Income Tax (Trading and Other Income) Bill

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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
394

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,”.
5
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,
10
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
15
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”,
20
(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
25
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
30
“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
35
(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”,
40
(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”.

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

      (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”,
5
(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”,
10
(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)—
15
(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”.
20
      (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”,
25
(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”,
30
(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).
35
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”.
40
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”.

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

56
In section 83 (patent fees etc. and expenses) after “the profits of a trade”
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”.
5
      (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
10
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
15
“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
20
(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
25
(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”.
30
      (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)—
35
(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
40
(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”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
397

60    (1)
Amend section 86 (employees seconded to charities and educational
establishments) as follows.
      (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
5
company (“the employer”) carrying on a trade, profession or
business for the purposes of which it”, and
(b)
for “, profession or vocation” substitute “or profession”.
      (3)
In subsection (2), in the definition of “deductible”, after “charged” insert “to
corporation tax”.
10
61
In section 86A (charitable donations: contributions to agent’s expenses) —
(a)
in subsection (1) for “a person” substitute “a company”, and
(b)
in subsection (2)(a) for “, profession or vocation” substitute “or
profession”.
62    (1)
Amend section 87 (taxable premiums etc.) as follows.
15
      (2)
In subsection (1)—
(a)
for “trade, profession or vocation” substitute “trade or profession”,
(b)
omit “or” at the end of paragraph (a),
(c)
after paragraph (b) insert—
“(c)
any amount falls to be treated as a receipt of a UK
20
property business by virtue of any of sections 277 to
282 of ITTOIA 2005 (receipts in respect of lease
premiums, sums payable instead of rent, for
surrender of lease and for variation or waiver of term
of lease and assignments), or
25
(d)
any amount would fall to be so treated but for the
operation of the rule in section 288 of that Act (the
additional calculation rule),”, and
(d)
after “below” insert “and in section 87A”.
      (3)
In subsection (2)—
30
(a)
for “the person” substitute “a company which is”,
(b)
for “trade, profession or vocation”, in both places where it occurs,
substitute “trade or profession”,
(c)
for “him” substitute “the company”,
(d)
for “he” substitute “the company”, and
35
(e)
for “tax” substitute “corporation tax”.
      (4)
In subsection (4)—
(a)
for “person” substitute “company”,
(b)
for “his” substitute “the company’s”,
(c)
for “trade, profession or vocation” substitute “trade or profession”,
40
and
(d)
for “him”, in both places where it occurs, substitute “the company”.
      (5)
In subsection (6)—
(a)
for “chargeable period”, wherever it occurs, substitute “accounting
period”,
45
(b)
for “person” substitute “company”, and

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
398

(c)
for “him” substitute “the company”.
      (6)
In subsection (7)—
(a)
for “his” substitute “the company’s”,
(b)
for “person” substitute “company”,
(c)
for “chargeable period”, wherever it occurs, substitute “accounting
5
period”, and
(d)
for “him”, in both places where it occurs, substitute “the company”.
      (7)
In subsection (8) after “section 34(2)” insert “or under section 277 of ITTOIA
2005 by virtue of section 278 of that Act (amount treated as lease premium
where work required)”.
10
      (8)
In subsection (9) after paragraph (b) insert—
“(c)
where the amount chargeable arose under Chapter 4 of Part
3 of ITTOIA 2005 (profits of property businesses: lease
premiums etc.), its receipt period (within the meaning of that
Chapter (see section 288(6)).”
15
      (9)
After subsection (9) insert—
“(9A)
In the application of this section and section 87A to Scotland—
(a)
the reference to a lease being granted out of the interest
referred to in subsection (4) above is to the grant of a sublease
of land subject to that interest, and
20
(b)
references to the lease so granted are to be construed as
references to the sublease.”
63
After section 87 insert—
“87A
Section 87(2) and (3) and reductions in receipts under ITTOIA 2005
(1)
This section applies if—
25
(a)
a lease has been granted out of the interest referred to in
section 87(4),
(b)
in calculating the amount that falls to be treated as a receipt
of a UK property business under Chapter 4 of Part 3 of
ITTOIA 2005 in respect of the lease, there is a reduction under
30
section 288 of that Act by reference to a taxed receipt, and
(c)
the taxed receipt is the amount chargeable for the purposes of
section 87.
(2)
Section 37A (section 37(4) and reductions in receipts under ITTOIA
2005) shall apply for modifying the operation of section 87(2) and (3)
35
as it applies for modifying the operation of section 37(4).
(3)
In this section the following expressions have the same meaning as
in Chapter 4 of Part 3 of ITTOIA 2005—
“reduction under section 288 by reference to a taxed receipt”
(see section 290(6) of that Act), and
40
“taxed receipt” (see section 287(4) of that Act).”
64
In section 88 (payments to Export Credits Guarantee Department)—
(a)
for “a person” substitute “a company”,
(b)
for “trade, profession or vocation carried on by that person”
substitute “trade or profession carried on by that company”, and
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
399

(c)
for “if that person” substitute “if that company”.
65
For section 89 (debts proving irrecoverable after event treated as
discontinuance) substitute—
“89
Debts proving to be irrecoverable after discontinuance etc
(1)
This section applies if—
5
(a)
section 337(1) applies to treat a trade as discontinued by
reason of any event, or
(b)
a person permanently ceases to carry on a trade or profession,

and a company carries on the trade or profession after that event or
cessation.
10
(2)
In computing for corporation tax purposes the profits of the trade or
profession in any period after the event or cessation, there may be
deducted a sum equal to any amount proved during that period to
be irrecoverable in respect of any debts—
(a)
which were credited in computing for tax purposes the
15
profits for any period before the event or cessation, and
(b)
in respect of which the benefit was assigned to the company
carrying on the trade or profession after the event or
cessation.
(3)
Subsection (2) applies only so far as the total amount proved to be
20
irrecoverable in respect of the debts exceeds any deduction allowed
in respect of them under—
(a)
section 74(1)(j), or
(b)
section 35 of ITTOIA 2005,

in a computation for any period before the event or cessation.”
25
66    (1)
Amend section 90 (additional payments to redundant employees) as
follows.
      (2)
In subsection (1)—
(a)
for “, profession or vocation” substitute “or profession”, and
(b)
for “profession, vocation or business”, in both places, substitute
30
“profession or business”.
      (3)
In subsection (3)—
(a)
for “profession, vocation or business” substitute “profession or
business”, and
(b)
omit “113(1) or”.
35
67    (1)
Amend section 91 (cemeteries) as follows.
      (2)
In subsection (1)—
(a)
after “computing” insert “for corporation tax purposes”, and
(b)
for “the person” substitute “the company”.
      (3)
In subsection (2) for “the person” substitute “the company”.
40
      (4)
In subsection (4)(a)(i)—
(a)
after “above” insert “, or under section 170(2)(b) of ITTOIA 2005
(relief for income tax purposes)”, and
(b)
after “computing” insert “for tax purposes”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
400

      (5)
In subsection (4)(a)(ii)—
(a)
for “the person” substitute “the company”, and
(b)
for “him” substitute “it”.
      (6)
In subsection (5)—
(a)
for “the persons carrying on the trade after the change” substitute
5
“the company carrying on the trade after the change”,
(b)
for “they” substitute “the company”,
(c)
for “their” substitute “its”, and
(d)
for “them” substitute “it”.
      (7)
For subsection (6) substitute—
10
“(6)
No expenditure shall be taken into account—
(a)
under both paragraphs (a) and (b) of subsection (1) above, or
(b)
under both subsection (1)(a) above and section 170(2)(b) of
ITTOIA 2005 or under both subsection (1)(b) above and
section 170(2)(a) of ITTOIA 2005,
15

whether for the same or different periods.”
68
In section 91A (waste disposal: restoration payments)—
(a)
in subsection (1) for “person” substitute “company”, and
(b)
in subsection (2) omit “income tax or”.
69
In section 91B (waste: disposal: preparation expenditure)—
20
(a)
in subsection (1) for “person”, in both places where it occurs,
substitute “company”,
(b)
in subsection (2) omit “income tax or”,
(c)
in subsection (4) for “person” substitute “company”,
(d)
in subsection (5)(a) after “computing” insert “for the purposes of
25
corporation tax or income tax”,
(e)
in subsection (5)(b) after “made” insert “for the purposes of
corporation tax or income tax”,
(f)
in subsection (6) after “this section” insert “or section 165 of ITTOIA
2005 (relief for income tax purposes)” and after “computing” insert
30
“for the purposes of corporation tax or income tax”, and
(g)
in subsection (10A) for “person”, in both places where it occurs,
substitute “company” and for “he” substitute “it”.
70
In section 91BA (waste disposal: entitlement of successor to allowances)—
(a)
in subsection (1) after “another person” insert “that is a company”,
35
and
(b)
in subsection (4) for “he” substitute “it”.
71
In section 91C (mineral exploration and access) for “person” substitute
“company” and for “tax” substitute “corporation tax”.
72
In section 93(1) (other grants under Industrial Development Act 1982 etc.)—
40
(a)
for “person” substitute “company”, and
(b)
after “chargeable” insert “to corporation tax”.
73
In section 94(1) (debts deducted and subsequently released)—
(a)
for “tax purposes” substitute “corporation tax purposes”, and