|
| |
|
(1C) | For those purposes, a company (“company X”) is a qualifying 100% |
| |
subsidiary of another company (“company Y”) at any time when the |
| |
conditions in subsection (1)(a) to (e) would be met if— |
| |
(a) | company X were the subsidiary, |
| |
(b) | company Y were the relevant company, and |
| 5 |
(c) | in subsection (1) for “at least 90%” in each place there were |
| |
| |
| |
17 | This Part of this Schedule is deemed to have come into force on 6th April |
| |
| 10 |
| |
| |
EIS: approved investment funds |
| |
18 (1) | In Part 5 of ITA 2007 (enterprise investment scheme), in section 251(1)(c) |
| |
(approved investment fund as nominee), for “6” substitute “12”. |
| 15 |
(2) | The amendment made by this paragraph has effect in relation to approved |
| |
funds which closed or close on or after 7 October 2006. |
| |
VCTs: disposal of holding |
| |
19 (1) | Chapter 3 of Part 6 of ITA 2007 (VCT approvals) is amended as follows. |
| |
(2) | In section 274(3) (requirements for the giving of approval), at the end of |
| 20 |
paragraph (d) insert “, and |
| |
(e) | the 70% qualifying holdings condition by section 280A”. |
| |
(3) | After section 280 insert— |
| |
“280A | The 70% qualifying holdings condition: disposal of holding |
| |
(1) | This section applies if— |
| 25 |
(a) | a company which is a VCT disposes of shares or securities |
| |
(“the holding”) wholly for money, and |
| |
(b) | the holding was comprised in the company’s qualifying |
| |
holdings throughout the 6 months ending immediately |
| |
| 30 |
(2) | For the purpose of determining whether the 70% qualifying holdings |
| |
condition is, has been or will be met— |
| |
(a) | the company is to be treated as if it continued to hold the |
| |
holding for the period of 6 months beginning with the |
| |
| 35 |
(b) | the value of the company’s investments in that period is to be |
| |
treated as reduced by the amount of money obtained from |
| |
| |
(3) | The value of the holding in the period mentioned in subsection (2)(a) |
| |
is to be treated as equal to its value (determined in accordance with |
| 40 |
this Chapter) immediately before the disposal. |
| |
|
| |
|
| |
|
(4) | If at any time the value of the company’s investments would by |
| |
virtue of subsection (2)(b) be reduced to an amount less than the |
| |
value of its qualifying holdings, the value of its investments at that |
| |
time is to be treated as equal to the value of its qualifying holdings. |
| |
(5) | If (and to the extent that) the holding was acquired with money the |
| 5 |
use of which is at any time ignored by virtue of section 280(2), |
| |
subsections (2) to (4) do not apply in relation to that time.” |
| |
(4) | This paragraph is deemed to have come into force on 6th April 2007. |
| |
(5) | The amendments made by this paragraph have effect in relation to disposals |
| |
made on or after that date. |
| 10 |
VCTs: power to make regulations as to breaches of conditions |
| |
20 (1) | In section 284 of ITA 2007 (power to make regulations as to procedure), in |
| |
the existing provision (which becomes subsection (1))— |
| |
(a) | after paragraph (a) insert— |
| |
“(aa) | for and in connection with the making by a company |
| 15 |
of an application to the Commissioners for Her |
| |
Majesty’s Revenue and Customs (“the |
| |
Commissioners”) for relief in respect of a breach |
| |
(including a future breach) of the conditions for its |
| |
VCT approval to continue in force,”, |
| 20 |
(b) | in paragraph (c), for the words from “that the conditions” to the end |
| |
| |
“(i) | that the conditions for its VCT approval to |
| |
continue in force are no longer met, or |
| |
(ii) | that it is likely that those conditions will cease |
| 25 |
| |
(c) | in paragraph (d) omit “for Her Majesty’s Revenue and Customs”. |
| |
(2) | After subsection (1) insert— |
| |
“(2) | In subsection (1)(aa), the reference to relief in respect of a breach of |
| |
the conditions mentioned there is to a determination by the |
| 30 |
Commissioners that they will not exercise their power to withdraw |
| |
the company’s VCT approval by reason of the breach for such period |
| |
as they may determine (and subject to such conditions as they may |
| |
| |
(3) | The provision that may be made by virtue of subsection (1)(aa) |
| 35 |
| |
(a) | provision as to the procedure to be followed in relation to |
| |
applications and determinations, |
| |
(b) | provision as to the grounds on which applications may be |
| |
| 40 |
(c) | provision conferring a discretion to be exercised by the |
| |
| |
|
| |
|
| |
|
| |
| |
Real Estate Investment Trusts |
| |
1 | Part 4 of FA 2006 (REITs) is amended as follows. |
| |
2 | In section 106 (conditions for company)— |
| |
(a) | in subsection (1), for “1 to 3” substitute “1 and 2”, and |
| 5 |
(b) | after subsection (8) insert— |
| |
“(9) | For the purpose of Condition 6 a loan shall not be treated as |
| |
dependent on the results of the company’s business by |
| |
reason only that the terms of the loan provide— |
| |
(a) | for the interest to be reduced in the event of the results |
| 10 |
| |
(b) | for the interest to be increased in the event of the |
| |
| |
3 | In section 107 (conditions for tax-exempt business)— |
| |
(a) | in subsections (1)(a) and (2)(a), for “1 to 3” substitute “1 and 2”, |
| 15 |
(b) | in subsections (1)(b) and (2)(b), for “Condition 4” substitute |
| |
| |
| |
(d) | in subsection (6), for “1 to 3” substitute “1 and 2”, |
| |
(e) | omit subsections (7) and (7A), and |
| 20 |
(f) | in subsections (8) and (9), for “Condition 4” substitute “Condition 3”. |
| |
4 | In section 108(2) (profit condition), for paragraph (b) substitute— |
| |
“(b) | “profits” means profits before deduction of tax, calculated in |
| |
accordance with international accounting standards and |
| |
| 25 |
(i) | realised and unrealised gains and losses on the |
| |
| |
(ii) | changes in the fair value of hedging derivative |
| |
contracts (within the meaning of section 120(4)), and |
| |
(iii) | items which are outside the ordinary course of the |
| 30 |
company’s business (irrespective of their treatment in |
| |
the company’s accounts), having regard to that |
| |
company’s past transactions.” |
| |
5 | In section 109 (notice), after subsection (2) insert— |
| |
“(3) | Subsection (4) applies where a company— |
| 35 |
(a) | does not expect to satisfy Condition 4 of section 106 on the |
| |
first day of an accounting period, by reason only that its |
| |
shares have not been listed and dealt with on a recognised |
| |
stock exchange within the preceding 12 months, but |
| |
(b) | reasonably expects to satisfy that Condition throughout the |
| 40 |
rest of the accounting period in reliance on section 415(1)(b) |
| |
| |
(4) | Where this subsection applies— |
| |
(a) | subsection (2)(c) does not apply, but |
| |
|
| |
|
| |
|
(b) | the notice under subsection (1) must be accompanied by a |
| |
statement by the company containing the assertions specified |
| |
| |
(5) | Those assertions are— |
| |
(a) | that Conditions 1, 2, 5 and 6 in section 106 are reasonably |
| 5 |
expected to be satisfied in respect of the company throughout |
| |
the specified accounting period, |
| |
(b) | that Condition 3 in section 106 is reasonably expected to be |
| |
satisfied in respect of the company for at least a part of the |
| |
first day of the specified accounting period, and throughout |
| 10 |
the remainder of that period, and |
| |
(c) | that Condition 4 in section 106 is reasonably expected to be |
| |
satisfied in respect of the company throughout all of the |
| |
specified accounting period apart from the first day.” |
| |
6 | In section 115 (profit: financing cost ratio)— |
| 15 |
(a) | in the formula in subsection (2), omit “+ Financing Costs”, and |
| |
(b) | in paragraph (a) of that subsection, after “allowances” insert “, of |
| |
losses from a previous accounting period and of amounts taken into |
| |
account under section 120(3)”. |
| |
7 | In section 116 (minor or inadvertent breach)— |
| 20 |
(a) | in subsection (3), after paragraph (c) insert— |
| |
“(ca) | make provision under paragraph (c) either by |
| |
specifying a sum that arises in relation to a company |
| |
or by providing for a sum to be treated as arising in |
| |
relation to a company;” and |
| 25 |
(b) | after that subsection insert— |
| |
“(3A) | The regulations may make provision about, or by reference |
| |
to, anything done by or in relation to a company or any sum |
| |
arising or treated as arising— |
| |
(a) | after the commencement of the regulations, or |
| 30 |
(b) | in the calendar year during which the regulations are |
| |
| |
8 | In section 117 (cancellation of tax advantage), insert at the end— |
| |
“(8) | On an appeal under subsection (7) the Special Commissioners may— |
| |
| 35 |
(b) | affirm the notice, or |
| |
| |
9 | In section 120 (calculation of profits)— |
| |
(a) | in paragraph (a) of subsection (4), for “an asset,” substitute “an asset |
| |
by the exploitation of which tax-exempt business is conducted,” |
| 40 |
(b) | after that paragraph insert— |
| |
“(aa) | a derivative contract is hedging in relation to a |
| |
company if or in so far as it is acquired as a hedge of |
| |
risk in relation to a liability incurred in connection |
| |
with tax-exempt business,” and |
| 45 |
|
| |
|
| |
|
(c) | after that subsection insert— |
| |
“(4A) | In subsection (4)(a) the reference to an asset includes a |
| |
| |
(a) | the value of an asset, and |
| |
(b) | profits attributable to it.” |
| 5 |
10 | In section 123(a) (attribution of distributions), for “Condition 4” substitute |
| |
| |
11 | After section 126 (movement of assets into ring fence) insert— |
| |
| |
(1) | This section applies if— |
| 10 |
(a) | C (tax-exempt) transfers an asset to a 75% subsidiary (“S”) of |
| |
| |
(b) | C (residual) disposes of its interest in S, |
| |
(c) | on the date of the transfer of the asset, S gives a notice under |
| |
section 109 which specifies an accounting period which |
| 15 |
begins within the period of six months beginning with the |
| |
date of the transfer, and |
| |
(d) | this Part begins to apply to S from the beginning of the |
| |
specified accounting period. |
| |
(2) | Where this section applies— |
| 20 |
(a) | sections 111 and 112 shall not apply to S in relation to the |
| |
asset transferred by C (tax-exempt) or in relation to business |
| |
conducted by the exploitation of that asset, and |
| |
(b) | section 125 shall not apply to the transfer of the asset by C |
| |
| 25 |
12 | In section 127 (interpretation), for “126” substitute “126A”. |
| |
13 | In section 133 (early exit), insert at the end— |
| |
“(6) | On an appeal under subsection (5) the Special Commissioners may— |
| |
| |
(b) | affirm the direction, or |
| 30 |
| |
14 | In section 138 (joint ventures), after subsection (3) insert— |
| |
“(4) | Regulations may make provision having retrospective effect in |
| |
respect of the calendar year in which they are made.” |
| |
15 | In paragraph 3 of Schedule 16 (excluded income: owner-occupied property), |
| 35 |
after sub-paragraph (3) insert— |
| |
“(3A) | For the purpose of Condition 2, no account shall be taken of the |
| |
fact that a property may fall to be described as owner-occupied by |
| |
reason only of the provision by the company of services to an |
| |
| 40 |
(a) | is in exclusive occupation of the property, and |
| |
(b) | is not connected with a member of the group (within the |
| |
meaning given by section 839 of ICTA).” |
| |
16 (1) | Schedule 17 (modifications for groups) is amended as follows. |
| |
|
| |
|
| |
|
(2) | In paragraph 2(b), for “Conditions 1 to 3” substitute “Conditions 1 and 2”. |
| |
(3) | Omit paragraph 6(2) and (3). |
| |
(4) | In paragraph 6(4) and (5), for “Condition 4” substitute “Condition 3”. |
| |
(5) | In paragraph 14, in the substituted subsection (2)— |
| |
(a) | in the formula in the opening words, omit “+ Financing Costs (all)”, |
| 5 |
(b) | in paragraph (a), after “allowances” insert “, of losses from a previous |
| |
accounting period and of amounts taken into account under section |
| |
| |
| |
(6) | after paragraph 33 insert— |
| 10 |
| |
34 (1) | This paragraph applies in relation to a company if— |
| |
(a) | the company ceases to be a member of a group to which |
| |
| |
(b) | at the time immediately after it ceases to be a member of |
| 15 |
| |
(i) | it satisfies Conditions 1 and 2 of section 106 and the |
| |
conditions specified in sections 107 and 108, or |
| |
(ii) | it is the principal company of a group which |
| |
satisfies those conditions as modified by the |
| 20 |
provisions of paragraphs 5 to 7 above, |
| |
(c) | it gives a notice under section 109 (or that section as |
| |
modified by paragraph 8 above) no later than the date on |
| |
which it ceases to be a member of the group, and |
| |
(d) | the notice specifies an accounting period which begins on |
| 25 |
the day on which the company ceases to be a member of |
| |
| |
(2) | A company may give a notice under section 109 (or that section as |
| |
modified by paragraph 8 above) in accordance with sub- |
| |
paragraph (1)(c) even if it does not expect to satisfy Conditions 3 |
| 30 |
to 6 of section 106 throughout the accounting period specified in |
| |
| |
(3) | Where this paragraph applies, the company shall be treated as a |
| |
company to which Part 4 applies (or as the principal company of a |
| |
group to which Part 4 applies) during the period of six months |
| 35 |
beginning with the time when it ceases to be a member of the |
| |
| |
(4) | Where this paragraph applies, the following provisions of Part 4 |
| |
| |
(a) | section 111 (or that section as modified by paragraphs 9 |
| 40 |
| |
(b) | section 112 (or that section as modified by paragraph 11 |
| |
| |
(c) | section 131 (as modified by paragraphs 25 and 26 above).” |
| |
(5) | But if, at the end of the period of six months mentioned in sub- |
| 45 |
paragraph (3), Conditions 3 to 6 in section 106 are not satisfied in |
| |
|
| |
|
| |
|
relation to the company, this paragraph shall not have effect and |
| |
the company shall be treated as having ceased to be a company to |
| |
which Part 4 applies (or the principal company of a group to |
| |
which Part 4 applies) on the date on which it ceased to be a |
| |
| 5 |
17 | In section 505(1) of ICTA (charities: exemptions), after paragraph (a) insert— |
| |
“(aa) | exemption from tax under Schedules A and D, or under Parts |
| |
2 and 3 of ITTOIA 2005, in respect of distributions to which |
| |
section 121 of the Finance Act 2006 (Real Estate Investment |
| |
Trusts: distributions) applies to the extent that the |
| 10 |
| |
(i) | arise in respect of shares vested in a person for |
| |
| |
(ii) | are applied to charitable purposes only;”. |
| |
18 | In section 531 of ITA 2007 (charities: exemptions)— |
| 15 |
(a) | after subsection (2) insert— |
| |
“(2A) | Distributions to which section 121 of FA 2006 (Real Estate |
| |
Investment Trusts: distributions) applies and which are |
| |
chargeable to income tax under Part 2 or Part 3 of ITTOIA |
| |
2005 are not taken into account in calculating total income so |
| 20 |
far as they arise in respect of shares vested in a person in trust |
| |
for a charitable trust or for charitable purposes.”, and |
| |
(b) | in subsection (3), for “and (2)” substitute “to (2A)”. |
| |
| |
| |
Pensions schemes: abolition of relief for life assurance premium contributions |
| 25 |
| |
| |
1 | Part 4 of FA 2004 (pension schemes etc) is amended as follows. |
| |
Life assurance premium contributions not to be relievable pension contributions |
| |
2 | In section 188(3) (relief for members’ contributions: contributions which are |
| 30 |
not relievable pension contributions), after paragraph (a) insert— |
| |
“(aa) | any contributions which are life assurance premium |
| |
contributions (see section 195A),”. |
| |
Life assurance premium contributions |
| |
3 | After section 195 insert— |
| 35 |
“195A | Life assurance premium contributions |
| |
(1) | Contributions paid by or on behalf of an individual under a |
| |
registered pension scheme are life assurance premium contributions |
| |
for the purposes of section 188(3)(aa) if— |
| |
|
| |
|