Finance Bill

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Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 1 — Amendments of Part 14 of CTA 2009
95

8
In the heading of Chapter 2, after “contaminated” insert “or derelict”.
9     (1)
Section 1147 (deduction for capital expenditure) is amended as follows.
      (2)
In subsection (2), after “that” insert “a major interest in”.
      (3)
For subsection (3) substitute—
“(3)
Condition B is that—
5
(a)
in the case of land in a contaminated state, the land was in a
contaminated state at the time of the acquisition, and
(b)
in the case of land in a derelict state, the land was in a derelict
state throughout the period beginning with the earlier of—
(i)
1 April 1998, and
10
(ii)
the date on which a major interest in the land was first
acquired by the company or a person who was
connected with the company.
(3A)
The Treasury may by order—
(a)
specify circumstances in which the condition in paragraph (a)
15
of subsection (3) need not be met, or
(b)
replace the date for the time being specified in paragraph
(b)(i) of that subsection with a later date.
(3B)
An order under subsection (3A) may contain incidental,
supplemental, consequential and transitional provision and
20
savings.”
10    (1)
Section 1149 (additional deduction for qualifying land remediation
expenditure) is amended as follows.
      (2)
In subsection (2), after “that” insert “a major interest in”.
      (3)
For subsection (3) substitute—
25
“(3)
Condition B is that—
(a)
in the case of land in a contaminated state, the land was in a
contaminated state at the time of the acquisition, and
(b)
in the case of land in a derelict state, the land was in a derelict
state throughout the period beginning with the earlier of—
30
(i)
1 April 1998, and
(ii)
the date on which a major interest in the land was first
acquired by the company or a person who was
connected with the company.
(3A)
The Treasury may by order—
35
(a)
specify circumstances in which the condition in paragraph (a)
of subsection (3) need not be met, or
(b)
replace the date for the time being specified in paragraph
(b)(i) of that subsection with a later date.
(3B)
An order under subsection (3A) may contain incidental,
40
supplemental, consequential and transitional provision and
savings.”
11    (1)
Section 1150 (no relief if company responsible for contamination) is
amended as follows.

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 1 — Amendments of Part 14 of CTA 2009
96

      (2)
The existing provision becomes subsection (1) of that section.
      (3)
In that subsection, for “state if the land is in that” substitute “or derelict state
if the land is in a contaminated or derelict”.
      (4)
After that subsection insert—
“(2)
A company is not entitled to relief under this Chapter in respect of
5
expenditure on land all or part of which is in a contaminated or
derelict state if—
(a)
the land is in that state wholly or partly as a result of any
thing done, or omitted to be done, by a person not within
subsection (1), and
10
(b)
that person, or a person connected with that person, has a
relevant interest in the land.
(3)
For the purposes of subsection (2) a person has a relevant interest in
land if the person—
(a)
holds any interest in, right over or licence to occupy the land
15
(including an option to acquire any such interest, right or
licence in any circumstances), or
(b)
has disposed of any estate or interest in the land for a
consideration that to any extent reflects the impact, or likely
impact, on the value of the land of the remediation of its
20
contamination or dereliction.”
      (5)
In the heading, insert at the end “or dereliction or polluter has interest”.
12    (1)
Section 1161 (relief in respect of I minus E basis: enhanced expenses payable)
is amended as follows.
      (2)
In subsection (2), after “that” insert “a major interest in”.
25
      (3)
For subsection (3) substitute—
“(3)
Condition B is that—
(a)
in the case of land in a contaminated state, the land was in a
contaminated state at the time of the acquisition, and
(b)
in the case of land in a derelict state, the land was in a derelict
30
state throughout the period beginning with the earlier of—
(i)
1 April 1998, and
(ii)
the date on which a major interest in the land was first
acquired by the company or a person who was
connected with the company.
35
(3A)
The Treasury may by order—
(a)
specify circumstances in which the condition in paragraph (a)
of subsection (3) need not be met, or
(b)
replace the date for the time being specified in paragraph
(b)(i) of that subsection with a later date.
40
(3B)
An order under subsection (3A) may contain incidental,
supplemental, consequential and transitional provision and
savings.”
      (4)
In subsection (4)—
(a)
for “Chapter 4” substitute “land remediation”, and
45

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 1 — Amendments of Part 14 of CTA 2009
97

(b)
omit “(see section 1162)”.
      (5)
Omit subsection (5).
      (6)
In subsection (6), omit “150% of”.
      (7)
In the heading, omit “enhanced”.
      (8)
In the heading before the section omit “for qualifying Chapter 4 expenditure”.
5
13
For section 1162 substitute—
“1162
Additional relief
(1)
If a company is entitled to relief under section 1161 for an accounting
period it is also entitled to relief under this section for the period.
(2)
For the company to obtain the relief it must make a claim.
10
(3)
The relief is that the company may treat 50% of the qualifying
Chapter 4 expenditure as expenses payable which fall to be brought
into account at Step 3 in section 76(7) of ICTA (deduction for
expenses payable).
(4)
For the purposes of this Chapter “the qualifying Chapter 4
15
expenditure” means—
(a)
the company’s qualifying land remediation expenditure for
the accounting period, less
(b)
the amount (if any) which as a result of paragraph (a) of Step
1 in section 76(7) of ICTA is not to be brought into account at
20
that step as expenses payable for the period.”
14    (1)
Section 1163 (no relief if company responsible for contamination) is
amended as follows.
      (2)
The existing provision becomes subsection (1) of that section.
      (3)
In that subsection—
25
(a)
after “1161” insert “or 1162”, and
(b)
for “state if the land is in that” substitute “or derelict state if the land
is in a contaminated or derelict”.
      (4)
After that subsection insert—
“(2)
A company is not entitled to relief under this Chapter in respect of
30
expenditure on land all or part of which is in a contaminated or
derelict state if—
(a)
the land is in that state wholly or partly as a result of any
thing done, or omitted to be done, by a person not within
subsection (1), and
35
(b)
that person, or a person connected with that person, has a
relevant interest in the land.
(3)
For the purposes of subsection (2) a person has a relevant interest in
land if—
(a)
the person holds any interest in, right over or licence to
40
occupy the land (including an option to acquire any such
interest, right or licence in any circumstances), or

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 1 — Amendments of Part 14 of CTA 2009
98

(b)
has disposed of any estate or interest in the land for a
consideration that to any extent reflects the impact, or likely
impact, on the value of the land of the remediation of its
contamination or dereliction.”
      (5)
In the heading, insert at the end “or dereliction or polluter has interest”.
5
15
In section 1165(1)(a) (meaning of “qualifying life assurance business loss”),
after “1161” insert “or 1162”.
16
In section 1169(2)(c) and (3)(c) (artificially inflated claims for relief), after
“1161” insert “or 1162”.
17    (1)
Section 1173 (expenditure incurred because of contamination) is amended as
10
follows.
      (2)
In subsections (1) and (2), after “contaminated” insert “or derelict”.
      (3)
For subsection (3) substitute—
“(3)
Subsection (4) applies—
(a)
in the case of land in a contaminated state, if the main
15
purpose of any activities is any of those specified in section
1146(3), or
(b)
in the case of land in a derelict state, if the main purpose of
any activities is any of those specified in section 1146A(3).”
      (4)
In the heading, insert at the end “or dereliction”.
20
18
Omit section 1174 (sub-contractor payments: introductory).
19    (1)
Section 1175 (“qualifying expenditure on sub-contracted land remediation”:
connected persons) is amended as follows.
      (2)
After subsection (1) insert—
“(1A)
In this section, a “sub-contractor payment” means a payment made
25
by the company to the sub-contractor in respect of relevant land
remediation contracted out by the company to the sub-contractor.”
      (3)
In subsection (2), for “sub-contractor payment” substitute “connected sub-
contractor payment for the purposes of section 1144(5)”.
      (4)
In subsection (3)—
30
(a)
in paragraph (a), after “carrying on” insert “or arranging for carrying
on”, and
(b)
in paragraph (c) for “incurred on” substitute “in respect of”.
      (5)
For the heading substitute “Connected sub-contractors”.
20
Omit section 1176 (“qualifying expenditure on sub-contracted land
35
remediation”: other cases).
21
In section 1178 (persons having a “relevant connection” to a company)—
(a)
after “contaminated” insert “or derelict”, and
(b)
in paragraph (b), after “when” insert “a major interest in”.

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 2 — Amendments of other enactments
99

22
After section 1178 insert—
“1178A
“Major interest in land”
(1)
References in this Part to the acquisition of a major interest in land
are to the acquisition of a freehold interest in the land or of a relevant
leasehold interest in the land.
5
(2)
The reference in subsection (1) to the acquisition of a freehold interest
in land is—
(a)
in relation to land in England and Wales, to the acquisition of
an estate in fee simple absolute (whether subsisting at law or
in equity),
10
(b)
in relation to land in Scotland, to the acquisition of the
interest of an owner of land, and
(c)
in relation to land in Northern Ireland, to the acquisition of
any freehold estate (whether subsisting at law or in equity).
(3)
The reference in subsection (1) to the acquisition of a relevant
15
leasehold interest in land is to the acquisition by grant or assignment
(or assignation) of—
(a)
in relation to land in England and Wales, a term of years
absolute (whether subsisting at law or in equity), or
(b)
in relation to land in Scotland, the tenant’s right over or
20
interest in a property subject to a lease, or
(c)
in relation to land in Northern Ireland, any leasehold estate
(whether subsisting at law or in equity),

in relation to which the condition in subsection (4) is met.
(4)
That condition is that—
25
(a)
in the case of a grant, the term of years or period of the lease
is at least 7 years, and
(b)
in the case of an assignment (or assignation) the unexpired
portion of the term or period is at least 7 years.”
23
In section 1179 (definitions), omit the definitions of “harm” and “land” and
30
the definition of “substance” (apart from the “and” at the end).
Part 2
Amendments of other enactments
ICTA
24
In section 76(7) of ICTA (expenses of insurance companies), in step 3—
35
(a)
for “1161” substitute “1162”,
(b)
for “150%” substitute “50% additional”, and
(c)
after “contaminated” insert “or derelict”.
FA 1998
25
In Schedule 18 to FA 1998 (company tax returns etc), in the heading of Part
40
9B, after “contaminated” insert “or derelict”.

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 3 — Commencement
100

CTA 2009
26    (1)
Schedule 4 to CTA 2009 (index of expressions) is amended as follows.
      (2)
After the entry relating to “deposit back arrangements” insert—

“derelict state (in relation to land)
section 1145A”.

(in Part 14)

5
      (3)
Omit the entries relating to “harm (in Part 14)” and “land (in Part 14)”.
      (4)
After the entry relating to “major interest (in Chapter 12 of Part 8)” insert—

“major interest in land (in Part 14)
section 1178A”.

      (5)
After the entry relating to “relevant consortium creditor relationship (in
Chapter 7 of Part 5)” insert—
10

“relevant contaminated land
section 1146”.

remediation (in Part 14)

      (6)
After the entry relating to “relevant debits (in Part 8)” insert—

“relevant derelict land
section 1146A”.

remediation (in Part 14)

15
      (7)
Omit the references relating to “relevant land remediation (in Part 14)”,
“sub-contractor payment (and sub-contractor) (in Chapter 6 of Part 14)” and
“substance (in Part 14)”.
Part 3
Commencement
20
27
Any power to make orders which is conferred on the Treasury by virtue of
an amendment of CTA 2009 made by this Schedule may be exercised at any
time after this Act is passed; and any order made by virtue of any such
amendment before 6 April 2010 may make provision having effect in
relation to expenditure incurred on or after 1 April 2009.
25
28
Subject to that, the amendments made by this Schedule have effect in
relation to expenditure incurred on or after 1 April 2009; and for this
purpose no account is to be taken of section 61 of CTA 2009 (earlier
expenditure treated as incurred when trade started).