Amendments proposed to the Finance Bill - continued	House of Commons
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Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

129

Schedule     7,     page     97,     leave out lines 7 to 12.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

126

Schedule     7,     page     97,     line     29,     at end insert—

    '(8)   For the purposes of this section, a share is acquired by the investing company for an unallowable purpose if the main purpose, or one of the main purposes, for which the company acquired the share is—

(a)	the purpose of circumventing Section 95 of the Taxes Act 1988, or

(b)	any other purpose which is a tax avoidance purpose.

    (9)   The main purpose, or one of the main purposes, for which the investing company acquired a share shall be taken to be the purpose of circumventing Section 95 of the Taxes Act 1988 (Taxation of Dealers in respect of distributions etc) if, at the time when the company acquired the share—

(a)	a credit institution was an associated company of the investing company, and

(b)	had the share been acquired by the credit institution, that institution would have held the share in circumstances such that Section 95 of the Taxes Act would have applied.

    (10)   In this section—"associated company", in relation to any other company, means a company which, within the meaning given by section 413(3)(a) of the Taxes Act 1988, is a member of the same group of companies as that other company;"credit institution" means—

(a)	a bank, within the meaning of section 840A of the Taxes Act 1988;

(b)	a building society; or

(c)	a person authorised by a licence under Part 3 of the Consumer Credit Act 1974 to carry on consumer credit business or consumer hire business within the meaning of that Act;

"tax advantage" has the meaning given by section 709(1) of the Taxes Act 1988;"tax avoidance purpose" in the case of any company, means any purpose that consists in securing a tax advantage (whether for the company or any other person).'.

   

Dawn Primarolo

78

Schedule     7,     page     97,     line     32,     leave out 'are not income producing but'.

   

Dawn Primarolo

79

Schedule     7,     page     97,     line     39,     at end insert—

    '(1A)   But Condition 1 is not satisfied if the whole or substantially the whole by fair value of the assets of the issuing company are income producing.'.

   

Dawn Primarolo

80

Schedule     7,     page     97,     line     43,     at end insert—

'(aa)

any share as respects which Condition 1 above is satisfied or would, apart from subsection (1A) above, be satisfied;'.

   

Dawn Primarolo

81

Schedule     7,     page     97,     line     45,     at end insert 'or would, apart from subsection (1)(c) of that section (excepted shares), be satisfied'.

   

Dawn Primarolo

82

Schedule     7,     page     98,     line     4,     at end insert—

'(e)	rights under a repo in relation to which section 730A of the Taxes Act 1988 applies;

(f)	any share in a company the whole or substantially the whole by fair value of whose assets are assets within paragraphs (a) to (e) above.'.

   

Dawn Primarolo

83

Schedule     7,     page     98,     line     30,     leave out 'subsection (4)' and insert 'subsections (4) and (4A)'.

   

Dawn Primarolo

84

Schedule     7,     page     98,     line     40,     at end insert—

    '(4A)   But a share is not a qualifying publicly issued share for those purposes if the investing company's purpose in acquiring the share is an unallowable purpose by virtue of subsection (8)(a) below.'.

   

Dawn Primarolo

85

Schedule     7,     page     99,     line     5,     leave out 'of the investing company'.

   

Dawn Primarolo

86

Schedule     7,     page     99,     line     17,     leave out 'of the investing company'.

   

Dawn Primarolo

87

Schedule     7,     page     99,     line     25,     leave out 'except where the share is a qualifying publicly issued share,'.

   

Dawn Primarolo

88

Schedule     7,     page     99,     line     33,     leave out from 'if' to end of line 39 and insert 'the investing company was an associated company of a bank (see subsection (10)) at the time when the investing company acquired the share, unless the investing company shows that—

(a)	immediately before that time, some or all of its business consisted in making and holding investments, and

(b)	it acquired the share in the ordinary course of that business.'.

   

Dawn Primarolo

89

Schedule     7,     page     99,     line     45,     leave out from beginning to end of line 2 on page 100 and insert—

'"bank" has the meaning given by section 840A of the Taxes Act 1988;'.

   

Dawn Primarolo

90

Schedule     7,     page     100,     line     17,     at end insert—

    '(1A)   But Condition 3 is not satisfied if—

(a)	Condition 1 in section 91C above is satisfied as respects the share or would, apart from subsection (1A) of that section (income producing assets), be so satisfied, or

(b)	Condition 2 in section 91D above is satisfied as respects the share or would, apart from subsection (1)(c) of that section (excepted shares), be so satisfied.'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

130

Schedule     7,     page     100,     line     29,     leave out sub-paragraph (5).

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

131

Schedule     7,     page     101,     line     26,     at end insert—

    '(2A)   But subsection (2) above shall not apply to a share which meets the conditions in paragraphs (a) and (b) of subsection (3) below but does not meet the condition in paragraph (c) of that subsection.'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

132

Schedule     7,     page     101,     line     30,     leave out 'and'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

133

Schedule     7,     page     101,     line     32,     at end insert—

'and

(c)	the conditions in section 91A(1) and 91B(1) do not cease to be satisfied on or before 31st December 2005.'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

134

Schedule     7,     page     103,     line     26,     at end insert—

'(iii)

an intangible fixed asset within the meaning of Schedule 29 to the Finance Act 2002.'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

135

Schedule     7,     page     105,     leave out line 29 and insert 'investing in a creditor relationship, with comparable risk and liquidity, issued by an independent party.'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

143

Schedule     7,     page     105,     line     42,     at end insert—

'Capital redemption policies - capital loss treatment

13A

(1)

Section 210 of the Taxation of Chargeable Gains Act 1992 is amended as follows—

(2)	After subsection (12) insert—

    "(12A)   Where a person makes a disposal of a capital redemption policy, within the meaning of Chapter 2 of Part 13 of the Taxes Act 1988, then no allowable loss shall accrue to that person.".'.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

141

Schedule     7,     page     105,     line     43,     leave out from beginning to end of line 36 on page 106.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

136

Schedule     7,     page     109,     line     9,     leave out from beginning to end of line 23.

   

Mr Philip Hammond
Mr Richard Spring
Mr Mark Field
Mr Mark Francois
Mr David Ruffley

137

Schedule     7,     page     109,     line     10,     at end insert—

    '(2A)   Where two or more associated companies cease to be members of a group at the same time, sub-paragraph (2) does not have effect in relation to a transfer between those companies.

    (2B)   But where—

(a)	a company ("the transferee") that has ceased to be a member of a group of companies ("the first group") has been assigned an asset or liability from another company ("the transferor") which was a member of that group at the time of the transfer, and

(b)	sub-paragraph (3) applies in relation to the transferee's ceasing to be a member of the first group so that sub-paragraph (2) does not have effect, and

(c)	the transferee subsequently ceases to be a member of another group of companies ("the second group"), and

(d)	there is a relevant connection between the two groups (see sub-paragraph (5)),

sub-paragraph (2) has effect in relation to the transferee's ceasing to be a member of the second group as if it were the second group of which both companies had been members at the time of the transfer.

    (2C)   For the purposes of sub-paragraph (4) there is a relevant connection between the first group and the second group if, at the time when the transferee ceases to be a member of the second group, the company which is the principal company of that group is under the control of—

(a)	the company that is the principal company of the first group or, if that group no longer exists, was the principal company of that group when the transferee ceased to be a member of it; or

(b)	any person or persons who control the company mentioned in paragraph (a) or who have had it under their control at any time in the period since the transferee ceased to be an member of the first group; or

(c)	any person or persons who have, at any time in that period, had under their control either—

(i)	a company that would have been a person falling within paragraph (b) if it had continued to exist, or

(ii)	a company that would have been a person falling within this paragraph (whether by reference to a company that would have been a person falling within paragraph (b) or by reference to a company or series of companies falling within this provision).

    (2D)   The provisions of section 416(2) to (6) of the Taxes Act 1988 (meaning of control) have effect for the purposes of sub-paragraph (5) as they have effect for the purposes of Part 11 of that Act.But a person carrying on a business of banking shall not be regarded for those purposes as having control of a company by reason only of having, or of the consequences of having exercised, any rights in respect of loan capital or debt issued or incurred by the company for money lent by that person to the company in the ordinary course of that business.'.

Prepared 28 Jun 2005