Finance Bill

House of Commons

Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 7 — Contaminated and derelict land
Part 2 — Amendments of other enactments
100

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),
(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
101

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).

Finance Bill
Schedule 8 — Venture capital schemes
102

Schedule 8
Section 27

Venture capital schemes
Enterprise investment scheme
1
Schedule 5B to TCGA 1992 (enterprise investment scheme: re-investment) is
amended as follows.
5
2     (1)
Paragraph 1(2) (application of Schedule) is amended as follows.
      (2)
For paragraphs (g) and (h) substitute “and
(g)
all of the money raised by the issue of the shares (other than any of
them which are bonus shares) is, no later than the time mentioned in
section 175(3) of ITA 2007, employed wholly for the purpose of that
10
activity,”.
      (3)
In the words following the paragraphs, for “conditions in paragraphs (g)
and (h) above do” substitute “condition in paragraph (g) above does”.
3     (1)
Paragraph 1A (failure of conditions of application) is amended as follows.
      (2)
In sub-paragraph (4)—
15
(a)
omit “or (h)”, and
(b)
for “sub-paragraph (4A) below” substitute “section 175(3) of ITA
2007”.
      (3)
Omit sub-paragraph (4A).
4     (1)
Paragraph 9 (other reconstructions and amalgamations) is amended as
20
follows.
      (2)
For sub-paragraph (1) substitute—
    “(1)
This paragraph applies if section 135 or 136 (company
reconstructions) applies in relation to shares to which deferral
relief, but not relief under Part 5 of ITA 2007 (or Chapter 3 of Part
25
7 of the Taxes Act), is attributable.
     (1A)
Paragraphs 3 and 4 of this Schedule have effect as if section 135 or
136 did not apply in relation to the shares.”
      (3)
In sub-paragraph (2), for “Sub-paragraph (1) above shall not have effect to
disapply section 135 or 136 where” substitute “Sub-paragraph (1A) does not
30
apply if”.
      (4)
For sub-paragraph (3) substitute—
    “(3)
Sub-paragraph (1A) does not apply if paragraph 8 applies in
relation to the shares.”
5
In paragraph 16 (information), omit sub-paragraph (4A).
35
6     (1)
Section 158 of ITA 2007 (form and amount of EIS relief) is amended as
follows.
      (2)
In subsection (4), omit—
(a)
“Subject to subsection (5),”, and
(b)
“before 6 October”.
40

Finance Bill
Schedule 8 — Venture capital schemes
103

      (3)
Omit subsection (5).
7     (1)
Section 175 of that Act (use of money raised requirement) is amended as
follows.
      (2)
For subsection (1) substitute—
“(1)
The requirement of this section is that all of the money raised by the
5
issue of the relevant shares (other than any of them which are bonus
shares) is, no later than the time mentioned in subsection (3),
employed wholly for the purpose of the qualifying business activity
for which it was raised.”
      (3)
In subsection (2), for “requirements in subsection (1)(a) and (b) do”
10
substitute “requirement in subsection (1) does”.
      (4)
In subsection (3)—
(a)
for “subsection (1)(a)” substitute “subsection (1)”, and
(b)
for “12 months” (in both places) substitute “two years”.
Corporate venturing scheme
15
8     (1)
Paragraph 36 of Schedule 15 to FA 2000 (corporate venturing scheme:
requirement as to money raised) is amended as follows.
      (2)
In sub-paragraph (1), for “At least 80%” substitute “All”.
      (3)
Omit sub-paragraph (1A).
      (4)
In sub-paragraph (1B), for “12 months” (in both places) substitute “two
20
years”.
      (5)
In sub-paragraph (1C), for “Sub-paragraphs (1) and (1A) are” substitute
“Sub-paragraph (1) is”.
      (6)
In sub-paragraph (5) omit “does not apply and the requirement of sub-
paragraph (1A)”.
25
Venture Capital Trusts
9     (1)
Section 293 of ITA 2007 (use of money raised requirement) is amended as
follows.
      (2)
For subsection (1) substitute—
“(1)
The requirement of this section is that—
30
(a)
less than two years has passed since the trading time, or
(b)
at least two years has passed since the trading time and all of
the money raised by the issue of the relevant holding has
been employed wholly for the purposes of a relevant
qualifying activity.”
35
      (3)
Omit subsections (2) to (4).
Consequential repeals
10
In consequence of the amendments made by paragraphs 2, 3 and 5, omit—
(a)
in FA 2001, in Schedule 15, paragraphs 26 to 28,

Finance Bill
Schedule 9 — Group relief: preference shares
104

(b)
in FA 2004, in Schedule 18, paragraph 13(1)(f), and
(c)
in ITA 2007, in Schedule 1, paragraph 345(2)(b), (3)(a) and (13)(b).
Commencement
11
The amendments made by paragraphs 2, 3, 5, 7, 8 and 10 have effect in
relation to shares issued on or after 22 April 2009.
5
12
The amendments made by paragraph 4 have effect in relation to—
(a)
any exchange of shares to which section 135 of TCGA 1992 applies,
where the new holding is issued on or after 22 April 2009, and
(b)
any arrangement within section 136(1) of that Act entered into on or
after that date.
10
13    (1)
The amendments made by paragraph 6 have effect as follows.
      (2)
The amendments made by sub-paragraph (2) have effect in relation to shares
issued in the tax year 2009-10 or a subsequent tax year.
      (3)
The amendment made by sub-paragraph (3) has effect in relation to claims
made under section 158(4) of ITA 2007 in respect of shares issued in the tax
15
year 2009-10 or a subsequent tax year.
14
The amendments made by paragraph 9 have effect in relation to shares or
securities issued on or after 22 April 2009.
Schedule 9
Section 28

Group relief: preference shares
20
Amendments of Schedule 18 to ICTA
1
Schedule 18 to ICTA (definitions relating to group relief) is amended as
follows.
2     (1)
Paragraph 1 is amended as follows.
      (2)
In sub-paragraph (2), for “fixed-rate” substitute “relevant”.
25
      (3)
In sub-paragraph (3)—
(a)
for “fixed-rate” substitute “relevant”,
(b)
for paragraph (c) substitute—
“(c)
either—
(i)
do not carry a right to dividends, or
30
(ii)
carry a right to dividends to which
paragraph 1A applies; and”, and
(c)
in paragraph (d), for “that new consideration” substitute “the new
consideration received by the company in respect of the issue of the
shares”.
35
3
After paragraph 1 insert—
“1A   (1)
This paragraph applies to a right to dividends carried by shares in
a company if—

Finance Bill
Schedule 9 — Group relief: preference shares
105

(a)
the dividends represent no more than a reasonable
commercial return on the new consideration received by
the company in respect of the issue of the shares, and
(b)
condition A, B or C is met.
      (2)
Condition A is that—
5
(a)
the dividends are of a fixed amount or at a fixed rate per
cent of the nominal value of the shares, and
(b)
the company is not entitled by virtue of any term subject to
which the shares are issued or held to reduce the amount
of, or not to pay, any of the dividends.
10
      (3)
Condition B is that—
(a)
the dividends are of a rate per cent of the nominal value of
the shares and the rate fluctuates in accordance with—
(i)
a standard published rate of interest, or
(ii)
the retail prices index, or any similar general index
15
of prices which is published by the government, or
by an agent of the government, of the country or
territory in whose currency the shares are
denominated, and
(b)
the company is not entitled by virtue of any term subject to
20
which the shares are issued or held to reduce the amount
of, or not to pay, any of the dividends.
      (4)
Condition C is that condition A or B would be met but for sub-
paragraph (2)(b) or (3)(b), and—
(a)
the company is only entitled to reduce the amount of, or
25
not to pay, any of the dividends in relevant circumstances,
or
(b)
having regard to all the circumstances, it is reasonable to
assume that the company is only likely to reduce the
amount of, or not to pay, any of the dividends in relevant
30
circumstances.
      (5)
For the purposes of sub-paragraph (4) a company reduces the
amount of, or does not pay, dividends “in relevant circumstances”
if—
(a)
at the time the dividend is or would be payable, the
35
company is in severe financial difficulties, or
(b)
it does so for the purpose of following a recommendation
of a relevant regulatory body.
      (6)
The Treasury may by order specify circumstances in which a
company is to be treated as in severe financial difficulties for the
40
purposes of sub-paragraph (5)(a).
      (7)
In sub-paragraph (5)(b) “relevant regulatory body” means—
(a)
in relation to a dividend paid by a company that is
authorised for the purposes of the Financial Services and
Markets Act 2000, the Financial Services Authority, and
45
(b)
in relation to a dividend paid by any other company, a
body discharging functions in relation to the company
under the law of a country or territory outside the United
Kingdom that correspond to functions discharged by the

Finance Bill
Schedule 10 — Sale of lessor companies etc: reforms
106

Financial Services Authority in relation to a company
authorised as mentioned in paragraph (a).
      (8)
In this paragraph “new consideration” has the same meaning as in
section 254.”
4
In paragraph 5B(4)(b), for “fixed-rate” substitute “relevant”.
5
Commencement
5
The amendments made by this Schedule have effect for accounting periods
beginning on or after 1 January 2008.
Election to opt out of changes in relation to pre-existing etc shares
6
If a company so elects, the amendments made by this Schedule do not have
10
effect in relation to shares issued by the company—
(a)
before 18 December 2008, or
(b)
on or after that date under an agreement entered into before that
date.
7
An election under paragraph 6—
15
(a)
must be made by the company by being included in its company tax
return for the first accounting period of the company beginning on
or after 1 January 2008 (and may be included in the return originally
made or by amendment), and
(b)
is irrevocable.
20
Paragraph 2(7) of Schedule 25 to ICTA
8
The amendments made by this Schedule do not have effect for the purposes
of paragraph 2(7) of Schedule 25 to ICTA (controlled foreign companies:
definition of non-voting fixed-rate preference shares).
Schedule 10
25
Section 29

Sale of lessor companies etc: reforms
Introduction
1
Schedule 10 to FA 2006 (sale etc of lessor companies etc) is amended as
follows.
Paragraph 7
30
2     (1)
Paragraph 7 (provision for purposes of condition A in paragraph 6) is
amended as follows.
      (2)
In sub-paragraph (8)(b), for “acquires any plant or machinery directly or
indirectly from a person who is connected with the company” substitute
“acquired any plant or machinery in circumstances in which this paragraph
35
applies”.