Finance Bill - continued        House of Lords
PART III, INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX - continued
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Provisions supplementary to s. 85.     86. - (1) The chargeable periods in relation to which provision may be made by a section 85 agreement include periods ending before the making of the agreement.
 
      (2) An agreement shall not have effect in accordance with section 85(3) above in relation to any determination of a question which-
 
 
    (a) relates to a time after a time as from which an officer of the Board has revoked the agreement in accordance with its terms;
 
    (b) relates to a time after or in relation to which there has been a failure by a party to the agreement to comply with any provision of the agreement compliance with which is, under the terms of the agreement, to be a condition of its having effect; or
 
    (c) relates to any matter as respects which any other conditions which, by the terms of the agreement, are to be conditions of its having effect have not been, or are no longer, satisfied.
      (3) Where-
 
 
    (a) there is a section 85 agreement between the Board and any person, and
 
    (b) there is a mutual agreement made under and for the purposes of any double taxation arrangements which is not consistent with the terms of the section 85 agreement,
  it shall be the duty of the Board to ensure that all such modifications of the section 85 agreement are made (whether in exercise of powers conferred on the Board by that agreement or otherwise) as may be necessary for enabling effect to be given to the mutual agreement in relation to the subject-matter of the section 85 agreement.
 
      (4) It shall be the duty of any person who is a party to a section 85 agreement to provide the Board from time to time with all such reports and other information as he may be required to provide under the agreement or by virtue of any request made by an officer of the Board in accordance with the terms of the agreement.
 
      (5) Where-
 
 
    (a) the Board and any person have purported to enter into a section 85 agreement at any time,
 
    (b) before that time, that person fraudulently or negligently provided the Board with information which was false or misleading,
 
    (c) that information was so provided for or in connection with the application to the Board for the making of the agreement or otherwise in connection with its preparation, and
 
    (d) the Board have notified that person that the agreement is nullified by reason of the misrepresentation,
  the agreement shall be deemed never to have been made.
 
      (6) Any provision of a section 85 agreement that provides for the modification or revocation of that agreement by the Board, or by an officer of the Board, may provide for the modification or revocation to take effect as from such time (including a time before the modification is made or the agreement revoked) as the Board or officer may determine.
 
      (7) Where a section 85 agreement-
 
 
    (a) relates to a chargeable period beginning or ending before the making of the agreement, and
 
    (b) provides for the manner in which adjustments are to be made for tax purposes in consequence of that agreement,
  the adjustments shall be made for those purposes in the manner provided for in the agreement.
 
      (8) A person shall be liable to a penalty not exceeding £10,000 if he fraudulently or negligently makes any false or misleading statement to the Board or an officer of the Board either-
 
 
    (a) for or in connection with any application to the Board for them to enter into a section 85 agreement; or
 
    (b) otherwise in connection with the preparation of such an agreement.
      (9) In section 98 of the Taxes Management Act 1970 (penalties in connection with returns etc.), in the second column of the table, after the final entry there shall be inserted the following entry-
 
 
 
"
 
"Section 86(4) of the Finance Act 1999.""
      (10) In this section-
 
 
    "double taxation arrangements" means any arrangements having effect under or by virtue of section 788 of the Taxes Act 1988 (double taxation agreements); and
 
    "section 85 agreement" means an agreement made for the purposes of section 85 above.
Effect of section 85 agreements on non-parties.     87. - (1) This section applies where-
 
 
    (a) any agreement made for the purposes of section 85 above has effect in relation to any provision ("the actual provision") made or imposed as between any person ("the taxpayer") and another ("the other party"); and
 
    (b) section 85(3) above has the effect in the taxpayer's case of requiring a question relating to the actual provision to be determined in accordance with the agreement rather than by reference to rules which would otherwise be applicable by virtue of Schedule 28AA to the Taxes Act 1988.
      (2) Paragraphs 6 and 7 of Schedule 28AA to the Taxes Act 1988 (relief from double counting in the case of disadvantaged persons) shall have effect in the other party's case on the assumption that any question falling within subsection (3) below is to be determined, to the same extent as in the taxpayer's case, by reference to the agreement.
 
      (3) Those questions are-
 
 
    (a) whether the taxpayer is a person on whom a potential advantage in relation to United Kingdom taxation is conferred by the actual provision; and
 
    (b) what constitutes the arm's length provision in relation to the actual provision.
      (4) Subsection (2) above shall have effect subject to any agreement made for the purposes of section 85 above between the Board and the other party.
 
      (5) Section 111 of the Finance Act 1998 (notice to persons who may be entitled to claim as disadvantaged persons) shall have effect as if the assumptions referred to in subsection (1)(b) of that section included any assumptions falling to be made by virtue of the agreement.
 
Controlled foreign companies.     88. - (1) In Schedule 25 to the Taxes Act 1988 (cases where section 747(3) does not apply), after sub-paragraph (1A) of paragraph 2 (acceptable distribution policy) there shall be inserted the following sub-paragraph-
 
 
    "(1B) A dividend paid by a company shall not fall within sub-paragraph (1)(d) above if, and to the extent that, the profits which are the relevant profits in relation to the dividend derive from dividends or other distributions paid to the company at any time which are dividends or other distributions-
 
 
    (a) to which section 208 applied; or
 
    (b) to which that section would have applied if the company had been resident in the United Kingdom at that time.
  Subsections (3) and (4) of section 799 (double taxation relief: computation of underlying tax) apply for the purposes of this sub-paragraph as they apply for the purposes of subsection (1) of that section."
 
      (2) Subsection (1) above applies for the purpose of determining whether dividends paid on or after 9th March 1999 for accounting periods ending on or after that date fall within sub-paragraph (1)(d) of paragraph 2 of that Schedule.
 
 
Management and enforcement
Corporation tax: due and payable date.     89. - (1) In the Table in section 98 of the Taxes Management Act 1970 (penalties for failure to provide information, produce documents etc), in the first column, after the entry for Part III of the Taxes Management Act 1970 insert "regulations under section 59E of this Act;".
 
      (2) In section 102(5)(a) of the Finance Act 1989 (surrender of company tax refund within group), for "section 10 of the Taxes Act 1988" substitute "section 59D or 59E of the Taxes Management Act 1970".
 
      (3) This section has effect in relation to accounting periods ending on or after 1st July 1999.
 
 
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