Finance Bill

House of Commons

Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 61 — Alternative finance investment bonds
Part 3 — Transactions relating to underlying assets consisting of land
429

(b)
as regards an industrial building or part of an industrial building, as
a balancing event (in relation to P) occurring in the chargeable period
in which the cessation takes place.
      (6)
For the purposes of sub-paragraph (5)—
(a)
in the case falling within paragraph (a), the disposal value that P is
5
required to bring into account is the market value of the asset at the
time of the transfer, and
(b)
in the case falling within paragraph (b), P is to be treated as receiving,
as the proceeds of the balancing event, the market value of the asset
at the time of the transfer.
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Q transferring asset to third person
17    (1)
This paragraph applies to an asset if the first and second conditions are met.
      (2)
The first condition is that the asset is part of the subject matter of the first
transaction and constitutes—
(a)
plant or machinery, or
15
(b)
an industrial building (or part of an industrial building).
      (3)
The second condition is that Q transfers the asset to any person other than P.
      (4)
At the time that Q transfers the asset, that other person is to be treated as
becoming, and P is to be treated as ceasing to be, the owner of the asset.
      (5)
Accordingly, the transfer is to be treated—
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(a)
as regards plant or machinery, as a disposal event (in relation to P)
occurring in the chargeable period in which the transfer takes place,
and
(b)
as regards an industrial building or part of an industrial building, as
a balancing event (in relation to P) occurring in the chargeable period
25
in which the transfer takes place.
      (6)
For the purposes of sub-paragraph (5)—
(a)
in the case falling within paragraph (a), the disposal value that P is
required to bring into account is the market value of the asset at the
time of the transfer;
30
(b)
in the case falling within paragraph (b), P is to be treated as receiving,
as the proceeds of the balancing event, the market value of the asset
at the time of the transfer.
Supplementary
Substitution of asset
35
18    (1)
This paragraph applies if—
(a)
conditions A to C and G are met in relation to an interest in land (“the
original land”),
(b)
Q ceases to hold the original land as a bond asset (and, accordingly,
transfers it to P) before the termination of the alternative finance
40
investment bond,
(c)
P and Q enter into further arrangements falling within paragraph
5(2) relating to an interest in other land (“the replacement land”), and

Finance Bill
Schedule 61 — Alternative finance investment bonds
Part 3 — Transactions relating to underlying assets consisting of land
430

(d)
the value of the interest in the replacement land at the time that it is
transferred from P to Q is greater than or equal to the value of the
interest in the original land at the time of the first transaction.
      (2)
Paragraphs 6 to 17 apply—
(a)
in relation to the original land with the modification set out in sub-
5
paragraph (3), and
(b)
in relation to the replacement land with the modifications set out in
sub-paragraph (4).
      (3)
Condition F does not need to be met in relation to the original land if
conditions A, B, C, F and G (as modified by sub-paragraph (4)) are met in
10
relation to the replacement land.
      (4)
In relation to the replacement land—
(a)
condition E applies as if the reference to the interest in the land were
a reference to the interest in the original land, and
(b)
condition G applies as if the reference in paragraph 5(11)(b) to the
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first transaction were a reference to the first transaction relating to
the original land.
      (5)
If the replacement land is in the United Kingdom, the original land ceases to
be subject to the charge imposed on it, or security granted over it, in
pursuance of condition D when that condition is complied with in relation
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to the replacement land.
      (6)
If the replacement land is not in the United Kingdom, the original land
ceases to be subject to the charge imposed on it, or security granted over it,
in pursuance of condition D when Q provides HMRC with the prescribed
evidence that each of conditions A to C is met in relation to the replacement
25
land.
      (7)
This paragraph also applies where the replacement land is replaced by
further replacement land; and in that event—
(a)
the references to the original land (except those in sub-paragraph (4))
are to be read as references to the replacement land, and
30
(b)
the references to the replacement land are to be read as references to
the further replacement land.
HMRC to notify Registrar of discharge of charge
19    (1)
Where a charge or security is discharged in accordance with paragraph 9 or
18(5) or (6), HMRC must—
35
(a)
in the case of a charge, notify the Chief Land Register of the discharge
in accordance with land registration rules (within the meaning of the
Land Registration Act 2002), and
(b)
in the case of a security, register the discharge in the Land Register of
Scotland.
40
      (2)
HMRC must do so within the period of 30 days beginning with the date on
which Q provides the evidence in question.

Finance Bill
Schedule 61 — Alternative finance investment bonds
Part 3 — Transactions relating to underlying assets consisting of land
431

Relief not available where bond-holder acquires control of underlying asset
20    (1)
The reliefs provided by paragraphs 6 to 12 (and paragraph 18 so far as it
relates to those paragraphs) are not available if control of the underlying
asset is acquired by—
(a)
a bond-holder, or
5
(b)
a group of connected bond-holders.
      (2)
A bond-holder (“BH”), or a group of connected bond-holders, acquires
control of the underlying asset if—
(a)
the rights of bond-holders under an alternative finance investment
bond include the right of management and control of the bond
10
assets, and
(b)
BH, or the group, acquires sufficient rights to enable BH, or the
members of the group acting jointly, to exercise the right of
management and control of the bond assets to the exclusion of any
other bond-holders.
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      (3)
In accordance with sub-paragraph (1), in the case of the reliefs provided by
paragraphs 6 and 10—
(a)
if BH, or the group, acquires control of the underlying asset before
the end of the period of 30 days beginning with the effective date of
the first transaction, paragraphs 6 and 10 do not apply, and
20
(b)
if BH, or the group, acquires control of the underlying asset after the
end of that period and conditions A to C have been met, paragraphs
7 and 11 apply.
21    (1)
But paragraph 20 does not prevent the reliefs being available in either of the
following cases.
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      (2)
The first case is where—
(a)
at the time that the rights were acquired BH (or all of the connected
bond-holders) did not know and had no reason to suspect that the
acquisition enabled the exercise of the right of management and
control of the bond assets to the exclusion of other bond-holders, and
30
(b)
as soon as reasonably practicable after BH (or any of the bond-
holders) becomes aware that the acquisition enables that exercise,
BH transfers (or some or all of the bond-holders transfer) sufficient
rights for that no longer to be possible.
      (3)
The second case is where BH—
35
(a)
underwrites a public offer of rights under the bond, and
(b)
does not exercise the right of management and control of the bond
assets.
      (4)
In this paragraph—
“connected” is to be read in accordance with section 839 of ICTA, and
40
“underwrite”, in relation to an offer of rights under a bond, means to
agree to make payments of capital under the bond in the event that
other persons do not make those payments.

Finance Bill
Schedule 61 — Alternative finance investment bonds
Part 4 — Supplementary
432

Relief not available if purpose of arrangements is improper
22    (1)
The reliefs provided by paragraphs 6 to 12 (and paragraph 18 so far as it
relates to those paragraphs) are not available if the arrangements mentioned
in paragraph 5(2)—
(a)
are not effected for genuine commercial reasons, or
5
(b)
form part of arrangements of which the main purpose, or one of the
main purposes, is the avoidance of liability to tax.
      (2)
In sub-paragraph (1) “tax” means income tax, corporation tax, capital gains
tax, stamp duty or stamp duty land tax.
Regulations
10
23    (1)
Regulations under any paragraph of this Schedule—
(a)
may make provision generally or only for specified purposes, or
different provision for different purposes, and
(b)
may make consequential, supplementary or incidental provision
(including amendments of any enactment).
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      (2)
Regulations under any paragraph of this Schedule are to be made by
statutory instrument.
      (3)
A statutory instrument containing regulations under any paragraph of this
Schedule is subject to annulment in pursuance of a resolution of the House
of Commons.
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Part 4
Supplementary
Consequential amendments of FA 2003
24
FA 2003 is amended as follows.
25
After section 73B insert—
25
“73C
Alternative finance investment bonds
Schedule 61 to the Finance Act 2009 makes provision for relief from
charge in the case of arrangements falling within section 48A of the
Finance Act 2005 (alternative finance investment bonds).”
26
In section 86 (payment of tax), after subsection (5) insert—
30
“(5A)
The above provisions are also subject to paragraph 7 of Schedule 61
to the Finance Act 2009 (payment of tax where land ceases to qualify
for relief in respect of alternative finance investment bonds).”
Consequential amendments of FA 2005
27    (1)
Section 48B of FA 2005 (alternative finance investment bond: effects) is
35
amended as follows.
      (2)
In subsections (2) and (3) for “any tax other than the Corporation Tax Acts”
substitute “income tax or capital gains tax”.

Finance Bill
Schedule 61 — Alternative finance investment bonds
Part 4 — Supplementary
433

      (3)
After subsection (8) insert—
“(9)
Schedule 61 to the Finance Act 2009 makes—
(a)
further provision about the treatment for the purposes of
TCGA 1992 of arrangements falling within section 48A, and
(b)
provision about their treatment for the purposes of stamp
5
duty land tax and capital allowances.”
Consequential amendment of CTA 2009
28
In CTA 2009, in Schedule 1, omit paragraph 651(a).
Commencement
29    (1)
The following provisions of this Schedule come into force on the day on
10
which this Act is passed—
(a)
Part 2,
(b)
Part 1 so far as relating to that Part, and
(c)
paragraphs 24, 25, 27 and 28.
      (2)
The following provisions of this Schedule have effect where the effective
15
date of the first transaction (within the meaning given by paragraph 5(2)) is
on or after the day on which this Act is passed—
(a)
Part 3,
(b)
Part 1 so far as relating to that Part, and
(c)
paragraph 26.
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