|
| |
|
(4) | For this purpose it does not matter whether a person receives, or is entitled to |
| |
| |
(a) | from the local enterprise organisation or urban regeneration company |
| |
| |
| 5 |
(5) | In this section “disqualifying benefit” means a benefit the expenses of obtaining |
| |
which, if incurred by the contributor directly in a transaction at arm’s length, |
| |
would not be deductible as expenses of management under section 1219. |
| |
(6) | Sections 83 (meaning of “local enterprise organisation”) and 86 (meaning of |
| |
“urban regeneration company”) apply for the purposes of this section as they |
| 10 |
apply for the purposes of section 82. |
| |
Export Credits Guarantee Department |
| |
1245 | Payments to Export Credits Guarantee Department |
| |
(1) | This section applies if— |
| |
(a) | a sum is payable by a company with investment business to the Export |
| 15 |
Credits Guarantee Department, and |
| |
(b) | the sum is payable under an agreement entered into as a result of |
| |
arrangements made under section 2 of the Export and Investment |
| |
Guarantees Act 1991 (c. 67) (insurance in connection with overseas |
| |
investment), or with a view to entering into such an agreement. |
| 20 |
(2) | The sum is treated for the purposes of Chapter 2 as expenses of management. |
| |
| |
1246 | Levies under FISMA 2000 |
| |
| |
(a) | spent by a company with investment business in paying a levy, or |
| 25 |
(b) | paid by a company with investment business as a result of an award of |
| |
| |
| are treated for the purposes of Chapter 2 as expenses of management. |
| |
(2) | In this section “costs rules” has the meaning given by section 92(2). |
| |
(3) | In this section “levy” has the meaning given by section 92(3). |
| 30 |
| |
Rules restricting deductions |
| |
| |
(1) | This Chapter contains provisions that restrict the deduction of expenses of |
| |
management under section 1219. |
| 35 |
(2) | Other provisions that prohibit or restrict the deduction of expenses of |
| |
management under section 1219 include— |
| |
(a) | section 1290 (employee benefit contributions), |
| |
|
| |
|
| |
|
(b) | section 1298 (business entertainment and gifts), |
| |
(c) | section 1302 (social security contributions), |
| |
(d) | section 1303 (penalties, interest and VAT surcharges), |
| |
(e) | section 1304 (crime-related payments), |
| |
(f) | section 200 of FA 2004 (no other relief for employers in connection with |
| 5 |
| |
(g) | section 246 of FA 2004 (restriction of deduction for non-contributory |
| |
| |
(3) | See also section 196A of FA 2004 (employers’ contributions: power to restrict |
| |
| 10 |
1248 | Expenses in connection with arrangements for securing a tax advantage |
| |
(1) | No deduction is allowed under section 1219 for any particular expenses of |
| |
management if any part of those expenses is incurred directly or indirectly in |
| |
consequence of, or otherwise in connection with, any arrangements for |
| |
securing a tax advantage. |
| 15 |
(2) | In subsection (1) “arrangements for securing a tax advantage” means |
| |
arrangements the main purpose, or one of the main purposes, of which is to |
| |
| |
(a) | the allowance of a deduction (or increased deduction) under section |
| |
| 20 |
(b) | any other tax advantage. |
| |
(3) | Subsection (1) does not apply if, as a result of paragraph 7A of Schedule 23A to |
| |
ICTA (manufactured payments under arrangements having an unallowable |
| |
purpose), the company incurring the expenses is not entitled to a relevant tax |
| |
relief in respect of, or referable to, the whole or any part of the expenses. |
| 25 |
(4) | The reference in subsection (1) to expenses of management includes amounts |
| |
treated by any provision as deductible under section 1219. |
| |
| |
“arrangements” includes any agreement, understanding, scheme, |
| |
transaction or series of transactions (whether or not legally |
| 30 |
| |
“relevant tax relief” has the same meaning as in paragraph 7A of Schedule |
| |
| |
“tax advantage” has the meaning given by section 840ZA of ICTA. |
| |
| 35 |
(1) | This section applies if— |
| |
(a) | an amount is charged in respect of employees’ remuneration in the |
| |
accounts for a period of a company with investment business, |
| |
(b) | the amount would apart from this section be deductible under section |
| |
1219 as expenses of management, and |
| 40 |
(c) | the remuneration is not paid before the end of the period of 9 months |
| |
immediately following the end of the period of account. |
| |
(2) | If the remuneration is paid after the end of that period of 9 months, the |
| |
deduction for it is allowed for the period of account in which it is paid (and not |
| |
in accordance with the timing rule in section 1219(1)). |
| 45 |
|
| |
|
| |
|
(3) | No deduction is allowed for the remuneration under section 1219 if it is not |
| |
| |
1250 | Unpaid remuneration: supplementary |
| |
(1) | For the purposes of section 1249 an amount charged in the accounts in respect |
| |
of employees’ remuneration includes an amount for which provision is made |
| 5 |
in the accounts with a view to its becoming employees’ remuneration. |
| |
(2) | For the purposes of section 1249 it does not matter whether an amount is |
| |
| |
(a) | particular employments, or |
| |
(b) | employments generally. |
| 10 |
(3) | If the profits of the company are calculated before the end of the 9 month |
| |
period mentioned in section 1249(1)(c)— |
| |
(a) | it must be assumed, in making the calculation, that any remuneration |
| |
which is unpaid when the calculation is made will not be paid before |
| |
the end of that period, but |
| 15 |
(b) | if the remuneration is subsequently paid before the end of that period, |
| |
nothing in this subsection prevents the calculation being revised and |
| |
any tax return being amended accordingly. |
| |
(4) | For the purposes of this section and section 1249 remuneration is paid when |
| |
| 20 |
(a) | is treated as received by an employee for the purposes of ITEPA 2003 |
| |
by section 18 or 19 of that Act (receipt of money and non-money |
| |
| |
(b) | would be so treated if it were not exempt income. |
| |
(5) | In this section and section 1249— |
| 25 |
“employee” includes an office-holder and “employment” therefore |
| |
| |
“remuneration” means an amount which is or is treated as earnings for the |
| |
purposes of Parts 2 to 7 of ITEPA 2003. |
| |
1251 | Car or motor cycle hire |
| 30 |
(1) | Subsection (2) applies if, in calculating the corporation tax to which a company |
| |
with investment business is liable for an accounting period, a deduction is |
| |
allowed under section 1219 for expenses incurred on the hiring of a car or |
| |
| |
(a) | which is not a qualifying hire car or motor cycle, and |
| 35 |
(b) | the retail price of which when new exceeds £12,000. |
| |
(2) | The amount of the deduction which would otherwise be allowable is reduced |
| |
by multiplying the amount by the fraction—![equation: over[plus[string["\xa3 12,000"],times[char[R],char[P]]],cross[num[2.0000000000000000,
"2"],times[char[R],char[P]]]]](missing.gif) |
| |
| where RP is the retail price of the car or motor cycle when new. |
| |
|
| |
|
| |
|
(3) | Subsection (4) applies if a deduction for expenses is reduced as a result of |
| |
subsection (2), or a corresponding provision, and— |
| |
| |
(i) | there is a rebate (however described) of the hire charges, or |
| |
(ii) | a debt in respect of any of the hire charges is released otherwise |
| 5 |
than as part of a statutory insolvency agreement, and |
| |
(b) | a credit representing the rebate, or the amount released, reverses (in |
| |
whole or in part) a debit representing the expenses. |
| |
(4) | In applying subsection (2) of section 1230 (calculation of the reversal amount |
| |
for the purposes of the claw back rules)— |
| 10 |
(a) | take the amount given by Step 1, |
| |
(b) | multiply that amount by the fraction set out in subsection (2) above |
| |
(instead of applying Step 2), and |
| |
(c) | apply Step 3 to the amount given by paragraph (b). |
| |
(5) | In this section “corresponding provision” means— |
| 15 |
(a) | section 56(2) (car or motor cycle hire: trade profits and property |
| |
| |
(b) | section 48(2) of ITTOIA 2005 (car or motor cycle hire: trade profits and |
| |
| |
(c) | section 76ZN(2) of ICTA (car or motor cycle hire: expenses of insurance |
| 20 |
| |
(6) | The power under section 74(4) of CAA 2001 to increase or further increase the |
| |
sums of money specified in Chapter 8 of Part 2 of CAA 2001 includes the power |
| |
to increase or further increase the sum of money specified in subsection (1)(b) |
| |
| 25 |
(7) | Sections 57 (meaning of “car or motor cycle” and other expressions) and 58 |
| |
(hiring cars with low CO2 emissions before 1 April 2013) apply for the purposes |
| |
of this section as they apply for the purposes of section 56. |
| |
| |
Companies with investment business: receipts |
| 30 |
1252 | Industrial development grants |
| |
(1) | If a company with investment business receives a payment by way of a grant |
| |
| |
(a) | section 7 or 8 of the Industrial Development Act 1982 (c. 52), or |
| |
(b) | Article 7, 9 or 30 of the Industrial Development (Northern Ireland) |
| 35 |
Order 1982 (S.I. 1982/1083 (N.I. 15)), |
| |
| the payment is to be treated as an amount to which the charge to corporation |
| |
| |
(2) | Subsection (1) does not apply if— |
| |
(a) | the grant is designated as made towards the cost of specified capital |
| 40 |
| |
(b) | the grant is designated as compensation for the loss of capital assets, or |
| |
(c) | the grant is for all or part of a corporation tax liability (including one |
| |
that has already been met). |
| |
|
| |
|
| |
|
(3) | Tax is not charged under this section if the payment is taken into account |
| |
(under another provision) in calculating profits for corporation tax purposes. |
| |
1253 | Contributions to local enterprise organisations or urban regeneration |
| |
companies: disqualifying benefits |
| |
(1) | This section applies if— |
| 5 |
(a) | a deduction has been made under section 1219 by virtue of section 1244 |
| |
(contributions to local enterprise agencies or urban regeneration |
| |
companies: expenses of management), and |
| |
(b) | the contributor or a connected person receives a disqualifying benefit |
| |
that is in any way attributable to the contribution. |
| 10 |
(2) | The contributor is to be treated as receiving, when the benefit is received, an |
| |
| |
(a) | which is equal to the value of the benefit (so far as not brought into |
| |
account in determining the amount of the deduction), and |
| |
(b) | to which the charge to corporation tax on income applies. |
| 15 |
(3) | In this section “disqualifying benefit” has the same meaning as in section 1244. |
| |
1254 | Repayments under FISMA 2000 |
| |
(1) | If as a result of a repayment provision a payment— |
| |
(a) | is made to a company with an investment business, and |
| |
(b) | is not brought into account as a receipt of a trade under section 104, or |
| 20 |
as a receipt of a property business as a result of section 210, |
| |
| the payment is to be treated as an amount to which the charge to corporation |
| |
| |
(2) | In this section “repayment provision” means— |
| |
(a) | any provision made by virtue of section 136(7) or 214(1)(e) of FISMA |
| 25 |
| |
(b) | any provision made by scheme rules for fees to be refunded in specified |
| |
| |
(3) | In this section “scheme rules” means the rules referred to in paragraph 14(1) of |
| |
Schedule 17 to FISMA 2000. |
| 30 |
| |
| |
1255 | Meaning of some accounting terms |
| |
(1) | Any reference in sections 1225 to 1227 to expenses of management being |
| |
debited in accounts is to those expenses being brought into account as a debit |
| 35 |
| |
(a) | the company’s profit and loss account or income statement, or |
| |
(b) | a statement of total recognised gains and losses, statement of changes |
| |
in equity or other statement of items brought into account in calculating |
| |
the company’s profits and losses for accounting purposes. |
| 40 |
(2) | In section 1229(1) “brought into account” means brought into account in— |
| |
|
| |
|
| |
|
(a) | the company’s profit and loss account or income statement, or |
| |
(b) | a statement of total recognised gains and losses, statement of changes |
| |
in equity or other statement of items brought into account in calculating |
| |
the company’s profits and losses for accounting purposes. |
| |
| 5 |
“credit” means an amount which for accounting purposes increases or |
| |
creates a profit, or reduces a loss, for a period of account, and |
| |
“debit” means an amount which for accounting purposes reduces a profit, |
| |
or increases or creates a loss, for a period of account. |
| |
| 10 |
| |
| |
| |
(1) | This Part contains some special rules about partnerships. |
| |
(2) | For restrictions that in some circumstances affect relief for losses, and certain |
| 15 |
other reliefs, for a company that is a member of a partnership see section 116 of |
| |
ICTA (arrangements for transferring relief). |
| |
| |
(1) | In this Act persons carrying on a trade in partnership are referred to |
| |
collectively as a “firm”. |
| 20 |
(2) | This section and sections 1259 to 1266 are expressed to apply to trades, but |
| |
unless otherwise indicated (whether expressly or by implication) also apply to |
| |
businesses that are not trades. |
| |
(3) | In those sections as applied by subsection (2)— |
| |
(a) | references to a trade are references to a business, and |
| 25 |
(b) | references to the profits of a trade are references to the income arising |
| |
| |
1258 | Assessment of partnerships |
| |
Unless otherwise indicated (whether expressly or by implication), a firm is not |
| |
to be regarded for corporation tax purposes as an entity separate and distinct |
| 30 |
| |
Calculation of partners’ shares |
| |
1259 | Calculation of firm’s profits and losses |
| |
(1) | This section applies if a firm carries on a trade and any partner in the firm (“the |
| |
partner”) is a company within the charge to corporation tax. |
| 35 |
|
| |
|
| |
|
(2) | For any accounting period of the firm, the amount of the profits of the trade |
| |
(“the amount of the firm’s profits”) is taken to be the amount determined, in |
| |
relation to the partner, in accordance with subsection (3) or (4). |
| |
(3) | If the partner is UK resident— |
| |
(a) | determine what would be the amount of the profits of the trade |
| 5 |
chargeable to corporation tax for that period if a UK resident company |
| |
carried on the trade, and |
| |
(b) | take that to be the amount of the firm’s profits. |
| |
(4) | If the partner is non-UK resident— |
| |
(a) | determine what would be the amount of the profits of the trade |
| 10 |
chargeable to corporation tax for that period if a non-UK resident |
| |
company carried on the trade, and |
| |
(b) | take that to be the amount of the firm’s profits. |
| |
(5) | The amount of any losses of the trade for an accounting period of the firm is |
| |
calculated, in relation to the partner, in the same way as the amount of any |
| 15 |
| |
(6) | This section is subject to section 1260. |
| |
1260 | Section 1259: supplementary |
| |
(1) | In determining under section 1259 the profits of a trade for any accounting |
| |
period no account is taken of any losses for another accounting period. |
| 20 |
(2) | Profits and losses are determined under section 1259 on the basis that no |
| |
interest paid or other distribution made by the firm is a distribution for the |
| |
purposes of section 1305(1) (which provides that no deduction is allowed for |
| |
dividends or other distributions). |
| |
1261 | Accounting periods of firms |
| 25 |
(1) | In this Part references to an accounting period of a firm which carries on a trade |
| |
are to a period that would be an accounting period of the firm if the firm were |
| |
| |
(2) | For the purposes of subsection (1) it is to be assumed that the company by |
| |
reference to which the accounting periods of the firm are determined (“the |
| 30 |
| |
| |
(b) | acquires a source of income on the occurrence of an event that falls |
| |
| |
(c) | ceases to trade on the occurrence of an event that falls within subsection |
| 35 |
| |
(d) | ceases to trade, and immediately afterwards starts to trade, on the |
| |
occurrence of a change in the persons carrying on the trade falling |
| |
| |
| Paragraph (a) is subject to subsection (6). |
| 40 |
(3) | An event falls within this subsection if— |
| |
(a) | immediately before the event no company carries on the trade in |
| |
| |
|
| |
|