Settlements: anti-avoidance etc

Part of Finance (No. 2) Bill – in a Public Bill Committee am 10:30 am ar 16 Ionawr 2018.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Amendments made: 2, in schedule 10, page 146, line 7, after “is” insert

“—

(a) where the individual is UK resident for the year,”

Amendment 51, in schedule 10, page 146, line 9, at end insert

“, and

(b) where the individual is non-UK resident for the year, treated for the purposes of subsection (2) and sections 643I to 643L (but no other purpose) as income of the individual for the year, subject to subsection (5).”

Amendment 52, in schedule 10, page 146, line 33, leave out from “purposes” to second “for” in line 34 and insert

“as income of the settlor for the year and, in a case within paragraph (b), not as income of the individual”.

Amendment 5, schedule 10, page 147, line 4, at end insert—

“(7) If—

(a) an enactment other than this section contains a reference (however expressed) to—

(i) income treated as arising by this section, or

(ii) an amount treated as income by this section, and

(b) the reference mentions this section without mentioning any particular provision of this section,

the reference is (in accordance with subsection (1)(b)) to be read as not including amounts treated as income by subsection (1)(b) except so far as they are treated as income of the settlor of a settlement by subsection (3) or (4).”

Amendment 6, in schedule 10, page 148, line 4, at end insert—

“(4) In this section and sections 643C to 643M, a reference to a benefit provided by trustees of a settlement is to—

(a) a benefit treated by subsection (6) as provided by the trustees, or

(b) any other benefit if it is provided by the trustees directly, or indirectly, out of—

(i) property comprised in the settlement, or

(ii) income arising under the settlement.

(5) In this section and sections 643C to 643M, a reference to a benefit provided by trustees of a settlement to an individual is to—

(a) a benefit treated by subsection (6) as provided by the trustees to the individual, or

(b) any other benefit if it is provided by the trustees to the individual directly, or indirectly, out of—

(i) property comprised in the settlement, or

(ii) income arising under the settlement.

(6) Where—

(a) income arises under a settlement, and

(b) the income, before being distributed, is the income of a person other than the trustees,

a benefit is for the purposes of subsection (4)(a) treated as provided by the trustees and is for the purposes of subsection (5)(a) treated as provided by the trustees to the person.

(7) A benefit treated as provided by subsection (6) is treated—

(a) as consisting of the income mentioned in that subsection, but after any reduction in accordance with Chapter 8 of Part 9 of ITA 2007 for trustees’ expenses, and

(b) as provided at the time that income arises.”

Amendment 7, in schedule 10, page 148, leave out lines 14 to 18 and insert—

“PFSI is the total of—

(a) any protected foreign-source income—

(i) arising under the settlement in the year or in any earlier tax year,

(ii) that would be treated under section 624 as income of the settlor but for section 628A,

(iii) that can be used directly or indirectly to provide benefits for the individual, and

(iv) on which the individual is not liable to income tax (ignoring for this purpose any liability under section 643A), and

(b) any protected foreign-source income—

(i) arising under the settlement in the year or in any earlier tax year,

(ii) that would be treated under section 629 as income of the settlor but for section 630A, and

(iii) on which the relevant child concerned (see section 629) is not liable to income tax (ignoring for this purpose any liability under section 643A),”.

Amendment 8, in schedule 10, page 148, line 25, leave out “all amounts which” and insert

“so much of PFSI as is”.

Amendment 9, in schedule 10, page 148, line 26, leave out “are”.

Amendment 10, in schedule 10, page 148, line 29, leave out “all amounts which” and insert

“so much of PFSI as is”.

Amendment 11, in schedule 10, page 148, line 30, leave out “are”.

Amendment 12, in schedule 10, page 149, line 33, leave out “available”.

Amendment 13, in schedule 10, page 149, leave out lines 37 to 40.

Amendment 14, in schedule 10, page 149, line 41, at end insert—

‘(6) In this section and section 643G—

“protected income” means the income that forms PFSI in the calculation of the settlement’s available protected income in the case of the relevant individual for the year, and

“the relevant individual”—

(a) where the deemed income is treated as income of an individual by section 643A(1)(a) both before and after the application of section 643A(3) and (4), means that individual, and

(b) where the deemed income is treated as income of the settlor by section 643A(3) or (4) after having been treated as income of another individual by section 643A(1), means that other individual.’

Amendment 15, in schedule 10, page 149, line 43, leave out “subsection (2)” and insert “this section”.

Amendment 16, in schedule 10, page 150, line 2, leave out from “settlement,” to end of line 7 and insert

‘the year and the relevant individual,

(b) “protected income” and “the relevant individual” have the meaning given by section 643F(6), and

(c) “the settlement” and “the year” mean, respectively, the settlement and tax year mentioned in section 643F.’

Amendment 17, in schedule 10,  page 150, line 10, after first “the” insert “relevant”.

Amendment 18, in schedule 10, page 150, line 16, leave out “available”.

Amendment 19, in schedule 10, page 150, line 17, at end insert—

“(ca) where the whole or part of an item of the protected income is, in respect of benefits provided by the trustees in the year or in any earlier tax year, taken into account in charging income tax under Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) for the year or any earlier tax year, reduce the item by so much of itself as is so taken into account,

(cb) where the whole or part of an item of the protected income is, by reference to benefits provided by the trustees to individuals other than the relevant individual, treated by section 643A or 643J or 643L as income for the year or any earlier tax year, reduce the item by so much of itself as is so treated,”.

Amendment 20, in schedule 10, page 150, line 18, leave out

“643A as arising to the”

and insert

“643A(1) (before the application of section 643A(3) and (4)) as arising to the relevant”.

Amendment 21, in schedule 10, page 150, line 19, after “benefits” insert

“referred to in paragraph (a)”.

Amendment 22, in schedule 10, page 150, line 23, after “benefits” insert

“referred to in paragraph (a)”.

Amendment 23, in schedule 10, page 150, line 24, leave out “available”.

Amendment 24, in schedule 10, page 150, line 25, leave out second “the” and insert “those”.

Amendment 25, in schedule 10, page 150, line 26, leave out “available”.

Amendment 26, in schedule 10, page 150, line 27, at end insert—

“(3) For the purposes of subsection (2)(ca), the whole or part of an item of the protected income is to be treated as taken into account in respect of a benefit so far as the item or part—

(a) is matched under section 735A of ITA 2007 with notional income with which the benefit is matched under that section, or

(b) would be matched under that section (if it applied also for this purpose) with notional income with which the benefit would be matched under that section (if it applied also for this purpose),

and here “notional income” means income which is treated as arising under section 732 of ITA 2007.”

Amendment 27, in schedule 10, page 150, line 47, leave out “643A(1),” and insert “643A(1)(a),”.

Amendment 53, in schedule 10, page 151, line 7, at end insert

“or

(iii) is treated by section 643A(1)(b), before the application of section 643A(3) and (4), as income of an individual (“the original beneficiary”) for a tax year (“the matching year”) but is not treated by section 643A(3), and is not treated by section 643A(4), as income of the settlor for the matching year,”.

Amendment 28, in schedule 10, page 152, leave out lines 10 to 19 and insert—

“(2) Where, in a case within subsection (1)(a)(i) and by reference to the amount mentioned in subsection (1)(a), income is treated by section 643J or 643L as arising to a person for a tax year, the original beneficiary is not liable to tax for any later tax year on so much of the amount mentioned in subsection (1)(a) as is equal to that income; and where, in a case within subsection (1)(a)(ii) and by reference to the amount mentioned in subsection (1)(a), income is treated by section 643J as arising to a person for a tax year, the settlor is not liable to tax for any later tax year on so much of the amount mentioned in subsection (1)(a) as is equal to that income.”

Amendment 29, in schedule 10, page 154, line 38, leave out “643A(1)” and insert—

“643A(1)(a), both before and after the application of section 643A(3) and (4),”.

Amendment 30, in schedule 10, page 156, line 40, at end insert—

“(ca) the original recipient is not taxed on the original benefit (see subsection (6A)),”.

Amendment 31, in schedule 10, page 158, line 15, at end insert—

“(6A) For the purposes of subsection (1)(ca), the original recipient is taxed on the original benefit if the original recipient is liable to income tax, or capital gains tax, by reference to the amount or value of the original benefit; and where the original recipient is so liable by reference to the amount or value of part only of the original benefit, this section applies as if the two parts of the original benefit were separate benefits.”

Amendment 32, in schedule 10, page 158, line 21, at end insert—

“and see also section 643B(4) to (7) (interpretation of references to provision of benefits by trustees).”—