Finance Bill

House of Commons

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
40

76
Relationship between rules prohibiting and allowing deductions
(1)
In section 31 of ITTOIA 2005 (trade profits: relationship between rules
prohibiting and allowing deductions)—
(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
5
calculating the profits of a trade in respect of an amount which
arises directly or indirectly in consequence of, or otherwise in
connection with, relevant tax avoidance arrangements, that
rule—
(a)
does not have priority under subsection (1)(a), and
10
(b)
is subject to any relevant prohibitive rule in this Part
(and to the provisions mentioned in subsection (1)(b)).”,
and
(b)
after subsection (3) insert—
“(4)
In this section “relevant tax avoidance arrangements” means
15
arrangements—
(a)
to which the person carrying on the trade is a party, and
(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).
20

“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
legally enforceable).”
(2)
In section 274 of ITTOIA 2005 (property businesses: relationship between rules
prohibiting and allowing deductions)—
25
(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
calculating the profits of a property business in respect of an
amount which arises directly or indirectly in consequence of, or
otherwise in connection with, relevant tax avoidance
30
arrangements, that rule—
(a)
does not have priority under subsection (1)(a), and
(b)
is subject to any relevant prohibitive rule in this Part
(and to the provisions mentioned in subsection (1)(b)).”,
and
35
(b)
after subsection (3) insert—
“(3A)
In this section “relevant tax avoidance arrangements” means
arrangements—
(a)
to which the person carrying on the property business is
a party, and
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(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
45
legally enforceable).”
(3)
In section 51 of CTA 2009 (trade profits: relationship between rules prohibiting
and allowing deductions)—

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
41

(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
calculating the profits of a trade in respect of an amount which
arises directly or indirectly in consequence of, or otherwise in
connection with, relevant tax avoidance arrangements, that
5
rule—
(a)
does not have priority under subsection (1)(a), and
(b)
is subject to any relevant prohibitive rule (and to the
provisions mentioned in subsection (1)(b)).”, and
(b)
after subsection (3) insert—
10
“(4)
In this section “relevant tax avoidance arrangements” means
arrangements—
(a)
to which the company carrying on the trade is a party,
and
(b)
the main purpose, or one of the main purposes, of which
15
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not
legally enforceable).”
20
(4)
In section 214 of CTA 2009 (property businesses: relationship between rules
prohibiting and allowing deductions)—
(a)
after subsection (1) insert—
“(1A)
But, if the relevant permissive rule would allow a deduction in
calculating the profits of a property business in respect of an
25
amount which arises directly or indirectly in consequence of, or
otherwise in connection with, relevant tax avoidance
arrangements, that rule—
(a)
does not have priority under subsection (1)(a), and
(b)
is subject to any relevant prohibitive rule (and to the
30
provisions mentioned in subsection (1)(b)).”, and
(b)
after subsection (3) insert—
“(3A)
In this section “relevant tax avoidance arrangements” means
arrangements—
(a)
to which the company carrying on the property business
35
is a party, and
(b)
the main purpose, or one of the main purposes, of which
is the obtaining of a tax advantage (within the meaning
of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding,
40
scheme, transaction or series of transactions (whether or not
legally enforceable).”
(5)
The amendments made by this section have effect in relation to deductions in
respect of amounts which arise directly or indirectly in consequence of, or
otherwise in connection with—
45
(a)
arrangements which are entered into on or after 21 December 2012, or
(b)
any transaction forming part of arrangements which is entered into on
or after that date.

Finance Bill
Part 2 — Oil
42

(6)
But those amendments do not have effect where the arrangements are, or any
such transaction is, entered into pursuant to an unconditional obligation in a
contract made before that date.
(7)
“An unconditional obligation” means an obligation which may not be varied
or extinguished by the exercise of a right (whether under the contract or
5
otherwise).
77
Close companies
Schedule 28 (which makes provision about close companies) has effect.
Part 2
Oil
10
Decommissioning relief agreements
78
Decommissioning relief agreements
(1)
There are to be paid out of money provided by Parliament any sums which a
Minister of the Crown is liable to pay under a decommissioning relief
agreement.
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(2)
A “decommissioning relief agreement” is an agreement which—
(a)
is made between a Minister of the Crown and a qualifying company,
and
(b)
provides that, in such circumstances as are specified in the agreement,
if the amount of tax relief in respect of any decommissioning
20
expenditure incurred by that or another qualifying company is less
than an amount determined in accordance with the agreement (“the
reference amount”), the difference is payable to the company that
incurred the expenditure.
(3)
“Qualifying company” means—
25
(a)
any company that has at any time carried on a ring fence trade,
(b)
any company that is associated with a company carrying on a ring fence
trade,
(c)
any company that has at any time been associated with a company that
was carrying on a ring fence trade at that time, and
30
(d)
in the case of decommissioning expenditure incurred in connection
with any plant or machinery, or any land, situated in the UK sector of a
cross-boundary field, any company that is a party to a joint operating
agreement or unitisation agreement in relation to that field.
(4)
For the purposes of subsection (2)(b) the amount of tax relief in respect of any
35
decommissioning expenditure is to be determined in accordance with the
agreement; and in making such a determination tax relief in respect of
expenditure incurred by the qualifying company that is not decommissioning
expenditure may, in such circumstances as are specified in the agreement, be
treated as if it were tax relief in respect of decommissioning expenditure.
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(5)
A payment made to a company under a decommissioning relief agreement is
not to be regarded as income or a gain of the company for any purpose of the
Tax Acts.

Finance Bill
Part 2 — Oil
43

(6)
Section 18(1) of CRCA 2005 (restriction on disclosure by Revenue and Customs
officials) does not prevent—
(a)
disclosure to a Minister of the Crown for the purpose of enabling the
Minister of the Crown to determine the extent of any liability under a
decommissioning relief agreement, or
5
(b)
disclosure to a company that has rights under a decommissioning relief
agreement for the purpose of enabling the company to determine the
reference amount.
(7)
In this section—
“company” has the meaning given by section 1121 of CTA 2010,
10
“cross-boundary field” has the meaning given by section 10(9) of the
Petroleum Act 1998,
“decommissioning expenditure” has the meaning given by section 79,
“Minister of the Crown” includes the Treasury,
“ring fence trade” has the same meaning as in Part 8 of CTA 2010 (see
15
section 277 of that Act),
“the UK sector of a cross-boundary field” means that part of a cross-
boundary field lying within the UK marine area (as defined by section
42 of the Marine and Coastal Access Act 2009), and
“unitisation agreement” has the meaning given by paragraph 1(2) of
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Schedule 17 to FA 1980.
(8)
Subsections (8) to (9) of section 30 of the Petroleum Act 1998 (which specifies
when one body corporate is associated with another) apply for the purposes of
this section as they apply for the purposes of that section.
79
Meaning of “decommissioning expenditure”
25
(1)
In section 78 “decommissioning expenditure” means expenditure incurred in
connection with—
(a)
demolishing any plant or machinery,
(b)
preserving any plant or machinery pending its reuse or demolition,
(c)
preparing any plant or machinery for reuse,
30
(d)
arranging for the reuse of any plant or machinery, or
(e)
the restoration of any land.
(2)
It is immaterial for the purposes of subsection (1)(b) whether the plant or
machinery is reused, is demolished or is partly reused and partly demolished.
(3)
It is immaterial for the purposes of subsection (1)(c) and (d) whether the plant
35
or machinery is in fact reused.
(4)
In subsection (1)(e) “restoration” includes landscaping.
(5)
The Treasury may by order amend this section.
(6)
An order under subsection (5) may include transitional provision and savings.
(7)
The power to make an order under subsection (5) is exercisable by statutory
40
instrument.
(8)
A statutory instrument containing an order under subsection (5) is subject to
annulment in pursuance of a resolution of the House of Commons.