Taxation (International and Other Provisions) Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Taxation (International and Other Provisions) Bill

Taxation (International and Other Provisions) Bill
Part 7 — Tax treatment of financing costs and income
Chapter 4 — Exemption of financing income
159

291
Statement of allocated exemptions: submission of revised statement
(1)
If the reporting body has submitted a statement of allocated exemptions under
section 290 or this section, it may submit a revised statement to HMRC.
(2)
A statement submitted under this section must be received by HMRC within
36 months of the end of the relevant period of account.
5
(3)
A statement submitted under this section must comply with the requirements
of section 292.
(4)
A statement submitted under this section—
(a)
must indicate the respects in which it differs from the previous
statement, and
10
(b)
supersedes the previous statement.
292
Statement of allocated exemptions: requirements
(1)
This section applies in relation to a statement of allocated exemptions
submitted under section 290 or 291.
(2)
The statement must be signed—
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(a)
if an appointment under section 288 has effect in relation to the relevant
period of account, by the appropriate person in relation to the company
appointed under that section, or
(b)
if such an appointment does not have effect in relation to the relevant
period of account, by the appropriate person in relation to each
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company to which this Chapter applies.
(3)
The statement must show—
(a)
the tested expense amount,
(b)
the available amount, and
(c)
the total disallowed amount.
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(4)
The statement must—
(a)
list one or more companies to which this Chapter applies, and
(b)
in relation to each listed company, specify one or more financing
income amounts for the relevant period of account that are to be
exempted, and give the relevant details in relation to each such amount.
30
(5)
For this purpose “the relevant details” in relation to a financing income amount
are—
(a)
which of conditions A, B and C in section 314 is met in relation to the
amount, and
(b)
the relevant accounting period of the company in which the amount
35
would, apart from this Part, be brought into account for the purposes
of corporation tax.
(6)
The sum of the amounts specified under subsection (4)(b) must not exceed the
lower of—
(a)
the total disallowed amount, and
40
(b)
the tested income amount (see Chapter 8).
(7)
In this section “the appropriate person”, in relation to a company, means—
(a)
the proper officer of the company, or

Taxation (International and Other Provisions) Bill
Part 7 — Tax treatment of financing costs and income
Chapter 4 — Exemption of financing income
160

(b)
such other person as may for the time being have the express, implied
or apparent authority of the company to act on its behalf for the
purposes of this Part.
(8)
Subsections (3) and (4) of section 108 of TMA 1970 (responsibility of company
officers: meaning of “proper officer”) apply for the purposes of this section as
5
they apply for the purposes of that section.
(9)
For the meaning of “financing income amount”, see Chapter 7.
293
Statement of allocated exemptions: effect
A financing income amount of a company to which this Chapter applies that is
specified in a statement of allocated exemptions under section 292(4)(b) is not
10
to be brought into account by the company for the purposes of corporation tax.
294
Company tax returns
(1)
This section applies if—
(a)
a company to which this Chapter applies has delivered a company tax
return for a relevant accounting period, and
15
(b)
as a result of the submission of a revised statement of allocated
exemptions under section 291—
(i)
there is a change in the amount of profits on which corporation
tax is chargeable for the period, or
(ii)
any other information contained in the return is incorrect.
20
(2)
The company is treated as having amended its company tax return for the
accounting period so as to reflect the change mentioned in subsection (1)(b)(i)
or to correct the information mentioned in subsection (1)(b)(ii).
295
Power to make regulations about statement of allocated exemptions
The Commissioners may by regulations make further provision about a
25
statement of allocated exemptions including, in particular, provision—
(a)
about the form of a statement and the manner in which it is to be
submitted,
(b)
requiring a person to give information to HMRC in connection with a
statement,
30
(c)
as to circumstances in which a statement that is not received by the time
specified in section 290(2) or 291(2) is to be treated as if it were so
received, and
(d)
as to circumstances in which a statement that does not comply with the
requirements of section 292 is to be treated as if it did so comply.
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296
Failure of reporting body to submit statement of allocated exemptions
(1)
This section applies if no statement of allocated exemptions is submitted under
section 290 that complies with the requirements of section 292.
(2)
Subject to the following provisions of this section, each financing income
amount for the relevant period of account of each company to which this
40
Chapter applies is to be reduced to nil.

Taxation (International and Other Provisions) Bill
Part 7 — Tax treatment of financing costs and income
Chapter 4 — Exemption of financing income
161

(3)
In this section “unrestricted reduction” means a reduction of a financing
income amount for the relevant period of account of a company to which this
Chapter applies, determined in accordance with subsection (2).
(4)
Subsection (5) applies if—
(a)
the total of the unrestricted reductions, exceeds
5
(b)
the lower of—
(i)
the total disallowed amount, and
(ii)
the tested income amount.
(5)
Each unrestricted reduction is to be reduced by—


where—
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UR is the unrestricted reduction in question,
TUR is the total of the unrestricted reductions, and
X is the excess mentioned in subsection (4).
297
Power to make regulations in relation to reductions under section 296
(1)
The Commissioners may by regulations make provision for the purpose of
15
securing that a company required under section 296 to reduce the amounts that
it brings into account in respect of financing income amounts for the relevant
period of account (“a company required to make default reductions”) has
sufficient information to determine their amount.
(2)
Provision that may be made in regulations under subsection (1) includes
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provision requiring one or more members of the worldwide group to send
specified information to a company required to make default reductions.
(3)
The Commissioners may by regulations make provision about cases in which
(whether as a result of non-compliance with regulations made under
subsection (1) or otherwise) a company required to make default reductions
25
does not possess specified information.
(4)
Provision that may be made in regulations under subsection (3) includes
provision as to assumptions that may or must be made in determining the
amount of a reduction under section 296 of a financing income amount.
(5)
The Commissioners may by regulations make provision for determining a time
30
later than that determined under paragraph 15(4) of Schedule 18 to FA 1998
(amendment of return by company) before which a company required to make
default reductions may amend its company tax return so as to reflect a
reduction under section 296.
(6)
In this section “specified” means specified in regulations under this section.
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298
Balancing payments between group companies: no tax charge or relief
(1)
This section applies if—
(a)
one or more financing income amounts of a company (“company A”)
for the relevant period of account are—
(i)
because of section 293, not brought into account, or
40
(ii)
because of section 296, reduced,

Taxation (International and Other Provisions) Bill
Part 7 — Tax treatment of financing costs and income
Chapter 5 — Intra-group financing income where payer denied deduction
162

(b)
one or more financing expense amounts of another company
(“company B”) for the relevant period of account are—
(i)
because of section 281, not brought into account, or
(ii)
because of section 284, reduced,
(c)
company A makes one or more payments (“the balancing payments”)
5
to company B, and
(d)
the sole or main reason for making the balancing payments is that the
conditions in paragraphs (a) and (b) are met.
(2)
To the extent that the sum of the balancing payments does not exceed the
amount specified in subsection (3), those payments—
10
(a)
are not to be taken into account in computing profits or losses of either
company A or company B for the purposes of corporation tax, and
(b)
are not to be regarded as distributions for any of the purposes of the
Corporation Tax Acts.
(3)
The amount mentioned in subsection (2) is the lower of—
15
(a)
the sum of the financing income amounts mentioned in subsection
(1)(a), and
(b)
the sum of the financing expense amounts mentioned in subsection
(1)(b).
Chapter 5
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Intra-group financing income where payer denied deduction
299
Tax exemption for certain financing income received from EEA companies
(1)
A financing income amount of a company that is a member of the worldwide
group (“the recipient”) is not to be brought into account for the purposes of
corporation tax if—
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(a)
it arises as a result of a payment by another company that is a member
of the worldwide group (“the payer”),
(b)
the payment is received during a period of account of the worldwide
group to which this Part applies, and
(c)
conditions A, B and C are met.
30
(2)
Condition A is that, at the time the payment is received, the payer is a relevant
associate of the recipient (see section 300).
(3)
Condition B is that, at the time the payment is received—
(a)
the payer is tax-resident in an EEA territory (see section 301), and
(b)
the payer is liable to a tax of that territory that is chargeable by reference
35
to profits, income or gains arising to the payer.
(4)
Condition C is that—
(a)
qualifying EEA tax relief for the payment is not available to the payer
in the period in which the payment is made (“the current period”) or
any previous period (see section 302), and
40
(b)
qualifying EEA tax relief for the payment is not available to the payer
in any period after the current period (see section 303).
(5)
For the meaning of “financing income amount”, see section 305.