Corporation Tax Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 4 — Property income
Chapter 9 — Post-cessation receipts
125

279
Extent of charge to tax
(1)
Rent receivable for a UK electric-line wayleave is not chargeable to tax under
this Chapter for an accounting period if—
(a)
a company carries on a UK property business in relation to some or all
of the land to which the wayleave relates, and
5
(b)
receipts (other than rents receivable for UK electric-line wayleaves) in
respect of some or all of that land are brought into account in
calculating the profits of the business of the accounting period.
(2)
In such a case, the rent receivable for the UK electric-line wayleave is brought
into account in calculating the profits of the company’s UK property business.
10
(3)
The rules for determining whether an amount is chargeable to tax under this
Chapter also need to be read with section 45(2) (payments for wayleaves if
company carries on a trade).
(4)
That subsection secures that an amount which would otherwise be chargeable
to tax under this Chapter may be brought into account instead in calculating
15
the profits of a trade.
Chapter 9
Post-cessation receipts
Charge to tax on post-cessation receipts
280
Charge to tax on post-cessation receipts
20
The charge to corporation tax on income applies to post-cessation receipts
arising from a UK property business.
281
Extent of charge to tax
(1)
A post-cessation receipt is chargeable to tax under this Chapter only so far as
the receipt is not otherwise chargeable to corporation or income tax.
25
(2)
Accordingly, a post-cessation receipt arising from a UK property business is
not chargeable to tax under this Chapter so far as it is brought into account in
calculating the profits of the business of any period.
Meaning of “post-cessation receipts”
282
Basic meaning of “post-cessation receipt”
30
(1)
In this Chapter “post-cessation receipt” means a sum—
(a)
which is received after a person permanently ceases to carry on a UK
property business, and
(b)
which arises from the carrying on of the business before the cessation.
(2)
In this Chapter, except in section 284, references to a UK property business
35
include one within the charge to income tax and references to a person
permanently ceasing to carry on a UK property business include—

Corporation Tax Bill
Part 4 — Property income
Chapter 9 — Post-cessation receipts
126

(a)
in the case of a company, the occurrence of an event treated under
section 362 of ITTOIA 2005 (company starting or ceasing to be within
charge to income tax) as the company permanently ceasing to carry on
the business, and
(b)
in the case of a UK property business carried on by a person in
5
partnership, the occurrence of an event treated under section 353(3) of
ITTOIA 2005 (basic meaning of “post-cessation receipt”) as the person
permanently ceasing to carry on the business.
283
Other rules about what counts as a “post-cessation receipt”
(1)
Section 284 (transfer of rights if transferee does not carry on UK property
10
business) treats certain amounts as being, or not being, post-cessation receipts
for the purposes of this Chapter.
(2)
The following provisions (which treat certain amounts as post-cessation
receipts) apply for the purposes of this Chapter as they apply for the purposes
of Chapter 15 of Part 3 (but as if any reference to a trade were to a UK property
15
business)—
section 82(6) (contributions to local enterprise organisations or urban
regeneration companies),
section 101(3) (distribution of assets of mutual concerns),
section 108(3) (receipt of benefits by donor or connected person),
20
section 192 (debts paid after cessation), and
section 193 (debts released after cessation), as qualified, where
appropriate, by section 56(4) (car or motor cycle hire).
(3)
This Chapter also needs to be read with—
(a)
section 249(3) (which treats certain amounts as not being post-cessation
25
receipts), and
(b)
section 1277 (which treats certain income as a post-cessation receipt:
unremittable income).
284
Transfer of rights if transferee does not carry on UK property business
(1)
This section applies if—
30
(a)
a company (“the transferor”) permanently ceases to carry on a UK
property business,
(b)
the transferor transfers to another person (“the transferee”) for value
the right to receive sums arising from the carrying on of any business
(“the transferred business”) comprised in the transferor’s UK property
35
business, and
(c)
the transferee does not subsequently carry on the transferred business.
(2)
The transferor is treated as receiving a post-cessation receipt.
(3)
The amount of the receipt is—
(a)
the amount or value of the consideration for the transfer, if the transfer
40
is at arm’s length, or
(b)
the value of the rights transferred as between parties at arm’s length, if
the transfer is not at arm’s length.
(4)
Any sums mentioned in subsection (1)(b) which are received after the cessation
of the property business are not post-cessation receipts.
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Corporation Tax Bill
Part 4 — Property income
Chapter 10 — Supplementary
127

Deductions
285
Allowable deductions
Sections 196 and 197 apply for the purposes of this Chapter as they apply for
the purposes of Chapter 15 of Part 3 (but as if any reference to a trade were to
a UK property business).
5
Election to carry back
286
Election to carry back
Sections 198 to 200 apply for the purposes of this Chapter as they apply for the
purposes of Chapter 15 of Part 3 (but as if any reference to a trade were to a UK
property business).
10
Chapter 10
Supplementary
Priority rules
287
Provisions which must be given priority over this Part
Any receipt or other credit item, so far as it falls within—
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(a)
Chapter 3 of this Part so far as it relates to an overseas property business
or Chapter 7 or 8 of this Part (rent receivable in connection with a UK
section 39(4) concern or for UK electric-line wayleaves), and
(b)
Chapter 2 of Part 3 (receipts of a trade),
is dealt with under Part 3.
20
288
Priority between Chapters within this Part
(1)
Any receipt, so far as it falls within—
(a)
Chapter 3 so far as it relates to a UK property business, and
(b)
Chapter 7 (rent receivable in connection with a UK section 39(4)
concern),
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is dealt with under Chapter 7.
(2)
Any receipt, so far as it falls within—
(a)
Chapter 3 so far as it relates to a UK property business, and
(b)
Chapter 8 (rent receivable for UK electric-line wayleaves),

is dealt with under Chapter 8.
30
(3)
Any receipt, so far as it falls within Chapter 7 (rent receivable in connection
with a UK section 39(4) concern) and Chapter 8 (rent receivable for UK electric-
line wayleaves), is dealt with under Chapter 8.

Corporation Tax Bill
Part 5 — Loan Relationships
Chapter 1 — Introduction
128

Other supplementary provisions
289
Effect of company starting or ceasing to be within charge to corporation tax
(1)
This section applies if a company starts or ceases to be within the charge to
corporation tax in respect of a property business.
(2)
The company is treated for the purposes of this Part—
5
(a)
as starting to carry on the business when it starts to be within the
charge, or
(b)
as ceasing to carry on the business when it ceases to be within the
charge.
290
Overseas property businesses and overseas land: adaptation of rules
10
(1)
This section applies if a provision of this Part—
(a)
applies to an overseas property business or land outside the United
Kingdom, but
(b)
is expressed by reference to a domestic concept of law.
(2)
In relation to that business or land, the provision is to be read so as to produce
15
the result most closely corresponding with that produced by the provision in
relation to a UK property business or land in the United Kingdom.
291
Meaning of “lease” and “premises”
(1)
In this Part “lease” includes—
(a)
an agreement for a lease (so far as the context permits), and
20
(b)
any tenancy,

but does not include a mortgage.
(2)
In this Part “premises” includes land.
Part 5
Loan Relationships
25
Chapter 1
Introduction
Introduction
292
Overview of Part
(1)
This Part sets out how profits and deficits arising to a company from its loan
30
relationships are brought into account for corporation tax purposes.
(2)
For the meaning of “loan relationship” see section 302 and Part 6 (relationships
treated as loan relationships etc).
(3)
For how such profits and deficits are calculated and brought into account,
see—
35

Corporation Tax Bill
Part 5 — Loan Relationships
Chapter 1 — Introduction
129

(a)
section 296 (profits and deficits to be calculated using credits and debits
given by this Part),
(b)
section 297 (trading credits and debits to be brought into account under
Part 3),
(c)
section 299 (charge to tax on non-trading profits),
5
(d)
section 300 (method of bringing non-trading deficits into account),
(e)
section 301 (calculation of non-trading profits and deficits from loan
relationships: non-trading credits and debits), and
(f)
Chapter 16 (non-trading deficits).
(4)
For the priority of this Part for corporation tax purposes, see Chapter 17.
10
(5)
This Part also contains the following Chapters (which mainly relate to the
amounts to be brought into account for the purposes of this Part)—
(a)
Chapter 3 (the credits and debits to be brought into account: general),
(b)
Chapter 4 (continuity of treatment on transfers within groups or on
reorganisations),
15
(c)
Chapter 5 (connected companies relationships: introduction and
general),
(d)
Chapter 6 (connected companies relationships: impairment losses and
releases of debts),
(e)
Chapter 7 (group relief claims involving impaired or released
20
consortium debts),
(f)
Chapter 8 (connected parties relationships: late interest),
(g)
Chapter 9 (partnerships involving companies),
(h)
Chapter 10 (insurance companies),
(i)
Chapter 11 (other special kinds of company),
25
(j)
Chapter 12 (special rules for particular kinds of securities),
(k)
Chapter 13 (European cross-border transfers of business),
(l)
Chapter 14 (European cross-border mergers),
(m)
Chapter 15 (tax avoidance),
(n)
Chapter 18 (general and supplementary provisions).
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(6)
This Part needs to be read with Part 19 (general exemptions).
293
Construction of references to profits or losses from loan relationships
(1)
In this Part references to profits or losses from loan relationships include
references to profits or losses from related transactions.
(2)
For the meaning of “related transaction” see section 304.
35
(3)
Except where the context indicates otherwise, in this Part references to profits
or losses from loan relationships include references to profits or losses of a
capital nature.
294
Matters treated as loan relationships
(1)
Part 6 deals with matters treated for some or all purposes as loan relationships
40
or rights, payments or profits under loan relationships.
(2)
Except where the context indicates otherwise, references to this Part in this Act
and elsewhere in the Tax Acts include references to Part 6.