Finance Bill (HC Bill 116)

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(d) relief 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
5(“the successor’s start-up accounting period”).

(4) Subsections (4) to (8) of section 45A apply as if—

(a) references to the unrelieved amount were to so much of the
amount referred to in subsection (3)(b) as was not deducted
or surrendered as mentioned in subsection (3)(c),

(b) 10references to the later period were to the successor’s start-up
accounting period, and

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

(5) In this section “ring fence trade” has the same meaning as in Part 8
(see section 277).

944B 15Modified application of section 45B

(1) Subsection (2) applies if—

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

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

(c) 20that accounting period began on or after 1 April 2017,

(d) relief under section 37 or 42 or Part 5 is not given for an
amount of the loss, and

(e) it is the case that—

(i) relief under section 37 was unavailable for the loss by
25reason of any provision mentioned in section
45A(3)(b)(i) or (ii),

(ii) relief under section 37 would be unavailable by
reason of section 44 for a loss (assuming there was
one) made by the successor in the transferred trade in
30the accounting period in which the successor begins
to carry on the transferred trade (“the successor’s
start-up accounting period”), or

(iii) the transferred trade is a ring fence trade.

(2) Subsections (2) to (8) of section 45B (carry forward of post-1 April
352017 trade loss against trade profits) apply as if—

(a) references to the unrelieved amount were to the amount
mentioned in subsection (1)(d),

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

(c) 40references to the company were to the successor, and

(d) references to the trade were to the transferred trade.

(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
45forward under section 45B(2) to the accounting period in
which the predecessor ceased to carry on the trade, and

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(c) any of that amount is not used under section 45B(4) to reduce
profits of the transferred trade of the accounting period in
which the predecessor ceases to carry on the trade.

(4) Subsections (2) to (8) of section 45B apply as if—

(a) 5references to the unrelieved amount were to so much of the
amount referred to in subsection (3)(b) as is not used as
mentioned in subsection (3)(c),

(b) references to the later period were to the accounting period of
the successor in which the successor begins to carry on the
10transferred trade,

(c) references to the company were to the successor, and

(d) references to the trade were to the transferred trade.

944C Modified application of section 45F

(1) If this Chapter applies to a transfer of a trade, the predecessor may
15not make a claim under section 45F for relief to be given for an
amount of a loss made in the transferred trade.

(2) But subsection (1) does not apply if—

(a) the trade is transferred before 13 July 2017, and

(b) the amount of the loss is carried forward to the accounting
20period in which the predecessor ceases to carry on the trade
under section 45 (carry forward of pre-1 April 2017 trade
losses).

(3) Subsection (4) applies if—

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

(b) 25an amount of a loss made by the predecessor in the
transferred trade is carried forward under section 45, 45A or
45B to the accounting period of the successor in which the
successor ceases to carry on the transferred trade, and

(c) relief in that accounting period is not given to the successor
30under section 45, 45A or (as the case may be) 45B for that
amount or for any part of it.

(4) Section 45F has effect as if the loss was made by the successor in the
transferred trade in the accounting period in which it began carrying
on the transferred trade.

944D 35Modified application of section 303B

(1) Subsection (2) applies if—

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

(b) the transferred trade is a ring-fence trade,

(c) the predecessor made a non-decommissioning loss in the
40transferred trade in the accounting period in which it ceased
to carry it on,

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

(e) relief under section 37 or 42 or Part 5 is not given for an
amount of the loss.

(2) 45Subsections (2) to (5) of section 303B (carry forward of non-
decommissioning losses against subsequent profits) have effect as
if—

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

(b) references to the later period were to the accounting period of
the successor in which the successor begins to carry on the
5transferred trade,

(c) references to the company were to the successor, and

(d) references to the trade were to the transferred trade.

(3) Section 303A (meaning of non-decommissioning loss) applies for the
purposes of this section.

(4) 10In this section “ring fence trade” has the same meaning as in Part 8
(see section 277).

944E Modified application of section 303D

(1) Subsection (2) applies if—

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

(b) 15the trade is a ring-fence trade,

(c) an amount of a loss made in the trade was carried forward
under section 303B(2) or 303D(3) to the accounting period in
which the predecessor ceased to carry on the trade (“the
cessation period”), and

(d) 20any of that amount was not—

(i) deducted under section 303B(4) or 303D(5) from the
predecessor’s profit (if any) of the cessation period,

(ii) deducted from the predecessor’s total profits of the
cessation period on a claim under section 303C(2), or

(iii) 25surrendered by the predecessor by way of group
relief for carried-forward losses under Part 5A.

(2) Subsections (3) to (6) of section 303D have effect as if—

(a) the reference to so much of the amount mentioned in section
303D(1)(a) as is unrelieved in the later period were to so
30much of the amount mentioned in subsection (1)(c) of this
section as was not deducted or surrendered as mentioned in
subsection (1)(d),

(b) references to the further period were to the accounting period
of the successor in which the successor begins to carry on the
35transferred trade,

(c) references to the company were to the successor, and

(d) references to the trade were to the transferred trade.

(3) In this section “ring fence trade” has the same meaning as in Part 8
(see section 277).”

66 40In section 945 (cases in which predecessor retains more liabilities than assets)
in subsection (4), for “section 944(3)” (in both places where those words
occur) substitute “sections 944 to 944E”.

67 (1) Section 951 (part of trade treated as separate trade) is amended as follows.

(2) After subsection (6) insert—

(7) 45Subsection (8) applies if—

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(a) a company (“the transferor”) ceases to carry on a trade (“trade
Z”),

(b) another company (“the transferee”) begins to carry on the
activities of trade Z as part of its trade (“part Z”) and

(c) 5by reason of this Chapter an amount of a loss made in trade
Z is carried forward under section 45A(4), 45B(2), 303B(2) or
303D(3) to an accounting period of the transferee.

(8) The provisions of sections 45A to 45F and 303B to 303D have effect,
in so far as they apply (or re-apply) in relation to the amount carried
10forward (or any part of it), as if the transferee carries or carried on
part Z as a separate trade.”

68 In section 952 (apportionment if part of trade treated as separate trade) in
subsection (1) for “or (4)” substitute “, (4) or (8)”.”

Part 9 15Tax avoidance

Restriction on refreshing losses

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

(2) In subsection (1)—

(a) 20after paragraph (a) insert—

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

(b) after paragraph (b) insert—

(ba) a carried-forward non-trading loss on intangible
25fixed assets (see subsection (3A),”.

(3) In subsection (2)—

(a) after “45” insert “, 45A or 45B”;

(b) omit “against subsequent trade profits”.

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

(5) 30After subsection (2) insert—

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

(6) 35After subsection (3) insert—

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

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(7) At the end insert—

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

Change in company ownership

70 5Part 14 of CTA 2010 (change in company ownership) is amended as follows.

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

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

(1B) Chapter 2B restricts relief for trading losses in some cases involving
10the transfer of an asset.

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

(1D) Chapter 2E restricts relief for trading losses in some cases involving
the transfer of a trade.”

72 (1) 15Section 673 (introduction to Chapter 2: disallowance of trading losses) is
amended as follows.

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

(3) 20In subsection (4), in the words after paragraph (b), for “3” substitute “5”.

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

73 (1) 25Section 674 (disallowance of trading losses) is amended as follows.

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

(3) After subsection (2) insert—

(2A) No relief may be given under section 45A or 303C for a loss made by
the company in an accounting period beginning before the change in
30ownership by carrying forward the loss and deducting it from a
company’s total profits of an accounting period ending after the
change in ownership.”

74 After section 674 insert—

674A Section 674: exception for certain losses of ring fence trade

(1) 35Section 674 does not prevent relief being given for a loss if—

(a) the loss is made in a ring fence trade,

(b) the loss is not a non-decommissioning loss,

(c) it is condition A in section 673 that is met, and

(d) the major change by reference to which that condition is met
40did not occur within a period of 3 years in which the change
in ownership occurred.

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(2) In this section—

  • “non-decommissioning loss” is to be interpreted in accordance
    with section 303A;

  • “ring fence trade” has the same meaning as in Part 8 (see section
    5277).”

75 After Chapter 2 insert—

“CHAPTER 2A Post-1 April 2017 losses: Further cases involving a change in the
company’s activities
676AA 10 Introduction to Chapter

(1) This Chapter applies if conditions 1 and 2 are met.

(2) Condition 1 is that on or after 1 April 2017 there is a change in the
ownership of a company (“the transferred company”).

(3) Condition 2 is that a major change in the business of the transferred
15company or a co-transferred company occurs within the required
period but not before 1 April 2017.

(4) The required period is—

(a) for the purposes of section 676AF, any period beginning no
more than 3 years before the change in ownership occurs
20which is a period of 5 years in which that change occurs,

(b) for the purposes of sections 676AG to 676AK, the period of 8
years beginning 3 years before the change in ownership.

(5) In this Chapter—

  • “the change in ownership” means the change in ownership
    25mentioned in subsection (2);

  • “the transferred company” has the meaning given by subsection
    (2);

  • “trade” includes an office.

676AB Priority of provisions of Chapters 2 and 3 over this Chapter

(1) 30If and so far as —

(a) a relevant provision of this Chapter, and

(b) a relevant provision of Chapter 2 or 3,

would each (if the other provision were ignored) apply in relation to
the same loss or other amount, the relevant provision of this Chapter
35does not apply in relation to that amount.

(2) In this section “relevant provision”—

(a) in relation to this Chapter means any of the provisions of
sections 676AF to 676AK;

(b) in relation to Chapters 2 and 3 means any of the provisions of
40sections 674 and 679 to 683.

676AC “Major change in the business” of a company

(1) In this Chapter references to a “major change in the business” of a
company include—

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(a) a major change in the nature or conduct of any trade or
business carried on by the company,

(b) a major change in the scale of any trade or business carried on
by the company, and

(c) 5beginning or ceasing to carry on a particular trade or
business.

(2) In subsection (1) the reference to a major change in the “nature or
conduct” of a trade or business includes—

(a) a major change in the type of property dealt in, or services or
10facilities provided in, the trade or business concerned,

(b) a major change in customers, outlets or markets of the trade
or business concerned,

(c) a major change in the nature of the investments held by the
company for the purposes of an investment business.

(3) 15The definitions in subsections (1) and (2) apply even if the change is
the result of a gradual process which began before the period of 5
years mentioned in section 676AA(4)(a) or (as the case may be) the
period of 8 years mentioned in section 676AA(4)(b).

(4) Where the condition in subsection (5) is met in the case of any two
20companies, the transfer of a trade or business, or any property, from
one of them to the other is to be disregarded in determining for the
purposes of section 676AA(3) whether or not there is a major change
in the business of either of those companies.

(5) The condition is that the companies are related to one another both—

(a) 25immediately before the change in ownership, and

(b) at the time of the transfer mentioned in subsection (4).

676AD Notional split of accounting period in which change in ownership
occurs

(1) This section applies for the purposes of this Chapter.

(2) 30The accounting period in which the change in ownership occurs
(“the actual accounting period”) is treated as two separate
accounting periods (“notional accounting periods”), the first ending
with the change and the second consisting of the remainder of the
period.

(3) 35Section 685 (apportionment of amounts) applies for the purposes of
this Chapter as it applies for the purposes of Chapter 3.

(4) The amounts for the actual accounting period in column 1 of the
table in section 685(2) are apportioned to the two notional accounting
periods in accordance with section 685.

(5) 40In this Chapter, and in sections 685 and 686 as they apply by virtue
of subsection (3), “the actual accounting period” and “notional
accounting periods” have the same meaning as in this section.

676AE “Affected profits”

(1) This section has effect for the purposes of this Chapter.

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(2) Profits of an accounting period ending after the change in ownership
are “affected profits” if and so far as—

(a) they arise before the 5th anniversary of the end of the
accounting period of the transferred company in which the
5change in ownership occurs, and

(b) they can fairly and reasonably be attributed to activities, or
other sources of income, as a result of which, or partly as a
result of which, the major change referred to in section
676AA(3) has occurred.

(3) 10If an accounting period of the company begins before, and ends after,
the anniversary mentioned in subsection (2), then for the purposes of
that subsection—

(a) the accounting period is treated as two separate accounting
periods, the first ending with that date and the second
15consisting of the remainder of the period, and

(b) the profits or losses of the accounting period are apportioned
to the two periods.

(4) Any apportionment under subsection (3)(b) is to be made on a time
basis according to the respective lengths of the two deemed
20accounting periods.

(5) But if that method of apportionment would work unjustly or
unreasonably in any case, such other method is to be used as is just
and reasonable.

676AF Restriction on use of carried-forward post-1 April 2017 trade losses

25A loss made by the transferred company in an accounting period
beginning before the change in ownership may not be deducted from
affected profits of an accounting period ending after the change in
ownership under any of the following provisions—

(a) section 45A(5) (carry-forward of post-1 April 2017 trade
30losses),

(b) section 45F(3) (carried-forward losses: terminal relief),

(c) section 303C(3) (excess carried-forward non-
decommissioning losses of ring fence trade), and

(d) section 124B(3) of FA 2012 (excess carried-forward BLAGAB
35trade losses).

676AG Restriction on debits to be brought into account

(1) This section has effect for the purpose of restricting the debits to be
brought into account for the purposes of Part 5 of CTA 2009 (loan
relationships) in respect of the transferred company’s loan
40relationships.

(2) The debits to be brought into account for the purposes of Part 5 of
CTA 2009 for—

(a) the accounting period beginning immediately after the
change in ownership, or

(b) 45any subsequent accounting period,

do not include relevant non-trading debits so far as amount A
exceeds amount B.

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(3) Amount A is the sum of—

(a) the amount of those relevant non-trading debits, and

(b) the amount of any relevant non-trading debits which have
been brought into account for the purposes of that Part for
5any previous accounting period ending after the change in
ownership.

(4) Amount B is the amount of the taxable total profits of the accounting
period ending with the change in ownership.

(5) For the meaning of “relevant non-trading debit”, see section 730.

676AH 10 Restriction on the carry forward of post-1 April 2017 non-trading
deficit from loan relationships

(1) This section has effect for the purpose of restricting the carry forward
under Chapter 16A of Part 5 of CTA 2009 (non-trading deficits: post
1 April 2017 deficits) of a pre-acquisition non-trading deficit from the
15transferred company’s loan relationships.

(2) For the purposes of this section an amount is a “pre-acquisition” non-
trading deficit from a company’s loan relationships if it is a non-
trading deficit from the company’s loan relationships for an
accounting period beginning before the change in ownership.

(3) 20Subsection (4) applies if, in the case of a pre-acquisition non-trading
deficit from the transferred company’s loan relationships, the non-
trading deficit in column 1 of row 4 of the table in section 685(2) is
apportioned in accordance with section 685(2) to the first notional
accounting period.

(4) 25None of that deficit may, by virtue of section 463G (carry forward of
unrelieved deficit), be set off against affected profits of—

(a) the accounting period beginning immediately after the
change in ownership, or

(b) any subsequent accounting period.

676AI 30 Restriction on relief for post-1 April 2017 non-trading loss on
intangible fixed assets

(1) This section has effect for the purpose of restricting relief under
section 753 of CTA 2009 (treatment of non-trading losses) in respect
of a relevant non-trading loss on intangible fixed assets.

(2) 35An amount is a “relevant non-trading loss on intangible fixed assets”
if and so far as—

  • it is by virtue of section 751 of CTA 2009 a non-trading loss on
    intangible fixed assets for a relevant pre-acquisition
    accounting period, or

  • 40it is made up of an amount falling within paragraph (a) which
    has been carried forward under section 753(3) of CTA 2009.

(3)
“Relevant pre-acquisition accounting period” means an accounting
period beginning—

(a) before the change in ownership, and

(b) 45on or after 1 April 2017.

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(4) In the case of a relevant non-trading loss on intangible fixed assets,
relief under section 753 of CTA 2009 against the total profits of the
actual accounting period is available only in relation to each of the
notional accounting periods considered separately.

(5) 5A relevant non-trading loss on intangible fixed assets may not be
deducted as a result of section 753(3) of CTA 2009 (losses carried
forward) from affected profits of an accounting period ending after
the change in ownership.

676AJ Restriction on deduction of post-1 April 2017 expenses of
10management

(1) This section has effect for the purpose of restricting deductions for
post-1 April 2017 relevant expenses of management of the
transferred company.

(2) Any amounts which—

(a) 15are, or are treated as, expenses of management referable to
the actual accounting period, and

(b) are apportioned to either of the two notional accounting
periods in accordance with section 685,

are treated for the purposes of Chapter 2 of Part 16 of CTA 2009
20(companies with investment business) as expenses of management
referable to that notional accounting period.

(3) Any allowances which are apportioned to either of the notional
accounting periods in accordance with section 685 are treated for the
purposes of section 253 of CAA 2001 and section 1233 of CTA 2009
25(companies with investment business: excess capital allowances) as
falling to be made in that notional accounting period.

(4) In calculating the taxable total profits of an accounting period of the
transferred company ending after the change in ownership—

(a) relevant expenses of management, and

(b) 30relevant allowances,

may not be deducted from affected profits of the accounting period.

(5) In this section “relevant expenses of management” means expenses
of management which are first deductible under section 1219 of CTA
2009 for an accounting period beginning—

(a) 35on or after 1 April 2017, and

(b) before the change in ownership.

(6) In this section “relevant allowances” means allowances falling to be
made for an accounting period beginning—

(a) on or after 1 April 2017, and

(b) 40before the change in ownership.

676AK Restriction on use of post-1 April 2017 UK property business losses

(1) This section has effect for the purpose of restricting relief under
sections 62 and 63 for a relevant UK property business loss made by
the transferred company.