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Finance Bill
Schedule 27 — Permanent establishment etc: consequential amendments

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          (2)      For the purposes of this Schedule a person is regarded as acting in an

independent capacity on behalf of a company only if the relationship

between them, having regard to its legal, financial and commercial

characteristics, is a relationship between persons carrying on independent

businesses that deal with each other at arm’s length.

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          (3)      Section 839 of the Taxes Act 1988 (connected persons) applies for the

purposes of this Schedule.

          (4)      This Schedule has effect in the case of a person who acts as a broker or

provides investment services as part only of a business as if that part were a

separate business.

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Schedule 27

Section 155

 

Permanent establishment etc: consequential amendments

Taxes Act 1988

  1       (1)      The Taxes Act 1988 is amended as follows.

          (2)      In section 606 (persons responsible in case of default of administrator of

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retirement benefits scheme), for subsection (13) substitute—

              “(13)                References in this section to the employer include, where the

employer is not resident in the United Kingdom, any person who is

treated as UK representative of the employer under section 126 of the

Finance Act 1995 or section 150 of the Finance Act 2003.”.

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          (3)      In section 806L (carry forward or carry back of unrelieved foreign tax), for

subsection (7) substitute—

              “(7)                In this section—

                                      “overseas permanent establishment” means a permanent

establishment through which a company carries on a trade in

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a territory outside the United Kingdom; and

                                      “permanent establishment”—

                           (a)                          if there are arrangements having effect under section

788 in relation to the territory concerned that define

the expression, has the meaning given by those

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arrangements, and

                           (b)                          if there are no such arrangements, or if they do not

define the expression, has the meaning given by

section 148 of the Finance Act 2003.”.

          (4)      In Schedule 15 (qualifying policies), in paragraph 24 (policies issued by non-

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resident companies), in sub-paragraph (3)(b) (twice) and (c) for “branch”

substitute “permanent establishment”.

Taxation of Chargeable Gains Act 1992

  2       (1)      The Taxation of Chargeable Gains Act 1992 (c. 12) is amended as follows.

          (2)      In section 10 (non-resident with United Kingdom branch or agency)—

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              (a)             omit subsection (3); and

 

 

Finance Bill
Schedule 27 — Permanent establishment etc: consequential amendments

    356

 

              (b)             in subsection (4), omit “or corporation tax”.

          (3)      In sections 13(5)(d), 25(7)(b), 106(10), 139(1A), 140A(2), 159(4)(b), 171(1A),

175(2AA), 179(1A), 190(2)(b) and (3)(b), 199(6)(b) and 228(6)(b), and in

Schedule 7A, paragraph 1(3A), for “10(3)” substitute “10B”.

Finance Act 1993

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  3       (1)      In sections 93 and 93A of the Finance Act 1993 (c. 34) (use of currency other

than sterling) for “branch”, wherever occurring, substitute “permanent

establishment”.

          (2)      The provisions in which the above amendment is to be made are—

              (a)             in section 93, subsection (2)(b) and the definition of “return of

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accounts” in subsection (7) (twice);

              (b)             in section 93A, subsections (2)(b), (3)(b) and (7)(b).

Finance Act 1995

  4       (1)      Section 126 of the Finance Act 1995 (c. 4) (UK representatives of non-

residents) is amended as follows.

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          (2)      In subsection (1), omit the words “, corporation tax”.

          (3)      In subsection (2)—

              (a)             after paragraph (b) insert “and”;

              (b)             in paragraph (c) omit the words from “or fall” to “non-resident”; and

              (c)             omit sub-paragraph (d) and the word “and” preceding it.

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          (4)      For subsection (8) substitute—

              “(8)                In this section, “branch or agency” means any factorship, agency,

receivership, branch or management.”.

          (5)      In subsection (9), omit paragraph (b) and the word “and” preceding it.

          (6)      After subsection (9) insert—

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              “(10)                This section does not apply in relation to income tax chargeable on

income of a company otherwise than as a trustee.”.

  5       (1)      Section 127 of the Finance Act 1995 (persons not treated as UK

representatives) is amended as follows.

          (2)      In subsection (1) for “(a) to (d)” substitute “(a) to (c)”.

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          (3)      In subsection (5)(b) omit “or 129”.

          (4)      In subsection (17), in the definition of “branch or agency” for “the

Management Act” substitute “section 126 above”.

          (5)      In subsection (19) omit paragraph (b) and the word “and” preceding it.

  6        In section 128 of the Finance Act 1995 (limit on income chargeable on non-

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residents: income tax), after subsection (11) insert—

              “(12)                This section does not apply in relation to income tax chargeable on

income of a company otherwise than as a trustee.”.

  7        Omit section 129 of the Finance Act 1995 (limit on income chargeable on non-

residents: corporation tax).

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Finance Bill
Schedule 28 — Capital gains tax: reporting limits and annual exempt amount
Part 1 — Reporting limits

    357

 

Finance Act 1996

  8        In Schedule 15 to the Finance Act 1996 (c. 8) (loan relationships: transitional

provisions), in paragraph 8(6)(c)—

              (a)             for “10(3)” substitute “10B”, and

              (b)             for “on a disposal by a branch or agency” substitute “attributable to

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a permanent establishment”.

Finance Act 2000

  9                 In Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme),

in paragraph 79(5) (gain accruing on chargeable event), for “section 10”

substitute “section 10B”.

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Schedule 28

Section 159

 

Capital gains tax: reporting limits and annual exempt amount

Part 1

Reporting limits

  1        After section 3 of the Taxation of Chargeable Gains Act 1992 (c. 12) insert—

15

       “3A     Reporting limits

              (1)             Where in the case of an individual—

                    (a)                   the amount of chargeable gains accruing to him in any year

of assessment does not exceed the exempt amount for that

year, and

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                    (b)                   the aggregate amount or value of the consideration for all

chargeable disposals of assets made by him in that year does

not exceed four times the exempt amount for that year,

                              a statement to that effect is sufficient compliance with so much of any

notice under section 8 of the Management Act as requires

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information for the purposes of establishing the amount in which he

is chargeable to capital gains tax for that year.

              (2)             For the purposes of subsection (1)(a) above—

                    (a)                   the amount of chargeable gains accruing to an individual in a

year of assessment for which no deduction falls to be made in

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respect of allowable losses is the amount after any reduction

for taper relief;

                    (b)                   the amount of chargeable gains accruing to an individual in a

year of assessment for which such a deduction does fall to be

made is the amount before deduction of losses or any

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reduction for taper relief.

              (3)             For the purposes of subsection (1)(b) above a “chargeable disposal”

is any disposal other than—

                    (a)                   a disposal on which any gain accruing is not a chargeable

gain, or

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Finance Bill
Schedule 28 — Capital gains tax: reporting limits and annual exempt amount
Part 2 — Annual exempt amount

    358

 

                    (b)                   a disposal the consideration for which is treated by virtue of

section 58 (husband and wife) as being such that neither a

gain nor a loss would accrue.

              (4)             Subsection (1) above applies to personal representatives (for the year

of assessment in which the individual in question dies and for the

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next 2 following years) as it applies to an individual.

              (5)             Subsection (1) above applies to the trustees of a settlement in

accordance with Schedule 1.

              (6)             In this section “exempt amount” has the meaning given by section 3

(read, where appropriate, with Schedule 1).”.

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  2       (1)      In the heading to Schedule 1 to that Act (application of exempt amount in

cases involving settled property) after “exempt amount” insert “and

reporting limits”.

          (2)      In paragraph 1 of that Schedule (trustees for person with a disability) after

sub-paragraph (5) insert—

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                           “(5A)                                                      In its application to the trustees of a settlement, section 3A(1) has

effect with the substitution for the reference to section 8 of the

Management Act of a reference to section 8A of that Act.”.

          (3)      In paragraph 2 of that Schedule (other trustees) after sub-paragraph (6)

insert—

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                           “(6A)                                                      In its application to the trustees of a settlement, section 3A(1) has

effect with the substitution for the reference to section 8 of the

Management Act of a reference to section 8A of that Act.”.

Part 2

Annual exempt amount

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  3       (1)      Section 3 of the Taxation of Chargeable Gains Act 1992 (c. 12) is amended as

follows.

          (2)      Omit subsection (6).

          (3)      In subsection (7) for “subsections (1) to (6)” substitute “subsections (1) to

(5C)”.

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          (4)      After that subsection insert—

              “(7A)                As they apply by virtue of subsection (7) above—

                    (a)                   subsection (5A) has effect with the omission of paragraph (b),

and

                    (b)                   subsection (5B) has effect with the omission of the words “or

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(b)”.”.

  4       (1)      Paragraph 1 of Schedule 1 to that Act is amended as follows.

          (2)      In sub-paragraph (1), in the words following paragraph (b)—

              (a)             for “section 3(1) to (6)” substitute “sections 3(1) to (5C) and 3A”;

              (b)             at the end insert “, but with the modifications specified in this

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paragraph”.

          (3)      After sub-paragraph (2) insert—

                           “(2A)                                    As they apply by virtue of sub-paragraph (1) above—

 

 

Finance Bill
Schedule 28 — Capital gains tax: reporting limits and annual exempt amount
Part 3 — Commencement

    359

 

                      (a)                     section 3(5A) has effect with the omission of paragraph (b),

and

                      (b)                     section 3(5B) has effect with the omission of the words “or

(b)”.”.

          (4)      In sub-paragraph (3)—

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              (a)             for “section 3” substitute “sections 3 and 3A(1)(a)”;

              (b)             after “the exempt amount for the year”, where it first occurs, insert

“(except the one in section 3(2))”.

          (5)      In sub-paragraph (7) for “An inspector” substitute “An officer of the Board”.

  5       (1)      Paragraph 2 of that Schedule is amended as follows.

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          (2)      In sub-paragraph (1) for “section 3(1) to (6)” substitute “sections 3(1) to (5C)

and 3A”.

          (3)      In sub-paragraph (2)—

              (a)             for “subsections (1) and (5)” substitute “section 3(1), (5A), (5B) and

(5C)”;

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              (b)             after “section 3(1), (5A), (5B) and (5C)” insert “and section 3A(1)(a)”.

          (4)      After sub-paragraph (2) insert—

                           “(2A)                                    As they apply by virtue of sub-paragraph (1) above—

                      (a)                     section 3(5A) has effect with the omission of paragraph (b),

and

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                      (b)                     section 3(5B) has effect with the omission of the words “or

(b)”.”.

          (5)      Omit sub-paragraph (3).

          (6)      In sub-paragraph (9) for “An inspector” substitute “An officer of the Board”.

  6        In the first column of the Table in section 98 of the Taxes Management Act

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1970 (c. 9) (penalty for failure to furnish particulars etc), at the appropriate

place insert—

                    “Paragraph 1(7) of Schedule 1 to the 1992 Act.”.

Part 3

Commencement

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  7        The amendments in paragraphs 1, 2, 3(2) and (3), 4(2)(a) and (4)(a) and 5(2),

(3)(b) and (5) of this Schedule apply in relation to any notice under section 8

or, as the case may be, section 8A of the Taxes Management Act 1970 given

in relation to the year 2003-04 or any subsequent year of assessment.

  8        The amendments in paragraphs 3(4), 4(2)(b), (3) and (4)(b) and 5(3)(a) and (4)

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of this Schedule shall be deemed always to have had effect.

  9        The amendments in paragraphs 4(5), 5(6) and 6 of this Schedule have effect

in relation to any notice given in respect of the year 2002-03 or any

subsequent year of assessment, except that the amendment in paragraph 6

has effect only in relation to such a notice given after the passing of this Act.

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