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

Part 9 Supplementary

Double jeopardy

74 A person is not liable to a penalty under any provision of this
5Schedule in respect of anything in respect of which the person has
been convicted of an offence.

Notice of appeal

75 Notice of an appeal under this Schedule must specify the grounds
of appeal.

10Conclusiveness of amounts stated in interest restriction return

76 (1) This paragraph applies to an amount stated in an interest
restriction return submitted under paragraph 7 or 8 (“the interest
restriction return”), other than an amount that is also stated in a
company tax return.

(2) 15If the amount can no longer be altered, it is taken to be
conclusively determined for the purposes of the Corporation Tax
Acts.

(3) An amount is regarded as one that can no longer be altered if—

(a) the interest restriction return has not been superseded by a
20subsequent interest restriction return;

(b) the applicable time limit has passed;

(c) any enquiry into the interest restriction return has been
completed;

(d) if the closure notice in relation to an enquiry into the
25interest restriction return contained a statement under
paragraph 49(2)(b), the period within which an appeal
against the statement may be brought has ended; and

(e) if such an appeal is brought, the appeal has been finally
determined.

(4) 30For the purposes of sub-paragraph (3) the “applicable time limit”
means the time limit in paragraph 8(3) or, in a case where
paragraph 57(2) or (4) applies and imposes a later time limit for
submission of the interest restriction return, that later time limit.

(5) Nothing in this paragraph affects—

(a) 35the power under paragraph 42 (extended time limits for
opening enquiries: discovery of errors), or

(b) any power to make a determination under paragraph 56 or
58 (determinations by officers of Revenue and Customs).””

Part 3 Consequential amendments

TMA 1970

3 (1) In section 98 of TMA 1970 (special returns, etc), in the table in subsection (5),
5in the first column, the entry relating to regulations under section 283, 284,
285, 295 or 297 of TIOPA 2010 is repealed.

(2) In consequence of sub-paragraph (1), paragraph 157(3) of Schedule 8 to
TIOPA 2010 is repealed.

FA 1998

4 10In paragraph 88 of Schedule 18 to FA 1998 (conclusiveness of amounts stated
in company tax returns), at the end insert—

“(9) Nothing in this paragraph affects the operation of any provision of
Part 10 of TIOPA 2010 (corporate interest restriction).””

CTA 2009

5 15In section A1 of CTA 2009 (overview of the Corporation Tax Acts), in
subsection (2)—

(a) omit paragraph (i), and

(b) after paragraph (ja) insert—

“(jb) Part 10 of that Act (corporate interest restriction),”.”

20CTA 2010

6 CTA 2010 is amended as follows.

7 After section 937N (risk transfer schemes) insert—

“937NA Priority

For the purposes of this Part, the provisions of Part 10 of TIOPA 2010
25(corporate interest restriction) are to be treated as of no effect.””

8 In section 938N (group mismatch schemes: priority), for paragraph (e)
substitute—

“(e) Part 10 of that Act (corporate interest restriction).””

9 In section 938V (tax mismatch schemes: priority), for paragraph (d)
30substitute—

“(d) Part 10 of that Act (corporate interest restriction).””

TIOPA 2010: consequential renumbering

10 (1) In consequence of the insertion of a new Part 10 of TIOPA 2010 by Part 1 of
this Schedule, the existing Part 10 of that Act becomes a new Part 11.

(2) 35The following provisions of TIOPA 2010 are repealed—

(a) the existing sections 375 and 376 (which contain powers that are no
longer exercisable), and

(b) the existing section 381(2)(e) and (f) (which refer to those sections);

but the repeals made by this sub-paragraph do not affect any orders made
under section 375 or 376 before the passing of this Act.

(3) As a result of the provision made by sub-paragraphs (1) and (2), the
following provisions of TIOPA 2010 are renumbered as follows—

(a) 5the existing section 372 becomes section 499;

(b) the existing section 373 becomes section 500;

(c) the existing section 374 becomes section 501;

(d) the existing section 377 becomes section 502;

(e) the existing section 378 becomes section 503;

(f) 10the existing section 379 becomes section 504;

(g) the existing section 380 becomes section 505;

(h) the existing section 381 becomes section 506;

(i) the existing section 382 becomes section 507.

(4) Consequently—

(a) 15in section 287(2A) of TCGA 1992, for “372” substitute “499”;

(b) in section 1014(2)(fa) of ITA 2007, for “372” substitute “499”;

(c) in section 1171(2)(f) of CTA 2010, for “372” substitute “499”;

(d) in section 1 of TIOPA 2010—

(i) in subsection (4), for “10” substitute “11”;

(ii) 20in subsection (5), for “373” substitute “500”;

(e) in section 381(2) of TIOPA 2010—

(i) in paragraph (a), for “372” substitute “499”;

(ii) in paragraph (b), for “373” substitute “500”;

(iii) in paragraph (d), for “374” substitute “501”;

(iv) 25in paragraph (g), for “377(2) and (3)” substitute “502(2) and
(3)”;

(v) in paragraph (h), for “380” substitute “505”;

(vi) in paragraph (i), for “382” substitute “507”.

(5) In section 379(1) and (2) of TIOPA 2010 (index of defined expressions), for
30“8” substitute “10”.

TIOPA 2010: repeal of Part 7

11 (1) Part 7 of TIOPA 2010 (tax treatment of financing costs and income) is
repealed; and accordingly the following provisions of that Act are also
repealed—

(a) 35section 1(1)(d) (overview);

(b) in Schedule 9, Part 7 (transitional provision);

(c) in Schedule 11, Part 5 (index of defined expressions).

(2) In consequence of sub-paragraph (1), the following enactments (which
amend provisions repealed by that sub-paragraph) are repealed—

(a) 40in F(No.3)A 2010, section 11 and Schedule 5;

(b) in FA 2011, in Schedule 13, paragraphs 29 and 30;

(c) in FA 2012—

(i) section 31 and Schedule 5;

(ii) in Schedule 16, paragraphs 242 and 243(a);

(iii) 45in Schedule 20, paragraphs 43 to 45;

(d) in FA 2013, section 44;

(e) in FA 2014, section 39.

(3) The following regulations were made under powers contained in Part 7 of
TIOPA 2010 and are therefore revoked by virtue of sub-paragraph (1)—

(a) 5the Corporation Tax (Financing Costs and Income) Regulations 2009
(S.I. 2009/3173S.I. 2009/3173);

(b) the Corporation Tax (Tax Treatment of Financing Costs and Income)
(Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217S.I. 2009/3217);

(c) the Corporation Tax (Exclusion from Short-Term Loan
10Relationships) Regulations 2009 (S.I. 2009/3313S.I. 2009/3313);

(d) the Tax Treatment of Financing Costs and Income (Available
Amount) Regulations 2010 (S.I. 2010/2929S.I. 2010/2929);

(e) the Tax Treatment of Financing Costs and Income (Correction of
Mismatches) Regulations 2010 (S.I. 2010/3025S.I. 2010/3025);

(f) 15the Taxation (International and Other Provisions) Act 2010 (Part 7)
(Amendment) Regulations 2012 (S.I. 2012/3045S.I. 2012/3045);

(g) the Tax Treatment of Financing Costs and Income (Correction of
Mismatches: Partnerships and Pensions) Regulations 2012 (S.I. 2012/
3111);

(h) 20the Tax Treatment of Financing Costs and Income (Excluded
Schemes) Regulations 2013 (S.I. 2013/2892S.I. 2013/2892);

(i) the Tax Treatment of Financing Costs and Income (Change of
Accounting Standards: Investment Entities) Regulations 2015 (S.I.
2015/662).

25TIOPA 2010: other amendments

12 TIOPA 2010 is amended as follows.

13 In section 1 (overview of Act), in subsection (1)—

(a) omit the “and” at the end of paragraph (d), and

(b) after paragraph (e) insert—

“(f) 30Part 9A (controlled foreign companies), and

(g) Part 10 (corporate interest restriction).””

14 In section 155 (transfer pricing: “potential advantage” in relation to United
Kingdom taxation), in subsection (6), for paragraph (a) substitute—

“(a) Part 10 (corporate interest restriction),”.”

15 35In section 157 (direct participation), in subsection (1)—

(a) omit the “and” at the end of paragraph (c), and

(b) after paragraph (d) insert “, and

(e) in Part 10, section 463(4).””

16 In section 159 (indirect participation: potential direct participant), in
40subsection (1)—

(a) omit the “and” at the end of paragraph (c), and

(b) after paragraph (d) insert “, and

(e) in Part 10, section 463(4).””

17 In section 160 (indirect participation: one of several major participants), in
45subsection (1)—

(a) omit the “and” at the end of paragraph (c), and

(b) after paragraph (d) insert “, and

(e) in Part 10, section 463(4).””

18 In section 259CB (financial instruments: hybrid or otherwise impermissible
5deduction/non-inclusion mismatches and their extent), in subsection (6), for
paragraph (e) substitute—

“(e) Part 10 (corporate interest restriction).””

19 In section 259DC (hybrid transfer deduction/non-inclusion mismatches and
their extent), in subsection (5), for paragraph (d) substitute—

“(d) 10Part 10 (corporate interest restriction).””

20 After section 259NE (treatment of a person who is a member of a
partnership) insert—

““Priority

259NEA Priority

15 For the purposes of this Part, the provisions of Part 10 (corporate
interest restriction) are to be treated as of no effect.””

21 (1) Chapter 3 of Part 9A (CFCs: the CFC charge gateway) is amended as follows.

(2) In section 371CE (which makes provision for determining whether Chapter
6 of Part 9A applies)—

(a) 20in subsection (2)(a), after “period” insert “(see section 371CEA)”, and

(b) omit subsections (4) and (5).

(3) After section 371CE insert—

“371CEA Section 371CE: meaning of “group treasury company”

(1) This section makes provision for determining whether the CFC is a
25group treasury company in the accounting period for the purposes
of section 371CE.

(2) The CFC is a group treasury company in the accounting period if—

(a) it is a member of a worldwide group in relation to a period of
account in which the accounting period wholly or partly falls,

(b) 30throughout the accounting period—

(i) all, or substantially all, of the activities undertaken by
it consist of treasury activities undertaken for the
group, and

(ii) all, or substantially all, of its assets and liabilities
35relate to such activities, and

(c) at least 90% of its relevant income for the accounting period
is group treasury revenue.

(3) For the purposes of this section a company undertakes treasury
activities for the group if it does one or more of the following in
40relation to, or on behalf of, the group or any of its members—

(a) managing surplus deposits of money or overdrafts,

(b) making or receiving deposits of money,

(c) lending money,

(d) subscribing for or holding shares in a company which is a UK
group company undertaking treasury activities for the group
at least 90% of whose relevant income is group treasury
revenue for its relevant accounting period,

(e) 5investing in debt securities, and

(f) hedging assets, liabilities, income or expenses.

(4) For the purposes of this section “group treasury revenue”, in relation
to a company, means revenue—

(a) arising from the treasury activities that the company
10undertakes for the group, and

(b) accounted for as such under generally accepted accounting
practice,

before any deduction (whether for expenses or otherwise).

(5) But revenue consisting of a dividend or other distribution is not
15group treasury revenue of the company unless it is from a company
that meets the conditions in subsection (3)(d).

(6) In this section—

• “debt security” has the same meaning as in the Handbook made
  by the Financial Conduct Authority or Prudential Regulation
  20Authority under the Financial Services and Markets Act 2000
  (as the Handbook in question has effect from time to time),

• “period of account” has the same meaning as in Part 10,

• “relevant accounting period” has the same meaning as in Part
  10,

• 25“relevant income”, in relation to a company, means income—

  (a)

  arising from the activities of the company, and

  (b)

  accounted for as such under generally accepted
  accounting practice,

  before any deduction (whether for expenses or otherwise),

• 30“UK group company” has the same meaning as in Part 10, and

• “worldwide group” has the same meaning as in Part 10.””

(4) In consequence of the amendments made by this paragraph, in Schedule 47
to FA 2013, omit paragraph 17.

22 (1) Chapter 9 of Part 9A (CFCs: exemption for profits from qualifying loan
35relationships) is amended as follows.

(2) For section 371IE substitute—

“371IE The “matched interest profits” exemption

(1) This section applies if—

(a) there are profits of qualifying loan relationships which are
40not exempt after sections 371IB and 371ID have been applied
to each qualifying loan relationship,

(b) the relevant corporation tax accounting period (as defined in
section 371BC(3)) of company C is a relevant accounting
period of it in relation to a period of account of a worldwide
45group,

(c) the CFC’s accounting period ends in that period of account,
and

(d) apart from this section, the profits mentioned in paragraph
(a) would be included in the chargeable profits of the CFC.

(2) In this section “the matched interest profits” means so much of the
profits mentioned in subsection (1)(a) as remain after excluded
5credits and excluded debits are left out of account.

(3) If the aggregate net tax-interest expense of the group for the period
is nil, all of the matched interest profits are exempt.

(4) Otherwise, there is a more limited exemption if the relevant
proportion of the matched interest profits apportioned to C or other
10relevant chargeable companies exceeds the aggregate net tax-interest
expense of the group for the period.

(5) For the purposes of this section “the relevant proportion of the
matched interest profits apportioned to C or other relevant
chargeable companies” is determined as follows.

15Step 1

For each relevant chargeable company (including C) determine the
percentage (P%) of the CFC’s chargeable profits that are apportioned
to the company under step 5 of section 371BC(1).

Step 2

20For each relevant chargeable company (including C) multiply P% by
the matched interest profits.

Step 3

The sum of the amounts for each company found under step 2 is “the
relevant proportion of the matched interest profits apportioned to C
25or other relevant chargeable companies”.

(6) For the purposes of this section a company is a relevant chargeable
company if the relevant corporation tax accounting period of the
company is a relevant accounting period in relation to the period of
account of the group.

(7) 30The limited exemption is given effect by treating the matched
interest profits as equal to the amount found by multiplying the
amount that they would otherwise be by—

where—

• 35E is the amount of the excess mentioned in subsection (4), and

• RPMIP is the relevant proportion of the matched interest profits
  apportioned to C or other relevant chargeable companies.

(8) For the purposes of this section the aggregate net tax-interest
expense of a worldwide group for a period of account is determined
40in accordance with Part 10 (corporate interest restriction) but
without regard to debits, credits or other amounts arising from—

(a) banking business carried on by a company within the charge
to corporation tax, or

(b) insurance business carried on by a company within the
45charge to corporation tax.

(9) For the purposes of this section—

Finance (No. 2) BillPage 527

• “excluded credit” has the meaning given by section 386(3),

• “excluded debit” has the meaning given by section 383(3), and

• “period of account”, “relevant accounting period” and
  “worldwide group” have the same meanings as in Part 10.””

(3) 5In section 371IJ (claims), in subsection (6), for “the tested income amount or
the tested expense amount mentioned in section 371IE(2)” substitute “the
aggregate net tax-interest expense that is mentioned in section 371IE”.

23 (1) Chapter 19 of Part 9A (CFCs: assumed taxable total profits, assumed total
profits and the corporation tax assumptions) is amended as follows.

(2) 10In section 371SL (group relief etc), at the end insert—

“(4) This section is subject to section 371SLA (corporate interest
restriction).””

(3) After section 371SL insert—

“371SLA Corporate interest restriction

(1) 15This section applies for the purpose of applying Part 10 (corporate
interest restriction).

(2) Assume—

(a) that the CFC is a member of a worldwide group for a period
of account of which it would be a member if section 371SL
20were ignored, and

(b) that the CFC is the only UK group company in the period
(within the meaning of that Part).

(3) Assume also that Part 10 applies as if subsections (2) and (3) of
section 392 (interest capacity of the group: the de minimis amount)
25were omitted.””

24 In Schedule 11, at the end insert—

““Part 7 Corporate interest restriction: index of defined expressions used in
Part 10

Part 4 Commencement and transitional provision

Commencement: new Part 10 of TIOPA

25 (1) The corporate interest restriction amendments have effect in relation to
5periods of account of worldwide groups that begin on or after 1 April 2017.

(2) In this paragraph “the corporate interest restriction amendments” means the
amendments made by Parts 1 to 3 of this Schedule, apart from those made
by paragraph 11 (repeal of Part 7 of TIOPA 2010).

(3) Any regulations made by the Treasury or Commissioners under Part 10 of
10TIOPA 2010 (as inserted by Parts 1 and 2 of this Schedule) before 1 April
2018 may have effect in relation to periods of account of worldwide groups
that begin on or after 1 April 2017.

(4) Sub-paragraphs (6) to (11) apply if—

(a) financial statements of a worldwide group are drawn up by or on
15behalf of the ultimate parent in respect of a period that begins before,
and ends on or after, 1 April 2017,

(b) the period in respect of which the financial statements are drawn up
is 18 months or less, and

(c) the financial statements are drawn up before the end of the period of
2030 months beginning with the beginning of the period in respect of
which they are drawn up.

(5) In sub-paragraphs (6) to (11)—

(a) “the group’s actual financial statements” means the financial
statements mentioned in sub-paragraph (4);

(b) 25“the straddling period of account” means the period in respect of
which those financial statements are drawn up.

(6) For the purposes of Part 10 of TIOPA 2010 (as inserted by Parts 1 and 2 of
this Schedule), the group’s actual financial statements are treated as not
having been drawn up.

(7) 30Instead, financial statements of the worldwide group are treated for those
purposes as having been drawn up in respect of each of the following
periods—

(a) the period beginning at the time the straddling period of account
begins and ending with 31 March 2017, and

(b) 35the period beginning with 1 April 2017 and ending at the time the
straddling period of account ends.

(8) Where condition C or D in section 482 of TIOPA 2010 (as inserted by Part 1
of this Schedule) is met in relation to the group’s actual financial statements,
the financial statements treated as drawn up by sub-paragraph (7) are
40treated as drawn up in accordance with the generally accepted accounting
principles and practice with which the group’s actual financial statements
were drawn up.

(9) Where neither of those conditions is met in relation to the group’s actual
financial statements, the financial statements treated as drawn up by sub-
45paragraph (7) are IAS financial statements.

(10) Where, for the purpose of determining amounts recognised in the financial
statements treated as drawn up by sub-paragraph (7), it is expedient to
apportion any amount that is recognised in the group’s actual financial
statements, the apportionment is to be made in accordance with section 1172
5of CTA 2010 (apportionment on a time basis).

(11) But if it appears that apportionment in accordance with that section would
work unjustly or unreasonably, the apportionment is to be made on a just
and reasonable basis.

(12) Expressions used in this paragraph and in Part 10 of TIOPA 2010 (as inserted
10by Parts 1 and 2 of this Schedule) have the same meaning as in Part 10 of that
Act.

Commencement: repeal of Part 7 of TIOPA 2010

26 (1) The repeals and revocations made by paragraph 11 of this Schedule have
effect in relation to periods of account of the worldwide group that begin on
15or after 1 April 2017.

(2) Sub-paragraphs (4) to (10) apply if financial statements of the worldwide
group are drawn up in respect of a period that begins before, and ends on or
after, 1 April 2017.

(3) In sub-paragraphs (4) to (10)—

(a) 20“the group’s actual financial statements” means the financial
statements mentioned in sub-paragraph (2);

(b) “the straddling period of account” means the period in respect of
which those financial statements are drawn up.

(4) For the purposes of Part 7 of TIOPA 2010, the group’s actual financial
25statements are treated as not having been drawn up.

(5) Instead, financial statements of the worldwide group are treated for those
purposes as having been drawn up in respect of each of the following
periods—

(a) the period beginning at the time the straddling period of account
30begins and ending with 31 March 2017, and

(b) the period beginning with 1 April 2017 and ending at the time the
straddling period of account ends.

(6) Where condition B, C or D in regulation 2 of the Acceptable Financial
Statements Regulations is met in relation to the group’s actual financial
35statements, the financial statements treated as drawn up by sub-paragraph
(5) are treated as drawn up in accordance with the generally accepted
accounting principles and practice with which the group’s actual financial
statements were drawn up.

(7) Where none of those conditions is met in relation to the group’s actual
40financial statements, the financial statements treated as drawn up by sub-
paragraph (5) are IAS financial statements.

(8) Where, for the purpose of determining amounts recognised in the financial
statements treated as drawn up by sub-paragraph (5), it is expedient to
apportion any amount that is recognised in the group’s actual financial
45statements, the apportionment is to be made in accordance with section 1172
of CTA 2010 (apportionment on a time basis).

(9) But if it appears that apportionment in accordance with that section would
work unjustly or unreasonably, the apportionment is to be made on a just
and reasonable basis.

(10) In sub-paragraph (6), “the Acceptable Financial Statements Regulations”
5means the Corporation Tax (Tax Treatment of Financing Costs and Income)
(Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217S.I. 2009/3217).

(11) Expressions used in this paragraph and in Part 7 of TIOPA 2010 have the
same meaning as in that Part.

Section 484 of TIOPA 2010

27 10In section 484 of TIOPA 2010 (as inserted by Part 1 of this Schedule)
subsection (5) (which requires the date specified in the election to be on or
after the day on which the election is made) does not apply in relation to an
election made on or before 31 March 2018.

Section 486 of TIOPA 2010

28 15In section 486 of TIOPA 2010 (as inserted by Part 1 of this Schedule)
subsection (5)(a) (which requires an election to be made before the end-day
of the new period of account) does not apply in relation to an election made
on or before 31 March 2018.

Change of accounting policy

29 (1) 20For the purposes of Part 10 of TIOPA 2010 (as inserted by Parts 1 and 2 of
this Schedule) a debit or credit to which this paragraph applies is to be
ignored.

(2) This paragraph applies to a debit or credit if—

(a) it is brought into account under the Loan Relationships and
25Derivative Contracts (Change of Accounting Practice) Regulations
2004 (S.I. 2004/3271S.I. 2004/3271), and

(b) the later period, in relation to the change of accounting policy to
which the debit or credit relates, begins before 1 April 2017.

(3) In sub-paragraph (2) “the later period” has the same meaning as in the
30regulations mentioned in that sub-paragraph.

Adjustments under Schedule 7 to F(No.2)A 2015

30 (1) For the purposes of Part 10 of TIOPA 2010 (as inserted by Parts 1 and 2 of
this Schedule) a debit or credit to which this paragraph applies is to be
ignored.

(2) 35This paragraph applies to a debit or credit if—

(a) it is brought into account for the purposes of Part 5 of CTA 2009 by
virtue of paragraphs 115 and 116 of Schedule 7 to F(No.2)A 2015
(transitional adjustments relating to loan relationships), or

(b) it is brought into account for the purposes of Part 7 of CTA 2009 by
40virtue of paragraphs 119 and 120 of that Schedule (transitional
adjustments relating to derivative contracts).

Power to make elections under Disregard Regulations for pre-1 April 2020 derivative contracts

31 (1) A company which is a member of a worldwide group for the purposes of
Part 10 of TIOPA 2010 (as inserted by Parts 1 and 2 of this Schedule) may
elect for the Disregard Regulations to have effect as if—

(a) 5the company had made an election (“the disregard election”) under
regulation 6A of those Regulations for the purposes of regulation
6(1)(a) of those Regulations,

(b) the disregard election applied to regulations 7, 8 and 9 of those
Regulations, and

(c) 10the disregard election had effect in relation to derivative contracts
entered into by the company before 1 April 2020.

(2) The election has effect for the calculation under Part 10 of that Act of—

(a) the tax-interest expense amounts and tax-interest income amounts of
the company and any relevant transferee company, and

(b) 15the adjusted corporation tax earnings under section 406 of the
company and any relevant transferee company.

(3) A company is a “relevant transferee company” if regulation 6B or 6C of the
Disregard Regulations applies in relation to the company as the transferee
mentioned in the regulation (on the assumption that an election has been
20made before the transfer under this paragraph).

(4) An election by a company under this paragraph has effect only if every
company which was a member of the worldwide group on 1 April 2017
(other than a company which was dormant on that date or at the time the
election is made) also makes an election under this paragraph.

(5) 25An election under this paragraph—

(a) must be made before 1 April 2018, and

(b) is irrevocable.

(6) Section 457 of TIOPA 2010 (as inserted by Part 1 of this Schedule) is to apply
in relation to debits resulting from an election under this paragraph.

(7) 30In this paragraph “the Disregard Regulations” means the Loan
Relationships and Derivative Contracts (Disregard and Bringing into
Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256S.I. 2004/3256).

Qualifying infrastructure companies

32 In the case of an accounting period of a company beginning before 1 April
352018, the company may make an election under section 433 or 444 of TIOPA
2010 (as inserted by Part 1 of this Schedule) before that date.

33 (1) This paragraph applies in the case of an accounting period of a company
beginning before 1 April 2018 (“the transitional accounting period”) if—

(a) the company does not meet the public infrastructure assets test, or
40the public infrastructure income test, for the transitional accounting
period, but

(b) in the case of each test that it does not meet as mentioned in
paragraph (a), the company would meet the test for an accounting
period that includes that date and is at least 3 months long.

(2) For the purposes of section 433 of TIOPA 2010 (as inserted by Part 1 of this
Schedule) the company is treated as meeting the test (or tests) for the
transitional accounting period.

(3) For the purposes of sections 438 and 440 to 442 of TIOPA 2010 (as inserted
5by Part 1 of this Schedule) such adjustments to the relevant amounts are to
be made as are just and reasonable, having regard to the extent to which, but
for this paragraph, the company would not have met the public
infrastructure assets test, or the public infrastructure income test, for the
transitional accounting period.

(4) 10For this purpose “the relevant amounts” means—

(a) amounts that would otherwise have qualified as exempt amounts
under section 438,

(b) amounts that would otherwise have been treated as mentioned in
section 440,

(c) 15the tax-EBITDA of the company, and

(d) the amounts that would otherwise have been left of account as a
result of section 442.

(5) Expressions used in this paragraph and in section 433 of TIOPA 2010 (as
inserted by Part 1 of this Schedule) have the same meaning in this paragraph
20as they have in that section.

Counteracting effect of avoidance arrangements

34 (1) This paragraph applies in relation to section 461 of TIOPA 2010 (as inserted
by Part 1 of this Schedule).

(2) Section 461 applies in relation to arrangements whenever entered into.

(3) 25Arrangements are not “relevant avoidance arrangements” for the purposes
of section 461 so far as—

(a) they secure that an amount paid before 1 April 2017 is brought into
account in an accounting period ending before that date, and

(b) directly in consequence of the amount being brought into account as
30mentioned in paragraph (a), there is a reduction in the tax-interest
expense amounts that could otherwise have been left out of account
under Part 10 of TIOPA 2010 (as inserted by this Schedule).

(4) If an accounting period begins before 1 April 2017 and ends on or after that
date, sub-paragraph (3) is to have effect as if so much of the accounting
35period as falls before that date, and so much of that period as falls on or after
that date, were treated as separate accounting periods.

(5) Arrangements are not “relevant avoidance arrangements” for the purposes
of section 461 if the obtaining of any tax advantages that would otherwise
arise from them can reasonably be regarded as arising wholly from
40commercial restructuring arrangements entered into in connection with the
commencement of Part 10 of TIOPA 2010 (as inserted by this Schedule).

(6) For this purpose “commercial restructuring arrangements” means—

(a) arrangements that, but for that Part, would have resulted in
significantly more corporation tax becoming payable as a result of
45one or more loan relationships being brought within the charge to
corporation tax, or

(b) arrangements that—

(i) are designed to secure, in a way that is wholly consistent with
its policy objectives, the benefit of a relief expressly conferred
by a provision of that Part, and

(ii) 5are effected by taking only ordinary commercial steps in
accordance with a generally prevailing commercial practice.

(7) This paragraph is to be read as if it formed part of section 461.

Commencement of orders or regulations containing consequential provision

35 (1) This paragraph applies in relation to any order or regulations made before 1
10April 2018 by the Treasury or Commissioners containing provision that is
consequential on provision made by this Schedule.

(2) Any order or regulations to which this paragraph applies may contain
provision (however expressed) for securing that the consequential provision
made by the order or regulations has effect in accordance with paragraph 25
15(commencement) as if the consequential provision were included in the
corporate interest restriction amendments mentioned in that paragraph.

Section 32

SCHEDULE 11 Relief for production of museum and gallery exhibitions

Part 1 20Amendment of CTA 2009

1 After Part 15D of CTA 2009 insert—

““Part 15E

Museums and galleries exhibition tax relief

CHAPTER 1 Introduction

Overview

1218ZA 25 Overview

(1) This Part is about the production of museum and gallery exhibitions,
and applies for corporation tax purposes.

(2) This Chapter explains what is meant by “exhibition” and “touring
exhibition” and how a company comes to be treated as the primary
30production company or a secondary production company for an
exhibition.

(3) Chapter 2 is about the taxation of the activities of a production
company and includes—

(a) provision for the company’s activities in relation to its
exhibition to be treated as a separate trade, and

(b) provision about the calculation of the profits and losses of
that trade.

(4) 5Chapter 3 is about relief (called “museums and galleries exhibition
tax relief”) which may be given to a production company in relation
to an exhibition—

(a) by way of additional deductions to be made in calculating the
profits or losses of the company’s separate trade, or

(b) 10by way of a payment (a “museums and galleries exhibition
tax credit”) to be made on the company’s surrender of losses
from that trade,

and describes the conditions a company must meet to qualify for
museums and galleries exhibition tax relief.

(5) 15Chapter 4 contains provision about the use of losses of the separate
trade (including provision about relief for terminal losses).

(6) Chapter 5 provides—

(a) for relief under Chapters 3 and 4 to be given on a provisional
basis, and

(b) 20for such relief to be withdrawn if it turns out that conditions
that must be met for such relief to be given are not actually
met.

Interpretation

1218ZAA “Exhibition”

(1) 25In this Part “exhibition” means a curated public display of an
organised collection of objects or works (or of a single object or work)
considered to be of scientific, historic, artistic or cultural interest.

(2) But a display is not an exhibition if—

(a) it is organised in connection with a competition of any kind,

(b) 30its main purpose, or one of its main purposes, is to sell
anything displayed or to advertise or promote any goods or
services,

(c) it includes a live performance by any person,

(d) anything displayed is for sale, or

(e) 35anything displayed is alive.

(3) Subsection (2) does not prevent a display being an exhibition if it
includes a live performance by a person which is merely incidental
to, or forms a merely incidental part of, the collection displayed.

(4) A display is “public” if the general public is admitted to it, whether
40or not the public is charged for admission.

(5) A display does not fall outside subsection (4) just because visitors
other than the general public are admitted to it for a single session or
a small number of sessions.