sc082806.26-32

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.B.  Standing Committee Proceedings: 28th June 2005
26

Finance Bill, continued

‘(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

Agreed to  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

Agreed to  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

Agreed to  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

Agreed to  83

Schedule  7,  page  98,  line  30,  leave out ‘subsection (4)’ and insert ‘subsections (4)

and (4A)’.

Dawn Primarolo

Agreed to  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

Agreed to  85

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

Dawn Primarolo

Agreed to  86

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

Dawn Primarolo

Agreed to  87

Schedule  7,  page  99,  line  25,  leave out ‘except where the share is a qualifying

publicly issued share,’.

Dawn Primarolo

Agreed to  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—

S.C.B.  Standing Committee Proceedings: 28th June 2005
27

Finance Bill, continued

(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

Agreed to  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

Agreed to  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

Withdrawn  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

Withdrawn  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

Not called  132

Schedule  7,  page  101,  line  30,  leave out ‘and’.

S.C.B.  Standing Committee Proceedings: 28th June 2005
28

Finance Bill, continued

Mr Philip Hammond

Mr Richard Spring

Mr Mark Field

Mr Mark Francois

Mr David Ruffley

Not called  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

Withdrawn  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

Withdrawn  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

Withdrawn  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

Not called  141

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

S.C.B.  Standing Committee Proceedings: 28th June 2005
29

Finance Bill, continued

106.

Mr Philip Hammond

Mr Richard Spring

Mr Mark Field

Mr Mark Francois

Mr David Ruffley

Withdrawn  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

Not called  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).

S.C.B.  Standing Committee Proceedings: 28th June 2005
30

Finance Bill, continued

(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.’.

Mr Philip Hammond

Mr Richard Spring

Mr Mark Field

Mr Mark Francois

Mr David Ruffley

Not called  142

Schedule  7,  page  111,  line  18,  leave out from beginning to end of line 30.

Mr Philip Hammond

Mr Richard Spring

Mr Mark Field

Mr Mark Francois

Mr David Ruffley

Not called  138

Schedule  7,  page  117,  line  37,  leave out from beginning to end of line 8 on page

118.

Mr Philip Hammond

Mr Richard Spring

Mr Mark Field

Mr Mark Francois

Mr David Ruffley

Not called  139

Schedule  7,  page  117,  line  38,  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,

(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,

(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—

S.C.B.  Standing Committee Proceedings: 28th June 2005
31

Finance Bill, continued

(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 cease to be a 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 a series of companides 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 incurre by the company for money lent by that person to the company

in the ordinary course of that business.’.

Mr Philip Hammond

Mr Richard Spring

Mr Mark Field

Mr Mark Francois

Mr David Ruffley

Not called  140

Schedule  7,  page  119,  line  12,  at end insert—

‘Degrouping: principal company becoming member of another group

24A      (1)
Paragraphs 18 and 24 do not apply where a company ceases to be a

member of a group by reason only of the fact that the principal company

of the group becomes a member of another group (“the second group”).

      (2)
But if, in a case where paragraphs 18 and 24 would have applied but for

sub-paragraph (1) above, after the assignment and before the end of the

period of six years after the date of the assignment—

(a)
the transferee ceases to satisfy the condition that it is both a 75%

subsidiary and an effective 51% subsidiary of one or more

members of the second group (“the qualifying condition”), and

(b)
at the time at which the transferee ceases to satisfy that condition,

the relevant loan relationship or derivative contract is held by the

transferee or another company in the same group,


this Schedule has effect as if the transferee, immediately after the

assignment to it of the relevant loan relationship or derivative contract,

had realised the loan relationship or derivative contract for its market

value at that time and immediately reacquired the asset at that value.

      (3)
The adjustments required to be made in consequence of sub-paragraph

(2), by the transferee or a company to which the relevant loan relationship

or derivative contract has been subsequently assigned, in relation to the

period between—

S.C.B.  Standing Committee Proceedings: 28th June 2005
32

Finance Bill, continued

(a)
the assignment of the relevant loan relationship or derivative

contract to the transferee, and

(b)
the transferee ceasing to satisfy the qualifying condition,


shall be made by bringing the aggregate net credit or debit into account

as if it had arisen immediately before the transferee ceased to satisfy the

qualifying condition.

      (4)
For the purposes of section 82 of this Finance Act 1996 (Method of

bringing amounts into account) and paragraph 14 of Schedule 26 to the

Finance Act 2002 (Method of bringing amounts into account), credits or

debits brought into account by virtue of this paragraph take their

character from the purposes for which the relevant loan relationship or

derivative contract was held by the transferee immediately after the

assignment.’.

Schedule, as amended, Agreed to.

Clauses 41 and 42 Agreed to.

Further consideration adjourned - (Mr Tom Watson)

[Adjourned till Thursday at 9.15 a.m.