|
| |
|
opening negative amount in relation to the territory at the beginning |
| |
of the accounting period. |
| |
(4) | The company may, in its company tax return for that relevant |
| |
accounting period, specify to which part of the relevant profits |
| |
amount of the company for the territory for the accounting period |
| 5 |
section 18A(1) is to apply by virtue of subsection (3). |
| |
18N | Residual opening negative amount: “matching” |
| |
(1) | At the end of each relevant accounting period of the company |
| |
(starting with the first) the residual opening negative amount is to be |
| |
reduced (or further reduced) by the amount of any residual |
| 10 |
aggregate relevant profits amount of the company for the accounting |
| |
period (but not to below nil). |
| |
(2) | For the purposes of this section the “residual opening negative |
| |
amount”, at the beginning of the company’s first relevant accounting |
| |
| 15 |
(a) | the total opening negative amount of the company at that |
| |
| |
(b) | the aggregate of the streamed opening negative amounts of |
| |
the company at that time. |
| |
(3) | For the purposes of this section the “residual aggregate relevant |
| 20 |
profits amount”, in relation to an accounting period, means the |
| |
amount (if any) by which— |
| |
(a) | the aggregate relevant profits amount of the company for the |
| |
accounting period, exceeds |
| |
(b) | the aggregate of so much of any relevant profits amounts of |
| 25 |
the company for the accounting period as has effect to bring |
| |
about a reduction under section 18M(1) for the accounting |
| |
| |
(4) | In any relevant accounting period of the company for which there is |
| |
a reduction under subsection (1), section 18A(1) does not apply in |
| 30 |
relation to the residual aggregate relevant profits amount of the |
| |
company for the accounting period. |
| |
(5) | But in the case of the last relevant accounting period of the company |
| |
for which there is a reduction under subsection (1), section 18A(1) is |
| |
disapplied by subsection (4) only in relation to so much of the |
| 35 |
residual aggregate relevant profits amount of the company for the |
| |
accounting period as is equal to the residual opening negative |
| |
amount of the company at the beginning of the accounting period. |
| |
(6) | The company may, in its company tax return for that relevant |
| |
accounting period, specify to which of the amounts forming part of |
| 40 |
the residual aggregate relevant profits amount of the company for |
| |
the accounting period section 18A(1) is to apply by virtue of |
| |
| |
18O | Transfers of foreign permanent establishment business |
| |
(1) | This section applies if— |
| 45 |
(a) | business carried on by a company (“the transferor”) through |
| |
a permanent establishment in a territory outside the United |
| |
|
| |
|
| |
|
Kingdom is transferred to a connected company that is (or |
| |
later becomes) a UK resident company (“the transferee”), and |
| |
(b) | section 18A is disapplied by sections 18K to 18N to a lesser |
| |
extent in the case of the companies (taken together) than it |
| |
would be disapplied in the case of the transferee if the |
| 5 |
business transferred was at all material times carried on by |
| |
| |
(2) | Those sections are to be taken to apply in relation to the transferee |
| |
(and, where appropriate, the transferor) in such manner as is |
| |
appropriate to secure that section 18A is disapplied to the same |
| 10 |
extent as it would be if the business were at all material times carried |
| |
| |
| |
| |
(1) | If a company is a small company at any time during a relevant |
| 15 |
accounting period, there is for that relevant accounting period no |
| |
relevant profits amount or relevant losses amount for the purposes |
| |
of this Chapter in relation to any relevant foreign territory that is not |
| |
| |
(2) | If a company is a close company at any time during a relevant |
| 20 |
accounting period, so much of the profits of the company for the |
| |
relevant accounting period as derives from gains which are |
| |
chargeable gains for the purposes of corporation tax is not to be |
| |
regarded as forming part of a relevant profits amount or relevant |
| |
losses amount of the company for the purposes of this Chapter. |
| 25 |
| |
(1) | So much of the profits or losses of a company as consists of profits or |
| |
losses arising from basic life assurance and general annuity business |
| |
(as defined in section 431(2) of ICTA) is not to be regarded as forming |
| |
part of a relevant profits amount or relevant losses amount of the |
| 30 |
company for the purposes of this Chapter. |
| |
(2) | In determining what part of any items brought into account as |
| |
mentioned in section 83(2)(a), (b), (c) or (d) of FA 1989 (receipts to be |
| |
taken into account) as profits attributable to a permanent |
| |
establishment in a territory outside the United Kingdom through |
| 35 |
which the company carries on business are referable to life assurance |
| |
business or gross roll-up business, section 432E of ICTA |
| |
(apportionment: participating funds) has effect as if— |
| |
(a) | references in that section to the surplus of the relevant |
| |
business were to the surplus of the business carried on |
| 40 |
through the permanent establishment, and |
| |
(b) | as if subsections (3) to (4A) of that section and section 432F of |
| |
| |
(3) | No amount which, by virtue of any enactment, is to be regarded as |
| |
being brought into account by a company as an increase in the value |
| 45 |
of non-linked assets is to be regarded for the purposes of this Chapter |
| |
as being attributable to a permanent establishment in a territory |
| |
|
| |
|
| |
|
outside the United Kingdom through which the company carries on |
| |
| |
(4) | Any election under section 107(4) of FA 2000 (general insurance: |
| |
adjustment for technical provision) is to be ignored for the purposes |
| |
| 5 |
| |
18R | Meaning of “full treaty territory” |
| |
(1) | For the purposes of this Chapter a territory is a “full treaty territory” |
| |
| |
(a) | double taxation arrangements have been made in relation to |
| 10 |
| |
(b) | the arrangements contain a relevant non-discrimination |
| |
| |
(2) | “Relevant non-discrimination provision” means a provision to the |
| |
effect that the taxation on a permanent establishment of an enterprise |
| 15 |
of a state which is party to the arrangements (a “contracting state”) is |
| |
not to be less favourably levied in any other contracting state than |
| |
the taxation levied on enterprises of that other contracting state |
| |
carrying on the same activities. |
| |
| 20 |
| |
“company tax return” has the same meaning as in Schedule 18 |
| |
to FA 1998 (see paragraph 3(1)); |
| |
“double taxation arrangements” means arrangements that have |
| |
effect under section 2(1) of TIOPA 2010; |
| 25 |
“the OECD model” means the Model Tax Convention on |
| |
Income and on Capital published by the Organisation for |
| |
Economic Co-operation and Development in July 2010 (“the |
| |
OECD”) or such other document published by the OECD in |
| |
place of it as is designated from time to time by order made |
| 30 |
| |
“small company” means a micro or small enterprise, as defined |
| |
in the Annex to Commission Recommendation 2003/361/EC |
| |
| |
5 | In section 775(4) (intangible fixed assets: cases where transfers within group |
| 35 |
provisions do not apply), omit the “or” at the end of paragraph (a) and insert |
| |
| |
(c) | an election under section 18A has effect in relation to the |
| |
transferor and the asset has at any time been held by the |
| |
transferor wholly or partly for the purposes of a permanent |
| 40 |
establishment in a territory outside the United Kingdom |
| |
through which the transferor carries on business.” |
| |
6 | After section 776 insert— |
| |
“776A | Assets held for exempt permanent establishment: partial exemption |
| |
(1) | This section applies if subsection (1) of section 775 is disapplied by |
| 45 |
paragraph (c) of subsection (4) of that section in the case of an asset |
| |
|
| |
|
| |
|
which has not at all times when the election under section 18A had |
| |
effect been held by the transferor wholly for the purposes of a |
| |
permanent establishment such as is mentioned in that paragraph. |
| |
(2) | The asset is treated for the purposes of this Part as having been |
| |
acquired by the transferee for such amount as is appropriate having |
| 5 |
regard to the operation of section 18A.” |
| |
7 | In section 803(b) (assets held for non-taxable activities excluded from Part |
| |
10), insert at the end “, otherwise than as a result of Chapter 3A of Part 2.” |
| |
8 | In section 1007(2)(b) (relief if employee etc acquires shares), insert at the end |
| |
“or would be but for section 18A.” |
| 10 |
9 | In section 1015(2)(b) (relief if employee etc obtains share option), insert at the |
| |
end “or would be but for section 18A.” |
| |
10 | In Schedule 4 to that Act (index of defined expressions), insert at the |
| |
| |
| “adjusted (in relation to a relevant profits |
| | | 15 | | amount) (in Chapter 3A of Part 2) |
| | | | | “aggregate relevant profits amount (in |
| | | | | | | | | | “company tax return (in Chapter 3A of Part |
| | | | | | | | 20 | | “double taxation arrangements (in Chapter |
| | | | | | | | | | “foreign permanent establishments amount |
| | | | | (in Chapter 3A of Part 2) |
| | | | | “full treaty territory (in Chapter 3A of Part 2) |
| | | 25 | | “the OECD model (in Chapter 3A of Part 2) |
| | | | | “relevant accounting period (in Chapter 3A |
| | | | | | | | | | “relevant foreign territory (in Chapter 3A of |
| | | | | | | | 30 | | “relevant losses amount (in Chapter 3A of |
| | | | | | | | | | “relevant profits amount (in Chapter 3A of |
| | | | | | | | | | “small company (in Chapter 3A of Part 2) |
| | | 35 | | “total opening negative amount” (in Chapter |
| | | | | | | | |
|
|
| |
|
| |
|
| |
| |
| |
11 | In paragraph 4(1) of Schedule 24 to ICTA (assumptions for calculating |
| |
chargeable profits etc of foreign companies: election or claim to give |
| 5 |
maximum relief assumed to be made), insert at the end “except that the |
| |
company shall be assumed not to have made an election under section 18A |
| |
| |
| |
12 | In TCGA 1992, after section 276 insert— |
| 10 |
“276A | No gain/no loss: foreign permanent establishment exemption |
| |
On a no gain/no loss disposal by a company in relation to which an |
| |
election under section 18A of CTA 2009 (exemption for profits or |
| |
losses of foreign permanent establishments) has effect, the amount of |
| |
the consideration which would secure that neither a gain nor a loss |
| 15 |
would accrue to the company on the disposal is to be arrived at after |
| |
taking account of the operation of the provisions of Chapter 3A of |
| |
| |
| |
13 | CAA 2001 is amended as follows. |
| 20 |
14 | In section 15 (plant and machinery allowances: qualifying activities), after |
| |
| |
“(2A) | A business carried on through one or more permanent |
| |
establishments outside the United Kingdom by a company in |
| |
relation to which an election under section 18A of CTA 2009 has |
| 25 |
| |
(a) | is an activity separate from any other activity of the company, |
| |
| |
(b) | is to be regarded as an activity all the profits and gains from |
| |
which are not, or (if there were any) would not be, chargeable |
| 30 |
| |
15 | In the Table in section 61 (disposal events and disposal values), after item 6 |
| |
| |
| “6A. Disposal event to which |
| The relevant transition value |
| | | | | | | 35 |
|
| and in column 1 of item 7, for “6” substitute “6A”. |
| |
|
| |
|
| |
|
16 | After section 62 insert— |
| |
“62A | Cases in which disposal value is transition value |
| |
(1) | Subject as follows, this section applies where an election under |
| |
section 18A of CTA 2009 has effect in relation to a company and the |
| |
operation of section 15(2A) brings about a disposal event consisting |
| 5 |
of plant or machinery beginning to be used for purposes other than |
| |
those of a qualifying activity. |
| |
(2) | Where this section applies to a disposal event, the disposal value is |
| |
| |
(3) | The transition value is such amount as gives rise to neither a |
| 10 |
balancing allowance nor a balancing charge. |
| |
(4) | This section does not apply if— |
| |
(a) | the qualifying expenditure in respect of the plant or |
| |
machinery, or of the group of assets of which it forms part at |
| |
any time during a relevant accounting period, exceeds £5 |
| 15 |
| |
(b) | the company has used the plant or machinery otherwise than |
| |
for the purposes of a permanent establishment in a territory |
| |
outside the United Kingdom at any time during a relevant |
| |
preceding accounting period. |
| 20 |
(5) | For the purposes of subsection (4)(a) plant or machinery used |
| |
together constitutes a group of assets. |
| |
(6) | In subsection (4) “relevant preceding accounting period” means the |
| |
accounting period in which the election under section 18A is made |
| |
or an earlier accounting period ending less than 6 years before the |
| 25 |
end of that accounting period.” |
| |
| |
17 | ITA 2007 is amended as follows. |
| |
18 | In section 879(1) (interest paid on advances from banks), insert at the end “or |
| |
is a bank that would be within the charge to corporation tax as respects the |
| 30 |
interest apart from section 18A of CTA 2009.” |
| |
19 (1) | Section 918 (manufactured dividends on UK shares: REITs) is amended as |
| |
| |
(2) | After subsection (3) insert— |
| |
“(3A) | But subsection (3) does not apply if— |
| 35 |
(a) | the manufactured dividend is paid by a UK resident |
| |
company in the course of a trade carried on through a |
| |
permanent establishment in a territory outside the United |
| |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| 40 |
for the accounting period in which it is paid.” |
| |
|
| |
|
| |
|
(3) | In subsection (4), for paragraphs (a) and (b) substitute— |
| |
“(a) | is non-UK resident and pays the manufactured dividend |
| |
otherwise than in the course of a trade carried on through a |
| |
branch or agency in the United Kingdom, or |
| |
(b) | is a UK resident company and pays the manufactured |
| 5 |
dividend in the course of a trade carried on through a |
| |
permanent establishment in a territory outside the United |
| |
Kingdom and section 18A of CTA 2009 has effect in relation |
| |
to the company for the accounting period in which it is |
| |
| 10 |
(4) | After subsection (5) insert— |
| |
“(5A) | But a UK resident is not a United Kingdom recipient if— |
| |
(a) | it is a UK resident company which receives the manufactured |
| |
dividend for the purposes of a trade carried on by the |
| |
recipient through a permanent establishment in a territory |
| 15 |
outside the United Kingdom, and |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| |
for the accounting period in which it is received.” |
| |
20 | In section 919 (manufactured interest on UK securities: payments by UK |
| |
residents etc), after subsection (1) insert— |
| 20 |
“(1A) | But this section does not apply if— |
| |
(a) | the manufactured interest is paid by a UK resident company |
| |
in the course of a trade carried on through a permanent |
| |
establishment in a territory outside the United Kingdom, and |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| 25 |
for the accounting period in which it is paid.” |
| |
21 (1) | Section 920 (foreign payers of manufactured interest: the reverse charge) is |
| |
| |
(2) | After subsection (1) insert— |
| |
“(1A) | This section also applies if— |
| 30 |
(a) | a UK resident company pays manufactured interest in the |
| |
course of a trade carried on through a permanent |
| |
establishment in a territory outside the United Kingdom, and |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| |
for the accounting period in which it is paid.” |
| 35 |
(3) | After subsection (2) insert— |
| |
“(2A) | But this section does not apply if— |
| |
(a) | the recipient is a UK resident company which receives the |
| |
manufactured interest for the purposes of a trade carried on |
| |
by the recipient through a permanent establishment in a |
| 40 |
territory outside the United Kingdom, and |
| |
(b) | section 18A of CTA 2009 has effect in relation to the company |
| |
for the accounting period in which it is received.” |
| |
(4) | In subsection (3), insert at the end “and section 919(1A) did not apply.” |
| |
22 | In section 922 (manufactured overseas dividends: payments by UK residents |
| 45 |
|
| |
|