House of Commons Amendments

Session 2010 - 12
Internet Publications
Other Bills before Parliament

Public Bill Committee: 19 May 2011
116

Finance (No. 3) continued

      (4)
In sub-paragraph (3) “relevant connected person” means a person with a

connection (direct or indirect) to an arrangement (within the meaning of Part

7A of ITEPA 2003) by virtue of which the return arises.’.

David Hanson

Kerry McCarthy

96

Clause  27,  page  19,  line  3,  at end add—

‘(2)
The Treasury shall prepare a report by 1 January 2012 on the impact of Schedule

3 on charities and community amateur sports clubs.’.

David Gauke

107

Clause  31,  page  20,  leave out lines 14 and 15 and insert—

‘(c)
subsection (2) may operate to prevent subsection (1) applying by virtue

of paragraph (b), unless subsection (2AB) applies.

(2AB)
This subsection applies if company A’s ceasing to be a member of the first group

at the same time as one or more associated companies forms part of arrangements

the main purpose, or one of the main purposes, of which is the avoidance of a

liability to corporation tax.’

David Gauke

113

Schedule  7,  page  157,  line  2,  at end insert—

‘Amendments of ICTA


In Schedule 24 to ICTA (assumptions for calculating chargeable profits,

creditable tax and corresponding United Kingdom tax of foreign companies),

in paragraph 4 (reliefs under Corporation Tax Acts dependent upon the making

of a claim or election), after sub-paragraph (2) insert—

“(2B)
For the purposes of sub-paragraph (1) an election under section 9A

of CTA 2010 (designated currency of a UK resident investment

company) is not to be regarded as an election upon which relief

under the Corporation Tax Acts is dependent, and sub-paragraph

(2)(b) does not apply in relation to such an election.

    (2C)
But if, by notice given to an officer of the Board, the United

Kingdom resident company which has or, as the case may be, any

two or more United Kingdom resident companies which together

have, a majority interest in the company so request, the company

shall be assumed (subject to section 9A(2) of CTA 2010) to have

made an election under section 9A of that Act in the form specified

in the notice (and accordingly that section and section 9B of that

Act apply to determine the effect (if any) of that election).”’

Public Bill Committee: 19 May 2011
117

Finance (No. 3) continued

David Gauke

114

Schedule  7,  page  157,  line  15,  after ‘arises’ insert ‘(“the relevant period”)’.

David Gauke

115

Schedule  7,  page  157,  leave out lines 16 to 19 and insert—

‘(b)
a change in the company’s functional currency (within the meaning of

section 17(4) of that Act) as between the relevant period and a period of

account ending in the 12 months immediately preceding that period.’.

David Gauke

116

Schedule  7,  page  157,  line  31,  after ‘arises’ insert ‘(“the relevant period”)’.

David Gauke

117

Schedule  7,  page  157,  leave out lines 32 to 35 and insert—

‘(b)
a change in the company’s functional currency (within the meaning of

section 17(4) of that Act) as between the relevant period and a period of

account ending in the 12 months immediately preceding that period.’.

David Gauke

108

Schedule  8,  page  159,  line  11,  leave out from ‘earnings’ to end of line 12 and insert

‘specified in regulations made by the Treasury under this paragraph.’.

David Gauke

109

Schedule  8,  page  159,  leave out lines 13 to 33 and insert—

‘(4)
In subsection (1)(b) “excluded amounts” means amounts specified in regulations

made by the Treasury under this subsection.’.

David Gauke

110

Schedule  8,  page  160,  leave out lines 40 to 43 and insert—

‘( )
In subsection (1)—

“relevant earnings” has the same meaning as in subsection (1)(a) of section

270B (see subsection (3) of that section), and

“excluded amounts” has the same meaning as in subsection (1)(b) of section

270B (see subsection (4) of that section).’.

David Gauke

111

Schedule  8,  page  161,  line  38,  at end insert—

Public Bill Committee: 19 May 2011
118

Finance (No. 3) continued

‘
Regulations made under section 270B(3)(b) or (4) of ITEPA 2003 (inserted by

paragraph 3) on or before 31 December 2011 may have retrospective effect in

relation to the tax year 2011-12.’.

David Hanson

Kerry McCarthy

97

Clause  40,  page  26,  line  6,  at end add—

‘(7)
The Treasury shall, within three months of the passing of this Act publish final

details of a new UK-wide Government contribution-based tax-free children’s

savings scheme for looked-after children.’.

David Hanson

Kerry McCarthy

98

Clause  40,  page  26,  line  6,  at end add—

‘(7)
The Government will, by 30 September 2011, publish a report on—

(a)
children’s savings accounts, and

(b)
saving across society,


including the impact of Government policy.’.

David Hanson

Kerry McCarthy

99

Clause  43,  page  27,  line  18,  leave out subsection (6).

David Gauke

112

Schedule  10,  page  171,  line  22,  at end insert—

    ‘(4)
But where an early commencement election is made in relation to a group—

(a)
sub-paragraphs (1) and (3) apply in relation to that group as if the

references in those sub-paragraphs to the passing of this Act were

references to 1 April 2011, and

(b)
sub-paragraph (2) applies in relation to any disposal of shares by a

member of that group as if the reference in that sub-paragraph to the

passing of this Act were a reference to 1 April 2011.

      (5)
An early commencement election in relation to a group means an election

made for the purposes of this paragraph by the principal company of the group.

      (6)
If a company ceases to be a member of a group in the period which begins with

1 April 2011 and ends with the passing of this Act, an early commencement

election may be made or revoked in relation to the group only with the consent

of that company contained in a notice which accompanies the election or

revocation.

Public Bill Committee: 19 May 2011
119

Finance (No. 3) continued

      (7)
Where an early commencement election is revoked, the election is treated as

never having had effect.

      (8)
An early commencement election may not be made or revoked after 31 March

2012 (and paragraph 3(1)(b) of Schedule 1A to the Management Act

(amendment of elections etc) does not apply in relation to an early

commencement election).’

David Hanson

Kerry McCarthy

100

Clause  47,  page  28,  line  11,  at end add—

‘(2)
Notwithstanding the provisions of paragraph 14 of Schedule 12, the Schedule will

not come into force until a full impact assessment on developing countries’ tax

revenue has been laid before and approved by the House of Commons.’.

David Gauke

118


Schedule  12,  page  189,  leave out lines 8 to 13 and insert—

‘15B (1)
An exempt period begins in relation to a company (“X”) at a time (“the

relevant time”) when—

(a)
X is resident outside the United Kingdom,

(b)
X is controlled by persons resident in the United Kingdom,

(c)
there is at least one relevant UK corporate investor in X, and

(d)
the requirements of paragraph 15C or 15D are met.

      (2)
There is a “relevant UK corporate investor in X” at a particular time if, at that

time, there is a company which—

(a)
is resident in the United Kingdom, and

(b)
would, on the assumptions set out in sub-paragraph (3), be a company

to which an apportionment of X’s chargeable profits for the relevant

accounting period would fall to be made in circumstances where

section 747(5) would not prevent tax being chargeable on the

company under section 747(4).

      (3)
The assumptions are—

(a)
X has chargeable profits for the relevant accounting period,

(b)
an apportionment of those profits falls to be made under section 747(3)

for that period, and

(c)
no reduction of those profits arises under section 751A, 751AA or

751AB.

      (4)
“The relevant accounting period” means the accounting period of X in which

the time mentioned in sub-paragraph (2) falls.

15C(1)
The requirements of this paragraph are that—

(a)
no company was, at any time before the relevant time, a relevant UK

corporate investor in X,’.

Public Bill Committee: 19 May 2011
120

Finance (No. 3) continued

David Gauke

119


Schedule  12,  page  189,  line  17,  leave out ‘such control’ and insert ‘the control of

persons resident in the United Kingdom’.

David Gauke

120


Schedule  12,  page  190,  leave out lines 16 to 19 and insert—

‘(c)
no company was, at any time during that accounting period, a relevant

UK corporate investor in X,

(d)
no company was, immediately before the relevant time, a relevant UK

corporate investor in X,’.

David Gauke

121


Schedule  12,  page  190,  line  26,  at end insert—

    ‘(2)
In determining for the purposes of sub-paragraph (1)(e)(ii) whether a company

is under the control of two or more bodies corporate taken together, a body

corporate which holds less than 10% of the issued ordinary shares of that

company is to be disregarded.

      (3)
For the purposes of sub-paragraph (2), a body corporate is treated as holding

any shares held by persons who are connected or associated with the body

corporate.’.

David Gauke

122


Schedule  12,  page  192,  line  14,  at end insert—

‘“relevant UK corporate investor in X” has the meaning given by paragraph

15B(2);’.

David Gauke

123


Schedule  13,  page  199,  line  2,  leave out ‘the relevant profits’ and insert ‘that’.

David Gauke

124


Schedule  13,  page  205,  leave out lines 3 to 12 and insert—

‘(b)
there is a transferred total opening negative amount in relation to the

business transferred.

(2)
In a case where the transferor had not made an election under section 18A before

the transfer took place, or such an election had not had effect before that time, the

“transferred total opening negative amount” is the amount that would have been

the total opening negative amount in the case of the transferor at the beginning of

the transferor’s first relevant accounting period if—

(a)
the only business carried on by the transferor was the business

transferred,

(b)
the transfer had not taken place,

(c)
the transferor’s first relevant accounting period had begun on the day

after the transfer day, and

Public Bill Committee: 19 May 2011
121

Finance (No. 3) continued

(d)
any reference in section 18J(3) to the accounting period in which the

election is made were a reference to the period beginning with the

accounting period in which the transfer took place and ending with the

transfer day.

(3)
In a case where an election made by the transferor under section 18A had effect

before the transfer took place, the “transferred total opening negative amount”

is—

(a)
the amount that would have been the total opening negative amount in the

case of the transferor on the transfer day if the accounting period in which

the transfer took place had ended on that day (the “remaining total

opening negative amount”), less

(b)
the amount that would have been the remaining total opening negative

amount if the transferor had never carried on the business transferred.


But the transferred total opening negative amount cannot be below nil.

(4)
In a case where—

(a)
an election made by the transferee under section 18A first has effect after

the transfer takes place, and

(b)
the accounting period of the transferee in which the transfer took place is

an affected prior accounting period for the purposes of section 18J(2),


there is to be added to the adjusted foreign permanent establishments amount in

relation to that accounting period a negative amount equal to so much (if any) of

the transferred total opening negative amount as is attributable to profits or losses

arising after the beginning of the earliest affected prior accounting period of the

transferee.

(5)
In a case where an election made by the transferee under section 18A had effect

before the transfer took place, sections 18K to 18N have effect in relation to the

transferee and the transferred total opening negative amount as if—

(a)
any reference to the total opening negative amount were a reference to

the transferred total opening negative amount,

(b)
any reference to the first relevant accounting period were a reference to

the period beginning with the day after the transfer day and ending

immediately before the start of the next accounting period of the

transferee, and

(c)
the requirement in section 18L(2) that a streaming election be made at the

same time as the company’s election under section 18A did not apply.

(6)
Where for the purposes of this section it is necessary to apportion the profits and

losses for any accounting period to different parts of that period, that

apportionment is to be made on a just and reasonable basis.

(7)
Any amount included in a transferred total opening negative amount is to be

disregarded in the application of sections 18J to 18N in the case of the transferor

after the transfer day.

(8)
In this section “the transfer day” means the day on which the transfer of the

business takes place.’.

David Gauke

125


Schedule  13,  page  206,  leave out from the beginning of line 43 to the end of line 6 on

page 207.

David Gauke

126


Schedule  13,  page  207,  line  8,  at end insert—

Public Bill Committee: 19 May 2011
122

Finance (No. 3) continued

‘7A
In section 845(4) (exceptions to rule that transfer between company and related

party treated as being at market value)—

(a)
omit the “and” at the end of paragraph (c), and

(b)
after that paragraph insert—

“(ca)
section 848A (assets held for purposes of exempt

foreign permanent establishments), and”.

7B
After section 848 insert—

“848A
Assets held for purposes of exempt foreign permanent establishments

(1)
This section applies if—

(a)
subsection (1) of section 775 (transfers within a group) would

apply in relation to the transfer but for paragraph (c) of

subsection (4) of that section, and

(b)
the asset 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 transfer is treated for the purposes of this Part as being at the

following value—
WDV + FPEA


where—

WDV is the tax written-down value of the asset, and

FPEA is the amount which, for the purposes of Chapter 3A of Part 2,

would in the case of the transferor be the foreign permanent

establishments amount attributable to the transfer for the accounting

period in which it took place if the transfer were at market value.”’.

David Gauke

127


Schedule  13,  page  208,  line  18,  at end insert ‘(with the result that that amount

includes the amount which for the purposes of that Chapter would in the case of the

company be the foreign permanent establishments amount attributable to the disposal for

the accounting period in which it was made if the disposal were not a no gain/no loss

disposal).

( )
For the purposes of this section a no gain/no loss disposal is one on which by

virtue of section 152 or any of the no gain/no loss provisions neither a gain nor a

loss accrues to the company making the disposal.”’.

David Hanson

Kerry McCarthy

101

Schedule  13,  page  213,  line  31,  leave out ‘on the day on which this Act is passed’

and insert ‘when a full impact assessment on developing countries’ tax revenue has been

laid before and approved by the House of Commons.’.

David Gauke

128


Schedule  13,  page  215,  line  28,  at end insert—

‘33A (1)
This paragraph applies if—

(a)
section 18O of CTA 2009 (as inserted by this Schedule) applies in

relation to a transfer of business, and



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