Finance Bill (HL Bill 123)

continued    Part 3 continued    

43(1)Paragraph 44 applies where a company has an accounting period beginning
before 1 April 2020 and ending on or after that date (the “straddling
period”).

(2)For the purposes of paragraph 44—

(a)5the “pre-commencement period” means the part of the straddling
period falling before 1 April 2020, and

(b)the “post-commencement period” means the part of the straddling
period falling on or after that date.

44(1)The amount of chargeable gains to be included in the company’s total profits
10for the straddling period is the total of—

(a)the chargeable gains accruing to the company in the pre-
commencement period, after making any deductions under section
2A(1) of TCGA 1992, and

(b)the chargeable gains accruing to the company in the post-
15commencement period, after making any deductions under that
section.

(2)For the purposes of sub-paragraph (1)(a) and (b), section 2A of TCGA 1992
applies as if the pre-commencement period and the post-commencement
period were separate accounting periods, subject to the modification in sub-
20paragraph (3).

(3)For the purposes of determining the amount to be included in the
company’s total profits in respect of chargeable gains for a period, the
reference in section 2A(1)(a) of TCGA 1992 to any allowable losses accruing
to the company in the period is to be treated as including—

(a)25for the purposes of the pre-commencement period, a reference to any
allowable losses accruing to the company in the post-
commencement period so far as they exceed the chargeable gains
accruing to the company in the post-commencement period, and

(b)for the purposes of the post-commencement period, a reference to
30any available allowable losses accruing to the company in the pre-
commencement period so far as they exceed the chargeable gains
accruing to the company in the pre-commencement period.

(4)For the purposes of applying Part 7ZA of CTA 2010 in relation to the
straddling period—

(a)35section 269ZBA of that Act applies in relation to the post-
commencement period as if it were a separate accounting period,

(b)the reference in section 269ZF(4)(h) to deductions under section
2A(1)(b) of TCGA 1992 is to be treated as if it were a reference only
to deductions under that provision from the chargeable gains of the
40post-commencement period, and

(c)the reference in step 3(c) of section 269ZF to the chargeable gains
included in the company’s total profits is to be treated as if it were a
reference to the total of—

(i)the chargeable gains accruing to the company in the pre-
45commencement period, after making any deductions under
section 2A(1)(a) or (b) of TCGA 1992, and

(ii)the chargeable gains accruing to the company in the post-
commencement period, after making any deductions under
section 2A(1)(a) of that Act.

45(1)This paragraph applies in relation to a non-UK resident company which
carries on a UK property business or has other UK property income—

(a)if the conditions in sub-paragraph (2) are met, and

(b)unless the company has elected that this paragraph is not to apply.

(2)5The conditions are met if the company—

(a)is within the charge to income tax for the tax year 2019-20,

(b)is chargeable to corporation tax for an accounting period falling
wholly within the period beginning with 1 April 2020 and ending
with 5 April 2020 because of a chargeable gain accruing to the
10company on the disposal of an asset, and

(c)is within the charge to corporation tax on income for an accounting
period beginning on 6 April 2020.

(3)For the purposes of determining the amount to be included in the
company’s total profits in respect of chargeable gains for an accounting
15period mentioned in sub-paragraph (2)(b) or (2)(c), the reference in section
2A(1)(a) of TCGA 1992 to any allowable losses accruing to the company in
the period is to be treated as including—

(a)for the purposes of an accounting period mentioned in sub-
paragraph (2)(b), a reference to any allowable losses accruing to the
20company in the accounting period mentioned in sub-paragraph
(2)(c) (so far as those losses are not otherwise deducted under section
2A(1) of TCGA 1992), and

(b)for the purposes of the accounting period mentioned in sub-
paragraph (2)(c), a reference to any allowable losses accruing to the
25company in an accounting period mentioned in sub-paragraph (2)(b)
(so far as those losses are not otherwise deducted under section 2A(1)
of TCGA 1992).

(4)For the purposes of the application of Part 7ZA of CTA 2010 in relation to the
accounting periods mentioned in sub-paragraphs (2)(b) and (2)(c)—

(a)30section 269ZYA of CTA 2010 (deductions allowance for company
without a source of chargeable income) applies as if the company
had made a claim under that section in respect of each accounting
period mentioned in sub-paragraph (2)(b), and

(b)the company’s deductions allowance for the accounting period
35mentioned in sub-paragraph (2)(c) is treated as being reduced by the
amount of the company’s deductions allowance for each accounting
period mentioned in sub-paragraph (2)(b).

Anti-forestalling provision

46(1)This sub-paragraph applies if—

(a)40a company has an accounting period ending before 1 April 2020,

(b)the company would, apart from this paragraph, obtain a tax
advantage as a result of a deduction, or an increased deduction,
under section 2A(1)(b) of TCGA 1992,

(c)the tax advantage arises as a result of arrangements entered into on
45or after 29 October 2018, and

(d)the main purpose, or one of the main purposes, of the arrangements
is to secure a tax advantage as a result of the fact that section 269ZBA
of CTA 2010, inserted by this Schedule, is not to have effect for the
accounting period for which the deduction would be made.

(2)If sub-paragraph (1) applies, the deductions made by the company for the
accounting period under section 2A(1)(b) of TCGA 1992 may not exceed 50%
of the company’s qualifying chargeable gains for the period.

(3)So far as necessary for the purposes of this paragraph, Part 7ZA of CTA 2010
5is treated as having come into force on the same day as this paragraph.

(4)This paragraph is treated as having come into force on 29 October 2018.

(5)Where a company has a straddling period, the pre-commencement period
and the post-commencement period are treated for the purposes of this
paragraph as separate accounting periods.

(6)10In this paragraph—

(a)“arrangements” includes any agreement, understanding, scheme
transaction or series of transactions (whether or not legally
enforceable),

(b)“straddling period”, “pre-commencement period” and “post-
15commencement period” have the same meaning as they have for the
purposes of paragraph 44, and

(c)“tax advantage” has the meaning given by section 1139 of CTA 2010.

Section 30

Schedule 5 Structures and buildings allowances

20Introduction

1CAA 2001 is amended as follows.

Research and development allowances

2In Part 2A (structures and buildings allowances), for section 270EC
substitute—

“270EC 25  Research and development

(1)This section applies if, at any time, a person sells the relevant interest
in a building or structure to another.

(2)The total amount of the allowances under this Part by reference to
the building or structure that is available to the person buying the
30relevant interest is reduced (but not below nil) by the amount of any
Part 6 allowance to which the person is entitled by reference to the
building or structure.

(3)There is another restriction on the total amount of those allowances
which applies if—

(a)35the sale in question, or a sale of the relevant interest at an
earlier time, is by a person entitled to a Part 6 allowance by
reference to the building or structure, and

(b)the amount paid for the relevant interest on any of those sales
is less than the ordinary Part 2A amount (see subsection (6)).

(4)The other restriction is that the total amount of the allowances under
this Part by reference to the building or structure that is available to
the person buying the relevant interest may not exceed the permitted
maximum.

(5)5For this purpose “the permitted maximum” is—

(a)the lowest sum paid for the relevant interest on the sale in
question or any earlier sale within subsection (3)(a), less

(b)the total amount of the allowances under this Part arising by
reference to the building or structure since the earliest sale
10identified for the purposes of paragraph (a) of this
subsection.

(6)In this section “the ordinary Part 2A amount” means—

(a)the amount of the qualifying expenditure, by reference to
which an allowance can be made under this Part, incurred in
15relation to the building or structure before the time of the sale
in question, less

(b)the total amount of the allowances under this Part arising
before that time by reference to the building or structure.

(7)In this section any reference to allowances under this Part is to
20allowances to which an entitlement has arisen under this Part or
would have arisen under this Part if the building or structure had
been in continuous qualifying use since it was first brought into non-
residential use.

(8)In this section “Part 6 allowance”, in relation to a person and a
25building or structure, means an allowance under Part 6 in respect of
expenditure incurred by the person on its construction or
acquisition.”

Contribution allowances

3(1)Section 538A (contributions: buildings and structures) is amended as
30follows.

(2)For subsection (3)(b) substitute—

“(b)the building or structure were brought into qualifying use,
for the purposes of the allowance in relation to the
contribution, on—

(i)35the day on which R first brought the building or
structure into qualifying use, or

(ii)if R is a public body, the earlier of the day mentioned
in sub-paragraph (i) and the day on which R first
brought the building or structure into non-residential
40use.”

(3)For subsection (4) substitute—

“(4)If, at any time in the period beginning with the day on which C made
the contribution and ending with the day on which R first brought
the building or structure into non-residential use, C did not have a
45relevant interest in the building or structure—

(a)C is to be treated for the purposes of allowances under Part
2A as having had a relevant interest in the building or
structure when that period begins, and

(b)C is not to be treated for those purposes as ceasing to have
5that interest on any subsequent sale of R’s relevant interest in
the building or structure.”

(4)After subsection (6) insert—

“(7)In determining, for the purposes of this section, the day on which R
first brings a building or structure into non-residential use, ignore
10any use of the building or structure which is insignificant.”

Minor amendments

4In section 270AA(2) (entitlement to structures and buildings allowances), at
the beginning of paragraph (b)(i) insert “on or”.

5In section 270BB (capital expenditure incurred on construction), in
15subsection (2)(a), for “qualifying use” substitute “non-residential use”.

6In section 270BL (apportionment of sums partly referable to non-qualifying
assets), for “qualifying expenditure” substitute “expenditure for which an
allowance can be made under this Part”.

7In section 270IA (evidence of qualifying expenditure etc), in subsection
20(4)(a), omit “written”.

Commencement

8The amendment made by paragraph 2 has effect in the case of any sale
within subsection (1) of the substituted section 270EC(1) of CAA 2001 that
takes place on or after 11 March 2020.

925The amendments made by paragraph 3 have effect in relation to
contributions made on or after 11 March 2020.

10Part 2A of CAA 2001 has effect, and is to be deemed always to have had
effect, with the amendments made by paragraphs 4 to 7.

Section 32

Schedule 6 30Non-UK resident companies carrying on UK property businesses etc

Calculation of non-trading profits and deficits from loan relationships or derivative contracts

1In section 301 of CTA 2009 (calculation of non-trading profits and deficits
from loan relationships), for the subsection (1A) inserted into that section by
paragraph 15(3) of Schedule 5 to FA 2019 substitute—

“(1A)35In the case of a non-UK resident company, subsections (4) to (7) need
to be read with section 5(3), (3A)(b) and (3B)(b) (territorial scope of
charge to corporation tax).”

2In section 574 of CTA 2009 (derivative contracts: non-trading credits and
debits to be brought into account), for the subsection (2A) inserted into that

 section by paragraph 18 of Schedule 5 to FA 2019 substitute—

“(2A)In the case of a non-UK resident company, subsection (2) needs to be
read with section 5(3), (3A)(b) and (3B)(b) (territorial scope of charge
to corporation tax).”

5Debits referable to times before UK property business etc is carried on

3After section 330 of CTA 2009 insert—

“Pre-commencement debits of property businesses etc of non-UK resident
companies

330ZA   Debits referable to times before UK property business etc carried on

(1)10This section applies if—

(a)a non-UK resident company has debits in respect of a loan
relationship to which it is a party for the purposes of its UK
property business,

(b)the debits are referable to times (“the pre-rental times”)
15before (but not more than 7 years before) the date on which it
starts to carry on the business, and

(c)the debits are not otherwise brought into account for tax
purposes.

(2)If, on the assumption that the company had been carrying on the
20business at the pre-rental times, the debits—

(a)would have been recognised in determining its profit or loss
for a period consisting of or including those times, and

(b)would have been brought into account for the purposes of
this Part,

25the debits are (so far as they exceed relevant credits) treated for the
purposes of this Part as if they were debits for the accounting period
in which it started to carry on the business.

(3)For this purpose “relevant credits” means credits of the company in
respect of the loan relationship which, on the assumption that the
30company had been carrying on the business at the pre-rental times—

(a)would have been recognised in determining its profit or loss
for a period consisting of or including those times,

(b)would have been brought into account for the purposes of
this Part, and

(c)35would not otherwise have been brought into account for tax
purposes.

(4)This section is subject to section 327 (disallowance of imported losses
etc).

(5)This section also applies in relation to a non-UK resident company
40which is a party to a loan relationship for the purpose of enabling it
to generate other UK property income (within the meaning given by
section 5(6)).”

4After section 607 of CTA 2009 insert—

“607ZA    Debits referable to times before UK property business etc carried
on

(1)This section applies if—

(a)5a non-UK resident company has debits in respect of a
derivative contract to which it is a party for the purposes of
its UK property business,

(b)the debits are referable to times (“the pre-rental times”)
before (but not more than 7 years before) the date on which it
10starts to carry on the business, and

(c)the debits are not otherwise brought into account for tax
purposes.

(2)If, on the assumption that the company had been carrying on the
business at the pre-rental times, the debits—

(a)15would have been recognised in determining its profit or loss
for a period consisting of or including those times, and

(b)would have been brought into account for the purposes of
this Part,

the debits are (so far as they exceed relevant credits) treated for the
20purposes of this Part as if they were debits for the accounting period
in which it started to carry on the business.

(3)For this purpose “relevant credits” means credits of the company in
respect of the derivative contract which, on the assumption that the
company had been carrying on the business at the pre-rental times—

(a)25would have been recognised in determining its profit or loss
for a period consisting of or including those times,

(b)would have been brought into account for the purposes of
this Part, and

(c)would not otherwise have been brought into account for tax
30purposes.

(4)This section also applies in relation to a non-UK resident company
which is a party to a derivative contract for the purpose of enabling
it to generate other UK property income (within the meaning given
by section 5(6)).”

535In paragraph 40 of Schedule 5 to FA 2019 (transitional provision: imported
losses in respect of derivative contracts), at the end insert—

“(7)Section 607ZA of CTA 2009 (debits referable to times before UK
property business carried on) has effect subject to this paragraph.”

Duty to notify chargeability to corporation tax: exceptions

640In paragraph 2 of Schedule 18 to FA 1998 (duty of company to notify HMRC
that it is chargeable for an accounting period if it has not received a notice
requiring a company tax return), in sub-paragraph (1A) (which provides an
exception to that duty), as inserted into that paragraph by paragraph 6(2) of
Schedule 5 to FA 2019—

(a)45omit the “and” before paragraph (b), and

(b)after that paragraph insert “, and

(c)having deducted the income tax mentioned in
paragraph (a) at the fourth step in paragraph 8
(calculation of tax payable), the amount of tax
5payable for the period is nil.”

7In section 55A(1) of FA 2004 (exception to duty of company to give notice of
coming within the charge to corporation tax), as inserted by paragraph 7 of
Schedule 5 to FA 2019—

(a)omit the “and” before paragraph (b), and

(b)10after that paragraph insert “, and

(c)in consequence of the deduction of the income tax
mentioned in paragraph (a) at the fourth step in
paragraph 8 of Schedule 18 to the Finance Act 1998
(calculation of tax payable), the amount of tax payable
15for the period will be nil.”

Period for making election under regulation 6A of the Disregard Regulations

8In regulation 6A of the Loan Relationships and Derivative Contracts
(Disregard and Bringing into Account of Profits and Losses) Regulations
2004—

(a)20in paragraph (5)(b), after “fair value” insert “(but see paragraph (6))”,
and

(b)at the end insert—

“(6)For the purposes of the definition of “the first relevant
period” an accounting period of a company is to be
25ignored if—

(a)the accounting period begins solely as a result of a
disposal of an asset by the company, and

(b)any gain accruing to the company on the disposal
would be chargeable to corporation tax as a result
30of section 2B(4) of the Taxation of Chargeable Gains
Act 1992.”

9In paragraph 44 of Schedule 5 to FA 2019, at the end insert—

“(4)In determining for the purposes of this paragraph whether, on the
commencement date, a company comes within the charge to
35corporation tax by reason of this Schedule, no account is to be
taken of any disposal made by the company before that date
where any gain accruing to the company on the disposal would be
chargeable to corporation tax as a result of section 2B(4) of TCGA
1992.”

40Commencement

10Schedule 5 to FA 2019 has effect as if the amendments made by paragraphs
1 to 7 had at all times been incorporated into the provision made by that
Schedule.

11The amendments made by paragraphs 8 and 9 have effect in relation to
45disposals made on or after 6 April 2019.

Section 34

Schedule 7 CT payment plans for tax on certain transactions with EEA residents

CT payment plans

1In TMA 1970, after section 59FA insert—

“59FB 5 CT payment plans for tax on certain transactions with EEA residents

Schedule 3ZC makes provision enabling a company that is liable to
pay corporation tax arising in connection with certain transactions to
defer payment of the tax by entering into a CT payment plan.”

2After Schedule 3ZB to TMA 1970 insert—

Section 59FB

10“Schedule 3ZC CT Payment plans for tax on certain transactions with EEA residents

Introduction

1This Schedule makes provision enabling a company that is liable
to pay qualifying corporation tax for an accounting period to defer
15payment of the tax by entering into a CT payment plan.

Qualifying corporation tax

2 (1) For the purposes of this Schedule a company is liable to pay
qualifying corporation tax for an accounting period if CT1 is
greater than CT2 where—

• 20CT1 is the corporation tax which the company is liable to pay
  for the accounting period, and

• CT2 is the corporation tax which the company would be
  liable to pay for the accounting period if any gains, credits,
  losses or debits arising in respect of qualifying transactions
  25of the company were ignored.

(CT2 will be zero if the company would not be liable to pay any
corporation tax for the period).

(2)The amount of qualifying corporation tax which the company is
liable to pay is the difference between CT1 and CT2.

30Qualifying transactions

3 (1) For the purposes of this Schedule each of the following is a
qualifying transaction of a company (“the company concerned”)—

(a)a disposal within sub-paragraph (2),

(b)a transaction within sub-paragraph (3),

(c)35a transaction within sub-paragraph (4), and

(d)a transfer within sub-paragraph (5).

(2)A disposal is within this sub-paragraph if—

(a)it is a disposal by the company concerned of an asset,

(b)it is a disposal to a company (“the transferee”) that at the
time of the disposal is resident outside the United
Kingdom in an EEA state, and

(c)it is a disposal to which section 139 or 171 of TCGA 1992
5would apply were the transferee resident at the time of the
disposal in the United Kingdom instead.

(3)A transaction is within this sub-paragraph if—

(a)it is a transaction, or the first in a series of transactions, as
a result of which the company concerned is directly or
10indirectly replaced as a party to a loan relationship by
another company (“the transferee”),

(b)at the time of the transaction the transferee is resident
outside the United Kingdom in an EEA state, and

(c)it is a transaction to which section 340(3) of CTA 2009
15would apply were the transferee resident at the time of the
transaction in the United Kingdom instead.

(4)A transaction is within this sub-paragraph if—

(a)it is a transaction, or the first in a series of transactions, as
a result of which the company concerned is directly or
20indirectly replaced as a party to a derivative contract by
another company (“the transferee”),

(b)at the time of the transaction the transferee is resident
outside the United Kingdom in an EEA state, and

(c)it is a transaction to which section 625(3) of CTA 2009
25would apply were the transferee resident at the time of the
transaction in the United Kingdom instead.

(5)A transfer is within this sub-paragraph if—

(a)it is a transfer from the company concerned of an
intangible fixed asset,

(b)30it is a transfer to a company (“the transferee”) that
immediately after the transfer is resident outside the
United Kingdom in an EEA state, and

(c)it is a transfer to which section 775(1) of CTA 2009 would
apply were the transferee resident immediately after the
35transfer in the United Kingdom instead.

(6)In this Schedule “transferee”, in relation to a qualifying transaction
of a company, means the transferee referred to in sub-paragraph
(2), (3), (4) or (5) (as the case may be).

Eligibility to enter a CT payment plan

4 (1) 40A company that is liable to pay qualifying corporation tax for an
accounting period may enter into a CT payment plan in respect of
the tax in accordance with this Schedule.

(2)The CT payment plan may relate to—

(a)all of the qualifying corporation tax that the company is
45liable to pay for the accounting period, or

(b)only part of the qualifying corporation tax that the
company is liable to pay for the accounting period.