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Finance Bill
Schedule 36 — Schedule to be inserted as Schedule 19B to the Taxes Act 1988

502

 

(a)   

in any post-commencement period (“the period of the

loss”) a qualifying company carrying on a ring fence trade

incurs a loss in the trade, and

(b)   

some or all of the loss falls to be set off under section 393

against trading income from the trade in succeeding

5

accounting periods,

           

so much of the loss as falls to be so set off is a “ring fence loss” of

the company.

      (2)  

In determining for the purposes of this Part of this Schedule how

much of a loss incurred in a ring fence trade falls to be set off as

10

mentioned in sub-paragraph (1)(b), it shall be assumed that every

claim is made that could be made by the company under section

393A to set losses incurred in the ring fence trade against ring

fence profits of earlier post-commencement periods.

      (3)  

So much of a ring fence loss as is attributable to qualifying E&A

15

allowances for the period of the loss is a “qualifying E&A loss”.

      (4)  

A ring fence loss is attributable to qualifying E&A allowances to

the extent that the amount of the ring fence loss does not exceed

the amount of the qualifying E&A allowances for the period of the

loss.

20

      (5)  

But a claim for post-commencement supplement may include an

election for a ring fence loss to be treated—

(a)   

as attributable to qualifying E&A allowances for the period

of the loss to such lesser extent as may be specified in the

election, or

25

(b)   

as not attributable to such allowances.

      (6)  

“Qualifying E&A allowances”, in the case of an accounting period,

means allowances for that period under Part 6 of the Capital

Allowances Act in respect of qualifying E&A expenditure

incurred by the company (including any pre-commencement

30

supplement treated under paragraph 9(2) as such an allowance).

      (7)  

This paragraph has effect for the purposes of this Part of this

Schedule.

Ring fence losses and non-qualifying losses

18    (1)  

So much of a ring fence loss as is not a qualifying E&A loss is a

35

non-qualifying loss.

      (2)  

Where—

(a)   

a loss was incurred by a qualifying company in its ring

fence trade in an accounting period ending on or before

31st December 2003, and

40

(b)   

some or all of that loss falls to be set off under section 393

against profits of that trade in accounting periods ending

on or after that date,

           

so much of the loss as falls to be so set off is a ring fence loss and

that loss is a non-qualifying loss.

45

      (3)  

This paragraph has effect for the purposes of this Part of this

Schedule.

 

 

Finance Bill
Schedule 36 — Schedule to be inserted as Schedule 19B to the Taxes Act 1988

503

 

The pool of qualifying E&A losses and the pool of non-qualifying losses

19    (1)  

For the purpose of determining the amount of any post-

commencement supplement, a qualifying company shall be taken

at all times in its post-commencement periods to have—

(a)   

a continuing pool of the company’s non-qualifying losses

5

(the “non-qualifying pool”), and

(b)   

a continuing mixed pool of the company’s qualifying E&A

losses and post-commencement supplement (the

“qualifying pool”).

      (2)  

A pool continues even if the amount in it is nil.

10

The non-qualifying pool

20    (1)  

The non-qualifying pool consists of the company’s non-qualifying

losses, allocated to the pool in accordance with sub-paragraph (2).

      (2)  

A non-qualifying loss is allocated to the pool by adding the

amount of the non-qualifying loss to the pool in the period of the

15

loss.

      (3)  

In the case of a non-qualifying loss incurred in an accounting

period ending on or before 31st December 2003, the period of the

loss shall be taken for the purposes of sub-paragraph (2) to be the

first accounting period of the company that ends on or after 1st

20

January 2004.

      (4)  

The amount in the non-qualifying pool is subject to reductions in

accordance with the following provisions of this Part of this

Schedule.

      (5)  

Where a reduction in the amount in the non-qualifying pool falls

25

to be made in any accounting period—

(a)   

the reduction is to be made after the addition to the pool of

any non-qualifying loss allocated to the pool in that period

in accordance with sub-paragraph (2), and

(b)   

references to the amount in the non-qualifying pool shall

30

be construed accordingly.

The qualifying pool

21    (1)  

The qualifying pool consists of—

(a)   

the company’s qualifying E&A losses, allocated to the pool

in accordance with sub-paragraph (2)(a), and

35

(b)   

the company’s post-commencement supplement,

allocated to the pool in accordance with sub-paragraph

(2)(b).

      (2)  

The allocation of qualifying E&A losses and post-commencement

supplement to the pool is as follows—

40

(a)   

the amount of a qualifying E&A loss is added to the pool

in the period of the loss, and

(b)   

if any post-commencement supplement is allowed on a

claim in respect of a post-commencement period, the

amount of that supplement is added to the pool in that

45

period.

 

 

Finance Bill
Schedule 36 — Schedule to be inserted as Schedule 19B to the Taxes Act 1988

504

 

      (3)  

The amount in the qualifying pool is subject to reductions in

accordance with the following provisions of this Part of this

Schedule.

      (4)  

Where a reduction in the amount in the qualifying pool falls to be

made in any accounting period, the reduction is to be made—

5

(a)   

after the addition to the pool of the amount of any

qualifying E&A losses allocated to the pool in that period

in accordance with sub-paragraph (2)(a), but

(b)   

before determining, and adding to the pool, the amount of

any supplement claimed in respect of the period,

10

           

and references to the amount in the pool shall be construed

accordingly.

Reductions in respect of utilised ring fence losses

22    (1)  

If one or more ring fence losses are set off under section 393 against

any profits of a post-commencement period, reductions shall be

15

made in that period in accordance with this paragraph.

      (2)  

The amount in the non-qualifying pool shall be reduced (but not

below nil) by setting against it a sum equal to the total amount so

set off.

      (3)  

If any of that sum remains after being so set against the amount in

20

the non-qualifying pool, the amount in the qualifying pool shall be

reduced (but not below nil) by setting against it so much of that

sum as so remains.

Reductions in respect of unrelieved group ring fence profits

23    (1)  

If there is an amount of unrelieved group ring fence profits for a

25

post-commencement period, reductions shall be made in that

period in accordance with this paragraph.

      (2)  

In the following provisions of this paragraph, references to the

remaining amount in a pool are references to so much (if any) of

the amount in the pool as remains after making any reductions

30

that fall to be made in accordance with paragraph 22.

      (3)  

The remaining amount in the non-qualifying pool shall be

reduced (but not below nil) by setting against it a sum equal to the

aggregate of the amounts of unrelieved group ring fence profits

for the period.

35

      (4)  

If any of that sum remains after being so set against the remaining

amount in the non-qualifying pool, the remaining amount in the

qualifying pool shall be reduced (but not below nil) by setting

against it so much of that sum as so remains.

The reference amount for a post-commencement period

40

24         

For the purposes of this Part of this Schedule the reference amount

for a post-commencement period is so much of the amount in the

qualifying pool as remains after making any reductions required

by paragraph 22 or 23.

 

 

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 1 — Amendments to Part 4 of the Finance Act 2003: general

505

 

Schedule 37

Section 282

 

Stamp duty land tax and stamp duty

Part 1

Amendments to Part 4 of the Finance Act 2003: general

Introduction

5

1          

Part 4 of the Finance Act 2003 (stamp duty land tax) is amended in

accordance with this Part of this Schedule.

Variation of lease

2          

In section 43 (land transactions)—

(a)   

in paragraph (c) of subsection (3) (variation of chargeable interest),

10

after “interest” insert “(other than a lease)”;

(b)   

after that paragraph insert—

“(d)   

the variation of a lease is an acquisition and disposal

of a chargeable interest only where it takes effect, or is

treated for the purposes of this Part, as the grant of a

15

new lease.”.

Agreement for lease

3          

In section 44 (contract and conveyance), after subsection (9) insert—

“(9A)   

Where—

(a)   

paragraph 12A of Schedule 17A applies (agreement for

20

lease), or

(b)   

paragraph 19(3) to (6) of Schedule 17A applies (missives of let

etc in Scotland),

   

it applies in place of subsections (4), (8) and (9).”.

Contract providing for conveyance to third party

25

4     (1)  

After section 44 insert—

“44A    

Contract providing for conveyance to third party

(1)   

This section applies where a contract is entered into under which a

chargeable interest is to be conveyed by one party to the contract (A)

at the direction or request of the other (B)—

30

(a)   

to a person (C) who is not a party to the contract, or

(b)   

either to such a person or to B.

(2)   

B is not regarded as entering into a land transaction by reason of

entering into the contract, but the following provisions have effect.

(3)   

If the contract is substantially performed B is treated for the purposes

35

of this Part as acquiring a chargeable interest, and accordingly as

entering into a land transaction.

   

The effective date of the transaction is when the contract is

substantially performed.

 

 

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 1 — Amendments to Part 4 of the Finance Act 2003: general

506

 

(4)   

Where the contract is (to any extent) afterwards rescinded or

annulled, or is for any other reason not carried into effect, the tax

paid by virtue of subsection (3) shall (to that extent) be repaid by the

Inland Revenue.

   

Repayment must be claimed by amendment of the land transaction

5

return made in respect of the contract.

(5)   

Subject to subsection (6), section 44 (contract and conveyance) does

not apply (except so far as it defines “substantial performance”) in

relation to the contract.

(6)   

Where—

10

(a)   

this section applies by virtue of subsection (1)(b), and

(b)   

by reason of B’s direction or request, A becomes obliged to

convey a chargeable interest to B,

   

section 44 applies to that obligation as it applies to a contract for a

land transaction that is to be completed by a conveyance.

15

(7)   

Section 44 applies in relation to any contract between B and C, in

respect of the chargeable interest referred to in subsection (1) above,

that is to be completed by a conveyance.

   

References to completion in that section, as it so applies, include

references to conveyance by A to C of the subject matter of the

20

contract between B and C.

(8)   

In this section “contract” includes any agreement and “conveyance”

includes any instrument.”.

      (2)  

In section 48 (chargeable interests), after subsection (6) insert—

“(7)   

This section has effect subject to subsection (3) of section 44A

25

(contract and conveyance to third party).”.

      (3)  

In section 77 (notifiable transactions), after subsection (4) insert—

“(5)   

A land transaction that a person is treated as entering into by virtue

of subsection (3) of section 44A (contract and conveyance to third

party) is notifiable.”.

30

Contract and conveyance: effect of transfer of rights

5     (1)  

Section 45 (contract and conveyance: effect of transfer of rights) is amended

as follows.

      (2)  

In subsection (1)—

(a)   

after paragraph (b) insert “, and

35

(c)   

paragraph 12B of Schedule 17A (assignment of

agreement for lease) does not apply.”;

(b)   

at the end insert “, and references to the transferor and the transferee

shall be read accordingly”.

      (3)  

For subsection (5) substitute—

40

“(5)   

Where a transfer of rights relates to part only of the subject-matter of

the original contract (“the relevant part”)—

(a)   

subsection (8)(b) of section 44 (restriction of charge to tax on

subsequent conveyance) has effect as if the reference to the

 

 

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 1 — Amendments to Part 4 of the Finance Act 2003: general

507

 

amount of tax chargeable on that contract were a reference to

an appropriate proportion of that amount, and

(b)   

a reference in the second sentence of subsection (3) above to

the original contract, or a reference in subsection (4) above to

the secondary contract arising from an earlier transfer of

5

rights, is to that contract so far as relating to the relevant part

(and that contract so far as not relating to the relevant part

shall be treated as a separate contract).”.

      (4)  

After that subsection insert—

“(5A)   

In relation to a land transaction treated as taking place by virtue of

10

subsection (3)— 

(a)   

references in Schedule 7 (group relief) to the vendor shall be

read as references to the vendor under the original contract;

(b)   

other references in this Part to the vendor shall be read,

where the context permits, as referring to either the vendor

15

under the original contract or the transferor.”.

      (5)  

After section 45 insert—

“45A    

Contract providing for conveyance to third party: effect of transfer of

rights

(1)   

This section applies where—

20

(a)   

a contract (“the original contract”) is entered into under

which a chargeable interest is to be conveyed by one party to

the contract (A) at the direction or request of the other (B)—

(i)   

to a person (C) who is not a party to the contract, or

(ii)   

either to such a person or to B,

25

   

and

(b)   

there is an assignment or other transaction (relating to the

whole or part of the subject-matter of the original contract) as

a result of which a person (D) becomes entitled to exercise

any of B’s rights under the original contract in place of B.

30

   

References in the following provisions of this section to a transfer of

rights are to any such assignment or other transaction.

(2)   

D is not regarded as entering into a land transaction by reason of the

transfer of rights, but section 44A (contract providing for conveyance

to third party) has effect in accordance with the following provisions

35

of this section.

(3)   

That section applies as if—

(a)   

D had entered into a contract (a “secondary contract”) in the

same terms as the original contract except with D as a party

instead of B, and

40

(b)   

the consideration due from D under the secondary contract

were—

(i)   

so much of the consideration under the original

contract as is referable to the subject-matter of the

transfer of rights and is to be given (directly or

45

indirectly) by D or a person connected with him, and

(ii)   

the consideration given for the transfer of rights.

 

 

Finance Bill
Schedule 37 — Stamp duty land tax and stamp duty
Part 1 — Amendments to Part 4 of the Finance Act 2003: general

508

 

(4)   

The substantial performance of the original contract shall be

disregarded if—

(a)   

it occurs at the same time as, and in connection with, the

substantial performance of the secondary contract, or

(b)   

it occurs after the transfer of rights.

5

(5)   

Where there are successive transfers of rights, subsection (3) has

effect in relation to each of them.

(6)   

The substantial performance of the secondary contract arising from

an earlier transfer of rights shall be disregarded if—

(a)   

it occurs at the same time as, and in connection with, the

10

substantial performance of the secondary contract arising

from a subsequent transfer of rights, or

(b)   

it occurs after that subsequent transfer.

(7)   

Where a transfer of rights relates to only part of the subject matter of

the original contract, or to only some of the rights under that

15

contract—

(a)   

a reference in subsection (3)(a) or (4) to the original contract,

or a reference in subsection (6) to the secondary contract

arising from an earlier transfer, is to that contract so far as

relating to that part or those rights, and

20

(b)   

that contract so far as not relating to that part or those rights

shall be treated as a separate contract.

(8)   

The effective date of a land transaction treated as entered into by

virtue of subsection (3) is not earlier than the date of the transfer of

rights.

25

(9)   

In relation to a such a transaction— 

(a)   

references in Schedule 7 (group relief) to the vendor shall be

read as references to A;

(b)   

other references in this Part to the vendor shall be read,

where the context permits, as referring to either A or B.

30

(10)   

Section 839 of the Taxes Act 1988 (connected persons) applies for the

purposes of subsection (3)(b).

(11)   

In this section “contract” includes any agreement.”.

      (6)  

In section 122 (index of defined expressions), in the entry for “vendor” insert

at the end “(see too sections 45(5A) and 45A(9))”.

35

Relief for sale and leaseback arrangements

6     (1)  

Section 57A (sale and leaseback arrangements) (inserted by the Stamp Duty

and Stamp Duty Land Tax (Variation of the Finance Act 2003) (No. 2)

Regulations 2003 (S.I. 2003/2816)) is amended as follows.

      (2)  

In subsection (3) (the qualifying conditions), for paragraph (b) substitute—

40

“(aa)   

that the sale transaction is entered into wholly or partly in

consideration of the leaseback transaction being entered into,

(b)   

that the only other consideration (if any) for the sale is the

payment of money or the assumption, satisfaction or release

of a debt (or both),”.

45

 

 

 
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