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SCHEDULE 23
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TAX TREATMENT OF AMOUNTS RELATING TO ACQUISITION ETC. OF CERTAIN RIGHTS |
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Rights to which this Schedule applies |
| | 1. This Schedule applies to-
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(a) licences granted under section 1 of the Wireless Telegraph Act 1949 in accordance with regulations made under section 3 of the Wireless Telegraphy Act 1998 (bidding for licences), and |
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(b) indefeasible rights to use a telecommunications cable system ("IRUs"), |
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and to any right derived, directly or indirectly, from a right within paragraph (a) or (b).
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Tax treatment of expenditure on acquisition and receipts from disposal |
| | 2. - (1) Amounts that may in accordance with normal accounting practice be taken into account in determining profit or loss for accounting purposes in respect of-
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(a) expenditure on the acquisition of a right to which this section applies, or |
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(b) receipts from the disposal of any such right, |
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shall be treated as items of a revenue nature for tax purposes provided they are so taken into account in any relevant statutory accounts of the taxpayer.
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(2) The reference in sub-paragraph (1) to the acquisition of a right to which this Schedule applies includes-
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(a) the extension of rights attached to such a right, and |
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(b) in relation to a right subject to a derivative right, the cancellation or restriction of rights attached to the derivative right. |
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(3) The reference in sub-paragraph (1) to the disposal of a right to which this Schedule applies includes-
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(a) the cancellation or restriction of rights attached to such a right, and |
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(b) the granting of a derivative right or the extension of rights attached to a derivative right. |
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Tax treatment of amounts arising from revaluation |
| | 3. - (1) There shall also be taken into account for tax purposes as an item of a revenue nature any amount in respect of the revaluation of a right to which this Schedule applies that, in accordance with normal accounting practice, falls to be taken into account for accounting purposes.
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(2) This paragraph applies whether or not the item-
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(a) may be so taken into account in determining profit or loss, or |
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(b) is so taken into account in any relevant statutory accounts of the taxpayer. |
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(3) An item taken into account for tax purposes under this paragraph shall be so taken into account as a credit or debit for the period of account in which it is recognised for accounting purposes in accordance with normal accounting practice.
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Tax treatment must accord with accounting approach in relevant group accounts |
| | 4. - (1) If the taxpayer is a member of a group of companies for which consolidated group accounts are required to be prepared, the accounting approach adopted by the taxpayer for tax purposes in respect of items within paragraph 2 or 3 must not be more cautious than that adopted in the group accounts.
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(2) The "accounting approach" means the accounting policies used in preparing the accounts and the methods of applying those policies.
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(3) Where consolidated group accounts are required to be prepared for more than one group of which the taxpayer is a member, this paragraph applies in relation to each of them.
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(4) In this paragraph-
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"consolidated group accounts" means group accounts that satisfy the requirements of- |
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(a) section 227 of the Companies Act 1985, or
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(b) in Northern Ireland, Article 235 of the Companies (Northern Ireland) Order 1986,
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or the corresponding requirements of the law of a country outside the United Kingdom; and |
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"group of companies" means a group as defined in- |
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(a) section 262(1) of the Companies Act 1985, or
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(b) in Northern Ireland, Article 270(1) of the Companies (Northern Ireland) Order 1986,
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or the corresponding provisions of the law of a country outside the United Kingdom. |
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Interpretation |
| | 5. In this Schedule-
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"normal accounting practice" means normal accounting practice with respect to the statutory accounts of companies incorporated in a part of the United Kingdom; |
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"statutory accounts" means accounts that are required by law to be prepared and which meet the requirements of- |
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(a) section 226 of the Companies Act 1985, or
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(b) in Northern Ireland, Article 234 of the Companies (Northern Ireland) Order 1986,
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or the corresponding requirements of the law of a country outside the United Kingdom; and |
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"for tax purposes" means for the purposes of calculating the profits of a trade under Case I of Schedule D. |
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Transitional provision in relation to IRUs |
| | 6. - (1) This Schedule does not apply to IRUs acquired before 21st March 2000.
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(2) This Schedule does not apply to an IRU by virtue of its being acquired on or after that date, directly or indirectly, from an associate or an associated company.
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For this purpose-
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"associate" has the meaning given by section 417(3) and (4) of the Taxes Act 1988; and |
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(a) in relation to another company, has the meaning given by section 416(1) of that Act, and
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(a) in relation to an individual, means a company of which that individual has control within the meaning of subsections (2) to (6) of that section.
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