Finance (No. 2) Bill - continued        House of Commons
Schedule A, - continued
PART I, MAIN CHARGING PROVISIONS - continued

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     20. - (1) Section 40 of the Taxes Act 1988 (tax treatment of receipts and outgoings on sale of land) is amended as follows.
 
      (2) In subsection (1) for "become receivable or payable on his behalf" substitute "been received or paid by him".
 
      (3) In subsection (3)(b), for the words from "had become receivable" to the end substitute "had been received or paid directly by him immediately before the time to which the apportionment is made".
 
      (4) After subsection (4) insert-
 
 
    "(4A) An amount deemed under this section to have been received or paid shall be taken into account in computing the profits of the Schedule A business in question for the period in which it is treated as received or paid.".
 
      (5) Omit subsection (5).
 
     21. Section 41 of the Taxes Act 1988 (relief for rent not paid, etc.) shall cease to have effect.
 
     22. In section 42A of the Taxes Act 1988 (non-residents and their representatives), omit subsection (8).
 
     23. In section 65 of the Taxes Act 1988 (Case IV and V assessments: general)-
 
 
    (a) omit subsections (2A) and (2B), and
 
    (b) in subsection (4), after "Subsections (1) to (3) above" insert "and section 65A below".
     24. For section 65A of the Taxes Act (Case V income from land overseas, etc.) substitute-
 
 
"Case V income from land outside UK: income tax.     65A. - (1) This section applies where a person is chargeable to income tax under Case V of Schedule D in respect of income which-
 
    (a) arises from a business carried on for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land outside the United Kingdom, and
 
    (b) is not income to which section 65(3) applies (income immediately derived from carrying on a trade, profession or vocation).
      (2) The provisions of Schedule A apply to determine whether income falls within subsection (1)(a) above as they would apply to determine whether the income fell within paragraph 1(1) of that Schedule if-
 
 
    (a) the land in question were in the United Kingdom, or
 
    (b) a caravan or houseboat which is to be used at a location outside the United Kingdom were to be used at a location in the United Kingdom.
      (3) Any provision of the Taxes Acts which deems there to be a Schedule A business in the case of land in the United Kingdom applies where the corresponding circumstances arise with respect to land outside the United Kingdom so as to deem there to be a business within subsection (1)(a) above.
 
      (4) All businesses and transactions carried on or entered into by a particular person or partnership, so far as they are businesses or transactions the income from which is chargeable to tax under Case V of Schedule D in accordance with this section, are treated for the purposes of the charge to tax under Case V as, or as entered into in the course of carrying on, a single business (an "overseas property business").
 
      (5) The income from an overseas property business shall be computed for the purposes of Case V of Schedule D in accordance with the rules applicable to the computation of the profits of a Schedule A business.
 
  Those rules apply separately in relation to-
 
 
    (a) an overseas property business, and
 
    (b) any actual Schedule A business of the person chargeable,

as if each were the only Schedule A business carried on by that person.
      (6) Sections 80 and 81 (expenses in connection with foreign trades and travel between trades etc.) do not apply in relation to the computation of the profits of an overseas property business.
 
      (7) Sections 503 and 504 of this Act and section 29 of the 1990 Act (provisions relating to furnished holiday accommodation) do not apply to the profits or losses of an overseas property business.
 
      (8) Where under this section rules expressed by reference to domestic concepts of law apply in relation to land outside the United Kingdom, they shall be interpreted so as to produce the result that most closely corresponds with the result produced for Schedule A purposes in relation to land in the United Kingdom.".
 
     25. After section 70 of the Taxes Act 1988 (corporation tax: basis of assessment, etc.) insert-
 
 
"Case V income from land outside UK: corporation tax.     70A. - (1) This section applies where a company is chargeable to corporation tax under Case V of Schedule D in respect of income which-
 
    (a) arises from a business carried on for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land outside the United Kingdom, and
 
    (b) is not income to which section 70(2) applies (income from a trade or vocation).
      (2) The provisions of Schedule A apply to determine whether income falls within subsection (1)(a) above as they would apply to determine whether the income fell within paragraph 1(1) of that Schedule if-
 
 
    (a) the land in question were in the United Kingdom, or
 
    (b) a caravan or houseboat which is to be used at a location outside the United Kingdom were to be used at a location in the United Kingdom.
      (3) Any provision of the Taxes Acts which deems there to be a Schedule A business in the case of land in the United Kingdom applies where the corresponding circumstances arise with respect to land outside the United Kingdom so as to deem there to be a business within subsection (1)(a) above.
 
      (4) All businesses and transactions carried on or entered into by a particular company or partnership, so far as they are businesses or transactions the income from which is chargeable to tax under Case V of Schedule D in accordance with this section, are treated for the purposes of the charge to tax under Case V as, or as entered into in the course of carrying on, a single business (an "overseas property business").
 
      (5) The income from an overseas property business shall be computed for the purposes of Case V of Schedule D in accordance with the rules applicable to the computation of the profits of a Schedule A business.
 
  Those rules apply separately in relation to-
 
 
    (a) an overseas property business, and
 
    (b) any actual Schedule A business of the company chargeable,

as if each were the only Schedule A business carried on by that company.
      (6) Sections 503 and 504 of this Act and section 29 of the 1990 Act (provisions relating to furnished holiday accommodation) do not apply to the profits or losses of an overseas property business.
 
      (7) Where under this section rules expressed by reference to domestic concepts of law apply in relation to land outside the United Kingdom, they shall be interpreted so as to produce the result that most closely corresponds with the result produced for Schedule A purposes in relation to land in the United Kingdom.".
 
 
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