Finance (No. 2) Bill (HC Bill 155)

(b) quasi-payments in relation to which the payment period begins on or
after the commencement date.

19 Chapter 6 of Part 6A of TIOPA 2010 (counteraction of deduction/non-
inclusion mismatches relating to intra-company transfers from permanent
5establishments) has effect in relation to excessive PE deductions in relation
to which the relevant PE period begins on or after the commencement date.

20 Chapters 9 and 10 of Part 6A of TIOPA 2010 (counteraction of double
deduction mismatches) have effect for accounting periods beginning on or
after the commencement date.

21 10Chapter 11 of Part 6A of TIOPA 2010 (imported mismatch payments) has
effect in relation to imported mismatch payments that are—

(a) payments made on or after the commencement date, or

(b) quasi-payments in relation to which the payment period begins on or
after the commencement date.

22 15The following provisions of this Schedule have effect in relation to
accounting periods beginning on or after the commencement date—

(a) paragraphs 2 to 4, and

(b) paragraphs 5(a), 7(a), 8(a), 10(a), 15 and 16.

23 For the purposes of paragraph 18 and 21, where a payment period begins
20before the commencement date and ends on or after that date (“the
straddling period”)—

(a) so much of the straddling period as falls before the commencement
date, and so much of that period as falls on or after that date, are to
be treated as separate taxable periods, and

(b) 25where it is necessary to apportion an amount for the straddling
period to the two separate taxable periods, it is to be apportioned—

(i) on a time basis according to the respective length of the
separate taxable periods, or

(ii) if that method would produce a result that is unjust or
30unreasonable, on a just and reasonable basis.

24 For the purposes of paragraph 19, where a relevant PE period begins before
the commencement date and ends on or after that date (“the straddling
period”)—

(a) so much of the straddling period as falls before the commencement
35date, and so much of that period as falls on or after that date, are to
be treated as separate taxable periods, and

(b) where it is necessary to apportion an amount for the straddling
period to the two separate taxable periods, it is to be apportioned—

(i) on a time basis according to the respective length of the
40separate taxable periods, or

(ii) if that method would produce a result that is unjust or
unreasonable, on a just and reasonable basis.

25 For the purposes of paragraphs 20 and 22(b), where a company has an
accounting period beginning before the commencement date and ending on
45or after that date (“the straddling period”)—

(a) so much of the straddling period as falls before the commencement
date, and so much of the straddling period as falls on or after that
date, are to be treated as separate accounting periods, and

(b) where it is necessary to apportion an amount for the straddling
period to the two separate accounting periods, it is to be
apportioned—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) 5if that method would produce a result that is unjust or
unreasonable, on a just and reasonable basis.

26 In this Part of this Schedule “the commencement date” means 1 January
2017.

Section 72

SCHEDULE 11 10Disposals of non-UK residential property interests

1 TCGA 1992 is amended in accordance with this Schedule.

2 In section 14B(1) (meaning of “non-resident CGT disposal”), in paragraph (a)
after “disposal of a UK residential property interest” insert “(within the
meaning given by Schedule B1)”.

3 15Omit section 14C (which introduces Schedule B1 and is superseded by the
section 4BB inserted by section 72 of this Act).

4 In Schedule B1 (disposals of UK residential property interests), in paragraph
1—

(a) in sub-paragraph (4) for “6 April 2015” substitute “the relevant date”;

(b) 20after that sub-paragraph insert—

“(4A) In sub-paragraph (4) “the relevant date” means—

(a) for the purpose of determining whether a disposal
is a non-resident CGT disposal, 6 April 2015;

(b) for any other purpose, 31 March 1982.”

5 25After Schedule B1 insert—

Section 4BB.

““Schedule BA1 Disposals of non-UK residential property interests

Meaning of “disposal of a non-UK residential property interest”

1 (1) For the purposes of this Act, the disposal by a person (“P”) of an
interest in non-UK land (whether made before or after this
30Schedule comes into force) is a “disposal of a non-UK residential
property interest” if the first or second condition is met.

(2) The first condition is that—

(a) the land has at any time in the relevant ownership period
consisted of or included a dwelling, or

(b) 35the interest in non-UK land subsists for the benefit of land
that has at any time in the relevant ownership period
consisted of or included a dwelling.

(3) The second condition is that the interest in non-UK land subsists
under a contract for an off-plan purchase.

(4) In sub-paragraph (2) “relevant ownership period” means the
period—

(a) beginning with the day on which P acquired the interest in
non-UK land or 31 March 1982 (whichever is later), and

(b) 5ending with the day before the day on which the disposal
occurs.

(5)
If the interest in non-UK land disposed of by P as mentioned in
sub-paragraph (1) results from interests in non-UK land which P
has acquired at different times (“the acquired interests”), P is
10regarded for the purposes of sub-paragraph (4)(a) as having
acquired the interest when P first acquired any of the acquired in-
terests.

(6) In this paragraph—

• “contract for an off-plan purchase” means a contract for the
  15acquisition of land consisting of, or including, a building or
  part of a building that is to be constructed or adapted for
  use as a dwelling;

• “dwelling” is to be read in accordance with paragraph 4.

(7) Paragraphs 6 and 20 of Schedule 4ZZC contain further provision
20about interests under contracts for off-plan purchases.

“Interest in non-UK land”

2 (1) In this Schedule “interest in non-UK land” means—

(a) an estate, interest, right or power in or over land outside
the United Kingdom, or

(b) 25the benefit of an obligation, restriction or condition
affecting the value of any such estate, interest, right or
power,

other than an excluded interest.

(2) The following are excluded interests—

(a) 30any security interest;

(b) a licence to use or occupy land.

(3) In sub-paragraph (2) “security interest” means an interest or right
held for the purpose of securing the payment of money or the
performance of any other obligation.

(4) 35The Treasury may by regulations—

(a) provide that any other description of interest or right in
relation to land outside the United Kingdom is an
excluded interest;

(b) exclude from sub-paragraph (2) such interests or rights as
40may be prescribed in the regulations.

(NaN)
Regulations under sub-paragraph (4) may make incidental,
consequential, supplementary or transitional provision or
savings.

Grants of options

3 (1) 45Sub-paragraph (2) applies where—

(a) a person (“P”) grants at any time an option binding P to sell
an interest in non-UK land, and

(b) a disposal by P of that interest in non-UK land at that time
would be a disposal of a non-UK residential property
5interest by virtue of paragraph 1.

(2) The grant of the option is regarded for the purposes of this
Schedule as the disposal of an interest in the land in question (if it
would not be so regarded apart from this paragraph).

(3) Nothing in this paragraph affects the operation of section 144 in
10relation to the grant of the option (or otherwise).

(4) Subsection (6) of section 144 (interpretation of references to “sale”
etc) applies for the purposes of this paragraph as it applies for the
purposes of that section.

Meaning of “dwelling”

4 (1) 15Paragraph 4 of Schedule B1 (meaning of “dwelling”), read with
paragraphs 6 to 10 of that Schedule, applies for the purposes of
this Schedule as it applies for the purposes of Schedule B1, but as
if—

(a) in paragraph 4, sub-paragraphs (5) and (6) were omitted,

(b) 20in paragraphs 6 and 8—

(i) any reference to an interest in UK land were to an
interest in non-UK land within the meaning of this
Schedule, and

(ii) any reference to paragraph 1(4) of that Schedule
25were a reference to paragraph 1(4) of this Schedule,
and

(c) in paragraphs 7 to 9 any reference to planning permission
or development consent were to any permission or consent
corresponding to planning permission or development
30consent within the meaning of that Schedule.

(2) In paragraph 5 of Schedule B1 (power to amend), the reference to
paragraph 4 includes paragraph 4 as applied by this paragraph.

(3) The Treasury may by regulations under this sub-paragraph make
provision changing or clarifying the cases where a building
35outside the United Kingdom counts as a dwelling for the purposes
of this Schedule (and sub-paragraph (1) has effect subject to any
such regulations).

(4) Provision made under sub-paragraph (3) may include provision
corresponding to paragraph 4(5) of Schedule B1.

40Interpretation

5 In this Schedule “land” includes a building.”

Section 72

SCHEDULE 12 Disposals of residential property interests: gains and losses

1 TCGA 1992 is amended in accordance with this Schedule.

2 In section 57A(3) (gains and losses on relevant high value disposals:
5interaction with other provisions)—

(a) the words from “Part 4” to the end become paragraph (a), and

(b) after that paragraph insert “or,

(b) Part 3 of Schedule 4ZZC applies (other disposals of
residential property interests which are or involve
10relevant high value disposals).”

3 After section 57B insert—

““Chapter 7

Computation of gains and losses: disposals of residential property interests

57C Gains and losses on disposals of residential property interests

Schedule 4ZZC makes provision about the computation of—

(a) residential property gains or losses, and

(b) 15other gains or losses,

on disposals of residential property interests which are not non-
resident CGT disposals.”

4 In Schedule B1 (disposals of UK residential property interests), in paragraph
1(7) after “Schedule 4ZZB” insert “and paragraphs 6 and 20 of Schedule
204ZZC”.

5 After Schedule 4ZZB insert—

Section 57C

““Schedule 4ZZC Disposals of residential property interests: gains and losses

Part 1 Introduction and interpretation

25Introduction

1 (1) In this Schedule “RPI disposal” means a disposal of a residential
property interest which is not a non-resident CGT disposal.

(2) This Schedule applies for the purpose of determining, in relation
to an RPI disposal—

(a) 30whether a residential property gain or loss accrues on the
disposal, and the amount of any such gain or loss, and

(b) whether a gain or loss other than a residential property
gain or loss accrues on the disposal, and the amount of any
such gain or loss.

(3) 35In this Schedule—

(a) Part 2 contains the main rules for computing the gains and
losses;

(b) Part 3 contains the rules for computing the gains and losses
in a case where the RPI disposal is, or involves, a relevant
5high value disposal (as defined in section 2C).

Interpretation

2 (1) For the purposes of this Schedule, a relevant high value disposal
is “comprised in” an RPI disposal if—

(a) the RPI disposal is treated for the purposes of section 2C
10and Schedule 4ZZA as two or more disposals, and

(b) the relevant high value disposal is one of those.

(2) In this Schedule—

• “chargeable interest” has the same meaning as in Part 3 of the
  Finance Act 2013 (annual tax on enveloped dwellings) (see
  15section 107 of that Act);

• “dwelling” has the meaning given by —

  (a)

  paragraph 4 of Schedule B1, in relation to a disposal
  of a UK residential property interest;

  (b)

  paragraph 4 of Schedule BA1, in relation to a disposal
  20of a non-UK residential property interest;

• “subject-matter”, in relation to an interest in land (or a
  chargeable interest) means the land to which the interest
  relates.

Part 2 25RPI disposals not involving relevant high value disposals

Application of Part

3 (1) This Part of this Schedule applies where a person (“P”) makes an
RPI disposal of (or of part of) an interest in land.

(2) But this Part of this Schedule does not apply if the disposal is—

(a) 30a relevant high value disposal, or

(b) a disposal in which a relevant high value disposal is
comprised.

(3) In this Part of this Schedule “the disposed of interest” means—

(a) the interest in land, or

(b) 35if the disposal is of part of that interest, the part disposed
of.

Computation of residential property gains and losses

4 (1) The residential property gain or loss accruing on the disposal is
computed as follows.

40Step 1

Determine the amount of the gain or loss that accrues to P.

(For the purpose of determining the amount of that gain or loss, no
account is taken of section 57C or this Schedule)

Step 2

The residential property gain or loss accruing on the disposal is an
5amount equal to the relevant fraction of that gain or loss (but see
Step 3).

Step 3

If there has been mixed use of the subject matter of the disposed of
interest on one or more days in the relevant ownership period, the
10residential property gain or loss accruing on the disposal is equal
to the appropriate fraction of the amount given by Step 2.

(2) In Step 2 “the relevant fraction” means—

(3) 20For the purposes of Step 3 there is “mixed use” of land on any day
on which the land consists partly, but not exclusively, of one or
more dwellings.

(4) In Step 3 “the appropriate fraction” means the fraction that is, on a
just and reasonable apportionment, attributable to the dwelling or
25dwellings.

(5) In this paragraph the “relevant ownership period” means the
period—

(a) beginning with the day on which P acquired the disposed
of interest or, if later, 31 March 1982, and

(b) 30ending with the day before the day on which the disposal
occurs.

Computation of balancing gains and loses

5 The gain or loss accruing on the disposal which is not a residential
property gain or loss is computed as follows.

35Step 1

In a case where there is a gain under Step 1 of paragraph 4(1),
determine the amount of that gain remaining after the deduction
of the residential property gain determined under that paragraph.
That remaining gain is the gain accruing on the disposal which is
40not a residential property gain.

Step 2

In a case where there is a loss under Step 1 of paragraph 4(1),
determine the amount of that loss remaining after the deduction of
the residential property loss determined under that paragraph.

That remaining loss is the loss accruing on the disposal which is
not a residential property loss.

Interest subsisting under contract for off-plan purchase

6 (1) This paragraph applies where the disposal referred to in
5paragraph 3(1) is a disposal of a residential property interest only
because of—

(a) the second condition in paragraph 1 of Schedule B1, or

(b) the second condition in paragraph 1 of Schedule BA1,

(interest subsisting under a contract for the acquisition of land that
10consists of, or includes, a building that is to be constructed for use
as a dwelling).

(2) The land that is the subject of the contract concerned is treated for
the purposes of this Part of this Schedule as consisting of (or, as the
case requires, including) a dwelling throughout P’s period of
15ownership of the disposed of interest.

Part 3 RPI disposals involving relevant high value disposals

Application of Part

7 (1) This Part of this Schedule applies where—

(a) 20a person (other than an excluded person) (“P”) makes an
RPI disposal of (or of part of) an interest in land, and

(b) that disposal (“the disposal of land”) is a relevant high
value disposal or a relevant high value disposal is
comprised in it.

(2) 25“Excluded person” has the meaning given by section 2B(2).

Interpretation of Part

8 (1) This paragraph applies for the interpretation of this Part of this
Schedule.

(2) “The asset”, in relation to a relevant high value disposal, means the
30chargeable interest which (or a part of which) is the subject of that
disposal.

(3) “The disposed of interest”, in relation to a relevant high value
disposal, means the asset or, if only part of the asset is the subject
of the relevant high value disposal, that part of the asset.

(4) 35A day is a “residential property chargeable day” in relation to a
relevant high value disposal if—

(a) it is a day on which the subject matter of the disposed of
interest consists wholly or partly of a dwelling, but

(b) it is not an ATED chargeable day (as defined in paragraph
403 of Schedule 4ZZA).

Computation of residential property gains or losses on the RPI disposal

9 (1) The residential property gain or loss accruing on the disposal of
land is computed as follows.

Step 1

5Determine in accordance with paragraphs 10 to 15 the amount of
the residential property gain or loss accruing on each relevant
high value disposal.

Step 2

Add together the amounts of any gains or losses determined
10under Step 1 (treating any amount which is a loss as a negative
amount).

(2) If the result is a positive amount, that amount is the residential
property gain on the disposal of land.

(3) If the result is a negative amount, that amount (expressed as a
15positive number) is the residential property loss on the disposal of
land.

Computation of residential property gains or losses on relevant high value disposal not
within Case 1, 2 or 3 (or where an election is made)

10 (1) This paragraph applies to a relevant high value disposal where—

(a) 20the disposal does not fall within any of Cases 1, 2 or 3 in
paragraph 2 of Schedule 4ZZA, or

(b) P has made an election under paragraph 5 of that Schedule
in respect of the asset.

(2) The residential property gain or loss accruing on the relevant high
25value disposal is computed as follows—

Step 1

Determine the amount of gain or loss which accrues to P.

Step 2

The residential property gain or loss accruing on the relevant high
30value disposal is equal to the special fraction of that gain or loss.

(3) The “special fraction” is—

(4) “Relevant ownership period” means the period—

(a) beginning with the day on which P acquired the disposed
40of interest or, if later, 31 March 1982, and

(b) ending with the day before the day on which the relevant
high value disposal occurs.

Computation of residential property gains and losses on relevant high value disposal
within Case 1, 2 or 3 (and no election made)

11 (1) 5This paragraph applies to a relevant high value disposal where—

(a) the disposal falls within Case 1, 2 or 3 in paragraph 2 of
Schedule 4ZZA, and

(b) P has not made an election under paragraph 5 of that
Schedule in respect of the asset.

(2) 10The residential property gain or loss accruing on the relevant high
value disposal is computed in accordance with paragraphs 12 to
15.

(3) In those paragraphs “the relevant year” means—

(a) where the relevant high value disposal falls within Case 1
15in paragraph 2 of Schedule 4ZZA, 2013,

(b) where it falls within Case 2 in that paragraph, 2015, and

(c) where it falls within Case 3 in that paragraph, 2016.

12 (1) Take the following steps—

Step 1

20Determine the amount equal to the special fraction of the notional
pre-ATED gain or loss (as the case may be) (see paragraph 13).

Step 2

Determine the amount equal to the special fraction of the notional
post-ATED gain or loss (as the case may be) (see paragraph 14).

25Step 3

Add (treating any amount which is a loss as a negative amount)—

(a) the amount of any gain or loss determined under Step 1,
and

(b) the amount of any gain or loss determined under Step 2.

(2) 30If the result is a positive amount, that amount is the residential
property gain on the relevant high value disposal.

(3) If the result is a negative amount, that amount (expressed as a
positive number) is the residential property loss on the relevant
high value disposal.

13 (1) 35This paragraph applies for the purposes of Step 1 in paragraph 12.

(2) “Notional pre-ATED gain or loss” means the gain or loss which
would have accrued on 5 April of the relevant year had the
disposed of interest been disposed of for a consideration equal to
the market value of the interest on that date.

(3) 40The “special fraction” is—

(4) 5The “relevant ownership period” is the period—

(a) beginning with the day on which P acquired the disposed
of interest or, if later, 31 March 1982, and

(b) ending with 5 April of the relevant year.

14 (1) This paragraph applies for the purposes of Step 2 in paragraph 12.

(2) 10“Notional post-ATED gain or loss” means the gain or loss which
would have accrued on the relevant high value disposal had P
acquired the disposed of interest on 5 April of the relevant year for
a consideration equal to its market value on that date (and see
paragraph 15).

(3) 15The “special fraction” is—

(4) The “relevant ownership period” is the period beginning with 6
April of the relevant year and ending with the day before the day
on which the relevant high value disposal occurs.

15 (1) 25This paragraph applies for the purposes of computing the notional
post-ATED gain or loss for the purposes of Step 2 in paragraph 12.

(2) In determining whether the asset which is the subject of the
relevant high value disposal is a wasting asset (as defined for the
purposes of Chapter 2 of Part 2), ignore the assumption that the
30asset was acquired on 5 April of the relevant year.

(3) Sections 41 (restriction of losses by reference to capital allowances
and renewals allowances) and 47 (wasting assets subject to capital
allowances) apply in relation to any capital allowance or renewals
allowance made in respect of the expenditure actually incurred by
35P in acquiring or providing the asset as if that allowance were
made in respect of the expenditure treated as incurred by P on 5
April of the relevant year.

Computation of balancing gains or losses on the RPI disposal

16 (1) The gain or loss on the disposal of land which is neither ATED-
40related nor a residential property gain or loss (“the balancing gain
or loss”) is computed as follows.

Step 1

Determine in accordance with paragraphs 17 and 18 the amount of
the gain or loss accruing on each relevant high value disposal

which is neither ATED-related nor a residential property gain or
loss.

Step 2

Add together the amounts of any balancing gains or losses
5determined under Step 1 (treating any amount which is a loss as a
negative amount).

(2) If the result is a positive amount, that amount is the balancing gain
on the disposal of land.

(3) If the result is a negative amount, that amount (expressed as a
10positive number) is the balancing loss on the disposal of land.

Computation of balancing gains or losses on relevant high value disposal not within
Case 1, 2 or 3 (or where an election is made)

17 (1) In the case of a relevant high value disposal to which paragraph 10
applies, the amount of the balancing gain or loss is determined as
15follows.

(2) Determine the number of balancing days in the relevant
ownership period.

(3) “Balancing day” means a day which is neither—

(a) a residential property chargeable day, nor

(b) 20an ATED chargeable day (as defined in paragraph 3 of
Schedule 4ZZA).

(4) The balancing gain or loss on the disposal is equal to the balancing
fraction of the amount of the gain or (as the case may be) loss
determined under Step 1 of paragraph 10(2).

(5) 25The “balancing fraction” is—

(6) In this paragraph “relevant ownership period” has the same
meaning as in paragraph 10.

Computation of balancing gains or losses on relevant high value disposal within Case
351, 2 or 3 (and no election made)

18 (1) The amount of the balancing gain or loss on a relevant high value
disposal to which paragraph 11 applies is found by adding—

(a) the amount of the balancing gain or loss belonging to the
notional pre-ATED gain or loss, and

(b) 40the amount of the balancing gain or loss belonging to the
notional post-ATED gain or loss,

(treating any amount which is a loss as a negative amount).

(2) If the result is a positive amount, that amount is the balancing gain
on the relevant high value disposal.

(3) If the result is a negative amount, that amount (expressed as a
positive number) is the balancing loss on the relevant high value
5disposal.

(4) The balancing gain or loss belonging to the notional pre-ATED
gain or loss is equal to the balancing fraction of the notional pre-
ATED gain or loss.

(5) The balancing gain or loss belonging to the notional post-ATED
10gain or loss is equal to the balancing fraction of the notional post-
ATED gain or loss.

(6) The balancing fraction is—

(7) “Balancing day” means a day which is neither—

(a) 20a residential property chargeable day, nor

(b) an ATED chargeable day (as defined in paragraph 3 of
Schedule 4ZZA).

(8) The appropriate ownership period is—

(a) for the purpose of computing the balancing gain or loss
25belonging to the notional pre-ATED gain or loss, the
relevant ownership period mentioned in paragraph 13(4);

(b) for the purpose of computing the balancing gain or loss
belonging to the notional post-ATED gain or loss, the
relevant ownership period mentioned in paragraph 14(4).

(9) 30In this paragraph—

• “notional pre-ATED gain or loss” means the same as in
  paragraph 13(2);

• “notional post-ATED gain or loss” means the same as in
  paragraph 14(2).

35Relevant high value disposal and “other” disposal are comprised in the disposal of land

19 (1) This paragraph applies where the disposals comprised in the
disposal of land include a disposal (the “non-ATED related
disposal”) which is not a relevant high value disposal.

(2) This Part of this Schedule (apart from this paragraph) applies in
40relation to the non-ATED related disposal as if it were a relevant
high value disposal.

(3) Sub-paragraph (4) applies if there has, at any time in the relevant
ownership period, been mixed use of the subject matter of the
disposed of interest.

(4) The amount of any residential property gain or loss on the non-
ATED related disposal computed under this Part of this Schedule
is taken to be the appropriate fraction of the amount that it would
otherwise be.

(5) 5In sub-paragraph (4) “the appropriate fraction” means the fraction
that is, on a just and reasonable apportionment, attributable to the
dwelling or dwellings.

(6) In this paragraph the “relevant ownership period” means—

(a) where paragraph 10 applies, the relevant ownership
10period as defined in paragraph 10(4), or

(b) where paragraph 11 applies, the relevant ownership
period as defined in paragraphs 13(4) and 14(4).

Interest subsisting under contract for off-plan purchase

20 (1) This paragraph applies where the RPI disposal made by P is a
15disposal of a residential property interest only because of—

(a) the second condition in paragraph 1 of Schedule B1, or

(b) the second condition in paragraph 1 of Schedule BA1,

(interest subsisting under a contract for the acquisition of land that
consists of, or includes, a building that is to be constructed for use
20as a dwelling).

(2) The land that is the subject of the contract concerned is treated for
the purposes of this Part of this Schedule as consisting of (or, as the
case requires, including) a dwelling throughout P’s period of
ownership of the interest in land.”

Section 75

25SCHEDULE 13 Entrepreneurs’ relief: “trading company” and “trading group”

1 TCGA 1992 is amended as follows.

2 In section 169H(7) (introduction), for “Section 169S contains” substitute
“Sections 169S and 169SA contain”.

3 30In section 169S (interpretation of Chapter), omit subsection (4A).

4 After section 169S insert—

“169SA Meaning of “trading company” and “trading group”

Schedule 7ZA gives the meaning in this Chapter of “trading
company” and “trading group”.”

5 After Schedule 7 insert—

Section 169SA

““Schedule 7ZA Entrepreneurs’ relief: “trading company” and “trading group”

Part 1 Meaning of “trading company” and “trading group”

1 (1) 5This paragraph gives the meaning of “trading company” and
“trading group” where used in the following provisions of
Chapter 3 of Part 5 (entrepreneurs’ relief)—

(a) in section 169I (material disposal of business assets)—

(i) paragraphs (a) and (b) of subsection (6) (which
10apply for the purposes of conditions A and B in that
section), and

(ii) sub-paragraphs (i) and (ii) of subsection (7A)(c)
(which apply for the purposes of conditions C and
D in that section), and

(b) 15section 169J(4) (disposal of trust business assets).

(2) “Trading company” and “trading group” have the same meaning
as in section 165 (see section 165A), but as modified by Part 2 of
this Schedule.

(3) “Trading activities” (see section 165A(4) and (9)) is to be read in
20accordance with Part 3 of this Schedule.

2 In provisions of Chapter 3 of Part 5 not mentioned in paragraph
1(1), “trading company” and “trading group” have the same
meaning as in section 165 (see section 165A), except that
subsections (7) and (12) of section 165A are to be disregarded.

25Part 2 Joint venture companies

Attribution of activities of a joint venture company

3 In relation to a disposal of assets consisting of (or of interests in)
shares in or securities of a company (“company A”), activities of a
30joint venture company are to be attributed to a company under
subsections (7) and (12) of section 165A only if P—

(a) passes the shareholding test in relation to the joint venture
company (see paragraphs 5 to 8), and

(b) passes the voting rights test in relation to the joint venture
35company (see paragraphs 9 to 12).

Meaning of “investing company”

4 (1) For the purposes of this Part, a company is an “investing
company” in relation to P and a joint venture company if it meets
conditions 1 and 2.

(2) 40Condition 1 is that—

(a) the company is company A (see paragraph 3), or

(b) P directly owns some portion of the ordinary share capital
of the company.

(3) Condition 2 is that the company owns some portion of the
5ordinary share capital of the joint venture company (whether it is
owned directly, indirectly, or partly directly and partly indirectly).

(4) In sub-paragraph (3) the reference to a company owning share
capital indirectly is to be read in accordance with section 1155 of
CTA 2010.

10Shareholding test

5 P passes the shareholding test in relation to a joint venture
company if, throughout the relevant period, the sum of the
percentages given by paragraphs (a) and (b) is at least 5%—

(a) the percentage of the ordinary share capital of the joint
15venture company that is owned directly by P, and

(b) P’s indirect shareholding percentage (see paragraph 6).

6 P’s “indirect shareholding percentage” is found by—

(a) calculating the percentage of the ordinary share capital of
the joint venture company that is owned indirectly by P
20through a particular investing company (see paragraph 7),
and

(b) where there are two or more investing companies, adding
those percentages together.

7 The percentage of the ordinary share capital of a joint venture
25company that is owned indirectly by P through a particular
investing company (“company IC”) at a particular time is given
by—

8 (1) The fraction of the joint venture company’s ordinary share capital
that is owned indirectly by company IC is calculated—

(a) by applying sections 1156 and 1157 of CTA 2010, as read
with section 1155 of that Act, and

(b) 40on the assumptions specified in sub-paragraph (2).

(2) The assumptions are—

(a) where company IC directly owns more than 50% of the
ordinary share capital of a company, company IC is taken
to own the whole of the ordinary share capital of that
45company;

(b) where a company other than company IC (“company B”)
directly owns more than 50% of the ordinary share capital
of another company (“company C”) which is a member of
a group of companies of which company IC is a member,
5company B is taken to own the whole of the ordinary share
capital of company C.

Voting rights test

9 P passes the voting rights test in relation to a joint venture
company if, throughout the relevant period, the sum of the
10percentages given by paragraphs (a) and (b) is at least 5%—