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Paragraph 8 of Schedule 25 |
| | 31. - (1) Paragraph 8 of Schedule 25 to the Taxes Act 1988 (which relates to the condition in paragraph 6(1)(b) of that Schedule) shall be amended as follows.
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(2) In sub-paragraph (3) (which applies sub-paragraph (2) with modifications in relation to a holding company) after "In the case of a holding company" there shall be inserted "or superior holding company".
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Paragraph 12 of Schedule 25 |
| | 32. - (1) Paragraph 12 of Schedule 25 to the Taxes Act 1988 (meaning of "holding company" in paragraphs 6 and 8(3)) shall be amended as follows.
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(2) In sub-paragraph (1), after "in paragraphs 6 and 8(3) above and" there shall be inserted "paragraph 12A below and in".
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(3) In sub-paragraph (5) (exclusion of income derived from certain sources) in paragraph (a)-
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(a) after "which is not a holding company" there shall be inserted "or superior holding company"; and |
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(b) after "engaged in exempt activities" there shall be inserted "or, in terms of sub-paragraph (5A) of that paragraph, is an exempt trading company". |
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Superior holding companies: supplementary provisions |
| | 33. After paragraph 12 of Schedule 25 to the Taxes Act 1988 there shall be inserted-
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 | "12A. - (1) In paragraphs 6, 8(3) and 12(5) above and this paragraph, "superior holding company" means-
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(a) a company whose business consists wholly or mainly in the holding of shares or securities of companies which- |
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(i) are holding companies or local holding companies; or
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(ii) are themselves superior holding companies; or
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(b) a company which would fall within paragraph (a) above if there were disregarded so much of its business as consists in the holding of property or rights of any description for use wholly or mainly by companies which it controls and which are resident in the territory in which it is resident. |
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(2) For the purposes of sub-paragraphs (4A) and (4B) of paragraph 6 above, the income of a company during any period which "represents qualifying exempt activity income of its subsidiaries" is any income of the company during that period which is directly or indirectly derived from companies-
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(a) which it controls, and |
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(b) which, throughout that period, fall within sub-paragraph (4B)(a) of that paragraph, but |
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(c) which are not holding companies other than local holding companies. |
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(3) In determining for the purposes of sub-paragraph (4A) or (4B) of paragraph 6 above the companies from which, and the proportions in which, different descriptions of income of a company are derived (whether directly or indirectly), any dividend shall be taken to be paid out of the appropriate profits.
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(4) Subsections (3) and (4) of section 799 (which provide rules for determining the profits out of which a dividend is to be regarded as paid for the purpose of subsection (1) of that section) shall apply for determining the appropriate profits for the purposes of subsection (3) above as they apply for determining the relevant profits for the purposes of subsection (1) of that section.
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(5) Sub-paragraphs (4) to (6) of paragraph 12 above shall apply in relation to sub-paragraph (4A) or (4B) of paragraph 6 above and a superior holding company as they apply in relation to sub-paragraph (3) or (4) of paragraph 6 above and a holding company, but taking the reference in sub-paragraph (4) of paragraph 12 above to paragraph (a) or (b) of sub-paragraph (1) of that paragraph as a reference to paragraph (a) or (b) of sub-paragraph (1) above."
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Paragraph 1 of Schedule 26 |
| | 34. - (1) In Schedule 26 to the Taxes Act 1988 (reliefs against liability for tax in respect of chargeable profits apportioned to UK resident company) paragraph 1 (trading losses and group relief etc) shall be amended as follows.
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(2) In sub-paragraph (1) (set-off against liability to tax under section 747(4)(a) where UK resident company entitled to deduction in respect of relevant allowance) the following provisions shall cease to have effect-
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(a) paragraph (c) (set-off only available if company has no profits or relevant allowance exceeds profits) and the word "and" immediately preceding that paragraph; and |
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(b) in the words following paragraph (c), the words "or, as the case may be, of the excess of it referred to in paragraph (c) above". |
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(3) In sub-paragraph (2)(a) (which defines the appropriate accounting period as that for which by virtue of section 754(2) the company is regarded as assessed to corporation tax in respect of the chargeable profits concerned) for "regarded as assessed to corporation tax" there shall be substituted "chargeable to tax by virtue of this Chapter".
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(4) Sub-paragraph (4) (time limit for making claims for group relief) shall cease to have effect.
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(5) Sub-paragraph (6) (which modifies section 43 of the Taxes Management Act 1970 in its application for the purposes of the paragraph) shall cease to have effect.
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Paragraph 3 of Schedule 26 |
| | 35. - (1) Paragraph 3 of Schedule 26 to the Taxes Act 1988 (gains on disposal of shares in controlled foreign companies) shall be amended as follows.
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(2) In sub-paragraph (1), for paragraph (a) (which refers to a direction having been given in respect of an accounting period of a controlled foreign company) there shall be substituted-
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"(a) an accounting period of a controlled foreign company ("the apportionment period") is one in respect of which an apportionment under section 747(3) falls to be made; and". |
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(3) Accordingly, in paragraphs (b) and (c) of sub-paragraph (1), for the words "the direction period", in each place where they occur, there shall be substituted "the apportionment period".
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(4) In paragraph (d) of sub-paragraph (1) (which refers to a sum being, under section 747(1)(a), assessed and recoverable from a company) for "assessed on and recoverable from" there shall be substituted "chargeable on".
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(5) In sub-paragraph (3), for "the direction period" there shall be substituted "the apportionment period".
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(6) In sub-paragraph (4), in the words following paragraph (c), for "assessed and recoverable" there shall be substituted "chargeable under section 747(4)(a)".
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(7) After subsection (6) there shall be inserted-
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"(6A) 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), |
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shall apply, whether by virtue of section 754 or otherwise, to a claim under sub-paragraph (6) above."
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Paragraph 4 of Schedule 26 |
| | 36. - (1) Paragraph 4 of Schedule 26 to the Taxes Act 1988 (dividends from the controlled foreign company) shall be amended as follows.
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(2) In sub-paragraph (1), for paragraph (a) (which refers to a direction having been given in respect of an accounting period of a controlled foreign company) there shall be substituted-
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"(a) an accounting period of a controlled foreign company is one in respect of which an apportionment under subsection (3) of section 747 falls to be made; and". |
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(3) Accordingly, in paragraph (b) of that sub-paragraph for "subsection (3) of that section" there shall be substituted "that subsection".
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(4) In sub-paragraph (2) (which refers to sums assessed on and recoverable from companies in accordance with s.747(4)(a)) for "assessed on and recoverable from" there shall be substituted "chargeable on".
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(5) In sub-paragraph (5)(a) (which refers to the amount of tax assessed on and recoverable from the company in accordance with s.747(4)(a)) for "assessed on and recoverable from" there shall be substituted "chargeable on".
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Commencement and transitional provision |
| | 37. - (1) The preceding provisions of this Schedule have effect as respects accounting periods of companies resident in the United Kingdom which end on or after the corporation tax self-assessment appointed day.
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(2) Where by virtue of sub-paragraph (1) above any question as to liability (if any) to tax by virtue of Chapter IV of Part XVII of the Taxes Act 1988 as respects any particular accounting period of a non-resident company which ends before the corporation tax self-assessment appointed day falls to be determined-
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(a) in the case of at least one company resident in the United Kingdom, for an accounting period of its which ends on or after that day, and |
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(b) in the case of at least one other such company, for an accounting period of its which ends before that day, |
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such separate determinations and computations shall be made as are necessary for determining the liability of the companies which fall within paragraph (a) above and the liability of the companies which fall within paragraph (b) above.
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(3) For the purposes of sub-paragraph (2) above-
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(a) any question as to the liability (if any) of a company falling within paragraph (a) shall be determined as if, in the case of every company resident in the United Kingdom, the accounting period of the non-resident company ended in an accounting period of the company ending on or after the corporation tax self-assessment appointed day; and |
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(b) any question as to the liability (if any) of a company falling within paragraph (b) shall be determined as if, in the case of every company resident in the United Kingdom, the accounting period of the non-resident company ended in an accounting period of the company ending before the corporation tax self-assessment appointed day. |
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(4) In this paragraph-
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"accounting period", in relation to a non-resident company, has the same meaning as it has in Chapter IV of Part XVII of the Taxes Act 1988; |
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"the corporation tax self-assessment appointed day" means the day which is the appointed day for the purposes of section 199 of the Finance Act 1994 (corporation tax self-assessment); |
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"non-resident company" means a company resident outside the United Kingdom. |
