Finance Bill (HL Bill 71)

SCHEDULE 5 continued    PART 3 continued

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  • “excluded credit” has the meaning given by section 386(3),

  • “excluded debit” has the meaning given by section 383(3), and

  • “period of account”, “relevant accounting period” and
    “worldwide group” have the same meanings as in Part 10.”

(3) 5In section 371IJ (claims), in subsection (6), for “the tested income amount or
the tested expense amount mentioned in section 371IE(2)” substitute “the
aggregate net tax-interest expense that is mentioned in section 371IE”.

23 (1) Chapter 19 of Part 9A (CFCs: assumed taxable total profits, assumed total
profits and the corporation tax assumptions) is amended as follows.

(2) 10In section 371SL (group relief etc), at the end insert—

“(4) This section is subject to section 371SLA (corporate interest
restriction).”

(3) After section 371SL insert—

“371SLA Corporate interest restriction

(1) 15This section applies for the purpose of applying Part 10 (corporate
interest restriction).

(2) Assume—

(a) that the CFC is a member of a worldwide group for a period
of account of which it would be a member if section 371SL
20were ignored, and

(b) that the CFC is the only UK group company in the period
(within the meaning of that Part).

(3) Assume also that Part 10 applies as if subsections (2) and (3) of
section 392 (interest capacity of the group: the de minimis amount)
25were omitted.”

24 In Schedule 11, at the end insert—

“Part 7 Corporate interest restriction: index of defined expressions used in
Part 10
abbreviated interest restriction return (in Part 10) 30paragraph 20
of Schedule 7A
abbreviated return election (in Part 10) paragraph 19
of Schedule 7A
accounting period (in Part 10) Chapter 2 of
35Part 2 of CTA
2009 (applied
by section 1119
of CTA 2010)
adjusted net group-interest expense of a worldwide group (in
Part 10)		 section 413
40

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aggregate net tax-interest expense of a worldwide group (in
Part 10)		 section 390
aggregate net tax-interest income of a worldwide group (in
Part 10)		 section 390
aggregate tax-EBITDA of a worldwide group (in Part 10) 5section 405
allocated reactivation of company for period of account (in
Part 10)		 paragraph 25
of Schedule 7A
allowable loss (in Part 10) TCGA 1992
(applied by
10section 1119 of
CTA 2010)
associated (in Chapter 8 of Part 10) section 449(2)
amount available for reactivation of company in period of
account (in Part 10)		 paragraph 26
of Schedule 7A
available, in relation to interest allowance (in Chapter 4 of
Part 10)		 15section 393
balance sheet (in Chapter 8 of Part 10) section 449(1)
chargeable gain (in Part 10) TCGA 1992
(applied by
20section 1119 of
CTA 2010)
the Commissioners (in Part 10) section 494(1)
company (in Part 10) section 1121 of
CTA 2010
company tax return (in Schedule 7A) 25paragraph 73
of Schedule 7A
consenting company (in Part 10) paragraph 10
of Schedule 7A
consolidated partnership (in Part 10) section 430
consolidated subsidiary of another entity (in Part 10) 30section 475
derivative contract (in Part 10) Part 7 of CTA
2009 (applied
by section 1119
of CTA 2010)
disallowed, in relation to tax-interest expense amount (in Part
10)		 35section 378
drawn up on acceptable principles, in relation to financial
statements (in Chapter 11 of Part 10)		 section 481
fair value accounting (in Part 10) section 494(1)

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fair value (in Part 10) section 494(1)
filing date, in relation to a period of account of a worldwide
group (in Part 10)		 paragraph 7(5)
of Schedule 7A
finance lease (in Part 10) section 494(1)
financial asset (in Chapter 8 of Part 10) 5section 449(1)
financial statements of a worldwide group (in Part 10) section 479
fixed ratio method (in Part 10) section 397
for accounting purposes (in Part 10) section 1127(4)
of CTA 2010
full interest restriction return (in Part 10) 10paragraph 20
of Schedule 7A
generally accepted accounting practice (in Part 10) section 1127(1)
and (3) of CTA
2010
group-EBITDA (chargeable gains) election (in Part 10) 15paragraph 15
of Schedule 7A
group ratio election (in Part 10) paragraph 13
of Schedule 7A
group ratio (blended) election (in Part 10) paragraph 14
20of Schedule 7A
group ratio method (in Part 10) section 398
group ratio percentage (in Part 10) section 399
IAS financial statements (in Part 10) section 488
impairment loss (in Part 10) section 391
income (in Part 10) 25section 1119 of
CTA 2010
insurance company (in Part 10) section 141 of
FA 2012
interest allowance of a worldwide group (in Part 10) section 396
interest allowance (alternative calculation) election (in Part
10)		 30paragraph 16
of Schedule 7A
interest allowance (consolidated partnerships) election (in
Part 10)		 paragraph 18
of Schedule 7A
interest allowance (non-consolidated investment) election (in
Part 10)		 paragraph 17
35of Schedule 7A
interest capacity of a worldwide group (in Part 10) section 392
interest reactivation cap of a worldwide group (in Part 10) section 373

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interest restriction return (in Part 10) section 494(1)
international accounting standards (in Part 10) section 1127(5)
of CTA 2010
investor in a worldwide group (in Part 10) section 404
loan relationship (in Part 10) 5Part 5 of CTA
2009 (applied
by section 1119
of CTA 2010)
loan relationships or other financing arrangements (in
Chapter 8 of Part 10)		 section 449(1)
10
local authority (in Part 10) section 1130 of
CTA 2010
local authority association (in Part 10) section 1131 of
CTA 2010
member of a worldwide group (in Part 10) 15section
473(4)(a)
multi-company worldwide group (in Part 10) section
473(4)(d)
net group-interest expense of a worldwide group (in Part 10) section 410
net tax-interest expense of a company (in Part 10) 20section 389
net tax-interest income of a company (in Part 10) section 389
non-consenting company (in Part 10) paragraph 10
of Schedule 7A
non-consolidated associate of a worldwide group (in Part 10) section 429
non-consolidated subsidiary of an entity (in Part 10) 25section 475
notice (in Part 10) section 1119 of
CTA 2010
party to a loan relationship (in Part 10) section 494(2)
period of account of a worldwide group (in Part 10) section 480
profit before tax, of a worldwide group (in Chapter 7 of Part
10)		 30section 416
pro-rata share of company (of total disallowed amount) (in
Part 10)		 paragraph 23
of Schedule 7A
pro-rata share of accounting period (of total disallowed
amount) (in Part 10)		 paragraph 24
35of Schedule 7A
provision (in relation to a public infrastructure asset) (in
Chapter 8 of Part 10)		 section 436
public infrastructure asset (in Chapter 8 of Part 10) section 436

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qualifying charitable donation (in Part 10) Part 6 of CTA
2010 (applied
by section 1119
of CTA 2010)
qualifying infrastructure company (in Chapter 8 of Part 10) 5section 433
qualifying infrastructure activity (in Chapter 8 of Part 10) section 436
qualifying net group-interest expense of a worldwide group
(in Part 10)		 section 414
recognised, in financial statements (in Part 10) section 489
recognised stock exchange (in Part 10) 10section 1137 of
CTA 2010
registered pension scheme (in Part 10) section 150(2)
of FA 2004
(applied by
15section 1119 of
CTA 2010)
related party (in Part 10) sections 462 to
472
related party investor (in Part 10) section 404
relevant asset (in Chapter 7 of Part 10) 20section 417
relevant accounting period (in Part 10) section 490
relevant expense amount (in Chapter 7 of Part 10) section 411
relevant income amount (in Chapter 7 of Part 10) section 411
relevant public body (in Part 10) section 491
reporting company (in Part 10) 25section 494(1)
the return period (in Part 10) section 494(1)
service concession agreement (in Part 10) section 494(1)
share, of an investor in a worldwide group (in Part 10) section 404
single-company worldwide group (in Part 10) section
30473(4)(c)
subject to interest reactivations (in Part 10) section 373
subject to interest restrictions (in Part 10) section 373
tax (in Part 10) section 1119 of
CTA 2010
tax-EBITDA of a company (in Part 10) 35section 406
tax-interest expense amount of a company (in Part 10) section 382

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tax-interest income amount of a company (in Part 10) section 385
trade (in Part 10) section 1119 of
CTA 2010
total disallowed amount of a worldwide group (in Part 10) section 373
UK generally accepted accounting practice (in Part 10) 5section 1127(2)
of CTA 2010
UK group company (in Part 10) section 492
UK property business (in Part 10) Chapter 2 of
Part 4 of CTA
102009 (applied
by section 1119
of CTA 2010)
the UK sector of the continental shelf (in Chapter 8 of Part 10) section 449(1)
the ultimate parent, of a worldwide group (in Part 10) section
15473(4)(b)
unexpired (in Chapter 4 of Part 10) section 395
United Kingdom (in Part 10) section 1170 of
CTA 2010
used (in Chapter 4 of Part 10) section 394
within the charge to corporation tax (in Part 10) 20section 1167 of
CTA 2010
wholly-owned subsidiary (in Part 10) section 494(1)
a worldwide group (in Part 10) section 473”

Part 4 25Commencement and transitional provision

Commencement: new Part 10 of TIOPA

25 (1) The corporate interest restriction amendments have effect in relation to
periods of account of worldwide groups that begin on or after 1 April 2017.

(2) In this paragraph “the corporate interest restriction amendments” means the
30amendments made by Parts 1 to 3 of this Schedule, apart from those made
by paragraph 11 (repeal of Part 7 of TIOPA 2010).

(3) Any regulations made by the Treasury or Commissioners under Part 10 of
TIOPA 2010 before 1 April 2018 may have effect in relation to periods of
account of worldwide groups that begin on or after 1 April 2017.

(4) 35Sub-paragraphs (6) to (11) apply if—

(a) financial statements of a worldwide group are drawn up by or on
behalf of the ultimate parent in respect of a period that begins before,
and ends on or after, 1 April 2017,

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(b) the period in respect of which the financial statements are drawn up
is 18 months or less, and

(c) the financial statements are drawn up before the end of the period of
30 months beginning with the beginning of the period in respect of
5which they are drawn up.

(5) In sub-paragraphs (6) to (11)—

(a) “the group’s actual financial statements” means the financial
statements mentioned in sub-paragraph (4);

(b) “the straddling period of account” means the period in respect of
10which those financial statements are drawn up.

(6) For the purposes of Part 10 of TIOPA 2010, the group’s actual financial
statements are treated as not having been drawn up.

(7) Instead, financial statements of the worldwide group are treated for those
purposes as having been drawn up in respect of each of the following
15periods—

(a) the period beginning at the time the straddling period of account
begins and ending with 31 March 2017, and

(b) the period beginning with 1 April 2017 and ending at the time the
straddling period of account ends.

(8) 20Where condition C or D in section 481 of TIOPA 2010 is met in relation to the
group’s actual financial statements, the financial statements treated as
drawn up by sub-paragraph (7) are treated as drawn up in accordance with
the generally accepted accounting principles and practice with which the
group’s actual financial statements were drawn up.

(9) 25Where neither of those conditions is met in relation to the group’s actual
financial statements, the financial statements treated as drawn up by sub-
paragraph (7) are IAS financial statements.

(10) Where, for the purpose of determining amounts recognised in the financial
statements treated as drawn up by sub-paragraph (7), it is expedient to
30apportion any amount that is recognised in the group’s actual financial
statements, the apportionment is to be made in accordance with section 1172
of CTA 2010 (apportionment on a time basis).

(11) But if it appears that apportionment in accordance with that section would
work unjustly or unreasonably, the apportionment is to be made on a just
35and reasonable basis.

(12) Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the
same meaning in this paragraph as they have in that Part.

Commencement: repeal of Part 7 of TIOPA 2010

26 (1) The repeals and revocations made by paragraph 11 of this Schedule have
40effect in relation to periods of account of the worldwide group that begin on
or after 1 April 2017.

(2) Sub-paragraphs (4) to (10) apply if financial statements of the worldwide
group are drawn up in respect of a period that begins before, and ends on or
after, 1 April 2017.

(3) 45In sub-paragraphs (4) to (10)—

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(a) “the group’s actual financial statements” means the financial
statements mentioned in sub-paragraph (2);

(b) “the straddling period of account” means the period in respect of
which those financial statements are drawn up.

(4) 5For the purposes of Part 7 of TIOPA 2010, the group’s actual financial
statements are treated as not having been drawn up.

(5) Instead, financial statements of the worldwide group are treated for those
purposes as having been drawn up in respect of each of the following
periods—

(a) 10the period beginning at the time the straddling period of account
begins and ending with 31 March 2017, and

(b) the period beginning with 1 April 2017 and ending at the time the
straddling period of account ends.

(6) Where condition B, C or D in regulation 2 of the Acceptable Financial
15Statements Regulations is met in relation to the group’s actual financial
statements, the financial statements treated as drawn up by sub-paragraph
(5) are treated as drawn up in accordance with the generally accepted
accounting principles and practice with which the group’s actual financial
statements were drawn up.

(7) 20Where none of those conditions is met in relation to the group’s actual
financial statements, the financial statements treated as drawn up by sub-
paragraph (5) are IAS financial statements.

(8) Where, for the purpose of determining amounts recognised in the financial
statements treated as drawn up by sub-paragraph (5), it is expedient to
25apportion any amount that is recognised in the group’s actual financial
statements, the apportionment is to be made in accordance with section 1172
of CTA 2010 (apportionment on a time basis).

(9) But if it appears that apportionment in accordance with that section would
work unjustly or unreasonably, the apportionment is to be made on a just
30and reasonable basis.

(10) In sub-paragraph (6), “the Acceptable Financial Statements Regulations”
means the Corporation Tax (Tax Treatment of Financing Costs and Income)
(Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217).

(11) Expressions used in this paragraph and in Part 7 of TIOPA 2010 have the
35same meaning in this paragraph as they have in that Part.

Time limits for elections relating to financial statements of a worldwide group

27 (1) In section 484 of TIOPA 2010, subsection (5) (which requires the date
specified in an election under subsection (3) of that section to be on or after
the day on which the election is made) does not apply in relation to an
40election made on or before 31 March 2018.

(2) In section 486 of that Act, subsection (5)(a) (which requires an election under
that section to be made before the end-day of the new period of account)
does not apply in relation to an election made on or before 31 March 2018.

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Time limit relating to appointment of reporting company or filing interest restriction return

28 (1) Paragraph 1(4)(a) of Schedule 7A to TIOPA 2010 (notice of the appointment
of reporting company ineffective if given outside the period specified in that
provision) does not apply to a notice that—

(a) 5is given on or before 31 March 2018, and

(b) would otherwise be of no effect by reason only of the expiry of the
period specified in that provision.

(2) Paragraph 2(4)(a) of that Schedule (notice of the revocation of the
appointment of reporting company ineffective if given outside the period
10specified in that provision) does not apply to a notice that—

(a) is given on or before 31 March 2018, and

(b) would otherwise be of no effect by reason only of the expiry of the
period specified in that provision.

(3) Where the date determined under paragraph 7(5) of that Schedule as the
15filing date in relation to a period of account of a worldwide group would
(apart from this sub-paragraph) be a date before 30 June 2018, that provision
has effect as if it provided for the filing date in relation to the period to be 30
June 2018.

Change of accounting policy

29 (1) 20For the purposes of Part 10 of TIOPA 2010 a debit or credit to which this
paragraph applies is to be ignored.

(2) This paragraph applies to a debit or credit if—

(a) it is brought into account under the Loan Relationships and
Derivative Contracts (Change of Accounting Practice) Regulations
252004 (S.I. 2004/3271), and

(b) the later period, in relation to the change of accounting policy to
which the debit or credit relates, begins before 1 April 2017.

(3) In sub-paragraph (2) “the later period” has the same meaning as in the
regulations mentioned in that sub-paragraph.

30Adjustments under Schedule 7 to F(No.2)A 2015

30 (1) For the purposes of Part 10 of TIOPA 2010 a debit or credit to which this
paragraph applies is to be ignored.

(2) This paragraph applies to a debit or credit if—

(a) it is brought into account for the purposes of Part 5 of CTA 2009 by
35virtue of paragraphs 115 and 116 of Schedule 7 to F(No.2)A 2015
(transitional adjustments relating to loan relationships), or

(b) it is brought into account for the purposes of Part 7 of CTA 2009 by
virtue of paragraphs 120 and 121 of that Schedule (transitional
adjustments relating to derivative contracts).

40Power to make elections under Disregard Regulations for pre-1 April 2020 derivative contracts

31 (1) A company which is a UK group company of a worldwide group on 1 April
2017 may elect for the Disregard Regulations to have effect as if—

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(a) the company had made an election (“the disregard election”) under
regulation 6A of those Regulations for the purposes of regulation
6(1)(a) of those Regulations,

(b) the disregard election applied to regulations 7, 8 and 9 of those
5Regulations, and

(c) the disregard election had effect in relation to derivative contracts
entered into by the company before 1 April 2020.

(2) The election has effect for the calculation under Part 10 of TIOPA 2010 of—

(a) the tax-interest expense amounts and tax-interest income amounts of
10the company and any relevant transferee company, and

(b) the adjusted corporation tax earnings under section 406 of that Act of
the company and any relevant transferee company.

(3) A company is a “relevant transferee company” if regulation 6B or 6C of the
Disregard Regulations applies in relation to the company as the transferee
15mentioned in the regulation (on the assumption that an election has been
made before the transfer under this paragraph).

(4) An election under this paragraph has effect only if every company which
was a UK group company of the worldwide group on 1 April 2017 (other
than one which was dormant on that date or at the time the election is made)
20also makes an election under this paragraph.

(5) An election under this paragraph—

(a) must be made before 1 April 2018, and

(b) is irrevocable.

(6) Section 457 of TIOPA 2010 is to apply in relation to debits resulting from an
25election under this paragraph.

(7) In this paragraph “the Disregard Regulations” means the Loan
Relationships and Derivative Contracts (Disregard and Bringing into
Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256).

(8) Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the
30same meaning in this paragraph as they have in that Part.

Qualifying infrastructure companies

32 (1) In the case of an accounting period of a company beginning before 1 April
2018, the company may make an election under section 433 or 444 of TIOPA
2010 before that date.

(2) 35Companies making an election under section 435 of TIOPA 2010 before 1
April 2018 may specify a date in the election from which it has effect which
is before the date on which the election is made.

33 (1) This paragraph applies in the case of an accounting period of a company
beginning before 1 April 2018 (“the transitional accounting period”) if—

(a) 40the company does not meet the public infrastructure assets test, or
the public infrastructure income test, for the transitional accounting
period, but

(b) in the case of each test that it does not meet as mentioned in
paragraph (a), the company would meet the test for an accounting
45period that includes that date and is at least 3 months long.


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Contents page 350-359 360-369 370-379 380-389 390-399 400-409 410-419 420-429 430-439 440-449 450-459 460-469 470-487 488-489 490-499 500-509 510-519 520-529 530-539 540-549 550-559 Last page