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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)

 
 

 
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