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 2 — Other enactments
715

(a)
in sub-paragraph (2) for “Schedule 26 to the Finance Act 2002 (c. 23)”
substitute “Part 7 of the Corporation Tax Act 2009”, and
(b)
in sub-paragraph (3)—
(i)
for “Schedule 26 to the Finance Act 2002” substitute “Part 7 of
the Corporation Tax Act 2009”, and
5
(ii)
for “that Schedule” substitute “that Part”.
      (4)
In paragraph 15(4), in the definition of “relevant trading profits and losses”
for the words from “under” to the end substitute “under Part 3 of the
Corporation Tax Act 2009 in respect of the trade or part of a trade in question
for periods in which the trade was carried on wholly or partly in the United
10
Kingdom.”
      (5)
In paragraph 23—
(a)
in sub-paragraph (2) for “Chapter 2 of Part 4 of the Finance Act 1996
(c. 8)” substitute “Part 5 of the Corporation Tax Act 2009”, and
(b)
in sub-paragraph (3) for “Chapter 2 of Part 4 of the Finance Act 1996
15
(c. 8)” and “that Chapter” substitute “Part 5 of the Corporation Tax
Act 2009” and “that Part” respectively.
      (6)
In paragraph 24(2) for “Schedule 26 to the Finance Act 2002 (c. 23)” substitute
“Part 7 of the Corporation Tax Act 2009”.
      (7)
In paragraph 24(3)—
20
(a)
for “Schedule 26 to the Finance Act 2002” substitute “Part 7 of the
Corporation Tax Act 2009”, and
(b)
for “that Schedule” substitute “that Part”.
      (8)
In paragraph 27(4), in the definition of “relevant trading profits and losses”
for the words from “under” to the end substitute “under Part 3 of the
25
Corporation Tax Act 2009 in respect of the trade or part of a trade in question
for periods in which the trade was carried on wholly or partly in the United
Kingdom.”
      (9)
In paragraph 33—
(a)
in paragraph (a) for “Chapter 2 of Part 4 of the Finance Act 1996 (c.
30
8)” substitute “Part 5 of the Corporation Tax Act 2009”, and
(b)
in paragraph (b) for “Schedule 26 to the Finance Act 2002 (c. 23)”
substitute “Part 7 of the Corporation Tax Act 2009”.
Income Tax (Trading and Other Income) Act 2005 (c. 5)
586
The Income Tax (Trading and Other Income) Act 2005 is amended as
35
follows.
587
In section 22(2)(b) (payments for wayleaves) for “would otherwise be
brought into account in calculating the profits” substitute “incurred by the
trader in respect of the wayleave would otherwise be brought into account
in calculating profits”.
40
588   (1)
Amend section 48 (car or motor cycle hire) as follows.
      (2)
In subsection (3) for “the deduction is reduced as a result of subsection (2)”
substitute “a deduction is reduced as a result of subsection (2), or a
corresponding provision,”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
716

      (3)
In subsection (4)(a) omit “under section 97 (debts incurred and later
released)”.
      (4)
After subsection (4) insert—
“(4A)
In this section “corresponding provision” means—
(a)
section 56(2) of CTA 2009 (car or motor cycle hire: trade
5
profits and property income),
(b)
section 1251(2) of CTA 2009 (car or motor cycle hire: expenses
of management), or
(c)
section 76ZN(2) of ICTA (car or motor cycle hire: expenses of
insurance companies).”
10
589
In section 49(2)(b) (car or motor cycle hire: supplementary) after “the car”
insert “or motor cycle”.
590
In section 60(6) (tenants under taxed leases: introduction) after “288” insert
“below or section 228 of CTA 2009”.
591   (1)
Amend section 64 (restriction on section 61 expenses: lease premium
15
receipts) as follows.
      (2)
For subsection (1) substitute—
“(1)
This section applies if a lease has been granted out of the taxed lease
and—
(a)
in calculating the amount of a receipt of a property business
20
under Chapter 4 of Part 3 (profits of property businesses:
lease premiums etc) in respect of the lease, there is a
reduction under section 288 (the additional calculation rule)
by reference to the taxed receipt, or
(b)
in calculating the amount of a receipt of a property business
25
under Chapter 4 of Part 4 of CTA 2009 (profits of a property
business: lease premiums etc) in respect of the lease, there is
a reduction under section 228 of that Act (the additional
calculation rule) by reference to the taxed receipt.

In this section and sections 65 and 67 the receipt that is so reduced is
30
referred to as a “lease premium receipt”.”
      (3)
In subsection (6) after “288” insert “below or section 228 of CTA 2009”.
592
In section 65(1)(a) (restrictions on section 61 expenses: lease of part of
premises) for “the conditions in section 64(1)(a) and (b) are met” substitute
“section 64 applies”.
35
593
In the title of section 66 (corporation tax receipts treated as taxed receipts)
after “tax receipts” insert “under ICTA”.
594   (1)
Amend section 67 (restrictions on section 61 expenses: corporation tax
receipts) as follows.
      (2)
In subsection (3)(a), after “2005” insert “but before 1st April 2009”.
40
      (3)
In the title after “receipts” insert “under ICTA”.
595   (1)
Amend section 71 (educational establishments) as follows.
      (2)
In subsection (3)—

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
717

(a)
in paragraph (a) for “education or library board” substitute
“education and library board”, and
(b)
in paragraph (b) for “or a controlled, maintained, grant-maintained
integrated, controlled integrated, voluntary or” substitute “, a grant-
aided school or an”.
5
596
Omit section 79(2) (additional payments: change in persons carrying on the
trade).
597
After section 79 insert—
“79A
Additional payments: change in the persons carrying on the trade
(1)
This section deals with the application of section 79 in circumstances
10
where there is a change in the persons carrying on the trade.
(2)
The employer is treated for the purposes of section 79 as
permanently ceasing to carry on the trade unless a person carrying
on the trade immediately before the change continues to carry it on
after the change.”
15
598
In section 80(2) (payments made by the Government) for “79” substitute
“79A”.
599
In section 88(6)(b) (payments to research associations, universities etc)
before “what” insert “to”.
600   (1)
Amend section 155 (levies and repayments under FISMA 2000) as follows.
20
      (2)
In subsection (1) omit the words from “carried” to the end.
      (3)
For subsection (2) substitute—
“(2)
A deduction is allowed for any sum—
(a)
spent by the person carrying on the trade in paying a levy, or
(b)
paid by that person as a result of an award of costs under
25
costs rules,

so far as it is not otherwise allowable.”
      (4)
In subsection (3) after “person” insert “carrying on the trade”.
      (5)
After subsection (3) insert—
“(3A)
For the purposes of this section “costs rules” means—
30
(a)
rules made under section 230 of FISMA 2000, or
(b)
provision relating to costs contained in standard terms fixed
under paragraph 18 of Schedule 17 to FISMA 2000.”
      (6)
In subsection (4)(e) for the words from “(other” to the end substitute “(other
than a sum paid as a result of an award of costs under costs rules)”.
35
601
In section 158(1)(d) (lease premiums etc: reduction of receipts) for “term”
substitute “terms”.
602
In section 170(3)(b) (deduction for capital expenditure) for “section 91(1)(b)
of ICTA” substitute “section 147(2)(b) of CTA 2009” and for “section 91(1)(a)
of ICTA substitute “section 147(2)(a) of CTA 2009”.
40
603
In section 171(2)(d) (allocation of ancillary capital expenditure) for “section
91(1)(b) of ICTA,” substitute “section 147(2)(b) of CTA 2009”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
718

604
In section 175(2) (basis of valuation of trading stock)—
(a)
in paragraph (a) after “trade” insert “, profession or vocation”, and
(b)
in paragraph (b) after “trade” insert “, profession or vocation”.
605
In section 176(1)(a) (sale basis of valuation: sale to unconnected person) after
“trade”, in both places where it occurs, insert “, profession or vocation”.
5
606
In section 177(1)(a) (sale basis of valuation: sale to connected person) after
“trade”, in both places where it occurs, insert “, profession or vocation”.
607
In section 178(1)(a) (sale basis of valuation: election by connected persons)
after “trade”, in both places where it occurs, insert “, profession or vocation”.
608   (1)
Amend section 180 (cost to buyer of stock valued on sale basis of valuation)
10
as follows.
      (2)
In subsection (1) after “trade” insert “, profession or vocation”.
      (3)
In subsection (2)(b) for “section 100(1A) to (1C) of ICTA” substitute “section
164(3) or sections 165 to 167 of CTA 2009”.
609
In section 184(1) (basis of valuation of work in progress)—
15
(a)
in paragraph (a) after “a” insert “trade,” and
(b)
in paragraph (b) after “that” insert “trade,”.
610
In section 194(7) (disposal of know-how as part of disposal of all or part of
trade)—
(a)
in paragraph (a) for “subsection (3) of section 531 of ICTA” substitute
20
“section 178 of CTA 2009”, and
(b)
for “that subsection”, in both places where it occurs, substitute “that
section”.
611
In section 246(2) (basic meaning of “post-cessation receipt”) for the words
from “the occurrence” to the end substitute “a reference to a company
25
ceasing to be within the charge to corporation tax in respect of a trade.”
612
In section 249(3) (debts released after cessation) for the words from “the
occurrence” to the end substitute “a reference to a company ceasing to be
within the charge to corporation tax in respect of a trade.”
613
In section 276(3) (introduction to Chapter 4 of Part 3) for “term” substitute
30
“terms”.
614
In section 279(3) for “or of” substitute “of or”.
615
In the title of section 281 (sums payable for variation or waiver of term of
lease) for “term” substitute “terms”.
616   (1)
Amend section 287 (circumstances in which additional calculation rule
35
applies) as follows.
      (2)
In subsection (1) for “term” substitute “terms”.
      (3)
In subsection (4)—
(a)
omit the “or” immediately before paragraph (b),
(b)
in paragraph (b) for “additional calculation rule” substitute “rule in
40
section 288 (the additional calculation rule)”,

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
719

(c)
after paragraph (b) insert—
“(c)
there is a receipt under any of sections 217 to 222 of
CTA 2009 (receipts in respect of lease premiums,
sums payable instead of rent, for surrender of lease
and for variation or waiver of terms of lease and
5
assignments) in respect of the lease, or
(d)
there would be such a receipt, but for the operation of
the rule in section 228 of that Act (the additional
calculation rule) in the calculation of its amount.”,
and
10
(d)
in the second sentence for “such a receipt” substitute “a receipt
falling within paragraph (a), (b), (c) or (d)”.
617   (1)
Amend section 288 (the additional calculation rule) as follows.
      (2)
In subsection (4)—
(a)
for “282,” substitute “282 above, or in section 217, 219, 220, 221 or 222
15
of CTA 2009,”, and
(b)
after “section 290(2) to (4)” insert “above”.
      (3)
In subsection (6)—
(a)
omit the “and” immediately before paragraph (d), and
(b)
after paragraph (d) insert “, and
20
(e)
in the case of a receipt under Chapter 4 of Part 4 of
CTA 2009 (profits of property businesses: lease
premiums etc), its receipt period within the meaning
of that Chapter (see section 228(6) of that Act).”
618   (1)
Amend section 290 (meaning of “unused amount” and “unreduced
25
amount”) as follows.
      (2)
In subsection (2) for the words from “formula” to the end substitute
“formula in—
(a)
section 277, 279, 280, 281 or 282 above, or
(b)
section 217, 219, 220, 221 or 222 of CTA 2009 (corporation tax
30
provisions corresponding to those listed in paragraph (a)).”
      (3)
For subsection (3) substitute—
“(3)
Subsection (4) applies—
(a)
to a taxed receipt under section 277 (lease premiums) as a
result of section 278 (amount treated as lease premium where
35
work required), and
(b)
to a taxed receipt under section 217 of CTA 2009 (lease
premiums) as a result of section 218 of that Act (amount
treated as lease premium where work required).”
      (4)
In subsection (5)—
40
(a)
in paragraph (a) after “288” insert “above or section 228 of CTA 2009
(the additional calculation rule)”,
(b)
in paragraph (b) after “61” insert “above or section 63 of CTA 2009”,
and
(c)
in paragraph (c) after “292” insert “below or section 232 of CTA
45
2009”.
      (5)
In subsection (6)—

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
720

(a)
after “288” insert “above or section 228 of CTA 2009”, and
(b)
for “that section” substitute “the section concerned”.
619   (1)
Amend section 293 (restrictions on section 292 expenses: the additional
calculation rule) as follows.
      (2)
For subsection (1) substitute—
5
“(1)
This section applies if—
(a)
in calculating the amount of a receipt under this Chapter
there is a reduction under section 288 (the additional
calculation rule) by reference to a taxed receipt, or
(b)
in calculating the amount of a receipt under Chapter 4 of Part
10
4 of CTA 2009 (profits of a property business: lease premiums
etc) there is a reduction under section 228 of that Act (the
additional calculation rule) by reference to a taxed receipt.

The receipt that is so reduced is referred to in this section as the “lease
premium receipt”.”
15
      (3)
In subsection (6) after “288” insert “above or section 228 of CTA 2009”.
620
For section 294(1)(c) (restriction on section 292 expenses: lease of part of
premises) substitute—
“(c)
the condition in subsection (1A) is met.
(1A)
The condition is that—
20
(a)
in calculating the amount of a receipt under any of sections
277 to 281 (receipts in respect of lease premiums or sums
payable instead of rent, for surrender of lease or for variation
or waiver of terms of lease) in respect of the lease, there is a
reduction under section 288 by reference to a taxed receipt, or
25
(b)
in calculating the amount of a receipt under any of sections
217 to 221 of CTA 2009 (receipts in respect of lease premiums
or sums payable instead of rent, for surrender of lease or for
variation or waiver of terms of lease) in respect of the lease,
there is a reduction under section 228 of that Act (the
30
additional calculation rule) by reference to a taxed receipt.

The receipt that is so reduced is referred to in this section as the “lease
premium receipt”.”
621
For section 295(2)(b) (limit on reductions and deductions) substitute—
“(b)
the total of the amounts mentioned in subsection (3).
35
(3)
Those amounts are—
(a)
the reductions under section 228 of CTA 2009 (the additional
calculation rule) by reference to the taxed receipt,
(b)
the deductions allowed in calculating the profits of a
property business for expenses under section 232 of CTA
40
2009 (tenant under taxed lease which uses premises for
purposes of property business treated as incurring expenses)
by reference to the taxed receipt, and
(c)
the deductions allowed in calculating the profits of a trade,
profession or vocation for expenses under section 61 above or
45
section 63 of CTA 2009 (tenant under taxed lease who uses
land in connection with trade treated as incurring expenses)
by reference to the taxed receipt.”

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
721

622
In section 296(1)(a) (corporation tax receipts treated as taxed receipts) after
“2005” insert “but before 1st April 2009”.
623
In section 298 (taking account of deductions for rent as a result of section
37(4) or 87(2) of ICTA)—
(a)
in subsections (1)(a) and (3)(a) after “2005” insert “but before 1st
5
April 2009”, and
(b)
in subsection (2) for “295(2)(b)” substitute “295(3)(c)”.
624
In section 299(1)(b) (payment of tax by instalments) for “term” substitute
“terms”.
625   (1)
Amend section 303 (rules for determining effective duration of lease) as
10
follows.
      (2)
For Rule 1 substitute—
“Rule 1: If—
(a)
the terms of the lease or any other circumstances
make it unlikely that the lease will continue beyond a
15
date before the end of the term for which the lease
was granted, and
(b)
the premium was not substantially greater than it
would have been had the term been one ending on
that date,
20
the lease is treated as ending on that date (or the earliest such
date).”
      (3)
After subsection (2) insert—
“(2A)
In Rule 1 “premium” includes—
(a)
an amount treated as a premium under section 278 (amount
25
treated as lease premium where work required),
(b)
a sum payable by the tenant under the terms subject to which
the lease is granted instead of the whole or a part of the rent
for a period,
(c)
a sum payable by the tenant under the terms subject to which
30
the lease is granted as consideration for the surrender of the
lease, and
(d)
a sum payable by the tenant (otherwise than by way of rent)
as consideration for the variation or waiver of a term of the
lease.”
35
626   (1)
Amend section 304 (applying the rules in section 303) as follows.
      (2)
In subsection (1)(b) for “term” substitute “terms”.
      (3)
In subsection (4) for the words from “securing” to the end substitute
“securing—
(a)
an income tax advantage in the application of this Chapter, or
40
(b)
a corporation tax advantage in the application of Chapter 4 of
Part 4 of CTA 2009 (profits of property business: lease
premiums etc).”
      (4)
In subsection (5) after “applying” insert “paragraph (b) of”.
627
In section 318(4) for “section 30 of ICTA” substitute “sections 255 to 257 of
45
CTA 2009”.