Finance (No. 2) Bill (HL Bill 156)

(6) After subsection (5) insert—

“(5A) A deduction under section 45 or 45B of CTA 2010 which is made in
respect of so much of the loss as is attributable to video games tax
relief is to be ignored for the purposes of section 269ZB of that Act
5(restriction on deductions from trading profits).””

38 (1) Section 1217DC (terminal losses) is amended as follows.

(2) In subsection (1)(c)—

(a) after “45” insert “, 45A or 45B”, and

(b) omit “trade X in”.

(3) 10In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade Y of the first accounting period
15beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Y which has been carried
forward under section 45B of that Act to the first accounting
20period beginning after the cessation.””

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
25against the profits of trade Z of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Z which has been carried
30forward under section 45B of that Act to the first accounting
period beginning after the cessation.””

(5) After subsection (7) insert—

“(7A) A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
35269ZB of that Act (restriction on deductions from trading profits).””

Losses of theatrical trade

39 Part 15C of CTA 2009 (theatrical productions) is amended as follows.

40 (1) Section 1217MA (restriction on use of losses before completion period) is
amended as follows.

(2) 40In subsection (1) for “Subsection (2)” substitute “This section”.

(3) In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) for “set against” substitute “deducted from”.

(4) After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate theatrical trade in a subsequent
period, the deduction is to be ignored for the purposes of section
5269ZB of CTA 2010 (restriction on deductions from trading profits).””

41 (1) Section 1217MB (use of losses in the completion period) is amended as
follows.

(2) In subsection (1) after “45” insert “or 45B”.

(3) In subsection (2) for “loss relief” substitute “section 37 and Part 5 of CTA
102010”.

42 (1) Section 1217MC (terminal losses) is amended as follows.

(2) In subsection (1)(b) after “45” insert “or 45B”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
15under section 45 of CTA 2010 had trade 1 not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade 2 of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
20under section 45B of CTA 2010 had trade 1 not ceased, as if it
were a loss made in trade 2 which has been carried forward
under that section to the first accounting period beginning
after the cessation.””

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) 25in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade 1 not ceased, as if it
were a loss carried forward by company B under that section
to be set against the profits of company B’s trade of the first
accounting period beginning after the cessation and so on,
30and

(b) in a case where the amount could have been carried forward
under section 45B of CTA 2010 had trade 1 not ceased, as if it
were a loss made in company B’s trade which has been
carried forward under that section to the first accounting
35period beginning after the cessation.””

(5) After subsection (8) insert—

“(9) A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
269ZB of that Act (restriction on deductions from trading profits).””

40Losses of orchestral trade

43 Chapter 4 of Part 15D of CTA 2009 (losses of separate orchestral trade) is
amended as follows.

44 (1) Section 1217SA (restriction on use of losses before completion period) is
amended as follows.

(2) In subsection (1) for “Subsection (2)” substitute “This section”.

(3) In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) for “set against” substitute “deducted from”.

(4) 5After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate orchestral trade in a
subsequent period, the deduction is to be ignored for the purposes of
section 269ZB of CTA 2010 (restriction on deductions from trading
10profits).””

45 (1) Section 1217SB (use of losses in the completion period) is amended as
follows.

(2) In subsection (1) after “45” insert “or 45B”.

(3) In subsection (2) for “loss relief” substitute “section 37 and Part 5 of CTA
152010”.

46 (1) Section 1217SC (terminal losses) is amended as follows.

(2) In subsection (1)(b) after “45” insert “or 45B”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
20under section 45 of CTA 2010 had trade 1 not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade 2 of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
25under section 45B of CTA 2010 had trade 1 not ceased, as if it
were a loss made in trade 2 which has been carried forward
under that section to the first accounting period beginning
after the cessation.””

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) 30in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade 1 not ceased, as if it
were a loss carried forward by company B under that section
to be set against the profits of company B’s trade of the first
accounting period beginning after the cessation and so on,
35and

(b) in a case where the amount could have been carried forward
under section 45B of CTA 2010 had trade 1 not ceased, as if it
were a loss made in company B’s trade which has been
carried forward under that section to the first accounting
40period beginning after the cessation.””

(5) After subsection (8) insert—

“(9) A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
269ZB of that Act (restriction on deductions from trading profits).””

Part 6 Oil activities

47 In Part 8 of CTA 2010 (oil activities) Chapter 4 (calculation of profits) is
amended as follows.

48 5After section 303 insert—

“303A Introduction to sections 303B to 303D: post-1 April 2017 non-
decommissioning losses of ring fence trades

(1) This section has effect for the purposes of sections 303B to 303D.

(2) A loss made by a company in a ring fence trade is a “non-
10decommissioning loss” so far as it is not attributable to expenditure
which is relevant expenditure in relation to a decommissioning relief
agreement.

(3) Where a company makes a loss for an accounting period in a ring
fence trade, the amount (if any) of that loss that is “attributable to”
15expenditure which is relevant expenditure in relation to a
decommissioning relief agreement is equal to—

(a) the total amount of such expenditure brought into account in
calculating that loss, or

(b) if lower, the amount of the loss.

(4) 20Expenditure is “relevant expenditure” in relation to a
decommissioning relief agreement if it is decommissioning
expenditure (as defined in section 81 of FA 2013) to which the
provision of the agreement described in section 80(2)(b) of that Act
relates.

25In this subsection the reference to section 81 of FA 2013 is to that
section as it has effect when the agreement in question is made.

(5) In this section “decommissioning relief agreement” has the meaning
given by section 80 of FA 2013.

303B Carry forward of losses against subsequent profits

(1) 30This section applies if—

(a) in an accounting period beginning on or after 1 April 2017
(“the loss-making period”) a company makes a non-
decommissioning loss in a ring fence trade,

(b) relief under—

35section 37 or 42, or

Part 5 (group relief),

is not given for an amount of the loss (“the unrelieved
amount”), and

(c) the company continues to carry on the ring fence trade in the
40next accounting period (“the later period”).

(2) The unrelieved amount is carried forward to the later period.

(3) Relief for the unrelieved amount is given to the company in the later
period if the company makes a profit in the trade for the later period.

(4) The relief is given by reducing the profits of the trade in the later
period by the unrelieved amount.

(5) Relief under this section is subject to restriction or modification in
accordance with the provisions of the Corporation Tax Acts.

303C 5Excess carried forward losses: relief against total profits

(1) This section applies if—

(a) an amount of a company’s non-decommissioning loss in an
accounting period in a ring fence trade is carried forward to
an accounting period of the company (“the later period”)
10under section 303B(2) or 303D(3), and

(b) any of that amount (“the unrelieved amount”) is not
deducted under section 303B(4) or 303D(5) (as the case may
be) from the company’s profits of the trade (if any) of the later
period.

(2) 15The company may make a claim for relief to be given for the
unrelieved amount under this section.

(3) If the company makes a claim, the relief is given by deducting the
unrelieved amount, or any part of it specified in the claim, from the
company’s total profits of the later period.

(4) 20A claim under this section must be made—

(a) within the period of two years after the end of the later
period, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(5) 25Relief under this section is subject to restriction or modification in
accordance with the provisions of the Corporation Tax Acts.

303D Further carry forward against subsequent profits of loss not fully used

(1) This section applies if—

(a) an amount of a company’s loss in a ring fence trade for an
30accounting period is carried forward to an accounting period
(“the later period”) of the company under section 303B(2) or
subsection (3) of this section,

(b) any of that amount is unrelieved in the later period, and

(c) the company continues to carry on the ring fence trade in the
35accounting period (“the further period”) after the later
period.

(2) An amount carried forward as mentioned in subsection (1)(a) is
“unrelieved in the later period” so far as it is not—

(a) deducted under section 303B(4) or subsection (5) of this
40section from the company’s profit (if any) of the later period,

(b) deducted from the company’s total profits of the later period
on a claim under section 303C, or

(c) surrendered by way of group relief for carried-forward losses
under Part 5A of CTA 2010.

(3) 45So much of the amount mentioned in subsection (1)(a) as is
unrelieved in the later period is carried forward to the further period.

(4) Relief for the amount carried forward under subsection (3) (“the
remaining carried forward amount”) is given to the company in the
further period if the company has a profit in the trade for that period.

(5) The relief is given by reducing the profits of the trade of the further
5period by the remaining carried forward amount.

(6) Relief under this section is subject to restriction or modification in
accordance with the provisions of the Corporation Tax Acts.””

49 (1) Section 304 (losses) is amended as follows.

(2) After subsection (1) insert—

“(1A) 10Relief in respect of a loss incurred by a company may not be given
against that company’s ring fence profits under any provision listed
in subsection (1B).

(1B) The provisions are—

(a) section 753 of CTA 2009 (non-trading losses on intangible
15fixed assets);

(b) section 45A (carry forward of trade loss against total profits);

(c) section 62(3) (relief for losses made in UK property
business).””

(3) In subsection (5), after “45” insert “45B, 303B(4) or 303D(5)”.

(4) 20After subsection (6) insert—

“(7) A deduction in respect of a loss made in a ring fence trade is to be
ignored for the purposes of section 269ZB (restriction on deductions
from trading profits) if the deduction is under—

(a) section 45 (carry forward of pre-1 April 2017 trade loss
25against subsequent profits), or

(b) section 45B (carry forward of post-1 April 2017 trade loss
against total profits).””

50 (1) Section 305 (group relief) is amended as follows.

(2) In the heading, at the end insert “and group relief for carried-forward
30losses”.

(3) After subsection (1) insert—

“(1A) On a claim under Chapter 3 of Part 5A, group relief for carried-
forward losses may not be allowed against the claimant company’s
ring fence profits.””

(4) 35For subsection (4) substitute—

“(4) In this section—

• “claimant company” is to be read in accordance with Part 5 (see
  section 188) or Part 5A (see sections 188CB(2) and 188CC(2)),
  as the case requires;

• 40“surrendering company” is to be read in accordance with Part 5
  (see section 188).””

Part 7 Oil contractors

51 Part 8ZA of CTA 2010 (oil contractors) is amended as follows.

52 (1) Section 356NE (losses) is amended as follows.

(2) 5The existing text becomes subsection (1) of that section.

(3) In subsection (1)—

(a) after “the contractor” insert “(or an amount of such a loss)”;

(b) after “profits)” insert “or section 45A (carry forward of post-1 April
2017 trade loss against total profits)”;

(c) 10after “the loss” insert “(or amount)”.

(4) After subsection (1) insert—

“(2) Relief in respect of a loss incurred by the contractor may not be given
against the contractor’s ring fence profits under any provision listed
in subsection (3).

(3) 15The provisions are—

(a) section 753 of CTA 2009 (non-trading losses on intangible
fixed assets);

(b) section 62(3) (relief for losses made in UK property business);

(c) section 303C(3) (excess carried forward non-
20decommissioning losses of ring fence trade: relief against
total profits).”

53 (1) Section 356NF (group relief) is amended as follows.

(2) In the heading, at the end insert “and group relief for carried-forward
losses”.

(3) 25After subsection (3) insert—

“(3A) On a claim under Chapter 3 of Part 5A, group relief for carried-
forward losses may not be allowed against the claimant company’s
contractor’s ring fence profits, except so far as the claim relates to
losses incurred by the surrendering company that arose from oil
30contractor activities.””

(4) For subsection (4) substitute—

“(4) In this section—

• “claimant company” is to be read in accordance with Part 5 (see
  section 188) or Part 5A (see sections 188CB(2) and 188CC(2)),
  35as the case requires;

• “surrendering company” is to be read in accordance with Part 5
  (see section 188) or Part 5A (see section 188BB(8)), as the case
  requires.””

54 After section 356NG insert—

““Restriction on obtaining certain deductions

356NH Restriction on deductions from contractor’s ring fence profits

(1) For the purpose of determining the contractor’s taxable total profits
5for an accounting period, the sum of any relevant deductions from
total profits made by the contractor for the accounting period may
not exceed the relevant Part 8ZA maximum.

(2) In this section “relevant deduction from total profits” means—

(a) any deduction of a loss (or an amount of a loss) under section
1045(4)(b) (carry forward of pre-1 April 2017 loss against
subsequent profits), so far as the loss arises from oil
contractor activities,

(b) any deduction of a loss (or an amount of a loss) under section
45A (carry forward of post-1 April 2017 trade loss against
15total profits), so far as the amount is set against the
contractor’s ring fence profits, and

(c) any deduction of a loss or other amount under Part 5A
(group relief for carried-forward losses), so far as the amount
in question is set against the contractor’s ring fence profits.

(3) 20In this section “the relevant Part 8ZA maximum” means the sum of—

(a) 50% of the contractor’s ring fence profits for the accounting
period, and

(b) the amount of the contractor’s ring fence profits deductions
allowance for the period.

356NI 25 Deductions allowances where company has contractor’s ring fence
profits

(1) This section applies if a company (“C”) has contractor’s ring fence
profits for an accounting period.

(2) Subsections (3) to (6) set out how to determine, for the accounting
30period—

(a) C’s deductions allowance for the purposes of Part 7ZA
(restrictions on obtaining certain deductions), and

(b) C’s contractor’s ring fence profits deductions allowance.

(3) Determine in accordance with Part 7ZA what C’s deductions
35allowance for the period would be in the absence of this section (and
call this “amount A”).

(4) Determine C’s contractor’s ring fence profits deductions allowance
for the period in accordance with subsection (5).

(5) C’s “contractor’s ring fence profits deductions allowance” for an
40accounting period—

(a) is so much of amount A as is specified in C’s company tax
return as its contractor’s ring fence profits deductions
allowance for the period, and

(b) accordingly, is nil if no amount is so specified.

(6) C’s deductions allowance for the period for the purposes of Part 7ZA
is to be taken to be an amount equal to amount A less the amount of
C’s ring fence profits deductions allowance for the period.

356NJ Modification of provisions restricting the use of losses

(1) 5The following deductions are to be treated as not being relevant
deductions for the purposes of section 269ZD (restrictions on
deductions from total profits)—

(a) the deduction of a loss (or an amount of a loss) under section
45A (carry forward of post- 1 April 2017 trade loss against
10total profits), so far as the amount is set against the
company’s contractor’s ring fence profits for the accounting
period;

(b) the deduction under Part 5A (group relief for carried-
forward losses) of a loss or other amount, so far as the amount
15is set against the company’s contractor’s ring fence profits for
the accounting period.

(2) A deduction under section 45(4)(b) (carry forward of pre-1 April
2017 trade loss against subsequent profits) of a loss arising from oil
contractor activities is to be ignored for the purposes of section
20269ZB of CTA 2010 (restriction on deductions from trading profits).””

Part 8 Tax avoidance

Restriction on refreshing losses

55 (1) Section 730F of CTA 2010 (meaning of “relevant carried-forward loss”) is
25amended as follows.

(2) In subsection (1)—

(a) after paragraph (a) insert—

“(aa) a carried-forward UK property business loss (see
subsection (2A),”;”

(b) 30after paragraph (b) insert—

“(ba) a carried-forward non-trading loss on intangible
fixed assets (see subsection (3A),”.”

(3) In subsection (2)—

(a) after “45” insert “, 45A or 45B”;

(b) 35omit “against subsequent trade profits”.

(4) In subsection (3), after “457” insert “or 463G”.

(5) After subsection (2) insert—

“(2A) “Carried-forward UK property business loss”, in relation to a
company and an accounting period, means a loss in a UK property
40business carried on by the company which is carried forward from a
previous accounting period under section 62(5).””

(6) After subsection (3) insert—

“(3A) “Carried-forward non-trading loss on intangible fixed assets”, in
relation to a company and an accounting period, means a non-
trading loss on intangible fixed assets which is carried forward from
5a previous accounting period under section 753 of CTA 2009
(treatment of non-trading losses).””

(7) At the end insert—

“(5) In this section “non-trading loss on intangible fixed assets” is to be
read in accordance with Part 8 of CTA 2009.””

10Change in company ownership

56 Part 14 of CTA 2010 (change in company ownership) is amended as follows.

57 In section 672 (overview of Part) after subsection (1) insert—

“(1A) Chapter 2A restricts relief in some further cases involving a change
in the company’s activities.

(1B) 15Chapter 2B restricts relief for trading losses in some cases involving
the transfer of an asset.

(1C) Chapters 2C and 2D restrict group relief for carried-forward losses in
some cases.””

58 (1) Section 673 (introduction to Chapter 2: disallowance of trading losses) is
20amended as follows.

(2) In subsection (2), for “of 3 years in which the change in ownership”
substitute “beginning no more than 3 years before the change in ownership
occurs which is a period of 5 years in which that change”.

(3) In subsection (4), in the words after paragraph (b), for “3” substitute “5”.

(4) 25The amendments made by this paragraph do not have effect unless both the
change in ownership referred to in section 673(1) and the major change in the
nature or conduct of a trade referred to in section 673(2) occur on or after 1
April 2017.

59 (1) Section 674 (disallowance of trading losses) is amended as follows.

(2) 30After subsection (1) insert—

“(1A) No relief may be given under section 45F (terminal losses) for a loss
made by the company in an accounting period ending after the
change in ownership—

(a) by reducing the profits of a trade of an accounting period
35beginning before the change of ownership, or

(b) in calculating the company’s taxable total profits of an
accounting period beginning before the change of
ownership.””

(3) In subsection (2), after “45” insert “, 45B or 303B”.