Amendments proposed to the Finance Bill - continued House of Commons

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Mr Andrew Smith

317

Schedule     22,     page     420,     line     21,     at end insert—

    '(1A) The Secretary of State may make provision by regulations—

      (a) enabling him, on the application of the company or group concerned, to adjust a training commitment (to any extent) to take account of changed circumstances;

      (b) requiring an application for adjustment to be in such form and contain such information as may be prescribed;

      (c) authorising the Secretary of State, when considering an application for adjustment, to consult any prescribed person involved in the training of seafarers;

      (d) as to the procedure to be followed where the Secretary of State is minded not to make the adjustment applied for.'.

   

Mr Andrew Smith

318

Schedule     22,     page     424,     leave out lines 19 to 26 and insert—

    '38.—(1) Where a tonnage tax election is made before the end of the initial period and the 75% limit is exceeded in the first relevant accounting period, the election is treated as never having been of any effect.

    (2) Where a tonnage tax election is made after the end of the initial period, then—

      (a) if the 75% limit is exceeded in the first relevant accounting period, the election does not have effect in relation to that period;

      (b) if the 75% limit is exceeded in the first and second relevant accounting periods, the election does not have effect in relation to either of those periods; and

      (c) if the 75% limit is exceeded in the first, second and third relevant accounting periods, the election is treated as never having been of any effect.

    (2A) For the purposes of sub-paragraphs (1) and (2) the first, second or third relevant accounting period means—

      (a) in relation to a single company, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of the company after its entry into tonnage tax;

      (b) in relation to a group, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of a member of the group that would have been a tonnage tax company.'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

303

Schedule     22,     page     426,     line     20,     at end insert— 'and

      (c) any trading income, such as the rebate of rentals, arising on the disposal of an interest in a ship, provided that the income does not arise from a trade consisting in the purchase and sale of ships.'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

304

Schedule     22,     page     426,     line     35,     at end insert ', and

      (c) any revenue from the transporting of oil.'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

305

Schedule     22,     page     427,     line     42,     at end insert 'and, in the case of non-trading income falling within sub-paragraph (2)(a), any such income that can be shown to arise from the short-term investment of surplus working capital from core qualifying activities or qualifying secondary activities'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

306

Schedule     22,     page     429,     line     20,     at end insert 'and ending before or on the company's exit from tonnage tax'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

307

Schedule     22,     page     431,     line     11,     at end insert—

    '(3) Where a company fails to issue a notice within the prescribed period the company shall be liable to a penalty of £100.'.

   

Mr Richard Ottaway
Mr David Heathcoat-Amory
Mr Howard Flight

147

Schedule     22,     page     431,     line     42,     leave out '5' and insert '2A'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

308

Schedule     22,     page     433,     line     23,     at end insert ', together with the length of any periods during which the asset was not a tonnage tax asset and not within the charge to corporation tax on chargeable gains.'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

309

Schedule     22,     page     433,     line     26,     at end insert—

'Chargeable gains: disposal of shares in tonnage tax companies

    65A.—(1) Where a tonnage tax company disposes of shares in another tonnage tax company ("company A"), the chargeable gain or loss shall be equal to the gain or loss which would have accrued if the shares had been disposed of immediately before company A became a tonnage tax company.

    (2) Where a tonnage tax company disposes of shares in a non-resident company ("company B") that satisfies the conditions in sub-paragraph (3) below, the chargeable gain or loss shall be equal to the gain or loss which would have accrued if the shares had been disposed of immediately before company B first satisfied those conditions.

    (3) The conditions are—

      (a) that the conditions in paragraphs 49(2)(a) and 49(2)(b) are satisfied;

      (b) that the 75 per cent. limit is not exceeded in relation to the overseas company; and

      (c) that all the income of the overseas company is such that, if it were a tonnage tax company, it would be relevant shipping income.

    (4) For the purposes of sub-paragraph (3)(b), the "75 per cent. limit" has the meaning given in 49(3).'.

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

293

Schedule     22,     page     437,     leave out lines 18 to 25 and insert—

.'.

'number of years
percentage reduction
1
20%
2
40%
3
60%
4
80%
5 or more
100%

   

Mr Richard Ottaway [R]
Mr David Heathcoat-Amory [R]
Mr Howard Flight [R]

294

Schedule     22,     page     439,     line     34,     at end insert—

    'The regulations shall make provision for the writing down to be done on a basis to be specified by the tonnage tax company, provided that the company can demonstrate that the basis is just and reasonable.'.

   

Mr Andrew Smith

319

Schedule     22,     page     440,     line     33,     leave out 'paragraph 90' and insert 'paragraphs 90 and 90A'.

   

Mr Andrew Smith

320

Schedule     22,     page     441,     line     4,     leave out sub-paragraphs (3) and (4).

   

Mr Andrew Smith

321

Schedule     22,     page     441,     line     20,     at end insert—

'Defeased leasing: excepted forms of security

    90A.—(1) Pararaph 90 (defeased leasing) is subject to the following exceptions.

    (2) It does not apply to the provision of security of any of the following kinds by the lessee, or a person connected with the lessee—

      (a) a mortgage of the ship;

      (b) security attaching—

          (i) to the ship's earnings, or

          (ii) to the proceeds of insurance policies on the ship;

      (c) security over rental rebates arising from the arm's length sale of the ship;

      (d) any other form of security relating to assets, sums or rights arising directly from the ordinary operation of the ship or from arm's length transactions involving the ship.

    In this sub-paragraph "the ship" means the ship that is the subject of the lease.

    (3) It does not apply to the provision of security by the lessee, or a person connected with the lessee, if the following conditions are met—

      (a) no deposit of money or other property by way of security is obtained by the lessor or any third party;

      (b) any payments under the security are limited to the amount of any rental payments under the lease in respect of which the lessee is in default.

    (4) It does not apply to the provision of security by a third party where no security other than security of a kind mentioned in sub-paragraph (2)(a) to (d) is held by the third party or any person connected with the third party.

    (5) It does not apply to the provision of security by a third party if the following conditions are met—

      (a) no deposit of money or other property by way of security is obtained by the lessor or any third party;

      (b) the security does not involve the assumption of any obligations of the lessee under the lease in return for a payment made (directly or indirectly) by the lessee or a person connected with him;

      (c) the security does not give rise to any payments to the lessor unless the lessee defaults on the rental payments under the lease; and

      (d) any payments under the security are limited to the amount of the rental payments in default.

    (6) For the purposes of this paragraph the lessor and any persons connected with him shall be treated as the same person.

    (7) In this paragraph—

      "connected person" has the meaning given by section 839 of the Taxes Act 1988; and

      "third party" means a person not connected with either the lessor or the lessee.'.

   

Mr Andrew Smith

322

Schedule     22,     page     441,     leave out lines 38 to 45 and insert—

    'After the time of that transaction the ship is used for the purposes of a tonnage tax trade carried on—

      (a) by the original company, or

      (b) by another tonnage tax company that is a member of the same group,

    without having been used since that time for the purposes of any other trade (except that of leasing).

    (3) This paragraph does not apply if the ship is newly-constructed and the transaction mentioned in Step Two in sub-paragraph (2) is effected not more than four months after the first occasion on which the ship is brought into use by any person for any purpose.

    (4) A person is regarded for the purposes of this paragraph as owning a ship if it is treated as belonging to him for the purposes of Part II of the Capital Allowances Act 1990.'.

 
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Prepared 8 Jun 2000