UK Finance Bill 2015-2016 | KPMG | GLOBAL

UK: Finance Bill 2015-2016, final parliamentary actions

Finance Bill 2015-2016 in the UK

The “report” stage and third reading of Finance Bill 2015-16 took place on 26 October 2015, followed by the bill being sent to the House of Lords (which has no authority to amend it). Accordingly, the version of the legislation passed by the Commons will form the basis of Finance (No.2) Act 2015.


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Amendments made at the report stage in the Commons concerned restitution interest and venture capital trusts.

  • The restitution interest provision imposes a corporation tax at a rate of 45% on compound restitution interest awarded under a claim relating to the payment of tax based on a mistake of law or unlawful collection of tax. This amendment is drafted to come into effect as of 21 October 2015 and HM Revenue & Customs will withhold this tax from the payment of restitution interest when made. This measure appears to be targeting potentially large repayments of tax that taxpayers may be entitled to under EU law (notably through Group Litigation Orders (GLOs)) on which compound interest may be payable depending on the outcome of ongoing litigation.
  • The venture capital trust (VCT) changes include: (1) a new restriction on investing in companies more than seven years after they have made their first commercial sale (10 years for “knowledge-intensive” companies) but with certain exceptions; (2) a new restriction on VCT monies being used to acquire an existing business; (3) repeal of concept of protected money (VCT funds raised before 6 April 2012) in relation to an investee company using such funds to acquire any shares; (4) a new maximum “lifetime” risk finance limit for investee companies of £12 million (£20 million for knowledge-intensive companies); (5) VCTs to be able to acquire non-qualifying holdings in certain investment funds and listed equities without compromising their VCT status; and (6) a new requirement for a qualifying holding to raise VCT monies “for the purposes of promoting growth and development.”


Read an October 2015 report prepared by the KPMG member firm in the UK: Weekly Tax Matters (30 October 2015)


Other topics described in this report include:

  • HMRC launched a plan to increase access to R&D tax relief for small businesses
  • Loan relationships and derivative contracts; new corporate rescue tax reliefs
  • Proposals to hold UK corporations criminally accountable where they fail to prevent the facilitation of tax evasion
  • Deduction of VAT on pension fund management costs

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