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Finance Bill
Schedule 33 — Long funding leases of films

275

 

2          

In ITTOIA 2005, after section 148FC insert—

“148FD  

 Cases where ss 148A to 148F do not apply: films

(1)   

If a person is or has been a lessor under a long funding lease of a film,

sections 148A to 148F do not apply in respect of the lease.

(2)   

“Film” has the same meaning as in Part 15 of the Corporation Tax Act

5

2009 (see section 1181 of that Act).”

3          

The amendments made by paragraphs 1 and 2 have effect where the

inception of the long funding lease is on or after 13 November 2008 (“the

relevant date”).

4          

Paragraphs 5 to 8 apply in respect of a long funding finance lease of a film—

10

(a)   

whose inception is before the relevant date, and

(b)   

which has not terminated before that date.

5     (1)  

Section 502B of ICTA or section 148A of ITTOIA 2005 (rental earnings) does

not apply to a period of account within sub-paragraph (2).

      (2)  

A period of account is within this sub-paragraph if—

15

(a)   

it begins on or after the relevant date, and

(b)   

no rentals due (wholly or partly) in respect of any part of the period

of account were due under the lease before the relevant date.

6     (1)  

For the purpose of calculating the profits of the lessor under the lease for a

period of account—

20

(a)   

that ends on or after the relevant date, and

(b)   

that is not within paragraph 5(2),

           

treat the lessor as receiving for that period of account income attributable to

the lease of an amount equal to the relevant amount (in addition to any

amount brought into account under section 502B(2) of ICTA or section

25

148A(2) of ITTOIA 2005).

      (2)  

The “relevant amount” is an amount equal to so much of the rentals as—

(a)   

become due on or after the relevant date, and

(b)   

are due wholly or partly in respect of the period of account,

           

as would not reasonably be regarded as reflected in the rental earnings for

30

that period of account.

      (3)  

If any rental is paid for a period (“the rental period”) which—

(a)   

begins before the relevant date, or

(b)   

is not wholly within the period of account,

           

for the purposes of sub-paragraph (2) treat the amount of that rental as equal

35

to the amount apportioned (on a time basis) in respect of so much of the

rental period as falls on or after the relevant date and within the period of

account.

7          

Section 502C of ICTA or section 148B of ITTOIA 2005 (exceptional items)

does not apply in relation to any profit or loss arising on or after the relevant

40

date.

8     (1)  

If section 502D of ICTA or section 148C of ITTOIA 2005 (lessor making

termination payment) applies in respect of the termination of the lease on or

after the relevant date, a deduction is allowed (in calculating the profits of

 
 

Finance Bill
Schedule 34 — Real Estate Investment Trusts

276

 

the lessor) in respect of any sum calculated by reference to the termination

value paid to the lessee.

      (2)  

The amount of the deduction is (if it would otherwise exceed that amount)

limited to the total amount brought into account in respect of the lease by

virtue of paragraph 5 or 6.

5

9          

For the purpose of paragraphs 3 to 8—

(a)   

“film” has the same meaning as in Part 15 of the Corporation Tax Act

2009 (see section 1181 of that Act),

(b)   

“rental earnings” has the same meaning as in section 502B of ICTA or

section 148A of ITTOIA 2005, and

10

(c)   

Chapter 6A of Part 2 of CAA 2001 (interpretation of provisions about

long funding leases) applies.

Schedule 34

Section 65

 

Real Estate Investment Trusts

Introduction

15

1          

Part 4 of FA 2006 (Real Estate Investment Trusts) is amended as follows.

Property rental business

2     (1)  

In section 104 (property rental business), insert at the end—

“(3)   

For the purposes of section 104(1) ignore the effect of section 98(2) of

ICTA (which provides for receipts and expenses in connection with

20

tied premises to be treated as part of a trade and not as part of a

Schedule A business).”

      (2)  

The amendment made by sub-paragraph (1) has effect in relation to

accounting periods ending on or after 22 April 2009.

Conditions for company

25

3     (1)  

Section 106 (conditions for company) is amended as follows.

      (2)  

In subsection (2), insert at the end “(subject to section 109 and regulations

under section 116)”.

      (3)  

In subsection (7)(a)(ii)—

(a)   

for “fixed-rate” substitute “relevant”, and

30

(b)   

omit “(within the meaning of paragraph 2 of Schedule 25 to ICTA

(acceptable distribution policy))”.

      (4)  

After subsection (7) insert—

“(7A)   

For the purposes of Condition 5—

(a)   

“relevant preference share” means a share which is a

35

“relevant preference share” for the purposes of Schedule 18 to

ICTA (group relief) or would be but for the fact that it carries

a right of conversion into shares or securities in the company,

and

 
 

Finance Bill
Schedule 34 — Real Estate Investment Trusts

277

 

(b)   

a share is “non-voting” if it carries no right to vote at a general

meeting of the company or if it carries a right to vote which is

contingent on the non-payment of a dividend and which has

not become exercisable.”

      (5)  

The amendment made by sub-paragraph (2) is to be treated as always

5

having had effect.

      (6)  

The amendments made by sub-paragraphs (3) and (4) have effect in relation

to accounting periods ending on or after 22 April 2009.

Conditions for balance of business

4     (1)  

In section 108(3)(a) (conditions for balance of business), for “if it is property

10

involved in the relevant property rental business within the meaning given

by section 107(6)(a),” substitute “if it would be shown as an asset if separate

accounts were produced for C (tax-exempt),”.

      (2)  

The amendment made by sub-paragraph (1) has effect in relation to

accounting periods ending on or after 22 April 2009.

15

Entry notice: conditions for company

5     (1)  

Section 109 (entry notice) is amended as follows.

      (2)  

After subsection (2) insert—

“(2A)   

Subsection (2B) applies where a company—

(a)   

does not expect to satisfy Condition 3 of section 106 on the

20

first day of an accounting period, but

(b)   

reasonably expects to satisfy that Condition throughout the

rest of the accounting period.

(2B)   

Where this subsection applies—

(a)   

subsection (2)(c) does not apply, but

25

(b)   

the notice under subsection (1) must be accompanied by a

statement by the company containing the assertions specified

in subsection (2C).

(2C)   

Those assertions are—

(a)   

that Conditions 1, 2, 4, 5 and 6 of section 106 are reasonably

30

expected to be satisfied in respect of the company throughout

the specified accounting period, and

(b)   

that Condition 3 of section 106 is reasonably expected to be

satisfied in respect of the company for at least a part of the

first day of the specified accounting period, and throughout

35

the remainder of that period.”

      (3)  

In subsection (3), omit “by reason only that its shares have not been listed

and dealt with on a recognised stock exchange within the preceding 12

months,”.

      (4)  

In subsection (5)—

40

(a)   

after “Conditions 1, 2,” insert “3,” and

(b)   

omit paragraph (b) (but not the “and” at the end).

 
 

Finance Bill
Schedule 34 — Real Estate Investment Trusts

278

 

      (5)  

Insert at the end—

“(6)   

A company may take advantage both of subsections (2A) to (2C) and

of subsections (3) to (5) (in which case the assertion under subsection

(2C)(a) should omit reference to Condition 4 and the assertion under

subsection (5)(a) should omit reference to Condition 3.”

5

      (6)  

The amendments made by this paragraph have effect in relation to

accounting periods beginning on or after 22 April 2009.

Funds awaiting re-investment

6     (1)  

In section 118(5) (funds awaiting re-investment), after “one or more periods

of” insert “(in aggregate)”.

10

      (2)  

The amendment made by sub-paragraph (1) has effect in relation to

accounting periods ending on or after 22 April 2009.

Connected persons

7     (1)  

Before section 137 (miscellaneous: insurance companies) insert—

“136A   

 Connected persons

15

(1)   

If they consider it expedient in the public interest the Treasury may

make regulations about the application of this Part to activities or

situations which involve, or arise in connection with, a relationship

between a REIT company and another person.

(2)   

In subsection (1) “REIT company” means—

20

(a)   

a company to which this Part applies, and

(b)   

a member of a group to which this Part applies (a “REIT

group”).

(3)   

The regulations may, in particular—

(a)   

treat a specified person, or a person in specified

25

circumstances, as forming part of a REIT group for specified

purposes;

(b)   

provide for a specified provision which applies in respect of

members of a REIT group also to apply, with or without

modifications, in respect of a specified person or a person in

30

specified circumstances.

(4)   

No regulations may be made under this section unless a draft of the

statutory instrument containing them has been laid before, and

approved by a resolution of, the House of Commons.”

      (2)  

Regulations under section 136A (inserted by sub-paragraph (1)) may make

35

provision in relation to accounting periods ending on or after the date on

which the regulations are made.

 
 

 
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