Corporation Tax Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 6 — Trading income
743

(a)
immediately before 15 March 1988 the company was non-UK
resident, having ceased to be UK resident under a Treasury consent,
and
(b)
immediately before 1 April 2009 section 66(1) of FA 1988 did not
apply to the company because of paragraph 1(1) of Schedule 7 to that
5
Act (certain companies which ceased to be UK resident before 15
March 1988 in pursuance of a Treasury consent).
      (2)
If at any time a company falling within sub-paragraph (1)—
(a)
ceases to carry on business,
(b)
becomes UK resident, or
10
(c)
if the Treasury consent was a general consent, ceases to be taxable in
a territory outside the United Kingdom,

section 14 applies in relation to the company after that time.
14    (1)
Subject to sub-paragraph (2), section 14 does not apply to a company if
immediately before 1 April 2009 section 66(1) of FA 1988 did not apply to the
15
company because of paragraph 2(1) of Schedule 7 to that Act (certain
companies which ceased to be UK resident on or after 15 March 1988 in
pursuance of a Treasury consent).
      (2)
If at any time a company falling within sub-paragraph (1)—
(a)
ceases to carry on business, or
20
(b)
becomes UK resident,

section 14 applies in relation to the company after that time.
15    (1)
In paragraph 13—
“general consent” means a consent under a section to which sub-
paragraph (2) applies which is given generally within the meaning of
25
subsection (4) of the section in question,
“taxable” means liable to tax on income by reason of domicile,
residence or place of management,
“Treasury consent” means a consent under a section to which sub-
paragraph (2) applies which is given for the purposes of subsection
30
(1)(a) of the section in question.
      (2)
This sub-paragraph applies to the following sections (restrictions on the
migration etc of companies)—
section 765 of ICTA,
section 482 of the Income and Corporation Taxes Act 1970,
35
section 468 of the Income Tax Act 1952, and
section 36 of FA 1951.
Part 6
Trading income
Hiring cars with low CO2 emissions before 1 April 2013
40
16
Section 58 does not apply to expenditure which is incurred on the hiring of
a car mentioned in that section which is first registered before 17 April 2002.
17
In relation to expenditure incurred on the hiring of a car—
(a)
for a period of hire which began before 1 April 2008, and

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Schedule 2 — Transitionals and savings
Part 6 — Trading income
744

(b)
under a contract entered into before 1 April 2008,

section 58 (in which “car with low CO2 emissions” is defined by reference to
section 45D of CAA 2001) applies as if section 45D(4) of CAA 2001 had not
been amended by section 77 of FA 2008.
Tenants under taxed leases
5
18    (1)
This paragraph relates to the operation of sections 62 to 67 where, in respect
of a lease—
(a)
there is a receipt of a Schedule A business or an overseas property
business (within the meaning of section 65A(4) or 70A(4) of ICTA) as
a result of section 34 or 35 of ICTA (treatment of premiums etc as rent
10
and assignments for profit of lease granted at an undervalue) for a
tax year before the tax year 2005-06 or an accounting period ending
before 1 April 2009, or
(b)
there would be such a receipt, but for the operation of section 37(2)
or (3) of ICTA (reductions in certain receipts under section 34 or 35
15
of ICTA).

In this paragraph and paragraphs 19 and 20 a receipt falling within
paragraph (a) or (b) is referred to as an “ICTA pre-commencement receipt”.
      (2)
For the purposes of sections 62 to 67—
(a)
the lease is treated as a taxed lease, and
20
(b)
the ICTA pre-commencement receipt is treated as a taxed receipt.
      (3)
For the purposes of those sections, the “receipt period” of a taxed receipt
which is an ICTA pre-commencement receipt is—
(a)
in the case of an ICTA pre-commencement receipt as a result of
section 34 of ICTA, the period treated in calculating the amount of
25
the receipt as being the duration of the lease, and
(b)
in the case of an ICTA pre-commencement receipt as a result of
section 35 of ICTA, the period treated in calculating the amount of
the receipt as being the duration of the lease remaining at the date of
the assignment.
30
      (4)
For the purposes of sections 62 to 67 the “unreduced amount” of a taxed
receipt which is an ICTA pre-commencement receipt is the amount of the
ICTA pre-commencement receipt as a result of section 34 or 35 of ICTA,
before the operation of section 37(2) or (3) of ICTA.
      (5)
Sub-paragraph (6) applies to a taxed receipt which is an ICTA pre-
35
commencement receipt arising as a result of section 34(2) of ICTA
(obligation on tenant to carry out work under lease).
      (6)
If the obligation to carry out work included the carrying out of work which
gave or will give rise to expenditure for which an allowance has been, or
may be, made under the enactments relating to capital allowances, the
40
unreduced amount of the taxed receipt is calculated as if the obligation had
not included the carrying out of that work.
19    (1)
This paragraph provides for the application of section 63 as a result of
section 65 if—
(a)
a lease is a taxed lease as a result of paragraph 18,
45
(b)
another lease is granted out of the taxed lease,

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 6 — Trading income
745

(c)
in calculating the amount of an ICTA pre-commencement receipt in
respect of the other lease, there is a reduction under section 37(2) or
(3) of ICTA by reference to the amount chargeable on the superior
interest for the purposes of that section, and
(d)
as a result of paragraph 18 the amount chargeable on the superior
5
interest is the taxed receipt for the purposes of section 63.
      (2)
Sections 63 to 67 apply as follows—
(a)
the ICTA pre-commencement receipt is treated as if it were a lease
premium receipt for the purposes of sections 66 and 67,
(b)
references in those sections to the reduction under section 228 by
10
reference to the taxed receipt are, in relation to the ICTA pre-
commencement receipt, to the reduction under section 37(2) or (3) of
ICTA by reference to the amount chargeable on the superior interest,
and
(c)
for the purposes of those sections the receipt period of the ICTA pre-
15
commencement receipt is—
(i)
in the case of an ICTA pre-commencement receipt as a result
of section 34 of ICTA, the period treated in calculating the
amount of the receipt as being the duration of the lease, and
(ii)
in the case of an ICTA pre-commencement receipt as a result
20
of section 35 of ICTA, the period treated in calculating the
amount of the receipt as being the duration of the lease
remaining at the date of the assignment.
      (3)
References in this paragraph and paragraph 20 to a reduction under section
37(2) or (3) of ICTA in an ICTA pre-commencement receipt by reference to
25
the amount chargeable on the superior interest are to the difference
between—
(a)
the amount of the ICTA pre-commencement receipt before the
operation of section 37(2) or (3) of ICTA, and
(b)
the amount of the receipt after the operation of that subsection,
30

so far as attributable to the amount chargeable on the superior interest for
the purposes of section 37 of ICTA.
20    (1)
This paragraph provides for the application of section 63 as a result of
section 65 if—
(a)
the taxed lease referred to in those sections is a taxed lease as a result
35
of section 227(4)(c) or (d) (lease taxed under ITTOIA 2005),
(b)
another lease is granted out of the taxed lease, and
(c)
in calculating the amount of an ICTA pre-commencement receipt in
respect of the other lease, there is a reduction under section 37(2) or
(3) of ICTA by reference to the amount chargeable on the superior
40
interest for the purposes of that section.
      (2)
Sections 63 to 67 apply as follows—
(a)
the ICTA pre-commencement receipt is treated as if it were a lease
premium receipt for the purposes of sections 66 and 67,
(b)
references in those sections to the reduction under section 228 by
45
reference to the taxed receipt are, in relation to the ICTA pre-
commencement receipt, to the reduction under section 37(2) or (3) of
ICTA by reference to the amount chargeable on the superior interest,
and

Corporation Tax Bill
Schedule 2 — Transitionals and savings
Part 6 — Trading income
746

(c)
for the purposes of those sections the receipt period of the ICTA pre-
commencement receipt is—
(i)
in the case of an ICTA pre-commencement receipt as a result
of section 34 of ICTA, the period treated in calculating the
amount of the receipt as being the duration of the lease, and
5
(ii)
in the case of an ICTA pre-commencement receipt as a result
of section 35 of ICTA, the period treated in calculating the
amount of the receipt as being the duration of the lease
remaining at the date of the assignment.
Local enterprise agencies
10
21
To the extent that any function of the Scottish Ministers under section 79 of
ICTA was, before 1 April 2009, also exercisable by the Secretary of State for
the purposes specified in section 2(2) of the European Communities Act 1972
(c. 68) that function as rewritten in—
(a)
section 83(2) (meaning of “local enterprise agency”),
15
(b)
section 84 (approval of local enterprise agencies), or
(c)
section 85 (supplementary provisions with respect to approvals),

continues to be also exercisable by the Secretary of State for those purposes.
Expenses connected with patents, designs and trade marks
22    (1)
This paragraph applies if—
20
(a)
fees have been incurred, but not paid, for the purposes of a trade in
connection with any of the matters mentioned in section 89 or 90,
(b)
the fees were incurred in a period of account no part of which falls in
an accounting period ending after 31 March 2009, and
(c)
the fees have not been taken into account in calculating the profits of
25
the trade of any accounting period.
      (2)
A deduction is allowed for the fees in calculating the profits of the period of
account in which they are paid.
Payments to Export Credits Guarantee Department
23    (1)
This paragraph applies if—
30
(a)
a sum is payable, but not paid, by the company carrying on a trade
to the Export Credits Guarantee Department under an agreement
mentioned in section 91(a) or with a view to entering into such an
agreement,
(b)
the sum was incurred in a period of account no part of which falls in
35
an accounting period ending after 31 March 2009, and
(c)
the sum has not been taken into account in calculating the profits of
the trade of any accounting period.
      (2)
A deduction is allowed for the sum in calculating the profits of the period of
account in which it is paid.
40
Reverse premiums
24    (1)
Sections 98 and 99 do not apply to a reverse premium—
(a)
which was received before 9 March 1999, or

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Schedule 2 — Transitionals and savings
Part 6 — Trading income
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(b)
to which the recipient was entitled immediately before that date.
      (2)
In determining whether a reverse premium was one to which the recipient
was entitled immediately before 9 March 1999, no account is to be taken of
any arrangements made on or after that date.
Sums recovered under insurance policies etc
5
25
Section 103 does not apply if—
(a)
a company carrying on a trade recovers a sum mentioned in that
section, and
(b)
the sum has been taken into account in calculating the profits of the
trade of an accounting period ending before 1 April 2009.
10
Meaning of “designated educational establishment”
26
To the extent that the power of the Welsh Ministers to make regulations
under section 84(5) of ICTA was, before 1 April 2009, also exercisable by the
Secretary of State for the purposes specified in section 2(2) of the European
Communities Act 1972 (c. 68), that power as rewritten in section 106
15
continues to be also exercisable by the Secretary of State for those purposes.
27
The reference in section 106(1)(a) to regulations made for England and
Scotland by the Secretary of State includes a reference to regulations made
for Great Britain by the Secretary of State before 1 July 1999.
Dealers in securities etc
20
28
The repeal by this Act of section 473(2B) of ICTA (conversion etc of securities
held as circulating capital) does not affect any election made under section
66 of FA 2002 (election to continue postponement of mark to market) before
the repeal takes effect.
Purchase or sale of woodlands
25
29
Section 134 does not apply if the purchase mentioned in subsection (2) of
that section was made under a contract entered into before 1 May 1963.
Waste disposal
30
If the predecessor ceased to carry on the trade carried on by the trader, or
ceased to carry on a trade so far as relating to the site, before 21 March 2000,
30
section 142 applies as if—
(a)
“, or a predecessor,” in subsection (1) were omitted, and
(b)
subsections (3) and (4) were omitted.
31
If the trade carried on by the trader was started before 1 April 1993, section
144(1) (definition of “waste disposal licence”) applies for the purposes of
35
sections 142 and 143 as if paragraphs (d) and (e) of that subsection were
omitted (radioactive waste and nuclear site authorisations or licences).
32
Section 144(3) does not apply for the purposes of sections 142 and 143 if the
trade was started before 1 April 1993.

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Part 7 — Property income
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Reserves of marketing authorities etc
33
In section 153(5) “approved scheme or arrangement” includes a scheme or
arrangement—
(a)
approved by the National Assembly for Wales, or
(b)
made with the National Assembly for Wales,
5

before 26 May 2007.
Adjustment on change of basis
34
Chapter 14 of Part 3 applies to a change of basis only if the first day of the
first period of account for which the new basis is adopted falls within an
accounting period that ends after 31 March 2009.
10
Part 7
Property income
Lease premiums
35
Section 217 does not apply in relation to a lease granted pursuant to a
contract entered into before 4 April 1963.
15
Lease premiums: sums payable instead of rent
36
Section 219 does not apply in relation to a lease granted—
(a)
before 6 April 1963, or
(b)
pursuant to a contract entered into before 4 April 1963.
Lease premiums: sums payable for surrender of lease
20
37
Section 220 does not apply in relation to a lease granted—
(a)
before 6 April 1963, or
(b)
pursuant to a contract entered into before 4 April 1963.
Lease premiums: assignments for profit of lease granted at undervalue
38
Section 222 does not apply in relation to a lease granted—
25
(a)
before 6 April 1963, or
(b)
pursuant to a contract entered into before 4 April 1963.
Lease premiums: pre-commencement receipts under ICTA treated as taxed receipts
39    (1)
This paragraph relates to the operation of sections 227 to 235 where, in
respect of a lease—
30
(a)
there is a receipt of a Schedule A business or an overseas property
business (within the meaning of section 65A(4) or 70A(4) of ICTA) as
a result of section 34 or 35 of ICTA (treatment of premiums etc as rent
and assignments for profit of lease granted at an undervalue) for a
tax year before the tax year 2005-06 or an accounting period ending
35
before 1 April 2009, or

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Part 7 — Property income
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(b)
there would be such a receipt, but for the operation of section 37(2)
or (3) of ICTA (reductions in certain receipts under section 34 or 35
of ICTA).

In this paragraph and paragraph 40 a receipt falling within paragraph (a) or
(b) is referred to as an “ICTA pre-commencement receipt”.
5
      (2)
For the purposes of Chapter 4 of Part 4—
(a)
the lease is treated as a taxed lease, and
(b)
the ICTA pre-commencement receipt is treated as a taxed receipt.
      (3)
For the purposes of that Chapter, the “receipt period” of a taxed receipt
which is an ICTA pre-commencement receipt is—
10
(a)
in the case of an ICTA pre-commencement receipt as a result of
section 34 of ICTA, the period treated in calculating the amount of
the receipt as being the duration of the lease, and
(b)
in the case of an ICTA pre-commencement receipt as a result of
section 35 of ICTA, the period treated in calculating the amount of
15
the receipt as being the duration of the lease remaining at the date of
the assignment.
      (4)
For the purposes of that Chapter the “unreduced amount” of a taxed receipt
which is an ICTA pre-commencement receipt is the amount of the ICTA pre-
commencement receipt as a result of section 34 or 35 of ICTA, before the
20
operation of section 37(2) or (3) of ICTA.
      (5)
Sub-paragraph (6) applies to a taxed receipt which is an ICTA pre-
commencement receipt arising as a result of section 34(2) of ICTA
(obligation on tenant to carry out work under lease).
      (6)
If the obligation to carry out work included the carrying out of work which
25
gave or will give rise to expenditure for which an allowance has been, or
may be, made under the enactments relating to capital allowances, the
unreduced amount of the taxed receipt is calculated as if the obligation had
not included the carrying out of that work.
Lease premiums: taking account of reductions under section 37(2) or (3) of ICTA
30
40    (1)
This paragraph applies if—
(a)
in calculating the amount of an ICTA pre-commencement receipt,
there is a reduction under section 37(2) or (3) of ICTA by reference to
the amount chargeable on the superior interest for the purposes of
that section, and
35
(b)
as a result of paragraph 39(1) and (2) or section 227(4)(c) or (d) (lease
taxed under ITTOIA 2005) the amount chargeable on the superior
interest is the taxed receipt for the purposes of Chapter 4 of Part 4.
      (2)
References to a reduction under section 37(2) or (3) of ICTA in an ICTA pre-
commencement receipt by reference to the amount chargeable on the
40
superior interest are to the difference between—
(a)
the amount of the ICTA pre-commencement receipt before the
operation of section 37(2) or (3) of ICTA, and
(b)
the amount of the receipt after the operation of that subsection,

so far as attributable to the amount chargeable on the superior interest for
45
the purposes of section 37 of ICTA.