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Corporation Tax Bill


Corporation Tax Bill

xxii

 

Chapter 15

Tax avoidance

Introduction

440   

Overview of Chapter

Unallowable purposes and tax relief schemes

441   

Loan relationships for unallowable purposes

442   

Meaning of “unallowable purpose”

443   

Restriction of relief for interest where tax relief schemes involved

Transactions not at arm’s length: general

444   

Transactions not at arm’s length: general

445   

Disapplication of section 444 where Schedule 28AA to ICTA applies

446   

Bringing into account adjustments made under Schedule 28AA to ICTA

Transactions not at arm’s length: exchange gains and losses

447   

Exchange gains and losses on debtor relationships: loans disregarded under

Schedule 28AA to ICTA

448   

Exchange gains and losses on debtor relationships: equity notes where holder

associated with issuer

449   

Exchange gains and losses on creditor relationships: no corresponding debtor

relationship

450   

Meaning of “corresponding debtor relationship”

451   

Exception to section 449 where loan exceeds arm’s length amount

452   

Exchange gains and losses where loan not on arm’s length terms

Connected parties deriving benefit from creditor relationships

453   

Connected parties deriving benefit from creditor relationships

Tax advantages from resetting interest rates ("reset bonds")

454   

Application of fair value accounting: reset bonds etc

Disposals for consideration not fully recognised by accounting practice

455   

Disposals for consideration not fully recognised by accounting practice

Chapter 16

Non-trading deficits

456   

Introduction to Chapter

457   

Basic rule for deficits: carry forward to accounting periods after deficit period

458   

Claim to carry forward deficit to later accounting periods

459   

Claim to set off deficit against profits of deficit period or earlier periods

460   

Time limits and procedure for claims under section 459(1)

461   

Claim to set off deficit against other profits for the deficit period

 
 

Corporation Tax Bill

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462   

Claim to carry back deficit to earlier accounting periods

463   

Profits available for relief under section 462

Chapter 17

Priority rules

464   

Priority of this Part for corporation tax purposes

465   

Exclusion of distributions except in tax avoidance cases

Chapter 18

General and supplementary provisions

Connections between persons

466   

Companies connected for an accounting period

467   

Connections where partnerships are involved

468   

Connection between companies to be ignored in some circumstances

469   

Creditors who are financial traders

470   

Section 469: supplementary provisions

471   

Creditors who are insurance companies carrying on BLAGAB

472   

Meaning of “control”

473   

Meaning of “major interest”

474   

Treatment of connected companies and partnerships for section 473

475   

Meaning of expressions relating to exchange gains and losses

Other general definitions

476   

Other definitions

Part 6

Relationships treated as loan relationships etc

Chapter 1

Introduction

477   

Overview of Part

Chapter 2

Relevant non-lending relationships

Introduction: meaning of “relevant non-lending relationship” etc

478   

Relevant non-lending relationships: introduction

479   

Relevant non-lending relationships not involving discounts

480   

Relevant non-lending relationships involving discounts

Application of Part 5 to relevant non-lending relationships

481   

Application of Part 5 to relevant non-lending relationships

 
 

Corporation Tax Bill

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482   

Miscellaneous rules about amounts to be brought into account because of this

Chapter

Meaning of “money debt” and “interest” in this Chapter

483   

Exchange gains and losses: amounts treated as money debts

484   

Provision not at arm’s length: meaning of “interest” and “money debt”

Exclusions

485   

Exclusion of debts where profits or losses within Part 7 or 8

486   

Exclusion of exchange gains and losses in respect of tax debts etc

Chapter 3

OEICs, unit trusts and offshore funds

Introduction

487   

Overview of Chapter

488   

Meaning of “open-ended investment company” etc

489   

Meaning of “offshore fund” etc

Holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights

490   

Holdings in OEICs, unit trusts and offshore funds treated as creditor

relationship rights

491   

Holding coming within section 490: opening valuations

492   

Disregard of investments made and liabilities incurred with avoidance

intention etc

The qualifying investments test

493   

The qualifying investments test

494   

Meaning of “qualifying investments”

495   

Qualifying holdings

496   

Meaning of “hedging relationship”

Power to change investments that are qualifying investments

497   

Power to change investments that are qualifying investments

Chapter 4

Building Societies

498   

Building society dividends and interest

Chapter 5

Industrial and provident societies

499   

Industrial and provident society payments treated as interest under loan

relationship

 
 

Corporation Tax Bill

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500   

Exclusion of interest where failure to make return

Chapter 6

Alternative finance arrangements

Introduction

501   

Introduction to Chapter

502   

Meaning of “financial institution”

Arrangements that are alternative finance arrangements

503   

Purchase and resale arrangements

504   

Diminishing shared ownership arrangements

505   

Deposit arrangements

506   

Profit share agency arrangements

507   

Investment bond arrangements

508   

Provision not at arm’s length: exclusion of arrangements from sections 503 to

507

Treatment as loan relationships

509   

Application of Part 5: general

510   

Application of Part 5 to particular alternative finance arrangements

Meaning of “alternative finance return”

511   

Purchase and resale arrangements

512   

Diminishing shared ownership arrangements

513   

Other arrangements

Treatment for other tax purposes

514   

Exclusion of alternative finance return from consideration for sale of assets

515   

Diminishing shared ownership arrangements not partnerships

516   

Treatment of principal under profit sharing agency arrangements

517   

Treatment of bond-holder under investment bond arrangements

518   

Investment bond arrangements: treatment as securities

519   

Investment bond arrangements: other provisions

520   

Provision not at arm’s length: non-deductibility of relevant return

Power to extend this Chapter to other arrangements

521   

Power to extend this Chapter to other arrangements

Chapter 7

Shares with guaranteed returns etc

Application of Part 5 to certain shares as rights under creditor relationship

522   

Introduction to Chapter

523   

Application of Part 5 to certain shares as rights under creditor relationship

 
 

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Shares subject to outstanding third party obligations

524   

Shares subject to outstanding third party obligations

525   

Meaning of “interest-like investment”

Non-qualifying shares

526   

Non-qualifying shares

527   

The increasing value condition

528   

Regulations about income-producing assets

529   

The redemption return condition

530   

The redemption return condition: excepted shares

531   

The redemption return condition: unallowable purposes

532   

The associated transactions condition

533   

Power to change conditions for non-qualifying shares

Consequences of section 523 applying or ceasing to apply

534   

Amounts to be brought into account where section 523 applies

535   

Shares ceasing to be shares to which section 523 applies

Chapter 8

Returns from partnerships

536   

Introduction to Chapter

537   

Payments in return for capital contribution to partnership

538   

Change of partnership shares

Chapter 9

Manufactured interest etc

539   

Introduction to Chapter

540   

Manufactured interest treated as interest under loan relationship

541   

Debits for deemed interest under stock lending arrangements disallowed

Chapter 10

Repos

Introduction

542   

Introduction to Chapter

Creditor repos and creditor quasi-repos

543   

Meaning of creditor repo

544   

Meaning of creditor quasi-repo

545   

Ignoring effect on lender etc of sale of securities

546   

Charge on lender for finance return in respect of the advance

547   

Repo under arrangement designed to produce quasi-interest: tax avoidance

 
 

Corporation Tax Bill

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Debtor repos and debtor quasi-repos

548   

Meaning of debtor repo

549   

Meaning of debtor quasi-repo

550   

Ignoring effect on borrower of sale of securities

551   

Relief for borrower for finance charges in respect of the advance

General provisions

552   

General provisions about arrangements

553   

Persons buying or selling for others

554   

Power to modify this Chapter

555   

Cases where section 554 applies: non-standard repos

Interpretation

556   

Meaning of securities and similar securities

557   

Meaning of person receiving an asset

558   

Interpretation of accounting expressions

559   

Minor definitions

Chapter 11

Investment life insurance contracts

Introduction

560   

Introduction to Chapter

561   

Meaning of “investment life insurance contract”

Investment life assurance contracts treated as creditor relationships

562   

Contract to be loan relationship

563   

Increased non-trading credits for BLAGAB and EEA taxed contracts

564   

Section 563: interpretation

565   

Relevant amount where the relevant company uses fair value accounting

Old accounting period contracts

566   

Introduction

567   

Gains on deemed surrenders to be brought into account on related

transactions

568   

Restriction on credits on old contracts: fair value accounting cases

569   

Restriction on debits on old contracts: non-fair value accounting cases

 
 

Corporation Tax Bill

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Part 7

Derivative contracts

Chapter 1

Introduction

Introduction

570   

Overview of Part

How profits and losses from derivative contracts are dealt with

571   

General rule: profits chargeable as income

572   

Profits and losses to be calculated using credits and debits given by this Part

573   

Trading credits and debits to be brought into account under Part 3

574   

Non-trading credits and debits to be brought into account under Part 5

Chapter 2

Contracts to which this Part applies

Introduction

575   

Overview of Chapter

Meaning of “derivative contract” and other basic definitions

576   

“Derivative contract”

577   

“Relevant contract”

578   

Relevant contracts of a company and being party to such contracts

579   

The accounting conditions

580   

“Option”

581   

“Future”

582   

“Contract for differences”

583   

“Underlying subject matter”

Cases where companies treated as parties to relevant contracts

584   

Hybrid derivatives with embedded derivatives

585   

Loan relationships with embedded derivatives

586   

Other contracts with embedded derivatives

Other contracts etc treated as derivative contracts

587   

Contract relating to holding in OEIC, unit trust or offshore fund

588   

Associated transaction treated as derivative contract

Exclusions from derivative contracts

589   

Contracts excluded because of underlying subject matter: general

590   

Disregard of subordinate or small value underlying subject matter

591   

Conditions A to E mentioned in section 589(5)

 
 

 
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