House of Commons Public Bill Committee Proceedings

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Public Bill Committee Proceedings: 19 June 2012
43

Finance Bill, continued

‘(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

Agreed to  81

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

(3) and (3A)’.

David Gauke

Agreed to  82

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

484.

David Gauke

Agreed to  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

Agreed to  84

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

David Gauke

Agreed to  85

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

David Gauke

Agreed to  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

Agreed to  87

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

David Gauke

Agreed to  88

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

Public Bill Committee Proceedings: 19 June 2012
44

Finance Bill, continued

David Gauke

Agreed to  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.’.

David Gauke

Agreed to  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

Agreed to  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

Agreed to  92

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

David Gauke

Agreed to  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

Agreed to  94

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

business losses,’.

David Gauke

Agreed to  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

Agreed to  96

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

David Gauke

Agreed to  97

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

Public Bill Committee Proceedings: 19 June 2012
45

Finance Bill, continued

David Gauke

Agreed to  98

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

and 371IA(9).’.

David Gauke

Agreed to  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,

(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

Agreed to  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

Agreed to  101

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

507.

David Gauke

Agreed to  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

Agreed to  103

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

Public Bill Committee Proceedings: 19 June 2012
46

Finance Bill, continued

David Gauke

Agreed to  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.

(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

Agreed to  105

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

omitted’.

David Gauke

Agreed to  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

Agreed to  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

Agreed to  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.

Public Bill Committee Proceedings: 19 June 2012
47

Finance Bill, continued

(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

Agreed to  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”.

      (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

Agreed to  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.”’.

Public Bill Committee Proceedings: 19 June 2012
48

Finance Bill, continued

David Gauke

Agreed to  188

Schedule  20,  page  520,  line  1,  at beginning insert—

‘40B
In Chapter 4 of Part 7 (exemption for financing income) after section 298

insert—

“298A
Application of Chapter to financing income amounts determined

under section 314A

(1)
The Commissioners may by regulations amend this Chapter—

(a)
to enable a financing income amount determined in

accordance with section 314A for the relevant period of

account (or a proportion of such an amount so determined) to

be specified in a statement of allocated exemptions under

section 292(4)(b), and

(b)
to require, where a financing income amount so determined

(or a proportion of such an amount so determined) is specified

in such a statement, the sum charged on the company as

mentioned in section 314A(1)(a) to be re-determined at step 5

in section 371BC(1) on the basis set out in subsection (2)

below.

(2)
The basis referred to in subsection (1)(b) is—

(a)
the relevant finance profits (see section 314A(1)(c)) are to be

left out of the CFC’s chargeable profits mentioned in

paragraph (a) at step 5 in section 371BC(1), and

(b)
the CFC’s creditable tax mentioned in paragraph (b) at that

step is to be reduced so far as it is just and reasonable for it to

be reduced having regard to the amounts left out of the CFC’s

chargeable profits.

(3)
For a case where only a proportion (“X%”) of a financing income

amount is specified in a statement of allocated exemptions under

section 292(4)(b), in subsection (2)(a) the reference to the relevant

finance profits is to be read as a reference to X% of those profits.

(4)
The Commissioners may by regulations amend this Chapter to require,

where a financing income amount determined in accordance with

section 314A for the relevant period of account is reduced under

section 296, the sum charged on the company as mentioned in section

314A(1)(a) to be re-determined in accordance with provision made by

regulations under subsection (1)(b) as if the proportion of the

financing income amount represented by the amount of the reduction

were specified in a statement of allocated exemptions under section

292(4)(b).

(5)
The Commissioners may by regulations amend this Part or Part 9A in

consequence of provision made by regulations under subsection (1) or

(4).”’.

David Gauke

Agreed to  189

Schedule  20,  page  520,  line  12,  leave out ‘and’ and insert—

‘(ba)
the CFC’s accounting period in relation to which the sum is

charged ends in the period of account of the worldwide group,

and’.

Public Bill Committee Proceedings: 19 June 2012
49

Finance Bill, continued

David Gauke

Agreed to  111

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

371BG(3)(a) and 371BH(2A)(b)’.

David Gauke

Agreed to  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’.

David Gauke

Agreed to  113

Schedule  20,  page  520,  line  28,  at end insert—

‘Insurance Companies (Reserve) (Tax) Regulations 1996 (S.I. 1996/2991)

42A
The Insurance Companies (Reserve) (Tax) Regulations 1996 (S.I. 1996/2991)

are amended as follows.

42B(1)
Regulation 8A is amended as follows.

      (2)
In paragraph (1)—

(a)
in sub-paragraph (a) for “controlled foreign company” substitute

“CFC (within the meaning of Part 9A of the Taxation (International

and Other Provisions) Act 2010)”, and

(b)
in sub-paragraph (b) for “controlled foreign company” substitute

“CFC”.

      (3)
In paragraph (4)—

(a)
for “controlled foreign company’s” substitute “CFC’s”, and

(b)
for “the company” substitute “the CFC”.

42C
In regulation 8B for “controlled foreign company” substitute “CFC (within the

meaning of Part 9A of the Taxation (International and Other Provisions) Act

2010)”.’.

Stephen Williams

Mark Durkan

Caroline Lucas

Not called  3

Schedule  20,  page  520,  line  31,  at end insert—

‘42A
Notwithstanding the provisions of this Part, this 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.’.

David Gauke

Agreed to  114

Schedule  20,  page  521,  line  26,  leave out ‘and 38’ and insert ‘, 38, 38A, 40A, 42B

and 42C’.



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