Finance Bill (HL Bill 123)

continued    Part 1 continued    

(8)The company’s deductions allowance for an alternative AP is the
lower of—

(a)the deductions allowance that would be available, ignoring
the effect of this section (see sections 269ZR to 269ZY), and

(b)5the available deductions allowance amount (see subsection
(9)).

(9)For the purposes of this section, the “available deductions allowance
amount” is—

(a)£5,000,000, less

(b)10the total of the deductions allowance amounts (if any)
already claimed by—

(i)the company, and

(ii)if the company is a member of a group at any time
during the relevant financial year, each other
15company that is, at any time during the relevant
financial year, a member of the group,

in respect of each claim AP and alternative AP that falls
wholly within the relevant financial year.

(10)In this section, references to the deductions allowance amounts
20claimed by a company in respect of an accounting period—

(a)for a claim AP, are references to any deductions allowance
claimed by the company under this section in respect of the
period, and

(b)for an alternative AP, are references to any other amount
25specified in the company’s tax return as its chargeable gains
deductions allowance for the period.

(11)For the purposes of subsection (9)(b), in the cases listed in the first
column of the table below, the rules in the second column apply to
determine the order in which deductions allowance amounts are to
30be treated as claimed in respect of the accounting periods—

269ZYB Provisional application of section 269ZYA

(1)This section applies in relation to a company and an accounting
period if—

(a)the conditions in section 269ZYA(3)(a) and (b) are met in
5relation to the accounting period, and

(b)the company’s tax return for the accounting period is
delivered before the end of the financial year in which the
accounting period falls (“the relevant financial year”).

(2)The company may make a declaration in the return for the
10accounting period that—

(a)at all earlier times in the relevant financial year—

(i)the company had no source of chargeable income (see
section 269ZYA(2)), and

(ii)if the company is a member of a group, each other
15member of the group had no source of chargeable
income, and

(b)the person intends to make a claim under section 269ZYA(3)
in respect of the accounting period.

(3)Until the declaration ceases to have effect, section 269ZYA has effect
20as if the company had made a claim under that section.

(4)The declaration ceases to have effect if—

(a)it is withdrawn,

(b)it is superseded by a claim made under section 269ZYA, or

(c)the company or, if the company is a member of a group,
25another member of the group, acquires a source of chargeable
income before the end of the relevant financial year.

(5)So far as not previously ceasing to have effect under subsection (4),
the declaration ceases to have effect two years after the end of the
accounting period in respect of which it is made.

(6)30If the declaration ceases to have effect, all necessary adjustments
must be made, by assessment, amendment of returns or otherwise.

(7)Subsection (6) applies despite any limitation on the time within
which assessments or amendments may be made.”

Offshore collective investment vehicles

1135In section 269ZZB of CTA 2010 (meaning of “group”), at the end insert—

“(9)For the purposes of the application of this Part in relation to a
collective investment vehicle to which paragraph 4 of Schedule
5AAA to TCGA 1992 applies, the reference in paragraph 4(2) of that
Schedule to “relevant purposes” is to be treated as including a
40reference to the purposes of this section.”

Insurance companies: ring fence

12(1)Section 210A of TCGA 1992 (insurance: ring-fencing of losses) is amended as
follows.

(2)In subsection (2), after “to the company”, in the first place it occurs, insert “as
permitted by subsection (2A)”.

(3)After subsection (2) insert—

“(2A)The following deductions may be made from the shareholders’ share
5of the BLAGAB chargeable gains accruing to the company in an
accounting period—

(a)any available non-BLAGAB allowable losses accruing to the
company in the period may be deducted under section
2A(1)(a), and

(b)10after making any deductions within paragraph (a), any
available non-BLAGAB allowable losses previously accruing
to the company, which have not been allowed as a deduction
from chargeable gains accruing in the period or in any
previous accounting period, may (subject to section 269ZFC
15of CTA 2010) be deducted under section 2A(1)(b).

(2B)But those deductions may not reduce the shareholders’ share of
BLAGAB chargeable gains below nil.

(2C)The amount of “available non-BLAGAB allowable losses” accruing
to a company in an accounting period is the amount by which the
20non-BLAGAB allowable losses accruing to the company in the
accounting period exceed the non-BLAGAB chargeable gains so
accruing.”

(4)In subsection (6)(a)—

(a)omit “amount by which”, and

(b)25omit “exceeds the shareholders’ share of BLAGAB chargeable gains
so accruing”.

(5)In subsection (8), in the words before paragraph (a)—

(a)for “If the” substitute “If there are”, and

(b)omit “exceed the BLAGAB allowable losses so accruing”.

(6)30In subsection (8)(b), after “deduction” insert “, under step 2 of section 75(1)
of FA 2012,”.

(7)For subsection (9) substitute—

“(9)If there are BLAGAB allowable losses accruing to the company in the
subsequent accounting period, the amount arrived at under
35subsection (7)(a) is increased by the shareholders’ share of the
amount of those allowable losses.”

(8)In subsection (13)—

(a)in the definition of “BLAGAB allowable losses”, at the end insert “but
excluding any allowable losses deducted under step 2 of section
4075(1) of FA 2012 in determining the BLAGAB chargeable gains of the
company for an accounting period,”;

(b)in the definition of “BLAGAB chargeable gains”, after “means
chargeable gains” insert “(as adjusted for allowable losses in
accordance with section 75 of FA 2012)”.

13After section 269ZFB of CTA 2010 insert—

“269ZFC Restriction on deductions of non-BLAGAB allowable losses from
BLAGAB chargeable gains

(1)This section has effect for determining the taxable total profits of an
5insurance company for an accounting period.

(2)The sum of any deductions of non-BLAGAB allowable losses from
the shareholders’ share of BLAGAB chargeable gains made by an
insurance company for an accounting period under section 2A(1)(b)
of TCGA 1992, as permitted by section 210A(2A)(b) of that Act, may
10not exceed the relevant maximum.

(3)In this section, the “relevant maximum” means the sum of—

(a)50% of the company’s relevant BLAGAB chargeable gains for
the accounting period, and

(b)the amount of the company’s BLAGAB deductions
15allowance for the accounting period.

(4)A company’s “relevant BLAGAB chargeable gains” for an
accounting period are—

(a)the shareholders’ share of the BLAGAB chargeable gains for
the accounting period, after any reduction under section
20210A(2A)(a) of TCGA 1992, less

(b)the amount of the company’s BLAGAB deductions
allowance for the accounting period.

But if the allowance mentioned in paragraph (b) exceeds the
shareholders’ share of the BLAGAB chargeable gains mentioned in
25paragraph (a), the company’s “relevant BLAGAB chargeable gains”
for the accounting period are nil.

(5)A company’s “BLAGAB deductions allowance” for an accounting
period—

(a)is so much of the company’s deductions allowance for the
30period as is specified in the company’s tax return as its
BLAGAB deductions allowance for the period, and

(b)accordingly, is nil if no amount of the company’s deductions
allowance for the period is so specified.

(6)An amount specified under subsection (5)(a) as the company’s
35BLAGAB deductions allowance for an accounting period may not
exceed the difference between—

(a)the amount of the company’s deductions allowance for the
period, and

(b)the total of any amounts specified for the period under
40section 269ZB(7)(a) (trading profits deductions allowance),
section 269ZBA(5)(a) (chargeable gains deductions
allowance) and section 269ZC(5)(a) (non-trading income
profits deductions allowance).

(7)In this section, “BLAGAB chargeable gains”, “insurance company”
45and “the shareholders’ share of BLAGAB chargeable gains” have the
same meaning as in section 210A of TCGA 1992.”

14(1)Part 7ZA of CTA 2010 is amended in accordance with this paragraph.

(2)In section 269ZD(2)(b)—

(a)omit the “and” after sub-paragraph (ia) (inserted by paragraph 4 of
this Schedule), and

(b)after sub-paragraph (ii) insert “and

(iia)5any deductions of non-BLAGAB allowable
losses from the shareholders’ share of
BLAGAB chargeable gains made for the
accounting period under section 2A(1)(b) of
TCGA 1992, as permitted by section
10210A(2A)(b) of that Act.”

(3)In section 269ZFB(2), at the end of paragraph (b) insert “and provided that
no deductions of non-BLAGAB allowable losses from the shareholders’
share of BLAGAB chargeable gains are to be made under section 2A(1)(b) of
TCGA 1992, as permitted by section 210A(2A)(b) of that Act.”

1515In section 95 of FA 2012 (use of non-BLAGAB allowable losses to reduce I-E
profit) for “in accordance with section 210A(2) of TCGA 1992” substitute
“under section 2A(1) of TCGA 1992, as permitted by section 210A(2) and
(2A) of that Act,”.

Oil activities: ring fence

1620In section 197 of TCGA 1992 (disposals of interests in oil fields etc: ring fence
provisions), after subsection (4) insert—

“(4A)A deduction in respect of an aggregate loss accruing in a chargeable
period that is (in accordance with subsection (4)(b) and (c)) allowable
as a deduction against an aggregate gain treated as accruing in a later
25period is to be ignored for the purposes of section 269ZBA of CTA
2010 (corporate capital loss restriction: restriction on deductions
from chargeable gains).”

Clogged losses

17In section 18 of TCGA 1992 (transactions between connected persons) at the
30end insert—

“(9)If deductible clogged losses have accrued to a company, the
company may make a claim in respect of an accounting period for—

(a)an amount of the deductible clogged losses to be treated, for
the purposes of section 2A(1)(a), as allowable losses accruing
35in the accounting period, and

(b)the same amount of allowable losses accruing to the company
in the period to be treated, for the purposes of section
2A(1)(b), as allowable losses previously accruing to the
company while it was within the charge to corporation tax.

(10)40The amount in respect of which the claim is made may not exceed the
total amount of any allowable losses accruing to the company in the
accounting period for which the claim is made.

(11)In subsection (9), “deductible clogged losses” means losses which
would, apart from Part 7ZA of CTA 2010, be deductible under
45subsection (3) from chargeable gains accruing to the company in an
accounting period.

(12)A claim under subsection (9) must be made by being included in the
company’s tax return for the accounting period for which the claim
is made.”

Pre-entry losses

18(1)5Schedule 7A of TCGA 1992 (restriction on set-off of pre-entry losses) is
amended in accordance with this paragraph.

(2)In paragraph 6(1)(b), after “from that gain” insert “(subject to sub-
paragraphs (1A) to (1C))”.

(3)In paragraph 6(1)(c), after “section 2A(1)” insert “(subject to sub-paragraphs
10(1A) to (1C))”.

(4)After sub-paragraph (1) insert—

“(1A)Sub-paragraph (1B) applies, in respect of an accounting period, if
the amount of chargeable gains accruing to the company in the
period exceeds the total of—

(a)15the amount of pre-entry losses accruing to the company in
the period that are deductible under sub-paragraph (1)(a),
and

(b)the amount of allowable losses, other than pre-entry losses,
accruing to the company in the period.

(1B)20Where this sub-paragraph applies in respect of an accounting
period—

(a)the sum of any deductions under sub-paragraph (1)(b)
may not exceed the total of—

(i)the amount of pre-entry losses that, on the
25assumption in sub-paragraph (1C), would be
deductible under sub-paragraph (1)(b), and

(ii)the amount of allowable losses (other than pre-
entry losses) that, on the assumption in sub-
paragraph (1C), would be deductible under section
302A(1), and

(b)for the purposes of sub-paragraph (1)(c), the deductions
made under section 2A(1) may not exceed the difference
between—

(i)the total of the amounts mentioned in paragraph
35(a)(i) and (ii), and

(ii)the amount of pre-entry losses deducted under
sub-paragraph (1)(b).

(1C)The assumption is that deductions under sub-paragraph (1)(b) are
treated for the purposes of Part 7ZA of CTA 2010 (restrictions on
40obtaining certain deductions) as if they were made under section
2A(1)(b) of this Act.”

Real estate investment trusts

19Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.

20In section 535B (use of pre-April 2019 residual business losses or deficits) at

 the end insert—

“(4)In determining, for the purposes of subsection (2)(a), the amount of
allowable losses accruing on disposals made before 6 April 2019
which would otherwise have been deducted from gains accruing to
5residual business of the company, section 269ZBA (restriction on
deductions) is to be ignored.”

21In section 550 (attribution of distributions) at the end insert—

“(4)In determining the amount of relevant non-chargeable gains for the
purposes of this section, section 269ZBA (restriction on deductions)
10is to be ignored.”

22In section 556 (disposal of assets) in subsection (7), for “and 535A” substitute
“, 535A and 535B”.

Counteraction of avoidance arrangements

23(1)Section 19 of F(No.2)A 2017 (losses: counteraction of avoidance
15arrangements) is amended in accordance with this paragraph.

(2)In subsection (8), before paragraph (a) insert—

“(za)section 2A(1) of TCGA 1992 (allowable capital losses);”.

(3)At the end insert—

“(13)In the case of a tax advantage as a result of a deduction (or increased
20deduction) under section 2A(1) of TCGA 1992, subsections (10) and
(11) have effect as if the references to 1 April 2017 were to 1 April
2020.”

Minor and consequential amendments to Part 7ZA of CTA 2010

24Part 7ZA of CTA 2010 is amended as follows.

25(1)25Section 269ZB (restriction on deductions from trading profits) is amended in
accordance with this paragraph.

(2)In subsection (8), for paragraph (b) substitute—

“(b)the total of—

(i)the amount of the company’s total non-trading profits
30deductions allowance for the period (see section
269ZC(3A)), and

(ii)in the case of an insurance company, any amount
specified for the period under section 269ZFC(5)(a)
(BLAGAB deductions allowance).”

(3)35Omit subsection (9) (meaning of a company’s “deductions allowance”).

26In section 269ZC (restriction on deductions from non-trading profits) omit
subsection (7) (meaning of a company’s “deductions allowance”).

27In section 269ZD (restriction on deductions from total profits) omit
subsection (6) (meaning of a company’s “deductions allowance”).

28After section 269ZD insert—

“269ZDA References to a company’s “deductions allowance”

(1)This section applies for the purposes of sections 269ZB to 269ZD and
269ZFC.

(2)5A company’s “deductions allowance” for an accounting period is to
be determined in accordance with section 269ZR where, at any time
in that period—

(a)the company is a member of a group (see section 269ZZB),
and

(b)10one or more other companies within the charge to
corporation tax are members of that group.

(3)Otherwise, a company’s “deductions allowance” for an accounting
period is to be determined in accordance with section 269ZW.

(4)But subsections (2) and (3) are subject to section 269ZYA (deductions
15allowance for company without a source of chargeable income).”

29(1)Section 269ZF (“relevant trading profits” and “relevant non-trading profits”)
is amended in accordance with this paragraph.

(2)In subsection (2)—

(a)for ““relevant non-trading profits””, in both places it occurs,
20substitute ““relevant non-trading income profits””,

(b)in paragraph (a), for “qualifying non-trading profits” substitute
“qualifying non-trading income profits”, and

(c)in paragraph (b) for “non-trading profits deductions allowance”
substitute “non-trading income profits deductions allowance”.

(3)25In subsection (3), in the words before step 1, for “and qualifying non-trading
profits” substitute “, qualifying non-trading income profits and qualifying
chargeable gains”.

(4)In subsection (3), in paragraph (3) of step 1—

(a)for “and relevant non-trading profits” substitute “, qualifying non-
30trading income profits and qualifying chargeable gains”, and

(b)for “both” substitute “each”.

(5)In subsection (3), in paragraph (3) of step 2—

(a)for “and the qualifying non-trading profits” substitute “, qualifying
non-trading income profits and qualifying chargeable gains”, and

(b)35for “both” substitute “each”.

(6)In the heading, for “and “relevant non-trading profits”” substitute “, “total
relevant non-trading profits” etc”.

30(1)Section 269ZFA (“relevant profits”) is amended as follows.

(2)In subsection (1)(b), for “section 269ZD(6)” substitute “section 269ZDA”.

(3)40In subsection (2)—

(a)in paragraph (a), for “qualifying trading profits and qualifying non-
trading profits” substitute “modified total profits”, and

(b)in paragraph (b), for “in determining” substitute “which could be
relieved against”.

31In section 269ZG (general insurance companies: excluded accounting
periods), in subsection (1), for “269ZE” substitute “269ZD”.

32In section 269ZR (deductions allowance for company in a group), at the end
insert—

“(5)5See section 269ZYA for further provision about the deductions
allowance for a company without a source of chargeable income
which is a member of a group.”

33In section 269ZW (deductions allowance for company not in a group), at the
end insert—

“(4)10See section 269ZYA for further provision about the deductions
allowance for a company without a source of chargeable income.”

34In section 269ZZ (company tax return to specify amount of deductions
allowance), in subsection (2)—

(a)after “section 269ZB(2),” insert “269ZBA(2),”, and

(b)15for “or 269ZD(2) or section 124D(1) of FA 2012” substitute “,
269ZD(2) or 269ZFC(2)”.

35(1)Section 269ZZA(1) (excessive specification of deductions allowance:
application of section) is amended in accordance with this paragraph.

(2)After paragraph (b) insert—

“(ba)20the company’s chargeable gains deductions allowance for the
period,”.

(3)In paragraph (c) for “non-trading profits deductions allowance” substitute
“non-trading income profits deductions allowance”.

(4)After paragraph (d) insert—

“(da)25the company’s BLAGAB deductions allowance for the
period.”

(5)Omit paragraph (e).

Minor and consequential amendments to Part 7A of CTA 2010

36Part 7A of CTA 2010 (banking companies: restrictions on obtaining certain
30deductions) is amended as follows.

37(1)Section 269CB (restriction on deductions for non-trading deficits from loan
relationships) is amended as follows.

(2)In subsection (2)—

(a)for “relevant non-trading profits”, in both places it occurs, substitute
35“total relevant non-trading profits”, and

(b)for “subsection (2)” substitute “subsection (2B)”.

(3)In subsection (3), for “relevant non-trading profits”, in both places it occurs,
substitute “total relevant non-trading profits”.

38In section 269CN (definitions)—

(a)40omit the definition of “relevant non-trading profits”, and

(b)at the end insert—

• ““total relevant non-trading profits”, in relation to a
  company, has the meaning given by section
  269ZF(2B).”

5Part 2 Corporate capital loss deductions: miscellaneous provision

Companies without a source of chargeable income: carry back of losses

39In section 2A of TCGA 1992 (company’s total profits to include chargeable
gains), after subsection (2) insert—

“(3)10Subsection (4) applies if—

(a)a company has two or more accounting periods that fall
wholly within the same financial year,

(b)the company is chargeable to corporation tax for each of
those accounting periods only because of a chargeable gain
15accruing to the company on the disposal of asset, and

(c)in the period (if any) between each of those accounting
periods, the company is not within the charge to corporation
tax.

(4)For the purposes of determining the amount of chargeable gains to
20be included in the company’s total profits for each of the accounting
periods by reference to which this subsection applies, subsection (1)
has effect as if after paragraph (a) (before the “and”) there were
inserted—

“(aa)so far as not otherwise deducted under this section, any
25allowable losses accruing to the company in another accounting
period that falls wholly within the same financial year as the
period mentioned in paragraph (a),”.”

Insurance companies: minor amendments to TCGA 1992 and FA 2012

40In section 210A of TCGA 1992, in subsection (10C), for the words from “In
30determining” to “an accounting period” substitute “For the purposes of
subsections (10A) and (10B)”.

41In section 93 of FA 2012 (minimum profits test), at the end insert—

“(6)For the purposes of this section, assume that non-BLAGAB allowable
losses cannot be deducted to any extent from BLAGAB chargeable
35gains (and, accordingly, assume that section 95 is not included in this
Act).”

Part 3 Commencement and anti-forestalling provision

Commencement

4240The amendments made by this Schedule have effect in relation to accounting
periods beginning on or after 1 April 2020.