(b) there would not be a shortfall in qualifying expenditure for
that accounting period in the absence of any additional
amount,

the additional amount is to be added to the actual qualifying
5expenditure for the next relevant accounting period (in addition to
any additional amount so added by virtue of subsection (8)).”

20 (1) Section 357CK (deductions that are not routine deductions) is amended as
follows.

(2) In subsection (1), at the end insert—

“(e) 10subsection (7A) (television production expenditure),

(f) subsection (7B) (video games development expenditure).”

(3) After subsection (7) insert—

“(7A) Head 5 is—

(a) the amount of any qualifying expenditure on a television
15programme for which an additional deduction for the
accounting period is obtained by the company under Part
15A of CTA 2009, and

(b) the amount of that additional deduction.

(7B) Head 6 is—

(a) 20the amount of any qualifying expenditure on a video game
for which an additional deduction for the accounting period
is obtained by the company under Part 15B of CTA 2009, and

(b) the amount of that additional deduction.”

Consequential renumbering

21 (1) 25Sections 1217 and 1218 of CTA 2009 are renumbered as follows—

(a) section 1217 becomes section 1218A, and

(b) section 1218 becomes section 1218B.

(2) In the following provisions of CTA 2009, for “section 1218” substitute
“section 1218B”—

(none) 30section 985(3),

(none) section 999(4),

(none) section 1000(3),

(none) section 1013(3), and

(none) section 1021(3).

(3) 35In Schedule 4 to CTA 2009—

(a) in the entry for “company with investment business (in Part 16)”, for
“section 1218(1) and (2)” substitute “section 1218B(1) and (2)”, and

(b) in the entry for “investment business in a company (in Part 16)”, for
“section 1218(3)” substitute “section 1218B(3)”.

(4) 40In section 18 of CAA 2001, for “section 1218” substitute “section 1218B”.

Commencement

22 (1) The amendments made by this Schedule come into force in accordance with
provision contained in an order made by the Treasury.

(2) An order under sub-paragraph (1)—

(a) may make different provision for different purposes;

(b) may make such adaptations of provisions of this Schedule brought
into force as appear to be necessary or expedient in consequence of
5other provisions of this Act not yet having come into force.

23 (1) The amendments made by this Schedule have effect in relation to accounting
periods beginning on or after 1 April 2013.

(2) For provision about the case where a company has an accounting period
beginning before 1 April 2013 and ending on or after that date, see
10paragraph 3(3) of Schedule 15 or (as the case may be) Schedule 16.

Section 38

SCHEDULE 18 Real estate investment trusts: UK REITs which invest in other UK REITs

1 Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.

2 (1) Section 530 (condition as to distribution of profits) is amended as follows.

(2) 15For subsection (1) substitute—

“(1) In the case of a group UK REIT, the condition in this section is met in
relation to an accounting period if—

(a) so much of the group’s UK profits arising in the period as are
UK REIT investment profits (see section 549A), and

(b) 20at least 90% of the rest of the group’s UK profits arising in the
period,

are distributed by the principal company of the group on or before
the filing date for the principal company’s tax return for the period
(see paragraph 14 of Schedule 18 to FA 1998).”

(3) 25For subsection (4) substitute—

“(4) In the case of a company UK REIT, the condition in this section is met
in relation to an accounting period if—

(a) so much of the profits of the company’s property rental
business arising in the period as are UK REIT investment
30profits (see section 549A), and

(b) at least 90% of the rest of the profits of the company’s
property rental business arising in the period,

are distributed on or before the filing date for the company’s tax
return for the period (see paragraph 14 of Schedule 18 to FA 1998).

(4A) 35For the purposes of subsection (4) profits of the company’s property
rental business are to be calculated in accordance with section 599.”

3 (1) Section 530A (condition as to distribution of profits: increase in profits after
delivery of tax return) is amended as follows.

(2) In subsection (2) for “530(1)(c)” substitute “530(1)”.

(3) 40In subsection (6) for “530(4)(b)” substitute “530(4)”.

(4) After subsection (9) insert—

“(10) This section cannot be relied upon to satisfy the requirement of
section 530(1)(a) or (4)(a).”

4 (1) Section 531 (conditions as to balance of business) is amended as follows.

(2) 5In subsection (5)(b) after “cash” insert “or relevant UK REIT shares”.

(3) In subsection (6)(b) after “cash” insert “and relevant UK REIT shares”.

(4) After subsection (8) insert—

“(9) In this section “relevant UK REIT shares” means—

(a) in the case of a group UK REIT, shares held by a member of
10the group in the principal company of another group UK
REIT or in a company UK REIT, and

(b) in the case of a company UK REIT, shares held by the
company in the principal company of a group UK REIT or in
another company UK REIT.”

5 15In section 548 (distributions: liability to tax) in subsections (1) and (3) after
“distribution” insert “(other than one falling within section 549A(5) or (7))”.

6 In section 549 (distributions: supplementary) in subsection (3)(a) and (b)
after “distribution” insert “(other than one falling within section 549A(5) or
(7))”.

7 20After section 549 insert—

“549A Distributions from one UK REIT to another UK REIT

(1) If a company receives a distribution falling within subsection (5) or
(7), the distribution is to be treated as profits of a property rental
business carried on by the company in the United Kingdom.

25Such profits are referred to in this Part as “UK REIT investment
profits”.

Such profits are referred to in this Part as “UK REIT investment
profits”.

(2) The property rental business mentioned in subsection (1) is to be
30treated as separate from any other property rental business of the
company.

(3) References to profits of property rental business or UK property
rental business are to be read as including UK REIT investment
profits accordingly, including where the profits referred to are
35otherwise profits calculated in accordance with international
accounting standards or section 599.

(4) Section 549(2) and (2A) applies in relation to distributions falling
within subsection (5) or (7) as it applies in relation to relevant
distributions.

(5) 40A distribution falls within this subsection if—

(a) it is made by the principal company of a group UK REIT to a
shareholder of the company which is—

(i) a member of another group UK REIT, or

(ii) a company UK REIT, and

(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,
5or

(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
10company of the post-cessation group.

(7) A distribution falls within this subsection if—

(a) it is made by a company UK REIT to a shareholder of the
company which is—

(i) a member of a group UK REIT, or

(ii) 15another company UK REIT, and

(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-
20cessation company.”

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) 25second, to distributions in satisfaction of the
requirement of section 530(1)(b) or 530(4)(b) (as the
case may be),”,

(b) in paragraph (b) for “second” substitute “third”,

(c) in paragraph (c) for “third” substitute “fourth”,

(d) 30in paragraph (d) for “fourth” substitute “fifth”, and

(e) in paragraph (e) for “fifth” substitute “sixth”.

9 In section 588 (joint ventures: effect of notice under section 586) after
subsection (6) insert—

“(7) Subsections (3) to (6) apply (in particular) for the purpose of
35interpreting section 549A(5)(a)(i) and (7)(a)(i).”

10 In section 589 (joint ventures: effect of notice under section 587) after
subsection (6) insert—

“(7) Subsections (3) to (6) apply (in particular) for the purpose of
interpreting section 549A(5)(a)(i) and (7)(a)(i).”

11 40In section 605 (property rental business: exclusion of business producing
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
45sections 973 and 974 (which relate to distributions made by UK REITs) after

subsection (6) insert—

“(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
5periods beginning on or after the day on which this Act is passed.

(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
10accounting period of the principal company of the group beginning
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
15Act is passed,

and the other amendments made by this Schedule have effect accordingly.

Section 41

SCHEDULE 19 Tax mismatch schemes

1 CTA 2010 is amended in accordance with paragraphs 2 to 4.

2 20In section 1(4) (overview of Act), after paragraph (j) insert—

“(ja) tax mismatch schemes (see Part 21BA),”.

3 After Part 21B insert—

“ Part 21BA Tax mismatch schemes

938O 25 Losses and profits from tax mismatch scheme to be disregarded

(1) This section applies to a company that is (at any time) a party to a tax
mismatch scheme.

(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
30debit or credit for the purposes of Part 5 of CTA 2009 (loan
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
matter—

(a) 35is treated, for the purposes of section 464(1) or (as the case
may be) 699(1) of that Act (priority of Part 5 or 7 for
corporation tax purposes), as if it were so brought into
account, and

(b) accordingly, may not be brought into account for any other
40corporation tax purposes as respects that matter.

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
5advantage of £2 million or more.

(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.

(5) 10Condition B is that—

(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) 15there is no chance that the scheme will secure a
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
20that the scheme would, if carried out, secure different relevant tax
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
25that the parties to the scheme carry it out.

(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
30(scheme profits and losses to be left out of account) is to be
disregarded.

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
35scheme if the loss or profit—

(a) arises from a transaction, or series of transactions, that forms
part of the scheme,

(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,
40and

(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
advantage, or

(b) it is not certain what the amount of the relevant tax
advantage secured by the scheme will be,

5a loss or profit is to be treated as meeting the first asymmetry
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
amount.

(4) Where—

(a) 10a loss or profit meets the conditions in subsection (1)(a) and
(b), and

(b) a part, but not the whole, of the loss or profit meets the first
asymmetry condition,

only that part of the loss or profit is a “scheme loss” or “scheme
15profit”.

(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
20or profit that would have done so.

(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
25and losses to be left out of account) is to be disregarded.

938R Meaning of “relevant tax advantage” etc and “the scheme period”

(1) In this Part “relevant tax advantage”, in relation to a scheme, means
an economic profit that—

(a) is made by the company over the scheme period,

(b) 30meets the condition in subsection (3), and

(c) is not negligible.

(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) 35meets the condition in subsection (3), and

(c) is not negligible.

(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
40or 7 of CTA 2009.

(4) A reference in this section to asymmetries includes, in particular—

(a) asymmetries relating to quantification, and

(b) asymmetries relating to timing.

(5) In this section—

(a) 45a reference to an economic profit includes an increase in an
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 5 Meaning of references to economic profits and losses

(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) 10any adjustments required to reflect the time value of money.

(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
15the company is a party to the scheme.

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
20scheme period must be calculated on the assumption that the
company—

(a) obtains the full tax benefit of any loss made by the company
in relation to a loan relationship or a derivative contract
during the period, and

(b) 25incurs the full tax cost of any profit made by the company in
relation to a loan relationship or a derivative contract during
the period.

(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) 30the loss were brought into account as a debit or as a reduction
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) 35The “full tax cost” of a profit is the increase in the liability of the
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
2009, and

(b) 40the company’s profits chargeable to corporation tax,
disregarding the profit, were nil.

938U Meaning of “scheme”

In this Part “scheme” includes any scheme, arrangements or
understanding of any kind whatever, whether or not legally
45enforceable, involving a single transaction or two or more
transactions.

938V Priority

For the purposes of this Part the following provisions are to be
treated as of no effect—

(a) section 441 of CTA 2009 (loan relationships for unallowable
5purposes);

(b) section 690 of that Act (derivative contracts for unallowable
purposes);

(c) Part 6 of TIOPA 2010 (tax arbitrage);

(d) Part 7 of that Act (tax treatment of financing costs and
10income).”

4 In Schedule 4 (index of defined expressions), at the appropriate places
insert—

5 In section 231(8) of TIOPA 2010 (tax arbitrage: overview), for the words from
“section” to the end substitute “sections 938N and 938V of CTA 2010 (this
Part treated as of no effect for the purposes of Parts 21B and 21BA of CTA
252010 (group mismatch and tax mismatch schemes)).”

6 (1) The amendments made by this Schedule have effect in relation to schemes
entered into at any time (including any time before the commencement
date).

(2) But section 938O in Part 21BA of CTA 2010 (as inserted by paragraph 3 of
30this Schedule) does not apply to—

(a) scheme losses or profits that relate to a time before the
commencement date, or

(b) scheme profits that relate to a time on or after that date but are made
in relation to a scheme entered into before that date.

(3) 35In this paragraph “the commencement date” means 5 December 2012.

Section 45

SCHEDULE 20 Community amateur sports clubs

Introductory

1 Chapter 9 of Part 13 of CTA 2010 (community amateur sports clubs) is
5amended as follows.

Meaning of “open to the whole community”

2 (1) Section 659 (meaning of “open to the whole community”) is amended as
follows.

(2) In subsection (1), for paragraph (c) substitute—

“(c) 10the costs associated with membership of the club for any year
do not represent a significant obstacle to membership of the
club, use of its facilities or full participation in its activities
(see subsection (2A)).”

(3) After subsection (2) insert—

“(2A) 15For the purposes of subsection (1)(c) the costs associated with
membership of a club for any year represent a significant obstacle to
membership of the club, use of its facilities or full participation in its
activities if—

(a) those costs exceed the amount specified for the year for the
20purposes of this subsection in regulations made by the
Treasury, and

(b) the club has not made such arrangements as are necessary to
secure that those costs do not represent such an obstacle.

(2B) The Treasury may by regulations make provision supplementing
25subsection (2A), including—

(a) provision as to what constitutes full participation in a club’s
activities;

(b) provision as to costs that are, or are not, to be regarded as the
costs associated with membership of a club;

(c) 30provision about calculating the amount of the costs
associated with membership of a club for any year.

(2C) The provision that may be made by regulations under this section
includes—

(a) different provision for different purposes, and

(b) 35provision having effect in relation to times before the
regulations are made.

(2D) Section 1171(4) (orders and regulations subject to negative resolution
procedure) does not apply to any regulations made under this
section if a draft of the statutory instrument containing them has
40been laid before, and approved by a resolution of, the House of
Commons.”