Income Tax (Trading and Other Income) Bill

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Session 2004 - 05
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Income Tax (Trading and Other Income) Bill

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
390

(b)
the taxed lease is the head lease for the purposes of section 37,
and
(c)
the lease granted as mentioned in paragraph (a) does not
extend to the whole of the premises subject to the head lease.
(5)
Section 37(4) and subsections (2) and (3) above shall be applied
5
separately to the part of the premises subject to the lease and to the
remainder of the premises, but as if for any reference to the amount
chargeable on the superior interest there were a reference to that
amount proportionately adjusted.
(6)
For the purposes of this section the appropriate fraction of the
10
amount chargeable on the superior interest is the fraction—

where—
A is the period in respect of which the ITTOIA receipt arose, and
B is the period in respect of which the amount chargeable on the
superior interest arose for the purposes of section 37.
15
(7)
For the purposes of this section the period in respect of which an
ITTOIA receipt arose is its receipt period (within the meaning of
Chapter 4 of Part 3 of ITTOIA 2005 (see section 288(6))).
(8)
In this section the following expressions have the same meaning as
in Chapter 4 of Part 3 of ITTOIA 2005—
20
“reduction under section 288 by reference to a taxed receipt”
(see section 290(6) of that Act),
“taxed lease” (see section 287(4) of that Act), and
“taxed receipt” (see section 287(4) of that Act).
(9)
In the application of this section to Scotland, references to a lease
25
granted out of a taxed lease are to be construed as references to a
sublease of land subject to the taxed lease.”
22    (1)
Amend section 38 (rules for ascertaining duration of leases) as follows.
      (2)
In subsection (2) for “tax” substitute “corporation tax”.
      (3)
In subsection (4) for “tax advantage in the application of this Part” substitute
30
“corporation tax advantage in the application of this Part or an income tax
advantage in the application of Chapter 4 of Part 3 of ITTOIA 2005”.
23
In section 40 (tax treatment of receipts and outgoings on sale of land)—
(a)
in subsection (1)—
(i)
after “for the purposes of” insert “corporation”, and
35
(ii)
for “him” substitute “the purchaser”,
(b)
in subsection (2) after “for the purposes of” insert “corporation”, and
(c)
in subsection (3)—
(i)
after “for the purposes of” insert “corporation”, and
(ii)
for “him” substitute “the vendor”.
40
24    (1)
Amend section 42 (appeals against determinations under sections 34 to 36)
as follows.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
391

      (2)
In subsection (1)—
(a)
after “determination of” insert “—

(a)”,
(b)
for “to tax” substitute “to corporation tax”, and
(c)
after “35 or 36” insert “, or
5
(b)
any amount that under Chapter 4 of Part 3 of ITTOIA
2005 (profits of property businesses: lease premiums
etc.) is brought into account as a receipt in calculating
the profits of a property business (within the meaning
of that Act),”.
10
      (3)
At the end of the side-note insert “or Chapter 4 of Part 3 of ITTOIA 2005”.
25    (1)
Amend section 42A (non-residents and their representatives) as follows.
      (2)
In subsection (1) for “under Schedule A on the income of any person”
substitute “—
(a)
under Schedule A, or
15
(b)
as the profits of a UK property business, under Chapter 3 of
Part 3 of ITTOIA 2005,

on the income of any person”.
      (3)
In subsection (2)(a) after “Schedule A business” insert “, or a UK property
business,”.
20
26
In section 43B(2) (transfer of rent)—
(a)
after “paragraph 1(1) of Schedule A” insert “or in the course of a UK
property business”, and
(b)
after “Schedule A business” insert “or the UK property business”.
27    (1)
Amend section 43C (transfer of rent: exceptions, etc.) as follows.
25
      (2)
In subsection (3)—
(a)
omit “or” at the end of paragraph (a), and
(b)
after paragraph (b) insert—
“(c)
section 284 of ITTOIA 2005 applies, or
(d)
that section would apply if the price at which an
30
estate or interest is sold were to exceed the price at
which it is to be reconveyed.”
      (3)
After subsection (4) insert—
“(4A)
If—
(a)
section 285 of ITTOIA 2005 would apply in relation to a
35
finance agreement, and
(b)
section 43B applies in relation to the agreement,

section 285 of ITTOIA 2005 shall not apply.”
      (4)
In subsection (6)—
(a)
after “brought into account” insert “—
40

(a)”, and
(b)
at the end insert “or
(b)
in computing under Chapter 2 of Part 2 of ITTOIA
2005 the profits of a trade carried on wholly or partly
in the United Kingdom.”
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
392

28
In section 43D(2) (interposed lease)—
(a)
after “paragraph 1(1) of Schedule A” insert “or in the course of a UK
property business”, and
(b)
after “Schedule A business” insert “or the UK property business”.
29    (1)
Amend section 43E (interposed lease: exceptions, etc.) as follows.
5
      (2)
In subsection (4)—
(a)
after “brought into account” insert “—

(a)”, and
(b)
at the end insert “or
(b)
in computing under Chapter 2 of Part 2 of ITTOIA
10
2005 the profits of a trade carried on wholly or partly
in the United Kingdom.”
      (3)
In subsection (5) after “Section 34” insert “and sections 277 to 281 of ITTOIA
2005”.
30    (1)
Amend section 43G (interpretation) as follows.
15
      (2)
In subsection (2) in the definition of “rent” after “Schedule A” insert “or, as
the profits of a UK property business, under Chapter 3 of Part 3 of ITTOIA
2005”.
      (3)
In subsection (2) in the definition of “premium”—
(a)
after ““premium”” insert “—
20
(a)
for the purposes of corporation tax”, and
(b)
after “section 34, and” insert—
“(b)
for the purposes of income tax has the meaning given
by section 307(1) of ITTOIA 2005 (and, in relation to
Scotland, section 307(3) of that Act), and includes—
25
(i)
a sum payable by the tenant under the terms
subject to which a lease is granted instead of
the whole or a part of the rent for a period,
(ii)
a sum payable by the tenant under those
terms as consideration for the surrender (in
30
Scotland, the renunciation) of the lease, and
(iii)
a sum payable by the tenant (otherwise than
by way of rent) as consideration for the
variation or waiver of a term of a lease, and”.
31    (1)
Amend section 46 (savings certificates and tax reserve certificates) as
35
follows.
      (2)
In subsection (1) after “liable to” insert “corporation”.
      (3)
In subsection (2) for “Tax” substitute “Corporation tax”.
      (4)
In subsection (4)(b) for “him and he” substitute “the holder and the holder”.
      (5)
After subsection (6) insert—
40
“(7)
In this section “Ulster Savings Certificates” means savings
certificates issued or treated as issued under section 15 of the
Exchequer and Financial Provisions Act (Northern Ireland) 1950.”

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
393

32    (1)
Amend section 53 (farming and other commercial occupation of land (except
woodlands)) as follows.
      (2)
In subsection (1) after “charged to” insert “corporation”.
      (3)
In subsection (2)—
(a)
for “person or partnership or body of persons” substitute “company
5
or partnership”, and
(b)
after “trade” insert “for corporation tax purposes”.
      (4)
In subsection (3) after “charged to” insert “corporation”.
33
In section 55(1) (mines, quarries and other concerns) after “charged to” insert
“corporation”.
10
34    (1)
Amend section 56 (transactions in deposits with and without certificates or
in debts) as follows.
      (2)
In subsection (2)—
(a)
for “person”, in the first place where it occurs, substitute “company”,
and
15
(b)
for “tax” substitute “corporation tax”.
      (3)
In subsection (3)
(a)
for “does” substitute “and section 551 of ITTOIA 2005 (charge to
income tax on profits from disposal of deposit rights) do”, and
(b)
in paragraph (a) for “person” substitute “company”.
20
35    (1)
Amend section 59 (persons chargeable: Schedule D) as follows.
      (2)
Omit subsections (1) and (2).
      (3)
In subsection (3)—
(a)
for “that section” substitute “section 12 of ITTOIA 2005”, and
(b)
omit “under Schedule D”.
25
      (4)
In subsection (4) for “Subsections (1) to (3)” substitute “Subsection (3)”.
36
Omit sections 60 to 63A (basis of assessment for income tax: Cases I and II of
Schedule D).
37
Omit section 64 (Case III assessments).
38
Omit section 65 (Cases IV and V assessments: general).
30
39
Omit section 65A (Case V income from land outside UK: income tax).
40
Omit section 68 (special rules where property etc. situated in Republic of
Ireland).
41
Omit sections 68A to 68C (share incentive plans).
42
Omit section 69 (Case VI assessments).
35
43
Omit section 71 (computation of income tax where no profits in year of
assessment).
44
In section 72(1) (apportionments etc for purposes of Cases I, II and VI)—
(a)
after “chargeable” insert “to corporation tax”, and
(b)
omit “income tax or” and “year of assessment,”.
40

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
394

45
In section 74(1) (general rules as to deductions not allowable)—
(a)
for “the Tax Acts” substitute “the Corporation Tax Acts”,
(b)
after “computing the amount of the profits to be charged” insert “to
corporation tax”,
(c)
for “, profession or vocation”, in each place where it occurs,
5
substitute “or profession”,
(d)
omit paragraph (b),
(e)
in paragraph (j) for “his” substitute “the creditor’s”, and
(f)
omit paragraph (o).
46
In section 76A(1) (levies and repayments under FISMA 2000) after “to be
10
charged” insert “to corporation tax”.
47
Omit section 77 (incidental costs of obtaining loan finance).
48    (1)
Amend section 79 (contributions to local enterprise agencies) as follows.
      (2)
In subsection (1)—
(a)
for “person” substitute “company”,
15
(b)
for “trade, profession or vocation”, in both places where it occurs,
substitute “trade or profession”,
(c)
for “him” substitute “the company”, and
(d)
before “tax” insert “corporation”.
      (3)
In subsection (3) for “any person if either he or any person connected with
20
him” substitute “any company if either the company or any person
connected with the company”.
      (4)
In subsection (9)—
(a)
after “has been made” insert “by a company”,
(b)
for “chargeable period”, in both places where it occurs, substitute
25
“accounting period”,
(c)
for “the contributor or any person connected with him” substitute
“the company or any person connected with the company”,
(d)
for “the contributor shall” substitute “the company shall”,
(e)
before “tax”, in both places where it occurs, insert “corporation”, and
30
(f)
for “he” substitute “the company”.
49    (1)
Amend section 79A (contributions to training and enterprise councils and
local enterprise companies) as follows.
      (2)
In subsection (1)—
(a)
for “person” substitute “company”,
35
(b)
for “trade, profession or vocation”, in both places where it occurs,
substitute “trade or profession”,
(c)
for “him” substitute “the company”, and
(d)
before “tax” insert “corporation”.
      (3)
In subsection (3) for “any person if either he or any person connected with
40
him” substitute “any company if either the company or any person
connected with the company”.
      (4)
In subsection (4)—
(a)
after “in respect of a contribution” insert “made by a company”,

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
395

(b)
for “chargeable period”, in both places where it occurs, substitute
“accounting period”,
(c)
for “the contributor or any person connected with him” substitute
“the company or any person connected with the company”,
(d)
for “the contributor shall” substitute “the company shall”,
5
(e)
before “tax”, in both places where it occurs, insert “corporation”, and
(f)
for “he” substitute “the company”.
50    (1)
Amend section 79B (contributions to urban regeneration companies) as
follows.
      (2)
In subsection (1)—
10
(a)
for “person” substitute “company”,
(b)
for “trade, profession or vocation”, in both places where it occurs,
substitute “trade or profession”,
(c)
for “him” substitute “the company”, and
(d)
before “if it would” insert “for the purposes of corporation tax”.
15
      (3)
In subsection (3) for “any person if either he or any person connected with
him” substitute “any company if either the company or any person
connected with the company”.
      (4)
In subsection (4)—
(a)
after “in respect of a contribution” insert “made by a company”,
20
(b)
for “chargeable period”, in both places where it occurs, substitute
“accounting period”,
(c)
for “the contributor or any person connected with him” substitute
“the company or any person connected with the company”,
(d)
for “the contributor shall” substitute “the company shall”,
25
(e)
before “tax”, in both places where it occurs, insert “corporation”, and
(f)
for “he” substitute “the company”.
51
Omit section 80 (expenses connected with foreign trades etc).
52
Omit section 81 (travel between trades etc).
53
Omit section 82 (interest paid to non-residents).
30
54
In section 82A(1) (expenditure on research and development)—
(a)
for “person” substitute “company”,
(b)
for “by him or on his behalf” substitute “by the company or on the
company’s behalf”, and
(c)
before “tax” insert “corporation”.
35
55
In section 82B(1) (payments to research associations, universities etc.)—
(a)
for “person” substitute “company”,
(b)
for “he” substitute “the company”, and
(c)
before “tax” insert “corporation”.
56
In section 83 (patent fees etc. and expenses) after “the profits of a trade”
40
insert “for the purposes of corporation tax”.
57    (1)
Amend section 83A (gifts in kind to charities etc.) as follows.
      (2)
In subsection (1) for “a person carrying on a trade, profession or vocation”
substitute “a company carrying on a trade or profession”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
396

      (3)
In subsection (2) for “the donor in the course of his trade” substitute “the
company in the course of its trade”.
      (4)
In subsection (3)—
(a)
for “the donor’s” substitute “the company’s”,
(b)
for “the purposes of the Tax Acts” substitute “corporation tax
5
purposes”, and
(c)
for “the donor” substitute “the company”.
      (5)
In subsection (4)—
(a)
after “in respect of the gift of an article” insert “made by a company”,
(b)
for “chargeable period”, in both places where it occurs, substitute
10
“accounting period”,
(c)
for “the donor or any person connected with him” substitute “the
company or any person connected with the company”,
(d)
for “the donor shall” substitute “the company shall”,
(e)
before “tax”, in both places where it occurs, insert “corporation”, and
15
(f)
for “he” substitute “the company”.
58    (1)
Amend section 84 (gifts to educational establishments) as follows.
      (2)
In subsection (1)—
(a)
for “a person carrying on a trade, profession or vocation” substitute
“a company carrying on a trade or profession”, and
20
(b)
for “his trade” substitute “its trade”.
      (3)
In subsection (3)—
(a)
for “the purposes of the Tax Acts” substitute “corporation tax
purposes”, and
(b)
for “his disposal” substitute “its disposal”.
25
      (4)
In subsection (3A) for “above is—” to the end substitute “the period of two
years beginning at the end of the accounting period in which the gift is
made.”
      (5)
Omit subsection (3B).
      (6)
In subsection (4)—
30
(a)
after “in respect of the gift of an article” insert “made by the donor”,
(b)
for “chargeable period”, in both places where it occurs, substitute
“accounting period”,
(c)
for “him” substitute “the donor”,
(d)
before “tax”, in both places where it occurs, insert “corporation”, and
35
(e)
for “he” substitute “the donor”.
59
In section 84A(2)(a) (costs of establishing share option or profit sharing
schemes: relief) after “Schedule D” insert “or Part 2 of ITTOIA 2005”.
60    (1)
Amend section 86 (employees seconded to charities and educational
establishments) as follows.
40
      (2)
In subsection (1)—
(a)
for “If a person (“the employer”) carrying on a trade, profession,
vocation or business for the purposes of which he” substitute “If a
company (“the employer”) carrying on a trade, profession or
business for the purposes of which it”, and
45