House of Commons Amendments

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Notices of Amendments: 4 June 2009
54

Finance Bill, continued

(b)
£3 million expressed in the relevant foreign currency, translated by

reference to the spot rate of exchange for the company’s end date.’.

Mr Stephen Timms

114

Schedule  15,  page  161,  leave out line 9 and insert—

‘(b)
the lower of—

(i)
the total disallowed amount, and

(ii)
the tested income amount.’.

Mr Stephen Timms

115

Schedule  15,  page  161,  line  38,  at end insert—

‘Balancing payments between group companies: no charge to, or relief from, tax

31A(1)
This paragraph applies where—

(a)
one or more financing income amounts of a company (“company A”)

for the relevant period of account are—

(i)
by virtue of paragraph 27, not brought into account, or

(ii)
by virtue of paragraph 30, reduced,

(b)
one or more financing expense amounts of another company

(“company B”) for the relevant period of account are—

(i)
by virtue of paragraph 15, not brought into account, or

(ii)
by virtue of paragraph 18, reduced,

(c)
company A makes one or more payments (“the balancing payments”)

to company B, and

(d)
the sole or main reason for making the balancing payments is that the

conditions in paragraphs (a) and (b) are met.

      (2)
To the extent that the sum of the balancing payments does not exceed the

amount specified in sub-paragraph (3), those payments—

(a)
are not to be taken into account in computing profits or losses of either

company A or company B for the purposes of corporation tax, and

(b)
are not to be regarded as distributions for any of the purposes of the

Corporation Tax Acts.

      (3)
The amount referred to in sub-paragraph (2) is the lower of—

(a)
the sum of the financing income amounts mentioned in sub-paragraph

(1)(a), and

(b)
the sum of the financing expense amounts mentioned in sub-paragraph

(1)(b).’.

Mr Stephen Timms

116

Schedule  15,  page  165,  line  18,  at end insert—

‘Part 5A

Anti-avoidance

Notices of Amendments: 4 June 2009
55

Finance Bill, continued

Schemes involving manipulation of rules in Part 2

38A(1)
A period of account of the worldwide group that, apart from this paragraph, is

not within paragraph 2(1) is treated as within that provision if conditions A to

C are met.

      (2)
Condition A is that—

(a)
at any time before the end of the period, a scheme is entered into, and

(b)
if the scheme had not been entered into, the period would have been

within paragraph 2(1).

      (3)
Condition B is that the main purpose, or one of the main purposes, of any party

to the scheme on entering into the scheme is to secure that the period is not

within paragraph 2(1).

      (4)
Condition C is that the scheme is not an excluded scheme.

Schemes involving manipulation of rules in Parts 3 and 4

38B(1)
Where conditions A to C are met in relation to a period of account of the

worldwide group (“the relevant period of account”), the tested expense

amount, the tested income amount and the available amount for the period are

to be calculated in accordance with paragraph 38D.

      (2)
Condition A is that—

(a)
at any time before the end of the relevant period of account, a scheme

is entered into, and

(b)
the main purpose, or one of the main purposes, of any party to the

scheme on entering into it is to secure that the amount of the relevant

net deduction (within the meaning given by paragraph 38C) is lower

than it would be if that amount were calculated in accordance with

paragraph 38D.

      (3)
Condition B is that a result of the scheme is that—

(a)
the sum of the profits of UK group companies that arise in relevant

accounting periods and that are chargeable to corporation tax is less

than it would be if that sum were determined in accordance with

paragraph 38D, or

(b)
the sum of the losses of UK group companies that arise in relevant

accounting periods (other than any taken into account in calculating

profits within paragraph (a)) and that are capable of being a carried-

back amount or a carried-forward amount is higher than it would be if

that sum were determined in accordance with paragraph 38D.

      (4)
Condition C is that the scheme is not an excluded scheme.

      (5)
In a case where—

(a)
a profit or loss arises in an accounting period of a UK group company,

and

(b)
a proportion of that period does not fall within the relevant period of

account,


the profit or loss is to be reduced, for the purposes of condition B, by the same

proportion.

Meaning of “relevant net deduction”

38C(1)
In paragraph 38B(2) the “relevant net deduction” means—

(a)
the amount by which the total disallowed amount exceeds the tested

income amount, or

(b)
if the total disallowed amount does not exceed the tested income

amount, nil.

Notices of Amendments: 4 June 2009
56

Finance Bill, continued

      (2)
In this paragraph the “total disallowed amount” means—

(a)
the amount by which the tested expense amount exceeds the available

amount, or

(b)
if the tested expense amount does not exceed the available amount, nil.

Calculation of amounts

38D(1)
References in paragraph 38B to the calculation of any amount or sum in

accordance with this paragraph are to the calculation of that amount or sum on

the following assumptions.

      (2)
The assumptions are that—

(a)
the scheme in question was not entered into, and

(b)
instead, anything that it is more likely than not would have been done

or not done had this Schedule not had effect in relation to the relevant

period of account, was done or not done.

Meaning of “carried-back amount” and “carried-forward amount”

38E(1)
In paragraph 38B “carried-back amount” means—

(a)
an amount carried back under section 393A(1)(b) of ICTA (trading

losses),

(b)
an amount carried back by virtue of a claim under section 459(1)(b) of

CTA 2009 (non-trading deficits from loan relationships), or

(c)
an amount carried back under section 389(2) of CTA 2009 (deficits of

insurance companies).

      (2)
In paragraph 38B “carried-forward amount” means—

(a)
an amount carried forward under section 76(12) or (13) of ICTA

(certain expenses of insurance companies),

(b)
an amount carried forward under section 392A(2) or (3) of ICTA (UK

property business losses),

(c)
an amount carried forward under section 392B(1)(b) of ICTA

(overseas property business losses),

(d)
an amount carried forward under section 393(1) of ICTA (trading

losses),

(e)
an amount carried forward under section 396(1) of ICTA (losses from

miscellaneous transactions),

(f)
an amount carried forward under section 436A(4) of ICTA (insurance

companies: losses from gross roll-up business),

(g)
an amount carried forward under section 8(1)(b) of TCGA 1992

(allowable losses),

(h)
an amount carried forward under section 391(2) of CTA 2009 (deficits

of insurance companies),

(i)
an amount carried forward under section 457(3) of CTA 2009 (non-

trading deficits from loan relationships),

(j)
an amount carried forward under section 753(3) of CTA 2009 (non-

trading loss on intangible fixed assets),

(k)
an amount carried forward under section 925(3) of CTA 2009 (patent

income: relief for expenses), or

(l)
an amount carried forward under section 1223 of CTA 2009 (expenses

of management and other amounts).

Notices of Amendments: 4 June 2009
57

Finance Bill, continued

Schemes involving manipulation of rules in Part 5

38F(1)
This paragraph applies to a financing income amount of a company received

during a period of account of the worldwide group if—

(a)
apart from this paragraph, the financing income amount would, by

virtue of paragraph 32, not be brought into account for the purposes of

corporation tax, and

(b)
conditions A to C are met.

      (2)
Condition A is that, at any time before the financing income amount is

received, a scheme is entered into that secures that any of the conditions in sub-

paragraphs (2) to (4) of paragraph 32 (“the relevant paragraph 32 condition”)

is met in relation to the amount.

      (3)
Condition B is that the purpose, or one of the main purposes, of any party to

the scheme on entering into the scheme is to secure that the relevant paragraph

32 condition is met.

      (4)
Condition C is that the scheme is not an excluded scheme.

      (5)
Where this paragraph applies to a financing income amount, the relevant

paragraph 32 condition is treated as not met in relation to the amount.

      (6)
Paragraph 38 (meaning of references to a “financing income amount” of a

company) applies for the purposes of this paragraph.

Meaning of “scheme” and “excluded scheme”

38G(1)
For the purposes of this Part “scheme” includes any scheme, arrangements or

understanding of any kind whatever, whether or not legally enforceable,

involving a single transaction or two or more transactions.

      (2)
For the purposes of this Part a scheme is “excluded” if it is of a description

specified in regulations made by the Commissioners.

      (3)
Regulations under sub-paragraph (2) may make different provision for

different purposes.’.

Mr Stephen Timms

117

Schedule  15,  page  167,  line  11,  leave out ‘is’ and insert ‘, and all other amounts

that are relevant amounts in respect of the group treasury company and the relevant

period, are’.

Mr Stephen Timms

118

Schedule  15,  page  167,  line  13,  leave out ‘this purpose’ and insert ‘the purposes of

this paragraph in respect of the relevant period’.

Mr Stephen Timms

119

Schedule  15,  page  167,  line  15,  at end insert—

  ‘(3A)
If two or more members of the worldwide group are group treasury companies

in the relevant period, an election under this paragraph made by any of them is

not valid unless each of them makes such an election in respect of the relevant

period before the end of the 3 year period mentioned in sub-paragraph (3).’.

Mr Stephen Timms

120

Schedule  15,  page  167,  line  25,  leave out ‘not UK companies’ and insert ‘neither

UK group companies nor relevant group companies’.

Notices of Amendments: 4 June 2009
58

Finance Bill, continued

Mr Stephen Timms

121

Schedule  15,  page  167,  line  28,  leave out ‘that are UK companies’ and insert ‘each

of which is either a UK group company or a relevant group company’.

Mr Stephen Timms

122

Schedule  15,  page  167,  line  38,  leave out ‘and’ and insert—

‘(ca)
subscribing for or holding shares in another company which is a UK

group company and a group treasury company,

(cb)
investing in debt securities, and’.

Mr Stephen Timms

123

Schedule  15,  page  168,  line  6,  at end insert—

‘“debt security” has the same meaning as in the FSA Handbook.’.

Mr Stephen Timms

124

Schedule  15,  page  168,  line  13,  at end insert—

‘Real estate investment trusts

42A(1)
This paragraph applies where, apart from this paragraph, an amount (“the

relevant amount”) is—

(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.

      (2)
The relevant amount is treated as not being a financing expense amount or a

financing income amount of the company if the finance arrangement is one to

which section 211 of CTA 2009 does not apply by virtue of section 120(3)(a)

of FA 2006.’.

Mr Stephen Timms

125

Schedule  15,  page  170,  line  3,  at end insert—

    ‘(7)
The Commissioners may by regulations make provision (including provision

conferring a discretion on the Commissioners) about circumstances in which

regulations under sub-paragraph (4) are not to apply in relation to the finance

arrangements.’.

Mr Stephen Timms

126

Schedule  15,  page  170,  line  19,  leave out ‘from the finance arrangement’.

Mr Stephen Timms

127

Schedule  15,  page  171,  line  10,  leave out ‘an investment company (within the

meaning of Part 4 of ICTA)’ and insert ‘a company with investment business (within the

meaning of Part 16 of CTA 2009)’.

Notices of Amendments: 4 June 2009
59

Finance Bill, continued

Mr Stephen Timms

128

Schedule  15,  page  171,  line  17,  leave out ‘75 of ICTA (expenses of management:

companies with investment business)’ and insert ‘1219 of CTA 2009 (expenses of

management of a company’s investment business)’.

Mr Stephen Timms

129

Schedule  15,  page  171,  line  42,  at end insert—

‘Charities

50A(1)
This paragraph applies where, apart from this paragraph, an amount (“the

relevant amount”) is a financing expense amount of a company by virtue of

meeting condition A, B or C in paragraph 39.

      (2)
The relevant amount is treated as not being a financing expense amount of the

company if the creditor is a charity.

      (3)
In this paragraph—

“charity” means any body of persons or trust established for charitable

purposes only;

“creditor” means—

(c)
in a case where the relevant amount is a debit that meets

condition A in paragraph 39, the loan creditor who receives the

payment in relation to which the relevant amount arises;

(d)
in a case where the relevant amount meets condition B or C in

paragraph 39, the recipient of the payment in relation to which

the relevant amount arises.

Educational and public bodies

50B(1)
This paragraph applies where, apart from this paragraph, an amount (“the

relevant amount”) is a financing expense amount of a company by virtue of

meeting condition A, B or C in paragraph 39.

      (2)
The relevant amount is treated as not being a financing expense amount of the

company if the creditor is—

(a)
a designated educational establishment,

(b)
a health service body,

(c)
a local authority, or

(d)
a person that is prescribed, or is of a description of persons prescribed,

in an order made by the Commissioners for the purposes of this

paragraph.

      (3)
The Commissioners may not prescribe a person, or a description of persons,

for the purposes of this paragraph unless they are satisfied that the person, or

each of the persons within the description, has functions some or all of which

are of a public nature.

      (4)
In this paragraph—

“creditor” means—

(e)
in a case where the relevant amount is a debit that meets

condition A in paragraph 39, the loan creditor who receives the

payment in relation to which the relevant amount arises;

(f)
in a case where the relevant amount meets condition B or C in

paragraph 39, the recipient of the payment in relation to which

the relevant amount arises;

Notices of Amendments: 4 June 2009
60

Finance Bill, continued

“designated educational establishment” has the same meaning as in section

105 of CTA 2009;

“health service body” has the same meaning as in section 519A of ICTA.’.

Mr Stephen Timms

130

Schedule  15,  page  173,  line  24,  leave out ‘income statement’ and insert ‘financial

statements’.

Mr Stephen Timms

131

Schedule  15,  page  173,  line  36,  leave out ‘redeemable’.

Mr Stephen Timms

132

Schedule  15,  page  174,  line  2,  leave out ‘income statement’ and insert ‘financial

statements’.

Mr Stephen Timms

133

Schedule  15,  page  174,  line  14,  leave out ‘income statement’ and insert ‘financial

statements’.

Mr Stephen Timms

134

Schedule  15,  page  174,  line  33,  leave out ‘income statement’ and insert ‘financial

statements’.

Mr Stephen Timms

135

Schedule  15,  page  175,  line  30,  leave out sub-paragraph (2).

Mr Stephen Timms

136

Schedule  15,  page  175,  leave out lines 36 to 39.

Mr Stephen Timms

137

Schedule  15,  page  178,  line  13,  after ‘if’ insert ‘the company is a member of the

worldwide group and’.

Mr Stephen Timms

138

Schedule  15,  page  178,  line  20,  leave out sub-paragraph (7).

Mr Stephen Timms

139

Schedule  15,  page  178,  line  28,  leave out sub-paragraph (9).

Mr Stephen Timms

140

Schedule  15,  page  178,  line  35,  leave out ‘or an income statement of the worldwide