Finance Bill

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 4 — European company statute
52

62
Groups
(1)
After section 170(10) of TCGA 1992 (groups: merger, &c.) insert—
“(10A)
Where the principal company of a group (Group 1)—
(a)
becomes an SE by reason of being the acquiring company in the
formation of an SE by merger by acquisition (in accordance with
5
Articles 2(1), 17(2)(a) and 29(1) of Council Regulation (EC)
2157/2001 on the Statute for a European Company (Societas
Europaea)),
(b)
becomes a subsidiary of a holding SE (formed in accordance
with Article 2(2) of that Regulation), or
10
(c)
is transformed into an SE (in accordance with Article 2(4) of that
Regulation),

Group 1 and any group of which the SE is a member on formation shall
be regarded as the same; and the question whether or not a company
has ceased to be a member of a group shall be determined accordingly.”
15
(2)
Subsection (1) shall have effect in relation to the formation of an SE (including
its formation by transformation) which occurs on or after 1st April 2005.
63
Groups: intangible fixed assets
(1)
After paragraph 51 of Schedule 29 to the FA 2002 (groups: continuity) insert—
“51A
For the purposes of this Schedule where the principal company of a
20
group (Group 1)—
(a)
becomes an SE by reason of being the acquiring company in
the formation of an SE by merger by acquisition (in
accordance with Articles 2(1), 17(2)(a) and 29(1) of Council
Regulation (EC) 2157/2001 on the Statute for a European
25
Company (Societas Europaea)),
(b)
becomes a subsidiary of a holding SE (formed in accordance
with Article 2(2) of that Regulation), or
(c)
is transformed into an SE (in accordance with Article 2(4) of
that Regulation),
30

Group 1 and any group of which the SE is a member on formation
shall be regarded as the same; and the question whether or not a
company has ceased to be a member of a group shall be determined
accordingly.”
(2)
Subsection (1) shall have effect in relation to the formation of an SE (including
35
its formation by transformation) which occurs on or after 1st April 2005.
64
Held-over gains
(1)
In section 116(11) of TCGA 1992 (shares: reorganisation, &c.) after “140A,”
insert “140E,”.
(2)
After section 140(6A) of that Act (postponement of charge on transfer of assets
40
to foreign company) insert—
“(6B)
If, as part of the process of a merger forming an SE in circumstances in
which section 140E applies, securities are transferred to the SE by a
transferor company—

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Part 4 — European company statute
53

(a)
the transfer to the SE shall be disregarded for the purposes of
subsection (4), and
(b)
the SE shall be treated as if it were the transferor company in
relation to—
(i)
any subsequent disposal of the securities, and
5
(ii)
any subsequent disposal by the transferee company of
assets to which subsection (5) applies.”
(3)
After section 154(2) of that Act (held over gains: depreciating assets) insert—
“(2A)
If, as part of the process of a merger forming an SE in circumstances in
which section 140E applies, asset No 2 or shares in a company which
10
holds asset No 2 are transferred to the SE, the transfer to the SE shall be
disregarded for the purposes of subsection (2), and—
(a)
if the SE holds asset No 2, it shall be treated for the purposes of
subsection (2), in relation to asset No 2, as if it were the claimant,
or
15
(b)
if the SE holds shares in the company which holds asset No 2,
section 175 shall apply in relation to the group of which the SE
is a member as if it were the same group as any group of which
the claimant was a member before the formation of the SE.
(2B)
If, as part of the process of a merger forming an SE in circumstances in
20
which section 140E applies, the SE becomes a member (whether or not
as the principal company) of a group of which the claimant is also a
member, for the purposes of subsection (2) section 175 shall apply in
relation to the trade carried on by the claimant as if the group of which
the SE is a member were the same group as the group of which the
25
claimant was a member before the formation of the SE.”
(4)
After section 179(1A) of that Act (company ceasing to be member of group)
insert—
“(1B)
Where, as part of the process of a merger to form an SE in circumstances
in which section 140E applies, a company which is a member of a group
30
(“Group 1”) ceases to exist and in consequence of that cessation—
(a)
assets are transferred to the SE, or
(b)
shares in one or more companies which were also members of
the group are transferred to the SE,

a company which has ceased to exist, or the shares in which have been
35
transferred to the SE, shall not be treated for the purposes of this section
as having left Group 1.
(1C)
If subsection (1B) applies in relation to a company then for the purposes
of this section—
(a)
the SE and a company which has ceased to exist in consequence
40
of the merger to form the SE shall be treated as the same entity,
and
(b)
if the SE is a member of a group (“Group 2”) following its
formation (whether or not as the principal company of the
group) a company which was a member of Group 1 and became
45
a member of Group 2 in consequence of the formation of the SE
shall be treated, for the purposes of this section, as if Group 1
and Group 2 were the same.”

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Part 5 — Miscellaneous matters
54

(5)
This section shall have effect in relation to the formation of an SE in accordance
with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a
European Company (Societas Europaea) which occurs on or after 1st April
2005.
65
Restrictions on set-off of pre-entry losses
5
(1)
Schedule 7A to TCGA 1992 (restrictions on set-off of pre-entry losses) shall be
amended as follows.
(2)
After paragraph 1(3A)(a) insert—
“(aa)
in a case in which (whether or not paragraph (a)(i) also
applies)—
10
(i)
the company is an SE resident in the United Kingdom,
and
(ii)
the asset was transferred to the SE as part of the
process of its formation by the merger by acquisition
of two or more companies in accordance with Articles
15
2(1) and 17(2)(a) or (b) of Council Regulation (EC)
2157/2001 on the Statute for a European Company
(Societas Europaea),

are references to the asset becoming a chargeable asset in
relation to the SE or, if at the time of the formation of the SE
20
the asset was a chargeable asset in relation to a company
which ceased to exist as part of the process of the formation
of the SE, to the asset becoming a chargeable asset in relation
to that company;”.
(3)
In the definition of “chargeable asset” in paragraph 1(3A) after “section 10B”
25
insert “(or, if the company is an SE, by reason of the asset having been
transferred to the SE on its formation)”.
(4)
In paragraph 1(6)(a) after “subsection (10)” insert “or (10A)”.
(5)
In paragraph 9(6) after “subsection (10)” insert “or (10A)”.
(6)
This section shall have effect in relation to the formation of an SE which occurs
30
on or after 1st April 2005.
Part 5
Miscellaneous matters
66
Vehicle excise duty: late renewal supplements
(1)
VERA 1994 is amended as follows.
35
(2)
Section 7A (supplement payable on late renewal of vehicle licence) is amended
as follows.
(3)
In subsection (1) (cases in which regulations may provide for supplement to be
payable), for the words from “in prescribed cases” to the end substitute
“where—
40
(a)
a vehicle has ceased to be appropriately covered,
(b)
the vehicle is not, before the end of the relevant prescribed
period, appropriately covered as mentioned in paragraph (a) or

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Part 5 — Miscellaneous matters
55

(b) of subsection (1A) below with effect from the time
immediately after it so ceased or appropriately covered as
mentioned in paragraph (d) of that subsection, and
(c)
the circumstances are not such as may be prescribed.”
(4)
After that subsection insert—
5
“(1A)
For the purposes of this section and section 7B a vehicle is appropriately
covered if (and only if)—
(a)
a vehicle licence or trade licence is in force for or in respect of
the vehicle,
(b)
the vehicle is an exempt vehicle in respect of which regulations
10
under this Act require a nil licence to be in force and a nil licence
is in force in respect of it,
(c)
the vehicle is an exempt vehicle that is not one in respect of
which regulations under this Act require a nil licence to be in
force, or
15
(d)
the vehicle is neither kept nor used on a public road and the
declarations and particulars required to be delivered by
regulations under section 22(1D) have been delivered in
relation to it in accordance with the regulations within the
immediately preceding period of 12 months.
20
(1B)
Where a vehicle for or in respect of which a vehicle licence is in force is
transferred by the holder of the vehicle licence to another person, the
vehicle licence is to be treated for the purposes of subsection (1A) as no
longer in force unless it is delivered to the other person with the vehicle.
(1C)
Where—
25
(a)
an application is made for a vehicle licence for any period, and
(b)
a temporary licence is issued pursuant to the application,

subsection (1B) does not apply to the licence applied for if, on a transfer
of the vehicle during the currency of the temporary licence, the
temporary licence is delivered with the vehicle to the transferee.
30
(1D)
In subsection (1)(b) “the relevant prescribed period” means such period
beginning with the date on which the vehicle ceased to be
appropriately covered as is prescribed.”
(5)
In subsection (2)(c) (amount of supplement variable according to length of
period between expiry of licence and payment of supplement or renewal of
35
licence), for sub-paragraphs (i) and (ii) substitute—
“(i)
the time of a notification (in accordance with regulations
under section 7B(1)) to, or in relation to, a person by
whom it is payable, and
(ii)
the time at which it is paid.”
40
(6)
In subsection (3)(b) (supplement not to cease to be payable by reason of taking
out of vehicle licence), for “a vehicle licence being taken out for the vehicle”
substitute “the vehicle being again appropriately covered”.
(7)
Omit subsection (4)(a) (definition of “expiry of a vehicle licence”).
(8)
In the heading, for “late renewal of vehicle licence” substitute “vehicle ceasing
45
to be appropriately covered”.

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(9)
Section 7B (late-renewal supplements: further provisions) is amended as
follows.
(10)
In subsection (1) (notification of person in whose name vehicle is registered)—
(a)
for “on non-renewal of a vehicle licence for” substitute “in relation to”,
and
5
(b)
for “failure to renew a vehicle licence” substitute “the vehicle ceasing to
be appropriately covered”.
(11)
In the heading, for “Late-renewal” substitute “Section 7A”.
67
Reorganisation of water and sewerage services in Northern Ireland
(1)
In this section “relevant transfer” means a transfer of property, rights or
10
liabilities where—
(a)
the transfer is of property, rights or liabilities which—
(i)
are specified or described in or determined in accordance with
a scheme, and
(ii)
consist of or include relevant property, rights or liabilities,
15
(b)
the transfer is from a Northern Ireland department or persons which
include a Northern Ireland department to a company or companies
specified in the scheme (“transferee company”), and
(c)
the transfer is effected by or under an enactment which—
(i)
is made after the coming into force of this section, and
20
(ii)
relates to the provision of water or sewerage services in
Northern Ireland.
(2)
In this section “relevant property, rights or liabilities” means property, rights
or liabilities connected with the provision of any water or sewerage services.
(3)
The Treasury may by regulations make provision for or in connection with
25
varying the way in which a relevant tax or duty would, apart from the
regulations, have effect in relation to, or in connection with, any of the
following—
(a)
anything done for the purpose of, or under or in consequence of, a
relevant transfer of relevant property, rights or liabilities from a
30
Northern Ireland department to a transferee company;
(b)
any relevant property, rights or liabilities which are the subject of a
relevant transfer from a Northern Ireland department to a transferee
company;
(c)
any relevant property, rights or liabilities of a transferee company.
35
(4)
The provision that may be made by the regulations includes provision for or in
connection with any of the following—
(a)
a tax provision not to apply or to apply with modifications in
prescribed cases or circumstances;
(b)
anything done to have or not to have a specified consequence for the
40
purposes of a tax provision in prescribed cases or circumstances;
(c)
any relevant property, rights or liabilities which are the subject of a
relevant transfer from a Northern Ireland department to a transferee
company to be treated in a specified way for the purposes of a tax
provision in prescribed cases or circumstances;
45

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57

(d)
the withdrawal of relief (whether or not granted by virtue of the
regulations), and the charging of tax, in prescribed cases or
circumstances;
(e)
requiring or enabling the Secretary of State, with the consent of the
Treasury, to determine or to specify the method to be used for
5
determining anything (including amounts or values, or times or
periods of time) which needs to be determined for the purposes of any
tax provision (whether or not modified by the regulations) as it applies
in relation to, or in connection with,—
(i)
anything done for the purpose of, or under or in consequence
10
of, a relevant transfer of relevant property, rights or liabilities
from a Northern Ireland department to a transferee company,
or
(ii)
any relevant property, rights or liabilities which are the subject
of a relevant transfer from a Northern Ireland department to a
15
transferee company.
(5)
A provision of regulations made by virtue only of subsection (3)(c) (“a
subsection (3)(c) provision”) (whether or not also by virtue of subsection (4))
shall not have effect for an accounting period of a transferee company unless
the company is wholly owned by the Crown during the whole of that
20
accounting period.
(6)
Regulations under this section may provide that, for the purposes of a
subsection (3)(c) provision, an accounting period of a transferee company shall
be taken to have ended on the company ceasing to be wholly owned by the
Crown.
25
(7)
For the purposes of this section, a company shall be regarded as wholly owned
by the Crown at any time when each of the issued shares in the company is
held by, or by a nominee of,—
(a)
the Treasury,
(b)
the Secretary of State,
30
(c)
a Northern Ireland department, or
(d)
another company which is wholly owned by the Crown.
(8)
In this section—
“enactment” includes a provision comprised in—
(a)
Northern Ireland legislation, or
35
(b)
an instrument made under an enactment;
“prescribed” means prescribed by or determined in accordance with
regulations under this section;
“relevant tax or duty” means income tax, corporation tax, capital gains
tax, stamp duty or stamp duty reserve tax;
40
“tax provision” means a provision of an enactment about a relevant tax or
duty.
(9)
Any power to make regulations under this section is exercisable by statutory
instrument.
(10)
A statutory instrument containing regulations under this section shall be
45
subject to annulment in pursuance of a resolution of the House of Commons.
(11)
Any power to make regulations under this section includes power—
(a)
to make different provision for different cases or circumstances;

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(b)
to make incidental, supplemental, consequential or transitional
provision or savings.
68
EU Mutual Assistance Directive: notifications
(1)
This section applies where, in accordance with Article 8a of the Mutual
Assistance Directive, the competent authority of another member State (“the
5
applicant authority”) requests the Commissioners for Her Majesty’s Revenue
and Customs to notify an instrument to the person to whom the instrument is
addressed.
(2)
The Commissioners must take the necessary measures to notify the instrument
to that person.
10
(3)
The notification shall be given in accordance with the law applicable to
notification of similar instruments in the part of the United Kingdom in which
it is given.
(4)
The Commissioners must—
(a)
inform the applicant authority immediately of their response to the
15
request, and
(b)
confirm to the applicant authority, as soon as is reasonably practicable,
the date on which the instrument was notified to the person concerned.
(5)
The Commissioners may request additional information from the applicant
authority for the purpose of giving the notification.
20
(6)
In this section “the Mutual Assistance Directive” means Council Directive 77/
799/EEC as amended (in particular by Council Directive 2004/56/EC).
(7)
In this section references to the Commissioners for Her Majesty’s Revenue and
Customs include, in relation to any time before 18th April 2005,—
(a)
the Commissioners of Customs and Excise;
25
(b)
the Commissioners of Inland Revenue.
(8)
In this section “instrument” means any instrument or decision which—
(a)
emanates from the administrative authorities of the member State in
which the applicant authority is situated, and
(b)
concerns the application in that member State of legislation on taxes
30
covered by the Mutual Assistance Directive.
(9)
This section has effect in relation to requests received by the Commissioners for
Her Majesty’s Revenue and Customs on or after 1st January 2005.
69
Abolition of statutory adjudicator for National Savings and Investments
(1)
After the coming into force of this section, no further disputes shall be referred
35
to a person appointed under section 84 of the Friendly Societies Act 1992 (c. 40)
(adjudicator for disputes under the National Savings Bank Act 1971 and the
National Debt Act 1972).
(2)
This section comes into force on 1st September 2005.