Notices of Amendments: 3 January 2019                  

28

Finance (No. 3) Bill, continued

879L  

Meaning of relevant business and third party acquisition

(1)    

This section applies for the purposes of section 879K(3).

(2)    

“Relevant business” means—

(a)    

in a case where the relevant asset is within paragraph (e) of

subsection (2) of section 879A, the business or (as the case

may be) the part of the business mentioned in the paragraph of

that subsection within which the licensed asset falls, and

(b)    

in any other case, the business or (as the case may be) the part

of the business mentioned in the paragraph of that subsection

within which the relevant asset falls.

(3)    

The transferor acquires something in a “third party acquisition” if—

(a)    

the transferor acquires it from a company (“C”) and, at the

time of that acquisition—

(i)    

if the transferor is an individual, the transferor is not

a related party in relation to C, or

(ii)    

if the transferor is a firm, no individual who is a

member of the transferor is a related party in relation

to C, or

(b)    

the transferor acquires it from a person (“P”) who is not a

company and, at the time of that acquisition—

(i)    

if the transferor is an individual, P is not connected

with the transferor, or

(ii)    

if the transferor is a firm, no individual who is a

member of the transferor is connected with P.

(4)    

But an acquisition is not a “third party acquisition” if—

(a)    

its main purpose, or one of its main purposes, is for any person

to obtain a tax advantage (within the meaning of section 1139

of CTA 2010), or

(b)    

it occurs during the period beginning with 8 July 2015 and

ending with 31 March 2019.

(5)    

In this section “connected” has the same meaning as in Chapter 12 (see

section 842).

Partial restrictions on debits

879M  

When the partial restrictions apply: qualifying IP assets

(1)    

Section 879O (the partial restrictions on debits) applies in respect of a

relevant asset (“the asset concerned”) of a company if—

(a)    

the company acquires the asset concerned on or after 1 April

2019 as part of the acquisition of a business,

(b)    

the company also acquires qualifying IP assets as part of the

acquisition of the business for use on a continuing basis in the

course of the business, and

(c)    

the amount in subsection (3) is less than 1.

(2)    

But section 879O does not apply in respect of the asset concerned if

either of the following sections applies in respect of it—

(a)    

section 879C (restrictions on debits: pre-FA 2019 relevant

assets);

Notices of Amendments: 3 January 2019                  

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Finance (No. 3) Bill, continued

(b)    

section 879K (restrictions on debits: acquisition from

individual or firm).

(3)    

The amount is—

where—

A is the expenditure incurred by the company for or in

connection with the acquisition of the qualifying IP assets

mentioned in subsection (1)(b),

B is the expenditure incurred by the company for or in

connection with the acquisition of the asset concerned and any

other relevant assets acquired with the business, and

N is 6.

(4)    

The Treasury may by regulations amend the meaning of N.

(5)    

In this section—

“expenditure” means expenditure that is—

(a)    

capitalised for accounting purposes, or

(b)    

recognised in determining the profit or loss of the

company concerned without being capitalised for

accounting purposes,

subject to any adjustments under this Part or Part 4 of TIOPA

2010;

“qualifying IP asset” has the same meaning as in section 879I

(see section 879J).

879N  

When the partial restrictions apply: acquisition from individual or

firm

(1)    

Section 879O (the partial restrictions on debits) also applies in respect

of a relevant asset of a company if—

(a)    

the company acquires the asset on or after 1 April 2019

directly or indirectly from an individual or firm (“the

transferor”),

(b)    

the related party condition is met,

(c)    

the third party acquisition condition is met, and

(d)    

the amount in subsection (6) is less than 1.

(2)    

But section 879O does not apply in respect of the relevant asset if

either of the following sections applies in respect of it—

(a)    

section 879C (restrictions on debits: pre-FA 2019 relevant

assets);

(b)    

section 879I (restrictions on debits: no business or no

qualifying IP assets acquired).

(3)    

The related party condition is met if—

(a)    

in a case where the transferor is an individual, the transferor is

a related party in relation to the company at the time of the

acquisition;

Notices of Amendments: 3 January 2019                  

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Finance (No. 3) Bill, continued

(b)    

in a case where the transferor is a firm, any individual who is

a member of the transferor is a related party in relation to the

company at that time.

(4)    

The third party acquisition condition is met if—

(a)    

in a case where the relevant asset is goodwill—

(i)    

the transferor acquired all or part of the relevant

business in one or more third party acquisitions as

part of which the transferor acquired goodwill, and

(ii)    

the relevant asset is acquired by the company as part

of an acquisition of all the relevant business;

(b)    

in a case where the relevant asset is not goodwill—

(i)    

the transferor acquired the relevant asset in a third

party acquisition, and

(ii)    

the relevant asset is acquired by the company as part

of an acquisition of all the relevant business.

(5)    

Section 879L (meaning of relevant business and third party

acquisition) applies for the purposes of this section.

(6)    

The amount is—

where—

A is the relevant accounting value of third party acquisitions (see

subsections (7) to (9)), and

B is the expenditure incurred by the company for or in

connection with the acquisition of the relevant asset that is—

(a)    

capitalised by the company for accounting purposes,

or

(b)    

recognised in determining the company’s profit or

loss without being capitalised for accounting

purposes,

subject to any adjustments under this Part or Part 4 of TIOPA

2010.

(7)    

In a case in which the relevant asset is goodwill, the relevant

accounting value of third party acquisitions is the notional accounting

value of the goodwill mentioned in subsection (4)(a)(i) (“the

previously acquired goodwill”).

(8)    

In a case in which the relevant asset is not goodwill, the relevant

accounting value of third party acquisitions is the notional accounting

value of the relevant asset.

(9)    

The “notional accounting value” of the previously acquired goodwill,

or the relevant asset, is what its accounting value would have been in

GAAP-compliant accounts drawn up by the transferor—

(a)    

immediately before the relevant asset was acquired by the

company, and

(b)    

on the basis that the relevant business was a going concern.

Notices of Amendments: 3 January 2019                  

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Finance (No. 3) Bill, continued

879O  

The partial restrictions on debits

(1)    

Where this section applies in respect of a relevant asset of a company,

the following restrictions have effect.

(2)    

If a debit in respect of the relevant asset is to be brought into account

by the company for tax purposes under a provision of Chapter 3 (debits

in respect of intangible fixed assets) or Chapter 15 (adjustments on

change of accounting policy), the amount of that debit is—

where—

D is the amount of the debit that would be brought into account

disregarding this section (and, accordingly, for the purposes

of any calculation of the tax written-down value of the

relevant asset needed to determine D, this section’s effect in

relation to any debits previously brought into account is to be

disregarded), and

RA is the relevant amount (see subsection (6)).

(3)    

If, but for this section, a debit in respect of any of the relevant assets

would be brought into account by the company for tax purposes under

a provision of Chapter 4 (realisation of intangible fixed assets), the

following two debits are to be brought into account under that

provision instead—

(a)    

a debit determined in accordance with subsection (4), and

(b)    

a debit determined in accordance with subsection (5), which

is to be treated for the purposes of Chapter 6 as a non-trading

debit (“the non-trading debit”).

(4)    

The amount of the debit determined in accordance with this subsection

is—

where—

D is the amount of the debit that would be brought into account

under Chapter 4 disregarding this section (and, accordingly,

for the purposes of any calculation of the tax written down

value of the relevant asset needed to determine D, this

section’s effect in relation to any debits previously brought

into account is to be disregarded), and

RA is the relevant amount (see subsection (6)).

Notices of Amendments: 3 January 2019                  

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Finance (No. 3) Bill, continued

(5)    

The amount of the non-trading debit is—

where—

D is the amount of the debit that would be brought into account

under Chapter 4 disregarding this section (but, for the

purposes of any calculation of the tax written-down value of

the relevant asset needed to determine D, this section’s effect

in relation to any debits previously brought into account is not

to be disregarded), and

TD is the amount of the debit determined in accordance with

subsection (4).

(6)    

In this section the “relevant amount” means—

(a)    

in a case where this section applies in respect of the relevant

asset by reason only of section 879M, the amount in

subsection (3) of that section;

(b)    

in a case where this section applies in respect of the relevant

asset by reason only of section 879N, the amount in

subsection (6) of that section;

(c)    

in a case where this section applies in respect of the relevant

asset by reason of both section 879M and 879N, the amount

found by multiplying the amount in subsection (3) of section

879M by the amount in subsection (6) of section 879N.

Supplementary

879P  

Date of acquisition of relevant asset

(11)    

A company that acquires a relevant asset in pursuance of an

unconditional obligation under a contract is to be treated for the

purposes of this Chapter as having acquired the asset on the date on

which the company became subject to that obligation or (if later) the

date on which that obligation became unconditional.

(2)    

An obligation is unconditional if it may not be varied or extinguished

by the exercise of a right (whether under contract or otherwise).”

7    (1)  

The amendments made by this Schedule have effect in relation to accounting

periods beginning on or after 1 April 2019.

      (2)  

For the purposes of sub-paragraph (1), an accounting period beginning before,

and ending on or after, 1 April 2019 is to be treated as if so much of the

accounting period as falls before that date, and so much of the accounting

period as falls on or after that date, were separate accounting periods.”

Notices of Amendments: 3 January 2019                  

33

Finance (No. 3) Bill, continued

Kirsty Blsackman

Mhairi Black

18

Schedule  1,  page  148,  line  34,  at end insert—

“21A      

The Chancellor of the Exchequer must review the expected revenue effects of

the changes made to TCGA 1992 in this Schedule, along with an estimate of

the difference between the amount of tax required to be paid to the

Commissioners under those provisions and the amount paid, and lay a report

of that review before the House of Commons within six months of the passing

of this Act.”

Kirsty Blackman

Mhairi Black

17

Schedule  2,  page  177,  line  21,  at end insert—

“Part 1A

Review of effects on public finances

17A      

The Chancellor of the Exchequer must review the expected revenue effects of

the changes made to capital gains tax returns and payments on account in this

in this Schedule, along with an estimate of the difference between the amount

of tax required to be paid to the Commissioners under those provisions and the

amount paid, and lay a report of that review before the House of Commons

within six months of the passing of this Act.”

Kirsty Blackman

Mhairi Black

29

Schedule  2,  page  177,  line  42,  at end insert “unless the amendment relates to a

disposal of an asset or assets resulting in a capital loss between the completion date of the

disposal in respect of which the return is made and the end of the tax year in which the

disposal is made.

(2A)    

In that case, an amendment may be made to take into account any capital losses

which have arisen after the completion date and within the same tax year.”

Kirsty Blackman

Mhairi Black

19

Schedule  5,  page  211,  line  45,  at end insert—

“Part 2A

Review of effects on public finances

34A(1)  

The Chancellor of the Exchequer must review the revenue effects of this

Schedule and lay a report of that review before the House of Commons within

six months of the passing of this Act.

Notices of Amendments: 3 January 2019                  

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Finance (No. 3) Bill, continued

      (2)  

The review under sub-paragraph (1) must consider—

(a)    

the expected change in corporation tax paid attributable to the

provisions in this Schedule, and

(b)    

an estimate of any change, attributable to the provisions in this

Schedule, in the difference between the amount of tax required to be

paid to the Commissioners and the amount paid.”

Kirsty Blackman

Mhairi Black

20

Schedule  5,  page  211,  line  45,  at end insert—

“Part 2A

Review of effects on tax paid by eu and non-eu resident firms

34A(1)  

The Chancellor of the Exchequer must review the revenue effects of this

Schedule and lay a report of that review before the House of Commons within

six months of the passing of this Act.

      (2)  

The review under sub-paragraph (1) must consider the expected change,

attributable to the provisions in this Schedule, in the difference between the

amount of tax required to be paid to the Commissioners and the amount paid

by non-UK resident companies that are—

(a)    

resident in the European Union, or

(b)    

not resident in the European Union.”

Kirsty Blackman

Mhairi Black

21

Schedule  6,  page  221,  line  26,  at end insert—

“13      

The Chancellor of the Exchequer must review the expected change to

payments of Diverted Profits Tax and any associated changes to overall

payments made to the Commissioners arising from the provisions of this

Schedule, and lay a report of that review before the House of Commons within

6 months of the passing of this Act.”

Kirsty Blackman

Mhairi Black

30

Schedule  12,  page  247,  line  15,  after “is” insert “the lesser of—

(a)    

such amount (if any) by which the maximum allowance for the second

straddling period calculated under sub-paragraph (2) exceeds the amount

of expenditure incurred on or before 31 December 2020 in respect of

which the allowance was claimed, and

(b)    

the greater of—

(i)    

what would be the maximum allowance for the whole of the

second straddling period if the modification made by section