Corporation Tax Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
618

“76ZD
Retraining courses
(1)
This section applies if—
(a)
a company carrying on life assurance business (“the
employer”) incurs training course expenses,
(b)
they are incurred in relation to a person (“the employee”)
5
who holds or has held an office or employment under the
employer, and
(c)
the relevant conditions are met.
(2)
The expenses are brought into account under section 76 as expenses
payable (so far as they otherwise would not be).
10
(3)
In this section—
“retraining course expenses” means expenses incurred in the
payment or reimbursement of retraining course expenses
within the meaning given by section 311(2) of ITEPA 2003,
and
15
“the relevant conditions” means—
(a)
the conditions in subsections (3) and (4) of section 311
of ITEPA 2003 (employment income exemptions:
retraining courses), and
(b)
in the case of travel expenses, the conditions in
20
subsection (5) of that section.”
35
After section 76ZD insert—
“76ZE
Retraining courses: recovery of tax
(1)
This section applies if—
(a)
an employer’s liability to corporation tax for an accounting
25
period is determined on the assumption that it is entitled by
virtue of section 76ZD to bring an amount into account in
determining the amount of a deduction to be made under
section 76, and
(b)
without section 76ZD the employer would not have been so
30
entitled.
(2)
If, subsequently—
(a)
the condition in section 311(4)(a) of ITEPA 2003 is not met
because of the employee’s failure to begin the course within
the period of one year after ceasing to be employed, or
35
(b)
the condition in section 311(4)(b) of ITEPA 2003 is not met
because of the employee’s continued employment or re-
employment,

an assessment of an amount or further amount of corporation tax
due as a result of the condition not being met may be made under
40
paragraph 41 of Schedule 18 to FA 1998.
(3)
Such an assessment must be made before the end of the period of 6
years immediately following the end of the accounting period in
which the failure to meet the condition occurred.
(4)
If subsection (2) applies, the employer must give an officer of
45
Revenue and Customs a notice containing particulars of—
(a)
the employee’s failure to begin the course,

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
619

(b)
the employee’s continued employment, or
(c)
the employee’s re-employment,

within 60 days of coming to know of it.
(5)
If an officer of Revenue and Customs has reason to believe that the
employer has failed to give such a notice, the officer may by notice
5
require the employer to provide such information as the officer may
reasonably require for the purposes of this section about—
(a)
the failure to begin the course,
(b)
the continued employment, or
(c)
the re-employment.
10
(6)
A notice under subsection (5) may specify a time (not less than 60
days) within which the required information must be provided.”
36
After section 76ZE insert—
“Redundancy payments etc
79ZF
Redundancy payments and approved contractual payments
15
(1)
Sections 76ZG to 76ZI apply if—
(a)
a company to which section 76 applies (“the employer”)
makes a redundancy payment or an approved contractual
payment to another person (“the employee”), and
(b)
the payment is in respect of the employee’s employment
20
wholly in the employer’s life assurance business or partly in
the employer’s life assurance business and partly in one or
more other capacities.
(2)
For the purposes of this section and sections 76ZG to 76ZH
“redundancy payment” means a redundancy payment payable
25
under—
(a)
Part 11 of the Employment Rights Act 1996, or
(b)
Part 12 of the Employment Rights (Northern Ireland) Order
1996.
(3)
For the purposes of this section and those sections—
30
“contractual payment” means a payment which, under an
agreement, an employer is liable to make to an employee on
the termination of the employee’s contract of employment,
and
a contractual payment is “approved” if, in respect of that
35
agreement, an order is in force under—
(a)
section 157 of the Employment Rights Act 1996, or
(b)
Article 192 of the Employment Rights (Northern
Ireland) Order 1996.”
37
After section 76ZF insert—
40
“76ZG
Payments in respect of employment wholly in employer’s business
(1)
This section applies if the payment is in respect of the employee’s
employment wholly in the employer’s life assurance business.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
620

(2)
The payment is treated as expenses payable which fall to be brought
into account at Step 1 in section 76(7), so far as it otherwise would not
be.
(3)
The amount brought into account by virtue of this section for an
approved contractual payment must not exceed the amount which
5
would have been due to the employee if a redundancy payment had
been payable.
(4)
If the payment is referable to an accounting period beginning after
the business has permanently ceased to be carried on, it is treated as
referable to the last accounting period in which the business was
10
carried on.”
38
After section 76ZG insert—
“76ZH
Payments in respect of employment in more than one capacity
(1)
This section applies if the payment is in respect of the employee’s
employment with the employer—
15
(a)
partly in the employer’s life assurance business, and
(b)
partly in one or more other capacities.
(2)
The amount of the redundancy payment, or the amount which
would have been due if a redundancy payment had been payable, is
to be apportioned on a just and reasonable basis between—
20
(a)
the employment in the life assurance business, and
(b)
the employment in the other capacities.
(3)
The part of the payment apportioned to the employment in the life
assurance business is treated as a payment in respect of the
employee’s employment wholly in the life assurance business for the
25
purposes of section 76ZG.”
39
After section 76ZH insert—
“76ZI
Additional payments
(1)
This section applies if the employer’s business, or part of it, ceases
(permanently) to be carried on and the employer makes a payment
30
to the employee in addition to—
(a)
the redundancy payment, or
(b)
if an approved contractual payment is made, the amount that
would have been due if a redundancy payment had been
payable.
35
(2)
If—
(a)
the additional payment would not otherwise be regarded as
expenses payable for the purposes of section 76, but
(b)
that is only because the business, or the part of the business,
has ceased to be carried on,
40

the additional payment is regarded as expenses payable for the
purposes of section 76.
(3)
So far as the additional payment would, apart from this subsection,
be regarded as expenses payable for the purposes of Step 5 in
subsection (7) of section 76, it is not to be so regarded for the
45

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
621

purposes of that subsection (or of subsection (2) above so far as
relating to section 76).
(4)
The amount treated under this section as expenses payable for the
purposes of section 76 is limited to 3 times the amount of—
(a)
the redundancy payment, or
5
(b)
if an approved contractual payment is made, the amount that
would have been due if a redundancy payment had been
payable.
(5)
If the payment is referable to an accounting period beginning after
the business or the part of the business has ceased to be carried on, it
10
is treated as referable to the last accounting period in which the
business, or the part concerned, was carried on.”
40
After section 76ZI insert—
“76ZJ
Payments by the Government
(1)
This section applies if—
15
(a)
a redundancy payment or an approved contractual payment
is payable by a company to which section 76 applies (“the
employer”), and
(b)
a payment to which subsection (2) applies is made in respect
of the payment.
20
(2)
This subsection applies to—
(a)
payments made by the Secretary of State under section 167 of
the Employment Rights Act 1996, and
(b)
payments made by the Department for Employment and
Learning under Article 202 of the Employment Rights
25
(Northern Ireland) Order 1996.
(3)
So far as the employer reimburses the Secretary of State or
Department for the payment, sections 76ZG to 76ZI apply as if the
payment were—
(a)
a redundancy payment, or
30
(b)
an approved contractual payment,

made by the employer.”
41
After section 76ZJ insert—
“Contributions to local enterprise organisations or urban regeneration companies
76ZK
Contributions to local enterprise organisations or urban regeneration
35
companies
(1)
This section applies if a company to which section 76 applies (“the
contributor”) incurs expenses in making a contribution (whether in
cash or in kind)—
(a)
to a local enterprise organisation, or
40
(b)
to an urban regeneration company.
(2)
The expenses are treated for the purposes of section 76 as expenses
payable which fall to be brought into account at Step 1 in section
76(7).

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
622

(3)
But if, in connection with the making of the contribution, the
contributor or a connected person—
(a)
receives a disqualifying benefit of any kind, or
(b)
is entitled to receive such a benefit,

the amount treated in accordance with subsection (2) is restricted to
5
the amount of the expenses less the value of the benefit.
(4)
For this purpose it does not matter whether a person receives, or is
entitled to receive, the benefit—
(a)
from the local enterprise organisation or urban regeneration
company concerned, or
10
(b)
from anyone else.
(5)
Subsection (6) applies if—
(a)
an amount has been brought into account in accordance with
subsection (2), and
(b)
the contributor or a connected person receives a
15
disqualifying benefit that is in any way attributable to the
contribution.
(6)
The contributor is to be treated as receiving, when the benefit is
received, an amount—
(a)
which is equal to the value of the benefit (so far as not
20
brought into account in determining the amount of the
deduction), and
(b)
to which the charge to corporation tax on income applies.
(7)
In this section—
“disqualifying benefit” means a benefit the expenses of
25
obtaining which, if incurred by the contributor directly in a
transaction at arm’s length, would not be expenses payable
for the purposes of section 76,
“local enterprise organisation” has the meaning given by
section 83 of CTA 2009,
30
“urban regeneration company” has the meaning given by
section 86 of CTA 2009.
(8)
Section 839 (“connected person”) applies for the purposes of
subsections (3) and (5).”
42
After section 76ZK insert—
35
“Unpaid remuneration
76ZL
Unpaid remuneration
(1)
This section applies if—
(a)
an amount is charged in respect of employees’ remuneration
in the accounts for a period of a company to which section 76
40
applies,
(b)
the amount would apart from this section be brought into
account under section 76 as expenses payable, and
(c)
the remuneration is not paid before the end of the period of 9
months immediately following the end of the period of
45
account.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
623

(2)
If the remuneration is paid after the end of that period of 9 months,
the amount is brought into account for the period of account in
which it is paid.
(3)
But—
(a)
subsection (2) is subject to section 86 of FA 1989 (spreading of
5
relief for acquisition expenses), and
(b)
in interpreting that section the remuneration is treated as
expenses payable which fall to be included at Step 1 in section
76(7) for the period of account in which the remuneration is
paid.
10
(4)
The amount is not brought into account under section 76 as expenses
payable if it is not paid.”
43
After section 76ZL insert—
“76ZM
Unpaid remuneration: supplementary
(1)
For the purposes of section 76ZL an amount charged in the accounts
15
in respect of employees’ remuneration includes an amount for which
provision is made in the accounts with a view to its becoming
employees’ remuneration.
(2)
For the purposes of section 76ZL it does not matter whether an
amount is charged for—
20
(a)
particular employments, or
(b)
employments generally.
(3)
If the profits of the company are calculated before the end of the 9
month period mentioned in section 76ZL(1)(c)—
(a)
it must be assumed, in making the calculation, that any
25
remuneration which is unpaid when the calculation is made
will not be paid before the end of that period, but
(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
30
accordingly.
(4)
For the purposes of this section and section 76ZL remuneration is
paid when it—
(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
35
and non-money earnings), or
(b)
would be so treated if it were not exempt income.
(5)
In this section and section 76ZL—
“employee” includes an office-holder and “employment”
therefore includes an office, and
40
“remuneration” means an amount which is or is treated as
earnings for the purposes of Parts 2 to 7 of ITEPA 2003.”
44
After section 76ZM insert—