|
| |
|
(6) | For the purposes of this Chapter, plant or machinery is “qualifying leased plant |
| |
or machinery”, in relation to the partnership, if— |
| |
(a) | expenditure is incurred (or treated as incurred) by the partnership on |
| |
the provision of the plant or machinery wholly or partly for the |
| |
purposes of the business, |
| 5 |
(b) | the partnership would be (or would at any time have been) entitled, on |
| |
the assumptions in subsection (7), to an allowance under Part 2 of CAA |
| |
2001 in respect of that expenditure, and |
| |
(c) | at any time in the period of 12 months ending with the relevant day the |
| |
plant or machinery has been subject to a plant or machinery lease which |
| 10 |
is not an excluded lease of background plant or machinery for a |
| |
building (see section 437(3)). |
| |
| |
(a) | that sections 34A and 70A of CAA 2001 (lessees, and not lessors, under |
| |
long funding leases to be entitled to capital allowances) are ignored, |
| 15 |
| |
(b) | that any claim that could be made for an allowance under Part 2 of that |
| |
| |
411 | “Relevant plant or machinery value” for condition A in section 410 |
| |
(1) | This section applies for the purposes of condition A in section 410. |
| 20 |
(2) | The relevant plant or machinery value is the sum of the amounts in subsection |
| |
(3), but subject to section 413 (relevant plant or machinery value where |
| |
partnership lessee under long funding lease). |
| |
| |
(a) | the amounts (if any) that would be shown in respect of plant or |
| 25 |
machinery in the appropriate balance sheet of the partnership drawn |
| |
up as at the start of the relevant day, and |
| |
(b) | the amounts (if any) that would be shown in the appropriate balance |
| |
sheet of the partnership drawn up as at the end of the relevant day in |
| |
respect of relevant transferred plant or machinery. |
| 30 |
(4) | For the purposes of subsection (3)(b) plant or machinery is “relevant |
| |
transferred plant or machinery” if an amount in respect of it would be shown |
| |
in the appropriate balance sheet of any company mentioned in subsection (5) |
| |
drawn up as at the start of the relevant day. |
| |
| 35 |
| |
(b) | any company which is an associated company of the partner company |
| |
on the relevant day (see section 430), |
| |
(c) | any other corporate partner in relation to whose interest in the business |
| |
there is a qualifying change on the relevant day, |
| 40 |
(d) | any other corporate partner in relation to which there is a qualifying |
| |
change of ownership on the relevant day, and |
| |
(e) | any company which is an associated company of any other corporate |
| |
partner mentioned in paragraph (c) or (d) on the relevant day. |
| |
(6) | For the purposes of subsection (5) “any other corporate partner” means a |
| 45 |
| |
(a) | carries on the business at the start of the relevant day, and |
| |
|
| |
|
| |
|
(b) | is within the charge to corporation tax in respect of the business. |
| |
(7) | This section is supplemented by section 412. |
| |
412 | Provision supplementing section 411 |
| |
(1) | For the purposes of section 411 and this section the amounts shown in the |
| |
appropriate balance sheet of the partnership or, as the case may be, any |
| 5 |
company in respect of any plant or machinery are— |
| |
(a) | the amounts shown in that balance sheet as the net book value (or |
| |
carrying amount) in respect of the plant or machinery, and |
| |
(b) | the amounts shown in that balance sheet as the net investment in |
| |
respect of finance leases of the plant or machinery. |
| 10 |
| |
(a) | any of the plant or machinery is a fixture in any land (see section |
| |
| |
(b) | the amount which falls (or would fall) to be shown in an appropriate |
| |
balance sheet as the net book value (or carrying amount) of the land |
| 15 |
includes (or would include) an amount in respect of the fixture, |
| |
| the amount of the net book value (or carrying amount) in respect of the fixture |
| |
is determined on a just and reasonable basis. |
| |
| |
(a) | any of the plant or machinery is subject to a finance lease (see section |
| 20 |
| |
(b) | any land or other asset which is not plant or machinery is subject to that |
| |
| |
| the amount of the net investment in respect of the finance lease of that plant or |
| |
machinery is determined on a just and reasonable basis. |
| 25 |
(4) | In section 411 and this section any reference to any amount shown in the |
| |
appropriate balance sheet of the partnership or a company is to the amount |
| |
which, on the assumptions in subsection (5), falls (or would fall) to be shown |
| |
in a balance sheet of the partnership or, as the case may be, the company. |
| |
(5) | The assumptions are that— |
| 30 |
(a) | the balance sheet is drawn up in accordance with generally accepted |
| |
| |
(b) | if the partnership acquired any plant or machinery in circumstances in |
| |
which this paragraph applies, the plant or machinery had been |
| |
acquired for an amount equal to its market value as at the relevant day. |
| 35 |
(6) | Paragraph (b) of subsection (5) applies if— |
| |
(a) | the relevant day falls on or after 22 March 2006, |
| |
(b) | the plant or machinery was acquired directly or indirectly from a |
| |
person who was connected with the partnership when the acquisition |
| |
| 40 |
(c) | either the acquisition took place on or after 5 December 2005 or the |
| |
person from whom the plant or machinery was so acquired was also |
| |
connected with the partnership on that date. |
| |
|
| |
|
| |
|
413 | Relevant plant or machinery value where partnership lessee under long |
| |
| |
(1) | Any amount included in the amounts mentioned in section 411(2) in respect of |
| |
plant or machinery to which this section applies is to be deducted from the sum |
| |
mentioned in that section. |
| 5 |
(2) | But the market value as at the relevant day of any plant or machinery to which |
| |
this section applies is to be added to that sum or, if that sum is nil, is the |
| |
relevant plant or machinery value. |
| |
(3) | This section applies to plant or machinery if— |
| |
(a) | condition A or B is met at the start of the relevant day, or |
| 10 |
(b) | the plant or machinery is acquired by the partnership from any |
| |
company mentioned in section 411(5) on the relevant day and condition |
| |
A or B is met at the end of that day. |
| |
(4) | Condition A is that the partnership is the lessee of the plant or machinery |
| |
under a long funding finance lease or a long funding operating lease. |
| 15 |
(5) | Condition B is that the partnership is treated as the owner of the plant or |
| |
machinery under section 67 of CAA 2001 (hire purchase and similar contracts). |
| |
414 | Partnership’s income for condition B in section 410 |
| |
(1) | This section applies for the purposes of condition B in section 410. |
| |
(2) | The reference to the partnership’s income is to its income as calculated for |
| 20 |
corporation tax purposes. |
| |
(3) | Any apportionment necessary to determine the amount of the partnership’s |
| |
income attributable to the period of 12 months ending with the relevant day is |
| |
to be made on a time basis. |
| |
| 25 |
(a) | that basis does not apply if it would work in an unjust or unreasonable |
| |
way in relation to any person, and |
| |
(b) | in that case the apportionment is to be made instead on a just and |
| |
| |
(5) | The proportion of the income that derives from qualifying leased plant or |
| 30 |
machinery is to be determined on a just and reasonable basis. |
| |
“Qualifying change” in company’s interest in a business |
| |
415 | “Qualifying change” in company’s interest in a business |
| |
(1) | For the purposes of the sales of lessors Chapters there is a qualifying change in |
| |
a company’s interest in a business on any day if its relevant percentage share |
| 35 |
at the end of the day is less than its relevant percentage share at the start of the |
| |
| |
(2) | In this section “relevant percentage share”, in relation to a company’s interest |
| |
in a business, means its percentage share in the profits or loss of the business |
| |
(determined in accordance with section 416). |
| 40 |
|
| |
|
| |
|
(3) | For the purposes of this section any reference to a company’s share in the |
| |
profits or loss of the business includes a nil share (whether as a result of the |
| |
dissolution of the partnership or otherwise). |
| |
416 | Determining the percentage share in the profits or loss of business |
| |
(1) | For the purposes of this Chapter a company’s percentage share in the profits |
| 5 |
or loss of a business at any time is determined on a just and reasonable basis. |
| |
(2) | In making that determination, regard must be had, in particular, to any matter |
| |
that would be taken into account in determining under section 1262 of CTA |
| |
2009 (but without regard to sections 1263 and 1264 of that Act) the company’s |
| |
share at that time in the profits or loss of the business. |
| 10 |
Qualifying changes in partner company’s interest in business |
| |
417 | Partner company’s income and other companies’ matching expense |
| |
(1) | This section applies if on any day (“the relevant day”)— |
| |
(a) | the partner company carries on a business of leasing plant or |
| |
machinery in partnership with other persons, |
| 15 |
(b) | the partner company is within the charge to corporation tax in respect |
| |
| |
(c) | there is a qualifying change in the partner company’s interest in the |
| |
business on the relevant day (see sections 415 and 416). |
| |
| 20 |
(a) | the partner company is treated as receiving an amount of income, and |
| |
(b) | any other company which carries on the business on that day and |
| |
which is within the charge to corporation tax in respect of the business |
| |
is treated as incurring an expense. |
| |
| 25 |
(a) | is treated as a receipt of the partner company’s notional business (see |
| |
| |
(b) | is brought into account in calculating for corporation tax purposes the |
| |
profits of that business for the accounting period in which it is treated |
| |
| 30 |
(4) | Except where subsection (5) applies, the expense— |
| |
(a) | is treated as an expense of the other company’s notional business, and |
| |
(b) | is allowed as a deduction in calculating for corporation tax purposes |
| |
the profits of that business for the accounting period in which it is |
| |
| 35 |
(5) | If at the end of the relevant day the other company is the only person carrying |
| |
on the business, the expense— |
| |
(a) | is treated as an expense incurred by the other company in its carrying |
| |
on of the business (at a time when it is the only person carrying it on), |
| |
| 40 |
(b) | is allowed as a deduction in calculating for corporation tax purposes |
| |
the profits of the business for the accounting period in which it is |
| |
| |
|
| |
|
| |
|
(6) | In this Chapter a company’s “notional business” means the business the profits |
| |
or losses of which are determined, in relation to the company, under section |
| |
1259 of CTA 2009 (calculation of firm’s profits and losses). |
| |
(7) | This section is supplemented by sections 418 and 419. |
| |
(8) | This section is subject to section 420 (exception: companies carrying on |
| 5 |
business ceasing to share in its profits). |
| |
418 | Amount of income and expense |
| |
(1) | The amount of the income under section 417 is calculated in accordance with |
| |
| |
(2) | The amount of the expense of the other company under section 417 is |
| 10 |
calculated in accordance with section 424. |
| |
419 | Relief for expense otherwise giving rise to carried forward loss |
| |
(1) | This section applies if— |
| |
(a) | a company is treated under section 417(5) as incurring an expense in an |
| |
accounting period of the company (“period 1”), |
| 15 |
(b) | the company makes a loss in period 1 or a later accounting period, |
| |
(c) | apart from this section some or all of that loss (“the carried forward |
| |
loss”) would be carried forward to the next accounting period of the |
| |
company after the accounting period in which the loss is made (“the |
| |
| 20 |
(d) | some or all of the carried forward loss (“the derived loss”) derives |
| |
| |
(i) | the expense under section 417(5), or |
| |
(ii) | an expense treated as arising under subsection (2) and allowed |
| |
as a deduction for the accounting period in which the loss is |
| 25 |
| |
(e) | the subsequent period starts within the period of 5 years beginning |
| |
with the relevant day within the meaning of section 417 and does not |
| |
start as a result of section 383 or 425. |
| |
(2) | Instead of being so carried forward, the derived loss is to be treated for |
| 30 |
corporation tax purposes as giving rise to an expense of an amount equal to—
|
| |
| |
| |
D is the number of days in the accounting period in which the loss is |
| |
| 35 |
R is the percentage rate applicable to section 826 of ICTA under section |
| |
| |
(3) | The amount of the expense under this section is allowed as a deduction in |
| |
calculating for corporation tax purposes the profits of the business for the |
| |
| 40 |
|
| |
|
| |
|
(4) | For the purpose of determining how much of a loss derives from an expense |
| |
under section 417(5) or an expense within subsection (1)(d)(ii), the loss is to be |
| |
calculated on the basis that that expense is the final amount to be deducted. |
| |
420 | Exception: companies carrying on business ceasing to share in its profits |
| |
(1) | Section 417 does not apply if conditions A, B and C are met. |
| 5 |
(2) | Condition A is that at the end of the relevant day none of the companies by |
| |
which the business was carried on any longer has any share in the profits or |
| |
| |
(3) | Condition B is that, in consequence of what happens on the relevant day, the |
| |
disposal value of all the plant and machinery that was used for the purposes of |
| 10 |
the business and in respect of which capital allowances have been claimed is to |
| |
be brought into account under section 61 of CAA 2001. |
| |
(4) | Condition C is that the disposal value to be brought into account in relation to |
| |
all the plant or machinery is the price that the plant or machinery would fetch |
| |
in the open market on that day. |
| 15 |
421 | The amount of the income: the basic amount |
| |
(1) | This section determines the amount of the income under section 417 when a |
| |
qualifying change in the interest of the partner company in a business of |
| |
leasing plant or machinery occurs on any day (“the relevant day”). |
| |
(2) | The amount of the income is found by— |
| 20 |
(a) | applying the formula in subsection (3) to give the basic amount, and |
| |
(b) | making such adjustment to the basic amount as is required in |
| |
accordance with section 422 or 423. |
| |
(3) | The formula is—
|
| |
(4) | In this section “PM” has the meaning given by section 400, but— |
| 25 |
(a) | reading any reference in that section to the relevant company as a |
| |
reference to the partnership, and |
| |
(b) | reading the reference in section 400(4) to an associated company as a |
| |
reference to a qualifying company (see subsection (7)). |
| |
(5) | In this section “TWDV” means the sum of— |
| 30 |
(a) | the total amount of unrelieved qualifying expenditure in single asset |
| |
pools for the new chargeable period that would be carried forward in |
| |
the pools from the old chargeable period under section 59 of CAA 2001 |
| |
(unrelieved qualifying expenditure), |
| |
(b) | the total amount of unrelieved qualifying expenditure in class pools for |
| 35 |
the new chargeable period that would be carried forward in the pools |
| |
from the old chargeable period under that section, and |
| |
(c) | the amount of unrelieved qualifying expenditure in the main pool for |
| |
the new chargeable period that would be carried forward in the pool |
| |
from the old chargeable period under that section. |
| 40 |
(6) | For the purposes of subsection (5)— |
| |
|
| |
|
| |
|
(a) | it is to be assumed that the chargeable period (within the meaning of |
| |
CAA 2001) of the partnership ends on the relevant day (“the old |
| |
chargeable period”) and a new one begins on the following day (“the |
| |
new chargeable period”), and |
| |
(b) | expenditure incurred by the partnership in acquiring plant or |
| 5 |
machinery on the relevant day is to be left out of account unless it is |
| |
acquired from a qualifying company. |
| |
(7) | In this section “qualifying company” means each of the following— |
| |
| |
(b) | any company which is an associated company of the partner company |
| 10 |
| |
(c) | any other corporate partner in relation to whose interest in the business |
| |
there is a qualifying change on the relevant day, |
| |
(d) | any other corporate partner in relation to which there is a qualifying |
| |
change of ownership on the relevant day, and |
| 15 |
(e) | any company which is an associated company of any other corporate |
| |
partner mentioned in paragraph (c) or (d) on the relevant day. |
| |
(8) | For the purposes of subsection (7) “any other corporate partner” means a |
| |
| |
(a) | carries on the business at the start of the relevant day, and |
| 20 |
(b) | is within the charge to corporation tax in respect of the business. |
| |
422 | Amount to be nil if basic amount negative |
| |
If the basic amount given by the formula in section 421(3) is a negative amount, |
| |
the amount is taken instead to be nil. |
| |
423 | Adjustment to the basic amount |
| 25 |
(1) | The amount of the company’s income under section 417 is limited to the |
| |
appropriate percentage of the basic amount. |
| |
(2) | The appropriate percentage is found by subtracting the company’s relevant |
| |
percentage share at the end of the day on which it is treated as receiving the |
| |
income from its relevant percentage share at the start of the day. |
| 30 |
(3) | In this section “relevant percentage share” has the same meaning as it has for |
| |
the purposes of section 415 (see subsection (2) of that section). |
| |
424 | The amount of expense |
| |
(1) | This section applies if, as a result of a qualifying change in the partner |
| |
company’s interest in a business on any day— |
| 35 |
(a) | the company is treated as receiving an amount of income under section |
| |
| |
(b) | any other company is treated as incurring an expense under that |
| |
| |
(c) | the other company’s percentage share in the profits or loss of the |
| 40 |
business is greater at the end than at the start of that day, and |
| |
(d) | the increase (or any part of the increase) is wholly attributable to the |
| |
change in the partner company’s interest in the business. |
| |
|
| |
|