Finance Bill (HC Bill 116)

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(2) In this section “relevant UK property business loss” means a loss
made in a UK property business in an accounting period
beginning—

(a) on or after 1 April 2017, and

(b) 5before the change in ownership.

(3) In relation to a relevant UK property business loss, relief under
section 62(3) is available only in relation to each of the notional
accounting periods considered separately.

(4) A relevant UK property business loss may not be deducted as a
10result of section 62(5) or 63(3) from affected profits of an accounting
period ending after the change in ownership.

676AL “Co-transferred company” and “related company”

(1) In this Chapter “co-transferred company” means any company
which is related to the transferred company both immediately before
15and immediately after the change in ownership.

(2) For the purposes of this Chapter any two companies (“T”) and (“C”)
are “related” to one another at any time when—

(a) the group condition is met in relation to T and C, or

(b) any of consortium conditions 1 to 4 is met in relation to T and
20C,

(whether on the assumption that T is the claimant company and C is
the surrendering company or vice versa).

(3) In this Chapter—

  • “consortium condition 1” is to be interpreted in accordance with
    25section 188CF,

  • “consortium condition 2” is to be interpreted in accordance with
    section 188CG,

  • “consortium condition 3” is to be interpreted in accordance with
    section 188CH,

  • 30“consortium condition 4” is to be interpreted in accordance with
    section 188CI,

  • “the group condition” is to be interpreted in accordance with
    section 188CE.”

76 After Chapter 2A insert—

35“CHAPTER 2B Asset transferred within group: restriction of relief for post-1 April
trade losses
676BA Introduction to Chapter

(1) This section applies if there is a change in the ownership of a
40company (“the company”) on or after 1 April 2017 and—

(a) conditions 1 and 2 are met, or

(b) condition 3 is met.

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(2) Condition 1 is that after the change in ownership the company
acquires an asset from another company in circumstances such
that—

(a) section 171 of TCGA 1992 (no gain/no loss transfer within
5group), or

(b) section 775 of CTA 2009 (tax-neutral transfer within group),

applies to the acquisition.

(3) Condition 2 is that—

(a) in a case within subsection (2)(a), a chargeable gain accrues to
10the company on a disposal of the asset within the period of 5
years beginning with the change in ownership, or

(b) in a case within subsection (2)(b), there is a non-trading
chargeable realisation gain on the realisation of the asset
within that period.

(4) 15Condition 3 is that a chargeable gain on a disposal of an asset within
the period of 5 years beginning immediately after the change in
ownership (or an amount of such a gain) is treated as accruing to the
company by virtue of an election under section 171A of TCGA 1992
(notional transfers within a group).

20(Accordingly, references in this Chapter to the accrual of a relevant
gain are to be read in the light of section 171B(2) and (3) of TCGA
1992.)

(5) For the purposes of subsection (3), an asset (P) acquired by the
company as mentioned in subsection (2) is treated as the same as an
25asset (Q) owned at a later time by the company if the value of Q is
derived in whole or in part from P.

(6) In particular, P is treated as the same as Q for those purposes if—

(a) Q is a freehold,

(b) P was a leasehold, and

(c) 30the lessee has acquired the reversion.

(7) In this Chapter—

  • “the change in ownership” means the change in ownership
    mentioned in subsection (1),

  • “the company” has the same meaning as in this section,

  • 35“non-trading chargeable realisation gain” means a chargeable
    realisation gain (within the meaning of Part 8 of CTA 2009
    (intangible fixed assets)) which is a non-trading credit for the
    purposes of that Part (see section 746 of that Act),

  • “realisation” has the meaning given by section 734 of CTA 2009,
    40and

  • “the relevant gain” means the gain (or amount of a gain) within
    subsection (3)(a) or (b) or (4).

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

(1) 45 This section applies for the purposes of this Chapter.

(2) The accounting period in which the change in ownership occurs
(“the actual accounting period”) is treated as two separate

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accounting periods (“notional accounting periods”), the first ending
with the change and the second consisting of the remainder of the
period.

(3) Section 702 (apportionment of amounts) applies for the purposes of
5this Chapter as it applies for the purposes of Chapter 4.

(4) The amounts for the actual accounting period in column 1 of the
table in section 702(2) are apportioned to the two notional accounting
periods in accordance with section 702.

(5) In this Chapter, and in sections 702 and 703 as they apply by virtue
10of subsection (3), “the actual accounting period” and “notional
accounting periods” have the same meaning as in this section.

676BC Disallowance of relief for trade losses

(1) This section has effect for the purposes of restricting relief under
sections 45A, 45F and 303C of this Act and section 124B of FA 2012
15for a loss made by the company in a trade before the change in
ownership.

(2) But this section applies only if, in accordance with the relevant
provisions and section 702, an amount is included in respect of
chargeable gains or, as the case may be, non-trading chargeable
20realisation gains in the total profits of the accounting period in which
the relevant gain accrues or arises.

(3) Relief under section 45A or 303C of this Act or section 124B of FA
2012 is available only in relation to each of the notional accounting
periods considered separately.

(4) 25A loss made in an accounting period beginning before the change in
ownership—

(a) may not be deducted as a result of section 45A or 303C of this
Act or section 124B of FA 2012 from so much of the total
profits of an accounting period ending after the change in
30ownership as represents the relevant gain;

(b) may not be deducted by virtue of paragraph (a) of the
definition of “relevant profits” in section 45F(7) from so much
of the total profits of an accounting period ending after the
change in ownership as represents the relevant gain.

676BD 35 Meaning of “the relevant provisions”

In this Chapter “the relevant provisions” means—

(a) section 8(1) of, and Schedule 7A to, TCGA 1992 (amounts
included in respect of chargeable gains in total profits), or

(b) Chapter 6 of Part 8 of CTA 2009 (intangible fixed assets: how
40credits and debits are given effect).

676BE Meaning of “amount of profits which represents a relevant gain”

(1) In this Chapter, the amount of any profits which represents a
relevant gain is found by comparing—

(a) the amount (“Y”) of the relevant gain, with

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(b) the amount (“Z”) which is included in respect of chargeable
gains or, as the case may be, non-trading chargeable
realisation gains for the accounting period concerned.

(2) If Y does not exceed Z, the amount of the profits which represents the
5relevant gain equals Y.

(3) If Y exceeds Z, the amount of those profits equals Z.”

77 After Chapter 2B insert—

“CHAPTER 2C Disallowance of group relief for carried-forward losses: general
10provision
676CA Introduction to Chapter

(1) This Chapter applies if on or after 1 April 2017 there is a change in
the ownership of a company (“the transferred company”).

(2) In this Chapter—

  • 15“the change in ownership” means the change in ownership
    mentioned in subsection (1);

  • “the transferred company” has the meaning given by subsection
    (1).

676CB Restriction on surrender of carried-forward losses

(1) 20Subsection (3) applies if a company (“the claimant company”)
would, (apart from this section), be eligible under Part 5A to make a
relevant claim for group relief for carried-forward losses.

(2) For the purposes of this section a claim for group relief for carried-
forward losses is a “relevant claim” if it is—

(a) 25for an accounting period ending after the change in
ownership, and

(b) in respect of an amount surrendered by the transferred
company or a co-transferred company which is a relevant
pre-acquisition loss.

(3) 30The general rule is that the relief is not available.

(4) The general rule is subject to the exceptions in sections 676CD and
676CE.

(5) For the purposes of this section—

(a) the accounting period of the company mentioned in
35subsection (2)(b) in which the change in ownership occurs is
treated as two separate accounting periods, the first ending
with the change and the second consisting of the remainder
of the period, and

(b) the profits or losses of the accounting period are apportioned
40to the two periods.

(6) Any apportionment under subsection (5)(b) is to be made on a time
basis according to the respective lengths of the two periods.

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(7) 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.

676CC Cases where consortium condition 1 or 2 was previously met

(1) 5Subsection (4) applies in relation to a claim for group relief for
carried-forward losses by the transferred company if conditions A
and B are met.

(2) Condition A is that the claim is—

(a) for an accounting period ending after the change in
10ownership, and

(b) in respect of a relevant pre-acquisition loss.

(3) Condition B is that consortium condition 1 was met in relation to—

(a) the transferred company (as the company owned by a
consortium as mentioned in section 188CF(1)(b)), and

(b) 15the surrendering company (as the company mentioned in
section 188CF(1)(c)),

immediately before the change in ownership (“time T”).

(4) The relief given under section 188CK in respect of the transferred
company’s total profits of the claim period may not exceed the relief
20that would be available on the assumption that the claim is based on
consortium condition 1 and the ownership proportion for the
purposes of that condition is equal to the lowest of the following
proportions—

(a) the proportion of the ordinary share capital of the transferred
25company that was beneficially owned by the surrendering
company at time T,

(b) the proportion of any profits available for distribution to
equity holders of the transferred company to which the
surrendering company was beneficially entitled at that time,

(c) 30the proportion of any assets of the transferred company
available for distribution to such equity holders on a winding
up to which the surrendering company would be beneficially
entitled (as determined at that time), and

(d) the proportion of the voting power in the transferred
35company that was directly possessed by the surrendering
company at that time.

(5) Subsection (8) applies in relation to a claim for group relief for
carried-forward losses by the transferred company if conditions A
and B are met.

(6) 40Condition A is that the claim is—

(a) for an accounting period ending after the change in
ownership, and

(b) in respect of a a relevant pre-acquisition loss.

(7) Condition B is that consortium condition 2 was met in relation to—

(a) 45the transferred company (as the company owned by a
consortium as mentioned in section 188CG(1)(b)), and

(b) the surrendering company (as the company mentioned in
section 188CG(1)(c)),

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immediately before the change in ownership (“time T”).

(8) The relief given under section 188CK in respect of the transferred
company’s total profits of the claim period may not exceed the relief
that would be available on the assumption that the claim is based on
5consortium condition 2 and the ownership proportion for the
purposes of that condition is equal to the lowest of the following
proportions—

(a) the proportion of the ordinary share capital of the transferred
company that was beneficially owned by the link company at
10time T,

(b) the proportion of any profits available for distribution to
equity holders of the transferred company to which the link
company was beneficially entitled at that time,

(c) the proportion of any assets of the transferred company
15available for distribution to such equity holders on a winding
up to which the link company would be beneficially entitled
(as determined at that time), and

(d) the proportion of the voting power in the transferred
company that was directly possessed by the link company at
20that time.

(9) For the purposes of this section—

(a) the accounting period of the surrendering company
mentioned in subsection (3)(b) or (7)(b) (as the case may be)
in which the change in ownership occurs is treated as two
25separate accounting periods, the first ending with the change
and the second consisting of the remainder of the period, and

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

(10) Any apportionment under subsection (9)(b) is to be made on a time
30basis according to the respective lengths of the two periods.

(11) In this section—

  • “the link company” means the company which is the link
    company (see section 188CG(1)(d)) for the purposes of the
    meeting of consortium condition 2 as mentioned in
    35subsection (7),

  • “the claim period” and “the surrendering company” has the
    same meaning as in Part 5A (see section 188FD(1)).

(12) Chapter 6 of Part 5 (equity holders and profits or assets available for
distribution) applies for the purposes of subsections (4)(b) and (c)
40and (8)(b) and (c).

676CD Cases where consortium condition 3 or 4 was previously met

(1) If the requirement in subsection (3) is met, section 676CB(3) does not
prevent a company from making under section 188CC a claim for
group relief for carried-forward losses falling within subsection (2).

(2) 45A claim falls within this subsection if it is—

(a) for an accounting period (“the claim period”) ending after the
change in ownership, and

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(b) in relation to an amount surrendered by the transferred
company which is a relevant pre-acquisition loss and is
attributable to an accounting period of that company
specified in the claim (“the specified loss-making period”).

(3) 5The requirement is that consortium condition 3 or consortium
condition 4 is met throughout a period which—

(a) begins before or during the specified loss-making period, and

(b) ends with or after the time when the change in ownership
occurs.

(4) 10For the purposes of a claim by virtue of this section, section 188CC(3)
has effect as if requirement 3 were omitted.

676CE Exceptions to restrictions

(1) Nothing in section 676CB(3) or 676CC affects the giving of group
relief for carried-forward losses by the making of a deduction under
15section 188CK(1) from total profits of the claimant company which
arise after the 5th anniversary of the end of the accounting period of
the transferred company in which the change in ownership occurs.

(2) Nothing in section 676CB(3) or 676CC affects the availability of relief
under Part 5A if immediately before the change in ownership the
20group condition was met in relation to the transferred company and
the claimant company.

But see also section 676CF.

(3) If an accounting period of the claimant company begins before, and
ends after, the anniversary mentioned in subsection (1), then for the
25purposes of that subsection—

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

(b) the profits or losses of the accounting period are apportioned
30to 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 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
35and reasonable.

(6) In this section “the claimant company” has the same meaning as in
Part 5A (see section 188FD(1)).

676CF Cases where Chapter 2, 2A or 3 also applies

(1) This section applies if—

(a) 40Chapter 2 applies in relation to the change in ownership by
virtue of condition A in section 673 being met,

(b) Chapter 2A applies in relation to the change in ownership, or

(c) Chapter 3 applies in relation to the change in ownership by
virtue of condition B in section 677 being met.

(2) 45This section also applies if—

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(a) the condition in subsection (1)(a) would be met if in
subsection (4A) of section 719 (meaning of “change in the
ownership of a company”) the reference to Chapter 2C
included a reference to Chapter 2, or

(b) 5the condition in subsection (1)(c) would be met if in
subsection (4A) of section 719 the reference to Chapter 2C
included a reference to Chapter 3.

(3) Where the company in relation to which the major change
mentioned in section 673(4), 676AA(3) or 677(3) has occurred would
10(apart from this section) be eligible under Part 5A to claim in respect
of a relevant pre-acquisition loss group relief for carried-forward
losses for an accounting period ending after the change in
ownership, no deduction in respect of that loss may be made from
affected profits under section 188CK.

15See section 676CG for the meaning of “affected profits”.

(4) For the purposes of this section—

(a) the accounting period in which the change in ownership
occurs is treated as two separate accounting periods, the first
ending with the change and the second consisting of the
20remainder of the period, and

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

(5) Any apportionment under subsection (4)(b) is to be made on a time
basis according to the respective lengths of the two deemed
25accounting periods.

(6) 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.

676CG “Affected profits”

(1) 30This section has effect for the purposes of section 676CF.

(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
35change 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 mentioned in section
673(4), 676AA(3) or 677(3) (as the case may be) has occurred.

(3) 40If an accounting period of the company in relation to which the major
change mentioned in section 673(4), 676AA(3) or 677(3) has occurred
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
45periods, the first ending with that date and the second
consisting of the remainder of the period, and

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

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

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

676CH “Relevant pre-acquisition loss”

(1) In this Chapter “relevant pre-acquisition loss” means—

(a) a non-trading deficit from loan relationships for an
10accounting period beginning before the change in ownership
carried forward to the surrender period under section
463G(6) of CTA 2009,

(b) a loss on intangible fixed assets so far as it is made up of
amounts carried forward to the surrender period under
15section 753(3) of CTA 2009 from one or more accounting
periods beginning before the change in ownership,

(c) expenses carried forward to the surrender period under
section 1223 of CTA 2009 (carry forward of expenses of
management of investment business) which were first
20deductible in an accounting period beginning before the
change in ownership,

(d) a loss made in an accounting period beginning before the
change in ownership and carried forward to the surrender
period under section 45A(3) (post- 1 April 2017 trade loss),

(e) 25a loss made in an accounting period beginning before the
change in ownership and carried forward to the surrender
period under section 62(5)(b) or 63(3)(a) (loss made in UK
property business),

(f) a loss made in an accounting period beginning before the
30change in ownership and carried forward to the surrender
period under section 303B(2) or 303D(3) (post-1 April non-
decommissioning losses of ring fence trade),

(g) a BLAGAB trade loss made in an accounting period
beginning before the change in ownership and carried
35forward to the surrender period under section 124A(2) or
124C(3) of FA 2012.

(2) In this section “the surrender period” is to be interpreted in
accordance with section 188BB(7).

676CI Interpretation of Chapter

(1) 40In this Chapter “co-transferred company” means any company
which is related to the transferred company both immediately before
and immediately after the change in ownership.

(2) For the purposes of this Chapter any two companies (“T”) and (“C”)
are “related” to one another at any time when—

(a) 45the group condition is met in relation to T and C, or

(b) any of consortium conditions 1 to 4 is met in relation to T and
C,

(whether on the assumption that T is the claimant company and C is
the surrendering company or vice versa).

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(3) In this Chapter—

  • “consortium condition 1” is to be interpreted in accordance with
    section 188CF,

  • “consortium condition 2” is to be interpreted in accordance with
    5section 188CG,

  • “consortium condition 3” is to be interpreted in accordance with
    section 188CH,

  • “consortium condition 4” is to be interpreted in accordance with
    section 188CI,

  • 10“the group condition” is to be interpreted in accordance with
    section 188CE.”

78 After Chapter 2C insert—

“CHAPTER 2D Asset transferred within group: Restriction of group relief for
15carried-forward losses
676DA Introduction to Chapter

(1) This section applies if—

(a) there is a change in the ownership of a company (“the
company”) on or after 1 April 2017, and

(b) 20the following are met—

  • conditions 1 and 2, or

  • condition 3.

(2) Condition 1 is that after the change in ownership the company
acquires an asset from another company in circumstances such
25that—

(a) section 171 of TCGA 1992 (no gain/no loss transfer within a
group), or

(b) section 775 of CTA 2009 (tax-neutral transfer within a group),

applies to the acquisition.

(3) 30Condition 2 is that—

(a) in a case within subsection (2)(a), a chargeable gain accrues to
the company on a disposal of the asset within the period of 5
years beginning with the change in ownership, or

(b) in a case within subsection (2)(b), there is a non-trading
35chargeable realisation gain on the realisation of the asset
within that period.

(4) Condition 3 is that a chargeable gain on a disposal of an asset within
the period of 5 years beginning immediately after the change in
ownership (or an amount of such a gain) is treated as accruing to the
40company by virtue of an election under section 171A of TCGA 1992
(notional transfers within a group).

(Accordingly, references in this Chapter to the accrual of a relevant
gain are to be read in the light of section 171B(2) and (3) of TCGA
1992.)

(5) 45For the purposes of subsection (3), an asset (P) acquired by the
company as mentioned in subsection (2) is treated as the same as an