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Corporation Tax Bill


 

Corporation Tax Bill

 

[AS AMENDED IN THE JOINT COMMITTEE]

 
 

The Bill is divided into four volumes. Volume I contains Clauses 1 to 476. Volume

II contains Clauses 477 to 906. Volume III contains Clauses 907 to 1330. Volume IV

contains the Schedules to the Bill.

Contents

Part 1

Introduction

1   

Overview of Act

Part 2

Charge to corporation tax: basic provisions

Chapter 1

The charge to corporation tax

Charge to tax on profits

2   

Charge to corporation tax

3   

Exclusion of charge to income tax

4   

Exclusion of charge to capital gains tax

General scheme of corporation tax

5   

Territorial scope of charge

6   

Profits accruing in fiduciary or representative capacity

7   

Profits accruing under trusts

8   

How tax is charged and assessed

Chapter 2

Accounting periods

9   

Beginning of accounting period

10   

End of accounting period

11   

Companies with more than one accounting date

12   

Companies being wound up

 

Bill 51                                                                                                 

54/4

 
 

Corporation Tax Bill

ii

 

Chapter 3

Company residence

13   

Overview of Chapter

14   

Companies incorporated in the United Kingdom

15   

Continuation of residence established under common law

16   

SEs which transfer registered office to the United Kingdom

17   

SCEs which transfer registered office to the United Kingdom

18   

Companies treated as non-UK resident under double taxation arrangements

Chapter 4

Non-UK resident companies: chargeable profits

Chargeable profits

19   

Chargeable profits

20   

Profits attributable to permanent establishment: introduction

The separate enterprise principle

21   

The separate enterprise principle

22   

Transactions treated as being on arm’s length terms

23   

Provision of goods or services for permanent establishment

24   

Application to insurance companies

The separate enterprise principle: application to non-UK resident banks

25   

Non-UK resident banks: introduction

26   

Transfer of financial assets

27   

Loans: attribution of financial assets and profits arising

28   

Borrowing: permanent establishment acting as agent or intermediary

Rules about deductions

29   

Allowable deductions

30   

Restriction on deductions: costs

31   

Restriction on deductions: payments in respect of intangible assets

32   

Restriction on deductions: interest or other financing costs

Chapter 5

Supplementary

33   

Trade includes office

 
 

Corporation Tax Bill

iii

 

Part 3

Trading income

Chapter 1

Introduction

34   

Overview of Part

Chapter 2

Income taxed as trade profits

Charge to tax on trade profits

35   

Charge to tax on trade profits

Trades and trade profits

36   

Farming and market gardening

37   

Commercial occupation of woodlands

38   

Commercial occupation of land other than woodlands

39   

Profits of mines, quarries and other concerns

40   

Credit unions

Starting and ceasing to trade

41   

Effect of company starting or ceasing to be within charge to corporation tax

Trading income and property income

42   

Tied premises

43   

Caravan sites where trade carried on

44   

Surplus business accommodation

45   

Payments for wayleaves

Chapter 3

Trade profits: basic rules

46   

Generally accepted accounting practice

47   

Losses calculated on same basis as profits

48   

Receipts and expenses

49   

Items treated as receipts and expenses

50   

Animals kept for trade purposes

51   

Relationship between rules prohibiting and allowing deductions

52   

Apportionment etc of profits and losses to accounting period

Chapter 4

Trade profits: rules restricting deductions

53   

Capital expenditure

 
 

Corporation Tax Bill

iv

 

54   

Expenses not wholly and exclusively for trade and unconnected losses

55   

Bad debts

56   

Car or motor cycle hire

57   

Car or motor cycle hire: supplementary

58   

Hiring cars (but not motor cycles) with low CO2 emissions before 1 April 2013

59   

Patent royalties

60   

Expenditure on integral features

Chapter 5

Trade profits: rules allowing deductions

Pre-trading expenses

61   

Pre-trading expenses

Tenants under taxed leases

62   

Tenants under taxed leases: introduction

63   

Tenants occupying land for purposes of trade treated as incurring expenses

64   

Limit on deductions if tenant entitled to mineral extraction allowance

65   

Tenants dealing with land as property employed for purposes of trade

66   

Restrictions on section 63 expenses: lease premium receipts

67   

Restrictions on section 63 expenses: lease of part of premises

Renewals

68   

Replacement and alteration of trade tools

Payments for restrictive undertakings

69   

Payments for restrictive undertakings

Seconded employees

70   

Employees seconded to charities and educational establishments

71   

Educational establishments

Contributions to agents’ expenses

72   

Payroll deduction schemes: contributions to agents’ expenses

Counselling and retraining expenses

73   

Counselling and other outplacement services

74   

Retraining courses

75   

Retraining courses: recovery of tax

Redundancy payments etc

76   

Redundancy payments and approved contractual payments

77   

Payments in respect of employment wholly in employer’s trade

78   

Payments in respect of employment in more than one capacity

79   

Additional payments

 
 

Corporation Tax Bill

v

 

80   

Application of section 79 in cases involving partnerships

81   

Payments made by the Government

Contributions to local enterprise organisations or urban regeneration companies

82   

Contributions to local enterprise organisations or urban regeneration

companies

83   

Meaning of “local enterprise organisation”

84   

Approval of local enterprise agencies

85   

Supplementary provisions with respect to approvals

86   

Meaning of “urban regeneration company”

Scientific research

87   

Expenses of research and development

88   

Payments to research associations, universities etc

Expenses connected with patents, designs and trade marks

89   

Expenses connected with patents

90   

Expenses connected with designs or trade marks

Export Credits Guarantee Department

91   

Payments to Export Credits Guarantee Department

Levies under FISMA 2000

92   

Levies etc under FISMA 2000

Chapter 6

Trade profits: receipts

Capital receipts

93   

Capital receipts

Debts released

94   

Debts incurred and later released

Amounts received following earlier cessation

95   

Acquisition of trade: receipts from transferor’s trade

Reverse premiums

96   

Reverse premiums

97   

Excluded cases

98   

Tax treatment of reverse premiums

99   

Arrangements not at arm’s length

100   

Connected persons and property arrangements

 
 

Corporation Tax Bill

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Other receipts

101   

Distribution of assets of mutual concerns

102   

Industrial development grants

103   

Sums recovered under insurance policies etc

104   

Repayments under FISMA 2000

Chapter 7

Trade profits: gifts to charities etc

Relief for certain gifts

105   

Gifts of trading stock to charities etc

106   

Meaning of “designated educational establishment”

107   

Gifts of medical supplies and equipment

Benefits associated with gifts

108   

Receipt of benefits by donor or connected person

Chapter 8

Trade profits: herd basis rules

Introduction

109   

Election for application of herd basis rules

110   

Meaning of “animal”, “herd”, “production herd” etc

111   

Other interpretative provisions

The herd basis rules

112   

Initial cost of herd and value of herd

113   

Addition of animals to herd

114   

Replacement of animals in herd

115   

Amount of receipt if old animal slaughtered under disease control order

116   

Sale of animals from herd

117   

Sale of whole or substantial part of herd

118   

Acquisition of new herd begun within 5 years of sale

119   

Section 118: sale for reasons outside farmer’s control

120   

Replacement of part sold begun within 5 years of sale

121   

Section 120: sale for reasons outside farmer’s control

Elections

122   

Herd basis elections

123   

Five year gap in which no production herd kept

124   

Slaughter under disease control order

Preventing abuse of the herd basis rules

125   

Preventing abuse of the herd basis rules

 
 

Corporation Tax Bill

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Supplementary

126   

Information if election made

127   

Further assessment etc if herd basis rules apply

Chapter 9

Trade profits: other specific trades

Dealers in securities etc

128   

Taxation of amounts taken to reserves

129   

Conversion etc of securities held as circulating capital

130   

Traders receiving distributions etc

Building societies

131   

Incidental costs of issuing qualifying shares

Industrial and provident societies

132   

Dividends etc granted by industrial and provident societies

Credit unions

133   

Annual payments paid by a credit union

Dealers in land etc

134   

Purchase or sale of woodlands

135   

Relief in respect of mineral royalties

136   

Lease premiums etc: reduction of receipts

Mineral exploration and access

137   

Mineral exploration and access

Companies liable to pool betting duty

138   

Payments by companies liable to pool betting duty

Intermediaries treated as making employment payments

139   

Deduction for deemed employment payment

140   

Special rules for partnerships

Managed service companies

141   

Deduction for deemed employment payments

Waste disposal

142   

Deduction for site preparation expenditure

143   

Allocation of site preparation expenditure

144   

Site preparation expenditure: supplementary

 
 

 
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Revised 6 February 2009