Finance Bill

House of Commons

Session 2009 - 10
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Finance Bill

Finance Bill
Schedule 17 — Risk transfer schemes
143

A company’s losses pool and profits pool
937I
A company’s losses pool and profits pool
(1)
The amount of a company’s losses pool for a risk transfer scheme as
at the beginning of an accounting period (“the current accounting
period”) is—
5

where—
A is—
(a)
the amount of the pool as at the beginning of the
previous accounting period, or
(b)
if the risk transfer scheme began in the current
10
accounting period, nil,
B is the total amount, if any, of ring-fenced scheme losses made
in the previous accounting period in relation to the scheme
by the company that, as a result of the application of section
937G(2) or (3), are not brought into account in that period,
15
and
C is the total amount (if any) that, as a result of the application
of section 937H(2) or (3), is brought into account in the
previous accounting period in relation to the scheme by the
company.
20
(2)
The amount of a company’s profits pool for a risk transfer scheme as
at the beginning of an accounting period (“the current accounting
period”) is—

where—
A is—
25
(a)
the amount of the pool as at the beginning of the
previous accounting period, or
(b)
if the risk transfer scheme began in the current
accounting period, nil,
B is—
30
(a)
the total of any relevant scheme profits made in the
previous accounting period in relation to the scheme
by the company, less
(b)
the total amount (if any) that, as a result of the
application of section 937H(2) or (3), is brought into
35
account in that accounting period in relation to the
scheme by the company, and
C is the total amount (if any) of ring-fenced scheme losses made
in the previous accounting period in relation to the scheme
by the company that, as a result of the application of section
40
937G(3) or (5), are brought into account in that period.
General
937J
Tax capacity assumption
(1)
This section applies for the purpose of determining whether
condition 2 in section 937C is met.
45

Finance Bill
Schedule 17 — Risk transfer schemes
144

(2)
Where a member of the relevant group (“the company”) makes a
scheme loss in an accounting period, the economic profits and losses
made by the relevant group in the period must be calculated on the
assumption that the company obtained the full tax benefit of the loss.
(3)
The “full tax benefit” of the loss is the reduction in the corporation tax
5
liability of the company that would result if—
(a)
the loss were brought into account, and
(b)
the company’s profits chargeable to corporation tax, before
doing so, were equal to the debit (or the reduction in any
credit) determined by reference to the loss.
10
(4)
A reference in this section to bringing a loss into account is to
bringing it into account in determining a debit or credit for the
purposes of Part 5 of CTA 2009 (loan relationships) or Part 7 of that
Act (derivative contracts).
937K
Meaning of “associated with”
15
(1)
For the purposes of this Part a company (“company B”) is associated
with another company (“company A”) at a time (“the relevant time”)
if any of the following five conditions is met.
(2)
The first condition is that the financial results of company A and
company B, for a period that includes the relevant time, meet the
20
consolidation condition.
(3)
The second condition is that there is a connection between company
A and company B for the accounting period of company A in which
the relevant time falls.
(4)
The third condition is that, at the relevant time, company A has a
25
major interest in company B or company B has a major interest in
company A.
(5)
The fourth condition is that—
(a)
the financial results of company A and a third company, for
a period that includes the relevant time, meet the
30
consolidation condition, and
(b)
at the relevant time the third company has a major interest in
company B.
(6)
The fifth condition is that—
(a)
there is a connection between company A and a third
35
company for the accounting period of company A in which
the relevant time falls, and
(b)
at the relevant time the third company has a major interest in
company B.
(7)
In this section the financial results of any two companies for any
40
period meet “the consolidation condition” if—
(a)
they are required to be comprised in group accounts
prepared under section 399 of the Companies Act 2006 (duty
of certain parent companies to prepare group accounts), or
(b)
they would be required to be comprised in such accounts but
45
for the application of an exemption mentioned in subsection
(3) of that section.

Finance Bill
Schedule 17 — Risk transfer schemes
145

(8)
The following provisions apply for the purposes of this section—
sections 466 to 471 of CTA 2009 (companies connected for
accounting period), and
sections 473 and 474 of CTA 2009 (meaning of “major interest”).
937L
Interpretation of references to economic losses and profits
5
(1)
A reference in this Part to an “economic” loss or profit made by any
person in a period is to a loss or profit made by that person in that
period, computed taking into account unrealised (as well as realised)
losses and profits.
(2)
For the purposes of this Part an economic loss or profit is made “by
10
the relevant group” if it is made by the members of the relevant
group considered together.
(3)
Where—
(a)
any member of the relevant group makes a scheme loss or
profit in an accounting period, and
15
(b)
that scheme loss or profit is, under generally accepted
accounting practice, calculated by reference to fluctuations in
the scheme rate, index or value over a longer period,

the economic loss or profit made by the group in the accounting
period as a result of those fluctuations is, so far as it relates to that
20
scheme loss or profit, to be computed over that longer period.
(4)
In determining for the purposes of this Part the amount of an
economic loss or profit made by the relevant group in any period, the
economic losses and profits of each member of the relevant group—
(a)
are (subject to subsection (3)) to be computed over that period
25
(whether or not that period is an accounting period of the
member), but
(b)
are only to be taken into account to the extent that they are
attributable to times at which the member is a party to the
risk transfer scheme in question.
30
(5)
A reference in this Part to a “pre-tax” economic loss or profit is a
reference to an economic loss or profit determined disregarding any
loss or gain made as a result of the operation of any provision of the
Corporation Tax Acts.
937M
Foreign currency accounting
35
(1)
In determining under this Part amounts that a company may or may
not bring into account in an accounting period, economic losses and
profits are to be computed in the tax calculation currency of that
company in that accounting period.
(2)
Section 17(5) of CTA 2010 (meaning of references to the tax
40
calculation currency of a company) applies for the purposes of this
section.
937N
Meaning of “scheme”

In this Part “scheme” includes any scheme, arrangements or
understanding of any kind whatever, whether or not legally
45
enforceable, involving a single transaction or two or more
transactions.

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Schedule 17 — Risk transfer schemes
146

Power to amend this Part
937O
Power to amend this Part in its application to dealers in securities
(1)
The Treasury may by order amend any enactment contained in this
Part so as to apply (with or without modifications) the rules in this
Part about scheme losses and scheme profits to losses and profits
5
made in a trade.
(2)
The power conferred by subsection (1) may only be exercised in
relation to losses and profits made by a company that carries on a
banking business, an insurance business or a business consisting
wholly or partly of dealing in securities.
10
(3)
In this section “securities” includes—
(a)
shares,
(b)
rights of unit holders in unit trust schemes to which TCGA
1992 applies as a result of section 99 of that Act, and
(c)
in the case of a company with no share capital, interests in the
15
company possessed by members of the company.
(4)
An order under this section—
(a)
may make different provision for different cases or purposes,
and
(b)
may include incidental, consequential, supplementary or
20
transitional provision.”
4
In Schedule 4 (index of defined expressions), insert at the appropriate
places—

“associated with (in Part 21A)
section 937K”

“economic loss (in Part 21A)
section 937L”

25

“economic profit (in Part 21A)
section 937L”

“the relevant group (in Part 21A)
section 937B(3)”

“relevant scheme profit (in Part 21A)
section 937F”

“ring-fenced scheme loss (in Part 21A)
section 937F”

“risk transfer scheme (in Part 21A)
section 937C”

30

“scheme (in Part 21A)
section 937N”

“scheme loss (in Part 21A)
section 937E”

“scheme profit (in Part 21A)
section 937E”

“the scheme rate, index or value (in Part 21A)
section 937D”.

Commencement and transitional provision
35
5     (1)
The amendments made by this Schedule have effect in relation to accounting
periods that begin on or after 1 April 2010 (“the commencement date”).

Finance Bill
Schedule 18 — Disclosure of tax avoidance schemes
147

      (2)
Where a company has an accounting period (“the straddling accounting
period”) that—
(a)
begins before the commencement date, and
(b)
ends on or after that date,

the straddling accounting period is to be treated as split.
5
      (3)
Where this paragraph provides that the straddling accounting period is to
be treated as split, that part of the straddling accounting period that falls
before the commencement date and that part of the straddling accounting
period that falls on or after that date are to be treated for the purposes of the
amendments made by this Schedule as separate accounting periods.
10
      (4)
In relation to the first accounting period of a company in relation to which
the amendments made by this Schedule have effect—
(a)
section 937I of CTA 2010 (as inserted by paragraph 3 above) does not
apply, and
(b)
as at the beginning of the period, the amounts of the company’s
15
losses pool and profits pool for any risk transfer scheme to which the
company is a party is nil.
Schedule 18
Section 57

Disclosure of tax avoidance schemes
Introduction
20
1
Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as
follows.
Initial marketing
2     (1)
Section 307 (meaning of “promoter”) is amended as follows.
      (2)
In paragraph (a) of subsection (1), for the words from “business” to “makes”
25
substitute “business, the person (“P”)—
(i)
is to any extent responsible for the design of the
proposed arrangements,
(ii)
makes a firm approach to another person (“C”) in
relation to the notifiable proposal with a view to P
30
making the notifiable proposal available for
implementation by C or any other person, or
(iii)
makes”.
      (3)
In paragraph (b) of that subsection, after “(a)(ii)” insert “or (iii)”.
      (4)
After subsection (1) insert—
35
“(1A)
For the purposes of this Part a person is an introducer in relation to
a notifiable proposal if the person makes a marketing contact with
another person in relation to the notifiable proposal.”

Finance Bill
Schedule 18 — Disclosure of tax avoidance schemes
148

      (5)
After subsection (4) insert—
“(4A)
For the purposes of this Part a person makes a firm approach to
another person in relation to a notifiable proposal if the person
makes a marketing contact with the other person in relation to the
notifiable proposal at a time when the proposed arrangements have
5
been substantially designed.
(4B)
For the purposes of this Part a person makes a marketing contact
with another person in relation to a notifiable proposal if—
(a)
the person communicates information about the notifiable
proposal to the other person,
10
(b)
the communication is made with a view to that other person,
or any other person, entering into transactions forming part
of the proposed arrangements, and
(c)
the information communicated includes an explanation of
the advantage in relation to any tax that might be expected to
15
be obtained from the proposed arrangements.
(4C)
For the purposes of subsection (4A) proposed arrangements have
been substantially designed at any time if by that time the nature of
the transactions to form part of them has been sufficiently developed
for it to be reasonable to believe that a person who wished to obtain
20
the advantage mentioned in subsection (4B)(c) might enter into—
(a)
transactions of the nature developed, or
(b)
transactions not substantially different from transactions of
that nature.”
      (6)
In subsection (5), after “promoter” insert “or introducer”.
25
      (7)
In subsection (6), after “promoter” (in both places) insert “or introducer”.
3     (1)
Section 308(2) (duties of promoter) is amended as follows.
      (2)
For “earlier” substitute “earliest”.
      (3)
Before paragraph (a) insert—
“(za)
the date on which the promoter first makes a firm approach
30
to another person in relation to a notifiable proposal,”.
4
In section 313A(1) (pre-disclosure enquiry), for “of a proposal or
arrangements” substitute “or introducer of a proposal, or the promoter of
arrangements,”.
5
In section 318(1) (interpretation), after the definition of “HMRC” insert—
35
““introducer”, in relation to a notifiable proposal, has the
meaning given by section 307;
“make a firm approach” has the meaning given by section
307(4A);
“make a marketing contact” has the meaning given by section
40
307(4B);”.

Finance Bill
Schedule 18 — Disclosure of tax avoidance schemes
149

Promoters to provide client lists
6
After section 313 insert—
“313ZA
Duty to provide details of clients
(1)
This section applies where a person who is a promoter in relation to
notifiable arrangements is providing (or has provided) services to
5
any person (“the client”) in connection with the notifiable
arrangements and either—
(a)
the promoter is subject to the reference number information
requirement, or
(b)
the promoter has failed to comply with section 308(1) or (3) in
10
relation to the notifiable arrangements (or the notifiable
proposal for them) but would be subject to the reference
number information requirement if a reference number had
been allocated to the notifiable arrangements.
(2)
For the purposes of this section “the reference number information
15
requirement” is the requirement under section 312(2) to provide to
the client prescribed information relating to the reference number
allocated to the notifiable arrangements.
(3)
The promoter must, within the prescribed period after the end of the
relevant period, provide HMRC with prescribed information in
20
relation to the client.
(4)
In subsection (3) “the relevant period” means such period during
which the promoter is or would be subject to the reference number
information requirement as is prescribed.
(5)
The promoter need not comply with subsection (3) in relation to any
25
notifiable arrangements at any time after HMRC have given notice
under section 312(6) in relation to the notifiable arrangements.”
7
In section 316 (information to be provided in manner and form specified by
HMRC), for “and 313(1) and (3)” substitute “, 313(1) and (3) and 313ZA(3)”.
8
In section 317(2) (regulations), after “may” insert “make different provision
30
for different cases and may”.
Information provided to introducers
9
After section 313B insert—
“313C
Information provided to introducers
(1)
Where HMRC suspect—
35
(a)
that a person (“P”) is an introducer in relation to a proposal,
and
(b)
that the proposal may be notifiable,

they may by written notice require P to provide HMRC with
prescribed information in relation to each person who has provided
40
P with any information relating to the proposal.
(2)
A notice must specify the proposal to which it relates.