Railways Bill

House of Commons

Session 2004 - 05
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Railways Bill

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 1 — Transfers to a national authority under section 1(2) schemes
116

Evidence
7     (1)
The production of a printed copy of bye-laws which is indorsed with a
certificate—
(a)
stating one or more matters specified in sub-paragraph (2), and
(b)
purporting to be signed by an officer of the railway operator by
5
whom the bye-laws purport to have been made,

is evidence of what is stated.
      (2)
Those matters are—
(a)
that the bye-laws were made by the railway operator in question;
(b)
that the copy is a true copy of the bye-laws;
10
(c)
that the bye-laws were confirmed by the appropriate national
authority on the date specified in the certificate;
(d)
the date of the coming into force of the bye-laws.
Power to amend or vary
8     (1)
The power to make bye-laws includes the power to make bye-laws
15
amending or revoking bye-laws.
      (2)
The appropriate national authority may by order revoke bye-laws.
Schedule 10
Section 52

Taxation provisions relating to transfer schemes
Part 1
20
Transfers to a national authority under section 1(2) schemes
Meaning of “relevant transfer” in Part 1 of Schedule
1
In this Part of this Schedule, “relevant transfer” means a transfer in
accordance with a scheme made under section 1(2) to a national authority.
Capital allowances: determination of disposal value of plant or machinery
25
2     (1)
This paragraph applies to a relevant transfer of plant or machinery which is
a disposal event for the purposes of Part 2 of the 2001 Act (capital allowances
for plant and machinery).
      (2)
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—
30
(a)
if a capital sum is received by the transferor by way of consideration
or compensation in respect of the transfer, as an amount equal to that
sum; or
(b)
if no such sum is received, as nil.
      (3)
For the purposes of this paragraph a sum received by a person connected
35
with the transferor is to be treated as received by the transferor.
      (4)
Section 88 of the 2001 Act (sales at an undervalue) is to be disregarded.

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 1 — Transfers to a national authority under section 1(2) schemes
117

      (5)
This paragraph is subject to sections 63(5) and 68 of the 2001 Act.
Capital allowances: determination of disposal value of fixtures
3     (1)
This paragraph applies to a relevant transfer if—
(a)
it is a disposal event for the purposes of Part 2 of the 2001 Act; and
(b)
by virtue of the transfer a person is treated by section 188 of that Act
5
as ceasing to own a fixture.
      (2)
For the purposes of the application of section 196 of that Act in relation to the
transferor, the disposal value of the fixture is to be treated—
(a)
if a capital sum is received by the transferor by way of consideration
or compensation in respect of the transfer, as an amount equal to that
10
portion of that sum which, if the person to whom the disposal is
made were entitled to an allowance, would fall to be treated for the
purposes of Part 2 of that Act as expenditure incurred by that person
on the provision of the fixture; or
(b)
if no such sum is received, as nil.
15
      (3)
For the purposes of this paragraph a sum received by a person connected
with the transferor is to be treated as received by the transferor.
      (4)
This paragraph is subject to section 63(5) of the 2001 Act.
Capital allowances: determination of capital value of industrial buildings etc.
4     (1)
This paragraph applies for the purposes of Part 3 of the 2001 Act, and the
20
other provisions of that Act which are relevant to that Part, in relation to a
relevant transfer of the relevant interest in an industrial building or
structure.
      (2)
The transfer is to be treated as a sale of that relevant interest.
      (3)
The net proceeds of that sale are to be treated—
25
(a)
if a capital sum is received by the transferor by way of consideration
or compensation in respect of the transfer, as an amount equal to that
sum; or
(b)
if no such sum is received, as nil.
      (4)
Sections 567 to 570 of the 2001 Act (sales treated as being for alternative
30
amount) are not to have effect in relation to that sale.
      (5)
For the purposes of this paragraph a sum received by a person connected
with the transferor is to be treated as received by the transferor.
Chargeable gains: assets to be treated as disposed without a gain or a loss
5
For the purposes of the 1992 Act, a relevant transfer of an asset is to be
35
treated as a disposal of that asset 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.

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 2 — Other transfers under section 1(2) schemes
118

Continuity in relation to transfer of intangible assets
6     (1)
For the purposes of Schedule 29 to the Finance Act 2002 (c. 23), a relevant
transfer of a chargeable intangible asset of the transferor is to be treated as a
tax-neutral transfer.
      (2)
Expressions used in this paragraph and in that Schedule have the same
5
meanings in this paragraph as in that Schedule.
Neutral effect of transfer for loan relationships and derivative contracts
7
No credit or debit shall be required or allowed, in respect of a relevant
transfer, to be brought into account in the transferor’s case—
(a)
for the purposes of Chapter 2 of Part 4 of the Finance Act 1996 (c. 8)
10
(loan relationships); or
(b)
for the purposes of Schedule 26 to the Finance Act 2002 (derivative
contracts).
Leased assets
8     (1)
This paragraph applies for the purposes of section 781 of the Taxes Act
15
(assets leased to traders and others) where—
(a)
the interest of the lessor or the lessee under a lease, or any other
interest in an asset, is transferred under a relevant transfer; or
(b)
a lease, or any other interest in a lease, is granted to a national
authority in accordance with provision contained by virtue of
20
paragraph 3 or 4 of Schedule 2 in a scheme made under section 1(2).
      (2)
Section 783(4) of that Act is to be disregarded and the transfer or grant is to
be treated as made without any capital sum having been obtained in respect
of the interest or lease by the transferor or grantor.
      (3)
Expressions used in this paragraph and in sections 781 to 785 of that Act
25
have the same meanings in this paragraph as in those sections.
Part 2
Other transfers under section 1(2) schemes
Meaning of “relevant transfer” in Part 2 of Schedule
9
In this Part of this Schedule, “relevant transfer” means a transfer in
30
accordance with a scheme made under section 1(2) to a person other than a
national authority.
Computation of profits and losses in respect of transfer of trade
10    (1)
This paragraph applies where a person (“the predecessor”) is carrying on a
trade or a part of a trade and, in consequence of a scheme made under
35
section 1(2)—
(a)
the predecessor ceases to carry on that trade or that part of that trade;
and
(b)
a person who is not a national authority (“the successor”) begins to
carry on that trade or that part of it.
40

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 2 — Other transfers under section 1(2) schemes
119

      (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
of the predecessor and the successor—
(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
5
successor at all times since its commencement as a separate trade;
and
(b)
the trade carried on by the successor after the time when the 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
10
trade before that time.
      (3)
Where a trade or a part of a trade falls to be treated under this paragraph as
a separate trade, such apportionments of receipts, expenses, assets and
liabilities shall be made for the purpose of computing relevant trading
profits and losses as may be just and reasonable.
15
      (4)
This paragraph is subject to paragraphs 12 and 18.
      (5)
In this paragraph, “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
question.
Trading losses: change in ownership
20
11    (1)
This paragraph applies to a relevant transfer of all the issued share capital of
a company (the “transferred company”).
      (2)
For the purposes of sections 768 and 768D of the Taxes Act, the transfer is not
to be taken to result in a change in the ownership of—
(a)
the transferred company; or
25
(b)
a company which is a wholly-owned subsidiary of the transferred
company when the transfer takes effect.
Capital allowances: transfer of whole trade
12    (1)
This paragraph applies where a person (“the predecessor”) is carrying on a
trade and, in consequence of a scheme made under section 1(2)—
30
(a)
the predecessor ceases to carry on that trade; and
(b)
a person who is not a national authority (“the successor”) begins to
carry on that trade.
      (2)
For the purposes of the allowances and charges provided for by the 2001 Act,
the trade is not to be treated as permanently discontinued, nor a new trade
35
as set up; but sub-paragraphs (3) and (4) of this paragraph are to apply.
      (3)
There are to be made to or on the successor, in accordance with the 2001 Act,
all such allowances and charges as would, if the predecessor had continued
to carry on the trade, have fallen to be made to or on the predecessor.
      (4)
The amounts of those allowances and charges are to be computed as if—
40
(a)
the successor had been carrying on the trade since the predecessor
began to do so; and
(b)
everything done to or by the predecessor had been done to or by the
successor;

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 2 — Other transfers under section 1(2) schemes
120


but so that transfers in accordance with the scheme, so far as they relate to
assets in use for the purposes of the trade, shall not be treated as giving rise
to an allowance or charge.
Capital allowances: transfer of part of a trade
13    (1)
Where a person (“the predecessor”) is carrying on a trade and, in
5
consequence of a scheme made under section 1(2)—
(a)
the predecessor ceases to carry on a trade, and
(b)
a person who is not a national authority (“the successor”) begins to
carry on activities of that trade as part of a trade carried on by the
successor,
10

then that part of the trade carried on by the successor shall be treated for the
purposes of paragraph 12 as a separate trade.
      (2)
Where a person (“the predecessor”) is carrying on a trade and, in
consequence of a scheme made under section 1(2)—
(a)
the predecessor ceases to carry on a part of a trade, and
15
(b)
a person who is not a national authority begins to carry on activities
of that part of that trade,

then the predecessor shall be treated for the purposes of paragraph 12 and
sub-paragraph (1) of this paragraph as having carried on that part of its trade
as a separate trade.
20
      (3)
Where activities fall to be treated for the purposes of this paragraph as a
separate trade, such apportionments of receipts, expenses, assets and
liabilities shall be made for the purposes of the 2001 Act as may be just and
reasonable.
Capital allowances: transfer of plant or machinery
25
14    (1)
This paragraph applies where—
(a)
there is a relevant transfer of plant or machinery;
(b)
paragraph 12 does not apply in relation to that transfer;
(c)
the plant or machinery would be treated for the purposes of the 2001
Act as disposed of by the transferor to the transferee on the transfer
30
taking effect; and
(d)
the scheme in accordance with which the transfer is made contains
provision for the disposal value of the plant or machinery to be
treated for the purposes of that Act as an amount specified in or
determined in accordance with the scheme.
35
      (2)
For the purposes of the 2001 Act—
(a)
the provision mentioned in sub-paragraph (1)(d) is to have effect
(instead of section 61(2) to (4), 72(3) to (5), 88, 171, 196 or 423 of that
Act) for determining an amount as the disposal value of the plant or
machinery or the price at which a fixture is to be treated as sold;
40
(b)
the transferee is to be treated as having incurred capital expenditure
of that amount on the provision of the plant or machinery for the
purposes for which it is used by the transferee on and after the taking
effect of the transfer;
(c)
the property is to be treated as belonging to the transferee in
45
consequence of the transferee having incurred that expenditure; and

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 2 — Other transfers under section 1(2) schemes
121

(d)
in the case of a fixture, the expenditure which falls to be treated as
incurred by the transferee is to be treated for the purposes of sections
181(1) and 182(1) of that Act to be incurred by the giving of a
consideration consisting in a capital sum of that amount.
      (3)
The provision mentioned in sub-paragraph (1)(d) for the determination of
5
an amount may include provision for a determination—
(a)
to be made by the Secretary of State in a manner described in the
scheme;
(b)
to be made by reference to factors so described or to the opinion of a
person so described; and
10
(c)
to be capable of being modified (on one or more occasions) in a
manner and in circumstances so described.
      (4)
The consent of the Treasury is required for the making or modification of a
determination under the provision mentioned in sub-paragraph (1)(d).
      (5)
The consent of the transferee is required for the modification of a
15
determination under the provision mentioned in sub-paragraph (1)(d).
      (6)
If there is a determination or a modification of a determination under the
provision mentioned in sub-paragraph (1)(d), all necessary adjustments—
(a)
must be made by making assessments or by repayment or discharge
of tax; and
20
(b)
must be made despite any limitation on the time within which
assessments may be made.
      (7)
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: determination of capital value of industrial buildings etc.
25
15    (1)
This paragraph applies for the purposes of Part 3 of the 2001 Act, and the
other provisions of that Act which are relevant to that Part, to a relevant
transfer of the relevant interest in an industrial building or structure.
      (2)
Section 573 of that Act is not to have effect in relation to that transfer.
Chargeable gains: assets to be treated as disposed of without a gain or a loss
30
16
For the purposes of the 1992 Act, a relevant transfer of an asset is to be
treated as a disposal of that asset 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.
Continuity in relation to transfer of intangible assets
35
17    (1)
For the purposes of Schedule 29 to the Finance Act 2002 (c. 23)—
(a)
a relevant transfer of a chargeable intangible asset of the transferor is
to be treated as a tax-neutral transfer; and
(b)
an intangible fixed asset which is an existing asset of the transferor at
the time of the transfer is to be treated, on and after the transfer, as
40
an existing asset in the hands of the transferee.
      (2)
Expressions used in this paragraph and in that Schedule have the same
meanings in this paragraph as in that Schedule.

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 3 — Transfers under section 12 schemes
122

Continuity in relation to loan relationships
18    (1)
For the purposes of the application of Chapter 2 of Part 4 of the Finance Act
1996 (c. 8) (loan relationships) in relation to a relevant transfer, the transferee
and the transferor are to be treated as if, at the time of the transfer, they were
members of the same group.
5
      (2)
In sub-paragraph (1), the reference to being members of the same group
must be construed in accordance with paragraph 12(8) of Schedule 9 to that
Act.
Continuity in relation to derivative contracts
19    (1)
For the purposes of the application of Schedule 26 to the Finance Act 2002
10
(c. 23) (derivative contracts) in relation to a relevant transfer, the transferee
and the transferor are to be treated as if, at the time of the transfer, they were
members of the same group.
      (2)
In sub-paragraph (1), the reference to being members of the same group
must be construed in accordance with paragraph 28(6) of that Schedule.
15
Leased assets
20    (1)
This paragraph applies for the purposes of section 781 of the Taxes Act
(assets leased to traders and others) where—
(a)
the interest of the lessor or the lessee under a lease, or any other
interest in an asset, is transferred under a relevant transfer; or
20
(b)
a lease, or any other interest in a lease, is granted to a person who is
not a national authority in accordance with provision contained by
virtue of paragraph 3 or 4 of Schedule 2 in a scheme made under
section 1(2).
      (2)
Section 783(4) of that Act is to be disregarded and the transfer or grant is to
25
be treated as made without any capital sum having been obtained in respect
of the interest or lease by the transferor or grantor.
      (3)
In the case of the transfer of an interest under a lease, payments made by the
transferor under the lease before the transfer takes effect are to be treated as
if they had been made under that lease by the transferee.
30
      (4)
Expressions used in this paragraph and in sections 781 to 785 of that Act
have the same meanings in this paragraph as in those sections.
Part 3
Transfers under section 12 schemes
Meaning of “relevant transfer” in Part 3 of Schedule
35
21
In this Part of this Schedule, “relevant transfer” means a transfer in
accordance with a scheme made under section 12.