Notices of Amendments: 20 December 2018                  

22

Finance (No. 3) Bill, continued

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;

(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

Notices of Amendments: 20 December 2018                  

23

Finance (No. 3) Bill, continued

(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.

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

Notices of Amendments: 20 December 2018                  

24

Finance (No. 3) Bill, continued

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)).

(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

Notices of Amendments: 20 December 2018                  

25

Finance (No. 3) Bill, continued

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.”

Kirsty Blackman

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.”

Notices of Amendments: 20 December 2018                  

26

Finance (No. 3) Bill, continued

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

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.

      (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

      (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—

Notices of Amendments: 20 December 2018                  

27

Finance (No. 3) Bill, continued

(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.”

The Chancellor of the Exchequer

2

Schedule  15,  page  291,  line  31,  leave out paragraph 2 and insert—

“2  (1)  

Chapter 3 of Part 5 of TCGA 1992 (transfer of business assets: entrepreneurs’

relief) is amended as follows.

      (2)  

In section 169K(1B) (disposals associated with relevant material disposal), for

paragraph (a) (together with the “and” at the end of it) substitute—

“(a)    

the ordinary shares disposed of constitute at least 5% of the

company’s ordinary share capital and are shares in the

individual’s personal company (and section 169S(3A)(a) to

(c) apply here but as if the reference to the final day of the

period mentioned in section 169S(3A)(a) were to the date of

the disposal), and”.

      (3)  

In section 169LA (relevant business assets: goodwill transferred to a close

company)—

(a)    

for subsection (1) substitute—

“(1)    

Subject to subsection (1A), subsection (4) applies if—

(a)    

as part of a qualifying business disposal, a person

(“P”) disposes of goodwill directly or indirectly to a

close company (“C”), and

(b)    

immediately after the disposal, P meets any of the

personal company conditions in the case of C or any

company which is a member of a group of companies

of which C is a member.

(1ZA)    

For the purposes of subsection (1)(b)—

(a)    

the reference to the personal company conditions is a

reference to any of the conditions in 169S(3)(a), (b),

(c)(i) or (ii), and

(b)    

P is taken to have all the rights and interests of any

relevant connected person.

(1ZB)    

For the purposes of subsection (1ZA)—

Notices of Amendments: 20 December 2018                  

28

Finance (No. 3) Bill, continued

(a)    

section 169S(3) is treated as having effect with the

omission of the references to “by virtue of that

holding”,

(b)    

section 169S(3A)(a) and (b) are to apply for the

purposes of section 169S(3)(c)(ii) but as if the

reference to the final day of the period mentioned in

section 169S(3A)(a) were to the time immediately

after the disposal, and

(c)    

the condition in section 169S(3)(c)(i) is to be read as

containing two separate conditions (one relating to

profits and the other relating to assets).”, and

(b)    

in subsection (1A)(a), for “subsection (1)(aa)” substitute “subsection

(1)(b)”.

      (4)  

In section 169S (interpretation of Chapter), for subsections (3) and (4)

substitute—

“(3)    

For the purposes of this Chapter a company is a “personal company”

in relation to an individual if—

(a)    

the individual holds at least 5% of the ordinary share capital

of the company,

(b)    

by virtue of that holding, at least 5% of the voting rights in the

company are exercisable by the individual, and

(c)    

either or both of the following conditions are met—

(i)    

by virtue of that holding, the individual is beneficially

entitled to at least 5% of the profits available for

distribution to equity holders and, on a winding up,

would be beneficially entitled to at least 5% of assets

so available, or

(ii)    

in the event of a disposal of the whole of the ordinary

share capital of the company, the individual would be

beneficially entitled to at least 5% of the proceeds.

(3A)    

In determining whether subsection (3)(c)(ii) applies for the purposes

of any provision of this Chapter under which a question arises as to

whether or not a company is the individual’s personal company at any

time in a particular period —

(a)    

it is to be assumed that (so far as this is not otherwise the case)

the whole of the ordinary share capital is disposed of at that

time for a consideration equal to its market value on the final

day of the period,

(b)    

it is to be assumed that the amount of the proceeds to which

the individual would be beneficially entitled at that time is the

amount of the proceeds to which, having regard to all the

circumstances as they existed at that time, it would be

reasonable to expect the person to be beneficially entitled, and

(c)    

the effect of any avoidance arrangements is to be ignored.

(3B)    

For the purposes of subsection (3A)(c)—

(a)    

arrangements are “avoidance arrangements” if the main

purpose of, or one of the main purposes of, the arrangements

is to secure that any provision of this Chapter applies or does

not apply, and

(b)    

“arrangements” includes any agreement, understanding,

scheme, transaction or series of transactions (whether or not

legally enforceable).