Corporation Tax Bill

House of Commons

Session 2008 - 09
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Corporation Tax Bill

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
631

(i)
immediately before the change the trade is
carried on by companies in partnership and
by no other person, and
(ii)
after the change none of those companies
continues to carry on the trade in
5
partnership.”
      (4)
In subsection (9) for the words from “if” to the end substitute “if the change
in the persons carrying on the trade is a cessation to which section 343(1)
applies.”
114
In section 398(b) for “Schedule D” substitute “Part 5 of CTA 2009 (loan
10
relationships)”.
115   (1)
Amend section 399 (dealings in commodity futures etc: withdrawal of loss
relief) as follows.
      (2)
Omit subsection (1B).
      (3)
In subsection (3) omit the words “under Case VI of Schedule D”.
15
116   (1)
Amend section 400 (write-off of government investment) as follows.
      (2)
In subsection (2)—
(a)
in paragraph (b) for the words from “Part 4” to the end substitute
“Part 16 of CTA 2009, any excess that falls to be deducted under
section 1223(3) of that Act;”,
20
(b)
in paragraph (bb)(ii) for “section 75” substitute “Chapter 2 of Part 16
of CTA 2009”, and
(c)
in paragraph (d) for “under 75(3) or 393(9)” substitute “under section
393(9) of this Act or section 1223 of CTA 2009”.
      (3)
In subsection (6) for “Case I or II of Schedule D.” substitute “Part 3 of CTA
25
2009.”
      (4)
In subsection (9A) for “section 80(5) of the Finance Act 1996” and “Chapter
II of Part IV of that Act” substitute “section 464(1) of CTA 2009” and “Part 5
of that Act” respectively.
117
Omit section 401 (relief for pre-trading expenditure).
30
118   (1)
Amend section 403 (amounts which may be surrendered by way of group
relief) as follows.
      (2)
In subsection (1)(b) for “Schedule A losses” substitute “UK property
business losses”.
      (3)
In subsection (3) for “Schedule A losses”, in each place where those words
35
occur, substitute “UK property business losses”.
119
In section 403ZC(1) (amounts eligible for group relief: non-trading deficit on
loan relationships) for “section 83 of the Finance Act 1996” substitute
“Chapter 16 of Part 5 of CTA 2009 (non-trading deficits)”.
120   (1)
Amend section 403ZD (other amounts available by way of group relief) as
40
follows.
      (2)
In subsection (1) for “Schedule A losses” substitute “UK property business
losses”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
632

      (3)
In subsection (3)—
(a)
for “Schedule A loss” substitute “UK property business loss”, and
(b)
for “Schedule A business” substitute “UK property business”.
      (4)
In subsection (4)—
(a)
for “section 75(1) (expenses of management of a company with
5
investment business)” substitute “section 1219 of CTA 2009
(expenses of management of a company’s investment business)”,
and
(b)
for “section 75(9) or 392A” substitute “section 392A above or section
1223(3) of CTA 2009”.
10
      (5)
In subsection (6) for “Schedule 29 to the Finance Act 2002” and “paragraph
35(3) of that Schedule” substitute “Part 8 of CTA 2009 (intangible fixed
assets)” and “section 753(3) of that Act” respectively.
121
In section 403ZE(1)(b)(ii) (computation of gross profits) for “75(9) or
392A(3)” substitute “392A(3) above or section 1223(3) of CTA 2009”.
15
122   (1)
Amend section 404 (limitation of group relief in relation to certain dual
resident companies) as follows.
      (2)
In subsection (2)(a) for “Schedule A loss” substitute “UK property business
loss”.
      (3)
In subsection (6)(a)(ia) for “Chapter II of Part IV of the Finance Act 1996”
20
substitute “Part 5 of CTA 2009”.
      (4)
In subsection (7) for “Chapter II of Part IV of the Finance Act 1996” substitute
“Part 5 of CTA 2009 (see section 302(6) of that Act)”.
123
In section 407 (relationship between group relief and other relief)—
(a)
in subsection (1)(b) for “section 83” to “1996” substitute “section 388,
25
389 or 391 or Chapter 16 of Part 5 of CTA 2009”, and
(b)
in subsection (2)(c) for “section 83(2)” to “1996” substitute “section
389 or 459 of CTA 2009”.
124
After section 411 insert—
“411ZA
  No relief where deduction of relevant return under alternative
30
finance arrangements disallowed
(1)
This section applies if the surrendering company is prevented from
obtaining a deduction in respect of an amount by section 520 of CTA
2009 (provision not at arm’s length: non-deductibility of relevant
return).
35
(2)
The amount may not be surrendered by way of group relief.”
125
In section 414(1)(b) (close companies) omit “within the meaning of section
486(12)”.
126   (1)
Amend section 431 (interpretation of provisions relating to insurance
companies) as follows.
40
      (2)
In subsection (2)—
(a)
in paragraph (b) of the definition of “free assets amount” for
“Chapter 2 of Part 4 of the Finance Act 1996” substitute “Part 5 of
CTA 2009 (see section 303 of that Act)”,

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
633

(b)
in the definition of “the I minus E basis” for “Case I of Schedule D”
substitute “section 35 of CTA 2009 (charge on trade profits)”,
(c)
at the appropriate place insert—
““life assurance trade profits provisions” means the
provisions applicable for the purposes of the taxation
5
under section 35 of CTA 2009 (charge on trade profits)
of the profits of life assurance business carried on by
an insurance company;”, and
(d)
in the definition of “net value” for “Chapter 2 of Part 4 of the Finance
Act 1996” substitute “Part 5 of CTA 2009: see section 303 of that Act”.
10
      (3)
In subsection (2YC)(a) omit “under Schedule A or Case III, V or VI of
Schedule D”.
      (4)
In subsection (2YD)(a) for “paragraph 4 of Schedule 11 to the Finance Act
1996” substitute “sections 387 to 391 of CTA 2009”.
127   (1)
Amend section 431G (company carrying on life assurance business) as
15
follows.
      (2)
In subsection (3) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009 (charge on trade profits)”.
      (3)
In subsection (4) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009”.
20
      (4)
In subsection (5) for “provision of Case I of Schedule D” substitute “of the life
assurance trade profits provisions”.
128
In section 431H(3) (company carrying on life assurance business and other
insurance business) for “Case I of Schedule D” substitute “section 35 of CTA
2009 (charge on trade profits)”.
25
129   (1)
Amend section 432YA (long-term business other than life assurance
business - adjustment consequent on change in Insurance Prudential
Sourcebook) as follows.
      (2)
In subsection (2) for “to Case I of Schedule D” substitute “for the purposes of
section 35 of CTA 2009 (charge on trade profits)”.
30
      (3)
In subsection (6) for paragraph (b) and the word “and” immediately before
it substitute—
“(b)
the reference in section 82E(4) to life assurance business were
a reference to PHI business, and
(c)
the reference in section 82E(7) to the life assurance trade
35
profits provisions were a reference to the provisions
applicable for the purposes of section 35 of CTA 2009.”
130   (1)
Amend section 432A (apportionment of income and gains) as follows.
      (2)
In subsection (1ZA)—
(a)
in paragraph (a) for “Schedule A in respect of any separate Schedule
40
A” substitute “Chapter 3 of Part 4 of CTA 2009 (profits of a property
business) in respect of any separate UK property”,
(b)
for paragraph (b) substitute—
“(b)
income chargeable under Chapter 3 of Part 4 of
CTA 2009 in respect of distributions treated by
45
section 121(1)(a) of the Finance Act 2006 as profits

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
634

of a UK property business carried on by the
company,”,
(c)
in paragraph (c) for “Case V of Schedule D” substitute “Chapter 3 of
Part 4 of CTA 2009”,
(d)
for paragraph (d) substitute—
5
“(d)
income chargeable under Chapter 2 of Part 10 of CTA
2009 (dividends of non-UK resident companies) or
Chapter 6 of that Part (sale of foreign dividend
coupons),
(da)
income chargeable under Chapter 7 of Part 10 of CTA
10
2009 (annual payments not otherwise charged) or
Chapter 8 of that Part (income not otherwise charged)
which arises from a source outside the United
Kingdom,”,
(e)
in paragraph (f) for “Chapter 2 of Part 4 of the Finance Act 1996”
15
substitute “Part 5 of CTA 2009”,
(f)
in paragraph (g) for “Schedule 26 to the Finance Act 2002” substitute
“Part 7 of CTA 2009”,
(g)
in paragraph (h) for the words from “Case III” to the end substitute
“Chapter 5 of Part 10 of CTA 2009 (distributions from unauthorised
20
unit trusts) or Chapter 7 of that Part (annual payments not otherwise
charged)”,
(h)
in paragraph (i) for “Part 3 of Schedule 29 to FA 2002” substitute
“Chapter 2 of Part 8 of CTA 2009”, and
(i)
in paragraph (j) for “Case VI of Schedule D” substitute “any
25
provision to which section 834A (miscellaneous charges) applies”.
      (3)
In subsection (1ZB)—
(a)
in paragraph (a) for “Schedule A businesses” substitute “UK
property businesses”,
(b)
in paragraph (c) for “Chapter 2 of Part 4 of the Finance Act 1996”
30
substitute “Part 5 of CTA 2009”,
(c)
in paragraph (d) for “Schedule 26 to the Finance Act 2002” substitute
“Part 7 of CTA 2009”,
(d)
in paragraph (e) for “Part 2 of Schedule 29 to FA 2002” substitute
“Chapter 3 of Part 8 of CTA 2009”, and
35
(e)
in paragraph (f) for “Case VI of Schedule D” substitute “any
provision to which section 834A applies”.
131   (1)
Amend section 432AA (Schedule A business or overseas property business)
as follows.
      (2)
In subsection (1) for “is treated as carrying on separate Schedule A
40
businesses or overseas property businesses” substitute “is treated (despite
sections 205 and 206 of CTA 2009) as carrying on separate UK property
businesses or overseas property businesses”.
      (3)
For the title substitute “UK property business or overseas property
business”.
45
132   (1)
Amend section 432AB (losses from Schedule A business or overseas
property business) as follows.
      (2)
In subsection (1) for “Schedule A business” substitute “UK property
business”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
635

      (3)
In subsection (4)(a) for “Schedule A business” substitute “UK property
business”.
      (4)
In the title for “Schedule A business” substitute “UK property business”.
133
In section 434(1) (franked investment income etc) for “provisions applicable
to Case I of Schedule D” substitute “life assurance trade profits provisions”.
5
134   (1)
Amend section 434A (computation of losses and limitation of relief) as
follows.
      (2)
In subsection (2) for the words “provisions of this Act applicable to Case I of
Schedule D” substitute “life assurance trade profits provisions”.
      (3)
In subsection (2A)—
10
(a)
omit the words from “which” to “1996”, and
(b)
for “Chapter II of Part IV of that Act” substitute “Part 5 of CTA 2009”.
135   (1)
Amend section 436A (gross roll-up business: separate charge on profits) as
follows.
      (2)
For subsection (1) substitute—
15
“(1)
The charge to corporation tax on income applies to profits arising to
an insurance company from gross roll-up business.”
      (3)
In subsection (2)(b) for “provisions of this Act applicable to Case I of
Schedule D” substitute “life assurance trade profits provisions”.
      (4)
In subsection (7) for “Case I of Schedule D” substitute “section 35 of CTA
20
2009 (charge on trade profits)”.
136
In section 440(6) (transfers of assets etc) for “in accordance with Case I of
Schedule D” substitute “under section 35 of CTA 2009 (charge on trade
profits)”.
137
In section 440A(7) (securities) for “in accordance with Case I of Schedule D”
25
substitute “under section 35 of CTA 2009 (charge on trade profits)”.
138   (1)
Amend section 440B (modifications where tax charged under Case I of
Schedule D) as follows.
      (2)
In subsection (1) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009 (charge on trade profits)”.
30
      (3)
In subsection (4A) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009”.
      (4)
In subsection (4B) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009”.
      (5)
In the title for “Case I of Schedule D” substitute “section 35 of CTA 2009”.
35
139   (1)
Amend section 440C (modifications for change of tax basis) as follows.
      (2)
In subsection (1)(b) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009 (charge on trade profits)”.
      (3)
In subsection (4)—
(a)
in paragraph (a) for “in accordance with Case I of Schedule D”
40
substitute “under section 35 of CTA 2009”, and

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
636

(b)
in paragraph (c) for “in accordance with Case I of Schedule D”
substitute “under section 35 of CTA 2009”.
      (4)
In subsection (6)(b) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009”.
      (5)
In subsection (7)(b) for “in accordance with Case I of Schedule D” substitute
5
“under section 35 of CTA 2009”.
140
In section 442(2) (overseas business of UK companies) for “of this Act
applicable to Case I of Schedule D” substitute “applicable for the purposes
of section 35 of CTA 2009 (charge on trade profits)”.
141
In section 442A(1) (taxation of investment return where risk reinsured) for
10
“Case VI of Schedule D” substitute “the charge to corporation tax on
income”.
142   (1)
Amend section 444AZA (transfers of life assurance business: Case VI losses
of the transferor) as follows.
      (2)
In subsection (1)(c) for “in accordance with Case I of Schedule D” substitute
15
“under section 35 of CTA 2009 (charge on trade profits)”.
      (3)
In subsection (2)—
(a)
for ““Case VI loss”” substitute ““qualifying loss of the transferor””,
and
(b)
omit “(a “Case I loss”)”.
20
      (4)
In subsection (4) for “Case VI loss” substitute “qualifying loss of the
transferor”.
      (5)
In the title for “Case VI” substitute “gross roll-up business”.
143   (1)
Amend section 444AZB (transfers of life assurance business: Case I losses of
the transferor) as follows.
25
      (2)
In subsection (1)(b) for “in accordance with Case I of Schedule D” substitute
“under section 35 of CTA 2009 (charge on trade profits)”.
      (3)
In subsection (2)—
(a)
for ““Case I loss”” substitute ““qualifying loss of the transferor””, and
(b)
omit “(a “Case VI loss”)”.
30
      (4)
In subsection (4) for “Case I loss” substitute “qualifying loss of the
transferor”.
      (5)
In the title for “Case I” substitute “trade”.
144
In section 444ABD(1A) (transferor’s period of account including transfer)—
(a)
for “in accordance with Case I of Schedule D”, in the first place where
35
it occurs, substitute “under section 35 of CTA 2009 (charge on trade
profits)”, and
(b)
for “in accordance with Case I of Schedule D”, in the second place
where it occurs, substitute “under section 35 of that Act”.
145   (1)
Amend section 444AEA (transfer schemes: anti-avoidance rule) as follows.
40
      (2)
In subsection (1)—
(a)
in paragraph (a) for “Case I” substitute “life assurance trade profits”,
and

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
637

(b)
in paragraph (b) omit “Case I”.
      (3)
In subsection (3)—
(a)
for “Case I advantage” substitute “life assurance trade profits
advantage”, and
(b)
omit “transferor’s Case I”.
5
      (4)
In subsection (4)—
(a)
for “Case I advantage” substitute “life assurance trade profits
advantage”, and
(b)
omit “transferee’s Case I”.
146   (1)
Amend section 444AEB (Case I advantage: transferor) as follows.
10
      (2)
In subsection (1)—
(a)
for “Case I advantage” substitute “life assurance trade profits
advantage”, and
(b)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
      (3)
In subsection (2)—
15
(a)
for “a Case I advantage” substitute “a life assurance trade profits
advantage”,
(b)
for “the Case I advantage” substitute “the advantage”, and
(c)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
      (4)
In subsection (4)—
20
(a)
for ““Case 1 profits”” substitute ““section 35 profits””,
(b)
for ““Case 1 losses”” substitute ““section 35 losses””, and
(c)
for “provisions of Case I of Schedule D” substitute “life assurance
trade profits provisions”.
      (5)
In the title for “Case I” substitute “Life assurance trade profits”.
25
147   (1)
Amend section 444AEC (Case I advantage: transferee) as follows.
      (2)
In subsection (1)—
(a)
for “Case I advantage” substitute “life assurance trade profits
advantage”, and
(b)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
30
      (3)
In subsection (2)—
(a)
for “a Case I advantage” substitute “a life assurance trade profits
advantage”,
(b)
for “the Case I advantage” substitute “the advantage”, and
(c)
in paragraphs (a) and (b) for “Case I” substitute “section 35”.
35
      (4)
In subsection (4) for “Case I”, in both places where it occurs, substitute
“section 35”.
      (5)
In the title for “Case I” substitute “Life assurance trade profits”.
148   (1)
Amend section 444AECA (parts of transfer scheme arrangements: anti-
avoidance rule) as follows.
40
      (2)
In subsection (1)—
(a)
in paragraph (a) for “Case I” substitute “life assurance trade profits”,
and