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

(b) they are drawn up after the end of the period of 30 months
beginning with the beginning of the period in respect of
which they are drawn up.

488 Meaning of “IAS financial statements”

(1) 5References in this Part to “IAS financial statements” of a worldwide
group for a period are (subject to subsection (2)) to consolidated
financial statements of the worldwide group’s ultimate parent and
its subsidiaries, drawn up in respect of the period in accordance with
international accounting standards.

(2) 10If the worldwide group is at all times during the period a single-
company worldwide group, the references are instead to financial
statements of the ultimate parent, drawn up in respect of the period
in accordance with international accounting standards.

489 References to amounts recognised in financial statements

(1) 15References in this Part to an amount “recognised” in financial
statements—

(a) include an amount comprised in an amount so recognised;

(b) are, where the amount is expressed in a currency other than
sterling, to that amount translated into its sterling equivalent.

(2) 20The exchange rate by reference to which an amount is to be
translated under subsection (1)(b) is the average rate of exchange for
the period of account, calculated from daily spot rates.

(3) References in this Part to an amount recognised in financial
statements “for a period” as an item of profit or loss include
25references to an amount that—

(a) was previously recognised as an item of other comprehensive
income, and

(b) is transferred to become an item of profit or loss in
determining the profit or loss for the period.

30Other definitions

490 Meaning of “relevant accounting period”

For the purposes of this Part a “relevant accounting period” of a
company, in relation to a period of account of a worldwide group,
means any accounting period that falls wholly or partly within the
35period of account of the worldwide group.

491 Meaning of “relevant public body”

(1) In this Part “relevant public body” means—

(a) the Crown,

(b) a Minister of the Crown,

(c) 40a government department,

(d) a Northern Ireland department,

(e) a foreign sovereign power,

(f) a designated educational establishment (within the meaning
given by section 106 of CTA 2009),

(g) a health service body (within the meaning given by section
986 of CTA 2010),

(h) a local authority or local authority association,

(i) any other body that acts under any enactment for public
5purposes and not for its own profit, or

(j) any wholly-owned subsidiary of any body falling within any
of the above paragraphs of this subsection.

(2) In this section “enactment” includes—

(a) an enactment contained in subordinate legislation within the
10meaning of the Interpretation Act 1978,

(b) an enactment contained in, or in an instrument made under,
an Act of the Scottish Parliament,

(c) an enactment contained in, or in an instrument made under,
a Measure or Act of the National Assembly for Wales, and

(d) 15an enactment contained in, or in an instrument made under,
Northern Ireland legislation.

(3) The Commissioners may by regulations amend this section so as to
alter the meaning of “relevant public body”.

(4) The provision that may be made by the regulations does not include
20provision altering the meaning of “relevant public body” so that it
includes a person who has no functions of a public nature.

492 Meaning of “UK group company”

In this Part “UK group company”, in relation to any time during a
period of account of a worldwide group, means a company—

(a) 25which is within the charge to corporation tax at that time, and

(b) which is a member of the group at that time.

493 Embedded derivatives

Sections 415 and 585 of CTA 2009 (loan relationships with embedded
derivatives) apply for the purposes of this Part of this Act.

494 30Other interpretation

In this Part—

• “the Commissioners” means the Commissioners for Her
  Majesty’s Revenue and Customs;

• “fair value accounting” means a basis of accounting under
  35which—

  (a)

  assets and liabilities are measured in the company’s
  balance sheet at their fair value, and

  (b)

  changes in the fair value of assets and liabilities are
  recognised as items of profit or loss;

• 40“fair value” has the meaning it has for accounting purposes;

• “finance lease”, in relation to a company or a worldwide group,
  means a lease that, in accordance with generally accepted
  accounting practice, falls (or would fall) to be treated as a
  finance lease or loan in the accounts of the company or the
  45financial statements of the group;

Finance (No. 2) BillPage 472

• “interest restriction return” means a return submitted under
  any provision of Schedule 7A;

• “reporting company” means a company which is for the time
  being appointed under any provision of Schedule 7A;

• 5“the return period”, in relation to an interest restriction return
  of a worldwide group, means the period of account of the
  group to which the return relates;

• “service concession arrangement” has the meaning given by
  international accounting standards;

• 10“wholly-owned subsidiary” has the meaning given by section
  1159(2) of the Companies Act 2006.

Regulations

495 Financial statements: different treatment by group or members

(1) The Commissioners may make regulations for the purpose of
15altering any calculation under Chapter 7 where—

(a) the financial statements of a worldwide group for a period
include or omit an amount in respect of any matter, and

(b) any member of the group deals with that matter for tax or
accounting purposes in a different way.

(2) 20The regulations—

(a) may make provision subject to an election or other specified
circumstances, and

(b) may make provision having effect in relation to any period
beginning before the regulations are made if the period
25begins at some time in the calendar year in which the
regulations are made.

496 Parties to capital market arrangements

(1) The Commissioners may make regulations entitling—

(a) a UK group company which has a liability to corporation tax
30as a result of this Part and which is a party to a capital market
arrangement, and

(b) another UK group company,

to make a joint election transferring the liability to the other UK
group company.

(2) 35The regulations may include provision—

(a) specifying other conditions that must be met for an election
to be made,

(b) requiring an election to be made on or before a particular
time (for example, before the accounting period for which the
40liability arises),

(c) authorising or requiring an officer of Revenue and Customs
(on the exercise of a discretion or otherwise) to accept or
reject an election,

(d) authorising or requiring an officer of Revenue and Customs
45(on the exercise of a discretion or otherwise) to revoke an
election previously in force and dealing with the effect of the
revocation, and

(e) dealing with the effect of the transfer of the corporation tax
liability on any other liabilities that relate to the transferred
corporation tax liability.

(3) In this section “capital market arrangement” has the same meaning
5as in section 72B(1) of the Insolvency Act 1986 (see paragraph 1 of
Schedule 2A to that Act).

497 Change in accounting standards

(1) The Treasury may by regulations amend this Part to take account of
a change in the way in which amounts are, or may be, presented or
10disclosed in financial statements where the change results from the
issue, revocation, amendment or recognition of, or withdrawal of
recognition from, an accounting standard by an accounting body.

(2) For this purpose—

• “accounting standard” includes any statement of practice,
  15guidance or other similar document, and

• “accounting body” means—

  (a)

  the International Accounting Standards Board (or
  successor body), or

  (b)

  the Accounting Standards Board (or successor body).

(3) 20The regulations—

(a) may make provision subject to an election or other specified
circumstances, and

(b) may make provision having effect in relation to any period
beginning before the regulations are made if the change
25mentioned in subsection (1) is relevant to that period.

(4) A statutory instrument containing regulations which are capable of
increasing the liability of a company to corporation tax may not be
made unless a draft of the instrument is laid before, and approved by
a resolution of, the House of Commons.

498 30Regulations

Regulations under this Part may—

(a) make different provision for different cases or circumstances,

(b) include supplementary, incidental and consequential
provision, or

(c) 35make transitional provision and savings.””

Part 2 New Schedule 7A to TIOPA 2010

2 In TIOPA 2010, after Schedule 7 insert—

Section 374

““Schedule 7A Interest restriction returns

5Part 1 The reporting company

Appointment by a worldwide group of a reporting company

1 (1) A member of a worldwide group may, by notice to an officer of
Revenue and Customs, appoint an eligible company to be the
10group’s reporting company.

(2) The notice must specify the first period of account of the group
(“the specified period of account”) in relation to which the
appointment is to have effect.

(3) An appointment under this paragraph has effect in relation to—

(a) 15the specified period of account, and

(b) subsequent periods of account of the group.

(4) The notice may not be given—

(a) before the end of the specified period of account, or

(b) after the end of the period of 6 months beginning with the
20end of the specified period of account.

(5) The notice is of no effect unless—

(a) it is authorised by at least 50% of eligible companies, and

(b) it is accompanied by a statement containing the required
information.

(6) 25For this purpose “the required information” means—

(a) a list of the eligible companies that have authorised the
notice, and

(b) a statement that the listed companies constitute at least
50% of eligible companies.

(7) 30The notice may be accompanied by a statement that such of the
companies listed under sub-paragraph (6)(a) as are specified in the
statement do not wish to be consenting companies in relation to
returns submitted by the reporting company.

(8) For the purposes of this paragraph a company is “eligible” if and
35only if the company —

(a) was a UK group company at a time during the specified
period of account, and

(b) was not dormant throughout that period.

Revocation by worldwide group of appointment under paragraph 1

2 (1) A member of a worldwide group may, by notice to an officer of
Revenue and Customs, revoke an appointment previously made
under paragraph 1.

(2) 5The notice must specify the first period of account of the group
(“the specified period of account”) in relation to which the
appointment is to be revoked.

(3) An appointment that is revoked under this paragraph ceases to
have effect in relation to—

(a) 10the specified period of account, and

(b) subsequent periods of account of the group.

(4) The notice may not be given—

(a) before the end of the specified period of account, or

(b) after the end of the period of 6 months beginning with the
15end of the specified period of account.

(5) The notice is of no effect unless—

(a) it is authorised by at least 50% of eligible companies, and

(b) it is accompanied by a statement containing the required
information.

(6) 20For this purpose “the required information” means—

(a) a list of the eligible companies that have authorised the
notice, and

(b) a statement that the listed companies constitute at least
50% of eligible companies.

(7) 25The revocation of an appointment does not prevent the making of
a further appointment under paragraph 1 (whether at the same
time as the revocation, or later).

(8) For the purposes of this paragraph a company is “eligible” if and
only if the company —

(a) 30was a UK group company at a time during the specified
period of account, and

(b) was not dormant throughout that period.

Regulations supplementing paragraphs 1 and 2

3 The Commissioners may by regulations make further provision
35about an appointment under paragraph 1 or the revocation of such
an appointment under paragraph 2, including in particular
provision—

(a) about the form and manner in which an appointment or
revocation may be made;

(b) 40requiring a person to give information to an officer of
Revenue and Customs in connection with the making of an
appointment or revocation;

(c) prohibiting a company from being appointed unless it
meets conditions specified in the regulations;

(d) about the time from which an appointment or revocation
has effect;

(e) providing that an appointment or revocation is of no effect,
or (in the case of an appointment) ceases to have effect, if a
5requirement under the regulations is not met.

Appointment of reporting company by Revenue and Customs

4 (1) This paragraph applies where—

(a) no appointment of a reporting company under paragraph
1 has effect in relation to a period of account of a
10worldwide group (“the relevant period of account”), and

(b) the time limit in sub-paragraph (4)(b) of that paragraph
prevents an appointment under that paragraph that has
effect in relation to the relevant period of account.

(2) An officer of Revenue and Customs may, by notice to an eligible
15company, appoint it to be the group’s reporting company.

(3) The notice must specify the relevant period of account (whether
by specifying the dates on which it begins and ends or, if the
officer does not have that information, by reference to a date or
dates).

(4) 20The appointment has effect in relation to the relevant period of
account.

(5) The appointment may be made—

(a) at any time before the end of the period of 36 months
beginning with the end of the relevant period of account,
25or

(b) at any time after the end of that period if, at that time, an
amount stated in the company tax return of a UK group
company for a relevant accounting period can be altered.

(6) Paragraph 88(3) to (5) of Schedule 18 to FA 1998 (meaning of “can
30no longer be altered”) applies for the purposes of this paragraph.

(7) For the purposes of this paragraph a company is “eligible” if and
only if the company —

(a) was a UK group company at a time during the relevant
period of account, and

(b) 35was not dormant throughout that period.

Appointment by officer of Revenue and Customs of replacement reporting company

5 (1) This paragraph applies where—

(a) an appointment of a reporting company under paragraph
1 or 4 or this paragraph has effect in relation to a period of
40account of a worldwide group (“the relevant period of
account”), and

(b) condition A or B is met.

(2) Condition A is that an officer of Revenue and Customs considers
that the reporting company mentioned in sub-paragraph (1)(a) has

not complied with, or will not comply with, a requirement under
or by virtue of this Schedule.

(3) Condition B is that the reporting company mentioned in sub-
paragraph (1)(a) has agreed that an officer of Revenue of Customs
5may exercise the power in this paragraph.

(4) An officer of Revenue and Customs may, by notice—

(a) revoke the appointment of the reporting company
mentioned in sub-paragraph (1)(a), and

(b) appoint in its place an eligible company to be the reporting
10company of the group.

(5) The notice must—

(a) be given to each of the companies mentioned in sub-
paragraph (4), and

(b) specify the relevant period of account (whether by
15specifying the dates on which it begins and ends or, if the
officer does not have that information, by reference to a
date or dates).

(6) Where the power in sub-paragraph (4) is exercised—

(a) the appointment that is revoked ceases to have effect in
20relation to—

(i) the relevant period of account, and

(ii) subsequent periods of account of the group;

(b) the appointment of the replacement has effect in relation to
the relevant period of account.

(7) 25For the purposes of this paragraph a company is “eligible” if and
only if the company —

(a) was a UK group company at a time during the relevant
period of account, and

(b) was not dormant throughout that period.

30Obligation of reporting company to notify group members of its status

6 (1) This paragraph applies where the appointment of a reporting
company has effect in relation to a period of account of a
worldwide group (“the relevant period of account”).

(2) The reporting company must, as soon as reasonably practicable
35after the relevant time, notify each relevant company that it is the
group’s reporting company in relation to the relevant period of
account.

(3) In sub-paragraph (2) “the relevant time” means—

(a) if the relevant period of account is the first period of
40account in relation to which the appointment has effect, the
time of the appointment;

(b) otherwise, the end of the period of 6 months beginning
with the end of the relevant period of account.

(4) Sub-paragraph (2) does not require the reporting company to
45notify a relevant company if the reporting company notified that

company under that sub-paragraph in relation to an earlier period
of account.

(5) The duty to comply with sub-paragraph (2) is enforceable by the
company required to be notified under that sub-paragraph.

(6) 5For the purposes of this paragraph a company is “relevant” if and
only if the company meets condition A or B.

(7) Condition A is that the company—

(a) was a UK group company at a time during the relevant
period of account, and

(b) 10was not dormant throughout that period.

(8) Condition B is that the company is the ultimate parent of the
worldwide group.

Obligation of reporting company to submit interest restriction return

7 (1) This paragraph applies where the appointment of a reporting
15company has effect in relation to a period of account of a
worldwide group.

(2) If the reporting company was appointed under paragraph 1 or 4,
it must submit a return for the period of account to an officer of
Revenue and Customs.

(3) 20If the reporting company was appointed under paragraph 5, it
must submit a return for the period of account to an officer of
Revenue and Customs unless a return for the period has already
been submitted under sub-paragraph (2) or this sub-paragraph.

(4) A return submitted under this paragraph must be received by an
25officer of Revenue and Customs before the filing date.

(5) For this purpose, “the filing date” means—

(a) the end of the period of 12 months beginning with the end
of the period of account, or

(b) if later, the end of the period of 3 months beginning with
30the day on which the reporting company was appointed.

(6) A return submitted under this paragraph is of no effect unless it is
received by an officer of Revenue and Customs before—

(a) the end of the period of 36 months beginning with the end
of the period of account, or

(b) 35if later, the end of the period of 3 months beginning with
the day on which the reporting company was appointed.

This is subject to paragraph 57.

Revised interest restriction return

8 (1) This paragraph applies where—

(a) 40the appointment of a reporting company has effect in
relation to a period of account of a worldwide group, and

(b) a return (“the previous interest restriction return”) was
submitted under paragraph 7, or this paragraph, for the
period of account.

(2) The reporting company may submit a revised interest restriction
return for the period of account to an officer of Revenue and
Customs.

(3) A revised interest restriction return submitted under sub-
5paragraph (2) is of no effect unless it is received by an officer of
Revenue and Customs before—

(a) the end of the period of 36 months beginning with the end
of the period of account, or

(b) if later, the end of the period of 3 months beginning with
10the day on which the reporting company was appointed.

This is subject to paragraphs 9 and 57.

(4) Where—

(a) a member of the group amends, or is treated as amending,
its company tax return, and

(b) 15as a result of the amendment any of the figures contained
in the previous interest restriction return have become
incorrect,

the reporting company must submit a revised interest restriction
return to an officer of Revenue and Customs.

(5) 20A revised interest restriction return submitted under sub-
paragraph (4) must be received by an officer of Revenue and
Customs before the end of the period of 3 months beginning
with—

(a) the day on which the amended company tax return was
25received by an officer of Revenue and Customs, or

(b) (as the case may be) the day as from which the company
tax return was treated as amended.

(6) A return submitted under this paragraph—

(a) must indicate the respects in which it differs from the
30previous return, and

(b) supersedes the previous return.

Extended period for submission of full return in place of abbreviated return

9 (1) This paragraph applies where—

(a) a reporting company has submitted an abbreviated
35interest restriction return for a period of account of a
worldwide group in accordance with this Schedule, and

(b) the worldwide group is not subject to interest restrictions
in the return period.

(2) Despite the passing of the time limit in paragraph 8(3), a full
40interest restriction return for the period of account submitted
under paragraph 8 has effect if it is received before the end of the
period of 60 months beginning with the end of the period of
account.

Meaning of “consenting company” and “non-consenting company”

10 (1) 45This paragraph makes provision for the purposes of this Part of
this Act about whether a company is a “consenting company” in