Finance Bill (HC Bill 102)

Finance BillPage 190

requirement pursuant to Section 4 of Chapter 6 of Title 1 of
the Solvency 2 Directive if that undertaking were an
insurance undertaking.

(2) In sections 269ZJ to 269ZO and this section—

  • 5“actuarial function”, in relation to a PRA-authorised person, has
    the meaning given by the PRA Rulebook;

  • “basic own funds” is to be interpreted in accordance with
    Article 88 of the Solvency 2 Directive;

  • “chief actuary”, in relation to a PRA-authorised person, means
    10a person who has the function of having responsibility for the
    actuarial function;

  • “insurance company” means a company which is an insurance
    undertaking, a reinsurance undertaking or a third-country
    insurance undertaking;

  • 15“insurance undertaking” has the meaning given in Article 13(1)
    of the Solvency 2 Directive;

  • “notional solvency capital requirement”, in relation to a ring-
    fenced fund, has the same meaning as in Commission
    Delegated Regulation (EU) 2015/35 supplementing the
    20Solvency 2 Directive;

  • “PRA-authorised person” has the same meaning as in the
    Financial Services and Markets Act 2000 (see section 2B(5) of
    that Act);

  • “the PRA Rulebook” means the Rulebook made by the
    25Prudential Regulation Authority under the Financial Services
    and Markets Act 2000 (as that Rulebook has effect from time
    to time);

  • “reinsurance undertaking” has the meaning given in Article
    13(4) of the Solvency 2 Directive;

  • 30“relevant ring-fenced fund” means a ring-fenced fund that is a
    with-profits fund;

  • “report on solvency and financial condition” means a report on
    solvency and financial condition pursuant to Article 51 of the
    Solvency 2 Directive;

  • 35“restricted own-fund item” is to be interpreted in accordance
    with Article 80(2) of Commission Delegated Regulation (EU)
    2015/35 supplementing the Solvency 2 Directive;

  • “ring-fenced fund” has the same meaning as in Commission
    Delegated Regulation (EU) 2015/35 supplementing the
    40Solvency 2 Directive;

  • “Solvency 2 Directive” means Directive 2009/138/EC of the
    European Parliament and the Council of 25 November 2009
    on the taking-up and pursuit of the business of Insurance and
    Reinsurance (Solvency II);

  • 45“technical standards implementing Regulation” means
    Commission Implementing Regulation (EU) 2015/2452 of 2
    December 2015 laying down implementing technical
    standards with regard to the procedures, formats and
    templates of the solvency and financial condition report in
    50accordance with the Solvency 2 Directive;

  • “third-country insurance undertaking” means an undertaking
    that has received authorisation under Article 162 of the

    Finance BillPage 191

    Solvency 2 Directive from the Prudential Regulation
    Authority or the Financial Conduct Authority;

  • “value of future transfers attributable to shareholders” has the
    same meaning as in Article 80 of Commission Delegated
    5Regulation (EU) 2015/35 supplementing the Solvency 2
    Directive;

  • “with-profits fund” has the meaning given by the Glossary
    forming part of the PRA Rulebook;

  • “with-profits actuary” has the meaning given by the Glossary
    10forming part of the Handbook made by the Financial
    Conduct Authority under the Financial Services and Markets
    Act 2000 (as that Handbook has effect from time to time).

269ZQ Power to amend

(1) The Treasury may by regulations make such amendments of the
15provisions mentioned in subsection (2) as they consider appropriate
in consequence of—

(a) any change made to, or replacement of, the PRA Rulebook or
the FCA Handbook;

(b) any regulatory requirement, or change to a regulatory
20requirement, imposed by EU legislation, or by or under any
Act (whenever adopted, enacted or made).

(2) The provisions are—

(a) sections 269ZJ to 269ZP,

(b) sections 124A to 124E of FA 2012.

(3) 25Regulations under this section may include transitional provision.

(4) In this section—

  • “the PRA Rulebook” means the Rulebook made by the
    Prudential Regulation Authority under the Financial Services
    and Markets Act 2000 (as that Rulebook has effect from time
    30to time);

  • “the FCA Handbook means the Handbook made by the
    Financial Conduct Authority under the Financial Services
    and Markets Act 2000 (as that Handbook has effect from time
    to time).

35Deductions allowance
269ZR Deductions allowance for company in a group

(1) This section makes provision as to the deductions allowance of a
company for an accounting period where, at any time in the period—

(a) the company is a member of a group, and

(b) 40one or more other companies within the charge to
corporation tax are members of that group.

(2) The company’s deductions allowance for the accounting period is
the sum of—

(a) any amounts of group deductions allowance allocated to the
45company for the period in accordance with sections 269ZS to
269ZV, and

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(b) the appropriate amount of non-group deductions allowance
of the company for the period,

up to a limit of £5,000,000.

(3) The “appropriate amount of non-group deductions allowance” of the
5company, for the accounting period, is—


where—

  • “DNG” is the number of days in the period on which the
    company is not a member of a group that has another
    10member that is a company within the charge to corporation
    tax, and

  • “DAC” is the total number of days in the period.

(4) If the accounting period is less than 12 months—

(a) the appropriate amount of non-group deductions allowance,
15and

(b) the limit in subsection (2),

are proportionally reduced.

269ZS Group deductions allowance and the nominated company

(1) This section applies where—

(a) 20two or more members of a group are companies within the
charge to corporation tax, and

(b) all the companies within the charge to corporation tax that
are members of the group together nominate (“the group
allowance nomination”) one of their number (“the nominated
25company”) for the purposes of this Part.

(2) The “group deductions allowance” for the group is £5,000,000 for
each accounting period of the nominated company throughout
which the group allowance nomination has effect.

(3) If the group allowance nomination takes effect, or ceases to have
30effect, part of the way through an accounting period of the
nominated company, the “group deductions allowance” for the
group for that period is—


where—

  • 35“DN” is the number of days in the accounting period on which
    a group allowance nomination that nominates the nominated
    company in relation to the group has effect, and

  • “DAC” is the total number of days in the accounting period.

(4) If an accounting period of the nominated company is less than 12
40months, the group deductions allowance for that period is
proportionally reduced.

(5) A group allowance nomination must state the date on which it is to
take effect (which may be earlier than the date the nomination is
made).

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(6) A group allowance nomination is of no effect unless it is signed by
the appropriate person on behalf of each company that is, when the
nomination is made, a member of the group and within the charge to
corporation tax.

(7) 5A group allowance nomination ceases to have effect—

(a) immediately before the date on which a new group
allowance nomination in respect of the group takes effect,

(b) upon the appropriate person in relation to a company within
the charge to corporation tax that is a member of the group
10notifying an officer of Revenue and Customs, in writing, that
the group allowance nomination is revoked, or

(c) upon the nominated company ceasing to be a company
within the charge to corporation tax or ceasing to be a
member of the group.

(8) 15The Commissioners for Her Majesty’s Revenue and Customs may by
regulations make further provision about a group allowance
nomination or any notification under this section including, in
particular, provision—

(a) about the form and manner in which a nomination or
20notification may be made,

(b) about how a nomination may be revoked and the form and
manner of such revocation,

(c) requiring a person to notify HMRC of the making or
revocation of a nomination,

(d) 25requiring a person to give information to HMRC in
connection with the making or revocation of a nomination or
the giving of a notification,

(e) imposing time limits in relation to making or revoking a
nomination or giving a notification, and

(f) 30providing that a nomination or its revocation, or a
notification, is of no effect, or ceases to have effect, if time
limits or other requirements under the regulations are not
met.

(9) In this Part “the appropriate person”, in relation to a company,
35means—

(a) the proper officer of the company, or

(b) such other person as may for the time being have the express,
implied or apparent authority of the company to act on its
behalf for the purposes of this Part.

(10) 40Subsections (3) and (4) of section 108 of TMA 1970 (responsibility of
company officers: meaning of “proper officer”) apply for the
purposes of subsection (9) as they apply for the purposes of that
section.

269ZT Group allowance allocation statement: submission

(1) 45A company must submit a group allowance allocation statement to
HMRC for each of its accounting periods in which it is the nominated
company in relation to a group.

This is subject to subsections (2) and (3).

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(2) If a company ceases to be the nominated company in relation to a
group before it submits a group allowance allocation statement to
HMRC for an accounting period—

(a) that company may not submit the statement, and

(b) 5the company that is for the time being the nominated
company in relation to the group must do so.

(3) But if a new group allowance nomination in respect of the group
takes effect on a date before it is made, that does not affect the
validity of the submission of any group allowance allocation
10statement submitted before the date the new nomination is made.

(4) A group allowance allocation statement under this section must be
received by HMRC before the first anniversary of the filing date for
the company tax return for the accounting period to which the
statement relates.

(5) 15A group allowance allocation statement under this section may be
submitted at a later time if an officer of Revenue and Customs allows
it.

(6) A group allowance allocation statement under this section must
comply with the requirements of section 269ZV.

269ZU 20 Group allowance allocation statement: submission of revised
statement

(1) This section applies if a group allowance allocation statement has
been submitted under section 269ZT, or this section, in respect of an
accounting period of a company that is, or was, a nominated
25company (“the nominee’s accounting period”).

(2) A revised group allowance allocation statement in respect of the
nominee’s accounting period may be submitted to HMRC by the
company that is for the time being the nominated company in
relation to the group.

(3) 30But if a new group allowance nomination in respect of the group
takes effect on a date before it is made, that does not affect the
validity of the submission of any revised group allowance allocation
statement submitted before the date the new nomination is made.

(4) A revised group allowance allocation statement may be submitted
35on or before whichever is the latest of the following dates—

(a) the first anniversary of the filing date for the company tax
return for the nominee’s accounting period,

(b) if notice of enquiry (within the meaning of Schedule 18 to FA
1998) is given into a relevant company tax return, 30 days
40after the enquiry is completed,

(c) if, after such an enquiry, an officer of Revenue and Customs
amends the return under paragraph 34(2) of that Schedule, 30
days after the notice of amendment is issued,

(d) if an appeal is brought against such an amendment, 30 days
45after the date on which the appeal is finally determined.

(5) A revised group allowance allocation statement may be submitted at
a later time if an officer of Revenue and Customs allows it.

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(6) In this section “relevant company tax return” means a company tax
return of a company for an accounting period for which an amount
of group deductions allowance was, or could have been, allocated by
a previous group allowance allocation statement in respect of the
5nominee’s accounting period.

(7) The references in subsection (4) to an enquiry into a relevant
company tax return do not include an enquiry resulting from an
amendment of such a return where—

(a) the scope of the enquiry is limited as mentioned in paragraph
1025(2) of Schedule 18 to FA 1998 (enquiry into amendments
when time limit for enquiry into return as originally
submitted is passed), and

(b) the amendment relates only to the allocation of group
deductions allowance for the nominee’s accounting period.

(8) 15A group allowance allocation statement under this section must
comply with the requirements of section 269ZV.

269ZV Group allowance allocation statement: requirements and effects

(1) This section applies in relation to a group allowance allocation
statement submitted under section 269ZT or 269ZU.

(2) 20The statement must be signed by the appropriate person in relation
to the company giving the statement.

(3) The statement must—

(a) identify the group to which it relates,

(b) specify the accounting period, of the company that is or was
25the nominated company, to which the statement relates (“the
nominee’s accounting period”),

(c) specify the days in the nominee’s accounting period on
which that company was the nominated company in relation
to the group or state that that company was the nominated
30company throughout the period,

(d) state the group deductions allowance the group has for the
nominee’s accounting period,

(e) list one or more of the companies that were members of the
group and within the charge to corporation tax in the
35nominee’s accounting period (“listed companies”),

(f) allocate amounts of the group deductions allowance to the
listed companies, and

(g) for each amount of group deductions allowance allocated to
a listed company, specify the accounting period of the listed
40company for which it is allocated.

(4) An amount of group deductions allowance allocated to a listed
company must be allocated to that company for an accounting
period that falls wholly or partly in the nominee’s accounting period.

(5) The maximum amount of group deductions allowance that may be
45allocated, by the group allowance allocation statement, to a listed
company for an accounting period of that company is—


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where—

  • “DAP” is the number of days in the accounting period of the
    listed company that are—

    (a)

    days in the nominee’s accounting period, and

    (b)

    5days on which the company was a member of the
    group,

  • “DNAP” is the number of days in the nominee’s accounting
    period, and

  • “GSA” is the group deductions allowance of the group for the
    10nominee’s accounting period.

(6) The sum of the amounts allocated to listed companies by the group
allowance allocation statement may not exceed the group deductions
allowance for the nominee’s accounting period.

(7) If a group allowance allocation statement is submitted that does not
15comply with subsection (5) or (6), the company that is, for the time
being, the nominated company in relation to the group must submit
a revised group allowance allocation statement that does comply
with those subsections within 30 days of the date on which the group
allowance allocation statement that did not comply was submitted or
20within such further period as an officer of Revenue and Customs
allows.

(8) If a group allowance allocation statement—

(a) complies with those subsections when it is submitted, but

(b) subsequently ceases to comply with either of them,

25the company that is, for the time being, the nominated company in
relation to the group must submit a revised group allowance
allocation statement that does comply with those subsections within
30 days of the date on which the group allowance allocation
statement ceased to comply with one of those subsections or within
30such further period as an officer of Revenue and Customs allows.

(9) If a company fails to comply with subsection (7) or (8), an officer of
Revenue and Customs may by written notice to the company amend
the group allowance allocation statement as the officer thinks fit for
the purpose of making it comply with subsections (5) and (6).

(10) 35An officer of Revenue and Customs who issues a notice under
subsection (9) to a company must, at the same time, send a copy of
the notice to each of the listed companies.

(11) The time limits otherwise applicable to the amendment of a company
tax return do not apply to any such amendment to the extent that it
40is made in consequence of a group allowance allocation statement
being submitted in accordance with section 269ZT or 269ZU.

(12) The Commissioners for Her Majesty’s Revenue and Customs may by
regulations make further provision about a group allowance
allocation statement including, in particular, provision—

(a) 45about the form of a statement and the manner in which it is
to be submitted,

(b) requiring a person to give information to HMRC in
connection with a statement,

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(c) as to the circumstances in which a statement that is not
received by the time specified in section 269ZU(4) is to be
treated as if it were so received, and

(d) as to the circumstances in which a statement that does not
5comply with the requirements of this section is to be treated
as if it did comply.

269ZW Deductions allowance for company not in a group

(1) This section makes provision as to the deductions allowance of a
company for an accounting period where section 269ZR (deductions
10allowance for company in a group) does not apply.

(2) The company’s deductions allowance for the accounting period is
£5,000,000.

(3) If the accounting period is less than 12 months, the company’s
deductions allowance for the period is proportionally reduced.

269ZX 15 Increase of deductions allowance where provision for onerous lease
reversed

(1) This section applies if—

(a) a relevant reversal credit (see section 269ZY) is brought into
account in calculating a company’s specified profits for an
20accounting period, and

(b) the amount of the company’s specified profits for the
accounting period is greater than nil.

(2) For the purposes of this section a company’s “specified profits” for
an accounting period are the sum of—

(a) 25the company’s total profits for the accounting period,
calculated with the modifications set out in section 269ZF(4),
and

(b) any I-E profit of the company for the accounting period.

(3) The company’s deductions allowance for the accounting period (as
30determined in accordance with section 269ZR or 269ZW) is to be
treated (for all purposes) as increased by—

(a) the amount of the relevant reversal credit, or

(b) if lower, the amount of the specified profits.

269ZY Meaning of “relevant reversal credit”

(1) 35For the purposes of section 269ZX a “relevant reversal credit” is a
credit, or other income, brought into account in respect of the
relevant reversal (see subsections (3) and (5)) of a relevant onerous
lease provision.

(2) A provision in the accounts of a company (“C”) is a “relevant onerous
40lease provision” if—

(a) the provision relates to a lease of land under which C is the
tenant (and “L” is the landlord),

(b) the provision is required, for accountancy purposes, as a
provision for an onerous lease, and

(c) 45the lease was entered into at arm’s length.

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(3) The reversal (in whole or in part) of a relevant onerous lease
provision is a “relevant reversal” if—

(a) the reversal is required for accountancy purposes as a result
of an arrangement (“C’s arrangement”) made at arm’s length
5under which C’s obligations under the lease are varied or
cancelled,

(b) subsection (4) does not apply, and

(c) at least one of conditions X, Y and Z in subsection (7) is met.

(4) This subsection applies if—

(a) 10C and L are connected at the time when C’s arrangement is
made, or

(b) the landlord who granted the lease (whether that was L or
another person) and the tenant to whom it was granted
(whether that was C or another person) were connected at the
15time when the lease was granted.

(5) The reversal (in whole or in part) of a relevant onerous lease
provision is a “relevant reversal” if—

(a) the lease has been granted out of a lease (“the superior
lease”),

(b) 20L and C are members of the same group of companies,

(c) the reversal would be a relevant reversal by virtue of
subsection (3) if the condition in subsection (3)(b) (lack of
connection between C and L) were met,

(d) the terms of C’s arrangement substantially reflect those of an
25arrangement (“L’s arrangement”) made at arm’s length
under which L’s obligations under the superior lease are
varied or cancelled, and

(e) subsection (6) does not apply.

(6) This subsection applies if—

(a) 30at the time when L’s arrangement is made, the landlord
under the superior lease (“S”) is connected with L or C, or

(b) the landlord who granted the superior lease (whether that is
S or another person) and the tenant to whom it was granted
(whether that was L or another person) were connected at the
35time when that lease was granted.

(7) The conditions mentioned in subsection (3)(c) are as follows.

Condition X is that—

(a) it is reasonable to suppose that immediately before C’s
arrangement was made there was a material risk that at some
40time within the next 12 months C would be unable to pay its
debts as they fell due, and

(b) the sole or main purpose of C’s arrangement was to avert that
risk (whether directly or indirectly).

Debts due to a person connected with C are to be regarded as not
45being debts for the purposes of paragraph (a).

Condition Y is that C is in insolvent administration.

Condition Z is that C’s arrangement is, or is part of, a statutory
insolvency arrangement.

(8) In this section “statutory insolvency arrangement” means—

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(a) a voluntary arrangement that has taken effect under, or as a
result of, the Insolvency Act 1986 or the Insolvency (Northern
Ireland) Order 1989 (S.I. 1989/ 2405 (N.I. 19)),

(b) a compromise or arrangement that has taken effect under
5Part 26 of the Companies Act 2006, or

(c) an arrangement or compromise of a kind corresponding to
any of those mentioned in paragraph (a) or (b) that has taken
effect under, or as a result of, the law of a country or territory
outside the United Kingdom,

10(and for the purposes of this section an arrangement which is, or is
part of, a statutory insolvency arrangement is taken to be “made”
when the statutory insolvency arrangement takes effect).

(9) For the purposes of this section a company in administration is in
insolvent administration if—

(a) 15it entered administration under Schedule B1 to the
Insolvency Act 1986, or Schedule B1 to the Insolvency
(Northern Ireland) Order 1989, at a time when its assets were
insufficient for the payment of its debts and other liabilities
and the expenses of the administration, or

(a) 20under the law of a country or territory outside the United
Kingdom circumstances corresponding to those mentioned
in paragraph (a) exist.

(10) In the application of subsection (5) to Scotland, the reference to the
lease having been granted out of the superior lease is to the lease
25being a sublease of land subject to the superior lease.

(11) Section 152 (groups of companies) applies for the purposes of this
section as it applies for the purposes of Part 5.

(12) For the purposes of this section any question whether a person is
connected with another is to be determined in accordance with
30section 1122.

269ZZ Company tax return to specify amount of deductions allowance

(1) A company’s tax return for an accounting period must specify—

(a) the amount of the company’s deductions allowance for the
period, and

(b) 35if section 269ZX (increase of deductions allowance where
provision for onerous lease reversed) applies, what that
amount would be without the increase provided for by
subsection (3) of that section.

(2) But subsection (1) applies only if the company makes for the
40accounting period a deduction to which section 269ZB(2), 269ZC(2)
or 269ZD(2) or section 124D(1) of FA 2012 applies.

269ZZA Excessive specifications of deductions allowance

(1) This section applies if a company’s tax return for an accounting
period specifies an excessive amount as—

(a) 45the company’s deductions allowance for the period,

(b) the company’s trading profits deductions allowance for the
period,