|
| |
|
| |
“(4) | In calculating under subsection (2) or (3) the profits of a trade for any |
| |
period of account no account is taken of any losses for another period |
| |
| |
640 | For section 850 (allocation of firm’s profits or losses between partners) |
| 5 |
| |
“850 | Allocation of firm’s profits or losses between partners |
| |
(1) | For any period of account a partner’s share of a profit or loss of a |
| |
trade carried on by a firm is determined for income tax purposes in |
| |
accordance with the firm’s profit-sharing arrangements during that |
| 10 |
| |
| This is subject to sections 850A and 850B. |
| |
(2) | In this section and sections 850A and 850B “profit-sharing |
| |
arrangements” means the rights of the partners to share in the profits |
| |
of the trade and the liabilities of the partners to share in the losses of |
| 15 |
| |
850A | Profit-making period in which some partners have losses |
| |
(1) | For any period of account, if— |
| |
(a) | the calculation under section 849 in relation to a partner (“A”) |
| |
| 20 |
(b) | A’s share determined under section 850 is a loss, |
| |
| A’s share of the profit of the trade is neither a profit nor a loss. |
| |
(2) | For any period of account, if— |
| |
(a) | the calculation under section 849 in relation to A produces a |
| |
| 25 |
(b) | A’s share determined under section 850 is a profit, and |
| |
(c) | the comparable amount for at least one other partner is a loss, |
| |
| A’s share of the profit of the trade is the amount produced by the |
| |
formula in subsection (3). |
| |
(3) | The formula is—![equation: cross[times[char[F],char[P]],over[times[char[P],char[P]],plus[times[char[P],char[
P]],times[char[T],char[C],char[P]]]]]](missing.gif) |
| 30 |
| |
FP is the amount of the firm’s profit calculated under section |
| |
| |
PP is the amount determined under section 850 to be A’s profit, |
| |
| 35 |
TCP is the total of the comparable amounts attributed to other |
| |
partners under step 3 in subsection (4) that are profits. |
| |
(4) | The comparable amount for each partner other than A is determined |
| |
| |
| 40 |
|
| |
|
| |
|
| Take the firm’s profit calculated under section 849 in relation to A. |
| |
| |
| Determine in accordance with the firm’s profit-sharing |
| |
arrangements during the relevant period of account the shares of |
| |
that profit that are attributable to each of the other partners. |
| 5 |
| |
| Each such share is the comparable amount for the partner to whom |
| |
| |
(5) | In subsections (2) to (4) “partner” means any partner in the firm, |
| |
whether or not chargeable to income tax. |
| 10 |
850B | Loss-making period in which some partners have profits |
| |
(1) | For any period of account, if— |
| |
(a) | the calculation under section 849 in relation to a partner (“A”) |
| |
| |
(b) | A’s share determined under section 850 is a profit, |
| 15 |
| A’s share of the loss of the trade is neither a profit nor a loss. |
| |
(2) | For any period of account, if— |
| |
(a) | the calculation under section 849 in relation to A produces a |
| |
| |
(b) | A’s share determined under section 850 is a loss, and |
| 20 |
(c) | the comparable amount for at least one other partner is a |
| |
| |
| A’s share of the loss of the trade is the amount produced by the |
| |
formula in subsection (3). |
| |
(3) | The formula is—![equation: cross[times[char[F],char[L]],over[times[char[P],char[L]],plus[times[char[P],char[
L]],times[char[T],char[C],char[L]]]]]](missing.gif) |
| 25 |
| |
FL is the amount of the firm’s loss calculated under section 849 |
| |
| |
PL is the amount determined under section 850 to be A’s loss, |
| |
| 30 |
TCL is the total of the comparable amounts attributed to other |
| |
partners under step 3 in subsection (4) that are losses. |
| |
(4) | The comparable amount for each partner other than A is determined |
| |
| |
| 35 |
| Take the firm’s loss calculated under section 849 in relation to A. |
| |
| |
| Determine in accordance with the firm’s profit-sharing |
| |
arrangements during the relevant period of account the shares of |
| |
that loss that are attributable to each of the other partners. |
| 40 |
| |
|
| |
|
| |
|
| Each such share is the comparable amount for the partner to whom |
| |
| |
(5) | In subsections (2) to (4) “partner” means any partner in the firm, |
| |
whether or not chargeable to income tax.” |
| |
641 (1) | Amend section 860 (adjustment income) as follows. |
| 5 |
(2) | After subsection (1) insert— |
| |
“(1A) | A change in the persons carrying on a property business from one |
| |
period of account to the next does not prevent Chapter 7 of Part 3 |
| |
(adjustment income) applying in relation to the property business so |
| |
long as a person carrying on the property business immediately |
| 10 |
before the change continues to carry on the property business |
| |
immediately after the change.” |
| |
| |
(a) | after “trade” insert “or property business”, and |
| |
(b) | after “Chapter 17 of Part 2” insert “, or Chapter 7 of Part 3,”. |
| 15 |
| |
(a) | in paragraph (a), at the end insert “or Chapter 7 of Part 3 (as the case |
| |
| |
(b) | in paragraph (b) after “trade” insert “or property business (as the |
| |
| 20 |
642 | For section 861 (sale of patent rights: effect of partnership changes) |
| |
| |
“861 | Sale of patent rights: effect of partnership changes |
| |
(1) | This section applies if each of the following conditions is met— |
| |
(a) | a person (“the trader”) sells the whole or part of any patent |
| 25 |
rights in carrying on a trade, |
| |
(b) | tax is chargeable under section 587 of this Act or section 912 |
| |
of CTA 2009 on the proceeds of the sale or on any instalment |
| |
| |
(c) | the tax is chargeable in one or more tax years or accounting |
| 30 |
periods (referred to in this section as “the tax charge |
| |
| |
(d) | there is a change in the persons carrying on the trade at any |
| |
time between the beginning of the first of those tax charge |
| |
periods and the end of the last of them, and |
| 35 |
(e) | the partnership condition and the continuity condition are |
| |
| |
(2) | The partnership condition is that— |
| |
(a) | the trader is a firm at the time of the sale, or |
| |
(b) | the trade is carried on in partnership at any time between the |
| 40 |
beginning of the first of the tax charge periods and the end of |
| |
| |
(3) | The continuity condition is— |
| |
(a) | in the case of an amount chargeable under section 587, that a |
| |
person who carried on the trade immediately before the |
| 45 |
change continues to carry it on after the change, or |
| |
|
| |
|
| |
|
(b) | in the case of an amount chargeable under section 912 of CTA |
| |
2009, that a company which carried on the trade in |
| |
partnership immediately before the change continues to |
| |
carry it on in partnership after the change. |
| |
(4) | Any amounts chargeable in respect of the proceeds or instalment |
| 5 |
that would (apart from this section) be treated in accordance with |
| |
Chapter 2 of Part 5 of this Act or Chapter 3 of Part 9 of CTA 2009 as |
| |
profits of the seller of the patent rights chargeable in tax charge |
| |
periods falling wholly after the change are treated for income tax |
| |
| 10 |
(a) | as proceeds, arising at a constant daily rate during the |
| |
remainder of the relevant period, of a sale of patent rights by |
| |
the person or persons carrying on the trade after the change, |
| |
| |
(b) | if the trade is carried on in partnership after the change, as |
| 15 |
arising to the partners in shares calculated in accordance with |
| |
the firm’s profit-sharing arrangements. |
| |
(5) | If the change occurs during the course of a tax charge period— |
| |
(a) | any person who would, but for this section, have been |
| |
charged to income tax in that period on a sum (“S”) in respect |
| 20 |
of the proceeds or instalment is so charged on a fraction of S |
| |
proportionate to the length of the part of the period before the |
| |
| |
(b) | the balance of S not dealt with under paragraph (a) is treated |
| |
for the purposes of this section and section 1271 of CTA 2009 |
| 25 |
(sale of patent rights: effect of partnership changes) as if it |
| |
were an amount such as is described in subsection (4). |
| |
(6) | In this section “the remainder of the relevant period” means— |
| |
(a) | if one or more tax charge periods begins after the tax charge |
| |
period in which the change occurs, the period beginning |
| 30 |
immediately after the change and ending 6 years after the |
| |
beginning of the first of the tax charge periods, or |
| |
(b) | otherwise, the period beginning immediately after the |
| |
change and ending at the end of the tax charge period in |
| |
| 35 |
(7) | In this section “profit-sharing arrangements” means the rights of the |
| |
partners to share in the profits of the trade.” |
| |
643 (1) | Amend section 862 (sale of patent rights: effect of later cessation of trade) as |
| |
| |
(2) | For subsections (1) and (2) substitute— |
| 40 |
“(1) | This section applies if— |
| |
(a) | a person (“the trader”) sells the whole or part of any patent |
| |
rights in carrying on a trade, |
| |
(b) | by virtue of section 861 amounts are chargeable to income tax |
| |
under section 587 as profits of one or more persons for the |
| 45 |
time being carrying on the trade in partnership, |
| |
(c) | a partner permanently ceases to carry on the trade after that, |
| |
| |
|
| |
|
| |
|
(d) | no person who carried on the trade immediately before the |
| |
cessation continues to carry on the trade immediately after |
| |
| |
(2) | Any amounts mentioned in subsection (1)(b) which would have been |
| |
chargeable in any tax year later than that in which the cessation |
| 5 |
occurred are charged in the tax year in which the cessation |
| |
| |
(3) | Omit subsections (3) and (7). |
| |
644 | Omit section 881 (disapplication of corporation tax: section 9 of ICTA). |
| |
645 (1) | Amend Schedule 1 (consequential amendments) as follows. |
| 10 |
(2) | Omit paragraph 312(4)(b) and the “and” immediately before it. |
| |
646 (1) | Amend Schedule 2 (transitionals and savings etc) as follows. |
| |
(2) | In paragraph 70(2) for “term” substitute “terms”. |
| |
(3) | In paragraph 71(2) for “term” substitute “terms”. |
| |
(4) | In paragraph 109(5) for “section 12 of ICTA” substitute “Chapter 2 of Part 2 |
| 15 |
| |
647 (1) | Amend Schedule 4 (abbreviations and defined expressions) as follows. |
| |
(2) | In Part 1 at the end insert— |
| |
| | The Corporation Tax Act 2009” |
| | |
|
| 20 |
(a) | in the entry for “accounting period”, in the second column— |
| |
(i) | for “sections 12 and” substitute “section”, and |
| |
(ii) | at the end insert “and Chapter 2 of Part 2 of CTA 2009”, and |
| |
(b) | omit the entry for “Schedule A business”. |
| |
| 25 |
648 | The Finance Act 2005 is amended as follows. |
| |
649 | In section 47A(6) (alternative finance arrangements: diminishing shared |
| |
ownership) for “Taxes” to “1970)” substitute “Income Tax Acts, TCGA 1992 |
| |
and all other enactments relating to capital gains tax”. |
| |
650 | In section 48A (alternative finance arrangements: alternative finance bond: |
| 30 |
introduction) in subsection (3) after “this section” insert “and section 507 of |
| |
CTA 2009 (investment bond arrangements)”. |
| |
651 | In section 48B (alternative finance arrangements: alternative finance |
| |
investment bond: effects)— |
| |
(a) | in subsections (2) and (3) after “any tax” insert “other than the |
| 35 |
| |
(b) | in subsection (4) after “section 48A”, in both places where it occurs, |
| |
insert “of this Act or section 507 of CTA 2009”, and |
| |
| |
|
| |
|
| |
|
(i) | after “section 48A” insert “of this Act or section 507 of CTA |
| |
| |
(ii) | after paragraph (b) insert “or”, and |
| |
(iii) | omit paragraph (d) and the “or” immediately before it. |
| |
652 | In section 49(2) (alternative finance arrangements: deposit) for “profit share |
| 5 |
return” substitute “alternative finance return”. |
| |
653 | In section 49A (alternative finance arrangements: profit share agency)— |
| |
(a) | in subsection (2) for “profit share return” substitute “alternative |
| |
| |
(b) | in subsection (3) for “Tax Acts” substitute “Income Tax Acts”. |
| 10 |
654 | Omit section 50 (treatment of alternative finance arrangements: companies). |
| |
655 | In section 51 (treatment of alternative finance arrangements: persons other |
| |
than companies) in subsections (1), (4) and (5)(b) omit “or profit share |
| |
| |
656 | In section 52 (provision not at arm’s length)— |
| 15 |
(a) | in subsection (2) omit “or profit share return”, and |
| |
| |
657 | Omit section 54 (return not to be treated as distribution). |
| |
658 | In section 54A (treatment of section 47, 49 and 49A arrangements as loans: |
| |
Community Investment Tax Relief)— |
| 20 |
(a) | in subsection (2)(a) after “or 49A” insert “of this Act or section 503, |
| |
| |
(b) | in subsection (2)(b) omit “or profit share return”, |
| |
(c) | in subsections (3) and (4) after “section 47” insert “of this Act or |
| |
section 503 of CTA 2009”, |
| 25 |
(d) | in subsection (5) after “section 49” insert “of this Act or section 505 of |
| |
| |
(e) | in subsection (6) after “section 49A” insert “of this Act or section 506 |
| |
| |
659 | In section 55 (further provisions) omit “, corporation tax”. |
| 30 |
660 | In section 56 (application of Chapter)— |
| |
(a) | in subsections (2) and (3) for “profit share return” substitute |
| |
“alternative finance return”, |
| |
(b) | omit subsection (4)(b) and the “and” immediately before it, |
| |
(c) | omit subsection (5), and |
| 35 |
| |
(i) | for “Section 54” substitute “Section 209(6A) of ICTA”, and |
| |
(ii) | for “profit share return” substitute “alternative finance |
| |
| |
661 | In section 57 (interpretation of Chapter)— |
| 40 |
(a) | in the definition of “alternative finance return” for “and 47A(5)” |
| |
substitute “47A(5), 48B(1), 49(2) and 49A(2)”, and |
| |
(b) | omit the definition of “profit share return”. |
| |
662 | In section 83(8) (application of accounting standards to securitisation |
| |
companies) in the definition of “asset” for “Schedule 26 to FA 2002 |
| 45 |
|
| |
|
| |
|
(derivative contracts) (see paragraph 12 of that Schedule)” substitute “Part 7 |
| |
of CTA 2009 (derivative contracts) (see sections 580, 581 and 582 of that |
| |
| |
663 | In section 105 (interpretation) after the definition of “CAA 2001” insert— |
| |
““CTA 2009” means the Corporation Tax Act 2009;”. |
| 5 |
664 (1) | Amend Schedule 2 (alternative finance arrangements: further provisions) as |
| |
| |
| |
| |
(4) | In paragraphs 8, 10, 11(c), 12 and 13 omit “or profit share return”. |
| 10 |
665 | In Schedule 4 (accounting practice and related matters) omit paragraphs 27 |
| |
| |
Railways Act 2005 (c. 14) |
| |
666 | The Railways Act 2005 is amended as follows. |
| |
667 (1) | Amend Schedule 10 (taxation provisions relating to transfer schemes) as |
| 15 |
| |
| |
(a) | in sub-paragraph (a) for “Chapter 2 of Part 4 of the Finance Act 1996 |
| |
(c. 8)” substitute “Part 5 of the Corporation Tax Act 2009”, and |
| |
(b) | in sub-paragraph (b) for “Schedule 26 to the Finance Act 2002 |
| 20 |
(derivative contracts)” substitute “Part 7 of the Corporation Tax Act |
| |
2009 (derivative contracts)”. |
| |
(3) | In paragraph 10(5) for the words from “under” to the end substitute “under |
| |
Part 3 of the Corporation Tax Act 2009 in respect of the trade or part of a |
| |
trade in question for periods in which the trade was carried on wholly or |
| 25 |
partly in the United Kingdom.” |
| |
| |
(a) | in sub-paragraph (1) for “Schedule 29 to the Finance Act 2002” and |
| |
“existing asset”, in both places where it occurs, substitute “Part 8 of |
| |
the Corporation Tax Act 2009” and “pre-FA 2002 asset” respectively, |
| 30 |
| |
(b) | in sub-paragraph (2) for “that Schedule”, in both places where it |
| |
occurs, substitute “that Part”. |
| |
| |
(a) | in sub-paragraph (1) for “Chapter 2 of Part 4 of the Finance Act 1996 |
| 35 |
(c. 8)” substitute “Part 5 of the Corporation Tax Act 2009”, and |
| |
(b) | in sub-paragraph (2) for “paragraph 12(8) of Schedule 9 to” substitute |
| |
| |
| |
(a) | in sub-paragraph (1) for “Schedule 26 to the Finance Act 2002 |
| 40 |
(derivative contracts)” substitute “Part 7 of the Corporation Tax Act |
| |
2009 (derivative contracts)”, and |
| |
(b) | in sub-paragraph (2) for “paragraph 28(6) of that Schedule” |
| |
substitute “section 624(3) of that Act”. |
| |
|
| |
|