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| |
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78 | Consequential amendments |
| |
(1) | In section 117(2) of ICTA (restriction on relief for limited partners)— |
| |
(a) | at the end of the definition of “the aggregate amount” insert— |
| |
| “less the amount of any reclaimed relief at that time;”, and |
| |
(b) | after that definition insert— |
| 5 |
““the amount of any reclaimed relief” at any time means |
| |
the total of any amounts at that time which the |
| |
individual has been treated as receiving under section |
| |
74 of the Finance Act 2005 (recovery of excess relief |
| |
given under section 380 or 381) as a result of the |
| 10 |
application of that section of that Act to him in respect of |
| |
losses sustained by him in the trade;”. |
| |
(2) | In section 118ZF of ICTA (meaning of “the aggregate amount”)— |
| |
(a) | in subsection (1), after “subsection (2)” insert “, less the amount of any |
| |
| 15 |
(b) | after that subsection insert— |
| |
“(1A) | For the purposes of subsection (1) “the amount of any reclaimed |
| |
relief” means the total of any amounts which the individual has |
| |
been treated as receiving under section 74 of the Finance Act |
| |
2005 (recovery of excess relief given under section 380 or 381) as |
| 20 |
a result of the application of that section of that Act to him in |
| |
respect of losses sustained by him in the trade.” |
| |
(3) | In section 121 of FA 2004 (definition of “the losses claimed”)— |
| |
(a) | at the end of subsection (1) insert— |
| |
| “less the amount of any relevant reclaimed relief.”, and |
| 25 |
(b) | after that subsection insert— |
| |
“(1A) | The “amount of any relevant reclaimed relief” means whichever |
| |
| |
(a) | the total of any amounts which the individual has been |
| |
treated as receiving under section 74 of the Finance Act |
| 30 |
2005 (recovery of excess relief given under section 380 or |
| |
381 of the Taxes Act 1988) as a result of the application |
| |
of that section of that Act to him in respect of losses |
| |
sustained by him in the trade, and |
| |
(b) | the total amount of any film-related losses sustained by |
| 35 |
the individual in the trade in any eligible years of |
| |
assessment within the meaning of section 74 of the |
| |
Finance Act 2005 to the extent that they are losses in |
| |
respect of which he has at any time claimed relief as |
| |
described in paragraph (a) or (b) of subsection (1) |
| 40 |
| |
(4) | The amendments made by this section are deemed to have come into force on |
| |
| |
|
| |
|
| |
|
Partners benefited by film relief |
| |
79 | Meaning of “capital contribution to the trade” |
| |
(1) | After section 122 of FA 2004 insert— |
| |
"122A | Partners: meaning of “capital contribution to the trade” |
| |
(1) | This section applies for the purposes of section 119 where an individual |
| 5 |
makes a relevant claim (within the meaning of subsection (1)(a) of that |
| |
section) in respect of a film-related loss sustained by him in a trade |
| |
carried on in partnership (“the relevant trade”). |
| |
(2) | The Board may by regulations provide that for the purposes of |
| |
determining under section 119— |
| 10 |
(a) | whether an exit event within the meaning of subsection (2)(b) or |
| |
(c) of that section occurs on or after 2nd December 2004, and |
| |
(b) | where such an event occurs on or after that date, the chargeable |
| |
amount within the meaning of subsection (5) of that section, |
| |
| any amount of a description specified in the regulations is to be |
| 15 |
excluded when computing the amount of the individual’s capital |
| |
contribution to the relevant trade. |
| |
(3) | Regulations under this section may— |
| |
(a) | make provision having effect before the date on which the |
| |
| 20 |
(b) | make such supplementary, incidental, consequential or |
| |
transitional provision as appears to the Board to be necessary or |
| |
| |
(c) | make different provision for different cases or different |
| |
| 25 |
(4) | The provision mentioned in subsection (3)(b) may include provision |
| |
amending or repealing any provision of an Act passed before the |
| |
| |
(5) | No regulations may be made under this section unless a draft has been |
| |
laid before and approved by a resolution of the House of Commons.” |
| 30 |
(2) | In section 121 of FA 2004 (definition of “the individual’s capital contribution to |
| |
the trade”) at the end insert— |
| |
“(7) | This section is subject to provision made by regulations under section |
| |
122A (partners: meaning of “capital contribution to the trade”).” |
| |
(3) | In section 123(1) of FA 2004 (definition of “film-related losses”) for “and 121” |
| 35 |
substitute “, 121 and 122A”. |
| |
(4) | The amendments made by this section are deemed to have come into force on |
| |
| |
|
| |
|
| |
|
| |
Accounting practice and related matters |
| |
80 | Accounting practice and related matters |
| |
(1) | Schedule 4 (accounting practice and related matters) has effect. |
| |
| 5 |
Part 1 makes provision about bad debts and related matters; |
| |
Part 2 makes other provision connected with accounting practice. |
| |
(3) | Part 1 of the Schedule, so far as it amends provisions that have effect both for |
| |
income tax and corporation tax, has effect for the purposes of corporation tax |
| |
| 10 |
(4) | Except as otherwise provided, the provisions of the Schedule have effect for |
| |
periods of account beginning on or after 1st January 2005. |
| |
81 | Computation of profits: change of accounting basis |
| |
(1) | In section 64 of FA 2002 (computation of profits: adjustment on change of |
| |
basis), for subsection (3) (meaning of “relevant change of accounting |
| 15 |
| |
“(3) | A “relevant change of accounting approach” means— |
| |
(a) | a change of accounting principle or practice that, in accordance |
| |
with generally accepted accounting practice, gives rise to a prior |
| |
| 20 |
(b) | a change from using UK generally accepted accounting practice |
| |
to using generally accepted accounting practice with respect to |
| |
accounts drawn up in accordance with international accounting |
| |
| |
(2) | In paragraphs 4(3) and 5(2) of Schedule 22 to FA 2002 (adjustments treated as |
| 25 |
arising on the last day of the first period of account for which the new basis is |
| |
adopted), for “last day” substitute “first day”. |
| |
(3) | The amendments in this section have effect for periods of account beginning on |
| |
or after 1st January 2005. |
| |
82 | Change of accounting practice: deferment of transitional adjustments |
| 30 |
(1) | This section applies where— |
| |
(a) | a company enters into a transaction on or after 14th December 2004, |
| |
otherwise than in the ordinary course of its business, |
| |
(b) | as a result of the transaction it incurs a loss in respect of a loan |
| |
relationship or derivative contract in respect of which, apart from this |
| 35 |
section, a debit would fall to be brought into account for tax purposes |
| |
in a period of account beginning before 1st January 2005, |
| |
(c) | the sole or main purpose of the company in entering into the |
| |
transaction at the time it did was to enable it to bring a debit into |
| |
account for tax purposes in such a period, and |
| 40 |
(d) | if the company had continued to hold the asset or liability representing |
| |
the loan relationship or derivative contract, as it was held immediately |
| |
|
| |
|
| |
|
before the transaction referred to in paragraph (a), in its first period of |
| |
account beginning on or after 1st January 2005, a debit would have |
| |
arisen in respect of the loan relationship or derivative contract in that |
| |
period that was a prescribed debit for the purposes of regulation 3 of |
| |
the Loan Relationship and Derivative Contracts (Change of Accounting |
| 5 |
Practice) Regulations 2004 (S.I. 2004/3271) (debits not to be brought |
| |
into account until the company’s first period beginning on or after 1st |
| |
| |
(2) | Where this section applies no such debit as is mentioned in subsection (1)(b) |
| |
shall be brought into account in the period of account mentioned there, but a |
| 10 |
debit of the same amount shall instead be brought into account as if it were a |
| |
prescribed debit for the purposes of the regulation referred to in subsection |
| |
(1)(d) (even though the loss giving rise to the debit was incurred before 1st |
| |
| |
(3) | In determining the sole or main purpose of a company for the purposes of |
| 15 |
subsection (1)(c) regard shall be had to anything done by a connected company |
| |
that would be relevant for the purposes of that determination if done by the |
| |
| |
| For this purpose companies are connected if they are connected persons within |
| |
the meaning of section 839 of ICTA. |
| 20 |
(4) | For the purposes of subsection (1)(d) it shall be assumed that the loan |
| |
relationship or derivative contract has the same value at the beginning of the |
| |
company’s first period of account beginning on or after 1st January 2005 as it |
| |
had at the time of the transaction referred to in subsection (1)(a). |
| |
(5) | This section does not apply where the transaction is entered into in pursuance |
| 25 |
of legally binding arrangements entered into before 14th December 2004. |
| |
(6) | In this section, references to a company entering into a transaction include a |
| |
reference to the company, or the directors of the company, taking a decision |
| |
about a loan relationship or derivative contract that affects its treatment for |
| |
accounting purposes (other than a decision to prepare some or all of the |
| 30 |
company’s accounts in accordance with international accounting standards). |
| |
83 | Application of accounting standards to securitisation companies |
| |
(1) | For the purposes of the Corporation Tax Acts as they apply to a securitisation |
| |
company in relation to a period of account— |
| |
(a) | beginning on or after 1st January 2005, and |
| 35 |
(b) | ending before 1st January 2007, |
| |
| generally accepted accounting practice shall be taken to be UK generally |
| |
accepted accounting practice as it applied for a period of account ending on |
| |
| |
(2) | For the purposes of this section a “securitisation company” means a company |
| 40 |
| |
(a) | a note-issuing company, |
| |
(b) | an asset-holding company, |
| |
(c) | an intermediate borrowing company, |
| |
(d) | a warehouse company, or |
| 45 |
(e) | a commercial paper funded company, |
| |
| |
|
| |
|
| |
|
(3) | A “note-issuing company” means a company in relation to which the following |
| |
| |
(a) | it is party as debtor to a capital market investment, |
| |
(b) | the securities that represent the capital market investment are issued |
| |
wholly or mainly to independent persons, |
| 5 |
(c) | the capital market investment is part of a capital market arrangement, |
| |
| |
(d) | the total value of the capital market investments made under that |
| |
capital market arrangement is at least £50 million. |
| |
(4) | An “asset-holding company” means a company— |
| 10 |
(a) | whose business (apart from any incidental activities) consists in |
| |
acquiring, holding and managing assets forming the whole or part of |
| |
the security for a capital market arrangement entered into by a note- |
| |
| |
(b) | whose liabilities representing debtor relationships are owed wholly or |
| 15 |
mainly to a note-issuing company or intermediate borrowing |
| |
| |
(5) | An “intermediate borrowing company” means a company— |
| |
(a) | whose only business is to enter into and be a party to creditor |
| |
relationships with an asset-holding company, and |
| 20 |
(b) | whose liabilities representing debtor relationships are owed wholly, or |
| |
substantially wholly, to a note-issuing company. |
| |
(6) | A “warehouse company” means a company whose business consists wholly of |
| |
acquiring and holding financial assets for the purpose— |
| |
(a) | of transferring them to a company (whether or not yet in existence) that |
| 25 |
at the time of the transfer is, or as a result of the transfer will become, |
| |
an asset-holding or note-issuing company, or |
| |
(b) | of itself becoming an asset-holding or note-issuing company. |
| |
(7) | A “commercial paper funded company” means— |
| |
(a) | a company that was an asset-holding company but whose obligations |
| 30 |
under debtor relationships to a note-issuing company or intermediate |
| |
| |
(i) | have been transferred to, or |
| |
(ii) | have been replaced by obligations under debtor relationships |
| |
| 35 |
| one or more companies carrying on a business of banking, or |
| |
(b) | a company that was an intermediate borrowing company but whose |
| |
obligations under debtor relationships to a note-issuing company— |
| |
(i) | have been transferred to, or |
| |
(ii) | have been replaced by obligations under debtor relationships |
| 40 |
| |
| one or more companies carrying on a business of banking. |
| |
| |
“asset” includes any option, future or contract for differences as defined |
| |
for the purposes of Schedule 26 to FA 2002 (derivative contracts) (see |
| 45 |
paragraph 12 of that Schedule); |
| |
|
| |
|
| |
|
“capital market investment” and “capital market arrangement” have the |
| |
same meaning as in section 72B(1) of the Insolvency Act 1986 (c. 45) (see |
| |
paragraphs 1, 2 and 3 of Schedule 2A to that Act); |
| |
“company” includes a partnership; |
| |
“financial asset” has the meaning it has for accounting purposes; and |
| 5 |
“independent persons” means persons who are not connected with the |
| |
| |
(9) | Section 839 of ICTA (connected persons) applies for the purposes of the |
| |
definition above of “independent persons”, except that in applying the |
| |
definition of “control” in that section a person is not to be treated as a |
| 10 |
participator in a company by reason only that he is a loan creditor of the |
| |
| |
84 | Taxation of securitisation companies |
| |
(1) | The Treasury may make provision by regulations as to the application of the |
| |
Corporation Tax Acts in relation to a securitisation company. |
| 15 |
(2) | For the purposes of this section a “securitisation company” means a |
| |
| |
(a) | in relation to which the following conditions are met— |
| |
(i) | it is party as debtor to a capital market investment, |
| |
(ii) | securities representing that capital market investment are |
| 20 |
| |
(iii) | the capital market investment is part of a capital market |
| |
| |
| and which meets such other conditions as may be specified; or |
| |
(b) | of a description specified by reference to its relationship, direct or |
| 25 |
indirect, with a company within paragraph (a). |
| |
(3) | The regulations may, in particular— |
| |
(a) | provide for the application, modification or non-application of any of |
| |
the provisions of the Corporation Tax Acts; |
| |
| 30 |
(i) | that the amount of profits of any specified description (before |
| |
any such adjustments as are mentioned in paragraph (c)) is to be |
| |
taken to be such amount, or is to be calculated on such basis, as |
| |
| |
(ii) | that that amount is to be brought into account for corporation |
| 35 |
tax purposes instead of any specified amount that would |
| |
otherwise fall to be brought into account; |
| |
(c) | provide for specified adjustments to be made to the amount to be |
| |
brought into account for corporation tax purposes; |
| |
| 40 |
(i) | that the regulations apply to a company only if an election to |
| |
| |
(ii) | that any such election must be made in the company’s first |
| |
company tax return after the passing of this Act and has effect |
| |
in relation to every period of account of the company beginning |
| 45 |
on or after 1st January 2005, and |
| |
(iii) | that once subject to the regulations a company shall continue to |
| |
be so for all subsequent periods of account; |
| |
|
| |
|
| |
|
(e) | impose conditions that must be met if a company is to have, or continue |
| |
to have, the benefit of the regulations; and |
| |
(f) | provide for the consequences of failing to meet any specified condition |
| |
(which may include recalculating, on the basis that the regulations did |
| |
not apply, the company’s profits for previous periods). |
| 5 |
(4) | The regulations may make different provision for different descriptions of |
| |
| |
(5) | Regulations under this section may— |
| |
| |
(i) | regulations made before 1st January 2006, or |
| 10 |
(ii) | the first regulations under this section (if made on or after that |
| |
| |
| make provision having effect for periods of account beginning on or |
| |
| |
(b) | in any case, make provision having effect from the beginning of periods |
| 15 |
of account current when the regulations are made. |
| |
| |
“capital market investment” and “capital market arrangement” have the |
| |
same meaning as in section 72B(1) of the Insolvency Act 1986 (c. 45) (see |
| |
paragraphs 1, 2 and 3 of Schedule 2A to that Act); and |
| 20 |
“specified” means specified in regulations under this section. |
| |
(7) | The first regulations under this section shall not be made unless a draft of the |
| |
regulations has been laid before and approved by a resolution of the House of |
| |
| |
| 25 |
| |
Double taxation relief: general |
| |
85 | Dividends by reference to which a deduction is allowed: no underlying tax |
| |
(1) | In section 799 of ICTA (computation of underlying tax) after subsection (2) |
| |
| 30 |
“(2A) | No underlying tax shall be taken into account under subsection (1) |
| |
above in the case of a dividend if, under the law of any territory outside |
| |
the United Kingdom, a deduction is allowed to a resident of that |
| |
territory in respect of an amount determined by reference to the |
| |
| 35 |
(2) | The amendment made by this section has effect in relation to dividends paid |
| |
on or after 16th March 2005. |
| |
Double taxation relief: restrictions |
| |
86 | Limits on credit: income tax and corporation tax: trading profits |
| |
(1) | For sections 798 to 798B of ICTA (double taxation relief: foreign interest and |
| 40 |
|
| |
|