Finance (No. 3) Bill (HC Bill 282)

58 In section 169N (amount of entrepreneurs’ relief: general), in subsection
(4B), for “Section 4” substitute “Section 1H”.

59 10In section 169VK (cap on investors’ relief for disposal by an individual), in
subsection (3), for “Section 4” substitute “Section 1H”.

60 In section 169VL (cap on investors’ relief for disposal by trustees of a
settlement), in subsection (4), for “Section 4” substitute “Section 1H”.

61 (1) Section 171 (transfers within a group: general provisions) is amended as
15follows.

(2) In subsection (1A), in the second sentence, for the words from “and would”
to the end substitute “chargeable to corporation tax as a result of section
2B(3) or (4).”

(3) After subsection (1A) insert—

“(1B) 20If—

(a) company A is deemed under section 25(3) to have previously
disposed of the asset, but

(b) no gain or loss accrued on that deemed disposal as a result of
section 25ZA(2),

25that deemed disposal is to be ignored in applying subsection (1) of
this section in relation to company B.”

(4) In subsection (2), omit paragraph (ba).

62 In section 171A (election to reallocate gain or loss to another member of the
group), for subsection (2) substitute—

“(2) 30In determining for the purposes of subsection (1)(c) whether
subsection (1) of section 171 would have applied, it is to be assumed
that subsection (1A)(b) of that section read—

“(b) that—

(i) at the time of the disposal, company B is resident in the
35United Kingdom, or carrying on a trade in the United
Kingdom through a permanent establishment there, or

(ii) the asset is a chargeable asset in relation to company B
immediately after the time of the disposal.”””

63 In section 171B (election under section 171A: effect), in subsection (5), for the
40words from “and would by virtue of” to the end substitute “chargeable to
corporation tax as a result of section 2B(3) or (4).”

64 In section 175 (replacement of business assets by members of a group), in
subsection (2AA), for “section 10B” substitute “section 2B(3)”.

65 (1) Section 179 (company ceasing to be member of group: post-appointed day
cases) is amended as follows.

(2) In subsection (3B)(c), for “section 13(2)” substitute “section 3”.

(3) In subsection (10A)(a), for the words from “and would by virtue of” to
5“purposes” substitute “chargeable to corporation tax as a result of section
2B(3) or (4),”.

66 Omit section 187A (deemed disposal under section 185: ATED-related gains
and losses).

67 For section 187B substitute—

“187B 10 Postponing gain or loss under section 185(2): interests in UK land

(1) This section applies if an interest in UK land is deemed to have been
disposed of under section 185(2) by a company at any time.

(2) The gain or loss that, but for this subsection, would have accrued to
the company at that time is not to accrue at that time.

(3) 15But, on a subsequent disposal by the company of the whole or part
of the interest in UK land, the whole or a corresponding part of the
gain or loss is treated as accruing on the subsequent disposal.

(4) This gain or loss is in addition to any gain or loss that actually accrues
on the subsequent disposal.

(5) 20A company may elect for a disposal deemed to have been made
under section 185(2) to be excluded from the operation of this
section.

(6) The election must be made within 2 years after the day on which the
deemed disposal occurs.

(7) 25In this section “interest in UK land” has the meaning given by section
1C.”

68 Omit sections 188A to 188K (and the italic heading before section 188A).

69 (1) Section 190 (tax recoverable from another group company or controlling
director) is amended as follows.

(2) 30In subsection (2), for paragraph (b) substitute—

“(b) that the gain is chargeable to corporation tax as a result of
section 2B(3) or (4).”

(3) In subsection (3)(b), for the words from “gain forms” to “10B” substitute
“taxpayer company was not resident in the United Kingdom at the time
35when the gain accrued”.

70 (1) Section 199 (exploration or exploitation assets: deemed disposals) is
amended as follows.

(2) In subsection (2), for “in respect of whom the residence condition (see
section 2(1A)) is not met” substitute “who is not UK resident for a tax year
40(as determined for the purposes of Chapter 1 of Part 1)”.

(3) In subsection (6), for paragraphs (a) and (b) substitute “would be chargeable
to capital gains tax or corporation tax as a result of section 1A(3)(a) or 2B(3)”.

71 In section 210A (insurance companies: ring-fencing of losses), in subsection
(1), for “Section 8(1)” substitute “Section 2A(1)”.

72 In section 222A (determination of main residence: non-resident CGT
disposals), in subsection (1), for paragraph (b) substitute—

“(b) 5the disposal is—

(i) a disposal on which a residential property gain (as
defined by Schedule 1B) accrues which is chargeable
to capital gains tax because of section 1A(3)(b), or

(ii) a disposal on which a loss accrues but is one which,
10had a gain accrued, would be within sub-paragraph
(i).”

73 (1) Section 222B (non-qualifying tax years) is amended as follows.

(2) In subsection (2), for “a non-resident CGT disposal” substitute “a disposal
falling within section 222A(1)(b) (non-resident disposals)”.

(3) 15In subsection (10), for “Section 11(1)(a)” substitute “Section 271ZA(2)”.

74 (1) Section 223 (amount of relief) is amended as follows.

(2) In subsection (7), in paragraph (b), for “an NRCGT gain chargeable to capital
gains tax by virtue of section 14D” substitute “a residential property gain (as
defined by Schedule 1B) which is chargeable to capital gains tax because of
20section 1A(3)(b)”.

(3) In subsection (7A), for “paragraph 9 of Schedule 4ZZB applies by virtue of
sub-paragraph (1)(b) of that paragraph” substitute “paragraph 8 or 14 of
Schedule 4AA applies”.

75 In section 228 (conditions for relief: supplementary), in subsection (6), for the
25words from “, and either” to “section 10B” substitute “chargeable to capital
gains tax or corporation tax on gains”.

76 (1) Section 260 (gifts on which inheritance tax is chargeable etc) is amended as
follows.

(2) In subsection (6ZA)(a), for “non-resident CGT disposal” substitute “direct or
30indirect disposal of UK land which meets the non-residence condition”.

(3) In subsection (6ZB), for “a reference to “chargeable NRCGT gain”” substitute
“a reference to “so much of any gain accruing on the disposal as falls to be
dealt with as mentioned in subsection (6ZD)(a) or (b)””.

(4) In subsection (6ZC), for ““the chargeable NRCGT gain” substitute ““so much
35of the gain mentioned in subsection (6ZB)”.

(5) After that subsection insert—

“(6ZD) For the purposes of subsections (6ZA) to (6ZC) a disposal is a “direct
or indirect disposal of UK land which meets the non-residence
condition” if it is—

(a) 40a disposal on which a gain accrues that falls to be dealt with
by section 1A(3) because the asset disposed of is within
paragraph (b) or (c) of that subsection, or

(b) a disposal on which a gain accrues that falls to be dealt with
by section 1A(1) in accordance with section 1G(2) because the
45asset disposed of is within section 1A(3)(b) or (c).”

77 (1) Section 261ZA (gifts of UK residential property interests to non-residents) is
amended as follows.

(2) In subsection (1)—

(a) in the opening words, for “of a UK residential property interest”
5substitute “of an asset within section 1A(3)(b) or (c)”, and

(b) for paragraph (b) substitute—

“(b) on the assumption that the disposal is a direct or
indirect disposal of UK land which meets the non-
residence condition (whether or not that is the case) ,
10that gain would be a relevant gain (see subsections (6)
and (7)).”

(3) In subsection (3)—

(a) in the opening words, for “non-resident CGT disposal” substitute
“direct or indirect disposal of UK land which meets the non-
15residence condition”,

(b) in paragraph (a), for ““chargeable NRCGT gain”” substitute
““relevant gain””, and

(c) in paragraph (b), for ““the chargeable NRCGT gain” substitute ““the
relevant gain”.

(4) 20In subsection (4)—

(a) in the opening words, for “the interest in UK land” substitute “the
asset within section 1A(3)(b) or (c)”, and

(b) in paragraph (b)—

(i) for “a chargeable NRCGT gain” substitute “a relevant gain”,
25and

(ii) for “a non-resident CGT disposal” substitute “a direct or
indirect disposal of UK land which meets the non-residence
condition”.

(5) In subsection (5)(b)(i)—

(a) 30for “a non-resident CGT disposal” substitute “a direct or indirect
disposal of UK land which meets the non-residence condition”, and

(b) for “the chargeable NRCGT gain” substitute “the relevant gain”.

(6) For subsection (6) substitute—

“(6) For the purposes of this section, a disposal is a “direct or indirect
35disposal of UK land which meets the non-residence condition” if it
is—

(a) a disposal on which a gain accrues that falls to be dealt with
by section 1A(3) because the asset disposed of is within
paragraph (b) or (c) of that subsection, or

(b) 40a disposal on which a gain accrues that falls to be dealt with
by section 1A(1) in accordance with section 1G(2) because the
asset disposed of is within section 1A(3)(b) or (c).

(7) For the purposes of this section, a “relevant gain” means so much of
any chargeable gain accruing on a disposal as falls to be dealt with as
45mentioned in subsection (6)(a) or (b).”

(7) In the title, for “UK residential property interests” substitute “direct or
indirect interests in UK land”.