House of Commons portcullis
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

724

 

insert—

“(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

of account.”

640        

For section 850 (allocation of firm’s profits or losses between partners)

5

substitute—

“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

period.

   

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

the trade.

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”)

produces a profit, and

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

profit,

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]]]]]

30

   

where—

FP is the amount of the firm’s profit calculated under section

849 in relation to A,

PP is the amount determined under section 850 to be A’s profit,

and

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

as follows.

   

Step 1

40

 
 

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

725

 

   

Take the firm’s profit calculated under section 849 in relation to A.

   

Step 2

   

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

   

Step 3

   

Each such share is the comparable amount for the partner to whom

it is attributed.

(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”)

produces a loss, and

(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

loss,

(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

profit,

   

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]]]]]

25

   

where—

FL is the amount of the firm’s loss calculated under section 849

in relation to A,

PL is the amount determined under section 850 to be A’s loss,

and

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

as follows.

   

Step 1

35

   

Take the firm’s loss calculated under section 849 in relation to A.

   

Step 2

   

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

   

Step 3

 
 

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

726

 

   

Each such share is the comparable amount for the partner to whom

it is attributed.

(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.”

      (3)  

In subsection (3)—

(a)   

after “trade” insert “or property business”, and

(b)   

after “Chapter 17 of Part 2” insert “, or Chapter 7 of Part 3,”.

15

      (4)  

In subsection (6)—

(a)   

in paragraph (a), at the end insert “or Chapter 7 of Part 3 (as the case

requires)”, and

(b)   

in paragraph (b) after “trade” insert “or property business (as the

case requires)”.

20

642        

For section 861 (sale of patent rights: effect of partnership changes)

substitute—

“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

of those proceeds,

(c)   

the tax is chargeable in one or more tax years or accounting

30

periods (referred to in this section as “the tax charge

periods”),

(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

met.

(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

the last of them.

(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

 
 

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

727

 

(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

purposes—

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,

and

(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

change, and

(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

which the change occurs.

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

follows.

      (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,

and

 
 

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

728

 

(d)   

no person who carried on the trade immediately before the

cessation continues to carry on the trade immediately after

the cessation.

(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

occurred.”

      (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

of CTA 2009”.

647   (1)  

Amend Schedule 4 (abbreviations and defined expressions) as follows.

      (2)  

In Part 1 at the end insert—

 

“CTA 2009

The Corporation Tax Act 2009”

 

      (3)  

In Part 2—

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”.

Finance Act 2005 (c. 7)

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

Corporation Tax Acts”,

(b)   

in subsection (4) after “section 48A”, in both places where it occurs,

insert “of this Act or section 507 of CTA 2009”, and

(c)   

in subsection (5)—

 
 

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

729

 

(i)   

after “section 48A” insert “of this Act or section 507 of CTA

2009”,

(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

finance return”, and

(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

return”.

656        

In section 52 (provision not at arm’s length)—

15

(a)   

in subsection (2) omit “or profit share return”, and

(b)   

omit subsection (6).

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,

505 or 506 of CTA 2009”,

(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

CTA 2009”, and

(e)   

in subsection (6) after “section 49A” insert “of this Act or section 506

of CTA 2009”.

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

(d)   

in subsection (6)—

(i)   

for “Section 54” substitute “Section 209(6A) of ICTA”, and

(ii)   

for “profit share return” substitute “alternative finance

return”.

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

 
 

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

730

 

(derivative contracts) (see paragraph 12 of that Schedule)” substitute “Part 7

of CTA 2009 (derivative contracts) (see sections 580, 581 and 582 of that

Act)”.

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

follows.

      (2)  

Omit paragraph 2.

      (3)  

Omit paragraph 7.

      (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

and 52.

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

follows.

      (2)  

In paragraph 7—

(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.”

      (4)  

In paragraph 17—

(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

and

(b)   

in sub-paragraph (2) for “that Schedule”, in both places where it

occurs, substitute “that Part”.

      (5)  

In paragraph 18—

(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

“section 335(6) of”.

      (6)  

In paragraph 19—

(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”.

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2009
Revised 6 February 2009