Corporation Tax Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 18 — Transactions in land
411

(ii)
rights in a partnership, or
(iii)
an interest in settled property,
(c)
to the creation of an option affecting the disposition of any property or
right and the giving of consideration for granting it,
(d)
to the creation of a requirement for consent affecting such a disposition
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and the giving of consideration for granting it,
(e)
to the creation of an embargo affecting such a disposition and the
giving of consideration for releasing it, and
(f)
to the disposal of any property or right on the winding up, dissolution
or termination of a company, partnership or trust.
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824
Tracing value
(1)
This section applies if it is necessary to determine the extent to which the value
of any property or right is derived from any other property or right for the
purposes of this Part.
(2)
Value may be traced through any number of companies, partnerships and
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trusts.
(3)
The property held by a company, partnership or trust must be attributed to the
shareholders, partners or beneficiaries at each stage in such manner as is
appropriate in the circumstances.
825
Meaning of “another person”
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(1)
For the purposes of this Part references to other persons are to be read in
accordance with subsections (2) to (4).
(2)
A partnership or partners in a partnership may be regarded as a person or
persons distinct from the individuals or other persons who are for the time
being partners.
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(3)
The trustees of settled property may be regarded as persons distinct from the
individuals or other persons who are for the time being the trustees.
(4)
Personal representatives may be regarded as persons distinct from the
individuals or other persons who are for the time being personal
representatives.
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826
Valuations and apportionments
(1)
All such valuations are to be made as are appropriate to give effect to this Part.
(2)
For the purposes of this Part, any expenditure, receipt, consideration or other
amount may be apportioned by such method as is just and reasonable in the
circumstances.
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Exemptions
827
Gain attributable to period before intention to develop formed
(1)
This section applies if—

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Part 18 — Transactions in land
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(a)
income is treated as arising because the condition mentioned in section
819(2)(d) is met (land developed with sole or main object of realising a
gain from its disposal when developed), and
(b)
part of the income is fairly attributable to a period before the intention
to develop was formed.
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(2)
No liability to corporation tax arises as a result of this Part in respect of that part
of the income.
(3)
In applying this section account must be taken of the treatment under Part 3 of
CTA 2009 (trading income) of a company which appropriates land as trading
stock.
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828
Disposals of shares in companies holding land as trading stock
(1)
No liability to corporation tax arises as a result of this Part in respect of a gain
on property deriving value from land if—
(a)
the gain is obtained by the holder of shares,
(b)
the gain arises as a result of the holder of shares falling within section
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820(1)(a) or (b) (persons acquiring, holding or developing land and
connected persons), and
(c)
the circumstances are such as are mentioned in subsections (2) and (3).
(2)
The gain arises on a disposal of shares in—
(a)
a company which holds that land as trading stock, or
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(b)
a company which directly or indirectly owns at least 90% of the
ordinary share capital of another company which itself holds that land
as trading stock.
(3)
All the land so held is disposed of—
(a)
in the normal course of its trade by the company which holds it, and
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(b)
so as to procure that all opportunity of profit in respect of the land
arises to that company.
(4)
This section does not affect any liability as a result of any person falling within
section 820(1)(c) (parties to arrangements and schemes, etc).
Recovery of tax
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829
Cases where consideration receivable by person not assessed
(1)
This section applies if a company (“A”) is assessed to tax under this Part in
respect of consideration receivable by another person (“B”).
(2)
Consideration is not regarded as having become receivable by B for this
purpose until B can effectively enjoy or dispose of it.
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(3)
A is entitled to recover from B any part of the tax which A has paid.
(4)
If any part of the tax remains unpaid at the end of the period of 6 months
beginning with the date when it became due and payable, it is recoverable
from B as if B were the company assessed.
(5)
Subsection (4) does not affect the right to recover the tax from A.
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Corporation Tax Bill
Part 18 — Transactions in land
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830
Certificates of tax paid etc
(1)
For the purposes of section 829(3), an officer of Revenue and Customs must, if
required to do so, produce a certificate specifying—
(a)
the amount of income in respect of which tax has been paid, and
(b)
the amount of tax paid.
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(2)
The certificate is conclusive evidence of any facts stated in it.
Clearances and power to obtain information
831
Clearance procedure
(1)
This section applies if a company considers that the condition mentioned in
section 819(2)(a), (b) or (d) may be met as respects a gain of a capital nature
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which it—
(a)
has obtained from the disposal of land, or
(b)
would obtain from a proposed disposal of land.
(2)
The company may provide the Commissioners for Her Majesty’s Revenue and
Customs with written particulars showing how the gain has arisen or would
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arise.
(3)
The Commissioners must notify the company whether or not they are satisfied
that, in the circumstances described in the particulars, it will not, or would not,
be liable to tax on the gain as a result of this Part.
(4)
The notification must be given before the end of the period of 30 days
20
beginning with the day after that on which the particulars are received.
(5)
A company notified by the Commissioners under this section that they are so
satisfied is not liable to corporation tax on the gain as a result of this Part.
(6)
A notification under this section about the Commissioners’ decision
concerning a gain is void if the particulars given under this section about the
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gain do not make a full and accurate disclosure of all facts and considerations
relating to it which are material to the decision.
832
Power to obtain information
(1)
An officer of Revenue and Customs may by notice require any person to
provide the officer within such period as the officer may direct with such
30
particulars as the officer may reasonably require for the purposes of this Part.
(2)
That period must be at least 30 days.
(3)
The particulars which a person must provide under this section, if required to
do so by such a notice, include particulars about—
(a)
transactions or arrangements with respect to which the person is or was
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acting on behalf of others,
(b)
transactions or arrangements which in the opinion of the officer should
properly be investigated for the purposes of this Part, although in the
person’s opinion no liability to corporation tax arises as a result of this
Part, and
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(c)
whether the person has taken or is taking any part and, if so, what part
in transactions or arrangements of a description specified in the notice.

Corporation Tax Bill
Part 19 — Sale and lease-back etc
Chapter 1 — Payments connected with transferred land
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(4)
Subsection (3) is subject to subsections (5) and (6).
(5)
In relation to anything done by a relevant lawyer on behalf of a client who does
not consent to the provision of information required to be provided by a notice
under subsection (1), the relevant lawyer may not be compelled under this
section to do more than—
5
(a)
state that the relevant lawyer was acting on behalf of a client, and
(b)
give the name and address of the client.
(6)
A relevant lawyer is not treated as having taken part in a transaction or
arrangement for the purposes of subsection (3)(c) just because of giving
professional advice to a client about it.
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(7)
In this section “relevant lawyer” means a barrister, advocate, solicitor or other
legal representative communications with whom may be the subject of a claim
to professional privilege or, in Scotland, protected from disclosure in legal
proceedings on the grounds of confidentiality of communication.
Interpretation
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833
Interpretation of Part
(1)
In this Part “capital”, in relation to a gain, means that the gain does not fall to
be included in any calculation of income for purposes of the Tax Acts otherwise
than as a result of this Part or Chapter 3 of Part 13 of ITA 2007 (transactions in
land).
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(2)
In this Part references to property deriving its value from land include—
(a)
any shareholding in a company deriving its value directly or indirectly
from land,
(b)
any partnership interest deriving its value directly or indirectly from
land,
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(c)
any interest in settled property deriving its value directly or indirectly
from land, and
(d)
any option, consent or embargo affecting the disposition of land.
(3)
In this Part—
“company” includes any body corporate, and
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“share” includes stock.
Part 19
Sale and lease-back etc
Chapter 1
Payments connected with transferred land
35
Introduction
834
Overview of Chapter
This Chapter provides that in certain circumstances where a transfer is made
regarding land, and the transferor or an associate becomes liable to make a

Corporation Tax Bill
Part 19 — Sale and lease-back etc
Chapter 1 — Payments connected with transferred land
415

payment connected with the land, corporation tax relief for the payment is
restricted.
Application of the Chapter
835
Transferor or associate becomes liable for payment of rent
(1)
Section 838 has effect if—
5
(a)
land, or an estate or interest in land, is transferred,
(b)
the transferor, or a company associated with the transferor, becomes
liable to make a payment of rent under a lease of the land or part of it,
and
(c)
a deduction by way of relevant corporation tax relief (see section 837)
10
is allowed for the payment.
(2)
Section 839 has effect if—
(a)
land, or an estate or interest in land, is transferred,
(b)
the transferor, or a company associated with the transferor, becomes
liable to make a payment of rent under a lease of the land or part of it,
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and
(c)
a deduction under section 76 of ICTA (expenses of insurance
companies) is allowed for the payment.
(3)
The reference in subsection (1)(a) or (2)(a) to a transfer of an estate or interest
in land includes a reference to any of the following—
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(a)
the granting of a lease or another transaction involving the creation of
a new estate or interest in the land,
(b)
the transfer of the lessee’s interest under a lease by surrender or
forfeiture of the lease, and
(c)
a transaction or series of transactions affecting land or an estate or
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interest in land, such that some person is the owner or one of the
owners before and after the transaction or transactions but another
person becomes or ceases to be one of the owners.
(4)
In relation to a transaction or series of transactions mentioned in subsection
(3)(c), a person is to be regarded as a transferor for the purposes of this Chapter
30
if the person—
(a)
is an owner before the transaction or transactions, and
(b)
is not the sole owner afterwards.
(5)
The liability mentioned in subsection (1)(b) or (2)(b) is one resulting from—
(a)
a lease of the land or part of it granted (at the time of the transfer or
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later) by the transferee to the transferor, or
(b)
another transaction or series of transactions affecting the land or an
estate or interest in it.
(6)
The liability mentioned in subsection (1)(b) or (2)(b) is one arising at the time
of the transfer or later.
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(7)
The reference in subsection (1)(a) or (2)(a) to a transfer does not include a
transfer on or before 14 April 1964.