Corporation Tax Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
639

(a)
share capital issued otherwise than wholly for new
consideration, or
(b)
the part (if there is such a part) of any share capital so issued
that is not properly referable to new consideration.
(2)
For the purposes of this Chapter share capital is issued by a company
5
in lieu of a cash dividend if—
(a)
it is issued in consequence of the exercise by any person of an
option conferred on the person, and
(b)
that option is an option to receive, in respect of shares in the
company, either a dividend in cash or additional share
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capital.
(3)
For the purposes of subsection (2), an option to receive either a
dividend in cash or additional share capital is conferred on a person
not only—
(a)
if the person is required to choose one or the other, but also
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(b)
if the person is offered the one subject to a right, however
expressed, to choose the other instead.
(4)
The reference in subsection (2) to a person’s exercise of an option
includes a person’s abandonment of, or failure to exercise, a right
such as is mentioned in subsection (3)(b).
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(5)
In this Chapter “share” includes stock, and any other interest of a
member in a company.
(6)
If two or more companies enter into arrangements to make
distributions to each other’s members, all parties concerned
(however many) may, for the purposes of this Chapter, be treated as
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if anything done by any one of those companies had been done by
any one of the others.
(7)
The following apply in relation to this Chapter as they apply in
relation to Part 23 of CTA 2010—
(a)
section 1113 (“in respect of shares”) of CTA 2010,
30
(b)
section 1115 (“new consideration”) of CTA 2010.”
462   (1)
Amend section 415 (charge to tax under Chapter 6) as follows.
      (2)
In subsection (1)(a) for “is or has been assessed or is liable to be assessed
under section 419 of ICTA” substitute “is or was chargeable to tax under
section 455 of CTA 2010”.
35
      (3)
In subsection (3)—
(a)
for “section 419 of ICTA has effect under section 422 of that Act
(extension of section 419 to loans by companies controlled by close
companies)” substitute “, as a result of section 460 of CTA 2010,
sections 455 to 459 of that Act have effect”, and
40
(b)
for “section 419(2) of ICTA” substitute “section 455(4) of that Act”.
463
In section 419(1)(b) (loans and advances to people who die) for “is or has
been assessed or is liable to be assessed under section 419 of ICTA (loans to
participators in close companies etc)” substitute “is or was chargeable to tax
under section 455 of CTA 2010 (charge to tax in case of loan to participator)”.
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Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
640

464
In section 420(1)(b) (loans and advances to trustees of settlements that have
ended) for “is or has been assessed or is liable to be assessed under section
419 of ICTA (loans to participators in close companies etc)” substitute “is or
was chargeable to tax under section 455 of CTA 2010 (charge to tax in case of
loan to participator)”.
5
465
After section 421 insert—
“421A
Power to obtain information
(1)
An officer of Revenue and Customs may, for the purposes of this
Chapter, by notice require any person in whose name any shares or
loan capital are registered—
10
(a)
to state whether or not that person is the beneficial owner of
the shares or loan capital, and
(b)
if that person is not the beneficial owner of the shares or loan
capital, to provide the name and address of the person on
whose behalf the shares or loan capital are registered in that
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person’s name.
(2)
Subsections (3) and (4) apply if a company (“the issuing company”)
appears to an officer of Revenue and Customs to be a close company.
(3)
The officer may, for the purposes of this Chapter, by notice require
the issuing company to provide the officer with—
20
(a)
particulars of any bearer securities issued by the company,
(b)
the names and addresses of the persons to whom the
securities were issued, and
(c)
details of the amounts issued to each person.
(4)
The officer may, for the purposes of this Chapter, by notice require—
25
(a)
any person to whom bearer securities were issued by the
company, or
(b)
any person to or through whom bearer securities issued by
the company were subsequently sold or transferred,

to provide any further information that the officer reasonably
30
requires with a view to enabling the officer to find out the names and
addresses of the persons beneficially interested in the securities.
(5)
In this section—
“loan creditor” has the meaning given by section 453 of CTA
2010, and
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“securities” includes—
(a)
shares, stocks, bonds, debentures and debenture
stock, and
(b)
any promissory note or other instrument evidencing
indebtedness to a loan creditor of the company.”
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466   (1)
Amend section 456 (securities issued to connected persons etc at excessive
price) as follows.
      (2)
For subsection (7) substitute—
“(7)
Chapter 2 of Part 10 of CTA 2010 (meaning of “close company”)
applies for the purposes of this section but with the omission of
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section 442(a) (exclusion of non-UK resident companies).”

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
641

      (3)
In subsection (8) for “section 416 of ICTA” substitute “sections 450 and 451
of CTA 2010”.
467
In section 460(2) (minor definitions) for “section 840ZA of ICTA” substitute
“section 1139 of CTA 2010”.
468
In section 482(7) (conditions in relation to excepted group life policies) for
5
“section 840ZA of ICTA” substitute “section 1139 of CTA 2010”.
469
In section 520(4) (the property categories) for “section 842 of ICTA”
substitute “section 1158 of CTA 2010”.
470
In section 643(4) (interpretation) for “section 416 of ICTA” substitute “section
449 of CTA 2010”.
10
471   (1)
Amend Schedule 2 (transitionals and savings) as follows.
      (2)
In paragraph 40(2)—
(a)
in the definition of “associate” for “section 417(3) and (4) of ICTA”
substitute “section 448 of CTA 2010”, and
(b)
in the definition of “associated company—
15
(i)
for “section 416(1) of that Act” substitute “section 449 of that
Act”, and
(ii)
for “subsections (2) to (6) of that section” substitute “sections
450 and 451 of that Act”.
      (3)
After paragraph 78 insert—
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“Stock dividends issued in respect of shares issued before 6 April 1975
78A   (1)
This paragraph applies if—
(a)
share capital is issued by a UK resident company in respect
of shares in the company issued before 6 April 1975 (“the
old shares”),
25
(b)
the old shares confer on the holder a right to convert them
into, or exchange them for, shares of a different class, and
(c)
as a result of the issue of the share capital, income would
(apart from this paragraph) be treated as arising under
section 410(2), (3) or (4) (stock dividend income).
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      (2)
Section 410 does not apply to the protected part of any bonus share
capital issued by the company in connection with an exercise of
that right.
      (3)
For the purposes of sub-paragraph (2), the protected part of the
bonus share capital is however much of it (if any) would have been
35
issued if the right had been exercised so as to bring about the
conversion or exchange of the shares on the earliest possible date
after 5 April 1975.
      (4)
In this paragraph “share” includes stock, and any other interest of
a member in a company
40
      (5)
Section 1113 of CTA 2010 (meaning of “in respect of shares”)
applies in relation to this paragraph as it applies in relation to Part
23 of CTA 2010.”
      (4)
In paragraph 131(2)—

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
642

(a)
in the definition of “associate” for “section 417(3) and (4) of ICTA”
substitute “section 448 of CTA 2010”, and
(b)
in the definition of “associated company—
(i)
for “section 416(1) of that Act” substitute “section 449 of that
Act”, and
5
(ii)
for “subsections (2) to (6) of that section” substitute “sections
450 and 451 of that Act”.
472   (1)
Amend Schedule 4 (abbreviations and defined expressions) as follows.
      (2)
In Part 1 at the end insert—

“CTA 2010
The Corporation Tax Act 2010”.

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      (3)
In Part 2—
(a)
in the entry for “accounting period”, in the second column, for
“section 834(1) of ICTA” substitute “section 1119 of CTA 2010”,
(b)
in the entry for “close company”, in the second column, for “sections
414 and 415 of ICTA” substitute “Chapter 2 of Part 10 of CTA 2010”,
15
(c)
in the entry for “permanent establishment”, in the second column,
for “section 148 of FA 2003” substitute “Chapter 2 of Part 24 of CTA
2010”, and
(d)
at the appropriate place insert—

“bonus share capital (in Chapter 3 of Part 4)
section 414A(1)”

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Finance Act 2005 (c. 7)
473
The Finance Act 2005 is amended as follows.
474   (1)
In section 48B(5) (alternative finance arrangements: alternative finance
investment bond: effects) omit paragraphs (b) and (c).
      (2)
Sub-paragraph (1) has effect for corporation tax purposes only.
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475   (1)
Omit section 54A (treatment of section 47, 49 and 49A arrangements as
loans: CITR).
      (2)
Sub-paragraph (1) has effect for corporation tax purposes only.
476
Omit section 84 (taxation of securitisation companies).
477
In section 102(7)(b) (Pension Protection Fund etc) for “section 832(1) of
30
ICTA” substitute “section 150(2) of the Finance Act 2004”.
Railways Act 2005 (c. 14)
478   (1)
Schedule 10 to the Railways Act 2005 (taxation provisions relating to transfer
schemes) is amended as follows.
      (2)
In paragraph 11—
35
(a)
in sub-paragraph (2) for “sections 768 and 768D of the Taxes Act”
substitute “the provisions of the Corporation Tax Act 2010 specified
in sub-paragraph (3)”, and

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
643

(b)
after sub-paragraph (2) insert—
    “(3)
Those provisions are—
(a)
Chapter 2 of Part 14 (but not section 674(1)),
(b)
section 683,
(c)
section 684,
5
(d)
section 700,
(e)
section 701,
(f)
section 704, and
(g)
section 705.”
      (3)
In paragraph 32—
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(a)
for “section 410(1) or (2) of the Taxes Act” substitute “section 154(3)
or 155(3) of the Corporation Tax Act 2010”, and
(b)
for “paragraph 5B of Schedule 18 to” substitute “section 173 of”.
Finance (No. 2) Act 2005 (c. 22)
479
In section 17(4) of the Finance (No. 2) Act 2005 (authorised unit trusts and
15
open-ended investment companies)—
(a)
in paragraph (l) for “section 468A of ICTA” substitute “section 615 of
the Corporation Tax Act 2010”,
(b)
in paragraph (m) for “section 468 of ICTA” substitute “section 619 of
the Corporation Tax Act 2010”, and
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(c)
in paragraph (n) for “section 839 of ICTA” substitute “section 1122 of
the Corporation Tax Act 2010”.
Finance Act 2006 (c. 25)
480
The Finance Act 2006 is amended as follows.
481
Omit section 82 (sale etc of lessor companies etc).
25
482
In section 83(6)(a) (restrictions on use of losses etc: leasing partnerships) for
“section 785ZA of ICTA” substitute “section 887 of the Corporation Tax Act
2010”.
483
In Part 4 (Real Estate Investment Trusts) omit—
(a)
sections 103 to 134,
30
(b)
section 136,
(c)
section 136A,
(d)
section 138,
(e)
section 139,
(f)
sections 141 and 142,
35
(g)
section 144, and
(h)
section 145(1).
484
Omit Schedule 10 (sale etc of lessor companies etc).
485
Omit Schedule 16 (Real Estate Investment Trusts: excluded business and
income).
40
486
Omit Schedule 17 (group Real Estate Investment Trusts: modifications).

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
644

Companies Act 2006 (c. 46)
487
The Companies Act 2006 is amended as follows.
488
In section 141(4)(a) (subsidiary acting as authorised dealer in securities) for
“section 839 of the Income and Corporation Taxes Act 1988 (c. 1)” substitute
“section 1122 of the Corporation Tax Act 2010”.
5
489
In section 834(5) (investment company: condition as to holdings in other
companies), in the definition of “group”, for “section 838 of the Income and
Corporation Taxes Act 1988 (c. 1)” substitute “Chapter 3 of Part 24 of the
Corporation Tax Act 2010”.
490
In section 1278(1)(c) (institutions to which information provisions apply) for
10
“section 842 of the Income and Corporation Taxes Act 1988 (c. 1)” substitute
“Chapter 4 of Part 24 of the Corporation Tax Act 2010”.
Charities Act 2006 (c. 50)
491
The Charities Act 2006 is amended as follows.
492
In section 5(5) (special provisions about recreational charities, sports clubs
15
etc) for the words from “a club” to the end substitute “a registered club
within the meaning of Chapter 9 of Part 13 of the Corporation Tax Act 2010
(community amateur sports clubs).”
493
In section 72(3) (disclosure of information to and by Northern Ireland
regulator) leave out “(as substituted by paragraph 104 of Schedule 8 to this
20
Act)”.
Income Tax Act 2007 (c. 3)
494
The Income Tax Act 2007 is amended as follows.
495
In section 69(7) (whether trade is same trade) for “has the same meaning as
in Part 11 of ICTA (see section 416 of that Act)” substitute “is to be read in
25
accordance with sections 450 and 451 of CTA 2010”.
496
In section 136(2) (disposals of new shares) for “one of conditions A and B”
substitute “condition A or B”.
497
In section 139(4) (the control and independence requirement) in the
definition of “control” for “section 416(2) to (6) of ICTA” substitute “sections
30
450 and 451 of CTA 2010”.
498   (1)
Amend section 151 (interpretation of Chapter) as follows.
      (2)
In subsection (1) for the definition of “investment company” substitute—
““investment company” means a company—
(a)
whose business consists wholly or mainly in the
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making of investments, and
(b)
which derives the principal part of its income from
the making of investments,
but does not include the holding company of a trading
group,”.
40
      (3)
In subsection (4) for “that definition” substitute “the definition of shares in
subsection (1)”.

Corporation Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
645

499
In section 170 (persons interested in capital etc of company)—
(a)
in subsection (3) for “paragraphs 1 and 3 of Schedule 18 to ICTA”
substitute “Chapter 6 of Part 5 of CTA 2010”,
(b)
in subsection (4)(a) for “paragraph 3 of that Schedule to the first
company” substitute “section 166 of that Act to company A”, and
5
(c)
in subsection (4)(b) for “paragraph” substitute “section”.
500
In section 190 (meaning of “qualifying 90% subsidiary”)—
(a)
in subsection (3) for “paragraphs 1 and 3 of Schedule 18 to ICTA”
substitute “Chapter 6 of Part 5 of CTA 2010”,
(b)
in subsection (4)(a) for “paragraph 3 of that Schedule to the first
10
company” substitute “section 166 of that Act to company A”, and
(c)
in subsection (4)(b) for “paragraph” substitute “section”.
501
In section 199(3)(c) (excluded activities: provision of services or facilities for
another business)—
(a)
for “section 344(2) of ICTA (persons to whom company’s trade may
15
be treated as belonging)” substitute “section 942 of CTA 2010”, and
(b)
for the words from “section 343” to the end substitute “section 941 of
that Act”.
502
In section 232(4)(a) (acquisition of a trade or trading assets)—
(a)
at the beginning insert “for the purpose of determining”, and
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(b)
for the words from “that trade” to the end substitute “that trade—
(i)
apply section 941(6) of CTA 2010, and
(ii)
an interest in a trade belonging to a company
may be treated in accordance with any of the
options set out in section 942 of that Act, and”.
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503
In section 257 (minor definitions)—
(a)
in subsection (1) in the definition of “director” for “section 417(5) of
ICTA” substitute “section 452 of CTA 2010”, and
(b)
in subsection (3) for “section 416(2) to (6) of ICTA” substitute
“sections 450 and 451 of CTA 2010”.
30
504
In section 301 (meaning of “qualifying 90% subsidiary”)—
(a)
in subsection (3) for “paragraphs 1 and 3 of Schedule 18 to ICTA”
substitute “Chapter 6 of Part 5 of CTA 2010”,
(b)
in subsection (4)(a) for “paragraph 3 of that Schedule to the first
company” substitute “section 166 of that Act to company A”, and
35
(c)
in subsection (4)(b) for “paragraph” substitute “section”.
505
In section 310(3)(c) (excluded activities: provision of services or facilities for
another business)—
(a)
for “section 344(2) of ICTA (persons to whom company’s trade may
be treated as belonging)” substitute “section 942 of CTA 2010
40
(options for purposes of ownership condition)”, and
(b)
for the words from “section 343” to the end substitute “section 941 of
that Act (trade transfers without change of ownership: ownership
condition)”.
506
In section 313 (interpretation)—
45
(a)
in subsection (4) for “section 416(2) to (6) of ICTA” substitute
“sections 450 and 451 of CTA 2010”,