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SCHEDULE 29
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CHARGEABLE GAINS: NON-RESIDENT COMPANIES AND GROUPS ETC. |
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PART I |
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APPLICATION OF TAXATION OF CHARGEABLE GAINS ACT 1992 |
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Main amendments |
| | 1. - (1) In section 170 of the Taxation of Chargeable Gains Act 1992 (groups of companies: interpretation), the following provisions shall cease to have effect-
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(a) paragraph (a) of subsection (2) (which provides that references to companies apply only to companies resident in the United Kingdom); and |
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(b) in subsection (9)(b) the words "(although resident in the United Kingdom)". |
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(2) The above amendments (referred to in this Schedule as "the main amendments") have effect in accordance with the following provisions of this Schedule.
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Transfers within a group |
| | 2. - (1) Section 171 of the Taxation of Chargeable Gains Act 1992 (transfers within a group: general provisions) is amended as follows.
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(2) For subsection (1) (treatment for corporation tax purposes of transfer of asset within group) substitute-
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"(1) Where-
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(a) a company ("company A") disposes of an asset to another company ("company B") at a time when both companies are members of the same group, and |
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(b) the conditions in subsection (1A) below are met, |
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company A and company B are treated for the purposes of corporation tax on chargeable gains as if the asset were acquired by company B for a consideration of such amount as would secure that neither a gain nor a loss would accrue to company A on the disposal.
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(1A) The conditions referred to in subsection (1)(b) above are-
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(a) that company A is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately before that time, and |
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(b) that company B is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately after that time. |
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For this purpose an asset is a "chargeable asset" in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.".
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(3) In subsection (2)-
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(a) in paragraph (a), for "a member of a group of companies" substitute "company B", and |
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(b) in the closing words, for "a member of a group of companies" substitute "company A". |
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(4) In subsection (3) for "the company first mentioned in that subsection" substitute "company A".
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(5) After subsection (5) add-
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"(6) Subsection (1) above applies notwithstanding any provision in this Act fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition.
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But where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale or acquisition to which this section applies.".
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(6) The above amendments, and the main amendments so far as they apply for the purposes of section 171, have effect in relation to disposals on or after 1st April 2000.
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Transfer of United Kingdom branch or agency |
| | 3. - (1) Section 172 of the Taxation of Chargeable Gains Act 1992 (transfer of United Kingdom branch or agency) shall cease to have effect.
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(2) The above amendment has effect in relation to disposals on or after 1st April 2000.
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De-grouping charge |
| | 4. - (1) Section 179 of the Taxation of Chargeable Gains Act 1992 (company ceasing to be member of group) is amended as follows.
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(2) For subsection (1) substitute-
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"(1) This section applies where-
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(a) a company ("company A") acquires an asset from another company ("company B") at a time when company B is a member of a group, |
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(b) the conditions in subsection (1A) below are met, and |
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(c) company A ceases to be a member of that group within the period of six years after the time of the acquisition. |
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References in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group in consequence of another member of the group ceasing to exist.
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(1A) The conditions referred to in subsection (1)(b) above are-
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(a) that company A is resident in the United Kingdom at the time it acquires the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and |
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(b) that company B is resident in the United Kingdom at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time. |
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For this purpose an asset is a "chargeable asset" in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.".
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(3) In subsection (2A)-
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(i) after "a company" insert "("company A")", and
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(ii) after "another company" insert "("company B")",
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(b) in paragraph (b) for "that company's" substitute "company A's", |
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(c) in paragraph (c) for "the company that made the acquisition" substitute "company A", and |
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(d) in the closing words for "the company's" substitute "company A's". |
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(4) In subsections (2B) (three times), (2C), (2D), (3) (three times), (4) (twice), (10)(c) and (13) for "the chargeable company" substitute "company A".
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(5) Subsections (11) and (12) (which are superseded by the provision made by paragraph 9 below) shall cease to have effect.
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(6) The amendments made by sub-paragraphs (2) to (4) above, and the main amendments so far as they apply for the purposes of section 179, have effect in relation to assets acquired on or after 1st April 2000.
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(7) The amendments made by sub-paragraph (5) above have effect in relation to gains accruing on or after 1st April 2000.
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Reconstruction or amalgamation involving transfer of business |
| | 5. - (1) Section 139 of the Taxation of Chargeable Gains Act 1992 (reconstruction or amalgamation involving transfer of business) is amended as follows.
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(2) In subsection (1) (transfer of business on basis of no gain and no loss) for paragraph (b) (requirement that both companies are resident in the United Kingdom) substitute-
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"(b) the conditions in subsection (1A) below are met in relation to the assets included in the transfer, and". |
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(3) After subsection (1) insert-
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"(1A) The conditions referred to in subsection (1)(b) above are-
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(a) that the company acquiring the assets is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and |
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(b) that the company from which the assets are acquired is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately before that time. |
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For this purpose an asset is a "chargeable asset" in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.".
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(4) The above amendments have effect in relation to disposals made on or after 1st April 2000.
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Deemed disposal on non-resident ceasing to carry on trade in United Kingdom through branch or agency |
| | 6. - (1) Section 25 of the Taxation of Chargeable Gains Act 1992 (non-residents: deemed disposals) is amended as follows.
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(2) After subsection (3) insert-
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"(3A) Subsection (3) above shall not apply if-
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(a) the person ceasing to carry on the trade is a company, and |
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(b) the trade is transferred to another company in circumstances in which section 139 or 171 applies in relation to the assets transferred.". |
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(3) Subsection (4) shall cease to have effect.
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(4) The amendment in sub-paragraph (2) above has effect in relation to cases where section 139 or, as the case may be, section 171 has effect as amended by this Schedule.
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(5) The amendment in sub-paragraph (3) above has effect in relation to cases where section 139 has effect as amended by this Schedule.
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Restriction on set-off of pre-entry losses |
| | 7. - (1) In Schedule 7A to the Taxation of Chargeable Gains Act 1992 (restriction on set-off of pre-entry losses), paragraph 1 (application and construction of Schedule) is amended as follows.
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(2) In sub-paragraph (3)-
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(a) for "it became a member of the relevant group" substitute "the relevant event occurred in relation to it", and |
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(b) for "that group" substitute "the relevant group". |
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(3) After sub-paragraph (3) insert-
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"(3A) In this paragraph references to the relevant event occurring in relation to a company-
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(i) the company was resident in the United Kingdom at the time when it became a member of the relevant group, or
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(ii) the asset was a chargeable asset in relation to the company at that time,
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are references to the company becoming a member of that group;
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(b) in any other case, are references to whichever is the first of- |
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(i) the company becoming resident in the United Kingdom, or
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(ii) the asset becoming a chargeable asset in relation to the company.
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For this purpose an asset is a "chargeable asset" in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes."
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(4) In sub-paragraph (4)(a) for "it became a member of the relevant group" substitute "the relevant event occurred in relation to it".
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(5) In sub-paragraph (5)-
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(a) in the opening words, for the words from "the company" to "the relevant group" substitute "the relevant event occurred in relation to the company by reference to which that asset is a pre-entry asset", |
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(b) in paragraph (a), for "a company has become a member of the relevant group" substitute "a relevant event has occurred in relation to a company", and |
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(c) in paragraph (b), for "a company became a member of the relevant group" substitute "a relevant event occurred in relation to a company". |
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(6) The above amendments, and the main amendments so far as they apply for the purposes of Schedule 7A, have effect in relation to the amount to be included in respect of chargeable gains in a company's total profits for any accounting period ending on or after 21st March 2000.
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(7) Any question whether a company was, in relation to times before 21st March 2000, a member of a group shall be determined by reference to the position under the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.
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(8) Any question whether a company was, in relation to times before 6th April 1992, a member of a group shall be determined by reference to the position under the Capital Gains Tax Act 1979.
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(9) Where-
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(a) immediately before the time when the main amendments have effect in relation to a company in accordance with sub-paragraph (6), the company was not a member of a group of companies for the purposes of section 170 of the Taxation of Chargeable Gains Act 1992 (as it stood before the main amendments), and |
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(b) immediately after that time, the company is a member of a group of companies for the purposes of that section (as amended by the main amendments), |
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Schedule 7A to that Act shall not have effect in relation to any losses accruing to the company before that time or any chargeable assets (within the meaning of paragraph 1(3A) of that Schedule) held by it immediately before that time.
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Restrictions on setting losses against pre-entry gains |
| | 8. - (1) The main amendments have effect for the purposes of Schedule 7AA to the Taxation of Chargeable Gains Act 1992 (restrictions on setting losses against pre-entry gains) in relation to accounting periods ending on or after 21st March 2000.
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(2) Any question whether a company was, in relation to times before 21st March 2000, a member of a group shall be determined by reference to the position under the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.
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Recovery of unpaid tax |
| | 9. - (1) For sections 190 and 191 of the Taxation of Chargeable Gains Act 1992 substitute-
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