Energy Bill [HL]

House of Commons

Session 2003 - 04
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Energy Bill [HL]

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 1 — Transfers to the NDA or a subsidiary of the NDA
202

      (2)
For the purposes of Part 2 of the 2001 Act (capital allowances for plant and
machinery), the NDA or its subsidiary is to be treated—
(a)
as having incurred capital expenditure on the provision of the plant
or machinery at the time of the transfer; and
(b)
as having owned the plant or machinery as a result of having
5
incurred that expenditure.
      (3)
The amount of that expenditure is to be treated as being the book value of
the plant or machinery.
      (4)
For the purposes of the application of section 61 of that Act in relation to the
transferor the disposal value of the plant or machinery is to be treated as
10
being the book value of the plant or machinery.
      (5)
The references in this paragraph to the book value of the plant or machinery
are references to the amount which, in accordance with generally accepted
accounting practice (within the meaning of the Tax Acts)—
(a)
was recognised as its value in the accounts of the transferor at the
15
time of the transfer; or
(b)
should have been so recognised at that time.
      (6)
Expressions used in this paragraph and in Part 2 of the 2001 Act have the
same meanings in this paragraph as in that Part.
Capital allowances: transfer not to be transaction between connected persons
20
10
For the purposes of Part 2 of the 2001 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
transfer of anything in accordance with a section 42 scheme to the NDA or a
subsidiary of the NDA.
25
Continuity in relation to loan relationships
11    (1)
This paragraph applies if, in consequence of a section 42 scheme, the NDA
or a subsidiary of the NDA replaces a person as a party to a loan
relationship.
      (2)
Chapter 2 of Part 4 of the Finance Act 1996 (c. 8) is to have effect in relation
30
to the time when the transfer takes effect and any later time as if—
(a)
the NDA or its subsidiary had been a party to the loan relationship
at the time when the transferor became a party to it and at all times
since that time; and
(b)
the loan relationship to which the NDA or its subsidiary is a party
35
after the time when 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 2 of Part 4 of the Finance
Act 1996 have the same meanings in this paragraph as in that Chapter.
40
Continuity in relation to derivative contracts
12    (1)
This paragraph applies if, in consequence of a section 42 scheme, the NDA
or a subsidiary of the NDA replaces a person as a party to a derivative
contract.

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 1 — Transfers to the NDA or a subsidiary of the NDA
203

      (2)
Schedule 26 to the Finance Act 2002 (c. 23) is to have effect in relation to the
time when the transfer takes effect and any later time as if—
(a)
the NDA or its subsidiary had been a party to the derivative contract
at the time when the transferor became a party to it and at all times
since that time; and
5
(b)
the derivative contract to which the NDA or its subsidiary is a party
after the time when the transfer takes effect is the same derivative
contract 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 Schedule 26 to the Finance Act
10
2002 have the same meanings in this paragraph as in that Schedule.
Continuity in relation to transfer of intangible assets
13    (1)
Where—
(a)
property is transferred in accordance with a section 42 scheme to the
NDA or a subsidiary of the NDA, and
15
(b)
the property transferred includes a chargeable intangible asset of the
transferor,

the transfer of that asset is to be treated for the purposes of Schedule 29 to
the Finance Act 2002 as a tax neutral transfer.
      (2)
Where, in the case of a transfer in accordance with a section 42 scheme of any
20
property to the NDA or a subsidiary of the NDA—
(a)
the property transferred includes an asset which is not a chargeable
intangible asset of the transferor, but
(b)
that asset falls to be treated after the transfer as a chargeable
intangible asset of the NDA or its subsidiary,
25

that asset shall be treated as acquired by the NDA or its subsidiary for an
amount equal to the amount of the consideration determined for the
purposes of paragraph 3(2) of this Schedule.
      (3)
Expressions used in this paragraph and in Schedule 29 to the Finance Act
2002 have the same meanings in this paragraph as in that Schedule.
30
Chargeable intangible assets: degrouping charges
14    (1)
This paragraph applies if a company (“the degrouped company”)—
(a)
acquired an intangible fixed asset from another company at a time
when both were members of the same group of companies (“the old
group”); and
35
(b)
ceases by virtue of a transfer to the NDA or a subsidiary of the NDA
in accordance with a section 42 scheme to be a member of the old
group.
      (2)
Paragraph 58 of Schedule 29 to the Finance Act 2002 (company ceasing to be
member of group) is not to treat the degrouped company as having, by
40
virtue of the transfer, sold and immediately reacquired the asset.
      (3)
Where sub-paragraph (2) has applied to an asset, paragraph 58 of Schedule
29 to the Finance Act 2002 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”) as if—
45
(a)
the degrouped company, and
(b)
the company from which it acquired the asset,

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 2 — Transfers relating to BNFL or the UKAEA etc.
204


had been members of the new group at the time of acquisition.
      (4)
Expressions used in this paragraph and in paragraph 58 of Schedule 29 to
the Finance Act 2002 (c. 23) have the same meanings in this paragraph as in
that paragraph.
Computation of profits and losses in respect of transfer of trade
5
15    (1)
This paragraph applies where, in consequence of a section 42 scheme—
(a)
a BNFL company ceases to carry on a trade or a part of a trade; and
(b)
an NDA group member begins to carry on the trade or that part of it.
      (2)
For the purpose of computing, in relation to the time when the scheme
comes into force and subsequent times, the relevant trading profits or losses
10
of the BNFL company and the NDA group member—
(a)
the trade or part is to be treated as having been a separate trade at the
time of its commencement and as having been carried on by the
NDA group member at all times since its commencement as a
separate trade; and
15
(b)
the trade carried on by the NDA group member after the time when
the section 42 scheme comes into force is to be treated as the same
trade as that which it is treated, by virtue of paragraph (a), as having
carried on as a separate trade before that time.
      (3)
This paragraph is subject to paragraph 11.
20
      (4)
In this paragraph—
“BNFL company” means BNFL or a subsidiary of BNFL;
“NDA group member” means the NDA or a subsidiary of the NDA;
“relevant trading profits and losses” means profits or losses under
Case I of Schedule D in respect of the trade or part of a trade in
25
question.
Part 2
Transfers relating to BNFL or the UKAEA etc.
Application of Part 2 of Schedule
16    (1)
This Part of this Schedule applies to a transfer if—
30
(a)
it is a transfer in accordance with a section 42 scheme of securities of
a BNFL company or of property, rights or liabilities of a BNFL
company; and
(b)
the transferee is a publicly owned company which is not a subsidiary
of the NDA.
35
      (2)
This Part of this Schedule also applies to a transfer if it is a transfer in
accordance with a section 42 scheme to a transferee falling within sub-
paragraph (3) of—
(a)
property, rights or liabilities of the UKAEA;
(b)
securities of a wholly-owned subsidiary of the UKAEA; or
40
(c)
property, rights or liabilities of such a subsidiary.
      (3)
The transferee falls within this sub-paragraph if it is—
(a)
a publicly owned company which is not a subsidiary of the NDA; or
(b)
the UKAEA.

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 2 — Transfers relating to BNFL or the UKAEA etc.
205

      (4)
In this paragraph “BNFL company” means BNFL or a wholly-owned
subsidiary of BNFL.
Application of rules for reorganisations under same ownership
17
Where the conditions set out in subsection (1) of section 343 of the Taxes Act
(company reconstructions without a change of ownership) are satisfied in
5
relation to a transfer to which this Part of this Schedule applies, that section
shall have effect in relation to the transfer with the omission of subsection (4)
(which restricts the losses that may be carried forward to the excess of
relevant liabilities over relevant assets).
Chargeable gains: assets to be treated as disposed without a gain or a loss
10
18    (1)
This paragraph applies for the purposes of the 1992 Act where an asset is
transferred by a transfer to which this Part of this Schedule applies.
      (2)
The asset shall be treated as disposed of to the transferee for a consideration
of such amount as would secure that, on the disposal, neither a gain nor a
loss accrues to the transferor.
15
Chargeable gains: degrouping charges
19    (1)
This paragraph applies if a company (“the degrouped company”)—
(a)
acquired an asset from another company at a time when both were
members of the same group of companies (“the old group”); and
(b)
ceases by virtue of a transfer to which this Part of this Schedule
20
applies 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)
Where sub-paragraph (2) has applied to an asset, section 179 of the 1992 Act
25
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”) as if—
(a)
the degrouped company, and
(b)
the company from which it acquired the asset,
30

had been members of the new group at the time of acquisition.
      (4)
Expressions used in this paragraph and in section 179 of the 1992 Act have
the same meanings in this paragraph as in that section.
Chargeable gains: disposal of debts
20    (1)
This paragraph applies if—
35
(a)
a debt owed to any person is transferred by a transfer to which this
Part of this Schedule applies; 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).
40
      (2)
The 1992 Act is to have effect as if the transferee (and not the transferor) were
the original creditor for those purposes.

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 2 — Transfers relating to BNFL or the UKAEA etc.
206

Capital allowances: transfer of plant or machinery
21    (1)
This paragraph applies where—
(a)
property transferred by a transfer to which this Part of this Schedule
applies includes plant or machinery; and
(b)
section 343 of the Taxes Act does not apply in relation to the transfer
5
of the plant or machinery.
      (2)
For the purposes of Part 2 of the 2001 Act (capital allowances for plant and
machinery), the transferee is to be treated—
(a)
as having incurred capital expenditure on the provision of the plant
or machinery at the time of the transfer; and
10
(b)
as having owned the plant or machinery as a result of having
incurred that expenditure.
      (3)
The amount of that expenditure is to be treated as being the book value of
the plant or machinery.
      (4)
For the purposes of the application of section 61 of that Act in relation to the
15
transferor the disposal value of the plant or machinery is to be treated as
being the book value of the plant or machinery.
      (5)
The references in this paragraph to the book value of the plant or machinery
are references to the amount which, in accordance with generally accepted
accounting practice (within the meaning of the Tax Acts)—
20
(a)
was recognised as its value in the accounts of the transferor at the
time of the transfer; or
(b)
should have been so recognised at that time.
      (6)
Expressions used in this paragraph and in Part 2 of the 2001 Act have the
same meanings in this paragraph as in that Part.
25
Capital allowances: transfer not to be transaction between connected persons
22
For the purposes of Part 2 of the 2001 Act references in that Part to a
transaction (however described) between connected persons within the
meaning of section 839 of the Taxes Act are not to include references to a
transfer to which this Part of this Schedule applies.
30
Continuity in relation to loan relationships
23    (1)
This paragraph applies if, in consequence of a transfer to which this Part of
this Schedule applies, the transferee replaces a person as a party to a loan
relationship.
      (2)
Chapter 2 of Part 4 of the Finance Act 1996 (c. 8) is to have effect in relation
35
to the time when the transfer takes effect and any later time as if—
(a)
the transferee had been a party to the loan relationship at the time
when the transferor became a party to it and at all times since that
time; and
(b)
the loan relationship to which the transferee is a party after the time
40
when 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 2 of Part 4 of the Finance
Act 1996 have the same meanings in this paragraph as in that Chapter.
45

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 2 — Transfers relating to BNFL or the UKAEA etc.
207

Continuity in relation to derivative contracts
24    (1)
This paragraph applies if, in consequence of a transfer to which this Part of
this Schedule applies, the transferee replaces a person as a party to a
derivative contract.
      (2)
Schedule 26 to the Finance Act 2002 (c. 23) is to have effect in relation to the
5
time when the transfer takes effect and any later time as if—
(a)
the transferee had been a party to the derivative contract at the time
when the transferor became a party to it and at all times since that
time; and
(b)
the derivative contract to which transferee is a party after the time
10
when the transfer takes effect is the same derivative contract 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 Schedule 26 to the Finance Act
2002 have the same meanings in this paragraph as in that Schedule.
15
Continuity in relation to transfer of intangible assets
25    (1)
Where—
(a)
property is transferred by a transfer to which this Part of this
Schedule applies, and
(b)
the property transferred includes a chargeable intangible asset of the
20
transferor,

the transfer of that asset is to be treated for the purposes of Schedule 29 to
the Finance Act 2002 as a tax neutral transfer.
      (2)
Where, in the case of a transfer of property by a transfer to which this Part of
this Schedule applies—
25
(a)
the property transferred includes an asset which is not a chargeable
intangible asset of the transferor, but
(b)
that asset falls to be treated after the transfer as a chargeable
intangible asset of the transferee,

that asset shall be treated as acquired by the transferee for an amount equal
30
to the amount of the consideration determined for the purposes of
paragraph 18(2) of this Schedule.
      (3)
Expressions used in this paragraph and in Schedule 29 to the Finance Act
2002 have the same meanings in this paragraph as in that Schedule.
Chargeable intangible assets: degrouping charges
35
26    (1)
This paragraph applies if a company (“the degrouped company”)—
(a)
acquired an intangible fixed asset from another company at a time
when both were members of the same group of companies (“the old
group”); and
(b)
ceases by virtue of a transfer to which this Part of this Schedule
40
applies to be a member of the old group.
      (2)
Paragraph 58 of Schedule 29 to the Finance Act 2002 (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)
Where sub-paragraph (2) has applied to an asset, paragraph 58 of Schedule
45
29 to the Finance Act 2002 is to have effect on and after the first subsequent

Energy Bill [HL]
Schedule 9 — Taxation provisions relating to nuclear transfer schemes
Part 3 — Transfers relating to relevant site licensees
208

occasion on which the degrouped company ceases to be a member of a
group of companies (“the new group”) as if—
(a)
the degrouped company, and
(b)
the company from which it acquired the asset,

had been members of the new group at the time of acquisition.
5
      (4)
Expressions used in this paragraph and in paragraph 58 of Schedule 29 to
the Finance Act 2002 (c. 23) have the same meanings in this paragraph as in
that paragraph.
Computation of profits and losses: transfer of trade
27    (1)
This paragraph applies where, in consequence of a section 42 scheme—
10
(a)
a BNFL company ceases to carry on a trade or a part of a trade; and
(b)
a publicly owned company that is not a subsidiary of the NDA (the
“transferee company”) begins to carry on the trade or that part.
      (2)
For the purpose of computing, in relation to the time when the scheme
comes into force and subsequent times, the relevant trading profits or losses
15
of the BNFL company and the transferee company—
(a)
the trade or part is to be treated as having been a separate trade at the
time of its commencement and as having been carried on by the
transferee company at all times since its commencement as a
separate trade; and
20
(b)
the trade carried on by the transferee company after the time when
the section 42 scheme comes into force is to be treated as the same
trade as that which it is treated, by virtue of paragraph (a), as having
carried on as a separate trade before that time.
      (3)
This paragraph is subject to paragraph 23.
25
      (4)
In this paragraph—
“BNFL company” means BNFL or a wholly-owned subsidiary of
BNFL; and
“relevant trading profits and losses” means profits or losses under
Case I of Schedule D in respect of the trade or part of a trade in
30
question.
Part 3
Transfers relating to relevant site licensees
28    (1)
This paragraph applies where, in consequence of a nuclear transfer scheme,
a subsidiary of the NDA becomes a relevant site licensee.
35
      (2)
For the purposes of the application of the enactments mentioned in sub-
paragraph (3) to the assets of the company which has become a relevant site
licensee, that company shall be treated as continuing, for so long as it is a
relevant site licensee, to be a member of the group of companies of which it
was a member immediately before the scheme took effect.
40
      (3)
Those enactments are—
(a)
the 1992 Act;
(b)
Schedule 29 to the Finance Act 2002;
(c)
paragraphs 5, 14, 19 and 26 of this Schedule.