Finance (No.2) Bill

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 6 — The London Olympic Games and Paralympic Games
52

67
International Olympic Committee
(1)
The Treasury may make regulations—
(a)
providing for the International Olympic Committee to be treated for
the purposes of corporation tax as not having a permanent
establishment in the United Kingdom;
5
(b)
providing for the International Olympic Committee not to be
chargeable to income tax or capital gains tax;
(c)
disapplying section 349(1) and (2) of ICTA (annual payments:
deductions of tax) to payments to the International Olympic
Committee.
10
(2)
The Treasury may make regulations—
(a)
providing for a specified person or class of person appearing to the
Treasury to be owned or controlled by the International Olympic
Committee to be treated for the purposes of corporation tax as not
having a permanent establishment in the United Kingdom;
15
(b)
providing for a specified person or class of person appearing to the
Treasury to be owned or controlled by the International Olympic
Committee not to be chargeable to income tax or capital gains tax;
(c)
disapplying section 349(1) and (2) of ICTA to payments to a specified
person or class of person appearing to the Treasury to be owned or
20
controlled by the International Olympic Committee.
(3)
Regulations under this section—
(a)
may make provision which applies generally or only in specified cases
or circumstances,
(b)
may make different provision for different cases or circumstances,
25
(c)
may have retrospective effect, and
(d)
may include incidental, consequential or transitional provision.
(4)
Regulations under this section—
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of the House
30
of Commons.
(5)
A claim may be made for any repayment of income tax required as a result of
an exemption conferred under this section.
68
Competitors and staff
(1)
The Treasury may make regulations—
35
(a)
exempting specified classes of person from income tax in respect of
specified classes of income arising from participation in London
Olympic events;
(b)
providing for specified classes of activity undertaken in connection
with London Olympic events to be disregarded for purposes of
40
corporation tax, income tax or capital gains tax;
(c)
providing for specified classes of activity in connection with London
Olympic events to be disregarded in determining for fiscal purposes
whether a person has a permanent establishment in the United
Kingdom;
45

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 7 — Chargeable gains
53

(d)
disapplying section 349(1) of ICTA (annual payments: deductions of
tax) in consequence of provision made under paragraphs (a) to (c)
above.
(2)
The regulations may specify classes of person wholly or partly by reference
to—
5
(a)
residence outside the United Kingdom, determined in such manner as
the regulations may provide;
(b)
documents issued or authority given by such persons exercising
functions in connection with the London Olympics as the regulations
may provide.
10
(3)
Regulations under this section—
(a)
may make provision which applies generally or only in specified cases
or circumstances,
(b)
may make different provision for different cases or circumstances, and
(c)
may include incidental, consequential or transitional provision.
15
(4)
Regulations under this section—
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of the House
of Commons.
(5)
In this section “London Olympic event” and “the London Olympics” have the
20
meaning given by section 1 of the London Olympic Games and Paralympic
Games Act 2006.
Chapter 7
Chargeable gains
Capital losses
25
69
Restriction on a company’s allowable losses
(1)
Section 8 of TCGA 1992 (company’s total profits to include chargeable gains)
is amended as follows.
(2)
In subsection (2) (exclusion of loss as allowable loss)—
(a)
for “does not include a loss” substitute “does not include—
30
(a)
a loss”, and
(b)
at the end insert “, or
(b)
a loss accruing to a company in disqualifying
circumstances (see subsection (2A))”.
(3)
After subsection (2) insert—
35
“(2A)
For the purposes of subsection (2)(b), a loss accrues to a company in
disqualifying circumstances if—
(a)
it accrues to the company directly or indirectly in consequence
of, or otherwise in connection with, any arrangements, and
(b)
the main purpose, or one of the main purposes, of the
40
arrangements is to secure a tax advantage.

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 7 — Chargeable gains
54

(2B)
For the purposes of subsection (2A)—
“arrangements” includes any agreement, understanding, scheme,
transaction or series of transactions (whether or not legally
enforceable), and
“tax advantage” has the meaning given by section 184D.
5
(2C)
For the purposes of subsection (2A) it does not matter—
(a)
whether the loss accrues at a time when there are no chargeable
gains from which it could otherwise have been deducted, or
(b)
whether the tax advantage is secured for the company or for
any other company.”.
10
(4)
In section 834(1) of ICTA (interpretation of the Corporation Tax Acts), in the
definition of “allowable loss”, at the end insert “or a loss accruing to a company
in disqualifying circumstances (within the meaning of section 8(2)(b) of the
1992 Act)”.
(5)
The amendments made by this section have effect in relation to any loss
15
accruing on any disposal that is made on or after 5th December 2005.
70
Restrictions on companies buying losses or gains
(1)
TCGA 1992 is amended as follows.
(2)
After section 184 insert—
“Restrictions on buying losses or gains etc
20
184A
Restrictions on buying losses: tax avoidance schemes
(1)
This section applies for the purposes of corporation tax in respect of
chargeable gains if—
(a)
at any time (“the relevant time”) there is a qualifying change of
ownership in relation to a company (“the relevant company”)
25
(see section 184C),
(b)
a loss (a “qualifying loss”) accrues to the relevant company or
any other company on a disposal of a pre-change asset (see
subsection (3)),
(c)
the change of ownership occurs directly or indirectly in
30
consequence of, or otherwise in connection with, any
arrangements the main purpose, or one of the main purposes, of
which is to secure a tax advantage (see section 184D), and
(d)
the advantage involves the deduction of a qualifying loss from
any chargeable gains (whether or not it also involves anything
35
else).
(2)
A qualifying loss accruing to a company is not to be deductible from
chargeable gains accruing to the company unless the gains accrue to the
company on a disposal of a pre-change asset.
(3)
In this section a “pre-change asset” means an asset which was held by
40
the relevant company before the relevant time (but see also sections
184E and 184F).

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 7 — Chargeable gains
55

(4)
In this section “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).
(5)
For the purposes of this section it does not matter—
(a)
whether a qualifying loss accrues before, after or at the relevant
5
time,
(b)
whether a qualifying loss accrues at a time when there are no
chargeable gains from which it could be deducted (or could
otherwise have been deducted), or
(c)
whether the tax advantage is secured for the company to which
10
a qualifying loss accrues or for any other company.
184B
Restrictions on buying gains: tax avoidance schemes
(1)
This section applies for the purposes of corporation tax in respect of
chargeable gains if—
(a)
at any time (“the relevant time”) there is a qualifying change of
15
ownership in relation to a company (“the relevant company”)
(see section 184C),
(b)
a gain (a “qualifying gain”) accrues to the relevant company or
any other company on a disposal of a pre-change asset (see
subsection (3)),
20
(c)
the change of ownership occurs directly or indirectly in
consequence of, or otherwise in connection with, any
arrangements the main purpose, or one of the main purposes, of
which is to secure a tax advantage, and
(d)
the advantage involves the deduction of a loss from a qualifying
25
gain (whether or not it also involves anything else).
(2)
In the case of a qualifying gain accruing to a company, a loss accruing
to the company is not to be deductible from the gain unless the loss
accrues to the company on a disposal of a pre-change asset.
(3)
In this section a “pre-change asset” means an asset which was held by
30
the relevant company before the relevant time (but see also sections
184E and 184F).
(4)
In this section “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).
35
(5)
For the purposes of this section it does not matter—
(a)
whether a qualifying gain accrues before, after or at the relevant
time,
(b)
whether a qualifying gain accrues at a time when there are no
losses which could be deducted (or could otherwise have been
40
deducted) from the gain, or
(c)
whether the tax advantage is secured for the company to which
a qualifying gain accrues or for any other company.