|
| |
|
(3) | In paragraph 7 (supplemental matters), in sub-paragraph (1) (definition of |
| |
“the relevant accounting period”), in the opening words, after “means” |
| |
insert “(subject to sub-paragraphs (1A) to (1C) below)”. |
| |
(4) | After that sub-paragraph insert— |
| |
“(1A) | In this Schedule “the relevant accounting period” means, in the |
| 5 |
case of a non-resident company which is not within the charge to |
| |
corporation tax, the accounting period which the company would |
| |
have on the following assumption. |
| |
(1B) | The assumption is that the company became resident in the United |
| |
Kingdom (and, accordingly, within the charge to corporation tax) |
| 10 |
at the time when it became a 75 per cent. subsidiary as mentioned |
| |
| |
(1C) | For the purposes of sub-paragraph (1B) above the reference to the |
| |
company’s being a 75 per cent. subsidiary is to its being such a |
| |
subsidiary disregarding section 413(7).”. |
| 15 |
Meaning of conditions in section 403F etc |
| |
7 | After Schedule 18 to ICTA (group relief: equity holders and profits or assets |
| |
available for distribution) insert— |
| |
| |
| |
Group relief: overseas losses of non-resident companies |
| 20 |
| |
Meaning of conditions for the purposes of section 403F |
| |
| |
1 | This Part of this Schedule applies, in the case of any non-resident |
| |
company, for the purposes of section 403F (relief in respect of |
| 25 |
overseas losses of non-resident companies). |
| |
The equivalence condition |
| |
2 | An amount meets the equivalence condition if it corresponds (in |
| |
all material respects) to an amount of a kind that, for the purposes |
| |
of section 403, could be available for surrender by way of group |
| 30 |
relief by a company resident in the United Kingdom. |
| |
The EEA tax loss condition: companies resident in EEA territory |
| |
3 (1) | In the case of a non-resident company which is resident in an EEA |
| |
territory (“the relevant territory”), an amount meets the EEA tax |
| |
loss condition in relation to the relevant territory in so far as |
| 35 |
conditions A and B are met. |
| |
(2) | Condition A is that the amount is calculated in accordance with |
| |
the applicable rules under the law of the relevant territory for |
| |
determining, in the case of the company, the amount of any loss or |
| |
|
| |
|
| |
|
other amount eligible for relief from any tax under the relevant |
| |
| |
(3) | Condition B is that, for the purposes of corporation tax, the |
| |
amount is not attributable to a UK permanent establishment of the |
| |
| 5 |
(4) | “UK permanent establishment”, in relation to the company, means |
| |
any permanent establishment through which it carries on a trade |
| |
| |
(5) | For the meaning of tax under any territory outside the United |
| |
Kingdom, see paragraph 17. |
| 10 |
The EEA tax loss condition: companies not resident in EEA territory |
| |
4 (1) | In the case of a non-resident company which is not resident in any |
| |
EEA territory but which carries on a trade in an EEA territory (“the |
| |
relevant territory”) through a permanent establishment, an |
| |
amount meets the EEA tax loss condition for any period in relation |
| 15 |
to the relevant territory in so far as conditions A and B are met. |
| |
(2) | Condition A is that the amount is calculated in accordance with |
| |
the applicable rules under the law of the relevant territory for |
| |
determining, in the case of the company, the amount of any loss or |
| |
other amount eligible for relief from any tax under the relevant |
| 20 |
| |
(3) | Condition B is that the amount is not attributable to activities of |
| |
the company which are made exempt from tax under the relevant |
| |
territory for the period by any double taxation arrangements. |
| |
(4) | For this purpose, activities of the company are made exempt from |
| 25 |
tax under the relevant territory for the period by any double |
| |
taxation arrangements if those arrangements— |
| |
(a) | have the following effect, or |
| |
(b) | would have the following effect if a claim were made. |
| |
(5) | The effect is that the income and gains (if any) arising for the |
| 30 |
period from those activities are ignored in calculating the |
| |
company’s profits, income or gains chargeable to tax under the |
| |
relevant territory for the period. |
| |
(6) | For the purposes of this paragraph, arrangements are double |
| |
taxation arrangements if they are made with a view to affording |
| 35 |
relief from double taxation in relation to— |
| |
(a) | any tax under the relevant territory and any other territory |
| |
outside the United Kingdom, or |
| |
(b) | any tax under the relevant territory and United Kingdom |
| |
income or corporation tax. |
| 40 |
The qualifying loss condition |
| |
5 (1) | This paragraph applies in the case of a non-resident company— |
| |
(a) | which is resident in any EEA territory, or |
| |
(b) | which is not so resident but which carries on a trade in an |
| |
EEA territory through a permanent establishment, |
| 45 |
|
| |
|
| |
|
| and for the purposes of this paragraph “the EEA territory |
| |
concerned” means the EEA territory in which the company is |
| |
resident or (as the case may be) in which it carries on a trade |
| |
through a permanent establishment. |
| |
(2) | An amount meets the qualifying loss condition in so far as the |
| 5 |
| |
(a) | cannot be given qualifying relief for any period (“the |
| |
current period”) or any other period, and |
| |
(b) | has not been given any other qualifying relief under the |
| |
law of any territory outside the United Kingdom (other |
| 10 |
than the EEA territory concerned). |
| |
(3) | Paragraph 6 determines whether the amount cannot be given |
| |
qualifying relief for the current period or any previous period. |
| |
(4) | Paragraph 7 determines whether the amount cannot be given |
| |
qualifying relief for any period after the current period. |
| 15 |
(5) | Paragraph 8 determines whether the amount has not been given |
| |
qualifying relief under the law of any territory outside the United |
| |
Kingdom (other than the EEA territory concerned). |
| |
Qualifying relief for current period and previous periods |
| |
6 (1) | For the purposes of paragraph 5, an amount cannot be given |
| 20 |
qualifying relief for the current period or any previous period if |
| |
conditions A and B are met. |
| |
(2) | Condition A is that, for the purposes of any tax under the EEA |
| |
territory concerned or under any relevant territory, the amount |
| |
cannot be taken into account in calculating any profits, income or |
| 25 |
| |
(a) | arise to the company or any other person in the current |
| |
period or any previous period, and |
| |
(b) | are chargeable to that tax for the current period or any |
| |
| 30 |
(3) | Condition B is that, for the purposes of any tax under the EEA |
| |
territory concerned or under any relevant territory, the amount |
| |
cannot be relieved in the current period or any previous period— |
| |
(a) | by the payment of a credit, |
| |
(b) | by the elimination or reduction of a tax liability, or |
| 35 |
(c) | by any other means of any kind. |
| |
(4) | An amount is to be regarded for the purposes of this paragraph as |
| |
meeting conditions A and B if (but only if) every step to secure that |
| |
the amount is so taken into account or relieved is taken (whether |
| |
by the company or any other person). |
| 40 |
(5) | In this paragraph “relevant territory” means— |
| |
(a) | if the company is resident in any EEA territory and is also |
| |
resident in any other territory outside the United |
| |
Kingdom, that other territory, |
| |
(b) | if the company is not resident in any EEA territory but |
| 45 |
carries on a trade in an EEA territory through a permanent |
| |
|
| |
|
| |
|
establishment, the territory (or territories) in which it is |
| |
| |
Qualifying relief for future periods |
| |
7 (1) | For the purposes of paragraph 5, an amount cannot be given |
| |
qualifying relief for any period after the current period if |
| 5 |
conditions A and B are met. |
| |
(2) | Condition A is that, for the purposes of any tax under the EEA |
| |
territory concerned or under any relevant territory, the amount |
| |
cannot be taken into account in calculating any profits, income or |
| |
| 10 |
(a) | might arise to the company or any other person in any |
| |
period after the current period, and |
| |
(b) | (if there were any) would be chargeable to that tax for any |
| |
period after the current period. |
| |
(3) | Condition B is that, for the purposes of any tax under the EEA |
| 15 |
territory concerned or under any relevant territory, the amount |
| |
cannot be relieved in any period after the current period— |
| |
(a) | by the payment of a credit, |
| |
(b) | by the elimination or reduction of a tax liability, or |
| |
(c) | by any other means of any kind. |
| 20 |
(4) | In determining for the purposes of conditions A and B whether an |
| |
amount can be so taken into account or relieved, the time at which |
| |
the determination is to be made is the time immediately after the |
| |
end of the current period. |
| |
(5) | In this paragraph “relevant territory” means— |
| 25 |
(a) | if the company is resident in any EEA territory and is also |
| |
resident in any other territory outside the United |
| |
Kingdom, that other territory, |
| |
(b) | if the company is not resident in any EEA territory but |
| |
carries on a trade in an EEA territory through a permanent |
| 30 |
establishment, the territory (or territories) in which it is |
| |
| |
Amount not given other qualifying relief under law of territory outside UK |
| |
8 (1) | For the purposes of paragraph 5, an amount has not been given |
| |
qualifying relief under the law of any territory outside the United |
| 35 |
Kingdom (other than the EEA territory concerned) if conditions A |
| |
| |
(2) | Condition A is that, for the purposes of any tax under any territory |
| |
outside the United Kingdom (other than the EEA territory |
| |
concerned), the amount has not been taken into account in |
| 40 |
calculating any profits, income or gains which— |
| |
(a) | have arisen to the company or any other person in any |
| |
| |
(b) | were chargeable to that tax for the period (or, but for so |
| |
taking the amount into account, would have been so |
| 45 |
| |
|
| |
|
| |
|
(3) | Condition B is that, for the purposes of any tax under any territory |
| |
outside the United Kingdom (other than the EEA territory |
| |
concerned), the amount has not been relieved in any period— |
| |
(a) | by the payment of a credit, |
| |
(b) | by the elimination or reduction of a tax liability, or |
| 5 |
(c) | by any other means of any kind. |
| |
| |
9 (1) | This paragraph applies in the case of a non-resident company |
| |
(“the relevant company”)— |
| |
(a) | which is resident in any EEA territory, or |
| 10 |
(b) | which is not so resident but which carries on a trade in an |
| |
EEA territory through a permanent establishment. |
| |
(2) | An amount meets the precedence condition in relation to the EEA |
| |
territory concerned in so far as relief for the amount cannot be |
| |
given in any other territory outside the United Kingdom which is |
| 15 |
a qualifying territory in relation to the relevant company. |
| |
(3) | For this purpose a territory is a qualifying territory in relation to |
| |
| |
(a) | another company is resident in that territory (which need |
| |
not be an EEA territory), |
| 20 |
(b) | that other company owns directly or indirectly any |
| |
ordinary share capital in the relevant company, |
| |
(c) | a third company which is resident in the United Kingdom |
| |
owns directly or indirectly any ordinary share capital of |
| |
| 25 |
(d) | the relevant company is a 75 per cent. subsidiary of that |
| |
| |
(e) | the relevant company is not a 75 per cent. subsidiary of that |
| |
third company as a result of its being a 75 per cent. |
| |
subsidiary of a fourth company which is resident in the |
| 30 |
| |
(4) | In this paragraph references, in relation to any amount and any |
| |
territory, to relief being given for the amount in the territory are to |
| |
| |
(a) | by taking the amount into account in calculating any |
| 35 |
profits, income or gains of any person chargeable to tax |
| |
under the law of that territory, |
| |
(b) | by the payment of a credit to any person under the law of |
| |
| |
(c) | by the elimination or reduction of a tax liability of any |
| 40 |
person under the law of that territory, or |
| |
(d) | by any other means of any kind. |
| |
(5) | “The EEA territory concerned” means the EEA territory in which |
| |
the relevant company is resident or (as the case may be) in which |
| |
it carries on a trade through a permanent establishment. |
| 45 |
|
| |
|
| |
|
| |
Application of UK rules to non-resident company |
| |
| |
10 (1) | This Part of this Schedule applies in the case of any loss or other |
| |
amount (“the EEA amount”) arising to a non-resident company |
| 5 |
(“the EEA company”) in any period (“the loss period”) in so far as |
| |
the EEA amount meets the conditions mentioned in subsection |
| |
(2)(a) to (d) of section 403F. |
| |
(2) | In this Part of this Schedule “the EEA territory concerned” means |
| |
the EEA territory in which the EEA company is resident or (as the |
| 10 |
case may be) in which it carries on a trade through a permanent |
| |
| |
(3) | In this Part of this Schedule any reference to the appropriate part |
| |
of the EEA amount is to that amount in so far as it meets the |
| |
conditions mentioned in subsection (2)(a) to (d) of section 403F. |
| 15 |
| |
11 (1) | The EEA amount must, on the relevant assumptions (see sub- |
| |
paragraph (5)), be recalculated in accordance with the applicable |
| |
UK tax rules (see paragraph 16). |
| |
(2) | The amount of the EEA amount that is available for surrender by |
| 20 |
the EEA company by way of group relief is so much of the |
| |
appropriate part of it as does not exceed the amount given by that |
| |
| |
(3) | But if the amount given by that recalculation is an amount of |
| |
income or other profits, no part of the EEA amount is available for |
| 25 |
surrender by way of group relief. |
| |
(4) | So far as any part of the EEA amount is available for surrender by |
| |
the EEA company by way of group relief, the provisions of this |
| |
Chapter have effect in that case on the basis that the relevant |
| |
| 30 |
(5) | In this paragraph “the relevant assumptions” are the assumptions |
| |
set out in paragraphs 12 to 15. |
| |
Assumptions as to UK residence |
| |
12 (1) | It is to be assumed that the EEA company is resident in the United |
| |
Kingdom throughout the loss period. |
| 35 |
(2) | But this does not require it to be assumed— |
| |
(a) | that there is any change in the place or places at which the |
| |
EEA company carries on its activities (although see |
| |
| |
(b) | that the EEA company ceases to be resident in the United |
| 40 |
Kingdom at the end of the loss period. |
| |
|
| |
|
| |
|
(3) | It is to be assumed that the EEA company becomes resident in the |
| |
United Kingdom (and, accordingly, within the charge to |
| |
corporation tax) at the beginning of the loss period. |
| |
Assumptions as to places in which activities carried out |
| |
13 (1) | In the case of any trade carried on by the EEA company in the loss |
| 5 |
period wholly or partly in the EEA territory concerned, it is to be |
| |
assumed that the trade is carried on wholly or partly in the United |
| |
| |
(2) | In the case of any estate, interest or rights in or over land in the |
| |
EEA territory concerned which are held by the EEA company, it is |
| 10 |
to be assumed that the land is in the United Kingdom. |
| |
(3) | For this purpose, the reference to domestic concepts of law in |
| |
relation to the land in the EEA territory concerned is to be read so |
| |
as to produce the result that most closely corresponds with that |
| |
produced for Schedule A purposes in relation to land in the |
| 15 |
| |
| |
14 (1) | It is to be assumed that an accounting period of the EEA company |
| |
begins at the beginning of the loss period. |
| |
(2) | It is to be assumed that the accounting period ends on the earlier |
| 20 |
| |
(a) | the end of 12 months from the beginning of the loss period, |
| |
| |
(b) | the end of the loss period. |
| |
(3) | If an accounting period ends in accordance with sub-paragraph |
| 25 |
(2)(a), it is to be assumed that a further accounting period begins |
| |
when the previous one ends. |
| |
(4) | It is to be assumed that the further accounting period ends on the |
| |
| |
(a) | the end of 12 months from the beginning of the further |
| 30 |
| |
(b) | the end of the loss period. |
| |
| |
15 (1) | This paragraph applies if, before the beginning of the loss period, |
| |
the EEA company incurs any capital expenditure on the provision |
| 35 |
of plant or machinery for the purposes of any activity. |
| |
(2) | It is to be assumed for the purposes of Part 2 of the Capital |
| |
Allowances Act that the plant or machinery— |
| |
(a) | was provided for purposes wholly other than those of the |
| |
| 40 |
(b) | was not brought into use for the purposes of the activity |
| |
until the beginning of the loss period, |
| |
|
| |
|