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

(3) But the power to amend the TTH election under this paragraph may only be
exercised if, at the time the election was approved (see paragraphs 61 and
62), an officer of Revenue and Customs could not have been reasonably
expected, on the basis of the information made available to the officer before
5that time, to be aware that the amount stated was incorrect.

(4) An amendment under this paragraph may not be made more than 12
months after information that, in the opinion of an officer of Revenue and
Customs, justifies the correction of the TTH election, comes to the officer’s
attention.

(5) 10An amendment under this paragraph is to be ignored for the purposes of the
application of Part 3 of this Schedule (effect of a TTH election on the seller).

(6) If, on or after the licence transfer date, the seller’s total profits for a pre-
transfer accounting period are reduced, the statement of the total profits (or
a statement of an amount determined by reference to the total profits) is not
15to be regarded as incorrect for the purposes of this paragraph (but see
paragraph 18).

(7) See paragraph 94 for provision about appeals against a decision under this
paragraph.

75 (1) This paragraph applies if, before the correction under paragraph 74 is made,
20an activated transferred profits amount for a pre-acquisition accounting
period has been applied in accordance with paragraph 25(2)(b) or (3)(b).

(2) An amendment made under paragraph 74(2) may not—

(a) reduce the transferred profits amount for that pre-acquisition
accounting period to an amount which is less than the amount that
25has been applied, in respect of loss periods ending before the
determination is made, in accordance with paragraph 25 for the pre-
acquisition accounting period, or

(b) reduce the total TTH amount to an amount which is less than the
total of the amounts that have been applied in accordance with
30paragraph 25 in respect of loss periods ending before the
determination is made.

Part 12 Chargeable gains

Transferred tax history is not to be regarded as an asset

76 35Where the seller and the purchaser jointly make a TTH election in respect of
the TTH asset, the transfer of tax history is not to be treated as—

(a) the disposal or acquisition of an asset for the purposes of TCGA 1992,
or

(b) the disposal or acquisition of an intangible fixed asset for the
40purposes of Part 8 of CTA 2009.

Consideration for transferred tax history to be treated as consideration for the licence interest

77 The amount or value of any consideration for the transfer of tax history is to
be treated as part of the consideration for the licence interest for the
purposes of—

(a) computing the chargeable gain or allowable loss accruing on the
disposal (or on any subsequent disposal) of the licence interest (see
section 8 of TCGA 1992), and

(b) computing the disposal value of the licence interest, on its disposal,
5for the purposes of Part 5 of CAA 2001 (mineral extraction
allowances).

Market value of the licence interest: value of transferred tax history to be taken into account

78 Any value attributable to the transfer of tax history is to be taken into
account in determining the market value of the licence interest for the
10purposes of—

(a) section 17 of TCGA 1992 (disposals and acquisitions treated as being
made at market value);

(b) Part 5 of CAA 2001, if the disposal value of the licence interest for the
purposes of that Part is the market value of the licence interest at the
15time of that disposal (see section 423 of CAA 2001).

Licence swaps: references to disposal include references to transfer of tax history

79 For the purposes of the application of sections 195A to 196 of TCGA 1992 (oil
licence swaps) in relation to the disposal of the licence interest by the seller
to the purchaser, references in those sections to the disposal are treated as
20including references to the transfer of tax history.

Interpretation of this Part

80 (1) References in this Part to “the transfer of tax history” are references to—

(a) the seller, in consequence of the TTH election, ceasing to be entitled
to take the transferred profits for an accounting period into account
25for certain corporation tax purposes in the circumstances specified in
Part 3 of this Schedule, and

(b) the purchaser, in consequence of the TTH election, acquiring an
entitlement, in the circumstances specified in Part 4 of this Schedule,
to apply an amount of the transferred profits for the purposes of the
30trade loss relief provisions and to a corresponding repayment of
supplementary charge.

(2) References in this Part to “the licence interest” are references to the interest
in a UK oil licence referred to in paragraph 1.

Part 13 35Onward sale

Application of paragraphs 83 to 90

81 This Part applies if—

(a) the purchaser (referred to in this Part as “the first purchaser”) and the
seller jointly make a TTH election (the “first TTH election”) in respect
40of an interest (the “first TTH asset”) in the TTH oil field,

(b) the first purchaser subsequently sells to another company (“the
second purchaser”) an interest in a UK oil licence which applies to
the area which includes the TTH oil field, and

(c) the first purchaser and the second purchaser jointly make a TTH
election (the “subsequent TTH election”) in respect of an interest (the
“subsequent TTH asset”) in the TTH oil field.

82 (1) Sub-paragraph (2) applies if—

(a) 5the first purchaser has an interest in the UK oil licence referred to in
paragraph 1, in addition to the interest in that licence acquired from
the seller, and

(b) the UK oil licence referred to in paragraph 81(b) is the same UK oil
licence referred to in paragraph 1.

(2) 10Interests in the licence acquired later by the first purchaser are treated, for
the purposes of this Part, as being transferred to the second purchaser before
interests in the licence acquired earlier by the first purchaser.

Original TTH amount treated as eligible ring fence profits

83 (1) This Schedule applies, for the purposes of the subsequent TTH election, as if
15the original TTH amount for all relevant accounting periods were an amount
of the first purchaser’s eligible ring fence profits for that period.

(2) Sub-paragraph (1) is subject to paragraphs 85 to 88.

(3) In this Part of this Schedule, “relevant accounting period” means a pre-
acquisition accounting period of the first purchaser for which there is,
20immediately before the effective date of the subsequent TTH election, an
unused transferred profits amount.

(4) In this Part of this Schedule, references to the “original TTH amount” mean,
in relation to a relevant accounting period—

(a) the unused transferred profits amount for that period, or

(b) 25if the first TTH asset is not the same as the subsequent TTH asset, the
relevant proportion of that amount for that period.

(5) For the purposes of sub-paragraph (4)(b), the “relevant proportion” is the
proportion that the subsequent TTH asset bears to the first TTH asset or, if
the proportion cannot reasonably be determined on that basis, such other
30proportion determined on a just and reasonable basis.

(6) In this paragraph, references to the unused transferred profits amount for an
accounting period are references to—

(a) the transferred profits amount, in relation to the first TTH election,
for that period, less

(b) 35the total of the amounts applied for that period in accordance with
paragraph 25, for the purposes of the application of that paragraph
in relation to a loss period of the first purchaser.

84 The original TTH amount for each relevant accounting period ceases to be
treated, for the purposes of the first TTH election, as a transferred profits
40amount for that period in relation to the first purchaser.

Original TTH amount transferred before eligible ring fence profits (subject to opt-out)

85 (1) Paragraphs 86 and 87 apply in relation to the subsequent TTH election,
subject to sub-paragraph (2).

(2) The first purchaser and the second purchaser may elect, at the time the TTH
election is made, that neither paragraph 86 nor paragraph 87 applies in
relation to the subsequent TTH election.

86 (1) The total TTH amount may not include an amount representing the first
5purchaser’s eligible ring fence profits for an accounting period unless it also
includes an amount representing, in respect of each relevant accounting
period, the original TTH amount for that period.

(2) Paragraph 11 (consecutive accounting periods) does not apply in relation to
an amount representing an original TTH amount for a relevant accounting
10period (but see sub-paragraph (3)).

(3) The total TTH amount may not include an amount representing the original
TTH amount for a particular accounting period unless it also includes an
amount representing the original TTH amount for the next following
relevant accounting period.

(4) 15If the original TTH amount exceeds the total TTH amount, the transferred
profits amount for the earliest relevant accounting period must be an
amount equal to—

(a) the total TTH amount, less

(b) the transferred profits amount for later relevant accounting periods.

(5) 20For the purposes of paragraph 12 (the transferred profits amount)—

(a) references to the “earliest period” are to be treated as references to
the earliest accounting period for which there is a transferred profits
amount by reason of the first purchaser’s eligible ring fence profits
for that period (and not by reason of an original TTH amount for that
25period), and

(b) the reference in sub-paragraph (2) to the TTH balance for the earliest
period is to be treated as a reference to the TTH balance less the
transferred profits amounts for each relevant accounting period.

87 In the application of this Schedule for the purposes of the subsequent TTH
30election—

(a) in sub-paragraph (2) of paragraph 30 (TTH activation event), the
reference to an allowance or allocation made to the purchaser
includes a reference to the relevant proportion (within the meaning
of paragraph 83(5)) of an allowance or allocation made to the first
35purchaser;

(b) in paragraph 30(2)(b) and (3)(b), and in paragraph 31
(decommissioning expenditure amount), references to a post-
acquisition accounting period of the purchaser include references to
a post-acquisition accounting period of the first purchaser;

(c) 40in paragraph 30(3) as it applies in relation to post-acquisition
accounting periods of the first purchaser, the reference to amounts
attributable to the TTH asset is to be treated as a reference to the
relevant proportion (within the meaning of paragraph 83(5)) of those
amounts;

(d) 45in paragraph 30(5) as it applies for the purposes of determining the
total decommissioning expenditure amount in relation to a post-
acquisition accounting period of the first purchaser, the reference to
the purchaser is to be treated as a reference to the first purchaser;

(e) references in this Schedule to a pre-acquisition accounting period of
the purchaser include references to a pre-acquisition accounting
period of the first purchaser;

(f) references in paragraphs 83 to 86 and 89 to an amount of the first
5purchaser’s eligible ring fence profits do not includes references to
an original TTH amount.

Opt-out under paragraph 85(2): further provision about the application of this Schedule

88 (1) This paragraph applies if—

(a) the first purchaser and the second purchaser make an election under
10paragraph 85(2) (disapplication of paragraphs 86 and 87), and

(b) in relation to the subsequent TTH election, the total TTH amount
exceeds the total amount of the first purchaser’s eligible ring fence
profits for—

(i) the accounting period which is, at the licence transfer date in
15relation to the subsequent TTH election, the first purchaser’s
most recent qualifying accounting period in respect of which
the amendment period has ended, and

(ii) each earlier accounting period which is, in relation to the first
TTH election, a post-acquisition accounting period of the first
20purchaser.

(2) In the application of this Schedule for the purposes of the subsequent TTH
election—

(a) in sub-paragraph (2) of paragraph 30 (TTH activation event), the
reference to an allowance or allocation made to the purchaser
25includes a reference to the relevant proportion (within the meaning
of paragraph 83(5)) of an allowance or allocation made to the first
purchaser;

(b) in paragraph 30(2)(b) and (3)(b), and in paragraph 31
(decommissioning expenditure amount), references to a post-
30acquisition accounting period of the purchaser include references to
the accounting periods of the first purchaser mentioned in sub-
paragraph (1)(b)(i) and (ii);

(c) in paragraph 30(3) as it applies in relation to the accounting periods
of the first purchaser mentioned in sub-paragraph (1)(b)(i) and (ii),
35the reference to amounts attributable to the TTH asset is to be treated
as a reference to the relevant proportion (within the meaning of
paragraph 83(5)) of those amounts;

(d) in paragraph 30(5) as it applies for the purposes of determining the
total decommissioning expenditure amount in relation to an
40accounting period of the first purchaser mentioned in sub-paragraph
(1)(b)(i) or (ii), the reference to the purchaser is to be treated as a
reference to the first purchaser;

(e) in paragraph 83 and in sub-paragraph (1)(b) of this paragraph,
references to an amount of the first purchaser’s eligible ring fence
45profits do not include references to an original TTH amount.

Supplementary charge: treatment of transferred adjusted ring fence profits

89 (1) The provisions of this Schedule apply, for the purposes of the subsequent
TTH election, as if—

(a) the transferred adjusted ring fence profits amount for each relevant
accounting period, or

(b) if the first TTH asset is not the same as the subsequent TTH asset, the
relevant proportion of that amount for that period,

5were an amount of the first purchaser’s eligible adjusted ring fence profits
for that period.

(2) For the purposes of sub-paragraph (1)(b), “the relevant proportion” means
the proportion that the subsequent TTH asset bears to the first TTH asset or,
if the proportion cannot reasonably be determined on that basis, such other
10proportion determined on a just and reasonable basis.

Tracking

90 (1) This paragraph applies if, after the effective date of the subsequent TTH
election, the first purchaser continues to be liable for the decommissioning
costs, or for a proportion of the decommissioning costs, for the subsequent
15TTH asset.

(2) In the application of this Schedule for the purposes of the subsequent TTH
election, references to the “purchaser” in paragraph 65 are to be treated, in
respect of the period beginning with the effective date of the subsequent
TTH election, as including references to the second purchaser.

20Sale by the second purchaser or subsequent sale

91 In the case of a sale by the second purchaser, or a subsequent sale, of an
interest within paragraph 81(c) in respect of which the parties make a TTH
election—

(a) references in paragraph 86 to the original TTH amount are references
25to the original TTH amount in relation to each election,

(b) amounts in relation to earlier elections are to be applied for the
purposes of paragraph 86(1) and (3) before amounts in relation to
later elections,

(c) the provisions of paragraph 87 apply in relation to the second
30purchaser, and each subsequent purchaser, as they apply in relation
to the first purchaser, and

(d) in paragraph 90—

(i) the reference to the first purchaser in sub-paragraph (1) is
treated as including a reference to the second purchaser, or a
35subsequent purchaser, and

(ii) sub-paragraph (2) applies in relation to each subsequent
purchaser as it applies in relation to the second purchaser.

Part 14 Supplementary

40Multiple interests in the same oil field

92 (1) This paragraph applies if—

(a) interests in more than one UK oil licence are sold by the seller to the
purchaser at the same time, and

(b) the seller and the purchaser would be entitled to jointly make a TTH
election in respect of more than one interest in the same oil field that
falls within both licensed areas.

(2) The seller and purchaser may jointly make a TTH election in respect of all
5interests in the oil field.

(3) If an election is made in accordance with this paragraph, the interests
mentioned in sub-paragraph (2) are to be treated as a single interest for the
purposes of this Schedule (and references in this Schedule to “the TTH asset”
are to be construed accordingly).

10Multiple TTH elections

93 (1) This paragraph applies if, in a loss period, more than one TTH election in
respect of the TTH asset has effect in relation to the purchaser.

(2) For the purposes of paragraph 44 (allocation of activated TTH to an
accounting period)—

(a) 15references to the unused transferred profits amount for an
accounting period are to be treated as references to the total of the
unused transferred profits amounts for that period in respect of each
of the TTH elections, and

(b) the amount in respect of a later TTH election is to be allocated to an
20accounting period before the amount which is subject to an earlier
TTH election.

Appeals

94 (1) A person may appeal against—

(a) a decision that a penalty under paragraph 68 is payable by that
25person;

(b) a decision to withdraw a TTH election under paragraph 72;

(c) a decision to amend a TTH election under paragraph 74 (amounts
discovered to be incorrect).

(2) Notice of an appeal must be given—

(a) 30in writing,

(b) before the end of the period of 30 days beginning with the date on
which notice of the decision is given, and

(c) to an officer of Revenue and Customs.

(3) Notice of an appeal must state the grounds of appeal.

(4) 35On an appeal that is notified to the tribunal, the tribunal may—

(a) confirm or cancel the decision, or

(b) in the case of an appeal within sub-paragraph (1)(c), substitute for
the decision another decision that an officer of Revenue and Customs
had power to make.

(5) 40If a decision under paragraph 72 (withdrawal) is cancelled, the TTH election
is to be treated as having had continuing effect (subject to any further
appeal).

(6) Subject to this paragraph and (in the case of an appeal within sub-paragraph
(1)(a)) paragraph 70, the provisions of Part 5 of TMA 1970 relating to appeals

have effect in relation to appeals under this paragraph as they have effect in
relation to appeals against an assessment to corporation tax.

Anti-avoidance

95 (1) If a person enters into arrangements within sub-paragraph (2), an officer of
5Revenue and Customs may—

(a) amend a TTH election, or

(b) amend or disallow a claim,

to secure that the election or claim has effect as if the arrangements had not
been entered into.

(2) 10Arrangements are within this sub-paragraph if it is reasonable to regard the
arrangements as—

(a) designed to secure that an entitlement to a repayment, or an
increased repayment, of tax by reason of the application of any
provision of this Schedule, arises earlier than would (apart from the
15arrangements) be the case,

(b) circumventing the intended limits of the provisions of this Schedule
on an amount that is relevant for the purposes of determining a
repayment of tax by reference to those provisions, or

(c) otherwise exploiting shortcomings in those provisions.

(3) 20In this paragraph, “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).

96 (1) If relief is given to a person under the trade loss relief provisions by reference
to an amount of the seller’s ring fence profits which (by reason of the
25application of the provisions of this Schedule) is treated as if it were an
amount of the purchaser’s profits, no relief may be given to any other person
by reference to the same amount.

(2) If a repayment of supplementary charge is made to a person by reference to
an amount of the seller’s adjusted ring fence profits which (by reason of the
30application of the provisions of this Schedule) is treated as if it were an
amount of the purchaser’s adjusted ring fence profits, no repayment may be
made to any other person by reference to the same amount.

Part 15 Interpretation

35Introductory

97 The following definitions apply for the purposes of this Schedule.

98 Expressions used in this Schedule that are defined for the purposes of Part 8
of CTA 2010 (oil activities) have the same meaning in this Schedule as in Part
8 of that Act.

40“UK oil licence”

99 “UK oil licence” means a licence granted under—

(a) Part 1 of the Petroleum Act 1998, or

(b) the Petroleum (Production) Act (Northern Ireland) 1964 (c.28 (N.I.)).

“Licensed area” and “transferred oil field”

100 In this Schedule—

(a) references to the “licensed area” are references to the area to which
5the UK oil licence mentioned in paragraph 1 applies, and

(b) references to a “transferred oil field” are references to an oil field, or
such part of an oil field, that falls within the licensed area.

“Licence transfer date”

101 “Licence transfer date”, in relation to a TTH election, means the date of
10completion of the sale of the TTH asset in respect of which the election is
made.

The seller’s “reference accounting period”

102 (1) The seller’s “reference accounting period” is the accounting period which is,
at the licence transfer date, the seller’s most recent qualifying accounting
15period in respect of which the amendment period has ended.

(2) The “amendment period”, in relation to an accounting period, is 12 months
beginning with the filing date for the company tax return for the accounting
period.

(3) In this paragraph “filing date” has the same meaning as in Schedule 18 to FA
201998 (see paragraph 14 of that Schedule).

The purchaser’s “reference accounting period”

103 (1) The “purchaser’s reference accounting period” means—

(a) an accounting period of the purchaser that begins with the same date
as, and ends with the same date as, the seller’s reference accounting
25period, or

(b) if no accounting period of the purchaser falls within paragraph (a),
the earliest accounting period of the purchaser that overlaps with the
seller’s reference accounting period.

(2) See paragraph 106 for provision about accounting periods before the
30purchaser comes within the charge to corporation tax.

The seller’s “pre-transfer accounting periods”

104 Each of the following is a “pre-transfer accounting period” of the seller—

(a) the reference accounting period (see paragraph 102), and

(b) each preceding accounting period.

35The purchaser’s “pre-acquisition accounting periods” and “post-acquisition accounting
periods”

105 (1) Each of the following is a “pre-acquisition accounting period” of the
purchaser—

(a) the purchaser’s reference accounting period, and

(b) 40each preceding accounting period.

(2) Each of the following is a “post-acquisition accounting period” of the
purchaser—

(a) the first accounting period after the purchaser’s reference accounting
period,

(b) 5each subsequent accounting period, and

(c) each period which is a notional accounting period for the purposes
of section 165 or section 416ZA of CAA 2001.

(3) See paragraph 106 for provision about accounting periods before the
purchaser comes within the charge to corporation tax.

10Accounting periods before the purchaser comes within the charge to corporation tax

106 (1) This paragraph applies if the date on which the purchaser comes within the
charge to corporation tax falls after the end of the seller’s reference
accounting period.

(2) The provisions of this Schedule have effect as if the purchaser had—

(a) 15an accounting period of 12 months ending on the day before the
purchaser comes within the charge to corporation tax, and

(b) successive accounting periods of 12 months in the preceding period.

“Transferred profits amount” and “activated transferred profits amount”

107 (1) References to the “transferred profits amount” for an accounting period of
20the seller are references to the amount representing the seller’s ring fence
profits for that period which forms part of the total TTH amount.

(2) See paragraph 45 for provision about references to the “transferred profits
amount” for a pre-acquisition accounting period of the purchaser.

(3) See paragraph 25(4) for provision about the meaning of “activated
25transferred profits amount”.

“Trade loss relief provisions”

108 “Trade loss relief provisions” means 37 to 44 of CTA 2010 (trade losses: carry
back relief etc).

Section 38

SCHEDULE 15 30Entrepreneurs’ relief

Periods throughout which conditions for relief must be met

1 (1) Chapter 3 of Part 5 of TCGA 1992 (transfer of business assets: entrepreneurs’
relief) is amended as follows.

(2) In section 169I (material disposal of business assets)—

(a) 35in subsections (3), (6) and (7A)(b) and (c), for “1 year” substitute “2
years”,

(b) in subsection (4)(a), for “1 year” substitute “2 years”,