House of Commons Public Bill Committee Proceedings

Session 2010 - 12
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Other Bills before Parliament

35

House of Commons

Tuesday 7 June 2011

Public Bill Committee Proceedings

Finance (No. 3) Bill

(except Clauses 4, 7, 10, 19, 35 and 72)

[Eleventh and Twelfth Sittings]

Clause 46 Agreed to.

Schedule 11 Agreed to.

David Hanson

Kerry McCarthy

Negatived on division  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.’.

Clause Agreed to.

David Gauke

Agreed to  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

Public Bill Committee Proceedings: 7 June 2011
36

Finance (N, continued

(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,’.

David Gauke

Agreed to  119

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

persons resident in the United Kingdom’.

David Gauke

Agreed to  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

Agreed to  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

Agreed to  122

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

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

15B(2);’.

Schedule, as amended, Agreed to.

Clause 48 Agreed to.

Public Bill Committee Proceedings: 7 June 2011
37

Finance (N, continued

David Gauke

Agreed to  123

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

David Gauke

Agreed to  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

(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

Public Bill Committee Proceedings: 7 June 2011
38

Finance (N, continued

(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

Agreed to  125

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

page 207.

David Gauke

Agreed to  126

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

‘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—


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

Agreed to  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

Public Bill Committee Proceedings: 7 June 2011
39

Finance (N, continued

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

Negatived on division  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

Agreed to  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

(b)
(apart from this paragraph) the effect of subsection (4) of that section

would be that a relevant losses amount falling within paragraph

33(1)(a) would be ignored for the purposes of section 18J(2) of that

Act.

      (2)
There is to be added to the adjusted foreign permanent establishments amount

in relation to the accounting period of the transferee in which the transfer took

place a negative amount equal to that relevant losses amount.’.

Schedule, as amended, Agreed to.

Clauses 49 to 52 Agreed to.

Schedule 14 Agreed to.

David Gauke

Agreed to  185

Clause  53,  page  32,  leave out lines 18 to 32 and insert—

‘(7)
Where a person prepares or is required to prepare accounts in accordance with

new standards for a period of account, the Taxes Acts (other than this section)

have effect as if the person prepared or was required to prepare accounts, for that

period, in accordance with the corresponding old standards.

(8)
For the purposes of subsection (7)—’.

David Gauke

Agreed to  186

Clause  53,  page  33,  leave out lines 3 and 4.

Clause, as amended, Agreed to.

Public Bill Committee Proceedings: 7 June 2011
40

Finance (N, continued

Clauses 54 to 56 Agreed to.

Bill Esterson

John McDonnell

Not selected  193


Clause  57,  page  35,  line  38,  at end insert ‘provided that if a company to which this

section applies does not train one UK rating for every fifteen crew employed, and the

capital allowances claimable by the company under this section would be lower than if

the section had not come into force, this section shall be deemed not to have come into

force in respect of that company.’.

Clause Agreed to.

Clauses 58 to 64 Agreed to.

Schedule 15 Agreed to.

Clause 65 Agreed to.

Schedule 16 Agreed to.

Mr David Hanson

Kerry McCarthy

Negatived on division  188

Clause  66,  page  39,  line  7,  at end add—


‘The Chancellor of the Exchequer must, no later than 1 April 2012, compile and

lay before the House of Commons a report containing an assessment of the impact

of this section and Schedule 17, including the impact in creating marginal

effective rates of taxation of over 100 per cent. (when considering the impact of

this section and the relevant income tax rates in force)’.

Clause Agreed to.

David Gauke

Agreed to  129

Schedule  17,  page  277,  line  23,  leave out from ‘adjustment’ to end of line 25 and

insert ‘is reflected in the closing amount the amount of the adjustment is to be added to

the closing amount.

(8D)
But no amount is to be added under subsection (8C) by reason of an adjustment

made in consequence of the scheme administrator satisfying a liability under

section 237B in a case where subsection (6) of that section applied.”’.

Public Bill Committee Proceedings: 7 June 2011
41

Finance (N, continued

David Gauke

Agreed to  130

Schedule  17,  page  280,  line  2,  after ‘reduction’ insert ‘(to the extent that it is not

reflected in an amount added under subsection (8A))’.

David Gauke

Agreed to  131

Schedule  17,  page  280,  line  16,  leave out from ‘event 2,’ to end of line 17 and insert

‘the annual rate of the pension to which the individual became entitled,’.

David Gauke

Agreed to  132

Schedule  17,  page  280,  line  27,  leave out from ‘adjustment’ to end of line 28 and

insert ‘is reflected in PE or LSE the amount of the adjustment is to be added to PE or LSE.

(8D)
But no amount is to be added under subsection (8C) by reason of an adjustment

made in consequence of the scheme administrator satisfying a liability under

section 237B in a case where subsection (6) of that section applied.”’.

David Gauke

Agreed to  133

Schedule  17,  page  285,  line  3,  leave out ‘the day before’.

Schedule, as amended, Agreed to.

Clause 67 Agreed to.

Mr David Hanson

Kerry McCarthy

Negatived on division  189

Schedule  18,  page  290,  line  2,  leave out ‘£18,000’ and insert ‘£21,500’.

Mr David Hanson

Kerry McCarthy

Not called  190

Schedule  18,  page  290,  line  9,  leave out ‘£18,000’ and insert ‘£21,500’.

Mr David Hanson

Kerry McCarthy

Not called  191

Schedule  18,  page  290,  line  17,  leave out ‘£18,000’ and insert ‘£21,500’.

Mr David Hanson

Kerry McCarthy

Not called  192

Schedule  18,  page  290,  line  24,  leave out ‘£18,000’ and insert ‘£21,500’.

Schedule Agreed to.



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