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Notices of Amendments: 24 May 2012                     

74

 

Finance Bill, continued

 
 

(b)    

the creditor relationship is, or is connected (directly or

 

indirectly) to, an arrangement the main purpose, or one of the

 

main purposes, of which is for the ultimate debtor to provide

 

(directly or indirectly) funding for a loan or arrangement as

 

mentioned in subsection (5)(a) or (b) in order to obtain a tax

 

advantage for the ultimate debtor.’.

 

David Gauke

 

70

 

Schedule  20,  page  460,  line  42,  leave out from ‘relationship’ to ‘an’ in line 48 and

 

insert ‘if the loan which is the subject of the creditor relationship is made to any extent

 

(other than a negligible one) out of funds received by the CFC (directly or indirectly)—

 

(a)    

from a relevant UK connected company other than by way of

 

a loan, or

 

(b)    

as a result of’.

 

David Gauke

 

71

 

Schedule  20,  page  461,  leave out lines 3 to 5 and insert—

 

‘(7)    

For the purposes of subsection (6) a company is “relevant UK

 

connected” if—

 

(a)    

the company is a UK resident company connected with the

 

CFC,

 

(b)    

the company’s main business is banking business or insurance

 

business, and

 

(c)    

the company’s banking business or insurance business (as the

 

case may be) is a trade.’.

 

David Gauke

 

72

 

Schedule  20,  page  461,  line  13,  leave out ‘company,’ and insert ‘company by—

 

(i)    

a non-UK resident person, or

 

(ii)    

a UK resident person who is not connected with the

 

CFC,’.

 

David Gauke

 

73

 

Schedule  20,  page  461,  line  41,  leave out from ‘relationship”’ to end of line 42 and

 

insert ‘or “ultimate debtor” for the purposes of this Chapter.’.

 

David Gauke

 

74

 

Schedule  20,  page  462,  line  2,  at end insert—

 

‘(2A)    

The claim may be amended or withdrawn by company C only by

 

amending the return.’.

 

David Gauke

 

75

 

Schedule  20,  page  462,  line  14,  leave out ‘assessment’ and insert ‘amendment’.

 
 

Notices of Amendments: 24 May 2012                     

75

 

Finance Bill, continued

 
 

David Gauke

 

76

 

Schedule  20,  page  473,  line  42,  leave out ‘by the CFC’.

 

David Gauke

 

77

 

Schedule  20,  page  473,  line  46,  leave out ‘a person other than the CFC,’ and insert

 

‘any person,’.

 

David Gauke

 

78

 

Schedule  20,  page  479,  line  43,  at end insert—

 

‘371QG 

Anti-avoidance

 

(1)    

This section applies in relation to an accounting period (“the relevant

 

accounting period”) of a CFC if—

 

(a)    

at any time an arrangement is entered into, and

 

(b)    

the main purpose, or one of the main purposes, of the

 

arrangement is to obtain for any person a tax advantage within

 

section 1139(2)(da) of CTA 2010 in relation to—

 

(i)    

the relevant accounting period, or

 

(ii)    

that period and one or more other accounting periods

 

of the CFC.

 

(2)    

The CFC’s chargeable profits and creditable tax for the relevant

 

accounting period are to be apportioned in accordance with section

 

371QC(2) (and not section 371QD if that section would otherwise

 

apply).

 

(3)    

The apportionments must (in particular) be made in a way which, so

 

far as practicable, counteracts the effects of the arrangement

 

mentioned in subsection (1)(a) so far as those effects are referable to

 

the purpose mentioned in subsection (1)(b).’.

 

David Gauke

 

79

 

Schedule  20,  page  480,  line  7,  leave out ‘Sections 371RC and 371RG set out

 

circumstances’ and insert ‘Section 371RC sets out certain cases’.

 

David Gauke

 

80

 

Schedule  20,  page  483,  line  30,  at end insert—

 

‘(3A)    

The Treasury may by regulations provide that, if specified conditions

 

are met, a company is not to be taken to be a CFC by virtue of—

 

(a)    

section 371RE, or

 

(b)    

provision corresponding to section 371RE contained in

 

regulations under subsection (3).’.

 

David Gauke

 

81

 

Schedule  20,  page  483,  line  31,  leave out ‘subsection (3)’ and insert ‘subsections

 

(3) and (3A)’.

 
 

Notices of Amendments: 24 May 2012                     

76

 

Finance Bill, continued

 
 

David Gauke

 

82

 

Schedule  20,  page  483,  line  33,  leave out from beginning to end of line 45 on page

 

484.

 

David Gauke

 

83

 

Schedule  20,  page  489,  line  5,  at end insert—

 

‘(2A)    

Subsection (2)(b) does not apply if—

 

(a)    

a notice is given to an officer of Revenue and Customs

 

revoking the notice under subsection (1), and

 

(b)    

the time at which the notice revoking the notice under

 

subsection (1) is given is a time at which, applying the

 

corporation tax assumptions apart from this section and the

 

assumption in subsection (2)(a), the CFC would have been

 

able to revoke its assumed election under section 9A of CTA

 

2010.’.

 

David Gauke

 

84

 

Schedule  20,  page  489,  line  6,  after ‘(1)’ insert ‘or (2A)’.

 

David Gauke

 

85

 

Schedule  20,  page  489,  line  29,  after ‘(1)’ insert ‘or (2A) (as the case may be)’.

 

David Gauke

 

86

 

Schedule  20,  page  496,  line  5,  at end insert—

 

‘(4A)    

In subsections (2) to (4) references to apportioned percentages of the

 

CFC’s chargeable profits for the relevant accounting period are to the

 

percentages apportioned at step 3 in section 371BC(1).’.

 

David Gauke

 

87

 

Schedule  20,  page  496,  line  40,  after ‘including’ insert ‘an assessment’.

 

David Gauke

 

88

 

Schedule  20,  page  497,  line  13,  after ‘conferring’ insert ‘or regulating’.

 

David Gauke

 

89

 

Schedule  20,  page  498,  line  40,  at end insert—

 

‘(8)    

But, in relation to a sum charged on a company by virtue of section

 

371BH(2), in this section—

 

(a)    

“the appropriate rate” means the rate given by section

 

371BH(2A)(a), and

 

(b)    

“relevant allowance” means any adjusted BLAGAB

 

management expenses for the purposes of section 73 of FA

 

2012.’.

 
 

Notices of Amendments: 24 May 2012                     

77

 

Finance Bill, continued

 
 

David Gauke

 

90

 

Schedule  20,  page  500,  line  20,  leave out ‘371RC, 371RE(2) and 371RG,’ and

 

insert ‘371RC and 371RE(2) and regulations under section 371RF(3A),’.

 

David Gauke

 

91

 

Schedule  20,  page  500,  line  24,  leave out ‘has the meaning given at’ and insert

 

‘means a company which is a chargeable company for the purposes of’.

 

David Gauke

 

92

 

Schedule  20,  page  500,  line  34,  leave out ‘371RG(6),’ and insert ‘371RF,’.

 

David Gauke

 

93

 

Schedule  20,  page  502,  line  1,  leave out ‘(see Chapter 15) ceasing to have that

 

interest’ and insert ‘ceasing to have any relevant interest in the CFC at all’.

 

David Gauke

 

94

 

Schedule  20,  page  503,  line  28,  leave out ‘profits,’ and insert ‘profits or property

 

business losses,’.

 

David Gauke

 

95

 

Schedule  20,  page  503,  line  29,  at end insert—

 

‘(2A)    

In subsection (2)(b) “property business losses” means any losses of a

 

UK property business or overseas property business of the CFC; such

 

losses are to be determined in a way corresponding to the way in which

 

property business profits are determined.’.

 

David Gauke

 

96

 

Schedule  20,  page  503,  line  45,  leave out from ‘(6)’ to ‘Part’ in line 46.

 

David Gauke

 

97

 

Schedule  20,  page  505,  leave out lines 16 to 20.

 

David Gauke

 

98

 

Schedule  20,  page  505,  line  37,  leave out ‘and 371CE(2).’ and insert ‘, 371CE(2)

 

and 371IA(9).’.

 

David Gauke

 

99

 

Schedule  20,  page  506,  line  13,  leave out from ‘entitled’ to end of line 15 and insert

 

‘—

 

(i)    

to direct how income or assets of the company are to

 

be applied,

 
 

Notices of Amendments: 24 May 2012                     

78

 

Finance Bill, continued

 
 

(ii)    

to have such income or assets applied on the person’s

 

behalf, or

 

(iii)    

otherwise to secure that such income or assets will be

 

applied (directly or indirectly) for the person’s

 

benefit, and’.

 

David Gauke

 

100

 

Schedule  20,  page  506,  leave out lines 22 to 26 and insert—

 

‘(4)    

In subsection (2)(c) references to a person being entitled to do

 

anything also cover cases in which it is reasonable to suppose that a

 

person is presently able, or will at a future date become able, to do the

 

thing (even though the person presently has, or will have, no

 

entitlement to do the thing).

 

(4A)    

Subsection (4B) applies if a person’s entitlement (or supposed ability)

 

to do anything mentioned in subsection (2)(c) is (or would be)

 

contingent upon a default of the company or any other person under

 

any agreement.

 

(4B)    

The person is not to have an interest in the company under subsection

 

(2)(c) by virtue of that entitlement (or supposed ability) unless the

 

default has occurred.’.

 

David Gauke

 

101

 

Schedule  20,  page  506,  line  45,  leave out from beginning to end of line 5 on page

 

507.

 

David Gauke

 

102

 

Schedule  20,  page  507,  line  45,  leave out ‘a loan to any other person.’ and insert

 

‘—

 

(i)    

a loan to any other person, or

 

(ii)    

so far as not covered by sub-paragraph (i), an

 

arrangement intended to produce for any person a

 

return in relation to any amount which it is reasonable

 

to suppose would be a return by reference to the time

 

value of that amount of money.’.

 

David Gauke

 

103

 

Schedule  20,  page  508,  line  37,  leave out ‘they’ and insert ‘the assets’.

 

David Gauke

 

104

 

Schedule  20,  page  511,  leave out line 19 and insert—

 

‘(3)    

For section 371IA(5) there is to be substituted—

 

“(5)    

75% of the profits of each qualifying loan relationship are

 

“exempt” under this Chapter.”

 

(3A)    

In section 371IA(9)(a) the words “or Chapter 8 (solo consolidation)”

 

are to be omitted.

 
 

Notices of Amendments: 24 May 2012                     

79

 

Finance Bill, continued

 
 

(3B)    

Sections 371IB to 371IE are to be omitted.

 

(3C)    

Section 371IH(9)(a) is to be read ignoring the modification in section

 

18HC(b) above.’.

 

David Gauke

 

105

 

Schedule  20,  page  511,  line  21,  after ‘X’ insert ‘and subsection (5) is to be

 

omitted’.

 

David Gauke

 

106

 

Schedule  20,  page  513,  leave out lines 17 to 19 and insert—

 

‘(4)    

For the purposes of step 3 in section 371NB(1) the amount of the

 

corresponding UK tax for the accounting period is to be determined in

 

accordance with subsection (5) below; and section 371NE is to be

 

omitted accordingly.

 

(5)    

“The corresponding UK tax” is the amount of corporation tax which

 

would be payable in respect of the adjusted relevant profits amount if

 

it were subject in full to corporation tax, ignoring any credit which

 

would be allowed against it under section 18(3) of TIOPA 2010 and

 

assuming, where there is more than one rate of corporation tax

 

applicable to period X, that it were chargeable at the average rate over

 

period X.”’.

 

David Gauke

 

107

 

Schedule  20,  page  517,  line  13,  leave out from ‘paragraph’ to end of line 16 and

 

insert ‘(b), and

 

(b)    

before paragraph (k) (as inserted by paragraph 136 of Schedule 16 to

 

this Act) insert—

 

“(ja)    

Part 9A of that Act (controlled foreign

 

companies),”.’.

 

David Gauke

 

108

 

Schedule  20,  page  518,  line  44,  leave out from beginning to ‘references’ in line 7

 

on page 519 and insert—

 

‘(4)    

Section 371RB of TIOPA 2010 (read with section 371RD of that Act)

 

applies for the purposes of this section.

 

(5)    

Section 371RD of TIOPA 2010 applies for the purpose of determining

 

if the requirements of subsection (3)(b) and (c) are met in any case.

 

(6)    

In subsections (4) and (5)’.

 

David Gauke

 

109

 

Schedule  20,  page  519,  line  32,  at end insert—

 

‘38A (1)  

Section 938M (group mismatch schemes: controlled foreign companies) is

 

amended as follows.

 

      (2)  

In subsection (1) for the words from the beginning to “company” substitute

 

“Section 371SL(1) of TIOPA 2010 (assumption that a CFC”.

 
 

Notices of Amendments: 24 May 2012                     

80

 

Finance Bill, continued

 
 

      (3)  

In subsection (2)—

 

(a)    

for “chargeable profits” substitute “assumed taxable total profits”, and

 

(b)    

for “Chapter 4 of Part 17 of ICTA” substitute “Part 9A of TIOPA

 

2010”.’.

 

David Gauke

 

110

 

Schedule  20,  page  519,  line  40,  at end insert—

 

‘40A (1)  

Section 179 (compensating payment if advantaged person is controlled foreign

 

company) is amended as follows.

 

      (2)  

For subsection (1) substitute—

 

“(1)    

Subsection (2) applies if—

 

(a)    

the actual provision is provision made or imposed in relation

 

to a CFC,

 

(b)    

for the purpose of determining the CFC’s assumed taxable

 

total profits for an accounting period, the CFC’s profits and

 

losses are to be calculated in accordance with section 147(3)

 

or (5) in the case of that provision,

 

(c)    

in relation to the accounting period, sums are charged on

 

chargeable companies at step 5 in section 371BC(1), and

 

(d)    

in consequence of the application of section 147(3) or (5) as

 

mentioned in paragraph (b), the total of those sums is more

 

than it would otherwise be.”

 

      (3)  

In subsection (2) for “controlled foreign company” substitute “CFC”.

 

      (4)  

In subsection (3)—

 

(a)    

in paragraph (a) for “companies mentioned in subsection (1)(c)”

 

substitute “chargeable companies on which a sum is charged”, and

 

(b)    

in paragraph (b) for “tax chargeable under section 747(4) of ICTA”

 

substitute “the CFC charge”.

 

      (5)  

For subsection (4) substitute—

 

“(4)    

In this section terms which are defined in Part 9A have the same

 

meaning as they have in that Part.

 

(5)    

For the purposes of subsections (1)(c) and (d) and (3)(a) assume that

 

any claims made under Chapter 9 of Part 9A for the accounting period

 

were not made.”’.

 

David Gauke

 

111

 

Schedule  20,  page  520,  line  21,  after ‘371BC(3)’ insert ‘, subject to sections

 

371BG(3)(a) and 371BH(2A)(b)’.

 

David Gauke

 

112

 

Schedule  20,  page  520,  line  23,  leave out from ‘9A’ to ‘by’ in line 24 and insert ‘or

 

which are qualifying loan relationship profits is limited to amounts—

 

(a)    

which so fall or which are such profits’.

 
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Revised 25 May 2012