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| "The Schedule A charge and mutual business. |
21C. - (1) The following provisions have effect for the purpose of applying the charge to tax under Schedule A in relation to mutual business.
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(2) The transactions or relationships involved in mutual business are treated as if they were transactions or relationships between persons between whom no relationship of mutuality existed.
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(3) Any surplus arising from the business is regarded as a profit (and any deficit as a loss) if it would be so regarded if the business were not mutual.
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(4) The person-
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(a) to whom the profit arises for corporation tax purposes, or |
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(b) who is regarded as receiving or entitled to the profit for income tax purposes, |
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is the person who would satisfy that description if the business were not mutual business.
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(5) Nothing in this section affects the operation of section 488 (co-operative housing associations).".
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| | 6. Section 25 of the Taxes Act 1988 (deductions from rent: general rules) shall cease to have effect.
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| | 7. - (1) Section 26 of the Taxes Act 1988 (land managed as one estate) is amended as follows.
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(2) In subsection (1)-
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(a) in paragraph (a), omit the words "at a full rent (not being a tenant's repairing lease)", and |
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(b) for the words from "not being" in paragraph (b) to the end of the subsection substitute "as if the rent, so far as it relates to that part and would otherwise be treated as being at a lower rate, were at a rate per annum equal to the relevant annual value." |
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(3) In subsection (2), omit paragraph (a).
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(4) After subsection (2) insert-
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"(2A) Where subsection (1) above applies, the following rules apply in computing the profits on which the owner is charged under Schedule A-
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(a) disbursements and expenses relating to any of that part of the estate which comprises land the rent in respect of which is determined under that subsection ("the relevant part of the estate") shall not be deductible from any receipts which are not so determined except to the extent that- |
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(i) the amount of the disbursements and expenses exceeds the amount of the rent so determined, and
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(ii) the receipts against which the remainder is set are receipts in respect of land comprised in the estate;
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(b) any excess for a chargeable period of the disbursements and expenses relating to the relevant part of the estate (including any excess carried forward under this paragraph) over the receipts for that period from which they are deductible in accordance with paragraph (a) above- |
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(i) shall be disregarded in computing any loss in respect of which relief may be given under section 379A or 392A, but
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(ii) may be carried forward to the following chargeable period and treated in relation to the later period as if it were a disbursement or expense relating to the relevant part of the estate;
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(c) disbursements and expenses relating to any land not comprised in the relevant part of the estate shall be deductible from the deemed receipts in respect of the land which is so comprised to the extent only that the deemed receipts exceed the aggregate of- |
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(i) the actual disbursements and expenses for that period relating to the relevant part of the estate, and
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(ii) any amounts carried forward to that period under paragraph (b) above;
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(d) any excess of the disbursements and expenses for that period relating to land not comprised in the relevant part of the estate over the amounts from which they are deductible shall be treated for the purposes of section 379A or 392A as a loss for that period in the Schedule A business in question.". |
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| | 8. In section 27 of the Taxes Act 1988 (maintenance funds for historic buildings), for subsection (3) substitute-
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"(3) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement-
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(a) there may be treated as deductible from the receipts arising from that part- |
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(i) any disbursements or expenses of the trustees of the settlement which relate to the other part of the estate and which would be so deductible if that part were also comprised in the settlement, and
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(ii) any disbursements or expenses of the owner of the other part of the estate to the extent to which they cannot be deducted by him in the chargeable period in which they are incurred because of an insufficiency of any receipts for that period from which they are deductible apart from this sub-paragraph;
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(b) any relief available to the trustees by virtue of section 379A(2)(b) shall instead be available to the owner of the other part of the estate. |
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This subsection has effect subject to subsection (2A) of section 26.".
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| | 9. Section 28 of the Taxes Act 1988 (deductions from receipts other than rent) shall cease to have effect.
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| | 10. Section 29 of the Taxes Act 1988 (sporting rights) shall cease to have effect.
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| | 11. In section 30(1) of the Taxes Act 1988 (expenditure on sea walls)-
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(a) for "for the purposes of sections 25, 28 and 31" substitute "for the purpose of computing the profits of any Schedule A business carried on in relation to those premises"; and |
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(b) for "in respect of dilapidation attributable to the year" substitute "as an expense of the business for that year". |
| | 12. Section 31 of the Taxes Act 1988 (provisions supplementary to sections 25 to 30) shall cease to have effect.
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| | 13. Section 33 of the Taxes Act 1988 (agricultural land: allowance for excess expenditure on management) shall cease to have effect.
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| | 14. Sections 33A and 33B of the Taxes Act 1988 (connected persons) shall cease to have effect.
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| | 15. - (1) Section 34 of the Taxes Act 1988 (treatment of premiums, etc. as rent or Schedule D profits) is amended as follows.
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(2) For the sidenote substitute "Treatment of premiums, etc. as rent.".
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(3) In subsection (3) for the words from "from the rent" onwards substitute "as an expense of any Schedule A business carried on by the landlord".
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(4) In subsection (6) for the words from "no charge" onwards substitute "no amount shall fall under that subsection to be treated as a receipt of any Schedule A business carried on by the landlord; but that other person shall be taken to have received as income an amount equal to the amount which would otherwise fall to be treated as rent and to be chargeable to tax as if he had received it in consequence of having, on his own account, entered into a transaction falling to be treated as mentioned in paragraph 1(2) of Schedule A.".
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(5) After subsection (7) insert-
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"(7A) An amount treated under this section as rent shall be taken into account in computing the profits of the Schedule A business in question for the chargeable period in which it is treated as received.".
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(6) In subsection (8) for the words from "may, if that person satisfies the Board" to "at his option" substitute "may, at his option, be paid".
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| | 16. - (1) Section 35 of the Taxes Act 1988 (charge on assignment of lease granted at an undervalue) is amended as follows.
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(2) In the sidenote for "Schedule D charge" substitute "Charge".
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(3) In subsection (2) for the words from "treated as profits or gains" onwards substitute "deemed to have been received as income by the assignor and to have been received by him in consequence of his having entered into a transaction falling to be treated as mentioned in paragraph 1(2) of Schedule A.".
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(4) After that subsection insert-
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"(2A) An amount deemed under this section to have been received as income by the assignor-
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(a) is treated as received when the consideration mentioned in subsection (2) becomes payable, and |
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(b) shall be taken into account in computing the profits of the Schedule A business in question for the chargeable period in which it is treated as received.". |
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