House of Commons Amendments

House of Commons

Session 2007 - 08
Internet Publications
Other Bills before Parliament

Public Bill Committee:
91

Crossrail Bill, continued

Capital allowances: determination of capital value of industrial buildings etc.

21  (1)
This paragraph applies for the purposes of Part 3 of CAA 2001, and the other

provisions of that Act which are relevant to that Part, in relation to a relevant

transfer of the relevant interest in an industrial building or structure.

      (2)
This paragraph is subject to section 36 of FA 2007 (which makes provision

about balancing adjustments etc under Part 3 of CAA 2001).

      (3)
The transfer is to be treated as a sale of that relevant interest.

      (4)
The net proceeds of that sale are to be treated—

(a)
if a capital sum is received by the transferor by way of consideration

or compensation in respect of the transfer, as an amount equal to that

sum, or

(b)
if no such sum is received, as nil.

      (5)
For the purposes of this paragraph a sum received by a person connected with

the transferor is to be treated as received by the transferor.

      (6)
Sections 567 to 570 of CAA 2001 (sales treated as being for alternative

amount) are not to have effect in relation to that sale.

Chargeable gains: assets to be treated as disposed of without a gain or a loss

22  (1)
For the purposes of TCGA 1992 a disposal—

(a)
constituted by a relevant transfer, or

(b)
to which sub-paragraph (2) applies,


is to be taken to be for a consideration such that no gain or loss accrues to the

person making the disposal.

      (2)
This sub-paragraph applies to a disposal if—

(a)
it is made in accordance with provision contained in a transfer scheme

by virtue of paragraph 5 or 11 of Schedule 12 to this Act,

(b)
the person making the disposal is a taxable public body,

(c)
the person to whom the disposal is made is an exempt public body, and

(d)
each of those persons is either the transferor or a transferee under the

scheme.

Neutral effect of transfer of intangible assets

23  (1)
For the purposes of Schedule 29 to FA 2002, a relevant transfer of a chargeable

intangible asset of the transferor is to be treated as not involving any realisation

of the asset by the transferor.

      (2)
Expressions used in this paragraph and in that Schedule have the same

meanings in this paragraph as in that Schedule.

Neutral effect of transfer for loan relationships and derivative contracts

24
No credit or debit shall be required or allowed, in respect of a relevant transfer,

to be brought into account in the transferor’s case—

(a)
for the purposes of Chapter 2 of Part 4 of FA 1996 (loan relationships),

or

(b)
for the purposes of Schedule 26 to FA 2002 (derivative contracts).

Leased assets

25  (1)
This paragraph applies for the purposes of section 781 of ICTA (assets leased

to traders and others) where—

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(a)
the interest of the lessor or the lessee under a lease, or any other

interest in an asset, is transferred under a relevant transfer, or

(b)
a lease, or any other interest in a lease, is granted by a taxable public

body to an exempt public body in accordance with provision contained

by virtue of paragraph 5 or 11 of Schedule 12 to this Act in a transfer

scheme.

      (2)
Section 783(4) of ICTA is to be disregarded and the transfer or grant is to be

treated as made without any capital sum having been obtained in respect of the

interest or lease by the transferor or grantor.

      (3)
Expressions used in this paragraph and in sections 781 to 785 of ICTA have

the same meanings in this paragraph as in those sections.

Transfers from exempt public bodies to taxable public bodies

Meaning of “relevant transfer” in Part 4 of Schedule

26
In this Part of this Schedule “relevant transfer” means a transfer, in accordance

with a transfer scheme, from an exempt public body to a taxable public body.

Capital allowances: transfer of plant or machinery

27  (1)
This paragraph applies where—

(a)
there is a relevant transfer of plant or machinery,

(b)
the plant or machinery would have been treated for the purposes of

CAA 2001 (had the transferor incurred expenditure qualifying for

allowances under Part 2 of that Act on the provision of the plant or

machinery) as disposed of by the transferor to the transferee on the

transfer taking effect, and

(c)
the transfer scheme in accordance with which the transfer is made

contains provision for the transferee to be treated for the purposes of

that Act as having incurred capital expenditure of an amount specified

in or determined in accordance with the scheme on the provision of the

plant or machinery.

      (2)
For the purposes of CAA 2001—

(a)
the transferee is to be treated as having incurred capital expenditure of

that amount on the provision of the plant or machinery for the purposes

for which it is used by the transferee on and after the taking effect of

the transfer,

(b)
the property is to be treated as belonging to the transferee as a result of

the transferee having incurred that expenditure, and

(c)
in the case of a fixture, the expenditure which falls to be treated as

incurred by the transferee is to be treated for the purposes of sections

181(1) and 182(1) of that Act as being incurred by the giving of a

consideration consisting in a capital sum of that amount.

      (3)
The provision mentioned in sub-paragraph (1)(c) for the determination of an

amount may include provision for a determination—

(a)
to be made by the Secretary of State in a manner described in the

scheme,

(b)
to be made by reference to factors so described or to the opinion of a

person so described, and

(c)
to be capable of being modified (on one or more occasions) in a

manner and in circumstances so described.

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      (4)
The consent of the Treasury is required for the making or modification of a

determination under the provision mentioned in sub-paragraph (1)(c).

      (5)
The consent of the transferee is required for the modification of a

determination under the provision mentioned in sub-paragraph (1)(c).

      (6)
As to the making of a determination or a modification of a determination under

the provision mentioned in sub-paragraph (1)(c), see further paragraph 43.

      (7)
Expressions used in this paragraph and in Part 2 of CAA 2001 have the same

meanings in this paragraph as in that Part.

Capital allowances: determination of capital value of industrial buildings etc.

28  (1)
This paragraph applies where there is a relevant transfer of the relevant interest

in an industrial building or structure and the transfer scheme in accordance

with which the transfer is made contains provision specifying for the purposes

of section 311 of CAA 2001—

(a)
the amount to be taken as the amount of the residue of qualifying

expenditure immediately after the event, and

(b)
the period to be taken as the period from the date of the event to the

end of the period of 25 years beginning with the day on which the

building or structure was first used.

      (2)
For the purposes of that section—

(a)
the transfer is to be treated as the occurrence of a relevant event,

(b)
the residue of qualifying expenditure immediately after the event is to

be taken to be the amount specified by virtue of sub-paragraph (1)(a),

and

(c)
the period from the date of the event to the end of the period of 25

years beginning with the day on which the building or structure was

first used is to be taken to be the period specified by virtue of sub-

paragraph (1)(b).

      (3)
Expressions used in this paragraph and in Part 3 of CAA 2001 have the same

meanings in this paragraph as in that Part.

Other provisions concerning transfers between public bodies

Meaning of “relevant transfer” in Part 5 of Schedule

29
In this Part of this Schedule “relevant transfer” means a transfer, in accordance

with a transfer scheme, from a public body to another public body.

Trading losses: change in ownership

30  (1)
This paragraph applies to a relevant transfer of all the issued share capital of a

company (the “transferred company”).

      (2)
For the purposes of sections 768 to 768E of ICTA, the transfer is not to be

taken to result in a change in the ownership of—

(a)
the transferred company, or

(b)
a company which is a wholly-owned subsidiary of the transferred

company when the transfer takes effect.

Chargeable gains: degrouping charges

31  (1)
This paragraph applies if a company (“the degrouped company”)—

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(a)
acquired an asset from another company at a time when both were

members of the same group of companies (“the old group”),

(b)
ceases by virtue of a relevant transfer to be a member of the old group,

and

(c)
becomes by virtue of the transfer a member of the same group of

companies as the transferee (“the new group”).

      (2)
Section 179 of TCGA 1992 (company ceasing to be member of group) is not

to treat the degrouped company as having by virtue of the transfer sold and

immediately reacquired the asset.

      (3)
Where sub-paragraph (2) has applied to an asset, section 179 of TCGA 1992

is to have effect on and after the first subsequent occasion on which the

degrouped company ceases to be a member of the new group otherwise than

by virtue of a relevant transfer as if—

(a)
the degrouped company, and

(b)
the company from which it acquired the asset,


had been members of the new group at the time of acquisition.

      (4)
If, disregarding any preparatory transactions, a company would be regarded by

virtue of a relevant transfer—

(a)
as ceasing to be a member of a group of companies for the purposes of

section 179 of TCGA 1992 (and, accordingly, of this paragraph), or

(b)
as becoming a member of a group of companies for the purposes of

this paragraph,


it is to be regarded for those purposes as so doing by virtue of the relevant

transfer and not by virtue of any preparatory transactions.

      (5)
In this paragraph “preparatory transactions” means anything done under or by

virtue of this Act for the purpose of initiating, advancing or facilitating the

relevant transfer in question.

      (6)
Expressions used in this paragraph and in section 179 of TCGA 1992 have the

same meanings in this paragraph as in that section.

Stamp duty

32  (1)
Stamp duty is not to be chargeable—

(a)
on a transfer scheme in the case of which the transferor and each

transferee is a public body, or

(b)
on an instrument certified by the Secretary of State to the

Commissioners for Her Majesty’s Revenue and Customs as made for

the purposes of such a transfer scheme, or as made for purposes

connected with such a transfer scheme.

      (2)
But where, by virtue of sub-paragraph (1), stamp duty is not chargeable on a

scheme or instrument, the scheme or instrument is to be treated as duly

stamped only if—

(a)
in accordance with section 12 of the Stamp Act 1891 (c. 39) it has been

stamped with a stamp denoting either that it is not chargeable to duty

or that it has been duly stamped, or

(b)
it is stamped with the duty to which it would be chargeable apart from

sub-paragraph (1).

      (3)
In this paragraph “instrument” has the same meaning as in the Stamp Act 1891

(c. 39).

Transfers etc involving private persons

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Crossrail Bill, continued

Meaning of “relevant transfer” in Part 6 of Schedule

33
In this Part of this Schedule “relevant transfer” means a transfer, in accordance

with a transfer scheme, from or to a person other than a public body.

Transfers of trading stock

34  (1)
This paragraph applies if under a relevant transfer trading stock of the

transferor is transferred to the transferee.

      (2)
Sub-paragraphs (3) and (4) have effect in computing for any corporation tax or

income tax purpose both the profits of the trade in relation to which the stock

is trading stock immediately before the transfer takes effect (“the transferor’s

trade”) and—

(a)
if the stock falls immediately after the transfer takes effect to be treated

as trading stock of the transferee, the profits of the trade in relation to

which it falls to be treated as trading stock (“the transferee’s trade”);

(b)
otherwise, the consideration given by the transferee, or the

expenditure incurred by the transferee, for the acquisition of the stock.

      (3)
The stock must be taken to have been—

(a)
disposed of by the transferor in the course of the transferor’s trade,

(b)
if sub-paragraph (2)(a) applies, acquired by the transferee in the course

of the transferee’s trade, and

(c)
subject to that, disposed of and acquired when the transfer takes effect.

      (4)
The value of the stock is to be taken to be—

(a)
if consideration is given to the transferor in respect of the transfer, an

amount equal to the value of the consideration, or

(b)
if no such consideration is given, nil.

      (5)
For the purposes of this paragraph consideration given to a person connected

with the transferor is to be treated as given to the transferor.

      (6)
In this paragraph “trading stock” has the same meaning as in section 100 of

ICTA (as respects corporation tax) or section 174 of ITTOIA 2005 (as respects

income tax).

      (7)
For the purposes of this paragraph whether a person is connected with another

person is determined in accordance with section 839 of ICTA (as respects

corporation tax) or section 993 of ITA 2007 (as respects income tax).

Capital allowances: determination of disposal value of plant or machinery

35  (1)
This paragraph applies to a relevant transfer of plant or machinery which is a

disposal event for the purposes of Part 2 of CAA 2001 (capital allowances for

plant and machinery).

      (2)
For the purposes of the application of section 61 of that Act (disposal events

and disposal value) in relation to the transferor, the disposal value of the plant

or machinery is to be treated—

(a)
if a capital sum is received by the transferor by way of consideration

or compensation in respect of the transfer, as an amount equal to that

sum, or

(b)
if no such sum is received, as nil.

      (3)
For the purposes of this paragraph a sum received by a person connected with

the transferor is to be treated as received by the transferor.

      (4)
Section 88 of CAA 2001 (sales at an undervalue) is to be disregarded.

      (5)
This paragraph is subject to sections 63(5) and 68 of CAA 2001.

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Capital allowances: determination of disposal value of fixtures

36  (1)
This paragraph applies to a relevant transfer if—

(a)
it is a disposal event for the purposes of Part 2 of CAA 2001, and

(b)
by virtue of the transfer a person is treated by section 188 of that Act

as ceasing to own a fixture.

      (2)
For the purposes of the application of section 196 of that Act in relation to the

transferor, the disposal value of the fixture is to be treated—

(a)
if a capital sum is received by the transferor by way of consideration

or compensation in respect of the transfer, as an amount equal to that

portion of that sum which falls (or, if the person to whom the disposal

is made were entitled to an allowance, would fall) to be treated for the

purposes of Part 2 of that Act as expenditure incurred by that person

on the provision of the fixture, or

(b)
if no such sum is received, as nil.

      (3)
For the purposes of this paragraph a sum received by a person connected with

the transferor is to be treated as received by the transferor.

      (4)
This paragraph is subject to section 63(5) of CAA 2001.

Capital allowances: section 265 of CAA 2001 not to apply in relation to transferee

37  (1)
This paragraph applies in relation to a relevant transfer.

      (2)
For the purposes of the application of Part 2 of CAA 2001 in relation to the

transferee, section 265 of that Act (successions: general) is to be disregarded.

Capital allowances: determination of capital value of industrial buildings etc.

38  (1)
This paragraph applies for the purposes of Part 3 of CAA 2001, and the other

provisions of that Act which are relevant to that Part, in relation to a relevant

transfer of the relevant interest in an industrial building or structure.

      (2)
This paragraph is subject to section 36 of FA 2007 (which makes provision

about balancing adjustments etc under Part 3 of CAA 2001).

      (3)
The transfer is to be treated as a sale of that relevant interest.

      (4)
The net proceeds of that sale are to be treated—

(a)
if a capital sum is received by the transferor by way of consideration

or compensation in respect of the transfer, as an amount equal to that

sum, or

(b)
if no such sum is received, as nil.

      (5)
For the purposes of this paragraph a sum received by a person connected with

the transferor is to be treated as received by the transferor.

      (6)
Sections 567 to 570 of CAA 2001 (sales treated as being for alternative

amount) are not to have effect in relation to that sale.

Chargeable gains: disposals not to be treated as made at market value

39  (1)
Section 17 of TCGA 1992 (disposals and acquisitions treated as made at

market value) is not to have effect in relation to—

(a)
a disposal constituted by a relevant transfer,

(b)
a disposal to which sub-paragraph (2) applies, or

(c)
the acquisition made by the person to whom the disposal is made;


but this sub-paragraph does not apply if the person making the disposal is

connected with the person making the acquisition.

      (2)
This sub-paragraph applies to a disposal if—

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Crossrail Bill, continued

(a)
it is made in accordance with provision contained in a transfer scheme

by virtue of paragraph 5 or 11 of Schedule 12 to this Act,

(b)
the person making the disposal or the person to whom the disposal is

made is a person other than a public body, and

(c)
each of those persons is either the transferor or a transferee under the

scheme.

      (3)
If sub-paragraph (1) applies to the disposal of an asset, the disposal is to be

taken (in relation to the person making the acquisition as well as the person

making the disposal) to be—

(a)
in a case where consideration in money or money’s worth is given by

the person making the acquisition or on his behalf in respect of the

vesting of the asset in him, for a consideration equal to the amount or

value of that consideration, or

(b)
in a case where no such consideration is given, for a consideration of

nil.

Loan relationships

40  (1)
Paragraph 11 of Schedule 9 to FA 1996 (transactions not at arm’s length) is not

to have effect where, as a result of a relevant transfer, the transferee replaces

the transferor as a party to a loan relationship.

      (2)
Expressions used in this paragraph and in Chapter 2 of Part 4 of FA 1996 have

the same meanings in this paragraph as in that Chapter.

Other provisions concerning transfers

Chargeable gains: value shifting

41
No transfer scheme is to be regarded as a scheme or arrangement for the

purposes of section 30 of TCGA 1992.

Group relief

42
The power of the Secretary of State to make a transfer scheme is not to be

regarded as constituting—

(a)
arrangements falling within section 410(1) or (2) of ICTA

(arrangements for transfer of company to another group or

consortium), or

(b)
option arrangements for the purposes of paragraph 5B of Schedule 18

to ICTA.

Modification of transfer schemes and determinations under paragraph 9(1)(d) or

27(1)(c): companies

43  (1)
This paragraph applies if—

(a)
a company delivers a company tax return,

(b)
subsequently, an event mentioned in sub-paragraph (2) below occurs,

and

(c)
as a result of that event, the return is incorrect.

      (2)
The events are—

(a)
the making of an agreement modifying a transfer scheme under

paragraph 14 of Schedule 12 to this Act;