Corporation Tax Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 2 — Authorised investment funds
312

Trustees’ expenses
611
Income tax provisions to apply in relation to trustees’ expenses
(1)
This section applies in a case of a kind mentioned in section 499(1) of ITA 2007
(beneficiary entitled to some or all of the income arising to trustees of a
settlement).
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(2)
In relation to the reduction of the beneficiary’s income by reference to expenses
of the trustees, sections 500 and 503 of ITA 2007 apply for corporation tax
purposes as they apply for income tax purposes.
Chapter 2
Authorised investment funds
10
Introduction
612
Overview of Chapter
(1)
This Chapter contains provision about taxation in relation to—
(a)
open-ended investment companies (see sections 613 and 614),
(b)
authorised unit trusts (see sections 616 to 618), and
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(c)
court investment funds (which are treated in accordance with section
620 as authorised unit trusts).
(2)
The Chapter also includes provision about—
(a)
open-ended investment companies which take the form of umbrella
companies (see section 615), and
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(b)
authorised unit trust schemes which take the form of umbrella schemes
(see section 619).
(3)
The effect of the provision mentioned in subsection (2) is that, for the purposes
of this Chapter, each part of the umbrella company or scheme is regarded as an
open-ended investment company or authorised unit trust, but the umbrella
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company or scheme itself is not.
Open-ended investment companies
613
Meaning of “open-ended investment company”
In this Chapter “open-ended investment company” means a company
incorporated in the United Kingdom to which section 236 of FISMA 2000
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applies.
614
Applicable corporation tax rate
The rate of corporation tax in relation to an open-ended investment company
for any financial year is the rate at which income tax at the basic rate is charged
for the tax year beginning on 6 April in that financial year (and sections 18 and
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19 (relief for companies with small profits) do not apply).

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 2 — Authorised investment funds
313

615
Umbrella companies
(1)
In this section “umbrella company” means an open-ended investment
company—
(a)
whose instrument of incorporation provides arrangements for separate
pooling of the contributions of the shareholders and the profits or
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income out of which payments are made to them, and
(b)
whose shareholders are entitled to exchange rights in one pool for
rights in another.
(2)
References in this section to a part of an umbrella company are to a separate
pool.
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(3)
For the purposes of this Chapter—
(a)
each of the parts of an umbrella company is to be regarded as an open-
ended investment company, and
(b)
the umbrella company as a whole is not to be regarded as an open-
ended investment company.
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(4)
The umbrella company as a whole is not to be regarded as a company for any
other purpose of the Tax Acts unless an enactment expressly provides
otherwise.
Authorised unit trusts
616
Meaning of “authorised unit trust” and “unit holder”
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(1)
In this Chapter “authorised unit trust” means, in relation to an accounting
period, a unit trust scheme in respect of which an order under section 243 of
FISMA 2000 is in force during the whole or part of the period.
(2)
In this Chapter “unit holder” means a person entitled to a share of the
investments subject to the trusts of a unit trust scheme.
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(3)
Subsections (1) and (2) are subject to section 619 (umbrella schemes).
617
Authorised unit trust treated as UK resident company
(1)
In respect of income arising to the trustees of an authorised unit trust, and for
the purposes of the provisions relating to relief for capital expenditure, the Tax
Acts have effect as if—
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(a)
the trustees were a UK resident company, and
(b)
the rights of the unit holders were shares in the company.
(2)
References in the Corporation Tax Acts to a body corporate are to be read in
accordance with subsection (1); and sections 1104 to 1107 (companies required
to provide tax certificates) apply with any necessary modifications.
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(3)
Subsection (1)(b) does not affect the making of distributions which are interest
distributions to unit holders.
(4)
“Interest distributions” has the meaning given by regulations made under
section 17(3) of F(No.2)A 2005.

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 2 — Authorised investment funds
314

618
Applicable corporation tax rate
The rate of corporation tax in relation to an authorised unit trust for any
financial year is the rate at which income tax at the basic rate is charged for the
tax year beginning on 6 April in that financial year (and sections 18 and 19
(relief for companies with small profits) do not apply).
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619
Umbrella schemes
(1)
In this section “umbrella scheme” means a unit trust scheme—
(a)
which provides arrangements for separate pooling of the contributions
of the participants and the profits or income out of which payments are
made to them (“pooling arrangements”),
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(b)
under which the participants are entitled to exchange rights in one pool
for rights in another, and
(c)
in respect of which an order under section 243 of FISMA 2000 is in force.
(2)
References in this section to a part of an umbrella scheme are to such of the
pooling arrangements as relate to a separate pool.
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(3)
For the purposes of this Chapter—
(a)
each of the parts of an umbrella scheme is to be regarded as an
authorised unit trust, and
(b)
the umbrella scheme as a whole is not to be regarded as an authorised
unit trust.
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(4)
In relation to a part of an umbrella scheme, references to investments subject to
the trusts of an authorised unit trust are references to such of the investments
as under the pooling arrangements form part of the separate pool to which the
part relates.
(5)
In relation to a part of an umbrella scheme, references to a unit holder are
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references to a person for the time being having rights in that separate pool.
Court investment funds
620
Court investment funds
(1)
In this section “court investment fund” means a fund established under section
42 of the Administration of Justice Act 1982 (investment funds for money paid
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into court).
(2)
The Tax Acts apply in relation to a court investment fund as if—
(a)
the fund were an authorised unit trust,
(b)
the person who is for the time being the investment manager of the
fund were the trustee of the trust, and
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(c)
the persons with qualifying interests (see the table in subsection (3))
were the unit holders in the trust.
(3)
This is the table referred to in subsection (2)(c)—

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 4 — Securitisation companies
315

Description of shares in the fund
Persons with qualifying interests in

relation to the shares

Shares held by the Accountant
The persons whose interests entitle

General
them, as against the Accountant

General, to share in the fund’s

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investments

Shares held by any other person
The persons whose interests entitle

authorised by the Lord Chancellor
them, as against the authorised

to hold such shares on behalf of
person, to share in the fund’s

others (an “authorised person”)
investment (or, if there are no such

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persons, the authorised person)

Shares held by persons authorised
The persons so authorised

by the Lord Chancellor to hold

such shares on their own behalf

(4)
In subsection (3) “the Accountant General” means—
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(a)
the Accountant General of the Senior Courts of England and Wales, or
(b)
the Accountant General of the Court of Judicature of Northern Ireland.
Chapter 3
Unauthorised unit trusts
621
Treatment of income
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(1)
This section applies in relation to an unauthorised unit trust if the trustees are
UK resident.
(2)
If income arises to the trustees, the income is treated for the purposes of the
Corporation Tax Acts as the income of the trustees and not of the unit holders.
622
Treatment of capital expenditure
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(1)
This section applies in relation to an unauthorised unit trust if the trustees are
UK resident.
(2)
The trustees (and not the unit holders) are treated as the persons to or on whom
an allowance or charge is to be made under any provision of the Corporation
Tax Acts relating to relief for capital expenditure.
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Chapter 4
Securitisation companies
623
Meaning of “securitisation company”
(1)
In this Chapter “securitisation company” means a company to which
subsection (2) or (6) applies.
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(2)
This subsection applies to a company if—

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 4 — Securitisation companies
316

(a)
conditions A, B and C are met in relation to it, and
(b)
it meets such other conditions as the Treasury may specify by
regulations.
(3)
Condition A is that the company is party as debtor to a capital market
investment.
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(4)
Condition B is that securities representing that capital market investment are
issued.
(5)
Condition C is that the capital market investment is part of a capital market
arrangement.
(6)
This subsection applies to a company if there is between it and a company to
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which subsection (2) applies a relationship (direct or indirect) of a description
specified by the Treasury by regulations.
(7)
In this section “capital market investment” and “capital market arrangement”
have the same meaning as in section 72B(1) of the Insolvency Act 1986 (see
paragraphs 1, 2 and 3 of Schedule 2A to that Act).
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624
Power to make regulations about the taxation of securitisation companies
(1)
The Treasury may by regulations make provision about the application of the
Corporation Tax Acts in relation to a securitisation company.
(2)
The regulations may, in particular, provide for the application, modification or
non-application of any of the provisions of the Corporation Tax Acts.
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(3)
The regulations may, in particular, provide—
(a)
that the amount of profits of any specified description (before any such
adjustments as are mentioned in subsection (4)) is to be taken to be such
amount, or is to be calculated on such basis, as may be specified, and
(b)
that the amount determined in accordance with regulations under
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paragraph (a) is to be brought into account for corporation tax purposes
instead of any specified amount that would otherwise fall to be brought
into account.
(4)
The regulations may, in particular, provide for specified adjustments to be
made to the amount to be brought into account for corporation tax purposes.
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(5)
The regulations may, in particular, provide—
(a)
that the regulations apply to a company only if an election that they are
to apply is made, or
(b)
that the regulations do not apply to a company if an election that they
are not to apply is made.
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(6)
The regulations may, in particular, provide that once subject to the regulations
a company is to continue to be subject to them for all subsequent periods of
account.
(7)
The regulations may, in particular, impose conditions that must be met if a
company is to have, or continue to have, the benefit of the regulations.
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(8)
The regulations may, in particular, provide for the consequences of failing to
meet any specified condition (which may include recalculating the company’s
profits for previous periods on the basis that the regulations did not apply).

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 5 — Companies in liquidation or administration
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(9)
In this section “specified” means specified in the regulations.
625
Regulations: supplementary
(1)
Regulations under this Chapter may—
(a)
make different provision for different descriptions of company,
(b)
contain incidental, supplemental, consequential and transitional
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provision and savings.
(2)
The provision which may be made under subsection (1)(b) includes provision
amending any provision of, or made under, the Taxes Acts (within the
meaning of section 118(1) of TMA 1970).
(3)
Regulations under this Chapter may include provision which—
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(a)
in the case of provision relating to corporation tax, has effect from the
beginning of periods of account current when the regulations are made,
and
(b)
in the case of provision relating to income tax or capital gains tax, has
effect in relation to times before the regulations are made.
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Chapter 5
Companies in liquidation or administration
Introduction
626
Meaning of “final year”, “penultimate year” etc
(1)
This section applies for the purposes of this Chapter.
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(2)
In relation to a company that is being wound up—
“the final year” means the financial year in which the winding up of the
company is completed, and
“the penultimate year” means the last financial year before the company’s
final year.
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(3)
In relation to a company in administration—
“the final year” means the financial year in which the dissolution event in
respect of the company occurs, and
“the penultimate year” means the last financial year before the company’s
final year.
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(4)
A reference in this Chapter to the “dissolution event” in respect of a company
in administration is a reference—
(a)
to the administrator sending a notice in respect of the company under
paragraph 84(1) of Schedule B1 to the Insolvency Act 1986 (company
moving from administration to dissolution), or
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(b)
if the company enters administration otherwise than under that Act, to
the doing of any other act for a similar purpose.
(5)
“Profits” means income and chargeable gains, except so far as the context
otherwise requires.