Finance Bill (HC Bill 114)

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25 Quarterly instalment payments

(1)The Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175)
are amended as follows.

(2)At the end of regulation 3 (large and very large companies) insert—

(11)5A company which—

(a)is chargeable to corporation tax for an accounting period only
because of a chargeable gain accruing to the company on the
disposal of an asset, and

(b)would, apart from this paragraph, be a very large company by
10virtue of this regulation in respect of the accounting period,

is to be treated for the purposes of these regulations as if it were a large
company by virtue of paragraph (1).”

(3)In regulation 3(10), in the words before paragraph (a), after “12 months” insert
“and paragraph (11) does not apply”.

(4)15The amendments made by this section have effect in relation to accounting
periods beginning on or after 11 March 2020.

26 Relief from CGT for loans to traders

In section 253(1)(b) of TCGA 1992 (which provides that a loan qualifies for
relief only if the borrower is UK resident), at the beginning insert “if the loan is
20made before 24 January 2019,”.

Reliefs for business

27 Research and development expenditure credit

(1)In section 104M(3) of CTA 2009 (amount of R&D expenditure credit) for “12%”
substitute “13%”.

(2)25The amendment made by this section has effect in relation to expenditure
incurred on or after 1 April 2020.

28 Structures and buildings allowances: rate of relief

(1)Part 2A of CAA 2001 (structures and buildings allowances) is amended as
follows.

(2)30In section 270AA (application of Part 2A)—

(a)in subsection (2) (entitlement to an allowance), at the beginning of
paragraph (b) insert “the beginning of”,

(b)in subsection (2)(b)(ii), for “50 years” substitute “33 1/3 years”, and

(c)in subsection (5) (basic rule: allowance for a chargeable period of one
35year), for “2%” substitute “3%”.

(3)In section 270EA (proportionate adjustment in certain cases), in subsection
(3)—

(a)in paragraph (a), for “(b)” substitute “(b)(i)”, and

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(b)after paragraph (a) (but before the “or”) insert—

(aa)the period mentioned in section 270AA(2)(b)(ii) expires
part way through the chargeable period,”.

(4)In section 270EB (multiple uses), in subsection (2), for “2%” substitute “3%”.

(5)5After section 270GC (but before Chapter 8) insert—

“Chapter 7A Adjustment for pre-April 2020 allowance
270GD Adjustment for pre-April 2020 allowance

(1)This section applies if—

(a)10on the relevant date, a person is entitled to an allowance under
this Part by reference to qualifying expenditure incurred in
relation to a building or structure,

(b)the person does not dispose of the relevant interest in the
building or structure before the end of the period mentioned in
15section 270AA(2)(b)(ii) (the “allowance period”), and

(c)at the end of the allowance period, the person is entitled to an
allowance under this Part by reference to the qualifying
expenditure mentioned in paragraph (a).

(2)The person is entitled to an additional amount of allowance for the
20chargeable period in which the allowance period ends.

(3)The additional amount of the allowance is 1% of the qualifying
expenditure multiplied by the following fraction—

D/365

where D is the number of days during the period beginning with 29
October 2018 and ending with the relevant date in respect of which an
allowance under this Part by reference to the qualifying expenditure
was made to the person.

(4)30For the purposes of this section “the relevant date” means—

(a)for income tax purposes, 5 April 2020, or

(b)for corporation tax purposes, 31 March 2020.”

(6)The amendments made by this section are treated as having come into force—

(a)for income tax purposes, on 6 April 2020, or

(b)35for corporation tax purposes, on 1 April 2020,

and in subsection (7) references to the commencement date are to be read
accordingly.

(7)For the purposes of subsection (6), in relation to a chargeable period beginning
before the commencement date and ending on or after that date, Part 2A of
40CAA 2001 applies as if—

(a)the part of the chargeable period falling before the commencement
date, and

(b)the part of the chargeable period falling on or after that date,

were separate chargeable periods.

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29 Structures and buildings allowances: miscellaneous amendments

Schedule 4 makes miscellaneous amendments of CAA 2001 in relation to
structures and buildings allowances.

30 Intangible fixed assets: pre-FA 2002 assets etc

(1)5Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.

(2)In section 711 (overview of Part 8) in subsection (8) after paragraph (fa) (but
before the “and” at the end of that paragraph) insert—

(fb)Chapter 16A (debits in respect of assets that were pre-FA 2002
assets etc),

(fc)10Chapter 16B (fungible assets),”.

(3)In section 845 (transfer between company and related party treated as at
market value) in subsection (4) (exceptions)—

(a)omit the “and” at the end of paragraph (d), and

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

(f)15sections 900E and 900F (special rules in respect of assets
that were pre-FA 2002 assets etc)”.

(4)In section 849AB (grant of licence or other right treated as at market value) in
subsection (6) (exceptions)—

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

(b)20at the end of paragraph (b) insert “, and

(c)section 900F (special rules in respect of assets that were
pre-FA 2002 assets etc)”.

(5)Omit section 858 (fungible assets) and the italic heading before that section.

(6)In section 882 (application of Part 8 to assets created or acquired on or after 1
25April 2002) for subsection (1) substitute—

(1)The general rule is that this Part applies to an intangible fixed asset of a
company (“the company”) only if one or more of the conditions in
subsections (1A) to (1D) is met.

(1A)The condition in this subsection is that the asset is created by the
30company on or after 1 April 2002.

(1B)The condition in this subsection is that the asset is acquired by the
company during the period beginning with 1 April 2002 and ending
with 30 June 2020 and either—

(a)it is acquired from a person who at the time of the acquisition is
35not a related party in relation to the company, or

(b)it is acquired in case A (in subsection (3)), case B (in subsection
(4)) or case C (in subsection (5)) from a person who at the time
of the acquisition is a related party in relation to the company.

(1C)The condition in this subsection is that the asset is acquired by the
40company on or after 1 July 2020.

(1D)The condition in this subsection is that the asset is held by the company
immediately before 1 July 2020 and at that time the company is not
within the charge to corporation tax in respect of the asset.

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(1E)But the condition in subsection (1D) is to be treated as not met if—

(a)at any time during the period beginning with 19 March 2020
and ending with 30 June 2020 the asset is a pre-FA 2002 asset in
the hands of any company that is within the charge to
5corporation tax in respect of the asset, and

(b)after that time but during that period the asset is not acquired
by any other company from a person who at the time of the
acquisition is not a related party in relation to that other
company.”

(7)10In section 883 (assets treated as created or acquired when expenditure
incurred)—

(a)after subsection (3) insert—

(3A)An intangible asset is treated as acquired on or after 1 July 2020
so far as expenditure on its acquisition is incurred on or after
15that date.

(3B)An intangible asset is treated as acquired during the period
beginning with 1 April 2002 and ending with 30 June 2020 so far
as expenditure on its acquisition is incurred during that period.

(3C)An intangible asset is treated as acquired during the period
20beginning with 19 March 2020 and ending with 30 June 2020 so
far as expenditure on its acquisition is incurred during that
period.”,

(b)in subsection (4)—

(i)for “whether” substitute “when”, and

(ii)25omit “on or after 1 April 2002”, and

(c)for subsection (5) substitute—

(5)If by reason of any of subsections (3) to (3C) of this section this
Part would apply to an intangible fixed asset of a company to a
limited extent only, the asset is to be treated as if it consisted of
30two separate assets—

(a)one asset being an asset to which this Part applies, and

(b)one asset being an asset to which the alternative
enactments apply.”

(8)Omit section 890 (fungible assets: application of section 858) and the italic
35heading before that section.

(9)Omit section 891 (realisation and acquisition of fungible assets).

(10)In section 892 (certain assets acquired on transfer of business)—

(a)in the heading at the end insert “or transfer within a group”,

(b)in subsection (2) omit “and” at the end of paragraph (b),

(c)40in subsection (2) after paragraph (c) insert “, and

(d)section 171 of that Act (transfers within a group)”, and

(d)after subsection (4) insert—

(5)If the transfer mentioned in subsection (1) occurred before 1 July
2020, this section applies as if paragraph (d) of subsection (2)
45were omitted.”

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(11)In section 893 (assets whose value derives from pre-2002 assets) in subsection
(1)(a) for “on or after 1 April 2002” substitute “during the period beginning
with 1 April 2002 and ending with 30 June 2020”.

(12)In section 895 (assets acquired in connection with disposals of pre-FA 2002
5assets) in subsection (1)(b) at the beginning insert “at any time before 1 July
2020”.

(13)After Chapter 16 insert—

“Chapter 16A Debits in respect of assets that were pre-FA 2002 assets etc
10Introduction
900A Introduction

(1)This Chapter contains special rules affecting the debits to be brought
into account by a company for tax purposes in respect of an intangible
fixed asset that is a restricted asset.

(2)15Sections 900B to 900D make provision determining when an intangible
fixed asset of a company is a restricted asset for the purposes of this
Chapter.

(3)Sections 900E and 900F contain the special rules.

(4)The following sections contain supplementary provisions—

(a)20section 900G (meaning of relieving acquisition),

(b)section 900H (when two persons are related), and

(c)section 900I (acquisition of asset in pursuance of an
unconditional obligation).

When an intangible fixed asset is a restricted asset
900B 25When an intangible fixed asset is a restricted asset: the first case

(1)An intangible fixed asset of a company is a restricted asset if—

(a)(a)the company acquired the asset on or after 1 July 2020,

(b)the company acquired the asset from a person who at the time
of the acquisition was a related party in relation to the company,
30and

(c)the asset is within subsection (2) or (3).

(2)The asset is within this subsection if—

(a)the asset was a pre-FA 2002 asset in the hands of any company
on 1 July 2020, and

(b)35at no time on or after 1 July 2020 has the asset been the subject
of a relieving acquisition.

(3)The asset is within this subsection if—

(a)the asset was created before 1 April 2002,

(b)immediately before 1 July 2020 the asset was held by a person
40other than a company, and

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(c)at no time on or after 1 July 2020 has the asset been the subject
of a relieving acquisition.

(4)But the asset is not within subsection (3) if the person mentioned in that
subsection (“the intermediary”) acquired the asset on or after 1 April
52002 from a person (“the third party”) who meets the conditions in
subsections (5), (6) and (7).

(5)The third party meets the condition in this subsection if—

(a)the third party is not a company, or

(b)the third party is a company in relation to which the
10intermediary is not a related party at the time of the
intermediary’s acquisition.

(6)The third party meets the condition in this subsection if at the time of
the intermediary’s acquisition the third party is not a related party in
relation to a company in relation to which the intermediary is a related
15party.

(7)The third party meets the condition in this subsection if at the time of
the acquisition of the asset by the company mentioned in subsection (1)
the third party is not a related party in relation to that company.

900C When an intangible fixed asset is a restricted asset: the second case

(1)20An intangible fixed asset of a company (“the asset concerned”) is a
restricted asset if—

(a)the company acquired the asset concerned on or after 1 July
2020,

(b)the company acquired the asset concerned from a person who
25at the time of the acquisition was a related party in relation to
the company, and

(c)the asset concerned is within subsection (2).

(2)The asset concerned is within this subsection if—

(a)the asset concerned was created on or after 1 July 2020,

(b)30at no time has the asset concerned been the subject of a relieving
acquisition,

(c)the value of the asset concerned derives in whole or in part from
another asset (“the other asset”), and

(d)the other asset was a pre-FA 2002 asset or a restricted asset in
35the hands of any company on the date the asset concerned was
created.

(3)The condition in subsection (2)(d) is to be treated as met if—

(a)the other asset was held by a person other than a company on
the date the asset concerned was created,

(b)40on the date the asset concerned was created that person was a
related party in relation to a company, and

(c)the other asset would have been a pre-FA 2002 asset or a
restricted asset in the hands of that company on the date the
asset concerned was created had that company acquired the
45other asset from that person immediately before that date.

(4)For the purposes of this section the cases in which the value of an asset
may be derived from any other asset include any case where—

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(a)assets have been merged or divided,

(b)assets have changed their nature, or

(c)rights or interests in or over assets have been created or
extinguished.

900D 5When an intangible fixed asset is a restricted asset: the third case

(1)An intangible fixed asset of a company (“the asset concerned”) is a
restricted asset if—

(a)the company acquired the asset concerned on or after 1 July
2020, and

(b)10the asset concerned is within subsection (2).

(2)The asset concerned is within this subsection if—

(a)the asset concerned was acquired by any company on or after 1
July 2020 directly or indirectly as a consequence of, or otherwise
in connection with, the realisation by another person of an asset
15(“the other asset”),

(b)that company and that other person were related parties at the
time of the realisation of the other asset,

(c)the other asset was a pre-FA 2002 asset or a restricted asset in
the hands of any company at any time during the period
20beginning with 1 July 2020 and ending with the time of the
realisation mentioned in paragraph (a),

(d)the other asset was not the subject of a relieving acquisition at
any time during the period beginning with 1 July 2020 and
ending with the time of the realisation mentioned in paragraph
25(a), and

(e)the asset concerned has not been the subject of a relieving
acquisition at any time after the realisation mentioned in
paragraph (a).

(3)The condition in subsection (2)(c) is to be treated as met if—

(a)30immediately before 1 July 2020 the other asset was held by a
person that was not a company,

(b)immediately before 1 July 2020 that person was a related party
in relation to a company, and

(c)the other asset would have been a pre-FA 2002 asset in the
35hands of that company on 1 July 2020 had that company
acquired the asset from that person immediately before that
date.

(4)For the purposes of subsection (2) it does not matter whether—

(a)the other asset is the same as the asset concerned,

(b)40the asset concerned is acquired at the time of the realisation of
the other asset, or

(c)the asset concerned is acquired by merging assets or otherwise.

The special rules
900E Special rule: section 900B case

(1)45This section applies in respect of a restricted asset of a company if it is
a restricted asset by reason of section 900B.

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(2)If the company was the first company to acquire the asset on or after 1
July 2020, the relevant Chapters of this Part have effect as if the
company acquired the asset at no cost.

(3)If the company was not the first company to acquire the asset on or after
51 July 2020, the relevant Chapters of this Part have effect as if the
company acquired the asset for the adjusted amount.

(4)The adjusted amount is—



where—

  • 10A is the amount of consideration—

    (a)

    for which the company actually acquired the asset, or

    (b)

    if different, for which it would (ignoring this section) be
    treated for the purposes of the Taxes Acts as having
    acquired the asset, and

  • 15B is the market value of the asset on the date it was first acquired
    by a company on or after 1 July 2020.

(5)Where B is greater than A the adjusted amount is nil.

(6)In this section—

  • “market value”, in relation to an asset, means the price the asset
    20might reasonably be expected to fetch on a sale in the open
    market, and

  • “the relevant Chapters of this Part” means—

    (a)

    Chapter 3 (debits in respect of intangible fixed assets),

    (b)

    Chapter 15 (adjustments on change of accounting
    25policy), and

    (c)

    Chapter 5 (calculation of tax written-down value) in so
    far as it has effect for the purposes of Chapters 3 and 15.

900F Special rule: section 900C or 900D case

(1)This section applies in respect of a restricted asset of a company if it is
30a restricted asset by reason of section 900C or 900D.

(2)The relevant Chapters of this Part have effect as if the company
acquired the asset for the adjusted amount.

(3)The adjusted amount is calculated as follows—

Step 1

35Find the amount—

(a)

for which the company actually acquired the asset, or

(b)

if different, for which it would (ignoring this section) be treated
for the purposes of the Taxes Acts as having acquired the asset.

Step 2

Deduct from the amount found at Step 1 such proportion of the
notional deduction amount for the relevant other asset or each relevant
other asset as is just and reasonable in the circumstances.

(4)Where the deduction at Step 2 results in a negative value the adjusted
45amount is nil.

(5)In subsection (3)—

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  • “relevant other asset” means an asset by reference to which the
    conditions in paragraphs (c) and (d) of section 900C(2) or (as the
    case may be) the conditions in section 900D(2) were met, and

  • “the notional deduction amount”, in relation to a relevant other
    5asset, means—

    (a)

    in a case where section 900E(2) would have applied had
    the company acquired the relevant other asset instead of
    the restricted asset, an amount equal to the market value
    of the relevant other asset at the time the restricted asset
    10was acquired, and

    (b)

    in a case where section 900E(3) would have applied had
    the company acquired the relevant other asset instead of
    the restricted asset, an amount equal to the market value
    of the relevant other asset at the time it was first
    15acquired by a company on or after 1 July 2020, and

    (c)

    in a case where subsection (2) of this section would have
    applied had the company acquired the relevant other
    asset instead of the restricted asset, the amount that
    would have been deducted at step 2 of subsection (3) of
    20this section if the company had acquired the relevant
    other asset instead of the restricted asset.

(6)In this section “market value” and “the relevant Chapters of this Part”
have the same meaning as in section 900E.

Supplementary provisions
900G 25Meaning of “relieving acquisition”

For the purposes of this Chapter, an asset is the subject of a relieving
acquisition if it is acquired by a company from a person who at the time
of the acquisition is not a related party in relation to the company.

900H Supplementary provision about when two persons are related

(1)30References in this Chapter to one person being a related party in
relation to another person are to be read as including references to the
participation condition being met as between those persons.

(2)References in subsection (1) to a person include a firm in a case where,
for section 1259 purposes, references in this Chapter to a company are
35read as references to the firm.

(3)In subsection (2) “section 1259 purposes” means the purposes of
determining under section 1259 the amount of profits or losses to be
allocated to a partner in a firm.

(4)Section 148 of TIOPA 2010 (when the participation condition is met)
40applies for the purposes of subsection (1) as it applies for the purposes
of section 147(1)(b) of TIOPA 2010.

900I Acquisition of asset in pursuance of an unconditional obligation

(1)A company that acquires an intangible fixed asset in pursuance of an
unconditional obligation under a contract is to be treated for the
45purposes of this Chapter as having acquired the asset on the date on



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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).

5Chapter 16B Fungible assets
900J Fungible assets: general

(1)For the purposes of this Part—

(a)fungible assets of the same kind that are held by the same
10person in the same capacity are treated as indistinguishable
parts of a single asset,

(b)that asset is treated as growing as additional assets of the same
kind are created or acquired, and

(c)that asset is treated as diminishing as some of the assets are
15realised.

(2)In this Part “fungible assets” means assets of a nature to be dealt in
without identifying the particular assets involved.

900K Fungible assets: pre-FA 2002 assets and restricted assets

(1)For the purposes of section 900J—

(a)20pre-FA 2002 assets,

(b)restricted assets, and

(c)standard intangible fixed assets,

are to be regarded as assets of different kinds.

(2)If section 900J applies (whether or not it is a case where subsection (1)
25of this section has effect)—

(a)a single asset comprising pre-FA 2002 assets is treated as itself
being a pre-FA 2002 asset,

(b)a single asset comprising restricted assets is treated as itself
being a restricted asset, and

(c)30a single asset comprising standard intangible fixed assets is
treated as itself being a standard intangible fixed asset.

900L Realisation of fungible assets: pre-FA 2002 assets and restricted assets

(1)This section applies if—

(a)a company realises a fungible asset, and

(b)35apart from subsection (1) of section 900K, the asset would be
treated as part of a single asset comprising more than one of the
kinds of asset referred to in that subsection.

(2)The realisation is treated—

(a)as diminishing a single asset of the company comprising pre-FA
402002 assets in priority to diminishing a single asset of the
company comprising restricted assets or a single asset of the
company comprising standard intangible fixed assets, and