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
(5) Part 9 of Schedule 19 to FA 2011 (the bank levy: power to make consequential changes) is amended as follows.
(6) For the Part heading substitute “ Powers to amend ”.
(7) In paragraph 81—
(a) after sub-paragraph (1) insert—
(1A) The Treasury may by regulations made by statutory instrument—
(a) amend Part 8 of this Schedule (definitions);
(b) amend other Parts of this Schedule in consequence of provision made under paragraph (a).”
(1B) An order under sub-paragraph (1) or regulations under sub-paragraph (1A) may include transitional provision.
;
(b) in sub-paragraph (2)—
(i) in the words before paragraph (a), for “this paragraph” substitute “ sub-paragraph (1) ”;
(ii) omit paragraph (b);
(iii) at the end insert—
(c) in the case of an order made on or before 30 June 2022, in relation to any chargeable period ending on or after 1 January 2022.
;
(c) after sub-paragraph (2) insert—
(2A) Regulations under sub-paragraph (1A) made on or before 30 June 2022 may have retrospective effect in relation to any chargeable period ending on or after 1 January 2022.
;
(d) in sub-paragraph (3), for “an order under this paragraph” substitute “ only an order under sub-paragraph (1) ”;
(e) after sub-paragraph (3) insert—
(4) Any other statutory instrument containing provision made under this paragraph may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
In this Act the following abbreviations are references to the following Acts—
CAA 2001 | Capital Allowances Act 2001
CEMA 1979 | Customs and Excise Management Act 1979
CRCA 2005 | Commissioners for Revenue and Customs Act 2005
CTA 2009 | Corporation Tax Act 2009
CTA 2010 | Corporation Tax Act 2010
CT(NI)A 2015 | Corporation Tax (Northern Ireland) Act 2015
FA followed by a year | Finance Act of that year
F(No.2)A or F(No.3)A followed by a year | Finance (No.2) Act or Finance (No.3) Act of that year
HODA 1979 | Hydrocarbon Oil Duties Act 1979
IHTA 1984 | Inheritance Tax Act 1984
ITA 2007 | Income Tax Act 2007
ITEPA 2003 | Income Tax (Earnings and Pensions) Act 2003
ITTOIA 2005 | Income Tax (Trading and Other Income) Act 2005
TCGA 1992 | Taxation of Chargeable Gains Act 1992
TCTA 2018 | Taxation (Cross-border Trade) Act 2018
TIOPA 2010 | Taxation (International and Other Provisions) Act 2010
TMA 1970 | Taxes Management Act 1970
TPDA 1979 | Tobacco Products Duty Act 1979
VATA 1994 | Value Added Tax Act 1994
VERA 1994 | Vehicle Excise and Registration Act 1994
SCHEDULE 1 Small profits rate for non-ring fence profits
Section 7
PART 1 Small profits rate
1 CTA 2010 is amended as follows.
2 In section 3 (corporation tax rates), for subsection (2) substitute—
(2) Subsection (1) is subject to—
(a) section 18A (which provides for tax to be charged at the standard small profits rate instead of the main rate in certain cases), and
(b) any other provision of the Corporation Tax Acts which provides for corporation tax to be charged at a different rate.
3 Before Part 4 insert the following as a new Part 3A—
PART 3A Companies with small profits
The standard small profits rate for non-ring fence profits
Profits charged at the standard small profits rate
18A (1) Corporation tax is charged at the standard small profits rate on a company's taxable total profits of an accounting period which are not ring fence profits if—
(a) the company is UK resident in the accounting period,
(b) it is not a close investment-holding company in the period, and
(c) its augmented profits of the accounting period do not exceed the lower limit.
(2) In this Act “the standard small profits rate” means a rate that—
(a) is lower than the main rate, and
(b) is set by Parliament for the financial year as the standard small profits rate.
(3) In this Part “ring fence profits” has the same meaning as in Part 8 (see section 276).
(4) In the case of a company with ring fence profits, see section 279A(3) (small ring fence profits rate chargeable on ring fence profits).
Marginal relief
Marginal relief for companies without ring fence profits
18B (1) This section applies if—
(a) a company is UK resident in an accounting period,
(b) it is not a close investment-holding company in the period,
(c) its augmented profits of the accounting period exceed the lower limit but do not exceed the upper limit, and
(d) its augmented profits of the accounting period do not include any ring fence profits.
(2) The corporation tax charged on the company's taxable total profits of the accounting period is reduced by an amount equal to—
F
×
(
U
−
A
)
×
N
A
where—
F is the standard marginal relief fraction,
U is the upper limit,
A is the amount of the augmented profits, and
N is the amount of the taxable total profits.
(3) In this Act “the standard marginal relief fraction” means the fraction set by Parliament for the financial year as the standard marginal relief fraction for the purposes of this Part.
Marginal relief for companies with ring fence profits
18C In the case of a company with ring fence profits—
(a) see section 279B (if the company's augmented profits of an accounting period consist exclusively of ring fence profits), and
(b) see section 279C (if the company's augmented profits of an accounting period consist of both ring fence profits and other profits).
The lower limit and the upper limit
The lower limit and the upper limit
18D (1) This section gives the meaning in this Part of “the lower limit” and “the upper limit” in relation to an accounting period of a company (“C”).
(2) If C has no associated company in the accounting period—
(a) the lower limit is £50,000, and
(b) the upper limit is £250,000.
(3) If C has one or more associated companies in the accounting period—
(a) the lower limit is—
£
50,000
(
1
+
N
)
(b) the upper limit is—
£
250,000
(
1
+
N
)
where N is the number of those associated companies.
(4) For an accounting period of less than 12 months the lower limit and the upper limit are proportionately reduced.
Associated companies
18E (1) For the purposes of section 18D, a company is another company's associated company in an accounting period if it is an associated company (see subsection (4)) for any part of the accounting period.
(2) The rule in subsection (1) applies to each of two or more associated companies even if they are associated companies for different parts of the accounting period.
(3) But an associated company is ignored for the purposes of section 18D if—
(a) it has not carried on a trade or business at any time in the accounting period, or
(b) it was an associated company for part only of the accounting period and has not carried on a trade or business at any time in that part of the accounting period.
(4) For the purposes of this Part, a company is an associated company of another at any time when—
(a) one of the two has control of the other, or
(b) both are under the control of the same person or persons.
(5) In subsection (4) “control” has the same meaning as in Part 10 (see sections 450 and 451).
(6) In this section—
(a) subsection (3) is subject to section 18F, and
(b) subsections (4) and (5) are subject to sections 18G to 18J.
Section 18E(3): treatment of certain non-trading companies
18F (1) Subsection (2) applies if a company carries on a business of making investments in an accounting period and throughout the period the company—
(a) carries on no trade,
(b) has one or more 51% subsidiaries, and
(c) is a passive company.
(2) The company is treated for the purposes of section 18E(3) as not carrying on a business at any time in the accounting period.
(3) A company is a passive company throughout an accounting period only if the following requirements are met—
(a) it has no assets in that period, other than shares in companies which are its 51% subsidiaries,
(b) no income arises to it in that period other than dividends,
(c) if income arises to it in that period in the form of dividends—
(i) the redistribution condition is met (see subsection (4)), and
(ii) the dividends are exempt distributions of a qualifying kind received by it (see subsection (5)),
(d) no chargeable gains accrue to it in that period,
(e) no expenses of management of the business mentioned in subsection (1) are referable to that period, and
(f) no qualifying charitable donations are deductible from the company's total profits of that period.
(4) The redistribution condition is that—
(a) the company pays dividends to one or more of its shareholders in the accounting period, and
(b) the total amount paid in the form of those dividends is at least equal to the amount of the income arising to the company in the form of dividends in that period.
(5) For the purposes of this section a distribution is an “exempt distribution of a qualifying kind” if—
(a) it is a distribution for the purposes of the Corporation Tax Acts because (and only because) it falls within paragraph A, B, G or H in section 1000(1), and
(b) it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).
(6) If income arises to a company in an accounting period in the form of a dividend and the requirement in subsection (3)(c) is met in respect of the income—
(a) neither the dividend nor any asset representing it is treated as an asset of the company in that accounting period for the purposes of subsection (3)(a), and
(b) no right of the company to receive the dividend is treated as an asset of the company for the purposes of subsection (3)(a) in that period or any earlier accounting period.
Attribution to persons of rights and powers of their partners
18G (1) This section applies if—
(a) it is necessary to determine in accordance with section 18E(4) and (5) whether a company is an associated company of another company, and
(b) the relationship between the two companies is not one of substantial commercial interdependence.
(2) In the application of section 451 (meaning of “control”: rights to be attributed) for the purposes of the determination, any person to whom rights and duties fall to be attributed under subsections (4) and (5) of that section is to be treated, for the purposes of those subsections, as having no associates.
(3) The Treasury may by regulations prescribe factors that are to be taken into account in determining whether a relationship between two companies amounts to substantial commercial interdependence for the purposes of this section.
Associated companies: fixed-rate preference shares
18H (1) In determining for the purposes of section 18E(4) whether a company is under the control of another, fixed-rate preference shares held by a company are ignored if the company holding them—
(a) is not a close company,
(b) takes no part in the management or conduct of the company which issued the shares, or in the management or conduct of its business, and
(c) subscribed for the shares in the ordinary course of a business which includes the provision of finance.
(2) In this section “fixed-rate preference shares” means shares which—
(a) were issued wholly for new consideration,
(b) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and
(c) do not carry any right to dividends other than dividends which—
(i) are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and
(ii) together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued.
(3) In subsection (2)(a) “new consideration” has the meaning given by section 1115.
Association through a loan creditor
18I (1) A company (“A”) is not under the control of another company (“B”) for the purposes of section 18E(4) if—
(a) B is a loan creditor of A,
(b) there is no other connection between A and B, and
(c) either—
(i) B is not a close company, or
(ii) B's relationship to A as a loan creditor arose in the ordinary course of a business which B carries on.
(2) Subsection (3) applies if—
(a) two companies (“A” and “B”) are controlled by the same person who is a loan creditor of each of them,
(b) there is no other connection between A and B, and
(c) either—
(i) the loan creditor is a company which is not a close company, or
(ii) the loan creditor's relationship to each of A and B as a loan creditor arose in the ordinary course of a business which the loan creditor carries on.
(3) In determining for the purposes of this Part whether A and B are associated with each other, rights which the loan creditor has as a loan creditor of A, or as a loan creditor of B, are ignored.
(4) In subsection (2)(a) “control” has the same meaning as in section 18E(4).
(5) In this section—
(a) “connection” includes a connection in the past as well as a connection in the present, and
(b) references to a connection between two companies include any dealings between them.
(6) In this section references to a loan creditor of a company are to be read in accordance with section 453.
Association through a trustee
18J (1) Subsection (2) applies if—
(a) two companies (“A” and “B”) are controlled by the same person by virtue of rights or powers (or both) held in trust by that person, and
(b) there is no other connection between A and B.
(2) In determining for the purposes of this Part whether A and B are associated with each other, the rights and powers mentioned in subsection (1)(a) are ignored.
(3) In subsection (1)—
(a) “control” has the same meaning as in section 18E(4),
(b) “connection” includes a connection in the past as well as a connection in the present, and
(c) the reference to a connection between A and B includes any dealings between them.
Supplementary
Power to obtain information
18K (1) This section applies if a company (“the issuing company”) appears to an officer of Revenue and Customs to be a close company.
(2) The officer may, for the purposes of this Part, by notice require the issuing company to provide the officer with—
(a) particulars of any bearer securities issued by the company,
(b) the names and addresses of the persons to whom the securities were issued, and
(c) details of the amounts issued to each person.
(3) The officer may, for the purposes of this Part, by notice require—
(a) any person to whom bearer securities were issued by the company, or
(b) any person to or through whom bearer securities issued by the company were subsequently sold or transferred,
to provide any further information that the officer reasonably requires with a view to enabling the officer to find out the names and addresses of the persons beneficially interested in the securities.
(4) In this section—
“loan creditor” has the meaning given by section 453, and
“securities” includes—
shares, stocks, bonds, debentures and debenture stock, and
any promissory note or other instrument evidencing indebtedness to a loan creditor of the company.
Meaning of “augmented profits”
18L (1) For the purposes of this Part a company's “augmented profits” of an accounting period are—
(a) the company's taxable total profits of that period, plus
(b) any exempt distributions of a qualifying kind received by the company (“R”) that are not excluded.
(2) For the purposes of this section a distribution is an “exempt distribution of a qualifying kind” if—
(a) it is a distribution for the purposes of the Corporation Tax Acts because (and only because) it falls within paragraph A, B, G or H in section 1000(1), and
(b) it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).
(3) For the purposes of this section a distribution which R receives from a company (“C”) is excluded if—
(a) C is a 51% subsidiary of R or of a company of which R is a 51% subsidiary, or
(b) C is a trading company or relevant holding company that is a quasi-subsidiary of R.
(4) Section 18M—
(a) makes further provision for determining whether a company is a 51% subsidiary of another for the purposes of subsection (3), and
(b) defines expressions used in that subsection.
Interpretation of section 18L(3)
18M (1) This section applies for the purposes of section 18L(3).
(2) In addition to meeting the requirements of section 1154(2), a company (“A”) is a 51% subsidiary of another company (“B”) only at times when—
(a) B would be beneficially entitled to more than 50% of any profits available for distribution to equity holders of A, and
(b) B would be beneficially entitled to more than 50% of any assets of A available for distribution to its equity holders on a winding up.
(3) In determining whether or not a company is a 51% subsidiary of another company (“C”), C is treated as not owning share capital if—
(a) it owns the share capital indirectly,
(b) the share capital is owned directly by a company (“D”), and
(c) a profit on the sale of the shares would be a trading receipt for D.
(4) A company is a “trading company” if its business consists wholly or mainly of carrying on one or more trades.
(5) A company is a “relevant holding company” if its business consists wholly or mainly of holding shares in or securities of trading companies (as defined by subsection (4)) that are its 90% subsidiaries.
(6) A company is a “quasi-subsidiary” of R if—
(a) it is owned by a consortium of which R is a member,
(b) it is not a 75% subsidiary of any company, and
(c) no arrangements of any kind (whether in writing or not) exist as a result of which it could become a 75% subsidiary of any company.
(7) A company is owned by a consortium if at least 75% of the company's ordinary share capital is beneficially owned by two or more companies each of which—
(a) beneficially owns at least 5% of that capital,
(b) would be beneficially entitled to at least 5% of any profits available for distribution to equity holders of the company, and
(c) would be beneficially entitled to at least 5% of any asset of the company available for distribution to its equity holders on a winding up.
(8) The companies meeting those conditions are called the members of the consortium.
(9) Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of this section as it applies for the purposes of section 151(4)(a) and (b).
Close investment-holding companies
18N (1) For the purposes of this Part, a close company (“the candidate company”) is a close investment-holding company in an accounting period unless throughout the period it exists wholly or mainly for one or more of the permitted purposes set out in subsection (2).
There is an exception to this rule in subsection (5).
(2) The candidate company exists for a permitted purpose so far as it exists—
(a) for the purpose of carrying on a trade or trades on a commercial basis,
(b) for the purpose of making investments in land, or estates or interests in land, in cases where the land is, or is intended to be, let commercially (see subsection (3)),
(c) for the purpose of holding shares in and securities of, or making loans to, one or more companies each of which—
(i) is a qualifying company, or
(ii) falls within subsection (4),
(d) for the purpose of co-ordinating the administration of two or more qualifying companies,
(e) for the purpose of the making of investments as mentioned in paragraph (b)—
(i) by one or more qualifying companies, or
(ii) by a company which has control of the candidate company, or
(f) for the purpose of a trade or trades carried on on a commercial basis—
(i) by one or more qualifying companies, or
(ii) by a company which has control of the candidate company.
(3) For the purposes of subsection (2)(b), any letting of land is taken to be commercial unless the land is let to—
(a) a person connected with the candidate company (“a connected person”), or
(b) a person who is—
(i) the spouse or civil partner of a connected person,
(ii) a relative of a connected person, or the spouse or civil partner of a relative of a connected person,
(iii) a relative of the spouse or civil partner of a connected person, or
(iv) the spouse or civil partner of a relative of the spouse or civil partner of the connected person.
(4) A company falls within this subsection (see subsection (2)(c)(ii)) if—
(a) it is under the control of the candidate company or of a company which has control of the candidate company, and
(b) it exists wholly or mainly for the purpose of holding shares in or securities of, or of making loans to, one or more qualifying companies.
(5) If a company is wound up and was not a close investment-holding company in the accounting period that ends (by virtue of section 12(2) of CTA 2009) immediately before the winding up starts, the company is not treated for the purposes of this Part as being a close investment-holding company in the subsequent accounting period.
(6) In this section “qualifying company” means a company which—
(a) is under the control of the candidate company or of a company which has control of the candidate company, and
(b) exists wholly or mainly for either or both of the purposes mentioned in subsection (2)(a) or (b).
(7) In this section—
“control” has the meaning given by section 450, and
“relative” means brother, sister, ancestor or lineal descendant.
PART 2 Amendments of Chapter 3A of Part 8 of CTA 2010
4 Chapter 3A of Part 8 of CTA 2010 (rates at which corporation tax is charged on ring fence profits) is amended as follows.
5 In section 279A (corporation tax rates on ring fence profits), in subsection (3), after paragraph (a) but before the “and” at the end of that paragraph insert—
(ab) it is not a close investment-holding company in the period,
.
6 In section 279B (company with only ring fence profits)—
(a) in subsection (1), after paragraph (a) insert—
(ab) it is not a close investment-holding company in the period,
,
(b) in subsection (2), in the definition of “R”, for “marginal” substitute “ ring fence marginal ”, and
(c) in subsection (3), for “marginal” substitute “ ring fence marginal ”.
7 (1) Section 279C (company with ring fence profits and other profits) is amended as follows.
(2) In subsection (1), after paragraph (a) insert—
(ab) it is not a close investment-holding company in the period,
.
(3) For subsection (2) substitute—
(2) The corporation tax charged on the company's taxable total profits of the accounting period is reduced by the total of—
(a) the sum equal to the ring fence marginal relief fraction of the ring fence amount, and
(b) the sum equal to the standard marginal relief fraction of the remaining amount.
8 After section 279D insert—
The remaining amount
279DA (1) In section 279C “the remaining amount” means the amount given by the formula—
(
UZ
−
AZ
)
×
NZ
AZ
(2) In this section—
UZ is the amount given by multiplying the upper limit by—
A
Z
A
AZ is the total amount of any profits other than ring fence profits that form part of the augmented profits of the accounting period,
NZ is the total amount of any profits other than ring fence profits that form part of the taxable total profits of the accounting period, and
A is the amount of the augmented profits of the accounting period.
9 (1) Section 279E (the lower limit and the upper limit) is amended as follows.
(2) In subsection (2)—
(a) in the opening words, for “If no company is a related 51% group company of A” substitute “ If A has no associated company ”,
(b) in paragraph (a), for “£300,000” substitute “ £50,000 ”, and
(c) in paragraph (b), for “£1,500,000” substitute “ £250,000 ”.
(3) In subsection (3)—
(a) in the opening words, for “If one or more companies are related 51% group companies of A” substitute “ If A has one or more associated companies ”,
(b) in paragraph (a), for “£300,000” substitute “ £50,000 ”, and
(c) in paragraph (b), for “£1,500,000” substitute “ £250,000 ”.
10 After section 279E insert—
Supplementary
Interpretation etc
279EA (1) The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of section 279E.
(2) Section 18K (power to obtain information) applies for the purposes of this Part as it applies for the purposes of Part 3A.
(3) For the purposes of this Chapter—
“augmented profits” has the same meaning as in Part 3A (see sections 18L and 18M), and
“close investment-holding company” has the same meaning as in that Part (see section 18N).
11 Omit sections 279F to 279H (meaning of “related 51% group company” etc).
PART 3 Consequential amendments
FA 1998
12 In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), in paragraph 8(1) (calculation of tax payable), in the second step, for “Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small ring fence profits etc)” substitute “ Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits) ”.
Corporation Tax (Instalment Payments) Regulations 1998
13 (1) The Corporation Tax (Instalment Payments) Regulations 1998 (interpretation) are amended as follows.
(2) In regulation 2 (interpretation)—
(a) in paragraph (1), omit the entry for “related 51% group company”,
(b) in paragraph (2), for “section 279G” substitute “ sections 18L and 18M ”, and
(c) after that paragraph insert—
(2A) The rules in Part 3A of CTA 2010 (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D of that Act apply for the purposes of these Regulations.
(3) In regulations 3 and 3A (large and very large companies), for “related 51% group” (in each place) substitute “ associated ”.
FA 2000
14 In Schedule 22 to FA 2000 (tonnage tax), in paragraph 57(6)(a) (exclusion of relief or set-off against tax liability), for “Chapter 3A of Part 8 of CTA 2010 (marginal relief for companies with small ring fence profits)” substitute “ Part 3A or Chapter 3A of Part 8 of the Corporation Tax Act 2010 (marginal relief for companies with small profits) ”.
CAA 2001
15 CAA 2001 is amended as follows.
16 (1) Section 99 (long-life assets: the monetary limit) is amended as follows.
(2) In subsection (4)—
(a) for “In the case of a company (“C”), if, in a chargeable period, one or more companies are related 51% group companies of C” substitute “ If, in a chargeable period, a company has one or more associated companies ”, and
(b) in the definition of “N”, for “number of related 51% group” substitute “ number of associated ”.
(3) After that subsection insert—
(4A) The rules in Part 3A of CTA 2010 (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D of that Act apply for the purposes of subsection (4).
17 In Part 2 of Schedule 1 (defined expressions), omit the entry for “related 51% group company”.
CTA 2010
18 CTA 2010 is amended as follows.
19 In section 1(2) (overview of Act)—
(a) for “Parts 4” substitute “ Parts 3A ”, and
(b) before paragraph (b) insert—
(a) relief for companies with small profits (other than ring-fence profits) (see Part 3A),
.
20 (1) Section 357BN (profits arising from the exploitation of patents etc: small claims treatment) is amended as follows.
(2) In subsection (7)—
(a) in paragraph (a), for “no company is a related 51% group company of the company” substitute “ the company has no associated company ”,
(b) in paragraph (b), for “one or more companies are related 51% group companies of the company” substitute “ the company has one or more associated companies ”, and
(c) in the definition of “N”, for “those related 51% group” substitute “ those associated ”.
(3) After subsection (8) insert—
(9) The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of this section.
21 (1) Section 357BNB (profits arising from the exploitation of patents etc: small claims figure election) is amended as follows.
(2) In subsection (6), for “no company is a related 51% group company of the company” substitute “ the company has no associated company ”.
(3) In subsection (7)—
(a) for “one or more companies are related 51% group companies of the company” substitute “ the company has one or more associated companies ”, and
(b) in the definition of “N”, for “those related 51% group” substitute “ those associated ”.
(4) After subsection (9) insert—
(10) The rules in Part 3A (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D apply for the purposes of this section.
22 In section 534 (REITs: profits), after subsection (2) insert—
(3) Profits which—
(a) arise from the residual business of a UK company which is, or is a member of, a UK REIT, and
(b) are charged to corporation tax,
are to be charged at a rate determined without reference to sections 18A and 18B (companies with small profits).
23 In section 535 (REITs: gains), after subsection (5) insert—
(6) Gains which—
(a) accrue to residual business of a company which is, or is a member of, a UK REIT, and
(b) are charged to corporation tax,
are to be charged at a rate determined without reference to sections 18A and 18B (companies with small profits).
24 In section 543 (REITs: financing-cost ratio), after subsection (4) insert—
(5) Accordingly, it is charged to corporation tax at the main rate of corporation tax.
25 In section 551 (REITs: distribution to holder of excessive rights), after subsection (5) insert—
(6) Accordingly, it is charged to corporation tax at the main rate of corporation tax.
26 In section 564 (REITs: breach of condition as to distribution of profits), after subsection (3) insert—
(4) Accordingly, it is charged to corporation tax at the main rate of corporation tax.
27 In section 614 (open-ended investment companies: applicable corporation tax rate), at the end insert “ (and sections 18A and 18B (relief for companies with small profits) do not apply) ”.
28 In section 618 (authorised unit trusts: applicable corporation tax rate), at the end insert “ (and sections 18A and 18B (relief for companies with small profits) do not apply) ”.
29 For section 627 substitute—
Meaning of “main rate of corporation tax” for companies with ring fence profits or small profits
627 (1) This section applies if corporation tax chargeable on any profits of a company for a financial year—
(a) is to be charged at the main ring fence profits rate,
(b) is to be charged at the standard small profits rate or the small ring profits rate, or
(c) is to be reduced by reference to the standard marginal relief fraction or the ring fence marginal relief fraction (within the meaning of Part 3A or Chapter 3A of Part 8).
(2) References in this Chapter to the main rate of corporation tax are to be taken, so far as relating to profits charged at any of the rates mentioned in subsection (1)(a) or (b), as references to the rate or rates concerned.
(3) References in this Chapter to the main rate of corporation tax are, if corporation tax is reduced as mentioned in subsection (1)(c), to be taken as including references to the fraction or fractions concerned (and with references to a rate being “fixed” or “proposed” read accordingly as references to the fraction or fractions concerned being fixed or proposed).
30 In section 1119 (Corporation Tax Acts definitions), omit the definition of “related 51% group company”.
31 In Schedule 4 (index of defined expressions)—
(a) insert the following entries at the appropriate places—
close investment-holding company (in Part 3A or Chapter 3A of Part 8) | section 18N (including as applied by section 279EA)
the standard marginal relief fraction | section 18B
the standard small profits rate | section 18A
,
(b) in the entry for “augmented profits”—
(i) in the first column, before “Chapter 3A” insert “ Part 3A or ”, and
(ii) in the second column, for “section 279G” substitute “ sections 18L and 18M (including as applied by section 279EA) ”,
(c) in the entry for “the lower limit”—
(i) in the first column, before “Chapter 3A” insert “ Part 3A or ”, and
(ii) in the second column, after “section” insert “ 18D or ”,
(d) in the entry for “the marginal relief fraction”, in the first column, for “marginal” substitute “ ring fence marginal ” (and, accordingly, move the entry to the appropriate place),
(e) omit the entry for “related 51% group company”,
(f) for the entries for “ring fence profits” (in Parts 3 and 8) substitute—
ring fence profits (in Part 3A or 8) | section 276 (including as applied by section 18A)
, and
(g) in the entry for “the upper limit”—
(i) in the first column, before “Chapter 3A” insert “ Part 3A or ”, and
(ii) in the second column, after “section” insert “ 18D or ”.
FA 2012
32 In section 102 of FA 2012 (policyholders' rate of tax on policyholders' share of I - E profit), at the end insert—
(5) The policyholders' share of the I - E profit for an insurance company's accounting period is to be left out of account in determining for the purposes of Part 3A of CTA 2010 (companies with small profits)—
(a) the augmented profits of the company for the accounting period, and
(b) the taxable total profits of the company for the accounting period.
PART 4 Commencement etc
Commencement
33 The amendments made by paragraphs 13, 16, 17, 20 and 21 have effect in relation to accounting periods beginning on or after 1 April 2023.
34 (1) The other amendments made by this Schedule have effect for the financial year 2023 and subsequent financial years.
(2) In the case of an accounting period (a “straddling period”) beginning before 1 April 2023 and ending on or after date, those other amendments have effect as if the different parts of the straddling period falling in the different financial years were separate accounting periods.
(3) For this purpose all necessary apportionments are to be made between the two separate accounting periods.
Power to make further consequential amendments
35 (1) The Treasury may by regulations make such provision as they consider appropriate in consequence of the provision made by this Schedule.
(2) The regulations—
(a) may amend any provision of the Corporation Tax Acts or any other enactment, and
(b) may contain incidental, supplemental, consequential or transitional provision.
SCHEDULE 2 Temporary extension of periods to which trade losses may be carried back
Section 18
PART 1 Income tax
Relief for trade losses made in tax year 2020-21
1 (1) A person who has made a loss in a trade in the tax year 2020-21 may make a claim for relief under this paragraph if—
(a) some or all of the loss (“the section 64 amount”) is an amount in respect of which the person is entitled to make a claim under section 64 of ITA 2007 (trade loss relief against general income) or would be so entitled were there sufficient income from which to deduct it, and
(b) condition A or B is met.
(2) Condition A is that the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for either or both of the tax years 2019-20 and 2020-21.
(3) Condition B is that the person's total income for the tax years 2019-20 and 2020-21—
(a) is nil, or
(b) does not include any income from which a deduction could be made in pursuance of a claim under section 64 of ITA 2007 in respect of the section 64 amount.
(4) The amount of the loss that may be relieved under this paragraph (“the deductible amount”) is—
(a) if condition A is met, so much of the section 64 amount as cannot be relieved pursuant to the claim under section 64 of ITA 2007;
(b) if condition B is met, the whole of the section 64 amount.
But see sub-paragraph (9) (limit on total deductions under this paragraph).
(5) A claim for relief under this paragraph is for the deductible amount to be deducted (in accordance with whichever is applicable of sub-paragraphs (7) and (8)) in calculating the person's net income for one or more of the tax years 2017-18, 2018-19 and 2019-20 at Step 2 of the calculation in section 23 of ITA 2007 (which applies as if this paragraph were a provision listed in section 24 of that Act).
(6) A deduction is to be made only from the profits of the trade (and accordingly subsection (2) of section 25 of ITA 2007 has effect as if this sub-paragraph were included in subsection (3) of that section).
(7) This sub-paragraph explains how the deductions are to be made in a case where the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for the tax year 2019-20.
Step 1 Deduct the deductible amount from the profits of the trade for the tax year 2018-19.
Step 2 Deduct from the profits of the trade for the tax year 2017-18 so much of the deductible amount as has not been deducted under Step 1.
(8) This sub-paragraph explains how the deductions are to be made in any other case.
Step 1 Deduct the deductible amount from the profits of the trade for the tax year 2019-20.
Step 2 Deduct from the profits of the trade for the tax year 2018-19 so much of the deductible amount as has not been deducted under Step 1.
Step 3 Deduct from the profits of the trade for the tax year 2017-18 so much of the deductible amount as has not been deducted under Step 1 or 2.
(9) The total amount that may be deducted in accordance with sub-paragraph (7), or in accordance with Steps 2 and 3 in sub-paragraph (8), is limited to £2,000,000.
(10) A claim for relief under this paragraph must be made on or before the first anniversary of the normal self-assessment filing date for the tax year 2020-21.
Relief for trade losses made in tax year 2021-22
2 (1) A person who has made a loss in a trade in the tax year 2021-22 may make a claim for relief under this paragraph if—
(a) some or all of the loss (“the section 64 amount”) is an amount in respect of which the person is entitled to make a claim under section 64 of ITA 2007 (trade loss relief against general income) or would be so entitled were there sufficient income from which to deduct it, and
(b) condition A or B is met.
(2) Condition A is that the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for either or both of the tax years 2020-21 and 2021-22.
(3) Condition B is that the person's total income for the tax years 2020-21 and 2021-22—
(a) is nil, or
(b) does not include any income from which a deduction could be made in pursuance of a claim under section 64 of ITA 2007 in respect of the section 64 amount.
(4) The amount of the loss that may be relieved under this paragraph (“the deductible amount”) is—
(a) if condition A is met, so much of the section 64 amount as cannot be relieved pursuant to the claim under section 64 of ITA 2007;
(b) if condition B is met, the whole of the section 64 amount.
But see sub-paragraph (9) (limit on total deductions under this paragraph).
(5) A claim for relief under this paragraph is for the deductible amount to be deducted (in accordance with whichever is applicable of sub-paragraphs (7) and (8)) in calculating the person's net income for one or more of the tax years 2018-19, 2019-20 and 2020-21 at Step 2 of the calculation in section 23 of ITA 2007 (which applies as if this paragraph were a provision listed in section 24 of that Act).
(6) A deduction is to be made only from the profits of the trade (and accordingly subsection (2) of section 25 of ITA 2007 has effect as if this sub-paragraph were included in subsection (3) of that section).
(7) This sub-paragraph explains how the deductions are to be made in a case where the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for the tax year 2020-21.
Step 1 Deduct the deductible amount from the profits of the trade for the tax year 2019-20.
Step 2 Deduct from the profits of the trade for the tax year 2018-19 so much of the deductible amount as has not been deducted under Step 1.
(8) This sub-paragraph explains how the deductions are to be made in any other case.
Step 1 Deduct the deductible amount from the profits of the trade for the tax year 2020-21.
Step 2 Deduct from the profits of the trade for the tax year 2019-20 so much of the deductible amount as has not been deducted under Step 1.
Step 3 Deduct from the profits of the trade for the tax year 2018-19 so much of the deductible amount as has not been deducted under Step 1 or 2.
(9) The total amount that may be deducted in accordance with sub-paragraph (7), or in accordance with Steps 2 and 3 in sub-paragraph (8), is limited to £2,000,000.
(10) A claim for relief under this paragraph must be made on or before the first anniversary of the normal self-assessment filing date for the tax year 2021-22.
Further provision about relief under paragraph 1 or 2
3 (1) The following sections of ITA 2007 apply in relation to relief under paragraph 1 or 2 as they apply in relation to relief under section 64 of that Act—
(a) sections 66 to 70 (restrictions on relief under section 64),
(b) sections 74ZA to 74D (general restrictions on relief),
(c) section 74E (no relief where cash basis used to calculate losses),
(d) sections 75 to 79 (restrictions on relief under section 64 and early trade losses relief in relation to capital allowances), and
(e) section 80 (restrictions on those reliefs in relation to ring fence income).
(2) Paragraphs 1 and 2 apply to professions and vocations as they apply to trades.
(3) Paragraphs 1 and 2 are subject to paragraph 2 of Schedule 1B to TMA 1970 (claims to loss relief involving 2 or more years).
(4) Sections 61 to 63 of ITA 2007 (meaning of “making a loss in a tax year” etc and prohibition against double counting) have effect as if paragraphs 1 and 2 were included in Chapter 2 of Part 4 of that Act.
(5) The reference in paragraph 3(1) of Schedule 2 to the Social Security Contributions and Benefits Act 1992 and Social Security Contributions and Benefits (Northern Ireland) Act 1992 (levy of Class 4 contributions with income tax) to section 64 of ITA 2007 includes paragraphs 1 and 2.
PART 2 Corporation tax
Relief for trade losses incurred in accounting periods ending in financial year 2020 or 2021
4 (1) Sections 37(3)(b) and 38(1) and (3) of CTA 2010 (relief for trade losses against profits of same or earlier accounting period) have effect in relation to any loss to which this paragraph applies as if references to 12 months were references to 3 years (but subject as follows).
(2) This paragraph applies to any loss incurred by a company in a trade in a relevant accounting period.
(3) In this paragraph “relevant accounting period” means an accounting period that ends in the period beginning with 1 April 2020 and ending with 31 March 2022.
(4) Sub-paragraph (5) applies where—
(a) a loss incurred by a company in a relevant accounting period (“the relevant loss”) is, to any extent, relievable under section 37 of CTA 2010 by virtue of this paragraph, and
(b) some but not all of the relevant loss is also relievable under that section by virtue of section 40 of that Act (ring fence trades: extension of periods for which relief may be given).
(5) A claim for relief under section 37 of CTA 2010 by virtue of this paragraph in respect of the relevant loss is treated, so far as possible, as being made in respect of the part of the loss that is not relievable as mentioned in sub-paragraph (4)(b).
(6) Section 42 of CTA 2010 (ring fence trades: further extension of period of relief) has effect as if—
(a) in subsection (1)(b), the reference to section 39 or 40 of that Act included a reference to this paragraph;
(b) in subsection (8), in the definition of “3 year relief period”, the reference to section 39 or 40 of that Act included a reference to this paragraph.
Cap on claims by company that is not a member of a 2020 group or 2021 group
5 (1) A 2020 claim may be made by a company that is not a member of a 2020 group only if the total amount of relief given as a result of the claim, when added to the total amount of relief given as a result of any other 2020 claims already made by the company, is under £2,000,000.
(2) A 2021 claim may be made by a company that is not a member of a 2021 group only if the total amount of relief given as a result of the claim, when added to the total amount of relief given as a result of any other 2021 claims already made by the company, is under £2,000,000.
Non-de minimis claims to be made after end of financial year
Non-de minimis claims to be made in company tax return
7 (1) A non-de minimis claim must be made in the company tax return (whether as originally made or by amendment) for the accounting period in which the loss in respect of which the claim is made is incurred.
(2) The company tax return for any earlier accounting period affected by the claim is treated as amended accordingly.
Meaning of “de minimis claim” etc
8 (1) For the purposes of this Part of this Schedule, a 2020 claim is a “de minimis 2020 claim” if—
(a) the total amount of relief given as a result of the claim, when added to the total amount of relief given as a result of any other 2020 claims already made by the company, is under £200,000, and
(b) the condition in paragraph (a) would still be met on the assumptions in sub-paragraph (3).
(2) For the purposes of this Part of this Schedule, a 2021 claim is a “de minimis 2021 claim” if—
(a) the total amount of relief given as a result of the claim, when added to the total amount of relief given as a result of any other 2021 claims already made by the company, is under £200,000, and
(b) the condition in paragraph (a) would still be met on the assumptions in sub-paragraph (3).
(3) The assumptions are—
(a) that the company makes all claims available to it (if any) for allowances under CAA 2001, or any other provision of the Corporation Tax Acts, that would result in an increase in the amount of the loss in respect of which the claim in question is made;
(b) that the company does not surrender any amount under Part 5 of CTA 2010 (group relief);
(c) that the claim in question is for all of the relief available to the company under section 37 of CTA 2010 by virtue of paragraph 4 in relation to the loss in respect of which the claim is made.
(4) In this Part of this Schedule—
(a) “non-de minimis 2020 claim” means a 2020 claim that is not a de minimis 2020 claim;
(b) “non-de minimis 2021 claim” means a 2021 claim that is not a de minimis 2021 claim;
(c) “de minimis claim” means a 2020 de minimis claim or a 2021 de minimis claim;
(d) “non-de minimis claim” means a non-de minimis 2020 claim or a non-de minimis 2021 claim.
Cap on non-de minimis claims by company that is a member of a 2020 group or 2021 group
9 (1) A non-de minimis 2020 claim may be made by a company that is a member of a 2020 group only if the total amount of relief given as a result of each of the following claims is, in aggregate, less than £2,000,000—
(a) the claim in question;
(b) any other 2020 claims made by the company (including any de minimis claims);
(c) any 2020 claims made by other members of the 2020 group (including any de minimis claims).
(2) A non-de minimis 2021 claim may be made by a company that is a member of a 2021 group only if the total amount of relief given as a result of each of the following claims is, in aggregate, less than £2,000,000—
(a) the claim in question;
(b) any other 2021 claims made by the company (including any de minimis claims);
(c) any 2021 claims made by other members of the 2021 group (including any de minimis claims).
Non-de minimis claims by group company to conform with statement
10 (1) A non-de minimis 2020 claim may be made by a company that is a member of a 2020 group only if—
(a) a 2020 loss carry-back allocation statement has been submitted on behalf of the group in accordance with regulations under paragraph 11, and
(b) the claim is for an amount specified in that statement in accordance with those regulations.
(2) A non-de minimis 2021 claim may be made by a company that is a member of a 2021 group only if—
(a) a 2021 loss carry-back allocation statement has been submitted on behalf of the group in accordance with regulations under paragraph 11, and
(b) the claim is for an amount specified in that statement in accordance with those regulations.
Loss carry-back allocation statements
11 (1) The Commissioners must by regulations make provision—
(a) requiring a statement (“a 2020 loss carry-back allocation statement”) to be submitted to HMRC on behalf of a 2020 group for the purpose of determining the non-de minimis 2020 claims that may be made by members of the group in compliance with paragraphs 9 and 10;
(b) requiring a statement (“a 2021 loss carry-back allocation statement”) to be submitted to HMRC on behalf of a 2021 group for the purpose of determining the non-de minimis 2021 claims that may be made by members of the group in compliance with paragraphs 9 and 10.
(2) The regulations may, in particular, include provision about—
(a) the nomination by members of a 2020 group or 2021 group of a member of the group to submit a loss carry-back allocation statement on behalf of the group;
(b) the contents of a loss carry-back allocation statement;
(c) when a loss carry-back allocation statement is to be submitted;
(d) when and how a loss carry-back allocation statement may or must be amended on behalf of a 2020 group or 2021 group;
(e) when and how a loss carry-back allocation statement may be amended by an officer of HMRC;
(f) the amendment of company tax returns in consequence of a loss carry-back allocation statement (including provision altering time limits that would otherwise apply);
(g) the recovery of overpaid relief (including provision allowing an assessment to tax to be made).
(3) The reference in sub-paragraph (2)(g) to overpaid relief is to an amount paid to a company by HMRC where—
(a) the payment is a repayment of tax made in consequence of a 2020 claim or 2021 claim,
(b) the loss carry-back allocation statement is amended in accordance with regulations under this paragraph, and
(c) as a result of the amendment, the claim no longer meets the condition in paragraph 10(1)(b) or (as the case may be) paragraph 10(2)(b) (claim to conform with loss carry-back allocation statement).
(4) In this paragraph—
“HMRC” means Her Majesty's Revenue and Customs;
“a loss carry-back allocation statement” means a 2020 loss carry-back allocation statement or a 2021 loss carry-back allocation statement.
Anti-avoidance
12 (1) A company may not make a 2020 claim if—
(a) at any time in the period beginning with 1 April 2020 and ending with 31 March 2021 the company is a member of a group,
(b) the company ceases to be a member of that group at any time in that period, and
(c) the main purpose, or one of the main purposes, of the company's ceasing to be a member of the group is to increase the total amount of relief given as a result of a 2020 claim.
(2) A company may not make a 2021 claim if—
(a) at any time in the period beginning with 1 April 2021 and ending with 31 March 2022 the company is a member of a group,
(b) the company ceases to be a member of that group at any time in that period, and
(c) the main purpose, or one of the main purposes, of the company's ceasing to be a member of the group is to increase the total amount of relief given as a result of a 2021 claim.
(3) In this paragraph “group” has the meaning given by section 269ZZB of CTA 2010 (meaning “group” in Part 7ZA of CTA 2010).
Interpretation
13 (1) In this Part of this Schedule—
“2020 claim” means a claim for relief under section 37 of CTA 2010 by virtue of paragraph 4 that is made in respect of a loss incurred in an accounting period that ends in the period beginning with 1 April 2020 and ending with 31 March 2021;
“2021 claim” means a claim for relief under section 37 of CTA 2010 by virtue of paragraph 4 that is made in respect of a loss incurred in an accounting period that ends in the period beginning with 1 April 2021 and ending with 31 March 2022;
“2020 group” means two or more companies which, at the end of 31 March 2021, are a group within the meaning given by section 269ZZB of CTA 2010 (meaning of “group”);
“2021 group” means two or more companies which, at the end of 31 March 2022 are a group within the meaning given by section 269ZZB of CTA 2010 (meaning of “group”);
“a 2020 loss carry-back allocation statement” has the meaning given by paragraph 11(1)(a);
“a 2021 loss carry-back allocation statement” has the meaning given by paragraph 11(1)(b);
“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;
“de minimis claim” and related expressions have the meanings given by paragraph 8.
(2) A reference in this Part of this Schedule to the total amount of relief given as a result of a 2020 claim or 2021 claim—
(a) is to the amount of the deduction or (as the case may be) the total of the deductions made under section 37(3) of CTA 2010 as a result of the claim, but
(b) does not include a deduction that would have been made under that provision as a result of the claim if sections 37 and 38 of that Act applied disregarding the modifications made by paragraph 4.
Power to modify
14 (1) The Commissioners may by regulations amend or otherwise modify the following provisions of this Part of this Schedule—
(a) paragraph 6 (non-de minimis claims to be made after financial year);
(b) paragraph 7 (non-de minimis claims to be made in tax return);
(c) paragraph 8(3) (assumptions in determining if claim is de minimis).
(2) Regulations under this paragraph may include supplementary, incidental, consequential or transitional provision (including provision amending or otherwise modifying a provision of this Part of this Schedule not mentioned in sub-paragraph (1)).
(3) Regulations under this paragraph are of no effect in relation to a 2020 claim or 2021 claim made before the regulations come into force.
(4) No regulations under this paragraph may be made after 31 March 2023.
Section 19
Introductory
1 Chapter 2 of Part 13 of CTA 2009 (relief for cost of research and development incurred by small and medium-sized enterprises) is amended as follows.
Cap on amount of tax credit
2 (1) Section 1058 (amount of tax credit) is amended as follows.
(2) In subsection (1)—
(a) in the words before paragraph (a), after “period is” insert “ the lesser of ”;
(b) at the end of paragraph (a) insert
and
(aa) the amount given by subsection (1A).
(3) After subsection (1), insert—
(1A) The amount given by this subsection is the sum of—
(a) £20,000, and
(b) the amount produced by multiplying by three (“the multiplier”) the company's relevant expenditure on workers for payment periods ending in the accounting period (see section 1058A).
(1B) If the accounting period is less than 12 months, the amount specified in subsection (1A)(a) is proportionately reduced.
(1C) Subsection (1)(aa) does not apply if section 1058D (exceptions to tax credit cap) applies in relation to the company for the accounting period.
(4) For subsection (2) substitute—
(2) The Treasury may by regulations—
(a) replace the percentage for the time being specified in subsection (1)(a) with a different percentage;
(b) replace the amount for the time being specified in subsection (1A)(a) with a different amount;
(c) replace the multiplier for the time being specified in subsection (1A)(b) with a different multiplier.
3 After section 1058 insert—
Relevant expenditure on workers
1058A (1) For the purposes of section 1058, the amount of a company's relevant expenditure on workers for a payment period is the sum of—
(a) the total amount of the company's PAYE and NIC liabilities for the payment period (see section 1058B) less any amount deducted in accordance with section 1058C (avoiding double counting of PAYE and NIC liabilities),
(b) if the company is connected with another company and has incurred qualifying expenditure on externally provided workers (see section 1127), the relevant portion of any staffing costs for the payment period incurred by the connected company in providing any of those workers for the company (see subsection (2)), and
(c) if the company is connected with another company and has incurred qualifying expenditure on contracted out research and development (see section 1053), any staffing costs for the payment period incurred by the connected company in undertaking any of that contracted out research and development on behalf of the company (see subsection (3)).
(2) The relevant portion of any staffing costs for a payment period incurred by a connected company in providing externally provided workers for a company is the sum of the amounts to be determined in the case of each of those workers as follows—
Step 1 Calculate the amount of expenditure that—
has been incurred by the connected company in providing the externally provided worker for the company,
has been incurred on staffing costs (see section 1123), and
forms part of the total amount of the connected company's PAYE and NIC liabilities for the payment period.
Step 2 Calculate the percentage (“the appropriate percentage”) given by—
R
T
×
100
where—
R is the amount of the company's qualifying expenditure on the externally provided worker that has been taken into account in calculating the amount of the company's qualifying Chapter 2 expenditure (see section 1051) for the payment period, and
T is the total amount of the company's qualifying expenditure on the externally provided worker (see section 1127) for the payment period.
Step 3 The amount to be determined in the case of the externally provided worker is the appropriate percentage of the amount given by step 1.
(3) The staffing costs for a payment period incurred by a connected company in undertaking contracted out research and development on behalf of a company is the amount of expenditure that—
(a) has been incurred by the connected company in undertaking relevant research and development on behalf of the company,
(b) has been incurred on staffing costs (see section 1123), and
(c) forms part of the total amount of the connected company's PAYE and NIC liabilities for the payment period.
(4) If, for the purposes of step 1(c) of subsection (2) or paragraph (c) of subsection (3), it is necessary to calculate the amount of a connected company's PAYE and NIC liabilities for a payment period that falls within (but is shorter than) the connected company's payment period, the total amount for the connected company's payment period is proportionately reduced.
Total amount of company's PAYE and NIC liabilities
1058B (1) For the purposes of section 1058A, the total amount of a company's PAYE and NIC liabilities for a payment period is the sum of—
(a) amount A, and
(b) amount B.
(2) Amount A is the amount of income tax for which the company is required to account to an officer of Revenue and Customs for the payment period under PAYE regulations.
(3) In calculating amount A disregard any deduction the company is authorised to make in respect of—
(a) child tax credit;
(b) working tax credit.
(4) Amount B is the amount of Class 1 national insurance contributions for which the company is required to account to an officer of Revenue and Customs for the payment period.
(5) In calculating amount B disregard any deduction the company is authorised to make in respect of—
(a) statutory maternity pay;
(b) statutory adoption pay;
(c) statutory paternity pay;
(d) statutory shared parental pay;
(e) statutory parental bereavement pay;
(f) child tax credit;
(g) working tax credit.
Avoiding double counting of PAYE and NIC liabilities
1058C When determining for the purposes of section 1058 a company's relevant expenditure on workers for a payment period (see section 1058A), deduct the following from the total amount of the company's PAYE and NIC liabilities for the payment period—
(a) the relevant portion of any staffing costs for the payment period incurred by the company in providing externally provided workers for a connected company (within the meaning given by section 1058A(2));
(b) any staffing costs for the payment period incurred by the company in undertaking contracted out research and development on behalf of a connected company (within the meaning given by section 1058A(3)).
Exceptions to tax credit cap
1058D (1) This section applies (and accordingly, section 1058(1)(aa) does not apply) in relation to a company for an accounting period if the company meets conditions A and B.
(2) A company meets condition A for an accounting period if, during the period, the company is engaged in—
(a) taking, or preparing to take, steps in order that relevant intellectual property will be created by it,
(b) creating relevant intellectual property, or
(c) performing a significant amount of management activity in relation to relevant intellectual property it holds.
(3) For the purposes of subsection (2)—
(a) a company is only engaged in an activity mentioned in paragraph (a), (b) or (c) of subsection (2) if the activity is wholly or mainly undertaken by employees of the company;
(b) intellectual property is “relevant” intellectual property in relation to a company if the whole or the greater part (in terms of value) of it is created by the company;
(c) intellectual property is created by a company if it is created in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others).
(4) For the purposes of this section—
“intellectual property” means—
any patent, trade mark, registered design, copyright, design right or plant breeder's right,
any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a), or
any information or technique not protected by a right within paragraph (a) or (b) but having industrial, commercial or other economic value;
“management activity”, in relation to intellectual property, means formulating plans and making decisions in relation to the development or exploitation of the intellectual property.
(5) A company meets condition B for an accounting period if the amount given by subsection (6) (if any) does not exceed 15% of the company's qualifying Chapter 2 expenditure (see section 1051) for the period.
(6) The amount given by this subsection is the sum of the following incurred by the company in the period—
(a) qualifying expenditure on externally provided workers (see section 1127), where the company, the staff provider and (if different) the staff controller (or staff controllers)—
(i) are all connected (see section 1129), or
(ii) have jointly elected (under section 1130) that section 1129 is to apply to them as if they were all connected;
(b) qualifying expenditure on contracted out research and development (see section 1053) where the company and the sub-contractor—
(i) are connected (see section 1134), or
(ii) have jointly elected (under section 1135) that section 1134 is to apply to them as if they were connected.
(7) The Treasury may by regulations replace the percentage for the time being specified in subsection (5) with a different percentage.
Commencement
4 The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 April 2021.
SCHEDULE 4 R&D tax credits for SMEs: Northern Ireland companies
Section 19
Cap on amount of tax credit
1 In Chapter 9 of Part 8B of CTA 2010 (research and development expenditure), section 357PD (amount of tax credit under section 1054 of CTA 2009) is amended in accordance with paragraphs 2 to 5.
2 For subsection (2) substitute—
(2) The amount of the R&D tax credit to which the company is entitled for the accounting period is, where the company has a Northern Ireland Chapter 2 surrenderable loss but does not have a mainstream Chapter 2 surrenderable loss, the lesser of—
(a) the amount of the Northern Ireland Chapter 2 surrenderable loss multiplied by the relevant percentage, and
(b) the amount given by section 1058(1A) of CTA 2009.
(2A) Subsection (2)(b) does not apply if section 1058D of CTA 2009 (exceptions to tax credit cap) applies in relation to the company for the accounting period.
3 For subsection (3) substitute—
(3) The amount of the R&D tax credit to which the company is entitled for the accounting period is, where the company has a mainstream Chapter 2 surrenderable loss but does not have a Northern Ireland Chapter 2 surrenderable loss, the lesser of—
(a) the amount of the mainstream Chapter 2 surrenderable loss multiplied by the percentage specified in section 1058(1)(a) of CTA 2009, and
(b) the amount given by section 1058(1A) of CTA 2009.
(3A) Subsection (3)(b) does not apply if section 1058D of CTA 2009 (exceptions to tax credit cap) applies in relation to the company for the accounting period.
4 In subsection (4), for the words from “sum of” to the end, substitute
lesser of—
(a) the sum of—
(i) the amount of the Northern Ireland Chapter 2 surrenderable loss multiplied by the relevant percentage, and
(ii) the amount of the mainstream Chapter 2 surrenderable loss multiplied by the percentage specified in section 1058(1)(a) of CTA 2009, and
(b) the amount given by section 1058(1A) of CTA 2009.
5 After subsection (4) insert—
(4A) Subsection (4)(b) does not apply if section 1058D of CTA 2009 (exceptions to tax credit cap) applies in relation to the company for the accounting period.
Commencement
6 Section 5(4) to (6) of CT(NI)A 2015 (commencement) has effect as if references to Part 8B of CTA 2010 were to that Part as amended by this Schedule.
Section 29
PART 1 Amendments of Part 4 of FA 2004
1 Part 4 of FA 2004 is amended in accordance with paragraphs 2 to 23.
2 (1) Section 152 (meaning of “arrangement”) is amended as follows.
(2) In subsection (2), after “cash balance benefits” insert “ , collective money purchase benefits ”.
(3) After subsection (3) insert—
(3A) For the purposes of this Part a money purchase arrangement is a “collective money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are collective money purchase benefits.
(4) After subsection (4) insert—
(4A) The reference in subsection (4) to an amount available for the provision of benefits to or in respect of the member includes, in relation to a collective money purchase arrangement, an amount available for the provision of benefits to or in respect of members collectively.
(5) In subsection (5)—
(a) the words after “means benefits” become paragraph (a);
(b) at the end of that paragraph insert “ , and ”;
(c) after that paragraph insert—
(b) that are not collective money purchase benefits.
(6) After that subsection insert—
(5A) In this Part “collective money purchase benefits” means benefits that are collective money purchase benefits within the meaning of Part 1 or 2 of the Pension Schemes Act 2021.
(7) In subsection (8), for the words from “two or three” to the end substitute “ two, three or four of the varieties specified in subsection (10) ”.
(8) In subsection (9)—
(a) for “those varieties of benefits” substitute “ the varieties of benefits specified in subsection (10) ”;
(b) for “two or three” (in both places those words occur) substitute “ two, three or four ”.
(9) After that subsection insert—
(10) The varieties of benefits mentioned in subsections (8) and (9) are—
(a) cash balance benefits,
(b) collective money purchase benefits,
(c) money purchase benefits that are neither cash balance benefits nor collective money purchase benefits, and
(d) defined benefits.
3 (1) In section 165 (pension rules), subsection (1) is amended as follows.
(2) In pension rule 3, after “defined benefits arrangement” insert “ or a collective money purchase arrangement ”.
(3) In pension rule 4, after “money purchase arrangement” insert “ that is not a collective money purchase arrangement ”.
4 (1) In section 167 (pension death benefit rules), subsection (1) is amended as follows.
(2) In pension death benefit rule 2, after “defined benefits arrangement” insert “ or a collective money purchase arrangement ”.
(3) In pension death benefit rule 3, after “money purchase arrangement” insert “ that is not a collective money purchase arrangement ”.
5 (1) Section 172C (allocation of unallocated employer contributions) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (a), after “cash balance arrangement” insert “ or a collective money purchase arrangement ”;
(b) in paragraph (b), for “other than cash balance benefits” substitute “ that are not cash balance benefits or collective money purchase benefits ”.
6 (1) Section 182 (unauthorised borrowing: money purchase arrangements) is amended as follows.
(2) In the heading, at the end insert “ other than collective money purchase arrangements ”.
(3) In subsection (1), after “money purchase arrangement” insert “ that is not a collective money purchase arrangement ”.
(4) In subsection (8), after “defined benefits” insert “ or collective money purchase benefits ”.
7 (1) Section 183 (effect of unauthorised borrowing: money purchase arrangements) is amended as follows.
(2) In the heading, at the end insert “ other than collective money purchase arrangements ”.
8 (1) Section 184 (unauthorised borrowing: other arrangements) is amended as follows.
(2) In subsection (1), for “arrangement which is not a money purchase arrangement” substitute “ relevant arrangement ”.
(3) After subsection (1) insert—
(1A) In this section “relevant arrangement” means an arrangement that—
(a) is not a money purchase arrangement, or
(b) is a collective money purchase arrangement.
(4) In subsection (2), in the definition of APB, for “arrangements which are not money purchase arrangements” substitute “ relevant arrangements ”.
(5) In subsection (3), in paragraphs (a) and (b), for “not money purchase arrangements” substitute “ relevant arrangements ”.
9 (1) Section 212 (valuation of uncrystallised rights for purposes of section 210) is amended as follows.
(2) In subsection (3)—
(a) in paragraph (b), for “other than a cash balance arrangement” substitute “ that is neither a cash balance arrangement nor a collective money purchase arrangement ”;
(b) in paragraph (c), after “defined benefits arrangement” insert “ or a collective money purchase arrangement ”.
(3) For subsections (7) to (10) substitute—
(7) If this subsection applies, the value of the member's uncrystallised rights under the arrangement on the date (“the hybrid value”) is to be calculated by taking the following steps—
Step 1 In relation to each relevant variety of benefits, calculate (in accordance with the preceding provisions of this section) the value of the member's uncrystallised rights on the date, assuming that benefits of that variety are provided under the arrangement.
Step 2 The hybrid value is the higher or highest of the amounts determined under step 1.”
(8) For the purposes of this section a variety of benefits is “relevant” in relation to a hybrid arrangement if, in any circumstances, benefits of that variety may be provided under the arrangement.
(9) In this section “variety of benefits” means a variety of benefits specified in section 152(10).
10 (1) Section 216 (benefit crystallisation events and amounts crystallised) is amended as follows.
(2) In subsection (1), in the table, in column 1—
(a) in benefit crystallisation event 5, after “defined benefit arrangement” insert “ , or a collective money purchase arrangement, ”;
(b) in benefit crystallisation event 5B, after “money purchase arrangement” insert “ , other than a collective money purchase arrangement, ”.
11 (1) Section 223 (non-residence: other arrangements) is amended as follows.
(2) In subsection (5)—
(a) after paragraph (a) insert—
(aa) what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were a collective money purchase arrangement,
;
(b) in paragraph (b), for “any other sort of money purchase arrangement” substitute “ a money purchase arrangement other than a cash balance arrangement or a collective money purchase arrangement ”.
12 (1) Section 226 (overseas scheme transfers: other arrangements) is amended as follows.
(2) In subsection (5)—
(a) after paragraph (a) insert—
(aa) what would be the other money purchase relevant relievable amount (under that section) if that arrangement had been a collective money purchase arrangement,
;
(b) in paragraph (b), for “any other sort of money purchase arrangement” substitute “ a money purchase arrangement other than a cash balance arrangement or a collective money purchase arrangement ”.
13 (1) Section 227B (the alternative chargeable amount) is amended as follows.
(2) In subsection (2), for “AA” (in both places it occurs) substitute “ X ”.
(3) In subsection (5), in paragraph (b)(i), after “A” insert “ , AA ”.
(4) In subsection (5), in paragraph (b)(ii)—
(a) after “greater” insert “ or greatest ”;
(b) after “A” insert “ , AA ”;
(c) for “both” substitute “ at least two of those amounts ”.
(5) In subsection (5), in the closing words—
(a) after “A” (in both places it occurs) insert “ , AA ”;
(b) after “greater” insert “ or greatest ”.
14 (1) Section 227C (meaning of “money-purchase input sub-total”) is amended as follows.
(2) In subsection (1)(b)(ii), after “A” insert “ , AA ”.
15 (1) Section 227D (pension input amounts in respect of certain hybrid arrangements) is amended as follows.
(2) In subsection (2)(a)—
(a) after “greater” insert “ or greatest ”;
(b) after “A” insert “ , AA ”.
16 (1) Section 227F (pension input periods in which rights are first flexibly accessed) is amended as follows.
(2) In subsection (5)(b), after “input amount” insert “ AA or ”.
17 (1) Section 227G (when pension rights are first flexibly accessed) is amended as follows.
(2) In subsection (9)(a), for “money purchase” substitute “ relevant ”.
(3) After subsection (9) insert—
(9A) In subsection (9), “relevant arrangement” means a money purchase arrangement that is not a collective money purchase arrangement.
18 (1) Section 237 (hybrid arrangements) is amended as follows.
(2) In subsection (1), after “amounts A,” insert “ AA, ”.
(3) After subsection (3) insert—
(3A) Input amount AA is what would be the pension input amount under section 233 if the benefits provided to or in respect of the individual under the arrangement were collective money purchase benefits.
(4) In subsection (4), for “other money purchase benefits” substitute “ money purchase benefits that are not cash balance benefits or collective money purchase benefits ”.
19 In section 280 (abbreviations and general index), in the table in subsection (2) insert at the appropriate places—
collective money purchase arrangement | section 152(3A)
collective money purchase benefits | section 152(5A)
.
20 (1) Schedule 28 (authorised pensions: supplementary) is amended as follows.
(2) In paragraph 2 (scheme pension), after sub-paragraph (8) insert—
(9) Where, under a collective money purchase arrangement—
(a) a scheme pension has become payable to the member, and
(b) the member subsequently becomes entitled to income payable by virtue of section 36(7)(b) or 87(7)(b) of the Pension Schemes Act 2021 (periodic income paid while pursuing continuity option 1),
the income so payable is to be treated for the purposes of this Part as a continuation of the scheme pension.
(10) Where, under a collective money purchase arrangement—
(a) the member becomes entitled to income payable by virtue of section 36(7)(b) or 87(7)(b) of the Pension Schemes Act 2021 (periodic income paid while pursuing continuity option 1), and
(b) no scheme pension was previously payable to the member,
the income so payable is to be treated for the purposes of this Part as a scheme pension.
(3) In paragraph 2A (scheme pension), after sub-paragraph (3) insert—
(3A) But for the purposes of sub-paragraph (2)(b), no substantial reduction occurs in the rate of a pension if—
(a) the pension is payable in respect of a collective money purchase arrangement, and
(b) the reduction is in accordance with the rules of the scheme.
21 (1) Schedule 29 (authorised lump sums - supplementary) is amended as follows.
(2) In paragraph 1 (pension commencement lump sum)—
(a) in sub-paragraph (1)(f), for “sub-paragraph (4)” substitute “ sub-paragraphs (4) and (4A) ”;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In paragraph 2 (pension commencement lump sum), in sub-paragraph (6B), after “money purchase arrangement” insert “ that is not a collective money purchase arrangement ”.
(4) In paragraph 3 (pension commencement lump sum: definition of “the applicable amount” for the purposes of paragraph 2(5))—
(a) in sub-paragraph (6), after “defined benefits arrangement” insert “ or a collective money purchase arrangement ”;
(b) in sub-paragraph (7A), after “money purchase arrangement” insert “ that is not a collective money purchase arrangement ”.
(5) In paragraph 4A (uncrystallised funds pension lump sum), in sub-paragraph (1)(a), after “money purchase arrangement” insert “ that is not a collective money purchase arrangement ”.
(6) In paragraph 7 (trivial commutation lump sum), in sub-paragraph (1)—
(a) in paragraph (aa)—
(i) after “defined benefits arrangement,” insert “ or in respect of a collective money purchase arrangement, ”;
(ii) after “under a money purchase arrangement” insert “ that is not a collective money purchase arrangement ”;
(iii) for “or partly in respect of the former and partly in respect of the latter” substitute “ or in respect of any combination of such arrangements and scheme pensions ”;
(b) in paragraph (d), after “defined benefits” insert “ , and any entitlement to collective money purchase benefits, ”.
22 (1) Schedule 32 (benefit crystallisation events - supplementary) is amended as follows.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Omit paragraph 5 (benefit crystallisation events 1 and 5: hybrid arrangements) together with the italic cross heading preceding it.
(4) Paragraph 10 (benefit crystallisation event 3: excepted circumstances) is amended in accordance with sub-paragraphs (5) to (7).
(5) Before sub-paragraph (1) insert—
(A1) For the purposes of benefit crystallisation event 3 “excepted circumstances” exist if condition A or B is met.
(6) In sub-paragraph (1)—
(a) for the opening words substitute “ Condition A is that— ”;
(b) before paragraph (a) insert—
(za) the entitlement to payment of a scheme pension at an increased annual rate is under an arrangement that is not a collective money purchase arrangement,
;
(c) in paragraph (a) omit “that”;
(d) in paragraph (b) omit “that” the first time it occurs.
(7) After sub-paragraph (4) insert—
(5) Condition B is that—
(a) the entitlement to payment of a scheme pension at an increased annual rate is under an arrangement that is a collective money purchase arrangement, and
(b) at the time when the annual rate of the individual's pension is increased, all the scheme pensions being paid under collective money purchase arrangements are increased at the same rate.
(8) After paragraph 14 insert—
Benefit crystallisation events 5 and 5B: hybrid arrangements
14ZA (1) This paragraph applies where, immediately before the individual reaches the age of 75 (“the relevant time”), there is under any of the relevant pension schemes a hybrid arrangement relating to the individual.
(2) If defined benefits or collective money purchase benefits are a relevant variety of benefits, benefit crystallisation event 5 applies in relation to that variety of benefits as if, at the relevant time, circumstances were such that benefits of that variety were to be provided under the arrangement.
(3) If cash balance benefits, or money purchase benefits that are neither cash balance benefits nor collective money purchase benefits, are a relevant variety of benefits, benefit crystallisation event 5B applies in relation to that variety of benefits as if, at the relevant time, circumstances were such that benefits of that variety were to be provided under the arrangement.
(4) The amount crystallised on the individual reaching the age of 75 is the greater or (as the case may be) greatest of the amounts crystallised by the benefit crystallisation event or events applying by virtue of sub-paragraphs (2) and (3).
(5) For the purposes of this paragraph a variety of benefits is “relevant” in relation to a hybrid arrangement if, in any circumstances, benefits of that variety may be provided under the arrangement.
(6) In this paragraph “variety of benefits” means a variety of benefits specified in section 152(10).
(9) After paragraph 14ZA insert—
Benefit crystallisation event 5A: “amounts crystallised by benefit crystallisation event 1”
14ZB In determining, for the purposes of benefit crystallisation event 5A, an amount crystallised by benefit crystallisation event 1 in relation to the arrangement and the individual, any reduction made for the purposes of that crystallisation event under paragraph 2B (prevention of overlap) is to be disregarded.
23 (1) Schedule 36 (transitional provision and savings) is amended as follows.
(2) In paragraph 29 (lump sum rights exceeding £375,000: primary and enhanced protection), in sub-paragraph (3)—
(a) in the substitute paragraph 3(6) of Schedule 29, after “ defined benefits arrangement ” insert “ or a collective money purchase arrangement ”;
(b) in the substitute paragraph 3(7A) of Schedule 29, after “ money purchase arrangement ” insert “ that is not a collective money purchase arrangement ”.
(3) In paragraph 34 (entitlement to lump sums exceeding 25% of uncrystallised rights), in sub-paragraph (2), in the substitute paragraph 2(7AA) of Schedule 29, after “ money purchase arrangement ” insert “ that is not a collective money purchase arrangement ”.
24 (1) In the Registered Pension Schemes (Transfer of Sums and Assets) Regulations 2006 (S.I. 2006/499), regulation 12 (member's drawdown pension fund or flexi-access pension fund) is amended as follows.
(2) In Table 3, after the entry for section 216(1), benefit crystallisation event 1 insert—
Section 216(1), benefit crystallisation event 5A (benefit crystallisation event on individual reaching the age of 75, having sums or assets designated as available for the payment of a drawdown pension) | To determine, for the purposes of benefit crystallisation event 5A, the aggregate of amounts crystallised by benefit crystallisation event 1 by reference to the old arrangement (so that, in an appropriate case, paragraph 14ZB of Schedule 32 applies).
PART 2 Commencement
25 (1) The amendments made by this Schedule come into force on such day as the Treasury may by regulations appoint.
(2) The Treasury may by regulations make transitional or saving provision in connection with the coming into force of any provision of this Schedule.
(3) Regulations under this paragraph are to be made by statutory instrument.
SCHEDULE 6 Construction industry scheme: amendments
Section 30
Introductory
1 Chapter 3 of Part 3 of FA 2004 (construction industry scheme) is amended as follows.
Contractors
2 (1) Section 59 of FA 2004 (contractors) is amended as follows.
(2) In subsection (1), for paragraph (l) substitute—
(l) a person carrying on a business at any time if, in the period of one year ending with that time, the person's expenditure on construction operations exceeds £3,000,000.
(3) For subsections (2) and (3) substitute—
(2) But this section only applies to a body or person falling within any of paragraphs (b) to (fa) or (h) to (k) of subsection (1) at any time if, in the period of one year ending with that time, the body or person's expenditure on construction operations exceeds £3,000,000.
(3) Where the condition in subsection (1)(l) or (2) is met in relation to a body or person at any time, the body or person may elect for the condition to be treated as no longer being met if, at that time, the body or person is not expected to make any further expenditure on construction operations.
(3A) Where the condition in subsection (1)(l) or (2) ceases to be met in relation to a body or person at any time, the body or person may elect for the condition to be treated as continuing to be met until the body or person is not expected to make any further expenditure on construction operations.
(3B) Subsections (3) and (3A) do not prevent the condition in subsection (1)(l) or (2) from being met again in relation to the body or person.
3 (1) This paragraph applies where—
(a) the condition in section 59(1)(l) or (2) of FA 2004 was met in relation to a body or person immediately before the amendments made by paragraph 2 come into force, and
(b) on the coming into force of those amendments, that condition would (but for sub-paragraph (2)) cease to be met in relation to the body or person.
(2) The condition in section 59(1)(l) or (2) of FA 2004 (as the case may be) is treated as continuing to be met in relation to the body or person until the body or person is not expected to make any further expenditure on construction operations (within the meaning given by section 74 of FA 2004).
Deductions for materials
4 In section 61(1) of FA 2004 (deductions on account of tax from contract payments), for “any other person” substitute “ the sub-contractor ”.
Grace period
5 In section 61 of FA 2004 (deductions on account of tax from contract payments), after subsection (3) insert—
(4) Subsection (5) applies where the contractor is a person falling within section 59(1)(l).
(5) An officer of Revenue and Customs may, if the officer considers it appropriate to do so, by notice in writing—
(a) exempt the contractor from the requirement to deduct sums from contract payments under subsection (1) for a specified period;
(b) treat the contractor as if such an exemption had applied in relation to—
(i) specified contract payments made before the date of the notice, or
(ii) contract payments made during a specified period before the date of the notice.
(6) The period referred to in subsection (5)(a)—
(a) must not exceed 90 days, but
(b) may be extended by one or more further notices under subsection (5).
(7) In subsection (5) “specified” means specified in the notice.
Restrictions on set-off
6 (1) Section 62 of FA 2004 (treatment of sums deducted) is amended as follows.
(2) After subsection (3) insert—
(3A) Regulations under subsection (3) may include provision authorising an officer of Revenue and Customs to—
(a) correct an error or omission relating to a set-off claim;
(b) remove a set-off claim;
(c) prohibit a person from making a further set-off claim, for a specified period or indefinitely.
(3B) Regulations under subsection (3) that include provision of the kind mentioned in subsection (3A) may, for example, include provision—
(a) allowing the things mentioned in subsection (3A)(a) to (c) to be done by amending a return (including a return not made under the regulations) or otherwise;
(b) allowing a set-off claim to be removed where the claimant is not eligible to make the claim (including where the claimant is not a company, not a sub-contractor, or is registered for gross payment);
(c) requiring information to be given to the Commissioners of Revenue and Customs, at such times as may be specified in the regulations.
(3C) In subsections (3A) and (3B), “set-off claim” means a claim for treating a sum deducted under section 61 as paid on account of any relevant liabilities.
(3) In subsection (4), for “subsection (3)” substitute “ this section ”.
Penalties
7 For section 72 of FA 2004 (penalties) substitute—
Penalties
72 (1) This section applies in a case within subsection (2), (3) or (4).
(2) A case is within this subsection if a person (“A”)—
(a) makes a statement, or furnishes a document, which A knows to be false in a material particular, or
(b) recklessly makes a statement, or furnishes a document, which is false in a material particular,
for the purpose of becoming registered for gross payment or for payment under deduction.
(3) A case is within this subsection if a person (“A”) who exercises influence or control over another person (“B”) or is in a position to do so —
(a) makes a statement, or furnishes a document, which A knows to be false in a material particular, or
(b) recklessly makes a statement, or furnishes a document, which is false in a material particular,
for the purpose of enabling or facilitating B to become registered for gross payment or for payment under deduction.
(4) A case is within this subsection if a person (“A”) who exercises influence or control over another person (“B”) or is in a position to do so—
(a) encourages B to make a statement, or furnish a document, which A knows to be false in a material particular, or
(b) encourages B to make a statement or furnish a document—
(i) which is false in a material particular, and
(ii) where A is reckless as to whether the statement or document is false in a material particular,
for the purpose of enabling or facilitating B to become registered for gross payment or for payment under deduction.
(5) In a case where this section applies, A is liable to a penalty not exceeding £3,000.
Commencement
8 (1) The amendments made by this Schedule have effect for the tax year 2021-22 and subsequent tax years.
(2) But the amendment made by paragraph 7 has no effect in relation to a statement made, or document furnished, before 6 April 2021.
Section 36
PART 1 Meaning of “tax”
1 After section 259B(3) of TIOPA 2010 insert—
(3ZA) A tax is not within paragraph (a) or (b) of subsection (2) so far as it is charged on income that—
(a) has arisen to an entity that—
(i) is not subject to the tax (as regards that income), and
(ii) is, under the law of the territory referred to in that subsection, regarded as being a person for the purposes of the tax, but
(b) is to be brought into account for the purposes of that tax by a different entity.
PART 2 Chapter 3 mismatches: relevant debt relief circumstances
2 Part 6A of TIOPA is amended as follows.
3 In section 259CB (hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), for subsection (3) substitute—
(3) So far as the excess arises—
(a) by reason of a relevant debt relief provision, or
(b) in relevant debt relief circumstances,
it is to be taken not to arise by reason of the terms, or any other feature, of the financial instrument (whether or not it would have arisen by reason of the terms, or any other feature, of the financial instrument regardless).
4 In section 259CC (interpretation of section 259CB), after subsection (3) insert—
(3A) To determine whether excess arises in “relevant debt relief circumstances” see sections 259NEB to 259NEF.
5 After section 259NEA insert—
Relevant debt relief circumstances
Relevant debt relief circumstances: introductory
259NEB (1) This section applies for the purposes of section 259CB(3).
(2) Excess arises in “relevant debt relief circumstances” if (and only if)—
(a) the payment or quasi-payment mentioned in section 259CB(2) comprises the release of a liability to pay an amount under a debtor relationship (within the meaning given by section 302(6) of CTA 2009), and
(b) the circumstances in section 259NEC, 259NED, 259NEE, or 259NEF apply.
(3) For the purposes of those sections references to—
(a) “the relevant release” means the release of liability mentioned in subsection (2)(a),
(b) “loan relationship” is to be construed in accordance with section 302 of CTA 2009,
(c) “amortised cost basis of accounting” is to be construed in accordance with section 313(4) and (4A) of that Act,
(d) “connected companies relationship” is to be construed in accordance with section 348 of that Act, and
(e) “deemed release” and “relevant rights” are to be construed in accordance with section 358(3) to (4A) of that Act.
Release of debts
259NEC (1) This section is to be read with section 259NEB (relevant debt relief circumstances: introductory).
(2) The circumstances in this section are—
(a) the relevant release takes place in an accounting period for which an amortised cost basis of accounting is used in respect of the debtor relationship, and
(b) condition A, B, C, D or E is met.
(3) Condition A is that the release is part of a statutory insolvency arrangement (within the meaning of section 1319 of CTA 2009).
(4) Condition B is that the release is not a release of relevant rights and is—
(a) in consideration of shares forming part of the ordinary share capital of a payee, or
(b) in consideration of any entitlement to such shares.
(5) Condition C is that—
(a) a payee meets one of the insolvency conditions (see subsection (8)), and
(b) the debtor relationship is not a connected companies relationship.
(6) Condition D is that the release is in consequence of the making of a mandatory reduction instrument or a third country instrument or the exercise of a stabilisation power under Part 1 of the Banking Act 2009.
(7) Condition E is that—
(a) the release is neither a deemed release nor a release of relevant rights, and
(b) immediately before the release, it is reasonable to assume that, without the release and any arrangements of which the release forms part, there would be a material risk that at some time within the next 12 months a payee would be unable to pay its debts.
(8) For the purposes of this section a company meets the insolvency conditions if—
(a) it is in insolvent liquidation,
(b) it is in insolvent administration,
(c) it is in insolvent administrative receivership,
(d) an appointment of a provisional liquidator is in force in relation to the company under section 135 of the Insolvency Act 1986 or Article 115 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or
(e) under the law of a country or territory outside the United Kingdom circumstances corresponding to those mentioned in paragraph (a), (b), (c) or (d) exist.
(9) Section 323(A1) of CTA 2009 applies for the interpretation of subsection (7)(b); and the rest of that section applies for the interpretation of subsection (8).
Release of connected companies debts
259NED (1) This section is to be read with section 259NEB (relevant debt relief circumstances: introductory).
(2) The circumstances in this section are—
(a) the relevant release takes place in an accounting period for which—
(i) an amortised cost basis of accounting is used in respect of the debtor relationship, and
(ii) the debtor relationship is a connected companies relationship, and
(b) the release is neither—
(i) a deemed release, nor
(ii) a release of relevant rights.
Release of connected companies debts during creditor's insolvency
259NEE (1) This section is to be read with section 259NEB (relevant debt relief circumstances: introductory).
(2) The circumstances in this section are—
(a) the relevant release takes place in an accounting period for which an amortised cost basis of accounting is used in respect of the debtor relationship,
(b) condition A, B, C, D or E in section 357 of CTA 2009 is met in relation to the payer,
(c) immediately before the time when any of those conditions was first met the debtor relationship was a connected companies relationship, and
(d) immediately after that time it was not such a relationship.
Corporate rescue: debt released shortly after connection arises
259NEF (1) This section is to be read with section 259NEB (relevant debt relief circumstances: introductory).
(2) The circumstances in this section are—
(a) the relevant release takes place within 60 days of the payer and a payee becoming connected with one another (within the meaning of section 363 of CTA 2009), and
(b) the corporate rescue conditions are met.
(3) The corporate rescue conditions are—
(a) that the payer and the payee became connected as a result of an arm's length transaction, and
(b) immediately before the payer and the payee became connected it was reasonable to assume that, without the connection and any arrangements of which the connection forms part, there would be a material risk that at some point within the next 12 months the payee would have been unable to pay its debts.
(4) For the purposes of subsection (3)(b), a payee is unable to pay its debts if—
(a) it is unable to pay its debts as they fall due, or
(b) the value of its assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.
PART 3 Chapter 3 mismatches: Investment trusts
6 Chapter 3 of Part 6A of TIOPA is amended as follows.
7 In section 259CB (hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent)—
(a) after subsection (3) (as substituted by paragraph 3) insert—
(3A) So far as the excess arises by reason of an interest distribution designation, it is to be taken not to arise by reason of the terms, or any other feature, of the financial instrument (whether or not it would have arisen by reason of the terms, or any other feature, of the financial instrument regardless of that designation).
, and
(b) in subsection (4), in the opening words, for “that and subsection” substitute “ subsections (3), (3A) and ”.
8 In section 259CC (interpretation of section 259CB), after subsection (3A) (as inserted by paragraph 4) insert—
(3B) An “interest distribution designation” means a designation made under regulation 5(2) of the Investment Trusts (Dividends) (Optional Treatment as Interest Distributions) Regulations 2009 (S.I. 2009/2034).
PART 4 Deemed dual inclusion income
9 Part 6A of TIOPA 2010 (hybrid and other mismatches) is amended as follows.
10 (1) Chapter 5 (hybrid payer deduction/non-inclusion mismatches) is amended as follows.
(2) In section 259EC (counteraction where the hybrid payer is within the charge to corporation tax for the payment period), in subsection (4) omit “arises in connection with the arrangement mentioned in section 259EA(2) and”.
(3) After subsection (5) insert—
(6) For the purposes of subsection (4)(b) the reference to ordinary income of an investor in the payer for a permitted taxable period for the purposes of any tax charged under the law of an investor jurisdiction is taken to include a reference to an amount that meets the following requirements.
(7) The requirements are that—
(a) the amount may not be deducted under the law of any territory from the income of any person for the purposes of calculating taxable profits for a relevant taxable period;
(b) in the case of a person resident for tax purposes in a zero-tax territory, the amount could not be deducted from the income of the person for the purposes of calculating taxable profits for a relevant taxable period if the person were resident in the United Kingdom for tax purposes; and
(c) under the law of the investor jurisdiction, the amount could be deducted from the income of the investor in the hybrid payer for the purposes of calculating the investor's taxable profits for a relevant taxable period if the following assumptions were made.
(8) The assumptions are that, for the purposes of identifying the recipient of the amount for tax purposes in the investor jurisdiction—
(a) condition B in section 259BE(3) was not met by the hybrid payer as respects the investor jurisdiction, and
(b) as a result of that, the hybrid payer was not a hybrid entity as respects the investor jurisdiction.
(9) In subsection (7), “zero-tax territory”, in relation to a person, means a territory in which the person—
(a) is not within the charge to tax, or
(b) is within the charge to tax at a nil rate.
(10) Section 259B(5) (determination of residence where no concept of residence for tax purposes exists) applies to the reference in subsection (7)(b) to a person's residence for tax purposes in a zero-tax territory as it applies to references to a person's residence for tax purposes in Chapter 8 or 11.
(11) A taxable period of an investor or another person is “relevant” for the purposes of subsection (7) if—
(a) the period begins before the end of 12 months after the end of the accounting period mentioned in subsection (4)(a), or
(b) where the period begins after that, it is just and reasonable for the question of whether the amount concerned may or could be deducted in calculating taxable profits to be determined by reference to that taxable period rather than an earlier period.
(4) In section 259ED(9) (counteraction where a payee is within the charge to corporation tax) omit “arises in connection with the arrangement mentioned in section 259EA(2) and”.
11 (1) Chapter 6 (deduction/non-inclusion mismatches relating to transfers by permanent establishments) is amended as follows.
(2) In section 259FB (counteraction of the excessive PE deduction), after subsection (4) insert—
(5) For the purposes of subsection (3)(b) the reference to ordinary income of the company for a permitted taxable period for the purposes of a tax charged under the law of the parent jurisdiction is taken to include a reference to excessive PE inclusion income of the company.
(6) Section 259FC defines “excessive PE inclusion income” of the company for this purpose.
(3) After section 259FB insert—
Meaning of excessive PE inclusion income
259FC (1) In section 259FB(5), “excessive PE inclusion income” of the company means—
(a) where paragraph (a) of subsection (4) applies, the PE inclusion income of the company, or
(b) where paragraph (b) of that subsection applies, the PE inclusion income of the company so far as it is reasonable to suppose that it exceeds the aggregate effect on taxable profits.
(2) For this purpose, “PE inclusion income” of the company means an amount in respect of which conditions A and B are met.
(3) Condition A is that the amount is in respect of a transfer of money or money's worth from the company in the parent jurisdiction to the company in the United Kingdom that—
(a) is actually made, or
(b) is (in substance) treated as being made for corporation tax purposes.
(4) Condition B is that it is reasonable to suppose that—
(a) the circumstances giving rise to the amount will not result in—
(i) a reduction in the taxable profits of the company for a relevant taxable period, or
(ii) an increase in a loss made by the company for a relevant taxable period,
for the purposes of a tax charged under the law of the parent jurisdiction, or
(b) those circumstances will result in such a reduction or increase for one or more relevant taxable periods, but the amount exceeds the aggregate effect on taxable profits.
(5) “The aggregate effect on taxable profits” is the sum of—
(a) any reductions, resulting from the circumstances giving rise to the amount, in the taxable profits of the company, for a relevant taxable period, for the purposes of a tax charged under the law of the parent jurisdiction, and
(b) any amounts by which a loss made by the company, for a relevant taxable period, for the purposes of a tax charged under the law of the parent jurisdiction, is increased as a result of the circumstances giving rise to the amount.
(6) For the purposes of subsections (4) and (5), any reduction in taxable profits or increase of losses is to be ignored in any case where tax is charged at a nil rate under the law of the parent jurisdiction.
(7) A taxable period of the company is “relevant” for the purposes of subsections (4) and (5) if—
(a) the period begins before the end of 12 months after the end of the accounting period mentioned in section 259FB(3)(a), or
(b) where the period begins after that, it is just and reasonable for the question of whether the circumstances giving rise to the amount will result in a reduction in taxable profits or an increase in a loss to be determined by reference to that taxable period rather than an earlier period.
12 (1) Chapter 9 (hybrid entity double deduction mismatches) is amended as follows.
(2) In section 259IC (counteraction where the hybrid entity is within the charge to corporation tax), in subsection (4), for the words from “unless” to the end substitute “ unless it is deducted from dual inclusion income for that period. ”
(3) After section 259IC insert—
Deemed dual inclusion income for the purposes of section 259IC
259ICA (1) For the purposes of section 259IC(10)(b) the reference to ordinary income of an investor in the hybrid entity for a permitted taxable period for the purposes of any tax charged under the law of an investor jurisdiction is taken to include a reference to an amount that meets the following requirements.
(2) The requirements are that—
(a) the amount may not be deducted under the law of any territory from the income of any person for the purposes of calculating taxable profits for a relevant taxable period;
(b) in the case of a person resident for tax purposes in a zero-tax territory, the amount could not be deducted from the income of the person for the purposes of calculating taxable profits for a relevant taxable period if the person were resident in the United Kingdom for tax purposes; and
(c) under the law of the investor jurisdiction, the amount could be deducted from the income of the investor in the hybrid entity for the purposes of calculating the investor's taxable profits for a relevant taxable period if the following assumptions were made.
(3) The assumptions are that, for the purposes of identifying the recipient of the amount for tax purposes in the investor jurisdiction, it is assumed that—
(a) condition B in section 259BE(3) was not met by the hybrid entity as respects the investor jurisdiction, and
(b) as a result of that, the hybrid entity was not a hybrid entity as respects the investor jurisdiction.
(4) In subsection (2), “zero-tax territory”, in relation to a person, means a territory in which the person—
(a) is not within the charge to tax, or
(b) is within the charge to tax at a nil rate.
(5) Section 259B(5) (determination of residence where no concept of residence for tax purposes exists) applies to the reference in subsection (2)(b) to a person's residence for tax purposes in a zero-tax territory as it applies to references to a person's residence for tax purposes in Chapter 8 or 11.
(6) A taxable period of an investor or another person is “relevant” for the purposes of subsection (2) if—
(a) the period begins before the end of 12 months after the end of the accounting period mentioned in section 259IC(10)(a), or
(b) where the period begins after that, it is just and reasonable for the question of whether the amount concerned may or could be deducted in calculating taxable profits to be determined by reference to that taxable period rather than an earlier period.
(4) Omit section 259ID (section 259ID income for the purposes of section 259IC).
13 (1) Chapter 10 (dual territory double deduction cases) is amended as follows.
(2) In section 259JD (counteraction where mismatch arises because of a relevant multinational and is not counteracted in the parent jurisdiction), after subsection (9) insert—
(10) For the purposes of subsection (8)(b) the reference to ordinary income of the company for a permitted taxable period for the purposes of a tax charged under the law of a territory outside the United Kingdom is taken to include a reference to excessive PE inclusion income of the company.
(11) Section 259JE defines “excessive PE inclusion income” of the company for this purpose.
(3) After section 259JD insert—
Meaning of excessive PE inclusion income
259JE (“1) In section 259JD(10), “excessive PE inclusion income” of the company means—
(a) where paragraph (a) of subsection (4) applies, the PE inclusion income of the company, or
(b) where paragraph (b) of that subsection applies, the PE inclusion income of the company so far as it is reasonable to suppose that it exceeds the aggregate effect on taxable profits.
(2) For this purpose, “PE inclusion income” of a company for an accounting period means an amount in respect of which conditions A and B are met.
(3) Condition A is that the amount is in respect of a transfer of money or money's worth from the company in the parent jurisdiction to the company in the United Kingdom that—
(a) is actually made, or
(b) is (in substance) treated as being made for corporation tax purposes.
(4) Condition B is that it is reasonable to suppose that—
(a) the circumstances giving rise to the amount will not result in—
(i) a reduction in the taxable profits of the company for a relevant taxable period, or
(ii) an increase in a loss made by the company for a relevant taxable period,
for the purposes of a tax charged under the law of the parent jurisdiction, or
(b) those circumstances will result in such a reduction or increase for one or more relevant taxable periods, but the amount exceeds the aggregate effect on taxable profits.
(5) “The aggregate effect on taxable profits” is the sum of—
(a) any reductions, resulting from the circumstances giving rise to the amount, in the taxable profits of the company, for a relevant taxable period, for the purposes of a tax charged under the law of the parent jurisdiction, and
(b) any amounts by which a loss made by the company, for a relevant taxable period, for the purposes of a tax charged under the law of the parent jurisdiction, is increased as a result of the circumstances giving rise to the amount.
(6) For the purposes of subsections (4) and (5), any reduction in taxable profits or increase of losses is to be ignored in any case where tax is charged at a nil rate under the law of the parent jurisdiction.
(7) A taxable period of the company is “relevant” for the purposes of subsections (4) and (5) if—
(a) the period begins before the end of 12 months after the end of the accounting period mentioned in section 259JD(8)(a), or
(b) where the period begins after that, it is just and reasonable for the question of whether the circumstances giving rise to the amount will result in a reduction in taxable profits or an increase in a loss to be determined by reference to that taxable period rather than an earlier period.
PART 5 Deemed dual inclusion income: anti-avoidance
14 In Chapter 13 of Part 6A of TIOPA 2010 (hybrid and other mismatches: anti-avoidance), in section 259M(4) (countering the effect of avoidance arrangements), omit the “or” after paragraph (a) and after paragraph (b) insert
, or
(c) the person does anything which, to any extent, results in an amount being treated as dual inclusion income of that person under any provision of this Part.
PART 6 Allocation of dual inclusion income within group
15 (1) Part 6A of TIOPA 2010 is amended as follows.
(2) In section 259A (overview of Part), after subsection (16) insert—
(16A) Chapter 12A contains provision allowing surplus dual inclusion income to be allocated within a group of companies.
(3) After Chapter 12 insert—
CHAPTER 12A Allocation of dual inclusion income within group
Introduction
Overview of Chapter
259ZM (1) This Chapter contains provision that allows surplus dual inclusion income to be allocated within a group of companies.
(2) Section 259ZMA contains the conditions that must be met for this Chapter to apply.
(3) Subsection (2) of that section defines “the DII surplus” and subsection (3) of that section defines “the DII shortfall”.
(4) Sections 259ZMB to 259ZMD contain provision allowing the unused part of the DII surplus of one company to be treated as dual inclusion income of another company in the same group, where it can be matched against the unused part of the DII shortfall of the other company.
(5) Section 259ZME identifies when companies are in the same group.
Application of Chapter
Circumstances in which Chapter applies
259ZMA (1) This Chapter applies if conditions A to E are met.
(2) Condition A is that, for an accounting period (“the surplus period”), the dual inclusion income of a company (“company A”) exceeds its counteraction amount.
In this Chapter, the amount of the excess is referred to as “the DII surplus”.
(3) Condition B is that, for an accounting period (“the shortfall period”), the counteraction amount of another company (“company B”) exceeds its dual inclusion income.
In this Chapter, the amount of the excess is referred to as “the DII shortfall”.
(4) See section 259ZMF for the meanings of “dual inclusion income” and “counteraction amount”.
(5) Condition C is that there is a period (“the overlapping period”) that is common to both the surplus period and the shortfall period (and see subsections (8) and (9)).
(6) Condition D is that there is a time during the overlapping period when both company A and company B are within the charge to corporation tax.
(7) Condition E is that there is a time during the overlapping period when company A and company B are members of the same group of companies (see section 259ZME).
(8) Subsection (9) applies if, during any part of the overlapping period—
(a) either company A or company B is not within the charge to corporation tax, or
(b) company A and company B are not members of the same group of companies.
(9) That part is treated as not forming part of the overlapping period but instead as—
(a) forming part of the surplus period that is not included in the overlapping period, and
(b) forming part of the shortfall period that is not included in the overlapping period.
Allocation of DII surplus
Claims for allocation of DII surplus
259ZMB (1) Company B may make a claim (an “allocation claim”) for all or part of the unused part of the DII surplus of company A for the overlapping period (see section 259ZMC) to be allocated to company B for the shortfall period, if the following requirements are met.
Requirement 1 Company A consents to the allocation claim.
Requirement 2 The allocation claim identifies the amount of the DII surplus to which it relates.
Requirement 3 Company B has an amount of ordinary income for the shortfall period (“matchable income”) that—
is not dual inclusion income, and
is equal to or exceeds the amount of the DII surplus to which the allocation claim relates.
Requirement 4 The allocation claim identifies the amount of matchable income to which the claim relates.
Requirement 5 The amount of matchable income to which the claim relates—
is equal to the amount of the DII surplus to which the claim relates, and
does not exceed the unused part of the DII shortfall of company B for the shortfall period (see section 259ZMD).
(2) If company B makes an allocation claim—
(a) the amount of company A's dual inclusion income for the surplus period is reduced by the amount of matchable income to which the claim relates, and
(b) the amount of matchable income to which the claim relates is treated in relation to company B as if the following assumptions were made.
(3) The assumptions are that—
(a) things done by or to company A in relation to that amount are treated as done by or to company B, and
(b) all other factual circumstances (or circumstances treated as existing as a result of any provision made by this Part) in relation to that amount are unchanged.
The unused part of the DII surplus
259ZMC (1) This section identifies the unused part of the DII surplus of company A for the overlapping period, for the purposes of an allocation claim made by company B (“the current allocation claim”).
(2) The unused part of the DII surplus of company A for the overlapping period is the amount equal to—
(a) the DII surplus for the overlapping period (see subsection (3)), less
(b) the amount of prior allocations for that period (see subsections (4) to (7)).
(3) To determine the DII surplus for the overlapping period—
(a) take the proportion of the surplus period included in the overlapping period, and
(b) apply that proportion to the DII surplus for the surplus period.
The DII surplus for the overlapping period is the amount given as a result of paragraph (b).
(4) To determine the amount of prior allocations for the overlapping period—
(a) identify any prior allocation claims for the purposes of this section (see subsection (5)), and
(b) take the steps set out in subsection (6) in relation to each such claim.
The amount of prior allocations for the overlapping period is the total of the previously used amounts given at Step 3 in subsection (6) for all the prior allocation claims.
(5) An allocation claim is a prior allocation claim for the purposes of this section if—
(a) it is an allocation claim made by a company in respect of all or part of the DII surplus of company A for the surplus period,
(b) it is made before the current allocation claim, and
(c) it has not been withdrawn.
(6) These are the steps referred to in subsection (4)(b) to be taken in relation to each prior allocation claim.
Step 1 Identify the overlapping period for the prior allocation claim.
Step 2 Identify any period that is common to the overlapping period for the current allocation claim and the overlapping period for the prior allocation claim. If there is a common period, go to Step 3. If there is no common period, there is no previously allocated amount in relation to the prior allocation claim (and ignore Step 3).
Step 3 Determine the previously allocated amount of the DII surplus in relation to the prior allocation claim (see subsection (7)).
(7) To determine the previously allocated amount of the DII surplus in relation to the prior allocation claim—
(a) take the proportion of the overlapping period for the prior allocation claim that is included in the common period identified at Step 2 in subsection (6) in relation to that claim, and
(b) apply that proportion to the amount of the DII surplus allocated on the prior allocation claim.
The previously allocated amount of the DII surplus in relation to the prior allocation claim is the amount given as a result of paragraph (b).
(8) If two or more allocation claims are made at the same time, for the purposes of this section treat the claims as made—
(a) in such order as the companies making them may jointly elect, or
(b) if no such election is made, in such order as an officer of Revenue and Customs may direct.
(9) For the purposes of Step 3 in subsection (6), the amount of the DII surplus allocated on a prior allocation claim is determined on the basis that an amount is allocated on the claim before it is allocated on a later claim.
(10) If the use of the proportion mentioned in subsection (3) or (7) would, in the circumstances of a particular case, produce a result that is unjust or unreasonable, the proportion is to be modified so far as necessary to produce a result that is just and reasonable.
The unused part of the DII shortfall
259ZMD (1) This section identifies the unused part of the DII shortfall of company B for the shortfall period, for the purposes of an allocation claim made by company B (“the current allocation claim”).
(2) The unused part of the DII shortfall of company B for the shortfall period is the amount equal to—
(a) the DII shortfall for the shortfall period, less
(b) the amount of prior matches for the shortfall period (see subsections (3) to (5)).
(3) To determine the amount of prior matches for the shortfall period—
(a) identify any prior allocation claims for the purposes of this section (see subsection (4)), and
(b) determine the previously matched amount of the DII shortfall in relation to each prior allocation claim (see subsection (5)).
The amount of prior matches for the shortfall period is the total of the previously matched amounts of the DII shortfall in relation to all the prior allocation claims.
(4) An allocation claim is a prior allocation claim for the purposes of this section if—
(a) it is an allocation claim made by company B for the shortfall period,
(b) it is made before the current allocation claim, and
(c) it has not been withdrawn.
(5) The previously matched amount of the DII shortfall in relation to a prior allocation claim is the amount that is treated as dual inclusion income of company B for the shortfall period as a result of the claim (see section 259ZMB(3)(a)).
(6) If two or more allocation claims are made at the same time, for the purposes of this section treat the claims as made—
(a) in such order as company B may elect, or
(b) if no such election is made, in such order as an officer of Revenue and Customs may direct.
(7) For the purposes of subsection (3)(b), the amount of the DII shortfall matched in relation to a prior allocation claim is determined on the basis that an amount is matched on the claim before it is matched on a later claim.
Groups
Groups of companies
259ZME (1) For the purposes of this Chapter, company A and company B are members of the same group of companies if—
(a) one is a 75% subsidiary of the other, or
(b) both are 75% subsidiaries of a third company.
(2) In subsection (1), “75% subsidiary” has the same meaning as in Part 5 of CTA 2010 (group relief) (see section 151 of that Act).
(3) Sections 154, 155A, 155B and 156 of CTA 2010 (members of group of companies: arrangements for transfers of companies) apply for the purposes of this Chapter as they apply for the purposes of Part 5 of CTA 2010, but as if references to a surrenderable amount were to the DII surplus.
“Dual inclusion income” and “counteraction amount”
Meaning of “dual inclusion income” and “counteraction amount”
259ZMF (1) This section applies for the purposes of this Chapter.
(2) The “dual inclusion income” of a company for an accounting period means the amount of any income that is dual inclusion income of the company for that period for the purposes of any provision of this Part.
(3) An amount of income that is dual inclusion income of a company for the purposes of more than one provision of this Part is not counted more than once for the purposes of subsection (2).
(4) The “counteraction amount” of a company for an accounting period means the total of all the following amounts that are applicable to the company for that period—
(a) the restricted deduction, within the meaning given by section 259EC(2);
(b) where section 259ED applies and there is only one payee, the relevant amount, within the meaning given by section 259ED(3);
(c) where section 259ED applies and there is more than one payee, the payee's share of the relevant amount, within the meaning given by section 259ED(3) and (6);
(d) the excessive PE deduction, within the meaning given by section 259FA(8);
(e) where section 259IB applies, the hybrid entity double deduction amount, within the meaning given by section 259IA(4);
(f) where section 259IC applies, the restricted deduction, within the meaning given by section 259IC(3);
(g) the dual territory double deduction amount, within the meaning given by section 259JA(5), reduced by the amount of the impermissible overseas deduction (if any), within the meaning given by section 259JC(2);
(h) a dual territory double deduction, within the meaning given by section 259KB(2);
(i) an excessive PE deduction, within the meaning given by section 259KB(3) to (5).
16 In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), after Part 8 insert—
PART 8A Claims for allocation of surplus dual inclusion income
Introduction
77B (1) This Part of this Schedule applies to allocation claims under Chapter 12A of Part 6A of TIOPA 2010 (hybrid and other mismatches: allocation of dual inclusion income within group).
(2) Expressions used in this Part of this Schedule and in that Chapter have the same meaning in this Part of this Schedule as they have in that Chapter.
Claims to be included in company tax return
77C (1) An allocation claim must be made by being included in the company tax return of the claimant company (“company B”) for the shortfall period.
(2) It may be included in the return originally made or by amendment.
Consent to allocation claim
77D (1) In accordance with Requirement 1 in section 259ZMB of TIOPA 2010, an allocation claim in respect of all or part of the DII surplus of a company (“company A”) requires the company's consent.
(2) The necessary consent must be given—
(a) by notice in writing,
(b) to an officer of Revenue and Customs,
(c) at or before the time the allocation claim is made.
Otherwise the allocation claim is ineffective.
(3) An allocation claim by company B is ineffective unless it is accompanied by a copy of the notice of consent to the allocation claim given by company A.
Notice of consent
77E (1) Notice of consent to an allocation claim given by company A must contain all the following details—
(a) the name of company A;
(b) the name of company B;
(c) the amount of the DII surplus to be allocated to company B;
(d) the accounting period of company A which is the surplus period.
(2) Notice of consent may not be amended, but it may be withdrawn and replaced by another notice of consent.
(3) Notice of consent may be withdrawn by notice to an officer of Revenue and Customs.
(4) Except where the consent is withdrawn under paragraph 77I (withdrawal in consequence of reduction of DII surplus), the notice of withdrawal must be accompanied by a notice signifying the consent of company B to the withdrawal.
Otherwise the notice of withdrawal is ineffective.
(5) Company B must, so far as it may do so, amend its company tax return for the accounting period for which the allocation claim was made so as to reflect the withdrawal of consent.
Notice of consent requiring amendment of return
77F (1) Where company A gives notice of consent to an allocation claim in respect of all or part of an accounting period after filing its company tax return for the accounting period, company A must amend its company tax return for the accounting period so as to reflect the notice of consent.
(2) The time limits otherwise applicable to amendment of a company tax return do not prevent an amendment being made under sub-paragraph (1).
(3) If company A fails to comply with sub-paragraph (1), the notice of consent is ineffective.
Withdrawal or amendment of allocation claim
77G (1) An allocation claim may be withdrawn by company B only by amending its company tax return.
(2) An allocation claim may not be amended, but must be withdrawn and replaced by another allocation claim.
Time limit for allocation claims
77H (1) An allocation claim may be made or withdrawn at any time up to whichever is the last of the following dates—
(a) the first anniversary of the filing date for the company tax return of company B for the accounting period for which the claim is made;
(b) if notice of enquiry is given into that return, 30 days after the enquiry is completed;
(c) if after such an enquiry an officer of Revenue and Customs amends the return under paragraph 34(2), 30 days after notice of the amendment is issued;
(d) if an appeal is brought against such an amendment, 30 days after the date on which the appeal is finally determined.
(2) An allocation claim may be made or withdrawn at a later time if an officer of Revenue and Customs allows it.
(3) The time limits otherwise applicable to amendment of a company tax return do not apply to an amendment to the extent that it makes or withdraws an allocation claim within the time allowed by or under this paragraph,
(4) The references in sub-paragraph (1) to an enquiry into a company tax return do not include an enquiry restricted to a previous amendment making or withdrawing a claim.
(5) An enquiry is so restricted if—
(a) the scope of the enquiry is limited as mentioned in paragraph 25(2), and
(b) the amendment giving rise to the enquiry consisted of the making or withdrawing of an allocation claim.
Reduction in DII surplus
77I (1) This paragraph applies if, after company A has given one or more notices of consent to an allocation claim or claims, the unused part of the DII surplus of company A is reduced to less than the amount stated in the notice of consent, or the total of the amounts stated in the notices of consent.
(2) Company A must within 30 days withdraw the notice of consent, or as many of the notices of consent as is necessary to bring the total amount of the DII surplus to which the claim or claims relate within the new unused part of the DII surplus of company A.
(3) Company A may give one or more new notices of consent.
(4) Company A must give notice in writing of the withdrawal of consent, and send a copy of any new notice of consent—
(a) to each of the companies affected, and
(b) to an officer of Revenue and Customs.
(5) If company A fails to act in accordance with sub-paragraph (2), an officer of Revenue and Customs may by notice to company A give such directions as the officer thinks fit as to which notice or notices are to be ineffective or are to have effect in a lesser amount.
(6) The power in sub-paragraph (5) must not be exercised to any greater extent than is necessary to secure that the total amount stated in the notice or notices is consistent with the unused part of the DII surplus of company A.
(7) An officer of Revenue and Customs must at the same time send a copy of the notice to each company affected by the exercise of the power.
(8) A company which receives—
(a) notice of the withdrawal of consent, or a copy of a new notice of consent, under sub-paragraph (4), or
(b) a copy of a notice containing directions by an officer of Revenue and Customs under sub-paragraph (7),
must, so far as it may do so, amend its company tax return for the accounting period for which the claim is made so that it is consistent with the new position with regard to consent to an allocation claim.
(9) An appeal may be brought by company A against any directions given by an officer of Revenue and Customs under sub-paragraph (5).
(10) Notice of appeal must be given—
(a) in writing,
(b) within 30 days after the notice containing the directions was issued, and
(c) to the officer of Revenue and Customs by whom the notice was given.
Assessments on other companies
77J (1) This paragraph applies where, after company A has given notice of consent to an allocation claim, company B 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 77I(4), or
(b) a copy of a notice containing directions by an officer of Revenue and Customs under paragraph 77I(7).
(2) If any of the tax is unpaid 6 months after company B's time limit for allocation claims, an officer of Revenue and Customs may make an assessment to tax in the name of company B on any other company that has benefited as a result of the consent given by company A.
(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 consent.
(5) A company assessed to an amount of tax under sub-paragraph (2) is entitled to recover from company B—
(a) a sum equal to that amount, and
(b) any interest on that amount which it has paid under section 87A of the Taxes Management Act 1970 (interest on unpaid corporation tax).
(6) For the purposes of this paragraph, company B's time limit for allocation claims is the last of the dates mentioned in paragraph 77H(1) on which company B could make or withdraw an allocation claim for the accounting period for which the claim in question is made.
Assessment to recover excessive amount claimed
77K (1) If an officer of Revenue and Customs discovers that any amount which is the subject of an allocation claim is or has become excessive, the officer may make an assessment to tax in the amount which in the officer's opinion ought to be charged.
(2) This power is without prejudice to—
(a) the power to make a discovery assessment under paragraph 41(1);
(b) the making of all such adjustments by way of discharge or repayment of tax or otherwise as may be required where an amount claimed by company B on an allocation claim is excessive or company A has given consent to an allocation claim in respect of a corresponding amount.
(3) If an assessment under this paragraph is made because company B fails, or is unable, to amend its company tax return under paragraph 77I(8), the assessment is not out of time if it is made within one year from—
(a) the date on which company A gives notice of the withdrawal of consent, or (if later) sends a copy of a new notice of consent, to company B under paragraph 77I(4), or
(b) the date on which an officer of Revenue and Customs sends company B a copy of a notice containing the officer's direction under paragraph 77I(7).
Joint amended returns
77L (1) The Treasury may by regulations make provision for arrangements under which—
(a) an allocation claim may be made without being accompanied by a copy of the notice of consent to the claim given by company A, provided authority for the claim being so made is given by a company which is authorised in relation to company B as mentioned in paragraph (b), and
(b) one company may be authorised to act on behalf of two or more companies in the same group in amending their company tax returns for the purpose of making an allocation claim or giving consent to an allocation claim or revising the amount to which an allocation claim or consent relates.
(2) Regulations under this paragraph may add to, exclude or modify the operation of any provisions of this Part of this Schedule to such extent as the Treasury think necessary or expedient for the purpose of, or in connection with, such arrangements.
(3) Provision may in particular be made—
(a) altering the conditions for making and withdrawing allocation claims, and
(b) giving an officer of revenue and Customs power to recover from the authorised company or another company in the group any amount which might be recovered from company B by an assessment under paragraph 77K.
PART 7 Financing cost of loan capital
17 (1) Chapter 6 of Part 6A of TIOPA 2010 (hybrid and other mismatches: deduction/non-inclusion mismatches relating to transfers by permanent establishments) is amended in accordance with sub-paragraph (2).
(2) In section 259FA(4) (circumstances in which the Chapter applies), omit the “and” after paragraph (a) and after paragraph (b) insert
, and
(c) is not in respect of the financing cost of loan capital which the permanent establishment is assumed to have by virtue of section 21(2) of CTA 2009 for the purpose of applying subsection (1) of that section (the separate enterprise principle).
PART 8 Chapters 9 and 10: carry forward of illegitimate overseas deduction
18 (1) Part 6A of TIOPA is amended as follows.
(2) In section 259IC (counteraction where hybrid entity is within charge to corporation tax), in subsection (8), after “person” insert “ other than an investor in the hybrid entity ”.
(3) In section 259JB (counteraction where mismatch arises because of a dual resident company), in subsection (6), after “person” insert “ other than the company ”.
(4) In section 259JD (counteraction where mismatch arises because of a relevant multinational and is not counteracted in the parent jurisdiction), in subsection (6), after “person” insert “ other than the company ”.
PART 9 Imported mismatches
19 Chapter 11 of Part 6A of TIOPA (imported mismatches) is amended as follows.
20 In section 259K (overview of chapter), after subsection (4A) insert—
(4B) Section 259KE sets a limit on reductions under section 259KC.
21 (1) Section 259KA (circumstances in which Chapter) is amended as follows.
(2) For subsection (7) substitute—
(7) Condition E is that it is reasonable to suppose that the relevant mismatch is not capable of counteraction.
(7A) A relevant mismatch is capable of counteraction to the extent it is capable of being considered, for the purposes of determining the tax treatment of a person, other than P, under the law of a territory that is OECD mismatch compliant.
(7B) If a proportion of the relevant mismatch is not capable of being so considered under the law of any such territory—
(a) Condition E is met in relation to that proportion, and
(b) the remainder of the relevant mismatch is to be ignored for the purposes of this Part.
(7C) A determination about the extent to which a relevant mismatch is capable of being so considered is to be made on a just and reasonable basis.
(7D) A territory is OECD mismatch compliant if under the law of that territory effect is given to the Final Report on Neutralising the Effects of Hybrid Mismatch Arrangements published by the Organisation for Economic Cooperation and Development on 5 October 2015 or any replacement or supplementary publication (within the meaning of section 259BA(3)).
(3) Omit subsection (8).
(4) After subsection (9)(a) for “as the payer, or a payee” substitute “ as a payee ”.
22 In section 259KC(2A), at the end insert “ and section 259KE (limit on reduction under section 259KC) ”.
23 After section 259KD insert—
Limit on reduction under section 259KC
259KE (1) This section applies where, in relation to the imported mismatch payment, the relevant deduction that may be deducted from P's income for a payment period is to be reduced under section 259KC.
(2) The reduction is not to exceed the amount that the relevant mismatch would have been if the amount of the mismatch payment had been equal to the amount of the imported mismatch payment.
PART 10 Meaning of “act together”
24 (1) Section 259ND of TIOPA 2010 (meaning of “50% investment” and “25% investment”) is amended as follows.
(2) For subsection (7) substitute—
(7) P is to be taken to “act together” with T in relation to U if (and only if) subsection (7A) or (7B) applies.
(7A) This subsection applies if—
(a) P and T are party to a partnership agreement that—
(i) it is reasonable to suppose is designed to affect the value of any of T's rights or interest in relation to U, or
(ii) relates to the exercise of any of T's rights in relation to U, or
(b) the same person manages—
(i) some or all of P's rights or interests in relation to U, and
(ii) some or all of T's rights or interests in relation to U.
(7B) This subsection applies if P has a relevant investment in U and—
(a) P and T are connected (within the meaning given by section 163),
(b) for the purposes of influencing the conduct of U's affairs—
(i) P is able to secure that T acts in accordance with P's wishes,
(ii) T can reasonably be expected to act, or typically acts, in accordance with P's wishes,
(iii) T is able to secure that P acts in accordance with T's wishes, or
(iv) P can reasonably be expected to act, or typically acts, in accordance with T's wishes, or
(c) P and T are party to any arrangement that—
(i) it is reasonable to suppose is designed to affect the value of any of T's rights or interests in relation to U, or
(ii) relates to the exercise of any of T's rights in relation to U.
(7C) To determine whether P has a “relevant investment” in U at a particular time, subsections (3) and (4) apply but as if—
(a) for “an X%”, in both places, there were substituted “ a relevant ”, and
(b) for “X% or more”, in each place, there were substituted “ greater than 5% ”.
(7D) For that purpose—
(a) subsection (6) is to be ignored, and
(b) P's rights and interests are to be aggregated with the rights and interests of persons connected to P (within the meaning given by section 1122 of CTA 2010, ignoring subsection (4) of that section).
(3) In subsection (8)—
(a) omit “But”, and
(b) for “paragraph (d) of subsection (7)” substitute “ paragraph (b) of subsection (7A) ”.
PART 11 Exempt investors in hybrid entities
25 Part 6A of TIOPA 2010 is amended as follows.
26 In section 259BC (the basic rules), after subsection (8) insert—
(8A) Income is to be treated as “ordinary income” if it would fall to be brought into account for the purpose of calculating taxable profits of a person but for the fact that the person is a qualifying institutional investor (and, if the person is based in a territory under the law of which there is no relevant tax on income of the kind in question, if the territory had such a tax).
For the meaning of “qualifying institutional investor” see section 259NDA.
27 (1) Section 259EB (hybrid payer deduction/non-inclusion mismatches and their extent) is amended in accordance with sub-paragraphs (2) and (3).
(2) In subsection (3), at the beginning insert “ Subject to subsections (4A) to (4C) ”.
(3) After subsection (4), insert—
(4A) No excess is to be taken to arise by reason of a hybrid payer being a hybrid entity for the purposes of subsection (1)(b) so far as it is attributable to a qualifying institutional investor based in a territory under the law of which—
(a) the income or profits of the hybrid entity are treated as income and profits of the investor, or
(b) the hybrid entity is not regarded as a distinct and separate person to the investor.
(4B) Excess is attributable to such a qualifying institutional investor to the extent that ordinary income (arising by reason of the payment or quasi-payment) would fall to be brought into account by the investor if—
(a) where subsection (4A)(a) applies, under the law of the territory the income or profits of the hybrid entity were not treated as income and profits of the investor, and
(b) where subsection (4A)(b) applies, under the law of the territory the hybrid entity were regarded as a distinct and separate person to the investor.
(4C) To determine if a “qualifying institutional investor” is “based” in a particular territory for the purposes of subsections (4A) and (4B) see section 259NDA.
28 In section 259GB (hybrid payee deduction/non-inclusion mismatches and their extent), after subsection (2) insert—
(2A) No excess is to be taken to arise by reason of a hybrid payee being a hybrid entity for the purposes of subsection (1)(b) so far as it is attributable to a qualifying institutional investor based in a territory under the law of which—
(a) the income or profits of the hybrid entity are not treated as income or profits of the investor, or
(b) the hybrid entity is regarded as a distinct and separate person to the investor.
(2B) Excess is attributable to such a qualifying institutional investor to the extent that ordinary income (arising by reason of the payment or quasi-payment) would fall to be brought into account by the investor if—
(a) where subsection (2A)(a) applies, under the law of the territory the income or profits of the hybrid entity were treated as income or profits of the investor, and
(b) where subsection (2A)(b) applies, under the law of the territory the hybrid entity were not regarded as a distinct and separate person to the investor.
(2C) To determine if a “qualifying institutional investor” is “based” in a particular territory for the purposes of subsections (2A) and (2B) see section 259NDA.
29 After section 259ND insert—
Qualifying institutional investors etc
Meaning of “qualifying institutional investor” etc
259NDA (1) This section has effect for the purposes of this Part.
(2) References to “qualifying institutional investor” have the meaning given by paragraph 30A of Schedule 7AC to TCGA 1992.
(3) A qualifying institutional investor is “based” in a territory—
(a) if it is resident for tax purposes in the territory, or
(b) where it is not resident anywhere for tax purposes, if it is established in the territory.
PART 12 Interaction with Part 4 of TIOPA 2010
30 TIOPA 2010 is amended as follows.
31 In Part 4 (transfer pricing), after section 192 insert—
Provision for cases within Part 6A
192A (1) Subsection (2) applies to the extent that—
(a) there is an amount to be deducted in respect of a payment by the issuing company under the security,
(b) that amount is required to be reduced (whether or not to nil) under section 147(3) or (5),
(c) the guarantor company makes a claim under section 192(1) in respect of that reduction, and
(d) as regards the payment, provision in Part 6A would, but for the reduction, apply in relation to the tax treatment of the issuing company (“the relevant tax treatment”).
(2) The relevant tax treatment is to apply in relation to the guarantor company.
32 In Chapter 11 of Part 6A (imported mismatches), in section 259K (overview of chapter), after subsection (4B) (as inserted by paragraph 20) insert—
(4C) Section 259KF contains provision for cases also falling within Part 4 (transfer pricing).
33 After section 259KE (as inserted by paragraph 23) insert—
Provision for cases within Part 4
259KF (1) This section applies where, in calculating the profits and losses of P for tax purposes, the amount to be deducted in respect of the imported mismatch payment is required to be reduced (whether or not to nil) under section 147(3) or (5) (tax calculations to be based on arm's length, not actual, provision).
(2) For the purposes of section 259KC(2), the amount of the relevant mismatch is to be determined as if the mismatch payment was reduced by the same proportion as the reduction mentioned in subsection (1).
(3) For the purposes of section 259KC(3)—
(a) the amount of the relevant mismatch is taken to be the amount it would have been had the arm's length provision been made or imposed instead of the actual provision in relation to the imported mismatch payment (making such assumptions as to the amount of the mismatch payment as are reasonable in the circumstances), and
(b) P's share of the relevant mismatch is to be determined accordingly.
(4) In subsection (3) “the arm's length provision” and “the actual provision” are to be construed in accordance with section 147(1).
PART 13 Securitisation companies
34 After section 259NE of TIOPA 2010 insert—
Securitisation companies
Securitisation companies
259NEZA (1) If the tax treatment of a securitisation company would (apart from this section) fall to be adjusted by virtue of provision in this Part, the provision is to be treated as of no effect as regards that company (and accordingly, no such adjustment may be made).
(2) In this section—
“securitisation company” means a company to which specified regulations apply;
“specified regulations” has the meaning given by regulation 2 of the Taxation of Securitisation Companies Regulations 2006 (S.I. 2006/3296).
PART 14 Transparent funds
35 (1) Part 6A of TIOPA 2010 is amended as follows.
(2) In section 259A (overview of Part), after subsection (17) insert—
(17A) Chapter 13A makes provision about the application of Chapters 3, 4, 5, 7, 9 and 11 in cases involving transparent funds (within the meaning of that Chapter).
(3) After Chapter 13 insert—
CHAPTER 13A Special provision concerning transparent funds
Meaning of “transparent fund”
259MA (1) In this Chapter “transparent fund” means a collective investment scheme, or an AIF (that is not a collective investment scheme), if—
(a) were all of the profits or income of the fund to arise from sources inside the United Kingdom and
(b) were all of its participants within the charge to income tax,
its profits or income would be profits or income of its participants for the purposes of that tax.
(2) In this section—
“AIF” has the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773);
“collective investment scheme” has the meaning given by section 235 of the Financial Services and Markets Act 2000;
“participant”, in relation to a transparent fund, means a person who—
takes part in the arrangements constituting the fund, whether by becoming the owner of, or of any part of, the property that is the subject of the arrangements or otherwise, and
does not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions.
Application of Chapters 3, 4, 5 and 7
259MB (1) This section applies where—
(a) Chapter 3, 4, 5 or 7 applies in respect of a payment or quasi-payment,
(b) the relevant structured arrangement condition is not met, and
(c) it is reasonable to suppose that a proportion of the payment or quasi-payment is attributable to a person as a result of that person's interest (direct or indirect) in a transparent fund that is the primary fund in relation to that person.
(2) For the purposes of this section, a proportion of a payment or quasi-payment is attributable to a person if, as a result of that payment or quasi-payment—
(a) ordinary income arises to that person, or
(b) would arise if the person were resident for tax purposes in the United Kingdom.
(3) The primary fund in relation to a person is—
(a) where the income arises or would arise because of an indirect interest the person has in a transparent fund as a result of another transparent fund, or a series of transparent funds, having an interest in that first fund, that first fund, or
(b) where the income arises or would arise because of a direct or indirect interest the person has in a single transparent fund, that fund.
(4) The relevant structured arrangement condition is the condition—
(a) where Chapter 3 applies, in section 259CA(6)(c),
(b) where Chapter 4 applies, in section 259DA(6)(c),
(c) where Chapter 5 applies, in section 259EA(7)(c), and
(d) where Chapter 7 applies, in section 259GA(7)(c).
(5) The Chapter in question applies subject to subsection (6).
(6) If it is reasonable to suppose that the proportion of the payment or quasi-payment that is attributable to a person as a result of the person's interest in the primary fund is less than 10% of the relevant amount, that proportion is to be ignored for the purposes of determining the extent of a mismatch under the Chapter in question.
(7) For the purposes of subsection (6) “the relevant amount” means the amount of ordinary income that it would, on the relevant assumption, have been reasonable to expect to arise to the primary fund as a result of—
(a) in the case of a payment, the payment, or
(b) in the case of a quasi payment, the circumstances giving rise to the relevant deduction (see section 259BB(2)).
(8) The relevant assumption is that the primary fund were a person to whom ordinary income would arise as a result of that payment or those circumstances.
(9) Where a person to whom a proportion of the payment or quasi-payment is attributable as a result of the person's interest in the primary fund is connected (within the meaning given by section 1122 of CTA 2010, ignoring subsections (4) and (7) of that section) to another person to whom a proportion is attributable as a result of that person's interest in that same fund, the rights and interests of those persons are to be aggregated (and accordingly if the proportion attributable between them is 10% or more of the relevant amount, that proportion is not to be ignored).
Application of Chapter 9
259MC (1) This section applies where—
(a) Chapter 9 applies in relation to a hybrid entity double deduction amount (see section 259IA(4)) in respect of an investor in a hybrid entity,
(b) the condition in section 259IA(6)(b) is not met, and
(c) that investor in the hybrid entity is an investor in it as a result of an interest (direct or indirect) it has in a transparent fund (“the relevant fund”) that directly holds an interest in—
(i) the hybrid entity, or
(ii) another entity that is not a transparent fund and which holds a direct or indirect interest in the hybrid entity.
(2) Chapter 9 applies subject to subsection (3).
(3) If it is reasonable to suppose that—
(a) some or all of the hybrid entity double deduction amount that relates to the investor arises as a result of the investor's interest in the relevant fund, and
(b) the amount that arises as a result of that interest (“the relevant amount”) is less than 10% of the potential double deduction amount,
the relevant amount is to be ignored for the purposes of determining the extent of a mismatch under that Chapter.
(4) In this section “potential double deduction amount” means the hybrid double deduction amount that would arise in relation to the relevant fund if it were an investor in the hybrid entity.
(5) Where the investor is connected (within the meaning given by section 1122 of CTA 2010, ignoring subsections (4) and (7) of that section) to another investor with an interest in the relevant fund, the rights and interests of those investors are to be aggregated (and accordingly, if the sum of the relevant amounts in respect of each of them is 10% or more of the potential double deduction amount, that proportion is not to be ignored).
Application of Chapter 11
259MD (1) Subsection (2) applies where—
(a) Chapter 11 applies as a result of sub-paragraph (i), (ii), (iii) or (iv) of section 259KA(6)(a) applying as a result of a payment or quasi-payment to which section 259MB would apply if the Chapter corresponding to that sub-paragraph applied in relation to that payment or quasi-payment, and
(b) the condition in section 259KA(9)(c) is not met.
(2) Where this subsection applies, section 259MB(6) applies for the purposes of determining the extent of a relevant mismatch under Chapter 11.
(3) The Chapters corresponding to the sub-paragraphs of section 269KA(6)(a) mentioned in subsection (1) are as follows—
Sub-paragraph (i) | Chapter 3
Sub-paragraph (ii) | Chapter 4
Sub-paragraph (iii) | Chapter 5
Sub-paragraph (iv) | Chapter 7.
(4) Subsection (5) applies where—
(a) Chapter 11 applies as a result of section 259KA(6)(a)(vi) applying as a result of a hybrid double deduction amount to which section 259MC would apply if Chapter 9 applied in relation to that amount, and
(b) the condition in section 259KA(9)(c) is not met.
(5) Where this subsection applies, section 259MC(3) applies for the purposes of determining the extent of a relevant mismatch under Chapter 11.
PART 15 Commencement
36 Part 6A of TIOPA 2010 has effect, and is deemed always to have had effect—
(a) with the amendments contained in Parts 2 to 3, 7, 10 and 13 of this Schedule, and
(b) with the amendment made by paragraph 26 so far as it applies in relation to a qualifying institutional investor that is an investment trust.
37 The amendments made by Parts 1, 4, 5, 8, 9, 11, 12 and 14 of this Schedule (except that made by paragraph 26 so far as it applies by virtue of paragraph 36(b)) have effect—
(a) in the case of their application to Chapter 6 of Part 6A of TIOPA 2010, in relation to excessive deductions in relation to which the relevant PE period begins on or after the day on which this Act is passed,
(b) in the case of their application to Chapter 9 or 10 of Part 6A of TIOPA 2010, in relation to accounting periods beginning on or after that date, and
(c) in the case of their application to any other Chapter of Part 6A of TIOPA 2010, in relation to—
(i) payments made on or after that date, or
(ii) quasi-payments in relation to which the payment period begins on or after that date.
38 (1) For the purposes of paragraph 37, where there is a straddling period—
(a) so much of the straddling period as falls before the day on which this Act is passed, and so much of it as falls on or after that date, are to be treated as separate accounting periods or taxable periods (as the case may be), and
(b) if it is necessary to apportion an amount for the straddling period to the two separate periods, it is to be apportioned—
(i) on a time basis, according to the respective length of the separate periods, or
(ii) if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.
(2) A “straddling period” is an accounting period or payment period (as the case may be) beginning before the day on which this Act is passed and ending on or after that date.
39 (1) Notwithstanding paragraph 37, a taxpayer may make an election (a “Part 4 retrospection election”) that the amendments made by Part 4 of this Schedule are to be deemed always to have had effect in relation to the taxpayer.
(2) A Part 4 retrospection election must be made on or before 31 December 2021.
(3) Sub-paragraphs (4) to (9) apply where a Part 4 retrospection election is made by a taxpayer.
(4) The taxpayer may, in consequence of the Part 4 retrospection election, make reasonable adjustments to claims, returns and elections made before the Part 4 retrospection election.
(5) Any such adjustments must be made on or before 31 December 2021 but, subject to that, the time limits otherwise applicable to amending or withdrawing the claim, return or election in question do not prevent an adjustment being made under sub-paragraph (4).
(6) Sub-paragraph (7) applies where—
(a) before the Part 4 retrospection election is made, the taxpayer has made a group relief claim, and
(b) under sub-paragraph (4), the taxpayer withdraws the group relief claim, or withdraws the group relief claim and replaces it with a group relief claim for a lesser amount.
(7) The surrendering company may make such adjustments to claims, returns and elections made before the Part 4 retrospection election as are reasonably necessary in consequence of the withdrawal, or the withdrawal and replacement, of the group relief claim.
(8) Any such adjustments must be made on or before 31 December 2021 but, subject to that, the time limits otherwise applicable to amending or withdrawing the claim, return or election in question do not prevent an adjustment being made under sub-paragraph (7).
(9) In sub-paragraphs (6) to (8)—
“group relief claim” means—
a claim for group relief under Part 5 of CTA 2010, or
a claim for group relief for carried-forward losses under Part 5A of CTA 2010;
“surrendering company” has the same meaning as in Part 5 or 5A (as the case may be) of CTA 2010.
40 (1) Part 6 of this Schedule (allocation of dual inclusion income within group) has effect in relation to accounting periods of a claimant company that begin on or after 1 January 2021.
(2) A “claimant company” is a company that makes an allocation claim for the purposes of Chapter 12A of Part 6A of TIOPA 2010 (inserted by Part 6 of this Schedule).
(3) For the purposes of sub-paragraph (1), where there is a straddling period—
(a) so much of the straddling period as falls before 1 January 2021, and so much of it as falls on or after that date, are to be treated as separate accounting periods, and
(b) if it is necessary to apportion an amount for the straddling period to the two separate periods, it is to be apportioned—
(i) on a time basis, according to the respective length of the separate periods, or
(ii) if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.
(4) A “straddling period” is an accounting period beginning before 1 January 2021 and ending on or after that date.
SCHEDULE 8 Relief from corporation tax for losses and other amounts
Section 37
PART 1 Allocation of deductions allowance of former groups
1 Part 7ZA of CTA 2010 (restrictions on deductions for carried-forward losses and other amounts) is amended as follows.
2 After section 269ZS (group deductions allowance and the nominated company) insert—
Group allowance nomination: former groups
269ZSA (1) This section applies where—
(a) a group ceases to be a group for the purposes of this Part (because the companies that were members of the group no longer together meet the condition in section 269ZZB(2)), and
(b) immediately before the group ceased to be a group for the purposes of this Part—
(i) two or more members of the group were companies within the charge to corporation tax, and
(ii) no group allowance nomination under section 269ZS had effect in relation to the group.
(2) All the companies that were, immediately before the group ceased to be a group for the purposes of this Part, members of the group and within the charge to corporation tax may together nominate (“the group allowance nomination”) one of their number (“the nominated company”) for the purposes of this Part.
(3) It is irrelevant for the purposes of subsection (2) whether or not the companies (including the nominated company) are within the charge to corporation tax when the nomination is made.
(4) A group allowance nomination under this section has effect during the period—
(a) beginning with the date on which it is stated to take effect (see section 269ZS(5), as it has effect by virtue of subsection (5)(a) of this section), and
(b) ending immediately before the group ceased to be a group for the purposes of this Part.
(5) For the purposes of this Part, treat a group allowance nomination under this section as a group allowance nomination under section 269ZS, but that section is to apply to a group allowance nomination under this section subject to the following modifications—
(a) section 269ZS(5) has effect as if, for the words in brackets, there were substituted “ (which must be earlier than the date on which the group ceased to be a group for the purposes of this Part) ”;
(b) section 269ZS(6) has effect as if, for the words “is, when the nomination is made”, there were substituted “ was, immediately before the group ceased to be a group for the purposes of this Part ”;
(c) section 269ZS(7) does not apply (but see subsection (4) of this section);
(d) in section 269ZS(8), ignore references to the revocation of a group allowance nomination (however expressed).
(6) Only one group allowance nomination under this section may be made in respect of a group.
3 After section 269ZV (group allowance allocation statement: requirements and effects) insert—
Group allowance allocation statement: former groups
269ZVA (1) This section applies where—
(a) a group ceases to be a group for the purposes of this Part (because the companies that were members of the group no longer together meet the condition in section 269ZZB(2)), and
(b) immediately before the group ceased to be a group for the purposes of this Part, a group allowance nomination had effect in relation to the group (including a group allowance nomination made after that event under section 269ZSA).
(2) Sections 269ZT to 269ZV have effect subject to the following modifications—
(a) section 269ZT(2)(a) does not apply to the company that was the nominated company under the group allowance nomination mentioned in subsection (1)(b) (accordingly, that company may submit a group allowance allocation statement under section 269ZT);
(b) for the purposes of sections 269ZT(2)(b), 269ZU(2) and 269ZV(7) and (8), treat the company that was the nominated company under the group allowance nomination mentioned in subsection (1)(b) as the company that is, for the time being, the nominated company in relation to the group;
(c) section 269ZV(5A) has effect as if the reference to a listed company that is the ultimate parent of a group were to a listed company that was the ultimate parent of the group immediately before the group ceased to be a group for the purposes of this Part.
PART 2 Other amendments of CTA 2010
Amendments of section 137 of CTA 2010
4 In section 137 of CTA 2010 (deductions from total profits for claims for group relief), in subsection (5)—
(a) omit paragraph (d);
(b) at the end insert—
(e) of a type to which section 269ZB(2), 269ZBA(2), 269ZC(2) or 269ZD(2) of Part 7ZA (restrictions on deductions for carried-forward losses and other amounts) could apply.
Amendments of Part 5A of CTA 2010
5 Part 5A of CTA 2010 (group relief for carried-forward losses) is amended as follows.
6 In section 188BE (restriction on surrendering losses etc where surrendering company could use them itself), for the existing text substitute—
The surrendering company may not surrender under this Chapter any loss or other amount carried forward to the surrender period to the extent that the loss or other amount could be deducted from the total profits of the company for the period at Step 2 of section 4(2).
7 (1) Section 188DD (claimant company's relevant maximum for overlapping period) is amended as follows.
(2) In subsection (3), for “269ZD(6)” substitute “ 269ZDA ”.
(3) In subsection (3A)—
(a) in paragraph (a), for “qualifying trading profits and qualifying non-trading profits” substitute “ modified total profits ”;
(b) in paragraph (b), for “in determining” substitute “ which could be relieved against ”.
Amendments of Part 7ZA of CTA 2010
8 Part 7ZA of CTA 2010 is amended as follows.
9 In section 269ZF(3) (steps for determining a company's qualifying trading profits, qualifying non-trading income profits and qualifying chargeable gains), in paragraph (2) of step 2—
(a) for “sum,” substitute
sum—
(a)
;
(b) at the end insert
, and
(b) ignore any amount (or any part of any amount) which could be relieved against the company's total profits of the accounting period on the making of a claim in respect of the amount (or part) if a claim is not in fact made in respect of it.
10 In section 269ZFA (“relevant profits” for purposes of section 269ZD), in subsection (1), after paragraph (b) insert—
But if the allowance mentioned in paragraph (b) exceeds the profits mentioned in paragraph (a), the company's “relevant profits” for the accounting period are nil.
11 (1) Section 269ZT (group allowance allocation statement: submission) is amended as follows.
(2) In subsection (1), for “and (3)” substitute “ to (3A) ”.
(3) After subsection (3) insert—
(3A) A company need not submit a group allowance allocation statement to HMRC for an accounting period if the statement would, if submitted, allocate no amount of group deductions allowance in accordance with section 269ZV(3)(f).
(4) In subsection (4), for the words from “before” to the end substitute
on or before whichever is the latest of the following dates—
(a) the first anniversary of the filing date for the company tax return for the accounting period to which the statement relates;
(b) if notice of enquiry (within the meaning of Schedule 18 to FA 1998) is given into a company tax return of a company for an accounting period for which an amount of group deductions allowance is, or could be, allocated by the statement, 30 days after the enquiry is completed;
(c) if, after such an enquiry, an officer of Revenue and Customs amends the return under paragraph 34(2) of that Schedule, 30 days after the notice of amendment is issued;
(d) if an appeal is brought against such an amendment, 30 days after the date on which the appeal is finally determined.
12 In section 269ZV(5) (maximum amount of group deductions allowance that may be allocated to a listed company by a group allowance allocation statement)—
(a) In the definition of “DAP”—
(i) in paragraph (a), after “period” insert “ on which the nominee was the nominated company in relation to the group ”;
(ii) in paragraph (b), after “which the” insert “ listed ”;
(b) in the definition of “DNAP”, after “period” insert “ on which the nominee was the nominated company in relation to the group ”.
Amendments of Chapter 7 of Part 14 of CTA 2010
13 Chapter 7 of Part 14 of CTA 2010 (meaning of “change in the ownership of a company”) is amended as follows.
14 In section 719(4A) (certain acquisitions giving rise to a change in the ownership of a company) for “2D” substitute “ 2E ”.
15 In section 721(4) (things other than ordinary share capital that may be taken into account in determining change in ownership), after “2D,” insert “ 2E, ”.
PART 3 Commencement and transitional provision
Commencement
16 (1) The amendments made by paragraphs 2 and 3 have effect in relation to accounting periods beginning on or after 1 April 2017.
(2) Where a company has an accounting period beginning before 1 April 2017 and ending on or after that date (“the straddling period”)—
(a) so much of the straddling period as falls before 1 April 2017, and so much of that period as falls on or after that date, are treated as separate accounting periods, and
(b) where it is necessary to apportion an amount for the straddling period to the two separate accounting periods, it is to be apportioned—
(i) in accordance with section 1172 of CTA 2010 (time basis), or
(ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.
17 The amendments made by paragraphs 4, 6 and 11 have effect in relation to accounting periods beginning on or after 1 April 2021.
18 The amendments made by paragraph 7 have effect as if they had been made by Schedule 4 to FA 2020 (see Part 3 of that Schedule).
19 The amendments made by paragraphs 9 and 10 are to be treated as having always had effect.
20 The amendments made by paragraph 12 have effect in relation to a group allowance allocation statement submitted under section 269ZT or 269ZU of CTA 2010 in respect of an accounting period beginning on or after 1 April 2021.
21 The amendments made by paragraphs 14 and 15 have effect in relation to an acquisition that takes place on or after 1 April 2021.
Transitional provision
22 (1) This paragraph applies where—
(a) section 269ZSA of CTA 2010 (inserted by paragraph 2 of this Schedule) applies in relation to a group (see section 269ZSA(1)),
(b) the group ceased to be a group for the purposes of Part 7ZA of CTA 2010 before the date on which this Act is passed, and
(c) one or more (but not all) of the companies that were, immediately before the group ceased to be a group for those purposes, members of the group and within the charge to corporation tax (the “former group companies”) no longer exist.
(2) If two or more of the former group companies still exist—
(a) section 269ZSA(2) of CTA 2010 has effect as if the reference to all the companies mentioned in that provision were to all the former group companies that still exist;
(b) section 269ZS(6) of CTA 2010, as it has effect by virtue of section 269ZSA(5)(b) of that Act, has effect as if the reference to each company mentioned in that provision were to each former group company that still exists.
(3) If only one of the former group companies still exists—
(a) section 269ZSA(2) of CTA 2010 has effect as if it enabled that company to nominate itself for the purposes of Part 7ZA of that Act;
(b) section 269ZS(6) of CTA 2010, as it has effect by virtue of section 269ZSA(5)(b) of that Act, has effect as if it provided that a group allowance nomination is of no effect unless it is signed by the appropriate person on behalf of that company.
23 (1) This paragraph applies where, in a case to which section 269ZVA of CTA 2010 (inserted by paragraph 3 of this Schedule) applies—
(a) the company that was the nominated company under the group allowance nomination mentioned in section 269ZVA(1)(b) of CTA 2010 must submit a group allowance allocation statement to HMRC (under section 269ZT of that Act, as that section has effect by virtue of section 269ZVA of that Act), and
(b) the date given by section 269ZT(4) of CTA 2010, as the date on or before which the statement must be received by HMRC, is earlier than 31 March 2022.
(2) For the purposes of Part 7ZA of CTA 2010, section 269ZT(4) of that Act is satisfied if the statement is received by HMRC on or before 31 March 2022.
SCHEDULE 9 Plastic packaging tax: secondary liability and assessment notices and joint and several liability notices
Section 59
PART 1 Secondary liability and assessment notices
Effect of secondary liability and assessment notice
1 A secondary liability and assessment notice given to a person (“R”) makes that person liable to pay an amount which is equal to or less than an amount of plastic packaging tax which another person (“P”) is liable to pay in relation to an accounting period of P (the “relevant time”) but which P has failed to pay on or before the date on which the amount became due and payable.
Test for giving a secondary liability and assessment notice
2 (1) The Commissioners may give a secondary liability and assessment notice to R if they consider that—
(a) R is acting in the course of a related business, and
(b) sub-paragraph (2) or (3) applies to R.
(2) This sub-paragraph applies to R if—
(a) R is or has been concerned in, or in the taking of steps with a view to, P failing to pay plastic packaging tax, and
(b) R knows or ought to know that R is or was so concerned.
(3) This sub-paragraph applies to R if—
(a) R is or has been involved in transporting, storing or otherwise dealing with a chargeable plastic packaging component, and
(b) R knows or ought to know that P has failed to pay plastic packaging tax which P is liable to pay in respect of the component.
(4) The Commissioners may—
(a) by regulations make provision about the factors which they may take into account in considering whether they may give a secondary liability and assessment notice to R;
(b) issue directions about those factors.
(5) The Commissioners may—
(a) give R more than one secondary liability and assessment notice in relation to the same relevant time;
(b) give R a secondary liability and assessment notice whether or not P has asked HMRC to review, or has appealed against, a decision that P is liable to pay some or all of the amount of plastic packaging tax which P has failed to pay as mentioned in paragraph 1.
Content of secondary liability and assessment notice
3 (1) A secondary liability and assessment notice must—
(a) set out why the Commissioners consider that it is appropriate to give a secondary liability and assessment notice to R under paragraph 2(1);
(b) specify the amount which the Commissioners have assessed that P has failed to pay as mentioned in paragraph 1;
(c) specify the amount which the Commissioners have assessed that R is liable to pay;
(d) specify how and when R must pay;
(e) specify how late payment interest will accrue if R does not make the payment by the date on which it is due and payable;
(f) set out how the Commissioners assessed the amount which R is required to pay.
(2) The amount must be an amount which the Commissioners consider just and reasonable, having regard in particular to their reasons for considering that paragraph 2(2) or (3) applies to R.
(3) The Commissioners must publish guidance on the matters which they will take into account when determining whether an amount is just and reasonable.
(4) A secondary liability and assessment notice may not require R to pay an amount before the end of the period of 30 days beginning with the day on which the notice is given to R.
(5) An amount assessed and notified to R in a secondary liability and assessment notice is recoverable on the basis that it is an amount of plastic packaging tax due from R.
(6) But sub-paragraph (5) does not apply if, or to the extent that, the assessment has been withdrawn or reduced.
Copy of notice to be given to P
4 When the Commissioners give a secondary liability and assessment notice to R, they must, as soon as practicable, give a copy of that notice to P.
Application to revoke or reduce amount
5 (1) R may apply to the Commissioners to—
(a) revoke a secondary liability and assessment notice, on the grounds that R took all reasonable steps to establish that P had paid or intended to pay all the plastic packaging tax which P was liable to pay in relation to the relevant time, or
(b) reduce the amount which R is required to pay by a secondary liability and assessment notice, on the grounds that the amount is not just and reasonable.
(2) The Commissioners may by regulations make provision about—
(a) the steps which are to be regarded as reasonable for the purposes of sub-paragraph (1)(a);
(b) applications for the purposes of sub-paragraph (1).
(3) The regulations may (among other things) make provision about information that must be supplied as part of an application.
(4) The Commissioners must notify R of their decision in response to an application under sub-paragraph (1) within the period of 30 days beginning with the day on which they receive the application.
(5) If the Commissioners decide to reduce the amount which R is required to pay, the notification of their decision must specify—
(a) the new amount which R is liable to pay, and
(b) how and when R must pay.
(6) R may not be required to pay the new amount before the end of the period of 30 days beginning with the day on which the notification is given to R.
(7) The Commissioners must repay any amount which R has paid in excess of the new amount.
Limitation on secondary liability
6 (1) The Commissioners may not give a secondary liability and assessment notice to R in respect of an amount of plastic packaging tax after the end of the period of 2 years beginning with—
(a) the day after the last day of the accounting period by reference to which P was liable to pay the amount, or, if later,
(b) the day on which a court or tribunal finally determines that P is liable to pay the amount.
(2) But in a case involving a loss of tax brought about deliberately by R or P (whether acting alone or with another person) sub-paragraph (1) has effect as if the reference to 2 years were to 20 years.
Reduction of amount where P's liability is reduced
7 (1) Where the amount which P is liable to pay in relation to the relevant time is reduced for any reason the Commissioners must consider whether to reduce the amount which R is liable to pay.
(2) If the Commissioners decide to reduce or cancel the amount which R is liable to pay, they must, within the period of 30 days beginning with the day on which they make their decision—
(a) inform R of the new amount which R is liable to pay (if any), and
(b) repay any amount which R has paid in excess of the new amount.
(3) The new amount must be such amount as the Commissioners consider just and reasonable, having regard in particular to their reasons for considering that paragraph 2(2) or (3) applies to R.
(4) Where P's liability to pay in relation to the relevant time is cancelled, the Commissioners must, within the period of 30 days beginning with the day on which that happens—
(a) notify R that the secondary liability and assessment notice is revoked, and
(b) repay any amount which R has paid.
No double payment
8 (1) R may not be required to pay any amount by a secondary liability and assessment notice if or to the extent that P has paid the amount mentioned in paragraph 1.
(2) P may not be required to pay the amount mentioned in paragraph 1 if or to the extent that R has paid an amount referable to that amount.
PART 2 Joint and several liability notices
Effect of joint and several liability notice
9 A joint and several liability notice given to a person (“R”) makes that person jointly and severally liable to pay plastic packaging tax that another person (“P”) will be liable to pay in respect of so much of any accounting period of P as falls within the period of two years beginning with—
(a) the day on which the notice is given to R, or
(b) if a joint and several liability notice is given to R at a time when another joint and several liability notice already has effect in relation to R, the day after the day on which the previous notice ceases to have effect.
Test for giving joint and several liability notice
10 (1) The Commissioners may give a joint and several liability notice to R if the Commissioners consider that—
(a) R is acting in the course of a related business, and
(b) sub-paragraph (2) or (3) applies to R.
(2) This sub-paragraph applies to R if—
(a) R is concerned in, or in the taking of steps with a view to, P not paying plastic packaging tax, and
(b) R knows or ought to know that R is so concerned.
(3) This sub-paragraph applies to R if—
(a) R is involved in transporting, storing or otherwise dealing with a chargeable plastic packaging component in respect of which P is or will be liable to pay plastic packaging tax,
(b) P has not paid that tax in respect of that component, and
(c) P intends not to pay that tax in respect of that component.
(4) The Commissioners may—
(a) by regulations make provision about the factors which they may take into account in considering whether they may give a joint and several liability notice to R;
(b) issue directions about those factors.
Content of joint and several liability notice
11 A joint and several liability notice must—
(a) state that R is jointly and severally liable with P to pay any plastic packaging tax that P is liable to pay in respect of so much of any accounting period of P as falls within the period of two years determined in accordance with paragraph 9, and
(b) set out why the Commissioners consider that it is appropriate to give a joint and several liability notice to R under paragraph 10(1), including whether the Commissioners consider that paragraph 10(2) or (3) (or both) applies to R.
Copy of notice to be given to P
12 When the Commissioners give a joint and several liability notice to R, they must, as soon as practicable, give a copy of that notice to P.
Revocation
13 (1) After being given a joint and several liability notice R must notify the Commissioners if paragraph 10(2)(a) or, as the case may be, (3)(a) (or both), does not apply or ceases to apply to R, including as a result of R ceasing to have dealings with P, at any time within the period of two years mentioned in paragraph 9.
(2) If—
(a) R notifies the Commissioners under sub-paragraph (1) within the period of 30 days beginning with the day on which R is given the joint and several liability notice (the “cancellation period”), and
(b) as a result of the notification the Commissioners consider that paragraph 10(2)(a) or, as the case may be, (3)(a), does not apply to R, including as a result of R ceasing to have dealings with P during the cancellation period,
the Commissioners must notify R that the joint and several liability notice is revoked with the result that R is not liable to pay any plastic packaging tax as mentioned in paragraph 9.
(3) If R does not notify the Commissioners under sub-paragraph (1), or notifies them only after the end of the cancellation period, R must be treated in relation to the period of liability as—
(a) knowing that R is concerned in, or in the taking of steps with a view to, P not paying plastic packaging tax as mentioned in paragraph 10(2), or
(b) knowing that P has not paid and intends not to pay tax as mentioned in paragraph 10(3).
(4) The period of liability is—
(a) if R does not notify the Commissioners under sub-paragraph (1) within the period of two years mentioned in paragraph 9, that period of two years, or
(b) if R does notify the Commissioners under sub-paragraph (1) within that period of two years but after the cancellation period, and as a result of the notification the Commissioners accept that paragraph 10(2)(a) or, as the case may be, (3)(a), does not apply to R—
(i) the cancellation period, or,
(ii) if the Commissioners consider that paragraph 10(2)(a) or, as the case may be, (3)(a), applied to R after the cancellation period, the period beginning with the day on which the joint and several liability notice was given to R and ending with the day on which the Commissioners consider that paragraph 10(2)(a) or, as the case may be, (3)(a), ceased to apply to R.
(5) The Commissioners must inform R and P of the result of a notification under sub-paragraph (1) within the period of 30 days beginning with the day on which they are given the notification.
14 (1) P may apply to the Commissioners to revoke a joint and several liability notice given to R, on the ground that the Commissioners were wrong to consider that paragraph 10(2) or (3) applies to R so far as relating to anything done or not done by, or any intention of, P.
(2) An application under sub-paragraph (1) must be made within the period of 30 days beginning with the day on which the Commissioners give a copy of the notice to P.
(3) The Commissioners must notify R and P of their decision in response to an application under sub-paragraph (1) within the period of 30 days beginning with the day on which they receive the application.
15 (1) The Commissioners may by regulations make further provision about—
(a) notifications for the purposes of paragraph 13(1);
(b) applications for the purposes of paragraph 14(1).
(2) The regulations may (among other things) make provision about information that must be supplied as part of the notification or application.
Assessments of liability
16 (1) Where P is liable to pay an amount of plastic packaging tax, the Commissioners may assess that R is liable to pay an amount equal to or less than the amount due from P.
(2) Where such an assessment is made, the Commissioners must notify R of—
(a) the amount due from P;
(b) the amount assessed as due from R;
(c) how the Commissioners assessed the amount due from R;
(d) the date by which payment must be made;
(e) how payment must be made;
(f) how late payment interest will accrue if R does not make the payment by the date on which it is due and payable.
(3) The amount assessed as due from R must be an amount which the Commissioners consider just and reasonable, having regard in particular to—
(a) their reasons for considering that paragraph 10(2) or (3) applies to R, and
(b) the requirement mentioned in paragraph 13(3) (requirement to treat R as knowingly involved in P's failure to pay tax).
(4) The Commissioners must publish guidance on the matters which they will take into account when determining whether an amount is just and reasonable.
(5) The date by which payment must be made may not be before the end of the period of 30 days beginning with the day on which R is notified in accordance with sub-paragraph (2).
(6) An amount may be assessed and notified to R even if R has made a notification under paragraph 13(1) (and the Commissioners must repay any amount that is subsequently found to have been overpaid).
Adjustments
17 (1) Where an assessment to P is withdrawn or reduced, or P's liability in respect of plastic packaging tax is otherwise adjusted, the Commissioners may determine that R's liability is to be cancelled or reduced, or otherwise adjusted, in whatever way they consider just and reasonable, having regard in particular to their reasons for considering that paragraph 10(2) or (3) applies to R.
(2) If the Commissioners decide to reduce or cancel the amount which R is liable to pay, or make any other adjustment to the assessment to R, they must, within the period of 30 days beginning with the day on which they make their decision—
(a) inform R of the new amount which R is liable to pay (if any), and
(b) repay any amount which R has paid in excess of the new amount.
Limitation on assessments
18 R may not be notified of any assessment under paragraph 16(2) or of any increase in an assessment under paragraph 4(2) of Schedule 10 in respect of an amount after the end of the period of 2 years beginning with—
(a) the day after the last day of the accounting period by reference to which P was liable to pay the amount, or, if later,
(b) the day on which a court or tribunal finally determines that P is liable to pay the amount.
No double payment
19 R may not be required to pay plastic packaging tax if or to the extent that P has paid it (and vice versa).
PART 3 Application of Schedule 10
20 (1) Schedule 10 applies with any necessary modifications, and subject as follows, in relation to any amount which R is liable to pay as a result of a secondary liability and assessment notice or a joint and several liability notice.
(2) Paragraphs 4 to 6 of that Schedule apply in relation to an assessment under paragraph 16(1) of this Schedule as they apply to an assessment under paragraph 2(2) of that Schedule, except that paragraph 6 applies as if, in sub-paragraph (2), “4” were “2”.
PART 4 Interpretation
Interpretation: related businesses
21 In this Schedule—
(a) “related business” means a business that is—
(i) involved in the production or importation of chargeable plastic packaging components by P, including in the transportation or storage of the components, or in the manufacture or supply of raw or processed materials used in, or in the production of, the components,
(ii) supplied, whether directly or indirectly, with chargeable plastic packaging components produced or imported by P, or
(iii) involved in the marketing or sale of chargeable plastic packaging components by P as an operator of an online marketplace or fulfilment business, and
(b) references to acting in the course of a related business include—
(i) in relation to a business that is carried on by a body corporate, being a director, manager, secretary, chief executive or member of the committee of management, or a person purporting to act in such a capacity, and
(ii) in relation to a business that is carried on by an unincorporated body (other than a partnership), being an officer of the the body or a member of its governing body, or a person purporting to act in such a capacity.
Interpretation: general
22 (1) In this Schedule—
(a) references to “R” and “P” have the meanings given by paragraph 1, in relation to secondary liability and assessment notices, or 9, in relation to joint and several liability notices;
(b) references to P paying, failing to pay or being liable to pay an amount of plastic packaging tax are references to P paying, failing to pay or being liable to pay in accordance with provisions of or under this Part apart from this Schedule;
(c) references to an amount of plastic packaging tax which P is liable to pay include references to an amount which P would have been liable to pay but for anything done, or not done, by R.
(2) In this Schedule—
“fulfilment business” means a business that stores or packs goods that are owned by another person with a view to sale by that person;
“online marketplace” means a website, or any other means by which information is made available over the internet, which facilitates the sale of goods through the website or other means by persons other than the operator (whether or not the operator also sells goods through the marketplace);
“operator” means the person who controls access to, and the contents of, the online marketplace or the fulfilment business.
(3) The Commissioners may by regulations—
(a) provide that goods offered for sale in circumstances specified in the regulations are or are not to be treated, for the purposes of this Schedule, as having been offered through an online marketplace or a fulfilment business;
(b) amend this paragraph so as to alter the definitions of “online marketplace”, “operator” and “fulfilment business”.
SCHEDULE 10 Plastic packaging tax: recovery and overpayments
Section 61
PART 1 Recovery
Recovery as a debt due
1 Plastic packaging tax is recoverable as a debt due to the Crown.
Assessments of amounts of plastic packaging tax due
2 (1) Sub-paragraph (2) applies where it appears to the Commissioners—
(a) that any period is an accounting period by reference to which a person who is registered or who is liable to be registered is liable to pay plastic packaging tax,
(b) that an amount of plastic packaging tax for which that person is liable to account by reference to that period has become due, and
(c) that there has been a relevant default by that person (see sub-paragraph (3)).
(2) The Commissioners—
(a) may—
(i) in a case where the amount of plastic packaging tax due from the person for that period cannot be ascertained, assess the amount due from the person for that period to the best of their judgement;
(ii) in any other case, assess the amount due from the person for that period, and
(b) where such an assessment is made, must notify the person of that amount.
(3) The following are “relevant defaults”—
(a) a failure to comply with a requirement of regulations under section 58;
(b) a failure to make a return required to be made by regulations under section 61;
(c) a failure to keep documents, or provide facilities, necessary to verify returns required by those regulations;
(d) the making, in purported compliance with a requirement of those regulations, of an incomplete or incorrect return;
(e) a failure to comply with a requirement imposed by or under section 63;
(f) a failure to provide the Commissioners with complete or accurate information in complying with any requirement imposed by or under this Part;
(g) an unreasonable delay in complying with a requirement, where the failure to comply would be a default within any of paragraphs (a) to (f).
(4) Where it appears to the Commissioners that a default falling within sub-paragraph (3) is a default by a person (A) on whom the requirement to make a return is imposed in A's capacity as the representative of another person (B), sub-paragraph (1)(b) applies as if the reference to the amount of plastic packaging tax due included a reference to any plastic packaging tax due from B.
3 (1) Sub-paragraph (2) applies where—
(a) the Commissioners have made an assessment for an accounting period as a result of a person's failure to make a return for that period,
(b) the plastic packaging tax assessed has been paid but no proper return has been made for that period, and
(c) as a result of a failure to make a return for a later accounting period, the Commissioners make another assessment (“the later assessment”) under paragraph 2 in relation to the later period.
(2) The Commissioners may, if they consider it appropriate in light of the absence of a proper return for the earlier period, specify in the later assessment an amount of plastic packaging tax due that is greater than the amount that they would have considered to be appropriate had they had regard only to the later period.
Supplementary assessments
4 (1) Sub-paragraph (2) applies where—
(a) an assessment has been notified to a person under paragraph 2(2), and
(b) it appears to the Commissioners that the amount which ought to have been assessed as due exceeds the amount that has already been assessed.
(2) The Commissioners—
(a) may make a supplementary assessment of the amount of plastic packaging tax due from the person to the best of their judgement, and
(b) where such an assessment is made, must notify the person of that amount.
Further provision about assessments under paragraphs 2 and 4
5 (1) An amount assessed and notified to a person under paragraph 2 or 4 is recoverable on the basis that it is an amount of plastic packaging tax due from that person.
(2) But sub-paragraph (1) does not apply if, or to the extent that, the assessment has been withdrawn or reduced.
Time limits for assessments
6 (1) An assessment under paragraph 2 or 4 may not be made after the relevant time.
(2) Except in a case within sub-paragraph (3) the relevant time is the earlier of—
(a) the end of the period of 4 years from the end of the accounting period to which the assessment relates, or
(b) the end of the period of 1 year beginning with the day on which evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge.
(3) Where an assessment of an amount due from a person is made in a case involving loss of plastic packaging tax—
(a) brought about deliberately by the person, or
(b) attributable to a failure by the person to comply with a requirement of section 55 or a requirement of regulations under section 58,
the relevant time is the end of the period of 20 years from the end of the accounting period to which the assessment relates.
(4) In sub-paragraph (3) the reference to a loss brought about by a person includes a reference to a loss brought about by another person acting on behalf of that person.
PART 2 Repayments
Repayments of overpaid tax
7 (1) This paragraph applies where a person (P) has paid an amount to the Commissioners by way of plastic packaging tax which was not tax due.
(2) The Commissioners are liable, on the making of a claim by P, to repay the amount.
(3) The Commissioners may by regulations make provision about—
(a) the form and manner of a claim;
(b) the information required in support of a claim.
(4) Except as provided by this paragraph, the Commissioners are not liable to repay any amount paid by way of plastic packaging tax by reason of the fact that it was not tax due.
(5) This paragraph is subject to paragraph 8.
Supplementary provision about repayment etc
8 (1) The Commissioners are not liable, on any claim for a repayment of plastic packaging tax, to repay any amount—
(a) paid more than 4 years before the making of the claim;
(b) if, or to the extent that, any person has become entitled to a tax credit in respect of that amount.
(2) It is a defence to any claim for repayment of an amount of plastic packaging tax that the repayment of that amount would unjustly enrich the claimant.
9 (1) This paragraph applies where—
(a) an amount has been paid by way of plastic packaging tax which (apart from paragraph 8(2)) would fall to be repaid to a person (P), and
(b) the whole or a part of the cost of the payment of that amount to the Commissioners has, for practical purposes, been borne by a person other than P.
(2) Where loss or damage has been, or may be, incurred by P as a result of mistaken assumptions made in P's case about the operation of any provisions relating to plastic packaging tax, that loss or damage is to be disregarded, except to the extent of the quantified amount, in the making of a relevant determination.
(3) In sub-paragraph (2)—
(a) “the quantified amount” means the amount (if any) which is shown by P to constitute the amount that would appropriately compensate P for loss or damage shown by P to have resulted, for any business carried on by P, from the making of the mistaken assumptions;
(b) a “relevant determination” means a determination for the purposes of paragraph 8(2) as to—
(i) whether or to what extent the repayment of an amount would enrich P, or
(ii) whether or to what extent any enrichment of P would be unjust.
(4) The reference in sub-paragraph (2) to provisions relating to plastic packaging tax is a reference to—
(a) any provision made by or under any enactment which relates to the tax or to any matter connected with it, or
(b) any notice published by the Commissioners under or for the purposes of any such provision.
Reimbursement arrangements
10 (1) The Commissioners may by regulations make provision for reimbursement arrangements to be disregarded for the purposes of paragraph 8(2) except where the arrangements—
(a) contain such provision as may be required by the regulations, and
(b) are supported by such undertakings to comply with the provisions of the arrangements as may be required by the regulations to be given to the Commissioners.
(2) In this paragraph “reimbursement arrangements” means arrangements for the purposes of a claim to a repayment of plastic packaging tax which—
(a) are made by a person for the purpose of securing that the person is not unjustly enriched by the repayment of any amount in pursuance of the claim, and
(b) provide for the reimbursement of a person who has for practical purposes borne the whole or any part of the cost of the original payment of that amount to the Commissioners.
(3) Regulations under this paragraph may (among other things) make provision requiring reimbursement arrangements to contain provision—
(a) requiring a reimbursement for which the arrangements provide to be made within a specified period after the repayment to which it relates;
(b) for the repayment of amounts to the Commissioners where those amounts are not reimbursed in accordance with the arrangements;
(c) requiring interest paid by the Commissioners on any amount repaid by them to be treated in the same way as that amount for the purposes of any requirement under the arrangements to make reimbursement or to repay the Commissioners;
(d) requiring records of a specified description relating to the arrangements to be kept and produced to the Commissioners, or to an officer of HMRC;
(e) imposing obligations on specified persons for the purposes of provision made under paragraphs (a) to (d).
(4) Regulations under this paragraph may—
(a) make provision about the form, manner and timing of undertakings given to the Commissioners in accordance with the regulations;
(b) provide for those matters to be determined by the Commissioners in accordance with the regulations.
Assessment for excessive repayment
11 (1) Sub-paragraph (3) applies where—
(a) an amount has been paid at any time to a person by way of a repayment of plastic packaging tax, and
(b) the amount paid exceeded the amount which the Commissioners were liable at that time to repay to that person.
(2) Sub-paragraph (3) also applies where a person is liable to pay any amount to the Commissioners in pursuance of an obligation imposed by regulations under paragraph 10(3)(b), (c) or (e).
(3) The Commissioners may—
(a) to the best of their judgement, assess the amount of the excess (in a case within sub-paragraph (1)) or the amount due (in a case within sub-paragraph (2)), and
(b) where such an assessment is made, notify the amount to the person.
(4) Subject to sub-paragraph (5), where—
(a) an assessment is made on any person under this paragraph in respect of a repayment of plastic packaging tax, and
(b) the Commissioners have power under Part 1 of this Schedule to make an assessment on that person as to an amount of plastic packaging tax due from that person,
the assessments may be combined and notified to the person as one assessment.
(5) A notice of a combined assessment under sub-paragraph (4) must separately identify the amount being assessed in respect of repayments of plastic packaging tax.
Supplementary assessments
12 (1) Sub-paragraph (2) applies where—
(a) an assessment has been notified to a person under paragraph 11, and
(b) it appears to the Commissioners that the amount which ought to have been assessed as due exceeds the amount that has already been assessed.
(2) The Commissioners may—
(a) on or before the last day on which the assessment under paragraph 11 could have been made, make a supplementary assessment of the amount of plastic packaging tax due from the person, and
(b) where such a supplementary assessment is made, notify the amount to that person.
Further provision about assessments under paragraphs 11 and 12
13 (1) Where an amount has been assessed and notified to a person under paragraph 11 or 12, it is recoverable on the basis that it is an amount of plastic packaging tax due from that person.
(2) But sub-paragraph (1) does not have effect if, or to the extent that, the assessment has been withdrawn or reduced.
Time limit for assessments
14 An assessment under paragraph 11 or 12 may not be made more than 2 years after evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.
SCHEDULE 11 Plastic packaging tax: reviews and appeals
Section 62
PART 1 Appealable decisions etc
Appealable decisions etc
1 (1) A person may appeal against a decision of the Commissioners or an officer of HMRC in respect of any of the following matters—
(a) whether or not a person is liable to pay an amount of plastic packaging tax;
(b) the amount of plastic packaging tax payable by a person;
(c) the registration, or cancellation of registration, of a person under this Part for the purposes of plastic packaging tax;
(d) the issuing of a secondary liability and assessment notice under paragraph 2 of Schedule 9;
(e) a refusal to revoke a secondary liability and assessment notice under paragraph 5 of Schedule 9;
(f) the issuing of a joint and several liability notice under paragraph 10 of Schedule 9;
(g) a refusal to revoke a joint and several liability notice under paragraph 13 or 14 of Schedule 9;
(h) a decision about the date on which the revocation of a joint and several liability notice is to have effect in accordance with a notification given under paragraph 13 of Schedule 9;
(i) a person's entitlement to a tax credit, the withdrawal of a tax credit, the amount of a tax credit or the period for which a tax credit is to be brought into account under regulations under section 53;
(j) a decision to require any security under regulations under section 65 or as to its amount;
(k) whether the Commissioners are liable to repay an amount to a person under paragraph 7(2) of Schedule 10 or the amount of such a repayment;
(l) whether or not the repayment of an amount under that paragraph is excessive (see paragraph 11 of that Schedule);
(m) the amount that a person is liable to pay the Commissioners in pursuance of an obligation imposed by regulations under paragraph 10(3)(b), (c) and (e) of that Schedule;
(n) whether or not a person is liable to a penalty under this Part or in respect of this Part or the amount of such a penalty;
(o) the period by reference to which payments of plastic packaging tax are to be made.
(2) A person may also appeal against the following determinations and directions of the Commissioners or an officer of HMRC—
(a) a determination that a packaging component—
(i) is a plastic packaging component;
(ii) is chargeable;
(b) a direction under section 63(4);
(c) a determination or direction by the Commissioners under regulations under section 69—
(i) that a person must appoint a tax representative;
(ii) not to approve the appointment of a tax representative;
(iii) withdrawing their approval of a tax representative;
(iv) requiring the replacement of a tax representative;
(d) the giving of a direction or supplementary direction by the Commissioners under section 72(2) or (4);
(e) a determination in respect of an application under regulations under section 74 or 75;
(f) a direction given to the person under paragraph 2(4)(b) or 10(4)(b) of Schedule 9;
(g) a determination on an application under Schedule 13 for group treatment or a determination by the Commissioners to terminate group treatment under that Schedule.
2 In Parts 2 and 3 of this Schedule, references to a decision include references to a determination and a direction.
PART 2 Reviews
Offer of review
3 (1) HMRC must offer a person (P) a review of a decision that has been notified to P if an appeal in respect of the decision may be brought under paragraph 1.
(2) The offer of the review must be made by notice given to P at the same time as the decision is notified to P.
(3) This paragraph does not apply to the notification of the conclusions of a review.
Right to require review
4 (1) Any person (other than P) who has the right of appeal under paragraph 1 against a decision may require HMRC to review that decision if the person has not appealed to the appeal tribunal under that paragraph.
(2) A notification that such a person requires a review must be made within the period of 30 days beginning with the day on which that person became aware of the decision.
Review by HMRC
5 (1) HMRC must review a decision if—
(a) they have offered a review of the decision under paragraph 3, and
(b) P notifies HMRC accepting the offer within the period of 30 days beginning with the date of the document notifying P of the decision.
(2) But P may not notify acceptance of the offer if P has already appealed to the appeal tribunal under paragraph 1.
(3) HMRC must also review a decision if a person other than P notifies them under paragraph 4.
(4) HMRC may not review a decision if P, or another person, has appealed to the appeal tribunal under paragraph 1 in respect of the decision.
Extensions of time for requiring review
6 (1) If under paragraph 3 HMRC have offered P a review of a decision, HMRC may within the period for requiring a review notify P that that period is extended.
(2) If under paragraph 4 another person may require HMRC to review a matter, HMRC may within the period for requiring a review notify the other person that that period is extended.
(3) If notice is given the period for requiring a review is extended to the end of the period of 30 days beginning with—
(a) the date of the notice, or
(b) any other date set out in the notice or a further notice.
(4) In this paragraph, “period for requiring a review” means—
(a) the period of 30 days referred to in—
(i) paragraph 5(1)(b)(in a case falling within sub-paragraph (1)), or
(ii) paragraph 4(2) (in a case falling within sub-paragraph (2)), or
(b) if notice has been given under sub-paragraph (1) or (2), that period as extended (or as most recently extended) in accordance with sub-paragraph (3).
Review out of time
7 (1) This paragraph applies if—
(a) HMRC have offered a review of a decision under paragraph 3 and P does not accept the offer within the time allowed under paragraph 5(1)(b) or 6(3), or
(b) a person who requires a review under paragraph 4 does not notify HMRC within the time allowed under paragraph 4(2) or 6(3).
(2) HMRC must review the decision under paragraph 5 if—
(a) after the time allowed, P, or the other person, notifies HMRC in writing requesting a review out of time,
(b) HMRC are satisfied that P, or the other person, had a reasonable excuse for not accepting the offer or requiring a review within the time allowed, and
(c) HMRC are satisfied that P, or the other person, made the request without unreasonable delay after the excuse had ceased to apply.
(3) But HMRC shall not review a decision if P, or another person, has appealed to the appeal tribunal under paragraph 1 in respect of the decision.
Nature of review etc
8 (1) This paragraph applies if HMRC are required to undertake a review under paragraph 5 or 7.
(2) The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.
(3) For the purposes of sub-paragraph (2), HMRC must, in particular, have regard to steps taken before the beginning of the review—
(a) by HMRC in reaching the decision, and
(b) by any person in seeking to resolve disagreement about the decision.
(4) The review must take account of any representations made by P, or the other person, at a stage which gives HMRC a reasonable opportunity to consider them.
(5) The review may conclude that the decision is to be—
(a) upheld,
(b) varied, or
(c) cancelled.
(6) HMRC must give P, or the other person, notice of the conclusions of the review and their reasoning within—
(a) the period of 45 days beginning with the relevant date, or
(b) such other period as HMRC and P, or HMRC and the other person, may agree.
(7) In sub-paragraph (6), “the relevant date” means—
(a) in a case falling within paragraph 3, the date HMRC received P's notification accepting the offer of a review,
(b) in a case falling within paragraph 4, the date HMRC received notification from another person requiring a review, or
(c) in a case falling within paragraph 7, the date on which HMRC decided to undertake the review.
(8) Where HMRC are required to undertake a review but do not give notice of the conclusions within the period specified in sub-paragraph (6), the review is to be treated as having concluded that the decision is upheld.
(9) If sub-paragraph (8) applies, HMRC must notify P, or the other person, of the conclusion which the review is treated as having reached.
PART 3 Appeals
“Appeal tribunal”
9 In this Schedule “appeal tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.
Bringing of appeals
10 (1) An appeal under paragraph 1 is to be made to the appeal tribunal before—
(a) the end of the period of 30 days beginning with—
(i) in a case where P is the appellant, the date of the document notifying P of the decision to which the appeal relates, or
(ii) in a case where a person other than P is the appellant, the day on which that person becomes aware of the decision, or
(b) if later, the end of the period for requiring a review (within the meaning of paragraph 6).
(2) But that is subject to sub-paragraphs (3) to (5).
(3) In a case where HMRC are required to undertake a review under paragraph 5—
(a) an appeal may not be made until the conclusion date, and
(b) any appeal is to be made within the period of 30 days beginning with that date.
(4) In a case where HMRC are requested to undertake a review under paragraph 7—
(a) an appeal may not be made to the appeal tribunal—
(i) unless HMRC have notified P, or the other person, as to whether or not a review will be undertaken, and
(ii) if HMRC have notified P, or the other person, that a review will be undertaken, until the conclusion date;
(b) any appeal where paragraph (a)(ii) applies is to be made within the period of 30 days beginning with the conclusion date;
(c) if HMRC have notified P, or the other person, that a review will not be undertaken, an appeal may be made only if the appeal tribunal gives permission to do so.
(5) In a case where paragraph 8(8) applies, an appeal may be made at any time from the end of the period specified in paragraph 8(6) to the date 30 days after the conclusion date.
(6) An appeal may be made after the end of any period specified in this paragraph if the appeal tribunal gives permission to do so.
(7) In this paragraph, “conclusion date” means the date of the document notifying the conclusions of the review.
Further provision about appeals
11 (1) An appeal relating to a decision that an amount is due from a person may not be considered by the appeal tribunal unless the amount which HMRC have determined to be due has been paid or deposited with HMRC.
(2) But sub-paragraph (1) does not apply if—
(a) HMRC are satisfied or, if HMRC are not satisfied but the appeal tribunal have decided, on the application of the appellant, that the requirement to pay or deposit the amount would cause the appellant to suffer hardship, and
(b) the appellant has paid or deposited such other amount (if any) by way of security as HMRC or, as the case may be, the appeal tribunal consider appropriate.
(3) Notwithstanding the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007, the decision of the appeal tribunal as to the issue of hardship is final.
Determinations on appeal
12 (1) Where, on an appeal under paragraph 1—
(a) it is found that an assessment of the appellant is an assessment for an amount that is less than it ought to have been, and
(b) the appeal tribunal give a direction specifying the correct amount,
the assessment has effect as an assessment of the amount specified in the direction and (without prejudice to any power under this Schedule to reduce the amount of interest payable on the amount of an assessment) as if it were an assessment notified to the appellant in that amount at the same time as the original assessment.
(2) On an appeal under paragraph 1, the powers of the appeal tribunal in relation to any decision of the Commissioners includes a power, where the tribunal allow an appeal on the ground that the Commissioners could not reasonably have arrived at the decision, either—
(a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct, or
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a review or a further review of the original decision as appropriate.
(3) Where, on an appeal under paragraph 1, the appeal tribunal find that a liability to a penalty or to an amount of interest arises, the tribunal must not give any direction for the modification of the amount payable in respect of that liability except—
(a) in exercise of a power conferred on the tribunal by section 80(6) (penalties), or
(b) for the purpose of making the amount payable conform to the amount due in accordance with this Part.
(4) Sections 85 and 85B of the Value Added Tax Act 1994 (settling of appeals by agreement and payment of tax where there is a further appeal) have effect as if—
(a) the references to section 83 of that Act included references to paragraph 1 of this Schedule, and
(b) the references to value added tax included references to plastic packaging tax.
SCHEDULE 12 Plastic packaging tax: information and evidence
Section 64
PART 1 Information
Power to take samples
1 (1) An authorised person may at any time take such samples from a product as the person requires for the purpose of determining how the product ought to be treated, or ought to have been treated, for the purposes of plastic packaging tax.
(2) A sample may only be taken under this paragraph if the authorised person—
(a) has reasonable cause to believe that the product is a chargeable plastic packaging component, and
(b) considers it necessary for the protection of the revenue against mistake or fraud.
(3) A sample taken under this paragraph must be disposed of in such manner as the Commissioners may direct.
(4) In this paragraph “authorised person” means a person acting under the authority of the Commissioners.
Disclosure of information
2 (1) The Commissioners may disclose information obtained or held by them in, or in connection with, their functions in relation to plastic packaging tax to—
(a) the Secretary of State;
(b) the Environment Agency;
(c) the Scottish Environmental Protection Agency;
(d) Natural Resources Wales;
(e) the Medicines and Healthcare Products Regulatory Agency;
(f) the Department of Agriculture, Environment and Rural Affairs in Northern Ireland or any agency thereof;
(g) an authorised officer of a person listed in paragraphs (a) to (f).
(2) Information may only be disclosed under sub-paragraph (1) for the purpose of assisting a person listed in paragraphs (a) to (g) of that sub-paragraph in the performance of their duties.
(3) A person listed in sub-paragraph (1)(a) to (g) may disclose information to the Commissioners, or to an authorised officer of the Commissioners, for the purposes of assisting the Commissioners in the performance of their duties relating to plastic packaging tax.
(4) No charge may be made for any disclosure made by virtue of this paragraph.
(5) Nothing in this paragraph permits the disclosure of information which, although disclosed in compliance with this paragraph, would contravene the data protection legislation.
(6) In this paragraph “data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act).
(7) References in this paragraph to an authorised officer of any person are to any person who has been designated by the principal as a person to and by whom information may be disclosed by virtue of this paragraph.
PART 2 Evidence
Evidence by certificate
3 (1) A certificate of the Commissioners that—
(a) a person was or was not at any time registered, or
(b) that a return required by regulations under section 61 has not been made or had not been made at any time,
is, in any proceedings evidence, or in proceedings in Scotland sufficient evidence, of that fact.
(2) A copy of any document provided to the Commissioners for the purposes of this Part and certified by them to be such a copy shall be admissible in any proceedings, whether civil or criminal, to the same extent as the document itself.
(3) In any proceedings any document purporting to be a certificate under sub-paragraph (1) or (2) is to be taken to be such a certificate unless the contrary is shown.
Inducements to provide information
4 (1) This paragraph applies to—
(a) criminal proceedings against a person in respect of an offence in connection with or in relation to plastic packaging tax;
(b) proceedings against a person for the recovery of a sum due in connection with or in relation to plastic packaging tax.
(2) A statement made, or a document produced, by or on behalf of the person is not inadmissible in proceedings to which this paragraph applies only by reason that—
(a) a matter falling within sub-paragraph (3) or (4) was drawn to that person's attention, and
(b) the person was, or may have been, induced to make the statement or provide the document as a result.
(3) The matters falling within this sub-paragraph are—
(a) that, in relation to plastic packaging tax, the Commissioners may assess an amount due by way of a penalty instead of instituting criminal proceedings;
(b) that it is the practice of the Commissioners (without giving any undertaking as to whether they will make such an assessment in any case) to be influenced by whether a person—
(i) has made a full confession of any dishonest conduct to which the person has been, or is, a party;
(ii) has otherwise co-operated fully with any investigation.
(4) The matter falling within this sub-paragraph is the fact that the Commissioners or, on appeal, an appeal tribunal have power by or under this Part to reduce a penalty.
SCHEDULE 13 Plastic packaging tax: groups of companies
Section 71
Bodies eligible for group treatment
1 (1) Two or more bodies are eligible to be treated as members of the same group for the purposes of this Part (“eligible bodies”) if—
(a) they are all bodies corporate,
(b) at least one of the bodies has an established place of business in the United Kingdom, and
(c) they are all under the same control.
(2) A body is eligible to be the representative member of a group if the body—
(a) is resident in the United Kingdom, or
(b) has a permanent establishment in the United Kingdom.
(3) A body is not an eligible body in relation to a group if it is a member of another group.
2 For the purposes of paragraph 1—
(a) two or more bodies are under the same control if—
(i) one of them controls each of the others,
(ii) one person (whether a body corporate or an individual) controls all of them, or
(iii) two or more individuals carrying on a business in partnership control all of them;
(b) a body corporate controls another body corporate only if—
(i) it is empowered by statute to control that body's activities, or
(ii) it is that body's holding company within the meaning of section 1159 of and Schedule 6 to the Companies Act 2006;
(c) an individual controls, or individuals control, a body corporate only if they would be that body's holding company within the meaning of those provisions, if they were a company.
Application for group treatment
3 (1) Two or more eligible bodies may apply to the Commissioners to be treated as members of the same group ....
(2) An application under this paragraph must specify which body is to be the representative member.
(3) Where the Commissioners receive an application under sub-paragraph (1), they must, by notice to the applicants or the body that is to be the representative member—
(a) confirm whether they accept or refuse the application, and
(b) if they accept the application, specify a date from which the applicants are to be treated as members of the same group.
(4) The Commissioners must give the notice within the period of 90 days beginning with the day on which the application is received.
(5) The date mentioned in sub-paragraph (3)(b) must be within that period.
4 (1) The Commissioners may only refuse an application under paragraph 3 if—
(a) it appears to them that the application—
(i) has been made in respect of a body that is not an eligible body, or
(ii) specifies as the representative body a body that is not eligible to be the representative body, or
(b) they consider it necessary to refuse the application for the protection of the revenue.
(2) But the Commissioners may not refuse an application on the basis of sub-paragraph (1)(b) after the end of the period of 90 days beginning with the day on which the application is received by them.
Applications to modify group treatment
5 (1) Where two or more bodies are treated as members of the same group, the representative member may apply to the Commissioners to—
(a) treat another eligible body as a member of the group,
(b) change which member of the group is the representative member,
(c) exclude a member of the group, or
(d) terminate the treatment of the members as members of a group,
...
(2) Where the Commissioners receive an application under sub-paragraph (1), they must, by notice to the applicant and, in a case within sub-paragraph (1)(b), the proposed new representative member—
(a) confirm whether they accept or refuse the application, and
(b) if they accept the application, specify a date from which the application is to be treated as having been accepted.
(3) The Commissioners must give the notice within the period of 90 days beginning with the day on which the application is received.
(4) The date mentioned in sub-paragraph (2)(b) must be within that period.
6 (1) The Commissioners may only refuse an application under paragraph 5(1)(a) or (1)(b) if they consider it necessary to refuse the application for the protection of the revenue.
(2) The Commissioners may only refuse an application under paragraph 5(1)(c) or (1)(d) if—
(a) the case does not fall within paragraph 8, and
(b) they consider it necessary to refuse the application for the protection of the revenue.
Applications relating to group treatment
7 Any application under this Schedule in respect of any bodies corporate must be made by—
(a) one of those bodies, or
(b) the person controlling those bodies.
Termination of group treatment by the Commissioners
8 The Commissioners may, by notice given to the members of the group concerned, terminate the treatment of any body corporate as a member of the group from the time specified in the notice where—
(a) it appears to the Commissioners that the body is not an eligible body in relation to the group, or
(b) the Commissioners consider it necessary to do so for the protection of the revenue.
9 Where—
(a) a body corporate ceases to be treated as a member of a group under paragraph 5(1)(c) or 8,
(b) immediately before that time the body was the representative member of the group,
(c) immediately after that time there are two or more bodies corporate who will continue to be treated as members of the group, and
(d) none of those bodies becomes the representative member under paragraph 5(1)(b),
the Commissioners must, by notice given to such one of the bodies mentioned in paragraph (c) as the Commissioners consider appropriate, substitute that body as the representative member from the time specified in the notice.
10 (1) The time specified in a notice under paragraph 8(a) may be a time before the giving of the notice but must not be before the time when the body ceased to be an eligible body.
(2) The time specified in a notice under paragraph 8(b) must not be a time before the day on which the notice is given to the members.
(3) The time specified in a notice under paragraph 9 may be a time before the giving of the notice.
Notifications relating to group treatment
11 (1) Where two or more bodies are treated as members of the same group and one of those bodies ceases to be an eligible body, that body must so notify the Commissioners.
(2) A body corporate designated as a representative member of a group must not cease to have an established place of business in the United Kingdom without first notifying the Commissioners.
Regulations about applications and notifications
12 (1) The Commissioners may by regulations make provision about—
(a) the timing of applications under this Schedule (including conferring power on the Commissioners to extend the time for making such applications);
(b) the form and manner of such applications;
(c) the information and particulars to be contained in or provided in connection with such applications.
(2) The Commissioners may also by regulations make provision requiring a person who has made an application under this Schedule to notify the Commissioners if any of the information contained in or provided in connection with the application is or becomes inaccurate.
(3) Sub-paragraph (1) applies in relation to notifications by the Commissioners under this Schedule as it applies in relation to applications under this Schedule.
SCHEDULE 14 Plastic packaging tax: assessment of penalties under section 80
Section 80
Interpretation
1 In this Schedule “penalty” means a penalty under section 80 (penalty for contravening relevant requirements).
Assessment etc of penalty
2 Where a person is liable to a penalty, the Commissioners—
(a) may assess the amount of that penalty, and
(b) where such an assessment is made, must notify the person of that amount.
3 (1) Sub-paragraph (2) applies where—
(a) the Commissioners have made an assessment of a penalty, and
(b) it appears to the Commissioners that the amount which ought to have been assessed exceeds the amount that has already been assessed.
(2) The Commissioners—
(a) may make a supplementary assessment of the amount of the penalty, and
(b) where such an assessment is made, must notify the person of that amount.
Further provision about assessments under paragraphs 2 and 3
4 (1) An amount assessed and notified to a person under paragraph 2 or 3 is recoverable on the basis that it is an amount of plastic packaging tax due from that person.
(2) But sub-paragraph (1) does not apply if, or to the extent that, the assessment has been withdrawn or reduced.
5 The fact that an act or omission giving rise to a penalty has ceased before an assessment is made under paragraph 2 or 3 does not affect the power of the Commissioners to make such an assessment.
6 (1) Sub-paragraph (2) applies where—
(a) the Commissioners assess a person to an amount due by way of a penalty under paragraph 2 or 3, and
(b) the person is also assessed under Schedule 10 for an accounting period to which the act or omission attracting the penalty is referable.
(2) The assessments under paragraph 2 or 3 and Schedule 10 may be combined and notified to the person as one assessment.
(3) A notice of a combined assessment under sub-paragraph (2) must separately identify the penalty being assessed.
Assessment etc of daily penalties
7 (1) Where an assessment is made under paragraph 2 or 3 to an amount of a penalty to which any person is liable, the notification of that amount must specify a time, not later than the end of the day of the giving of the notification, to which the amount of any daily penalty is calculated.
(2) For the purposes of sub-paragraph (1) “daily penalty” means a penalty imposed under section 80(1)(b).
(3) If further penalties accrue in respect of a continuing failure after that date, a further assessment or further assessments may be made under paragraph 2 or 3 in respect of the amounts so accruing.
8 (1) Sub-paragraph (2) applies where—
(a) an assessment to a penalty is made specifying a date for the purposes of paragraph 7(1) above, and
(b) the failure in question is remedied within such period as may for the purposes of this sub-paragraph have been notified by the Commissioners to the person liable for the penalty.
(2) The failure is to be deemed for the purposes of any further liability to a penalty to have been remedied on the specified date.
Time limits for assessments
9 (1) An assessment under paragraph 2 or 3 may not be made after the end of the relevant period.
(2) Except in a case within sub-paragraph (3) the relevant period is the period of 4 years from the act or omission to which the penalty relates.
(3) Where an assessment under paragraph 2 or 3 is made in a case involving loss of plastic packaging tax—
(a) brought about deliberately by the person, or
(b) attributable to a failure by the person to comply with a requirement of section 55 or a requirement of regulations under section 58,
the relevant period is the period of 20 years from the act or omission to which the penalty relates.
(4) In sub-paragraph (3) the reference to a loss brought about by a person includes a reference to a loss brought about by another person acting on behalf of that person.
SCHEDULE 15 Plastic packaging tax: amendments of other legislation
Section 82
PART 1 Penalties
Failure to notify etc
1 (1) Schedule 41 to FA 2008 (penalties: failure to notify etc) is amended as follows.
(2) In the Table in paragraph 1, after the entries relating to insurance premium tax, insert—
Plastic packaging tax | Obligation under section 56 of FA 2021 (obligation to give notice of liability to be registered).
(3) In paragraph 7(9) (potential lost revenue), in the opening words, after “insurance premium tax,” insert “ plastic packaging tax , ”.
Failure to comply with requirements relating to returns
2 (1) Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended as follows.
(2) In paragraph 1(4), in the definition of “penalty date” for “13A” substitute “ 13B ”.
(3) In the table in paragraph 1, after item 13A insert—
13B | Plastic packaging tax | Return under regulations under section 61 of FA 2021
.
3 (1) In Schedule 10 to F(No.3)A 2010 (which prospectively amends Schedule 55 to FA 2009 (penalties for failure to make returns etc)) in paragraph 7, in the inserted paragraph 13A(1), after “13A” insert “ , 13B ”.
(2) The amendments to Schedule 55 to FA 2009 made by Schedule 10 to F(No.3)A 2010 (including the amendment made by sub-paragraph (1)) are taken to have come into force for the purposes of plastic packaging tax on the day on which this paragraph comes into force.
Failure to make payment on time
4 In Schedule 56 to FA 2009, in the Table in paragraph 1 (penalty for failure to make payments on time)—
(a) after item 11A insert—
11AA | Plastic packaging tax | Amount payable under regulations under section 61 of FA 2021 | The date determined by or under regulations under section 61 of FA 2021 as the date by which the amount must be paid
11AB | Plastic packaging tax | Amount payable by virtue of secondary liability and assessment notice or joint and several liability notice under Schedule 9 to FA 2021 | The date determined in accordance with Schedule 9 to FA 2021 as the date by which the amount must be paid
;
(b) after item 16A insert—
16AA | Plastic packaging tax | Amount assessed under Schedule 10 to FA 2021 | The date by which the amount would have been required to be paid if it had been shown in the return
.
5 (1) In Schedule 11 to F(No.3)A 2010 (which prospectively amends Schedule 56 to FA 2009 (penalties for failure to make payments)), in paragraph 2—
(a) in sub-paragraph (13)(a), in the substituted text of item 23 in the Table in paragraph 1 of Schedule 56 to FA 2009, in columns 1 and 2, for “ or 11A ” substitute “, 11A or 11B”;
(b) in sub-paragraph (14)(a), in the substituted text of item 24 in the Table in paragraph 1 of Schedule 56 to FA 2009, for “ or 11A ” substitute “, 11A or 11B”.
(2) The amendments to Schedule 56 to FA 2009 made by Schedule 11 to F(No.3)A 2010 (including the amendments made by this paragraph) are taken to have come into force for the purposes of plastic packaging tax on the day on which paragraph 4 of this Schedule comes into force.
Errors in documents
6 In Schedule 24 to FA 2007 (penalties for errors), in the Table in paragraph 1, after the entry relating to the statement under section 1(1)(a) of the Petroleum Revenue Tax Act 1980, insert—
Plastic packaging tax | Return under regulations under section 61 of FA 2021.
Failure to disclose tax avoidance schemes
7 In Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes: indirect taxes), in paragraph 2(1), after “landfill tax” insert— “ plastic packaging tax ”.
Modifications
8 (1) Paragraph 16(1) of Schedule 41 to FA 2008 (penalties: failure to notify etc) has effect in its application to plastic packaging tax as if for “shall” there were substituted “ may ”.
(2) The following provisions have effect in their application to plastic packaging tax as if in each case for “must” there were substituted “ may ”
(a) paragraph 18(1) of Schedule 55 to FA 2009 (penalty for failure to make returns etc);
(b) paragraph 11(1) of Schedule 56 to FA 2009 (penalty for failure to make payments on time).
PART 2 Miscellaneous
Provisional collection of plastic packaging tax
9 In section 1(1) of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions affecting income tax etc) after “digital services tax,” insert “ plastic packaging tax, ”.
Isle of Man
10 In section 1(1) of the Isle of Man Act 1979 (common duties), at the end insert
;
(g) plastic packaging tax chargeable under the law of the United Kingdom or the Isle of Man.
HMRC powers to obtain information etc
11 (1) Schedule 36 to FA 2008 (powers to obtain information etc) is amended as follows.
(2) In the Table in paragraph 61A (involved third parties), after item 12 insert—
13 | A person involved (in any capacity) in the production, or importation to or exportation from the United Kingdom, of packaging components (within the meaning of section 48 of FA 2021) or in connected activities | Documents relating to matters in which the person is or has been involved | Plastic packaging tax
14 | A person involved (in any capacity) in the purchase or sale of plastic packaging components (within the meaning of section 48 of FA 2021) or of goods packaged in such components | Documents relating to matters in which the person is or has been involved | Plastic packaging tax
(3) In paragraph 63(1) (meaning of “tax”), after paragraph (i) insert—
(iza) plastic packaging tax,
.
Interest
12 In Schedule 53 to FA 2009 (late payment interest) after paragraph 11C insert—
Plastic packaging tax due from unregistered persons
11D (1) This paragraph applies where an amount of plastic packaging tax is due from a person (P) in respect of a period during which P meets the liability condition but was not registered.
(2) The late payment interest start date in respect of the amount is the date which would have been the late payment interest date in respect of that amount if P had been registered when P first became liable to be registered.
(3) For the purposes of this paragraph P meets the “liability condition” at a particular time if—
(a) at the end of the preceding month, the condition in section 55(2)(b) of FA 2021 (liability to register) is met in relation to P, or
(b) at that time, the condition in section 55(2)(a) of that Act is met in relation to P.
Serial tax avoidance
13 In Schedule 18 to FA 2016 (serial tax avoidance), in paragraph 4(2), after “landfill tax” insert— “ plastic packaging tax ”.
SCHEDULE 16 SDLT: increased rates for non-resident transactions
Section 88
Amendments of FA 2003
1 In FA 2003, Part 4 (stamp duty land tax) is amended as follows.
2 After section 75 insert—
Increased rates for non-resident transactions
Increased rates for non-resident transactions
75ZA (1) In its application for the purpose of determining the amount of tax chargeable in respect of a chargeable transaction that is a non-resident transaction, this Part has effect as if 2% were added to each rate specified in the rate-specifying provisions.
(2) The “rate-specifying provisions” are—
(a) in section 55(1B), Table A;
(b) in Schedule 4ZA, in paragraph 1(2), Table A;
(c) in Schedule 4A, paragraph 3(1)(a);
(d) in Schedule 5, in paragraph 2(3), Table A;
(e) in Schedule 6ZA, in paragraph 4, Table A;
(f) in section 74(1A), Step 4.
(3) Schedule 9A defines “non-resident transaction” and makes further provision in connection with this section.
Anti-avoidance
.
3 In section 101 (unit trust schemes), in subsection (7), at the end insert
, or
Schedule 9A (increased rates for non-resident transactions).
4 In section 122 (index of defined expressions), in the table, at the appropriate place insert—
non-resident transaction | Schedule 9A, paragraph 2
.
5 After Schedule 9 insert—
SCHEDULE 9A
Increased rates for non-resident transactions
Section 75ZA
PART 1 Introduction
1 This Schedule is arranged as follows—
(a) Part 2 explains how to determine for the purposes of this Part of this Act whether a chargeable transaction is a “non-resident transaction”;
(b) Part 3 explains how to determine for the purposes of this Schedule whether an individual is “non-resident” in relation to a chargeable transaction;
(c) Part 4 explains how to determine for the purposes of this Schedule whether a company is “non-resident” in relation to a chargeable transaction;
(d) Part 5 contains special rules applying in relation to particular purchasers and transactions;
(e) Part 6 contains supplementary provision.
PART 2 Meaning of “non-resident transaction”
Meaning of “non-resident transaction”
2 (1) A chargeable transaction is a “non-resident transaction” for the purposes of this Part of this Act if—
(a) the purchaser is, or (if there is more than one) the purchasers include, a person who is non-resident in relation to the transaction,
(b) the main subject-matter of the transaction consists of—
(i) a major interest in one or more dwellings, or
(ii) a major interest in one or more dwellings and other property,
(c) that major interest, at the beginning of the effective date of the transaction, is not a term of years absolute or leasehold estate that has 7 years or less to run, and
(d) the de minimis threshold is exceeded.
(2) A reference in sub-paragraph (1)(b) or (c) to a major interest in a dwelling includes an undivided share in a major interest in a dwelling.
(3) For the purposes of sub-paragraph (1)(d), the de minimis threshold is exceeded if—
(a) in a case in which the chargeable consideration for the transaction does not consist of or include rent, the chargeable consideration for the transaction is £40,000 or more;
(b) in a case in which the chargeable consideration for the transaction consists of or includes rent—
(i) the chargeable consideration other than rent is £40,000 or more, or
(ii) the annual rent is £1,000 or more.
(4) In sub-paragraph (3) “annual rent” in relation to a transaction, means the average annual rent over the term of the lease to which the transaction relates or, if—
(a) different amounts of rents are payable for different parts of the term, and
(b) those amounts (or any of them) are ascertainable at the effective date of the transaction,
the average annual rent over the period for which the highest ascertainable rent is payable.
(5) For provision modifying sub-paragraph (1)(a) in its application to chargeable transactions of particular descriptions, see—
paragraph 13 (bare trust acquiring new lease);
paragraph 14 (purchases by certain settlements).
(6) Sub-paragraph (1) is subject to paragraph 17 (completion of contract previously substantially performed).
PART 3 “Non-resident” in relation to a chargeable transaction: individuals
Whether individual “non-resident” in relation to a chargeable transaction
3 For the purposes of this Schedule, an individual is “non-resident” in relation to a chargeable transaction if the individual is not UK resident in relation to the transaction (see paragraphs 4 and 5).
Whether individual “UK resident” in relation to a chargeable transaction: basic rule
4 (1) For the purposes of this Schedule, an individual is “UK resident” in relation to a chargeable transaction if the individual is present in the United Kingdom on at least 183 days during any continuous period of 365 days that falls within the relevant period.
(2) “The relevant period” means the period that—
(a) begins with the day 364 days before the effective date of the chargeable transaction, and
(b) ends with the day 365 days after the effective date of the chargeable transaction.
(3) This paragraph does not apply in relation to a chargeable transaction to which paragraph 5 applies.
(4) References in this paragraph to an individual being present in the United Kingdom on a day are to the individual being present in the United Kingdom at the end of that day.
(5) This paragraph is subject to paragraph 12 (spouses and civil partners of UK residents).
Whether individual “UK resident” in relation to a chargeable transaction: special cases
5 (1) For the purposes of this Schedule, an individual is “UK resident” in relation to a chargeable transaction to which this paragraph applies if the individual is present in the United Kingdom on at least 183 days during the period that—
(a) begins with the day 364 days before the effective date of the chargeable transaction, and
(b) ends with the effective date of the chargeable transaction.
(2) This paragraph applies to a chargeable transaction if any of conditions A to C is met in relation to the transaction.
(3) Condition A is that the purchaser is, or (if there is more than one) the purchasers include—
(a) a company, or
(b) a person acting as a trustee of a unit trust scheme.
(4) Condition B is that the purchaser is, or (if there is more than one) the purchasers include, an individual who is treated as entering into the transaction by virtue of paragraph 2 of Schedule 15 (transaction entered into for the purposes of a partnership treated as entered into by partners).
(5) Condition C is that—
(a) the purchaser is, or (if there is more than one) the purchasers include, an individual who is acting as a trustee of a settlement, and
(b) under the terms of the settlement no beneficiary is entitled—
(i) to occupy the dwelling or dwellings for life, or
(ii) to income earned in respect of the dwelling or dwellings.
(6) References in this paragraph to an individual being present in the United Kingdom on a day are to the individual being present in the United Kingdom at the end of that day.
(7) This paragraph is subject to paragraph 12 (spouses and civil partners of UK residents).
Crown employment
6 (1) For the purposes of paragraphs 4 and 5, an individual is (subject to sub-paragraph (3)) treated as present in the United Kingdom at the end of a day if at that time the individual—
(a) is in Crown employment, and
(b) is present in a country or territory outside the United Kingdom for the purpose of performing activities in the course of that employment.
(2) For the purposes of paragraphs 4 and 5, an individual is (subject to sub-paragraph (3)) treated as present in the United Kingdom at the end of a day if at that time the individual—
(a) is the spouse or civil partner of an individual who is treated as present in the United Kingdom at the end of that day under sub-paragraph (1), and
(b) is living with that spouse or civil partner.
(3) Sub-paragraph (1) or (2) applies in relation to an individual only if a claim that it should so apply is included in a land transaction return or an amendment of such a return.
(4) “Crown employment” means employment under the Crown—
(a) which is of a public nature, and
(b) the earnings from which are payable out of the public revenue of the United Kingdom or of Northern Ireland.
(5) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.
PART 4 “Non-resident” in relation to a chargeable transaction: companies
Whether company is “non-resident” in relation to a chargeable transaction
7 (1) For the purposes of this Schedule a company is “non-resident” in relation to a chargeable transaction if either of the following conditions is met.
(2) The first condition is that, on the effective date of the chargeable transaction, the company is not UK resident for the purposes of the Corporation Tax Acts (see Chapter 3 of Part 2 of CTA 2009).
(3) The second condition is that, on the effective date of the chargeable transaction, the company (though UK resident for the purposes of the Corporation Tax Acts)—
(a) is a close company (see paragraph 8),
(b) meets the non-UK control test in relation to the transaction (see paragraphs 9 and 10), and
(c) is not an excluded company (see paragraph 11).
(4) This paragraph is subject to—
(a) paragraph 15 (co-ownership authorised contractual schemes);
(b) paragraph 16 (alternative property finance).
Meaning of “close company”
8 (1) For the purposes of this Schedule, a company is a “close company” if it is a close company within the meaning given by Chapter 2 of Part 10 of CTA 2010 (basic definitions), applying that Chapter subject to the following modifications.
(2) Section 444 (companies involved with close companies) applies as if condition A in that section were omitted.
(3) Section 446 (particular types of quoted company not treated as close) is treated as omitted.
Non-UK control
9 (1) For the purposes of this Schedule, a company meets the “non-UK control test” in relation to a chargeable transaction if it is a close company within the meaning given by Chapter 2 of Part 10 of CTA 2010 (basic definitions), applying that Chapter subject to the following modifications.
(2) Section 439 (“close company”) applies as if—
(a) references to a participator were to a relevant participator, and
(b) references to five or fewer participators were to any number of relevant participators.
(3) In sub-paragraph (2), “relevant participator” means a participator (within the meaning given by Chapter 2 of Part 10 of CTA 2010) who—
(a) is non-resident in relation to the chargeable transaction (within the meaning of this Schedule), and
(b) is not a general partner in a limited partnership.
(4) Section 444 (companies involved with close companies) applies as if condition A in that section were omitted.
(5) Section 446 (particular types of quoted company not treated as close) is treated as omitted.
(6) Section 451 (attribution of rights and powers) has effect subject to the limitations set out in paragraph 10.
(7) The reference in sub-paragraph (3)(b) to a general partner does not include a general partner who possesses, or is entitled to acquire, rights that entitle the general partner, in the event of the winding up of the company or in any other circumstances, to receive more than 1% of the assets of the company which would then be available for distribution among its members.
Non-UK control: attribution of rights and powers
10 (1) This paragraph sets out limitations on the rights and powers of a person (A) that, apart from this paragraph, would be capable of being attributed to another person (B) under section 451(4) of CTA 2010, as that provision applies for the purposes of paragraph 9(1).
(2) Where A and B are partners in a partnership, no rights and powers of A may be attributed to B under paragraph (c) or (d) of section 451(4) of CTA 2010 by virtue of that fact.
(3) Where—
(a) A and B are spouses or civil partners of each other,
(b) A and B are living together, and
(c) A is UK resident in relation to the chargeable transaction,
no rights and powers of A may be attributed to B under paragraph (c) or (d) of section 451(4) of CTA 2010 by virtue of the fact mentioned in paragraph (a).
(4) Where A's or B's interest in a company is de minimis, no rights and powers of A in relation to the company may be attributed to B under any of paragraphs (a) to (d) of section 451(4) of CTA 2010.
(5) For this purpose, a person's interest in a company is “de minimis” if—
(a) the proportion of the share capital or issued share capital in the company that the person possesses or is entitled to acquire is less than 5%,
(b) the proportion of the voting rights in the company that the person possesses or is entitled to acquire is less than 5%,
(c) the issued share capital in the company that the person possesses or is entitled to acquire would, on the assumption that the whole of the income of the company were distributed among the participators, entitle the person to receive less than 5% of the income so distributed, and
(d) the person's rights in the company entitle the person, in the event of the winding up of the company or in any other circumstances, to less than 5% of the assets of the company which would then be available for distribution among the participators.
(6) Any rights A has as a loan creditor are to be disregarded for the purposes of the assumption in sub-paragraph (5)(c).
(7) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.
Excluded companies
11 (1) A company is an “excluded company” for the purposes of paragraph 7(3)(c) if it is any of the following—
(a) a PAIF;
(b) a body corporate that is a 51% subsidiary of PAIF;
(c) a company UK REIT;
(d) a company that is a member of a group UK REIT;
(e) a company acting as a trustee of a settlement.
(2) In this paragraph—
(a) “PAIF” means a body corporate that is a property AIF for the purposes of Schedule 7A to this Act by virtue of paragraph 2(2) of that Schedule;
(b) “51% subsidiary” has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of CTA 2010);
(c) “company UK REIT” has the same meaning as in Part 12 of CTA 2010 (see section 524(5) of that Act);
(d) “group UK REIT” has the same meaning as in Part 12 of CTA 2010 (see section 523(5) of that Act).
PART 5 Special rules for particular purchasers and transactions
Spouses and civil partners of UK residents
12 (1) This paragraph applies where—
(a) there are two or more purchasers in relation to a chargeable transaction who are or will be jointly entitled to the interest acquired, and
(b) the following conditions are met in relation to those purchasers.
(2) The conditions are—
(a) that, on the effective date of the transaction, the purchasers, or (if there are more than two) two of them, are spouses or civil partners of each other;
(b) that, on the effective date of the transaction, those spouses or civil partners are living together;
(c) that one of those spouses or civil partners is UK resident in relation to the chargeable transaction;
(d) that (apart from this paragraph) one of those spouses or civil partners is non-resident in relation to the chargeable transaction;
(e) that neither of the spouses or civil partners is acting as a trustee of a settlement.
(3) For the purposes of this Schedule, the spouse or civil partner mentioned in sub-paragraph (2)(d) is UK resident in relation to the chargeable transaction.
(4) Section 1011 of the Income Tax Act 2007 (references to married persons, or civil partners, living together) applies for the purposes of this paragraph.
Bare trust acquiring new lease
13 (1) Sub-paragraph (2) applies to a chargeable transaction if—
(a) the purchaser is, or (if there is more than one) the purchasers include, a person (P) who is acting as a trustee of a bare trust, and
(b) paragraph 3(3) of Schedule 16 (trustee of bare trust granted a lease treated as purchaser of the whole of the interest acquired) applies in relation to P.
(2) In determining for the purposes of this Part of this Act whether the chargeable transaction is a “non-resident transaction”, paragraph 2(1)(a) (condition that purchaser be non-resident) has effect as if a reference to the purchaser or purchasers—
(a) included the beneficiary or beneficiaries of the bare trust, and
(b) did not include P.
Purchase by settlement if beneficiary entitled to occupy, or to income from, dwelling
14 (1) Sub-paragraph (2) applies to a chargeable transaction if—
(a) the purchaser is, or (if there is more than one) the purchasers include, a person (P) who is acting as a trustee of a settlement, and
(b) under the terms of the settlement a beneficiary is entitled—
(i) to occupy the dwelling or dwellings for life, or
(ii) to income earned in respect of the dwelling or dwellings.
(2) In determining for the purposes of this Part of this Act whether the chargeable transaction is a “non-resident transaction”, paragraph 2(1)(a) (condition that purchaser be non-resident) has effect as if a reference to the purchaser or purchasers—
(a) included the beneficiary or beneficiaries of the settlement, and
(b) did not include P.
(3) In this paragraph “settlement” does not include a settlement under a unit trust scheme.
Co-ownership authorised contractual schemes
15 (1) Subject to sub-paragraph (2), a co-ownership authorised contractual scheme is not “non-resident” in relation to any chargeable transaction.
(2) A collective investment scheme that is a co-ownership authorised contractual scheme by virtue of section 102A(7) (EEA schemes) is “non-resident” in relation to all chargeable transactions.
Alternative property finance
16 (1) Sub-paragraph (2) applies in relation to a chargeable transaction within section 71A(1)(a) (purchase of land by financial institution as part of alternative property finance arrangements).
(2) The financial institution that enters into the transaction is “non-resident” in relation to the transaction if and only if the person with whom it enters into the arrangements mentioned in section 71A(1) is non-resident in relation to the transaction.
(3) Sub-paragraph (4) applies in relation to a chargeable transaction within section 73(1)(a)(i) (purchase of land by financial institution as part of alternative property finance arrangements).
(4) The financial institution that enters into the transaction is “non-resident” in relation to the transaction if and only if the person with whom it enters into the arrangements mentioned in section 73(1) is non-resident in relation to the transaction.
Completion of contract previously substantially performed
17 In a case within section 44(8) (contract substantially performed and subsequently completed by a conveyance) the later of the notifiable transactions mentioned in that provision is a “non-resident transaction” for the purposes of this Part if and only if the earlier of those notifiable transactions is a non-resident transaction for the purposes of this Part.
PART 6 Supplementary provision
Completion of land transaction return
18 (1) Sub-paragraph (2) applies in relation to a land transaction return in respect of a chargeable transaction if—
(a) in order to determine whether the chargeable transaction is a non-resident transaction, it is necessary to determine whether one or more individuals are UK resident in relation to the transaction under paragraph 4(1), and
(b) that individual or any of those individuals, at the beginning of the day on which the land transaction return is delivered, has not yet met the condition in that provision (but might turn out to do so depending on their residence during the remainder of the relevant period).
(2) The land transaction return must be prepared on the assumption that the individual or (as the case may be) each of the individuals is resident outside the United Kingdom throughout the period—
(a) beginning with the day on which the land transaction return is delivered, and
(b) ending at the end of the relevant period.
(3) In this paragraph “the relevant period” has the same meaning as in paragraph 4(1).
Amendment of return where individual becomes UK resident after return delivered
19 (1) Sub-paragraph (2) applies where—
(a) a land transaction return in respect of a chargeable transaction is prepared on the assumption mentioned in paragraph 18(2), and
(b) the individual or (as the case may be) each of the individuals in respect of whom the assumption was made subsequently meets the condition in paragraph 4(1) (with the result that the transaction is not a non-resident transaction).
(2) The land transaction return may be amended, at any time before the end of the period of 2 years beginning with the day after the effective date of the transaction, to take account of the fact that the transaction is not a non-resident transaction.
(3) Where a land transaction return is amended under sub-paragraph (2), paragraph 6(2A) of Schedule 10 (notice of amendment of return to be accompanied by the contract for the transaction etc) does not apply in relation to the amendment.
What counts as a dwelling
20 (1) This paragraph sets out rules for determining what counts as a dwelling for the purposes of this Schedule.
(2) A building or part of a building counts as a dwelling if—
(a) it is used or suitable for use as a single dwelling, or
(b) it is in the process of being constructed or adapted for such use.
(3) Land that is, or is to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure on that land) is taken to be part of that dwelling.
(4) Land that subsists, or is to subsist, for the benefit of a dwelling is taken to be part of that dwelling.
(5) The main subject-matter of a transaction is also taken to consist of or include an interest in a dwelling if—
(a) substantial performance of a contract constitutes the effective date of that transaction by virtue of a relevant deeming provision,
(b) the main subject-matter of the transaction consists of or includes an interest in a building, or a part of a building, that is to be constructed or adapted under the contract for use as a single dwelling, and
(c) construction or adaptation of the building, or part of a building, has not begun by the time the contract is substantially performed.
(6) In sub-paragraph (5)—
“contract” includes any agreement;
“relevant deeming provision” means any of sections 44 to 45A or paragraph 5(1) or (2) of Schedule 2A or paragraph 12A of Schedule 17A;
“substantially performed” has the same meaning as in section 44.
(7) A building or part of a building used for a purpose specified in section 116(2) or (3) is not used as a dwelling for the purposes of sub-paragraph (2) or (5).
(8) Where a building or part of a building is used for a purpose mentioned in sub-paragraph (7), no account is to be taken for the purposes of sub-paragraph (2) of its suitability for any other use.
Interpretation
21 In this Schedule—
“CTA 2009” means the Corporation Tax Act 2009;
“CTA 2010” means the Corporation Tax Act 2010.
Power to modify this Schedule
22 (1) The Treasury may by regulations amend or otherwise modify this Schedule for the purpose of preventing certain chargeable transactions from being non-resident transactions for the purposes of this Schedule.
(2) The provision which may be included in regulations under this paragraph by reason of section 114(6)(c) includes incidental or consequential provision which may cause a chargeable transaction to be a non-resident transaction for the purposes of this Schedule.
Commencement
6 (1) The amendments made by this Schedule have effect in relation to any land transaction of which the effective date is, or is after, the commencement date.
(2) But those amendments do not have effect in relation to—
(a) a transaction effected in pursuance of a contract entered into and substantially performed before the commencement date, or
(b) a transaction that—
(i) is entered into pursuant to a contract entered into before 11 March 2020, and
(ii) is not excluded for the purposes of this paragraph.
(3) A transaction is excluded for the purposes of paragraph (b) of sub-paragraph (2) if—
(a) there is any variation of the contract, or assignment of rights under the contract, on or after 11 March 2020,
(b) the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or
(c) on or after that date there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.
(4) In this paragraph “the commencement date” means 1 April 2021.
SCHEDULE 17 SDLT (relief from higher rate charge for certain housing co-operatives etc): minor and consequential amendments
Section 89
1 Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this Schedule.
2 (1) Section 81 (further return where relief withdrawn) is amended as follows.
(2) For subsection (1A) substitute—
(1A) Where relief is withdrawn to any extent under—
(a) any of paragraphs 5G to 5L of Schedule 4A (relief from higher rate under Schedule 4A (higher rate for certain transactions)),
(b) paragraph 6 of Schedule 7A (PAIF seeding relief), or
(c) paragraph 14 or 16 of Schedule 7A (COACS seeding relief),
the purchaser must deliver a further return before the end of the period of 30 days after the relevant date.
(3) In subsection (1B), after paragraph (e) insert—
(ea) in the case of relief under paragraph 5FA of that Schedule (qualifying housing co-operatives), the date determined in accordance with subsection (1C);
.
(4) After subsection (1B) insert—
(1C) For the purposes of subsection (1B)(ea) (relief under paragraph 5FA of Schedule 4A withdrawn because the conditions in paragraph 5L(3) of that Schedule are met), the date is—
(a) where paragraph 5L(4) of Schedule 4A does not apply, the first day in the period mentioned in paragraph 5L(3)(a) of that Schedule on which the purchaser is not a qualifying housing body;
(b) where paragraph 5L(4) or (7) of that Schedule applies and relief is withdrawn because condition A in paragraph 5L(5) of that Schedule is met, the day of succession of the relevant successor;
(c) where paragraph 5L(4) or (7) of that Schedule applies and relief is withdrawn because condition B in paragraph 5L(6) of that Schedule is met, the first day in the part of the control period that falls after the day of succession of the relevant successor on which the relevant successor is not a qualifying housing body.
(1D) Where relief is withdrawn to any extent under paragraph 5L of Schedule 4A in a case to which paragraph 5L(4) or (7) applies, the reference in subsection (1A) to the purchaser is to be read as a reference to the relevant successor.
(5) For subsection (3) substitute—
(3) The provisions of Schedule 10 (returns, assessments and other matters) apply for the purposes of this section with the following modifications—
(a) references to a return under section 76 (general requirement to deliver land transaction return) are to be read as references to a return under subsection (1) or (1A);
(b) references to the transaction to which a return relates are to be read as references to the withdrawal of relief in respect of which the return is required under subsection (1) or (1A);
(c) references to a chargeable transaction to which (as yet) no return relates are to be read as references to the withdrawal of relief under any of the provisions mentioned in subsection (1) or (1A);
(d) references to the effective date of a transaction—
(i) in relation to the withdrawal of relief under any of the provisions mentioned in subsection (1), are to be read as references to the date on which the disqualifying event occurs, and
(ii) in relation to the withdrawal of relief under any of the provisions mentioned in subsection (1A), are to be read as references to the relevant date (see subsections (1B) and (1C));
(e) where, by virtue of subsection (1D), a return is to be made by the relevant successor, references to the purchaser are to be read as references to the relevant successor;
(f) paragraph 36(5A) is to be read as if it also permitted an appeal under paragraph 35(1)(e) on the ground that no further return is required.
(6) Omit subsection (5).
(7) At the end insert—
(6) In subsections (1C), (1D) and (3)(e) (which relate to the withdrawal of relief under paragraph 5L of Schedule 4A) “the relevant successor” means the person who is the most recent successor in the chain of succession at the time relief is withdrawn (and that person could be the first successor, the second successor or a subsequent successor).
(7) Terms used in subsections (1C) and (6) which are defined for the purposes of paragraph 5L of Schedule 4A have the same meaning in those subsections as they have in that paragraph.
3 (1) Section 81ZA (alternative finance arrangements: return where relief withdrawn) is amended as follows.
(2) In subsection (1), for “or 6H” substitute “ , 6H or 6I ”.
(3) For subsection (2) substitute—
(2) The provisions of Schedule 10 (returns, assessments and other matters) apply for the purposes of this section with the following modifications—
(a) references to a return under section 76 (general requirement to deliver land transaction return) are to be read as references to a return under subsection (1);
(b) references to the transaction to which a return relates are to be read as references to the withdrawal of relief in respect of which the return is required under subsection (1);
(c) references to a chargeable transaction to which (as yet) no return relates are to be read as references to the withdrawal of relief under any of the provisions mentioned in subsection (1);
(d) references to the effective date of a transaction are to be read as references to the date of the disqualifying event;
(e) references to the purchaser are to be read as references to the relevant person so far as that is necessary as a result of subsection (1) of this section or section 85(3) (payment of additional tax by relevant person where relief withdrawn);
(f) paragraph 36(5A) is to be read as if it also permitted an appeal under paragraph 35(1)(e) on the ground that no further return is required.
(4) In subsection (3), for the words from “the first day” to the end substitute
—
(a) where the relief was given under paragraph 5, 5B, 5C, 5D or 5F of Schedule 4A, the first day in the control period on which a relevant requirement was not met;
(b) where the relief was given under paragraph 5FA of Schedule 4A, the date determined in accordance with subsection (5A).
(5) In subsections (4) and (5), for “subsection (3)” substitute “ subsection (3)(a) ”.
(6) After subsection (5) insert—
(5A) For the purposes of subsection (3)(b) (relief withdrawn because the conditions in paragraph 6I(2) of Schedule 4A are met), the date is—
(a) where paragraph 6I(3) of Schedule 4A does not apply, the first day in the period mentioned in paragraph 6I(2)(a) of that Schedule on which the relevant person is not a qualifying housing body;
(b) where paragraph 6I(3) or (6) of that Schedule applies and relief is withdrawn because condition A in paragraph 6I(4) of that Schedule is met, the day of succession of the relevant successor;
(c) where paragraph 6I(3) or (6) of that Schedule applies and relief is withdrawn because condition B in paragraph 6I(5) of that Schedule is met, the first day in the part of the control period that falls after the day of succession of the relevant successor on which the relevant successor is not a qualifying housing body.
(7) In subsection (6), for the definition of “the relevant person” substitute—
“the relevant person” means—
(a) the person (other than the financial institution) who entered into the arrangements in question, or
(b) where relief is withdrawn to any extent under paragraph 6I of Schedule 4A in a case to which paragraph 6I(3) or (6) applies, the relevant successor;
“the relevant successor” means the person who is the most recent successor in the chain of succession at the time relief is withdrawn (and that person could be the first successor, the second successor or a subsequent successor).
(8) After subsection (6) insert—
(7) Terms used in subsection (5A), and in the definition of “the relevant successor” in subsection (6), which are defined for the purposes of paragraph 6I of Schedule 4A have the same meaning in those provisions as they have in that paragraph.
4 (1) Section 85 (liability for tax) is amended as follows.
(2) After subsection (2) insert—
(2A) Where relief is withdrawn to any extent under paragraph 5L of Schedule 4A (qualifying housing co-operatives) in a case to which paragraph 5L(4) or (7) applies—
(a) subsection (1) does not apply in relation to the additional tax payable as a result of the withdrawal of the relief, and
(b) the relevant successor is liable to pay that additional tax.
(2B) In subsection (2A) “the relevant successor” has the same meaning as it has in subsections (1C), (1D) and (3)(e) of section 81 (see subsections (6) and (7) of that section).
(3) In subsection (3), for “and 6H” substitute “ , 6H and 6I ”.
(4) In subsection (4), for the words from “means” to the end substitute “ has the same meaning as in section 81ZA (see subsections (6) and (7) of that section) ”.
5 (1) Section 86 (payment of tax) is amended as follows.
(2) In subsection (2)(za), for “5K” substitute “ 5L ”.
(3) In subsection (2A), for “and 6H” substitute “ , 6H and 6I ”.
6 In section 87(3) (interest on unpaid tax)—
(a) in paragraph (za), for “5K” substitute “ 5L ”;
(b) after paragraph (za) insert—
(zb) in the case of an amount payable because relief is withdrawn under any of paragraphs 6D, 6F, 6G, 6H and 6I of Schedule 4A, the date which is the date of the disqualifying event for the purposes of section 81ZA (see subsection (3) of that section);
.
7 (1) Schedule 4A (stamp duty land tax: higher rate for certain transactions) is amended as follows.
(2) In paragraph 2(6)(a)—
(a) for “5K” substitute “ 5L ”;
(b) for “6H” substitute “ 6I ”.
(3) In paragraph 6A—
(a) in sub-paragraph (4), for “and 5F(1)” substitute “ , 5F(1) and 5FA ”;
(b) in sub-paragraph (5), for “or 5F(1)” substitute “ , 5F(1) or 5FA ”.
(4) In paragraph 6C(2)(b), for “and 5F(1)” substitute “ , 5F(1) and 5FA ”.
(5) After paragraph 6H insert—
6I (1) This paragraph applies where relief under paragraph 5FA (qualifying housing co-operatives) has been allowed, in accordance with paragraph 6A(4), in relation to the purchase of a major interest in land.
(2) The relief is withdrawn (subject to sub-paragraph (3)) if—
(a) on any day in the period of three years beginning with the effective date of the first transaction (“the control period”), the relevant person is not a qualifying housing body, and
(b) immediately before the first day on which that is the case the relevant person holds a relevant interest (whether jointly, or in common, or otherwise).
(3) If, on any day in the control period, the relevant person is not a qualifying housing body because it ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless—
(a) another person (“the first successor”) has succeeded to the engagements of the relevant person, and
(b) condition A or condition B is met (and if condition B is met, subject to sub-paragraph (6)).
(4) Condition A is that, on the day the first successor succeeds to the engagements of the relevant person (“the day of succession”), the first successor is not a qualifying housing body.
(5) Condition B is that—
(a) on any day in the part of the control period that falls after the day of succession, the first successor is not a qualifying housing body, and
(b) immediately before the first day on which that is the case the first successor still holds a relevant interest (whether jointly, or in common, or otherwise).
(6) If condition B is met because the first successor ceases to exist (whether by virtue of a conversion into, or amalgamation with, another person or for any other reason), relief is not to be withdrawn under this paragraph unless it would have been withdrawn by virtue of sub-paragraph (3) if references in sub-paragraphs (3) to (5)—
(a) to the relevant person were references to the first successor, and
(b) to the first successor were references to the person who has succeeded to the engagements of the first successor (“the second successor”).
(7) Sub-paragraph (6) is to apply to the second successor as it applies to the first successor, and so on, subject to the necessary modifications.
(8) In this paragraph—
(a) “qualifying housing body” means—
(i) a company that is a qualifying housing co-operative for the purposes of section 150(3A) of the Finance Act 2013 (relief from ATED),
(ii) a registered provider of social housing, or
(iii) a registered social landlord;
(b) “relevant interest” has the same meaning as in paragraph 6D;
(c) “the relevant person” means the person (other than the financial institution) who enters into the arrangements mentioned in section 71A(1) or 73(1);
(d) references to a major interest include an undivided share in a major interest in land.
(6) In paragraph 9, in the definition of “financial institution”, for “6H” substitute “ 6I ”.
8 In Schedule 10 (returns, assessments and other matters), in paragraph 12(2A) (notice of enquiry)—
(a) in paragraph (b), omit “in respect of the same land transaction”;
(b) in the words after paragraph (b), for “land transaction” substitute “ return ”.
SCHEDULE 18 VAT and distance selling: Northern Ireland
Section 95
PART 1 Amendments to Schedules 9ZA and 9ZB to VATA 1994
Amendments to Part 9 of Schedule 9ZA to VATA 1994
1 Part 9 of Schedule 9ZA to VATA 1994 (value added tax on acquisitions in Northern Ireland from Member States: registration in respect of distance sales) is amended as follows.
2 (1) Paragraph 48 (liability to be registered) is amended as follows.
(2) In sub-paragraph (1), in the words after paragraph (b), for “on any day” to the end substitute
—
(i) in a case where sub-paragraph (1A) applies, on a day determined in accordance with sub-paragraph (1B), or
(ii) in a case where sub-paragraph (1A) does not apply, on any day when the person makes a relevant supply.
(3) After that sub-paragraph insert—
(1A) This sub-paragraph applies where —
(a) the person has a single place of establishment, or (where the person does not have a place of establishment) a single place where the person has a permanent address or where the person usually resides, and
(b) that place is in a member State or Northern Ireland.
(1B) The person becomes liable to be registered on any day in a given year if—
(a) in the period beginning with 1 January of that year and ending with that day, the person makes a relevant supply, and
(b) in that period, or in the period beginning with 1 January and ending with 31 December of the year before the year in which that day falls, the person makes European supplies whose value exceeds £8,818.
(4) Omit sub-paragraphs (6) and (7).
(5) At the end insert—
(8) For the purposes of this paragraph, a supply of goods or services is a “European supply” if it is—
(a) a supply of services listed in Article 58(1) of the VAT Directive to a person who is not a taxable person and who is established, or (where the person does not have a place of establishment) who has a permanent address or who usually resides, in a member State or Northern Ireland and that is not the place mentioned in sub-paragraph (1A)(a) (that is, the place in which the person supplying the services is established etc), or
(b) a supply of goods that would be an “intra-Community distance sale of goods” within the meaning given by Article 14(4) of the VAT Directive if references in that Article to a “Member State” were read as if they included a reference to Northern Ireland (and references to a “third country” and “third territory” were read accordingly as including Great Britain) involving the removal of goods to a member State or Northern Ireland and that is not the place mentioned in sub-paragraph (1A)(a) (that is, the place in which the person supplying the goods is established etc).
(9) For the purposes of sub-paragraph (8)(a), a person is not a taxable person if they are not liable or entitled to register for VAT in accordance with the law of the place where the person to whom the services are supplied is established, has their permanent address or usually resides.
(10) In sub-paragraph (8), “the VAT Directive” means Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
3 (1) Paragraph 49 (ceasing to be liable to be registered) is amended as follows.
(2) In sub-paragraph (1)—
(a) in the words before paragraph (a), after “this Schedule” insert “ by virtue of paragraph 48(1)(i) ”;
(b) in paragraph (a), for “the relevant supplies” substitute “ European supplies ”;
(c) in paragraph (b), for “relevant supplies” substitute “ European supplies ”;
(d) in paragraphs (a) and (b), for “£70,000” in both places it occurs substitute “ £8,818 ”.
(3) After that sub-paragraph insert—
(1A) A person who has become liable to be registered under this Part of this Schedule by virtue of paragraph 48(1)(ii) ceases to be so liable by virtue of that paragraph if at any time paragraph 48(1A) applies in relation to that person.
(1B) A person who has become liable to be registered under this Part of this Schedule by virtue of paragraph 48(3) ceases to be so liable by virtue of that paragraph if at any time the Commissioners are satisfied that the person—
(a) has ceased to make supplies as mentioned in that paragraph, and
(b) will not make such supplies within the period of one year beginning with the day on which the Commissioners are notified or otherwise become aware that the person has ceased to make them.
(4) In sub-paragraph (2) after “But” insert
—
(a) the fact that a person ceases to be liable to be registered under this Part of this Schedule by virtue of one provision does not prevent the person being liable to be registered under this Part of this Schedule by virtue of another provision, and
(b)
.
(5) After sub-paragraph (2) insert—
(3) Sub-paragraphs (8) to (10) of paragraph 48 apply for the purposes of this paragraph as they apply for the purposes of that paragraph.
Amendments to Part 5 of Schedule 9ZB to VATA 1994
4 In Part 5 of Schedule 9ZB to VATA 1994 (goods removed to or from Northern Ireland: rules relating to particular supplies), in paragraph 29 (distance selling between EU and Northern Ireland: place of supply)—
(a) in sub-paragraph (1)(c)—
(i) omit the “or” at the end of paragraph (i);
(ii) for the “and” at the end of paragraph (ii) substitute “ or ”;
(iii) after that paragraph insert—
(iii) is registered under the OSS scheme or a non-UK scheme (within the meaning of Schedule 9ZD), and
;
(b) in sub-paragraph (3), after “paragraph 48(2)” insert “ of Schedule 9ZA ”.
PART 2 Amendments relating to the One Stop Shop and Import One Stop Shop Schemes
5 In section 40A of VATA 1994 (Northern Ireland Protocol) after subsection (3) insert—
(4) Schedule 9ZD—
(a) establishes a special accounting scheme (“the OSS scheme”) for use by persons making intra-Community distance sales of goods from Northern Ireland to member States, and
(b) makes provision about corresponding schemes in member States.
(5) Schedule 9ZE—
(a) establishes a special accounting scheme (“the IOSS scheme”) for use by persons supplying imported goods to Northern Ireland or into the European Union, and
(b) makes provision about corresponding schemes in member States.
(6) Schedule 9ZF makes provision modifying other provisions of this Act and other enactments in connection with the provision made in Schedules 9ZD and 9ZE.
(7) The Treasury may by regulations—
(a) amend Schedules 9ZD and 9ZE, and
(b) amend Parts 1 and 2 of Schedule 9ZF,
(including by inserting provision modifying any provision of an Act whenever passed or made).
(8) The Commissioners may by regulations—
(a) amend Part 3 of Schedule 9ZF (including by inserting provision modifying any provision of an Act whenever passed or made), and
(b) make such further provision as they consider appropriate about the administration, collection or enforcement of value added tax due under Schedules 9ZD and 9ZE.
(9) Regulations under subsections (7) and (8) may—
(a) confer on a person specified in the regulations a discretion to do anything under, or for the purposes of, the regulations;
(b) make provision by reference to things specified in a notice published in accordance with the regulations;
(c) make consequential, transitional, transitory, saving, supplementary or incidental provision.
6 After Schedule 9ZC to VATA 1994 insert—
SCHEDULE 9ZD
Distance selling of goods from Northern Ireland: special accounting scheme
Section 40A
PART 1 Introduction
Overview
1 In this Schedule—
(a) Parts 2 and 3 establish a special accounting scheme (the One Stop Shop scheme, referred to in this Schedule as the “OSS scheme”) which may be used by persons making intra-Community distance sales of goods from Northern Ireland to member States;
(b) Part 4 is about persons participating in schemes in member States that correspond to the OSS scheme;
(c) Part 5 is about the collection of non-UK VAT in relation to such corresponding schemes;
(d) Part 6 is about appeals;
(e) Part 7 contains definitions.
“Scheme supply”
2 For the purposes of this Schedule, “scheme supply” means a supply of goods that would be an “intra-Community distance sale of goods” within the meaning given by Article 14(4) of the VAT Directive if references in that Article to a “Member State” were read as if they included a reference to Northern Ireland (and references to a “third country” and “third territory” were read accordingly as including Great Britain).
PART 2 Registration
The register
3 Persons registered under the OSS scheme are to be registered in a single register kept by the Commissioners for the purposes of the scheme.
Persons who may be registered
4 (1) A person (“P”) may register under the OSS scheme if—
(a) P makes or intends to make one or more scheme supplies in the course of a business that P carries on,
(b) one of the following applies—
(i) P's business is established in Northern Ireland,
(ii) P's business is not established in Northern Ireland or a member State but P has a fixed establishment in Northern Ireland, or
(iii) P's business is not established in Northern Ireland or a member State and P does not have a fixed establishment in Northern Ireland, but P makes or intends to make scheme supplies from Northern Ireland to a member State and does not have a fixed establishment in a member State, and
(c) P is not barred from registering by—
(i) sub-paragraph (2),
(ii) the second or third paragraph of Article 369a(2) of the VAT Directive, or
(iii) any provision of the Implementing Regulation.
(2) P may not be registered under the OSS scheme if they are a participant in a non-UK scheme (see para 38(1)).
(3) P must register under the OSS scheme if P intends to account for VAT on scheme supplies even if P is otherwise registered under this Act.
Becoming registered
5 (1) The Commissioners must register a person (“P”) under the OSS scheme if P—
(a) satisfies them that the requirements for registration are met (see paragraph 4), and
(b) makes a request in accordance with this paragraph (a “registration request”).
(2) A registration request must state—
(a) P's name and postal and electronic addresses (including any websites),
(b) whether or not P has begun to make scheme supplies and (if so) the date on which P began to do so, and
(c) whether or not P has previously been identified under a non-UK scheme and (if so) the date on which P was first identified under the scheme concerned.
(3) A registration request must—
(a) contain any further information, and any declaration about its contents, that the Commissioners may by regulations require, and
(b) be made by such electronic means, and in such manner, as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Date on which registration takes effect
6 Where a person (“P”) is registered under this Schedule, P's registration takes effect on the date determined in accordance with Article 57d of the Implementing Regulation.
Further provision about registration
7 The Commissioners may, by means of a notice published by them, make further provision about registration under this Schedule.
Notification of changes etc
8 (1) A person (“P”) registered under the OSS scheme must inform the Commissioners of the date when P first makes scheme supplies (unless P has already given the Commissioners that information under paragraph 5(2)(b)).
(2) That information, and any information P is required to give under Article 57h of the Implementing Regulation (notification of certain changes), must be communicated by such electronic means, and in such manner, as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Cancellation of registration
9 The Commissioners must cancel the registration of a person (“P”) under the OSS scheme if—
(a) P has ceased to make, or no longer intends to make, scheme supplies and has notified the Commissioners of that fact;
(b) the Commissioners otherwise determine that P has ceased to make, or no longer intends to make, such supplies;
(c) P has ceased to satisfy any of the other requirements for registration in paragraph 4(1) and has notified the Commissioners of that fact,
(d) the Commissioners otherwise determine that P has ceased to satisfy any of those conditions, or
(e) the Commissioners determine that P has persistently failed to comply with P's obligations in or under this Schedule or the Implementing Regulation.
PART 3 Liability, returns, payment etc
Liability to pay non-UK VAT to Commissioners
10 (1) This paragraph applies where a person (“P”)—
(a) makes a scheme supply, and
(b) is registered under the OSS scheme when the supply is made.
(2) P is liable to pay to the Commissioners the gross amount of VAT on the supply.
(3) The reference in sub-paragraph (2) to the gross amount of VAT on the supply is to the amount of VAT charged on the supply in accordance with the law of the member State in which the supply is treated as made, without any deduction of VAT pursuant to Article 168 of the VAT Directive.
OSS scheme returns
11 (1) A person (“P”) who is or has been registered under the OSS scheme must submit a return (an “OSS scheme return”) to the Commissioners for each reporting period.
(2) Each quarter for the whole or part of which P is registered under the OSS scheme is a “reporting period” for P.
OSS scheme returns: further requirements
12 (1) An OSS scheme return is to be made out in sterling.
(2) Any conversion from one currency into another for the purposes of sub-paragraph (1) is to be made using the exchange rates published by the European Central Bank—
(a) for the last day of the reporting period to which the OSS scheme return relates, or
(b) if no such rate is published for that day, for the next day for which such a rate is published.
(3) An OSS scheme return—
(a) must be submitted to the Commissioners before the end of the month following the month in which the last day of the reporting period to which it relates falls;
(b) must be submitted by such electronic means, and in such form and manner, as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Payment
13 (1) A person who is required to submit an OSS scheme return must pay, by the deadline for submitting the return, the amounts required in accordance with paragraph 10 in respect of scheme supplies made in the reporting period to which the return relates.
(2) A payment under this paragraph must be made in such manner as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Availability of records
14 (1) A person (“P”) who is registered under the OSS scheme must make available to the Commissioners, on request, any obligatory records P is keeping of transactions entered into by P while registered under the scheme.
(2) The records must be made available by electronic means.
(3) In sub-paragraph (1) “obligatory records” means records kept in accordance with an obligation imposed in accordance with Article 369k of the VAT Directive.
Amounts required to be paid to member States
15 Section 44 of the Commissioners for Revenue and Customs Act 2005 (requirement to pay receipts into the Consolidated Fund) does not apply to any money received for or on account of VAT that is required to be paid to a member State under Article 46 of Council Regulation (EU) No 904/2010.
PART 4 Persons registered under non-UK special accounting schemes
Meaning of “a non-UK scheme”
16 (1) In this Schedule “a non-UK scheme” means any provision of the law of a member State which implements Section 3 of Chapter 6 of Title XII of the VAT Directive.
(2) In relation to a non-UK scheme, references to the “administering member State” are to the member State under whose law the scheme is established.
Exemption from requirement to register under this Act
17 (1) A participant in a non-UK scheme is not required to be registered under this Act by virtue of making scheme supplies in respect of which the participant is required to make returns under that other scheme.
(2) Sub-paragraph (1) overrides any contrary provision in this Act.
(3) Where a participant in a non-UK scheme who is not registered under this Act (“the unregistered person”) makes relevant supplies, it is to be assumed for all purposes of this Act relating to the determination of—
(a) whether or not VAT is chargeable under this Act on those supplies,
(b) how much VAT is chargeable under this Act on those supplies,
(c) the time at which those supplies are treated as taking place, and
(d) any other matter that the Commissioners may specify by regulations,
that the unregistered person is registered under this Act.
(4) Scheme supplies made by the unregistered person are “relevant supplies” if—
(a) the value of the supplies must be accounted for in a return required to be made by the unregistered person under a non-UK scheme, and
(b) the supplies are treated as made in the United Kingdom.
De-registration
18 (1) Sub-paragraph (2) applies where a person (“P”) who is registered under Schedule 1A or Part 9 of Schedule 9ZA—
(a) satisfies the Commissioners that P intends to apply for identification under a non-UK scheme, and
(b) asks the Commissioners to cancel P's registration under Schedule 1A or Part 9 of Schedule 9ZA (as the case may be).
(2) The Commissioners may cancel P's registration under Schedule 1A or Part 9 of Schedule 9ZA (as the case may be) with effect from—
(a) the day on which the request is made, or
(b) a later date agreed between P and the Commissioners.
Scheme participants who are also registered under this Act
19 (1) A person (“P”) who—
(a) is a participant in a non-UK scheme, and
(b) is also registered, or required to be registered, under this Act,
is not required to discharge any obligation placed on them as a taxable person, to the extent that the obligation relates to relevant supplies.
(2) The reference in sub-paragraph (1) to an obligation placed on P as a taxable person is to an obligation—
(a) to which P is subject under or by virtue of this Act, and
(b) to which P would not be subject if P was neither registered nor required to be registered under this Act.
(3) A supply made by a participant in a non-UK scheme is a “relevant supply” if—
(a) the value of the supply must be accounted for in a return required to be made by the participant under that scheme, and
(b) the supply is treated as made in the United Kingdom.
(4) The Commissioners may by regulations specify cases in relation to which sub-paragraph (1) is not to apply.
(5) In section 25(2) (deduction of input tax from output tax by a taxable person) the reference to output tax that is due from the taxable person does not include any VAT that the taxable person is liable under a non-UK scheme to pay to the tax authorities for the administering member State.
Value of supplies to connected persons
20 In paragraph 1 of Schedule 6 (valuation: supply to connected person at less than market value) the reference to a supply made by a taxable person is to be read as including a scheme supply that is made by a participant in a non-UK scheme (and is treated as made in the United Kingdom).
Refund of VAT on supplies of goods and services supplied to scheme participant
21 The power of the Commissioners to make regulations under section 39 (repayment of VAT to those in business overseas) includes power to make provision for giving effect to the second sentence of Article 369j of the VAT Directive (which provides for VAT on certain supplies to participants in special accounting schemes to be refunded in accordance with Directive 2008/9/EC).
PART 5 Collection of non-UK VAT
Assessments: general modifications of section 73
22 (1) For the purposes of this Schedule, section 73 (failure to make returns etc) is to be read as if—
(a) the reference in subsection (1) of that section to returns required under this Act included relevant non-UK returns, and
(b) references in that section to a prescribed accounting period included a tax period.
(2) See also the modifications in paragraph 23.
(3) In this Schedule “relevant non-UK return” means a non-UK return (see paragraph 38(1)) that is required to be made (wholly or partly) in respect of scheme supplies that are treated as made in the United Kingdom.
Assessments in connection with increase in consideration: modifications
23 (1) Sub-paragraphs (2) to (4) make modifications of sections 73 and 76 which—
(a) have effect for the purposes of this Schedule, and
(b) are in addition to any other modifications of those sections made by this Schedule.
(2) Section 73 has effect as if, after subsection (3), there were inserted—
(3A) Where a person has failed to make an amendment or notification that the person is required to make under paragraph 33 of Schedule 9ZD in respect of an increase in the consideration for a UK supply (as defined in paragraph 33(7)), the Commissioners may assess the amount of VAT due from the person as a result of the increase to the best of their judgement and notify it to the person.
(3B) An assessment under subsection (3A)—
(a) is of VAT due for the tax period mentioned in paragraph 33(1)(a) of Schedule 9ZD;
(b) must be made within the time limits provided for in section 77, and must not be made after the end of the period of—
(i) 2 years after the end of the tax period referred to in paragraph 33(1)(a) of Schedule 9ZD, or if later,
(ii) one year after evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.
(3C) Subject to section 77, where further evidence such as is mentioned in subsection (3B)(b)(ii) comes to the Commissioners' knowledge after they have made an assessment under subsection (3A), another assessment may be made under that subsection, in addition to any earlier assessment.
(3) The reference in section 73(9) to subsection (1) of that section is taken to include a reference to section 73(3A) (treated as inserted by sub-paragraph (2)).
(4) Section 76 (assessment of amounts due by way of penalty, interest or surcharge) is to be read as if the reference in subsection (5) of that section to section 73(1) included a reference to section 73(3A) (treated as inserted by sub-paragraph (2)).
Assessments: consequential modifications
24 References to prescribed accounting periods in the following provisions are to be read in accordance with the modifications made by paragraphs 22 and 23—
(a) section 74 (interest on VAT recovered or recoverable by assessment);
(b) section 76 (assessment of amounts due by way of penalty, interest or surcharge);
(c) section 77 (assessments: time limits etc).
Deemed amendments of relevant non-UK returns
25 (1) Where a person who has made a relevant non-UK return makes a claim under paragraph 31(7)(b) (overpayments) in relation to an error in the return, the relevant non-UK return is taken for the purposes of this Act to have been amended by the information in the claim.
(2) Where a person who has made a relevant non-UK return gives the Commissioners a notice relating to the return under paragraph 33(2)(b) (increase or decrease in consideration), the relevant non- UK return is taken for the purposes of this Act to have been amended by that information.
(3) Where (in a case not falling within sub-paragraph (1) or (2)) a person who has made a relevant non-UK return notifies the Commissioners (after the expiry of the period during which the non-UK return may be amended under Article 61 of the Implementing Regulation) of a change that needs to be made to the return to correct an error, or rectify an omission, in it, the relevant non-UK return is taken for the purposes of this Act to have been amended by that information.
Interest on VAT: “reckonable date”
26 (1) Sub-paragraph (2) states the “reckonable date” for the purposes of section 74(1) and (2) for any case where an amount carrying interest under that section—
(a) is an amount assessed under section 73(2) (refunds etc) in reliance on paragraph 22, or that could have been so assessed, and
(b) was correctly paid or credited to the person, but would not have been paid or credited to the person had the facts been as they later turn out to be.
(2) The “reckonable date” is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).
(3) Sub-paragraph (4) states the “reckonable date” for any other case where an amount carrying interest under section 74 is assessed under section 74(1) or (2) in reliance on paragraph 22, or could have been so assessed.
(4) The “reckonable date” is taken to be the latest date by which a non- UK return was required to be made for the tax period to which the amount assessed relates.
(5) Where section 74(1) or (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount assessed under section 73(3A) (treated as inserted by paragraph 23(2)), the “reckonable date” for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 33(2).
Default surcharge: notice of special surcharge period
27 (1) A person who is required to make a relevant non-UK return for a tax period is regarded for the purposes of this paragraph and paragraph 28 as being in default in respect of that period if either—
(a) conditions 1A and 2A are met, or
(b) conditions 1B and 2B are met,
(but see also paragraph 29).
(2) The conditions are as follows—
(a) condition 1A is that the tax authorities for the administering member State have not received the return by the deadline for submitting it;
(b) condition 2A is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the obligation to submit the return;
(c) condition 1B is that, by the deadline for submitting the return, those tax authorities have received the return but have not received the amount of VAT shown on the return as payable by the person in respect of the tax period;
(d) condition 2B is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the VAT outstanding.
(3) The Commissioners may serve on a person who is in default in respect of a tax period a notice (a “special surcharge liability notice”) specifying a period—
(a) ending on the first anniversary of the last day of that tax period, and
(b) beginning on the date of the notice.
(4) A period specified under sub-paragraph (3) is a “special surcharge period”.
(5) If a special surcharge liability notice is served in respect of a tax period which ends on or before the day on which an existing special surcharge period ends, the special surcharge period specified in that notice must be expressed as a continuation of the existing special surcharge period (so that the existing period and its extension are regarded as a single special surcharge period).
Further default after service of notice
28 (1) If a person on whom a special surcharge liability notice has been served—
(a) is in default in respect of a tax period ending within the special surcharge period specified in (or extended by) that notice, and
(b) has outstanding special scheme VAT for that tax period,
the person is to be liable to a surcharge of the amount given by sub-paragraph (2).
(2) The surcharge is equal to whichever is the greater of—
(a) £30, and
(b) the specified percentage of the person's outstanding special scheme VAT for the tax period.
(3) The specified percentage depends on whether the tax period is the first, second or third etc period in respect of which the person is in default and has outstanding special scheme VAT, and is—
(a) for the first such tax period, 2%;
(b) for the second such tax period, 5%;
(c) for the third such tax period, 10%;
(d) for each such tax period after the third, 15%.
(4) “Special scheme VAT”, in relation to a person, means VAT that the person is liable to pay to the tax authorities for the administering member State under a non-UK scheme in respect of scheme supplies treated as made in the United Kingdom.
(5) A person has “outstanding special scheme VAT” for a tax period if some or all of the special scheme VAT for which the person is liable in respect of that period has not been paid by the deadline for the person to submit a non-UK return for that period (and the amount unpaid is referred to in sub-paragraph (2)(b) as “the person's outstanding special scheme VAT” for the tax period).
Default surcharge: exceptions for reasonable excuse etc
29 (1) A person who would otherwise have been liable to a surcharge under paragraph 28(1) is not to be liable to the surcharge if the person satisfies the Commissioners or, on appeal, the tribunal that, in the case of a default which is material to the surcharge—
(a) the non-UK return or, as the case may be, the VAT shown on that return, was despatched at such a time and in such manner that it was reasonable to expect that it would be received by the tax authorities for the administering member State within the appropriate time limit, or
(b) there is a reasonable excuse for the return or the VAT not having been so despatched.
(2) Where sub-paragraph (1) applies to a person—
(a) the person is treated as not having been in default in respect of the tax period in question, and
(b) accordingly, any special surcharge liability notice the service of which depended on that default is regarded as not having been served.
(3) A default is “material” to a surcharge if—
(a) it is the default which gives rise to the surcharge, under paragraph 28(1), or
(b) it is a default which was taken into account in the service of the special surcharge liability notice on which the surcharge depends and the person concerned has not previously been liable to a surcharge in respect of a tax period ending within the special surcharge period specified in or extended by that notice.
(4) A default is left out of account for the purposes of paragraphs 27(3) and 28(1) if—
(a) the conduct by virtue of which the person is in default is also conduct falling within section 69(1) (breaches of regulatory provisions), and
(b) by reason of that conduct the person concerned is assessed to a penalty under that section.
(5) If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a tax period specified in the direction is to be left out of account for the purposes of paragraphs 27(3) and 28(1).
(6) Section 71(1) (meaning of “reasonable excuse”) applies for the purposes of this paragraph as it applies for the purposes of sections 59 to 70.
Interest in certain cases of official error
30 (1) Section 78 (interest in certain cases of official error) applies as follows in relation to a case where, due to an error on the part of the Commissioners—
(a) a person has accounted under a non-UK scheme for an amount by way of UK VAT that was not UK VAT due from the person, and as a result the Commissioners are liable under paragraph 31 to pay (or repay) an amount to the person, or
(b) (in a case not falling within paragraph (a)), a person has paid, in accordance with an obligation under a non-UK scheme, an amount by way of UK VAT that was not UK VAT due from the person and which the Commissioners are in consequence liable to repay to the person.
(2) Section 78 has effect as if the condition in section 78(1)(a) were met in relation to that person.
(3) In the application of section 78 as a result of this paragraph, section 78(12)(b) is read as providing that any reference in that section to a return is to a return required to be made under a non-UK scheme.
(4) In section 78, as it applies as a result of this paragraph, “output tax” has the meaning that expression would have if the reference in section 24(2) to a “taxable person” were to a “person”.
Overpayments
31 (1) A person may make a claim if the person—
(a) has made a non-UK return for a tax period relating wholly or partly to scheme supplies treated as made in the United Kingdom,
(b) has accounted to the tax authorities for the administering member State for VAT in respect of those supplies, and
(c) in doing so has brought into account as UK VAT due to those authorities an amount (“the overpaid amount”) that was not UK VAT due to them.
(2) A person may make a claim if the person has, as a participant in a non-UK scheme, paid (to the tax authorities for the administering member State or to the Commissioners) an amount by way of UK VAT that was not UK VAT due (“the overpaid amount”), otherwise than in the circumstances mentioned in sub-paragraph (1)(c).
(3) A person who is or has been a participant in a non-UK scheme may make a claim if the Commissioners—
(a) have assessed the person to VAT for a tax period, and
(b) in doing so, have brought into account as VAT an amount (“the amount not due”) that was not VAT due.
(4) Where a person makes a claim under sub-paragraph (1) or (2), the Commissioners must repay the overpaid amount to the person.
(5) Where a person makes a claim under sub-paragraph (3), the Commissioners must credit the person with the amount not due.
(6) Where—
(a) as a result of a claim under sub-paragraph (3) an amount is to be credited to a person, and
(b) after setting any sums against that amount under or by virtue of this Act, some or all of the amount remains to the person's credit,
the Commissioners must pay (or repay) to the person so much of the amount as remains to the person's credit.
(7) The reference in sub-paragraph (1) to a claim is to a claim made—
(a) by correcting, in accordance with Article 61 of the Implementing Regulation, the error in the non-UK return mentioned in sub-paragraph (1)(a), or
(b) (after the expiry of the period during which the non-UK return may be amended under Article 61) to the Commissioners.
(8) Sub-paragraphs (1) and (2) do not require any amount to be repaid except to the extent that is required by Article 63 of the Implementing Regulation.
Overpayments: supplementary
32 (1) In section 80 (credit for, or repayment of, overstated or overpaid VAT), subsections (3) to (3C) (unjust enrichment) and (4A), (4C) and (6) (recovery by assessment of amounts wrongly credited) have effect as if—
(a) a claim—
(i) under paragraph 31(1) were a claim under section 80(1),
(ii) under paragraph 31(2) were a claim under section 80(1B), and
(iii) under paragraph 31(3) were a claim under section 80(1A);
(b) references in that section to a prescribed accounting period included a tax period.
(2) In section 80(3) to (3C), (4A), (4C) and (6), as modified by sub-paragraph (1), references to the crediting of amounts are to be read as including the payment of amounts.
(3) The Commissioners are not liable to repay the overpaid amount on a claim made—
(a) under paragraph 31(2), or
(b) as mentioned in paragraph 31(7)(b),
if the claim is made more than 4 years after the relevant date.
(4) On a claim made under paragraph 31(3), the Commissioners are not liable to credit the amount not due if the claim is made more than 4 years after the relevant date.
(5) The “relevant date” is—
(a) in the case of a claim under paragraph 31(1), the end of the tax period mentioned in paragraph 31(1)(a), except in the case of a claim resulting from an incorrect disclosure;
(b) in the case of a claim under paragraph 31(1) resulting from an incorrect disclosure, the end of the tax period in which the disclosure was made;
(c) in the case of a claim under paragraph 31(2), the date on which the payment was made;
(d) in the case of a claim under paragraph 31(3), the end of the quarter in which the assessment was made.
(6) A person makes an “incorrect disclosure” where—
(a) the person discloses to the tax authorities in question (whether the Commissioners or the tax authorities for the administering member State) that the person has not brought into account for a tax period an amount of UK VAT due for the period (“the disclosed amount”),
(b) the disclosure is made in a later tax period, and
(c) some or all of the disclosed amount is not in fact VAT due.
Increase or decrease in consideration for a supply
33 (1) This paragraph applies where—
(a) a person makes a non-UK return for a tax period (“the affected tax period”) relating (wholly or partly) to a UK supply, and
(b) after the return has been made the amount of the consideration for the UK supply increases or decreases.
(2) The person must, in the tax period in which the increase or decrease is accounted for in the person's business accounts—
(a) amend the non-UK return to take account of the increase or decrease, or
(b) (if the period during which the person is entitled under Article 61 of the Implementing Regulation to amend the non-UK return has expired) notify the Commissioners of the adjustment needed to the figures in the non-UK return because of the increase or decrease.
(3) Where the change to which an amendment or notice under sub-paragraph (2) relates is an increase in the consideration for a UK supply, the person must pay to the tax authorities for the administering member State (in accordance with Article 62 of the Implementing Regulation) or, in a case falling within sub-paragraph (2)(b), the Commissioners, the difference between—
(a) the amount of VAT that was chargeable on the supply before the increase in consideration, and
(b) the amount of VAT that is chargeable in respect of the whole of the increased consideration for the supply.
(4) Where the change to which an amendment or notice under sub-paragraph (2) relates is a decrease in the consideration for a UK supply, the amendment or notice has effect as a claim; and where a claim is made the Commissioners must repay any VAT paid by the person that would not have been VAT due from the person had the consideration for the supply always been the decreased amount.
(5) The Commissioners may by regulations specify—
(a) the latest time by which, and the form and manner in which, a claim or other notice under sub-paragraph (2)(b) must be given;
(b) the latest time by which, and the form in which, a payment under sub-paragraph (3) must be made in a case within sub-paragraph (2)(b).
(6) A payment made under sub-paragraph (3) in a case within sub-paragraph (2)(a) must be made before the end of the tax period referred to in sub-paragraph (2).
(7) In this paragraph “UK supply” means a scheme supply that is treated as made in the United Kingdom.
Bad debts
34 Where a participant in a non-UK scheme—
(a) has submitted a non-UK return to the tax authorities for the administering member State, and
(b) amends the return to take account of the writing-off as a bad debt of the whole or part of the consideration for a scheme supply that is treated as made in the United Kingdom,
the amending of the return may be treated as the making of a claim to the Commissioners for the purposes of section 36(2) (bad debts: claim for refund of VAT).
Penalties for errors: disclosure
35 Where a person corrects a non-UK return in a way that constitutes telling the tax authorities for the administering member State about—
(a) an inaccuracy in the return,
(b) a supply of false information, or
(c) a withholding of information,
the person is regarded as telling HMRC about that for the purposes of paragraph 9 of Schedule 24 to the Finance Act 2007.
Set-offs
36 Where a participant in a non-UK scheme is liable to pay UK VAT to the tax authorities for the administering member State in accordance with the scheme, the UK VAT is regarded for the purposes of section 130(6) of the Finance Act 2008 (set-off) as payable to the Commissioners.
PART 6 Appeals
37 (1) An appeal lies to the tribunal with respect to any of the following—
(a) a refusal to register a person under the OSS scheme;
(b) the cancellation of the registration of any person under the OSS scheme;
(c) a refusal to make a repayment under paragraph 31 (overpayments), or a decision by the Commissioners as to the amount of a repayment due under that provision;
(d) a refusal to make a repayment under paragraph 33(4) (decrease in consideration);
(e) any liability to a surcharge under paragraph 28 (default surcharge).
(2) Part 5 of this Act (reviews and appeals), and any order or regulations under that Part, have effect as if an appeal under this paragraph were an appeal which lies to the tribunal under section 83(1) (but not under any particular paragraph of that subsection).
(3) Where the Commissioners have made an assessment under section 73 in reliance on paragraph 22 or 23—
(a) section 83(1)(p)(i): (appeals against assessments under section 73(1) etc) applies as if the relevant non-UK return were a return under this Act, and
(b) the references in section 84(3) and (5) to the matters mentioned in section 83(1)(p) are to be read accordingly.
PART 7 Interpretation
38 (1) In this Schedule—
“administering member State”, in relation to a non-UK scheme, has the meaning given by paragraph 16(2);
“the Implementing Regulation” means Council Implementing Regulation (EU) No 282/2011;
“non-UK return” means a return required to be made, for a tax period, under a non-UK scheme;
“non-UK scheme” has the meaning given by paragraph 16(1);
“OSS scheme” has the meaning given by paragraph 1(a);
“OSS scheme return” has the meaning given by paragraph 11(1);
“participant”, in relation to a non-UK scheme, means a person who is identified under that scheme;
“relevant non-UK return” has the meaning given by paragraph 22(3);
“reporting period” is to be read in accordance with paragraph 11(2);
“scheme supply” has the meaning given by paragraph 2;
“tax period” means a period for which a person is required to make a return under a non-UK scheme;
“UK VAT” means VAT in respect of scheme supplies treated as made in the United Kingdom;
“the VAT Directive” means Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
(2) In relation to a non-UK scheme (or a non-UK return), references in this Schedule to “the tax authorities” are to the tax authorities for the member State under whose law the scheme is established.
(3) References in this Schedule to scheme supplies being “treated as made” in the United Kingdom are to their being treated as made in the United Kingdom by paragraph 29(1) of Schedule 9ZB.
SCHEDULE 9ZE
Distance selling of goods imported to Northern Ireland: special accounting scheme
Section 40A
PART 1 Introduction
Overview
1 In this Schedule—
(a) Parts 2 and 3 establish a special accounting scheme (the Import One Stop Shop scheme, referred to in this Schedule as the “IOSS scheme”) which may be used by certain persons making supplies of goods to Northern Ireland or into the European Union from countries or territories other than Northern Ireland or member States;
(b) Part 4 makes provision about the collection of UK VAT on such supplies;
(c) Part 5 makes provision about IOSS representatives;
(d) Part 6 makes supplementary provision;
(e) Part 7 is about appeals;
(f) Part 8 contains definitions.
Qualifying supplies of goods
2 (1) For the purposes of this Schedule, a supply of goods is a “qualifying supply of goods” if—
(a) the supply is a distance sale of goods imported from third territories or third countries for the purposes of the second paragraph of Article 14(4) of the VAT Directive (as modified by sub-paragraph (2)),
(b) the intrinsic value of the consignment of which the goods are part is not more than £135, and
(c) the consignment of which the goods are part does not contain goods of a class or description subject to any duty of excise, whether or not those goods are in fact chargeable with that duty, and whether or not that duty has been paid on those goods.
(2) For the purposes of sub-paragraph (1)(a), the second paragraph of Article 14(4) of the VAT Directive is to be read as if after “Member State” there were inserted “ or Northern Ireland ”.
PART 2 Registration
The register
3 Persons registered under the IOSS scheme are to be registered in a single register kept by the Commissioners for the purposes of the scheme.
Persons who may be registered
4 A person (“P”) may register under the IOSS scheme if—
(a) P makes or intends to make one or more qualifying supplies of goods in the course of a business that P carries on,
(b) one of the following applies—
(i) P is established in Northern Ireland,
(ii) P is established in a country or territory with which the EU has concluded an agreement making provision corresponding or similar to that contained in Council Directive 2010/24/EU or Regulation (EU) No 904/2010, or
(iii) P is represented by an IOSS representative established in Northern Ireland (see Part 5),
(c) P is not identified under any provision of the law of a member State which implements Section 4 of Chapter 6 of Title XII of the VAT Directive, and
(d) P is not barred from registering by—
(i) the second paragraph of Article 369l(3) of the VAT Directive, or
(ii) any provision of the Implementing Regulation.
Becoming registered
5 (1) The Commissioners must register a person (“P”) under the IOSS scheme if P—
(a) satisfies them that the requirements for registration are met (see paragraph 4), and
(b) makes a request in accordance with this paragraph (a “registration request”).
(2) A registration request must state—
(a) P's name and postal and electronic addresses (including any websites);
(b) the number (if any) P has been allocated by the tax authorities in the country in which P belongs;
(c) the date on which P began, or intends to begin, making qualifying supplies of goods.
(3) A registration request must include a statement—
(a) that P is not established in a member State, or
(b) that P is so established, but is represented by an IOSS representative established in Northern Ireland.
(4) A registration request must—
(a) contain any further information, and any declaration about its contents, that the Commissioners may by regulations require, and
(b) be made by such electronic means, and in such manner, as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Date on which registration takes effect
6 Where a person (“P”) is registered under this Schedule, P's registration takes effect on the date determined in accordance with Article 57d of the Implementing Regulation.
Further provision about registration
7 (1) Where the Commissioners register a person under the IOSS scheme who is an IOSS representative the Commissioners must also register under the IOSS scheme each person represented by the representative.
(2) The Commissioners may, by means of a notice published by them, make further provision about registration under this Schedule.
Notification of changes etc
8 A notification under Article 57h of the Implementing Regulation (notification of certain changes) must be given by such electronic means, and in such manner, as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations prescribe.
Cancellation of registration
9 The Commissioners must cancel the registration of a person (“P”) under the IOSS scheme if—
(a) P has ceased to make, or no longer intends to make, qualifying supplies of goods and has notified the Commissioners of that fact,
(b) the Commissioners otherwise determine that P has ceased to make, or no longer intends to make, such supplies,
(c) P has ceased to satisfy any of the other conditions for registration in paragraph 4 and has notified the Commissioners of that fact,
(d) the Commissioners otherwise determine that P has ceased to satisfy any of those conditions,
(e) the Commissioners determine that P has persistently failed to comply with P's obligations in or under this Schedule or the Implementing Regulation, or
(f) any of the circumstances described in Article 369r(3)(a) to (e) of the VAT Directive occur in relation to P.
PART 3 Liability, returns, payment etc
Liability to pay VAT to Commissioners
10 (1) This paragraph applies where a person (“P”)—
(a) makes a qualifying supply of goods, and
(b) is registered under the IOSS scheme when the supply is made.
(2) P is liable to pay to the Commissioners the VAT on the supply under and in accordance with this Schedule.
(3) The amount of VAT which a person is liable to pay on the supply is to be determined in accordance with sub-paragraphs (4) to (6), without any deduction of VAT pursuant to Article 168 of the VAT Directive.
(4) If the supply is treated as made in the United Kingdom, the amount is the amount of VAT charged on the supply under this Act (see paragraph 34(2)) and that amount is to be regarded for the purposes of this Act as VAT charged in accordance with this Act.
(5) In a case where sub-paragraph (4) applies and—
(a) P has a business establishment, or some other fixed establishment, in the United Kingdom in relation to a business carried on by P, and
(b) P is not registered, or liable to be registered, under Schedule 1,
no VAT is chargeable on the supply under this Act.
(6) If the supply is treated as made in a member State, the amount is the amount of VAT charged on the supply in accordance with the law of that member State.
IOSS scheme returns
11 (1) A person (“P”) who is, or has been, registered under this Schedule must submit a return (an “IOSS scheme return”) to the Commissioners for each reporting period.
(2) Each month for the whole or any part of which P is registered under this Schedule is a “reporting period” for P.
IOSS scheme returns: further requirements
12 (1) An IOSS scheme return is to be made out in sterling.
(2) Any conversion from one currency into another for the purposes of sub-paragraph (1) is to be made using the exchange rates published by the European Central Bank—
(a) for the last day of the reporting period to which the IOSS scheme return relates, or
(b) if no such rate is published for that day, for the next day for which such a rate is published.
(3) An IOSS scheme return—
(a) must be submitted to the Commissioners before the end of the calendar month following the month in which the last day of the reporting period to which it relates falls;
(b) must be submitted by such electronic means, and in such form and manner, as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Payment
13 (1) A person who is required to submit an IOSS scheme return must pay, by the deadline for submitting the return, the amounts required in accordance with paragraph 10 in respect of qualifying supplies of goods made in the reporting period to which the return relates.
(2) A payment under this paragraph must be made in such manner as the Commissioners may direct (by means of a notice published by them or otherwise) or may by regulations require.
Availability of records
14 (1) A person (“P”) who is registered under the IOSS scheme must make available to the Commissioners, on request, any obligatory records P is keeping of transactions entered into by P while registered under the scheme.
(2) The records must be made available by electronic means.
(3) In sub-paragraph (1) “obligatory records” means records kept in accordance with an obligation imposed in accordance with Article 369x of the VAT Directive.
Amounts required to be paid to member States
15 Section 44 of the Commissioners for Revenue and Customs Act 2005 (requirement to pay receipts into the Consolidated Fund) does not apply to any money received for or on account of VAT that is required to be paid to a member State under Article 46 of Council Regulation (EU) No 904/2010.
PART 4 Collection etc of UK VAT
Assessments: general modifications of section 73
16 (1) For the purposes of this Schedule, section 73 (failure to make returns etc) is to be read as if—
(a) the reference in subsection (1) of that section to returns required under this Act included relevant special scheme returns, and
(b) references in that section to a prescribed accounting period included a tax period.
(2) See also the modifications in paragraph 17.
(3) In this Schedule “relevant special scheme return” means a special scheme return (see paragraph 43(1)) that is required to be made (wholly or partly) in respect of qualifying supplies of goods that are treated as made in the United Kingdom.
Assessments in connection with increase in consideration: modifications
17 (1) Sub-paragraphs (2) to (4) make modifications of sections 73 and 76 which—
(a) have effect for the purposes of this Schedule, and
(b) are in addition to any other modifications of those sections made by this Schedule.
(2) Section 73 has effect as if, after subsection (3), there were inserted—
(3A) Where a person has failed to make an amendment or notification that the person is required to make under paragraph 27 of Schedule 9ZE in respect of an increase in the consideration for a UK supply (as defined in paragraph 27(7)), the Commissioners may assess the amount of VAT due from the person as a result of the increase to the best of their judgement and notify it to the person.
(3B) An assessment under subsection (3A)—
(a) is of VAT due for the tax period mentioned in paragraph 27(1)(a) of Schedule 9ZE;
(b) must be made within the time limits provided for in section 77, and must not be made after the end of the period of—
(i) 2 years after the end of the tax period referred to in paragraph 27(1)(a), or if later,
(ii) one year after evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.
(3C) Subject to section 77, where further evidence such as is mentioned in subsection (3B)(b)(ii) comes to the Commissioners' knowledge after they have made an assessment under subsection (3A), another assessment may be made under that subsection, in addition to any earlier assessment.
(3) The reference in section 73(9) to subsection (1) of that section is taken to include a reference to section 73(3A) (treated as inserted by sub-paragraph (2)).
(4) Section 76 (assessment of amounts due by way of penalty, interest or surcharge is to be read as if the reference in subsection (5) of that section to section 73(1) included a reference to section 73(3A) (treated as inserted by sub-paragraph (2)).
Assessments: consequential modifications
18 References to prescribed accounting periods in the following provisions are to be read in accordance with the modifications made by paragraphs 16 and 17—
(a) section 74 (interest on VAT recovered or recoverable by assessment);
(b) section 76 (assessment of amounts due by way of penalty, interest or surcharge);
(c) section 77 (assessments: time limits etc).
Deemed amendments of relevant non-UK returns
19 (1) Where a person who has made a relevant special scheme return makes a claim under paragraph 25(7)(b) (overpayments) in relation to an error in the return, the relevant special scheme return is taken for the purposes of this Act to have been amended by the information in the claim.
(2) Where a person who has made a relevant special scheme return gives the Commissioners a notice relating to the return under paragraph 27(2)(b) (increase or decrease in consideration), the relevant special scheme return is taken for the purposes of this Act to have been amended by that information.
(3) Where (in a case not falling within sub-paragraph (1) or (2)) a person who has made a relevant special scheme return notifies the Commissioners (after the expiry of the period during which the special scheme return may be amended under Article 61 of the Implementing Regulation) of a change that needs to be made to the return to correct an error, or rectify an omission, in it, the relevant special scheme return is taken for the purposes of this Act to have been amended by that information.
Interest on VAT: “reckonable date”
20 (1) Sub-paragraph (2) states the “reckonable date” for the purposes of section 74(1) and (2) for any case where an amount carrying interest under that section—
(a) is an amount assessed under section 73(2) (refunds etc) in reliance on paragraph 16, or that could have been so assessed, and
(b) was correctly paid or credited to the person, but would not have been paid or credited to the person had the facts been as they later turn out to be.
(2) The “reckonable date” is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).
(3) Sub-paragraph (4) states the “reckonable date” for any other case where an amount carrying interest under section 74 is assessed under section 74(1) or (2) in reliance on paragraph 16, or could have been so assessed.
(4) The “reckonable date” is taken to be the latest date by which a non- UK return was required to be made for the tax period to which the amount assessed relates.
(5) Where section 74(1) or (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount assessed under section 73(3A) (treated as inserted by paragraph 17(2)), the “reckonable date” for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 27(2).
Default surcharge: notice of special surcharge period
21 (1) A person who is required to make a relevant special scheme return for a tax period is regarded for the purposes of this paragraph and paragraph 22 as being in default in respect of that period if either—
(a) conditions 1A and 2A are met, or
(b) conditions 1B and 2B are met,
(but see also paragraph 23).
(2) The conditions are as follows—
(a) condition 1A is that the tax authorities for the administering member State have not received the return by the deadline for submitting it;
(b) condition 2A is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the obligation to submit the return;
(c) condition 1B is that, by the deadline for submitting the return, those tax authorities have received the return but have not received the amount of VAT shown on the return as payable by the person in respect of the tax period;
(d) condition 2B is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the VAT outstanding.
(3) The Commissioners may serve on a person who is in default in respect of a tax period a notice (a “special surcharge liability notice”) specifying a period—
(a) ending on the first anniversary of the last day of that tax period, and
(b) beginning on the date of the notice.
(4) A period specified under sub-paragraph (3) is a “special surcharge period”.
(5) If a special surcharge liability notice is served in respect of a tax period which ends on or before the day on which an existing special surcharge period ends, the special surcharge period specified in that notice must be expressed as a continuation of the existing special surcharge period (so that the existing period and its extension are regarded as a single special surcharge period).
Further default after service of notice
22 (1) If a person on whom a special surcharge liability notice has been served—
(a) is in default in respect of a tax period ending within the special surcharge period specified in (or extended by) that notice, and
(b) has outstanding special scheme VAT for that tax period,
the person is to be liable to a surcharge of the amount given by sub-paragraph (2).
(2) The surcharge is equal to whichever is the greater of—
(a) £30, and
(b) the specified percentage of the person's outstanding special scheme VAT for the tax period.
(3) The specified percentage depends on whether the tax period is the first, second or third etc period in respect of which the person is in default and has outstanding special scheme VAT, and is—
(a) for the first such tax period, 2%;
(b) for the second such tax period, 5%;
(c) for the third such tax period, 10%;
(d) for each such tax period after the third, 15%.
(4) “Special scheme VAT”, in relation to a person, means VAT that the person is liable to pay to the tax authorities for the administering member State under a special scheme in respect of qualifying supplies of goods treated as made in the United Kingdom.
(5) A person has “outstanding special scheme VAT” for a tax period if some or all of the special scheme VAT for which the person is liable in respect of that period has not been paid by the deadline for the person to submit a special scheme return for that period (and the amount unpaid is referred to in sub-paragraph (2)(b) as “the person's outstanding special scheme VAT” for the tax period).
Default surcharge: exceptions for reasonable excuse etc
23 (1) A person who would otherwise have been liable to a surcharge under paragraph 22(1) is not to be liable to the surcharge if the person satisfies the Commissioners or, on appeal, the tribunal that, in the case of a default which is material to the surcharge—
(a) the special scheme return or, as the case may be, the VAT shown on that return, was despatched at such a time and in such manner that it was reasonable to expect that it would be received by the tax authorities for the administering member State within the appropriate time limit, or
(b) there is a reasonable excuse for the return or the VAT not having been so despatched.
(2) Where sub-paragraph (1) applies to a person—
(a) the person is treated as not having been in default in respect of the tax period in question, and
(b) accordingly, any special surcharge liability notice the service of which depended on that default is regarded as not having been served.
(3) A default is “material” to a surcharge if—
(a) it is the default which gives rise to the surcharge, under paragraph 22(1), or
(b) it is a default which was taken into account in the service of the special surcharge liability notice on which the surcharge depends and the person concerned has not previously been liable to a surcharge in respect of a tax period ending within the special surcharge period specified in or extended by that notice.
(4) A default is left out of account for the purposes of paragraphs 21(3) and 22(1) if—
(a) the conduct by virtue of which the person is in default is also conduct falling within section 69(1) (breaches of regulatory provisions), and
(b) by reason of that conduct the person concerned is assessed to a penalty under that section.
(5) If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a tax period specified in the direction is to be left out of account for the purposes of paragraphs 21(3) and 22(1).
(6) Section 71(1) (meaning of “reasonable excuse”) applies for the purposes of this paragraph as it applies for the purposes of sections 59 to 70.
Interest in certain cases of official error
24 (1) Section 78 (interest in certain cases of official error) applies as follows in relation to a case where, due to an error on the part of the Commissioners—
(a) a person has accounted under a special scheme for an amount by way of UK VAT that was not UK VAT due from the person, and as a result the Commissioners are liable under paragraph 25 to pay (or repay) an amount to the person, or
(b) (in a case not falling within paragraph (a)), a person has paid, in accordance with an obligation under a special scheme, an amount by way of UK VAT that was not UK VAT due from the person and which the Commissioners are in consequence liable to repay to the person.
(2) Section 78 has effect as if the condition in section 78(1)(a) were met in relation to that person.
(3) In the application of section 78 as a result of this paragraph, section 78(12)(b) is read as providing that any reference in that section to a return is to a return required to be made under a non-UK special scheme.
(4) In section 78, as it applies as a result of this section, “output tax” has the meaning that expression would have if the reference in section 24(2) to a “taxable person” were to a “person”.
Overpayments
25 (1) A person may make a claim if the person—
(a) has made a special scheme return for a tax period relating wholly or partly to qualifying supplies of goods treated as made in the United Kingdom,
(b) has accounted to the tax authorities for the administering member State for VAT in respect of those supplies, and
(c) in doing so has brought into account as UK VAT due to those authorities an amount (“the overpaid amount”) that was not UK VAT due to them.
(2) A person may make a claim if the person has, as a participant in a special scheme, paid (to the tax authorities for the administering member State or to the Commissioners) an amount by way of UK VAT that was not UK VAT due (“the overpaid amount”), otherwise than in the circumstances mentioned in sub-paragraph (1)(c).
(3) A person who is or has been a participant in a special scheme may make a claim if the Commissioners—
(a) have assessed the person to VAT for a tax period, and
(b) in doing so, have brought into account as VAT an amount (“the amount not due”) that was not VAT due.
(4) Where a person makes a claim under sub-paragraph (1) or (2), the Commissioners must repay the overpaid amount to the person.
(5) Where a person makes a claim under sub-paragraph (3), the Commissioners must credit the person with the amount not due.
(6) Where—
(a) as a result of a claim under sub-paragraph (3) an amount is to be credited to a person, and
(b) after setting any sums against that amount under or by virtue of this Act, some or all of the amount remains to the person's credit,
the Commissioners must pay (or repay) to the person so much of the amount as remains to the person's credit.
(7) The reference in sub-paragraph (1) to a claim is to a claim made—
(a) by correcting, in accordance with Article 61 of the Implementing Regulation, the error in the special scheme return mentioned in sub-paragraph (1)(a), or
(b) (after the expiry of the period during which the special scheme return may be amended under Article 61) to the Commissioners.
(8) Sub-paragraphs (1) and (2) do not require any amount to be repaid except to the extent that is required by Article 63 of the Implementing Regulation.
Overpayments: supplementary
26 (1) In section 80 (credit for, or repayment of, overstated or overpaid VAT), subsections (3) to (3C) (unjust enrichment) and (4A), (4C) and (6) (recovery by assessment of amounts wrongly credited) have effect as if—
(a) a claim—
(i) under paragraph 25(1) were a claim under section 80(1),
(ii) under paragraph 25(2) were a claim under section 80(1B), and
(iii) under paragraph 25(3) were a claim under section 80(1A);
(b) references in that section to a prescribed accounting period included a tax period.
(2) In section 80(3) to (3C), (4A), (4C) and (6), as modified by sub-paragraph (1), references to the crediting of amounts are to be read as including the payment of amounts.
(3) The Commissioners are not liable to repay the overpaid amount on a claim made—
(a) under paragraph 25(2), or
(b) as mentioned in paragraph 25(7)(b),
if the claim is made more than 4 years after the relevant date.
(4) On a claim made under paragraph 25(3), the Commissioners are not liable to credit the amount not due if the claim is made more than 4 years after the relevant date.
(5) The “relevant date” is—
(a) in the case of a claim under paragraph 25(1), the end of the tax period mentioned in paragraph 25(1)(a), except in the case of a claim resulting from an incorrect disclosure;
(b) in the case of a claim under paragraph 25(1) resulting from an incorrect disclosure, the end of the tax period in which the disclosure was made;
(c) in the case of a claim under paragraph 25(2), the date on which the payment was made;
(d) in the case of a claim under paragraph 25(3), the end of the quarter in which the assessment was made.
(6) A person makes an “incorrect disclosure” where—
(a) the person discloses to the tax authorities in question (whether the Commissioners or the tax authorities for the administering member State) that the person has not brought into account for a tax period an amount of UK VAT due for the period (“the disclosed amount”),
(b) the disclosure is made in a later tax period, and
(c) some or all of the disclosed amount is not in fact VAT due.
Increase or decrease in consideration for a supply
27 (1) This paragraph applies where—
(a) a person makes a special scheme return for a tax period (“the affected tax period”) relating (wholly or partly) to a UK supply, and
(b) after the return has been made the amount of the consideration for the UK supply increases or decreases.
(2) The person must, in the tax period in which the increase or decrease is accounted for in the person's business accounts—
(a) amend the special scheme return to take account of the increase or decrease, or
(b) (if the period during which the person is entitled under Article 61 of the Implementing Regulation to amend the special scheme return has expired) notify the Commissioners of the adjustment needed to the figures in the special scheme return because of the increase or decrease.
(3) Where the change to which an amendment or notice under sub-paragraph (2) relates is an increase in the consideration for a UK supply, the person must pay to the tax authorities for the administering member State (in accordance with Article 62 of the Implementing Regulation) or, in a case falling within sub-paragraph (2)(b), the Commissioners, the difference between—
(a) the amount of VAT that was chargeable on the supply before the increase in consideration, and
(b) the amount of VAT that is chargeable in respect of the whole of the increased consideration for the supply.
(4) Where the change to which an amendment or notice under sub-paragraph (2) relates is a decrease in the consideration for a UK supply, the amendment or notice has effect as a claim; and where a claim is made the Commissioners must repay any VAT paid by the person that would not have been VAT due from the person had the consideration for the supply always been the decreased amount.
(5) The Commissioners may by regulations specify—
(a) the latest time by which, and the form and manner in which, a claim or other notice under sub-paragraph (2)(b) must be given;
(b) the latest time by which, and the form in which, a payment under sub-paragraph (3) must be made in a case within sub-paragraph (2)(b).
(6) A payment made under sub-paragraph (3) in a case within sub-paragraph (2)(a) must be made before the end of the tax period referred to in sub-paragraph (2).
(7) In this paragraph “UK supply” means a qualifying supply of goods that is treated as made in the United Kingdom.
Bad debts
28 Where a participant in a special scheme—
(a) has submitted a special scheme return to the tax authorities for the administering member State, and
(b) amends the return to take account of the writing-off as a bad debt of the whole or part of the consideration for a qualifying supply of goods that is treated as made in the United Kingdom,
the amending of the return may be treated as the making of a claim to the Commissioners for the purposes of section 36(2) (bad debts: claim for refund of VAT).
Penalties for errors: disclosure
29 Where a person corrects a special scheme return in a way that constitutes telling the tax authorities for the administering member State about—
(a) an inaccuracy in the return,
(b) a supply of false information, or
(c) a withholding of information,
the person is regarded as telling HMRC about that for the purposes of paragraph 9 of Schedule 24 to the Finance Act 2007 (reductions for disclosure).
Set-offs
30 Where a participant in a special scheme is liable to pay UK VAT to the tax authorities for the administering member State in accordance with the scheme, the UK VAT is regarded for the purposes of section 130(6) of the Finance Act 2008 (set-off) as payable to the Commissioners.
PART 5 IOSS representatives
Eligibility and representation
31 (1) A person may register as an IOSS representative for the purposes of the IOSS scheme if the person is established in Northern Ireland.
(2) A person may not be represented by more than one IOSS representative at a time.
Register
32 (1) Before a person (“R”) can be registered as an IOSS representative, R must provide to the Commissioners the information required by Article 369p(2) and (3) of the VAT Directive.
(2) The Commissioners may by regulations or by means of a notice published by them make further provision about the registration of a person as an IOSS representative.
(3) The provision that may be made under sub-paragraph (2) includes provision—
(a) requiring the registration of the names of IOSS representatives against the names of the person (or persons) they represent in the register kept for the purposes of this Schedule;
(b) imposing requirements to be met before a person may be registered in that register as an IOSS representative or before such registration may be cancelled;
(c) making it the duty of an IOSS representative, for the purposes of registration, to notify the Commissioners, within such period as may be prescribed, that the representative's appointment has taken effect or has ceased to have effect;
(d) allowing the Commissioners to refuse to register a person as an IOSS representative, or to cancel a person's registration as an IOSS representative, in such circumstances as may be specified in the regulations;
(e) as to the manner and circumstances in which a person is to be appointed, or is to be treated as having ceased to be, an IOSS representative;
(f) about the making or deletion of entries relating to IOSS representatives in the register kept for the purposes of this Schedule.
Duties and obligations
33 Where a person registered under the IOSS scheme (“P”) is represented by an IOSS representative (“R”), R—
(a) may act on P's behalf in relation to the IOSS scheme,
(b) must secure (where appropriate by acting on P's behalf) P's compliance with and discharge of the obligations and liabilities to which P is subject by virtue of or under this Schedule, and
(c) is personally liable in respect of—
(i) any failure to secure P's compliance with or discharge of any such obligation or liability, and
(ii) anything done for purposes connected with acting on P's behalf,
as if the obligations and liabilities imposed on P were imposed jointly and severally on R and P.
PART 6 Supplementary provision
Registration under this Act
34 (1) Notwithstanding any provision in this Act to the contrary (apart from paragraph 1(1A) of Schedule 1 as it has effect in accordance with paragraph 7 of Schedule 9ZF), a participant in a special scheme is not required to be registered under this Act by virtue of making qualifying supplies of goods.
(2) Where a participant in a special scheme (“the scheme participant”) makes relevant supplies, it is to be assumed for all purposes of this Act relating to the determination of—
(a) whether or not VAT is chargeable under this Act on those supplies,
(b) how much VAT is chargeable under this Act on those supplies, and
(c) any other matter that the Commissioners may specify by regulations,
that the scheme participant is registered under this Act.
(3) Supplies of scheme services made by the scheme participant are “relevant supplies” if—
(a) the value of the supplies must be accounted for in a special scheme return, and
(b) the supplies are treated as made in the United Kingdom.
(4) References in this Schedule to a person being registered under this Act do not include a reference to that person being registered under the IOSS scheme.
De-registration
35 Where a person (“P”) who is registered under Schedule 1 or 1A solely by virtue of the fact that P makes or intends to make qualifying supplies of goods satisfies the Commissioners that P intends to apply for—
(a) registration under this Schedule, or
(b) identification under any provision of the law of a member State which implements Section 4 of Chapter 6 of Title XII of the VAT Directive,
the Commissioners may, if P so requests, cancel P's registration under Schedule 1 or, as the case may be, 1A with effect from the day on which the request is made or from such later date as may be agreed between P and the Commissioners.
Scheme participants who are also registered under this Act
36 (1) A person who—
(a) is a participant in a special scheme, and
(b) is also registered, or required to be registered, under this Act,
is not required to discharge any obligation placed on the person as a taxable person, so far as the obligation relates to relevant supplies unless the obligation is an input tax obligation.
(2) The reference in sub-paragraph (1) to an obligation placed on the person as a taxable person is to an obligation—
(a) to which the person is subject under or by virtue of this Act, and
(b) to which the person would not be subject if the person were neither registered nor required to be registered under this Act.
(3) A supply made by a participant in a special scheme is a “relevant supply” if—
(a) the value of the supply must be accounted for in a return required to be made by the participant under the special scheme, and
(b) the supply is treated as made in the United Kingdom.
(4) In section 25(2) (deduction of input tax from output tax by a taxable person) the reference to output tax that is due from the taxable person does not include any VAT that the taxable person is liable under a special scheme to pay to the tax authorities for the administering member State.
(5) In this paragraph, “input tax obligation” means an obligation imposed on a taxable person relating to a claim to deduct under section 25(2) or to the payment of a VAT credit.
No import VAT chargeable on qualifying supplies of goods
37 No charge to VAT occurs on the importation of goods into the United Kingdom as a result of their entry into Northern Ireland, or their removal to Northern Ireland from Great Britain, where—
(a) that importation is in the course of a supply of those goods which is a qualifying supply of goods, and
(b) the person making the supply is registered under the IOSS scheme.
Time and place of supply of goods
38 (1) Sub-paragraphs (3) and (4) apply (instead of sections 6 and 7) for the purposes of determining when and where a supply of goods within sub-paragraph (2) takes place.
(2) A supply of goods is within this sub-paragraph where—
(a) the supply of those goods is a qualifying supply of goods,
(b) the supply is not facilitated by an online marketplace,
(c) the person making the supply is registered under the IOSS scheme, and
(d) the goods are supplied to a person in Northern Ireland or a member State.
(3) The supply of goods is to be treated as taking place at the time when payment for the goods has been accepted, within the meaning of Article 61b of the Implementing Regulation.
(4) The goods are to be treated as supplied—
(a) in the case of goods supplied to a person in Northern Ireland, in the United Kingdom;
(b) in the case of goods supplied to a person in a member State, in that member State.
Place of supply of goods: supplies facilitated by online marketplaces
39 (1) Sub-paragraph (2) applies (instead of section 6) to a supply of goods deemed to have taken place by section 5B(2)(a) or (b) as it has effect in accordance with paragraph 1B of Schedule 9ZC.
(2) The supply of goods is to be treated as taking place at the time when payment for the goods has been accepted within the meaning of Article 41a of the Implementing Regulation.
(3) Sub-paragraph (4) applies (instead of section 7) to a supply of goods deemed to have taken place by section 5B(2)(a) where the operator of the online marketplace that facilitated the supply of goods from P to R (within the meaning of that section) is registered under the IOSS scheme.
(4) The supply of goods is to be treated as taking place outside the United Kingdom.
(5) Sub-paragraph (6) applies (instead of section 7) to a supply of goods deemed to have taken place by section 5B(2)(b) where the operator of the online marketplace that facilitated the supply of goods from P to R (within the meaning of that section) is registered under the IOSS scheme.
(6) The supply of goods is to be treated as taking place in the United Kingdom.
VAT representatives
40 Section 48(1ZA) (VAT representatives) does not permit the Commissioners to direct a participant in a special scheme to appoint a VAT representative.
Refund of UK VAT
41 (1) Part 21 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) has effect in relation to a person registered under the IOSS scheme as it applies to a trader (within the meaning of those Regulations) subject to the following modifications.
(2) Regulation 186 (repayments of VAT) has effect as if after “imported by him into the United Kingdom” there were inserted “ by virtue of their entry into Northern Ireland ”.
(3) That Part has effect as if regulations 187, 188(1) and 188(2)(b) were omitted (VAT representatives and persons to whom Part 21 applies).
PART 7 Appeals
Appeals
42 (1) An appeal lies to the tribunal with respect to any of the following—
(a) a refusal to register a person under the IOSS scheme;
(b) the cancellation of the registration of any person under the IOSS scheme;
(c) a refusal to make a repayment under paragraph 25 (overpayments), or a decision by the Commissioners as to the amount of a repayment due under that provision;
(d) a refusal to make a repayment under paragraph 27(4) (decrease in consideration);
(e) any liability to a surcharge under paragraph 22 (default surcharge).
(2) Part 5 of this Act (reviews and appeals), and any order or regulations under that Part, have effect as if an appeal under this paragraph were an appeal which lies to the tribunal under section 83(1) (but not under any particular paragraph of that subsection).
(3) Where the Commissioners have made an assessment under section 73 in reliance on paragraph 16 or 17—
(a) section 83(1)(p)(i) (appeals against assessments under section 73(1) etc) applies as if the special scheme return were a return under this Act, and
(b) the references in section 84(3) and (5) to the matters mentioned in section 83(1)(p) are to be read accordingly.
PART 8 Interpretation
Interpretation
43 (1) In this Schedule—
“administering member State”, in relation to a special scheme, means the member State under whose law the scheme is established;
“the Implementing Regulation” means Council Implementing Regulation (EU) No 282/2011;
“IOSS scheme” has the meaning given by paragraph 1(a);
“IOSS scheme return” has the meaning given by paragraph 11(1);
“participant in a special scheme” means a person who—
is registered under the IOSS scheme, or
is identified under any provision of the law of a member State which implements Section 4 of Chapter 6 of Title XII of the VAT Directive;
“qualifying supply of goods” has the meaning given by paragraph 2;
“registration request” is to be construed in accordance with paragraph 5(1)(b);
“relevant special scheme return” has the meaning given by paragraph 16(3);
“reporting period” is to be read in accordance with paragraph 11(2);
“special scheme” means—
the accounting scheme under this Schedule, or
any other scheme, under the law of a member State, implementing Section 4 of Chapter 6 of Title XII of the VAT Directive;
“special scheme return” means—
an IOSS scheme return, or
a value added tax return submitted to the tax authorities of a member State;
“tax period” means—
a reporting period (under the accounting scheme under this Schedule), or
any other period for which a person is required to make a return under a special scheme;
“UK VAT” means VAT which a person is liable to pay (whether in the United Kingdom or a member State) in respect of qualifying supplies treated as made in the United Kingdom at a time when the person is or was a participant in a special scheme;
“value added tax return”, in relation to a member State, means any value added tax return required to be submitted under any provision of the law of that member State which implements Article 369s of the VAT Directive;
“the VAT Directive” means Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
(2) References in this Schedule to qualifying supplies of goods being “treated as made”—
(a) in the United Kingdom are to their being treated as made in the United Kingdom by paragraph 38 or 39;
(b) in a member State are to their being treated as made in that member State by virtue of any provision of the law of that member State which gives effect to Article 33(c) of the VAT Directive.
SCHEDULE 9ZF
Modifications etc in connection with Schedules 9ZD and 9ZE
Section 40A
PART 1 Modifications of this Act
1 This Act has effect subject to the following modifications.
2 In section 4 (scope of VAT on taxable supplies), after subsection (1) insert—
(1A) But a person is not a “taxable person” for the purposes of subsection (1) merely by virtue of the person being registered under Schedule 9ZD (the OSS scheme).
3 (1) Section 76 (assessment of amounts due by way of penalty, interest or surcharge) has effect subject to the following modifications.
(2) Subsection (1)(a) has effect as if for “or 59A,” there were substituted “ , section 59A, paragraph 28 of Schedule 9ZD or paragraph 22 of Schedule 9ZE, ”.
(3) That section has effect as if after subsection (3) there were inserted—
(3A) In the case of a surcharge under paragraph 28 of Schedule 9ZD or paragraph 22 of Schedule 9ZE, the assessment under this section is of an amount due in respect of “the relevant period”, that is to say, the tax period (see section 76A) in respect of which the person is in default and in respect of which the surcharge arises.
4 This Act has effect as if after section 76 there were inserted—
Section 76: cases involving special accounting schemes
76A (1) References in section 76 to a prescribed accounting period are to be read as including a tax period so far as that is necessary for the purposes of the references in section 76(1)(a) to paragraph 28 of Schedule 9ZD and paragraph 22 of Schedule 9ZE (assessment of surcharge in certain cases involving special accounting schemes).
(2) References in section 77 to a prescribed accounting period are to be read accordingly.
(3) In this section and section 76 “tax period” means a tax period as defined in paragraph 38 of Schedule 9ZD or paragraph 43 of Schedule 9ZE, as the case may be.
5 Section 80 (credit for, or repayment of, overstated or overpaid VAT) has effect as if in subsection (7), after “this section” there were inserted “ (and paragraph 31 of Schedule 9ZD and paragraph 25 of Schedule 9ZE) ”.
6 Section 84 (further provision about appeals) has effect as if in subsection (6), after “section 70” there were inserted “ or (as the case may be) paragraph 28 of Schedule 9ZD or paragraph 22 of Schedule 9ZE ”.
7 Schedule 1 (registration in respect of taxable supplies: UK establishment) has effect as if in paragraph 1 (liability to be registered), after sub-paragraph (1) there were inserted—
(1A) Where the person is UK-established and registered under Schedule 9ZE, in determining the value of a person's supplies for the purpose of sub-paragraph (1), any qualifying supply of goods (within the meaning of that Schedule) made by the person that is treated as supplied in the United Kingdom by virtue of paragraph 38 of that Schedule is to be taken into account.
8 Schedule 1A (registration in respect of taxable supplies: non-UK establishment) has effect as if after paragraph 11 there were inserted—
12 Paragraphs 8 to 11 are subject to paragraph 18 of Schedule 9ZD and paragraph 35 of Schedule 9ZE (cancellation of registration of persons seeking to be registered under the Schedule concerned).
PART 2 Modifications etc of other Acts
Finance Act 2007
9 In Schedule 24 to FA 2007, Part 1 (error in taxpayer's document) has effect as if—
(a) in the table, after the entry relating to a VAT return, statement or declaration in connection with a claim there were inserted—
VAT | Return under a special accounting scheme.
;
(b) before sub-paragraph (5) there were inserted—
(4A) In this paragraph “return under a special accounting scheme” means any of the following, so far as relating to supplies of goods treated as made in the United Kingdom—
(a) an OSS scheme return or a relevant non-UK return under Schedule 9ZD to VATA 1994 (see paragraphs 11 and 22(3) of that Schedule);
(b) a relevant special scheme return under Schedule 9ZE to VATA 1994 (see paragraphs 11 and 16(3) of that Schedule).
Finance Act 2009
10 FA 2009 has effect subject to the following modifications.
11 Section 101 (late payment interest on sums due to HMRC) has effect as if after subsection (9) there were inserted—
(10) The reference in subsection (1) to amounts payable to HMRC includes—
(a) amounts of UK VAT payable under a non-UK scheme;
(b) amounts of UK VAT payable under a special scheme;
and references in Schedule 53 to amounts due or payable to HMRC are to be read accordingly.
(11) In subsection (10)—
(a) expressions used in paragraph (a) have the same meaning as in Schedule 9ZD to VATA 1994 (the OSS scheme);
(b) expressions used in paragraph (b) have the same meaning as in Schedule 9ZE to VATA 1994 (the IOSS scheme).
12 Section 108 (suspension of penalties during currency of agreement for deferred payment) has effect as if in the table in subsection (5), in the entry relating to value added tax, in the second column, after “1994” there were inserted, “ or under paragraph 28 of Schedule 9ZD or paragraph 22 of Schedule 9ZE, to that Act ”.
Taxation (Cross-border Trade) Act 2018
13 (1) Section 54 of the Taxation (Cross-border Trade) Act 2018 (prohibition on collection of certain taxes or duties on behalf of country or territory without reciprocity) does not apply in relation to VAT collected by HMRC under Schedule 9ZD or 9ZE.
(2) But sub-paragraph (1) is not to be read as having any bearing on whether or not, in the absence of that sub-paragraph, accounting for VAT collected under those Schedules would otherwise have been authorised.
PART 3 Modifications of secondary legislation
Value Added Tax Regulations 1995
14 The Value Added Tax Regulations 1995 (S.I. 1995/2518) have effect subject to the following modifications.
15 In Part 5A (reimbursement arrangements), regulation 43A (interpretation of Part 5A) has effect as if, in the definition of “claim”, after paragraph (a) there were inserted—
(b) a claim made under paragraph 31 of Schedule 9ZD, or paragraph 25 of Schedule 9ZE, to the Act (claims which have effect for the purpose of section 80(3) of the Act as if they were section 80 claims).
16 (1) Part 19 (bad debt relief (the new scheme)) has effect subject to the following modifications.
(2) Regulation 165 (interpretation of Part 19) has effect as if—
(a) in the definition of “claim”, after “regulations 166” there were inserted “ or 166A ”;
(b) in the definition of “return”, after “regulation 25” there were inserted “but “relevant non-UK return” has the meaning given by paragraph 22(3) of Schedule 9ZD to the Act and “relevant special scheme return” has the meaning given by paragraph 16(3) of Schedule 9ZE to the Act”;
(c) at the appropriate place there were inserted—
“tax period” has the meaning given by paragraph 38 of Schedule 9ZD or paragraph 43 of Schedule 9ZE (as the case may be) to the Act
.
(3) Regulation 166 (the making of a claim to the Commissioners) has effect as if, at the beginning of paragraph (1) there were inserted “Subject to regulation 166A, and”.
(4) That Part has effect as if after regulation 166 there were inserted—
The making of a claim to the Commissioners: special accounting schemes
166AA (1) This regulation applies where the VAT on the relevant supply was accounted for on a relevant non-UK return or a relevant special scheme return.
(2) Where this regulation applies, the claimant must make the claim by—
(a) amending, in accordance with Article 61 of the Implementing Regulation, that relevant non-UK return or relevant special scheme return, or
(b) (where the period during which a person is entitled to make such an amendment has expired) notifying the Commissioners of the claim in writing in English.
(5) Regulation 168 (records required to be kept by the claimant) has effect as if after paragraph (3) there were inserted—
(4) Where regulation 166AA applies, “prescribed accounting period” in this regulation is to be read as “tax period”.
(6) Regulation 171 (repayment of a refund) has effect as if at—
(a) at the beginning of paragraph (1) there were inserted “Subject to regulation 171A,”;
(b) at the beginning of paragraph (2) there were inserted “Subject to regulation 171B,”;
(c) at the beginning of paragraph (3) there were inserted “subject to regulation 171B and,”.
(7) Those Regulations have effect as if after regulation 171 there were inserted—
Calculation of repayment where reduction in consideration: special accounting schemes
171A In a case falling within sub-paragraph (b)(iii) of regulation 171(1) where the VAT on the relevant supply was accounted for on a relevant non-UK return or a relevant special scheme return, the amount to be repaid is such an amount as is equal to the amount by which the VAT chargeable on the relevant supply is reduced.
Timing and method of repayments: special accounting schemes
171B (1) Where—
(a) the VAT on the relevant supply was accounted for on a relevant non-UK return or a relevant special scheme return, and
(b) a repayment is required by regulation 171(1),
that repayment must be made no later than twenty days after the end of the tax period in which the payment for the relevant supply is received or the reduction in consideration is accounted for in the claimant's business accounts.
(2) Where—
(a) the VAT on the relevant supply was accounted for on a relevant non-UK return or a relevant special scheme return, and
(b) a repayment is required by regulation 171(3),
that repayment must be made no later than twenty days after the end of the tax period in which the failure to comply first occurred.
(3) In either case the repayment must be made by—
(a) amending the relevant non-UK return or the relevant special scheme return for the tax period in which the VAT on the relevant supply was brought into account, or
(b) (where the relevant period has expired) sending the sum due to the Commissioners.
(4) In sub-paragraph (3)(b), the “relevant period” is the period of 3 years beginning with the day on which the relevant non-UK return or the relevant special scheme return for the tax period in which the VAT on the relevant supply was brought into account was required to be submitted.
17 (1) Part 20A of those Regulations (Repayments to EU traders incurring VAT on goods in Northern Ireland) has effect subject to the following modifications.
(2) Regulation 184D has effect as if, in the alternative version of regulation 173B(2)(c), after “Northern Ireland” there were inserted “, unless it is a supply or importation—
(a) that is a scheme supply for the purposes of Schedule 9ZD to the Act, and
(b) that is made by a person who is registered under that Schedule when the supply is made”;
(3) Regulation 184I has effect as if, in the alternative version of regulation 173L(2), after “Northern Ireland” there were inserted “, unless it is a supply—
(a) that is a scheme supply for the purposes of Schedule 9ZD of the Act, and
(b) that is made by a person who is registered under that Schedule when the supply is made”.
18 The Regulations have effect as if after regulation 213 there were inserted—
PART 26 UK OSS and IOSS special accounting schemes: registration, notification of changes and returns
Interpretation
214 (1) In this Part—
“applicant” means a person making a registration request under paragraph 5 of Schedule 9ZD or paragraph 5 of Schedule 9ZE to the Act;
“principal VAT Directive” means Council Directive 2006/112/EC of 28 November on the common system of value added tax;
“relevant place” means Northern Ireland or a member State.
(2) In regulations 215 and 216, references to a number allocated under Article 362 of the principal VAT Directive mean a number allocated at any time under that Article.
Registration requests: OSS scheme
215 A registration request under paragraph 5 of Schedule 9ZD to the Act must contain details of—
(a) any VAT identification number or tax reference number by which the applicant is identified for VAT purposes by any relevant place in accordance with Article 214, Article 239 or Article 240 of the principal VAT Directive, and the name of that relevant place,
(b) any number previously allocated to the applicant by a member State or the United Kingdom under Article 362 of the principal VAT Directive, or otherwise for the purposes of Article 369d of the principal VAT Directive, and the name of that relevant place,
(c) where the applicant has previously been identified under a non-UK scheme (within the meaning of Schedule 9ZD to the Act), the date the applicant ceased to be so identified,
(d) whether the applicant is treated as a member of a group under any of sections 43A to 43D of the Act, and
(e) the name of any relevant place in which the applicant has a fixed establishment, and the address of each such fixed establishment.
Registration requests: IOSS scheme
216 A registration request under paragraph 5 of Schedule 9ZE to the Act must contain details of—
(a) any VAT identification number or tax reference number by which the applicant is identified for VAT purposes by any relevant place in accordance with Article 214, Article 239 or Article 240 of the principal VAT Directive, and the name of that relevant place, and
(b) any number previously allocated to the applicant by a member State or the United Kingdom under Article 362 of the principal VAT Directive, or otherwise for the purposes of Article 369q of the principal VAT Directive, and the name of that relevant place.
Registration requests: declaration
217 A registration request under paragraph 5 of Schedule 9ZD or paragraph 5 of Schedule 9ZE to the Act must also contain a declaration by the applicant that the information the applicant has provided in the registration request is accurate and complete to the best of the applicant's knowledge.
Requirement to use electronic portal
218 The following communications must be made by using the electronic portal set up by the Commissioners for the purposes of implementing Sections 3 and 4 of Chapter 6 of Title XII to the principal VAT Directive—
(a) a registration request under paragraph 5 of Schedule 9ZD or paragraph 5 of Schedule 9ZE to the Act;
(b) the information required by paragraph 8 of Schedule 9ZD or paragraph 8 of Schedule 9ZE to the Act;
(c) a return required under paragraph 11 of Schedule 9ZD or paragraph 11 of Schedule 9ZE to the Act.
PART 27 Non-UK OSS and IOSS special accounting schemes: adjustments, claims and error correction
Meaning of “tax period”
219 In this Part, “tax period” has the meaning given by paragraph 38 of Schedule 9ZD or paragraph 43 of Schedule 9ZE (as the case may be) to the Act.
Amending a special accounting scheme return
219A (1) Any amendment to a return under a special accounting scheme for a tax period in which a relevant supply was brought into account must—
(a) be made in a subsequent return under a special accounting scheme of the same type,
(b) be made before the end of the period of three years beginning with the day on which the return for the tax period in which the relevant supply was brought into account was required to be submitted, and
(c) include details of—
(i) the member State in which the relevant supply was made;
(ii) the tax period to which the amendment relates;
(iii) the amount of VAT concerned.
(2) In this regulation, “return under a special accounting scheme” means any of the following, so far as relating to supplies of goods treated as made in the United Kingdom—
(a) an OSS scheme return or a relevant non-UK return under Schedule 9ZD to the Act (see paragraphs 11 and 22(3) of that Schedule);
(b) an IOSS scheme return or a relevant special scheme return under Schedule 9ZE to VATA 1994 (see paragraphs 11 and 16(3) of that Schedule).
Correction of errors on non-UK and special scheme returns more than 3 years after the date the original return was required to be made
220 (1) In this regulation “notice” means a notice given under paragraph 25(3) of Schedule 9ZD or paragraph 19(3) of Schedule 9ZE to the Act.
(2) A person giving a notice (P) must do so—
(a) no later than 4 years after the end of the tax period in respect of which the return identified in the notice was required to be made; and
(b) in writing in English.
(3) P must also provide such documentary evidence in support of the notice as P possesses.
Claims in respect of overpaid VAT
221 (1) A person making a claim under paragraph 31(1) of Schedule 9ZD, or paragraph 25(1) of Schedule 9ZE, to the Act must provide to the Commissioners at the time of making the claim a statement in writing in English explaining how the claim is calculated.
(2) A person making a claim under any other provision of paragraph 31 of Schedule 9ZD, or paragraph 25 of Schedule 9ZE to the Act must—
(a) make that claim to the Commissioners, and
(b) provide to the Commissioners at the time of making the claim a statement in writing in English explaining how the claim is calculated.
Increases or decreases in consideration occurring more than 3 years after the end of the affected tax period
222 (1) A claim or other notice made under paragraph 33(2)(b) of Schedule 9ZD or paragraph 27(2)(b) of Schedule 9ZE to the Act must be made in writing in English.
(2) A person making a payment—
(a) under paragraph 33(3) of Schedule 9ZD to the Act in a case falling within paragraph 33(2)(b) of that Schedule, or
(b) under paragraph 27(3) of Schedule 9ZE to the Act in a case falling within paragraph 27(2)(b) of that Schedule,
must do so no later than twenty days after the end of the tax period in which the increase in consideration is accounted for in the person's business accounts.
Scheme participants who are also taxable persons: disapplication of paragraph 19(1)
223 (1) Paragraph 19(1) of Schedule 9ZD to the Act is not to apply in the case of an input tax obligation.
(2) In this regulation “input tax obligation” means an obligation imposed on a taxable person relating to a claim to deduction under section 25(2) of the Act or to payment of a VAT credit.
PART 3 Omission of Part 2 of Schedule 9ZC to VATA 1994
7 In Schedule 9ZC to VATA 1994 (online sales by overseas persons and low value importations: modifications relating to the Northern Ireland Protocol) omit Part 2 (modifications of the Value Added Tax (Imported Goods) Relief Order 1984).
PART 4 Amendments relating to supplies of goods by persons established outside the United Kingdom that are facilitated by online marketplaces
8 (1) Schedule 9ZC to VATA 1994 is amended as follows.
(2) Before paragraph 2 insert—
1B This Act has effect as if after section 5A there were inserted—
Supplies of goods in Northern Ireland facilitated by online marketplaces: deemed supply
5B (1) This section applies where—
(a) a person (“P”) makes a taxable supply of goods in the course or furtherance of a business to another person (“R”),
(b) the supply is facilitated by an online marketplace, and
(c) either the IOSS scheme condition or the Union goods condition is met.
(2) For the purposes of this Act—
(a) P is to be treated as having supplied the goods to the operator of the online marketplace, and
(b) the operator is to be treated as having supplied the goods to R in the course or furtherance of a business carried on by the operator.
(3) The IOSS scheme condition is met where—
(a) R belongs in Northern Ireland and is not a taxable person,
(b) the supply is a qualifying supply of goods within the meaning of Schedule 9ZE, and
(c) the operator of the online marketplace is registered under that Schedule.
(4) But the IOSS scheme condition is not met where—
(a) P is established in the United Kingdom, and
(b) the supply involves the removal of goods from Great Britain to Northern Ireland.
(5) The Union goods condition is met where—
(a) P is not established in Northern Ireland or a member State,
(b) R either—
(i) belongs in Northern Ireland and is not a taxable person, or
(ii) belongs in a member State and is not liable or entitled to be registered for VAT in accordance with the law of that member State, and
(c) the supply is a supply of Union goods that are located in Northern Ireland at the time they are supplied.
(6) But the Union goods condition is not met where—
(a) P is established in Great Britain, and
(b) R belongs in Northern Ireland.
(7) In this section, “Union goods” has the same meaning as in Regulation (EU) 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (see Article 5(23) of that Regulation).
(3) After paragraph 2 insert—
2A In Part 2 of Schedule 8 (zero-rating: the groups), Group 21 (online marketplaces: deemed supply) has effect as if after Item 1 there were inserted—
2 A supply by a person not established in Northern Ireland or a member State that is deemed to be a supply to an operator of an online marketplace by virtue of section 5B (as it has effect in accordance with paragraph 1B of this Schedule).
(4) In paragraph 3, after sub-paragraph (1) insert—
(1A) Sub-paragraph (1) has effect as if at the start there were inserted “Subject to paragraph 6ZA,
.
(5) After paragraph 3 insert—
3A Schedule 11 has effect as if after paragraph 6 there were inserted—
6ZA (1) An operator of an online marketplace must preserve and make available records relating to a relevant taxable supply in accordance with the requirements of Article 242a of the VAT Directive and Article 54c of the Implementing Regulation.
(2) In this paragraph—
“the Implementing Regulation” has the same meaning as in Schedule 9ZE;
“relevant taxable supply” means a supply of goods where that supply is deemed to be a supply by an operator of an online marketplace by virtue of section 5B (as it has effect in accordance with paragraph 1B of this Schedule);
“the VAT Directive” has the same meaning as in Schedule 9ZE.
3B (1) Sub-paragraph (2) applies (instead of section 6) to a supply of goods deemed to have taken place by section 5B(2)(a) or (b) (as it has effect in accordance with paragraph 1B of this Schedule).
(2) The supply of goods is to be treated as taking place at the time when payment for the goods has been accepted within the meaning of Article 41a of the Implementing Regulation.
(3) In this paragraph, “the Implementing Regulation” has the same meaning as in Schedule 9ZE.
(6) Before Part 3 insert—
PART 2A Modification of the Value Added Tax Regulations 1995
5A (1) In the Value Added Tax Regulations 1995 (S.I. 1995/2518), Part 3 (VAT invoices and other invoicing requirements) has effect subject to the following modifications.
(2) In regulation 13 (obligation to provide a VAT invoice), paragraph (1C) has effect as if—
(a) in sub-paragraph (a), after “section 5A” there were inserted “ or 5B (as it has effect in accordance with paragraph 1B of Schedule 9ZC to the Act) ”;
(b) in sub-paragraph (b), after “section 7(5B) of” there were inserted “ , or paragraph 38 of Schedule 9ZE to, ”.
(3) In regulation 13A (electronic invoicing), paragraph (5) has effect as if—
(a) in sub-paragraph (a), after “section 5A” there were inserted “ or 5B (as it has effect in accordance with paragraph 1B of Schedule 9ZC to the Act) ”;
(b) in sub-paragraph (b), after “section 7(5B) of” there were inserted “ , or paragraph 38 of Schedule 9ZE to, ”.
(4) Regulation 16B (retailers' and simplified invoices: exceptions), has effect as if—
(a) in sub-paragraph (a), after “section 5A” there were inserted “ or 5B (as it has effect in accordance with paragraph 1B of Schedule 9ZC to the Act) ”;
(b) in sub-paragraph (b), after “section 7(5B) of” there were inserted “ , or paragraph 38 of Schedule 9ZE to, ”.
SCHEDULE 19 Deferring VAT payment by reason of the coronavirus emergency
Section 99
Definitions
1 In this Schedule—
“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;
“HMRC” means Her Majesty's Revenue and Customs;
“relevant VAT sum” means a sum to meet all or part of a liability described in article 5 of the Finance Act 2008, Section 135 (Coronavirus) Order 2020 (S.I. 2020/934).
Power to agree to further defer payment
2 (1) The Commissioners (having agreed that payment of relevant VAT sums may be deferred until 31 March 2021) may—
(a) agree that payment of a relevant VAT sum may be further deferred, and
(b) make such arrangements as they consider appropriate for persons to pay relevant VAT sums.
(2) The period for which payment is further deferred under sub-paragraph (1) may be different for different cases.
(3) Arrangements made under sub-paragraph (1) may, among other things—
(a) require that, in order to participate in the arrangements, a person must meet specified conditions,
(b) require or enable a sum to be paid in instalments, including instalments of different amounts, and
(c) make different provision for different cases.
(4) Nothing in sub-paragraphs (1) to (3) affects the powers otherwise available to the Commissioners in connection with the collection and management of relevant VAT sums or other sums.
No surcharge
3 No liability to a surcharge on a relevant VAT sum arises under section 59 of VATA 1994 (the default surcharge).
Penalty
4 (1) A person who is liable to pay a relevant VAT sum is liable to a penalty if the person—
(a) fails to pay the sum on or before 30 June 2021, and
(b) fails to enter into payment arrangements in respect of the sum on or before that day.
(2) In sub-paragraph (1), “payment arrangements” means arrangements with HMRC (whether general or individually tailored) under which the sum is to be paid and includes arrangements entered into before this Schedule comes into force.
(3) A person is not liable to a penalty under this Schedule in respect of a relevant VAT sum if the person satisfies HMRC or, on appeal, a tribunal that there is a reasonable excuse for the failures described in sub-paragraph (1)(a) and (b).
(4) In sub-paragraph (3), “tribunal” has the same meaning as in VATA 1994 (see section 82 of that Act).
Amount of penalty
5 The amount of the penalty under this Schedule is 5% of so much of the relevant VAT sum as has not been paid immediately before the day on which the amount due by way of penalty is assessed under paragraph 6(1).
Assessment of penalty
6 (1) Where a person is liable to a penalty under this Schedule, HMRC may assess the amount due by way of penalty and notify it to the person (subject to sub-paragraph (4)).
(2) If it appears to HMRC that the amount that ought to have been assessed in an assessment under sub-paragraph (1) exceeds the amount that was assessed, HMRC may make a supplementary assessment of the amount of the excess and notify it to the person (subject to sub-paragraph (4)).
(3) If it appears to HMRC that the amount that was assessed in an assessment under sub-paragraph (1) exceeds the amount that ought to have been assessed, HMRC may, by notice to the person, amend the assessment so as to reduce the amount due.
(4) An assessment under sub-paragraph (1) or (2) may not be made after the end of the period of 2 years beginning with the time when facts sufficient in the opinion of HMRC to indicate that the person had failed as described in paragraph 4(1)(a) and (b) came to HMRC's knowledge.
(5) An amendment under sub-paragraph (3) may be made after the last day on which the assessment in question could have been made.
Payment of penalty
7 (1) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the assessment of the penalty under paragraph 6(1) is issued.
(2) Where HMRC make a supplementary assessment under paragraph 6(2), the additional amount must be paid before the end of the period of 30 days beginning with the day on which they issue the notification of that assessment.
(3) Where HMRC amend an assessment under paragraph 6(3) that does not affect when the penalty must be paid.
Recovery of penalty
8 (1) If an amount is assessed and notified to a person under this Schedule then unless, or except to the extent that, the assessment is withdrawn or reduced, the amount is recoverable as if it were VAT due from the person.
(2) In sub-paragraph (1), “VAT” has the same meaning as in VATA 1994 (see section 96 of that Act).
Reviews and appeals
9 (1) Part 5 of VATA 1994 (reviews and appeals) has effect in relation to—
(a) any liability to a penalty under this Schedule, and
(b) the amount of a penalty under this Schedule,
as if those matters were listed in section 83(1) of that Act.
(2) Section 84(3), (3B) and (3C) of that Act (requirement to deposit sum payable with HMRC) have effect in relation to appeals against decisions with respect to those matters.
Double jeopardy
10 A person is not liable to a penalty under this Schedule in respect of a failure in respect of which the person has been convicted of an offence.
Notifications etc
11 (1) Section 98 of VATA 1994 (service of notices) applies to notices and notifications to be given under this Schedule as it applies to notices and notifications to be given under that Act.
(2) For the purposes of this Schedule, a notice or notification given to a personal representative, trustee in bankruptcy, trustee in sequestration, receiver, liquidator or other representative of a person is to be treated as having been given to that person.
(3) In sub-paragraph (2), “trustee in sequestration” has the same meaning as in VATA 1994 (see section 96 of that Act).
Section 101
1 The Customs (Northern Ireland) (EU Exit) Regulations 2020 (S.I. 2020/1605) are amended in accordance with this Schedule.
Duty on certain steel products imported on or after 3 March 2021
2 (1) After regulation 7 insert—
Amount of section 30A(3) duty for certain steel products
7A (1) This regulation applies to goods if—
(a) they are imported into the United Kingdom as a result of their entry into Northern Ireland,
(b) they are not relevant goods,
(c) they are not Union goods,
(d) the origin of the goods (as determined in accordance with the provisions of Union customs legislation in force relating to non-preferential origin) is neither in the United Kingdom nor in the European Union,
(e) they are declared, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure,
(f) they would (ignoring this regulation) have been subject to the EU steel safeguarding measure, and
(g) if they had instead been imported into a member State they would have benefitted from tariff-rate quota in relation to that measure.
(2) For the purpose of determining the amount of duty charged under section 30A(3) of the Act in respect of goods to which this regulation applies—
(a) the EU steel regulation does not apply, and
(b) the steel safeguards notice applies as if references to import duty were to duty charged under section 30A(3).
(2) In regulation 8 (determination of section 30A charge), after “7” insert “ , 7A ”.
(3) In regulation 9 (relief from section 30A duty), in sub-paragraph (c)—
(a) for “regulation” substitute “ regulations ”;
(b) after “7” insert “ and 7A ”.
(4) The amendments made by this paragraph—
(a) have effect in relation to goods declared on or after 3 March 2021, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure, and
(b) have effect as if made under section 30B of TCTA 2018 (and may be amended or revoked accordingly).
Duty on certain steel products imported before 3 March 2021
3 (1) Before regulation 8 insert—
Amount of section 30A(3) duty for certain steel products before 3 March 2021
7B (1) This regulation applies to goods if—
(a) they are imported into the United Kingdom as a result of their entry into Northern Ireland,
(b) they are declared before 3 March 2021, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure,
(c) they are not relevant goods,
(d) they are not Union goods,
(e) the origin of the goods (as determined in accordance with the provisions of Union customs legislation in force relating to non-preferential origin) is neither in the United Kingdom nor in the European Union,
(f) they would (ignoring this regulation) have been subject to an EU steel safeguarding measure,
(g) if they had instead been imported into a member State they would have benefitted from tariff-rate quota in relation to that measure, and
(h) they would not have been subject to a domestic steel safeguarding measure (whether they would have benefited from a quota or were otherwise not subject to the measure) if—
(i) the goods had been declared for the free-circulation procedure or the authorised use procedure in Great Britain, and
(ii) that declaration had been accepted at the same time as the actual declaration was accepted.
(2) Where the person declaring the goods makes a relevant claim that is accepted by HMRC, the EU steel regulation does not apply for the purpose of determining the amount of duty charged under section 30A(3) of the Act in respect of the goods.
(3) In this regulation “relevant claim” means a claim made in accordance with the procedure set out in the steel notice provided all conditions in that notice are complied with.
(2) In regulation 8 (determination of section 30A charge), before “and 9” insert “ , 7B ”.
(3) The amendments made by this paragraph—
(a) have effect in relation to goods declared on or after IP completion day, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure, and
(b) have effect as if made under section 30B of TCTA 2018 (and may be amended or revoked accordingly).
Duty on certain steel products removed to Northern Ireland on or after 3 March 2021
4 (1) After regulation 13 insert—
Amount of section 40A(1) duty for certain steel products
13A (1) This regulation applies to goods if—
(a) they are removed to Northern Ireland from Great Britain,
(b) they are declared, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure,
(c) they are not relevant goods,
(d) they are not Union goods,
(e) they are not domestic goods,
(f) they are not goods to which regulation 11 applies,
(g) the origin of the goods (as determined in accordance with the provisions of Union customs legislation in force relating to non-preferential origin) is neither in the United Kingdom nor in the European Union,
(h) they would (ignoring this regulation) have been subject to an EU steel safeguarding measure, and
(i) if they had instead been imported into a member State they would have benefitted from tariff-rate quota in relation to that measure.
(2) For the purpose of determining the amount of duty charged under section 40A(1) of the Act in respect of goods to which this regulation applies—
(a) the EU steel regulation does not apply, and
(b) the steel safeguards notice applies as if references to import duty were to duty charged under section 40A(1).
(2) In regulation 14 (determination of section 40A charge), after “13,” insert “ 13A, ”.
(3) In regulation 16 (relief from section 40A duty), in paragraph (1)(c)—
(a) for “regulation” substitute “ regulations ”;
(b) after “13” insert “ and 13A ”.
(4) The amendments made by this paragraph—
(a) have effect in relation to goods declared on or after 3 March 2021, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure, and
(b) have effect as if made under section 40B of TCTA 2018 (and may be amended or revoked accordingly).
Duty on certain steel products removed to Northern Ireland after IP completion day
5 (1) Before regulation 14 insert—
Amount of section 40A(1) duty for certain domestic steel products
13B (1) This regulation applies to goods if—
(a) they are removed to Northern Ireland from Great Britain,
(b) they are declared, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure,
(c) they are domestic goods,
(d) they are not relevant goods,
(e) they are not Union goods,
(f) they are not goods to which regulation 11 applies,
(g) the origin of the goods (as determined in accordance with the provisions of Union customs legislation in force relating to non-preferential origin) is neither in the United Kingdom nor in the European Union,
(h) they would (ignoring this regulation) have been subject to an EU steel safeguarding measure, and
(i) if they had instead been imported into a member State they would have benefitted from tariff-rate quota in relation to that measure.
(2) Where the person declaring the goods makes a relevant claim that is accepted by HMRC, the EU steel regulation does not apply for the purpose of determining the amount of duty charged under section 40A(1) of the Act in respect of the goods.
(3) In this regulation “relevant claim” means a claim—
(a) made in accordance with a procedure specified in a notice given by HMRC Commissioners, or
(b) if no such notice is in force, made in accordance with the procedure set out in the steel notice provided all conditions in that notice are complied with.
(4) HMRC Commissioners may by notice provide that a person who makes a relevant claim of the type mentioned in paragraph (3)(a) must notify the Secretary of State of the making of the claim.
(5) The notice may provide—
(a) that specified information must be included in the notification to the Secretary of State;
(b) for the form and manner in which such a notification must be given;
(c) that such a notification must be given within such period as is specified in the notice.
(6) A notice under paragraph (3)(a) or (4)—
(a) must be published;
(b) may be withdrawn;
(c) may be amended from time to time.
Amount of section 40A(1) duty for certain steel products before 3 March 2021
13C (1) This regulation applies to goods if—
(a) they are removed to Northern Ireland from Great Britain,
(b) they are declared before 3 March 2021, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure,
(c) they are not domestic goods,
(d) they are not relevant goods,
(e) they are not Union goods,
(f) they are not goods to which regulation 11 applies,
(g) the origin of the goods (as determined in accordance with the provisions of Union customs legislation in force relating to non-preferential origin) is neither in the United Kingdom nor in the European Union,
(h) they would (ignoring this regulation) have been subject to an EU steel safeguarding measure,
(i) if they had instead been imported into a member State they would have benefitted from tariff-rate quota in relation to that measure, and
(j) they would not have been subject to a domestic steel safeguarding measure (whether they would have benefited from a quota or were otherwise not subject to the measure) if—
(i) the goods had been declared for the free-circulation procedure or the authorised use procedure in Great Britain, and
(ii) that declaration had been accepted at the same time as the actual declaration was accepted.
(2) Where the person declaring the goods makes a relevant claim that is accepted by HMRC, the EU steel regulation does not apply for the purpose of determining the amount of duty charged under section 40A(1) of the Act in respect of the goods.
(3) In this regulation “relevant claim” means a claim made in accordance with the procedure set out in the steel notice provided all conditions in that notice are complied with.
(2) In regulation 14 (determination of section 40A charge), before “15” insert “ 13B, 13C, ”.
(3) The amendments made by this paragraph—
(a) have effect in relation to goods declared on or after IP completion day, in accordance with Union customs legislation, for a procedure corresponding to the free-circulation procedure or the authorised use procedure, and
(b) have effect as if made under section 40B of TCTA 2018 (and may be amended or revoked accordingly).
Interpretation
6 (1) In regulation 3 (interpretation of Part 2), at the appropriate places insert—
“domestic steel safeguarding measure” means an additional rate of duty payable as a result of the steel safeguards notice (and goods are subject to that measure if that additional rate is payable in respect of the goods);
;
“EU steel safeguarding measure” means an additional rate of duty payable as a result of Article 1 of the EU steel regulation (and goods are subject to that measure if that additional rate is payable in respect of the goods);
;
“EU steel regulation” means Commission Implementing Regulation (EU) 2019/159 as it may be amended, or replaced, from time to time;
;
“steel notice” means the notice on movements of steel into Northern Ireland published by HMRC on 3 March 2021;
;
“steel safeguards notice” means Taxation Notice 2020/06: safeguard measures on certain steel products – application of tariff rate quotas published on 30 September 2020 by the Secretary of State, as that notice may be amended, or replaced, from time to time;
.
(2) The amendments made by this paragraph—
(a) are treated as having come into force on IP completion day, and
(b) have effect as if made under sections 30B and 40B of TCTA 2018 (and may be amended or revoked accordingly).
Power to extend application of the regulations to other goods
7 Where provision inserted by this Schedule—
(a) relates to particular goods, and
(b) is to have effect as if made under a power conferred by TCTA 2018,
that power may (amongst other things) be exercised to make similar provision relating to other goods, including provision having retrospective effect provided any such retrospective provision does not impose or increase taxation.
SCHEDULE 21 Restriction of use of rebated diesel and biofuels
Section 102
1 HODA 1979 is amended as follows.
2 In section 6AA (excise duty on biodiesels), in subsection (2)—
(a) after paragraph (a) insert—
(aa) for heating,
;
(b) in paragraph (b), for “so used” substitute “ used as mentioned in paragraph (a) or (aa) ”.
3 (1) In section 6AB (excise duty on blends of biodiesel and heavy oils), in subsection (4A), for “other than as fuel for road vehicles” substitute “ as fuel for excepted machines ”.
(2) If paragraph 2 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part, in sub-paragraph (1) of this paragraph, after “vehicles” insert “ etc ”.
4 In section 6A (fuel substitutes), in subsection (2)—
(a) at the end of paragraph (a) (but before the “or”) insert—
(aa) for heating;
;
(b) in paragraph (b), for “so used” substitute “ used as mentioned in paragraph (a) or (aa) ”.
7 (1) In section 13ZB (restrictions on supply of certain heavy oil for heating etc), in subsection (5), in the definition of “prohibited use”, for “for a road vehicle” substitute “ other than for an excepted machine ”.
(2) If paragraph 4 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part, in sub-paragraph (1) of this paragraph, after “vehicle” insert “ or as fuel for a private pleasure craft ”.
8 (1) Section 13AA (restrictions on use of rebated kerosene) is amended as follows.
(2) In subsection (1), for paragraphs (a) and (b) substitute “ an excepted machine other than an excepted machine used for heating ”.
(3) In subsection (2), for paragraphs (a), (b) and (c) substitute—
(a) be used as fuel for an excepted machine other than an excepted machine used for heating, or
(b) be taken into the fuel supply of an excepted machine other than an excepted machine used for heating.
9 In section 13AB (penalty for contravention of section 13AA), in subsection (2), in the words before paragraph (a), omit “of an engine”.
10 (1) Section 14A (rebate on biodiesel used other than as fuel for road vehicles etc) is amended as follows.
(2) In the heading, for “other than as fuel for road vehicles etc” substitute “ as fuel for excepted machines ”.
(3) In subsection (1)—
(a) in paragraph (a), for “for a road vehicle” substitute “ other than for an excepted machine ”;
(b) omit paragraph (aa);
(c) in paragraph (b), for “used as mentioned in paragraph (a) or (aa)” substitute “ other than a substance used as fuel for an excepted machine ”.
(4) Omit subsection (4).
11 (1) Section 14B (rebate on bioblend used other than as fuel for road vehicles) is amended as follows.
(2) In the heading, for “other than as fuel for road vehicles” substitute “ as fuel for excepted machines ”.
(3) In subsection (1)(a)—
(a) in sub-paragraph (i), for “for a road vehicle” substitute “ other than for an excepted machine ”;
(b) in sub-paragraph (ii), for “so used” substitute “ other than a substance used as fuel for an excepted machine ”.
(4) In subsection (1)(b)(i), for the words from “fuel” to “of” substitute “ mentioned in ”.
(5) If paragraph 6 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part—
(a) in sub-paragraph (2) of this paragraph, after “vehicles” insert “ etc ”;
(b) after sub-paragraph (3)(a) of this paragraph insert—
(aa) omit sub-paragraph (ia);
;
(c) in sub-paragraph (3)(b) of this paragraph, for “so used” substitute “ used as mentioned in sub-paragraph (i) or (ia) ”.
12 (1) Section 14C (restrictions on use of rebated diesel and bioblend) is amended as follows.
(2) In subsection (1)—
(a) in paragraph (a), for “for a road vehicle” substitute “ other than for an excepted machine ”;
(b) in paragraph (b), for “so used” substitute “ other than a substance used as fuel for an excepted machine ”;
(c) for subsections (c) and (d) substitute
, or
(c) taken into the fuel supply of any engine that is not the engine of an excepted machine as fuel or as an additive or extender in any substance used as fuel.
(3) In subsection (2)—
(a) in paragraph (a), for the words from “fuel” to “of” substitute “ mentioned in ”;
(b) in paragraph (c), for “such an engine” substitute “ an engine used as mentioned in section 13AA(1) ”.
(4) Omit subsection (4A).
(5) If paragraph 7 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part, in sub-paragraph (2)(c) of this paragraph—
(a) for “subsections (c) and (d)” substitute “ subsection (c) ”;
(b) omit “, or”.
13 (1) Section 14D (penalties for misuse of rebated biodiesel or bioblend) is amended as follows.
(2) In subsection (1)—
(a) in the words before paragraph (a), for “a road vehicle” substitute “ a fuel supply ”;
(b) in paragraph (b), for “vehicle” substitute “ fuel supply ”.
(3) In subsection (2)(b), for “vehicle or the fuel supply of an engine” substitute “ fuel supply ”.
(4) In subsection (3)(b), for “vehicle or the fuel supply of an engine” substitute “ fuel supply ”.
16 (1) Section 19 (fuel used in fishing boats etc) is amended as follows.
(2) In the heading, for “fishing boats” substitute “ lifeboats ”.
(3) In subsection (3), omit “less any rebate allowed in respect of the duty”.
17 (1) In section 20AAA (mixing of rebated oil), in subsection (4)(a), for “for a road vehicle” substitute “ other than for an excepted machine ”.
(2) If paragraph 10 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part, in sub-paragraph (1) of this paragraph, after “vehicle” insert “ or as fuel for propelling a private pleasure craft ”.
19 (1) Section 24A (penalties for misuse of marked oil) is amended as follows.
(2) In subsection (1), for “a road vehicle” substitute “ other than for an excepted machine ”.
(3) In subsection (3), for “for road vehicles or for road vehicles of a particular description” substitute “ other than for excepted machines ”.
(4) In subsection (7) for the words from “road vehicle” to “the vehicle” substitute “ vehicle, vessel, machine or appliance other than an excepted machine ”.
20 (1) Section 27 (interpretation) is amended as follows.
(2) In subsection (1)—
(a) after the definition of “controlled oil” insert—
“excepted machine” means a vehicle, vessel, machine or appliance that is of a description given in Schedule 1A;
;
(b) omit the definition of “excepted vehicle”;
(c) in the definition of “road vehicle” for “excepted vehicle” substitute “ vehicle that is an excepted machine ”.
(3) In subsection (1ZA)—
(a) in the words before paragraph (a), after “vehicle” insert “ , vessel, machine or appliance ”;
(b) in paragraph (a), after “vehicle” insert “ or vessel, or, as the case may be, for powering the machine or appliance ”;
(c) at the end of paragraph (a) (but before the “or” at the end of that paragraph) insert—
(aa) in relation to an appliance that contains a furnace or boiler for use in a heating system, that furnace or boiler,
;
(d) for paragraph (b) substitute—
(b) an engine, furnace or boiler which draws fuel from the same supply as an engine or, as the case may be, furnace or boiler, within paragraph (a) or (aa).
(4) In subsection (1ZB)—
(a) after “into a vehicle” insert “ , vessel, machine or appliance ”;
(b) after “into the vehicle” insert “ , vessel, machine or appliance ”;
(c) the words from “from which the engine” to the end become paragraph (a);
(d) in that paragraph, after “propelling the vehicle” insert “ or vessel or, as the case may be, for powering the machine or appliance, ”;
(e) after that paragraph insert
, or
(b) in relation to an appliance that contains a furnace or boiler for use in a heating system, from which the furnace or boiler draws fuel.
(5) In subsection (1ZC)—
(a) in the words before paragraph (a)—
(i) after “vehicle” insert “ , vessel, machine or appliance, ”;
(ii) after “engine” insert “ , furnace or boiler ”;
(b) in paragraph (a), for “or engine” substitute “ , vessel, machine or appliance, or of the engine, furnace or boiler ”;
(c) in paragraph (b), for “or engine” substitute “ , vessel, machine or appliance, or of the engine, furnace or boiler ”.
(6) In subsection (1ZD)—
(a) omit “appliances and”;
(b) after “vehicles” insert “ , vessels, machines or appliances ”.
21 Omit Schedule 1 (excepted vehicles).
22 Before Schedule 2 insert—
SCHEDULE 1A
Excepted machines
Section 27(1)
1 Any vehicle, vessel, machine or appliance of one of the following descriptions is an “excepted machine” for the purposes of this Act.
Agricultural vehicle
2 (1) An agricultural vehicle at a time when it is used for—
(a) purposes relating to agriculture, horticulture, pisciculture or forestry,
(b) cutting verges bordering public roads,
(c) cutting hedges or trees bordering public roads or bordering verges which border public roads, or
(d) clearing or otherwise dealing with frost, ice, snow or flooding,
including when it is going to or from the place where it is to be or has been used for any of those purposes.
(2) An agricultural vehicle that is used for any purpose on land where it is kept and used for purposes relating to agriculture, horticulture, pisciculture or forestry.
(3) An agricultural vehicle kept and used on a golf course or on land maintained by a community amateur sports club.
(4) An agricultural vehicle used in any other circumstances provided—
(a) it is not being used on a public road, and
(b) it uses fuel gas for fuel.
(5) In this paragraph, “an agricultural vehicle” means—
(a) a tractor;
(b) a vehicle designed and constructed primarily for use otherwise than on roads which—
(i) has a revenue weight not exceeding 1,000 kilograms, and
(ii) is designed and constructed to seat only the driver;
(c) any vehicle that is an exempt vehicle for the purposes of paragraph 20A of Schedule 2 to that Act (vehicles used for purposes relating to agriculture, horticulture or forestry);
(d) any other vehicle designed and constructed to be used for purposes relating to agriculture, horticulture, pisciculture or forestry.
Special vehicles
3 (1) A special vehicle at a time when it is used—
(a) for purposes relating to agriculture, horticulture, pisciculture or forestry, including when it is going to or from the place where it is to be or has been used for such purposes, or
(b) on a golf course or on land maintained by a community amateur sports club.
(2) A special vehicle used in any other circumstances provided it uses fuel gas for fuel.
(3) In this paragraph, a “special vehicle” is a vehicle of any weight but otherwise designed, constructed and used as mentioned in Part 4 of Schedule 1 to the Vehicle Excise and Registration Act 1994.
Unlicensed vehicles
4 (1) An unlicensed vehicle at a time when it is used—
(a) for purposes relating to agriculture, horticulture, pisciculture or forestry,
(b) on a golf course or on land maintained by a community amateur sports club, or
(c) on land occupied by a travelling fair or travelling circus.
(2) An unlicensed vehicle used in any other circumstances provided it uses fuel gas for fuel.
(3) In this paragraph, “unlicensed vehicle” means a vehicle that is—
(a) unlicensed for the purposes of section 22(1D) of the Vehicle Excise and Registration Act 1994,
(b) kept by a person who has complied with such requirements relating to the vehicle as are prescribed for the time being in regulations under that section, and
(c) not used or kept on a public road.
Trains etc
5 Any vehicle designed to be operated on a railway within the meaning of section 67(1) of the Transport and Works Act 1992.
Vessels
6 (1) Any vessel other than a vessel in Northern Ireland that is a private pleasure craft.
(2) Any machine or appliance that is permanently on a vessel within sub-paragraph (1).
(3) Any machine or appliance that is permanently on a private pleasure craft in Northern Ireland, but that draws fuel from a supply other than the supply from which the engine provided for propelling the private pleasure craft draws fuel.
(4) In this paragraph, references to Northern Ireland do not include any of the territorial sea of the United Kingdom that is adjacent to Northern Ireland.
Mowing machines
7 A machine designed only for mowing grass at a time when it is used on—
(a) land maintained for purposes relating to agriculture, horticulture, pisciculture or forestry;
(b) a golf course or on land maintained by a community amateur sports club;
(c) land occupied by a travelling fair or travelling circus.
Other machines or appliances
8 (1) A machine or appliance that is not a vehicle or vessel at a time when it is used—
(a) for purposes relating to agriculture, horticulture, pisciculture or forestry;
(b) on a golf course or on land maintained by a community amateur sports club;
(c) to operate or maintain equipment in a travelling fair or travelling circus;
(d) for heating, or to generate electricity, for premises that are not used for commercial purposes.
(2) For the purposes of sub-paragraph (1)(d), caravans used for the accommodation of those who travel with a travelling fair or travelling circus are to be treated as premises that are not used for commercial purposes.
Interpretation
9 (1) In this Schedule—
“caravan” has the meaning given by section 29(1) of the Caravan Sites and Control of Development Act 1960;
“community amateur sports club” has the meaning given by section 658 of the Corporation Tax Act 2010;
“fair” means a fair consisting wholly or principally of the provision of amusements;
“fuel gas” means any substance which would be road fuel gas within the meaning given by section 5(1) if it were for use as fuel in a road vehicle;
“golf course” includes driving range (whether or not on the site of a golf course).
(2) In this Schedule, references to a vehicle being used—
(a) on a golf course, or
(b) on land maintained by a community amateur sports club,
include references, when two parts of the golf course or land are on either side of a road, to the vehicle going between the two parts by the shortest practicable route.
(3) In this Schedule, a fair or circus is a travelling fair or circus if—
(a) it is provided or operated wholly or principally by persons who travel from place to place for the purpose of providing or operating fairs or circuses, and
(b) it is held at a place no part of which has been used for the provision of that fair or (as the case may be) circus on more than 27 days in the same calendar year.
23 (1) Schedule 4 (subjects for regulations under section 24) is amended as follows.
(2) In paragraph 19, for “road vehicle” substitute “ vehicle, vessel, machine or appliance ”.
(3) In paragraph 20, at the end insert “ , vessel, machine or appliance ”.
(4) In paragraph 21—
(a) for “(other” substitute “ (including places of any description, and in particular tents or movable structures, other ”;
(b) after “vehicles” insert “ , vessels, machines or appliances ”;
(c) after “any vehicle” insert “ , vessel, machine or appliance ”.
(5) If paragraph 13 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part—
(a) in sub-paragraph (2) of this paragraph, after “road vehicle” insert “ or a vessel ”;
(b) in sub-paragraph (3) of this paragraph, for the words from “at the end” to the end substitute “for “ or a vessel ” substitute “, vessel, machine or appliance” ”;
(c) for sub-paragraph (4)(b) of this paragraph substitute—
(b) for “or vessels” substitute “ , vessels, machines or appliances ”;
;
(d) for sub-paragraph (4)(c) of this paragraph substitute—
(c) for “or vessel” substitute “ , vessel, machine or appliance ”
.
24 (1) In Schedule 5 (sampling), in paragraph 7, after “vehicle” insert “ , vessel, machine or appliance ”.
(2) If paragraph 14 of Schedule 11 to FA 2020 has come into force in relation to any part of the United Kingdom before this Schedule comes into force then, in relation to that part, in sub-paragraph (1) of this paragraph, for the words from “after” to the end substitute “for “ or a vessel ” substitute “, vessel, machine or appliance” ”.