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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.

 
 

 
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