House of Commons Amendments

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Public Bill Committee: 14 June 2012
149

Finance Bill, continued

(a)
a transfer of business from a with-profits fund to a fund that is not a with-

profits fund, or

(b)
a transfer of business from a fund that is not a with-profits fund to a with-

profits fund.’.

David Gauke

139

Clause  130,  page  78,  line  27,  at beginning insert ‘either’.

David Gauke

140

Clause  130,  page  78,  line  28,  at end insert ‘or, if they are, the transfer consists of or

includes a with-profits fund transfer within the meaning of section 129(5E)’.

David Gauke

141

Clause  130,  page  78,  line  31,  leave out ‘business (or part of the business)

transferred’ and insert ‘relevant transferred business’.

David Gauke

142

Clause  130,  page  78,  line  38,  at end insert—

‘(2A)
In subsection (1)(c) “the relevant transferred business” means—

(a)
if the transferor and transferee are not members of the same group of

companies when the transfer occurs, the business (or part of the business)

transferred under the insurance business transfer scheme, and

(b)
if the transfer consists of or includes a with-profits fund transfer, the

business transferred by the with-profits fund transfer.’.

David Gauke

143

Clause  130,  page  78,  line  41,  leave out from ‘apply’ to end of line 42 and insert ‘so

far as section 129(5) applies in relation to the transfer.’.

David Gauke

144

Schedule  16,  page  388,  line  41,  leave out paragraph (c) and insert—

‘(c)
in step 2, for paragraph (a) (together with the “and” at the end of it)

substitute—

“(a)
so much of the amount for the purposes of section

73 of FA 2012 of the adjusted BLAGAB

management expenses of the company for the

period as, on the assumption that the company had

no BLAGAB non-trading loan relationships profits

for the period, could be subtracted at step 6 under

Public Bill Committee: 14 June 2012
150

Finance Bill, continued

that section without producing a negative amount,

and”,’.

David Gauke

145

Schedule  17,  page  417,  line  8,  leave out sub-paragraphs (2) to (5) and insert—

    ‘(2)
Each new holding is treated for the purposes of corporation tax on chargeable

gains as if it were a holding of the company with a base cost and an indexation

allowance as at 1 January 2013 equal to the total of the base costs and

indexation allowances of the old holdings that are carried into the new holding.

      (3)
In the case of securities (“new securities”) comprised in a new holding, the

amount of the base cost or indexation allowance of an old holding that is

carried into the new holding is equal to the proportion which the new securities

derived from the old holding bear to all of the securities comprised in the old

holding.

      (4)
For the purpose of calculating the indexation allowance of a new holding in

respect of any period falling on or after 1 January 2013, it is to be assumed that,

on that date, there had been a disposal of the holding for a consideration of such

amount as would secure that on the disposal neither a gain nor a loss would

accrue to the company.

      (5)
For the purposes of this paragraph—

(a)
references to a base cost are—

(i)
in the case of a section 104 holding, references to the amount

of qualifying expenditure within the meaning of section 110

of TCGA 1992, and

(ii)
in the case of a 1982 holding, references to the amount of

expenditure that would fall to be deducted if the holding were

disposed of,

(b)
references to an indexation allowance are—

(i)
in the case of a section 104 holding, references to the

indexation allowance as found in accordance with section 110

of TCGA 1992, and

(ii)
in the case of a 1982 holding, references to the indexation

allowance within the meaning of Chapter 4 of Part 2 of that

Act,

(c)
the base cost and the indexation allowance of an old holding are

calculated on the assumption that the holding is disposed of

immediately before 1 January 2013,

(d)
“section 104 holding” has the same meaning as in section 104(3) of

TCGA 1992, and

(e)
“1982 holding” has the same meaning as in section 109 of that Act.’.

Public Bill Committee: 14 June 2012
151

Finance Bill, continued

Stephen Williams

Mark Durkan

Caroline Lucas

Ian Swales

2

Clause  180,  page  105,  line  19,  at end add—

‘(2)
Notwithstanding the provisions of Part 4 of Schedule 20, the Schedule will not

come into force until a full impact assessment has been prepared in conjunction

with the Department for International Development reviewing the effect on

developing countries’ tax revenue, and details of aid and technical assistance

being provided to developing countries in order to increase the capability and

technical expertise in their tax regimes to collect the taxes that are due in their

countries, has been laid before and approved by the House of Commons.’.

Mark Durkan

Caroline Lucas

1

Page  105,  line  13,  leave out Clause 180.

David Gauke

46

Schedule  20,  page  428,  line  15,  leave out ‘section’ and insert ‘sections 371BG

and’.

David Gauke

47

Schedule  20,  page  428,  line  46,  leave out ‘to 371BG’ and insert ‘and 371BF’.

David Gauke

48

Schedule  20,  page  430,  line  2,  leave out from beginning to end of line 3 on page

431 and insert—

‘(1)
Subsection (2) applies if conditions A to C are met in relation to a

relevant interest, or a part of a relevant interest, which a chargeable

company (“CC”) has in the CFC at all times during the CFC’s

accounting period.

(2)
Step 5 in section 371BC(1) is to be taken in relation to CC on the

following basis.

(3)
That basis is—

(a)
so much of P% as is attributable to CC having the relevant

interest, or the part of a relevant interest, during the CFC’s

accounting period is to be left out of P%, and

(b)
so much of Q% as is so attributable is to be left out of Q%.

(4)
Condition A is that, at all times during the CFC’s accounting period,

CC has the relevant interest, or the part of a relevant interest, by virtue

of its holding shares (“the relevant shares”) in the CFC (directly or

indirectly).

Public Bill Committee: 14 June 2012
152

Finance Bill, continued

(5)
Condition B is that any increase in the value of the relevant shares at

any time during the relevant corporation tax accounting period is (or

would be) income, or brought into account in determining any income,

of CC chargeable to corporation tax for that period.

(6)
Condition C is that any dividend or other distribution received at any

time during the relevant corporation tax accounting period by CC from

the CFC (directly or indirectly) by virtue of its holding the relevant

shares is (or would be) income, or brought into account in determining

any income, of CC chargeable to corporation tax for that period.

(7)
Subsection (8) applies if—

(a)
CC has the relevant interest, or the part of a relevant interest,

by virtue of section 371OB(3) or (4),

(b)
the CFC is an offshore fund (as defined in section 355) which

does not meet the qualifying investments test in section 493 of

CTA 2009, and

(c)
conditions B and C would be met but for the offshore fund not

meeting that test.

(8)
Conditions B and C are to be taken to be met.

(9)
This section is subject to section 371BH.

371BH
Companies carrying on BLAGAB

(1)
Subsection (2) applies in relation to a chargeable company (“CC”)

if—

(a)
CC carries on basic life assurance and general annuity

business during the relevant corporation tax accounting

period,

(b)
the I-E rules apply to CC for the relevant corporation tax

accounting period, and

(c)
the following are met in relation to a relevant interest, or a part

of a relevant interest, which CC has in the CFC at all times

during the CFC’s accounting period—

(i)
condition D,

(ii)
condition E or F (or both), and

(iii)
condition G.

(2)
An additional sum is charged on CC at step 5 in section 371BC(1) and,

for this purpose, step 5 is to be taken on the following basis.

(2A)
That basis is—

(a)
in paragraph (a) at step 5, the reference to the appropriate rate

is to be read as a reference to—

(i)
the policyholders’ rate of tax under section 102 of FA

2012 applicable to the I-E profit for the relevant

corporation tax accounting period, or

(ii)
if there is more than one such rate, the average rate

over the whole of the relevant corporation tax

accounting period, and

(b)
any reduction of P% or Q% under section 371BG(3) by

reference to any relevant interest of CC is to be ignored, but—

(i)
P% is to be reduced so that it represents only the

policyholders’ share of the BLAGAB component of

Public Bill Committee: 14 June 2012
153

Finance Bill, continued

the apportioned profit (see subsections (2H) to (4)),

and

(ii)
Q% is to be reduced by the same proportion as P% is

reduced under sub-paragraph (i).

(2B)
Condition D is that, at all times during the CFC’s accounting period,

CC has the relevant interest, or the part of a relevant interest, by virtue

of its holding shares (“the relevant shares”) in the CFC (directly or

indirectly).

(2C)
Condition E is met if the following requirement is met in relation to a

time during the relevant corporation tax accounting period.

(2D)
The requirement is that any increase (or any part of any increase) in

the value of the relevant shares which occurs at that time is not (or

would not be) brought into account at step 1 in section 73 of FA 2012

in determining whether CC has an I-E profit for the relevant

corporation tax accounting period.

(2E)
Condition F is met if the following requirement is met in relation to a

time during the relevant corporation tax accounting period.

(2F)
The requirement is that any dividend or other distribution (or any part

of any dividend or other distribution) received at that time by CC from

the CFC (directly or indirectly) by virtue of its holding the relevant

shares is not (or would not be) brought into account at step 1 in section

73 of FA 2012 in determining whether CC has an I-E profit for the

relevant corporation tax accounting period.

(2G)
Condition G is that the assets which represent the relevant interest, or

the part of a relevant interest, during the CFC’s accounting period are

(to any extent) assets held by CC for the purposes of CC’s long-term

business.

(2H)
“The apportioned profit” means so much of P% as is attributable to CC

having the relevant interest, or the part of a relevant interest, during the

CFC’s accounting period.’.

David Gauke

49

Schedule  20,  page  433,  line  14,  leave out from ‘under’ to end of line 15 and insert

‘—

(i)
the law of the territory in which the CFC is

incorporated or formed,

(ii)
the articles of association or other document

regulating the CFC, or

(iii)
any arrangement entered into by or in relation to the

CFC,’.

David Gauke

50

Schedule  20,  page  435,  line  33,  at end insert—

‘(2A)
Profits treated as non-trading finance profits under subsection (2) are

not to be taken to fall within section 371CB(3) or (4).’.

Public Bill Committee: 14 June 2012
154

Finance Bill, continued

David Gauke

51

Schedule  20,  page  435,  line  36,  at end insert—

‘(3A)
For this purpose, section 337(1) (definition of “the worldwide group”)

applies with the omission of paragraph (a).’.

David Gauke

146

Schedule  20,  page  436,  leave out lines 36 and 37 and insert ‘by a UK connected

company.

(3)
In subsection (2)(b)(ii)—

“services” does not include services provided as part of insurance

business, and

“UK connected company” means—

(a)
a UK resident company connected with the CFC, or

(b)
a non-UK resident company connected with the CFC acting

through a UK permanent establishment.’.

David Gauke

52

Schedule  20,  page  447,  line  1,  leave out ‘derive (directly or indirectly) from’ and

insert ‘represent, or derive (directly or indirectly) from,’.

David Gauke

53

Schedule  20,  page  449,  line  14,  leave out ‘section 371FB’ and insert ‘sections

371FB and 371FBA’.

David Gauke

54

Schedule  20,  page  449,  line  39,  leave out from ‘CFC”)’ to end of line 40.

David Gauke

55

Schedule  20,  page  450,  line  41,  leave out ‘371BC(3))’ and insert ‘371BC(3),

ignoring sections 371BG(3)(a) and 371BH(2A)(b))’.

David Gauke

56

Schedule  20,  page  450,  line  41,  at end insert—

‘371FBA
Loans from foreign permanent establishments of UK resident

companies

(1)
Subsection (2) applies if—

(a)
there is a company (“C”) which has made an election under

section 18A of CTA 2009 (exemption for profits or losses of

foreign permanent establishments),

(b)
during a relevant accounting period of C which begins on or

after 1 January 2013, C has a creditor relationship which,

applying the assumptions set out in section 18H(3) of CTA

2009 in relation to C for the relevant accounting period, would

be a qualifying loan relationship (within the meaning of

Public Bill Committee: 14 June 2012
155

Finance Bill, continued

Chapter 9 of this Part) of C in relation to which the CFC would

be the ultimate debtor,

(c)
in the application of section 18H(2) of CTA 2009 for the

relevant accounting period, C makes a claim under Chapter 9

of this Part (as applied by section 18H(2)), and

(d)
the relevant accounting period falls wholly or partly in the

CFC’s accounting period.

(2)
75% of the principal outstanding during the CFC’s accounting period

on the loan which is the subject of the qualifying loan relationship is

to be added to the CFC’s free capital or free assets (as the case may

be).

(3)
Terms used in this section which are defined in section 18A of CTA

2009 have the meaning given by that section.’.

David Gauke

147

Schedule  20,  page  451,  leave out lines 43 and 44 and insert ‘by a UK connected

company.

(2A)
In subsection (2)(b)(ii)—

“services” does not include services provided as part of insurance

business, and

“UK connected company” means—

(c)
a UK resident company connected with the CFC, or

(d)
a non-UK resident company connected with the CFC acting

through a UK permanent establishment.’.

David Gauke

57

Schedule  20,  page  452,  leave out lines 9 to 11.

David Gauke

58

Schedule  20,  page  452,  line  27,  at end insert—

‘(8)
In this section “original contract of insurance”, in relation to a contract

of reinsurance which is one in a chain of contracts of reinsurance,

means the original contract of insurance reinsured by the first contract

in the chain; and in subsection (6)(b) the reference to the original

insured is to be read accordingly.’.

David Gauke

59

Schedule  20,  page  455,  line  3,  leave out from ‘which’ to end of line 4 and insert ‘a

member of the CFC group incurs a debt in the United Kingdom to—

(a)
a non-UK resident person, or

(b)
a UK resident person who is not a member of the CFC group.’.



© Parliamentary copyright	Revised 14 June 2012