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

(2) The following amendments have effect in consequence of that repeal.

(3) In section 185(1) of TCGA 1992 (deemed disposal of assets on company
ceasing to be resident in UK) for “and section 187 apply” substitute
“applies”.

(4) 5In Schedule 3ZB to TMA 1970 (CT exit charge payment plans)—

(a) in paragraph 2(3) (meaning of “exit charge provisions” in Part 1) omit
paragraph (b), and

(b) in paragraph 3 (interpretation: exit charge assets and liabilities)—

(i) in subparagraph (2)(a) omit “, (b)”, and

(ii) 10in subparagraph (2)(c)(ii) omit “or (b)”.

(5) The amendments made by this paragraph have effect in relation to a
company in a case where section 185 of TCGA 1992 applies to the company
by reason of its ceasing to be resident in the United Kingdom on or after 1
January 2020.

10 (1) 15Sections 860 to 862 of CTA 2009 (postponement of gain on deemed
realisation under section 859) are repealed.

(2) The following amendments have effect in consequence of that repeal.

(3) In section 859 of CTA 2009 (asset ceasing to be chargeable intangible asset:
deemed realisation at market value) omit subsection (3).

(4) 20In Schedule 3ZB to TMA 1970 (CT exit charge payment plans)—

(a) in paragraph 2(3) (meaning of “exit charge provisions” in Part 1)—

(i) at the end of paragraph (e) insert “and”, and

(ii) omit paragraph (g) and the “and” immediately before it, and

(b) in paragraph 3 (interpretation: exit charge assets and liabilities) in
25subparagraph (2)(c)(i) omit “or (g)”.

(5) The amendments made by this paragraph have effect in relation to a
company in a case where section 859 of CTA 2009 applies to the company by
reason of its ceasing to be resident in the United Kingdom on or after 1
January 2020.

30Part 3 Treatment of assets subject to EU exit charges

11 (1) After section 184I of TCGA 1992 insert—

““Assets subject to EU exit charges

184J Asset subject to EU exit charge on becoming chargeable asset

(1) 35This section applies if—

(a) an asset becomes a chargeable asset in relation to a company
by reason of an event specified in subsection (2), and

(b) on the occurrence of that event the company becomes subject
to an EU exit charge in relation to the asset.

(2) 40The events are—

(a) the company becoming resident in the United Kingdom, and

(b) in the case of a company that is not resident in the United
Kingdom, the asset beginning to be held for the purposes of
a trade carried on by the company in the United Kingdom
through a permanent establishment.

(3) 5The company is to be treated for the purposes of this Act as if it had
acquired the asset for its market value at the time it became a
chargeable asset in relation to the company.

(4) For the purposes of this section an asset is a “chargeable asset” in
relation to a company at any time if any gain on its disposal by the
10company at that time would be chargeable to corporation tax.

(5) “EU exit charge” means a charge to tax under the law of a member
State in accordance with Article 5(1) of Directive (EU) 2016/1164 of
the European Parliament and of the Council of 12 July 2016 laying
down rules against tax avoidance practices that directly affect the
15functioning of the internal market.”

(2) The amendment made by this paragraph has effect in relation to assets that
become chargeable assets on or after 1 January 2020.

12 (1) Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.

(2) In section 863 (asset becoming chargeable intangible asset) after subsection
20(2) insert—

“(3) But subsection (2)(b) is subject to section 863A.”

(3) After section 863 insert—

“863A Asset becoming chargeable intangible asset: EU exit charge

(1) This section applies if—

(a) 25an asset becomes a chargeable intangible asset in relation to a
company by reason of an event specified in section 863(1)(a)
or (b), and

(b) on the occurrence of that event the company becomes subject
to an EU exit charge in respect of the asset.

(2) 30This Part applies as if the company had acquired the asset for its
market value at the time it became a chargeable intangible asset in
relation to the company.

(3) “EU exit charge” means a charge to tax under the law of a member
State in accordance with Article 5(1) of Directive (EU) 2016/1164 of
35the European Parliament and of the Council of 12 July 2016 laying
down rules against tax avoidance practices that directly affect the
functioning of the internal market.”

(4) The amendments made by this paragraph have effect in relation to assets
that become chargeable intangible assets on or after 1 January 2020.

Section 26

SCHEDULE 9 Corporation tax relief for carried-forward losses

Restrictions on deductions from profits

1 CTA 2010 is amended as follows.

2 5In section 188DD (group relief for carried-forward losses: claimant
company’s relevant maximum for overlapping period) omit subsection (4).

3 In section 188ED (group relief for carried-forward losses: claimant
company’s relevant maximum for overlapping period)—

(a) omit subsection (4), and

(b) 10in subsection (5) for “(4)” substitute “(3)”.

4 In section 269ZB (restriction on deductions from trading profits) in
subsection (8) for paragraph (b) substitute—

“(b) any amount specified for the period under section
269ZC(5)(a) (non-trading profits deductions allowance).”

5 15In section 269ZC (restriction on deductions from non-trading profits) in
subsection (6) for paragraph (b) substitute—

“(b) any amount specified for the period under section
269ZB(7)(a) (trading profits deductions allowance).”

6 (1) Section 269ZD (restriction on deductions from total profits) is amended as
20follows.

(2) In subsection (2)—

(a) in paragraph (b)—

(i) at the end of sub-paragraph (i) insert “and”, and

(ii) omit sub-paragraph (iii) and the “and” immediately before it,
25and

(b) in the second sentence omit “and section 269ZE”.

(3) In subsection (4)(a) after “period” insert “(see section 269ZFA)”.

(4) Omit subsection (5).

(5) For subsection (7) substitute—

“(7) 30Subsection (2) does not apply in relation to a company for an
accounting period where the amount given by paragraph (1) of step
1 in section 269ZF(3) is not greater than nil.”

7 Omit section 269ZE (restriction on deductions from total profits: insurance
companies).

8 35After section 269ZF insert—

“269ZFA “Relevant profits”

(1) A company’s “relevant profits” for an accounting period are—

(a) the company’s qualifying profits for the accounting period,
less

(b) 40the company’s deductions allowance for the accounting
period (see section 269ZD(6)).

(2) A company’s “qualifying profits” for an accounting period are—

(a) the amount given by paragraph (1) of step 1 in section
269ZF(3) in determining the company’s qualifying trading
profits and qualifying non-trading profits for the accounting
5period, less

(b) the amount given by paragraph (1) of step 2 in section
269ZF(3) in determining those profits for the accounting
period.”

9 After section 269ZFA (as inserted by paragraph 8) insert—

10““Modifications for certain insurance companies

269ZFB Modifications for certain insurance companies

(1) This section has effect for determining the taxable total profits of a
company for an accounting period if the company—

(a) is an insurance company, and

(b) 15carries on basic life assurance and general annuity business
in the period.

(2)
A reference in section 269ZD(7) and section 269ZFA(2) to the amount
given by a paragraph of a step in section 269ZF(3) is to be read as a
reference to the amount that would be so given if—

(a) 20section 269ZF(4)(a) did not require income referable to a
company’s basic life assurance and general annuity business
to be ignored unless it falls within, and is dealt with under,
Part 9A of CTA 2009 by reason of an election under section
931R of that Act, and

(b) 25section 269ZF(4)(d) required only the policyholders’ share of
any I-E profit (as determined in accordance with section 103
of FA 2012) to be ignored.

(3) In this section—

• “basic life assurance and general annuity business” has the
  30meaning given by section 57 of FA 2012, and

• “insurance company” has the meaning given by section 65 of
  that Act.”

10 In section 269ZJ (exclusion of shock losses from restrictions) omit subsection
(4).

11 35In section 269ZQ (power to amend) in subsection (2)(b) for “124E” substitute
“124C”.

12 In section 269ZV (group allowance allocation statement: requirements and
effects) after subsection (5) insert—

“(5A) In its application in relation to a listed company that is the ultimate
40parent (see section 269ZZB(3)) of each other company in the group,
subsection (5) has effect as if after “the group” in paragraph (b) of the
definition of DAP there was inserted “and was not a member of any
other group”.”

13 In section 269CC (restrictions on deductions by banking companies:
45management expenses etc) in subsection (7) (how to determine “relevant
maximum”) in Step 1 for “269ZD(5)” substitute “269ZFA”.

14 In section 269CN (restrictions on deductions by banking companies:
definitions) in the definition of “relevant profits” for “269ZD(5)” substitute
“269ZFA”.

15 In section 304(7) (certain deductions in respect of losses made in a ring fence
5trade to be ignored for the purposes of the restriction on deductions from
trading profits) in paragraph (b) for “total” substitute “trade”.

16 FA 2012 is amended as follows.

17 In section 124 (carry forward of pre-1 April 2017 BLAGAB trade losses
against subsequent profits) in subsection (5) omit “(but see also section
10124D)”.

18 In section 124A (carry forward of post-1 April 2017 BLAGAB trade losses
against subsequent profits) in subsection (5) omit “(but see also section
124D)”.

19 In section 124C (further carry forward against subsequent profits of post-1
15April 2017 loss not fully used) in subsection (6) omit “(but see also section
124D)”.

20 Omit sections 124D and 124E (restriction on deductions from BLAGAB trade
profits).

Terminal losses: straddling periods

21 20For section 45G of CTA 2010 substitute—

“45G Section 45F: accounting period falling partly within 3 year period

(1) This section applies if—

(a) a company ceases to carry on a trade in an accounting period
(“the terminal period”), and

(b) 25a previous accounting period of the company (“the
straddling period”) falls partly within the period of 3 years
ending with the end of the terminal period.

(2) The sum of any deductions under section 45F from the profits of the
trade of the straddling period is not to exceed an amount equal to the
30overlapping proportion of those profits (calculated before making
those deductions).

(3) The sum of—

(a) any deductions under section 45F from the profits of the
trade of the straddling period, and

(b) 35any deductions under that section from the total profits of the
straddling period in respect of losses made in the trade,

must not exceed an amount equal to the overlapping proportion of
the total profits of the straddling period (calculated before making
those deductions).

(4) 40The overlapping proportion is the same as the proportion that the
part of the straddling period falling within the period of 3 years
mentioned in subsection (1)(b) bears to the whole of the straddling
period.”

Group relief for carried-forward losses

22 CTA 2010 is amended as follows.

23 In section 188BG(3) (types of loss that may not be surrendered by a Solvency
2 insurance company)—

(a) 5omit “or” at the end of paragraph (b), and

(b) after paragraph (c) insert “or

(d) a BLAGAB trade loss carried forward to the
surrender period under section 124A(2) or 124C(3) of
FA 2012,”.

24 (1) 10Section 188DD (claimant company’s relevant maximum for overlapping
period in case of claim under section 188CB) is amended as follows.

(2) In subsection (3)—

(a) for “relevant” (in both places) substitute “qualifying”, and

(b) for “section 269ZD(5)” (in both places) substitute “subsection (3A)”.

(3) 15After subsection (3) insert—

“(3A) The claimant company’s “qualifying profits” for the claim period
are—

(a) the amount given by paragraph (1) of step 1 in section
269ZF(3) in determining the company’s qualifying trading
20profits and qualifying non-trading profits for the period, less

(b) the amount given by paragraph (1) of step 2 in section
269ZF(3) in determining those profits for the period.”

25 (1) Section 188ED (claimant company’s relevant maximum for overlapping
period in case of claim under section 188CC) is amended as follows.

(2) 25In subsection (3)—

(a) for “relevant” (in both places) substitute “qualifying”, and

(b) for “section 269ZD(5)” (in both places) substitute “subsection (3A)”.

(3) After subsection (3) insert—

“(3A) The claimant company’s “qualifying profits” for the claim period
30are—

(a) the amount given by paragraph (1) of step 1 in section
269ZF(3) in determining the company’s qualifying trading
profits and qualifying non-trading profits for the period, less

(b) the amount given by paragraph (1) of step 2 in section
35269ZF(3) in determining those profits for the period.”

Transferred trades

26 CTA 2010 is amended as follows.

27 In section 357JI (Northern Ireland losses: transfers of trade without a change
of ownership) in subsection (2) for the words from the beginning to “that
40section” substitute “Sections 943A to 944C (which modify the application of
Chapter 2 of Part 4) have effect as if the references in those sections”.

28 In section 676 (disallowance of trading loss on change in ownership of
company: company reconstructions)—

(a) in subsection (2) for the words from “section 944(3)” to “successor
company)” substitute “Chapter 1 of Part 22”,

(b) in subsection (4)(a) after “45” insert “, 45A, 45B, 303B, 303C or 303D”,
and

(c) 5in subsection (4)(b) for “944(3)” substitute “Chapter 1 of Part 22”.

29 In section 676AF (restriction on use of carried-forward post-1 April 2017
trade losses)—

(a) the existing provision becomes subsection (1), and

(b) after that subsection insert—

“(2) 10A loss made by another company (“the predecessor
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 provisions mentioned in
15paragraphs (a) to (c) of subsection (1) (as applied by virtue of
Chapter 1 of Part 22 (transfers of trades)).”

30 In section 676BC (disallowance of relief for trade losses)—

(a) in subsection (1) omit “by the company”,

(b) in subsection (4), in the words before paragraph (a), after “made”
20insert “by the company”, and

(c) after subsection (4) insert—

“(5) A loss made by another company (“the predecessor
company”) in an accounting period beginning before the
change in ownership may not be deducted as a result of
25section 45A, 45F or 303C (as applied by Chapter 1 of Part 22
(transfers of trades)) from so much of the total profits of an
accounting period of the company ending after the change in
ownership as represents the relevant gain.”

Deduction buying

31 (1) 30In section 730C of CTA 2010 (disallowance of deductible amounts: relevant
claims)—

(a) in subsection (2) omit paragraph (aa), and

(b) in subsection (3A) for “paragraphs (a) to (e)” substitute “paragraph
(a) or (b)”.

(2) 35In Schedule 4 to F(No.2)A 2017 (relief for carried-forward losses) omit
paragraph 172.

Commencement

32 (1) The amendments made by this Schedule have effect in relation to accounting
periods beginning on or after the relevant date (see subparagraph (3)).

(2) 40For the purposes of the amendments made by this Schedule, where a
company has an accounting period beginning before the relevant date and
ending on or after that date (“the straddling period”)—

(a) so much of the straddling period as falls before the relevant date, and
so much of that period as falls on or after that date, are to be treated
45as separate accounting periods, and

(b) where it is necessary to apportion an amount for the straddling
period to the two separate accounting period, it is to be
apportioned—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) 5if that method would produce a result that is unjust or
unreasonable, on a just and reasonable basis.

(3) The “relevant date” is—

(a) 1 April 2017, in relation to the amendments made by paragraphs 24
and 25 of this Schedule,

(b) 106 July 2018, in relation to the amendments made by paragraphs 1 to
11, 13 and 14 and 16 to 20 of this Schedule, and

(c) 1 April 2019, in relation to the other amendments made by this
Schedule.

Section 27

SCHEDULE 10 15Corporate interest restriction

Introductory

1 Part 10 of TIOPA 2010 (corporate interest restriction) is amended as follows.

Tax-interest amounts: amounts capitalised in intangible fixed assets

2 In Chapter 3 (tax-interest amounts), after section 391 insert—

“391A 20 Amounts capitalised in carrying value of intangible fixed assets

In determining for the purposes of this Part whether an amount is a
tax-interest expense amount or tax-interest income amount, section
906(1) of CTA 2009 (priority of intangible fixed asset rules) does not
apply in respect of any matter which may be brought into account in
25accordance with Part 5 or 7 of that Act.”

Carry forward of interest allowance: new holding company

3 After section 395 insert—

“395A Carry forward of interest allowance: new holding company

(1) This section applies if—

(a) 30a company (“C”) ceases to be the ultimate parent of a
worldwide group (“the old group”) because of a qualifying
takeover, and

(b) another company (“N”) becomes the ultimate parent of a
worldwide group (“the new group”) as a result of the
35takeover.

(2) For this purpose there is a qualifying takeover if there is a change in
the ownership of C which is disregarded for the purposes of
Chapters 2 to 6 of Part 14 of CTA 2010 as a result of section 724A of
that Act where—

(a) 40C is the other company referred to as C in that section, and

(b) N is the new company referred to as N in that section.

(3) For the purposes of this Chapter, the interest allowance of the new
group is determined as if periods of account of the old group which
ended before the beginning of the first period of account of the new
5group were periods of account of the new group.”

Carry forward of excess debt cap: new holding company

4 After section 400 insert—

“400A Carry forward of excess debt cap: new holding company

(1) This section applies if—

(a) 10a company (“C”) ceases to be the ultimate parent of a
worldwide group (“the old group”) because of a qualifying
takeover, and

(b) another company (“N”) becomes the ultimate parent of a
worldwide group (“the new group”) as a result of the
15takeover.

(2) For this purpose there is a qualifying takeover if there is a change in
the ownership of C which is disregarded for the purposes of
Chapters 2 to 6 of Part 14 of CTA 2010 as a result of section 724A of
that Act where—

(a) 20C is the other company referred to as C in that section, and

(b) N is the new company referred to as N in that section.

(3) In determining in accordance with section 400 the group’s fixed ratio
debt cap or group ratio debt cap for its first period of account, its
excess debt cap generated in the immediately preceding period of
25account is taken to be that of the old group for the period of account
of the old group ending immediately before the qualifying
takeover.”

Adjusted net group-interest expense: capitalised interest

5 Section 410 (net group-interest expense), after subsection (5) insert—

“(5A) 30If, on the assumption that subsections (3) and (5) applied to relevant
assets, an amount would, in accordance with subsection (3) or (5),
have been treated as included in A or B in subsection (1)—

(a) as an amount attributable to the capitalised expense, or

(b) as an amount attributable to the capitalised income,

35none of that amount is to be included in A or B in that subsection.”

6 (1) Section 413 (adjusted net group-interest expense) is amended as follows.

(2) In subsection (3)—

(a) in paragraph (a), for “an asset or liability” substitute “a non-financial
asset or non-financial liability”, and

(b) 40in paragraph (b), after “an amount that” insert “, in the case of a non-
financial asset,”.

(3) In subsection (4)—

(a) in paragraph (a), for “an asset or liability” substitute “a non-financial
asset or non-financial liability”, and

(b) in paragraph (b), after “an amount that” insert “, in the case of a non-
financial asset,”.

(4) 5For subsection (5) substitute—

“(5) For the purposes of subsections (3)(a) and (b) and (4)(a) and (b)—

(a) an asset is a “non-financial asset” if it is not a financial asset
for accounting purposes or it is a share in a company,

(b) a liability is a “non-financial liability” if it is not a financial
10liability for accounting purposes or it is in respect of a share
issued by a company, and

(c) references to amounts brought into account in determining
the carrying value of a non-financial asset or non-financial
liability do not include amounts so brought into account as a
15result of writing off any part of an amount which was itself so
brought into account;

and in paragraphs (a) and (b) “share” has the meaning given by
section 476(1) of CTA 2009.”

7 (1) Section 423 (capitalised interest brought into account for tax purposes in
20accordance with GAAP) is amended as follows.

(2) After subsection (2) insert—

“(2A) Section 413 has effect, in the case of a GAAP-taxable asset that is a
relevant asset, as if—

(a) the definition of “upward adjustment” included so much of
25its carrying value written down in the group’s financial
statements for the relevant period of account as is attributable
to a relevant expense amount brought into account in the
group’s financial statements in determining its carrying
value, and

(b) 30the definition of “downward adjustment” included so much
of the reduction of its carrying value written down in the
group’s financial statements for the relevant period of
account as is attributable to a relevant income amount
brought into account in the group’s financial statements in
35determining its carrying value.

(2B) For the purposes of subsection (2A) it does not matter whether the
relevant expense or income amount is brought into account in
determining the asset’s carrying value in the group’s financial
statements for the relevant period of account or an earlier period.”

(3) 40In subsection (3), for “But subsection (2)(b) of this section is of no effect
where” substitute “But subsections (2)(b) and (2A) of this section are of no
effect so far as”.

(4) In subsection (4), at the end insert “(and, for the purposes of this subsection,
an asset is a GAAP-taxable asset even if an election under section 730 of CTA
452009 is, or could be, made in respect of it)”.