Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill
Schedule 26 — Special rate expenditure and the special rate pool
Part 2 — Commencement etc
317

(a)
where the integral feature is a pre-commencement integral feature
because of sub-paragraph (2)(a), is the expenditure mentioned in that
sub-paragraph, and
(b)
otherwise, is the expenditure incurred on the integral feature before
the relevant date, by virtue of which this paragraph first applied.
5
      (5)
The “relevant date” has the same meaning as in paragraph 14.
Saving for intra-group transfers
16    (1)
This paragraph applies where, on or after the relevant date—
(a)
there is a sale of a pre-commencement integral feature,
(b)
the buyer and seller are companies which are members of the same
10
group, and
(c)
the buyer’s expenditure on the integral feature would (apart from
this paragraph) be special rate expenditure.
      (2)
An integral feature is a pre-commencement integral feature if qualifying
expenditure on it—
15
(a)
was incurred by the seller before the relevant date and allocated to
the seller’s main pool, or
(b)
was incurred by the seller on or after that date and allocated to the
seller’s main pool because of a previous election under this
paragraph.
20
      (3)
The buyer and seller may jointly elect for paragraph 17 to apply.
      (4)
The election must be made by notice to an officer of Revenue and Customs
within 2 years after the date on which the sale takes place.
      (5)
All such assessments and adjustments of assessments are to be made as are
necessary to give effect to the election.
25
      (6)
Whether the buyer and seller are members of the same group is to be
determined in accordance with section 170(3) to (6) of TCGA 1992.
      (7)
The “relevant date” has the same meaning as in paragraph 14.
17    (1)
Where this paragraph applies, for the purposes of making allowances and
charges under Part 2 of CAA 2001—
30
(a)
the integral feature is treated as having been sold by the seller to the
buyer at a price which gives rise to neither a balancing allowance nor
a balancing charge, and
(b)
the buyer’s expenditure on the integral feature is treated as
qualifying expenditure which is not special rate expenditure (and, if
35
allocated to a pool, is to be allocated to the buyer’s main pool).
      (2)
Allowances and charges are to be made under Part 2 of CAA 2001 to or on
the buyer as if everything done to or by the seller had been done to or by the
buyer.
Interpretation
40
18
Expressions used in this Part of this Schedule and in Part 2 of CAA 2001 have
the same meaning in this Part of this Schedule as in that Part of that Act.

Finance Bill
Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 1 — Consequential amendments
318

Schedule 27
Section 81

Abolition of allowances: consequential amendments and savings
Part 1
Consequential amendments
CAA 2001
5
1
CAA 2001 is amended as follows.
2
In section 1 (capital allowances), omit—
(a)
subsection (2)(b) and (c) (entitlement to industrial and agricultural
buildings allowances), and
(b)
in subsection (3) “, industrial buildings or agricultural buildings,”.
10
3
In section 2(3) (general means of giving effect to capital allowances), omit—
(a)
“sections 352 to 355 (industrial buildings allowances);”, and
(b)
“sections 391 and 392 (agricultural buildings allowances);”.
4
In section 3 (claims for capital allowances), omit subsections (4)(b) and (5)(b).
5     (1)
Section 186 (fixture on which an industrial buildings allowance has been
15
made) is amended as follows.
      (2)
In subsection (1)(a) and (b), for “is” substitute “was”.
      (3)
In subsection (3)—
(a)
at the beginning insert “If the total consideration for the transfer by
the past owner exceeds R,”, and
20
(b)
in the definition of “R”—
(i)
after “expenditure” insert “which would have been”, and
(ii)
at the end insert “, had the time immediately after the transfer
fallen immediately before the repeal of Part 3 by section 81 of
the Finance Act 2008.”
25
      (4)
After that subsection insert—
“(3A)
Where subsection (3) does not apply, the maximum allowable
amount is the part of the consideration for the transfer by the past
owner that is attributable to the fixture.”
      (5)
In subsection (5), for “in Part 3” substitute “for the purposes of Part 3
30
immediately before its repeal by section 81 of the Finance Act 2008.”
6
In section 443(3) (disposal values and disposal events), omit “or 3” and “and
industrial building allowances”.
7
In section 448(3) (additional VAT rebate generates disposal value), in
subsection (3) omit “or 3” and “and industrial buildings allowances”.
35
8
In section 537 (contribution allowances), omit “, 3, 4” in—
(a)
subsection (1),
(b)
subsection (2)(b)(ii), and
(c)
the heading.
9
Omit section 539 (contribution allowances: industrial buildings).
40

Finance Bill
Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 1 — Consequential amendments
319

10
Omit section 540 (contribution allowances: agricultural buildings).
11
In section 542(1) (effect of transfers of trade on contribution allowances), for
“Parts 3, 4 and 5” substitute “Part 5”.
12
In section 546 (introduction to Chapter 2 of Part 12), omit paragraph (b).
13
In section 564 (application of procedure in section 563)—
5
(a)
in subsection (1), for “3” substitute “3A”, and
(b)
omit subsection (3).
14
In section 567(1) (sales treated as for alternative amounts), omit “3,” and “4,”.
15
In section 569 (election to treat sale as being for an alternative amount),
omit—
10
(a)
in subsections (3)(a) and (5)(a), “3 or”, and
(b)
in subsection (5), “319 (building not an industrial building, etc
throughout) or”.
16
In section 570 (elections: supplementary), omit—
(a)
in subsection (1), “, 4”, and
15
(b)
in subsection (3), “3,”.
17
In section 570A(1) (avoidance affecting proceeds of balancing event), omit
“3,” and “4,”.
18
In section 573(1) (transfers treated as sales), omit “3,” and “4,”.
19    (1)
Part 2 of Schedule 1 (index of defined expressions) is amended as follows.
20
      (2)
Omit the entries relating to the following defined expressions—
“adjusted net cost (in Chapter 7 of Part 3)”,
“agricultural building”,
“balancing adjustment (in Part 3)”,
“balancing adjustment (in Part 4)”,
25
“balancing event (in Part 3)”,
“balancing event (in Part 4)”,
“building (in Part 3 - includes structure)”,
“commercial building (in Part 3, in relation to qualifying enterprise
zone expenditure)”,
30
“developer, carrying on a trade as (in Chapter 4 of Part 3)”,
“enterprise zone (in Part 3)”,
“expenditure on the construction of a building (in Part 3)”,
“expenditure on the construction of a building (in Part 4)”,
“highway concession (in Chapter 9 of Part 3)”,
35
“husbandry (in Part 4)”,
“industrial building”,
“lease and related expressions (in Part 3)”,
“lease and related expressions (in Part 4)”,
“proceeds from a balancing event (in Part 3)”,
40
“proceeds from a balancing event (in Part 4)”,
“qualifying enterprise zone expenditure (in Part 3)”,
“qualifying hotel (in Part 3)”,
“qualifying trade (in Part 3)”,

Finance Bill
Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 1 — Consequential amendments
320

“related agricultural land (in Part 4)”,
“relevant interest (in Part 3)”,
“relevant interest (in Part 4)”,
“residue of qualifying expenditure (in Part 3)”,
“residue of qualifying expenditure (in Part 4)”, and
5
“writing-down period (in Part 4)”.
      (3)
In the entry relating to “sale, transfers under Parts 3, 3A, 4, 4A and 10 treated
as”, omit “3,” and “4,”.
20
In Schedule 3 (transitional provision and savings), omit—
(a)
paragraphs 56 to 83, and
10
(b)
paragraph 110.
ICTA
21
In section 495 of ICTA (regional development grants), omit—
(a)
in subsection (1)(b), “, 3” and “, industrial buildings”, and
(b)
in subsection (3)(b), “, 3”.
15
FA 2000
22
In Schedule 22 (tonnage tax), omit paragraphs 84 and 86.
FA 2001
23    (1)
FA 2001 is amended as follows.
      (2)
In Schedule 19 (insertion of Part 4A of CAA 2001: consequential
20
amendments), omit paragraph 4.
      (3)
In Schedule 21 (capital allowances: minor amendments), omit paragraphs 5
and 6.
Proceeds of Crime Act 2002 (c. 29)
24
In Schedule 10 to the Proceeds of Crime Act 2002 (tax consequences of
25
transfers under Part 5 of that Act), omit paragraphs 18 to 21.
Energy Act 2004 (c. 20)
25
In Schedule 4 to the Energy Act 2004 (tax exemption for NDA and NDA
companies), omit paragraphs 5 and 6.
ITTOIA 2005
30
26
In Schedule 1 to ITTOIA 2005 (consequential amendments), omit
paragraphs 552 to 558.
ITA 2007
27    (1)
ITA 2007 is amended as follows.
      (2)
In section 24(1)(b) (reliefs deductible at Step 2), omit the entry relating to Part
35
3 of CAA 2001.

Finance Bill
Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 2 — Savings
321

      (3)
In section 25(3) (reliefs deductible at Steps 2 and 3: supplementary), omit the
entry relating to section 355 of that Act.
      (4)
In Schedule 1 (minor and consequential amendments), omit paragraph 406.
FA 2007
28
In FA 2007, omit section 36 (industrial and agricultural buildings
5
allowances: balancing adjustments).
FA 2008
29
In FA 2008, omit—
(a)
section 82 (phasing out of allowances before abolition),
(b)
section 83 (qualifying enterprise zone expenditure: transitional
10
provision), and
(c)
section 84 (which inserts section 313A of CAA 2001).
Commencement
30    (1)
Subject to sub-paragraph (2), this Part of this Schedule has effect in relation
to chargeable periods (within the meaning of CAA 2001) beginning on or
15
after—
(a)
for corporation tax purposes, 1 April 2011, and
(b)
for income tax purposes, 6 April 2011.
      (2)
The amendments made by paragraph 5 have effect in relation to a transfer
by the past owner (within the meaning of section 186 of CAA 2001) in such
20
a chargeable period.
Part 2
Savings
Enterprise zone expenditure
31    (1)
Sub-paragraph (2) applies if—
25
(a)
an initial allowance or a writing down allowance has been made
under Part 3 of CAA 2001 in respect of qualifying enterprise zone
expenditure, and
(b)
an event occurs in relation to the building on which the expenditure
was incurred which, if that Part of that Act remained in force, would
30
be a balancing event in respect of which a balancing charge would be
made.
      (2)
Unless the event occurs more than 7 years after the building was first used,
a balancing charge is to be made in respect of the event as if that Part of that
Act remained in force.
35
Definition of structure
32
Despite the repeal of Part 3 of CAA 2001 by section 81, Chapter 2 of that Part
continues to have effect for the purposes of paragraph (a) of item 7 in List B
in section 22(1) of that Act (structures which are not plant and machinery).

Finance Bill
Schedule 28 — Inheritance of tax-relieved pension savings
322

Definition of qualifying trade
33
Despite the repeal of Part 3 of CAA 2001 by section 81, the following
provisions continue to have effect for the purposes of section 484 of that Act
(dredging allowances: definition of qualifying trade)—
(a)
section 274(1) (definition of qualifying trade), and
5
(b)
sections 276(3) and 341(4) of that Act (parts of trades and
undertakings; meaning of “highway concession”) so far as they relate
to the Tables in that section.
Commencement
34
This Part of this Schedule has effect in relation to chargeable periods (within
10
the meaning of CAA 2001) beginning on or after—
(a)
for corporation tax purposes, 1 April 2011, and
(b)
for income tax purposes, 6 April 2011.
Schedule 28
Section 88

Inheritance of tax-relieved pension savings
15
Amendments of Part 4 of FA 2004
1
Part 4 of FA 2004 (pensions schemes etc) is amended as follows.
2     (1)
Section 172 (assignment) is amended as follows.
      (2)
In subsection (3)—
(a)
in paragraph (a), for “an actual or” substitute “a”, and
20
(b)
in paragraph (b), for “the member” substitute “a member of the
pension scheme”.
      (3)
After subsection (6) insert—
“(6A)
References in this section to a benefit to which the member or a
person has an entitlement under the pension scheme includes rights
25
to payments under—
(a)
a scheme pension or dependants’ scheme pension provided
by the scheme administrator or as a result of the application
of sums or assets held for the purposes of the pension
scheme, or
30
(b)
a lifetime annuity or dependants’ annuity purchased by the
application of sums or assets held for the purposes of the
pension scheme.”
3     (1)
Section 172A (surrender) is amended as follows.
      (2)
In subsection (1), at the end of paragraph (a) (but before the “or”) insert—
35
“(aa)
any rights to payments under a lifetime annuity or
dependants’ annuity purchased by the application of sums
or assets held for the purposes of the pension scheme,”.
      (3)
In subsection (3)(a), for “relating to” substitute “in respect of”.

Finance Bill
Schedule 28 — Inheritance of tax-relieved pension savings
323

      (4)
In subsection (5), after paragraph (c) insert—
“(ca)
a surrender of (or agreement to surrender) rights to payments
under an annuity in any case covered by regulations under
paragraph 3(2B) or 17(3) of Schedule 28;”.
      (5)
After subsection (9) insert—
5
“(9A)
References in this section to a benefit to which the member or a
person has an entitlement under the pension scheme includes rights
to payments under—
(a)
a scheme pension or dependants’ scheme pension provided
by the scheme administrator or as a result of the application
10
of sums or assets held for the purposes of the pension
scheme, or
(b)
a lifetime annuity or dependants’ annuity purchased by the
application of sums or assets held for the purposes of the
pension scheme.”
15
4     (1)
Section 172B (increase in rights of connected person on death) is amended as
follows.
      (2)
In subsection (2), at the end of paragraph (a) (but before the “or”) insert—
“(aa)
rights to payments under a scheme pension or dependants’
scheme pension provided by the scheme administrator or as
20
a result of the application of sums or assets held for the
purposes of the pension scheme or under a lifetime annuity
or dependants’ annuity purchased by the application of sums
or assets held for the purposes of the pension scheme,”.
      (3)
In subsections (3)(a) and (7)(b), for “is actually or prospectively entitled”
25
substitute “has an actual or prospective entitlement”.
      (4)
In subsection (7)—
(a)
omit paragraph (a) (including the “and” at the end), and
(b)
in paragraph (b), for “them” substitute “at least 20 members of the
pension scheme”.
30
      (5)
After subsection (7) insert—
“(7A)
This section does not apply if—
(a)
the increase mentioned in subsection (1)(a) is an increase in
the rate of a dependants’ annuity or dependants’ scheme
pension or in rights representing a dependants’ unsecured
35
pension fund or dependants’ alternatively secured pension
fund, and
(b)
the increase is attributable to rights of the dead member to
payments under a dependants’ annuity or dependants’
scheme pension or rights representing a dependants’
40
unsecured pension fund.
(7B)
References in this section to a benefit to which the member or a
person has an entitlement under the pension scheme includes rights
to payments under—
(a)
a scheme pension or dependants’ scheme pension provided
45
by the scheme administrator or as a result of the application
of sums or assets held for the purposes of the pension
scheme, or