|
| |
|
(2) | The parent company is beneficially entitled to the appropriate proportion of |
| |
profits and assets if (and only if) it— |
| |
(a) | is beneficially entitled to at least 75% of any profits available for |
| |
distribution to equity holders of the subsidiary company, and |
| |
(b) | would be beneficially entitled to at least 75% of any assets of the |
| 5 |
subsidiary company available for distribution to its equity holders |
| |
| |
(3) | In this Schedule references to a qualifying 90% subsidiary are to be read in |
| |
the same way as references to a qualifying 75% subsidiary, but as if the |
| |
references to 75% were to 90%. |
| 10 |
(4) | A company (“company A”) cannot be a qualifying 90% subsidiary of another |
| |
company for the purposes of this Schedule if company A is a qualifying 75% |
| |
subsidiary of a third company. |
| |
(5) | Schedule 18 to ICTA (equity holders and profits or assets etc) applies for the |
| |
purposes of any provision of this Part of this Schedule as it applies for the |
| 15 |
purposes of any corresponding provision of Chapter 4 of Part 10 of that Act |
| |
| |
(6) | But, in a case where the subsidiary company does not have ordinary share |
| |
capital, that Schedule applies for those purposes as if the members of that |
| |
company were equity holders of that company for the purposes of that |
| 20 |
| |
The amount of the income: the basic amount |
| |
16 (1) | This paragraph determines the amount of the income under paragraph 3 |
| |
when a qualifying change of ownership in relation to a company (“the |
| |
relevant company”) carrying on a business of leasing plant or machinery |
| 25 |
occurs on any day (“the relevant day”). |
| |
(2) | The amount of the income is found by— |
| |
(a) | applying the following formula to give the basic amount, and |
| |
(b) | making any adjustment in accordance with any of paragraphs 19 to |
| |
| 30 |
(3) | The formula is— |
| |
| |
“PM” has the meaning given by paragraph 17, and |
| |
“TWDV” has the meaning given by paragraph 18. |
| |
Meaning of “PM” in paragraph 16 |
| 35 |
17 (1) | For the purposes of this paragraph references to plant or machinery, in the |
| |
case of any company, do not include any plant or machinery— |
| |
(a) | on the provision of which the company has incurred expenditure |
| |
which is not, as a result of section 34A of CAA 2001 (expenditure for |
| |
long funding leasing), qualifying expenditure for the purposes of |
| 40 |
| |
|
| |
|
| |
|
(b) | which is, as a result of section 67 of that Act (hire-purchase and |
| |
similar contracts), treated for the purposes of that Part as owned by |
| |
a person other than the company, |
| |
| but, apart from that, include all other plant or machinery, whether or not |
| |
| 5 |
(2) | For the purposes of paragraph 16, “PM” means the amount found by adding |
| |
| |
(a) | the amounts (if any) shown in the appropriate balance sheet of the |
| |
relevant company in respect of plant or machinery which it owns at |
| |
the start of the relevant day, and |
| 10 |
(b) | the amounts (if any) shown in the appropriate balance sheet of each |
| |
associated company in respect of plant or machinery which it |
| |
transfers to the relevant company on the relevant day, |
| |
| and the reference here to an associated company is to a company which is an |
| |
associated company of the relevant company on the relevant day. |
| 15 |
(3) | For this purpose the amounts shown in the appropriate balance sheet of any |
| |
company in respect of any plant or machinery are— |
| |
(a) | the amounts shown in that balance sheet as the net book value (or |
| |
carrying amount) in respect of the plant or machinery, and |
| |
(b) | the amounts shown in that balance sheet as the net investment in |
| 20 |
respect of finance leases of the plant or machinery. |
| |
| |
(a) | any of the plant or machinery is a fixture in any land, and |
| |
(b) | the amount which falls (or would fall) to be shown in an appropriate |
| |
balance sheet as the net book value (or carrying amount) of the land |
| 25 |
includes (or would include) an amount in respect of the fixture, |
| |
| the amount of the net book value (or carrying amount) in respect of the |
| |
fixture is determined on a just and reasonable basis. |
| |
| |
(a) | any of the plant or machinery is subject to a finance lease, and |
| 30 |
(b) | any land or asset which is not plant or machinery is subject to that |
| |
| |
| the amount of the net investment in respect of the finance lease of that plant |
| |
or machinery is determined on a just and reasonable basis. |
| |
(6) | In this paragraph any reference to any amount shown in the appropriate |
| 35 |
balance sheet of a company is to the amount which, on the following |
| |
assumptions, falls (or would fall) to be shown in a balance sheet of the |
| |
| |
| |
(a) | that the balance sheet is drawn up as at the start of the relevant day |
| 40 |
in accordance with generally accepted accounting practice, and |
| |
(b) | that, if the company acquires any plant or machinery directly or |
| |
indirectly from a person who is connected with the company, the |
| |
plant or machinery had been acquired for an amount equal to its |
| |
market value as at the relevant day. |
| 45 |
(8) | Sub-paragraph (7)(b) does not apply if the relevant day falls before 22nd |
| |
| |
|
| |
|
| |
|
Meaning of “TWDV” in paragraph 16 |
| |
18 (1) | For the purposes of paragraph 16, “TWDV” means the amount found by |
| |
| |
(a) | the total amount of unrelieved qualifying expenditure in single asset |
| |
pools for the new chargeable period that is carried forward in the |
| 5 |
pools from the previous chargeable period under section 59 of CAA |
| |
| |
(b) | the total amount of unrelieved qualifying expenditure in class pools |
| |
for the new chargeable period that is carried forward in the pools |
| |
from the previous chargeable period under that section, and |
| 10 |
(c) | the amount of unrelieved qualifying expenditure in the main pool |
| |
for the new chargeable period that is carried forward in the pool |
| |
from the previous chargeable period under that section. |
| |
(2) | For the purposes of “TWDV”— |
| |
(a) | “the new chargeable period” means the accounting period of the |
| 15 |
relevant company that begins on the day following the relevant day |
| |
(see paragraph 3(4)), and |
| |
(b) | expenditure incurred by the relevant company in acquiring plant or |
| |
machinery on the relevant day is to be left out of account unless it is |
| |
acquired from an associated company, |
| 20 |
| and the reference here to an associated company is to a company which is an |
| |
associated company of the relevant company on the relevant day. |
| |
Amount to be nil if basic amount negative |
| |
19 | If the basic amount given by the formula is a negative amount, the amount |
| |
is taken instead to be nil. |
| 25 |
Adjustment to basic amount: qualifying 75% subsidiaries |
| |
20 (1) | This paragraph applies if— |
| |
(a) | the qualifying change of ownership occurs on any day as a result of |
| |
| |
(b) | the change occurs by reference to a company (“company A”) ceasing |
| 30 |
to be a qualifying 75% subsidiary of another company (“company B”) |
| |
| |
(2) | There is no adjustment to the basic amount unless, on that day, company |
| |
| |
(a) | becomes owned by a consortium of which company B is a member, |
| 35 |
| |
(b) | becomes a qualifying 90% subsidiary of a company owned by a |
| |
consortium of which company B is a member. |
| |
(3) | In that case, the amount of the income is limited to the appropriate |
| |
percentage of the basic amount. |
| 40 |
(4) | The appropriate percentage is found by subtracting the relevant fraction at |
| |
the end of the day from 100%. |
| |
(5) | For this purpose “the relevant fraction” is whichever is the lowest of the |
| |
| |
|
| |
|
| |
|
(a) | the percentage of the ordinary share capital of company A that is |
| |
beneficially owned by company B, |
| |
(b) | the percentage to which company B is beneficially entitled of any |
| |
profits available for distribution to equity holders of company A, |
| |
(c) | the percentage to which company B would be beneficially entitled of |
| 5 |
any assets of company A available for distribution to its equity |
| |
| |
(6) | In any case where company A becomes a qualifying 90% subsidiary of a |
| |
company, sub-paragraph (5) is to be read as if for references to company A |
| |
there were substituted references to that company. |
| 10 |
Adjustment to the basic amount: consortium relationships |
| |
21 (1) | This paragraph applies if the qualifying change of ownership occurs on any |
| |
day as a result of paragraph 12. |
| |
(2) | In a case where that change arises only because the relevant fraction at the |
| |
end of the day is less than the relevant fraction at the start of the day, the |
| 15 |
amount of the income is limited to the appropriate percentage of the basic |
| |
| |
(3) | The appropriate percentage is found by subtracting the relevant fraction at |
| |
the end of the day from the relevant fraction at the start of the day. |
| |
(4) | In any other case, the amount of the income is limited to the relevant fraction |
| 20 |
at the start of that day of the basic amount. |
| |
(5) | In this paragraph “the relevant fraction” has the same meaning as in |
| |
| |
| |
22 (1) | This paragraph applies if— |
| 25 |
(a) | on any day (“the relevant day”) a company begins to be within the |
| |
charge to corporation tax in respect of a business of leasing plant or |
| |
machinery which it carries on otherwise than in partnership, and |
| |
(b) | there is a qualifying change of ownership in relation to the company |
| |
which occurs on the relevant day. |
| 30 |
(2) | For the purposes of this Part of this Schedule, any plant or machinery owned |
| |
by the company immediately before the relevant day is to be ignored in |
| |
calculating the amount of the income treated as received on that day. |
| |
| |
Leasing business carried on by a company in partnership |
| 35 |
Change in company’s interest in business: income treated as received etc |
| |
23 (1) | This paragraph applies for corporation tax purposes if— |
| |
(a) | on any day (“the relevant day”) a company (“the partner company”) |
| |
carries on a business of leasing plant or machinery in partnership |
| |
with other persons (see paragraph 25), |
| 40 |
(b) | the partner company is within the charge to corporation tax in |
| |
respect of the business, and |
| |
|
| |
|
| |
|
(c) | there is a qualifying change in the partner company’s interest in the |
| |
business on the relevant day (see paragraphs 27 and 28). |
| |
| |
(a) | the partner company is treated as receiving an amount of income, |
| |
| 5 |
(b) | any other company which carries on the business on that day and |
| |
which is within the charge to corporation tax in respect of the |
| |
business is treated as incurring an expense. |
| |
| |
(a) | is treated as a receipt of the partner company’s notional business, |
| 10 |
| |
(b) | is brought into account in calculating for corporation tax purposes |
| |
the profits of that business for the accounting period in which it is |
| |
| |
| 15 |
(a) | is treated as an expense of the other company’s notional business, |
| |
| |
(b) | is allowed as a deduction in calculating for corporation tax purposes |
| |
the profits of that business for the accounting period in which it is |
| |
| 20 |
(5) | In this Part of this Schedule a company’s “notional business” means the |
| |
| |
(a) | from which the company’s share in the profits or loss of the business |
| |
carried on by the partnership is treated under section 114(2) of ICTA |
| |
as deriving for the purposes of the charge to corporation tax, and |
| 25 |
(b) | which is treated under that provision as carried on alone by the |
| |
company for those purposes. |
| |
(6) | This paragraph is supplemented by paragraph 24. |
| |
Amount of income and expense |
| |
24 (1) | The amount of the income is calculated in accordance with paragraphs 29 to |
| 30 |
| |
(2) | The amount of the expense of the other company is calculated in accordance |
| |
| |
Meaning of “business of leasing plant or machinery” |
| |
25 (1) | For purposes of this Part of this Schedule whether, on any day (“the relevant |
| 35 |
day”), a company (“the partner company”) carries on a business of leasing |
| |
plant or machinery in partnership with other persons is determined in |
| |
accordance with paragraphs 6 to 8 (but modified as follows). |
| |
(2) | Any reference in those paragraphs to the relevant company is to be read as |
| |
a reference to the partnership. |
| 40 |
(3) | Any reference in those paragraphs to an associated company of the relevant |
| |
company on the relevant day is to be read as a reference to each of the |
| |
| |
| |
|
| |
|
| |
|
(b) | any company which is an associated company (see paragraph 26) of |
| |
the partner company on the relevant day, |
| |
(c) | any other partner company in relation to whose interest in the |
| |
business there is a qualifying change on the relevant day, |
| |
(d) | any other partner company in relation to which there is a qualifying |
| 5 |
change of ownership on the relevant day, and |
| |
(e) | any company which is an associated company of any other partner |
| |
company mentioned in paragraph (c) or (d) on the relevant day. |
| |
(4) | For this purpose “any other partner company” means a company— |
| |
(a) | which carries on the business at the start of the relevant day, and |
| 10 |
(b) | which is within the charge to corporation tax in respect of the |
| |
| |
Meaning of “associated company” |
| |
26 (1) | A company is an “associated company” of another company on any day if, |
| |
at the start of that day,— |
| 15 |
(a) | one of the two has control of the other, or |
| |
(b) | both are under the control of the same person or persons, |
| |
| and for this purpose “control” is to be read in accordance with section 416 of |
| |
| |
(2) | Sub-paragraphs (3) and (4) apply if, at the start of any day, a company (“the |
| 20 |
| |
(a) | is owned by a consortium, or |
| |
(b) | is a qualifying 90% subsidiary of a company owned by a consortium. |
| |
(3) | If there is any qualifying change in the consortium company’s interest in a |
| |
business on that day, references to an associated company of the consortium |
| 25 |
company on that day include— |
| |
(a) | any member of the consortium at the start of that day, and |
| |
(b) | any company which is an associated company of any such member |
| |
| |
(4) | If there is any qualifying change of ownership in relation to the consortium |
| 30 |
company on that day but there is no qualifying change in its interest in a |
| |
business on the relevant day, references to an associated company of the |
| |
consortium company on that day include— |
| |
(a) | any relevant member of the consortium on that day, and |
| |
(b) | any company which is an associated company of any relevant |
| 35 |
member of the consortium on that day. |
| |
(5) | For this purpose a member of the consortium is a “relevant” member on any |
| |
| |
(a) | it is a member of the consortium at the start of the day, and |
| |
(b) | the qualifying change of ownership occurs on that day in a case |
| 40 |
where the member of the consortium is regarded as “company E” for |
| |
the purposes of paragraph 12 (consortium relationships). |
| |
(6) | This paragraph applies for the purposes of this Part of this Schedule. |
| |
|
| |
|
| |
|
Meaning of “qualifying change” in company’s interest in a business |
| |
27 (1) | For the purposes of this Schedule there is a qualifying change in a |
| |
company’s interest in a business on any day if its relevant percentage share |
| |
at the end of the day is less than its relevant percentage share at the start of |
| |
| 5 |
(2) | In this paragraph “relevant percentage share”, in relation to a company’s |
| |
interest in a business, means its percentage share in the profits or loss of the |
| |
business (determined in accordance with paragraph 28). |
| |
(3) | For the purposes of this paragraph any reference to a company’s share in the |
| |
profits or loss of the business includes a nil share (whether as a result of the |
| 10 |
dissolution of the partnership or otherwise). |
| |
Determining the percentage share in the profits or loss of business |
| |
28 (1) | For the purposes of this Part of this Schedule a company’s percentage share |
| |
in the profits or loss of a business at any time is determined on a just and |
| |
| 15 |
(2) | In making that determination, regard must be had, in particular, to— |
| |
(a) | any matter that would be taken into account in determining under |
| |
section 114(2) of ICTA the company’s share at that time in the profits |
| |
or loss of the business, and |
| |
(b) | any matter that would be taken into account in determining under |
| 20 |
that provision the company’s share at that time in any capital |
| |
allowances and charges under CAA 2001. |
| |
The amount of the income: the basic amount |
| |
29 (1) | This paragraph determines the amount of the income under paragraph 23 |
| |
when a qualifying change in the interest of a company (“the partner |
| 25 |
company”) in a business of leasing plant or machinery occurs on any day |
| |
| |
(2) | The amount of the income is found by— |
| |
(a) | applying the following formula to give the basic amount, and |
| |
(b) | making the adjustment in accordance with paragraph 30 or 31 to the |
| 30 |
| |
(3) | The formula is— |
| |
(4) | In this paragraph “PM” has the meaning given by paragraph 17, but — |
| |
(a) | reading any reference in that paragraph to the relevant company as |
| |
a reference to the partnership, and |
| 35 |
(b) | reading any reference in that paragraph to an associated company of |
| |
the relevant company on the relevant day as a reference to a |
| |
qualifying company (see sub-paragraph (7)). |
| |
(5) | In this paragraph “TWDV” means the amount found by adding together— |
| |
(a) | the total amount of unrelieved qualifying expenditure in single asset |
| 40 |
pools for the new chargeable period that would be carried forward |
| |
|
| |
|