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Specifically, counteraction must first be notified by a designated HMRC officer. Unless, having considered any representations made by the taxpayer, a designated HMRC officer then decides that counteraction ought not to apply, the arrangements must be referred to an Advisory Panel for its opinion. Counteraction will be on a just and reasonable basis.


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The GAAR will apply to income tax, NICs, corporation tax, capital gains tax, inheritance tax, petroleum revenue tax, stamp duty land tax and the new annual tax on enveloped dwellings previously known as the annual residential property tax due to be enacted in the Finance Bill The legislation will apply to abusive tax arrangements entered into on or after the date of Royal Assent to the Finance Bill The government first announced that it would consider introducing a legislative general anti-avoidance rule in the June Budget.

This led to a study group and a series of consultations. See Overview , paragraph 1. Group relief and CFCs Finance Bill will amend the group relief rules so that chargeable profits of a controlled foreign company CFC that are apportioned to a surrendering company are included in the threshold that certain amounts capable of surrender must exceed before group relief is available. A company can surrender certain types of corporation tax loss to another company in its group. The claimant company can then use this relief, called group relief, to set against its taxable profits, resulting in a lower corporation tax liability.

For more detail, see Practice note, Groups of companies: tax: Group relief. However, excess losses on transactions in UK real property, excess losses arising in respect of intangible assets, qualifying charitable donations and management expenses together, relevant amounts can be surrendered only to the extent that they exceed a certain threshold, namely the profits of the surrendering company before those profits are reduced by any losses or allowances available from any other accounting period of the surrendering company gross profits see Practice note, Groups of companies: tax: Losses available for surrender.

The aim of the CFC regime is to identify whether all or part of the profits of a non-UK resident company should be brought into the charge to UK tax by attributing those chargeable profits to a UK resident person or persons. For details of the regime, see Practice notes, Controlled foreign companies and attribution of gains: tax for accounting periods beginning before 1 January and Controlled foreign companies new regime : overview for accounting periods beginning on or after that date.

However, those CFC apportioned chargeable profits are not currently taken into account in calculating gross profits for the group relief restriction. The proposed legislation amends the group relief rules so that CFC chargeable profits apportioned to the surrendering company are included in the threshold that relevant amounts must exceed before group relief is available. This threshold is described as the "profits related threshold" and is the sum of the surrendering company's gross profits and the chargeable profits of a CFC apportioned to the surrendering company in its surrender period.

On this basis, if CFC chargeable profits are apportioned under the CFC rules, any management expenses for example would have to exceed those chargeable profits before they could be surrendered. The profits related threshold covers apportionments under both the old and new CFC regimes. The proposed legislation is to have effect for a surrender period of the surrendering company ending on or after 20 March Any chargeable profits for an accounting period of a CFC ending before that date will be disregarded.

Chargeable profits of a CFC in an accounting period which falls partly before and partly after 20 March are to be apportioned on a time or just and reasonable basis, with any profits apportioned to the part ending before 20 March being disregarded. Trade and property business deductions loophole closed As announced on 21 December , Finance Bill will add targeted anti-avoidance rules TAARs effective from that date to the income tax and corporation tax provisions governing the relationship between rules prohibiting and allowing deductions from profits of a trade or property business.

The TAARs will apply where a permissive rule would otherwise allow a deduction in calculating the profits of a trade or property business for an amount which arises from tax avoidance arrangements and will ensure that the rules prohibiting a deduction take precedence over those allowing a deduction. For more detail, see Legal update, Scheme exploiting trading and property business deduction priority rules closed.

Transfer of assets abroad and attribution of gains rules The government has announced, but not published, changes to the draft Finance Bill legislation published on 11 December to amend anti-avoidance rules dealing with the transfer of assets abroad Chapter 2, Part 13, Income Tax Act TAA rules and the attribution of chargeable gains realised by non-UK tax resident companies that are closely controlled by UK participators section 13, Taxation of Chargeable Gains Act section The purpose of this legislation is to make both sets of rules compliant with EU law and clarify certain aspects of their operation.

The changes to the draft legislation amending the TAA rules are that:. The exemption for genuine transactions will allow HMRC to make an apportionment where part of a transaction is genuine and part not, so that only income attributable to the non-genuine part is chargeable to tax. This change will take effect with the exemption itself on 6 April The last version of the draft legislation required an apportionment to be made but did not indicate how it should be done, so this seems to be an attempt to address this.

The provisions to clarify the matching rules for benefits received by persons other than the person who transferred the assets abroad have been removed. There will be a further consultation on these provisions, which will now be postponed until the Finance Bill The change to the draft legislation amending section 13 is that the new exemption for economically significant activities no longer requires activity to be carried on wholly outside the UK through a non-UK business establishment. We will review the effect of the changes after the revised legislation is published in the draft Finance Bill on 28 March Without sight of the draft legislation it is not possible to assess whether it will now achieve EU compliance.

For the last version of the draft legislation and to follow further developments, see Private client tax legislation tracker Transfer of assets abroad and attribution of gains rules. Both rate changes will be implemented by the Finance Bill CFCs: amendments In addition to the proposed changes to the CFCs regime published in December see Legal update, Draft Finance Bill legislation: key business tax measures: CFCs: amendments to the new regime , the government will introduce, in the Finance Bill , the following:.

Measures relaxing the qualifying resources limitation rules in section IB 9 of TIOPA see Practice note, Controlled foreign companies: the new regime: Qualifying resources limitation for:. UK debt incurred and repaid under "daylight facilities" incurred and repaid within 48 hours or "similar" arrangements; and.

UK third party debt incurred as part of an arrangement requiring short term up to six months bridging finance, which is repaid from a subsequent rights issue for example, in connection with the acquisition of a target company. An amendment to the definition of group treasury companies to fully align the CFC definition with the definition for debt cap purposes, which will be amended in the Finance Bill see Tax legislation tracker: finance: Debt cap: group treasury companies.

These measures will apply from 1 January , except that the group treasury companies amendment will be subject to a transitional rule enabling the existing definition to be used for accounting periods ending, or treated as ending, before 20 March For background on the CFC rules, see Practice notes, Controlled foreign companies new regime : overview and Controlled foreign companies: the new regime. Exit charges: election to defer payment extended to non-UK resident companies within the charge to corporation tax The government announced an extension to the proposed "exit charge" deferral election election , which is to be introduced in the Finance Bill with retrospective effect.

The original proposal applied to companies that ceased to be resident in the UK see the draft legislation intended to implement the original proposal published for consultation on 11 December Legal update, Deferring payment of corporate exit charges: draft Finance Bill provisions and consultation document. The election is to be extended to non-UK resident companies that are incorporated in another EEA member state that carry on a trade in the UK through a permanent establishment provided that the trade is transferred in whole or in part to another EEA member state. The list of corporation tax charges that can be deferred will need to be amended consequent upon this change.

In addition, the list of corporation tax charges that can be deferred will be extended to include the corporation tax attributable to the revaluation of trading stock. The tax information and impact note published on 20 March states that the measure will apply in respect of exit charges arising on or after 11 March The error no doubt arises from the fact that companies may elect for deferred payment for an accounting period if the day that is nine months and one day after the end of the accounting period relevant day falls on or after 11 December Therefore, companies may apply to defer tax payments for an exit charge arising for accounting periods ending on or after 10 March The following paragraph clarifies the correct position.

From 11 December , companies can apply for an exit charge payment plan to defer payment of that part of their corporation tax bills which relates to exit charges where the statutory date for payment of that tax under section 59D TMA has not already passed. This means that where a company has migrated from the UK on or after 11 March , any tax related to exit charges for its final accounting period can be deferred.

Whilst the application for deferral must generally be made within 9 months of the end of the accounting period for which the charges arise, companies have until 31 March to apply for deferral where that time limit falls between 11 December and 31 March , in order to allow them time to make the necessary application. Foreign currency assets and chargeable gains: extension to ships and aircraft The Finance Bill is to include legislation allowing chargeable gains or allowable losses arising on disposals of shares by companies to be calculated in a non-sterling currency and the gain or loss then converted into sterling using the exchange rate at the time of disposal.

This replaces the current system of converting both the acquisition costs and disposal proceeds into sterling and then calculating the difference see Practice note, Taxation of foreign exchange gains and losses for UK companies: Chargeable gains. This measure was announced as part of the Budget and draft legislation was published on 11 December see Legal update, Draft Finance Bill legislation: key business tax measures: Foreign currency assets and chargeable gains and Tax legislation tracker: corporate: Foreign currency assets and chargeable gains.

However, as part of the Budget, the government announced that, following consultation, this measure will be extended to cover not only disposals of shares but also disposals of ships, aircraft and interests in shares. This is a welcome extension as the original proposal was viewed as overly limited; indeed, it is to be hoped that the measure will be widened even further in time as this will reduce the administrative burden on taxpayers.

The measure will have effect on a date to be appointed, shortly after Royal Assent to the Finance Bill. A technical note will be published on 28 March , to clarify how the amended rules will interact with existing group relief legislation.

Kenya enacts Finance Act

Multinationals: UK to press for international tax reform In his speech, the Chancellor appeared to reiterate the commitment made in the Autumn Statement to use the UK's presidency of the G8 to press for reform of the OECD transfer pricing rules see Legal update, Autumn Statement: business tax implications: Transfer pricing and multinationals. See HM Treasury, Budget statement. The legislation will be in the Finance Bill and will take effect from April Some of the Budget materials refer to "stamp taxes" on shares and some to "stamp duty" on shares: the expectation must be that the stamp duty reserve tax charge will also be abolished.

Tax and procurement: changes to government's proposals HMRC has published a summary of responses to the informal consultation on the government's proposals requiring potential government contractors to certify occasions of non-compliance as part of the procurement selection stage and for contractual documentation to include provisions enabling the contracting authority to terminate the contract for non-compliance. For more information on the original proposals, see Legal update, Bidder tax behaviour may affect award of government contracts.

Tax changes introduced by the Finance (No.2) Act 2013

The response document, which confirms the 1 April start date, sets out the following key changes to the original proposals:. The certification period will look-back only 6 years instead of the proposed ten years and bidders will only be required to certify occasions of non-tax compliance occurring on or after 1 April , relating to tax returns filed on or after 1 October removing the draconian retrospective aspect to the proposals. The rather vaguely drawn definition of "occasion of non-compliance" is to be tightened but will also be reviewed within a year so that it only covers:.

Generally, a certificate will only extend to the activities covered by the "economic operator" fulfilling the contract, as follows:. The government will review within a year how these rules apply to foreign economic operators, who will be required to certify their compliance with equivalent foreign tax rules respondents to the informal consultation registered concern that UK bidders would be caught more easily than foreign bidders.

The government will also review this policy within a year to ensure that it has not discouraged taxpayers from settling cases with HMRC a concern raised by some respondents. The government's view is that this policy is consistent with EU law and public procurement regulations. Changes will be made to the rules through secondary legislation, including increasing the amounts that can be collected in this way.

In , the government held a consultation on coding out and issued a response document to the consultation see Legal update, Collecting small debts through PAYE: response document and next steps. Customs civil penalties regime: modernisation The government has announced that it will consult on modernising the customs civil penalties regime to bring it in line with other HMRC penalties. The legislative regime for tax penalties has recently gone through a period of change. Previously, various penalty regimes existed in different areas of the legislation applying separate penalty codes to each type of tax.

The new regime applies broadly the same principles across all taxes. For more information, see Practice note, Tax penalties: overview. Following consultation, legislation will be introduced in the Finance Bill to reform the civil penalties regime to bring it within the scope of the principles of the new penalties legislation.

Data gathering from card payment processors The government has confirmed that the Finance Bill will introduce provisions allowing HMRC to require merchant acquirers to provide bulk data to HMRC about businesses accepting card payments. The legislation will effect amendments to Schedule 23 to the Finance Act Draft legislation was contained in the draft Finance Bill published later that month see Legal update, Draft Finance Bill legislation: key business tax measures: Data-gathering from merchant acquirers.

The government states that it has considered responses to that draft legislation and has amended the drafting to ensure that the measure is comprehensive. In particular, the measure now also refers to other businesses that contract with retailers to settle credit, debit and charge card transactions. As previously announced, the measure will have effect from the date on which the Finance Bill receives Royal Assent. The government intends to put the necessary secondary legislation in place by autumn There are three main limbs to HMRC's strategy:.

Taking action to reduce the opportunities for offshore tax evasion, including:. Taking steps to increase the likelihood of catching offshore evaders and their professional facilitators, including:. Strengthening the severity of punishment for those who are caught evading tax offshore, including:. See HM Treasury, Budget , paragraph 2. The Budget documents include the text of a memorandum of understanding MOU with each of Jersey and Guernsey setting out the terms of a disclosure facility to run from 6 April to 30 September The MOUs are unsigned and undated.

The terms of these facilities appear to be identical to those agreed with the Isle of Man IOM and published on 19 February , except for the range of capped penalties. In the Jersey and Guernsey facilities, the higher penalties may also apply in relation to failure to notify chargeability to tax under Schedule 41 to the Finance Act and late filing of tax returns under Schedule 55 to the Finance Act We suspect that the omission of these provision from the IOM facility may be an oversight and so may be rectified for example, in a joint declaration.

The government has not yet published the automatic tax information exchange agreements that will accompany the three disclosure facilities, which it has previously announced would be along the lines of the agreement between the UK and the US to implement the Foreign Accounts Tax Compliance Act FATCA. According to an action plan at the end of the offshore evasion strategy, automatic information exchange with both the US and the Crown Dependencies will begin in However, the plan may be inaccurate, as it also shows that the disclosure facilities will run from mid to the end of rather than on the dates above which are the same in all three facilities.

The Guernsey government had already confirmed that it would enter into a package of this kind with the UK, but Jersey had only confirmed that it was consulting its financial institutions about the proposal. That consultation ended on 15 March, so this announcement is earlier than might have been expected. The government will look to sign similar agreements with other jurisdictions and is already in discussions with the Overseas Territories.


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For more background, see Private client tax legislation tracker FATCA-style agreements with other jurisdictions. For information about tax penalties, see Practice note, Tax penalties: consolidated regime for culpable penalties. Real time information: penalties The Budget confirmed that, as previously announced see Legal update, Draft Finance Bill Real time information: penalties , Finance Bill will contain provisions to impose penalties for late filing of returns under real time information RTI.

The government has published an updated tax information and impact note TIIN for these proposals, replacing the one published on 11 December The government will publish an updated TIIN for presumably the primary legislation alongside the regulations. Further regulations will be introduced to implement subsequent similar automatic exchange agreements that the UK enters into.

Employment and pensions Approved employee share plans: self-certification The Budget confirms that the government will proceed with a proposal to replace the current system of HMRC approvals for company share option plans , SAYE option schemes and share incentive plans with a self certification regime. It will publish further details shortly.

Legislation to implement the self-certification regime will be included in Finance Bill Benefit in kind exemption for health-related expenditure It was announced in the Budget that the government will introduce a new tax exemption for health-related benefits paid for by employers on the recommendation of the Health and Work Assessment and Advisory Service to support an employee's return to work. The government will consult on the exemption later in and legislation will be in the Finance Bill Company cars: tax rates and fuel benefits HMRC has published details of changes to the tables that set out the values on which employees who are provided with company cars will be taxed from 6 April The changes, which were announced in the Budget see Legal update, Budget: key business tax announcements: Company cars , encourage the use of very low emission cars.

Finance Bill will amend the table in section of ITEPA which gives the percentage of the original cost of a car that will be treated as an employee benefit for The lower the emissions, the lower the benefit in kind charge. The rates for , based on emissions of carbon dioxide per kilometre, will be as follows:. Car and van fuel benefit charges for will increase in line with the RPI and secondary legislation will be introduced in the autumn. Corporation tax relief for employee share acquisitions The government has published draft legislation, which applies from 20 March , to clarify the scope of corporation tax deductions in respect of employee share acquisitions under Part 12 of the Corporation Tax Act CTA The draft legislation replaces section of the CTA with a revised section , and adds a new section A.

The new provisions are designed to put beyond doubt that where a corporation tax deduction is available under Part 12 of the CTA , no other deduction is available in connection with the provision of the shares or the option, or any matter connected with the shares or the option. The new provisions also disallow any corporation tax deduction in respect of share options where shares are not ultimately acquired pursuant to the option.

The measures are intended to prevent companies attempting to claim deductions for accounting deductions for share-based payments in addition to a deduction under Part 12, or in connection with an option on occasions where shares are not acquired pursuant to a share option and therefore no deduction is available in connection with the acquisition of the shares.

See Corporation tax relief for employee share acquisitions: draft legislation and explanatory note and TIIN, Corporation tax deductions for employee share acquisitions. The holding period of an EMI option will count towards the one year holding period required for shares to qualify for entrepreneurs' relief, as specified in a draft clause for the Finance Bill published in December see Legal update, Draft Finance Bill enterprise management incentives EMI options and entrepreneurs' relief.

The draft legislation has been revised so that the relief will also be available on the same basis for shares that replace EMI option shares on a company reorganisation, and for certain shares following an exchange of EMI option shares for shares in another company. Legislation to amend entrepreneurs' relief as it applies to EMI option shares will be included in the Finance Bill , which is expected to be published on 28 March Employee shareholder shares: tax treatment The Budget included further details about the proposed new "employee shareholder" employment status:.

The tax provisions relating to employee shareholder shares will take effect on 1 September , along with the separate legislation introducing the new employment status. The draft legislation to provide a capital gains tax exemption for disposals of employee shareholder shares has been revised to exclude an income tax charge on a buyback of CGT-exempt employee shareholder shares, and to strengthen the "material interest" restriction.

Legislation will be included in the Finance Bill Notional loans in respect of employment-related securities acquired for less than market value, under sections Q - W of ITEPA For more information, see Loans to employees and directors: tax issues: Benefit in kind tax charge on beneficial loans and Notional loans: acquisition of securities for less than market value including nil paid or partly paid shares.

This will fund:. Responses to the Nuttall Review recommendations on employee ownership see Legal update, Nuttall review of employee ownership: government response and to proposals from other employee ownership advocates. A new capital gains tax relief on the sale of a controlling interest in a business to an employee ownership structure. This relief is related to the development of an "off the shelf" employee owned company model by the Department for Business, Innovation and Skills and the Implementation Group on Employee Ownership.

The intention is to introduce legislation for the relief in the Finance Bill The government will also consider further incentives in this area, including measures targeted at indirect employee ownership models. See HM Treasury, Budget , paragraph 1. The allowance will be operated as part of the normal payroll process of a business using HMRC's real-time information system as to which, see Practice note, Pay as you earn PAYE : Real-time information. The government states that employers will merely need to confirm their eligibility through their regular payroll processes, following which the allowance will be deducted from their employer NICs over the course of the year.

The government intends to discuss the details of the design and operation of this measure with taxpayers and advisers to make the system as simple and effective as possible. The government's aim is to introduce legislation to effect this new allowance later in The government anticipates that up to 1. This is, therefore, likely to be a welcome boost to the UK's small enterprises.

Office of Tax Simplification: Review of tax-advantaged share schemes As announced in December , Finance Bill will include legislation to simplify tax-advantaged share schemes, following the Office of Tax Simplification's OTS review of tax-advantaged share schemes. The draft legislation has been revised following consultation to:. Protect the position of existing SAYE participants who reach a specified age. Ensure that SIP partnership shares may not be subject to forfeiture provisions.

Allow companies flexibility to limit the amount of cash dividends that can be reinvested in SIP dividend shares.


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For more information on the OTS review of tax-advantaged share schemes and the proposed changes, see Legal update, Draft Finance Bill Tax-advantaged share scheme simplification. Office of Tax Simplification: Review of unapproved share schemes The government will consult on some of the recommendations that the OTS made in its review of non tax-advantaged share schemes. Legislation will be introduced in future finance bills.

Anti-avoidance

For all Budget developments relevant to share schemes, see Legal update, Budget: tax developments relevant to share schemes. The draft legislation applies to certain non-UK domiciled employees carrying out employment duties both in the UK and overseas under a single contract of employment and provides for:. An apportionment of earnings on a just and reasonable basis.

Simplified "mixed fund" rules that permit eligible employees to calculate their UK tax liability by reference to the total amount remitted to the UK from a nominated account rather than having to apply the complex remittance basis mixed fund ordering rules on a transaction-by-transaction basis. However, a response document has not been published and no new or additional information provided. Draft legislation for these measures, together with the proposed "fixed protection " transitional relief, was published on 11 December see Practice note, Finance Bill pensions provisions: Reductions in the annual and lifetime allowances and Transitional relief: fixed protection In addition, it was confirmed that the previously announced anti-avoidance measure to curtail the use of so-called family pension plans that are sometimes offered as part of employees' flexible benefits arrangements will be implemented to take effect from 6 April see Practice note, Finance Bill pensions provisions: Restricting relief for family pension plans.

It was also announced that the government plans to consult on amendments to the tax rules relating to investment-regulated pensions schemes in most cases self-invested personal pensions SIPPs or schemes that were formerly small self-administered schemes. The apparent aim is to encourage the conversion of unused space in commercial properties to residential property.

At the moment, investment-regulated schemes are effectively barred from investing in residential property under the "taxable property" provisions enacted in the Finance Act For a summary of all the Budget pensions-related measures, see Legal update, Budget: pensions implications. These changes will have effect for qualifying expenditure incurred on or after 1 April This measure is aimed at promoting fairness in the tax system: the current exclusions are an anomaly since investors in similar assets in other industry sectors are entitled to FYAs.

The measure will also make available FYAs for expenditure on energy efficient and environmentally beneficial plant and machinery to function more generally as green incentive measures for the railway and shipping industries. However, there are some exclusions, which currently include expenditure on ships and railway assets General exclusions 3 and 4, section 46 2 , Capital Allowances Act For general background on FYAs, see Practice note, Capital allowances on property transactions: First year allowances. For background on allowances for low emissions vehicles and gas refuelling equipment, see Practice note, Enhanced capital allowances ECAs for investment in environmental technologies.

Updating of lists of technologies and products for energy-saving and water efficient enhanced capital allowances schemes Subject to EU state aid approval, the energy-saving and water-efficient enhanced capital allowances schemes will be updated by Treasury Order in summer The main changes will be the inclusion of two new technologies to the schemes: carbon dioxide heat pumps for water heating and grey water re-use technology. In addition, four technologies will be removed from the energy-saving scheme, and one will be removed from the water efficient scheme. The qualifying criteria for a number of technologies in both schemes will also be revised.

For background on energy saving technologies and water-efficient enhanced capital allowances schemes, see Practice note, Enhanced capital allowances ECAs for investment in environmental technologies. See TIIN: Update of the enhanced capital allowances schemes for energy-saving and environmentally beneficial water efficient technologies and Overview , paragraph 1. For all environmental Budget developments, see Legal update, Budget key environmental announcements. Finance Income tax rules on interest The government has confirmed its intention to legislate in the Finance Bill on disguised interest and on withholding from interest on compensation payments, specialty debt and payments in kind see Legal update, Draft Finance Bill legislation: key business tax measures: Disguised interest: income tax and Withholding from interest , and Tax legislation tracker: finance: Income tax rules on interest.

As part of the Budget, the government has announced that, following consultation, the draft disguised interest rules have been revised to exclude certain types of share, subject to an anti-avoidance rule. Further details are currently unknown and will be clarified when the revised draft legislation is published. Review of loan relationship and derivative contract rules The government has announced that it will consult on modernising the loan relationship and derivative contract rules as to which, see Practice notes, Loan relationships and Derivatives: tax with a view to introducing legislation in the Finance Bill and the Finance Bill The government states that the aim will be to provide "simpler and fairer" tax treatment, to reduce uncertainty, to improve structural and legislative clarity, and to reduce administrative burdens.

However, no further details are currently known on this potentially major consultation. Financial services Additional tier one capital instruments The government has announced that, following the conclusion of the Capital Requirements Directive IV CRD IV, as to which, see PLC Financial Services, Practice note, Hot topics: CRD IV , it will issue secondary legislation to confirm and ensure that banks' additional tier one debt capital instruments will be deductible in calculating the bank's profits for corporation tax purposes, whether the instrument is already in issue or has yet to be issued.

The government has already produced draft legislation ensuring the deductibility of coupons on CRD IV-compliant tier 2 regulatory capital instruments: see Legal update, Draft Finance Bill legislation: key business tax measures: Corporation tax treatment of banks' tier 2 regulatory capital. Bank levy: increase in rates The government has announced that the rates of the bank levy will increase again from 1 January for periods falling wholly or partly after that date. The new rates to be included in the Finance Bill will be:.

For long-term equity and liabilities: 0. For short-term liabilities: 0. The bank levy will be reviewed during to ensure it is operating efficiently. For more information on the bank levy, see Practice note, Bank levy.

Ch.1 Finance Act 2018 Class 5

It states that the government expects banks to comply with the spirit, as well as the letter, of tax law. Prior to introduction of legislation, the government will consult on how non-compliance shall be determined and the nature of the report. Bond funds: withholding from interest distributions The government is to consult on a proposal to remove the requirement to withhold tax from interest distributions by UK-domiciled bond funds as to which, see Practice note, Unit trusts and open-ended investment companies: tax: Interest distribution when sold via reputable intermediaries and marketed only to non-UK investors.

If this proposal is taken forward, subject to the details of the measure, this is likely to increase the attractiveness of UK bond funds for overseas investors. Consultation on expanding the "white list" of investment transactions The government has announced that it will consult on the possibility of expanding the "white list" of investment transactions which apply to legislation on the investment manager's exemption IME , authorised investment funds AIFs , investment trusts and offshore reporting funds.

In particular, the government is considering the application of the white list to traded life policy investments and certain forms of carbon credit that are not currently covered. In relation to the IME, see Practice note, Offshore funds: tax: Investment manager's exemption , in relation to the taxation of authorised investment funds, see Practice note, Unit trusts and open-ended investment companies: tax , in relation to the taxation of investment trusts, see Practice note, Investment trusts: tax and in relation to the taxation of offshore reporting funds, see Offshore funds: tax: Offshore funds legislation.

Broadly, the IME ensures that non-residents are not exposed to any additional liability to UK income tax or corporation tax by using the services of independent fund managers in the UK. The IME only applies to "investment transactions" carried out on behalf of a non-resident. AIFs and investment trusts are exempt from taxation on chargeable gains arising on investment transactions.

Investors in offshore funds which are reporting funds are subject to tax on their share of the offshore fund's reported income. Gains realised on investment transactions will not constitute income of the offshore fund which must be reported to investors. Limited partnerships: optional legal personality The government will consult with a view to making technical changes to the Limited Partnership Act as it applies to funds, including the possibility of allowing limited partnerships to elect to have legal personality. This is in order to more effectively accommodate their use for private equity and venture capital investments.

For general information on the taxation of limited partnerships, see Practice note, Limited partnerships: tax. See HM Treasury, Budget , paragraphs 1. Investment trusts legislation: changes The investment trust companies legislation will be amended to correct two unintended consequences of previous changes to the legislation.

In relation to the taxation of investment trust companies, see Practice note, Investment trusts: tax. Investment trusts are subject to corporation tax on their income but are exempt from tax on chargeable gains. In order to qualify as an investment trust a company must satisfy various conditions. One of these conditions is that the business of the company consists of investing its funds in shares, land or other assets with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds Condition A.

Draft legislation will be included in the Finance Bill to amend Condition A. The amendment will clarify that, provided all or substantially all of the business of a company consists of investing its funds in shares, land or other assets with the aim of spreading investment risk, other ancillary activities will not prevent the company from satisfying the condition. This amendment will have retrospective effect for accounting periods commencing on or after 1 January Draft regulations for consultation will be published in spring to introduce a further exception to the distribution requirement.

This new exception will apply where an investment trust has accumulated realised revenue losses in excess of its income for an accounting period, so that a distribution out of capital will not be required. It is expected to have effect for accounting periods commencing on or after 1 July Offshore funds regulations: immediate changes and further future amendments Two statutory instruments will be introduced to amend the offshore funds regulations.

The first, which takes effect from 3pm on 20 March , clarifies that an offshore income gain cannot be avoided by a merger or reorganisation of the offshore fund. The second will introduce amendments ensuring that investors are taxed on the correct proportionate share of income of an offshore fund. In relation to the taxation of offshore funds, see Practice note, Offshore funds: tax: Offshore funds legislation.

The original offshore funds legislation was introduced to prevent income being rolled up offshore and effectively converted into chargeable gains. Business inputs constitute intermediate goods and services because companies either resell these goods and services or utilize the materials, products, machinery and services to produce other goods or services that are sold to households. The study highlights that, to date, virtually none of the states have adopted constitutionally valid methods for apportioning these types of foreign source income.

The meeting presents an extensive program covering all types of state and local taxes that business taxpayers are confronted with today. The ever-popular audit sessions and state chamber of commerce roundtables are included, and other conference sessions provide updates on key SAL. The survey consists of 20 questions and. Colorado voters will decide next month whether to legalize sports betting and immediately subject it to taxation.

Our reporters were there to bring you the details of upcoming guidance, changes to a popular real-time auditing program, and the agency's compliance efforts. The American Bar Association tax section is planning to expand tax preparation services for military personnel that could start as soon as the filing season.

A specific type of improper like-kind exchange transaction is the sole focus of recent California Franchise Tax Board guidance advising that it will impose failure-to-file penalties on qualified intermediaries, an attorney for the board said. The IRS is giving special consideration to the Environmental Protection Agency's request for clearer language in opportunity zone regulations to spur investment in contaminated properties, or "brownfield sites," a tax official said.

This weekend roundup of Bloomberg Tax Insights includes the DOJ Tax Division's growing inclination to raise the crime-fraud exception to attorney-client privilege; calculating the benefits and risks of the GILTI high-tax exception; including a pending merger in the value of stock; BEPS short timeline for comments on the next public consultation documents; and how the Utah Supreme Court did a poor job of interpreting the commerce clause.

Most states avoided adopting federal rules for taxing a new category of foreign income that could boost revenue because they are expecting plenty of revenue from another source: online sales taxes. The Alabama Tax Tribunal Oct. Taxpayer sold a product used as a spray-on truck bedliner. Taxpayer didn't charge the tax on sales to franchisees or to automobile dealers, arguing that franchisee customers were similar to dealers who resold to their own customers.

Upon review, the tribunal found that: 1 the franchisees didn't resell the chemicals at retail but consumed them in installing the Line X bedliners; 2 the bedliners cannot be considered a custom sale; 3 the sales to the franchisees were taxable sales; and 4 the sales from the company store to dealers weren't taxable based on good faith resale certificates. Accordingly, the tribunal directed the Department of Revenue to remove the company store sales to dealers from the taxable measure and recompute the final assessment.

Tax Trib. Law Judge Ruling Docket No.