Corporation Tax Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 1 — Introduction
440

(4)
If an item of property is sold together with other property, then, for the
purposes of the charges under sections 908 and 912—
(a)
the net proceeds of the sale of that item are treated as being so much of
the net proceeds of the sale of all the property as, on a just and
reasonable apportionment, is attributable to that item, and
5
(b)
the expenditure incurred on the provision or purchase of that item is
treated as being so much of the consideration given for all the property
as, on a just and reasonable apportionment, is attributable to that item.
930
Questions about apportionments affecting two or more persons
(1)
Any question about the way in which a sum is to be apportioned under section
10
929 must be determined in accordance with section 563(2) to (6) of CAA 2001
(procedure for determining certain questions affecting two or more persons) if
it materially affects two or more taxpayers.
(2)
For the purposes of subsection (1) a question materially affects two or more
taxpayers if at the time when the question falls to be determined it appears that
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the determination is material to the liability to tax (for whatever period) of two
or more persons.
931
Meaning of “capital sums” etc
Section 4 of CAA 2001 (meaning of “capital sums” etc) applies in relation to this
Part as it applies in relation to that Act.
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Part 10
Miscellaneous income
Chapter 1
Introduction
932
Overview of Part
25
(1)
This Part applies the charge to corporation tax on income to—
(a)
dividends of a non-UK resident company (see Chapter 2),
(b)
beneficiaries’ income from estates in administration (see Chapter 3),
(c)
income from the holding of an office (see Chapter 4),
(d)
income treated as received from unauthorised unit trusts (see Chapter
30
5),
(e)
income treated as arising from the sale or other realisation of dividend
coupons in respect of foreign holdings (see Chapter 6),
(f)
annual payments not otherwise charged to corporation tax (see
Chapter 7), and
35
(g)
other income not otherwise charged to corporation tax (see Chapter 8).
(2)
Chapter 9 contains rules that give priority to provisions outside this Part in
relation to matters that fall within Chapter 2, 5 or 6.
(3)
This Part needs to be read with Part 19 (general exemptions).

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration
441

Chapter 2
Dividends of non-UK resident companies
933
Charge to tax on dividends of non-UK resident companies
(1)
The charge to corporation tax on income applies to dividends of a non-UK
resident company.
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(2)
In subsection (1) “dividends” does not include dividends of a capital nature.
Chapter 3
Beneficiaries’ income from estates in administration
Introduction
934
Charge to tax on estate income
10
(1)
The charge to corporation tax on income applies to estate income.
(2)
In this Chapter—
“estate” means the estate of a deceased person (whether a UK estate or a
foreign estate), and
“estate income” means the income treated under this Chapter as arising
15
from an absolute, limited or discretionary interest in the whole or part
of the residue of an estate.
(3)
If different parts of an estate are subject to different residuary dispositions,
those parts are treated for the purposes of this Chapter as if they were separate
estates.
20
935
Absolute, limited and discretionary interests
(1)
A person has an absolute interest in the whole or part of the residue of an estate
for the purposes of this Chapter if—
(a)
the capital of the residue or that part is properly payable to the person,
or
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(b)
it would be so payable if the residue had been ascertained.
(2)
A person has a limited interest in the whole or part of the residue of an estate
during any period for the purposes of this Chapter if—
(a)
the person does not have an absolute interest in it, and
(b)
the income from it would be properly payable to the person if the
30
residue had been ascertained at the beginning of that period.
(3)
A person has a discretionary interest in the whole or part of the residue of an
estate for the purposes of this Chapter if—
(a)
a discretion may be exercised in the person’s favour, and
(b)
on its exercise in the person’s favour any of the income of the residue
35
during the whole or part of the administration period (see section 938)
would be properly payable to the person if the residue had been
ascertained at the beginning of that period.

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration
442

(4)
For the purposes of this section, an amount is only treated as properly payable
to a person (“A”) if—
(a)
it is properly payable to A, or to another person in A’s right, for A’s
benefit, or
(b)
A is a personal representative and subsection (5) applies.
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(5)
The personal representatives of a deceased person (“B”) are to be treated as
having an absolute or limited interest in the whole or part of the residue of the
estate of another deceased person (“C”) if—
(a)
they have a right in their capacity as B’s personal representatives, and
(b)
were the right vested in them for their own benefit, they would have
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that interest in C’s estate.
(6)
For the purposes of subsection (4), it does not matter whether the amount is
payable directly by the personal representatives or through a trustee or other
person.
936
Meaning of “UK estate” and “foreign estate”
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(1)
In this Chapter—
“UK estate”, in relation to a tax year, means an estate which meets
conditions A and B, or condition C, for that year, and
“foreign estate”, in relation to a tax year, means an estate which is not a
UK estate in relation to that year.
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(2)
Condition A is that all the income of the estate either—
(a)
has borne United Kingdom income tax by deduction, or
(b)
is income in respect of which the personal representatives are directly
assessable to United Kingdom income tax for the tax year.
(3)
Condition B is that none of the income of the estate is income for which the
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personal representatives are not liable to United Kingdom income tax for the
tax year because they are not UK resident or not ordinarily UK resident.
(4)
For the purposes of conditions A and B, sums within section 963(3) or (4) (sums
treated as bearing income tax) are ignored.
(5)
Condition C is that the aggregate income of the estate for the tax year consists
30
only of sums within section 963(3) or (4).
Types of estate income
937
Absolute interests in residue
(1)
Income is treated as arising in an accounting period from a company’s absolute
interest in the whole or part of the residue of an estate if—
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(a)
the company has an assumed income entitlement for the accounting
period in respect of the interest (see sections 948 to 952), and
(b)
condition A or B is met.
(2)
Condition A is that a payment is made in respect of the interest in the
accounting period and before the end of the administration period (see section
40
938).

Corporation Tax Bill
Part 10 — Miscellaneous income
Chapter 3 — Beneficiaries’ income from estates in administration
443

(3)
Condition B is that the accounting period is the final accounting period (see
section 938).
(4)
Income treated as arising as a result of this section is estate income for the
purposes of this Chapter.
938
Meaning of “the administration period”, “the final accounting period” and
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“the final tax year”
(1)
In this Chapter “the administration period”, in relation to the estate of a
deceased person, means the period beginning with the deceased’s death and
ending with the completion of the administration of the estate.
(2)
In the application of subsection (1) to Scotland, the reference to the completion
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of the administration is to be taken as a reference to the date at which, after
discharge of, or provision for, liabilities falling to be met out of the deceased’s
estate, the free balance held in trust for the residuary legatees or for the persons
with the right to the intestate estate has been ascertained.
(3)
In this Chapter “the final accounting period” means the accounting period in
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which the administration period ends.
(4)
In this Chapter “the final tax year” means the tax year in which the
administration period ends.
939
Limited interests in residue
(1)
Income is treated as arising in an accounting period from a company’s limited
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interest in the whole or part of the residue of an estate in cases A, B and C.
(2)
Case A is where—
(a)
the interest has not ceased before the beginning of the accounting
period, and
(b)
a sum is paid in respect of the interest in that period and before the end
25
of the administration period.
(3)
Case B is where—
(a)
the accounting period is the final accounting period,
(b)
the interest has not ceased before the beginning of that period, and
(c)
a sum remains payable in respect of the interest at the end of the
30
administration period.
(4)
Case C is where—
(a)
the accounting period is a period before the final accounting period,
(b)
the interest ceases in the accounting period, and
(c)
a sum is paid in respect of the interest in a later accounting period but
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before the end of the administration period, or remains payable in
respect of it at the end of the administration period.
(5)
This section does not apply to limited interests to which section 957 (successive
interests: holders of limited interests) applies.
(6)
Income treated as arising as a result of this section or section 957 is estate
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income for the purposes of this Chapter.