House of Commons portcullis
House of Commons
Session 2008 - 09
Internet Publications
Other Bills before Parliament

Corporation Tax Bill


Corporation Tax Bill

xx

 

Chapter 12

Special rules for particular kinds of securities

Introduction

398   

Overview of Chapter

Gilt-edged securities

399   

Index-linked gilt-edged securities: basic rules

400   

Index-linked gilt-edged securities: adjustments for changes in index

401   

Gilt strips

402   

Market value of securities

403   

Meaning of “strip”

404   

Restriction on deductions etc relating to FOTRA securities

405   

Certain non-UK residents with interest on 3½% War Loan 1952 Or After

Deeply discounted securities: connected companies and close companies

406   

Introduction

407   

Postponement until redemption of debits for connected companies’ deeply

discounted securities

408   

Companies connected for section 407

409   

Postponement until redemption of debits for close companies’ deeply

discounted securities

410   

Exceptions to section 409

411   

Interpretation of section 409

412   

Persons indirectly standing in the position of creditor

Funding bonds

413   

Issue of funding bonds

414   

Redemption of funding bonds

Derivatives

415   

Loan relationships with embedded derivatives

416   

Election for application of sections 415 and 585

417   

Further provisions about elections under section 416

418   

Loan relationships treated differently by connected debtor and creditor

419   

Section 418: supplementary

Options etc

420   

Assumptions where options etc apply

Chapter 13

European cross-border transfers of business

Introduction

421   

Introduction to Chapter

 
 

Corporation Tax Bill

xxi

 

Transfers of loan relationships at notional carrying value

422   

Transfer of loan relationship at notional carrying value

423   

Transferor using fair value accounting

424   

Reorganisations involving loan relationships

425   

Original holder using fair value accounting

Exception for tax avoidance cases

426   

Tax avoidance etc

427   

Procedure on application for clearance

428   

Decision on application for clearance

Transparent entities

429   

Disapplication of Chapter where transparent entities involved

Interpretation

430   

Interpretation

Chapter 14

European cross-border mergers

Introduction

431   

Introduction to Chapter

432   

Meaning of “the transferee” and “transferor”

Transfers of loan relationships at notional carrying value

433   

Transfer of loan relationship at notional carrying value

434   

Transferor using fair value accounting

435   

Reorganisations involving loan relationships

436   

Original holder using fair value accounting

Exception for tax avoidance cases

437   

Tax avoidance etc

Transparent entities

438   

Disapplication of Chapter where transparent entities involved

Interpretation

439   

Interpretation

 
 

Corporation Tax Bill

xxii

 

Chapter 15

Tax avoidance

Introduction

440   

Overview of Chapter

Unallowable purposes and tax relief schemes

441   

Loan relationships for unallowable purposes

442   

Meaning of “unallowable purpose”

443   

Restriction of relief for interest where tax relief schemes involved

Transactions not at arm’s length: general

444   

Transactions not at arm’s length: general

445   

Disapplication of section 444 where Schedule 28AA to ICTA applies

446   

Bringing into account adjustments made under Schedule 28AA to ICTA

Transactions not at arm’s length: exchange gains and losses

447   

Exchange gains and losses on debtor relationships: loans disregarded under

Schedule 28AA to ICTA

448   

Exchange gains and losses on debtor relationships: equity notes where holder

associated with issuer

449   

Exchange gains and losses on creditor relationships: no corresponding debtor

relationship

450   

Meaning of “corresponding debtor relationship”

451   

Exception to section 449 where loan exceeds arm’s length amount

452   

Exchange gains and losses where loan not on arm’s length terms

Connected parties deriving benefit from creditor relationships

453   

Connected parties deriving benefit from creditor relationships

Tax advantages from resetting interest rates ("reset bonds")

454   

Application of fair value accounting: reset bonds etc

Disposals for consideration not fully recognised by accounting practice

455   

Disposals for consideration not fully recognised by accounting practice

Chapter 16

Non-trading deficits

456   

Introduction to Chapter

457   

Basic rule for deficits: carry forward to accounting periods after deficit period

458   

Claim to carry forward deficit to later accounting periods

459   

Claim to set off deficit against profits of deficit period or earlier periods

460   

Time limits and procedure for claims under section 459(1)

461   

Claim to set off deficit against other profits for the deficit period

 
 

Corporation Tax Bill

xxiii

 

462   

Claim to carry back deficit to earlier accounting periods

463   

Profits available for relief under section 462

Chapter 17

Priority rules

464   

Priority of this Part for corporation tax purposes

465   

Exclusion of distributions except in tax avoidance cases

Chapter 18

General and supplementary provisions

Connections between persons

466   

Companies connected for an accounting period

467   

Connections where partnerships are involved

468   

Connection between companies to be ignored in some circumstances

469   

Creditors who are financial traders

470   

Section 469: supplementary provisions

471   

Creditors who are insurance companies carrying on BLAGAB

472   

Meaning of “control”

473   

Meaning of “major interest”

474   

Treatment of connected companies and partnerships for section 473

475   

Meaning of expressions relating to exchange gains and losses

Other general definitions

476   

Other definitions

Part 6

Relationships treated as loan relationships etc

Chapter 1

Introduction

477   

Overview of Part

Chapter 2

Relevant non-lending relationships

Introduction: meaning of “relevant non-lending relationship” etc

478   

Relevant non-lending relationships: introduction

479   

Relevant non-lending relationships not involving discounts

480   

Relevant non-lending relationships involving discounts

Application of Part 5 to relevant non-lending relationships

481   

Application of Part 5 to relevant non-lending relationships

 
 

Corporation Tax Bill

xxiv

 

482   

Miscellaneous rules about amounts to be brought into account because of this

Chapter

Meaning of “money debt” and “interest” in this Chapter

483   

Exchange gains and losses: amounts treated as money debts

484   

Provision not at arm’s length: meaning of “interest” and “money debt”

Exclusions

485   

Exclusion of debts where profits or losses within Part 7 or 8

486   

Exclusion of exchange gains and losses in respect of tax debts etc

Chapter 3

OEICs, unit trusts and offshore funds

Introduction

487   

Overview of Chapter

488   

Meaning of “open-ended investment company” etc

489   

Meaning of “offshore fund” etc

Holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights

490   

Holdings in OEICs, unit trusts and offshore funds treated as creditor

relationship rights

491   

Holding coming within section 490: opening valuations

492   

Disregard of investments made and liabilities incurred with avoidance

intention etc

The qualifying investments test

493   

The qualifying investments test

494   

Meaning of “qualifying investments”

495   

Qualifying holdings

496   

Meaning of “hedging relationship”

Power to change investments that are qualifying investments

497   

Power to change investments that are qualifying investments

Chapter 4

Building Societies

498   

Building society dividends and interest

Chapter 5

Industrial and provident societies

499   

Industrial and provident society payments treated as interest under loan

relationship

 
 

Corporation Tax Bill

xxv

 

500   

Exclusion of interest where failure to make return

Chapter 6

Alternative finance arrangements

Introduction

501   

Introduction to Chapter

502   

Meaning of “financial institution”

Arrangements that are alternative finance arrangements

503   

Purchase and resale arrangements

504   

Diminishing shared ownership arrangements

505   

Deposit arrangements

506   

Profit share agency arrangements

507   

Investment bond arrangements

508   

Provision not at arm’s length: exclusion of arrangements from sections 503 to

507

Treatment as loan relationships

509   

Application of Part 5: general

510   

Application of Part 5 to particular alternative finance arrangements

Meaning of “alternative finance return”

511   

Purchase and resale arrangements

512   

Diminishing shared ownership arrangements

513   

Other arrangements

Treatment for other tax purposes

514   

Exclusion of alternative finance return from consideration for sale of assets

515   

Diminishing shared ownership arrangements not partnerships

516   

Treatment of principal under profit sharing agency arrangements

517   

Treatment of bond-holder under investment bond arrangements

518   

Investment bond arrangements: treatment as securities

519   

Investment bond arrangements: other provisions

520   

Provision not at arm’s length: non-deductibility of relevant return

Power to extend this Chapter to other arrangements

521   

Power to extend this Chapter to other arrangements

Chapter 7

Shares with guaranteed returns etc

Application of Part 5 to certain shares as rights under creditor relationship

522   

Introduction to Chapter

523   

Application of Part 5 to certain shares as rights under creditor relationship

 
 

Corporation Tax Bill

xxvi

 

Shares subject to outstanding third party obligations

524   

Shares subject to outstanding third party obligations

525   

Meaning of “interest-like investment”

Non-qualifying shares

526   

Non-qualifying shares

527   

The increasing value condition

528   

Regulations about income-producing assets

529   

The redemption return condition

530   

The redemption return condition: excepted shares

531   

The redemption return condition: unallowable purposes

532   

The associated transactions condition

533   

Power to change conditions for non-qualifying shares

Consequences of section 523 applying or ceasing to apply

534   

Amounts to be brought into account where section 523 applies

535   

Shares ceasing to be shares to which section 523 applies

Chapter 8

Returns from partnerships

536   

Introduction to Chapter

537   

Payments in return for capital contribution to partnership

538   

Change of partnership shares

Chapter 9

Manufactured interest etc

539   

Introduction to Chapter

540   

Manufactured interest treated as interest under loan relationship

541   

Debits for deemed interest under stock lending arrangements disallowed

Chapter 10

Repos

Introduction

542   

Introduction to Chapter

Creditor repos and creditor quasi-repos

543   

Meaning of creditor repo

544   

Meaning of creditor quasi-repo

545   

Ignoring effect on lender etc of sale of securities

546   

Charge on lender for finance return in respect of the advance

547   

Repo under arrangement designed to produce quasi-interest: tax avoidance

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2008
Revised 9 December 2008