Finance (No. 2) Bill

House of Commons

Session 2010 - 11
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Other Bills before Parliament

Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 6 — Consortium claims for group relief
57

(6)
Neither consortium condition 2 nor consortium condition 3 is met
unless the link company is a member of the same group of
companies as the other company mentioned in subsection (1)(d) or
(2)(d) without the involvement of a relevant company.
(7)
A “relevant company” is a company that is not established in the
5
EEA.
(8)
For the purposes of subsection (6) a company (“A”) is a member of
the same group of companies as another company (“B”) without the
involvement of a relevant company if—
(a)
in a case where A is the 75% subsidiary of B, B owns at least
10
75% of A’s ordinary share capital otherwise than through a
relevant company,
(b)
in a case where B is the 75% subsidiary of A, A owns at least
75% of B’s ordinary share capital otherwise than through a
relevant company, and
15
(c)
in a case where neither company is the 75% subsidiary of the
other but both are 75% subsidiaries of a third company, the
third company—
(i)
is not a relevant company, and
(ii)
owns at least 75% of A’s ordinary share capital, and at
20
least 75% of B’s ordinary share capital, otherwise than
through a relevant company.”
5
After section 134 (meaning of “UK related” company) insert—
“134A
Companies “established in the EEA”
(1)
For the purposes of section 133 a company is established in the EEA
25
if—
(a)
it is constituted under the law of the United Kingdom or an
EEA territory, and
(b)
it has its registered office, central administration or principal
place of business within the European Economic Area.
30
(2)
In this section “EEA territory”, in relation to any time, means a
territory outside the United Kingdom that is within the European
Economic Area at that time.”
6     (1)
Section 146 (maximum amount of group relief in consortium claims) is
amended as follows.
35
      (2)
In subsection (3)—
(a)
omit the “and” at the end of paragraph (a), and
(b)
after that paragraph insert—
“(aa)
assuming that the link company was UK related,
and”.
40
      (3)
In subsection (6), at the end insert “, assuming that the link company was UK
related.”
      (4)
In subsection (8)—
(a)
omit the “and” at the end of the definition of “consortium claim”, and

Finance (No. 2) Bill
Schedule 6 — Consortium claims for group relief
58

(b)
at the end insert “, and
“UK related”, in relation to a company, has the meaning
given by section 134.”
Limitations on group relief based on proportion of voting power held by company
7     (1)
Section 143 (which makes provision limiting the amount of group relief that
5
is available in cases where the surrendering company is owned by a
consortium) is amended as follows.
      (2)
In subsection (3)—
(a)
omit the “and” at the end of paragraph (b), and
(b)
at the end of paragraph (c) insert “, and
10
(d)
the proportion of the voting power in the
surrendering company that is directly possessed by
the claimant company.”
      (3)
In subsection (4)(a), for “paragraphs (a) to (c)” substitute “paragraphs (a) to
(d)”.
15
8     (1)
Section 144 (which makes provision limiting the amount of group relief that
is available in cases where the claimant company is owned by a consortium)
is amended as follows.
      (2)
In subsection (3)—
(a)
omit the “and” at the end of paragraph (b), and
20
(b)
at the end of paragraph (c) insert “, and
(d)
the proportion of the voting power in the claimant
company that is directly possessed by the
surrendering company.”
      (3)
In subsection (4)(a), for “paragraphs (a) to (c)” substitute “paragraphs (a) to
25
(d)”.
Limitations on group relief where arrangements preventing control are in place
9
After section 146 insert—
“146A
Conditions 1 and 2: surrendering company not controlled by claimant
company etc
30
(1)
This section applies if—
(a)
the claimant company makes a claim for group relief based
on consortium condition 1,
(b)
it is the surrendering company that is owned by the
consortium, and
35
(c)
during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
prevent the claimant company, either alone or together with
one or more other companies that are members of the
consortium, from controlling the surrendering company.
40
(2)
This section also applies if—
(a)
the claimant company makes a claim for group relief based
on consortium condition 2, and

Finance (No. 2) Bill
Schedule 6 — Consortium claims for group relief
59

(b)
during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
prevent the link company, either alone or together with one
or more other companies that are members of the
consortium, from controlling the surrendering company.
5
(3)
Arrangements are within this subsection if—
(a)
the company, either alone or together with one or more other
companies that are members of the consortium, would
control the surrendering company, but for the existence of
the arrangements, and
10
(b)
the arrangements form part of a scheme the main purpose, or
one of the main purposes, of which is to enable the claimant
company to obtain a tax advantage under this Chapter.
(4)
The group relief to be given on the claim is to be determined as if the
surrenderable amount for the overlapping period were 50% of what
15
it would be but for this section (see section 139(2) to determine the
surrenderable amount for the overlapping period).
(5)
In this section “the overlapping period” is to be read in accordance
with section 142.
(6)
Section 1139 (“tax advantage”) applies for the purposes of this
20
section.
146B
Conditions 1 and 3: claimant company not controlled by surrendering
company etc
(1)
This section applies if—
(a)
the claimant company makes a claim for group relief based
25
on consortium condition 1,
(b)
it is the claimant company that is owned by the consortium,
and
(c)
during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
30
prevent the surrendering company, either alone or together
with one or more other companies that are members of the
consortium, from controlling the claimant company.
(2)
This section also applies if—
(a)
the claimant company makes a claim for group relief based
35
on consortium condition 3, and
(b)
during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
prevent the link company, either alone or together with one
or more other companies that are members of the
40
consortium, from controlling the claimant company.
(3)
Arrangements are within this subsection if—
(a)
the company, either alone or together with one or more other
companies that are members of the consortium, would
control the claimant company, but for the existence of the
45
arrangements, and

Finance (No. 2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
60

(b)
the arrangements form part of a scheme the main purpose, or
one of the main purposes, of which is to enable the claimant
company to obtain a tax advantage under this Chapter.
(4)
The group relief to be given on the claim is to be determined as if the
claimant company’s total profits for the overlapping period were
5
50% of what they would be but for this section (see section 140(2) to
determine the total profits for the overlapping period).
(5)
In this section “the overlapping period” is to be read in accordance
with section 142.
(6)
Section 1139 (“tax advantage”) applies for the purposes of this
10
section.”
Commencement
10
The amendments made by this Schedule have effect in relation to accounting
periods beginning on or after 12 July 2010.
Schedule 7
15
Section 18

First-year allowances for zero-emission goods vehicles
1
CAA 2001 is amended as follows.
2
In section 39 (first-year allowances available for certain types of qualifying
expenditure only), at the appropriate place in the list insert—

“section 45DA
expenditure on zero-emission goods vehicles,”.

20
3
After section 45D insert—
“45DA
Expenditure on zero-emission goods vehicles
(1)
Expenditure is first-year qualifying expenditure if—
(a)
it is incurred in the period of 5 years beginning with the
relevant date,
25
(b)
it is incurred on the provision of a zero-emission goods
vehicle,
(c)
the vehicle is unused and not second-hand,
(d)
the vehicle is registered, and
(e)
the expenditure is not excluded by section 46 (general
30
exclusions).
(2)
For the purposes of subsection (1)(d) it does not matter whether the
vehicle is first registered before or after the expenditure is incurred.
(3)
In this section—
“goods vehicle” means a mechanically propelled road vehicle
35
which is of a design primarily suited for the conveyance of
goods or burden of any description;
“the relevant date” means—

Finance (No. 2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
61

(a)
in the case of expenditure incurred by a person within
the charge to corporation tax, 1 April 2010, and
(b)
in the case of expenditure incurred by a person within
the charge to income tax, 6 April 2010;
“zero-emission goods vehicle” means a goods vehicle which
5
cannot in any circumstances emit CO2 by being driven.
(4)
The Treasury may by order amend this Chapter so as to provide for
specified descriptions of vehicles to be treated, or not to be treated,
as goods vehicles for the purposes of this section.
(5)
This section is subject to section 45DB.
10
45DB
Exclusions from allowances under section 45DA
(1)
Expenditure incurred by a person is not first-year qualifying
expenditure under section 45DA if it is within subsection (2), (4) or
(6).
(2)
Expenditure is within this subsection if, at the time a claim is made
15
under section 3 for a section 45DA allowance in respect of the
expenditure, the person who incurred the expenditure is, or forms
part of, an undertaking within subsection (3).
(3)
An undertaking is within this subsection if one or both of the
following conditions are met—
20
(a)
it is reasonable to assume that the undertaking would be
regarded as a firm in difficulty for the purposes of the
Community Guidelines on State Aid for Rescuing and
Restructuring Firms in Difficulty (2004/C 244/02);
(b)
the undertaking is subject to an outstanding recovery order
25
made by virtue of Article 108(2) of the Treaty on the
Functioning of the European Union (Commission Decision
declaring aid illegal and incompatible with the common
market).
(4)
Expenditure is within this subsection if it is incurred for the purposes
30
of a qualifying activity—
(a)
in the fishery or aquaculture sector, as covered by Council
Regulation (EC) No 104/2000, or
(b)
relating to the management of waste of undertakings.
(5)
In subsection (4)(b) the reference to waste of undertakings does not
35
include waste of the person who incurred the expenditure or of any
other person forming part of the same undertaking as that person.
(6)
Expenditure is within this subsection to the extent that it is taken into
account for the purposes of a relevant grant, or relevant payment,
made towards that expenditure.
40
(7)
A grant or payment is relevant if it is—
(a)
a notified State aid, other than an allowance under this Part,
or
(b)
a grant or subsidy, other than a notified State aid, which the
Treasury by order declares to be relevant for the purposes of
45
the withholding of a section 45DA allowance.

Finance (No. 2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
62

(8)
If a relevant grant or relevant payment towards the expenditure is
made after the making of a section 45DA allowance, the allowance is
to be withdrawn to that extent.
(9)
All such assessments and adjustments of assessments are to be made
as are necessary to give effect to subsection (8).
5
(10)
Any such assessment or adjustment is not out of time if it is made
within 3 years of the end of the chargeable period in which the grant
or payment was made.
(11)
In this section—
“General Block Exemption Regulation” means Commission
10
Regulation (EC) No. 800/2008 (General block exemption
Regulation);
“management” and “waste” have the meaning given by Article
1 of Directive 2006/12/EC of the European Parliament and of
the Council;
15
“notified State aid” means a State aid notified to and approved
by the European Commission;
“section 45DA allowance” means a first year allowance in
respect of expenditure that is first-year qualifying
expenditure under section 45DA;
20
“undertaking” means—
(a)
an autonomous enterprise, or
(b)
an enterprise (not within paragraph (a)) and its
partner enterprises (if any) and its linked enterprises
(if any),
25
and for this purpose “enterprise”, “autonomous enterprise”,
“partner enterprises” and “linked enterprises” have the
meaning given by Annex 1 to the General Block Exemption
Regulation.
(12)
The Treasury may by order make such provision amending this
30
section as appears to them appropriate for the purpose of giving
effect to any future amendments of or instrument replacing—
(a)
the General Block Exemption Regulation,
(b)
the Community Guidelines on State Aid for Rescuing and
Restructuring Firms in Difficulty (2004/C 244/02),
35
(c)
Council Regulation (EC) No 104/2000,
(d)
Directive 2006/12/EC of the European Parliament and of the
Council, or
(e)
the Treaty on the Functioning of the European Union.”
4
In section 46 (general exclusions applying to first-year qualifying
40
expenditure), in subsection (1), at the appropriate place in the list insert—

“section 45DA
(expenditure on zero-emission goods

vehicles),”.

5     (1)
Section 52 (first-year allowances) is amended as follows.
      (2)
In subsection (3), at the appropriate place in the Table insert—
45

Finance (No. 2) Bill
Schedule 7 — First-year allowances for zero-emission goods vehicles
63

“Expenditure qualifying under section 45DA
100%”.

(expenditure on zero-emission goods vehicles)

      (3)
In subsection (5)—
(a)
omit the “and” at the end of the entry for section 210, and
(b)
after that entry insert—
5
“ section 212T (cap on first-year allowances: zero-
emission goods vehicles), and”.
6
After section 212S insert—
“Chapter 16B
Cap on first-year allowances: zero-emission goods vehicles
10
212T
Cap on first-year allowances: zero-emission goods vehicles
(1)
A section 45DA allowance is not available in respect of expenditure
(“the current expenditure”) incurred by a person (“the investor”)—
(a)
if section 45DA allowances have previously been made in
respect of undertaking expenditure of 85 million euros, or
15
(b)
(where paragraph (a) does not apply) if, and to the extent
that, the aggregate of—
(i)
the undertaking expenditure in respect of which
section 45DA allowances have previously been made,
and
20
(ii)
the current expenditure,

exceeds 85 million euros.
(2)
“Undertaking expenditure” means—
(a)
expenditure incurred by the investor,
(b)
if the investor is a partnership, expenditure incurred (at any
25
time) by a person who is a partner enterprise forming part of
the investor at the time the current expenditure is incurred,
and
(c)
if the investor and one or more other persons together form,
or have at any time formed, an undertaking, expenditure
30
which is—
(i)
incurred by that undertaking, or
(ii)
incurred by any of those other persons at a relevant
time.
(3)
Expenditure is incurred by a person at a “relevant time” if it is
35
incurred—
(a)
at a time when the investor and the person are part of the
same undertaking, or
(b)
at a time before the investor and the person became part of
the same undertaking (or, if they became part of the same
40
undertaking on more than one occasion, before the last time).
(4)
For the purposes of subsection (1), expenditure incurred in a
currency other than the euro is to be converted into its equivalent in