Corporation Tax Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
624

“Car or motor cycle hire
76ZN
Car or motor cycle hire
(1)
Subsection (2) applies if—
(a)
in calculating the corporation tax to which a company is
liable for an accounting period, an amount representing
5
expenses incurred on the hiring of a car or motor cycle can be
brought into account under section 76 as expenses payable,
(b)
the car or motor cycle is not a qualifying hire car or motor
cycle, and
(c)
the retail price of the car or motor cycle when new exceeds
10
£12,000.
(2)
The amount that would otherwise be capable of being brought into
account as expenses payable is reduced by multiplying the amount
by the fraction— $equation: over[plus[string["\xa3 12,000"],times[char[R],char[P]]],cross[num[2.0000000000000000, "2"],times[char[R],char[P]]]]$

where RP is the retail price of the car or motor cycle when new.
15
(3)
Subsection (4) applies if an amount is reduced as a result of
subsection (2), or a corresponding provision, and—
(a)
subsequently—
(i)
there is a rebate (however described) of the hire
charges, or
20
(ii)
a debt in respect of any of the hire charges is released
otherwise than as part of a statutory insolvency
agreement, and
(b)
an amount is brought into account in respect of the rebate or
release.
25
(4)
For the purposes of subsection (3)(b) an amount is brought into
account in respect of a rebate of hire charges or the release of a debt
if—
(a)
the amount of a reversal representing the rebate or release
falls to be deducted under Step 4 in section 76(7), or
30
(b)
(in the case of a rebate of hire charges) an amount
representing the rebate is chargeable under section 85(1) of
the Finance Act 1989 (c. 26).
(5)
The amount that would otherwise be deductible as mentioned in
subsection (4)(a) or chargeable as mentioned in subsection (4)(b) is
35
reduced by multiplying it by the fraction set out in subsection (2).
(6)
In this section “corresponding provision” means—
(a)
section 56(2) of CTA 2009 (car or motor cycle hire: trade
profits and property income),
(b)
section 1251(2) of CTA 2009 (car or motor cycle hire:
40
companies with investment business), and
(c)
section 48(2) of ITTOIA 2005 (car or motor cycle hire: trade
profits and property income).

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
625

(7)
The power under section 74(4) of CAA 2001 to increase or further
increase the sums of money specified in Chapter 8 of Part 2 of CAA
2001 includes the power to increase or further increase the sum of
money specified in subsection (1)(c) or (2).
(8)
In this section “car or motor cycle” and “qualifying hire car or motor
5
cycle” have the meanings given by section 57 of CTA 2009.”
45
After section 76ZN insert—
“76ZO
Hiring cars (but not motor cycles) with low CO2 emissions before 1
April 2013
(1)
Section 76ZN does not apply to expenses incurred on the hiring of a
10
car with low CO2 emissions, or an electrically-propelled car, if—
(a)
the car was first registered on or after 17 April 2002, and
(b)
the period of hire begins before 1 April 2013 under a contract
entered into before that date.
(2)
For this purpose—
15
“car with low CO2 emissions” has the meaning given by section
45D of CAA 2001, and
“electrically-propelled car” has the meaning given by that
section.”
46
Omit section 76A (levies and repayments under FISMA 2000).
20
47
Omit section 76B (levies and repayments under the FISMA 2000: investment
companies).
48
Omit section 79 (contributions to local enterprise agencies).
49
Omit section 79A (contributions to training and enterprise councils and local
enterprise companies).
25
50
Omit section 79B (contributions to urban regeneration companies).
51
Omit section 82A (expenditure on research and development).
52
Omit section 82B (payments to research associations, universities etc).
53
Omit section 83 (patent fees etc and expenses).
54
Omit section 83A (gifts in kind to charities etc).
30
55
Omit section 84 (gifts to educational establishments).
56    (1)
Amend section 84A (costs of establishing share option or profit sharing
schemes: relief) as follows.
      (2)
In subsection (2)—
(a)
in paragraph (a) omit “Schedule D or”,
35
(b)
omit paragraph (b) and the “or” immediately before it, and
(c)
omit paragraph (c).
      (3)
Omit subsection (3ZA)(b).
57
Omit section 85 (payments to trustees of approved profit sharing schemes).
58
Omit section 85A (costs of establishing employee share ownership trust:
40
relief).

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
626

59
Omit section 85B (which introduces Schedule 4AA).
60
Omit section 86 (employees seconded to charities and educational
establishments).
61
Omit section 86A (charitable donations: contributions to agent’s expenses).
62
Omit sections 87 and 87A (taxable premiums etc).
5
63
Omit section 88 (payments to Export Credits Guarantee Department).
64
Omit section 88D (restriction of deductions in respect of certain debts).
65
Omit section 89 (debts proving to be irrecoverable after discontinuance etc).
66
Omit section 90 (additional payments to redundant employees).
67
Omit section 91 (cemeteries).
10
68
Omit section 91A (waste disposal: restoration payments).
69
Omit sections 91B and 91BA (waste disposal: preparation expenditure).
70
Omit section 91C (mineral exploration and access).
71
Omit section 92 (regional development grants).
72
Omit section 93 (other grants under Industrial Development Act 1982 etc).
15
73
Omit section 94 (debts deducted and subsequently released).
74
Omit section 95 (taxation of dealers in respect of distributions etc).
75
In section 95ZA(1) (taxation of UK distributions received by insurance
companies) for “section 208” substitute “section 1285 of CTA 2009”.
76
Omit section 97 (treatment of farm animals etc).
20
77
Omit section 98 (tied premises: receipts and expenses treated as those of
trade).
78
Omit section 99 (dealers in land).
79
Omit section 100 (valuation of trading stock at discontinuance of trade).
80
Omit section 101 (valuation of work in progress at discontinuance of
25
profession or vocation).
81
Omit section 102 (provisions supplementary to sections 100 and 101).
82
Omit sections 103 to 106 (Case VI charges on receipts).
83
Omit section 110 (interpretation etc).
84
Omit section 111(1) (treatment of partnerships).
30
85
Omit sections 114 and 115 (special rules for computing profits and losses).
86    (1)
Amend section 116 (arrangements for transferring relief) as follows.
      (2)
In subsection (4) for “under Case VI of Schedule D” substitute “under or by
virtue of any provision to which section 834A (miscellaneous charges)
applies”.
35
      (3)
Omit subsection (5).

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
627

87
Omit section 118ZA (treatment of limited liability partnerships).
88
Omit section 119 (rent etc payable in connection with mines, quarries and
similar concerns).
89
Omit section 120 (rent etc payable in respect of electric line wayleaves).
90
Omit section 121 (management expenses of owner of mineral rights).
5
91
Omit section 122 (relief in respect of mineral royalties).
92
Omit section 125 (annual payments for dividends or non-taxable
consideration).
93
Omit section 128(2) and (3) (commodity and financial futures etc: losses and
gains).
10
94    (1)
Amend section 130 (meaning of “company with investment business” and
“investment company” in Part 4) as follows.
      (2)
Omit ““company with investment business” means any company whose
business consists wholly or partly in the making of investments”.
      (3)
For the title substitute “Meaning of “investment company” in Part 4”.
15
95
In section 187(10) (interpretation of sections 185 and 186) for “, within the
meaning of section 486,” substitute “, as defined in section 834(1)”.
96
Omit section 208 (UK company distributions not generally chargeable to
corporation tax).
97    (1)
Amend section 209 (meaning of distribution) as follows.
20
      (2)
In subsection (2)(e) at the beginning insert “subject to subsection (6A),”.
      (3)
After subsection (6) insert—
“(6A)
Relevant alternative finance return shall not be treated as a
distribution for the purposes of the Corporation Tax Acts by virtue
of subsection (2)(e)(iii).
25

In this subsection “relevant alternative finance return”—
(a)
for corporation tax purposes means anything that is
alternative finance return for the purposes of Part 6 of CTA
2009 as a result of section 513 of that Act or any part of the
redemption payment under arrangements to which section
30
507 of that Act applies (investment bond arrangements), and
(b)
for income tax purposes means anything that is alternative
finance return for the purposes of Chapter 5 of Part 2 of the
Finance Act 2005 as a result of section 48B(1), 49(2) or 49A(2)
of that Act or any part of the redemption payment under
35
arrangements to which section 48A of that Act applies
(alternative finance investment bonds).”
98
In section 212(3) (interest etc paid in respect of certain securities) for “section
208” substitute “section 1285 of CTA 2009 (exemption for UK company
distributions)”.
40
99    (1)
Amend section 214 (chargeable payments connected with exempt
distributions) as follows.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
628

      (2)
In subsection (1)(c) for “section 337A(1)” substitute “section 1305(1) of CTA
2009 (denial of deduction for distributions)”.
      (3)
For subsection (1B) substitute—
“(1B)
So far as relating to corporation tax, the charge to tax under
subsection (1) has effect as an application of the charge to
5
corporation tax on income.”
100
In Chapter 3 of Part 6 (matters which are not distributions for the purposes
of the Corporation Tax Acts) after section 230 insert—
“Industrial and provident society dividends etc
230A
Dividend or bonus granted by industrial and provident society
10
(1)
This section applies if—
(a)
a dividend or bonus is granted by a registered industrial and
provident society, and
(b)
section 132 (deduction for dividends etc granted by
industrial and provident societies) of CTA 2009 allows the
15
sum representing the dividend or bonus to be deducted in
calculating the profits of a trade.
(2)
The dividend, or the bonus, is not treated as a distribution for the
purposes of the Corporation Tax Acts.”
101
In section 231AA(3) (no tax credit for borrower under stock lending
20
arrangement or interim holder under repurchase agreement) for “Schedule
13 to the Finance Act 2007” substitute “Chapter 10 of Part 6 of CTA 2009
(repos)”.
102
In section 231AB(2) (no tax credit for original owner under repurchase
agreement in respect of certain manufactured dividends) for “Schedule 13 to
25
the Finance Act 2007” substitute “Chapter 10 of Part 6 of CTA 2009 (repos)”.
103
Omit section 337 (company beginning or ceasing to carry on trade).
104   (1)
Amend section 337A (computation of company’s profits or income:
exclusion of general deductions) as follows.
      (2)
Omit subsection (1)(a).
30
      (3)
In subsection (2)—
(a)
in paragraph (a) for “Chapter 2 of Part 4 of the Finance Act 1996”
substitute “Part 5 of CTA 2009”, and
(b)
omit paragraph (b) and the “and” immediately before it.
105   (1)
Amend section 342 (tax on companies in liquidation) as follows.
35
      (2)
In subsection (3A) for “section 12(7)” substitute “section 12(4) of CTA 2009”.
      (3)
In subsection (5) for “section 12(7)” substitute “section 12(4) of CTA 2009”.
      (4)
In subsection (6) for “section 12(7)” substitute “section 12(4) of CTA 2009”.
106   (1)
Amend section 342A (tax on companies in administration) as follows.
      (2)
In subsection (7) for “section 12(3)” substitute “section 10(1) of CTA 2009”.
40

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
629

      (3)
In subsection (8) for “section 12(3)” substitute “section 10(1) of CTA 2009”.
      (4)
For subsection (9) substitute—
“(9)
Section 342(7) applies in relation to this section as it applies in
relation to that section, except that the reference to the completion of
the winding up is to be read as a reference to the relevant event.”
5
107
In section 343(2) (company reconstructions without change of ownership)—
(a)
for the words from the beginning to “but—” substitute “In the
circumstances mentioned in subsection (1)—”, and
(b)
in paragraph (a) for “those Acts” substitute “the Capital Allowances
Act (including enactments which under this Act are to be treated as
10
contained in that Act)”.
108   (1)
Amend section 392A (Schedule A losses) as follows.
      (2)
In subsection (1) for “Schedule A loss” substitute “UK property business
loss”.
      (3)
In subsection (2)—
15
(a)
for “Schedule A loss”, in each place where it occurs, substitute “UK
property business loss”, and
(b)
for “Schedule A business” substitute “UK property business”.
      (4)
In subsection (3)—
(a)
for paragraph (a) substitute—
20
“(a)
ceases to carry on a UK property business, or to be
within the charge to corporation tax in respect of such
a business, but”, and
(b)
in the words after paragraph (b), for “Schedule A loss” substitute
“UK property business loss” and for “section 75” substitute “Chapter
25
2 of Part 16 of CTA 2009”.
      (5)
In subsection (4)—
(a)
in paragraph (a) for ““Schedule A loss”” substitute ““UK property
business loss”” and for “Schedule A business” substitute “UK
property business”, and
30
(b)
in paragraph (b) for “the same meaning as in Part IV” substitute “the
meaning given by section 1218 of CTA 2009”.
      (6)
In subsection (5) for “Schedule A business” substitute “UK property
business”.
      (7)
For the title substitute “UK property business losses”.
35
      (8)
In the cross-heading immediately before the section for “Schedule A
business” substitute “UK property business”.
109
In section 392B(2) (losses from overseas property business) for “Schedule A
business” substitute “UK property business”.
110
In section 393(8)(a) (losses other than terminal losses) for “Case I or V of
40
Schedule D,” substitute “Chapter 2 of Part 3 of CTA 2009,”.
111
In section 393A(3) (losses: set off against profits of the same, or an earlier,
accounting period) for “falling within Case V of Schedule D:” substitute
“carried on wholly outside the United Kingdom:”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
630

112   (1)
Amend section 396 (Case VI losses) as follows.
      (2)
In subsection (1)—
(a)
for “under Case VI of Schedule D” substitute “under or by virtue of
a relevant provision”, and
(b)
for “under that Case” substitute “charged under or by virtue of a
5
provision to which section 834A (miscellaneous charges) applies”.
      (3)
For subsection (2) substitute—
“(2)
In this section “relevant provision” means any provision to which
section 834A applies, except section 761(1)(b)(ii) (offshore income
gains).”
10
      (4)
After subsection (2) insert—
“(2A)
Subsection (2B) applies to any loss made by a company in a
transaction if—
(a)
the transaction was of such a nature that, if any profits had
arisen from it, the company would have been liable to
15
corporation tax in respect of the profits under Case VI of
Schedule D for an accounting period ending before 1 April
2009, and
(b)
the transaction—
(i)
did not fall within section 34, 35 or 36 (lease
20
premiums etc), and
(ii)
was not a disposal made after 31 March 2007 to which
Chapter 5 of Part 17 (offshore funds) applied.
(2B)
So far as relief for the loss has not previously been given, the loss is
to be treated as a loss to be set off against income in accordance with
25
subsection (1).”
      (5)
For the title substitute “Losses from miscellaneous transactions”.
113   (1)
Amend section 397 (restriction on relief in case of farming and market
gardening) as follows.
      (2)
In subsection (7) for the words from “Case I” to “ITTOIA 2005” substitute
30
“the calculation of the profits of a trade in Part 3 of CTA 2009 (or in Part 2 of
ITTOIA 2005)”.
      (3)
In subsection (8)—
(a)
in the words before paragraph (a), after “subsection” insert “a trade
shall be treated as discontinued, and a new trade set up in the event
35
of any of the following—”,
(b)
for paragraph (a) and the “and” immediately after it substitute—
“(a)
a company starting or ceasing to be within the charge
to corporation tax in respect of a trade;”,
(c)
in paragraph (b) for the words from the beginning to “the trade”
40
substitute “a change in the persons carrying on a trade”, and
(d)
after paragraph (b) insert “; or
(c)
a change in the persons carrying on a trade not falling
within paragraph (b) if—