Corporation Tax Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
717

reduction under section 288 (the additional calculation rule)
by reference to the taxed receipt, or
(b)
in calculating the amount of a receipt of a property business
under Chapter 4 of Part 4 of CTA 2009 (profits of a property
business: lease premiums etc) in respect of the lease, there is
5
a reduction under section 228 of that Act (the additional
calculation rule) by reference to the taxed receipt.

In this section and sections 65 and 67 the receipt that is so reduced is
referred to as a “lease premium receipt”.”
      (3)
In subsection (6) after “288” insert “below or section 228 of CTA 2009”.
10
593
In section 65(1)(a) (restrictions on section 61 expenses: lease of part of
premises) for “the conditions in section 64(1)(a) and (b) are met” substitute
“section 64 applies”.
594
In the title of section 66 (corporation tax receipts treated as taxed receipts)
after “tax receipts” insert “under ICTA”.
15
595   (1)
Amend section 67 (restrictions on section 61 expenses: corporation tax
receipts) as follows.
      (2)
In subsection (3)(a), after “2005” insert “but before 1st April 2009”.
      (3)
In the title after “receipts” insert “under ICTA”.
596   (1)
Amend section 71 (educational establishments) as follows.
20
      (2)
In subsection (3)—
(a)
in paragraph (a) for “education or library board” substitute
“education and library board”, and
(b)
in paragraph (b) for “or a controlled, maintained, grant-maintained
integrated, controlled integrated, voluntary or” substitute “, a grant-
25
aided school or an”.
597
Omit section 79(2) (additional payments: change in persons carrying on the
trade).
598
After section 79 insert—
“79A
Additional payments: change in the persons carrying on the trade
30
(1)
This section deals with the application of section 79 in circumstances
where there is a change in the persons carrying on the trade.
(2)
The employer is treated for the purposes of section 79 as
permanently ceasing to carry on the trade unless a person carrying
on the trade immediately before the change continues to carry it on
35
after the change.”
599
In section 80(2) (payments made by the Government) for “79” substitute
“79A”.
600
In section 88(6)(b) (payments to research associations, universities etc)
before “what” insert “to”.
40
601   (1)
Amend section 155 (levies and repayments under FISMA 2000) as follows.
      (2)
In subsection (1) omit the words from “carried” to the end.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
718

      (3)
For subsection (2) substitute—
“(2)
A deduction is allowed for any sum—
(a)
spent by the person carrying on the trade in paying a levy, or
(b)
paid by that person as a result of an award of costs under
costs rules,
5

so far as it is not otherwise allowable.”
      (4)
In subsection (3) after “person” insert “carrying on the trade”.
      (5)
After subsection (3) insert—
“(3A)
For the purposes of this section “costs rules” means—
(a)
rules made under section 230 of FISMA 2000, or
10
(b)
provision relating to costs contained in standard terms fixed
under paragraph 18 of Schedule 17 to FISMA 2000.”
      (6)
In subsection (4)(e) for the words from “(other” to the end substitute “(other
than a sum paid as a result of an award of costs under costs rules)”.
602
In section 158(1)(d) (lease premiums etc: reduction of receipts) for “term”
15
substitute “terms”.
603
In section 170(3)(b) (deduction for capital expenditure) for “section 91(1)(b)
of ICTA” substitute “section 147(2)(b) of CTA 2009” and for “section 91(1)(a)
of ICTA substitute “section 147(2)(a) of CTA 2009”.
604
In section 171(2)(d) (allocation of ancillary capital expenditure) for “section
20
91(1)(b) of ICTA,” substitute “section 147(2)(b) of CTA 2009”.
605
In section 175(2) (basis of valuation of trading stock)—
(a)
in paragraph (a) after “trade” insert “, profession or vocation”, and
(b)
in paragraph (b) after “trade” insert “, profession or vocation”.
606
In section 176(1)(a) (sale basis of valuation: sale to unconnected person) after
25
“trade”, in both places where it occurs, insert “, profession or vocation”.
607
In section 177(1)(a) (sale basis of valuation: sale to connected person) after
“trade”, in both places where it occurs, insert “, profession or vocation”.
608
In section 178(1)(a) (sale basis of valuation: election by connected persons)
after “trade”, in both places where it occurs, insert “, profession or vocation”.
30
609   (1)
Amend section 180 (cost to buyer of stock valued on sale basis of valuation)
as follows.
      (2)
In subsection (1) after “trade” insert “, profession or vocation”.
      (3)
In subsection (2)(b) for “section 100(1A) to (1C) of ICTA” substitute “section
164(3) or sections 165 to 167 of CTA 2009”.
35
610
In section 184(1) (basis of valuation of work in progress)—
(a)
in paragraph (a) after “a” insert “trade,” and
(b)
in paragraph (b) after “that” insert “trade,”.
611
In section 194(7) (disposal of know-how as part of disposal of all or part of
trade)—
40
(a)
in paragraph (a) for “subsection (3) of section 531 of ICTA” substitute
“section 178 of CTA 2009”, and

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
719

(b)
for “that subsection”, in both places where it occurs, substitute “that
section”.
612
In section 246(2) (basic meaning of “post-cessation receipt”) for the words
from “the occurrence” to the end substitute “a reference to a company
ceasing to be within the charge to corporation tax in respect of a trade.”
5
613
In section 249(3) (debts released after cessation) for the words from “the
occurrence” to the end substitute “a reference to a company ceasing to be
within the charge to corporation tax in respect of a trade.”
614
In section 276(3) (introduction to Chapter 4 of Part 3) for “term” substitute
“terms”.
10
615
In section 279(3) for “or of” substitute “of or”.
616
In the title of section 281 (sums payable for variation or waiver of term of
lease) for “term” substitute “terms”.
617   (1)
Amend section 287 (circumstances in which additional calculation rule
applies) as follows.
15
      (2)
In subsection (1) for “term” substitute “terms”.
      (3)
In subsection (4)—
(a)
omit the “or” immediately before paragraph (b),
(b)
in paragraph (b) for “additional calculation rule” substitute “rule in
section 288 (the additional calculation rule)”,
20
(c)
after paragraph (b) insert—
“(c)
there is a receipt under any of sections 217 to 222 of
CTA 2009 (receipts in respect of lease premiums,
sums payable instead of rent, for surrender of lease
and for variation or waiver of terms of lease and
25
assignments) in respect of the lease, or
(d)
there would be such a receipt, but for the operation of
the rule in section 228 of that Act (the additional
calculation rule) in the calculation of its amount.”,
and
30
(d)
in the second sentence for “such a receipt” substitute “a receipt
falling within paragraph (a), (b), (c) or (d)”.
618   (1)
Amend section 288 (the additional calculation rule) as follows.
      (2)
In subsection (4)—
(a)
for “282,” substitute “282 above, or in section 217, 219, 220, 221 or 222
35
of CTA 2009,”, and
(b)
after “section 290(2) to (4)” insert “above”.
      (3)
In subsection (6)—
(a)
omit the “and” immediately before paragraph (d), and
(b)
after paragraph (d) insert “, and
40
(e)
in the case of a receipt under Chapter 4 of Part 4 of
CTA 2009 (profits of property businesses: lease
premiums etc), its receipt period within the meaning
of that Chapter (see section 228(6) of that Act).”

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
720

619   (1)
Amend section 290 (meaning of “unused amount” and “unreduced
amount”) as follows.
      (2)
In subsection (2) for the words from “formula” to the end substitute
“formula in—
(a)
section 277, 279, 280, 281 or 282 above, or
5
(b)
section 217, 219, 220, 221 or 222 of CTA 2009 (corporation tax
provisions corresponding to those listed in paragraph (a)).”
      (3)
For subsection (3) substitute—
“(3)
Subsection (4) applies—
(a)
to a taxed receipt under section 277 (lease premiums) as a
10
result of section 278 (amount treated as lease premium where
work required), and
(b)
to a taxed receipt under section 217 of CTA 2009 (lease
premiums) as a result of section 218 of that Act (amount
treated as lease premium where work required).”
15
      (4)
In subsection (5)—
(a)
in paragraph (a) after “288” insert “above or section 228 of CTA 2009
(the additional calculation rule)”,
(b)
in paragraph (b) after “61” insert “above or section 63 of CTA 2009”,
and
20
(c)
in paragraph (c) after “292” insert “below or section 232 of CTA
2009”.
      (5)
In subsection (6)—
(a)
after “288” insert “above or section 228 of CTA 2009”, and
(b)
for “that section” substitute “the section concerned”.
25
620   (1)
Amend section 293 (restrictions on section 292 expenses: the additional
calculation rule) as follows.
      (2)
For subsection (1) substitute—
“(1)
This section applies if—
(a)
in calculating the amount of a receipt under this Chapter
30
there is a reduction under section 288 (the additional
calculation rule) by reference to a taxed receipt, or
(b)
in calculating the amount of a receipt under Chapter 4 of Part
4 of CTA 2009 (profits of a property business: lease premiums
etc) there is a reduction under section 228 of that Act (the
35
additional calculation rule) by reference to a taxed receipt.

The receipt that is so reduced is referred to in this section as the “lease
premium receipt”.”
      (3)
In subsection (6) after “288” insert “above or section 228 of CTA 2009”.
621
For section 294(1)(c) (restriction on section 292 expenses: lease of part of
40
premises) substitute—
“(c)
the condition in subsection (1A) is met.
(1A)
The condition is that—
(a)
in calculating the amount of a receipt under any of sections
277 to 281 (receipts in respect of lease premiums or sums
45

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
721

payable instead of rent, for surrender of lease or for variation
or waiver of terms of lease) in respect of the lease, there is a
reduction under section 288 by reference to a taxed receipt, or
(b)
in calculating the amount of a receipt under any of sections
217 to 221 of CTA 2009 (receipts in respect of lease premiums
5
or sums payable instead of rent, for surrender of lease or for
variation or waiver of terms of lease) in respect of the lease,
there is a reduction under section 228 of that Act (the
additional calculation rule) by reference to a taxed receipt.

The receipt that is so reduced is referred to in this section as the “lease
10
premium receipt”.”
622
For section 295(2)(b) (limit on reductions and deductions) substitute—
“(b)
the total of the amounts mentioned in subsection (3).
(3)
Those amounts are—
(a)
the reductions under section 228 of CTA 2009 (the additional
15
calculation rule) by reference to the taxed receipt,
(b)
the deductions allowed in calculating the profits of a
property business for expenses under section 232 of CTA
2009 (tenant under taxed lease which uses premises for
purposes of property business treated as incurring expenses)
20
by reference to the taxed receipt, and
(c)
the deductions allowed in calculating the profits of a trade,
profession or vocation for expenses under section 61 above or
section 63 of CTA 2009 (tenant under taxed lease who uses
land in connection with trade treated as incurring expenses)
25
by reference to the taxed receipt.”
623
In section 296(1)(a) (corporation tax receipts treated as taxed receipts) after
“2005” insert “but before 1st April 2009”.
624
In section 298 (taking account of deductions for rent as a result of section
37(4) or 87(2) of ICTA)—
30
(a)
in subsections (1)(a) and (3)(a) after “2005” insert “but before 1st
April 2009”, and
(b)
in subsection (2) for “295(2)(b)” substitute “295(3)(c)”.
625
In section 299(1)(b) (payment of tax by instalments) for “term” substitute
“terms”.
35
626   (1)
Amend section 303 (rules for determining effective duration of lease) as
follows.
      (2)
For Rule 1 substitute—
“Rule 1: If—
(a)
the terms of the lease or any other circumstances
40
make it unlikely that the lease will continue beyond a
date before the end of the term for which the lease
was granted, and
(b)
the premium was not substantially greater than it
would have been had the term been one ending on
45
that date,
the lease is treated as ending on that date (or the earliest such
date).”

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
722

      (3)
After subsection (2) insert—
“(2A)
In Rule 1 “premium” includes—
(a)
an amount treated as a premium under section 278 (amount
treated as lease premium where work required),
(b)
a sum payable by the tenant under the terms subject to which
5
the lease is granted instead of the whole or a part of the rent
for a period,
(c)
a sum payable by the tenant under the terms subject to which
the lease is granted as consideration for the surrender of the
lease, and
10
(d)
a sum payable by the tenant (otherwise than by way of rent)
as consideration for the variation or waiver of a term of the
lease.”
627   (1)
Amend section 304 (applying the rules in section 303) as follows.
      (2)
In subsection (1)(b) for “term” substitute “terms”.
15
      (3)
In subsection (4) for the words from “securing” to the end substitute
“securing—
(a)
an income tax advantage in the application of this Chapter, or
(b)
a corporation tax advantage in the application of Chapter 4 of
Part 4 of CTA 2009 (profits of property business: lease
20
premiums etc).”
      (4)
In subsection (5) after “applying” insert “paragraph (b) of”.
628
In section 318(4) for “section 30 of ICTA” substitute “sections 255 to 257 of
CTA 2009”.
629   (1)
Amend section 356 (application to Schedule A businesses) as follows.
25
      (2)
In subsection (1) for “a Schedule A business” substitute “one within the
charge to corporation tax”.
      (3)
In subsection (2) for the words from “includes” to the end substitute
“includes, in the case of a company, the occurrence of an event treated under
section 289 of CTA 2009 (company starting or ceasing to be within the charge
30
to corporation tax) as the company permanently ceasing to carry on the
business.”
      (4)
In subsection (3) for “Schedule A business” substitute “UK property
business”.
      (5)
In the title for “Schedule A business” substitute “businesses within the
35
charge to corporation tax”.
630
In section 413(4) (person liable) for paragraph (b) substitute—
“(b)
section 947 of CTA 2009 (under which similar provision is
made for the purposes of Chapter 3 of Part 10 of that Act)”.
631
In section 419(2) (loans and advances to persons who die) for paragraph (b)
40
substitute—
“(b)
section 947 of CTA 2009” (under which similar provision is
made for the purposes of Chapter 3 of Part 10 of that Act)”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
723

632
In section 466(3) (person liable: personal representatives) for “section 701(8)
of ICTA” and “Part 16 of ICTA” substitute “section 947 of CTA 2009” and
“Chapter 3 of Part 10 of CTA 2009” respectively.
633
In section 496(7) (modification of section 494: qualifying endowment
policies held as security for company debts) in the definition of “accounting
5
period” for “section 12 of ICTA” substitute “Chapter 2 of Part 2 of CTA
2009”.
634
In section 671 (successive absolute interests)—
(a)
at the end of subsection (4) add “(or, where the previous holder is a
company chargeable to corporation tax, having regard to the
10
application of section 954(4) of CTA 2009 to the previous holder)”,
and
(b)
at the end of subsection (6) add “(but, in a case where the last
previous holder or any earlier previous holder is a company
chargeable to corporation tax, having regard to the application of
15
section 954(6) of CTA 2009 to the previous holder)”.
635
After section 749 insert—
“749A
Interest on tax overpaid
No liability to income tax arises in respect of interest paid under
section 826 of ICTA (interest on tax overpaid).”
20
636
In section 754(1) (redemption of funding bonds) for “section 582(1) of ICTA”
substitute “section 413 of CTA 2009”.
637   (1)
Amend section 839 (annual payments payable out of relevant foreign
income) as follows.
      (2)
In subsection (1) for “A to C” substitute “A, B1 or B2 and C”.
25
      (3)
In subsection (3)—
(a)
for “B” substitute “B1”, and
(b)
omit “or to corporation tax under Case III of Schedule D”.
      (4)
After subsection (3) insert—
“(3A)
Condition B2 is that, had the payment arisen in the United Kingdom
30
it would have been—
(a)
required to be brought into account under Part 5 of CTA 2009
(loan relationships) as a non-trading credit, or
(b)
chargeable to corporation tax under Chapter 5 of Part 10 of
that Act (distributions from unauthorised unit trusts) or
35
Chapter 7 of that Part (annual payments not otherwise
charged).”
638
In section 847(2) (partnerships: general provisions), in the words before
paragraph (a) for the words from “are expressed” to “also apply” substitute
“which are expressed to apply to trades also apply, unless otherwise
40
indicated (whether expressly or by implication)”.
639
In section 849 (calculation of firm’s profits or losses) after subsection (3)