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New Schedule 3
"Transfers: Tax
1.--(1) In this Schedule--
"the 1988 Act" means the Income and Corporation Taxes Act 1988,
"the 1990 Act" means the Capital Allowances Act 1990,
"the 1992 Act" means the Taxation of Chargeable Gains Act 1992,
"the Capital Allowances Acts" has the same meaning as in the Tax Acts,
"fixture" has the same meaning as in Chapter VI of Part II of the 1990 Act,
"franchise company" means any body corporate which is, or is to be, the franchisee or the franchise operator under a franchise agreement, and
"qualifying transfer" means a transfer which is a relevant transfer for the purposes of any of Parts II to VI of this Schedule.
(2) So far as it relates to corporation tax, this Schedule is to be construed as one with the Corporation Tax Acts.
(3) So far as it relates to capital allowances, this Schedule is to be construed as one with the Capital Allowances Acts.
2. In this Part of this Schedule--
"relevant transfer" means a transfer of property, rights or liabilities by virtue of--
(a) section 192,
(b) a scheme under paragraph 1 of Schedule 14, or
(c) a scheme under paragraph 31 of Schedule 16,
"transferee", in relation to a relevant transfer, means the Authority, and
"transferor", in relation to a relevant transfer, means the person from whom the property, rights or liabilities are transferred.
3. For the purposes of the 1992 Act a disposal by virtue of provision made under paragraph 34(a) of Schedule 16 is to be taken to be for a consideration such that no gain or loss accrues to the person making the disposal.
4.--(1) Sub-paragraph (2) applies if in the case of a relevant transfer--
(a) a debt owed to the transferor is transferred to the transferee, and
(b) the transferor would, apart from this paragraph, be the original creditor in relation to that debt for the purposes of section 251 of the 1992 Act (disposal of debts).
(2) The 1992 Act is to have effect as if the transferee (and not the transferor) were the original creditor for those purposes.
5.--(1) This paragraph applies in relation to property if--
(a) the property is plant or machinery to which a relevant transfer relates,
(b) the property would be treated for the purposes of the Capital Allowances Acts as disposed of by the transferor to the transferee on the transfer taking effect, and
(c) the relevant order or scheme contains provision for the transferee to be taken for the purposes of those Acts to have incurred capital expenditure of an amount specified in or determined in accordance with the order or scheme on the provision of the property.
(2) For the purposes of those Acts--
(a) the transferee is to be taken to have incurred capital expenditure of that amount on the provision of the property for the purposes for which it is used by the transferee on and after the taking effect of the transfer,
(b) the property is to be taken as belonging to the transferee in consequence of the transferee having incurred that expenditure, and
(c) in the case of a fixture, the expenditure which falls to be treated as incurred by the transferee is to be taken for the purposes of section 54 of the 1990 Act to be incurred by the giving of a consideration consisting in a capital sum of that amount.
(3) In sub-paragraph (1)(c) "the relevant order or scheme" means--
(a) in the case of a transfer by virtue of section 192, an order made by the Secretary of State by statutory instrument, or
(b) in the case of a transfer by virtue of a scheme under paragraph 1 of Schedule 14 or paragraph 31 of Schedule 16, the scheme concerned.
(4) A provision mentioned in sub-paragraph (1)(c) for the determination of an amount may include provision--
(a) for a determination to be made by the Secretary of State in a manner described in the order or scheme,
(b) for a determination to be made by reference to factors so described or to the opinion of a person so described, and
(c) for a determination to be capable of being modified (on one or more occasions) in a manner and in circumstances so described.
(5) The Treasury's consent is required for the making or modification of a determination under a provision mentioned in sub-paragraph (1)(c).
(6) The transferee's consent is also required for such a modification after the relevant transfer takes effect.
(7) If there is a determination or a modification of a determination under a provision mentioned in sub-paragraph (1)(c) all necessary adjustments--
(a) must be made by making assessments or by repayment or discharge of tax, and
(b) must be made despite any limitation on the time within which assessments may be made.
6. For the purposes of Part II of the 1990 Act references in that Part to a transaction (however described) between connected persons within the meaning of section 839 of the 1988 Act are not to include references to a relevant transfer.
7.--(1) Sub-paragraph (2) applies if as a result of a relevant transfer the transferee replaces, or (if the transferor had been a company) would have replaced, the transferor as a party to a loan relationship.
(2) Chapter II of Part IV of the Finance Act 1996 is to have effect in relation to any period beginning with the time the relevant transfer takes effect as if--
(a) the transferee had been a party to the loan relationship at the time the transferor became, or (if the transferor had been a company) would have become, a party to the loan relationship and at all times since that time, and
(b) the loan relationship to which the transferee is a party after the time the transfer takes effect is the same loan relationship as that to which, by virtue of paragraph (a), it is treated as having been a party before that time.
(3) Expressions used in this paragraph and in Chapter II of Part IV of the Finance Act 1996 have the same meanings in this paragraph as in that Chapter.
8. In this Part of this Schedule--
"relevant transfer" means a transfer of property, rights or liabilities by virtue of--
(a) paragraph 11 of Schedule 17, or
(b) a scheme under paragraph 1 of Schedule 18,
"transferee", in relation to a relevant transfer, means the Authority, and
"transferor", in relation to a relevant transfer, means the Board.
9. For the purposes of the 1992 Act a disposal--
(a) constituted by a relevant transfer, or
(b) by virtue of provision made under paragraph 4 of Schedule 18,
is to be taken (in relation to the person to whom the disposal is made as well as the person making the disposal) to be for a consideration such that no gain or loss accrues to the person making the disposal.
10.--(1) If there has been a disposal of an asset--
(a) constituted by a relevant transfer, or
(b) by virtue of provision made under paragraph 4 of Schedule 18,
subsection (8) of section 41 of the 1992 Act (which applies that section to cases where assets have been acquired without gain or loss) is to have effect as if the asset had been disposed of and acquired in circumstances mentioned in that subsection.
(2) This paragraph is not to prejudice paragraph 9.
11.--(1) Sub-paragraph (2) applies if a company ("the degrouped company")--
(a) acquired an asset from another company at any time when both were members of the same group of companies ("the old group"), and
(b) ceases by virtue of a relevant transfer to be a member of the old group.
(2) Section 179 of the 1992 Act (company ceasing to be member of group) is not to treat the degrouped company as having by virtue of the transfer sold and immediately reacquired the asset.
(3) If sub-paragraph (2) applies to an asset, that section is to have effect on and after the first subsequent occasion on which the degrouped company ceases to be a member of a group of companies ("the new group"), otherwise than by virtue of a qualifying transfer, as if the degrouped company and the company from which it acquired the asset had been members of the new group at the time of acquisition.
(4) If, disregarding any preparatory transactions, a company would be regarded for the purposes of section 179 of the 1992 Act (and, accordingly, of this paragraph) as ceasing to be a member of a group of companies by virtue of a qualifying transfer, it is to be regarded for those purposes as so doing by virtue of the qualifying transfer and not by virtue of any preparatory transactions.
(5) In this paragraph "preparatory transaction" means anything done under or by virtue of this Part of this Act for the purpose of initiating, advancing or facilitating the qualifying transfer in question.
(6) Expressions used in this paragraph and in section 179 of the 1992 Act have the same meanings in this paragraph as in that section.
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