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Finance (No.2) Bill


Finance (No.2) Bill
Schedule 1 — Group relief where surrendering company not resident in UK
Part 1 — Amendments of Chapter 4 of Part 10 of ICTA

158

 

           

and section 13 of the Capital Allowances Act (use for qualifying

activity of plant or machinery provided for other purposes) is to

apply accordingly.

      (3)  

This paragraph is to be read as one with Part 2 of the Capital

Allowances Act.

5

Applicable UK tax rules

16    (1)  

For the purposes of this Part of this Schedule references to

recalculating the EEA amount in accordance with the applicable

UK tax rules are to recalculating it in accordance with any

provision made by or under the Corporation Tax Acts—

10

(a)   

which applies for the purpose of calculating for

corporation tax purposes the amount of the loss or other

amount to which the EEA amount corresponds, or

(b)   

which otherwise affects in any way the amount of that loss

or other amount for which relief from corporation tax is

15

available.

      (2)  

For the purposes of sub-paragraph (1), the Treasury may by

regulations provide for the modification of any provision made by

or under the Corporation Tax Acts—

(a)   

which applies as mentioned in sub-paragraph (1)(a), or

20

(b)   

which otherwise affects an amount as mentioned in sub-

paragraph (1)(b).

      (3)  

Regulations under this paragraph may make provision in relation

to—

(a)   

all classes of trade or business, or

25

(b)   

any particular class or classes of trade or business.

      (4)  

Regulations under this paragraph may make—

(a)   

different provision for different cases or different

purposes, and

(b)   

incidental, supplemental, consequential or transitional

30

provision and savings.

      (5)  

Regulations under this paragraph may make provision having

effect before the date on which the regulations are made.

Part 3

Definitions for the purposes of this Schedule

35

Charge to tax under the law of any territory outside the United Kingdom

17    (1)  

This paragraph applies for the purposes of this Schedule.

      (2)  

Any reference to a tax under a territory outside the United

Kingdom is a reference to a tax chargeable under the law of that

territory which—

40

(a)   

is charged on income and corresponds to United Kingdom

income tax, or

 

 

Finance (No.2) Bill
Schedule 1 — Group relief where surrendering company not resident in UK
Part 2 — Amendments of other enactments

159

 

(b)   

is charged on income or chargeable gains or both and

corresponds to United Kingdom corporation tax.

      (3)  

A tax chargeable under the law of a territory outside the United

Kingdom is not to be regarded as failing to correspond to income

or corporation tax just because—

5

(a)   

it is chargeable under the law of a province, state or other

part of a country, or

(b)   

it is levied by or on behalf of a municipality or other local

body.”.

Part 2

10

Amendments of other enactments

Claims for group relief

8          

After paragraph 77 of Schedule 18 to FA 1998 (joint amended returns)

insert—

“Claims in respect of overseas losses of non-resident companies

15

77A   (1)  

This paragraph applies if a claim for group relief is made in

respect of any loss or other amount as a result of the condition in

section 402(2A) of the Taxes Act 1988 being satisfied (relief in

respect of overseas losses of non-resident companies).

      (2)  

In relation to the surrendering company, this Part of this Schedule

20

applies as if—

(a)   

references to the relief being surrendered were to the EEA

amount and to the relief being claimed, and

(b)   

references to its accounting period were to its deemed

accounting period under Part 2 of Schedule 18A to the

25

Taxes Act 1988.

      (3)  

Notice of consent of the surrendering company—

(a)   

is to be given to the officer of the Board under paragraph

70(3)(b) by the claimant company (and not by the

surrendering company), and

30

(b)   

is to be given to the officer to whom the claimant company

makes its company tax returns.

      (4)  

If the surrendering company is not within the charge to income or

corporation tax, the requirement under paragraph 71(1)(e) for

notice of consent by the surrendering company to contain details

35

of its tax district reference is not to apply.

      (5)  

If notice of consent is withdrawn under paragraph 71, the notice of

the withdrawal is to be given to the officer of the Board by the

claimant company (and not by the surrendering company).

      (6)  

If notice of consent is withdrawn under paragraph 75—

40

(a)   

the notice of withdrawal, and any copy of any new notice

of consent, is to be sent to an officer of Revenue and

Customs by the claimant company (and not by the

surrendering company), and

 

 

Finance (No.2) Bill
Schedule 1 — Group relief where surrendering company not resident in UK
Part 3 — Commencement

160

 

(b)   

any notice containing directions by an officer of Revenue

and Customs under sub-paragraph (4) of that paragraph is

to be given to the claimant company (and not to the

surrendering company).

      (7)  

The remaining provisions of that paragraph, and the rest of this

5

Part of this Schedule, are, accordingly, to be read with the

appropriate modifications (so that, in particular, it is the claimant

company (and not the surrendering company) which can bring an

appeal under paragraph 75(7)).

      (8)  

A notice under paragraph 27 (notice to produce documents etc for

10

purposes of an enquiry) given to the claimant company may

require the claimant company—

(a)   

to explain why the EEA amount meets the conditions

mentioned in subsection (2)(a) to (d) of section 403F of the

Taxes Act 1988 and is not prevented from being

15

surrendered by section 403G of that Act, and

(b)   

to provide details of the recalculation required under Part

2 of Schedule 18A to that Act in relation to the EEA

amount.

      (9)  

Except where expressly indicated, requirements imposed under

20

this paragraph are in addition to those imposed apart from this

paragraph.

     (10)  

In this paragraph “the EEA amount” has the same meaning as in

Part 2 of Schedule 18A to the Taxes Act 1988.”.

Part 3

25

Commencement

Commencement

9     (1)  

The amendments made by this Schedule, other than those made by

paragraphs 4(2) and 5, have effect—

(a)   

in relation to any accounting period of a claimant company

30

beginning on or after 1st April 2006, and

(b)   

in relation to any period (“the loss period”) beginning on or after 1st

April 2006 in which any loss or other amount arises to a non-resident

company.

      (2)  

If an accounting period (a “straddling period”) of a claimant company

35

begins before 1st April 2006 and ends on or after that date—

(a)   

so much of the straddling period as falls before 1st April 2006, and

(b)   

so much of the straddling period as falls on or after that date,

           

are to be treated as separate accounting periods for the purposes of the

amendments made by this Schedule other than those made by paragraphs

40

4(2) and 5.

      (3)  

The amount of the claimant company’s profits for the straddling period is to

be attributed, on an apportionment in accordance with this paragraph, to

those separate accounting periods.

 

 

Finance (No.2) Bill
Schedule 2 — Relief for research and development: subjects of clinical trials

161

 

      (4)  

If the loss period of the non-resident company begins before 1st April 2006

and ends on or after that date—

(a)   

so much of the loss period as falls before 1st April 2006, and

(b)   

so much of the loss period as falls on or after that date,

           

are to be treated as separate periods for the purposes of the amendments

5

made by this Schedule other than those made by paragraphs 4(2) and 5.

      (5)  

The amount of the loss or other amount of the non-resident company for the

loss period is to be attributed, on an apportionment in accordance with this

paragraph, to those separate periods.

      (6)  

Any apportionment under this paragraph is to be made on a just and

10

reasonable basis.

Schedule 2

Section 28

 

Relief for research and development: subjects of clinical trials

Amendments to Schedule 20 to FA 2000

1     (1)  

Schedule 20 to FA 2000 (tax relief for expenditure on research and

15

development by small or medium-sized enterprises) is amended as follows.

      (2)  

In paragraph 3 (qualifying R&D expenditure), in sub-paragraph (4), after

paragraph (b) insert—

“(ba)   

is incurred on relevant payments to the subjects of a

clinical trial (see paragraph 6A),”.

20

      (3)  

After paragraph 6 (expenditure on software or consumable items), insert—

“Relevant payments to subjects of clinical trials

6A    (1)  

For the purposes of this Schedule “relevant payment”, in relation

to a subject of a clinical trial, means a payment made to him for

participating in the trial.

25

      (2)  

For the purposes of this Schedule “clinical trial” means an

investigation in human subjects undertaken in connection with

the development of a health care treatment or procedure.”

      (4)  

In paragraph 10 (treatment of expenditure where company and sub-

contractor are connected persons), in sub-paragraph (2)(a)(iii), for “or on

30

software or consumable items” substitute “, on software or consumable

items or on relevant payments to the subjects of a clinical trial”.

Amendments to Schedule 12 to FA 2002

2     (1)  

Schedule 12 to FA 2002 (tax relief for expenditure on research and

development: large companies etc) is amended as follows.

35

      (2)  

In paragraph 4 (qualifying expenditure on direct research and

development), in sub-paragraph (3)—

(a)   

omit the word “or” at the end of paragraph (b);

 

 

Finance (No.2) Bill
Schedule 2 — Relief for research and development: subjects of clinical trials

162

 

(b)   

after that paragraph insert—

“(ba)   

is incurred on relevant payments to the subjects of

a clinical trial, or”.

      (3)  

In paragraph 9 (expenditure on research and development directly

undertaken by the SME), in sub-paragraph (2)—

5

(a)   

omit the word “or” at the end of paragraph (b);

(b)   

after that paragraph insert—

“(ba)   

is incurred on relevant payments to the subjects of

a clinical trial, or”.

      (4)  

In paragraph 17 (which applies certain definitions from Schedule 20 to FA

10

2000)—

(a)   

in the heading, after ““software or consumable items”” insert “,

“relevant payments to the subjects of a clinical trial””;

(b)   

omit the word “and” at the end of paragraph (c);

(c)   

after that paragraph insert—

15

“(ca)   

paragraph 6A (relevant payments to subjects of

clinical trials); and”.

Amendments to Schedule 13 to FA 2002

3     (1)  

Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research etc) is

amended as follows.

20

      (2)  

In paragraph 3 (qualifying expenditure on direct research and

development), in sub-paragraph (5)—

(a)   

omit the word “or” at the end of paragraph (b);

(b)   

after that paragraph insert—

“(ba)   

is incurred on relevant payments to the subjects of

25

a clinical trial, or”.

      (3)  

In paragraph 5 (which applies certain definitions from Schedule 20 to FA

2000)—

(a)   

in the heading, after ““software or consumable items”,” insert

““relevant payments to the subjects of a clinical trial”,”;

30

(b)   

in sub-paragraph (3), after paragraph (c) insert—

“(ca)   

paragraph 6A (relevant payments to subjects of

clinical trials);”.

      (4)  

In paragraph 9 (relevant expenditure of the sub-contractor), in sub-

paragraph (3)—

35

(a)   

omit the word “or” at the end of paragraph (b);

(b)   

after that paragraph insert—

“(ba)   

is incurred on relevant payments to the subjects of

a clinical trial, or”.

 

 

 
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