Corporation Tax Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 3 — Currency
680

(b)
has (before 1 April 2010) made an election under paragraph 13 of
Schedule 18 to FA 2009.
      (2)
An election by a company under this paragraph—
(a)
must be made before the end of the period of 30 days beginning with
the first day of the first accounting period of the company beginning
5
on or after 21 July 2009, and
(b)
is irrevocable.
14
In relation to an accounting period beginning before 21 July 2009 (and
ending on or after 1 April 2010), Chapter 4 of Part 2 has effect in relation to
the company—
10
(a)
with the omission of sections 12 to 16,
(b)
with the omission of section 17(2), (3) and (5),
(c)
with the substitution of the following for section 10(2) and (3)—
“(2)
The translation must be made by reference to the appropriate
exchange rate.
15
(3)
The appropriate exchange rate is—
(a)
the average exchange rate for the current accounting
period, or
(b)
an appropriate spot rate of exchange for the
transaction in question.”, and
20
(d)
with the substitution of the following for section 11(2) to (4)—
“(2)
The translation must be made by reference to the appropriate
exchange rate.
(3)
The appropriate exchange rate is—
(a)
the average exchange rate for the current accounting
25
period, or
(b)
an appropriate spot rate of exchange for the
transaction in question.”
15
This Schedule has effect in relation to the company as if the following
paragraphs were substituted for paragraphs 11 and 12—
30
“11   (1)
This paragraph applies if—
(a)
a loss of a company (arising in an accounting period
ending on or after 1 April 2010) (“the loss”) is required by
section 7, 8 or 9 to be translated from a currency other than
sterling into its sterling equivalent,
35
(b)
the translation is for the purpose of calculating a loss
arising in an accounting period beginning on or after 21
July 2009, and
(c)
the loss is to be a carried-back amount that is to be carried
back to an accounting period beginning before 21 July
40
2009.
      (2)
Section 12 (sterling equivalents: carried-back amounts) does not
have effect in relation to the loss.
      (3)
The translation must be made by reference to—
(a)
the average exchange rate for the accounting period
45
mentioned in sub-paragraph (1)(b), or

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 4 — Loss relief (other than share loss relief)
681

(b)
the rate mentioned in sub-paragraph (4).
      (4)
That rate is—
(a)
if the amount to be translated relates to a single
transaction, an appropriate spot rate of exchange for the
transaction, or
5
(b)
if the amount to be translated relates to more than one
transaction, a rate of exchange derived on a just and
reasonable basis from appropriate spot rates of exchange
for those transactions.
      (5)
In this paragraph “carried-back amount” has the same meaning as
10
in Chapter 4 of Part 2 (see section 17(2)).
12    (1)
This paragraph applies if—
(a)
a loss arises in an accounting period beginning on or after
21 July 2009 (and ending on or after 1 April 2010),
(b)
the loss is to be a carried-back amount that is to be carried
15
back to an accounting period beginning before 21 July
2009, and
(c)
apart from this paragraph section 14 would require the
loss to be adjusted.
      (2)
Section 14 does not have effect in relation to the loss.
20
      (3)
In this paragraph “carried-back amount” has the same meaning as
in Chapter 4 of Part 2 (see section 17(2)).”
16
In relation to profits or losses arising in accounting periods of the company
ending before 1 April 2010, an election under paragraph 13 has the effect that
it would have had if it had been made under paragraph 13 of Schedule 18 to
25
FA 2009 (assuming that that paragraph had not been repealed by this Act).
Part 4
Loss relief (other than share loss relief)
Carry forward loss reliefs
17    (1)
The repeal by this Act of the superseded carry forward provisions does not
30
alter the effect of those provisions so far as they determine—
(a)
whether, and
(b)
to what extent,

relief for any loss made (or treated as made) in an accounting period ending
on or before 31 March 2010 is to be given for an accounting period ending
35
after that date.
      (2)
But any relief for the loss (or any part of the loss) which is given for an
accounting period ending after that date is to be given in accordance with
the relevant provisions of Part 4 of this Act.
      (3)
In this paragraph “the superseded carry forward provisions” means—
40
(a)
sections 392A, 392B, 393 and 396 of ICTA, and
(b)
any provision inserting or amending, or affecting the application of,
any of the above provisions.

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 4 — Loss relief (other than share loss relief)
682

Trade loss relief against total profits
18    (1)
This paragraph applies for the purposes of section 37 if any of the accounting
periods covered by subsection (3)(b) of that section (including, if relevant, as
modified by section 39 or 40) ends on or before 31 March 2010.
      (2)
Relief for the loss can be given for the accounting periods ending on or
5
before that date.
      (3)
If relief is to be given for those periods, the relief is given in the way in which
it would have been given under section 393A(1) of ICTA ignoring this Act.
19    (1)
This paragraph applies for the purposes of section 42 if any of the accounting
periods covered by subsection (3) of that section ends on or before 31 March
10
2010.
      (2)
Relief for the loss can be given for the accounting periods ending on or
before that date.
      (3)
If relief is to be given for those periods, the relief is given in the way in which
it would have been given under section 393B of ICTA ignoring this Act.
15
Transfers of trade to obtain relief
20
Section 41 has effect in relation to cessations of a trade on or after 21 May
2009.
Dealings in commodity futures
21
Section 52(1)(c) does not cover arrangements made wholly before 6 April
20
1976.
Leasing contracts and company reconstructions
22
Section 53(1)(a) does not cover contracts entered into before 6 March 1973.
Reliefs for limited partners not to exceed contribution to the firm
23
The relief covered by section 56(4) includes—
25
(a)
relief given for a loss under section 338, 393A or 403 of ICTA, and
(b)
any amount that, ignoring this Act, would have been included in the
company’s aggregate amount in relation to the trade for the
purposes of section 118 of ICTA as a result of paragraph 23(3) of
Schedule 2 to CAA 2001.
30
Reliefs for members of LLPs not to exceed contribution to the LLP
24    (1)
The relief covered by section 59(4) includes relief given for a loss under
section 338, 393A or 403 of ICTA.
      (2)
In section 61—
(a)
the amounts of loss covered by subsection (1)(b) include amounts of
35
loss which, as a result of section 118 of ICTA (as applied by section
118ZB of that Act), are not relieved under section 338, 393A or 403 of
ICTA,

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 5 — Losses on disposal of shares
683

(b)
in subsections (3) and (4) references to section 61 include references
to section 118ZD of ICTA, and
(c)
the relief covered by subsection (3)(b) includes relief under section
338, 393A or 403 of ICTA.
Loss relief against miscellaneous income: Case VI losses under ICTA
5
25    (1)
This paragraph applies to any loss made by a company in a transaction if—
(a)
the transaction was of such a nature that, if any profits had arisen
from it, the company would have been liable under ICTA to
corporation tax in respect of the profits under Case VI of Schedule D
(see section 18 of ICTA) for an accounting period ending before 1st
10
April 2009, and
(b)
the transaction—
(i)
did not fall within section 34, 35 or 36 of ICTA (lease
premiums etc), and
(ii)
was not a disposal made after 31 March 2007 to which
15
Chapter 5 of Part 17 of that Act (offshore funds) applied.
      (2)
So far as relief for the loss has not been previously given, the loss is to be
treated as a loss to be carried forward and relieved in accordance with
section 91.
Write-off of government investment
20
26
Section 92(1) does not cover government investment written off before 6
April 1988.
Part 5
Losses on disposal of shares
Disposals of new shares
25
27    (1)
In relation to new shares issued before 1 April 2010, section 74(2) applies
with the omission of “This is subject to section 87(3).”
      (2)
In this paragraph “new shares” is to be read in accordance with section 87.
Qualifying trading companies
28    (1)
In relation to shares issued before 17 March 2004, section 78(2)(a) applies
30
with the omission of sub-paragraph (iv) and the “and” immediately before
it.
      (2)
In relation to shares issued before 7 March 2001, section 78(4)(b) applies with
the substitution for “at the relevant time” of “throughout the relevant
period”.
35
      (3)
For the purposes of sub-paragraph (2), shares that were issued—
(a)
after 5 April 1998, but
(b)
before 7 March 2001,

are treated as having been issued on or after 7 March 2001 in respect of any
part of the relevant period which falls on or after that date.
40

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 5 — Losses on disposal of shares
684

      (4)
In relation to shares issued before 6 April 1998, section 78 applies with the
substitution for subsections (2) to (5) of—
“(2)
Condition A is that the company either—
(a)
is a trading company on the date of the disposal, or
(b)
has ceased to be a trading company at a time which is not
5
more than 3 years before that date and has not since that time
been an excluded company or an investment company.
(3)
Condition B is that the company either—
(a)
has been a trading company for a continuous period of 6
years ending on that date or at that time, or
10
(b)
has been a trading company for a shorter continuous period
ending on that date or at that time and has not before the
beginning of that period been an excluded company or an
investment company.
(4)
Condition C is that none of the shares in the company has been listed
15
on a recognised stock exchange at any time in the period—
(a)
beginning with the incorporation of the company or, if later,
12 months before the date on which the shares in question
were subscribed for, and
(b)
ending with the date on which the shares are disposed of.
20
(5)
Condition D is that the company has been UK resident throughout
the period from its incorporation until the date of the disposal.”
The trading requirement
29    (1)
In relation to shares issued before 6 April 2007, section 79 applies with the
following modifications—
25
(a)
the omission of subsection (2),
(b)
in subsection (5), the omission of paragraph (d)(ii) and the “or”
immediately before it, and
(c)
the omission of subsection (6).
      (2)
In relation to shares issued before 6 April 2000, section 79 applies with the
30
substitution for the definition of “research and development” in subsection
(7) of—
““research and development” means any activity which is
intended to result in a patentable invention (within the
meaning of the Patents Act 1977) or in a computer program.”
35
      (3)
Section 79 does not apply in relation to shares issued before 6 April 1998.
Ceasing to meet trading requirement because of administration or receivership
30    (1)
In relation to shares issued before 17 March 2004, section 80 applies with the
following modifications—
(a)
in subsection (1), the omission of “merely” and the substitution for
40
“the company or any of its subsidiaries” of “its”,
(b)
in subsection (2)(b), the omission of “concerned”,
(c)
in subsection (3)(a), the omission of “or any of its subsidiaries”,
(d)
in subsection (3)(b), the omission of “or any of its subsidiaries”, and

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 5 — Losses on disposal of shares
685

(e)
in subsection (4), the omission of “is”, in the second place where it
occurs.
      (2)
In relation to an administration order the petition for which was presented
before 15 September 2003, section 80(2) applies with the substitution for
paragraph (a) of—
5
“(a)
the making of the order in question, and”.
      (3)
In relation to shares issued before 21 March 2000, section 80 applies with the
omission of subsections (1) and (2).
      (4)
Section 80 does not apply in relation to shares issued before 6 April 1998.
The control and independence requirement
10
31    (1)
In relation to shares issued before 6 April 2007, section 81(1)(a) applies with
the omission of “of the company”.
      (2)
In relation to shares issued before 21 March 2000, section 81 applies with the
following modifications—
(a)
the substitution for subsections (1) to (3) of—
15
“(1)
The control element of the requirement is that—
(a)
the company must not control (or together with any
person connected with it control) another company or
have a 51% subsidiary, and
(b)
no arrangements must be in existence by virtue of
20
which the company could fail to meet paragraph (a).
(2)
The independence element of the requirement is that—
(a)
the company must not be under the control of another
company (or another company and any other person
connected with that company) or be a 51% subsidiary
25
of another company, and
(b)
no arrangements must be in existence by virtue of
which the company could fail to meet paragraph (a).
(3)
This section is subject to section 87(3); and nothing in
subsection (1) prevents the company having one or more
30
qualifying subsidiaries.”, and
(b)
in subsection (4) the omission of the definition of “arrangements”
and, in the definition of “control”, the omission of “, in subsection
(1)(a),” and the words “(but see section 1124 for the meaning of
“control” in subsection (2)(a)(ii))”.
35
      (3)
Section 81 does not apply in relation to shares issued before 6 April 1998.
The qualifying subsidiaries requirement
32
Section 82 does not apply in relation to shares issued before 6 April 1998.
The property managing subsidiaries requirement
33
Section 83 does not apply in relation to shares issued before 17 March 2004.
40

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 5 — Losses on disposal of shares
686

The gross assets requirement
34    (1)
In relation to shares issued before 6 April 2006, section 84 applies with the
substitution in subsections (1) and (2)—
(a)
of “£15 million” for “£7 million”, and
(b)
of “£16 million” for “£8 million”.
5
      (2)
For the purposes of sub-paragraph (1) shares issued on or after 6 April 2006
to a company which subscribed for them before 22 March 2006 are treated as
having been issued before 6 April 2006.
      (3)
Section 84 does not apply in relation to shares issued before 6 April 1998.
The unquoted status requirement
10
35    (1)
In relation to shares issued before 7 March 2001, section 85 applies with the
following modifications—
(a)
the substitution for subsection (1) of—
“(1)
The unquoted status requirement is that the company must
be an unquoted company throughout the relevant period.”,
15
(b)
the substitution for subsection (2) of—
“(2)
If the company is an unquoted company at the time when any
shares are issued, it is not treated for the purposes of this
section as ceasing to be an unquoted company in relation to
those shares at any subsequent time merely because any
20
shares, stocks, debentures or other securities of the company
are at that time—
(a)
listed on an exchange designated by an order made
for the purposes of section 184(3)(b) of ITA 2007, or
(b)
dealt in by any means designated by an order made
25
for the purposes of section 184(3)(c) of ITA 2007,

if the order was made after the shares were issued.”, and
(c)
in subsection (3) the substitution for the definition of “arrangements”
of—
““the relevant period” means the period—
30
(a)
beginning with the incorporation of the
company or, if later, the date one year before
the issue of the shares in question, and
(b)
ending with the date of the disposal.”
      (2)
For the purposes of sub-paragraph (1)(a) and (c), shares that were issued—
35
(a)
after 5 April 1998, but
(b)
before 7 March 2001,

are treated as having been issued on or after 7 March 2001 in respect of any
part of the relevant period which falls on or after that date.
      (3)
Section 85 does not apply in relation to shares issued before 6 April 1998.
40
Power to amend requirements by Treasury order
36
Section 86 does not apply in relation to shares issued before 6 April 1998.