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Corporation Tax Bill


Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 12 — Charitable companies etc

701

 

(a)   

in subsection (5)(b) for “acquired any plant or machinery in

circumstances in which this paragraph applies” substitute “acquires

any plant or machinery directly or indirectly from a person who is

connected with the partnership”, and

(b)   

omit subsection (6).

5

      (7)  

In section 417 (partner company’s income and other companies’ matching

expense) omit subsection (8).

      (8)  

Omit section 420 (exception: companies carrying on business ceasing to

share in its profits).

      (9)  

In section 424 (the amount of expense)—

10

(a)   

in subsection (1)(c) for “is greater at the end than at the start of”

substitute “increases at any time on”,

(b)   

in subsection (1)(d) after “the increase”, in both places, insert “at any

time”, and

(c)   

for subsection (3) substitute—

15

“(3)   

The appropriate percentage is the percentage of the other

company’s percentage share in the profits or loss of the

business immediately after the change that is wholly

attributable to the change.”

Part 11

20

Close companies

Exceptions to the charge under section 455

69    (1)  

The reference in section 456(4)(b) to other outstanding loans and advances

does not include a loan or advance made before 31 March 1971 unless it was

made for the purpose of purchasing a dwelling which was or was to be the

25

borrower’s only or main residence.

      (2)  

Condition A in section 456(4) is not to be treated as met if such of the other

outstanding loans and advances within section 456(4)(b) as were made

before 31 March 1971 together exceed £10,000.

      (3)  

The reference in section 456(7) to a loan or advance does not include one

30

made before 31 March 1971.

Part 12

Charitable companies etc

Transactions in deposits

70         

The repeal by this Act of section 56(3)(c) of ICTA (exemption from

35

corporation tax for profits and gains arising to charitable company from

transactions in deposits) does not affect the application of that provision in

relation to the disposal or exercise of—

(a)   

a right to receive an amount stated in a certificate of deposit (as

defined by section 56(5) of ICTA), or interest on such an amount, or

40

(b)   

a right under an arrangement of a kind mentioned in section 56A(1)

of ICTA,

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 12 — Charitable companies etc

702

 

           

if the right was in existence before 1 April 1996.

Exemption for investment income

71         

In relation to distributions paid before 1 July 2009 section 486 has effect as if

subsection (2) provided as follows—

“(2)   

The income referred to in subsection (1) is—

5

(a)   

profits which are charged to tax under section 299 of CTA

2009 (non-trading profits from loan relationships),

(b)   

a dividend of a non-UK resident company, and

(c)   

income treated for the purposes of Chapter 5 of Part 10 of

CTA 2009 (distributions from unauthorised unit trusts) as

10

received by a unit trust holder from a scheme to which

section 972 of that Act applies (unauthorised unit trust

schemes).”

           

and as if subsection (3) were omitted,

           

and as if in subsection (4) the reference to subsection (2)(c) were a reference

15

to subsection (2)(b) and (c).

Exemption for certain miscellaneous income

72    (1)  

In relation to distributions paid before 1 July 2009 section 488 has effect as if

the income mentioned in subsection (3) included relevant foreign

distributions.

20

      (2)  

In this paragraph “relevant foreign distribution” means a distribution of a

non-UK resident company which is not chargeable under Chapter 2 of Part

10 of CTA 2009 (dividends of non-UK resident companies).

Transactions with substantial donors

73         

Section 496(1)(e) and (f) and sections 502 to 510 (non-charitable expenditure:

25

transactions with substantial donors) do not have effect in relation to—

(a)   

a transaction occurring before 22 March 2006, or

(b)   

a transaction entered into in pursuance of a contract made before 22

March 2006 (otherwise than in pursuance of a variation on or after

that date).

30

74         

For the purposes of section 502 a person may meet the definition of

“substantial donor” by reference to gifts made at a time before this Act comes

into force.

75         

In relation to times before 23 April 2009, section 502(2)(b) has effect with the

substitution of “£100,000” for “£150,000”.

35

76         

Until paragraph 15 of Schedule 9 to the Housing and Regeneration Act 2008

comes into force, section 508 (donors: exceptions) has effect as if subsection

(2)(a) and the “or” immediately after it were omitted.

Non-charitable expenditure

77    (1)  

This paragraph applies if, as a result of sections 515 to 517, an amount of

40

expenditure for an accounting period ending after 31 March 2010 or any

subsequent accounting period (“the carry back accounting period”) is

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 13 — Real Estate Investment Trusts

703

 

treated as non-charitable expenditure for an accounting period beginning

before 22 March 2006 or any earlier accounting period.

      (2)  

The amount of relief or exemption to be disallowed in respect of the

accounting period beginning before 22 March 2006 or any earlier accounting

period is not to exceed the amount which would have been disallowed in

5

respect of that period if—

(a)   

sections 515 to 517 had not applied in relation to the carry back

accounting period, and

(b)   

the amount of expenditure for the carry back accounting period to be

treated as non-charitable expenditure for an earlier accounting

10

period had instead been calculated in accordance with the provisions

mentioned in sub-paragraph (3).

      (3)  

Those provisions are—

(a)   

sections 505 and 506 of ICTA, and

(b)   

Part 3 of Schedule 20 to that Act,

15

           

as those provisions would have had effect in relation to the carry back

accounting period if the amendments made to them by section 55 of FA 2006

had not been made and the amendments made to them by this Act had not

been made.

Part 13

20

Real Estate Investment Trusts

Notice under section 523 or 524

78    (1)  

This paragraph applies in relation to accounting periods beginning before 22

April 2009.

      (2)  

Section 525 has effect as if for subsections (2) to (9) there were substituted—

25

“(2)   

Subsection (3) applies if the company giving the notice—

(a)   

does not expect to meet condition D in section 528 on the first

day of accounting period 1, merely because the company’s

shares have not been listed and dealt with on a recognised

stock exchange within the preceding 12 months, but

30

(b)   

reasonably expects to meet that condition throughout the rest

of accounting period 1 in reliance on section 446(1)(b).

(3)   

If this subsection applies—

(a)   

subsection (1)(c) does not apply, but

(b)   

the notice must be accompanied by a statement by the

35

company containing the assertions specified in subsection

(4).

(4)   

Those assertions are—

(a)   

that conditions A, B, E and F in section 528 are reasonably

expected to be met in relation to the company throughout

40

accounting period 1,

(b)   

that condition C in that section is reasonably expected to be

met in relation to the company for at least a part of the first

day of accounting period 1, and throughout the remainder of

the period, and

45

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 14 — Co-operative housing associations and self-build societies

704

 

(c)   

that condition D in that section is reasonably expected to be

met in relation to the company throughout all of accounting

period 1 apart from the first day.

(5)   

For the meaning of “accounting period 1”, see section 609.”

      (3)  

Section 577(7)(b) has effect as if “or (5) to (7)” were omitted.

5

Property rental business: excluded business

79    (1)  

In relation to any time before 6 July 2009, section 604 has effect with the

following modifications.

      (2)  

In subsection (2) for class 3 substitute—

 

“Class 3

Letting of property if conditions A and B are met.

 

10

  

Condition A is that the property is let—

 
  

(a)   

by one member of a group to another, or

 
  

(b)   

by a member of a group to a company the shares

 
  

in which are stapled to the shares of a member of

 
  

the group (see subsection (3)).

 

15

  

Condition B is that the property would fall in accordance

 
  

with generally accepted accounting practice to be

 
  

described as owner-occupied (see subsection (3A).”

 

      (3)  

For subsection (3) substitute—

“(3)   

For the purposes of paragraph (b) of condition A in class 3, shares of

20

one company (company A) are stapled to shares of another

(company B) if, in consequence of the nature of the rights attaching

to the shares of company A (including any terms or conditions

attaching to the right to transfer the shares) it is necessary or

advantageous for a person who has, disposes of or acquires shares of

25

company A also to have, dispose of or acquire a holding of shares of

company B.

(3A)   

For the purposes of condition B in class 3, ignore the fact that a

property may fall to be described as owner-occupied merely because

of the provision by the company of services to an occupant who—

30

(a)   

is in exclusive occupation of the property, and

(b)   

is not connected with a member of the group.”

Part 14

Co-operative housing associations and self-build societies

Concurrent exercise of functions

35

80         

So far as any function of the Welsh Ministers under section 488 of ICTA (co-

operative housing associations) was immediately before 1 April 2010

exercisable by the Welsh Ministers concurrently with the Secretary of State,

the corresponding function of the Welsh Ministers under section 644, 645 or

649 is exercisable concurrently with the Secretary of State.

40

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 15 — Transactions in securities

705

 

81         

So far as any function of the Welsh Ministers under section 489 of ICTA (self-

build societies) was immediately before 1 April 2010 exercisable by the

Welsh Ministers concurrently with the Secretary of State, the corresponding

function of the Welsh Ministers under section 653 or 657 is exercisable

concurrently with the Secretary of State.

5

Delegation of functions to the Regulator of Social Housing

82         

Until paragraph 13 of Schedule 9 to the Housing and Regeneration Act 2008

comes into force, section 646 has effect as if the following were substituted

for subsection (1)—

“(1)   

In the case of a body registered as a social landlord in the register

10

maintained by the Housing Corporation under Part 1 of the Housing

Act 1996, the Secretary of State may delegate to the Housing

Corporation any of the Secretary of State’s functions under section

644 or 645.”

83         

Until paragraph 14 of Schedule 9 to the Housing and Regeneration Act 2008

15

comes into force, section 654 has effect with the substitution, in subsection

(1), of “the Housing Corporation” for “the Regulator of Social Housing”.

Part 15

Transactions in securities

Transactions in securities: general

20

84    (1)  

Part 15 (transactions in securities), so far as relating to the counteraction of

corporation tax advantages, applies—

(a)   

whether or not the transaction or transactions in consequence of

which, or of the combined effect of which, the tax advantage has been

or will be obtained occur on or after 1 April 2010, and

25

(b)   

whether or not that advantage relates to an accounting period

ending on or after that date.

      (2)  

Sub-paragraph (1) does not affect section 746(5) (under which no

assessments may be made as a result of a counteraction notice later than 6

years after the accounting period to which the tax advantage relates).

30

      (3)  

No notification under section 703(9) of ICTA (notification that the

Commissioners for Her Majesty’s Revenue and Customs have reason to

believe that section 703 applies to a company in respect of one or more

specified transactions) may be given on or after 1 April 2010.

      (4)  

If notification under section 703(9) of ICTA has been given before that date,

35

Chapter 1 of Part 17 of that Act (cancellation of corporation tax advantages

from certain transactions in securities) continues to apply in relation to the

cancellation of any tax advantage resulting from the transaction or

transactions specified in the notification, regardless of the date on which any

accounting period to which the tax advantage relates ends.

40

      (5)  

This paragraph is to be interpreted as if it were part of Part 15.

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 16 — Factoring of income etc

706

 

Transactions in securities: meaning of relevant companies for the purposes of sections 737 and

738

85    (1)  

In its application to a transaction in securities that took place before 29 April

1996 or two or more transactions in securities the first of which took place

before that date, section 739(1)(b)(i) (meaning of “relevant company”)

5

applies with the substitution for the words “included in the official UK list”

of the words “authorised to be dealt in on the Stock Exchange”.

      (2)  

In its application to a transaction in securities that took place before 1

January 1997 or two or more transactions in securities the first of which took

place before that date, section 739(1) applies as if the companies referred to

10

in paragraph (b) included companies none of whose shares or stocks are

dealt in on the Unlisted Securities Market regularly or from time to time.

      (3)  

In this paragraph “companies” and “transaction in securities” have the same

meaning as in Part 15 (see section 751).

Part 16

15

Factoring of income etc

Transfers of income streams

86         

Chapter 1 of Part 16 does not have effect in relation to transfers before 22

April 2009.

Application of Chapter 2 of Part 16 (finance arrangements) to pre-6 June 2006 arrangements

20

87         

Chapter 2 of Part 16 has no effect in relation to an arrangement made before

6 June 2006 so far as section 43B or 43D of ICTA applies to the arrangement

(sections 43B and 43D of ICTA contain provision about rent factoring: their

repeal by paragraph 1 of Schedule 6 to FA 2006 does not apply in relation to

pre-6 June 2006 transactions).

25

Application of section 771 (finance arrangements: exceptions)

88    (1)  

In relation to a transfer before 22 April 2009, section 771 has effect as if after

subsection (1) there were inserted—

“(1A)   

For the purposes of subsection (1) the effect of section 785A of ICTA

(rent factoring of leases of plant or machinery) is to be disregarded.”

30

      (2)  

If the arrangement mentioned in section 771 came into force before 1 October

2007, subsection (5)(b) of that section applies as if for “Schedule 13 to FA 2007

or Chapter 10 of Part 6 of CTA 2009” there were substituted “paragraph 15

of Schedule 9 to FA 1996”.

      (3)  

Paragraph 14(6) of Schedule 13 to FA 2007 (when an arrangement is in force)

35

applies for the purposes of sub-paragraph (2) of this paragraph as for those

of that Schedule.

      (4)  

In the case of plant or machinery which is the subject of a sale and finance

leaseback (as defined in section 221 of CAA 2001) where the date of the

transaction (within the meaning of that section) is before 9 October 2007,

40

section 771(8) has effect as if at the end there were inserted “, but in applying

that section it is to be assumed that the words “and which are not a long

 
 

Corporation Tax Bill
Schedule 2 — Transitionals and savings etc
Part 17 — Manufactured payments and repos

707

 

funding lease in the case of the lessor” were omitted from section 219(1)(b)

of that Act (meaning of “finance lease”)”.

      (5)  

In relation to transactions referred to in section 228A(2)(a) of CAA 2001 (as

substituted by paragraph 12 of Schedule 20 to FA 2008) and entered into

before 9 October 2007, section 771(9) has effect as if at the end there were

5

inserted “with the modifications contained in section 228F of that Act”.

Application of section 779 (income-transfer under loan or credit transaction)

89         

In relation to a transfer before 22 April 2009, section 779(4) has effect as if—

(a)   

after “if it” there were inserted “assigns,” and

(b)   

after “forgoes it” there were inserted “(without a sale or transfer of

10

the property)”.

Part 17

Manufactured payments and repos

Manufactured dividends and manufactured overseas dividends: distributions paid before 1 July

2009

15

90    (1)  

In relation to distributions paid before 1 July 2009, Chapters 2 and 3 of Part

17 have effect with the following modifications.

      (2)  

Section 783 is omitted.

      (3)  

The following is substituted for section 784

“784    

 Manufactured dividends on shares

20

(1)   

This section applies if a person pays a manufactured dividend to

another person.

(2)   

The Corporation Tax Acts apply to in relation to—

(a)   

the recipient of the manufactured dividend, and

(b)   

companies claiming title through or under the recipient,

25

   

as if the manufactured dividend were a dividend on the shares.

(3)   

If the payer is a UK resident company, the Corporation Tax Acts

apply in relation to the payer as if the manufactured dividend were

a dividend of the company.

(4)   

Subsection (1) is subject to—

30

(a)   

section 786 (treatment of recipient: Real Estate Investment

Trusts),

(b)   

section 796 (manufactured dividends: amounts exceeding

underlying payments), and

(c)   

section 803 (power to deal with special cases).”

35

      (4)  

In section 786(1) “(instead of section 784(2))” is substituted for “instead of

section 784(1))”.

      (5)  

Section 787 is omitted.

      (6)  

In section 788(6)(a) “section 784(2)” is substituted for “section 784(1)”.

 
 

 
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