Finance Act 2006 (c. 25)

(The document as of February, 2008)

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(1) In sections 71A to 73 of FA 2003 (alternative property finance) for "individual" substitute "person" (and for "an individual" substitute "a person").

(2) Sections 71A(6), 72(6), 72A(6) and 73(4) shall cease to have effect.

(3) In section 73(3) after "chargeable" insert "on a chargeable consideration that is not less than the market value of the interest and, in the case of the grant of a lease at a rent, the rent."

(4) After section 73 insert--

" 73A Sections 71A to 73: supplemental

Sections 71A to 73 do not apply to arrangements in which the first transaction is exempt from charge by virtue of Schedule 7. "

(5) This section shall have effect in relation to arrangements in which the effective date of the first transaction (within the meaning of sections 71A to 73 of FA 2003) is on or after the date on which this Act is passed; and section 119(1) of FA 2003 shall have effect for determining the effective date for the purposes of this subsection.

Stamp duty

169 Reliefs for certain company acquisitions

(1) Part 3 of FA 1986 (stamp duty) is amended as follows.

(2) In section 75 (relief for acquisition of target company's undertaking in pursuance of reconstruction scheme)--

(a) in subsection (4) (condition as to registered office etc) omit "that the registered office of the acquiring company is in the United Kingdom and", and

(b) in subsection (5)(c) (condition that any shareholder holds the same proportion of shares in the companies) after "the same" insert ", or as nearly as may be the same,".

(3) In section 76 (other relief for acquisition of target company's undertaking), in subsection (3) (condition as to registered office etc) omit "that the registered office of the acquiring company is in the United Kingdom and".

(4) In section 77 (relief for acquisition of target company's share capital), in subsection (3) (conditions for relief),--

(a) omit paragraph (a) (condition as to registered office),

(b) in paragraph (g) (condition that the number of shares of any particular class bear to all the shares the same proportion) after "the same proportion" insert ", or as nearly as may be the same proportion,", and

(c) in paragraph (h) (condition that proportion of shares of any particular class held by any shareholder be the same) after "the same" insert ", or as nearly as may be the same,".

(5) The amendments made by this section have effect in relation to instruments executed after the day on which this Act is passed.

Part 9 Miscellaneous provisions

Landfill tax

170 Rate of landfill tax

(1) In section 42 of FA 1996 (amount of landfill tax) for the amount specified in subsection (1)(a), and the corresponding amount specified in subsection (2), substitute "£21".

(2) The amendments made by this section have effect in relation to taxable disposals made, or treated as made, on or after 1st April 2006.

Climate change levy

171 Climate change levy: rates

(1) In Schedule 6 to FA 2000 (climate change levy) for the Table in paragraph 42(1) (amount payable by way of levy) substitute--

TABLE

Taxable commodity supplied	Rate at which levy payable if supply is neither a half-rate supply nor a reduced-rate supply
Electricity	£0.00441 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility	£0.00154 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state	£0.00985 per kilogram
Any other taxable commodity	£0.01201 per kilogram

(2) This section has effect in relation to supplies treated as taking place on or after 1st April 2007.

172 Abolition of half-rate supplies etc

(1) For the purposes of climate change levy, no supply made on or after 1st April 2006 is a half-rate supply.

(2) Subsections (3) to (6) have effect for determining when a supply is to be regarded as made for the purposes of subsection (1).

(3) A supply--

(a) of electricity, or

(b) of gas that is in a gaseous state and is of a kind supplied by a gas utility,

is to be regarded as made at the time when the electricity or gas is actually supplied.

(4) In the case of a supply of a taxable commodity not falling within subsection (3) by a person who is resident in the United Kingdom--

(a) if the commodity is to be removed, the supply is to be regarded as made at the time of the removal,

(b) if the commodity is not to be removed, the supply is to be regarded as made when the commodity is made available to the person to whom it is supplied.

This subsection does not apply if subsection (6) (deemed self-supply) applies in the case of the supply.

(5) In the case of a supply of a taxable commodity not falling within subsection (3) by a person who is not resident in the United Kingdom, the supply is to be regarded as made--

(a) when the commodity is delivered to the person to whom it is supplied, or

(b) if earlier, when it is made available in the United Kingdom to that person.

This subsection does not apply if subsection (6) (deemed self-supply) applies in the case of the supply.

(6) In any case where, by virtue of paragraph 23(3) of Schedule 6 to FA 2000, a person is, for the purposes of that Schedule, deemed to make a supply to himself of a quantity of a taxable commodity--

(a) which he has produced, and

(b) which does not fall within subsection (3),

the supply is to be regarded as made at the time when he produced that particular quantity of the taxable commodity.

(7) In paragraph 34 of Schedule 6 to FA 2000 (deemed supplies of commodities other than electricity and certain gas), in sub-paragraph (2) omit the words "(or, in the case of electricity, consumed)" (which are unnecessary, because the paragraph does not apply in the case of electricity).

(8) In consequence of subsection (1), Schedule 6 to FA 2000 (climate change levy) is amended as follows.

(9) In paragraph 37 (supplies of electricity or gas spanning change of rate etc) in sub-paragraph (1)(c) omit "half-rate supplies or".

(10) In paragraph 38 (other supplies spanning change of rate etc) in sub-paragraph (1)(c) omit "half-rate supplies or".

(11) In paragraph 42(1) (amount payable by way of levy)--

(a) in paragraph (a), for "neither a half-rate supply nor" substitute "not";

(b) omit paragraph (b);

(d) in the Table (and in the Table substituted for it by section 171 of this Act), in the heading to column (2), for "neither a half-rate supply nor" substitute "not".

(12) Paragraph 43 (half-rate for supplies to horticultural producers) shall cease to have effect.

(13) In paragraph 62 (tax credits) in subsection (1)--

(a) in paragraph (c)--

(i) for "neither a half-rate supply nor" substitute "not";

(ii) omit "half-rate or";

(b) omit paragraph (d).

(14) In paragraph 101 (civil penalties: incorrect notifications) in sub-paragraph (2)(a)--

(a) at the end of sub-paragraph (ii) insert "or";

(b) omit sub-paragraph (iii).

(15) In paragraph 147 (interpretation: general) omit the definition of "half-rate supply".

(16) Subsections (8) to (15) come into force on such day as the Treasury may by order made by statutory instrument appoint.

(17) The power to make an order under subsection (16)--

(a) may be exercised so as to bring a provision into force only in such cases as may be described in the order,

(b) may be exercised so as to make different provision for different cases or descriptions of case,

International tax arrangements

173 International tax enforcement arrangements

(1) If Her Majesty by Order in Council declares that--

(a) arrangements relating to international tax enforcement which are specified in the Order have been made in relation to any territory or territories outside the United Kingdom, and

(b) it is expedient that those arrangements have effect,

those arrangements have effect (and do so in spite of anything in any enactment or instrument).

(2) For the purposes of subsection (1) arrangements relate to international tax enforcement if they relate to any or all of the following--

(a) the exchange of information foreseeably relevant to the administration, enforcement or recovery of any UK tax or foreign tax;

(b) the recovery of debts relating to any UK tax or foreign tax;

(3) In this section--

"UK tax" means any tax or duty imposed under the domestic law of the United Kingdom, and
"foreign tax" means any tax or duty imposed under the law of the territory, or any of the territories, in relation to which the arrangements have been made.

(4) Where any arrangements have effect by virtue of this section, no obligation of secrecy (whether imposed by statute or otherwise)--

(a) prevents any Minister of the Crown, or person with responsibilities in any government department, from disclosing to the Commissioners for Her Majesty's Revenue and Customs or any authorised Revenue and Customs official any information which is authorised to be disclosed in accordance with the arrangements to any authorised officer of the authorities of the territory, or any of the territories, in relation to which the arrangements have been made, or

(b) prevents the Commissioners for Her Majesty's Revenue and Customs or any authorised Revenue and Customs official from disclosing to any such authorised officer any information which is authorised to be so disclosed in accordance with the arrangements.

(5) But neither the Commissioners for Her Majesty's Revenue and Customs nor any authorised Revenue and Customs official may disclose any information in pursuance of any arrangements having effect by virtue of this section to any authorised officer of the authorities of the territory, or any of the territories, in relation to which the arrangements have been made unless satisfied that the authorities of the territory concerned are bound by, or have undertaken to observe, rules of confidentiality with respect to the information which are not less strict than those applying to it in the United Kingdom.

(6) An Order in Council made under this section revoking an earlier such Order may contain any transitional provisions that appear appropriate.

(7) An Order under this section is not to be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons.

(8) Any provisions which--

(a) are included in an Order in Council made under any of the provisions specified in subsection (10),

(b) are in force immediately before the passing of this Act, and

(c) could have been included in an Order in Council under this section had the Order in Council been made after that time,

have effect after that time as if included in an Order in Council under this section.

(9) If any such provisions relate to arrangements covering UK taxes or foreign taxes (or both) other than those in relation to which the Order in Council had effect, the provisions also have effect after the passing of this Act (by virtue of subsection (8)) in relation to those other UK taxes or foreign taxes (or both).

(10) The provisions referred to in subsection (8)(a) are--

(a) sections 788 and 815C of ICTA (international arrangements relating to income tax, corporation tax and capital gains tax and analogous foreign taxes), and

(b) sections 158 and 220A of IHTA 1984 (international arrangements relating to inheritance tax and analogous foreign taxes).

(11) In this section "Revenue and Customs official" has the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005 (c. 11) (confidentiality).

174 Arrangements under section 173: information powers

(1) Subsections (1) to (8) and (8C) to (9) of section 20 of TMA 1970 (powers to call for information relevant to liability to income tax, corporation tax or capital gains tax), and sections 20B, 20BB and 20D of that Act so far as relating to those subsections, have effect as if--

(a) the references in those provisions to tax liability included liability to relevant foreign tax, and

(b) the references to tax included relevant foreign tax,

(but subject to subsection (3)).

(2) "Relevant foreign tax" means any tax or duty--

(a) imposed under the law of a territory in relation to which arrangements having effect by virtue of section 173 have been made, and

(b) covered by the arrangements.

(3) In their application by virtue of subsection (1) the provisions mentioned in that subsection have effect as if--

(a) the reference in section 20(7A) to any provision of the Taxes Acts were to any provision of the law of the territory concerned,

(b) the reference in subsection (2) of section 20B to an appeal were to an appeal, review or similar proceedings under the law of that territory, and

175 Arrangements under section 173: recovery of debts

(1) The Treasury may by regulations make provision for the recovery in the United Kingdom of debts relating to any relevant foreign tax pursuant to arrangements having effect by virtue of section 173.

(2) "Relevant foreign tax" means any tax or duty--

(a) imposed under the law of a territory in relation to which such arrangements have been made, and

(b) covered by the arrangements.

(3) Regulations under this section may make provision for the taking of action to recover debts relating to any relevant foreign tax by way of legal proceedings, distress, diligence or otherwise.

(4) Such provision may in particular be made by applying, with any appropriate modifications, any enactment or rule of law that applies in relation to the recovery of any tax or duty imposed under the domestic law of the United Kingdom (including any enactment relating to penalties or interest on unpaid amounts).

(5) The power to make regulations under this section is exercisable by statutory instrument.

(6) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

176 Double taxation agreements: procedure

In section 788 of ICTA (relief by agreement with other territories), for subsection (10) substitute--

" (10) An Order under this section is not to be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons. "

Disclosure of information

177 Disclosure of information

(1) After section 352 of the Gambling Act 2005 (c. 19) (disclosure of information: data protection) insert--

" 352A Wrongful disclosure

(1) Where the Commissioners for Her Majesty's Revenue and Customs provide information to a person under this Act, section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) shall apply to the disclosure of the information by the person as it applies to the disclosure of information in contravention of a provision of that Act.

(2) But section 19 shall not apply to disclosure--

(a) in accordance with this Act,

(b) in accordance with another enactment, or

(3) In subsection (1)--

(a) information provided to a person shall be treated as being provided both to him and to any person on whose behalf he acts or by whom he is employed, and

(b) the reference to disclosure by the person to whom information was provided includes a reference to disclosure by any person acting on behalf of, or employed by, the person to whom the information was provided (or a person to whom it is treated as being provided by virtue of paragraph (a)).

(4) In the application of section 18(2)(c) and (d) of that Act by virtue of subsection (2)(c) above a reference to functions of the Revenue and Customs shall be taken as a reference to functions of the person making the disclosure.

(5) In the application of section 19 of that Act by virtue of subsection (1) above "revenue and customs information" means information provided by the Commissioners (but subject to the express exclusion in section 19(2)).

(6) Section 19 of that Act shall, in so far as it applies by virtue of this section, be treated for the purposes of section 28 of this Act as an offence under this Act. "

(2) Section 352A of the Gambling Act 2005 (c. 19) as inserted by subsection (1) above shall come into force on the passing of this Act.

Part 10 Supplementary provisions

178 Repeals

(1) The enactments mentioned in Schedule 26 (which include provisions that are spent or of no practical utility) are repealed to the extent specified.

(2) The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.

179 Interpretation

In this Act--

"ALDA 1979" means the Alcoholic Liquor Duties Act 1979 (c. 4);
"CAA 2001" means the Capital Allowances Act 2001 (c. 2);
"FA", followed by a year, means the Finance Act of that year;
"F(No.2)A", followed by a year, means the Finance (No.2) Act of that year;
"HODA 1979" means the Hydrocarbon Oil Duties Act 1979 (c. 5);
"ICTA" means the Income and Corporation Taxes Act 1988 (c. 1);
"IHTA 1984" means the Inheritance Tax Act 1984 (c. 51);
"ITEPA 2003" means the Income Tax (Earnings and Pensions) Act 2003 (c. 1);
"ITTOIA 2005" means the Income Tax (Trading and Other Income) Act 2005 (c. 5);
"OTA 1975" means the Oil Taxation Act 1975 (c. 22);
"TCGA 1992" means the Taxation of Chargeable Gains Act 1992 (c. 12);
"TMA 1970" means the Taxes Management Act 1970 (c. 9);
"VATA 1994" means the Value Added Tax Act 1994 (c. 23);
"VERA 1994" means the Vehicle Excise and Registration Act 1994 (c. 22).

180 Short title

This Act may be cited as the Finance Act 2006.

SCHEDULES

Section 27

SCHEDULE 1 Group relief where surrendering company not resident in UK

Part 1 Amendments of Chapter 4 of Part 10 of ICTA

Availability of relief

1 (1) Section 402 of ICTA (surrender of relief between members of groups and consortia) is amended as follows.

(2) In subsection (1) (availability of relief) for the words from the beginning to "set out" substitute--

" (1) Subject to and in accordance with this Chapter and section 492(8)--

(a) relief for trading losses and other amounts eligible for relief from corporation tax, or

(b) losses and other amounts not eligible for relief from corporation tax,

may, in the cases set out " .

(3) For subsection (2) (group claims) substitute--

" (2) In respect of amounts falling within subsection (1)(a) above, group relief shall be available in a case where--

(a) the surrendering company and the claimant company are both members of the same group,

(b) the surrendering company is resident in the United Kingdom or is not so resident but carries on a trade there through a permanent establishment, and

(c) the claimant company is resident in the United Kingdom or is not so resident but carries on a trade there through a permanent establishment,

and, in respect of amounts falling within subsection (1)(b) above, group relief shall be available in a case where the condition in subsection (2A) below is satisfied.

A claim made by virtue of this subsection is referred to as a "group claim".

(2A) The condition in this subsection is satisfied if the surrendering company is within the charge to tax under the law of any EEA territory and--

(a) the surrendering company is a 75 per cent. subsidiary of the claimant company and the claimant company is resident in the United Kingdom, or

(b) both the surrendering company and the claimant company are 75 per cent. subsidiaries of a third company that is resident in the United Kingdom.

(2B) For the purposes of subsection (2A) above, the surrendering company is within the charge to tax under the law of any EEA territory if--

(a) it is a non-resident company which is resident in any EEA territory, or

(b) it is a non-resident company which is not resident in any EEA territory but which carries on a trade in any EEA territory through a permanent establishment. " .

(4) In subsection (3A) (group relief not available unless both companies satisfy following condition) for "Group relief is not available" substitute "A consortium claim shall not be made".

Limits on group relief

2 (1) Section 403A of ICTA (limits on group relief) is amended as follows.

(2) In subsection (10) (qualifying conditions for the purposes of subsection (9)), for paragraph (a) (group claims) substitute--

" (a) if (or so far as) the claim is a group claim for the surrender of any loss or other amount other than a qualifying overseas loss, whenever the conditions in paragraphs (a) to (c) of section 402(2) are satisfied;

(ab) if (or so far as) the claim is a group claim for the surrender of a qualifying overseas loss, whenever the condition specified in section 402(2A) is satisfied; and " .

(3) After that subsection insert--

" (11) For the purposes of subsection (10) above a "qualifying overseas loss" means a loss or other amount that is available for surrender by way of group relief in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies). " .

Relief for or in respect of non-resident companies within the charge to corporation tax

3 (1) Section 403D of ICTA (relief for or in respect of non-resident companies) is amended as follows.

(2) In subsection (1) (provision for determining amounts available for surrender by a non-resident company), in the opening words,--

(a) after "non-resident company" insert "carrying on a trade in the United Kingdom through a permanent establishment", and

(b) after "as so available" insert "(but see also subsection (11) below)".

(3) At the end insert--

" (11) Any loss or other amount that is available for surrender by way of group relief in accordance with this section is in addition to any loss or other amount that is so available in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies). " .

(4) In consequence of the amendments made by this paragraph, the title to the section becomes "Relief for or in respect of UK losses of non-resident companies".

Relief in respect of overseas losses of non-resident companies

4 (1) After section 403E of ICTA (relief for overseas losses of UK resident companies) insert--

" 403F Relief in respect of overseas losses of non-resident companies

(1) This section has effect for determining for the purposes of this Chapter the extent to which a loss or other amount is available for surrender by way of group relief by a non-resident company--

(a) which is resident in an EEA territory, or

(b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,

in a case where a group claim may be made as a result of the condition in section 402(2A) being satisfied.

(2) A loss or other amount is not available for surrender by way of group relief by the non-resident company except in so far as, in relation to the EEA territory, the amount meets--

(a) the equivalence condition,

(b) the EEA tax loss condition,

(d) the precedence condition.

(3) Part 1 of Schedule 18A determines, in the case of any amount and any EEA territory, the extent to which those conditions are met.

(4) In so far as a loss or other amount meets those conditions, Part 2 of Schedule 18A applies--

(a) for calculating the amount of the loss or other amount (if any) that is available for surrender by way of group relief, and

(b) otherwise for making provision in relation to the application of this Chapter to the non-resident company.

(5) This section is subject to section 403G (unallowable overseas losses of non-resident companies). " .

(2) After section 403F of ICTA (as inserted by sub-paragraph (1)) insert--

" 403G Unallowable overseas losses of non-resident companies

(1) This section applies in the case of a loss or other amount arising to a non-resident company--

(a) which is resident in any EEA territory, or

(b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,

where the amount is not attributable for corporation tax purposes to any UK permanent establishment of the non-resident company.

(2) The amount is not available for surrender by way of group relief by the non-resident company in so far as conditions A and B are met.

(3) Condition A is that--

(a) the amount would not qualify for group relief but for any relevant arrangements, or

(b) the amount would not have arisen to the non-resident company but for any relevant arrangements.

(4) Condition B is that the main purpose, or one of the main purposes, of the relevant arrangements was to secure that the amount would qualify for group relief.

(5) In this section references to relevant arrangements, in relation to any amount, are to--

(a) arrangements made on or after 20th February 2006, or

(b) arrangements made before that date where the amount would (but for this section) first qualify for group relief on or after that date or (as the case may be) the amount arises on or after that date.

(6) In this section--

"arrangements" includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),
"UK permanent establishment", in relation to the non-resident company, means any permanent establishment through which it carries on a trade in the United Kingdom. " .

Interpretation of Chapter 4 of Part 10 of ICTA

5 (1) Section 413 of ICTA (interpretation) is amended as follows.

(2) In subsection (1) (general definitions), after the definition of "consortium claim", insert--

" "EEA territory", in relation to any time, means a territory outside the United Kingdom which is within the European Economic Area at that time; " .

Group relief: equity holders and profits or assets available for distribution

6 (1) Schedule 18 to ICTA (group relief: equity holders and profits or assets available for distribution) is amended as follows.

(2) In paragraph 5F (special rules in the case of non-resident companies), in sub-paragraph (1)(b) (application of paragraph for relevant purposes) for "by the consortium" substitute " by the consortium;

but this paragraph does not have effect in relation to any determination in the case of amounts falling within section 402(1)(b). " .

(3) In paragraph 7 (supplemental matters), in sub-paragraph (1) (definition of "the relevant accounting period"), in the opening words, after "means" insert "(subject to sub-paragraphs (1A) to (1C) below)".

(4) After that sub-paragraph insert--

" (1A) In this Schedule "the relevant accounting period" means, in the case of a non-resident company which is not within the charge to corporation tax, the accounting period which the company would have on the following assumption.

(1B) The assumption is that the company became resident in the United Kingdom (and, accordingly, within the charge to corporation tax) at the time when it became a 75 per cent. subsidiary as mentioned in section 402(2A).

(1C) For the purposes of sub-paragraph (1B) above the reference to the company's being a 75 per cent. subsidiary is to its being such a subsidiary disregarding section 413(7). " .

Meaning of conditions in section 403F etc

7 After Schedule 18 to ICTA (group relief: equity holders and profits or assets available for distribution) insert--

Section 403F

" SCHEDULE 18A Group relief: overseas losses of non-resident companies

Part 1 Meaning of conditions for the purposes of section 403F

Introduction

1 This Part of this Schedule applies, in the case of any non-resident company, for the purposes of section 403F (relief in respect of overseas losses of non-resident companies).

The equivalence condition

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