|
| |
|
(3) | After that paragraph insert— |
| |
“Persons acting together in relation to financing arrangements |
| |
4A (1) | A person (“P”) shall be treated for the purposes of paragraph |
| |
1(1)(b)(i) above (but subject to sub-paragraph (7) below) as |
| |
indirectly participating in the management, control or capital of |
| 5 |
another (“A”) at the time of the making or imposition of the actual |
| |
| |
(a) | the actual provision relates, to any extent, to financing |
| |
| |
(b) | A is a body corporate or partnership; |
| 10 |
(c) | P and other persons acted together in relation to the |
| |
financing arrangements; and |
| |
(d) | P would be taken to have control of A if, at any relevant |
| |
time, there were attributed to P the rights and powers of |
| |
each of the other persons mentioned in paragraph (c) |
| 15 |
| |
(2) | A person (“Q”) shall be treated for the purposes of paragraph |
| |
1(1)(b)(ii) above (but subject to sub-paragraph (7) below) as |
| |
indirectly participating in the management, control or capital of |
| |
each of the affected persons at the time of the making or |
| 20 |
imposition of the actual provision if— |
| |
(a) | the actual provision relates, to any extent, to financing |
| |
arrangements for one of the affected persons (“B”); |
| |
(b) | B is a body corporate or partnership; |
| |
(c) | Q and other persons acted together in relation to the |
| 25 |
financing arrangements; and |
| |
(d) | Q would be taken to have control of both B and the other |
| |
affected person if, at any relevant time, there were |
| |
attributed to Q the rights and powers of each of the other |
| |
persons mentioned in paragraph (c) above. |
| 30 |
(3) | It is immaterial for the purposes of sub-paragraph (1)(c) or (2)(c) |
| |
above whether P or Q and the other persons acting together in |
| |
relation to the financing arrangements did so at the time of the |
| |
making or imposition of the actual provision or at some earlier |
| |
| 35 |
(4) | In sub-paragraph (1)(d) or (2)(d) “relevant time” means— |
| |
(a) | a time when P or Q and the other persons were acting |
| |
together in relation to the financing arrangements; or |
| |
(b) | a time in the period of six months beginning with the day |
| |
on which they ceased so to act. |
| 40 |
(5) | In determining for the purposes of sub-paragraph (1)(d) or (2)(d) |
| |
whether P or Q would be taken to have control of another person, |
| |
the rights and powers of any person (and not just P or Q) shall be |
| |
taken to include those that would be attributed to that person in |
| |
determining under paragraph 4 above whether he is indirectly |
| 45 |
participating in the management, control or capital of the other |
| |
| |
|
| |
|
| |
|
(6) | In this paragraph “financing arrangements” means arrangements |
| |
made for providing or guaranteeing, or otherwise in connection |
| |
with, any debt, capital or other form of finance. |
| |
(7) | Where the condition in paragraph 1(1)(b) above would not be |
| |
satisfied but for this paragraph, paragraph 1(2) above applies only |
| 5 |
to the extent that the actual provision relates to the financing |
| |
arrangements in question.”. |
| |
(4) | After the paragraph inserted by sub-paragraph (3) above insert— |
| |
“Financing arrangements: anticipatory provision |
| |
4B (1) | To the extent that it applies to provision relating to financing |
| 10 |
arrangements, this Schedule has effect as if in paragraph 1(1)(b) |
| |
above the words “or within the period of six months beginning |
| |
with the day on which the actual provision was made or imposed” |
| |
were inserted immediately before sub-paragraph (i). |
| |
(2) | In this paragraph “financing arrangements” has the same meaning |
| 15 |
as in paragraph 4A above.”. |
| |
(5) | In paragraph 6 (elimination of double counting), after sub-paragraph (4) |
| |
| |
“(4A) | A claim by the disadvantaged person for the purposes of this |
| |
paragraph shall not be made where— |
| 20 |
(a) | the condition in paragraph 1(1)(b) above would not be |
| |
satisfied but for paragraph 4A above; |
| |
(b) | the actual provision is provision in relation to a security |
| |
issued by one of the affected persons (“the issuer”); |
| |
(c) | a guarantee is provided in relation to the security by a |
| 25 |
person with whom the issuer has a participatory |
| |
| |
| In this sub-paragraph “security” and “guarantee” have the same |
| |
meaning as in paragraph 1A above. |
| |
(4B) | For the purposes of sub-paragraph (4A) above, the cases where |
| 30 |
one person has a “participatory relationship” with another are |
| |
| |
(a) | one of them is directly or indirectly participating in the |
| |
management, control or capital of the other; or |
| |
(b) | the same person or persons is or are directly or indirectly |
| 35 |
participating in the management, control or capital of each |
| |
| |
(4C) | Paragraph 4A above applies for the purposes of sub-paragraph |
| |
(4B) above as it applies for the purposes of paragraph 1(1)(b) |
| |
| 40 |
Amendments of Schedule 9 to FA 1996 |
| |
2 (1) | In Schedule 9 to FA 1996 (loan relationships: computational provisions), |
| |
paragraph 2 (late interest) is amended as follows. |
| |
(2) | In sub-paragraph (1B)— |
| |
|
| |
|
| |
|
(a) | omit “, but not a CIS-based close company,” and the words after |
| |
| |
(b) | in paragraph (a), at the end insert “or a person who controls a |
| |
company which is such a participator”; |
| |
(c) | in paragraph (b), after “who is” insert “, or who controls a company |
| 5 |
| |
(d) | for paragraph (c) substitute— |
| |
“(c) | a company controlled by such a participator or by |
| |
a person who controls a company which is such a |
| |
| 10 |
(d) | a company in which such a participator has a major |
| |
| |
| |
| “This is subject to sub-paragraph (1E).”. |
| |
(3) | After sub-paragraph (1D) insert— |
| 15 |
“(1E) | A case does not fall within sub-paragraph (1B) above if either of |
| |
the following exceptions applies. |
| |
(1F) | The first exception applies where— |
| |
(a) | the debtor company is a CIS-based close company at all |
| |
such times as are mentioned in sub-paragraph (1B) above; |
| 20 |
(b) | the person standing in the position of a creditor as respects |
| |
the loan relationship is not resident in a non-qualifying |
| |
territory at any such time; and |
| |
(c) | the debtor company is a small or medium-sized enterprise |
| |
for the relevant accounting period. |
| 25 |
(1G) | The second exception applies where— |
| |
(a) | the debt is one that is owed to, or to persons acting for, a |
| |
| |
(b) | no member of that partnership is resident in a non- |
| |
qualifying territory at any time in the relevant accounting |
| 30 |
| |
(c) | the debtor company has received written notice from the |
| |
partnership containing information from which it appears |
| |
that the condition in paragraph (b) above is satisfied; and |
| |
(d) | the debtor company is a small or medium-sized enterprise |
| 35 |
for the relevant accounting period.”. |
| |
(4) | In sub-paragraph (6), at the appropriate places insert— |
| |
““non-qualifying territory” has the meaning given by |
| |
paragraph 5E of Schedule 28AA to the Taxes Act 1988;”; |
| |
““resident” has the meaning given by paragraph 5B(6) of |
| 40 |
Schedule 28AA to the Taxes Act 1988;”; |
| |
““small or medium-sized enterprise” has the meaning given by |
| |
paragraph 5D of that Schedule.”. |
| |
3 (1) | Paragraph 18 of that Schedule (discounted securities of close companies) is |
| |
| 45 |
(2) | In sub-paragraph (1), omit paragraphs (aa) and (c). |
| |
(3) | In sub-paragraph (1)(b)— |
| |
|
| |
|
| |
|
(a) | in sub-paragraph (i), at the end insert “or a person who controls a |
| |
company which is such a participator”; |
| |
(b) | in sub-paragraph (ii), after “an associate of” insert “a person who is, |
| |
or who controls a company which is,”; |
| |
(c) | for sub-paragraph (iii) substitute— |
| 5 |
“(iii) | a company controlled by such a |
| |
participator or by a person who controls a |
| |
company which is such a participator.”. |
| |
(4) | After sub-paragraph (1) insert— |
| |
“(1ZA) | But for any such accounting period this paragraph shall not apply |
| 10 |
in relation to that debtor relationship if any of the following |
| |
| |
(5) | In sub-paragraph (1A), for the words before paragraph (a) substitute “The |
| |
first exception applies where—”. |
| |
(6) | After that sub-paragraph insert— |
| 15 |
“(1B) | The second exception applies where— |
| |
(a) | the issuing company is a CIS-based close company; |
| |
(b) | at all times in the period when there is such a person as is |
| |
described in sub-paragraph (1)(b) above, that person is not |
| |
resident in a non-qualifying territory; and |
| 20 |
(c) | the issuing company is a small or medium-sized enterprise |
| |
| |
(1C) | The third exception applies where— |
| |
(a) | the debt is one that is owed to, or to persons acting for, a |
| |
| 25 |
(b) | no member of that partnership is resident in a non- |
| |
qualifying territory at any time in the period when there is |
| |
such a person as is described in sub-paragraph (1)(b) |
| |
| |
(c) | the debtor company has received written notice from the |
| 30 |
partnership containing information from which it appears |
| |
that the condition in paragraph (b) above is satisfied; and |
| |
(d) | the issuing company is a small or medium-sized enterprise |
| |
| |
(7) | In sub-paragraph (4), at the appropriate places insert— |
| 35 |
““CIS-based close company” and “CIS limited partnership” |
| |
have the meaning given by paragraph 2(6) above;”; |
| |
““non-qualifying territory” has the meaning given by |
| |
paragraph 5E of Schedule 28AA to the Taxes Act 1988;”; |
| |
““resident” has the meaning given by paragraph 5B(6) of |
| 40 |
Schedule 28AA to that Act;”; |
| |
““small or medium-sized enterprise” has the meaning given by |
| |
paragraph 5D of that Schedule.”. |
| |
|
| |
|
| |
|
Commencement and transitional provisions |
| |
4 (1) | Except where sub-paragraph (2) or (3) applies, the amendments made by |
| |
this Schedule have effect in relation to accounting periods beginning on or |
| |
| |
(2) | As regards any actual provision that constitutes, or gives rise to, a debtor |
| 5 |
relationship entered into in pursuance of a contract— |
| |
(a) | made before 4th March 2005, and |
| |
(b) | not varied after that date, or not varied until after that date, |
| |
| the amendments made by paragraph 1(2), (3) and (5) apply only in relation |
| |
to accounting periods beginning on or after 1st April 2007 or, in a case where |
| 10 |
the contract is varied before 1st April 2007, in relation to accounting periods |
| |
beginning on or after the date of the variation. |
| |
(3) | As regards a debtor relationship entered into in pursuance of a contract— |
| |
(a) | made before 4th March 2005, and |
| |
(b) | not varied after that date, or not varied until after that date, |
| 15 |
| the amendments made by paragraph 2(2)(a) and (e), (3) and (4) and |
| |
paragraph 3(2) and (4) to (7) apply only in relation to accounting periods |
| |
beginning on or after 1st April 2007 or, in a case where the contract is varied |
| |
before 1st April 2007, in relation to accounting periods beginning on or after |
| |
the date of the variation. |
| 20 |
(4) | In the case of a company’s accounting period (“the straddling period”) that |
| |
begins before and ends on or after a relevant date, for the purposes of sub- |
| |
paragraph (1) or (where it applies) sub-paragraph (2) or (3) the amendments |
| |
made by this Schedule have effect as if the straddling period consisted of— |
| |
(a) | one accounting period beginning with the straddling period and |
| 25 |
ending with the day before the relevant date, and |
| |
(b) | a second accounting period beginning with the relevant date and |
| |
ending with the straddling period, |
| |
| and the company’s profits and losses are to be computed accordingly for tax |
| |
| 30 |
(5) | A reference in sub-paragraph (2) or (3) to a variation of a contract does not |
| |
include a reference to a variation that does not affect the terms of the debtor |
| |
relationship in question. |
| |
(6) | Sub-paragraph (3) is not to be read as allowing or requiring a debit to be |
| |
brought into account under Chapter 2 of Part 4 of FA 1996 for an accounting |
| 35 |
period beginning on or after 1st April 2007, or the date of the variation, in |
| |
respect of any amount of interest or discount in respect of which a debit is so |
| |
brought into account for any earlier accounting period. |
| |
(7) | In the application of this paragraph to a person within the charge to income |
| |
| 40 |
(a) | a reference to an accounting period is to be read as a reference to a |
| |
| |
(b) | a reference in sub-paragraph (4) to a company is to be read as a |
| |
reference to such a person. |
| |
| 45 |
“actual provision” has the same meaning as in Schedule 28AA to ICTA; |
| |
| |
|
| |
|
| |
|
(a) | in relation to a company, has the meaning given by section |
| |
| |
(b) | in relation to a person other than a company, has a |
| |
| |
| 5 |
(a) | 4th March 2005 for the purposes of sub-paragraph (1); |
| |
(b) | 1st April 2007, or (as the case may be) the date of the variation, |
| |
for the purposes of sub-paragraph (2) or (3). |
| |
| |
| |
| 10 |
Expenses of insurance companies |
| |
1 (1) | Section 76 of ICTA is amended as follows. |
| |
(2) | In subsection (8) (expenses attributable to basic life assurance and general |
| |
annuity business for the purposes of Step 1 are to be those so attributable |
| |
under proper internal accounting practice) in the second sentence (meaning |
| 15 |
of “proper internal accounting practice”) at the end of paragraph (b) insert |
| |
| |
(c) | the Integrated Prudential Sourcebook.”. |
| |
(3) | The amendment made by this paragraph has effect in relation to periods of |
| |
account ending on or after 31st December 2004. |
| 20 |
Interpretative provisions relating to insurance companies |
| |
2 (1) | Section 431(2) of ICTA is amended as follows. |
| |
(2) | Insert the following definition at the appropriate place— |
| |
““the Integrated Prudential Sourcebook” means the Integrated |
| |
Prudential Sourcebook made by the Financial Services |
| 25 |
Authority under the Financial Services and Markets Act |
| |
| |
(3) | For the definition of “liabilities” substitute— |
| |
““liabilities”, in relation to an insurance company, means— |
| |
(a) | the mathematical reserves of the company as |
| 30 |
determined in accordance with chapter 7.3 of the |
| |
Integrated Prudential Sourcebook, and |
| |
(b) | liabilities of the company (whose value falls to be |
| |
determined in accordance with chapter 1.3 of that |
| |
Sourcebook) which arise from deposit back |
| 35 |
| |
and for this purpose “deposit back arrangements” has the |
| |
same meaning as in that Sourcebook;”. |
| |
(4) | Omit the definition of “long-term liabilities”. |
| |
|
| |
|
| |
|
(5) | For the definition of “value” substitute— |
| |
““value”, in relation to an asset of an insurance company, means |
| |
the value of the asset as determined in accordance with |
| |
chapter 1.3, as read with chapter 3.2, of the Integrated |
| |
| 5 |
(6) | The amendments made by this paragraph have effect in relation to periods |
| |
of account ending on or after 31st December 2004. |
| |
Amendment of Chapter 1 of Part 12 of ICTA etc |
| |
3 | For section 431A of ICTA substitute— |
| |
“431A | Amendment of Chapter etc |
| 10 |
(1) | The Treasury may by order amend any insurance company taxation |
| |
provision where it is expedient to do so in consequence of the |
| |
exercise of any power under the Financial Services and Markets Act |
| |
2000, in so far as that Act relates to insurance companies. |
| |
(2) | Where any exercise of a power under that Act has effect for a period |
| 15 |
ending on or before, or beginning before and ending after, the day on |
| |
which an order containing an amendment in consequence of that |
| |
exercise is made under subsection (1) above, the power conferred by |
| |
that subsection includes power to provide for the amendment to |
| |
have effect in relation to that period. |
| 20 |
(3) | The Treasury may by order amend any of the following provisions— |
| |
(a) | sections 432ZA, 432A, 432B to 432G and 755A and Schedule |
| |
| |
(b) | sections 83A, 85, 88 and 89 of the Finance Act 1989; |
| |
(c) | section 210A of the Taxation of Chargeable Gains Act 1992. |
| 25 |
(4) | An order under subsection (3) above may only be made so as to have |
| |
effect in relation to periods of account— |
| |
(a) | beginning on or after 1st January 2005, and |
| |
(b) | ending before 1st October 2006. |
| |
(5) | The Treasury may by order amend subsection (4)(b) above by |
| 30 |
substituting for “1st October 2006” a date no later than 1st October |
| |
| |
(6) | Any power conferred by this section to make an order includes |
| |
| |
(a) | different provision for different cases or different purposes, |
| 35 |
| |
(b) | incidental, supplemental, consequential or transitional |
| |
| |
(7) | In this section “insurance company taxation provision” means any of |
| |
| 40 |
(a) | a provision of this Chapter; |
| |
(b) | any other provision of the Tax Acts so far as relating to |
| |
| |
|
| |
|