|
| |
| |
(b) | so much of the loss of the straddling period (if any) as derives from |
| |
relevant pre-announcement capital expenditure. |
| |
(9) | For the purposes of this paragraph the amount of the loss of the straddling |
| |
basis period that derives from relevant pre-announcement capital |
| |
expenditure is determined on a just and reasonable basis. |
| 5 |
(10) | In this paragraph “relevant pre-announcement capital expenditure” |
| |
| |
(a) | any capital allowance in respect of expenditure paid before 12 March |
| |
| |
(b) | any capital allowance in respect of expenditure paid on or after that |
| 10 |
date pursuant to an unconditional obligation in a contract made |
| |
| |
| and for this purpose “an unconditional obligation” means an obligation |
| |
which may not be varied or extinguished by the exercise of any right |
| |
conferred on the individual in question (whether or not under the contract). |
| 15 |
7 (1) | Section 74B of ITA, and the other provisions inserted into that Act by this |
| |
Schedule so far as relating to that section, have effect in relation to a loss |
| |
arising directly or indirectly in consequence of, or otherwise in connection |
| |
with, relevant tax avoidance arrangements made on or after 12 March 2008. |
| |
(2) | But those provisions do not have effect if the arrangements were made |
| 20 |
pursuant to an unconditional obligation in a contract made before that date; |
| |
and for this purpose “an unconditional obligation” means an obligation |
| |
which may not be varied or extinguished by the exercise of any right |
| |
conferred on the individual in question (whether or not under the contract). |
| |
| 25 |
| |
Avoidance involving financial arrangements |
| |
Rent factoring of leases of plant or machinery |
| |
1 (1) | Section 785A of ICTA (rent factoring of leases of plant or machinery) is |
| |
| |
(2) | In subsection (1), omit paragraph (d). |
| 30 |
| |
(a) | for “relevant portion of the consideration” substitute “market value |
| |
of the rights transferred”, and |
| |
(b) | for “in a period of account to the extent that it is receivable in that |
| |
period of account” substitute “at the time of the transfer”. |
| 35 |
(4) | After that subsection insert— |
| |
“(2A) | But subsection (2) does not apply if and to the extent that any of the |
| |
market value of the rights transferred is (apart from this section) |
| |
| |
| 40 |
(b) | as a capital allowances disposal receipt.” |
| |
| |
| |
|
| |
| |
(5) | After subsection (5) insert— |
| |
“(5ZA) | The references in subsections (1)(c) and (3) to another person include |
| |
any person in which P has an interest, including any partnership of |
| |
which P is a member and the trustees of any trust of which P is a |
| |
| 5 |
(6) | The amendments made by this paragraph have effect in relation to |
| |
arrangements for transfers of rights entered into on or after 12 March 2008. |
| |
Credit allowable in relation to interest |
| |
2 (1) | In section 807A of ICTA (disposals and acquisitions of company loan |
| |
relationships with or without interest), omit subsection (3) (credit allowable |
| 10 |
as if amount of foreign tax had been paid). |
| |
| |
(a) | in section 807A of ICTA, subsections (5) and (6) and, in subsection |
| |
(7), the definitions of “related transaction” and “trading credit”, and |
| |
(b) | section 91(4) of FA 1997. |
| 15 |
(3) | The repeals made by this paragraph have effect in relation to related |
| |
transactions on or after 12 March 2008. |
| |
Distributions arising from tax arrangements |
| |
3 (1) | In paragraph 1 of Schedule 9 to FA 1996 (loan relationships: distributions), |
| |
after sub-paragraph (1) insert— |
| 20 |
“(1A) | Credits relating to any amount which falls, when paid, to be |
| |
treated as a distribution in respect of a loan relationship are to be |
| |
brought into account for the purposes of this Chapter if the |
| |
amount arises in consequence of, or otherwise in connection with, |
| |
arrangements the purpose, or one of the main purposes, of which |
| 25 |
is securing for any person a tax advantage; and for this purpose— |
| |
(a) | “arrangements” includes any agreement, understanding, |
| |
scheme, transaction or series of transactions, and |
| |
(b) | “tax advantage” has the meaning given by section 840ZA |
| |
| 30 |
(2) | The amendment made by sub-paragraph (1) has effect in relation to |
| |
accounting periods ending on or after 12 March 2008 but, in the case of an |
| |
accounting period beginning before that date, only if the credits relate to any |
| |
time on or after that date. |
| |
Distributions from shares treated as loan relationships |
| 35 |
| |
(a) | section 91A(2)(b) (distributions in respect of shares subject to |
| |
outstanding third party obligations), and |
| |
(b) | section 91B(2)(b) (distributions in respect of non-qualifying shares), |
| |
| omit “falling within section 209(2)(a) or (b) of the Taxes Act 1988”. |
| 40 |
(2) | The repeals made by sub-paragraph (1) have effect in relation to |
| |
distributions on or after 9 October 2007. |
| |
| |
| |
|
| |
| |
Depreciatory transactions |
| |
5 (1) | Section 91A of FA 1996 (shares treated as loan relationship: shares subject to |
| |
outstanding third party obligations which are interest-like investments) is |
| |
| |
(2) | After subsection (2) insert— |
| 5 |
“(2A) | No debits are to be brought into account by the investing company |
| |
for the purposes of this Chapter as respects the share.” |
| |
(3) | In subsections (3) and (4), omit “debits and”. |
| |
6 (1) | Section 91B of FA 1996 (shares treated as loan relationship: non-qualifying |
| |
shares) is amended as follows. |
| 10 |
(2) | After subsection (2) insert— |
| |
“(2A) | No debits are to be brought into account by the investing company |
| |
for the purposes of this Chapter as respects the share.” |
| |
(3) | In subsections (3) and (4), omit “debits and”. |
| |
(4) | After subsection (6) insert— |
| 15 |
“(6A) | Where a share is a non-qualifying share for the purposes of this |
| |
section by reason of the Condition in section 91E being satisfied— |
| |
(a) | subsection (2A) does not apply in relation to the share, but |
| |
(b) | the amount of the debits brought into account by the |
| |
investing company as respects the share are not to exceed the |
| 20 |
amount of the credits brought into account in respect of the |
| |
associated transactions under Schedule 26 to the Finance Act |
| |
| |
7 | The amendments made by paragraphs 5 and 6 have effect in relation to |
| |
accounting periods ending on or after 12 March 2008 but, in the case of an |
| 25 |
accounting period beginning before that date, only if the debits relate to any |
| |
time on or after that date. |
| |
| |
8 (1) | Section 91A of FA 1996 (shares treated as loan relationship: shares subject to |
| |
outstanding third party obligations) is amended as follows. |
| 30 |
(2) | In subsection (7), for “paragraph (b) above” substitute “this subsection”. |
| |
(3) | In subsection (8)(b), after “will be” insert “or has been”. |
| |
9 (1) | Section 91C of FA 1996 (shares treated as loan relationship: shares likely to |
| |
increase in value at rate representing return on investment of money) is |
| |
| 35 |
(2) | In subsection (1), for “paragraph (b) above” substitute “this subsection”. |
| |
(3) | In subsection (6), for “entered into by the investing company” substitute “or |
| |
| |
10 | The amendments made by paragraphs 8 and 9 have effect in relation to times |
| |
on or after 12 March 2008. |
| 40 |
| |
| |
|
| |
| |
| |
11 (1) | In section 91D(2) of FA 1996 (shares treated as loan relationship: redeemable |
| |
shares), omit “or” at the end of paragraph (a) and insert at the end “or |
| |
(c) | it is reasonable to assume that the investing company will or |
| |
might become entitled to qualifying redemption amounts.” |
| 5 |
(2) | The amendment made by sub-paragraph (1) has effect in relation to times on |
| |
| |
Schemes etc designed to reproduce interest-like return |
| |
12 (1) | Section 91E of FA 1996 (shares treated as loan relationship: schemes etc |
| |
designed to produce return equating to return on investment of money at |
| 10 |
interest) is amended as follows. |
| |
| |
(a) | after “arrangement” insert “(whether or not the investing company is |
| |
| |
(b) | after “return” insert “(for any one or more persons)”. |
| 15 |
(3) | In subsection (3), insert at the end (but not as part of paragraph (d))— |
| |
| “and acquiring rights or receiving benefits in respect of other shares.” |
| |
(4) | The amendments made by this paragraph have effect in relation to times on |
| |
| |
| 20 |
13 (1) | In FA 1996, after section 91G insert— |
| |
| |
91H | Payments in return for capital contribution |
| |
(1) | This section applies where a company is a party to relevant |
| |
arrangements under which— |
| 25 |
(a) | a partnership of which it is a member is or may become |
| |
entitled to receive a capital contribution from any person |
| |
(whether directly or indirectly), and |
| |
(b) | that person, or a person connected with that person, receives |
| |
a sum of money or other asset from the company (whether |
| 30 |
| |
(2) | In subsection (1) “relevant arrangements” means arrangements— |
| |
(a) | which are designed to produce for the company a return |
| |
which equates, in substance, to a return on the investment of |
| |
the money or other asset at a commercial rate of interest, and |
| 35 |
(b) | the purpose or one of the main purposes of the arrangements |
| |
is to secure a tax advantage. |
| |
(3) | The return is to be treated for the purposes of this Chapter as a profit |
| |
from a loan relationship of the company; and the credits to be |
| |
brought into account in respect of the loan relationship are to be |
| 40 |
determined on the amortised cost basis of accounting. |
| |
| |
| |
|
| |
| |
(4) | But where the return to any extent represents partnership profits in |
| |
respect of which the company is chargeable to corporation tax |
| |
(whether for the same or any earlier accounting period), the charge |
| |
to corporation tax is to be reduced to such extent as is just and |
| |
| 5 |
(5) | Section 839 of the Taxes Act 1988 (connected persons) applies for the |
| |
purposes of subsection (1). |
| |
| |
(a) | “arrangements” includes any agreement, understanding, |
| |
scheme, transaction or series of transactions, and |
| 10 |
(b) | “tax advantage” has the meaning given by section 840ZA of |
| |
| |
91I | Change of partnership shares |
| |
(1) | This section applies where a company is a party to relevant |
| |
arrangements under which— |
| 15 |
(a) | the company makes a capital contribution to a partnership of |
| |
| |
(b) | profits of the partnership fall to be shared in a way such that |
| |
the company is not allocated the whole of its due share of the |
| |
| 20 |
(c) | the capital of the partnership falls to be shared in a way such |
| |
that the company or a person connected with the company is |
| |
entitled to more than the whole of its due share of the capital. |
| |
(2) | In subsection (1) “relevant arrangements” means arrangements— |
| |
(a) | which are designed to produce for the company a return |
| 25 |
which equates, in substance, to a return on the investment of |
| |
the capital contribution at a commercial rate of interest, and |
| |
(b) | the purpose or one of the main purposes of the arrangements |
| |
is to secure a tax advantage. |
| |
(3) | The return is to be treated for the purposes of this Chapter as a profit |
| 30 |
from a loan relationship of the company; and the credits to be |
| |
brought into account in respect of the loan relationship are to be |
| |
determined on the amortised cost basis of accounting. |
| |
(4) | But where the return to any extent represents partnership profits in |
| |
respect of which the company is chargeable to corporation tax |
| 35 |
(whether for the same or any earlier accounting period), the charge |
| |
to corporation tax is to be reduced to such extent as is just and |
| |
| |
(5) | For the purposes of subsection (1) a company’s “due share” of any |
| |
profits or capital is the share that the company would have been |
| 40 |
allocated or entitled to if allocation or entitlement were determined |
| |
by reference to the proportion of the total capital contributed to the |
| |
partnership that was contributed by it. |
| |
(6) | Section 839 of the Taxes Act 1988 (connected persons) applies for the |
| |
purposes of subsection (1). |
| 45 |
| |
| |
| |
|
| |
| |
(a) | “arrangements” includes any agreement, understanding, |
| |
scheme, transaction or series of transactions, and |
| |
(b) | “tax advantage” has the meaning given by section 840ZA of |
| |
| |
(2) | In section 131 of FA 2004 (companies in partnership), insert at the end— |
| 5 |
“(10) | Subsection (4) does not apply if and to the extent that the chargeable |
| |
amount is brought into account under section 91H or 91I of the |
| |
| |
(3) | The amendments made by this paragraph have effect in relation to returns |
| |
arising on or after 12 March 2008. |
| 10 |
Loan relationships treated differently by debtor and creditor |
| |
14 (1) | In FA 1996, after section 94A insert— |
| |
“94B | Loan relationships treated differently by connected debtor and |
| |
| |
(1) | This section applies where there are two companies which are |
| 15 |
connected and conditions A, B and C are met. |
| |
(2) | Condition A is that one of the companies (“the debtor company”), in |
| |
accordance with generally accepted accounting practice, treats the |
| |
rights and liabilities under a loan relationship to which it is a party |
| |
as debtor as divided between— |
| 20 |
(a) | rights and liabilities under a loan relationship (“the host |
| |
| |
(b) | rights and liabilities under one or more derivative financial |
| |
instruments or equity instruments. |
| |
(3) | Condition B is that the other company is party to the loan |
| 25 |
relationship as creditor (“the creditor company”) and, in accordance |
| |
with generally accepted accounting practice, does not treat its rights |
| |
and liabilities under the loan relationship as so divided. |
| |
(4) | Condition C is that the debits brought into account by the debtor |
| |
company under this Chapter in respect of the host contract for any |
| 30 |
accounting period exceed the credits brought into account |
| |
(otherwise than by virtue of this section) in respect of the loan |
| |
relationship by the creditor company for the corresponding |
| |
accounting period or periods of the creditor company. |
| |
(5) | The creditor company is to be treated for the purposes of this |
| 35 |
Chapter as bringing into account for the corresponding accounting |
| |
period or periods additional credits in respect of the loan |
| |
relationship of an amount equal to the excess. |
| |
(6) | But where the creditor company is party to the loan relationship as |
| |
creditor during only part of the corresponding accounting period (or |
| 40 |
any of the corresponding periods) it is to be treated for those |
| |
purposes as bringing into account for the period only such portion of |
| |
the excess as is just and reasonable. |
| |
(7) | The references in this section to a company which is party to a loan |
| |
relationship as debtor or creditor include a company which |
| 45 |
| |
| |
|
| |
| |
indirectly stands in the position of a debtor or creditor as respects the |
| |
loan relationship by reference to a series of loan relationships or |
| |
money debts which would be loan relationships if a company |
| |
directly stood in the position of debtor or creditor. |
| |
(8) | For the purposes of this section an accounting period of the creditor |
| 5 |
company corresponds with an accounting period of the debtor |
| |
company if it coincides with it or falls wholly or partly within it. |
| |
(9) | Where a corresponding accounting period of the creditor company |
| |
does not coincide with that of the debtor company such |
| |
apportionments as are just and reasonable are to be made for the |
| 10 |
purposes of this section. |
| |
(10) | Section 839 of the Taxes Act 1988 (connected persons) applies for the |
| |
purposes of this section; but two companies are also connected for |
| |
the purposes of this Schedule if their accounting results are reflected |
| |
in the consolidated group accounts of a group of companies.” |
| 15 |
(2) | In paragraph 7 of Schedule 6 to F(No.2)A 2005 (loan relationships with |
| |
embedded derivatives), after sub-paragraph (1) insert— |
| |
“(1A) | An election under this paragraph does not have effect in relation |
| |
to any relevant assets in the case of which section 94B of FA 1996 |
| |
| 20 |
(3) | The amendments made by sub-paragraph (1) have effect in relation to debits |
| |
and credits arising on or after 12 March 2008. |
| |
(4) | The amendment made by sub-paragraph (2) has effect in relation to elections |
| |
made on or after that date. |
| |
Commercial rate of interest |
| 25 |
15 (1) | In section 103 of FA 1996 (interpretation of Chapter 2 of Part 4), omit |
| |
subsections (3A) and (3B) (meaning of “commercial rate of interest”). |
| |
(2) | Accordingly, in Schedule 7 to F(No.2)A 2005, omit paragraph 13. |
| |
(3) | The amendments made by this paragraph have effect in relation to times on |
| |
| 30 |
| |
16 (1) | Schedule 26 to FA 2002 (derivative contracts) is amended as follows. |
| |
(2) | In paragraph 3(1)(b)(ii) (contract must be treated for accounting purposes as |
| |
financial asset or liability), for “is treated for accounting purposes as, or as |
| |
forming” substitute “for accounting purposes is, or forms”. |
| 35 |
(3) | In paragraph 4(2)(b) (contracts excluded by virtue of underlying subject |
| |
matter) after “(2D)” insert “and which are not designed to produce a return |
| |
which equates, in substance, to the return on an investment of money at a |
| |
commercial rate of interest”. |
| |
(4) | The amendments made by this paragraph have effect in relation to |
| 40 |
accounting periods ending on or after 12 March 2008. |
| |
| |
| |
|
