Finance Bill (HC Bill 49)

(6) If—

(a) the company ceases to carry on the business in a calendar year, and

(b) an amount would otherwise have been treated as a result of subsection
(4) as a receipt of the company’s business in a later calendar year,

5any amount within paragraph (b) is treated instead as a receipt of the
company’s business in the accounting period in which the company ceased to
carry on the business.

(7) For the purposes of this section—

(a) “equalisation reserve”, in relation to an insurance company, means the
10equalisation reserve in respect of a business which the company was
required, by virtue of equalisation reserves rules (within the meaning
of section 444BA of ICTA), to maintain,

(b) “equivalent reserve” means an equivalent reserve (within the meaning
of section 444BD of ICTA) in relation to which section 444BA of ICTA
15applied,

(c) a company’s “existing” equalisation or equivalent reserve means the
equalisation or equivalent reserve as it stood immediately before the
first accounting period of the company (“the relevant accounting
period”) in relation to which the amendments made by this section
20have effect (but see subsection (8)), and

(d) references in this section to the company’s business are to the business
in respect of which the equalisation or equivalent reserve was
maintained.

(8) If—

(a) 25an insurance company has made an election under section 444BA(4) of
ICTA in relation to an accounting period ending before the specified
day, and

(b) an amount would, but for this section, have been carried forward to the
relevant accounting period of the company as a deductible amount,

30that amount is not to be carried forward to that period as a deductible amount
but is instead to be deducted from the amount of the equalisation or equivalent
reserve as it stood immediately before that period.

(9) References in this section to section 444BA of ICTA include that section as
modified by regulations made under section 444BB or 444BC of that Act.

27 35Election to accelerate receipts under s.26(4)

(1) An insurance company may make an election in relation to a calendar year
(“the relevant year”) for all of the amounts that would, as a result of section
26(4), otherwise be treated as arising in later calendar years as receipts of a
business carried on by the company to be treated instead as receipts of the
40business arising in the relevant year.

(2) An election under this section—

(a) must be made by notice to an officer of Revenue and Customs within 2
years from the end of the relevant year, and

(b) is irrevocable.

(3) 45A company which makes an election under section 29 as the transferor or the
transferee may make an election under this section but not in relation to the
calendar year in which the transfer takes place.

28 Deemed receipts under s.26(4): double taxation relief

(1) This section applies if—

(a) a receipt is treated as arising to an insurance company’s business in an
accounting period as a result of section 26(4),

(b) 5the company carries on business through a permanent establishment
outside the United Kingdom by reference to which double taxation
relief is afforded in respect of any income or gains, and

(c) the permanent establishment is one in relation to which regulation
10(2) of the Insurance Companies (Reserves) (Tax) Regulations 1996
10previously applied.

(2) For the purpose of calculating the profits or losses by reference to which double
taxation relief is afforded for the accounting period, only the appropriate
proportion (if any) of the receipt is to be taken into account.

(3) The appropriate proportion of the receipt is—

(a) 15equal to the mean of each proportion found for each relevant period (if
any), or

(b) equal to such other proportion as the company may determine on a just
and reasonable basis.

(4) For the purposes of subsection (3)(a) a proportion for a relevant period is the
20proportion which the PE’s premium income for the period bears to the
company’s premium income for the period.

(5) For the purposes of subsections (3)(a) and (4)—

• “the company’s premium income”, in relation to a relevant period, means
  the amount of net premiums written by reference to which the
  25calculation under section 444BA(2)(a) or (b) of ICTA was made for the
  period,

• “the PE’s premium income”, in relation to a relevant period, means so
  much of the company’s premium income for the period as is
  attributable to the permanent establishment, and

• 30a “relevant period” means an accounting period of the company in
  relation to which each of the following conditions is met—

  (a)

  section 444BA of ICTA has applied in relation to the accounting
  period,

  (b)

  the business mentioned in subsection (1)(a) has been carried on
  35through the permanent establishment in the accounting period,
  and

  (c)

  the accounting period is the company’s last accounting period
  in relation to which section 444BA of ICTA applied or is one that
  falls wholly or partly in the period of six years ending with the
  40day on which that last accounting period ended.

(6) In subsection (5)—

(a) “net premiums written” means gross premiums written net of
reinsurance premiums payable under reinsurance ceded, and

(b) references to section 444BA of ICTA include that section as modified by
45regulations made under that Act.

29 Transfer of whole or part of the business

(1) If—

(a) an insurance company carries on a business,

(b) amounts fall to be treated as receipts of the business as a result of
section 26(4) (“deemed receipts”), and

(c) under an insurance business transfer scheme there is a transfer of the
5whole or part of the business to another insurance company within the
charge to corporation tax,

the transferor and the transferee may jointly make an election for those deemed
receipts to be allocated between them in accordance with the following
provisions.

(2) 10If the transfer is a transfer of the whole of the business or substantially the
whole of the business—

(a) section 26(6) does not apply in relation to the transferor (if it would
otherwise have applied),

(b) the deemed receipt which, on the assumption that there had been no
15transfer, would have arisen in the transfer year is apportioned between
the transferor and the transferee in accordance with subsection (5), and

(c) the remaining deemed receipts (if any) which, on that assumption,
would have arisen in subsequent calendar years are treated as receipts
of the transferee (and not as receipts of the transferor).

(3) 20If the transfer is a transfer of a part of the business and subsection (2) does not
apply—

(a) the appropriate portion of the deemed receipt arising in the transfer
year is apportioned between the transferor and the transferee in
accordance with subsection (5), and

(b) 25the appropriate portions of the remaining deemed receipts (if any) are
treated as receipts of the transferee (and the receipts of the transferor
are reduced accordingly).

(4) The appropriate portion of a deemed receipt is to be determined on a just and
reasonable basis.

(5) 30An apportionment under subsection (2)(b) or (3)(a) is to be made in proportion
to the number of days of the calendar year falling before the day of the transfer
and the number of days of the calendar year falling on or after the day of
transfer.

(6) A deemed receipt which is treated as a receipt of the transferee as a result of
35this section is treated as a receipt of the business of the transferee which
consists of or includes the transferred business, and, accordingly, section 26(4)
and (6) have effect in relation to the transferee—

(a) as if references to the company were references to the transferee, and

(b) as if references to the business were references to the business of the
40transferee which consists of or includes the transferred business.

(7) An election under this section—

(a) must be made by notice to an officer of Revenue and Customs within
28 days from the end of the day on which the transfer takes place,

(b) must be accompanied by an explanation as to the way in which the
45transferor and the transferee have determined any issue falling to be
determined for the purposes of this section, and

(c) is irrevocable.

(8) In this section—

Finance BillPage 23

• “the transferred business” means so much of the business as is transferred
  to the transferee, and

• “the transfer year” means the calendar year in which the transfer takes
  place.

(9) 5If a company makes an election under this section as the transferee, this section
has effect for the purposes of any subsequent elections made by the company
under this section as the transferor as if references to the business were
references to the activities in respect of which deemed receipts are treated as
arising to it.

30 10Abolition of relief for equalisation reserves: Lloyd’s corporate members etc

(1) Regulations made by the Treasury under section 47 of FA 2009 (equalisation
reserves for Lloyd’s corporate and partnership members) that revoke previous
regulations made under that section may include provision corresponding to
the provision made by sections 26(4) to (8) and 27, subject to such modifications
15as may be made in the regulations.

(2) Section 47 of FA 2009 is repealed.

(3) That repeal has effect in relation to accounting periods ending on or after such
day (“the specified day”) as is specified in an order made by the Treasury (and
different days may be specified for different cases).

(4) 20Subsections (2) and (3) are not to affect the operation of any transitional or
saving provision included (whether as a result of this section or otherwise) in
regulations made under section 47 of FA 2009 that revoke previous regulations
made under that section so far as the provision remains capable of having
effect in relation to times falling on or after the specified day.

25Miscellaneous

31 Tax treatment of financing costs and income

Schedule 5 contains provision about the tax treatment of financing costs and
income.

32 Group relief: meaning of “normal commercial loan”

(1) 30CTA 2010 is amended as follows.

(2) In section 162(2)(c) (meaning of “normal commercial loan”), after “securities
in” insert “a quoted unconnected company (see section 164(2A)) or in”.

(3) In section 164 (sections 160 and 162: supplementary), in subsection (2)(c), after
“securities in” insert “a quoted unconnected company (see subsection (2A)) or
35in”.

(4) After subsection (2) of that section insert—

“(2A) For the purposes of this section and section 162 a company is a quoted
unconnected company if (and only if)—

(a) its ordinary shares are listed on a recognised stock exchange,
40and

(b) it is not connected with the relevant company.”

(5) In subsection (4) of that section—

(a) for “If the candidate company’s” substitute “In the case of a company
whose”, and

(b) for “subsection (3)(c) is” substitute “subsections (2A)(a) and (3)(c) are”.

(6) 5In subsection (5) of that section, for “subsections (3) and (4)” substitute “this
section”.

(7) The amendments made by this section have effect in relation to loans made on
or after 21 March 2012.

33 Company distributions

(1) 10Part 23 of CTA 2010 (company distributions) is amended as follows.

(2) Section 1002 (exceptions for certain transfers of assets or liabilities between a
company and its members) is repealed.

(3) In section 1020 (transfers of assets or liabilities treated as distributions)—

(a) in subsection (2), omit from “But” to the end, and

(b) 15after that subsection insert—

“(2A) But the company is not treated as making a distribution under
subsection (2) if the transfer of assets or liabilities—

(a) is a distribution by virtue of paragraph B in section
1000(1), or

(b) 20would be such a distribution in the absence of sub-
paragraph (a) of that paragraph (distribution
representing repayment of capital on the shares).”

(4) Section 1021 (transfers of assets or liabilities treated as distributions:
exceptions) is repealed.

(5) 25In consequence of the repeal made by subsection (2)—

(a) omit section 194(2) of CTA 2010,

(b) in section 998(3) of that Act, for “1002” substitute “1003”,

(c) in section 1001 of that Act, in the third column of the table, omit
“Section 1002 (exception for certain transfers of assets and liabilities)”,
30and

(d) omit paragraph 1(2) of Schedule 3 to F(No.3)A 2010.

(6) The amendments made by this section have effect in relation to distributions
made on or after the day on which this Act is passed.

CHAPTER 4 Capital gains

34 35Annual exempt amount

(1) TCGA 1992 is amended as follows.

(2) In section 3 (annual exempt amount), for the figure specified in subsection (2)
substitute “£10,600”.

(3) In that section—

(a) in each of subsections (3), (3A), (3B) and (4), for “RPI” substitute “CPI”,
and

(b) in subsection (3A), for “retail prices index” substitute “consumer prices
index”.

(4) 5In section 288 (interpretation), after subsection (2) insert—

“(2A) In this Act “consumer prices index” means the all items consumer
prices index published by the Statistics Board.”

(5) The amendment made by subsection (2) has effect for the tax year 2012-13 and
subsequent tax years.

(6) 10Section 3(3) of TCGA 1992 (indexation) does not apply in relation to the tax
year 2012-13.

(7) The amendments made by subsections (3) and (4) have effect for the tax year
2013-14 and subsequent tax years.

35 Foreign currency bank accounts

(1) 15TCGA 1992 is amended as follows.

(2) In section 13 (attribution of gains to members of non-resident companies), in
subsection (5), omit paragraph (c).

(3) In section 251 (debts: general provisions), after subsection (5) insert—

“(5A) References in this section to the disposal of a debt include the disposal
20of an interest in a debt (and, in the case of an interest in a debt, the
reference in subsection (3) to the amount of the debt is to the amount of
the person’s interest in the debt).”

(4) For section 252 substitute—

“252 Foreign currency bank accounts

(1) 25Section 251(1) does not apply in relation to a gain accruing to a person
on a disposal of a foreign currency debt (or an interest in such a debt)
unless that person is—

(a) an individual,

(b) the trustees of a settlement, or

(c) 30the personal representatives of a deceased person.

(2) A “foreign currency debt” is a debt—

(a) owed by a bank in a currency other than sterling, and

(b) represented by a sum standing to the credit of an account-
holder in an account in that bank.”

(5) 35Omit section 252A and Schedule 8A (foreign currency bank accounts).

(6) The amendments made by this section have effect in relation to disposals
occurring on or after 6 April 2012.

36 Collective investment schemes: chargeable gains

(1) TCGA 1992 is amended as follows.

(2) In section 99A(2) (treatment of umbrella schemes), after “subsection (1)” insert
“and section 103C”.

(3) After section 103B insert—

“103C Power to make regulations about collective investment schemes

(1) 5The Treasury may by regulations make provision about the treatment
of participants in collective investment schemes for the purposes of this
Act.

(2) The regulations may, in particular, specify descriptions of collective
investment scheme in relation to which they are to apply.

(3) 10Regulations under this section may make different provision for
different cases or different purposes.

(4) Regulations under this section—

(a) may modify this Act or any other enactment or instrument
(whenever passed or made), and

(b) 15may include incidental, consequential, supplementary or
transitional provision.

(5) A statutory instrument containing regulations under this section must
be laid before the House of Commons after being made.

(6) The regulations cease to have effect at the end of the period of 40 days
20beginning with the day on which the instrument is made unless before
the end of that period the instrument is approved by a resolution of the
House of Commons.

(7) After an instrument containing regulations under this section has been
approved under subsection (6), subsections (5) and (6) do not apply to
25any subsequent such instrument (and accordingly section 287(3)
applies to any such instrument).

(8) If regulations cease to have effect as a result of subsection (6), that does
not—

(a) affect anything previously done under the regulations, or

(b) 30prevent the making of new regulations to the same or similar
effect.

(9) In calculating the period of 40 days for the purposes of subsection (6),
no account is to be taken of any time during which Parliament is
dissolved or prorogued or during which the House of Commons is
35adjourned for more than 4 days.

(10) In this section—

• “modify” includes amend, repeal or revoke, and

• “participant”, in relation to a collective investment scheme, is to be
  read in accordance with section 235 of the Financial Services
  40and Markets Act 2000.”

37 Roll-over relief

(1) In section 155 of TCGA 1992 (roll-over relief: relevant classes of assets), in the
entry for Class 7A, for “Council Regulation (EC) No. 1782/2003” substitute
“Council Regulation (EC) No 73/2009”.

(2) In section 86 of FA 1993, for subsection (2) (power to add to classes specified in
section 155 of TCGA 1992) substitute—

“(2) The Treasury may by order made by statutory instrument amend
section 155 of the Taxation of Chargeable Gains Act 1992 (roll-over
5relief: relevant classes of assets) so as to add to or amend the classes of
assets specified in that section.

(2A) But an order under subsection (2) may not restrict the assets which fall
within a class listed in that section (whether by virtue of subsection (2)
or otherwise).

(2B) 10An order under subsection (2) may make such consequential
amendments of section 156ZB of, or Schedule 7AB to, the Taxation of
Chargeable Gains Act 1992 as appear to the Treasury to be
appropriate.”

(3) Accordingly, section 43(3) of FA 2002 is repealed.

(4) 15The amendment made by subsection (1) has effect where the disposal of the old
assets (or an interest in them) or the acquisition of the new assets (or an interest
in them) is on or after 1 January 2009.

CHAPTER 5 Miscellaneous

Enterprise incentives

38 20Seed enterprise investment scheme

Schedule 6 contains provision for and in connection with the seed enterprise
investment scheme (including provision for re-investment relief under TCGA
1992).

39 Enterprise investment scheme

25Schedule 7 contains provision about the enterprise investment scheme
(including provision about deferral relief under Schedule 5B to TCGA 1992).

40 Venture capital trusts

Schedule 8 contains provision about venture capital trusts.

Capital allowances

41 30Plant and machinery: restricting exception for manufacturers and suppliers

(1) In section 230 of CAA 2001 (exception for manufacturers and suppliers), in
subsection (1), for “restrictions in sections 217 and 218 do” substitute
“restriction in section 218 does”.

(2) The amendment made by subsection (1) has effect in relation to expenditure of
35B’s that is incurred on or after 12 August 2011 (regardless of when the relevant
transaction was entered into).

(3) But, in relation to any such expenditure that is incurred before the next
amendment date, the restriction in section 217 of CAA 2001 does not apply
(despite subsection (1)) if B can show that the condition in subsection (4) is met.

(4) The condition is that, had the amendments made by paragraphs 1 to 7 of
5Schedule 9 had effect in relation to the expenditure, the restriction in section
217 would not have applied.

(5) “The next amendment date” means the date defined in paragraph 9 of
Schedule 9 as the start date.

42 Plant and machinery allowances: anti-avoidance

10Schedule 9 contains provision to counter abuse of Part 2 of CAA 2001.

43 Plant and machinery allowances: fixtures

Schedule 10 contains provision about plant and machinery allowances in
respect of fixtures.

44 Expenditure on plant and machinery for use in designated assisted areas

15Schedule 11 contains provision about first-year allowances in respect of
expenditure on plant and machinery for use in designated assisted areas.

45 Allowances for energy-saving plant and machinery

(1) Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

(2) In section 45A (expenditure on energy-saving plant or machinery), after
20subsection (1) insert—

“(1A) This section is subject to section 45AA (payments under Energy Act
2008 schemes).”

(3) After that section insert—

“45AA Section 45A exclusion: payments under Energy Act 2008 schemes

(1) 25Expenditure incurred on or after the relevant date on plant or
machinery is to be treated as never having been first-year qualifying
expenditure under section 45A if—

(a) a payment is made, or another incentive is given, under a
scheme established by virtue of section 41 of the Energy Act
302008 (feed-in tariffs) in respect of electricity generated by the
plant or machinery, or

(b) a payment is made, or another incentive is given, under a
scheme established by regulations under section 100 of that Act
(renewable heat incentives) in respect of heat generated, or gas
35or fuel produced, by the plant or machinery.

(2) All such assessments and adjustments of assessments are to be made as
are necessary to give effect to subsection (1).

(3) If a person who has made a tax return becomes aware that, after making
it, anything in it has become incorrect because of the operation of this

section, the person must give notice to an officer of Revenue and
Customs specifying how the return needs to be amended.

(4) The notice must be given within 3 months beginning with the day on
which the person first became aware that anything in the return had
become incorrect because of the operation of this section.

(5) 5Except as provided by subsection (6), the relevant date is—

(a) for corporation tax purposes, 1 April 2012, and

(b) for income tax purposes, 6 April 2012.

(6) In the case of expenditure incurred on a combined heat and power
system, the relevant date in relation to subsection (1)(b) is—

(a) 10for corporation tax purposes, 1 April 2014, and

(b) for income tax purposes, 6 April 2014.”

(4) In section 104A (special rate expenditure)—

(a) in subsection (1), omit the “and” after paragraph (e), and after
paragraph (f) insert “, and

“(g) 15expenditure incurred on or after the third relevant date
on the provision of solar panels.”, and

(b) after subsection (3) insert—

“(3A) The third relevant date is—

(a) for corporation tax purposes, 1 April 2012, and

(b) 20for income tax purposes, 6 April 2012.”

46 Plant and machinery: long funding leases

(1) Section 70E of CAA 2001 (disposal events and disposal values) is amended as
follows.

(2) In subsection (2A), for the definition of “R” substitute—

• 25“R is the sum of—

  (a)

  any relevant rebate (see subsections (2F) and (2G)), and

  (b)

  any other relevant lease-related payment (see
  subsections (2FA) and (2G)).”

(3) After subsection (2F) insert—

“(2FA) 30Relevant lease-related payment” means any payment which—

(a) is payable at any time for the benefit (directly or indirectly) of
the lessee or a person connected with the lessee,

(b) is connected with the long funding lease, or with any
arrangement connected with that lease, and

(c) 35is not—

(i) an initial payment or any other payment made to the
lessor by the lessee under the lease,

(ii) a payment made to the lessor by the lessee under a
guarantee of any residual amount (as defined in section
4070YE),

(iii) an initial payment or any other payment made under a
relevant superior lease to the person who is the lessor
under that lease by the person who is the lessee under
that lease, or