Finance Bill (HC Bill 116)

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(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
5period 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).”

10Losses 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) 15In 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) 20If 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
profits).”

45 (1) 25Section 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
2010”.

46 (1) 30Section 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
under section 45 of CTA 2010 had trade 1 not ceased, as if it
35were 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
under section 45B of CTA 2010 had trade 1 not ceased, as if it
40were a loss made in trade 2 which has been carried forward
under that section to the first accounting period beginning
after the cessation.”

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(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 1 not ceased, as if it
were a loss carried forward by company B under that section
5to be set against the profits of company B’s trade 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 45B of CTA 2010 had trade 1 not ceased, as if it
10were a loss made in company B’s trade which has been
carried forward under that section to the first accounting
period beginning after the cessation.”

(5) After subsection (8) insert—

(9) A deduction under section 45 or 45B of CTA 2010 which is made in
15reliance 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 Part 8 of CTA 2010 (oil activities) is amended as follows.

48 20After 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-
25decommissioning 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”
30expenditure 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) 35Expenditure 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.

40In 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.

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303B Carry forward of losses against subsequent profits

(1) This section applies if—

(a) in an accounting period beginning on or after 1 April 2017
(“the loss-making period”) a company makes a non-
5decommissioning loss in a ring fence trade,

(b) relief under—

section 37 or 42, or

Part 5 (group relief),

is not given for an amount of the loss (“the unrelieved
10amount”), and

(c) the company continues to carry on the ring fence trade in the
next 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
15period 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 20Excess carried forward losses: relief against total profits

(1) This section applies if—

(a) an amount of a non-decommissioning loss made in a ring
fence trade is carried forward to an accounting period of a
company (“the later period”) under section 303B(2) or
25303D(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) 30The company may make a claim for relief to be given for the
unrelieved amount under this section (but see subsection (4)).

(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) 35The company may not make a claim if—

(a) the ring fence trade became small or negligible in the loss-
making period or any intervening period,

(b) relief under section 37 was unavailable for the non-
decommissioning loss by reason of section 37(5) or 44, or

(c) 40relief under section 37 would be unavailable by reason of
section 44 for a loss (assuming there was one) made in the
ring fence trade in the later period or any intervening period.

(5) In subsection (4)—

  • “intervening period” means an accounting period of the
    45company which begins after the loss-making period and
    before the later period, and

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  • “the loss-making period” means the accounting period of the
    company in which the non-decommissioning loss was made.

(6) A claim under this section must be made—

(a) within the period of two years after the end of the later
5period, or

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

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

303D 10Further carry forward against subsequent profits of loss not fully used

(1) This section applies if—

(a) an amount of a loss made in a ring fence trade is carried
forward to an accounting period (“the later period”) of a
company under section 303B(2) or subsection (3) of this
15section,

(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
accounting period (“the further period”) after the later
period.

(2) 20An 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
section from the company’s profit (if any) of the later period,

(b) deducted from the company’s total profits of the later period
25on a claim under section 303C, or

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

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

(4) 30Relief 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
period by the remaining carried forward amount.

(6) 35Relief 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) Relief in respect of a loss incurred by a company may not be given
40against 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
fixed assets);

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

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(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) After subsection (6) insert—

(7) 5A 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
against subsequent profits), or

(b) 10section 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
losses”.

(3) 15After 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) For subsection (4) substitute—

(4) 20In 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;

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

51 In section 307 (overview of Chapter 5 of Part 8: ring fence expenditure
supplement) in subsection (6) for paragraph (c) substitute—

(c) relief given under sections 45, 45B, 303B, 303C and 303D for
ring fence losses carried forward from earlier periods,”.

52 (1) 30Section 321 (supplement in respect of a post-commencement period) is
amended as follows.

(2) In subsection (2) (treatment of supplement as loss etc)—

(a) in the words before paragraph (a) after “period” insert “beginning
before 1 April 2017”, and

(b) 35in paragraph (b) after “forward of” insert “pre-1 April 2017”.

(3) After subsection (2) insert—

(2A) Any post-commencement supplement allowed on a claim in respect
of a post-commencement period beginning on or after 1 April 2017 is
to be treated for the purposes of the Corporation Tax Acts (other than
40the post-commencement supplement provisions or Part 4 of
Schedule 19B to ICTA) as if it were a loss—

(a) which is incurred in carrying on the ring fence trade in that
period, and

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(b) which falls in whole to be used under section 45B (carry
forward of post-1 April 2017 trade loss against subsequent
trade profits) to reduce trading income from the ring fence
trade in succeeding accounting periods.”

53 (1) 5Section 323 (meaning of “ring fence losses”) is amended as follows.

(2) In subsection (1)—

(a) for paragraph (b) substitute—

(b) some or all of the loss falls to be carried forward to the
following accounting period under section 45, 45B or
10303B (carry forward of trade losses against
subsequent profits)”, and

(b) in the words after paragraph (b) for “used” substitute “carried
forward”.

(3) In subsection (2) for “used” substitute “carried forward”.

54 15For section 327 substitute—

327 Reductions in respect of relief for carried-forward ring fence losses

(1) Reductions are to be made in accordance with this section in a post-
commencement period if the relevant amount for the period (see
subsection (4)) is not nil.

(2) 20If the company has a non-qualifying pool, the amount in the non-
qualifying pool is to be reduced (but not below nil) by setting against
it a sum equal to the relevant amount for the post-commencement
period.

(3) If—

(a) 25any of that sum remains after being so set against the amount
in the non-qualifying pool, or

(b) the company does not have a non-qualifying pool,

the amount in the ring fence pool is to be reduced (but not below nil)
by setting against it so much of that sum as so remains or (as the case
30may be) a sum equal to the relevant amount for the post-
commencement period.

(4) For the purposes of this section, the relevant amount for a post-
commencement period is the sum of—

(a) the amount of any relief given in respect of ring fence losses
35in the post-commencement period under sections 45, 45B,
303B, 303C and 303D, and

(b) the amount of any relief prevented from being given in
respect of ring fence losses in the post-commencement period
by claims made under sections 45(4A) and 45B(5).”

55 40In section 328A (adjustment of pool to remove pre-2013 losses after the initial
6 periods) in subsection (11)—

(a) in paragraph (a) for the words from the beginning to “a loss”
substitute “no account is to be taken of a loss in determining under
section 327(4) the relevant amount for a post-commencement
45period”, and

(b) in paragraph (b) for the words from “ring fence losses” to the end
substitute “any such profits are reduced by the use under section 45,

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45B, 303B, 303C and 303D of ring fence losses that are not
represented by the reduction”.

Part 7 Oil contractors

56 5Part 8ZA of CTA 2010 (oil contractors) is amended as follows.

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

(2) The 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) 10after “profits)” insert “or section 45A (carry forward of post-1 April
2017 trade loss against total profits)”;

(c) after “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
15against the contractor’s ring fence profits under any provision listed
in subsection (3).

(3) The provisions are—

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

(b) 20section 62(3) (relief for losses made in UK property business);

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

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

(2) 25In the heading, at the end insert “and group relief for carried-forward
losses”.

(3) After 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
30contractor’s ring fence profits, except so far as the claim relates to
losses incurred by the surrendering company that arose from oil
contractor activities.”

(4) For subsection (4) substitute—

(4) In this section—

  • 35“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;

  • “surrendering company” is to be read in accordance with Part 5
    (see section 188) or Part 5A (see section 188BB(7)), as the case
    40requires.”

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59 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.

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(6) Subsection (7) applies if a relevant reversal credit is brought into
account in calculating C’s contractor’s ring fence profits for the
accounting period.

In this subsection the reference to bringing into account a relevant
5reversal credit is to be interpreted in accordance with section 269ZY.

(7) C’s contractor’s ring fence profits deductions allowance for the
accounting period (as determined in accordance with subsection (5))
is to be treated for all purposes as increased by—

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

(b) 10if lower, the amount of the contractor’s ring fence profits for
the accounting period.

(8) 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 15 Modification of provisions restricting the use of losses

(1) The 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
2045A (carry forward of post- 1 April 2017 trade loss against
total 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-
25forward losses) of a loss or other amount, so far as the amount
is 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
30contractor activities is to be ignored for the purposes of section
269ZB of CTA 2010 (restriction on deductions from trading profits).”

Part 8 Transferred trades

61 Chapter 1 of Part 22 of CTA 2010 (transfers of trade without a change of
35ownership) is amended as follows.

62 In section 940A (overview of Chapter) in subsection (4) for “944” substitute
“943A”.

63 Before section 944 (but after the italic heading preceding that section)
insert—

943A 40 Disapplication of section 39

If this Chapter applies to a transfer of a trade, section 39 (terminal
losses: extension of periods for which relief may be given) does not

apply in relation to a claim under section 37 by the predecessor for
relief for a loss made in the transferred trade.”

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64 (1) Section 944 (modified application of Chapter 2 of Part 4) is amended as
follows.

(2) In the heading for “Chapter 2 of Part 4” substitute “section 45”.

(3) Omit subsections (1) and (2).

(4) 5In subsection (3)—

(a) for “Relief” substitute “If this Chapter applies to a transfer of a trade,
relief”, and

(b) after “carry forward of” insert “pre-1 April 2017”.

(5) In subsection (4) after paragraph (a) insert—

(ab) 10any claim made by the predecessor under section 45F in
reliance on subsection (2) of section 944C,”.

65 After section 944 insert—

944A Modified application of section 45A

(1) Subsection (2) applies if—

(a) 15this Chapter applies to a transfer of a trade,

(b) the transferred trade is not a ring fence trade,

(c) the predecessor made a loss in the transferred trade in the
accounting period in which it ceased to carry it on,

(d) that accounting period began on or after 1 April 2017,

(e) 20relief for an amount of that loss is not given under section 37
or Part 5,

(f) relief under section 37 was not unavailable for that loss by
reason of a provision mentioned in section 45A(3)(b)(i) or (ii),
and

(g) 25relief under section 37 would not be unavailable by reason of
section 44 for a loss (assuming there was one) made by the
successor in the transferred trade in the accounting period in
which the successor begins to carry on the transferred trade
(“the successor’s start-up accounting period”).

(2) 30Subsections (4) to (8) of section 45A (carry-forward of post-1 April
2017 trade loss against total profits) apply as if—

(a) references to the unrelieved amount were to the amount
referred to in subsection (1)(e),

(b) references to the later period were to the successor’s start-up
35accounting period, and

(c) references to the company were to the successor.

(3) Subsection (4) applies if—

(a) this Chapter applies to a transfer of a trade,

(b) an amount of a loss made in the transferred trade was carried
40forward under section 45A(4) to the accounting period of the
predecessor in which the predecessor ceased to carry on the
trade,

(c) any of that amount was not deducted from the predecessor’s
total profits on a claim under section 45A(5) or surrendered
45by the predecessor by way of group relief for carried-forward
losses under Part 5A, and