Clause 623: Meaning of “securitisation company”

1959.     This clause provides a definition of “securitisation company”. It is based on section 84(2) and (6) of FA 2005.

1960.     Subsections (3) to (5) set out the conditions that must be met if a company is to be a “securitisation company”. Subsection (2) includes the proviso that in addition to meeting the conditions in subsections (3) to (5) the company must also meet any conditions set out in regulations. Such conditions are in regulation 4 of the Taxation of Securitisation Companies Regulations 2006 (SI 2006/3296).

Clause 624: Power to make regulations about the taxation of securitisation companies

1961.     This clause sets out how the Treasury may make regulations governing the taxation of securitisation companies. It is based on section 84(1), (3) and (6) of FA 2005.

Clause 625: Regulations: supplementary

1962.     This clause contains provisions that supplement the regulation-making powers conferred by clauses 623 and 624. It is based on section 84(4) and (5) of FA 2005.

1963.

Chapter 5: Companies in liquidation or administration

Overview

1964.     This Chapter deals with the taxation of companies in liquidation or administration. It is based on sections 342 and 342A of ICTA.

1965.     The rules governing the accounting periods of such companies are in Chapter 2 of Part 2 of CTA 2009.

Clause 626: Meaning of “final year”, “penultimate year” etc

1966.     This clause defines a number of the terms used in the Chapter. It is based on sections 6(4), 342(1) and 342A(1) of ICTA.

Clause 627: Meaning of “rate of corporation tax” in case of companies with small profits

1967.     This clause defines “rate of corporation tax” for companies with small profits subject to this Chapter. It is based on section 342(2) and (3) and section 342A(2) and (3) of ICTA.

Clause 628: Company in liquidation: corporation tax rates

1968.     This clause sets out the corporation tax rates that are to be applied in the final or penultimate year of the liquidation period of a company that is being wound up. It is based on section 342(2), (3) and (8) of ICTA.

1969.     If the rates of corporation tax have been either fixed or proposed for the final year or the penultimate year then the proposed or fixed rates are to be used. Accordingly in the vast majority of cases the normal corporation tax rates will apply.

1970.     Corporation tax rates are generally proposed in the PBR (Pre-Budget Report). The PBR takes place in autumn. The PBR in the autumn of Financial Year 1 proposes corporation tax rates for Financial Year 3. The same PBR proposes the rate of corporation tax for companies with small profits and fractions for Financial Year 2. The associated Finance Act usually becomes law in July of Financial Year 2. The corporation tax rates for Financial Year 3 become fixed in Financial Year 2 and the rate for companies with small profits and fractions for Financial Year 2 also become fixed in Financial Year 2.

1971.     The clause assists liquidators seeking to finalise a company’s liability in advance of a formal winding up by setting out the rates to be used even in those rare cases where corporation tax rates have not been fixed at the time when a liquidator wishes to make an assessment to tax.

Clause 629: Company in liquidation: making of assessment to tax

1972.     This clause enables a liquidator to make a corporation tax self-assessment for an accounting period that has not finished. It is based on section 342(4), (5) and (6) of ICTA.

1973.     In normal circumstances it is not possible to make a corporation tax self-assessment before the end of an accounting period. In the majority of instances the profits for the period are not known in advance and the relevant corporation tax rates may not have been fixed.

1974.     Liquidators may seek to finalise a company’s liability to corporation tax in advance of the completion of a formal winding up. This clause enables the liquidator to do so by making a corporation tax self-assessment before the end of an accounting period.

1975.     The rules about accounting periods for companies being wound up are in section 12 of CTA 2009 (see in particular subsection (3)).

Clause 630: Company in administration: corporation tax rates

1976.     This clause sets out the corporation tax rates that are to be applied in the final year and the penultimate year of an administration period that concludes with the company’s dissolution. It is based on section 342A(2), (3) and (10) of ICTA.

1977.     If the rates of corporation tax have been either fixed or proposed for the final year or the penultimate year then the proposed or fixed rates are to be used. Accordingly in the vast majority of cases the normal corporation tax rates will apply.

1978.     The clause assists administrators seeking to finalise a company’s liability in advance of an anticipated dissolution date by setting out the rates to be used even in those rare cases where corporation tax rates have not been fixed at the time when the administrator wishes to make an assessment to tax.

Clause 631: Company in administration: making of assessment to tax

1979.     This clause enables an administrator to make a corporation tax self-assessment for an accounting period that has not finished. It is based on section 342A(6), (7) and (8) of ICTA.

1980.     In normal circumstances it is not possible to make a corporation tax self-assessment before the end of an accounting period. In the majority of instances the profits for the period are not known in advance and the relevant corporation tax rates may not have been fixed.

1981.     Administrators may seek to finalise a company’s liability to corporation tax in advance of an anticipated dissolution date. This clause enables the administrator to do so by making a corporation tax self-assessment before the end of an accounting period.

1982.     The rules about determining the end of an accounting period are in section 10 of CTA 2009 (see particularly subsection (3)).

Clause 632: Meaning of rate being “fixed” or “proposed”

1983.      This clause defines terms used in the previous clauses. It is based on section 342(7) and 342A(9) of ICTA.

Clause 633: Exemption for interest on overpaid tax in final accounting period

1984.     This clause provides a limited exemption for interest on overpaid tax received or paid in the final accounting period. It is based on sections 342(3A) and 342A(4), (5) of ICTA.

1985.     The rules about accounting periods for companies being wound up are in section 12 of CTA 2009 (see in particular subsection (4)).

1986.

Chapter 6: Banks etc in compulsory liquidation

Overview

1987.     This Chapter deals with the taxation of banks in compulsory liquidation. It is based on Schedule 12 to F(No 2)A 1992.

Clause 634: Overview of Chapter

1988.     This clause gives an overview of the Chapter. It is new.

Clause 635: Application of Chapter

1989.     This clause sets out the conditions that a company must meet in order for the Chapter to apply. It is based on paragraph 1 of Schedule 12 to F(No 2)A 1992.

1990.     Subsection (6) refers to an EEA firm with permission under paragraph 15 of Schedule 3 to FISMA. The source qualified this by adding “(as a result of qualifying for authorisation by virtue of paragraph 12 of that Schedule)”. This qualification is considered unnecessary as the only way in which permission under paragraph 15 may be given is by virtue of paragraph 12. These words are therefore repealed without replacement.

Clause 636: Charge to corporation tax on winding up receipts

1991.     This clause charges amounts received during the winding up period. It is based on paragraph 3(1), (1A), (2) and (3) of Schedule 12 to F(No 2)A 1992.

Clause 637: Transfer of rights to payment

1992.     This clause charges sums received in respect of transfers of rights as if those sums were winding up receipts. It is based on paragraph 5 of Schedule 12 to F(No 2)A 1992.

1993.     In the case of a non-arm’s length transaction the source provided that market value was to be substituted for the consideration received. However, the tax charge was based on amounts received. In relation to the deemed amounts arising from non-arm’s length transactions the source, therefore, stated that “references .. to sums received shall be construed accordingly.”

1994.     Although the meaning was not in doubt the source was not as clear as it might have been. In the rewritten clause a slightly different approach is adopted by explicitly treating the value of transferred rights as winding up receipts.

Clause 638: Allowable deductions

1995.     This clause provides rules for setting allowable deductions against winding up receipts. It is based on paragraph 4 of Schedule 12 to F(No 2)A 1992.

Clause 639: Election to carry back

1996.     This clause gives a company the right to elect to carry back a winding up receipt to the date that the business ceased. It is based on paragraph 6 of Schedule 12 to F(No 2)A 1992.

Clause 640: Relationship of Chapter with other corporation tax provisions

1997.     This clause gives priority to a charge under this Chapter over potential charges arising under other provisions. It is based on paragraph 3(4) and (5) of Schedule 12 to F(No 2)A 1992.

Clause 641: Interpretation of Chapter

1998.     This clause sets out a number of definitions and interpretations relevant to the Chapter. It is based on paragraph 2 of Schedule 12 to F(No 2)A 1992.

1999.

Chapter 7: Co-operative housing associations

Overview of Chapter

2000.     This Chapter rewrites section 488 of ICTA. It provides tax rules for co-operative housing associations and an approvals process that underpins those rules. The approvals process has been modified significantly for Scotland and Wales as a result of devolution. The rewritten legislation incorporates these effects.

Clause 642: Disregard of rent from members and of interest payable

2001.     This clause provides that, where an approved housing association makes a claim, any rent that it receives from its members is ignored for tax purposes and any interest that it pays is treated by the association as not payable. It is based on section 488(1) and (2) of ICTA.

2002.     The source legislation is based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings the disregard of rent and interest into line with the chargeable gains exemption in clause 643. See Change 46 in Annex 1.

Clause 643: Exemption for gains on a sale of property

2003.     This clause exempts an approved housing association from corporation tax on gains on sales of property to its members. It is based on section 488(5) of ICTA.

Clause 644: Approval of housing associations

2004.     This clause sets out the process by which housing associations are approved for the purposes of this Chapter. It is based on section 488(6) and (7) of ICTA.

2005.     Since section 488 of ICTA was enacted, a number of changes to the approvals regime have been made as a result of devolution.

2006.     Specified functions have been transferred:

• to the Scottish Ministers by the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc) Order 2004 (SI 2004/2030), articles 2(1) and 3; and

• to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and (2) of Schedule 11.

2007.     The effects of these modifications are included explicitly in this Chapter.

2008.     In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development, the approvals process for Northern Ireland refers to the Department for Social Development instead of the Head of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.

2009.     Subsection (4) provides a signpost to a saving provision in Schedule 2 concerning the concurrent exercise of these functions in relation to Wales by the Secretary of State and the Welsh Ministers where the association is a “cross-border body”.

Clause 645: Tests to be satisfied by the association

2010.     This clause sets out the tests which housing associations have to satisfy in order to be approved for the purposes of this Chapter. It is based on section 488(6) of ICTA.

2011.     As mentioned in relation to clause 644, since section 488 of ICTA was enacted, a number of changes to the approvals regime have been made as a result of devolution.

2012.     So far as exercisable in relation to Wales, the functions under section 488(6) have been transferred to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and (2) of Schedule 11.

2013.     Article 5 of the Scotland Act 1988 (Transfer of Functions to the Scottish Ministers etc) Order 2004 (SI 2004/2030) amended section 488(6)(iii). The effect of the amendment on the approvals process for Northern Ireland is discussed in Change 47 in Annex 1.

Clause 646: Delegation of powers to the Regulator of Social Housing

2014.     This clause permits the Secretary of State’s functions under clauses 644 or 645 to be delegated to the Regulator of Social Housing. It is based on section 488(7A) of ICTA.

2015.     The Housing and Regeneration Act 2008 established the Regulator of Social Housing in place of the Housing Corporation as the body responsible for regulating social housing in England. This clause incorporates the prospective amendments made by paragraph 13 of Schedule 9 to the Housing and Regeneration Act 2008 which come into force from a day to be appointed by Order (section 325(1) of that Act). Until the Order is made this clause is subject to the provisions for co-operative housing associations and self-build societies in Schedule 2.

Clause 647: Claims under section 642 or 643

2016.     This clause sets out the conditions that must be met for a claim under clause 642 or 643 to be made. It is based on section 488(9), (10) and (11) of ICTA.

2017.     Claims under the source legislation in relation to rent and interest are based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings those claims into line with the claim for the chargeable gains exemption in clause 643. See Change 46 in Annex 1.

Clause 648: Adjustments of liability

2018.     This clause sets out how adjustments to an association’s corporation tax liability may be made as a result of a claim or an amendment of a claim. It is based on section 488(4) and (11A) of ICTA.

2019.     Adjustments under the source legislation as a result of claims in relation to rent and interest may be based on tax years or accounting periods, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. See Change 46 in Annex 1.

Clause 649: Power to make further provision

2020.     This clause sets out the power to make further provision by statutory instrument or, in Northern Ireland, by statutory rule. It is based on section 488(8) of ICTA.

2021.     Powers to make regulations under this provision in relation to Wales were transferred to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and (2) of Schedule 11.

2022.     In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development, the powers to make regulations under this provision for the purposes of housing associations in Northern Ireland refer to the Department for Social Development rather than the Head of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.

Chapter 8: Self-build societies

Overview of Chapter

2023.     This Chapter rewrites section 489 of ICTA. It provides tax rules for self-build societies and an approvals process that underpins those rules. The approvals process has been modified significantly for Wales as a result of devolution. The draft legislation incorporates these effects on the face of the legislation.

Clause 650: Meaning of “self-build society”

2024.     This clause sets out the meaning of “self-build society” for the purposes of the Chapter. It is based on section 489(11) of ICTA.

Clause 651: Disregard of rent from members

2025.     This clause sets out that where a self-build society is approved and makes a claim, any rent that it receives from its members is ignored for tax purposes. It is based on section 489(1) and (11) of ICTA.

2026.     The source legislation is based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings the disregard for rent into line with the chargeable gains exemption in clause 652. See Change 46 in Annex 1.

Clause 652: Exemption for gains on disposals of land to members

2027.     This clause exempts an approved society from corporation tax on chargeable gains on sales of property to its members. It is based on section 489(3) of ICTA.

Clause 653: Approval of self-build societies

2028.     This clause sets out the process by which self-build societies become approved for the purposes of this Chapter. It is based on section 489(4), (5) and (12) of ICTA.

2029.     Approvals under this clause for self-build societies in Wales have been transferred to the Welsh Ministers by article 2 of and Schedule 1 to the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), and paragraphs 30(1) and (2) of Schedule 11 to the Government of Wales Act 2006. The effects of these modifications are included explicitly in this Chapter.

2030.     In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development, the approvals process for Northern Ireland refers to the Department for Social Development instead of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.

2031.     Subsection (5) provides a signpost to a saving provision in Schedule 2 concerning the concurrent exercise of these functions in relation to Wales by the Secretary of State and the Welsh Ministers where the society is a “cross-border body”.

Clause 654: Delegation of powers to the Regulator of Social Housing

2032.     This clause permits the Secretary of State’s functions under clause 653 to be delegated to the Regulator of Social Housing. It is based on section 489(5A) of ICTA.

2033.     The Housing and Regeneration Act 2008 established the Regulator of Social Housing in place of the Housing Corporation as the body responsible for regulating social housing in England. This clause incorporates the prospective amendments made by paragraph 14 of Schedule 9 to the Housing and Regeneration Act 2008 which come into force from a day to be appointed by Order (section 325(1) of that Act). Until the Order is made this clause is subject to the provisions for co-operative housing associations and self-build societies in Schedule 2.

Clause 655: Claims under section 651 or 652

2034.     This clause sets out the conditions that must be met for a claim under clause 651 or 652 to be made. It is based on section 489(7) to (10) of ICTA.

2035.     Claims under the source legislation in relation to rent are based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings those claims into line with the claim for the chargeable gains exemption in clause 652. See Change 46 in Annex 1.

Clause 656: Adjustments of liability

2036.     This clause sets out how adjustments to a society’s corporation tax liability may be made as a result of a claim or an amendment of a claim. It is based on section 489(2) and (9A) of ICTA.

2037.     Adjustments under the source legislation as a result of claims in relation to rent may be based on tax years or accounting periods, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. See Change 46 in Annex 1.

Clause 657: Power to make further provision

2038.     This clause sets out the power to make further provision by statutory instrument or, in Northern Ireland, by statutory rule. It is based on section 489(6) and (12) of ICTA.

2039.     Powers to make regulations under this provision for the purposes of self-build societies in Wales were transferred to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and (2) of Schedule 11.

2040.     In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development, powers to make regulations under this provision for the purposes of self-build societies in Northern Ireland refer to the Department for Social Development instead of the Head of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.

2041.

Chapter 9: Community amateur sports clubs

Overview

2042.     This Chapter provides for the registration of community amateur sports clubs (CASCs) and exemptions from tax of registered clubs. It is based on Schedule 18 to FA 2002.

2043.     Paragraph 9 of that Schedule has not been rewritten in this Chapter.

2044.     Paragraph 9(1) is merely a signpost to Chapter 2 of Part 8 of ITA (gift aid) which treats a registered club as a charity (see section 430 of ITA). Paragraph 9(1) is not rewritten as it is unnecessary.

2045.     The remaining provisions of paragraph 9 are rewritten in this Bill by amending the provisions of IHTA, TCGA and CAA to which they cross-refer. See Schedule 1.