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389 | Provision supplementing section 388 |
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(1) | For the purposes of section 388 and this section the amounts shown in the |
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appropriate balance sheet of any company in respect of any plant or machinery |
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(a) | the amounts shown in that balance sheet as the net book value (or |
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carrying amount) in respect of the plant or machinery, and |
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(b) | the amounts shown in that balance sheet as the net investment in |
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respect of finance leases of the plant or machinery. |
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(a) | any of the plant or machinery is a fixture in any land (see section |
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(b) | the amount which falls (or would fall) to be shown in an appropriate |
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balance sheet as the net book value (or carrying amount) of the land |
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includes (or would include) an amount in respect of the fixture, |
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| the amount of the net book value (or carrying amount) in respect of the fixture |
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is determined on a just and reasonable basis. |
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(a) | any of the plant or machinery is subject to a finance lease (see section |
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(b) | any land or other asset which is not plant or machinery is subject to that |
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| the amount of the net investment in respect of the finance lease of that plant or |
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machinery is determined on a just and reasonable basis. |
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(4) | In section 388 and this section any reference to any amount shown in the |
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appropriate balance sheet of a company is to the amount which, on the |
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assumptions in subsection (5), falls (or would fall) to be shown in a balance |
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(a) | that the balance sheet is drawn up in accordance with generally |
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accepted accounting practice, and |
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(b) | that, if the company acquired any plant or machinery in circumstances |
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in which this paragraph applies, the plant or machinery had been |
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acquired for an amount equal to its market value as at the relevant day. |
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(6) | Paragraph (b) of subsection (5) applies if— |
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(a) | the relevant day falls on or after 22 March 2006, |
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(b) | the plant or machinery was acquired directly or indirectly from a |
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person who was connected with the company when the acquisition |
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(c) | either the acquisition took place on or after 5 December 2005 or the |
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person from whom the plant or machinery was so acquired was also |
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connected with the company on that date. |
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390 | Relevant plant or machinery value where relevant company lessee under long |
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(1) | Any amount included in the amounts mentioned in section 388(2) in respect of |
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plant or machinery to which this section applies is to be deducted from the sum |
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mentioned in that section. |
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(2) | But the market value as at the relevant day of any plant or machinery to which |
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this section applies is to be added to that sum or, if that sum is nil, is the |
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relevant plant or machinery value. |
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(3) | This section applies to plant or machinery if— |
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(a) | condition A or B is met at the start of the relevant day, or |
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(b) | the plant or machinery is acquired by the relevant company from an |
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associated company on the relevant day and condition A or B is met at |
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(4) | Condition A is that the relevant company is the lessee of the plant or machinery |
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under a long funding finance lease or a long funding operating lease. |
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(5) | Condition B is that the relevant company is treated as the owner of the plant or |
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machinery under section 67 of CAA 2001 (hire purchase and similar contracts). |
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391 | Relevant company’s income for condition B in section 387 |
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(1) | This section applies for the purposes of condition B in section 387. |
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(2) | The reference to the relevant company’s income is to its income as calculated |
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for corporation tax purposes. |
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(3) | Any apportionment necessary to determine the amount of the relevant |
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company’s income attributable to the period of 12 months ending with the |
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relevant day is to be made on a time basis. |
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(a) | that basis does not apply if it would work in an unjust or unreasonable |
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way in relation to any person, and |
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(b) | in that case the apportionment is to be made instead on a just and |
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(5) | The proportion of the income that derives from qualifying leased plant or |
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machinery is to be determined on a just and reasonable basis. |
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“Qualifying change of ownership” |
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392 | “Qualifying change of ownership” |
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(1) | This section defines when there is a qualifying change of ownership in relation |
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to a company (“A”) for the purposes of the sales of lessors Chapters. |
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(2) | There is a qualifying change of ownership in relation to A on any day if there |
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is a relevant change in the relationship on that day between— |
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(b) | a principal company of A. |
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(3) | For an exception to subsection (2) see section 395 (no qualifying change of |
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ownership in certain intra-group reorganisations). |
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(4) | There is a relevant change in the relationship between A and a principal |
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company of A on any day in any of the circumstances in section 393 or 394 |
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(qualifying 75% subsidiaries and consortium relationships). |
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(5) | For an exception to subsection (4) see section 396 (no qualifying change of |
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ownership where principal company’s interest in consortium company |
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393 | Qualifying 75% subsidiaries |
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(1) | A company (“B”) is a principal company of A if— |
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(a) | A is a qualifying 75% subsidiary of B, and |
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(b) | B is not a qualifying 75% subsidiary of another company. |
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(2) | There is a relevant change in the relationship between A and B (as a principal |
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company) on any day if A ceases to be a qualifying 75% subsidiary of B on that |
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(3) | A company (“C”) is a principal company of A if— |
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(a) | A is a qualifying 75% subsidiary of B, |
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(b) | B is a qualifying 75% subsidiary of C, and |
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(c) | C is not a qualifying 75% subsidiary of another company. |
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(4) | There is a relevant change in the relationship between A and C (as a principal |
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(a) | A ceases to be a qualifying 75% subsidiary of B on that day, or |
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(b) | B ceases to be a qualifying 75% subsidiary of C on that day. |
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(5) | If C is a qualifying 75% subsidiary of another company (“D”), D is a principal |
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company of A unless D is a qualifying 75% subsidiary of another company, and |
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(6) | Accordingly, there is a relevant change in the relationship between A and a |
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principal company of A on any day if— |
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(a) | in determining which company is a principal company, regard is had |
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to any company which is a qualifying 75% subsidiary of another, and |
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(b) | that company ceases to be a qualifying 75% subsidiary of the other on |
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(7) | This section is supplemented by section 398 (“qualifying 75% or 90% |
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394 | Consortium relationships |
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(1) | A company (“E”) is a principal company of A if— |
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(a) | A is owned by a consortium of which E is a member, or |
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(b) | A is a qualifying 90% subsidiary of a company owned by a consortium |
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| and E is not a qualifying 75% subsidiary of another company. |
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(2) | There is a relevant change in the relationship between A and E (as a principal |
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company) on any day if the ownership proportion at the end of the day is less |
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than the ownership proportion at the start of the day. |
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(3) | In this section “the ownership proportion” is whichever is the lowest of the |
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(a) | the percentage of the ordinary share capital of A that is beneficially |
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(b) | the percentage to which E is beneficially entitled of any profits available |
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for distribution to equity holders of A, and |
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(c) | the percentage to which E would be beneficially entitled of any assets |
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of A available for distribution to its equity holders on a winding up. |
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(4) | But if A is a qualifying 90% subsidiary of a company, subsection (3) is to be read |
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as if references to that company were substituted for references to A. |
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(5) | A company (“F”) is a principal company of A if, in a case where E is a |
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qualifying 75% subsidiary of F but F is not a qualifying 75% subsidiary of |
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(a) | A is owned by a consortium of which E is a member, or |
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(b) | A is a qualifying 90% subsidiary of a company owned by a consortium |
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(6) | There is a relevant change in the relationship between A and F (as a principal |
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(a) | the ownership proportion at the end of the day is less than the |
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ownership proportion at the start of the day, or |
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(b) | E ceases to be a qualifying 75% subsidiary of F on that day. |
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(7) | If F is a qualifying 75% subsidiary of another company (“G”), G is a principal |
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company of A unless G is a qualifying 75% subsidiary of another company, and |
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(8) | Accordingly, there is a relevant change in the relationship between A and a |
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principal company of A on any day if— |
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(a) | in determining which company is a principal company, regard is had |
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to any company which is a qualifying 75% subsidiary of another, and |
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(b) | that company ceases to be a qualifying 75% subsidiary of the other on |
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| (as well as if the ownership proportion at the end of the day is less than the |
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ownership proportion at the start of the day). |
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(9) | This section is supplemented by— |
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(a) | section 397 (companies owned by consortiums and members of |
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(b) | section 398 (“qualifying 75% or 90% subsidiary” etc). |
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395 | No qualifying change of ownership in certain intra-group reorganisations |
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(1) | This section applies if— |
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(a) | a relevant change in the relationship between a company (“A”) and a |
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principal company of A occurs on any day, |
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(b) | that change occurs by reference to A or any other company ceasing to |
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be a qualifying 75% subsidiary on that day, and |
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(c) | A, and every company by reference to which that change occurs, are |
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qualifying 75% subsidiaries of the principal company concerned at the |
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start and end of that day. |
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(2) | For the purposes of the sales of lessors Chapters, there is no qualifying change |
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of ownership in relation to A on that day as a result of that change in the |
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