|
| |
|
| |
| |
| |
| |
42 (1) | This paragraph applies where, apart from this paragraph, an amount (“the |
| 5 |
| |
(a) | a financing expense amount of a group treasury company by virtue |
| |
of meeting condition A, B or C in paragraph 39, or |
| |
(b) | a financing income amount of a group treasury company by virtue of |
| |
meeting condition A, B or C in paragraph 40. |
| 10 |
(2) | The relevant amount is treated as not being a financing expense amount or |
| |
a financing income amount of the group treasury company, but only if that |
| |
company makes an election for this purpose. |
| |
(3) | An election under this paragraph must be made within 3 years after the end |
| |
| 15 |
(4) | A company is a group treasury company in the relevant period if the |
| |
following conditions are met. |
| |
(5) | The first condition is that the company is a member of the worldwide group. |
| |
(6) | The second condition is that the company undertakes treasury activities for |
| |
the worldwide group in the relevant period (whether or not it also |
| 20 |
undertakes other activities). |
| |
(7) | The third condition is that— |
| |
(a) | if the company is the only company to meet the first and second |
| |
conditions in the relevant period, or the only other companies to |
| |
meet those conditions are not UK companies, at least 90% of the |
| 25 |
relevant income of the company for the relevant period is group |
| |
| |
(b) | if the company and one or more other companies that are UK |
| |
companies meet the first and second conditions in the relevant |
| |
period, at least 90% of the aggregate relevant income of those |
| 30 |
companies for the relevant period is group treasury revenue. |
| |
(8) | For the purposes of this paragraph, a company undertakes treasury |
| |
activities for the worldwide group in the relevant period if, in that period, it |
| |
does one or more of the following things in relation to, or on behalf of, the |
| |
worldwide group or any of its members— |
| 35 |
(a) | managing surplus deposits of money or overdrafts, |
| |
(b) | making or receiving deposits of money, |
| |
| |
(d) | hedging assets, liabilities, income or expenses. |
| |
(9) | For the purposes of this paragraph “group treasury revenue”, in relation to |
| 40 |
a company, means revenue— |
| |
(a) | arising from the treasury activities that the company undertakes for |
| |
| |
(b) | accounted for as such under generally accepted accounting practice; |
| |
| before any deduction (whether for expenses or otherwise). |
| 45 |
|
| |
|
| |
|
(10) | But revenue consisting of a dividend or other distribution is not group |
| |
treasury revenue unless it is a dividend or distribution from a company that |
| |
is, in the relevant period— |
| |
(a) | a UK group company, and |
| |
(b) | a group treasury company. |
| 5 |
| |
“relevant income”, in relation to a company, means income— |
| |
(a) | arising from the activities of the company, and |
| |
(b) | accounted for as such under generally accepted accounting |
| |
| 10 |
before any deduction (whether for expenses or otherwise); |
| |
“relevant period” means the period of account of the worldwide group |
| |
to which the relevant amount relates. |
| |
Companies engaged in oil extraction activities |
| |
43 (1) | This paragraph applies where, apart from this paragraph, an amount (“the |
| 15 |
| |
(a) | a financing expense amount of a company by virtue of meeting |
| |
condition A in paragraph 39, or |
| |
(b) | a financing income amount of a company by virtue of meeting |
| |
condition A in paragraph 40. |
| 20 |
(2) | The relevant amount is treated as not being a financing expense amount or |
| |
a financing income amount of the company if the following conditions are |
| |
| |
(3) | The first condition is that the company is treated, in the accounting period in |
| |
which the amount is brought into account, as carrying on a ring fence trade |
| 25 |
(see section 502 of ICTA). |
| |
(4) | The second condition is that the amount falls to be brought into account in |
| |
calculating the profits of that trade for that accounting period. |
| |
Intra-group short-term finance: financing expense |
| |
44 (1) | This paragraph applies where, apart from this paragraph, an amount (“the |
| 30 |
relevant amount”) is a financing expense amount of a company (“company |
| |
A”) by virtue of meeting condition A in paragraph 39. |
| |
(2) | The relevant amount is treated as not being a financing expense amount of |
| |
company A, but only if an election is made for this purpose. |
| |
(3) | Such an election may not be made unless the following conditions are met. |
| 35 |
(4) | The first condition is that company A and the other party to the loan |
| |
relationship (“company B”) are both members of the worldwide group. |
| |
(5) | The second condition is that the finance arrangement is a short-term loan |
| |
relationship as respects the period of account of the worldwide group. |
| |
(6) | An election under this paragraph may only be made— |
| 40 |
(a) | jointly by company A and company B, and |
| |
(b) | within 36 months of the end of the accounting period of the |
| |
worldwide group to which the relevant amount relates. |
| |
|
| |
|
| |
|
(7) | An election under this paragraph is irrevocable. |
| |
(8) | In this paragraph “short-term loan relationship” has the meaning given in |
| |
| |
Intra-group short-term finance: financing income |
| |
45 (1) | This paragraph applies where— |
| 5 |
(a) | under paragraph 44, the relevant amount is treated as not being a |
| |
financing expense amount of company A, and |
| |
(b) | apart from this paragraph, the relevant amount is a financing income |
| |
amount of company B by virtue of meeting condition A in paragraph |
| |
| 10 |
(2) | The relevant amount is treated as not being a financing income amount of |
| |
| |
(3) | In this paragraph “company A” and “company B” have the same meanings |
| |
| |
Short-term loan relationships |
| 15 |
46 (1) | For the purposes of paragraph 44, the finance arrangement is a short-term |
| |
loan relationship as respects the period of account of the worldwide group |
| |
(“the relevant period”) if— |
| |
(a) | regulations made by the Commissioners provide for it to be so, or |
| |
(b) | one or other of the following conditions is met. |
| 20 |
(2) | The first condition is that the finance arrangement does not terminate during |
| |
| |
(a) | to the extent that the finance arrangement provides for the creation |
| |
of money debt, its terms require all money debt created under it to be |
| |
settled within 12 months of money debt first being created under it, |
| 25 |
| |
(b) | to the extent that the finance arrangement is otherwise a loan |
| |
relationship, its terms provide for it to terminate within 12 months of |
| |
| |
(3) | The second condition is that the finance arrangement terminates during, or |
| 30 |
after the end of, the relevant period and— |
| |
(a) | to the extent that the relationship provided for the creation of money |
| |
debt, all money debt created under it was settled within 12 months |
| |
of money debt first being created under it, and |
| |
(b) | to the extent that the relationship was otherwise a loan relationship, |
| 35 |
it terminated within 12 months of its coming into force. |
| |
(4) | The Treasury may, by regulations, make provision about other |
| |
circumstances in which the finance arrangement is to be taken not to be a |
| |
short-term loan relationship as respects— |
| |
(a) | the relevant period, or |
| 40 |
(b) | any part or parts of the relevant period. |
| |
(5) | Regulations under sub-paragraph (4) may include provision for the finance |
| |
arrangement to be taken never to have been a short-term loan relationship |
| |
as respects the relevant period or the part or parts of it. |
| |
|
| |
|
| |
|
(6) | No regulations may be made under sub-paragraph (4) unless a draft of the |
| |
statutory instrument containing them has been laid before, and approved by |
| |
a resolution of, the House of Commons. |
| |
Stranded deficits in non-trading loan relationships: financing expense |
| |
47 (1) | This paragraph applies where, apart from this paragraph, an amount (“the |
| 5 |
relevant amount”) is a financing expense amount of a company (“company |
| |
A”) by virtue of meeting condition A in paragraph 39. |
| |
(2) | The relevant amount is treated as not being a financing expense amount of |
| |
company A, but only if an election is made for this purpose. |
| |
(3) | Such an election may not be made unless the following conditions are met. |
| 10 |
(4) | The first condition is that company A and the other party to the loan |
| |
relationship (“company B”) are both members of the worldwide group. |
| |
(5) | The second condition is that company B— |
| |
(a) | is resident in the United Kingdom, or |
| |
(b) | is not resident in the United Kingdom and is carrying on a trade in |
| 15 |
the United Kingdom through a permanent establishment in the |
| |
| |
(6) | The third condition is that, under section 457 of CTA 2009, company B |
| |
carries forward an amount of non-trading deficit from the finance |
| |
arrangement and sets it off against non-trading profits of an accounting |
| 20 |
period that falls wholly or partly within the period of account of the |
| |
| |
(7) | The fourth condition is that the amount of non-trading deficit carried |
| |
forward and set off is equal to, or greater than, the relevant amount. |
| |
(8) | An election under this paragraph may only be made— |
| 25 |
(a) | jointly by company A and company B, and |
| |
(b) | within 36 months of the end of the accounting period of the |
| |
worldwide group to which the relevant amount relates. |
| |
Stranded deficits in non-trading loan relationships: financing income |
| |
48 (1) | This paragraph applies where— |
| 30 |
(a) | under paragraph 47, the relevant amount is treated is not being a |
| |
financing expense amount of company A, and |
| |
(b) | apart from this paragraph, the relevant amount is a financing income |
| |
amount of company B by virtue of meeting condition A in paragraph |
| |
| 35 |
(2) | The relevant amount is treated as not being a financing income amount of |
| |
| |
(3) | In this paragraph “company A” and “company B” have the same meanings |
| |
| |
|
| |
|
| |
|
Stranded management expenses in non-trading loan relationships: financing expense |
| |
49 (1) | This paragraph applies where, apart from this paragraph, an amount (“the |
| |
relevant amount”) is a financing expense amount of a company (“company |
| |
A”) by virtue of meeting condition A in paragraph 39. |
| |
(2) | The relevant amount is treated as not being a financing expense amount of |
| 5 |
company A, but only if an election is made for this purpose. |
| |
(3) | Such an election may not be made unless the following conditions are met. |
| |
(4) | The first condition is that company A and the other party to the finance |
| |
arrangement (“company B”) are both members of the worldwide group. |
| |
(5) | The second condition is that company B is an investment company (within |
| 10 |
the meaning of Part 4 of ICTA) and— |
| |
(a) | is resident in the United Kingdom, or |
| |
(b) | is not resident in the United Kingdom and is carrying on a trade in |
| |
the United Kingdom through a permanent establishment in the |
| |
| 15 |
(6) | The third condition is that company B is allowed a deduction under section |
| |
75 of ICTA (expenses of management: companies with investment business) |
| |
in respect of an accounting period that falls wholly or partly within the |
| |
period of account of the worldwide group (“the relevant period”). |
| |
(7) | The fourth condition is that the amount of the deduction allowed is equal to, |
| 20 |
or greater than, the relevant amount. |
| |
(8) | The fifth condition is that the calculation of company B’s total profits for the |
| |
relevant period for the purposes of corporation tax results in a loss if |
| |
company B’s credit is not included in that calculation. |
| |
(9) | An election under this paragraph may only be made— |
| 25 |
(a) | jointly by company A and company B, and |
| |
(b) | within 36 months of the end of the accounting period of the |
| |
worldwide group to which the relevant amount relates. |
| |
(10) | In this paragraph “company B’s credit” means the credit to company B that |
| |
arises from the debit to company A by virtue of which condition A in |
| 30 |
| |
Stranded management expenses in non-trading loan relationships: financing income |
| |
50 (1) | This paragraph applies where— |
| |
(a) | under paragraph 49, the relevant amount is treated is not being a |
| |
financing expense amount of company A, and |
| 35 |
(b) | apart from this paragraph, the relevant amount is a financing income |
| |
amount of company B by virtue of meeting condition A in paragraph |
| |
| |
(2) | The relevant amount is treated as not being a financing income amount of |
| |
| 40 |
(3) | In this paragraph “company A” and “company B” have the same meanings |
| |
| |
|
| |
|
| |
|
Interpretation of paragraphs 42 to 50 |
| |
51 | In paragraphs 42 to 50 “finance arrangement” means— |
| |
(a) | in the case of an amount that is a debit or credit that meets the |
| |
condition in paragraph 39(2) or 40(2), the loan relationship to which |
| |
the debit or credit relates; |
| 5 |
(b) | in the case of an amount that meets the condition in paragraph 39(4) |
| |
or 40(4), the finance lease to which the amount relates; |
| |
(c) | in the case of an amount that meets the condition in paragraph 39(5) |
| |
or 40(5), the debt factoring or similar transaction to which the |
| |
| 10 |
| |
The “tested expense amount” and “tested income amount” |
| |
The tested expense amount |
| |
52 (1) | References in this Schedule to the “tested expense amount” for a period of |
| |
account of the worldwide group are to the sum of the net financing |
| 15 |
deductions of each relevant group company. |
| |
(2) | References in this Schedule to the “net financing deduction” of a company |
| |
for a period of account of the worldwide group are to— |
| |
(a) | the sum of the company’s financing expense amounts for the period |
| |
| 20 |
(b) | the sum of the company’s financing income amounts for the period |
| |
| |
(3) | References in sub-paragraph (2) to a company’s financing expense amounts |
| |
or financing income amounts for a period of account of the worldwide |
| |
group do not include any amount that arises as a result of a transaction that |
| 25 |
takes place at a time at which the company is not a relevant group company. |
| |
(4) | Where the amount determined in accordance with sub-paragraph (2) is |
| |
negative, the net financing deduction of the company for the period is nil. |
| |
(5) | Where the amount determined in accordance with sub-paragraph (2) is |
| |
small (see paragraph 54), the net financing deduction of the company for the |
| 30 |
| |
| |
53 (1) | References in this Part to the “tested income amount” for the period of |
| |
account of the worldwide group are to the sum of the net financing incomes |
| |
of each UK group company. |
| 35 |
(2) | The reference in sub-paragraph (1) to the “net financing income” of a |
| |
company for a period of account of the worldwide group is to— |
| |
(a) | the sum of the company’s financing income amounts for the period |
| |
| |
(b) | the sum of the company’s financing expense amounts for the period |
| 40 |
| |
(3) | References in sub-paragraph (2) to a company’s financing expense amounts |
| |
or financing income amounts for a period of account of the worldwide |
| |
|
| |
|
| |
|
group do not include any amount that arises as a result of a transaction that |
| |
takes place at a time at which the company is not a UK group company. |
| |
(4) | Where the amount determined in accordance with sub-paragraph (2) is |
| |
negative, the net financing income of the company for the period is nil. |
| |
(5) | Where the amount determined in accordance with sub-paragraph (2) is |
| 5 |
small (see paragraph 54), the net financing income of the company for the |
| |
| |
Companies with net financing deduction or net financing income that is small |
| |
54 (1) | An amount determined in accordance with 52(2) or 53(2) is “small” if it is less |
| |
| 10 |
(2) | The Treasury may by order amend sub-paragraph (1) by substituting a |
| |
higher or lower amount for the amount for the time being specified there. |
| |
(3) | No order may be made under sub-paragraph (2) unless a draft of the |
| |
statutory instrument containing it has been laid before, and approved by a |
| |
resolution of, the House of Commons. |
| 15 |
(4) | An order under sub-paragraph (2) may only have effect in relation to |
| |
periods of account of the worldwide group beginning after the date on |
| |
| |
| |
| 20 |
| |
55 (1) | References in this Schedule to the “available amount” for a period of account |
| |
of the worldwide group are to the sum of the amounts disclosed in the |
| |
income statement of the group for that period in respect of— |
| |
(a) | interest payable on amounts borrowed, |
| 25 |
(b) | amortisation of discounts relating to amounts borrowed, |
| |
(c) | amortisation of premiums relating to amounts borrowed, |
| |
(d) | amortisation of ancillary costs relating to amounts borrowed, |
| |
(e) | the financing cost implicit in payments made under finance leases, |
| |
(f) | the financing cost relating to debt factoring, or |
| 30 |
(g) | amounts of such other description as may be specified in regulations |
| |
made by the Commissioners. |
| |
(2) | An amount that falls within any of paragraphs (a) to (g) of sub-paragraph (1) |
| |
is to be disregarded for the purposes of that sub-paragraph to the extent |
| |
| 35 |
(a) | the amount represents a dividend payable in respect of redeemable |
| |
| |
(b) | those shares are recognised as a liability in the financial statements |
| |
of the group for the period. |
| |
|
| |
|