House of Commons Amendments

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Public Bill Committee: 9 June 2009
83

Finance Bill, continued

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

meaning of Part 16 of CTA 2009)’.

Mr Mark Hoban

Mr David Gauke

Mr Greg Hands

55

Schedule  15,  page  171,  line  10,  leave out ‘an investment company’ and insert ‘a

company with investment business’.

Mr Mark Hoban

Mr David Gauke

Mr Greg Hands

56

Schedule  15,  page  171,  line  11,  leave out ‘4 of ICTA’ and insert ‘16 of CTA 2009’.

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 Mark Hoban

Mr David Gauke

Mr Greg Hands

57

Schedule  15,  page  171,  line  17,  leave out ‘75 of ICTA’ and insert ‘1219 of CTA

2009’.

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.

Public Bill Committee: 9 June 2009
84

Finance Bill, continued

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;

“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 Mark Hoban

Mr David Gauke

Mr Greg Hands

58

Schedule  15,  page  172,  line  25,  leave out from first ‘that’ to first ‘a’ in line 26 and

insert ‘is referable to’.

Mr Mark Hoban

Mr David Gauke

Mr Greg Hands

59

Schedule  15,  page  172,  line  33,  leave out ‘Part’ and insert ‘Schedule’.

Mr Mark Hoban

Mr David Gauke

Mr Greg Hands

60

Schedule  15,  page  173,  line  1,  leave out from first ‘that’ to first ‘a’ in line 2 and

insert ‘is referable to’.

Mr Stephen Timms

130

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

statements’.

Public Bill Committee: 9 June 2009
85

Finance Bill, continued

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

group’.

Mr Stephen Timms

141

Schedule  15,  page  178,  line  37,  leave out sub-paragraph (3).

Mr Stephen Timms

142

Schedule  15,  page  179,  line  3,  leave out from ‘not’ to ‘and’ in line 4 and insert

‘acceptable’.

Public Bill Committee: 9 June 2009
86

Finance Bill, continued

Mr Stephen Timms

143

Schedule  15,  page  179,  line  10,  leave out sub-paragraph (3) and insert—

    ‘(3)
For the purposes of this paragraph financial statements are “acceptable” if—

(a)
they are drawn up in accordance with international accounting

standards,

(b)
they meet such conditions relating to accounting standards, or

accounting principles or practice, as may be specified in regulations

made by the Commissioners, or

(c)
conditions A to C are met.’.

Mr Stephen Timms

144

Schedule  15,  page  179,  line  18,  leave out ‘of the worldwide group for the period’.

Mr Stephen Timms

145

Schedule  15,  page  179,  line  20,  after second ‘the’ insert ‘same’.

Mr Stephen Timms

146

Schedule  15,  page  179,  line  25,  leave out from ‘the’ to ‘, and’ in line 26 and insert

‘financial statements’.

Mr Stephen Timms

147

Schedule  15,  page  179,  line  28,  leave out from ‘in’ to ‘drawn’ in line 29 and insert

‘IAS financial statements of the worldwide group for the same period, were such

statements’.

Mr Stephen Timms

148

Schedule  15,  page  179,  line  32,  leave out from first ‘the’ to ‘are’ and insert

‘financial statements’.

Mr Stephen Timms

149

Schedule  15,  page  180,  line  17,  at end insert—

‘ (1A)
References in this Schedule to amounts disclosed in financial statements do not

include, in the case of an amount that—

(a)
is an amount mentioned in paragraph 55(1)(a) to (g), and

(b)
has been capitalised and is accordingly included in the balance sheet

comprised in the financial statements,


any part of that amount that was included in a balance sheet comprised in

financial statements for an earlier period.’.

Mr Stephen Timms

150

Schedule  15,  page  181,  line  4,  at end insert—

‘“FSA Handbook” means the Handbook made by the Financial Services

Authority under FISMA 2000;’.

Public Bill Committee: 9 June 2009
87

Finance Bill, continued

Mr Stephen Timms

151

Schedule  15,  page  181,  line  12,  at end insert—

‘
In paragraph 5 of Schedule 28AA to ICTA (provision not at arm’s length),

after sub-paragraph (8) (as inserted by paragraph 14 of Schedule 14 to this Act)

insert—

  “(9)
For the purposes of sub-paragraph (1), Schedule 15 to FA 2009 (tax

treatment of financing costs and income) is to be disregarded.”’.

Mr Stephen Timms

152

Schedule  15,  page  181,  line  15,  after ‘group’ insert ‘—

(a)
’.

Mr Stephen Timms

153

Schedule  15,  page  181,  line  15,  at end insert ‘, or

(b)
to which paragraph 79 applies.

Anti-avoidance: change of period of account of worldwide group

79
This paragraph applies to a period of account of the worldwide group (“the

relevant period of account”) if—

(a)
the ultimate parent of the group changes the date to which financial

statements of the group are drawn up,

(b)
as a result of the change, the relevant period of account—

(i)
begins before 1 January 2010, and

(ii)
includes a period that would, if the change had not been made,

have fallen within a period of account beginning on or after

that date, and

(c)
the main purpose, or one of the main purposes, of the ultimate parent

of the group in making the change is to secure that the first period of

account in relation to which this Schedule has effect does not include

any period falling within the relevant period of account.’.

Mr Stephen Timms

154

Schedule  15,  page  181,  line  15,  at end insert—

‘Transitional provision

    (1)
An amount that would, apart from this paragraph, meet condition A, B or C in

paragraph 39 (definition of “financing expense amount”) does not meet that

condition if it is a debit that, but for a relevant enactment, would be brought

into account for the purposes of corporation tax in an accounting period

beginning before 1 January 2010.

      (2)
For this purpose the following are “relevant enactments”—

(a)
section 373 of CTA 2009 (late interest treated as not accruing until

paid in some cases),

(b)
section 407 of that Act (postponement until redemption of debits for

connected companies’ deeply discounted securities),

(c)
section 409 of that Act (postponement until redemption of debits for

close companies’ deeply discounted securities), and

Public Bill Committee: 9 June 2009
88

Finance Bill, continued

(d)
regulation 3A of the Loan Relationships and Derivative Contracts

(Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271)

(prescribed debits and credits brought into account over prescribed

period).

      (3)
An amount that would, apart from this paragraph, meet condition A, B or C in

paragraph 40 (definition of “financing income amount”) does not meet that

condition if it is a credit that, but for the regulation mentioned in sub-paragraph

(2)(d) of this paragraph, would be brought into account for the purposes of

corporation tax in an accounting period beginning before 1 January 2010.’.

Mr Stephen Timms

155

Schedule  16,  page  182,  line  32,  at end insert ‘and

( )
in this Act, section 57(6).’.

Mr Stephen Timms

156

Schedule  16,  page  183,  line  4,  after ‘17’ insert ‘, and Part 18,’.

Mr Stephen Timms

157

Schedule  16,  page  187,  line  29,  at end insert—

‘Part 3

Reduction in chargeable profits for certain financing income

Reduction in chargeable profits for certain financing income

21
ICTA is amended as follows.

22
In the following provisions, after “751A” insert “or 751AA”—

(a)
section 747(3A) and (5A) (imputation of chargeable profits and

creditable tax of controlled foreign companies),

(b)
section 749(10) (residence),

(c)
section 749A(9) (elections and designations under section 749:

supplementary provisions), and

(d)
section 750(3)(ab) (territories with a lower level of taxation).

23
After section 751A (reduction in chargeable profits for certain activities of

EEA business establishments) insert—

“751AA
Reduction in chargeable profits for certain financing income

(1)
This section applies if—

(a)
an apportionment under section 747(3) falls to be made as

regards an accounting period (“the relevant accounting

period”) of a controlled foreign company,

(b)
the chargeable profits of the controlled foreign company for

the relevant accounting period would, apart from this section,

include an amount of income in respect of a payment made by

another company (“the payer”),

Public Bill Committee: 9 June 2009
89

Finance Bill, continued

(c)
the amount that the payer brings into account for the purposes

of corporation tax in respect of the payment is reduced (in part

or in full) by virtue of Part 3 of Schedule 15 to FA 2009 (tax

treatment of financing costs and income), and

(d)
a company resident in the United Kingdom (“the UK resident

company”) has a relevant interest in the controlled foreign

company in the relevant accounting period.

(2)
The UK resident company may make an application to the

Commissioners for Her Majesty’s Revenue and Customs for the

chargeable profits of the controlled foreign company for the relevant

accounting period (“the chargeable profits”) to be reduced by an

amount (“the specified amount”) specified in the application

(including to nil).

(3)
If the Commissioners grant the application—

(a)
the chargeable profits are treated as reduced by the specified

amount, and

(b)
the controlled foreign company’s creditable tax (if any) for

that period is treated as reduced by so much of that tax as, on

a just and reasonable basis, relates to the reduction in the

chargeable profits,


for the purpose of applying section 747(3) to (5) for determining the

sum (if any) chargeable on the UK resident company under section

747(4)(a) (but for no other purpose).

(4)
The Commissioners may grant the application only if they are satisfied

that the specified amount does not exceed the relevant amount.

(5)
In subsection (4) “the relevant amount” means the amount (if any) by

which it is just and reasonable that the chargeable profits should be

treated as reduced, having regard to the effect of Parts 3 and 4 of

Schedule 15 to FA 2009 on amounts brought into account for the

purposes of corporation tax by the payer, or any other company.”

24  (1)
Section 751B (supplementary) is amended as follows.

      (2)
In the heading, for “Section 751A” substitute “Sections 751A and 751AA”.

      (3)
In subsections (1), (2), (3) (in each place) and (5), after “751A” insert “or

751AA”.

      (4)
In subsection (8)—

(a)
after ““the relevant amount”” insert “—

(a)
in the case of an appeal in respect of the refusal of an

application under section 751A,”, and

(b)
after “mentioned in that subsection” insert “, and

(b)
in the case of an appeal in respect of the refusal of an

application under section 751AA, has the meaning

given by subsection (5) of that section.”

      (5)
In subsection (10)—

(a)
after “751A” insert “or 751AA”, and

(b)
after “751A(1)” insert “or 751AA(1)”.

Commencement

25  (1)
The amendments made by this Part have effect in relation to accounting

periods of controlled foreign companies ending on or after 1 January 2010.