Railways Bill

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Session 2004 - 05
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Railways Bill

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 3 — Transfers under section 12 schemes
123

Capital allowances: determination of disposal value of plant or machinery
22    (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
5
transferor, the disposal value of the plant or machinery 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
sum; or
(b)
if no such sum is received, as nil.
10
      (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)
Section 88 of the 2001 Act (sales at an undervalue) is to be disregarded.
      (5)
This paragraph is subject to sections 63(5) and 68 of the 2001 Act.
Capital allowances: determination of disposal value of fixtures
15
23    (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
as ceasing to own a fixture.
      (2)
For the purposes of the application of section 196 of that Act in relation to the
20
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
portion of that sum which falls (or, if the person to whom the
disposal is made were entitled to an allowance, would fall) to be
25
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.
      (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.
30
      (4)
This paragraph is subject to section 63(5) of the 2001 Act.
Capital allowances: determination of capital value of industrial buildings etc.
24    (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, in relation to a
relevant transfer of the relevant interest in an industrial building or
35
structure.
      (2)
The transfer is to be treated as a sale of that relevant interest.
      (3)
The net proceeds of that sale, in relation to the transferor, are 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
40
sum; or
(b)
if no such sum is received, as nil.

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 3 — Transfers under section 12 schemes
124

      (4)
Sections 567 to 570 of the 2001 Act (sales treated as being for alternative
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: disposals not be treated as made at market value
5
25    (1)
Section 17 of the 1992 Act (disposals and acquisitions treated as made at
market value) is not to have effect in relation to—
(a)
a disposal constituted by a relevant transfer or a disposal in
accordance with provision contained by virtue of paragraph 3 or 4 of
Schedule 2 to this Act in a scheme made under section 12 of this Act;
10
or
(b)
the acquisition made by the person to whom the disposal is made.
      (2)
But sub-paragraph (1) does not apply—
(a)
if the person making the disposal is connected with the person
making the acquisition; or
15
(b)
in the case of a disposal in accordance with provision contained in a
scheme by virtue of paragraph 3 or 4 of Schedule 2, if the disposal is
made by or to a person other than the transferor or transferee.
      (3)
If sub-paragraph (1) applies to the disposal of an asset, the disposal is to be
taken (in relation to the person making the acquisition as well as the person
20
making the disposal) to be—
(a)
in a case where consideration in money or money’s worth is given by
the person making the acquisition or on his behalf in respect of the
vesting of the asset in him, for a consideration equal to the amount
or value of that consideration; or
25
(b)
in a case, where no such consideration is given, for a consideration of
nil.
Chargeable gains: degrouping charges
26    (1)
This paragraph applies if a company (“the degrouped company”)—
(a)
acquired an asset from another company at a time when both were
30
members of the same group of companies (“the old group”); and
(b)
ceases by virtue of a relevant transfer 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
35
immediately reacquired the asset.
      (3)
Where sub-paragraph (2) has applied to an asset, section 179 of the 1992 Act
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”) otherwise than by virtue of a relevant transfer as if—
40
(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.
      (4)
If, disregarding any preparatory transactions, a company would be
regarded for the purposes of section 179 of the 1992 Act (and, accordingly,
45

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 4 — Other provisions concerning transfers
125

of this paragraph) as ceasing to be a member of a group of companies by
virtue of a relevant transfer, it is to be regarded for those purposes as so
doing by virtue of the relevant transfer and not by virtue of any preparatory
transactions.
      (5)
In this paragraph, “preparatory transactions” means anything done under or
5
by virtue of the 1993 Act or this Act for the purpose of initiating, advancing
or facilitating the relevant transfer in question.
      (6)
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
10
27    (1)
This paragraph applies to a relevant transfer of a debt owed to the transferor
if 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).
      (2)
The 1992 Act is to have effect as if the transferee (and not the transferor) were
15
the original creditor for those purposes.
Loan relationships
28    (1)
Paragraph 11 of Schedule 9 to the Finance Act 1996 (c. 8) is not to have effect
where, as a result of a relevant transfer, the transferee replaces the transferor
as a party to a loan relationship.
20
      (2)
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.
Part 4
Other provisions concerning transfers
Stamp duty
25
29    (1)
Stamp duty is not to be chargeable—
(a)
on a scheme made under section 1(2); or
(b)
on an instrument certified by the Secretary of State to the
Commissioners of Inland Revenue as made for the purposes of such
a scheme, or as made for purposes connected with such a scheme.
30
      (2)
But where, by virtue of sub-paragraph (1), stamp duty is not chargeable on
a scheme or instrument, the scheme or instrument is to be treated as duly
stamped only if—
(a)
in accordance with section 12 of the Stamp Act 1891 (c. 39) it has been
stamped with a stamp denoting either that it is not chargeable to
35
duty or that it has been duly stamped; or
(b)
it is stamped with the duty to which it would be chargeable apart
from sub-paragraph (1).
      (3)
In this paragraph, “instrument” has the same meaning as in the Stamp Act
1891.
40

Railways Bill
Schedule 10 — Taxation provisions relating to transfer schemes
Part 5 — Interpretation of Schedule
126

Stamp duty land tax
30    (1)
No transfer in accordance with a scheme made under section 1(2) is to give
rise to any liability to stamp duty land tax.
      (2)
Relief under this paragraph must be claimed in a land transaction return or
in an amendment of a land transaction return.
5
      (3)
In sub-paragraph (2), “land transaction return” has the meaning given by
section 76(1) of the Finance Act 2003 (c. 14).
Chargeable gains: value shifting
31
No scheme made under section 1(2) or 12 is to be regarded as a scheme or
arrangement for the purposes of section 30 of the 1992 Act.
10
Group relief
32
Neither the power of the Secretary of State to make a scheme under section
1(2) nor the power of the Secretary of State or the Scottish Ministers to make
a scheme under section 12 is to be regarded as constituting—
(a)
arrangements falling within section 410(1) or (2) of the Taxes Act
15
(arrangements for transfer of company to another group or
consortium); or
(b)
option arrangements for the purposes of paragraph 5B of Schedule
18 to that Act.
Consequential amendment
20
33
In section 35(3)(d) of the 1992 Act (no gain no loss disposals), after sub-
paragraph (xv) insert—
“(xvi)
paragraph 5 or 16 of Schedule 10 to the Railways Act
2005.”
Part 5
25
Interpretation of Schedule
34    (1)
In this Schedule—
“the 1992 Act” means the Taxation of Chargeable Gains Act 1992 (c. 12);
“the 2001 Act” means the Capital Allowances Act 2001 (c. 2);
“national authority” means—
30
(a)
the Secretary of State;
(b)
the Scottish Ministers;
(c)
the National Assembly for Wales; or
(d)
the Office of Rail Regulation;
“the Taxes Act” means the Income and Corporation Taxes Act 1988
35
(c. 1);
“transferee”, in relation to a transfer in accordance with a scheme made
under section 1(2) or 12, means the person to whom the transfer is
made;
“transferor”, in relation to a transfer in accordance with a scheme made
40
under section 1(2) or 12, means the person from whom the transfer is
made.

Railways Bill
Schedule 11 — Miscellaneous amendments of 1993 Act
127

      (2)
So far as it relates to corporation tax this Schedule is to be construed as one
with the Corporation Tax Acts.
      (3)
So far as it relates to capital allowances this Schedule is to be construed as
one with the 2001 Act.
Schedule 11
5
Section 53

Miscellaneous amendments of 1993 Act
Introductory provision
1
The 1993 Act is amended as follows.
Licence conditions
2
In section 9(3)(f) (conditions requiring the provision of information), after
10
“this Part” insert “or Part 4 of the Railways Act 2005”.
Access agreements
3
In—
(a)
section 17(4) (access agreements: directions requiring facility owners
to enter into contracts for the use of their railway facilities, and
15
(b)
section 19(7) (access agreements: contracts for the use of installations
comprised in a network),

after “this Part” insert “or Part 4 of the Railways Act 2005 (network
modifications etc.)”.
Duties of provider of last resort
20
4
In paragraph (b) of section 30(3) (duty of Authority in absence of
franchise)—
(a)
for “giving notice under subsection (5) of section 38 below”
substitute “making a proposal to which section 24 of the Railways
Act 2005 (proposals to discontinue franchised or secured services)
25
applies”; and
(b)
for the words from “subsections (5) and (6)” to the end of the
paragraph substitute “subsections (7) and (8) of that section)
terminate on the proposal date specified for the purposes of
subsection (5)(a)(ii) of that section; or”.
30
Exclusion for liability for breach of statutory duty
5
In section 50(1) (exclusion of liability for breach of statutory duty), for
“Authority,” substitute “Secretary of State and of the Scottish Ministers, so
far as”.
Purposes for which franchising functions may be exercised
35
6     (1)
In section 54 (purposes for which franchising functions may be exercised), in
subsection (1)—

Railways Bill
Schedule 11 — Miscellaneous amendments of 1993 Act
128

(a)
for the “Authority or a Passenger Transport Authority or Passenger
Transport Executive” substitute “Secretary of State or the Scottish
Ministers”; and
(b)
in paragraph (a), after “any of” insert “his or”.
      (2)
For subsection (2) of that section substitute—
5
“(2)
The Secretary of State and the Scottish Ministers shall each have
power to enter into agreements under which an undertaking is given
by him or them—
(a)
to exercise his or their franchising functions;
(b)
to refrain from exercising them; or
10
(c)
to exercise them in a particular manner.”
      (3)
In subsection (3) of that section, in the first definition of “franchising
functions”—
(a)
for “Authority”, wherever occurring, substitute “Secretary of State or
the Scottish Ministers”;
15
(b)
in paragraph (a), for “of the Authority’s functions” substitute “of the
functions of the Secretary of State or of the Scottish Ministers”;
(c)
in that paragraph, for “35” substitute “31”; and
(d)
in paragraph (b), for “Schedule 21 to the Transport Act 2000”
substitute “section 1(2) of the Railways Act 2005”;
20

and omit the definition of “franchising functions” in relation to a Passenger
Transport Authority or Passenger Transport Executive.
Orders for securing compliance
7     (1)
In subsection (9) of section 55 (interpretation of provision relating to orders
for securing compliance), for “section 50 above” substitute “section 43 of the
25
Railways Act 2005 (exclusion of liability for breach of statutory duty)”.
      (2)
In subsection (10) of that section, in the definition of “relevant condition or
requirement”, for paragraphs (c) and (d) substitute—
“(c)
in the case of a person under closure restrictions, any
duty mentioned in subsection (11) to which he is
30
subject;”.
      (3)
For the definition of “relevant operator” in that subsection substitute—
“‘relevant operator’ means—
(a)
a licence holder;
(b)
a franchisee;
35
(c)
a franchise operator who is a party to the franchise
agreement;
(d)
a person under closure restrictions.”
      (4)
In subsection (11) of that section, for paragraphs (a) and (b) substitute “who
is under—
40
(a)
a duty under section 22(8), 26(8), 29(8) or 37(2) of the
Railways Act 2005 not to discontinue a railway passenger
service or an experimental passenger service or not to
discontinue the operation or use of a network or station, or
part of a network or station;
45

Railways Bill
Schedule 11 — Miscellaneous amendments of 1993 Act
129

(b)
a duty to comply with any requirement imposed under
section 33(2)(i) of that Act (closure requirements imposed on
operators); or
(c)
a duty to comply with conditions to which he has agreed
under section 34(5) of that Act (conditions of minor
5
modification determination).”
      (5)
After that subsection insert—
“(11A)
In the definition of ‘the appropriate authority’ in subsection (10)
above the reference to a relevant condition or requirement in the case
of a person under Scottish closure restrictions is a reference to a
10
relevant condition or requirement which—
(a)
falls within paragraph (c) of the definition in that subsection;
(b)
is imposed or arises in the case of a closure; and
(c)
is so imposed or so arises in a Scottish case;

and the reference to a relevant condition or requirement in the case
15
of a person under closure restrictions that are not Scottish closure
restrictions is a reference to any relevant condition or requirement in
relation to which paragraphs (a) and (b) are satisfied, but not
paragraph (c).
(11B)
In subsection (11A), ‘a Scottish case’, in relation to a closure, means—
20
(a)
a case in which the Scottish Ministers are the national
authority for the purposes of provisions of Part 4 of the
Railways Act 2005 relating to the proposal for the closure;
(b)
a case in which it is the Scottish Ministers who make a
determination under section 34 of that Act (minor
25
modifications) in relation to the closure; or
(c)
a case in which the closure is a closure notice of which is
given under section 37 of that Act (experimental passenger
services) and the proposal relates to a Scotland-only service.”
Financial assistance from the Secretary of State to companies in railway administration
30
8     (1)
In section 63 (financial assistance for companies in railway administration),
for subsection (1)(b) substitute—
“(b)
agree to indemnify a relevant person in respect of—
(i)
liabilities incurred by that person in connection with
the carrying out by the railway administrator of his
35
functions under the order; and
(ii)
loss or damage incurred by that person in that
connection.”
      (2)
After subsection (2) of that section insert—
“(2A)
A grant, loan, indemnity or guarantee under this section may be
40
made or given in whatever manner, and on whatever terms and
subject to whatever conditions, the Secretary of State considers
appropriate.”
      (3)
After subsection (3) insert—
“(3A)
The power of the Secretary of State under this section to agree to
45
indemnify a relevant person—