|
| |
|
(3) | But this paragraph does not apply if paragraph 15 applies in relation to the |
| |
| |
15 (1) | This paragraph applies where— |
| |
(a) | Chapter 7 of Part 6 of CTA 2009 applies in relation to a share held by |
| |
a company immediately before 22 April 2009 by reason of the |
| 5 |
redemption return condition being met (see section 529 of that Act) |
| |
(or would so apply but for the share not being designed to produce |
| |
a return which equates in substance to the return on an investment |
| |
of money at a commercial rate of interest), and |
| |
(b) | section 521B of CTA 2009 applies in relation to the share and the |
| 10 |
company on 22 April 2009. |
| |
(2) | Part 5 of CTA 2009 applies as if the company had acquired the share on 22 |
| |
April 2009 for an amount equal to the notional carrying value of the share on |
| |
| |
(3) | In sub-paragraph (2) “notional carrying value” has the same meaning as in |
| 15 |
section 521E(2) of CTA 2009 (see subsection (3) of that section). |
| |
(4) | Section 521E of CTA 2009 does not apply by virtue of the coming into force |
| |
of section 521B of that Act. |
| |
| |
(a) | section 486D(2) of CTA 2009, or |
| 20 |
(b) | section 521E(2) of that Act, |
| |
| relating to a return which begins to be produced before 1 August 2009 can |
| |
be made at any time before that date but only in relation to any return |
| |
produced on or after the day on which the election is made. |
| |
| 25 |
| |
Transfers of income streams |
| |
| |
| |
| |
1 (1) | This Part applies where— |
| 30 |
(a) | a company within the charge to corporation tax (“the transferor”) |
| |
makes a transfer to another person (“the transferee”) of a right to |
| |
relevant receipts (see sub-paragraph (2)), and |
| |
(b) | (subject to sub-paragraph (3)) the transfer of the right is not a |
| |
consequence of the transfer to the transferee of an asset from which |
| 35 |
the right to relevant receipts arises. |
| |
(2) | “Relevant receipts” means any income— |
| |
(a) | which (but for the transfer) would be charged to corporation tax as |
| |
income of the transferor, or |
| |
(b) | which (but for the transfer) would be brought into account in |
| 40 |
calculating profits of the transferor for the purposes of corporation |
| |
| |
|
| |
|
| |
|
(3) | Despite paragraph (b) of sub-paragraph (1), this Part applies if the transfer |
| |
of the right is a consequence of the transfer to the transferee of all rights |
| |
under an agreement for annual payments; and for the purposes of that |
| |
paragraph the transfer of an asset under a sale and repurchase agreement is |
| |
not to be regarded as a transfer of the asset. |
| 5 |
(4) | Paragraph 2 makes provision as to the consequences of this Part applying. |
| |
(5) | For exclusions from this Part, see— |
| |
(a) | paragraph 3 (amount otherwise taxed), and |
| |
(b) | paragraph 4 (transfer by way of security). |
| |
(6) | Paragraph 5 makes special provision about transfers of partnership shares. |
| 10 |
(7) | Paragraph 6 contains supplementary provisions. |
| |
Value of transferred income stream treated as income |
| |
2 (1) | The relevant amount (see sub-paragraph (2)) is to be treated as income of the |
| |
transferor chargeable to corporation tax in the same way and to the same |
| |
extent as that in which the relevant receipts— |
| 15 |
(a) | would have been chargeable to corporation tax, or |
| |
(b) | would have been brought into account in calculating any profits for |
| |
the purposes of corporation tax, |
| |
| but for the transfer of the right to relevant receipts. |
| |
(2) | The relevant amount is— |
| 20 |
(a) | (except where paragraph (b) applies) the amount of the |
| |
consideration for the transfer of the right, or |
| |
(b) | where the amount of any such consideration is substantially less |
| |
than the market value of the right at the time when the transfer takes |
| |
place (or where there is no consideration for the transfer of the right), |
| 25 |
the market value of the right at that time. |
| |
(3) | The income under sub-paragraph (1) is to be treated as arising— |
| |
(a) | to the extent that it does not exceed the amount of the consideration |
| |
for the transfer of the right, in the period or periods for which, in |
| |
accordance with generally accepted accounting practice, the |
| 30 |
consideration for the transfer is recognised for accounting purposes |
| |
in a profit and loss account or income statement of the transferor, and |
| |
(b) | otherwise, in the period or periods for which, in accordance with |
| |
generally accepted accounting practice, the consideration for the |
| |
transfer would be so recognised if it were of an amount equal to the |
| 35 |
market value of the right at the time when the transfer takes place. |
| |
(4) | But if at any time it becomes reasonable to assume that the income (to any |
| |
extent) is not, or would not be, treated by sub-paragraph (3) as arising in an |
| |
accounting period of the transferor, the income is to that extent to be treated |
| |
as arising immediately before that time. |
| 40 |
Exception: amount otherwise taxed |
| |
3 | This Part does not apply if and to the extent that the income under |
| |
paragraph 2(1) is (apart from this Part)— |
| |
(a) | charged to tax as income of the transferor, |
| |
|
| |
|
| |
|
(b) | brought into account as income in calculating the profits of the |
| |
| |
(c) | brought into account under CAA 2001. |
| |
Exception: transfer by way of security |
| |
4 | This Part does not apply if the consideration for the transfer is the advance |
| 5 |
under an arrangement that is a structured finance arrangement for the |
| |
purposes of section 774A or 774C of ICTA in relation to the transferor or a |
| |
partnership in which the transferor is a partner. |
| |
| |
5 (1) | For the purposes of this Part a transfer of a right to relevant receipts |
| 10 |
consisting of the reduction in the transferor’s share in the profits or losses of |
| |
a partnership is to be regarded as a consequence of a transfer of an asset from |
| |
which the right arose (that is, the partnership property) if condition A or B |
| |
| |
(2) | Condition A is that there is a reduction of the transferor’s share in the |
| 15 |
partnership property and the reduction in the transferor’s share in the |
| |
profits or losses is proportionate to that reduction. |
| |
(3) | Condition B is that it is not the main purpose, or one of the main purposes, |
| |
of the transfer to secure that the relevant receipts are not charged to |
| |
corporation tax or income tax as income of any partner or brought into |
| 20 |
account as income of any partner for the purpose of either of those taxes. |
| |
| |
6 (1) | For the purposes of this Part— |
| |
(a) | the grant or surrender (or renunciation) of a lease of land is to be |
| |
regarded as a transfer of the land, |
| 25 |
(b) | the disposal of an interest in an oil licence (within the meaning of |
| |
section 809 of CTA 2009) is to be regarded as a transfer of the oil |
| |
| |
(c) | the grant or disposal of interest in intellectual property (within the |
| |
meaning of section 712(3) of CTA 2009) which constitutes a pre-2002 |
| 30 |
asset (within the meaning of section 881 of that Act) is to be regarded |
| |
as a transfer of that intellectual property. |
| |
(2) | The Treasury may by order make other provision for securing that other |
| |
transactions are to be regarded as transfers of assets for those purposes. |
| |
| 35 |
(a) | references to a transfer include sale, exchange, gift and assignment |
| |
(or assignation) and any other arrangement which equates in |
| |
substance to a transfer, and |
| |
(b) | references to a transfer taking place are, in the case of an |
| |
arrangement other than a sale, exchange, gift or assignment (or |
| 40 |
assignation), to the making of the arrangement. |
| |
(4) | A transfer to or by any partnership of which the transferor or transferee is a |
| |
member, and a transfer to the trustees of any trust of which the transferor is |
| |
a beneficiary, counts as a transfer in relation to which this Part applies. |
| |
|
| |
|
| |
|
| |
Non-corporate transferors |
| |
7 | In ITA 2007, after section 809 insert— |
| |
| |
Transfers of income streams |
| 5 |
809AZA | Application of Chapter |
| |
(1) | This Chapter applies where— |
| |
(a) | a person within the charge to income tax (“the transferor”) |
| |
makes a transfer to another person (“the transferee”) of a |
| |
right to relevant receipts (see subsection (2)), and |
| 10 |
(b) | (subject to subsection (3)) the transfer of the right is not a |
| |
consequence of the transfer to the transferee of an asset from |
| |
which the right to relevant receipts arises. |
| |
(2) | “Relevant receipts” means any income— |
| |
(a) | which (but for the transfer) would be charged to income tax |
| 15 |
as income of the transferor, or |
| |
(b) | which (but for the transfer) would be brought into account in |
| |
calculating profits of the transferor for the purposes of |
| |
| |
(3) | Despite paragraph (b) of subsection (1), this Chapter applies if the |
| 20 |
transfer of the right is a consequence of the transfer to the transferee |
| |
of all rights under an agreement for annual payments; and for the |
| |
purposes of that paragraph the transfer of an asset under a sale and |
| |
repurchase agreement is not to be regarded as a transfer of the asset. |
| |
(4) | Section 809AZB makes provision as to the consequences of this |
| 25 |
| |
(5) | For exclusions from this Chapter, see— |
| |
(a) | section 809AZC (amount otherwise taxed), and |
| |
(b) | section 809AZD (transfer by way of security). |
| |
(6) | Section 809AZE makes special provision about transfers of |
| 30 |
| |
(7) | Section 809AZF contains supplementary provisions. |
| |
809AZB | Value of transferred income stream treated as income |
| |
(1) | The relevant amount (see subsection (2)) is to be treated as income of |
| |
the transferor chargeable to income tax in the same way and to the |
| 35 |
same extent as that in which the relevant receipts— |
| |
(a) | would have been chargeable to income tax, or |
| |
(b) | would have been brought into account in calculating any |
| |
profits for the purposes of income tax, |
| |
| but for the transfer of the right to relevant receipts. |
| 40 |
(2) | The relevant amount is— |
| |
|
| |
|
| |
|
(a) | (except where paragraph (b) applies) the amount of the |
| |
consideration for the transfer of the right, or |
| |
(b) | where the amount of any such consideration is substantially |
| |
less than the market value of the right at the time when the |
| |
transfer takes place (or where there is no consideration for the |
| 5 |
transfer of the right), the market value of the right at that |
| |
| |
(3) | The income under subsection (1) is to be treated as arising in the |
| |
chargeable period of the transferor in which the transfer takes place. |
| |
(4) | But subsection (5) applies if (apart from the transfer) any of the |
| 10 |
| |
(a) | would have been brought into account in accordance with |
| |
Part 2 or 3 of ITTOIA 2005 (trading income and property |
| |
income) in calculating any profits for the purposes of income |
| |
| 15 |
(b) | in accordance with generally accepted accounting practice, |
| |
would have been recognised otherwise than wholly in the |
| |
chargeable period in which the transfer takes place. |
| |
(5) | If this subsection applies, the income under subsection (1) is to be |
| |
| 20 |
(a) | to the extent that it does not exceed the amount of the |
| |
consideration for the transfer of the right, in the chargeable |
| |
period or periods for which, in accordance with generally |
| |
accepted accounting practice, the consideration for the |
| |
transfer is recognised for accounting purposes in a profit and |
| 25 |
loss account or income statement of the transferor, and |
| |
(b) | otherwise, in the chargeable period or periods for which, in |
| |
accordance with generally accepted accounting practice, the |
| |
consideration for the transfer would be so recognised if it |
| |
were of an amount equal to the market value of the right at |
| 30 |
the time when the transfer takes place. |
| |
(6) | But if in a case where the transferor is a company it at any time |
| |
becomes reasonable to assume that the income (to any extent) is not, |
| |
or would not be, treated by subsection (5) as arising in an accounting |
| |
period of the transferor, the income is to that extent to be treated as |
| 35 |
arising immediately before that time. |
| |
809AZC | Exception: amount otherwise taxed |
| |
This Chapter does not apply if and to the extent that the income |
| |
under section 809AZB(1) is (apart from this Chapter)— |
| |
(a) | charged to tax as income of the transferor, |
| 40 |
(b) | brought into account in calculating the profits of the |
| |
| |
(c) | brought into account under CAA 2001. |
| |
809AZD | Exception: transfer by way of security |
| |
This Chapter does not apply if the consideration for the transfer is |
| 45 |
the advance under an arrangement that is a structured finance |
| |
arrangement for the purposes of section 774A or 774C of ICTA in |
| |
|
| |
|
| |
|
relation to the transferor or a partnership in which the transferor is a |
| |
| |
809AZE | Partnership shares |
| |
(1) | For the purposes of this Chapter a transfer of a right to relevant |
| |
receipts consisting of the reduction in a transferor’s share in the |
| 5 |
profits or losses of a partnership is to be regarded as a consequence |
| |
of a transfer of an asset from which the right arose (that is, the |
| |
partnership property) if condition A or B is met. |
| |
(2) | Condition A is that there is a reduction of the transferor’s share in the |
| |
partnership property and the reduction in the transferor’s share in |
| 10 |
the profits or losses is proportionate to that reduction. |
| |
(3) | Condition B is that it is not the main purpose, or one of the main |
| |
purposes, of the transfer to secure that the relevant receipts are not |
| |
charged to income tax or corporation tax as income of any partner or |
| |
brought into account as income of any partner for the purpose of |
| 15 |
| |
| |
(1) | For the purposes of this Chapter— |
| |
(a) | the grant or surrender of a lease of land is to be regarded as a |
| |
transfer of the land, and |
| 20 |
(b) | the disposal of an interest in an oil licence (within the |
| |
meaning of section 809 of CTA 2009) is to be regarded as a |
| |
transfer of the oil licence. |
| |
(2) | The Treasury may by order make other provision for securing that |
| |
other transactions are to be regarded as transfers of assets for those |
| 25 |
| |
| |
(a) | references to a transfer include sale, exchange, gift and |
| |
assignment (or assignation) and any other arrangement |
| |
which equates in substance to a transfer, and |
| 30 |
(b) | references to a transfer taking place are, in the case of an |
| |
arrangement other than a sale, exchange, gift or assignment |
| |
(or assignation), to the making of the arrangement. |
| |
(4) | A transfer to or by any partnership of which the transferor or |
| |
transferee is a member, and a transfer to the trustees of any trust of |
| 35 |
which the transferor is a beneficiary, counts as a transfer in relation |
| |
to which this Chapter applies.” |
| |
| |
| |
8 (1) | Part 6 of CTA 2009 (relationships treated as loan relationships etc) is |
| 40 |
| |
(2) | In section 477(2) (overview of Part 6), after paragraph (aa) (inserted by |
| |
| |
“(ab) | Chapter 2B (transferred income streams),”. |
| |
|
| |
|
| |
|
(3) | After Chapter 2A (inserted by Schedule 24) insert— |
| |
| |
Transferred income streams |
| |
486F | Introduction to Chapter |
| |
(1) | This Chapter provides for Part 5 to apply in relation to a company to |
| 5 |
which an income stream transfer is made (“the transferee”). |
| |
(2) | An “income stream transfer” is a transfer by a person (“the |
| |
transferor”) to which either of the following provisions applies— |
| |
(a) | Part 1 of Schedule 25 to FA 2009 (transfers of income streams |
| |
| 10 |
(b) | Chapter 5A of Part 13 of ITA 2007 (transfers of income |
| |
| |
486G | Consideration to be treated as loan relationship |
| |
(1) | For the purposes of this Part— |
| |
(a) | the consideration for the transfer of the right to relevant |
| 15 |
receipts is to be treated as a money debt which is owed to the |
| |
transferee by the person by whom the relevant receipts fall to |
| |
| |
(b) | the transfer is to be treated as a transaction for the lending of |
| |
money from which that debt is treated as arising. |
| 20 |
(2) | For the meaning of “relevant receipts” see paragraph 1(2) of Schedule |
| |
25 to FA 2009 or section 809AZA(2) of ITA 2007.” |
| |
| |
Consequential amendments and repeals |
| |
| 25 |
(a) | section 730 (transfers of rights to receive distributions in respect of |
| |
| |
(b) | section 775A (transfers of rights to receive annual payments), |
| |
(c) | section 785A (rent factoring of leases of plant or machinery), and |
| |
(d) | in section 786 (transactions associated with loans or credit)— |
| 30 |
(i) | in subsection (5), “assigns,”, “(without a sale or transfer of the |
| |
property)” and “assigned,”, |
| |
(ii) | in subsection (5ZA), “assigned,”, and |
| |
(iii) | in subsection (5A), “assigned,”. |
| |
(2) | In ITTOIA 2005, omit— |
| 35 |
(a) | in Chapter 11 of Part 4 (transactions in deposits)— |
| |
(i) | in section 551(2), the words after “of it”, and |
| |
(ii) | in section 552(1), paragraph (e) and the word “and” before it, |
| |
| |
(b) | Chapter 13 of Part 4 (sales of foreign dividend coupons). |
| 40 |
(3) | Omit the following provisions (which relate to the provisions repealed by |
| |
sub-paragraphs (1) and (2))— |
| |
|
| |
|