PART III continued CHAPTER II continued
Schedule 22 to this Act (tonnage tax) has effect.
(1) In section 365(3) of the Taxes Act 1988 (loans to buy annuities)—
(a) for the words “the qualifying maximum for the year of assessment”, in the first place where they occur, there shall be substituted the words “the sum of £30,000”; and
(b) for those words, in the second place where they occur, there shall be substituted the words “that sum”.
(2) In section 353(1G) of that Act (percentage of interest eligible for relief), for the words from “the percentage” to the end there shall be substituted “23 per cent.”.
(3) In section 369(1A) of that Act (deductible percentage where interest payable under deduction of tax), for the words from “the percentage” to the end there shall be substituted “23 per cent.”.
(4) This section has effect in relation to payments of interest made on or after 6th April 2000.
(1) This section applies to—
(a) the scheme under section 2(2) of the [1973 c. 50.] Employment and Training Act 1973 known as “New Deal 50plus”, and
(b) the corresponding scheme under section 1 of the [1950 c. 29 (N.I.).] Employment and Training Act (Northern Ireland) 1950.
(2) A payment to a person as a participant in the scheme by way of an employment credit or training grant under the scheme is exempt from income tax and, accordingly, shall be disregarded in computing the amount of any receipts brought into account for income tax purposes.
(3) This section applies to any such payment made on or after 25th October 1999.
(1) A payment to a person as a participant in an employment zone programme is exempt from income tax and, accordingly, shall be disregarded in computing the amount of any receipts brought into account for income tax purposes.
(2) An “employment zone programme” means an employment zone programme established for an area or areas designated under section 60 of the [1999 c. 30.] Welfare Reform and Pensions Act 1999.
(3) This section applies to any such payment made on or after 6th April 2000.
(1) In section 209 of the Taxes Act 1988 (meaning of “distribution”), after subsection (3A) insert—
“(3B) For the purposes of subsection (2)(e)(iii) above the consideration given by the company for the use of the principal secured shall not be treated as being to any extent dependent on the results of the company’s business or any part of it by reason only of the fact that the terms of the security provide—
(a) for the consideration to be reduced in the event of the results improving, or
(b) for the consideration to be increased in the event of the results deteriorating.”.
This subsection applies to payments made on or after 21st March 2000.
(2) In Schedule 18 to the Taxes Act 1988 (group relief: equity holders and profits available for distribution), in paragraph 1(5E)—
(a) in paragraph (a), after “improving” insert “, or for the rate of interest to be increased in the event of the results of the company’s business or any part of it deteriorating”; and
(b) in paragraph (b), after “increasing” insert “, or for the rate of interest to be increased in the event of the value of any of the company’s assets diminishing”.
This subsection applies for the purposes of determining whether, at any time on or after 21st March 2000, a loan is a normal commercial loan for the purposes of paragraph 1(1)(b) of Schedule 18 to the Taxes Act 1988.
Schedule 23 to this Act has effect with respect to the treatment of amounts relating to the acquisition, disposal or revaluation of—
(a) licences granted under section 1 of the [1949 c. 54.] Wireless Telegraphy Act 1949 in accordance with regulations made under section 3 of the [1998 c. 6.] Wireless Telegraphy Act 1998 (bidding for licences),
(b) indefeasible rights to use a telecommunications cable system, or
(c) rights derived, directly or indirectly, from a right within paragraph (a) or (b).
In sections 79(11) and 79A(7) of the Taxes Act 1988 (relief for contributions to local enterprise agencies, business links and similar organisations: time limits), the words “and before 1st April 2000” shall cease to have effect.
In Chapter V of Part IV of the Taxes Act 1988 (provisions relating to the Schedule D charge: deductions), after section 91B (waste disposal: site preparation), insert—
(1) This section applies where—
(a) site preparation expenditure has been incurred in relation to a waste disposal site,
(b) that expenditure was incurred by a person in the course of carrying on a trade, and
(c) on or after 21st March 2000—
(i) that person (“the predecessor”) ceases to carry on that trade, or ceases to carry it on so far as it relates to that site, and
(ii) another person (“the successor”) begins to carry on that trade, or to carry on in the course of a trade the activities formerly carried on by the predecessor in relation to that site.
(2) If the conditions specified in the following provisions of this section are met, then, for the purposes of section 91B above—
(a) the trade carried on by the successor shall be treated as the same trade as that carried on by the predecessor, and
(b) allowances shall be made to the successor (and not to the predecessor) as if everything done to or by the predecessor had been done to or by the successor.
(3) The first condition is that the whole of the site in question is transferred to the successor.
Provided the successor holds an estate or interest in the whole of the site, it need not be the same as that held by the predecessor.
(4) The second condition is that the successor, at the time he first deposits waste material at the site, holds a relevant licence in respect of the site which is then in force.
(5) Expressions used in this section have the same meaning as in section 91B.”.
(1) In section 165(1) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (relief for gifts of business assets), in the closing words (which list the provisions restricting relief), for “sections 166 and 167” substitute “sections 166, 167 and 169”.
(2) In section 260(1) of that Act (gifts on which inheritance tax is chargeable etc.), in the closing words (which list the provisions restricting relief), for “section 261” substitute “sections 169 and 261”.
(3) In section 165(2)(b)(i) of, and paragraph 2(2)(b)(i) of Schedule 7 to, that Act (shares or securities in respect of which gifts relief may be claimed), for “neither listed on a recognised stock exchange nor dealt in on the Unlisted Securities Market” substitute “not listed on a recognised stock exchange”.
(4) In section 165(3)(b) of that Act (disposals of shares or securities excepted from gifts relief), after “shares or securities,” insert “the transferee is a company or”.
(5) This section has effect in relation to disposals made on or after 9th November 1999.
(1) After section 76 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, insert—
Schedule 4A to this Act has effect with respect to disposals for consideration of an interest in settled property.”.
(2) After Schedule 4 to that Act insert the Schedule 4A set out in Schedule 24 to this Act.
(3) This section applies to any disposal of an interest in settled property made, or the effective completion of which falls, on or after 21st March 2000.
Expressions used in this subsection have the same meaning as in Schedule 4A to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.
(1) After section 76A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (inserted by section 91(1) above), insert—
Schedule 4B to this Act has effect with respect to transfers of value by trustees that are, in accordance with the Schedule, treated as linked with trustee borrowing.”.
(2) After Schedule 4A to that Act (inserted by section 91(2) above), insert the Schedule 4B set out in Schedule 25 to this Act.
(3) After section 85 of that Act, insert—
Schedule 4C to this Act has effect with respect to the attribution to beneficiaries of gains accruing under Schedule 4B.”.
(4) After Schedule 4B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (inserted by subsection (2) above), insert the Schedule 4C set out in Part I of Schedule 26 to this Act.
The consequential amendments in Part II of Schedule 26 to this Act have effect.
(5) The provisions of this section have effect in relation to any transfer of value in relation to which the material time is on or after 21st March 2000.
The expressions “transfer of value” and “material time” have the same meaning in this subsection as in Schedule 4B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.
(1) After section 79 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, insert—
(1) This section applies to a chargeable gain accruing to the trustees of a settlement where—
(a) in computing the gain, the allowable expenditure is reduced in consequence, directly or indirectly, of a claim to gifts relief in relation to an earlier disposal to the trustees;
(b) the transferor on that earlier disposal, or any person connected with the transferor, has at any time—
(i) acquired an interest in the settled property, or
(ii) entered into an arrangement to acquire such an interest; and
(c) in connection with that acquisition or arrangement any person has at any time received, or become entitled to receive, any consideration.
(2) Where this section applies to a chargeable gain, no allowable losses accruing to the trustees (in the year in which the gain accrues or any earlier year) may be set against the gain.
This applies to the whole of the chargeable gain (and not just the element deferred as a result of the claim to gifts relief).
(3) In this section—
(a) “gifts relief” means relief under section 165 or 260; and
(b) references to losses not being allowed to be set against a chargeable gain are to the losses not being allowed as a deduction against chargeable gains to the extent that they include that gain.
(4) The references in subsection (1)(b) above to an interest in settled property have the same meaning as in Schedule 4A.”.
(2) This section applies to gains accruing on or after 21st March 2000.
(1) After section 79A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (inserted by section 93 above), insert—
(1) This section applies where trustees of a settlement are participators—
(a) in a close company, or
(b) in a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom.
For this purpose “participator” has the same meaning as in section 13.
(2) Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing a charge to tax arising by virtue of the attribution to the trustees under section 13, by reason of their participation in the company mentioned in subsection (1) above, of any part of a chargeable gain accruing to a company that is not resident in the United Kingdom.
(3) Where this section applies and—
(a) a chargeable gain accrues to a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom, and
(b) all or part of the chargeable gain is treated under section 13(2) as accruing to a close company which is not chargeable to corporation tax in respect of the gain by reason of double taxation relief arrangements, and
(c) had the company mentioned in paragraph (b) (and any other relevant company) not been resident in the United Kingdom, all or part of the chargeable gain would have been attributed to the trustees by reason of their participation in the company mentioned in subsection (1) above,
section 13(9) shall apply as if the company mentioned in paragraph (b) above (and any other relevant company) were not resident in the United Kingdom.
(4) The references in subsection (3) above to “any other relevant company” are to any other company which if it were not resident in the United Kingdom would be a company in relation to which section 13(9) applied with the result that all or part of the chargeable gain was attributed to the trustees as mentioned in that subsection.”.
(2) This section applies where a chargeable gain accrues on or after 21st March 2000 to a company that is not resident in the United Kingdom.
(1) Section 85 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (disposal of interest in non-resident settlements) is amended as follows.
(2) In subsection (2) (market value uplift for interest where trustees become non-resident) for “Subject to subsections (4) and (9) below,” substitute “Subject to subsections (4), (9) and (10) below,”.
(3) In subsection (5) (market value uplift for interest where trustees become treaty non-resident), at the beginning insert “Subject to subsection (10) below,”.
(4) After subsection (9) add—
“(10) Subsection (3) or (7) above does not apply to the disposal of an interest created by or arising under a settlement which has relevant offshore gains at the material time.
The material time is—
(a) in relation to subsection (3) above, the relevant time within the meaning of section 80;
(b) in relation to subsection (7) above, the time found under subsection (8) above.
(11) For the purposes of subsection (10) above, a settlement has relevant offshore gains at any time if, were the year of assessment to end at that time, there would be an amount of trust gains which by virtue of section 89(2) or paragraph 8(3) of Schedule 4C would be available to be treated as chargeable gains accruing to any beneficiaries of the settlement receiving capital payments in the following year of assessment.”.
(5) This section applies where the material time (within the meaning of section 85(10) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, inserted by subsection (4) above) falls on or after 21st March 2000.
(1) In section 96(5) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (capital payments by trustees to non-resident company), in the opening words (which refer to the persons by whom the company is controlled), omit “and each of them is then resident or ordinarily resident in the United Kingdom”.
(2) This section applies to payments received on or after 21st March 2000.
Schedule 27 to this Act has effect.
In that Schedule—
Part I makes amendments of Chapter IV of Part X of the Taxes Act 1988 (group relief), and
Part II contains consequential amendments.
(1) Schedule 28 to this Act has effect with respect to the recovery of unpaid corporation tax payable by a company not resident in the United Kingdom.
(2) The provisions of that Schedule have effect in relation to corporation tax for accounting periods ending on or after 1st April 2000.
In paragraph 77 of Schedule 18 to the [1998 c. 36.] Finance Act 1998 (power to make provision by regulations about joint arrangements for group relief), in sub-paragraph (1)(a) (arrangements permitting claim for relief without copy of notice of consent to surrender), after “the surrendering company” insert “, provided authority for the claim being so made is given by a company which is authorised in relation to the claimant company as mentioned in paragraph (b)”.
(1) For section 403C of the Taxes Act 1988 (special rules for consortium cases) substitute—
(1) In the case of a consortium claim the amount that may be set off against the total profits of the claimant company is limited by this section.
(2) Where the claimant company is a member of the consortium, the amount that may be set off against the total profits of that company for the overlapping period is limited to the relevant fraction of the surrenderable amount.
That fraction is whichever is the lowest in that period of the following percentages—
(a) the percentage of the ordinary share capital of the surrendering company that is beneficially owned by the claimant company;
(b) the percentage to which the claimant company is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and
(c) the percentage to which the claimant company would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding-up.
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
(3) Where the surrendering company is a member of the consortium, the amount that may be set off against the total profits of the claimant company for the overlapping period is limited to the relevant fraction of the claimant company’s total profits for the overlapping period.
That fraction is whichever is the lowest in that period of the following percentages—
(a) the percentage of the ordinary share capital of the claimant company that is beneficially owned by the surrendering company;
(b) the percentage to which the surrendering company is beneficially entitled of any profits available for distribution to equity holders of the claimant company; and
(c) the percentage to which the surrendering company would be beneficially entitled of any assets of the claimant company available for distribution to its equity holders on a winding-up.
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
(4) In any case where the claimant or surrendering company is a subsidiary of a holding company which is owned by a consortium, for the references in subsection (2) or (3) above to the claimant or surrendering company there shall be substituted references to the holding company.
(5) Expressions used in this section and in section 403A have the same meanings in this section as in that section.
(6) Schedule 18 has effect for supplementing this section.”.
(2) In section 406(6) of the Taxes Act 1988 (claims relating to losses etc. of consortium company or group member), for “accounting period in respect of which the member’s share in the consortium” substitute “overlapping period in respect of which the relevant fraction”.
(3) The following provisions shall cease to have effect—
(a) in section 402(4) of the Taxes Act 1988, the words from “if the share in the consortium” to “is nil or”; and
(b) in section 413 of that Act, subsections (8) and (9).
(4) In Schedule 18 to the Taxes Act 1988—
(a) in paragraphs 1(1), 2(1), 3(1), 4(3) and (4), 5A(3) and (4), 5C(3) and (4), 5D(3) and (4), 5E(3) and (4) and 6, for “section 413(7) to (9)” substitute “sections 403C and 413(7)”; and
(b) in paragraph 7(1)(b), for “subsection (8) of that section” substitute “section 403C”.
(5) The amendments in this section shall be deemed always to have had effect.
(1) After section 171 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 insert—
(1) This section applies where—
(a) two companies (“A” and “B”) are members of a group of companies; and
(b) A disposes of an asset to a person who is not a member of the group (“C”).
(2) Subject to subsections (3) and (4) below, A and B may, by notice in writing to an officer of the Board, jointly elect that, for the purposes of corporation tax on chargeable gains—
(a) the asset, or any part of it, shall be deemed to have been transferred by A to B immediately before the disposal to C;
(b) section 171(1) shall be deemed to have applied to that transfer; and
(c) the disposal of the asset or part to C shall be deemed to have been made by B.
(3) No election may be made under subsection (2) above unless section 171(1) would have applied to an actual transfer of the asset or part from A to B.
(4) An election under that subsection must be made before the second anniversary of the end of the accounting period of A in which the disposal to C was made.
(5) Any payment by A to B, or by B to A, in pursuance of an agreement between them in connection with the election—
(a) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and
(b) shall not for any purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income,
provided it does not exceed the amount of the chargeable gain or allowable loss that is treated, as a result of the disposal, as accruing to B.”.
(2) This section has effect in relation to disposals made on or after 1st April 2000.
Schedule 29 to this Act has effect.
In that Schedule—
Part I makes provision with respect to the application of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 to companies not resident in the United Kingdom and groups of companies etc,
Part II contains minor and consequential amendments, and
Part III contains transitional provisions.
Schedule 30 to this Act (double taxation relief) shall have effect.
Schedule 31 to this Act (which makes provision in relation to controlled foreign companies) shall have effect.
(1) For sections 92 to 95 of the [1993 c. 34.] Finance Act 1993 there shall be substituted—
(1) Where a company carries on a business, the profits or losses of the business for an accounting period shall for the purposes of corporation tax be computed and expressed in sterling; but this is subject to section 93 below.
(2) In this section—
“losses” includes management expenses and any allowances falling to be made under section 28 or 61(1) of the [1990 c. 1.] Capital Allowances Act 1990;
“profits” includes gains, income and any charges falling to be made under section 28 or 61(1) of that Act.
(1) This section applies where in an accounting period a company carries on a business and either the first condition or the second condition is fulfilled.
(2) The first condition is that—
(a) the accounts of the company as a whole are prepared in a currency other than sterling in accordance with normal accounting practice; and
(b) in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in such a currency in accordance with such practice.
(3) The second condition is that—
(a) the accounts of the company as a whole are prepared in sterling but, so far as relating to the business, they are prepared, using the closing rate/net investment method, from financial statements prepared in a currency other than sterling; or
(b) in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in sterling but, so far as relating to the business, it is prepared, using that method, from financial statements prepared in such a currency.
(4) The profits or losses of the business for an accounting period shall for the purposes of corporation tax be found by—
(a) taking the amount of all the profits and losses of the business for the period computed and expressed in the relevant foreign currency;
(b) taking account of any of the following which are so computed and expressed—
(i) any management expenses brought forward under section 75(3) of the Taxes Act 1988 from an earlier accounting period;
(ii) any losses of the business brought forward under section 392B or 393 of that Act from such a period; and
(iii) any non-trading deficits on loan relationships brought forward under section 83 of the [1996 c. 8.] Finance Act 1996 from the previous accounting period; and
(c) taking the sterling equivalent of the amount found by applying paragraphs (a) and (b) above.
(5) In the application of section 22B, 34, 35, 38C, 38D or 79A of the [1990 c. 1.] Capital Allowances Act 1990 for the purposes of subsection (4)(a) or (b) above, it shall be assumed that any sterling amount mentioned in any of those sections is its equivalent expressed in the relevant foreign currency.
(6) Where in an accounting period—
(a) a company carries on different parts of a business through different branches (whether within or outside the United Kingdom); and
(b) this section would apply differently in relation to different parts if they were separate businesses,
those parts shall be treated for the purposes of this section as if they were separate businesses for that period.
(7) In this section, unless the context otherwise requires—
“accounts”, in relation to a company, means—
the annual accounts of the company prepared in accordance with Part VII of the [1985 c. 6.] Companies Act 1985 or Part VIII of the [S.I. 1986/1032 (N.I.6).] Companies (Northern Ireland) Order 1986; or
if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of its home State; or
if the company is not so required to keep accounts, such of its accounts as most closely correspond to accounts which it would have been required to prepare if the provisions of that Part applied to it;
“branch” includes any collection of assets and liabilities;
“the closing rate/net investment method” means the method so called as described under the title “Foreign currency translation” in the Statement of Standard Accounting Practice issued in April 1983 by the Institute of Chartered Accountants in England and Wales;
“home State”, in relation to a company, means the country or territory under whose laws the company is incorporated;
“losses” has the same meaning as in section 92 above except that it does not include allowable losses within the meaning of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992;
“profits” has the same meaning as in section 92 above except that it does not include chargeable gains within the meaning of that Act;
“the relevant foreign currency” means the currency other than sterling or, where the first condition is fulfilled and two different such currencies are involved, the currency in which the return of accounts is prepared;
“return of accounts”, in relation to a branch in the United Kingdom, means a return of such accounts of the branch as may be required by the Inland Revenue under paragraph 3 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters).