Finance Bill (No 2) 2017 Bill: amended version

Clauses that will apply from 6 April 2017

• Taxable benefits: time limit for making good
• Pensions advice
• Legal expenses etc.
• Money purchase annual allowance
• EIS and SEIS: the no pre-arranged exits requirement
• VCTs: follow-on funding
• Social investment tax relief 
• Business investment relief
• Calculation of profits of trades and property businesses
• Trading and property allowances
• Carried-forward losses
• Losses: counteraction of avoidance arrangements
• Corporate interest restriction
• Museum and gallery exhibitions
• Grassroots sports
• Profits from the exploitation of patents: cost-sharing arrangements
• Hybrid and other mismatches
• Elections in relation to assets appropriated to trading stock
• Substantial shareholding exemption
• Substantial shareholding exemption: institutional investors
• Deemed domicile: income tax and capital gains tax
• Deemed domicile: inheritance tax
• Settlements and transfers of assets abroad: value of benefits
• Exemption from attribution of carried interest gains
• Inheritance tax on overseas property representing UK residential property
• Employment income provided through third parties
• Trading income provided through third parties
• Disguised remuneration schemes: restriction of income tax relief
• Disguised remuneration schemes: restriction of corporation tax relief
• First-year allowance for expenditure on electric vehicle charging points
• Disposals concerned with land in United Kingdom
• Petroleum revenue tax: elections for oil fields to become non-taxable
• Gaming duty: rates
• Remote gaming duty: freeplay

Clauses that contain modifications:

New HMRC Policy papers on:

• Carried forward losses and counteraction of avoidance arrangements - updated legislation
• Corporate interest restriction - updated legislation
• Deemed domicile: Income Tax and Capital Gains Tax - updated legislation
• Employment income provided through third parties - updated legislation
• Hybrid and other mismatches - updated legislation
• Inheritance Tax on overseas property representing UK residential property - updated legislation
• Substantial Shareholding Exemption: institutional investors - updated legislation

Items in red were deleted from the 2017 Finance Bill: there was insufficient parliamentary time left before the General Election on 8 June to debate them.

It is confirmed that the items deleted will be included in the next finance bill following parliament's summer recess.

Finance (No 2) Bill 2016/17

CONTENTS

 

Part 1

Direct taxes Income tax charge and rates

1.Income tax charge for tax year 2017-18

2.Main rates of income tax for tax year 2017-18

3.Default and savings rates of income tax for tax year 2017-18

4.Starting rate limit for savings for tax year 2017-18

5.Dividend nil rate for tax year 2018-19 etc

Corporation tax charge

6.Corporation tax charge for financial year 2018

 Employment income

7.Workers’ services provided to public sector through intermediaries

 8.Optional remuneration arrangements

 9.Taxable benefits: time limit for making good

 10.Taxable benefits: ultra-low emission vehicles

 11.Taxable benefits: asset made available without transfer

 12.Pensions advice

 13.Legal expenses etc

14.Termination payments etc: amounts chargeable on employment income

 15.PAYE settlement agreements

Pensions

16.Money purchase annual allowance

17.Overseas pensions

18.Pensions: offshore transfers

Trading and property businesses income

19.Calculation of profits of trades and property businesses

20.Trading and property allowances

Investment income

21.Deduction of income tax at source

22.Life insurance policies: recalculating gains on part surrenders etc

23.Personal portfolio bonds

Reliefs relating to investments

24.EIS and SEIS: the no pre-arranged exits requirement

25.VCTs: follow-on funding

26.VCTs: exchange of non-qualifying shares and securities

27.Social investment tax relief

28.Business investment relief

Chapter 3

Corporation tax

Corporation tax reliefs

29.Carried-forward losses

30.Losses: counteraction of avoidance arrangements

31.Corporate interest restriction

32.Museum and gallery exhibitions

33.Grassroots sport

34.Profits from the exploitation of patents: cost-sharing arrangements

Hybrids and other mismatches

35.Permitted taxable periods of payees and deductions for amortisation

Northern Ireland

36.Trading profits taxable at the Northern Ireland rate

Chapter 4

Chargeable gains

37.Exemption from attribution of carried interest gains

38.Elections in relation to assets appropriated to trading stock

39.Substantial shareholding exemption

40.Substantial shareholding exemption: institutional investors

Chapter 5

Provisions relating to more than one tax

Domicile, overseas property etc

41.Deemed domicile: income tax and capital gains tax

42.Deemed domicile: inheritance tax

43.Settlements and transfer of assets abroad: value of benefits

44.Inheritance tax on overseas property representing UK residential property

Employee shareholder shares

45.Employee shareholder shares: amount treated as earnings

46.Employee shareholder shares: abolition of CGT exemption

47.Employee shareholder shares: purchase by company

Disguised remuneration

48.Employment income provided through third parties

49.Trading income provided through third parties

50.Disguised remuneration schemes: restriction of income tax relief

51.Disguised remuneration schemes: restriction of corporation tax relief

Capital allowances

52.First-year allowance for expenditure on electric vehicle charging points

Transactions in UK land

53.Disposals concerned with land in United Kingdom

Co-ownership authorised contractual schemes

54.Co-ownership authorised contractual schemes: capital allowances

55.Co-ownership authorised contractual schemes: information requirements

56.Co-ownership authorised contractual schemes: offshore funds

Part 2

Indirect taxes 

57.VAT: zero-rating of adapted motor vehicles etc

Insurance premium tax

58.IPT: standard rate

59.IPT: anti-forestalling provision

Landfill tax

60.Landfill tax: taxable disposals

Air passenger duty

61.Air passenger duty: rates of duty from 1 April 2017

62.Air passenger duty: rates of duty from 1 April 2018

Petroleum revenue tax

63.Petroleum revenue tax: elections for oil fields to become non-taxable

Vehicle excise duty

64.VED: rates for light passenger vehicles, light goods vehicles, motorcycles etc

Alcohol duties

65.Alcoholic liquor duties: rates

Gaming duties

66.Gaming duty: rates

67.Remote gaming duty: freeplay

Tobacco products

68.Tobacco products duty: rates

69.Tobacco products duty: minimum excise duty

70.Tobacco products manufacturing machinery: licensing scheme

Part 3

Soft drinks industry levy ER amends sent to NRM 20/04

Introductory

71.Soft drinks industry levy

72.“Soft drink” and “package”

73.Meaning of “prepared drink”

Chargeable soft drinks

74.Meaning of “chargeable soft drink”

75.Sugar content condition

76.Exempt soft drinks

Charging of the soft drinks industry levy

77.Charge to soft drinks industry levy

78.Chargeable events: soft drinks packaged in the UK

79.Chargeable events: soft drinks imported into the UK

80.Secondary warehousing regulations

81.Liability to pay the levy

82.Levy rates

Exemption etc

83.Small producer exemption

84.Meaning of “small producer”

85.Tax credits

Registration

86.The register

87.Liability to register: packagers

88.Liability to register: producers

89.Liability to register: imported chargeable soft drinks

90.Notification of liability and registration

91.Voluntary registration: small producers

92.Cancellation of registration under section 87, 88 or 89

93.Cancellation of voluntary registration

94.Correction of the register

95.Applications, notifications etc

Offences

96.Fraudulent evasion

97.Failure to notify registration liability

Administration and enforcement

98.Payment, collection and recovery

99.Records

100.Power to make further provision about enforcement

101.Appeals etc

102.Supplementary amendments

Miscellaneous

103.Regulations: death, incapacity or insolvency of person carrying on a business

104.Provisional collection of soft drinks industry levy

General

105.Interpretation

106.Regulations

107.Commencement

Part 4

Fulfilment businesses

108.Carrying on a third country goods fulfilment business

109.Requirement for approval

110.Register of approved persons

111.Regulations relating to approval, registration etc.

112.Disclosure of information by HMRC

113.Offence

114.Forfeiture

115.Penalties

116.Appeals

117.Regulations

118.Interpretation

119.Commencement

Part 5

Administration, avoidance and enforcement

Reporting and record-keeping

120.Digital reporting and record-keeping for income tax etc

121.Digital reporting and record-keeping for income tax etc: further amendments

122.Digital reporting and record-keeping for VAT

Enquiries

123.Partial closure notices

Avoidance etc

124.Errors in taxpayers’ documents NRM updated planner, adjusting note

125.Penalties for enablers of defeated tax avoidance

126.Disclosure of tax avoidance schemes: VAT and other indirect taxes

127.Promoters of tax avoidance schemes: threshold conditions etc

128.Requirement to correct certain offshore tax non-compliance

129.Penalty for transactions connected with VAT fraud etc

Customs enforcement powers

130.Power to enter premises and inspect goods

131.Power to search vehicles or vessels

Information

132.Data-gathering from money service businesses

Part 6

Final

133.Northern Ireland welfare payments: updating statutory reference

134.Interpretation

135.Short title

Schedule 1

Workers’ services provided to public sector through
intermediaries

Part 1 Preliminary amendments

Part 2 New Chapter 10 of Part 2 of ITEPA 2003

Part 3 Consequential amendments

Part 4 Commencement

Schedule 2 Optional remuneration arrangements

Schedule 3  Overseas pensions

Part 1 Registered pension schemes established outside the UK

Part 2 Income tax on pension income

Part 3 Lump sums for UK residents from foreign pension schemes

Schedule 4 Pensions: offshore transfers

Part 1 Charges where payments made in respect of overseas

pensions

Part 2 Income tax on pension transfers: overseas transfer charge

Schedule 5 Trades and property businesses: calculation of profits

Part 1 Trades etc: amendments of ITTOIA 2005

Part 2 Property businesses: amendments of ITTOIA 2005

Part 3 Trades etc: amendments of other Acts

Part 4 Commencement and transitional provision

Schedule 6 Trading and property allowances

Part 1 Main provisions

Part 2 Consequential amendments

Part 3 Commencement

Schedule 7 Deduction of income tax at source

Part 1 Interest distributions of investment trust or authorised

investment fund

Part 2 Interest on peer-to-peer lending

Part 3 Further amendment and commencement

Schedule 8 Social investment tax relief

Part 1 Amendments of Part 5B of ITA 2007

Part 2 Consequential amendments

Part 3 Commencement

Schedule 9 Relief for carried-forward losses

Part 1  Amendment of general rules about carrying forward losses

Part 2 Restriction on deductions in respect of carried-forward losses

Part 3  Group relief for carried-forward losses

Part 4 Insurance companies: carrying forward BLAGAB trade losses

Part 5 Carrying forward trade losses in certain creative industries

Part 6 Oil activities

Part 7 Oil contractors

Part 8 Tax avoidance

Part 9 Northern Ireland trading losses etc

Part 10 Minor and consequential amendments

Part 11 Commencement etc

Schedule 10 Corporate interest restriction

Part 1 New Part 10 of TIOPA 2010

Part 2 New Schedule 7A to TIOPA 2010

Part 3 Consequential amendments

Part 4 Commencement and transitional provision

Schedule 11 Relief for production of museum and gallery exhibitions

Part 1 Amendment of CTA 2009

Part 2 Consequential amendments

Part 3 Commencement

Schedule 12 Trading profits taxable at the Northern Ireland rate

Part 1 Amendments relating to SMEs

Part 2 Minor amendments

Part 3 Commencement etc

Schedule 13 Deemed domicile: income tax and capital gains tax

Part 1 Application of deemed domicile rule

Part 2 Protection of overseas trusts

Part 3 Capital gains tax rebasing

Part 4 Cleansing of mixed funds

Schedule 14 Settlements and transfer of assets abroad: value of benefits

Schedule 15 Inheritance tax on overseas property representing UK

residential property

Schedule 16 Employment income provided through third parties

Schedule 17 Employment income provided through third parties: loans etc

outstanding on 5 April 2019

Part 1 Application of Part 7A of ITEPA 2003

Part 2 Approval of a qualifying loan etc.

Part 3 Exclusions

Part 4 Supplementary provision

Part 5 Consequential amendments

Schedule 18 Trading income provided through third parties: loans etc

outstanding on 5 April 2019

Schedule 19 VAT: zero-rating of adapted motor vehicles etc

Schedule 20 Soft drinks industry levy: recovery and overpayments

 Schedule 21 Soft drinks industry levy: requirements to keep records etc:

penalties

Part 1 Penalties

Part 2 Assessments

Schedule 22 Soft drinks industry levy: appeals and reviews

Part 1 Appealable decisions

Part 2 Reviews

Part 3 Appeals

Schedule 23 Soft drinks industry levy: supplementary amendments

Schedule 24 Third country goods fulfilment businesses: penalty

Schedule 25 Digital reporting and record-keeping: amendment of TMA

1970

Schedule 26 Partial closure notices

Schedule 27 Penalties for enablers of defeated tax avoidance

Part 1 Liability to penalty

Part 2 “Abusive” and “tax arrangements”: meaning

Part 3 “Defeat” in respect of abusive tax arrangements

Part 4 Persons who “enabled” the arrangements

Part 5 Amount of penalty

Part 6 Assessment of penalty

Part 7 GAAR Advisory Panel opinion, and representations

Part 8 Appeals

Part 9 Information

Part 10 Publishing details of persons who have incurred penalties

Part 11 Miscellaneous

Part 12 General

Schedule 28 Disclosure of tax avoidance schemes: VAT and other indirect taxes

Part 1 Duties to disclose avoidance schemes etc

Part 2 Penalties

Part 3 Consequential amendments

Part 4 Supplemental

Schedule 29 Requirement to correct certain offshore tax non-compliance

Part 1 Liability for penalty for failure to correct

Part 2 Amount of penalty

Part 3 Further provisions relating to the requirement to correct

Part 4 Supplementary

 

Just after scrapping over half of the original Finance (No 2) 2017 Bill, parliament also proposed five new clauses into Finance (No 2) Bill as follows:

Review of international best practice in relation to tax avoidance and tax evasion

(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of international best practice by Governments and tax collection authorities in relation to—

(a) the prevention and reduction of tax avoidance arrangements, and

(b) combatting tax evasion.

(2) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.

(3) In this section, “tax avoidance arrangements” mean arrangements broadly comparable in their effect to arrangements in the United Kingdom which have the obtaining of a tax advantage as the main purpose, or one of the main purposes, of the arrangements.”

Review of VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service

(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service, including but not limited to—

(a) an analysis of the impact on the financial position of Police Scotland and the Scottish Fire and Rescue Service arising from their VAT treatment, and

(b) an estimate of the change to their financial position were they eligible for a refund of VAT under section 33 of the VAT Act 1994.

(2)  report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.”

 Review of oil and gas corporation tax rates and investment allowances

(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of the corporation tax rates and investment allowances applicable to companies producing oil and gas in the UK or on the UK continental shelf.

(2) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.”

Review of tax regime relating to decommissioning of oil and gas infrastructure

(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of the ways in which the tax regime could be changed to increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure or the development of new fields in the UK continental shelf.

(2) In undertaking the review under subsection (1), the Chancellor of the Exchequer must consult—

(a) the Department for Business, Energy and Industrial Strategy;

(b) the Oil and Gas Authority;

(c) Scottish Ministers; and

(d) such other stakeholders as the Chancellor of the Exchequer thinks appropriate.

(3) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.” 

Review of tax status of allowances for members of the House of Lords

(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of the tax status of allowances payable to members of the House of Lords in that capacity.

(2) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.”

The following list of taxpayers are likely to be affected by the decision to cut down Finance (No 2) Bill 2017: their fate lies in the balance pending a new government's plans following the election.

• Non-domiciled individuals who expected to be deemed UK domiciled may have realised capital gains in rebasing their assets prior to the proposed 6 April 2017 changes. They many also have incurred income tax liabilities in 'cleansing' foreign bank accounts.
• Non-doms settlors and trustees of offshore trusts who were to be affected by the deemed UK domciled rules should be very careful with regard to remittances to the UK.
• Making Tax Digital, the introduction may now be postponed by a year: although a blow to software companies this will be a cost saving for many taxpayers.
• Companies selling subsidiaries since 1 April 2017 may find that they have liabilities under the old version of the SSE rules
• Landlords / traders who may want to use cash basis, or claim £1,000 allowance (though latter more of a year end worry).
• Remitance basis users who were wanting to take advantage of the new wider Business Investment Relief rules.
• Large groups subject to interest restrictions.
• Companies looking to claim the new museum and gallery relief, or tax relief for contributions to grass roots sports.
• Any taxpayer appropriating assets standing at a loss to stock.
• Users of disguised remuneration schemes, including traders and partners who might fall in the new rules targeting avoidance of tax and NICs by depressing trading income.
• Taxpayers falling in the ‘profits from trading in and developing UK land’ rules with  contracts entered into before 5 July 2016 (the current grandfathering, was to be removed by dropped FB clauses).
• Parties to ‘failed avoidance schemes’: the new penalty provisions and restrictions will not apply to errors.