|
| |
|
184C | Sections 184A and 184B: meaning of “qualifying change of |
| |
| |
(1) | For the purposes of sections 184A and 184B, there is a qualifying change |
| |
of ownership in relation to a company at any time if any one or more of |
| |
the following occur at that time— |
| 5 |
(a) | the company joins a group of companies (see subsections (2) to |
| |
| |
(b) | the company ceases to be a member of a group of companies, |
| |
(c) | the company becomes subject to different control (see |
| |
| 10 |
(2) | Whether a company is a member of a group of companies at any time |
| |
is determined in accordance with section 170. |
| |
(3) | But, apart from in the excepted case, nothing in section 170(10) or (10A) |
| |
is to prevent all the companies of one group from being regarded as |
| |
joining another group when the principal company of the first group |
| 15 |
becomes a member of the other group at any time. |
| |
(4) | The excepted case is the case where— |
| |
(a) | the persons owning the shares of the principal company of the |
| |
first group immediately before that time are the same as the |
| |
persons owning the shares of the principal company of the |
| 20 |
other group immediately after that time, |
| |
(b) | the principal company of the other group was not the principal |
| |
company of any group immediately before that time, and |
| |
(c) | immediately after that time the principal company of the other |
| |
group had assets consisting entirely (or almost entirely) of |
| 25 |
shares of the principal company of the first group. |
| |
(5) | For this purpose, references to shares of a company are to the shares |
| |
comprised in the issued share capital of the company. |
| |
(6) | The general rule is that a company becomes subject to different control |
| |
at any time if any one or more of the following occur— |
| 30 |
(a) | a person has control of the company at that time (whether alone |
| |
or together with one or more others) and the person did not |
| |
previously have control of the company, |
| |
(b) | a person has control of the company at that time together with |
| |
one or more others and the person previously had control of the |
| 35 |
| |
(c) | a person ceases to have control of the company at that time |
| |
(whether the person had control alone or together with one or |
| |
| |
(7) | The general rule is subject to the following exceptions. |
| 40 |
(8) | A company does not become subject to different control in any case |
| |
where it joins a group of companies and the case is the excepted case |
| |
| |
(9) | A company (“the subsidiary”) does not become subject to different |
| |
control at any time in any case where— |
| 45 |
(a) | immediately before that time the subsidiary is the 75 per cent. |
| |
subsidiary of another company, and |
| |
|
| |
|
| |
|
(b) | (although there is a change in the direct ownership of the |
| |
subsidiary) that other company continues immediately after |
| |
that time to own it as a 75 per cent. subsidiary. |
| |
184D | Sections 184A and 184B: meaning of “tax advantage” |
| |
For the purposes of sections 184A and 184B, “tax advantage” means— |
| 5 |
(a) | relief or increased relief from corporation tax, |
| |
(b) | repayment or increased repayment of corporation tax, |
| |
(c) | the avoidance or reduction of a charge to corporation tax or an |
| |
assessment to corporation tax, or |
| |
(d) | the avoidance of a possible assessment to corporation tax. |
| 10 |
184E | Sections 184A and 184B: “pre-change assets”: basic rules |
| |
| |
(a) | a company other than the relevant company makes a disposal |
| |
| |
(b) | the asset has been disposed of at any time after the relevant time |
| 15 |
by a disposal to which section 171(1) does not apply (a “non- |
| |
section 171(1) transfer”), |
| |
| the asset ceases to be regarded as a pre-change asset for the purposes of |
| |
sections 184A and 184B (but see also subsections (10) and (11)). |
| |
(2) | But (without affecting the generality of the provision made by the |
| 20 |
following subsection) if, on a non-section 171(1) transfer,— |
| |
(a) | an asset would cease to be regarded as a pre-change asset as a |
| |
result of subsection (1), and |
| |
(b) | the company making the non-section 171(1) transfer retains any |
| |
interest in or over the asset, |
| 25 |
| that interest is to be regarded as a pre-change asset for the purposes of |
| |
| |
| |
(a) | the relevant company or any other company holds an asset |
| |
(“the new asset”) at or after the relevant time, |
| 30 |
(b) | the value of the new asset derives in whole or in part from a pre- |
| |
| |
(c) | the new asset is not acquired by the company concerned as a |
| |
result of a non-section 171(1) transfer, |
| |
| the new asset is also to be regarded as a pre-change asset for the |
| 35 |
purposes of sections 184A and 184B. |
| |
(4) | For this purpose the cases in which the value of an asset may be derived |
| |
from any other asset include any case where— |
| |
(a) | assets have been merged or divided, |
| |
(b) | assets have changed their nature, or |
| 40 |
(c) | rights or interests in or over assets have been created or |
| |
| |
(5) | If a pre-change asset is “the old asset” for the purposes of section 116 |
| |
(reorganisations, conversions and reconstructions), “the new asset” for |
| |
the purposes of that section is also to be regarded as a pre-change asset |
| 45 |
for the purposes of sections 184A and 184B. |
| |
|
| |
|
| |
|
(6) | If a pre-change asset is the “original shares” for the purposes of sections |
| |
127 to 131 (reorganisation or reduction of share capital), the “new |
| |
holding” for the purposes of those sections is also to be regarded as a |
| |
pre-change asset for the purposes of sections 184A and 184B. |
| |
(7) | The following subsection applies if, as a result of the application of a |
| 5 |
relevant deferral provision in the case of a disposal of a pre-change |
| |
asset (“the original disposal”),— |
| |
(a) | a gain or loss that would otherwise accrue to a company does |
| |
| |
(b) | any part of any such gain is treated as forming part of a single |
| 10 |
chargeable gain which does not accrue to the company on the |
| |
| |
| and a gain or loss does, wholly or partly in consequence of the |
| |
application of that provision in the case of the original disposal, accrue |
| |
to the company or any other company on a subsequent occasion. |
| 15 |
(8) | So much of the gain or loss accruing on the subsequent occasion as |
| |
accrues in consequence of the application of the relevant deferral |
| |
provision in the case of the original disposal is to be regarded for the |
| |
purposes of sections 184A and 184B as accruing on a disposal of a pre- |
| |
change asset (so far as it would not otherwise be so regarded). |
| 20 |
(9) | A “relevant deferral provision” means any of the following— |
| |
(a) | section 139 (reconstruction involving transfer of business), |
| |
(b) | section 140 (postponement of charge on transfer of assets to |
| |
| |
(c) | section 140A (transfer of a UK trade), |
| 25 |
(d) | section 140E (merger leaving assets within UK tax charge), |
| |
(e) | sections 152 and 153 (replacement of business assets), |
| |
(f) | section 187 (postponement of charge on deemed disposal under |
| |
| |
| 30 |
(a) | a pre-change asset of the relevant company is transferred to |
| |
another company (“the transferee company”), |
| |
(b) | any of sections 139, 140A and 140E apply to the companies in |
| |
the case of the asset, and |
| |
(c) | the transfer of the asset is made directly or indirectly in |
| 35 |
consequence of, or otherwise in connection with, the |
| |
arrangements mentioned in section 184A or 184B, |
| |
| the asset is to be regarded as a “pre-change asset” in the hands of the |
| |
transferee company for the purposes of sections 184A and 184B. |
| |
(11) | In such a case, subsection (1) applies as if the reference in paragraph (a) |
| 40 |
of that subsection to the relevant company were to the transferee |
| |
| |
184F | Sections 184A and 184B: “pre-change assets”: pooling rules |
| |
(1) | This section applies, in the case of any pre-change asset of the relevant |
| |
company or any pre-change asset of any company which is acquired on |
| 45 |
a disposal to which section 171(1) applies, if— |
| |
|
| |
|
| |
|
(a) | the pre-change asset consists of a holding of securities which |
| |
falls as a result of any provision of Chapter 1 of Part 4 to be |
| |
regarded as a single asset (“the pre-change pooled asset”), and |
| |
(b) | as a result of any disposal or acquisition at any time after the |
| |
relevant time, any securities (“the other securities”) would (but |
| 5 |
for this section) be regarded as forming part of the pre-change |
| |
| |
(2) | None of the other securities are to be regarded for the purposes of this |
| |
Act as forming part of the pre-change pooled asset. |
| |
(3) | But this does not prevent the other securities from being regarded, as a |
| 10 |
result of any provision of that Chapter, as forming part of or |
| |
constituting a different, single asset (“the other pooled asset”). |
| |
(4) | Securities of the same class as the other securities which are disposed of |
| |
at or after the relevant time— |
| |
(a) | are to be identified first with the other securities or securities |
| 15 |
forming part of the other pooled asset, |
| |
(b) | are to be identified next with securities forming part of the pre- |
| |
change pooled asset (if the number of securities disposed of |
| |
exceeds the number identified in accordance with paragraph |
| |
| 20 |
(c) | subject to paragraphs (a) and (b), are to be identified in |
| |
accordance with the provisions applicable apart from those |
| |
| |
(5) | The above identification rules apply even if some or all of the securities |
| |
disposed of are otherwise identified— |
| 25 |
| |
(b) | by a transfer or delivery giving effect to it; |
| |
| but where a company disposes of securities in one capacity, they are not |
| |
to be identified with securities which it holds, or can dispose of, only in |
| |
| 30 |
(6) | Chapter 1 of Part 4 has effect subject to this section. |
| |
| |
“pre-change asset” means an asset which is pre-change asset for |
| |
the purposes of section 184A or 184B, |
| |
“securities” does not include relevant securities as defined in |
| 35 |
section 108 but, subject to that, means— |
| |
(a) | shares or securities of a company, and |
| |
(b) | any other assets where they are of a nature to be dealt in |
| |
without identifying the particular assets disposed of or |
| |
| 40 |
(8) | For the purposes of this section, shares or securities of a company are |
| |
not to be treated as being of the same class unless— |
| |
(a) | they are so treated by the practice of a recognised stock |
| |
| |
(b) | they would be so treated if dealt with on a recognised stock |
| 45 |
| |
(3) | In Schedule 7A (restriction on set-off of pre-entry losses), in paragraph 1(1) |
| |
(application of Schedule), at the end insert “, but this Schedule shall have no |
| |
|
| |
|
| |
|
effect in any case where section 184A (restrictions on buying losses: tax |
| |
avoidance schemes) has effect in relation to those losses”. |
| |
(4) | Section 177B and Schedule 7AA (restrictions on setting losses against pre-entry |
| |
gains) shall cease to have effect. |
| |
(5) | In section 213 (insurance companies: spreading of gains and losses under |
| 5 |
| |
(a) | in subsection (8H) for “that the net amount is” to the end substitute |
| |
“that the net amount would still arise even if losses accruing after the |
| |
date on which the company or transferee joined the group of |
| |
companies were disregarded”, and |
| 10 |
(b) | in subsection (8I) for “paragraph 1” to the end substitute “section 184C |
| |
as if those references were contained in that section; and in subsection |
| |
(8A)(b) above “group” has the same meaning as in that section”. |
| |
| The amendments made by this subsection have effect where the accounting |
| |
period for which the net amount represents an excess of losses over gains is an |
| 15 |
accounting period ending on or after 5th December 2005. |
| |
(6) | The amendments made by this section, other than subsection (5), have effect |
| |
for calculating the amount to be included in respect of chargeable gains in a |
| |
company’s total profits for any accounting period ending on or after 5th |
| |
| 20 |
(7) | But, in respect of any such accounting period, those amendments do not have |
| |
effect in relation to the deduction of any loss from chargeable gains that accrue |
| |
on any disposal made before 5th December 2005 unless that loss accrues on a |
| |
disposal made on or after that date. |
| |
(8) | For the purposes of those amendments, it does not matter whether a qualifying |
| 25 |
change of ownership in relation to a company occurs— |
| |
(a) | before 5th December 2005, or |
| |
(b) | on or after that date. |
| |
(9) | The following subsection applies so long as each of the following conditions is |
| |
| 30 |
(a) | at any time (“the relevant time”) before 5th December 2005 there is a |
| |
qualifying change of ownership in relation to a company (“the relevant |
| |
company”) for the purposes of section 184A or 184B of TCGA 1992, |
| |
(b) | the change of ownership occurs because the relevant company ceases |
| |
to be a member of a group of companies at the relevant time (whether |
| 35 |
or not it also occurs for any other reason), |
| |
(c) | the principal company of that group has control of the relevant |
| |
company at the relevant time and at all subsequent times, |
| |
(d) | the principal company of that group does not, at or after the relevant |
| |
time, join another group otherwise than in the excepted case, and |
| 40 |
(e) | a qualifying loss for the purposes of section 184A of TCGA 1992, or a |
| |
qualifying gain for the purposes of section 184B of that Act, accrues to |
| |
the relevant company or any other company on a disposal made before |
| |
| |
(10) | Section 184A or 184B of TCGA 1992 applies in relation to that qualifying loss |
| 45 |
or gain as if, for the purposes of that section, a “pre-change asset” included an |
| |
asset held before the relevant time by any company which, immediately before |
| |
the relevant time, was a member of the same group of companies as the |
| |
| |
|
| |
|
| |
|
(11) | Subsections (9) and (10) are to be read as if contained in section 184C of TCGA |
| |
| |
71 | Other avoidance involving losses accruing to companies |
| |
(1) | After section 184F of TCGA 1992 (as inserted by section 70 above) insert— |
| |
“184G | Avoidance involving losses: schemes converting income to capital |
| 5 |
(1) | This section applies for the purposes of corporation tax in respect of |
| |
chargeable gains if conditions A to D are satisfied. |
| |
| |
(a) | any receipt arises to a company (“the relevant company”) on a |
| |
disposal of an asset, and |
| 10 |
(b) | the receipt arises directly or indirectly in consequence of, or |
| |
otherwise in connection with, any arrangements. |
| |
| |
(a) | a chargeable gain (the “relevant gain”) accrues to the relevant |
| |
company on the disposal, and |
| 15 |
(b) | losses accrue (or have accrued) to the relevant company on any |
| |
other disposal of any asset (whether before or after or as part of |
| |
| |
(4) | Condition C is that, but for the arrangements, an amount would have |
| |
fallen to be taken into account wholly or partly instead of the receipt in |
| 20 |
calculating the income chargeable to corporation tax— |
| |
(a) | of the relevant company, or |
| |
(b) | of a company which, at any qualifying time, is a member of the |
| |
same group as the relevant company. |
| |
| 25 |
(a) | the main purpose of the arrangements, or |
| |
(b) | one of the main purposes of the arrangements, |
| |
| is to secure a tax advantage that involves the deduction of any of the |
| |
losses from the relevant gain (whether or not it also involves anything |
| |
| 30 |
(6) | If the Board consider, on reasonable grounds, that conditions A to D are |
| |
or may be satisfied, they may give the relevant company a notice in |
| |
respect of the arrangements (but see also section 184I). |
| |
(7) | If, when the notice is given, conditions A to D are satisfied, no loss |
| |
accruing to the relevant company at any time is to be deductible from |
| 35 |
| |
(8) | A notice under this section must— |
| |
(a) | specify the arrangements, |
| |
(b) | specify the accounting period in which the relevant gain |
| |
| 40 |
(c) | inform the relevant company of the effect of this section. |
| |
(9) | If relevant gains accrue in more than one accounting period, a single |
| |
notice under this section may specify all the accounting periods |
| |
| |
|
| |
|
| |
|
| |
“arrangements” includes any agreement, understanding, scheme, |
| |
transaction or series of transactions (whether or not legally |
| |
| |
“group”, in relation to companies, means a group determined in |
| 5 |
accordance with section 170, |
| |
“qualifying time”, in relation to any arrangements, means any |
| |
time which falls in the period— |
| |
(a) | beginning with the time at which the arrangements are |
| |
| 10 |
(b) | ending with the time at which the matters (other than |
| |
any tax advantage) intended to be secured by the |
| |
arrangements are secured, |
| |
“tax advantage” has the meaning given by section 184D. |
| |
184H | Avoidance involving losses: schemes securing deductions |
| 15 |
(1) | This section applies for the purposes of corporation tax in respect of |
| |
chargeable gains if conditions A to D are satisfied. |
| |
| |
(a) | a chargeable gain (the “relevant gain”) accrues to a company |
| |
(“the relevant company”) directly or indirectly in consequence |
| 20 |
of, or otherwise in connection with, any arrangements, and |
| |
(b) | losses accrue (or have accrued) to the relevant company on any |
| |
disposal of any asset (whether before or after or as part of the |
| |
| |
(3) | Condition B is that the relevant company, or a company connected with |
| 25 |
the relevant company, incurs any expenditure— |
| |
(a) | which is allowable as a deduction in calculating its total profits |
| |
chargeable to corporation tax but which is not allowable as a |
| |
deduction in computing its gains under section 38, and |
| |
(b) | which is incurred directly or indirectly in consequence of, or |
| 30 |
otherwise in connection with, the arrangements. |
| |
(4) | Condition C is that the main purpose, or one of the main purposes, of |
| |
the arrangements is to secure a tax advantage that involves both— |
| |
(a) | the deduction of the expenditure in calculating total profits, and |
| |
(b) | the deduction of any of the losses from the relevant gain, |
| 35 |
| whether or not it also involves anything else. |
| |
(5) | Condition D is that the arrangements are not excluded arrangements. |
| |
| For this purpose arrangements are excluded arrangements if— |
| |
(a) | the arrangements are made in respect of land or any estate or |
| |
| 40 |
(b) | the arrangements fall within section 779(1) or (2) of the Taxes |
| |
Act (sale and lease-back: limitation on tax reliefs), |
| |
(c) | the person to whom the payment mentioned in that subsection |
| |
is payable is not a company connected with the relevant |
| |
| 45 |
(d) | the arrangements are made between persons dealing at arm’s |
| |
| |
|
| |
|