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
638

(b)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
      (3)
In subsection (2)—
(a)
for “Case I profits” substitute “section 35 profits”,
(b)
for “Case I losses” substitute “section 35 losses”, and
(c)
for “Case I advantage” substitute “life assurance trade profits
5
advantage”.
      (4)
In subsection (3)—
(a)
for “a Case I advantage” substitute “a life assurance trade profits
advantage”,
(b)
for “the Case I advantage” substitute “the advantage”, and
10
(c)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
      (5)
In subsection (5)—
(a)
for “a Case I advantage” substitute “a life assurance trade profits
advantage”, and
(b)
for “the Case I advantage” substitute “the advantage”.
15
      (6)
In subsection (6) for “Case I”, in both places where it occurs, substitute
“section 35”.
      (7)
In the title for “Case I” substitute “life assurance trade profits”.
149   (1)
Amend section 444AECC (parts of transfer scheme arrangements: Case I
advantage transferee) as follows.
20
      (2)
In subsection (1)—
(a)
for “Case I advantage” substitute “life assurance trade profits
advantage”, and
(b)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
      (3)
In subsection (2)—
25
(a)
for “Case I profits” substitute “section 35 profits”,
(b)
for “Case I losses” substitute “section 35 losses”, and
(c)
for “Case I advantage” substitute “life assurance trade profits
advantage”.
      (4)
In subsection (3)—
30
(a)
for “a Case I advantage” substitute “a life assurance trade profits
advantage”,
(b)
for “the Case I advantage” substitute “the advantage”, and
(c)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
      (5)
In subsection (5) for “Case I”, in both places where it occurs, substitute
35
“section 35”.
      (6)
In the title for “Case I” substitute “life assurance trade profits”.
150   (1)
Amend section 444AED (clearance: no avoidance or group advantage) as
follows.
      (2)
In subsection (2) for “Case I”, in both places where it occurs, substitute “life
40
assurance trade profits”.
      (3)
In subsection (3) for “Case I”, in both places where it occurs, substitute “life
assurance trade profits”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
639

151
In section 444AF(5) (demutualisation surplus: life assurance business)—
(a)
in paragraph (a) for “provisions of this Act applicable to Case I of
Schedule D” substitute “life assurance trade profits provisions”, and
(b)
in paragraph (b) omit “under Case VI of Schedule D”.
152
In section 444AH (modification of section 444AG etc for Case VI businesses)
5
in the heading for “Case VI” substitute “gross roll-up”.
153
In section 444AK(3) (mutual surplus: gross roll-up business) for “provisions
of this Act applicable to Case I of Schedule D” substitute “life assurance
trade profits provisions”.
154
In section 444BA(1) (equalisation reserves for general business) for “Case I
10
or V of Schedule D” substitute “section 35 of CTA 2009 (charge on trade
profits)”.
155
In section 444BB(2) (modification of section 444BA for mutual or overseas
business and for non-resident companies) for “to Case I of Schedule D”
substitute “for the purposes of section 35 of CTA 2009 (charge on trade
15
profits)”.
156
Omit section 469(4A) to (5) and (6) (other unit trusts).
157
Omit section 472A (trading profits etc from securities: taxation of amounts
taken to reserves).
158
Omit section 473 (conversion etc of securities held as circulating capital).
20
159
In section 475 (tax-free Treasury securities: exclusion of interest on borrowed
money)—
(a)
in subsections (1)(b) and (2)(a) for “the Tax Acts” substitute “the
Income Tax Acts”,
(b)
in subsection (2), omit paragraph (b) and the “and” immediately
25
before it, and
(c)
in subsection (4) omit the words from “or to be brought” to the end.
160
In section 477A (building societies: loan relationships), omit subsections
(3)(a) and (aa), (4) and (10).
161
Omit section 477B (incidental costs of issuing qualifying shares).
30
162   (1)
Amend section 486 (industrial and provident societies and co-operative
associations) as follows.
      (2)
In subsection (1), omit from the word “but” to the end.
      (3)
Omit subsections (4) and (7).
      (4)
Omit subsections (10) and (11).
35
      (5)
In subsection (12) omit the definition of “registered industrial and provident
society”.
163
Omit section 487 (credit unions).
164
Omit section 491 (distribution of assets of body corporate carrying on
mutual business).
40
165
In section 492(3A) (treatment of oil extraction activities etc for tax purposes)
for “section 75” substitute “section 1219 of CTA 2009”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
640

166   (1)
Amend section 494 (loan relationships etc) as follows.
      (2)
In subsection (1) for “Chapter II of Part IV of the Finance Act 1996” substitute
“Part 5 of CTA 2009”.
      (3)
In subsection (2)—
(a)
for “Chapter II of Part IV of the Finance Act 1996”, in both places
5
where it occurs, substitute “Part 5 of CTA 2009”,
(b)
in paragraph (b) for “subsection (4) of section 84” substitute “section
329”, and
(c)
in paragraph (c) and in the second sentence for “section 100”
substitute “Chapter 2 of Part 6 (relevant non-lending relationships)”.
10
      (4)
In subsection (2ZA) for “Chapter 2 of Part 4 of the Finance Act 1996”
substitute “Part 5 of CTA 2009”.
      (5)
In subsection (2A)—
(a)
in paragraph (a) for “Chapter II of Part IV of the Finance Act 1996”
substitute “Part 5 of CTA 2009”, and
15
(b)
in the words following paragraph (b) for “section 82(2)” substitute
“section 297”.
167   (1)
Amend section 494AA (sale and lease-back) as follows.
      (2)
In subsection (3) for “Schedule D” substitute “Part 3 of CTA 2009”.
      (3)
In subsection (5)—
20
(a)
in paragraph (a) for “Schedule D” substitute “Part 3 of CTA 2009”,
and
(b)
for “Chapter II of Part IV of the Finance Act 1996” substitute “Part 5
of CTA 2009”.
168
In section 494A(1) (computation of amount available for surrender by way
25
of group relief) for “Schedule A losses” substitute “UK property business
losses”.
169   (1)
Amend section 500 (deduction of PRT in computing income for corporation
tax purposes) as follows.
      (2)
For subsection (3)(b) substitute—
30
“(b)
if that chargeable period ends after the accounting period of
the company in or at the end of which the company—
(i)
ceases to carry on the trade giving rise to the income
referred to above, or
(ii)
ceases to be within the charge to corporation tax in
35
respect of that trade,

that accounting period.”
      (3)
In subsection (6)(d) for the words from “means” to the end substitute
“means—
(i)
the accounting period in or at the end of which ends
40
the operative chargeable period, or
(ii)
if the company ceases to carry on its ring fence trade
(or to be within the charge to corporation tax in
respect of that trade) before the end of the operative
chargeable period, the last accounting period of that
45
trade (or, as the case requires, the accounting period

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
641

during or at the end of which the company ceased to
be within the charge to corporation tax in respect of
that trade).”
170
In section 501A(5) (supplementary charge in respect of ring fence trades)—
(a)
in paragraph (a) for “Chapter 2 of Part 4 of the Finance Act 1996” and
5
“section 103(1A) and (1B)” substitute “Part 5 of CTA 2009” and
“section 475” respectively,
(b)
in paragraph (b) for “that Chapter” and “section 103(1A) and (1B)”
substitute “that Part” and “section 475” respectively, and
(c)
in paragraph (c) for “under Schedule 26 to the Finance Act 2002
10
(derivative contracts)” substitute “in accordance with Part 7 of CTA
2009 (derivative contracts)”.
171
In section 503(1)(a) (letting of furnished holiday accommodation treated as
a trade for certain corporation tax purposes)—
(a)
for “Schedule A business” substitute “UK property business”, and
15
(b)
for “trade the profits of which are chargeable to corporation tax
under Case I of Schedule D,” substitute “trade carried on wholly or
partly in the United Kingdom the profits of which are chargeable to
corporation tax under Part 3 of CTA 2009,”.
172
Omit section 504 (meaning of “commercial letting of furnished holiday
20
accommodation”).
173   (1)
Amend section 505 (charitable companies: general) as follows.
      (2)
In subsection (1)(a) for “under Schedules A and D” substitute “under Parts 3
and 4 of CTA 2009”.
      (3)
In subsection (1)(aa) for “under Schedules A and D” substitute “under Parts
25
3 and 4 of CTA 2009”.
      (4)
In subsection (1)(c)—
(a)
for sub-paragraph (ii) substitute—
“(ii)
from tax under section 299 of CTA 2009 (non-
trading profits in respect of loan
30
relationships),
(iiza)
from tax under Chapter 5 of Part 10 of that Act
(distributions from unauthorised unit trusts),
(iizb)
from tax under Chapter 7 of that Part (annual
payments not otherwise charged),”,
35
(b)
omit sub-paragraph (iia),
(c)
for sub-paragraph (iib) substitute—
“(iib)
from tax under Chapter 2 of Part 10 of CTA
2009 (dividends of non-UK resident
companies) or from tax under Chapter 8 of
40
that Part (income not otherwise charged) so
far as it applies to relevant foreign
distributions,”, and
(d)
for sub-paragraph (iic) substitute—
“(iic)
from tax under Part 8 of CTA 2009 in respect
45
of non-trading gains on intangible fixed
assets,”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
642

      (5)
In subsection (1)(e) for “Schedule D” substitute “Part 3 of CTA 2009”.
      (6)
In subsection (1AA) for the words from “which” to the end substitute “which
is not chargeable under Chapter 2 of Part 10 of CTA 2009.”
      (7)
In subsection (2) for “Case III of Schedule D” substitute “the charge to
corporation tax on income”.
5
174   (1)
Amend section 506C (sections 506A and 506B: supplemental) as follows.
      (2)
In subsection (1) for paragraph (a) substitute—
“(a)
section 105 of CTA 2009,”.
      (3)
In subsection (7)(b)(ii) after “2005” insert “or section 501(2) of CTA 2009”.
175
Omit section 509 (reserves of marketing boards etc).
10
176
In section 510A(6A) (European Economic Interest Groupings) for “Chapter
2 of Part 4 of the Finance Act 1996” and “section 87A of, and paragraphs 19
and 20 of Schedule 9 to,” substitute “Part 5 of CTA 2009” and “Chapter 9 of
that Part and sections 467 and 472 to 474 of” respectively.
177
For section 518(2) (harbour reorganisation schemes) substitute—
15
“(2)
For the purposes of provisions of the Corporation Tax Acts that
apply—
(a)
only if a person starts to carry on a trade, or
(b)
only if a person ceases to carry on a trade,

the transferor is not treated as ceasing to carry on the trade, and the
20
transferee is not treated as starting to carry it on.”
178
Omit section 524 (taxation of receipts from sale of patent rights).
179
Omit section 525 (capital sums: winding up or partnership change).
180
Omit section 526 (relief for expenses).
181
Omit section 528 (manner of making allowances and charges).
25
182
Omit section 531 (provisions supplementary to section 530).
183
Omit section 532 (application of Capital Allowances Act).
184
Omit section 533 (interpretation of sections 520 to 532).
185
Omit section 556 (activity treated as trade etc and attribution of income).
186
Omit section 558(5) and (6) (visiting performers: supplementary provisions).
30
187
In section 568(1) (deductions from profits of contributions paid under
certified schemes)—
(a)
omit “section 74 of this Act or”,
(b)
after “section 33 of ITTOIA 2005” insert “or section 53 of CTA 2009
(no deduction for capital expenditure)”, and
35
(c)
for “under Case I of Schedule D or under Part 2 of ITTOIA 2005,”
substitute “under Part 2 of ITTOIA 2005 or Part 3 of CTA 2009,”.
188
In section 570(4) (payments under certified schemes which are not
repayments of contributions), in the words after paragraph (c), for the words
from “section 337(1)” to the end substitute “section 18 of ITTOIA 2005 or
40

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
643

section 41 of CTA 2009 (company starting or ceasing to be within charge to
corporation tax) is to be treated as effecting a cessation of trading.”
189   (1)
Amend section 571 (cancellation of certificates) as follows.
      (2)
In subsection (1) omit the words from “(in” to “Schedule D)”.
      (3)
After subsection (1A) insert—
5
“(1B)
So far as relating to corporation tax, the charge to tax under
subsection (1) has effect as an application of the charge to
corporation tax on income.”
190
Omit section 577 (business entertaining expenses).
191
Omit section 577A (expenditure involving crime).
10
192
Omit section 578 (housing grants).
193
Omit sections 578A and 578B (expenditure on car hire).
194
Omit sections 579 and 580 (statutory redundancy payments).
195
Omit section 582 (funding bonds issued in respect of interest on certain
debts).
15
196
Omit section 584 (relief for unremittable overseas income).
197
Omit sections 586 and 587 (disallowance of deductions for war risk
premiums and of certain payments in respect of war injuries to employees).
198
In section 587B(2)(b) (gifts of shares, securities and real property to charities
etc) for “section 83A,” substitute “section 105 of CTA 2009 (gifts of trading
20
stock to charities etc),”.
199
Omit section 588 (training courses for employees).
200
Omit section 589A (counselling services for employees).
201
Omit section 589B(5) (interpretation of section 589A).
202
Omit section 617 (social security benefits and contributions).
25
203
Omit section 695 (limited interests in residue).
204
Omit section 696 (absolute interests in residue).
205
Omit section 697 (supplementary provisions as to absolute interests in
residue).
206
Omit section 698 (special provisions as to certain interests in residue).
30
207
Omit section 699A (untaxed sums comprised in the income of the estate).
208
In section 700 (adjustments and information)—
(a)
omit subsections (1) to (3),
(b)
in subsection (4) omit “this Part or”,
(c)
in subsection (5)—
35
(i)
omit paragraph (a),
(ii)
in paragraph (b) omit “(a) or”, and
(iii)
in the words following paragraph (b) omit the words from
“deemed” to “this Part or”, in the first place where they occur,

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
644

and the words “this Part or” in the second place where they
occur, and for “(a) to” substitute “(aa) and”, and
(d)
after subsection (6) insert—
“(7)
This section is to be read as if it were in Chapter 6 of Part 5 of
ITTOIA 2005.”
5
209
Omit section 701 (interpretation).
210
Omit section 702 (application to Scotland).
211
In section 703(3) (cancellation of corporation tax advantage) omit the words
from “(the amount” to “accordingly)”.
212
In section 709(2) (meaning of “corporation tax advantage” and other
10
expressions), in the definition of “trading stock”, for “the same meaning as
in section 100(1)” substitute “the meaning given by section 163 of CTA 2009”.
213
In section 730(6) (transfers of rights to receive distributions in respect of
shares)—
(a)
for the words from “, in respect of” to “Schedule D” substitute “be
15
chargeable, under the charge to corporation tax on income, in respect
of any distribution which is deemed to be his income by virtue of this
section,”, and
(b)
for “section 18(3B)” substitute “Chapter 6 of Part 10 of CTA 2009 (sale
of foreign dividend coupons)”.
20
214
In section 736B(2) (deemed manufactured payments in the case of stock
lending arrangements) for “section 97 of the Finance Act 1996” substitute
“Chapter 9 of Part 6 of CTA 2009”.
215
In section 736C(9) (deemed interest: cash collateral under stock lending
arrangements)—
25
(a)
in paragraph (a) for “Chapter 2 of Part 4 of the Finance Act 1996”
substitute “Part 5 of CTA 2009”, and
(b)
in paragraph (b) for “section 100” to “lending of money)” substitute
“Chapter 2 of Part 6 of that Act applies (relevant non-lending
relationships)”.
30
216
In section 747(1B) (controlled foreign companies: company residence for
purposes of Chapter), for “section 249 of the Finance Act 1994” substitute
“section 18 of CTA 2009”.
217
In section 751(3) (controlled foreign companies: accounting periods) for
“subsections (3), (5) and (7) of section 12” substitute “sections 10(1) and (5),
35
11(1) and (2) and 12 of CTA 2009”.
218   (1)
Amend section 755A (treatment of chargeable profits and creditable tax
apportioned to company carrying on life assurance business) as follows.
      (2)
In subsection (5) for “Case I of Schedule D” substitute “section 35 of CTA
2009 (charge on trade profits)”.
40
      (3)
In subsection (7) for “Case I of Schedule D” substitute “section 35 of CTA
2009”.
      (4)
In subsection (11BA)—
(a)
for “Case I profits”, in both places where it occurs, substitute “section
35 profits”, and
45