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Finance Bill
Schedule 4 — Chargeable gains: location of assets etc
Part 1 — Location of assets

73

 

      (2)  

In subsection (8) (place where securities are situated to be determined under

section 275 of TCGA 1992) for “section 275” substitute “sections 275(1) and

(2)(b) and 275C”.

Foreign securities: delayed remittances

2     (1)  

Section 723 of ICTA is amended as follows.

5

      (2)  

In subsection (8) (place where securities are situated to be determined under

section 275 of TCGA 1992) for “section 275” substitute “sections 275(1) and

(2)(b) and 275C”.

Designated international organisations

3     (1)  

Section 265 of TCGA 1992 is amended as follows.

10

      (2)  

In subsection (3) (securities issued by designated international organisations

to be taken to be situated outside UK for the purposes of capital gains tax)

for “capital gains tax” substitute “this Act”.

Location of assets: general

4     (1)  

Section 275 of TCGA 1992 is amended as follows.

15

      (2)  

Re-number that section as subsection (1) of that section.

      (3)  

In that subsection, in paragraph (d) (location of shares or securities issued by

municipal or governmental authority etc) for “securities” substitute

“debentures”.

      (4)  

In that subsection, after that paragraph insert—

20

“(da)   

subject to paragraph (d) above, shares in or debentures of a

company incorporated in any part of the United Kingdom are

situated in the United Kingdom,”.

      (5)  

In that subsection, in paragraph (e) (location of registered shares or

securities)—

25

(a)   

for “subject to paragraph (d)” substitute “subject to paragraphs (d)

and (da)”;

(b)   

for “securities” substitute “debentures”.

      (6)  

In that subsection, for paragraph (h) (location of patents, trade marks and

registered designs) substitute—

30

“(h)   

patents, trade marks, registered designs and corresponding

rights are situated where they are registered, and if registered

in more than one register, where each register is situated, and

licences or other rights in respect of any such rights are

situated in the United Kingdom if they or any right derived

35

from them are exercisable in the United Kingdom,”.

      (7)  

In that subsection, for paragraph (j) (location of copyright, design right and

franchises) substitute—

“(j)   

copyright, design right, franchises and corresponding rights,

and licences or other rights in respect of any such rights, are

40

situated in the United Kingdom if they or any right derived

from them are exercisable in the United Kingdom,”.

 

 

Finance Bill
Schedule 4 — Chargeable gains: location of assets etc
Part 1 — Location of assets

74

 

      (8)  

After that subsection insert—

“(2)   

In subsection (1) above—

(a)   

in paragraphs (d), (da) and (e), the references to shares or

debentures, in relation to a company that has no share

capital, include any interests in the company possessed by

5

members of the company, and

(b)   

in paragraphs (d) and (e), the references to debentures, in

relation to a person other than a company, include securities.

(3)   

In subsection (1) above, in each of paragraphs (h) and (j),

“corresponding rights” means any rights under the law of a country

10

or territory outside the United Kingdom that correspond or are

similar to those within that paragraph.

(4)   

Subsection (1) above is subject to—

section 265(3) (securities issued by designated international

organisations to be taken to be situated outside UK),

15

section 266 (securities issued by Inter-American Development

Bank to be taken to be situated outside UK), and

section 275C (location of assets: interests of co-owners).”.

Location of certain intangible assets

5          

After section 275 of TCGA 1992 insert—

20

“275A   

  Location of certain intangible assets

(1)   

This section applies for the purpose of determining whether the

situation of an intangible asset (“asset A”) is in the United Kingdom

if the situation of asset A is not otherwise determined (see section

275B(1)).

25

(2)   

In this section “intangible asset” means—

(a)   

intangible or incorporeal property and includes a thing in

action, or

(b)   

anything that under the law of a country or territory outside

the United Kingdom corresponds or is similar to intangible

30

or incorporeal property or a thing in action.

(3)   

If asset A is subject to UK law (see section 275B(2)) at the time it is

created, it shall be taken for the purposes of this Act to be situated in

the United Kingdom at all times.

(4)   

Subsections (5) to (9) below have effect if asset A—

35

(a)   

is a future or option (see section 275B(3)), and

(b)   

is not subject to UK law at the time it is created.

(5)   

If, as a result of the application of the rule in subsection (6) below in

relation to asset A or any other asset or assets, asset A falls to be

treated as being subject to UK law at the time it is created, it shall be

40

taken for the purposes of this Act to be situated in the United

Kingdom at all times.

(6)   

That rule is that where, in the case of any intangible asset,—

(a)   

the asset is a future or option,

 

 

Finance Bill
Schedule 4 — Chargeable gains: location of assets etc
Part 1 — Location of assets

75

 

(b)   

the underlying subject matter (see section 275B(4)) of the

asset consists of or includes an asset which is an intangible

asset, and

(c)   

either—

(i)   

that intangible asset is subject to UK law at the time it

5

is created and, on the assumption that there were no

rights or interests in or over that asset, the situation of

that asset would not be otherwise determined, or

(ii)   

that intangible asset is treated by this subsection as

being so subject at that time,

10

   

the intangible asset mentioned in paragraph (a) above is to be treated

for the purposes of subsection (5) above and this subsection as being

so subject at the time it is created.

(7)   

If—

(a)   

asset A is not taken to be situated in the United Kingdom by

15

virtue of subsection (5) above, and

(b)   

as a result of the application of the rule in subsection (8)

below in relation to asset A or any other asset or assets,

asset A falls to be treated as being situated in the United

Kingdom at any time,

20

   

it shall be taken for the purposes of this Act to be situated in the

United Kingdom at that time.

(8)   

That rule is that where, in the case of any intangible asset,—

(a)   

the asset is a future or option, and

(b)   

the underlying subject matter of the asset consists of or

25

includes an asset—

(i)   

which is, by virtue of subsection (9) below or of any

provision of this Act apart from this section, situated

in the United Kingdom at any time, or

(ii)   

which is treated by this subsection as being so

30

situated at any time,

   

the intangible asset mentioned in paragraph (a) above is to be treated

for the purposes of subsection (7) above and this subsection as being

so situated at that time.

(9)   

Where—

35

(a)   

the underlying subject matter of a future or option consists of

or includes shares or debentures issued by a company

incorporated in any part of the United Kingdom, but

(b)   

at the time the future or option is created, those shares or

debentures have not been issued,

40

   

the underlying subject matter of the future or option, so far as

consisting of or including those shares or debentures, is to be taken,

for the purposes of subsection (8) above, to consist of or include an

asset which is situated in the United Kingdom at all times.

275B    

Section 275A: supplementary provisions

45

(1)   

For the purposes of section 275A, the situation of an asset is not

otherwise determined if, apart from that section, this Act does not

make any provision for determining—

(a)   

the situation of the asset, or

 

 

Finance Bill
Schedule 4 — Chargeable gains: location of assets etc
Part 1 — Location of assets

76

 

(b)   

whether the situation of the asset is in the United Kingdom.

(2)   

For the purposes of section 275A, an intangible asset is subject to UK

law at a particular time if any right or interest which comprises or

forms part of the asset is, at that time,—

(a)   

governed by, or otherwise subject to, or

5

(b)   

enforceable under,

   

the law of any part of the United Kingdom.

(3)   

Sub-paragraphs (6) to (10) of paragraph 12 of Schedule 26 to the

Finance Act 2002 (meaning of “future” and “option”) apply for the

purposes of section 275A as they apply for the purposes of Part 2 of

10

that Schedule.

(4)   

For the purposes of section 275A—

(a)   

the underlying subject matter of a future is the property

which, if the future were to run to delivery, would fall to be

delivered at the date and price agreed when the contract is

15

made, and

(b)   

the underlying subject matter of an option is the property

which would fall to be delivered if the option were exercised.

(5)   

Section 275A is subject to section 275C (location of assets: interests of

co-owners).

20

(6)   

This section is to be construed as one with section 275A.”.

Location of assets: interests of co-owners

6          

After section 275B of TCGA 1992 (as inserted by paragraph 5) insert—

“275C   

  Location of assets: interests of co-owners

(1)   

This section applies for determining for the purposes of this Act—

25

(a)   

the situation of an interest (see subsection (4)) in an asset, or

(b)   

whether the situation of an interest in an asset is in the United

Kingdom.

(2)   

The situation of the interest in the asset shall be taken to be the same

as the situation of the asset, as determined in accordance with

30

subsection (3) below.

(3)   

The situation of the asset for the purposes of subsection (2) above

shall be determined on the assumption that the asset is wholly-

owned by the person holding the interest in the asset.

(4)   

In this section “interest”, in relation to an asset, means an interest as

35

a co-owner of the asset (whether the asset is owned jointly or in

common and whether or not the interests of the co-owners are

equal).”.

 

 

Finance Bill
Schedule 4 — Chargeable gains: location of assets etc
Part 3 — Commencement

77

 

Part 2

Minor amendments: non-resident company with UK permanent establishment

Computation of losses

7     (1)  

Section 16 of TCGA 1992 is amended as follows.

      (2)  

In subsection (3) (loss accruing to person in year of assessment during which

5

he is not resident or ordinarily resident in UK not to be allowable loss unless,

under section 10, he would be chargeable to tax in respect of chargeable gain

if the loss had been a gain) after “section 10” insert “or 10B”.

Reallocation within group of gain or loss accruing under section 179

8     (1)  

Section 179A of TCGA 1992 is amended as follows.

10

      (2)  

In subsection (12) (asset is “chargeable asset” if gain accruing to company on

disposal of asset would be chargeable gain and would by virtue of section

10(3) form part of company’s chargeable profits for corporation tax) for

“section 10(3)” substitute “section 10B”.

Exemptions for disposals by companies with substantial shareholding

15

9     (1)  

Schedule 7AC to TCGA 1992 is amended as follows.

      (2)  

In paragraph 3(2)(c)(ii) (one of conditions for exemption that chargeable

gain accruing to company on disposal would by virtue of section 10(3) form

part of company’s chargeable profits for corporation tax) for “section 10(3)”

substitute “section 10B”.

20

Part 3

Commencement

Commencement

10    (1)  

The amendments made by Part 1 of this Schedule have effect for

determining for the purposes of TCGA 1992—

25

(a)   

the situation of any asset, or

(b)   

whether the situation of any asset is in the United Kingdom,

           

at any time on or after 16th March 2005 (irrespective of when the asset was

acquired by the person holding it).

      (2)  

The amendment made by paragraph 7 has effect in relation to any loss

30

accruing to a company in an accounting period ending on or after 16th

March 2005.

      (3)  

The amendment made by paragraph 8 has effect for determining for the

purposes of section 179A of TCGA 1992 whether an asset is a “chargeable

asset” in relation to a company at any time on or after 16th March 2005.

35

      (4)  

The amendment made by paragraph 9 has effect in relation to disposals on

or after 16th March 2005.

 

 

 
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