|
| |
|
(b) | it is a distribution of amounts shown in the financial |
| |
statements under section 532(2)(a) (statement of group’s |
| |
property rental business) as— |
| |
(i) | profits or gains (or both) of UK members of the group, |
| |
| 5 |
(ii) | profits or gains (or both) of UK property rental |
| |
business of non-UK members of the group. |
| |
(6) | In subsection (5) the reference to a distribution made by the principal |
| |
company includes a reference to a distribution made by the principal |
| |
company of the post-cessation group. |
| 10 |
(7) | A distribution falls within this subsection if— |
| |
(a) | it is made by a company UK REIT to a shareholder of the |
| |
| |
(i) | a member of a group UK REIT, or |
| |
(ii) | another company UK REIT, and |
| 15 |
(b) | it is a distribution in respect of profits or gains (or both) of |
| |
property rental business of the company. |
| |
(8) | In subsection (7) the reference to a distribution made by a company |
| |
UK REIT includes a reference to a distribution made by the post- |
| |
| 20 |
8 | In section 550 (attribution of distributions) in subsection (2)— |
| |
(a) | for paragraph (a) substitute— |
| |
“(a) | first, to distributions in satisfaction of the requirement |
| |
of section 530(1)(a) or 530(4)(a) (as the case may be), |
| |
(aa) | second, to distributions in satisfaction of the |
| 25 |
requirement of section 530(1)(b) or 530(4)(b) (as the |
| |
| |
(b) | in paragraph (b) for “second” substitute “third”, |
| |
(c) | in paragraph (c) for “third” substitute “fourth”, |
| |
(d) | in paragraph (d) for “fourth” substitute “fifth”, and |
| 30 |
(e) | in paragraph (e) for “fifth” substitute “sixth”. |
| |
9 | In section 588 (joint ventures: effect of notice under section 586) after |
| |
| |
“(7) | Subsections (3) to (6) apply (in particular) for the purpose of |
| |
interpreting section 549A(5)(a)(i) and (7)(a)(i).” |
| 35 |
10 | In section 589 (joint ventures: effect of notice under section 587) after |
| |
| |
“(7) | Subsections (3) to (6) apply (in particular) for the purpose of |
| |
interpreting section 549A(5)(a)(i) and (7)(a)(i).” |
| |
11 | In section 605 (property rental business: exclusion of business producing |
| 40 |
listed income) after subsection (1) insert— |
| |
“(1A) | But see section 549A which treats income falling within class 7 of the |
| |
table as profits of property rental business.” |
| |
12 | In Chapter 18 of Part 15 of ITA 2007 (deduction of income tax at source) in |
| |
sections 973 and 974 (which relate to distributions made by UK REITs) after |
| 45 |
|
| |
|
| |
|
| |
“(7) | In relation to references to profits of property rental business, see |
| |
section 549A of CTA 2010.” |
| |
13 (1) | The amendments made by paragraph 4 above have effect for accounting |
| |
periods beginning on or after the day on which this Act is passed. |
| 5 |
(2) | The amendment made by paragraph 7 above has effect in relation to |
| |
distributions as follows— |
| |
(a) | in the case of a distribution received by a member of a group UK |
| |
REIT, the amendment has effect if the distribution is received in an |
| |
accounting period of the principal company of the group beginning |
| 10 |
on or after the day on which this Act is passed, and |
| |
(b) | in the case of a distribution received by a company UK REIT, the |
| |
amendment has effect if the distribution is received in an accounting |
| |
period of the company beginning on or after the day on which this |
| |
| 15 |
| and the other amendments made by this Schedule have effect accordingly. |
| |
| |
| |
| |
1 | CTA 2010 is amended in accordance with paragraphs 2 to 4. |
| |
2 | In section 1(4) (overview of Act), after paragraph (j) insert— |
| 20 |
“(ja) | tax mismatch schemes (see Part 21BA),”. |
| |
| |
| |
| |
938O | Losses and profits from tax mismatch scheme to be disregarded |
| 25 |
(1) | This section applies to a company that is (at any time) a party to a tax |
| |
| |
(2) | No scheme loss or profit made by the company in any accounting |
| |
period in relation to the scheme is to be brought into account as a |
| |
debit or credit for the purposes of Part 5 of CTA 2009 (loan |
| 30 |
relationships) or Part 7 of that Act (derivative contracts). |
| |
(3) | An amount that would, apart from this section, be brought into |
| |
account for the purposes of Part 5 or 7 of that Act as respects any |
| |
| |
(a) | is treated, for the purposes of section 464(1) or (as the case |
| 35 |
may be) 699(1) of that Act (priority of Part 5 or 7 for |
| |
corporation tax purposes), as if it were so brought into |
| |
| |
(b) | accordingly, may not be brought into account for any other |
| |
corporation tax purposes as respects that matter. |
| 40 |
|
| |
|
| |
|
938P | Meaning of “tax mismatch scheme” |
| |
(1) | A scheme is a tax mismatch scheme if condition A or B is met. |
| |
(2) | Condition A is that, at the time the scheme is entered into, there is no |
| |
practical likelihood that the scheme will fail to secure a relevant tax |
| |
advantage of £2 million or more. |
| 5 |
(3) | The Treasury may by order substitute a higher amount for the |
| |
amount for the time being specified in subsection (2). |
| |
(4) | Any such substitution is to have effect in relation to schemes entered |
| |
into on or after the day on which the order comes into force. |
| |
| 10 |
(a) | the purpose, or one of the main purposes, of the company in |
| |
entering into the scheme is to obtain the chance of securing a |
| |
relevant tax advantage (of any amount), and |
| |
(b) | at the time the scheme is entered into— |
| |
(i) | there is no chance that the scheme will secure a |
| 15 |
relevant tax disadvantage, or |
| |
(ii) | there is such a chance, but the expected value of the |
| |
scheme is nevertheless a positive amount. |
| |
(6) | If, at the time the company enters into the scheme, there are chances |
| |
that the scheme would, if carried out, secure different relevant tax |
| 20 |
advantages or disadvantages in different circumstances, the |
| |
amounts and probabilities of each must be taken into account in |
| |
determining the expected value of the scheme. |
| |
(7) | In determining whether condition A or B is met, it is to be assumed |
| |
that the parties to the scheme carry it out. |
| 25 |
(8) | Where, at the time the scheme is entered into, the length of the |
| |
scheme period is uncertain, condition A or B is met if it would be met |
| |
on any reasonable assumption as to the length of the scheme period. |
| |
(9) | In determining whether condition A or B is met, section 938O |
| |
(scheme profits and losses to be left out of account) is to be |
| 30 |
| |
938Q | Meaning of “scheme loss” and “scheme profit” |
| |
(1) | A loss or profit made by a company in an accounting period is a |
| |
“scheme loss” or “scheme profit” in relation to a tax mismatch |
| |
scheme if the loss or profit— |
| 35 |
(a) | arises from a transaction, or series of transactions, that forms |
| |
| |
(b) | is, or is comprised in, an amount that is brought into account |
| |
as a debit or credit for the purposes of Part 5 or 7 of CTA 2009, |
| |
| 40 |
(c) | meets the first or second asymmetry condition. |
| |
(2) | The first asymmetry condition is that the loss or profit affects the |
| |
amount of any relevant tax advantage secured by the scheme. |
| |
(3) | Where, at the end of the accounting period— |
| |
|
| |
|
| |
|
(a) | it is not certain whether the scheme will secure a relevant tax |
| |
| |
(b) | it is not certain what the amount of the relevant tax |
| |
advantage secured by the scheme will be, |
| |
| a loss or profit is to be treated as meeting the first asymmetry |
| 5 |
condition if, at that time, there is a chance that the scheme will secure |
| |
a relevant tax advantage and that the loss or profit will affect its |
| |
| |
| |
(a) | a loss or profit meets the conditions in subsection (1)(a) and |
| 10 |
| |
(b) | a part, but not the whole, of the loss or profit meets the first |
| |
| |
| only that part of the loss or profit is a “scheme loss” or “scheme |
| |
| 15 |
(5) | The second asymmetry condition is that the loss or profit— |
| |
(a) | does not meet the first asymmetry condition, but |
| |
(b) | arises from a transaction, or series of transactions, that might |
| |
(if events had turned out differently) have given rise to a loss |
| |
or profit that would have done so. |
| 20 |
(6) | References in this section to a loss or profit include a loss or profit |
| |
arising in respect of interest or expenses. |
| |
(7) | In determining whether the condition in subsection (1)(b) or the first |
| |
or second asymmetry condition is met, section 938O (scheme profits |
| |
and losses to be left out of account) is to be disregarded. |
| 25 |
938R | Meaning of “relevant tax advantage” etc and “the scheme period” |
| |
(1) | In this Part “relevant tax advantage”, in relation to a scheme, means |
| |
| |
(a) | is made by the company over the scheme period, |
| |
(b) | meets the condition in subsection (3), and |
| 30 |
| |
(2) | In this Part “relevant tax disadvantage”, in relation to a scheme, |
| |
means an economic loss that— |
| |
(a) | is made by the company over the scheme period, |
| |
(b) | meets the condition in subsection (3), and |
| 35 |
| |
(3) | The condition is that the economic profit or loss arises as a result of |
| |
asymmetries in the way that the company brings, or does not bring, |
| |
amounts into account as debits and credits for the purposes of Part 5 |
| |
| 40 |
(4) | A reference in this section to asymmetries includes, in particular— |
| |
(a) | asymmetries relating to quantification, and |
| |
(b) | asymmetries relating to timing. |
| |
| |
(a) | a reference to an economic profit includes an increase in an |
| 45 |
economic profit and a decrease in an economic loss, and |
| |
|
| |
|
| |
|
(b) | a reference to an economic loss includes an increase in an |
| |
economic loss and a decrease in an economic profit. |
| |
(6) | In this Part “the scheme period”, in relation to a scheme, means the |
| |
period during which the scheme has effect. |
| |
938S | Meaning of references to economic profits and losses |
| 5 |
(1) | An economic profit or loss is to be computed for the purposes of this |
| |
Part taking into account, in particular— |
| |
(a) | profits and losses made as a result of the operation of the |
| |
Corporation Tax Acts, and |
| |
(b) | any adjustments required to reflect the time value of money. |
| 10 |
(2) | In determining for the purposes of this Part the amount of an |
| |
economic profit or loss made by the company over the scheme |
| |
period, profits and losses made by the company are to be taken into |
| |
account only to the extent that they are attributable to times at which |
| |
the company is a party to the scheme. |
| 15 |
938T | Tax capacity assumption |
| |
(1) | This section applies for the purpose of determining whether a |
| |
scheme will, or might, secure a relevant tax advantage. |
| |
(2) | The economic profits and losses made by the company over the |
| |
scheme period must be calculated on the assumption that the |
| 20 |
| |
(a) | obtains the full tax benefit of any loss made by the company |
| |
in relation to a loan relationship or a derivative contract |
| |
| |
(b) | incurs the full tax cost of any profit made by the company in |
| 25 |
relation to a loan relationship or a derivative contract during |
| |
| |
(3) | The “full tax benefit” of a loss is the reduction in the liability of the |
| |
company to corporation tax that would result if— |
| |
(a) | the loss were brought into account as a debit or as a reduction |
| 30 |
in a credit for the purposes of Part 5 or 7 of CTA 2009, and |
| |
(b) | the company’s profits chargeable to corporation tax, |
| |
disregarding the loss, were equal to the debit (or the |
| |
reduction in the credit) determined by reference to the loss. |
| |
(4) | The “full tax cost” of a profit is the increase in the liability of the |
| 35 |
company to corporation tax that would result if— |
| |
(a) | the profit were brought into account as a credit or as a |
| |
reduction in a debit for the purposes of Part 5 or 7 of CTA |
| |
| |
(b) | the company’s profits chargeable to corporation tax, |
| 40 |
disregarding the profit, were nil. |
| |
| |
| In this Part “scheme” includes any scheme, arrangements or |
| |
understanding of any kind whatever, whether or not legally |
| |
enforceable, involving a single transaction or two or more |
| 45 |
| |
|
| |
|