Finance (No. 3) Bill

Session 2010 - 11
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Other Bills before Parliament

Finance (No. 3) Bill

Finance (No. 3) Bill
Part 2 — Income tax, corporation tax and capital gains tax
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“new standards” means accounting standards which reflect one or more
leasing changes;
“old standards” means accounting standards disregarding any leasing
changes;
“Taxes Acts” means—
5
(a)
the Tax Acts, and
(b)
TCGA 1992 and all other enactments relating to capital gains
tax;
“UK GAAP” means UK generally accepted accounting practice as defined
in section 997(2) of ITA 2007 and section 1127(2) of CTA 2010.
10
(12)
This section has effect in relation to any period (including any period falling
wholly or partly before the day on which this Act is passed) in respect of which
a change to a leasing accounting standard which occurs on or after 1 January
2011 may or must be adopted by any person for accounting purposes.
54
Leasing companies: withdrawal of election
15
(1)
In section 398A(1)(a) of CTA 2010 (election out of qualifying change of
ownership), after “day”)” insert “before 23 March 2011”.
(2)
The amendment made by this section is to be treated as having come into force
on 23 March 2011.
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Companies with small profits: associated companies
20
(1)
For section 27 of CTA 2010 (meaning of “associated company”: attribution to
persons of rights and powers of their partners) substitute—
“27
Attribution to persons of rights and powers of their associates
(1)
This section applies if—
(a)
it is necessary to determine in accordance with section 25(4) and
25
(5) whether a company is an associated company of another
company, and
(b)
the relationship between the two companies is not one of
substantial commercial interdependence.
(2)
In the application of section 451 (meaning of “control”: rights to be
30
attributed) for the purposes of the determination, any person to whom
rights and duties fall to be attributed under subsections (4) and (5) of
that section is to be treated, for the purposes of those subsections, as
having no associates.
(3)
The Treasury may by order prescribe factors that are to be taken into
35
account in determining whether a relationship between two companies
amounts to substantial commercial interdependence for the purposes
of this section.”
(2)
The amendment made by this section has effect in relation to accounting
periods ending on or after 1 April 2011.
40
(3)
But a company may elect that the amendment made by this section is of no
effect in relation to an accounting period that begins before that date.
(4)
An election under subsection (3) must be made within one year from the end
of the accounting period to which it relates.

Finance (No. 3) Bill
Part 2 — Income tax, corporation tax and capital gains tax
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(5)
The first order under section 27(3) of CTA 2010 (as substituted by subsection
(1) of this section) may be made so as to have effect in relation to accounting
periods ending on or after 1 April 2011.
56
Insurance companies: apportionment of amounts brought into account
(1)
In section 432C of ICTA (section 432B apportionment: non-participating
5
funds), in subsection (9), for the words from “D is” to the end substitute—
“D is the sum of—
(a)
the mean of the opening and closing liabilities of the
relevant business so far as referable to basic life
assurance and general annuity business (but taking that
10
mean to be nil if it would otherwise be below nil),
reduced (but not below nil) by the mean of the opening
and closing net values of any assets linked to that
category of business, and
(b)
the mean of the opening and closing liabilities of the
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relevant business so far as referable to PHI business (but
taking that mean to be nil if it would otherwise be below
nil), reduced (but not below nil) by the mean of the
opening and closing net values of any assets linked to
that category of business.”
20
(2)
The amendment made by this section has effect in relation to periods of
account beginning on or after 1 January 2011.
(3)
For the purposes of section 432CA of ICTA, where the current period of
account begins on or after 1 January 2011, the reference in subsection (4) to
section 432C is a reference to that section as amended by this section even if the
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applicable appropriate period of account began before that date.
(4)
In subsection (3), “current period of account”, “appropriate period of account”
and “applicable” have the meaning given by section 432CA of ICTA.
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Tonnage tax: capital allowances in respect of ship leasing
(1)
Part 10 of Schedule 22 to FA 2000 (companies within tonnage tax: capital
30
allowances in respect of ship leasing) is amended as follows.
(2)
In paragraph 94 (quantitative restrictions on allowances)—
(a)
in sub-paragraph (3)(a), for “a rate of 20% per annum” substitute “the
rate determined under sub-paragraph (3A)”,
(b)
in sub-paragraph (3)(b), for “a rate of 10% per annum” substitute “the
35
rate specified in section 104D(1) of the Capital Allowances Act 2001”,
(c)
after sub-paragraph (3) insert—
   “(3A)
The rate mentioned in sub-paragraph (3)(a) is—
(a)
if the rate of the writing down allowance to which the
lessor would be entitled in respect of the expenditure
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apart from this paragraph is that specified in section
56(1) of the Capital Allowances Act 2001, that rate,
and
(b)
otherwise, the rate specified in section 104D(1) of that
Act.”,
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(d)
in sub-paragraph (4)—

Finance (No. 3) Bill
Part 2 — Income tax, corporation tax and capital gains tax
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(i)
omit the words “within each of those bands”,
(ii)
after “separate pools” insert “in accordance with sub-paragraph
(4A)”, and
(iii)
omit the second sentence, and
(e)
after that sub-paragraph insert—
5
   “(4A)
The expenditure is to be allocated to the following pools—
(a)
to the extent that it is expenditure in respect of which
the lessor is entitled to writing down allowance at the
rate specified in section 56(1) of the Capital
Allowances Act 2001, a pool to be known as “the
10
tonnage tax (main rate) pool”, and
(b)
to the extent that it is expenditure in respect of which
the lessor is entitled to writing down allowance at the
rate specified in section 104D(1) of that Act, a pool to
be known as “the tonnage tax (special rate) pool”.”
15
(3)
In paragraph 95(4)—
(a)
for “(4)” substitute “(4A)”, and
(b)
for “20%” substitute “tonnage tax (main rate)” and for “10%” substitute
“tonnage tax (special rate)”.
(4)
In paragraph 97—
20
(a)
in sub-paragraphs (2) and (3), for “20%” substitute “tonnage tax (main
rate)” and for “10%” substitute “tonnage tax (special rate)”, and
(b)
in sub-paragraph (4), for “10%” substitute “tonnage tax (special rate)”.
(5)
In paragraph 98(8), for “20%” substitute “tonnage tax (main rate)” and for
“10%” substitute “tonnage tax (special rate)”.
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(6)
In paragraph 99 (quantitative restrictions: change of circumstances taking case
out of restrictions)—
(a)
in sub-paragraph (2), for “20%” substitute “tonnage tax (main rate)”
and for “10%” substitute “tonnage tax (special rate)”,
(b)
in sub-paragraph (4), for the words from “the whole of” to the end
30
substitute “the amount that the tax written down value of the ship
would have been, at the time the change of circumstances occurs, had
paragraph 94 never applied.”, and
(c)
omit sub-paragraph (5).
(7)
In consequence of the amendments made by this section, omit section 80(5) to
35
(7) of FA 2008.
(8)
The amendments made by this section have effect in relation to chargeable
periods ending on or after 1 January 2011.
(9)
But the amendments made by this section are of no effect in relation to
expenditure incurred before that date.
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58
Transfer pricing: application of OECD principles
(1)
In section 164 of TIOPA 2010 (Part to be interpreted in accordance with OECD
principles), for subsection (4) substitute—
“(4)
In this section “the transfer pricing guidelines” means—

Finance (No. 3) Bill
Part 2 — Income tax, corporation tax and capital gains tax
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(a)
the version of the Transfer Pricing Guidelines for Multinational
Enterprises and Tax Administrations approved by the
Organisation for Economic Co-operation and Development
(OECD) on 22 July 2010, or
(b)
such other document approved and published by the OECD in
5
place of that (or a later) version or in place of those Guidelines
as is designated for the time being by order made by the
Treasury,

including, in either case, such material published by the OECD as part
of (or by way of update or supplement to) the version or other
10
document concerned as may be so designated.”
(2)
The amendment made by this section has effect (in relation to provision made
or imposed at any time)—
(a)
for corporation tax purposes, for accounting periods beginning on or
after 1 April 2011, and
15
(b)
for income tax purposes, for the tax year 2011-12 and subsequent tax
years.
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Offshore funds

In Part 8 of TIOPA 2010 (offshore funds), after section 363 insert—
“363A
Residence of offshore funds which are undertakings for collective
20
investment in transferable securities
(1)
This section applies to an offshore fund (within the meaning of section
355) which—
(a)
is, for the purposes of the UCITS Directive, an undertaking for
collective investment in transferable securities, and
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(b)
is authorised pursuant to Article 5 of the UCITS Directive in a
Member State other than the United Kingdom.
(2)
If—
(a)
the offshore fund is a body corporate which, under the law of
the Member State in which it is authorised pursuant to Article 5
30
of the UCITS Directive, is treated as resident in that State for the
purposes of any tax imposed under that law on income, and
(b)
(apart from this section) the body corporate would be treated as
resident in the United Kingdom for the purposes of any
enactment (within the meaning of section 354) relating to
35
income tax, corporation tax or capital gains tax,

the body corporate is instead to be treated as if it were not resident in
the United Kingdom.
(3)
If, by virtue of section 99 or 103A of TCGA 1992, that Act applies in
relation to the offshore fund as if it were a company, that Act applies as
40
if the company were neither resident nor ordinarily resident in the
United Kingdom (if it would not otherwise do so).
(4)
In this section “the UCITS Directive” means Directive 2009/65/EC of
the European Parliament and of the Council.”