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Finance Bill


Finance Bill
Part 8 — Other taxes

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     (3)    In paragraph 20B (exemption under paragraph 20A: averaging periods) for

sub-paragraphs (6) to (8) substitute—

                       “(6)                If the total mentioned in sub-paragraph (3)(b) exceeds that

mentioned in sub-paragraph (3)(a), then—

                    (a)                   in a case where, at the time when the balancing period ends,

5

an averaging period also ends because of sub-paragraph

(2)(f) or (g), the supplier is for the purposes of this Schedule

deemed to make at that time a taxable supply of a quantity of

electricity equal to the excess;

                    (b)                   in any other case, a balancing debit equal to the excess is

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carried forward to the next balancing period.”.

     (4)    The amendment made by subsection (2) has effect where the end of the

balancing period referred to in paragraph (a) of the sub-paragraph (6)

substituted by that subsection falls on or after 31st March 2003.

     (5)    The amendment made by subsection (3) has effect where the end of the

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balancing period referred to in paragraph (a) of the sub-paragraph (6)

substituted by that subsection falls on or after 1st April 2003.

Insurance premium tax

 194   Higher rate of tax: divided companies

     (1)    In Schedule 6A to the Finance Act 1994 (c. 9) (insurance premium tax:

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premiums liable to tax at higher rate), insert after paragraph 3—

“Insurance provided by divided company

        3A               (1)                A premium under a taxable insurance contract relating to a motor car

or motor cycle also falls within paragraph 2 above if—

                    (a)                   the insurance to be provided under the contract is provided

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by a divided company, and

                    (b)                   any division of that company would, if it were a separate

company, be a person connected with a supplier of motor

cars or motor cycles.

                       (2)                A premium under a taxable insurance contract relating to relevant

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goods also falls within paragraph 3 above if—

                    (a)                   the insurance to be provided under the contract is provided

by a divided company, and

                    (b)                   any division of that company would, if it were a separate

company, be a person connected with a supplier of relevant

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goods.

                       (3)                Sub-paragraph (1) or (2) above does not apply if the insurance is

provided to the insured free of charge.

                       (4)                A premium falls within paragraph 2 above by virtue of this

paragraph only to the extent that it is attributable to cover for a risk

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which relates to a motor car or motor cycle supplied by a supplier of

motor cars or motor cycles with whom the division in question

would, if it were a separate company, be connected.

                       (5)                A premium falls within paragraph 3 above by virtue of this

paragraph only to the extent that it is attributable to cover for a risk

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Finance Bill
Part 9 — Miscellaneous and supplementary provisions

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which relates to relevant goods supplied by a supplier of relevant

goods with whom the division would, if it were a separate company,

be connected.

                       (6)                For the purposes of this paragraph—

                    (a)                   a company is a “divided company” if under the law under

5

which the company is formed, under the company’s

constitution or under arrangements entered into by or in

relation to the company—

                           (i)                          some or all of the assets of the company are available

primarily, or only, to meet particular liabilities of the

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company, and

                           (ii)                         some or all of the members of the company, and some

or all of its creditors, have rights primarily, or only, in

relation to particular assets of the company;

                    (b)                   a “division” of such a company means an identifiable part of

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it (by whatever name known) that carries on distinct business

activities and to which particular assets and liabilities of the

company are primarily or wholly attributable.

                       (7)                In this paragraph “provided to the insured free of charge” has the

meaning given by sub-paragraph (5) of paragraph 2 or 3 above.

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                                       In determining for this purpose whether a divided company by

whom insurance is provided is a person falling within sub-

paragraph (2) of paragraph 2 or 3 above, the company shall be

treated as connected with any person with whom a division of that

company would be connected if it were a separate company.

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                       (8)                Other expressions defined for the purposes of paragraph 2 or 3 above

have the same meaning in this paragraph.”.

     (2)    Subsection (1) applies in relation to a premium that falls to be regarded for the

purposes of Part 3 of the Finance Act 1994 (c. 9) (insurance premium tax) as

received under a taxable insurance contract by an insurer on or after the day on

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which this Act is passed.

Part 9

Miscellaneous and supplementary provisions

Provisions consequential on changes to company law

 195   Companies acquiring their own shares

35

     (1)    This section applies for the purposes of the Taxes Acts and the Inheritance Tax

Act 1984 (c. 51) where a company acquires any of its own shares (whether by

purchase, the issuing of bonus shares or otherwise).

     (2)    The acquisition of any of those shares by the company is not to be treated as the

acquisition of an asset.

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     (3)    The company is not, by virtue of the acquisition or holding of any of those

shares or its being entered in the company’s register of members in respect of

any of them, to be treated as a member of itself.

     (4)    Subject to subsection (5)—

 

 

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Part 9 — Miscellaneous and supplementary provisions

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           (a)           the company’s issued share capital is to be treated as if it had been

reduced by the nominal value of the shares acquired,

           (b)           such of those shares as are not cancelled on acquisition are to be treated

as if they had been so cancelled, and

           (c)           any subsequent cancellation by the company of any of those shares is

5

to be disregarded (and, accordingly, is not the disposal of an asset and

does not give rise to an allowable loss within the meaning of the

Taxation of Chargeable Gains Act 1992 (c. 12)).

     (5)    Where the shares are issued to the company as bonus shares, subsection (4)(a)

and (b) does not apply and the shares are to be treated as if they had not been

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issued.

     (6)    Where, disregarding subsections (2) to (5)—

           (a)           a company holds any of its own shares, and

           (b)           the company issues bonus shares in respect of those shares or any class

of those shares (“the existing shares”),

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            nothing in this section prevents the existing shares being the company’s

holding of shares for the purposes of the application of section 126 of the

Taxation of Chargeable Gains Act 1992 (application of sections 127 to 131 of

that Act (company reorganisations etc)).

     (7)    In subsection (6) the reference to the application of section 126 of the Taxation

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of Chargeable Gains Act 1992 does not include a reference to the application of

that section in a modified form by virtue of any enactment relating to

chargeable gains.

     (8)    Where a company disposes of any of its own shares to a person in

circumstances where, but for subsections (2) to (5), it would be regarded as

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holding the shares immediately before the disposal—

           (a)           subsections (4)(b) and (c) and (5) cease to apply in relation to the shares

disposed of (“the relevant shares”),

           (b)           the relevant shares are to be treated as having been issued as new

shares to that person by the company at the time of the disposal (and

30

not as having been disposed of by the company at that time),

           (c)           that person is to be treated as having subscribed for the relevant shares,

           (d)           an amount equal to the amount or value of the consideration (if any)

payable for the disposal of the relevant shares is to be treated as the

amount subscribed for those shares,

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           (e)           if the amount or value of that consideration does not exceed the

nominal value of those shares, the share capital of those shares is to be

treated for the purposes of Part 6 of the Taxes Act 1988 as if it were an

amount equal to the amount or value of that consideration, and

           (f)           if the amount or value of that consideration exceeds their nominal

40

value, the relevant shares are to be treated as if they had been issued at

a premium representing that excess.

     (9)    Where—

           (a)           a company purchases its own shares, and

           (b)           the price payable by a company for the shares is taken into account in

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computing the profits of the company which are chargeable to tax in

accordance with the provisions of the Taxes Act 1988 applicable to Case

I or II of Schedule D,

 

 

Finance Bill
Part 9 — Miscellaneous and supplementary provisions

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            subsections (2) to (7) do not apply and subsection (8) does not apply in relation

to any disposal by the company of any of the shares.

     (10)   Schedule 40 to this Act (which makes amendments relating to the acquisition

and disposal by a company of its own shares) has effect.

     (11)   For the purposes of this section—

5

           (a)           a company issues “bonus shares” if it issues share capital as paid up

otherwise than by the receipt of new consideration (within the meaning

of section 254 of the Taxes Act 1988), and

           (b)           “the Taxes Acts” has the same meaning as in the Taxes Management

Act 1970 (c. 9),

10

            and in this section references to a “company” are to a company with a share

capital.

     (12)   The preceding provisions of this section and the provisions of Schedule 40 to

this Act have effect in relation to any acquisition of shares by a company on or

after such day as the Treasury may by order made by statutory instrument

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appoint.

 196   Companies in administration

Schedule 41 to this Act (provisions relating to the treatment, for tax purposes,

of companies in administration) has effect.

International matters

20

 197   Exchange of information between tax authorities of member States

     (1)    No obligation as to secrecy imposed by statute or otherwise precludes the

Commissioners or an authorised officer of the Commissioners from disclosing

to the competent authorities of another member State any information required

to be so disclosed by virtue of the Mutual Assistance Directive.

25

     (2)    Neither the Commissioners nor an authorised officer shall disclose any

information in pursuance of the Mutual Assistance Directive unless satisfied

that the competent authorities of the other State are bound by, or have

undertaken to observe, rules of confidentiality with respect to the information

that are not less strict than those applying to it in the United Kingdom.

30

     (3)    Nothing in this section permits the Commissioners or an authorised officer of

the Commissioners to authorise the use of information disclosed by virtue of

the Mutual Assistance Directive otherwise than for the purposes of taxation or

to facilitate legal proceedings for failure to observe the tax laws of the receiving

State.

35

     (4)    In this section—

                    “the Commissioners” means the Commissioners of Inland Revenue or the

Commissioners of Customs and Excise;

                    the “Mutual Assistance Directive” means Council Directive 77/799/EEC,

as amended by Council Directives 79/1070/EEC and 92/12/EEC.

40

     (5)    The Treasury may by order make such provision amending the definition of

the “Mutual Assistance Directive” in subsection (4) as appears to them

appropriate for the purpose of giving effect to any Council Directive adopted

after 16th April 2003 amending or replacing the Mutual Assistance Directive.

 

 

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Part 9 — Miscellaneous and supplementary provisions

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     (6)    An order under subsection (5) shall be made by statutory instrument which

shall be subject to annulment in pursuance of a resolution of the House of

Commons.

     (7)    In section 48 of the Value Added Tax Act 1994 (c. 23) (VAT representatives)—

           (a)           in subsection (1B) (meaning of “the mutual assistance provisions”) for

5

paragraphs (a) and (b) substitute—

                        “(a)                           section 134 of the Finance Act 2002 and Schedule 39 to

that Act (recovery of taxes etc due in other member

States);

                        (b)                           section 197 of the Finance Act 2003 (exchange of

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information between tax authorities of member

States);”;

           (b)           after subsection (8) insert—

                  “(9)                    The Treasury may by order amend the definition of “the mutual

assistance provisions” in subsection (1B) above.”.

15

 198   Arrangements for mutual exchange of tax information

     (1)    In the following provisions (which confer power to make arrangements for the

exchange of information necessary for carrying out the tax laws of the UK and

the territory to which the arrangements relate) for “necessary for carrying out”

substitute “foreseeably relevant to the administration or enforcement of”.

20

     (2)    The provisions are—

                    sections 788(2) and 815C(1) of the Taxes Act 1988 (income tax, capital

gains tax and corporation tax), and

                    sections 158(1A) and 220A(1) of the Inheritance Tax Act 1984 (c. 51)

(inheritance tax).

25

     (3)    Any reference in arrangements made before the passing of this Act, or in any

Order in Council under which such arrangements have effect, to information

necessary for the carrying out of the tax laws of the United Kingdom or the

territory to which the arrangements relate shall be read as including any

information foreseeably relevant to the administration or enforcement of the

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tax laws of the United Kingdom or, as the case may be, of that territory.

 199   Savings income: Community obligations and international arrangements

     (1)    The Treasury may make regulations for implementing and for dealing with

matters arising out of or related to—

           (a)           any Community obligation created with a view to ensuring the

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effective taxation of savings income under the law of the United

Kingdom and the laws of the other member States, or

           (b)           any arrangements made with a territory other than a member State

with a view to ensuring the effective taxation of savings income under

the law of the United Kingdom and the law of the other territory.

40

     (2)    Regulations under this section may, in particular, require paying agents—

           (a)           to obtain and verify prescribed descriptions of information about the

identity and residence of relevant payees to whom they make savings

income payments, and

           (b)           to provide to the Inland Revenue (or an officer of the Inland Revenue)

45

prescribed descriptions of information about relevant payees to whom

 

 

Finance Bill
Part 9 — Miscellaneous and supplementary provisions

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they make savings income payments and about the savings income

payments which they make to them.

     (3)    Regulations under this section may include provision for the inspection on

behalf of the Inland Revenue of books, documents and other records of persons

who are, or appear to an officer of the Inland Revenue to be, paying agents.

5

     (4)    Regulations under this section may include provision for notices under such

regulations to be combined with notices under sections 17 and 18 of the Taxes

Management Act 1970 (c. 9) (interest paid or credited by banks and others).

     (5)    Regulations under this section may include provision about the time at or

within which, and the manner in which, any requirement imposed by such

10

regulations is to be complied with.

     (6)    Regulations under this section may include provision for penalties for failure

to comply with requirements imposed by such regulations (including

provision applying any provision of the Taxes Management Act 1970 about the

determination of penalties or any other matter relating to penalties); and in the

15

first column of the Table in section 98 of that Act (penalties for failure to furnish

information etc), insert at the appropriate place “Regulations under section 199

of the Finance Act 2003.”.

     (7)    In this section “paying agents” means persons of a prescribed description who

make savings income payments to other persons; and the descriptions of

20

persons who may be prescribed as paying agents include, in particular, public

officers and government departments.

     (8)    For the purposes of this section a person makes savings income payments to

another person if the person—

           (a)           makes payments of savings income to the other person, or

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           (b)           secures the payment of savings income for the other person.

     (9)    In this section “savings income” means interest (apart from interest of a

prescribed description) or other sums of a prescribed description.

     (10)   In this section “relevant payees” means persons of a prescribed description

who are resident (within the meaning of the regulations) in a prescribed

30

territory and persons of any such other description as may be prescribed; and

the only territories which may be prescribed are the other member States and

territories with which arrangements such as are mentioned in subsection (1)(b)

have been made.

     (11)   Regulations under this section—

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           (a)           may make different provision for different cases or descriptions of case,

and

           (b)           may include supplementary, incidental, consequential or transitional

provision.

     (12)   The power to make regulations under this section is exercisable by statutory

40

instrument.

     (13)          A statutory instrument containing regulations under this section is subject to

annulment in pursuance of a resolution of the House of Commons.

     (14)   In this section—

                    “the Inland Revenue” means the Commissioners of Inland Revenue, and

45

                    “prescribed” means prescribed by regulations under this section.

 

 

 
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