Corporation Tax Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
666

PART 3

Other provisions
Description

Section 85(1) of the Finance Act
Certain receipts of basic life assurance

1989
and general annuity business

Section 85A(1) of the Finance Act
Excess adjusted life assurance trade

5

1989
profits

Paragraph 3(1) of Schedule 12 to the
Banks etc in compulsory liquidation

Finance (No 2) Act 1992

Section 256(2) of the Capital
Life assurance business: capital

Allowances Act
allowances

10

Section 131(4) of the Finance Act
Companies in partnership

2004

Section 27(2) of the Finance (No 2)
Avoidance involving tax arbitrage:

Act 2005
qualifying payments

Section 112(1) of the Finance Act
Real estate investment trusts: entry

15

2006
charge

(3)
The reference in Part 2 of the above table to Chapter 8 of Part 10 of
CTA 2009 does not include that Chapter so far as relating to income
which arises from a source outside the United Kingdom.”
274
After section 834A insert—
20
“834B
Meaning of “UK property business” and “overseas property
business”
In the enactments relating to corporation tax “UK property business”
and “overseas property business” have the meaning given by
Chapter 2 of Part 4 of CTA 2009.”
25
275
After section 834B insert—
“834C
Total profits
(1)
In the Corporation Tax Acts references to total profits, in relation to
an accounting period of a company, are to the amount arrived at by
adding together—
30
(a)
the amounts chargeable for the period under the charge to
corporation tax on income, and
(b)
any amount to be included for the period in respect of
chargeable gains (see section 8 of the 1992 Act).
(2)
Subsection (1) is subject to the provisions of the Corporation Tax
35
Acts.”
276   (1)
Amend section 842 (investment trusts) as follows.
      (2)
In subsection (1AB) for “Chapter 2 of Part 4 of the Finance Act 1996”
substitute “Part 5 of CTA 2009”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
667

      (3)
In subsection (1AC) for the words from “falls” to the end substitute “is
charged to corporation tax under section 1229(3)(b) of CTA 2009 (claw back
of relief for expenses of management)”.
      (4)
After subsection (2C) insert—
“(2D)
For the purpose of determining whether a company may be
5
approved for the purposes of this section for an accounting period,
the excess of any relevant credits arising in that period over any
relevant debits so arising is treated for the purposes of this section as
income derived from shares or securities.
(2E)
In subsection (2D) “relevant credits” and “relevant debits”, in
10
relation to an accounting period, means credits and debits which are
brought into account in respect of that period by virtue of section 574
of CTA 2009 (non-trading credits and debits to be brought into
account under Part 5 of that Act).”
277
Omit Schedule A1 (determination of profits attributable to permanent
15
establishment: supplementary provisions).
278
Omit Schedule 4AA (share incentive plans: corporation tax deductions).
279
Omit Schedule 5 (treatment of farm animals etc for purposes of Case I of
Schedule D).
280
In paragraph 13(3) of Schedule 18A (group relief: overseas losses of non-
20
resident companies) for “Schedule A purposes” substitute “the purpose of
calculating the profits of a UK property business under Part 4 of CTA 2009”.
281   (1)
Amend Schedule 19ABA (modification of life assurance provisions of the
Corporation Tax Acts in relation to BLAGAB group reinsurers) as follows.
      (2)
In paragraph 9 for “Case I of Schedule D” substitute “section 35 of CTA
25
2009”.
      (3)
In the italic cross-heading before paragraph 9 for “Case I of Schedule D”
substitute “section 35 of CTA 2009”.
      (4)
In paragraph 23 for “Case I” substitute “life assurance trade”.
      (5)
In the italic cross-heading before paragraph 23 for “Case I” substitute “life
30
assurance trade”.
282
In paragraph 6(6)(b) of Schedule 19B (petroleum extraction activities:
exploration expenditure supplement), at the end insert “or starts to be
within the charge to corporation tax in respect of such a ring fence trade.”
283   (1)
Amend Schedule 19C (petroleum extraction activities: ring fence
35
expenditure supplement) as follows.
      (2)
In paragraph 6(6)—
(a)
in paragraph (a), for “paragraph 14 of Schedule 20 to the Finance Act
2000” substitute “section 1045 of CTA 2009”, and
(b)
in paragraph (b), for “that Schedule” substitute “section 1054 of that
40
Act”.
      (3)
In paragraph 6(9) for the words from “qualifying expenditure” to “2002”
substitute “qualifying Chapter 5 expenditure as defined by section 1076 of
CTA 2009”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
668

284   (1)
Amend Schedule 23A (manufactured dividends and interest) as follows.
      (2)
In paragraph 4 (manufactured overseas dividends)—
(a)
in sub-paragraph (1A)(b) for “section 75” substitute “Part 16 of CTA
2009”, and
(b)
in sub-paragraph (9) for “section 97 of the Finance Act 1996” and
5
“Chapter II of Part IV” substitute “Chapter 9 of Part 6 of CTA 2009”
and “Part 5” respectively.
      (3)
In paragraph 7(1A) (irregular manufactured payments) for “section 97 of the
Finance Act 1996” and “Chapter II of Part IV” substitute “section 540 of CTA
2009” and “Part 5” respectively.
10
      (4)
In paragraph 7A (manufactured payments under arrangements having an
unallowable purpose)—
(a)
in sub-paragraph (8)—
(i)
in paragraph (a) for “section 75(4)(b)” substitute “section
1219(2)(b) of CTA 2009”,
15
(ii)
in paragraph (c) for “paragraph 13 of Schedule 9 to the
Finance Act 1996” substitute “section 441 of CTA 2009”, and
(iii)
in the second sentence for the words from the beginning to
“effect” substitute “The reference to section 76 is a reference
to that section as it has effect”, and
20
(b)
in sub-paragraph (10), in paragraph (c) of the definition of “relevant
tax relief” for “Chapter 2 of Part 4 of the Finance Act 1996” substitute
“Part 5 of CTA 2009”.
285   (1)
Amend Schedule 24 (assumptions for calculating chargeable profits,
creditable tax and corresponding United Kingdom tax of foreign companies)
25
as follows.
      (2)
In paragraph 1(3) (general) for “section 154(2) of the Finance Act 1996”
substitute “section 1279 of CTA 2009”.
      (3)
In paragraph 12 (unremittable overseas income)—
(a)
for “section 584” substitute “Part 18 of CTA 2009”,
30
(b)
for “paragraph (a) or paragraph (b) of subsection (1) of that section”
substitute “section 1274(3) or (4) of that Act”, and
(c)
for the words from “a notice” to “given” substitute “a claim under
section 1275 of that Act (claim for relief for unremittable income)
may be made”.
35
286   (1)
Amend Schedule 25 (cases where section 747(3) does not apply) as follows.
      (2)
In paragraph 2(1A)—
(a)
for paragraph (a) substitute—
“(a)
it is chargeable neither under Chapter 2 of Part 3 of
CTA 2009 as profits of a trade carried on wholly or
40
partly in the United Kingdom nor under section
436A (gross roll-up business: separate charge on
profits);”, and
(b)
in paragraph (b) for the words from “Case I” to “above” substitute
“Chapter 2 of Part 3 of CTA 2009 as profits of a trade carried on
45
wholly or partly in the United Kingdom, or under section 436A”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
669

      (3)
In paragraph 2(1B)(a) for “section 208” substitute “section 1285 of CTA
2009”.
      (4)
In paragraph 4(1A)—
(a)
for paragraph (a) substitute—
“(a)
it is chargeable neither under Chapter 2 of Part 3 of
5
CTA 2009 as profits of a trade carried on wholly or
partly in the United Kingdom nor under section
436A (gross roll-up business: separate charge on
profits);”, and
(b)
in paragraph (b) for the words from “Case I” to “above” substitute
10
“Chapter 2 of Part 3 of CTA 2009 as profits of a trade carried on
wholly or partly in the United Kingdom, or under section 436A”.
      (5)
In paragraph 12(6) for “Case I of Schedule D” substitute “section 35 of CTA
2009”.
287
In Schedule 26 (reliefs against liability for tax in respect of chargeable
15
profits) in paragraph 1(3)(c) for “section 75(1)” substitute “section 1219(1) of
CTA 2009”.
288   (1)
Amend Schedule 27 (distributing funds) as follows.
      (2)
In paragraph 1(1)(d)(ii)—
(a)
omit the words from “in accordance” to “(Schedule D)”,
20
(b)
for “Case III of Schedule D” substitute “Part 5 of CTA 2009 (loan
relationships) or Chapter 7 of Part 10 of that Act (annual payments
not otherwise charged)”, and
(c)
for “Case V of Schedule D” substitute “Chapter 2 of Part 10 of CTA
2009 (dividends of non-UK resident companies) or Chapter 8 of that
25
Part (income not otherwise charged)”.
      (3)
For the heading for paragraph 3 substitute “Certain foreign income”.
      (4)
In paragraph 3(1)(aa)—
(a)
in sub-paragraph (i) for “Case III of Schedule D” substitute “Part 5 of
CTA 2009 (loan relationships) or Chapter 7 of Part 10 of that Act
30
(annual payments not otherwise charged)”, and
(b)
in sub-paragraph (ii) for “Case V of Schedule D” substitute “Chapter
2 of Part 10 of CTA 2009 (dividends of non-UK resident companies)
or Chapter 8 of that Part (income not otherwise charged)”.
      (5)
In paragraph 4(3)(b) for “section 75” substitute “section 1219 of CTA 2009”.
35
      (6)
In paragraph 5(3)—
(a)
in paragraph (c) for “section 208” substitute “section 1285 of CTA
2009”,
(b)
in paragraph (d) for “Chapter 2 of Part 4 of the Finance Act 1996”
substitute “Part 5 of CTA 2009”, and
40
(c)
in paragraph (e) for “Schedule 26 to the Finance Act 2002” substitute
“Part 7 of CTA 2009”.
      (7)
In paragraph 5(5) for “section 154(2) of the Finance Act 1996” substitute
“section 1279 of CTA 2009”.
289   (1)
Amend Schedule 28A (change in ownership of company with investment
45
business deductions) as follows.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
670

      (2)
In paragraph 6 (amounts in issue for purposes of section 768B)—
(a)
in sub-paragraph (a)—
(i)
for “within the meaning of section 75” substitute “within the
meaning of Chapter 2 of Part 16 of CTA 2009”, and
(ii)
for “under section 75” substitute “under section 1219 of CTA
5
2009 (expenses of management of a company’s investment
business)”,
(b)
in sub-paragraph (c) for “section 75(9)” substitute “section 1223 of
CTA 2009 (expenses of management carried forward)”,
(c)
in sub-paragraph (d) for “section 75(7)” substitute “section 1233 of
10
CTA 2009 (excess capital allowances)”,
(d)
in sub-paragraph (da) for “Case III profits and gains” substitute
“non-trading profits”,
(e)
in sub-paragraph (db) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”,
15
(f)
in sub-paragraph (dc) for “section 83(3A) of the Finance Act 1996”
substitute “section 457(1) of CTA 2009”,
(g)
omit sub-paragraph (dd),
(h)
in sub-paragraph (de) for “paragraph 34 of Schedule 29 to the
Finance Act 2002” substitute “section 751 of CTA 2009”, and
20
(i)
in sub-paragraph (df) for “paragraph 35(3) of that Schedule”
substitute “section 753(3) of CTA 2009”.
      (3)
In paragraph 6A—
(a)
for “Case III profits and gains” substitute “non-trading profits”,
(b)
for sub-paragraph (a) substitute—
25
“(a)
the amount of the profits arising from the
company’s loan relationships chargeable under
section 299 of CTA 2009 (charge to tax on non-
trading profits),”, and
(c)
in the words following sub-paragraph (b) for “to (dd)” substitute “or
30
(dc)”.
      (4)
In paragraph 7(1)—
(a)
in sub-paragraph (d)(ii) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”,
(b)
in sub-paragraph (d)(iii) for “paragraph 2(2) of Schedule 9 to”
35
substitute “section 373 of”,
(c)
in sub-paragraph (d)(iv) for “paragraph 17 or 18 of that Schedule”
substitute “sections 406 to 412 of that Act”, and
(d)
in sub-paragraph (e)(ii) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”.
40
      (5)
In paragraph 9—
(a)
in sub-paragraph (1) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”, and
(b)
in sub-paragraph (2)(b) for “that Chapter” substitute “that Part”.
      (6)
In paragraph 10—
45
(a)
in sub-paragraph (1) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”, and
(b)
in sub-paragraph (3)(b) for “paragraph 1(2) of Schedule 8 to the
Finance Act 1996” substitute “section 461 of CTA 2009”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
671

      (7)
In paragraph 11—
(a)
in sub-paragraph (1)(a) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”,
(b)
in sub-paragraph (1)(b)(i) for “paragraph 17 or 18 of Schedule 9 to”
substitute “sections 406 to 412 of”,
5
(c)
in sub-paragraph (1)(b)(ii) for “sub-paragraph (2) of paragraph 2 of
that Schedule” substitute “section 373(1) of that Act”,
(d)
in sub-paragraph (1)(c) for “paragraphs 2(2), 17 and 18 of that
Schedule” substitute “sections 373 and 406 to 412 of that Act”,
(e)
omit sub-paragraph (2),
10
(f)
in sub-paragraph (3)(a) omit “or (2)”, and
(g)
in sub-paragraph (3)(c) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”.
      (8)
In paragraph 12 for “Chapter II of Part IV of the Finance Act 1996” and “that
Chapter” substitute “Part 5 of CTA 2009” and “that Part” respectively.
15
      (9)
In paragraph 13—
(a)
in sub-paragraph (1)(ea) for “Case III profits and gains” substitute
“non-trading profits”,
(b)
in sub-paragraph (1)(eb) for “Chapter II of Part IV of the Finance Act
1996” substitute “Part 5 of CTA 2009”,
20
(c)
in sub-paragraph (1)(ec) for “section 83(3A) of the Finance Act 1996”
substitute “section 457(1) of CTA 2009”,
(d)
omit sub-paragraph (1)(ed),
(e)
in sub-paragraph (ee) for “paragraph 34 of Schedule 29 to the Finance
Act 2002” substitute “section 751 of CTA 2009”, and
25
(f)
in sub-paragraph (ef) for “paragraph 35(3) of that Schedule”
substitute “section 753(3) of CTA 2009”.
     (10)
In paragraph 16—
(a)
in sub-paragraph (1)(d)(ii) for “Chapter II of Part IV of the Finance
Act 1996” substitute “Part 5 of CTA 2009”,
30
(b)
in sub-paragraph (1)(d)(iii) for “paragraph 2(2) of Schedule 9 to”
substitute “section 373(1) of”,
(c)
in sub-paragraph (1)(d)(iv) for “paragraph 17 or 18 of that Schedule”
substitute “sections 406 to 412 of that Act”,
(d)
in sub-paragraph (1)(e)(ii) for “Chapter II of Part IV of the Finance
35
Act 1996” substitute “Part 5 of CTA 2009”, and
(e)
omit sub-paragraph (1)(f).
290   (1)
Amend Schedule 28AA (provision not at arm’s length) as follows.
      (2)
In paragraph 6A(3) for the words from “the same meaning as” to the end
substitute “the meaning given by section 174 of ITTOIA 2005 or section 163
40
of CTA 2009.”
      (3)
In paragraph 6E—
(a)
omit “Case III of Schedule D or”, and
(b)
after “2005” insert “or required to be brought into account under Part
5 of CTA 2009 as a non-trading credit”.
45
      (4)
In the heading above paragraph 6E for “chargeable under Case III of
Schedule D” substitute “chargeable”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
672

      (5)
Omit paragraph 8(1), (3) and (4).
      (6)
In paragraph 14(1), in the definition of “losses”—
(a)
in paragraph (a) for “section 75(9)” substitute “section 1223 of CTA
2009”, and
(b)
for paragraph (d) substitute—
5
“(d)
sections 387 to 391 or Chapter 16 of Part 5 of CTA
2009 (deficits on loan relationships);”.
291   (1)
Amend Schedule 30 (transitional provisions and savings) as follows.
      (2)
Omit paragraphs 2 to 4.
      (3)
Omit paragraph 5.
10
      (4)
In paragraph 7(5)(b) after “business” insert “, or begins to carry on a trade,”.
Part 2
Other enactments
Finance Act 1950 (c. 15)
292
The Finance Act 1950 is amended as follows.
15
293
In section 39(3) (treatment for taxation purposes of enemy debts etc written
off during the war), in paragraph (b) of the proviso—
(a)
in sub-paragraph (i) for “section 75(1) of the Income and Corporation
Taxes Act 1988” substitute “section 1219 of the Corporation Tax Act
2009”, and
20
(b)
in sub-paragraph (ii) for “that Act” substitute “the Income and
Corporation Taxes Act 1988”.
Taxes Management Act 1970 (c. 9)
294
The Taxes Management Act 1970 is amended as follows.
295
In section 12(5) (information about chargeable gains) for “section 100(2) of
25
the principal Act” substitute “section 163 of CTA 2009”.
296
Omit section 12AE (choice between different Cases of Schedule D).
297
In section 17 (interest paid or credited by banks, building societies etc
without deduction of income tax) after subsection (7) insert—
“(8)
References in this section to interest include references to—
30
(a)
alternative finance return within the meaning of Chapter 5 of
Part 2 of the Finance Act 2005 (see section 57 of that Act), and
(b)
alternative finance return within the meaning of Chapter 6 of
Part 6 of CTA 2009 (see sections 511 to 513 of that Act).”
298
In section 18 (interest paid without deduction of income tax) at the end
35
insert—
“(5)
References in this section to interest include references to—
(a)
alternative finance return within the meaning of Chapter 5 of
Part 2 of the Finance Act 2005 (see section 57 of that Act), and