Finance Bill

House of Commons

Session 2009 - 10
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Finance Bill

Finance Bill
Schedule 20 — Accounting standards: loan relationships and derivative contracts
157

(b)
subsections (4) and (5),

were omitted.
13
Section 398D of CTA 2010 (as inserted by paragraph 6)—
(a)
has effect with the omission of subsection (6) in relation to
accounting periods beginning before 24 March 2010, and
5
(b)
has effect with the omission of subsection (7) until that date.
Schedule 20
Section 64

Accounting standards: loan relationships and derivative contracts
Loan relationships
1
In Chapter 18 of Part 5 of CTA 2009 (loan relationships: general and
10
supplementary provision), before section 466 (and the heading before it)
insert—
“Changes in accounting standards
465A
Power to make regulations where accounting standards change
(1)
The Treasury may by regulations make provision for cases where, in
15
consequence of a change in accounting standards, there is a relevant
accounting change.
(2)
“Change in accounting standards” means the issue, revocation,
amendment or recognition of, or withdrawal of recognition from, an
accounting standard by an accounting body.
20
(3)
“Relevant accounting change” means a change in the way in which a
company is permitted or required, for accounting purposes, to
recognise amounts which—
(a)
are brought into account by the company as credits or debits
for any period for the purposes of this Part, or
25
(b)
would be so brought into account but for any provision made
by or under this Part.
(4)
Regulations under subsection (1) may amend this Part (apart from
this section).
(5)
Regulations under subsection (1) may—
30
(a)
make different provision for different cases,
(b)
make incidental, supplemental, consequential and
transitional provision and savings, and
(c)
make provision subject to an election or other specified
circumstances.
35
(6)
Regulations making consequential provision by virtue of subsection
(5)(b) may, in particular, include provision amending a provision of
the Corporation Tax Acts.
(7)
Regulations under subsection (1) may apply to a pre-commencement
period if they make provision in relation to a relevant accounting
40

Finance Bill
Schedule 20 — Accounting standards: loan relationships and derivative contracts
158

change which may or must be adopted, for accounting purposes, for
a period of account, or part of a period of account, which coincides
with that pre-commencement period.
(8)
In this section—
“accounting body” means the International Accounting
5
Standards Board or the Accounting Standards Board, or a
successor body to either of those Boards;
“accounting standard” includes any statement of practice,
guidance or other similar document;
“pre-commencement period”, in relation to regulations, means
10
an accounting period, or part of an accounting period, which
begins before the regulations are made.”
Derivative contracts
2
In Chapter 13 of Part 7 of CTA 2009 (derivative contracts: general and
supplementary provision), after section 701 insert—
15
“Changes to accounting standards
701A
Power to make regulations where accounting standards change
(1)
The Treasury may by regulations make provision for cases where, in
consequence of a change in accounting standards, there is a relevant
accounting change.
20
(2)
“Change in accounting standards” means the issue, revocation,
amendment or recognition of, or withdrawal of recognition from, an
accounting standard by an accounting body.
(3)
“Relevant accounting change” means a change in the way in which a
company is permitted or required, for accounting purposes, to
25
recognise amounts which—
(a)
are brought into account by the company as credits or debits
for any period for the purposes of this Part, or
(b)
would be so brought into account but for any provision made
by or under this Part.
30
(4)
Regulations under subsection (1) may amend this Part (apart from
this section).
(5)
Regulations under subsection (1) may—
(a)
make different provision for different cases,
(b)
make incidental, supplemental, consequential and
35
transitional provision and savings, and
(c)
make provision subject to an election or other specified
circumstances.
(6)
Regulations making consequential provision by virtue of subsection
(5)(b) may, in particular, include provision amending a provision of
40
the Corporation Tax Acts.
(7)
Regulations under subsection (1) may apply to a pre-commencement
period if they make provision in relation to a relevant accounting
change which may or must be adopted, for accounting purposes, for

Finance Bill
Schedule 21 — Furnished holiday lettings
Part 1 — Income tax
159

a period of account (or part of a period of account) which coincides
with that pre-commencement period.
(8)
In this section—
“accounting body” means the International Accounting
Standards Board or the Accounting Standards Board, or a
5
successor body to either of those Boards;
“accounting standard” includes any statement of practice,
guidance or other similar document;
“pre-commencement period”, in relation to regulations, means
an accounting period (or part of an accounting period) which
10
begins before the regulations are made.”
Affirmative resolution procedure
3
In section 1310(4) of CTA 2009 (orders and regulations subject to affirmative
resolution of House of Commons), before paragraph (za) insert—
“(zza)
section 465A or 701A (powers to make regulations where
15
accounting standards change),”.
Schedule 21
Section 65

Furnished holiday lettings
Part 1
Income tax
20
FA 2004
1
In FA 2004, in section 189 omit—
(a)
subsection (2)(ba) (but not the “and” after it), and
(b)
subsections (5) and (6).
ITTOIA 2005
25
2
In ITTOIA 2005 omit—
(a)
section 313(3), and
(b)
Chapter 6 of Part 3.
ITA 2007
3
In ITA 2007 omit—
30
(a)
section 117(2),
(b)
section 127, and
(c)
in section 836(3), exception D.
Commencement etc
4
This Part, and Part 5 of this Schedule so far as it relates to income tax, have
35
effect in relation to the tax year 2010-11 and subsequent tax years.

Finance Bill
Schedule 21 — Furnished holiday lettings
Part 2 — Corporation tax
160

5     (1)
This paragraph applies if conditions A and B are met.
      (2)
Condition A is that a person (“P”) carries on, or carried on, a UK furnished
holiday lettings business in a pre-commencement tax year.
      (3)
Condition B is that—
(a)
P makes, or has made, a claim under section 83 of ITA 2007 in respect
5
of losses made in the notional single trade in a pre-commencement
tax year, and
(b)
in accordance with Chapter 2 of Part 4 of ITA 2007, some or all of the
loss in respect of which the claim is made (“the unrelieved loss”)
would (but for this Part of this Schedule) fall to be deducted from
10
profits of the tax year 2010-11.
      (4)
Relief may be given to a person under section 118 of ITA 2007 as if the
unrelieved loss were a loss—
(a)
made in a UK property business carried on by P, and
(b)
made in the tax year 2009-10,
15

but only by deducting the unrelieved loss from profits of a UK property
business or overseas property business in the tax year 2010-11 and
subsequent tax years.
      (5)
In this paragraph—
“notional single trade” means a single trade of the kind mentioned in
20
section 127(3) of ITA 2007;
“pre-commencement tax year” means the tax year 2009-10 and each
previous tax year;
“UK furnished holiday lettings business” has the same meaning as in
section 127 of ITA 2007;
25
“UK property business” has the same meaning as in ITA 2007.
      (6)
In relation to the tax year 2006-07 and each earlier tax year, this paragraph
(in particular any reference to ITA 2007 or to an expression used in that Act)
is to have effect with such modifications as are necessary.
Part 2
30
Corporation tax
CTA 2009
6     (1)
CTA 2009 is amended as follows.
      (2)
Omit—
(a)
section 202(5),
35
(b)
section 252(3)(a) (and the “and” after it), and
(c)
Chapter 6 of Part 4.
      (3)
In section 748—
(a)
in subsection (4)—
(i)
in paragraph (a), for “an ordinary property business,”
40
substitute “a UK property business, or”, and
(ii)
omit paragraph (b) (and the “or” after it), and
(b)
omit subsection (5).

Finance Bill
Schedule 21 — Furnished holiday lettings
Part 3 — Capital allowances
161

      (4)
In Schedule 4, omit the entry relating to “commercial letting of furnished
holiday accommodation (in Chapter 6 of Part 4)”.
CTA 2010
7
In CTA 2010, omit section 65.
Commencement etc
5
8
This Part, and Part 5 of this Schedule so far as it relates to corporation tax,
have effect in relation to accounting periods beginning on or after 1 April
2010.
9     (1)
This paragraph applies if conditions A and B are met.
      (2)
Condition A is that a company (“C”) carries on, or carried on, a UK furnished
10
holiday lettings business in a pre-commencement accounting period.
      (3)
Condition B is that—
(a)
C incurs a loss in the notional single trade in a pre-commencement
accounting period, and
(b)
some or all of the loss (“the unrelieved loss”) is not deducted in
15
accordance with Chapter 2 of Part 10 of ICTA from profits of the
company’s last pre-commencement accounting period.
      (4)
The unrelieved loss may be set off under section 62 of CTA 2010 as if the
unrelieved loss were a loss—
(a)
made in a UK property business carried on by C, and
20
(b)
made in the company’s last pre-commencement accounting period,

but only by deducting the unrelieved loss from profits of a UK property
business or overseas property business in post-commencement accounting
periods.
      (5)
In this paragraph—
25
“notional single trade” means a single trade of the kind mentioned in
section 127(3) of ITA 2007;
“post-commencement accounting period” means an accounting period
beginning on or after 1 April 2010;
“pre-commencement accounting period” means an accounting period
30
beginning on or before 31 March 2010;
“UK furnished holiday lettings business” has the same meaning as in
section 127 of ITA 2007;
“UK property business” has the same meaning as in CTA 2009.
Part 3
35
Capital allowances
CAA 2001
10    (1)
CAA 2001 is amended as follows.
      (2)
In section 15—
(a)
in subsection (1)—
40
(i)
in paragraph (b), for “an ordinary” substitute “a UK”, and

Finance Bill
Schedule 21 — Furnished holiday lettings
Part 3 — Capital allowances
162

(ii)
omit paragraph (c), and
(b)
in subsection (3)(a), for “an ordinary” substitute “a UK”.
      (3)
Omit sections 16 and 17.
      (4)
In section 28(1) and (2), for “an ordinary” substitute “a UK”.
      (5)
In section 33(8)—
5
(a)
in paragraph (b), for “an ordinary” substitute “a UK”, and
(b)
omit paragraph (c).
      (6)
In section 35(1)(a), for “an ordinary” substitute “a UK”.
      (7)
In section 63(3)—
(a)
in paragraph (b), for “an ordinary” substitute “a UK”, and
10
(b)
omit paragraph (c).
      (8)
In section 248—
(a)
in the heading, for “Ordinary” substitute “UK”, and
(b)
for “an ordinary” substitute “a UK”.
      (9)
Omit section 249.
15
     (10)
In section 536(5)(a)—
(a)
in sub-paragraph (i), for “an ordinary” substitute “a UK”, and
(b)
omit sub-paragraph (ii).
     (11)
In Schedule A1—
(a)
in paragraph 5(1), omit “other than a furnished holiday lettings
20
business”,
(b)
in paragraph 11(1), omit “or a furnished holiday lettings business”,
(c)
in paragraph 12(1), omit “other than a furnished holiday lettings
business”, and
(d)
in paragraph 20—
25
(i)
in sub-paragraph (a), omit “or a furnished holiday lettings
business”, and
(ii)
in sub-paragraph (c), omit “(other than a furnished holiday
lettings business)”.
     (12)
In Part 2 of Schedule 1, omit the entries for—
30
(a)
“furnished holiday lettings business (in Part 2)”, and
(b)
“ordinary property business”.
Commencement etc
11
This Part, and Part 5 of this Schedule so far as it relates to capital allowances,
have effect—
35
(a)
for corporation tax purposes, in relation to expenditure incurred on
or after 1 April 2010, and
(b)
for income tax purposes, in relation to expenditure incurred on or
after 6 April 2010.
12    (1)
A person is not to be taken, by virtue of this Part, to have brought plant or
40
machinery into use for the purposes of a qualifying activity.

Finance Bill
Schedule 21 — Furnished holiday lettings
Part 4 — Chargeable gains
163

      (2)
A person is not, by virtue of this Part, required by section 61 of the CAA 2001
to bring the disposal value of any plant or machinery into account.
13    (1)
This paragraph applies if Conditions A and B are met.
      (2)
Condition A is that, before the commencement of paragraph 10 (“the
relevant commencement”), a person incurred expenditure that is qualifying
5
expenditure.
      (3)
Condition B is that, if the expenditure had been incurred after the relevant
commencement, by virtue of section 35 of CAA 2001 it would not be
qualifying expenditure.
      (4)
Part 1 of this Schedule does not prevent the expenditure from continuing to
10
be—
(a)
regarded as qualifying expenditure after the relevant
commencement, and
(b)
taken into account accordingly for the purposes of capital
allowances.
15
      (5)
In this paragraph “qualifying expenditure” means qualifying expenditure
for the purposes of Part 2 of CAA 2001.
Part 4
Chargeable gains
TCGA 1992
20
14
In TCGA 1992, omit section 241.
Roll-over relief: general
15
In so far as section 241 of TCGA 1992 applies for the purposes of sections 152,
153 and 155 to 157 of that Act (roll-over relief on replacement of business
assets), the chargeable gains repeals have effect in relation to cases where
25
either or both of the following conditions are met—
(a)
the disposal of (or of the interest in) the old assets is a post-
commencement disposal of (or of an interest in) FHL assets, and
(b)
the acquisition of (or of the interest in) the new assets is a post-
commencement acquisition of (or of an interest in) FHL assets.
30
Roll-over relief: replacement by depreciating assets
16
In so far as section 241 of TCGA 1992 applies for the purposes of section 154
of that Act (roll-over relief on replacement of business assets by depreciating
assets), the chargeable gains repeals have effect in relation to cases where
one or more of the following conditions are met—
35
(a)
the disposal of (or of the interest in) asset No 1 is a post-
commencement disposal of (or of an interest in) FHL assets,
(b)
the acquisition of (or of the interest in) asset No 2 is a post-
commencement acquisition of (or of an interest in) FHL assets, and
(c)
the acquisition of (or of the interest in) asset No 3 is a post-
40
commencement acquisition of (or of an interest in) FHL assets.