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Mr Paul Boateng
163
Clause 127, page 114, leave out line 1 and insert—
'228H Sections 228A to 228G: supplementary'.
Mr Paul Boateng
164
Clause 127, page 114, line 2, leave out '228F' and insert '228G'.
Mr Paul Boateng
165
Clause 127, page 114, line 3, leave out 'current' and insert 'net'.
Mr Paul Boateng
166
Clause 127, page 114, line 25, leave out '228F' and insert '228G'.
Mr Paul Boateng
167
Clause 127, page 114, line 33, leave out '228F' and insert '228G'.
Mr Paul Boateng
168
Clause 127, page 114, line 37, at end insert—
| (i) | a sale and finance leaseback, or |
| (ii) | a lease and finance leaseback, and |
| (b) | some or all of the plant or machinery becomes, while the subject of the leaseback, also the subject of a lease in relation to which the following conditions are met— |
| (i) | the term of the lease begins on or after 18 May 2004; |
| (ii) | S, or a person connected with S, is the lessee under the lease; |
| (iii) | the lease is not accounted for as a finance lease in the accounts of the lessee. |
(2) For the purpose of income tax or corporation tax, in calculating the lessee's income or profits for a period of account the amount deducted in respect of amounts payable under the operating lease shall not exceed the relevant amount.
(3) Subsections (4) and (5) apply in relation to the calculation of the lessor's income or profits for a period of account for the purpose of income tax or corporation tax.
(4) Where—
| (a) | an amount receivable in respect of the lessor's interest under the operating lease falls to be taken into account in that calculation, and |
| (b) | that amount is reduced by an amount due to the lessee under the operating lease, |
that reduction shall be disregarded when taking the amount receivable into account.
(5) The amounts receivable in respect of the lessor's interest under the operating lease that fall to be taken into account in that calculation may be disregarded to the extent that they exceed the relevant amount (whether or not subsection (4) applies).
(6) Where only some of the plant or machinery is the subject of the operating lease, subsections (2) to (5) shall apply subject to such apportionments as may be just and reasonable.
(7) For the purposes of this section a lease is accounted for as a finance lease in a person's accounts if—
| (a) | the lease falls, under generally accepted accounting practice, to be treated in that person's accounts as a finance lease or loan, or |
| (b) | in a case where the lease is comprised in other arrangements, those arrangements fall, under generally accepted accounting practice, to be so treated. |
(8) In this section—
"lease and finance leaseback" has the meaning given in section 228F; "lessee" means the lessee under the operating lease; "lessor" means the lessor under the operating lease; "operating lease" means the lease referred to in subsection (1)(b); "relevant amount" means an amount equal to the permitted maximum under section 228B as it applies in relation to the leaseback."'.
Mr Paul Boateng
169
Clause 127, page 114, line 38, leave out '228G' and insert '228J'.
Mr Paul Boateng
170
Schedule 23, page 391, line 5, after 'subject to' insert 'paragraphs 2 to 8 of'.
Mr Paul Boateng
171
Schedule 23, page 391, line 6, at end insert—
| '( ) | Paragraph 8A of this Schedule makes provision in relation to the taxation of chargeable gains where an existing leaseback terminates.'. |
Mr Paul Boateng
172
Schedule 23, page 391, leave out line 28 and insert—
| 'Basic Amount x | (Notional Rental Deduction ¸ Deductible Excess)
Notional Rental Deduction'. |
Mr Paul Boateng
173
Schedule 23, page 392, line 34, at end insert—
| | '(1) | Section 228C applies subject to this paragraph where— |
(a) the existing leaseback terminates otherwise than by expiry of its term, and
(b) the amount calculated in accordance with section 228C(3) exceeds the relevant cap.
| (2) | In determining the amount by which income or profits are to be increased under section 228C(2), the amount calculated in accordance with section 228C(3) shall be disregarded to the extent that it exceeds the relevant cap. |
| (Original Consideration ¸ Relevant Rentals) x | Net Consideration
Original Consideration |
| (i) | finance charges shown in the accounts for periods that end before 17 March 2004, and |
| (ii) | the appropriate proportion of finance charges shown in the accounts for the transitional period of account; |
"Net Consideration" has the same meaning as in section 228C.'.
Mr Paul Boateng
174
Schedule 23, page 393, leave out lines 15 to 17 and insert—
| '(4) | For the purposes of sub-paragraphs (2) and (3) there is a taxable disposal if, during the period of six years beginning with the date of termination of the leaseback— |
(a) the whole of the plant or machinery is the subject of a disposal event (within the meaning of Part 2), or
(b) part of the plant or machinery is the subject of such a disposal event.'.
Mr Paul Boateng
175
Schedule 23, page 393, line 22, leave out from 'shall be' to ' "Disposal' in line 26 and insert '—
| (i) | in a case falling within sub-paragraph (2)(b), the relevant fraction of the amount calculated in accordance with section 228C(3), or |
| (ii) | in a case falling within sub-paragraph (3)(b), the relevant fraction of the section 226 restriction. |
| (6) | In sub-paragraph (5)(b)(i) and (ii) "relevant fraction" means— |
(Disposal Proceeds -- Restricted Qualifying Expenditure)
(Lessee Acquisition Expenditure -- Restricted Qualifying Expenditure)
|
Mr Paul Boateng
176
Schedule 23, page 393, line 27, leave out from second 'the' to '; but' in line 29 and insert 'taxable disposal or, if higher, the market value of the plant or machinery at the time of the taxable disposal'.
Mr Paul Boateng
177
Schedule 23, page 393, line 35, at end insert—
| '(6A) | Where there is a taxable disposal by virtue of sub-paragraph (4)(b), this paragraph applies in relation to that disposal with the following modifications— |
(a) references in sub-paragraphs (5)(a) and (6) to the plant or machinery shall be taken to be references to the part of the plant or machinery comprised in the taxable disposal;
(b) the amount by which profits or income are to be increased by virtue of sub-paragraph (5)(b) shall be the partial disposal fraction of the amount given by sub-paragraph (5)(b)(i) or (ii);
(c) the partial disposal fraction of the restricted qualifying expenditure and of the lessee acquisition expenditure shall be used for the purposes of sub-paragraph (6) instead of those amounts of expenditure.
| (6B) | For the purposes of sub-paragraph (6A) the partial disposal fraction is— |
Apportioned Lessee Acquisition Expenditure
Lessee Acquisition Expenditure
|
where "Apportioned Lessee Acquisition Expenditure" means so much of the lessee acquisition expenditure as was attributable to the acquisition of the part of the plant or machinery comprised in the taxable disposal.'.
Mr Paul Boateng
178
Schedule 23, page 394, line 12, leave out 'rental deduction' and insert 'taxed rental'.
Mr Paul Boateng
179
Schedule 23, page 394, line 14, leave out 'rental deduction' and insert 'taxed rental'.
Mr Paul Boateng
180
Schedule 23, page 394, line 32, leave out 'deduction' and insert 'rental'.
Mr Paul Boateng
181
Schedule 23, page 395, line 24, at end insert—
| 8A | (1) | Sub-paragraph (2) applies where— |
(a) an existing leaseback is the leaseback in a lease and finance leaseback,
(b) the leaseback terminates,
(c) on or after the termination there is a disposal, by the user, of the whole or part of the plant and machinery subject to the leaseback, and
(d) a chargeable gain that accrues on that disposal ("the relevant chargeable gain") falls to be taken into account for the purposes of a chargeable gains computation.
| | (2) | The following fraction of the relevant chargeable gain shall instead be taken into account for the purposes of the chargeable gains computation— |
(Net Rentals ¸ Termination Charge)
Lease Premium
|
"Net Rentals" means—
| (a) | the total of the amounts deducted in calculating the user's income or profits, for the purpose of income tax or corporation tax, in respect of amounts payable under the leaseback, minus |
| (b) | the total of the amounts shown in the user's accounts in respect of finance charges relating to the leaseback; |
| | "Termination Charge" means the amount by which the user's income or profits are to be increased by virtue of section 228C(2) of the CAA 2001 because of the termination; |
| | "Lease Premium" means the consideration relating to the leaseback referred to in section 228F(6)(b) of the CAA 2001. |
| (3) | References in this paragraph to termination of the leaseback shall be construed in accordance with section 228H(1) of the CAA 2001. |
| | "CAA 2001" means the Capital Allowances Act 2001; |
| | "chargeable gains computation" means the computation, for the purposes of the TCGA 1992, of the total amount of chargeable gains that accrue to the user in any chargeable period that ends on or after 17 March 2004; |
| | "disposal" shall be construed in accordance with the TCGA 1992; |
| | "lease and finance leaseback" has the same meaning as in section 228F of the CAA 2001; |
| | "TCGA 1992" means the Taxation of Chargeable Gains Act 1992; |
| | "user" means the person who is the lessee under the leaseback.'. |
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