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Paragraph 2 of Schedule 24 |
| | 18. In paragraph 2(1) of Schedule 24 to the Taxes Act 1988 (foreign company assumed to become resident in UK at beginning of first accounting period in respect of which a direction is given or which is an ADP exempt period)-
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(a) in paragraph (a), for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made"; and |
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(b) in the words following paragraph (b), for "a direction is given" there shall be substituted "an apportionment falls to be made". |
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Paragraph 4 of Schedule 24 |
| | 19. - (1) Paragraph 4 of Schedule 24 to the Taxes Act 1988 (assumption that claims or elections giving maximum relief have been made, subject to notice to the contrary) shall be amended as follows.
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(2) In sub-paragraph (1A)(a) (sub-paragraph (2) to apply to accounting period of foreign company in respect of which a direction is given) for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made".
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(3) In sub-paragraph (2) (notice to be given to the Board at any time not later than the expiry of the appropriate period etc)-
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(a) for "given to the Board" there shall be substituted "given to an officer of the Board"; and |
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(b) for "the appropriate period" there shall be substituted "the period of twenty months following the end of the accounting period". |
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(4) In consequence of sub-paragraph (3)(b) above, sub-paragraph (2A) shall cease to have effect.
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(5) In sub-paragraph (3) (majority interest in foreign company) in paragraph (b) for "an assessment" there shall be substituted "any liability".
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(6) In sub-paragraph (3A) (application of sub-paragraph (3) to ADP exempt periods)-
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(a) in paragraph (a), for "a direction had been duly given under section 747(1)" there shall be substituted "an apportionment under section 747(3) had fallen to be made"; |
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(b) for paragraph (b) there shall be substituted- |
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"(b) such apportionments as are mentioned in sub-paragraph (3) above had been made and such liabilities as are mentioned in that sub-paragraph had arisen." |
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Paragraph 9 of Schedule 24 |
| | 20. - (1) Paragraph 9 of Schedule 24 to the Taxes Act 1988 (losses in pre-direction accounting periods) shall be amended as follows.
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(2) For "pre-direction", wherever occurring, there shall be substituted "pre-apportionment".
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(3) In sub-paragraph (1) (which provides that, subject to sub-paragraph (2), the paragraph applies where the foreign company incurs a loss in an accounting period preceding the first in respect of which a direction is given etc)-
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(a) the words "Subject to sub-paragraph (2) below," shall cease to have effect; and |
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(b) in paragraph (a), for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made". |
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(4) Sub-paragraph (2) (which provides that the paragraph does not apply where a declaration is made under paragraph 11(3)) shall cease to have effect.
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(5) In sub-paragraph (3) (assumption that pre-direction period was first accounting period in respect of which a direction was given) for "a direction was given under section 747(1)" there shall be substituted "an apportionment under section 747(3) fell to be made".
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(6) For sub-paragraph (4) (claim to be made by notice given to Board within 60 days of notice under section 753(1) or (3) relating to starting period etc) there shall be substituted-
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"(4) A claim under sub-paragraph (3) above shall be made by notice given to an officer of the Board within the period of twenty months following the end of the starting period or within such longer period as the Board may in any particular case allow."
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(7) Sub-paragraph (5) (which provides for an assumption that Chapter IV was in force before the beginning of the first of the pre-direction periods, and which is of no further practical utility) shall cease to have effect.
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(8) Sub-paragraph (6) (no account to be taken of declaration under paragraph 11(3)) shall cease to have effect.
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(9) At the end of the paragraph there shall be added-
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"(7) Nothing in-
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(a) paragraph 10 of Schedule 18 to the Finance Act 1998 (claims or elections in company tax returns), or |
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(b) Schedule 1A to the Management Act (claims or elections not included in returns),
shall apply, whether by virtue of section 754 or otherwise, to a claim under sub-paragraph (3) above."
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Paragraph 10 of Schedule 24 |
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| | 21. In paragraph 10 of Schedule 24 to the Taxes Act 1988 (capital allowances) in sub-paragraph (1) (which, subject to paragraphs 11 and 12, provides an assumption where capital expenditure is incurred in an accounting period falling before the first accounting period in respect of which a direction is given or which is an ADP exempt period)-
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(a) for "Subject to paragraphs 11 and 12 below," there shall be substituted "Subject to paragraph 12 below,"; and |
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(b) in paragraph (a), for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made". |
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Paragraph 11 of Schedule 24 |
| | 22. Paragraph 11 of Schedule 24 to the Taxes Act 1988 (power of Board by notice to declare that a specified accounting period is to be treated as the first direction period where it appears that no direction was given as respects that period as a result of capital allowances being claimed) shall cease to have effect.
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Paragraph 11A of Schedule 24 |
| | 23. In paragraph 11A of Schedule 24 to the Taxes Act 1988 (capital allowances) sub-paragraphs (3) and (6) (which relate to the application of paragraph 11(1)(c)) shall cease to have effect.
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Transfer pricing |
| | 24. After paragraph 19 of Schedule 24 to the Taxes Act 1988 there shall be inserted-
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"Transfer pricing |
| | 20. - (1) Sub-paragraph (2) of paragraph 5 of Schedule 28AA (no potential UK tax advantage where both parties are within charge to income or corporation tax etc) shall be assumed not to apply in any case where, apart from that sub-paragraph (and on the assumption in paragraph 1(1) above),-
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(a) paragraph 6 of that Schedule would apply; and |
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(b) the company would be the disadvantaged person for the purposes of that paragraph. |
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(2) Schedule 28AA (transfer pricing etc: provision not at arm's length) shall be assumed not to apply in any case where, apart from this sub-paragraph,-
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(a) the actual provision would (on the assumption in paragraph 1(1) above) confer a potential advantage in relation to United Kingdom taxation on the company; |
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(b) the other affected person would be a company resident outside the United Kingdom; and |
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(c) each accounting period of that company which falls wholly or partly within the accounting period in question is one as regards which- |
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(i) an apportionment under section 747(3) falls to be made; or
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(ii) no such apportionment falls to be made by virtue of the period being an ADP exempt period.
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(3) In any case where-
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(a) by virtue of sub-paragraph (2) above, Schedule 28AA is assumed not to apply, and |
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(b) the actual provision mentioned in paragraph (a) of that sub-paragraph involves (on the assumption in paragraph 1(1) above) any such interest or other distribution out of assets as would constitute a distribution for the purposes of the Corporation Tax Acts by virtue of paragraph (da) of section 209(2),
that interest or distribution out of assets shall be assumed not to constitute such a distribution by virtue of that paragraph."
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Schedule 25 |
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| | 25. For the heading to Schedule 25 to the Taxes Act 1988 (cases excluded from direction-making powers) there shall be substituted- "CASES WHERE SECTION 747(3) DOES NOT APPLY".
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Paragraph 1 of Schedule 25 |
| | 26. In paragraph 1 of Schedule 25 to the Taxes Act 1988 (which provides that Part I of the Schedule has effect for the purposes of section 748(1)(a)) there shall be added at the end "and the other provisions of Chapter IV of Part XVII which refer to a company pursuing an acceptable distribution policy".
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Paragraph 2A of Schedule 25 |
| | 27. - (1) Paragraph 2A of Schedule 25 to the Taxes Act 1988 (acceptable distribution policy: modifications of paragraph 2) shall be amended as follows.
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(2) In sub-paragraph (2) (dividend paid for earlier accounting period which is not an excluded period to be treated as falling within paragraph 2(1)(a)) in paragraph (a) and paragraph (b)-
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(a) for "which immediately precedes" there shall be substituted "immediately preceding"; and |
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(b) for "is not an excluded period" there shall be substituted "which is not an excluded dividend". |
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(3) In sub-paragraph (4) (position where no direction could be given under section 747(1) in respect of earlier accounting period because foreign company pursued acceptable distribution policy) for "no direction could be given in respect of the earlier period under section 747(1)" there shall be substituted "no apportionment under section 747(3) fell to be made in respect of the earlier period".
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(4) In sub-paragraph (8), before paragraph (a) (definition of "excluded period") there shall be inserted-
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"(aa) a dividend is an excluded dividend if it is paid, in whole or in part, out of the total profits from which (in accordance with section 747(6)(a)) the chargeable profits for an excluded period are derived,". |
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(5) In sub-paragraph (8)(a) (which defines an excluded period as one for which a direction is given under section 747(1)) for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made".
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