Corporation Tax Bill

House of Commons

Session 2009 - 10
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Corporation Tax Bill

Corporation Tax Bill
Part 24 — Corporation Tax Acts definitions etc
Chapter 4 — Investment trusts
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1162
The 15% holding limit: exceptions
(1)
In condition E the reference to a holding in a company does not include a
holding in—
(a)
an investment trust, or
(b)
a company that would qualify as an investment trust but for condition
5
B (listing in the official UK list).
(2)
Subsection (3) applies if a company has a holding in a company and
immediately after—
(a)
the time when the holding was acquired (if it has not been enlarged), or
(b)
the most recent time when the holding was enlarged,
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the holding represented 15% or less by value of the investing company’s
investments.
(3)
For the purposes of condition E the holding is treated as continuing to
represent 15% or less by value of the investing company’s investments until
the holding is next enlarged.
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(4)
Subsection (5) applies if—
(a)
a company disposes of shares or securities from a holding it has in a
company,
(b)
immediately before the disposal the holding represents more than 15%
by value of the investing company’s investments, and
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(c)
immediately after the disposal the holding represents 15% or less by
value of the investing company’s investments.
(5)
For the purpose of determining whether the investing company meets
condition E in accounting periods later than that in which the disposal was
made, the holding is treated (if it does not already fall to be so treated under
25
subsection (3)) as continuing to represent 15% or less by value of the investing
company’s investments until the holding is next enlarged.
(6)
If a holding which a company has in another company—
(a)
was acquired before 6 April 1965, and
(b)
on 6 April 1965 represented 25% or less by value of the investing
30
company’s investments,

condition E does not apply to the holding so long as it is not enlarged.
1163
Basic meaning of “holding in a company”
(1)
In this Chapter “holding in a company” means the shares or securities (whether
of one class or more than one class) held in any one company.
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(2)
For the purposes of section 1162 a holding in a company is enlarged whenever
the company whose holding it is—
(a)
acquires further shares or securities of the company, but
(b)
does not do so by being allotted shares or securities without becoming
liable to give any consideration.
40
1164
More about the meaning of “holding in a company”
(1)
Subsection (2) applies if, in connection with a scheme of reconstruction—
(a)
a company issues shares or securities,

Corporation Tax Bill
Part 24 — Corporation Tax Acts definitions etc
Chapter 5 — Other Corporation Tax Acts provisions
570

(b)
the shares or securities are issued to persons holding shares or
securities in a second company in respect of and in proportion to (or as
nearly as may be in proportion to) their holdings in the second
company, and
(c)
those persons do not become liable to give any consideration for the
5
shares or securities.
(2)
For the purposes of this Chapter-
(a)
a holding of the shares or securities of the second company, and
(b)
a corresponding holding of the shares or securities issued by the first
company,
10

are to be regarded as the same holding.
(3)
For the purposes of this Chapter, holdings in two or more companies which are
members of the same group are treated as holdings in a single company.
(4)
Subsection (3) does not apply to a holding in—
(a)
an investment trust, or
15
(b)
a company that would qualify as an investment trust but for condition
B (listing in the official UK list).
(5)
For the purposes of subsection (3) it does not matter whether or not the group
is one that includes the company which has the holdings.
(6)
If a company (“company A”) is a member of a group, money owed to it by
20
another member of the group is treated, for the purpose of determining
whether condition E is met—
(a)
as a security of the latter held by company A, and
(b)
accordingly as, or as part of, the holding of company A in the company
owing the money.
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(7)
In this section “group” means a company and all its 51% subsidiaries.
1165
Other interpretation
(1)
In this Chapter “company” has the meaning given by section 1121 and is to be
read in accordance with section 99 of TCGA 1992 (application of that Act to
unit trust schemes).
30
(2)
In this Chapter “scheme of reconstruction” has the same meaning as in section
136 of TCGA 1992.
(3)
In this Chapter “shares” includes stock and is to be read in accordance with
section 99 of TCGA 1992.
Chapter 5
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Other Corporation Tax Acts provisions
1166
Scotland
(1)
In the application of the Corporation Tax Acts to Scotland—
“assignment” means assignation,
“estate in land” includes the land,
40
“mortgage” means—

Corporation Tax Bill
Part 24 — Corporation Tax Acts definitions etc
Chapter 5 — Other Corporation Tax Acts provisions
571

(a)
a standard security, or
(b)
a heritable security, as defined in the Conveyancing (Scotland)
Act 1924, but including a security constituted by ex facie
absolute disposition or assignation, and
“surrender” includes renunciation.
5
(2)
In the application of the Corporation Tax Acts to Scotland, any reference to
property or rights being held on trust or on trusts is a reference to the property
or rights being held in trust.
1167
Sources of income within the charge to corporation tax or income tax
In the Corporation Tax Acts, a source of income is within the charge to
10
corporation tax or income tax if that tax—
(a)
is chargeable on the income arising from it, or
(b)
would be so chargeable if there were any income arising from it,
and references to a person, or income, being within the charge to corporation
tax or income tax are to be read in the same way.
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1168
Payment of dividends
(1)
For the purposes of the Corporation Tax Acts dividends are to be treated as
paid on the date when they become due and payable.
(2)
Subsection (1) is subject to any provision to the contrary.
1169
Settlements and trustees
20
(1)
Chapter 2 of Part 9 of ITA 2007 (which relates to settlements and trustees)
applies for the purposes of the Corporation Tax Acts as it applies for the
purposes of the Income Tax Acts.
(2)
See (in particular)—
(a)
section 466 of that Act, which explains what is meant by references to
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settled property, and
(b)
sections 467 to 473 of that Act, which explain what is meant by
references to a settlor in relation to a settlement.
1170
Territorial sea of the United Kingdom
The territorial sea of the United Kingdom is treated for the purposes of the
30
Corporation Tax Acts as part of the United Kingdom.
1171
Orders and regulations
(1)
This section applies to all powers under the Corporation Tax Acts of the
Treasury or the Commissioners for Her Majesty’s Revenue and Customs to
make orders or regulations, other than excluded powers.
35
(2)
All powers under the following are excluded—
(a)
ICTA (see instead section 828 of that Act),
(b)
TCGA 1992 (see instead section 287 of that Act),
(c)
CAA 2001 (see instead section 570B of that Act),
(d)
Part 4 of FA 2004 (see instead section 282 of that Act),
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Corporation Tax Bill
Part 24 — Corporation Tax Acts definitions etc
Chapter 5 — Other Corporation Tax Acts provisions
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(e)
CTA 2009 (see instead section 1310 of that Act),
(f)
TIOPA 2010 (see instead section 372 of that Act), and
(g)
the following provisions of this Act—
(i)
section 204(3) (markets in the United Kingdom on which shares
or securities are dealt in), and
5
(ii)
section 1150(1) (meaning of “investment transaction”).
(3)
Any power to which this section applies is exercisable by statutory instrument.
(4)
Any statutory instrument containing any order or regulations made under a
power to which this section applies is subject to annulment in pursuance of a
resolution of the House of Commons.
10
(5)
Subsection (4) does not apply in relation to any order or regulations made
under—
(a)
section 73A of FA 2004 (exemption for designated international
organisations), or
(b)
either of the following provisions of this Act—
15
(i)
section 1120(2)(e) (designation of international organisations as
banks), or
(ii)
section 1180(2) (power to make transitional or saving provision
in connection with the coming into force of this Act).
(6)
Further, subsection (4) does not apply—
20
(a)
if any other Parliamentary procedure is expressly provided to apply in
relation to the order or regulations, or
(b)
if the order in question appoints a day for the purposes of any provision
of the Corporation Tax Acts from which the provision will have effect
(with or without amendments) or will cease to have effect.
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(7)
Subsection (4) is also subject to any other provision to the contrary.
1172
Apportionment to different periods
(1)
Any apportionment to different periods which falls to be made under the
Corporation Tax Acts is to be made on a time basis according to the respective
lengths of the periods.
30
(2)
Subsection (1) is subject to any provision to the contrary.
1173
Miscellaneous charges
(1)
In the Corporation Tax Acts references to any provision to which this section
applies are references to any provision listed in the following table, so far as the
provision relates to corporation tax (but subject to any applicable limitation in
35
subsection (3)).
(2)
This is the table—
PART 1

Provisions of CTA 2009
Description

Chapter 15 of Part 3
Post-cessation receipts: trades

40

Corporation Tax Bill
Part 24 — Corporation Tax Acts definitions etc
Chapter 5 — Other Corporation Tax Acts provisions
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Provisions of CTA 2009
Description

Chapter 7 of Part 4
Rent receivable in connection with a

UK section 39(4) concern

Chapter 8 of Part 4
Rent receivable for UK electric-line

wayleaves

5

Chapter 9 of Part 4
Post-cessation receipts: UK property

businesses

Section 752
Non-trading gains on intangible fixed

assets

Section 908
Profits from disposals of know-how

10

Section 912
Profits from sales of patent rights

Section 965(4)
Adjustments after the administration

period

Chapter 8 of Part 10
Income not otherwise charged

Section 986(4), so far as it relates to
Withdrawal of deductions if approval

15

an amount treated as received under
for share incentive plan withdrawn:

section 998(3)
non-trading cases

Section 1083(5)
Refunds of expenditure on research

and development

Section 1229
Management expenses: claw back of

20

relief

Section 1252
Industrial development grants:

companies with investment business

Section 1253
Contributions to local enterprise

organisations or urban regeneration

25

companies: disqualifying benefits

Section 1254
Repayments under FISMA 2000

Section 1277(4)
Withdrawal of relief for unremittable

foreign income after source ceases

PART 2
30

Provisions of this Act
Description

Section 538(3)
Real estate investment trusts: entry

charge

Section 636(1)
Banks etc in compulsory liquidation

Section 779(2)
Loan or credit transactions

35

Section 818(1)
Gains from transactions in land

Corporation Tax Bill
Part 24 — Corporation Tax Acts definitions etc
Chapter 5 — Other Corporation Tax Acts provisions
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Provisions of this Act
Description

Section 851(8)
Sale and lease-back: taxation of

consideration

Section 874(1)
Leased assets: capital sums

Section 1086(2)
Chargeable payments connected with

5

exempt distributions

PART 3

Other provisions
Description

Section 56(2) of ICTA
Transactions in deposits

Section 436A(1) of ICTA
Gross roll-up business: separate

10

charge on profits

Section 442A(1) of ICTA
Taxation of investment return where

risk reinsured

Section 571(1) of ICTA
Cancellation of tax certificates

Section 774(1) of ICTA
Transactions between dealing

15

company and associated company

Section 85(1) of FA 1989
Certain receipts of basic life assurance

and general annuity business

Section 85A(1) of FA 1989
Excess adjusted life assurance trade

profits

20

Section 256(2) of CAA 2001
Life assurance business: capital

allowances

Section 254(2) of TIOPA 2010
Tax arbitrage: calculation or

recalculation of income etc following

receipt notice

25

Regulation 18(4) of the Offshore
Offshore income gains

Funds (Tax) Regulations 2009 (S.I.

2009/3001)

(3)
The reference in Part 1 of the above table to Chapter 8 of Part 10 of CTA 2009
does not include that Chapter so far as relating to income which arises from a
30
source outside the United Kingdom.

Corporation Tax Bill
Part 25 — Definitions for purposes of Act and final provisions
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Part 25
Definitions for purposes of Act and final provisions
Definitions for the purposes of Act
1174
Abbreviated references to Acts
In this Act—
5
“CAA 2001” means the Capital Allowances Act 2001,
“CTA 2009” means the Corporation Tax Act 2009,
“FA”, followed by a year, means the Finance Act of that year,
“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year,
“FISMA 2000” means the Financial Services and Markets Act 2000,
10
“ICTA” means the Income and Corporation Taxes Act 1988,
“ITA 2007” means the Income Tax Act 2007,
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003,
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act
2005,
15
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992,
“TIOPA 2010” means the Taxation (International and Other Provisions)
Act 2010, and
“TMA 1970” means the Taxes Management Act 1970.
1175
Claims and elections
20
In this Act any reference to a claim or election is to a claim or election in
writing.
1176
Meaning of “connected” persons and “control”
(1)
Section 1122 (how to tell whether persons are connected) applies for the
purposes of this Act unless otherwise indicated (whether expressly or by
25
implication).
(2)
Section 1124 (meaning of control in relation to a body corporate or partnership)
applies for the purposes of this Act unless otherwise indicated (whether
expressly or by implication).
Final provisions
30
1177
Minor and consequential amendments
Schedule 1 (minor and consequential amendments) has effect.
1178
Power to make consequential provision
(1)
The Treasury may by order make provision in consequence of this Act.
(2)
The power conferred by subsection (1) may not be exercised after 31 March
35
2013.