LegalizeReform history
Income and Corporation Taxes Act 1988
100 versions
· 1988-02-09
2022-07-14
Income and Corporation Taxes Act 1988
2019-07-05
Income and Corporation Taxes Act 1988
2019-02-12
Income and Corporation Taxes Act 1988
2017-11-16
Income and Corporation Taxes Act 1988
2017-04-27
Income and Corporation Taxes Act 1988
2017-04-06
Income and Corporation Taxes Act 1988
2016-12-14
Income and Corporation Taxes Act 1988
2016-09-15
Income and Corporation Taxes Act 1988
2016-08-12
Income and Corporation Taxes Act 1988
2016-06-16
Income and Corporation Taxes Act 1988
2015-03-26
Income and Corporation Taxes Act 1988
2015-02-12
Income and Corporation Taxes Act 1988
2014-08-01
Income and Corporation Taxes Act 1988
2014-07-17
Income and Corporation Taxes Act 1988
2014-01-01
Income and Corporation Taxes Act 1988
2013-07-17
Income and Corporation Taxes Act 1988
2013-04-06
Income and Corporation Taxes Act 1988
2012-07-17
Income and Corporation Taxes Act 1988
2012-04-01
Income and Corporation Taxes Act 1988
2012-03-14
Income and Corporation Taxes Act 1988
2011-08-11
Income and Corporation Taxes Act 1988
2011-07-19
Income and Corporation Taxes Act 1988
2011-06-16
Income and Corporation Taxes Act 1988
2011-02-25
Income and Corporation Taxes Act 1988
2010-12-16
Income and Corporation Taxes Act 1988
2010-10-01
Income and Corporation Taxes Act 1988
2010-07-27
Income and Corporation Taxes Act 1988
2010-04-08
Income and Corporation Taxes Act 1988
2010-04-01
Income and Corporation Taxes Act 1988
2009-12-01
Income and Corporation Taxes Act 1988
2009-11-11
Income and Corporation Taxes Act 1988
2009-10-01
Income and Corporation Taxes Act 1988
2009-09-01
Income and Corporation Taxes Act 1988
2009-08-13
Income and Corporation Taxes Act 1988
2009-07-21
Income and Corporation Taxes Act 1988
2009-06-01
Income and Corporation Taxes Act 1988
2009-04-23
Income and Corporation Taxes Act 1988
2009-04-22
Income and Corporation Taxes Act 1988
2009-04-06
Income and Corporation Taxes Act 1988
2009-04-01
Income and Corporation Taxes Act 1988
2009-02-21
Income and Corporation Taxes Act 1988
Changes on 2009-02-21
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#### Leasing contracts and company reconstructions.
#### Terminal losses.
##### 4
@@ -22842,7 +22842,7 @@
## SCHEDULE 31
#### The charge to income tax.
#### Application of lower rate to income from savings and distributions.
##### 1A
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#### Advance corporation tax and qualifying distributions.
#### Schedule A.
##### 8A
@@ -23434,7 +23434,7 @@
- “*debit*” means an amount which for accounting purposes reduces a profit, or increases or creates a loss, for a period of account.
#### Relief for rent etc. not paid.
#### Appeals against determinations under sections 34 to 36 or Chapter 4 of Part 3 of ITTOIA 2005.
##### 76A
@@ -23490,7 +23490,7 @@
- (5) “*Repayment provision*” has the meaning given in section 76A(3).
#### Disposal or exercise of rights in pursuance of deposits.
#### Deep discount securities.
##### 79A
@@ -23734,7 +23734,7 @@
- (3) Relevant expenditure is expenditure incurred in making to the agent any payment in respect of expenses which have been or are to be incurred by the agent in connection with his functions under the scheme.
#### Case V income from land outside UK: corporation tax.
#### Computation of income tax where no profits in year of assessment.
##### 87A
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#### Levies and repayments under the Financial Services and Markets Act 2000: investment companies.
#### Levies and repayments under the Financial Services and Markets Act 2000.
##### 126A
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#### Conventional basis: general charge on receipts after discontinuance . . . .
#### U.K. company distributions not generally chargeable to corporation tax.
#### Application of lower rate to company distributions.
##### 140A
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### Contributions in respect of share option gains
#### Chargeable payments connected with exempt distributions.
#### Exempt distributions: division of business
##### 187A
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#### Election by company paying dividend.
##### 197A
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##### 197AA
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##### 197AB
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##### 197AC
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### Mileage allowances
##### 197AD
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##### 197AE
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#### Returns.
##### 197AF
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##### 197AG
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##### 197AH
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### Mileage allowances
##### 197B
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##### 197C
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##### 197D
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##### 197E
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##### 197F
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### Sporting and recreational facilities
##### 197G
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##### 198A
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##### 200ZA
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##### 200AA
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##### 200A
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##### 200B
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##### 200C
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##### 200D
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##### 200E
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##### 200F
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##### 200G
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##### 200H
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##### 200J
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##### 201AA
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##### 201A
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##### 202A
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##### 202B
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##### 203A
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##### 203B
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##### 203C
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##### 203D
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##### 203E
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##### 203F
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##### 203FA
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##### 203FB
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##### 203G
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##### 203H
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##### 203I
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##### 203J
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##### 203K
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##### 203L
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##### 206A
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##### 207A
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#### PAYE: payment by intermediary.
##### 209A
- (1) Subsection (3AA) of section 209 does not apply in relation to a security issued by a company (the “*issuing company*”) if the security is one which to a significant extent reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in one or more companies each of which is—
- (a) the issuing company; or
- (b) an associated company of the issuing company;
but this subsection is subject to the following provisions of this section.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 above from applying in relation to a security if—
- (a) the issuing company is a bank or securities house;
- (b) the security is issued by the issuing company in the ordinary course of its business; and
- (c) the security reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in companies falling within paragraph (a) or (b) of subsection (1) above by reason only that the security reflects fluctuations in a qualifying index.
- (3) In subsection (2)(c) above “*qualifying index*” means an index whose underlying subject matter includes both—
- (a) shares in one or more companies falling within paragraph (a) or (b) of subsection (1) above, and
- (b) shares in one or more companies falling within neither of those paragraphs,
and which is an index such that the shares falling within paragraph (b) above represent a significant proportion of the market value of the underlying subject matter of the index.
- (4) In this section—
- “*bank*” has the meaning given by section 840A;
- “*securities house*” means any person—who is authorised for the purposes of the Financial Services and Markets Act 2000; andwhose business consists wholly or mainly of dealing in financial instruments as principal;and in paragraph (b) above “*financial instrument*” has the meaning given by section 984 of ITA 2007.
- (5) For the purposes of this section a company is an “*associated company*” of another at any time if at that time one has control of the other or both are under the control of the same person or persons.
- (6) For the purposes of subsection (5) above, “*control*”, in relation to a company, means the power of a person to secure—
- (a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
- (b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
- (7) There shall be left out of account for the purposes of subsection (6) above—
- (a) any shares held by a company, and
- (b) any voting power or other powers arising from shares held by a company,
if a profit on a sale of the shares would be treated as a trading receipt of a trade carried on by the company and the shares are not, within the meaning of Chapter 1 of Part 12, assets of an insurance company’s long-term insurance fund (see section 431(2)).
##### 209B
- (1) Subsection (3AA) of section 209 does not at any time apply in relation to a security issued by a company (the “*issuing company*”) if at that time, or any earlier time on or after 17th April 2002, there are or have been any hedging arrangements that relate to some or all of the company’s liabilities under the security.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 from applying in relation to a security at any time if—
- (a) conditions 1 to 4 below are satisfied in relation to any such hedging arrangements at that time; and
- (b) at all earlier times on or after 17th April 2002 when there have been hedging arrangements that relate to some or all of the company’s liabilities under the security, conditions 1 to 4 below were satisfied in relation to those hedging arrangements.
- (3) Where subsection (3AA) of section 209 at any time ceases to apply in relation to a security by virtue of this section, subsection (2)(d) of that section shall have effect in relation to the security as from that time as it would have had effect if subsection (3AA) had never applied in relation to the security.
- (4) Condition 1 is that the hedging arrangements do not constitute, include, or form part of, any scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax (including stamp duty or stamp duty land tax).
- (5) Condition 2 is that the hedging arrangements are such that, where for the purposes of corporation tax a deduction in respect of the security falls to be made at any time by the issuing company, then at that time, or within a reasonable time before or after it, any amounts intended under the hedging arrangements to offset some or all of that deduction arise—
- (a) to the issuing company; or
- (b) to a company which is a member of the same group of companies as the issuing company.
- (6) Condition 3 is that the whole of every amount arising as mentioned in subsection (5) above is brought into charge to corporation tax—
- (a) by a company falling within paragraph (a) or (b) of that subsection, or
- (b) by two or more companies, taken together, each of which falls within paragraph (a) or (b) of that subsection.
- (7) Condition 4 is that for the purposes of corporation tax any deductions in respect of expenses of establishing or administering the hedging arrangements are reasonable, in proportion to the amounts required to be brought into charge to corporation tax by subsection (6) above.
- (8) For the purposes of this section “*hedging arrangements*”, in relation to a security, means any scheme or arrangement for the purpose, or for purposes which include the purpose, of securing that an amount of income or gain accrues, or is received or receivable, whether directly or indirectly, which is intended to offset some or all of the amounts which fall to be brought into account, in accordance with generally accepted accounting practice, in respect of amounts accruing or falling to be paid in accordance with the terms of the security.
- (9) Any reference in this section to two companies being members of the same group of companies is a reference to their being members of the same group of companies for the purposes of Chapter 4 of Part 10 of this Act (group relief).
##### 213A
- (1) A reference in the Corporation Tax Acts to distributions of a company shall not apply to a distribution if—
- (a) it is a distribution consisting of—
- (i) the transfer of part of a business by a company (“the distributing company”) to one or more other companies (“the transferee company or companies”), and
- (ii) the issue of shares by the transferee company or companies to the members of the distributing company, and
- (b) the requirements of either section 140A(1A) of the 1992 Act (division of UK business) or section 140C(1A) of that Act (division of non-UK business) are satisfied in relation to the distribution.
- (2) A distribution to which this section applies is an “*exempt distribution*” for the purposes of sections 214 to 217.
- (3) The expression “*relevant company*” in sections 214 to 217 includes the distributing company and the transferee company or companies.
### Industrial and provident society dividends etc
##### 230A
- (1) This section applies if—
- (a) a dividend or bonus is granted by a registered industrial and provident society, and
- (b) section 132 (deduction for dividends etc granted by industrial and provident societies) of CTA 2009 allows the sum representing the dividend or bonus to be deducted in calculating the profits of a trade.
- (2) The dividend, or the bonus, is not treated as a distribution for the purposes of the Corporation Tax Acts.
##### 231A
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##### 231AA
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) he is the borrower under a stock lending arrangement or the lender under a creditor repo or creditor quasi-repo;
- (b) the qualifying distribution is, or is a payment representative of, a distribution in respect of securities to which the arrangement or repo in question relates; and
- (c) a manufactured dividend representative of that distribution is paid by that person in respect of securities to which the arrangement or repo in question relates.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*stock lending arrangement*” has the same meaning as in section 263B of the 1992 Act and, in relation to any such arrangement, any reference to the borrower, or the securities to which the arrangement relates, shall be construed accordingly.
- (3) In this section “*creditor repo*” and “*creditor quasi-repo*” have the meaning given by Schedule 13 to the Finance Act 2007.
- (4) For the purposes of this section “*manufactured dividend*” has the same meaning as in paragraph 2 of Schedule 23A (and any reference to a manufactured dividend being paid accordingly includes a reference to a payment falling by virtue of section 736B(2) . . . to be treated for the purposes of Schedule 23A as if it were made).
- (5) For the purposes of this section a person is taken to have paid a manufactured dividend representative of a distribution in respect of securities to which a creditor repo relates if (as a result of paragraph 13(1) of Schedule 13 to the Finance Act 2007) the person is treated for the purposes of Chapter 9 of Part 15 of ITA 2007 as making a payment which is representative of the income payable on the securities.
##### 231AB
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) the person is the borrower under a debtor repo or debtor quasi-repo;
- (b) the qualifying distribution is a manufactured dividend paid to the borrower in consequence of that repo; and
- (c) the arrangement or arrangements in relation to that repo are not such that the actual dividend which the manufactured dividend represents is receivable otherwise than by the borrower under that repo.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*debtor repo*” and “*debtor quasi-repo*” have the meaning given by Schedule 13 to the Finance Act 2007.
- (3) Subsection (4) of section 231AA applies for the purposes of this section as it applies for the purposes of that section.
##### 231B
- (1) This section applies in any case where—
- (a) a person (“A”) is entitled to a tax credit in respect of a qualifying distribution;
- (b) arrangements subsist such that another person (“B”) obtains, whether directly or indirectly, a payment representing any of the value of the tax credit;
- (c) the arrangements (whether or not made directly between A and B) were entered into for an unallowable purpose; and
- (d) the condition in subsection (2) below is satisfied.
- (2) The condition is that if B had been the person entitled to the tax credit and the qualifying distribution to which it relates, and had received the distribution when it was made, then—
- (a) B would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if B is a company, B could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (3) This section does not apply if and to the extent that any other provision of the Tax Acts has the effect of cancelling or reducing the tax advantage which would otherwise be obtained by virtue of the arrangements.
- (4) Where this section applies—
- (a) no claim shall be made under section 231(2) for payment of the amount of the tax credit;
- (b) no claim shall be made under section 397(2) of ITTOIA 2005. . . in respect of the tax credit;
- (c) the income consisting of the distribution in respect of which A is entitled to the tax credit shall not be regarded for the purposes of section 241 as franked investment income; and
- (d) no claim shall be made under section 35 of the Finance (No. 2) Act 1997 (transitional relief) for payment of an amount determined by reference to that distribution.
- (5) For the purposes of this section, the question whether any arrangements were entered into for an “unallowable purpose” shall be determined in accordance with subsections (6) and (7) below.
- (6) Arrangements are entered into for an unallowable purpose if the purposes for which at least one person is a party to the arrangements include a purpose which is not amongst the business or other commercial purposes of that person.
- (7) Where one of the purposes for which a person enters into any arrangements is the purpose of securing that that person or another obtains a tax advantage, that purpose shall be regarded as a business or other commercial purpose of the person only if it is neither the main purpose, nor one of the main purposes, for which the person enters into the arrangements.
- (8) Any reference in this section to a person obtaining a tax advantage includes a reference to a person obtaining a payment representing any of the value of a tax credit in circumstances where, had the person obtaining the payment been entitled to the tax credit and the qualifying distribution to which it relates, that person—
- (a) would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if that person is a company, could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (9) If an amount representing any of the value of a tax credit to which a person is entitled is applied at the direction of, or otherwise in favour of, some other person (whether by way of set off or otherwise), the case shall be treated for the purposes of this section as one where that other person obtains a payment representing any of the value of the tax credit.
- (10) In determining for the purposes of subsections (2)(b) and (8)(b) b above whether a company could have used the income consisting of the distribution in question to frank a distribution of the company, the company shall be taken to use its actual franked investment income to frank distributions before using the income consisting of the distribution in question.
- (11) References in this section to using franked investment income to frank a distribution of a company have the same meaning as in Chapter V of Part VI.
- (12) In this section—
- “*arrangements*” means arrangements of any kind, whether in writing or not (and includes a series of arrangements, whether or not between the same parties);
- “*business or other commercial purposes*” includes the efficient management of investments;
- “*franked investment income*” has the same meaning as in Chapter V of Part VI and references to income consisting of a distribution shall be construed accordingly;
- “*tax advantage*” has the meaning given by section 840ZA
#### Children’s tax credit.
##### 234A
- (1) This section applies where dividend or interest is distributed by a company which is—
- (a) a company within the meaning of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986, or
- (b) a company created by letters patent or by or in pursuance of an Act.
- (2) If the company makes a payment of dividend or interest to any person, and subsection (3) below does not apply, within a reasonable period the company shall send an appropriate statement to that person.
- (3) If the company makes a payment of dividend or interest into a bank or building society account held by any person, within a reasonable period the company shall send an appropriate statement to either—
- (a) the bank or building society concerned, or
- (b) the person holding the account.
- (4) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part to the other person and subsection (5) below does not apply,
within a reasonable period the nominee shall send an appropriate statement to that person.
- (5) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part into a bank or building society account held by the other person,
within a reasonable period the nominee shall send an appropriate statement to either the bank or building society concerned or the other person.
- (6) In the case of a payment of interest which is not a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the gross amount which, after deduction of the income tax appropriate to the interest, corresponds to the net amount actually paid,
- (b) the rate and the amount of income tax appropriate to such gross amount,
- (c) the net amount actually paid, and
- (d) the date of the payment.
- (7) In the case of a payment of dividend or interest which is a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the amount of the dividend or interest paid,
- (b) the date of the payment, and
- (c) the amount of the tax credit to which a person is entitled in respect of the dividend or interest, or to which a person would be so entitled if he had a right to a tax credit in respect of the dividend or interest.
- (8) In this section “*send*” means send by post.
- (8A) In this section “*bank*” has the meaning given by section 840A.
- (9) If a person fails to comply with subsection (2), (3), (4) or (5) above, the person shall incur a penalty of £60 in respect of each offence, except that the aggregate amount of any penalties imposed under this subsection on a person in respect of offences connected with any one distribution of dividends or interest shall not exceed £600.
- (10) The Board may by regulations provide that where a person is under a duty to comply with subsection (2), (3), (4) or (5) above, the person shall be taken to comply with the subsection if the person either—
- (a) acts in accordance with the subsection concerned, or
- (b) acts in accordance with rules contained in the regulations;
and subsection (9) above shall be construed accordingly.
- (11) Regulations under subsection (10) above may make different provision for different circumstances.
##### 245A
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##### 245B
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### Chapter VA — Foreign Income Dividends
### Election by company paying dividend
#### Married couple's allowance (post-5th December 2005 marriages and civil partnerships etc.)
##### 246A
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##### 246B
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### Recipient of foreign income dividend
##### 246C
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##### 246D
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### Companies: payments and receipts
##### 246E
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##### 246F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Foreign source profit and distributable foreign profit
##### 246I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Matching of dividend with distributable foreign profit
##### 246J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Repayment or set-off of advance corporation tax
##### 246N
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246P
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246Q
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### International headquarters companies
##### 246S
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246T
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246U
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246V
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246W
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Adjustments
##### 246X
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Application of this Chapter
##### 246Y
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Elections as to transfer of relief under section 257A or 257AB.
### Approved share incentive plans
##### 251A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 251B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 251C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transitional relief: husband with excess allowances.
##### 251D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 256A
- (1) For the purposes of this Chapter an individual's adjusted net income for a year of assessment is calculated as follows.
*Step 1*
Take the amount of the individual's net income for the year of assessment.
*Step 2*
If in the year of assessment the individual makes, or is treated under section 426 of ITA 2007 as making, a gift that is a qualifying donation for the purposes of Chapter 2 of Part 8 of that Act (gift aid) deduct the grossed up amount of the gift.
*Step 3*
If the individual is given relief in accordance with section 192 of FA 2004 (relief at source) in respect of any contribution paid in the year of assessment under a pension scheme, deduct the gross amount of the contribution.
*Step 4*
Add back any relief under section 266 of this Act given by virtue of subsection (7) of that section (payments for life insurance etc) that was deducted in calculating the individual's net income for the year of assessment.
The result is the individual's adjusted net income for the year of assessment.
- (2) The grossed up amount of a gift is the amount of the gift grossed up by reference to the basic rate for the year of assessment.
- (3) The gross amount of a contribution is the amount of the contribution before deduction of tax under section 192(1) of FA 2004.
##### 256B
In this Chapter “*the minimum amount*” means £2,350.
##### 257AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) If the claimant is, for the whole or any part of the year of assessment, a married man whose wife is living with him and whose marriage was entered into before 5th December 2005, and either of them was born before 6th April 1935, he shall (subject to subsection (3A) below) be entitled for that year to a tax reduction calculated by reference to £2,665 . . . .
- (3) If the claimant is, for the whole or any part of the year of assessment, a married man whose wife is living with him and whose marriage was entered into before 5th December 2005, and either of them
- (a) is at any time within that year of the age of 75 or upwards, and
- (b) was born before 6th April 1935,
he shall (subject to subsection (3A) below) be entitled for that year to a tax reduction calculated by reference to £2,705 (instead of to the reduction provided for by subsection . . . (2) above).
- (3A) Subsections (2) and (3) above shall not apply in relation to the claimant for any year of assessment if an election made by the claimant and his wife under section 257AB(1)(c) has effect for that year.
- (4) For the purposes of subsection (3) above a person who would have been of or over the age of 75 within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.
- (5) In relation to a claimant whose adjusted net income for the year of assessment exceeds £12,300, subsections (2) and (3) above shall apply as if the amounts specified in them were reduced by—
- (a) one half of the excess, less
- (b) any reduction made in his allowance under section 257 by virtue of subsection (5) of that section,
. . .
- (5A) The amounts specified in subsections (2) and (3) above shall not by virtue of subsection (5) above be treated as reduced below the minimum amount.
- (6) A man shall not be entitled by virtue of this section to more than one tax reduction for any year of assessment; and in relation to a claim by a man who becomes married in the year of assessment and has not previously in the year been entitled to relief under this section, this section shall have effect as if the amounts specified in subsections (2) and (3) above were reduced by one twelfth for each month of the year ending before the date of the marriage.
- In this subsection “*month*” means a month beginning with the 6th day of a month of the calendar year.
- (6A) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257AB
- (1) This section applies if —
- (a) the claimant is, for the whole or any part of the year of assessment, living with his spouse or civil partner,
- (b) either the claimant or his spouse or civil partner was born before 6th April 1935,
- (c) the marriage or civil partnership was entered into on or after 5th December 2005 or, if the marriage was entered into before that date, an election for this section to apply has effect for that year, and
- (d) the claimant's net income for that year exceeds that of his spouse or civil partner or, if they have the same amount of net income for that year, the claimant is specified in an election as the person to be entitled to relief under this section for that year.
- (2) The claimant shall be entitled for that year to a tax reduction—
- (a) calculated by reference to £5,975 (if either the claimant or his spouse or civil partner is at any time within that year of the age of 75 or upwards), or
- (b) calculated by reference to £5,905 (in any other case).
- (3) For the purposes of subsection (2)(a) above an individual who would have been of or over the age of 75 within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.
- (4) In relation to a claimant whose adjusted net income for the year of assessment exceeds £19,500, subsection (2) above applies as if the amounts specified in it were reduced by—
- (a) one half of the excess, less
- (b) any reduction made in his allowance under section 257 by virtue of subsection (5) of that section.
- (5) The amounts specified in subsection (2) above shall not by virtue of subsection (4) above be treated as reduced below the minimum amount.
- (6) An individual shall not be entitled by virtue of this section to more than one tax reduction for any year of assessment.
- (7) In relation to a claim by an individual who —
- (a) becomes a spouse or civil partner in the year of assessment, and
- (b) has not previously in the year been entitled to relief under this section,
this section shall have effect as if the amounts specified in subsection (2) above were reduced by one twelfth for each month of the year ending before the date of the marriage or civil partnership.
- In this subsection “*month*” means a month beginning with the 6th day of a month of the calendar year.
- (8) An election under subsection (1)(c) —
- (a) shall be made jointly by the parties to the marriage,
- (b) shall be made before the first year of assessment for which it is to have effect,
- (c) shall have effect for that and each succeeding year of assessment for which any party to the marriage is entitled to relief under this section, and
- (d) shall be irrevocable.
- (9) An election under subsection (1)(d) —
- (a) shall be made jointly by the parties to the marriage or civil partnership, and
- (b) shall be made on or before the 5th anniversary of the 31st January next following the end of the year of assessment to which the election relates.
- (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
#### Qualifying policies.
##### 257BA
- (1) An individual may elect that for any year of assessment for which the individual's spouse or civil partner is entitled to a tax reduction under section 257A or 257AB—
- (a) the individual shall be entitled (on making a claim) to a tax reduction calculated by reference to half the minimum amount, and
- (b) the spouse or civil partner's appropriate amount shall be reduced by half the minimum amount.
- (2) An individual and the individual's spouse or civil partner may jointly elect that for any year of assessment for which the individual is entitled to a tax reduction under section 257A or 257AB—
- (a) the individual's spouse or civil partner shall be entitled (on making a claim) to a tax reduction calculated by reference to the minimum amount, and
- (b) the individual's appropriate amount shall be reduced by the minimum amount.
- (3) An individual may elect that for any year of assessment for which the individual's spouse or civil partner is entitled to a tax reduction by virtue of an election under subsection (2) above—
- (a) the individual shall be entitled (on making a claim) to a tax reduction calculated by reference to half the minimum amount (in addition to any tax reduction to which the individual is already entitled under section 257A or 257AB), and
- (b) the tax reduction to which the spouse or civil partner is entitled by virtue of that election shall be calculated by reference to half the minimum amount (instead of by reference to the minimum amount).
- (3A) In this section “*the appropriate amount*” means the amount by reference to which the calculation of the tax reduction is to be made.
- (4) An election under this section shall be made by giving notice to the inspector in such form as the Board may determine and—
- (a) subject to subsections (5) and (7) below, shall be made before the first year of assessment for which it is to have effect, and
- (b) shall have effect for that and each succeeding year of assessment for which the individual concerned is entitled to relief under section 257A or 257AB, subject to its withdrawal under subsection (8) below or a subsequent election under this section.
- (5) An election may be made during the first year of assessment for which it is to have effect if that is the year of assessment in which the marriage or civil partnership takes place.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) An election may be made within the first thirty days of the first year of assessment for which it is to have effect if before that year the inspector has been given written notification that it is intended to make the election.
- (8) The person or persons by whom an election was made may withdraw it by giving notice to the inspector in such form as the Board may determine; but the withdrawal shall not have effect until the year of assessment after the one in which the notice is given.
- (9) An individual shall not be entitled by virtue of an election under this section to more than one tax reduction for any year of assessment.
- (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
##### 257BB
- (1) Where—
- (a) an individual is entitled to a tax reduction under section 257A or 257AB, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of an election under section 257BA) to a tax reduction equal to the unused part of the individual's MCA tax reductions.
- (1A) The individual's MCA tax reductions are the sum of—
- (a) the tax reduction to which the individual is entitled under section 257A or 257AB, and
- (b) any tax reduction to which the individual is entitled by virtue of an election under section 257BA(3).
- (1B) The unused part of the individual's MCA tax reductions is equal to—
- (a) the individual's MCA tax reductions, less
- (b) the individual's comparable tax liability.
- (2) Subsection (1) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (3) Where—
- (a) an individual is entitled to a tax reduction by virtue of an election under section 257BA, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of section 257A or 257AB) to a tax reduction equal to the unused part of the individual's tax reduction.
- (3AA) The unused part of the individual's tax reduction is equal to—
- (a) the tax reduction to which the individual is entitled by virtue of the election under section 257BA, less
- (b) the individual's comparable tax liability.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subsection (3) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (5) Any notice under subsection (2) or (4) above—
- (a) shall be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
- (5A) For the purposes of this section, the comparable tax liability of an individual is the amount of the individual's tax left after Step 6 of the calculation in section 23 of ITA 2007, making that calculation with the modifications set out in subsections (5B) and (5C).
- (5B) In making that calculation, do not deduct any tax reduction under—
- (a) section 788 (double taxation arrangements: relief by agreement), or
- (b) section 790(1) (relief for foreign tax where there are no double taxation arrangements).
- (5C) If the individual's entitlement to a tax reduction under section 257A, 257AB, 257BA or this section is extinguished under section 423(4) of ITA 2007 (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (5A) and (5B) the amount by which the tax reduction is reduced.
- (5D) For the purposes of this section a person is treated as being entitled to a tax reduction under section 788 if the person is entitled to credit against income tax under arrangements which have effect under that section.
- (5E) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257B
- (1) Where—
- (a) a man is entitled to relief under section 257A, but
- (b) the amount which he is entitled to deduct from his total income by virtue of that section exceeds what is left of his total income after all other deductions have been made from it,
his wife shall be entitled to a deduction from her total income of an amount equal to the excess.
- (2) In determining for the purposes of subsection (1)(b) above the amount that is left of a person’s total income for a year of assessment after other deductions have been made from it, there shall be disregarded any deduction made—
- (a) on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or
- (b) under section 289 or
- (c) on account of any payments to which section 593(2) or 639(3) applies,or
- (d) on account of any payments to which section 54(5) of the Finance Act 1989 applies.
, or
- (e) on account of any payments to which section 32(4) of the Finance Act 1991 applies.
- (3) This section shall not apply for a year of assessment unless the claimant’s husband has given to the inspector written notice that it is to apply; and any such notice—
- (a) shall be given not later than six years after the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
##### 257C
- (1) If the retail prices index for the month of September preceding a year of assessment is higher than it was for the previous September, then, unless Parliament otherwise determines, sections 256B, 257. . . , 257A and 257AB shall apply for that year as if for each amount specified in them as they applied for the previous year (whether by virtue of this section or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index, and—
- (a) if in the case of an amount specified in sections 257(5) , 257A(5) and 257AB(4) the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple;
- (b) if in the case of any other amount the increase is not a multiple of £10, rounding the increase up to the nearest amount which is such a multiple.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) Subsection (1) above shall not require any change to be made in the amounts deductible or repayable under PAYE regulations during the period beginning with 6th April and ending with 17th May in the year of assessment.
- (3) The Treasury shall in each year of assessment make an order specifying the amounts which by virtue of subsection (1) above will be treated as specified for the following year of assessment in sections 256B, 257. . . , 257A and 257AB.
- (4) *This section shall have effect in relation to reliefs for the year* 1990-91 (*as well as for later years*);*and for that purpose it shall be assumed that sections* 257*and* 257A*applied for the year* 1989-90*as they apply, apart from this section, for the year* 1990-91.
##### 257D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 261A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 266A
- (1) This section applies if—
- (a) pursuant to an employer-financed retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for or in respect of any employee of that employer, and
- (b) the payment is made under such an insurance or contract as is mentioned in section 266.
This section applies whether or not the accrual of the relevant benefits is dependent on any contingency.
- (2) Relief, if not otherwise allowable, shall be given to that employee under section 266 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if—
- (a) the payment had been made by him, and
- (b) the insurance or contract under which the payment is made had been made with him.
- (3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse, widow or widower, children, dependants or personal representatives.
- (4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them.
- (5) The amount treated as paid for or in respect of each employee is—
$$A×BC$where—A is the sum paid,B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, andC is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.$
- (6) This section does not apply if—
- (a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or
- (b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met.
- (7) Those conditions are—
- (a) that the employment is with a foreign employer, and
- (b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme.
- (8) In subsection (6)(a) “*earnings charged on remittance*” means earnings which are taxable earnings under—
- (a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or
- (b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK).
- (9) In this section—
- “*employer-financed retirement benefits scheme*”, and
- “*relevant benefits*”,
- have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).
#### Supplementary provisions.
##### 282A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 282B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further interpretation of sections 135 to 139.
##### 289A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 289B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 290A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Credit-tokens.
##### 291A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 291B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 300A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 301A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 303AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditional acquisition of shares.
##### 303A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Aggregation of wife’s income with husband’s.
##### 304A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 305A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 138.
#### Approved profit sharing schemes.
##### 326A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326BB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 327A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for contributions in respect of share option gains.
##### 329AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 331A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 332A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 338B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 337A
- (1) For the purposes of corporation tax, subject to any provision of the Corporation Tax Acts expressly authorising a deduction—
- (a) a company’s profits shall be computed without any deduction in respect of dividends or other distributions, and
- (b) a company’s income from any source shall be computed without any deduction in respect of charges on income.
- (2) In computing a company’s income from any source for the purposes of corporation tax—
- (a) no deduction shall be made in respect of interest except in accordance with Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships); and
- (b) no deduction shall be made in respect of losses from intangible fixed assets within Schedule 29 to the Finance Act 2002 except in accordance with that Schedule.
##### 338A
- (1) This section defines what payments or other amounts are “*charges on income*” for the purposes of corporation tax.
This section has effect subject to any express exceptions in the Corporation Tax Acts.
- (2) Subject to the following provisions of this section, the following (and only the following) are charges on income—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) qualifying donations within the meaning of section 339 (qualifying donations to charity);
- (c) amounts allowed as charges on income under section 587B(2)(a)(ii) (gifts of shares etc to charity).
- (3) No payment that is deductible in computing profits or any description of profits for the purposes of corporation tax shall be treated as a charge on income.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 339A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 342A
- (1) In this section—
- (a) references to the relevant event, in relation to a company in administration, are references—
- (i) to the administrator sending a notice in respect of the company under paragraph 84(1) of Schedule B1 to the Insolvency Act 1986 (company moving from administration to dissolution), or
- (ii) in the case of a company which enters administration otherwise than under that Act, to the doing of any other act for a like purpose, and
- (b) references to a company’s final year are references to the financial year in which the relevant event occurs, and references to the company’s penultimate year are references to the last financial year preceding its final year.
- (2) Subject to subsections (3) and (4)—
- (a) corporation tax shall be charged on the profits of the company arising in the administration in its final year at the rate of corporation tax fixed or proposed for the penultimate year, but
- (b) where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.
- (3) If, before the relevant event, any of the rates or fractions mentioned in subsection (2) has been fixed or proposed for the final year, that subsection shall have effect in relation to that rate or fraction as if for the references to the penultimate year there were substituted references to the final year.
- (4) If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.
- (5) In subsection (4) “*the company’s final accounting period*” means the last accounting period of the company before the relevant event.
- (6) An assessment on the company’s profits for an accounting period in which the company is in administration shall not be invalid because made before the end of the accounting period.
- (7) In making an assessment after the company enters administration and before the date of the relevant event, the administrator may act on an assumption as to when that date will fall so far as it governs section 12(3).
- (8) The assumption of the wrong date shall not alter the company’s final and penultimate year and, if the right date is later—
- (a) an accounting period shall end on the date assumed and a new accounting period shall begin, and
- (b) thereafter, section 12(3) shall apply as if the company had entered administration at the beginning of that new accounting period.
- (9) Subsections (7) and (9) of section 342 apply in relation to this section as they apply in relation to that section, except that in subsection (7) of that section the reference to the completion of the winding up is to be read as a reference to the relevant event.
- (10) Where the company entered administration before its final year, paragraphs (a) and (b) of subsection (2) (but not subsection (3)) apply in relation to the company’s profits arising at any time in its penultimate year.
#### Transfers of trade to obtain balancing allowances
#### P.A.Y.E.: meaning of payment.
##### 343ZA
- (1) This section applies where—
- (a) a company (“the predecessor”) ceases to carry on a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that trade as its trade or as part of its trade,
- (c) in the accounting period in which the predecessor ceases to carry on the trade the predecessor would (apart from this section) be entitled under Part 2 of the Capital Allowances Act to a balancing allowance in respect of the trade, and
- (d) the predecessor's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor to that balancing allowance.
- (2) This section also applies where—
- (a) a company (“the predecessor”) ceases to carry on part of a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that part of the trade as its trade or as part of its trade, and
- (c) the predecessor's ceasing to carry on the part of the trade mentioned in paragraph (a) is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor, on cessation of the trade, to a balancing allowance in respect of the trade under Part 2 of the Capital Allowances Act.
- (3) This section does not apply where section 343 applies.
- (4) Where this section applies, the Corporation Tax Acts have effect subject to section 343(2), but as if the words “and are subject to section 343A (company reconstructions involving business of leasing plant or machinery)” were omitted.
- (5) Where this section applies because of subsection (1), and the successor carries on the activities of the trade the predecessor ceased to carry on as part of the successor's trade, for the purposes of section 343(2) that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (6) Where this section applies because of subsection (2), for the purposes of section 343(2)—
- (a) that part of the trade which the predecessor ceased to carry on is to be treated as a separate trade carried on by the predecessor, and
- (b) where the successor carries on the activities of that part of the trade as part of its trade, that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (7) Where subsection (5) or (6) applies, such apportionment of receipts, expenses, assets and liabilities is to be made as may be just.
- (8) Section 343(10) applies to an apportionment under subsection (7) as it applies to an apportionment under section 343(9).
##### 343A
- (1) This section applies if the trade is or forms part of a business of leasing plant or machinery which the predecessor or the successor carries on on the day of cessation.
- (2) If, on the day of cessation, both the predecessor and the successor carry on the trade otherwise than in partnership, section 343(2) does not apply unless—
- (a) the principal company or companies of the predecessor immediately before the cessation are the same as the principal company or companies of the successor immediately afterwards, and
- (b) if any such principal company is a consortium principal company, the relevant fraction in relation to the predecessor immediately before the cessation is the same as the relevant fraction in relation to the successor immediately afterwards (irrespective of whether the members of each consortium are the same).
- (3) If, on the day of cessation, the predecessor or the successor carries on the trade in partnership, section 343(2) does not apply unless—
- (a) the predecessor ceases to carry on the whole of its trade, and
- (b) that trade is a business of leasing plant or machinery which the predecessor carries on in partnership on the day of cessation.
- (4) In any case where section 343(2) does not apply as a result of this section, the plant or machinery belonging to the trade shall be treated for the purposes of the Corporation Tax Acts as sold by the predecessor to the successor on the day of the cessation for an amount equal to its market value as at that day.
- (5) In this section—
- “business of leasing plant or machinery”—has the same meaning as in Part 2 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc) (if the business is carried on otherwise than in partnership), andhas the same meaning as in Part 3 of that Schedule (if the business is carried on in partnership),
- “*consortium principal company*” means a company which is a principal company as a result of paragraph 12 of that Schedule,
- “*market value*”, in relation to plant or machinery, is to be construed in accordance with paragraph 41(8) of that Schedule,
- “*plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act,
- “*principal company*” is to be construed in accordance with paragraph 11 or (as the case may be) 12 of Schedule 10 to the Finance Act 2006, and
- “*relevant fraction*” has the same meaning as in paragraph 12 of that Schedule.
#### Relevant loan interest.
#### Interest which never has been relevant loan interest etc.
#### Section 209(3AA): link to shares of company or associated company
##### 347A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 347B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
##### 349ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information relating to distributions.
##### 349B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 350A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule A losses.
##### 357A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 357B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 357C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 360A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Procedure for making election.
##### 197A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mileage allowances
##### 197AD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 249 and 250.
##### 197AF
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AG
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AH
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mileage allowances
##### 197B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197D
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##### 197E
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##### 197F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Sporting and recreational facilities
##### 197G
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##### 198A
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##### 200ZA
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##### 200AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 200A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 200B
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##### 200C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 200D
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##### 200E
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##### 200F
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##### 200G
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##### 200H
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##### 200J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 201AA
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##### 201A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 202A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 202B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203D
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##### 203E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203FA
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##### 203FB
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##### 203G
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##### 203H
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##### 203I
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##### 203J
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##### 203K
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##### 203L
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##### 206A
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##### 207A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### PAYE: payment by intermediary.
##### 209A
- (1) Subsection (3AA) of section 209 does not apply in relation to a security issued by a company (the “*issuing company*”) if the security is one which to a significant extent reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in one or more companies each of which is—
- (a) the issuing company; or
- (b) an associated company of the issuing company;
but this subsection is subject to the following provisions of this section.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 above from applying in relation to a security if—
- (a) the issuing company is a bank or securities house;
- (b) the security is issued by the issuing company in the ordinary course of its business; and
- (c) the security reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in companies falling within paragraph (a) or (b) of subsection (1) above by reason only that the security reflects fluctuations in a qualifying index.
- (3) In subsection (2)(c) above “*qualifying index*” means an index whose underlying subject matter includes both—
- (a) shares in one or more companies falling within paragraph (a) or (b) of subsection (1) above, and
- (b) shares in one or more companies falling within neither of those paragraphs,
and which is an index such that the shares falling within paragraph (b) above represent a significant proportion of the market value of the underlying subject matter of the index.
#### Returns.
##### 367A
- (1) Sections 353 and 365 have effect as if—
- (a) purchase and resale arrangements involved the making of a loan, and
- (b) alternative finance return were interest.
- (2) Section 366 has effect accordingly.
- (3) In this section—
- “*alternative finance return*” has the meaning given in sections 564I to 564L of ITA 2007, and
- “*purchase and resale arrangements*” means arrangements to which section 564C of ITA 2007 applies.
#### Interpretation of Part VI.
##### 374A
- (1) This section applies where, in the case of any loan, interest on the loan never has been relevant loan interest or the borrower never has been a qualifying borrower.
- (2) Without prejudice to subsection (3) below, in relation to a payment of interest—
- (a) as respects which either of the conditions mentioned in paragraphs (a) and (b) of section 374(1) is fulfilled, and
- (b) from which a deduction was made as mentioned in section 369(1),
section 369 shall have effect as if the payment of interest were a payment of relevant loan interest made by a qualifying borrower.
- (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to make any deduction or to retain any amount deducted and, accordingly, where any amount has been deducted, he shall be liable to make good that amount and an officer of the Board may make such assessments as may in his judgment be required for recovering that amount.
- (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made . . . .
- (5) If the borrower fraudulently or negligently makes any false statement or representation in connection with the making of any deduction, he shall be liable to a penalty not exceeding the amount deducted.
##### 375A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 376A
- (1) The Board shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of section 376(4).
- (1A) The following are entitled to be registered—
- (a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000—
- (i) to accept deposits; or
- (ii) to effect or carry out contracts of general insurance;
- (b) a 90 per cent subsidiary of a person mentioned in—
- (i) section 376(4)(e); or
- (ii) paragraph (a) above;
- (c) any other body whose activities and objects appear to the Board to qualify it for registration.
- (2) If the Board are satisfied that an applicant for registration is entitled to be registered, they may register the applicant generally or in relation to any description of loan specified in the register, with effect from such date as may be so specified; and a body which is so registered shall become a qualifying lender in accordance with the terms of its registration.
- (3) The registration of any body may be varied by the Board—
- (a) where it is general, by providing for it to be in relation to a specified description of loan, or
- (b) where it is in relation to a specified description of loan, by removing or varying the reference to that description of loan,
and where they do so, they shall give the body written notice of the variation and of the date from which it is to have effect.
- (4) If it appears to the Board at any time that a body which is registered under this section would not be entitled to be registered if it applied for registration at that time, the Board may by written notice given to the body cancel its registration with effect from such date as may be specified in the notice.
- (5) The date specified in a notice under subsection (3) or (4) above shall not be earlier than the end of the period of 30 days beginning with the date on which the notice is served.
- (6) Any body which is aggrieved by the failure of the Board to register it under this section, or by the variation or cancellation of its registration, may, by notice given to the Board before the end of the period of 30 days beginning with the date on which the body is notified of the Board’s decision, require the matter to be determined by the Special Commissioners; and the Special Commissioners shall thereupon hear and determine the matter in like manner as an appeal.
### Losses from UK property business or overseas property business
##### 379A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 379B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transactions in deposits with and without certificates or in debts.
##### 384A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Losses from Schedule A business or overseas property business
##### 392A
- (1) Where a company incurs a Schedule A loss in an accounting period, the loss shall be set off for the purposes of corporation tax against the company’s total profits for that period.
- (2) To the extent that a company’s Schedule A loss cannot be set off under subsection (1), it shall, if the company continues to carry on the Schedule A business in the succeeding accounting period, be carried forward to that period and be treated for the purposes of this section as a Schedule A loss of that period.
- (3) Where a company with investment business—
- (a) ceases to carry on a Schedule A business, but
- (b) continues to be a company with investment business,
any Schedule A loss that cannot be used under the preceding provisions shall be carried forward to the succeeding accounting period and be treated for the purposes of section 75 as if it were expenses of management deductible for that period.
- (4) In this section—
- “*bank*” has the meaning given by section 840A;
- “*securities house*” means any person—who is authorised for the purposes of the Financial Services and Markets Act 2000; andwhose business consists wholly or mainly of dealing in financial instruments as principal;and in paragraph (b) above “*financial instrument*” has the meaning given by section 984 of ITA 2007.
- (5) For the purposes of this section a company is an “*associated company*” of another at any time if at that time one has control of the other or both are under the control of the same person or persons.
- (6) For the purposes of subsection (5) above, “*control*”, in relation to a company, means the power of a person to secure—
- (a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
- (b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
- (7) There shall be left out of account for the purposes of subsection (6) above—
- (a) any shares held by a company, and
- (b) any voting power or other powers arising from shares held by a company,
if a profit on a sale of the shares would be treated as a trading receipt of a trade carried on by the company and the shares are not, within the meaning of Chapter 1 of Part 12, assets of an insurance company’s long-term insurance fund (see section 431(2)).
##### 209B
- (1) Subsection (3AA) of section 209 does not at any time apply in relation to a security issued by a company (the “*issuing company*”) if at that time, or any earlier time on or after 17th April 2002, there are or have been any hedging arrangements that relate to some or all of the company’s liabilities under the security.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 from applying in relation to a security at any time if—
- (a) conditions 1 to 4 below are satisfied in relation to any such hedging arrangements at that time; and
- (b) at all earlier times on or after 17th April 2002 when there have been hedging arrangements that relate to some or all of the company’s liabilities under the security, conditions 1 to 4 below were satisfied in relation to those hedging arrangements.
- (3) Where subsection (3AA) of section 209 at any time ceases to apply in relation to a security by virtue of this section, subsection (2)(d) of that section shall have effect in relation to the security as from that time as it would have had effect if subsection (3AA) had never applied in relation to the security.
- (4) Condition 1 is that the hedging arrangements do not constitute, include, or form part of, any scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax (including stamp duty or stamp duty land tax).
- (5) Condition 2 is that the hedging arrangements are such that, where for the purposes of corporation tax a deduction in respect of the security falls to be made at any time by the issuing company, then at that time, or within a reasonable time before or after it, any amounts intended under the hedging arrangements to offset some or all of that deduction arise—
- (a) to the issuing company; or
- (b) to a company which is a member of the same group of companies as the issuing company.
- (6) Condition 3 is that the whole of every amount arising as mentioned in subsection (5) above is brought into charge to corporation tax—
- (a) by a company falling within paragraph (a) or (b) of that subsection, or
- (b) by two or more companies, taken together, each of which falls within paragraph (a) or (b) of that subsection.
- (7) Condition 4 is that for the purposes of corporation tax any deductions in respect of expenses of establishing or administering the hedging arrangements are reasonable, in proportion to the amounts required to be brought into charge to corporation tax by subsection (6) above.
- (8) For the purposes of this section “*hedging arrangements*”, in relation to a security, means any scheme or arrangement for the purpose, or for purposes which include the purpose, of securing that an amount of income or gain accrues, or is received or receivable, whether directly or indirectly, which is intended to offset some or all of the amounts which fall to be brought into account, in accordance with generally accepted accounting practice, in respect of amounts accruing or falling to be paid in accordance with the terms of the security.
- (9) Any reference in this section to two companies being members of the same group of companies is a reference to their being members of the same group of companies for the purposes of Chapter 4 of Part 10 of this Act (group relief).
##### 213A
- (1) A reference in the Corporation Tax Acts to distributions of a company shall not apply to a distribution if—
- (a) it is a distribution consisting of—
- (i) the transfer of part of a business by a company (“the distributing company”) to one or more other companies (“the transferee company or companies”), and
- (ii) the issue of shares by the transferee company or companies to the members of the distributing company, and
- (b) the requirements of either section 140A(1A) of the 1992 Act (division of UK business) or section 140C(1A) of that Act (division of non-UK business) are satisfied in relation to the distribution.
- (2) A distribution to which this section applies is an “*exempt distribution*” for the purposes of sections 214 to 217.
- (3) The expression “*relevant company*” in sections 214 to 217 includes the distributing company and the transferee company or companies.
### Industrial and provident society dividends etc
##### 230A
- (a) a “*Schedule A loss*” means a loss incurred by a company in a Schedule A business carried on by it; and
- (b) “*company with investment business*” has the same meaning as in Part IV.
- (5) The preceding provisions of this section apply to a Schedule A business only to the extent that it is carried on—
- (a) on a commercial basis, or
- (b) in the exercise of statutory functions.
- (6) For the purposes of subsection (5)(a)—
- (a) a business or part is not carried on on a commercial basis unless it is carried on with a view to making a profit, but if it is carried on so as to afford a reasonable expectation of profit it is treated as carried on with a view to making a profit; and
- (b) if there is a change in the manner in which a business or part is carried on, it is treated as having been carried on throughout an accounting period in the way in which it was being carried on by the end of the period.
- (7) In subsection (5)(b) “*statutory functions*” means functions conferred by or under any enactment (including an enactment contained in a local or private Act).
##### 392B
- (1) Where in any accounting period a company incurs a loss in an overseas property business (whether carried on by it solely or in partnership)—
- (a) the loss shall be carried forward to the succeeding accounting period and set against any profits of the business for that period,
- (b) if there are no profits of the business for that period, or if the profits for that period are exceeded by the amount of the loss, the loss or the remainder of it shall be carried forward again and set against any profits of the business for the next succeeding accounting period,
and so on.
- (2) Subsections (5) to (7) of section 392A apply in relation to relief under subsection (1) above and an overseas property business as they apply in relation to relief under section 392A(1) to (3) and a Schedule A business.
##### 393A
- (1) Subject to section 492(3), where in any accounting period ending on or after 1st April 1991 a company carrying on a trade incurs a loss in the trade, then, subject to subsection (3) below, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against profits (of whatever description)—
- (a) of that accounting period, and
- (b) if the company was then carrying on the trade and the claim so requires, of preceding accounting periods falling wholly or partly within the period specified in subsection (2) below;
and, subject to that subsection and to any relief for an earlier loss, the profits of any of those accounting periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.
- (2) The period referred to in paragraph (b) of subsection (1) is (subject to subsection (2A) below) the period of twelve months immediately preceding the accounting period in which the loss is incurred; but the amount of the reduction that may be made under that subsection in the profits of an accounting period falling partly before the beginning of that period shall not exceed a part of those profits proportionate to the part of the accounting period falling within that period.
- (2A) This section shall have effect in relation to any loss to which this subsection applies as if, in subsection (2) above, the words “three years” were substituted for the words “twelve months”.
- (2B) Where a company ceases to carry on a trade at any time, subsection (2A) above applies to the following—
- (a) the whole of any loss incurred in that trade by that company in an accounting period beginning twelve months or less before that time; and
- (b) the part of any loss incurred in that trade by that company in an accounting period ending, but not beginning, in that twelve months which is proportionate to the part of that accounting period falling within those twelve months.
- (2C) Where—
- (a) a loss is incurred by a company in a ring fence trade carried on by that company, and
- (b) the accounting period in which the loss is incurred is an accounting period for which an allowance under section 164 of the Capital Allowances Act (general decommissioning expenditure incurred before cessation of ring fence trade) is made to that company,
subsection (2A) above applies to so much of the amount of that loss not falling within subsection (2B) above as does not exceed the amount of that allowance.
- (2D) Section 393B makes further provision about setting off losses in cases where subsection (2C) applies.
- (3) Subsection (1) above shall not apply to trades falling within Case V of Schedule D; and a loss incurred in a trade in any accounting period shall not be relieved under that subsection unless—
- (a) the trade is one carried on in the exercise of functions conferred by or under any enactment (including an enactment contained in a local or private Act), or
- (b) for that accounting period the trade was being carried on on a commercial basis and with a view to the realisation of gain in the trade or in any larger undertaking of which the trade formed part;
but this subsection is without prejudice to section 397.
- (4) For the purposes of subsection (3) above—
- (a) where at any time a trade is carried on so as to afford a reasonable expectation of gain, it shall be treated as being carried on at that time with a view to the realisation of gain; and
- (b) where in an accounting period there is a change in the manner in which a trade is being carried on, it shall be treated as having throughout the accounting period been carried on in the way in which it was being carried on by the end of that period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Subject to subsection (7A) below, where a company ceases to carry on a trade, subsection (9) of section 393 shall apply in computing for the purposes of this section a loss in the trade in an accounting period ending with the cessation, or ending at any time in the twelve months immediately preceding the cessation, as it applies in computing a loss in an accounting period for the purposes of subsection (1) of that section.
- (7A) For the purposes of this section where—
- (a) subsection (7) above has effect for computing the loss for any accounting period, and
- (b) that accounting period is one beginning before the beginning of the twelve months mentioned in that subsection,
the part of that loss that is not the part falling within subsection (2B)(b) above shall be treated as reduced (without any corresponding increase in the part of the loss that does fall within subsection (2B)(b) above) by an amount equal to so much of the aggregate of the charges on income treated as expenses by virtue of subsection (7) above as is proportionate to the part of the accounting period that does not fall within those twelve months.
- (8) Relief shall not be given by virtue of subsection (1)(b) above in respect of a loss incurred in a trade so as to interfere with any relief under section 338 in respect of payments made wholly and exclusively for the purposes of that trade.
- (9) For the purposes of this section—
- (a) the amount of a loss incurred in a trade in an accounting period shall be computed in the same way as trading income from the trade in that period would have been computed;
- (b) “*trading income*” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; and
- (c) references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
- (10) A claim under subsection (1) above may only be made within the period of two years immediately following the accounting period in which the loss is incurred or within such further period as the Board may allow.
- (11) Subsection (11A) applies in any case where—
- (a) by virtue of section 165 of the Capital Allowances Act (general decommissioning expenditureafter ceasing ring fence trade) the qualifying expenditure of the company for the chargeable period related to the cessation of its ring fence trade is treated as increased by any amount, or
- (b) by virtue of section 416 of that Act (expenditure on restoration within 3 years of ceasing to trade) any expenditure is treated as qualifying expenditure incurred by the company on the last day of trading.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11A) In relation to any claim under subsection (1)—
- (a) to the extent that the claim relates to an increase falling within subsection (11)(a), this section shall have effect as if—
- (i) in subsection (10), “the relevant period” were substituted for “ the period of two years ”, and
- (ii) after subsection (10) there were inserted—
> (10ZA) In subsection (10) “*relevant period*” means the period calculated by adding two years to the post-cessation period (within the meaning of section 165 of the Capital Allowances Act).
;
- (b) to the extent that the claim relates to expenditure falling within subsection (11)(b), subsection (10) shall have effect with the substitution of “ five years ” for “two years”.
- (12) In this section “*ring fence trade*” has the same meaning as in section 162 of the Capital Allowances Act.
##### 393B
- (1) This section applies if these conditions are met—
- (a) a company makes a claim under section 393A(1) requiring that a loss incurred in a ring fence trade be set off against profits;
- (b) section 393A(2A) applies in relation to that claim (three year set off period) by virtue of—
- (i) section 393A(2B) (loss precedes cessation of trade), or
- (ii) section 393A(2C) (loss arises in year when general decommissioning expenditure incurred); and
- (c) the loss incurred in the ring fence trade that may be set off under section 393A (“L”) exceeds the profits against which L may be set off under section 393A (“P”).
- (2) The profits of the ring fence trade of an accounting period are to be relieved under subsection (3) if that period—
- (a) falls wholly or partly before the three year set off period, and
- (b) ends on or after 17 April 2002.
- (3) Subject to any relief for an earlier loss, those profits of that accounting period shall be treated as reduced by—
- (a) the amount by which L exceeds P, or
- (b) so much of that amount as cannot be relieved under this subsection against profits of the ring fence trade of a later accounting period.
- (4) Subsection (3) is subject to subsection (5) in the case of an accounting period that falls partly (but not wholly) before the three year set off period.
- (5) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls before the three year set off period.
- (6) Subsection (3) is subject to subsection (7) in the case of an accounting period that begins before 17 April 2002 and ends on or after that date.
- (7) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls after 16 April 2002.
- (8) In this section—
- “*ring fence*” has the same meaning as in section 162 of the Capital Allowances Act;
- “*three year set off period*” means the period of three years that applies to the claim under section 393A(1) by virtue of section 393A(2A) and section 393A(2B) or (2C).
#### Dealings in commodity futures etc: withdrawal of loss relief.
##### 403ZA
- (1) For the purposes of section 403 a trading loss means a loss incurred by the surrendering company in the surrender period in carrying on a trade, computed as for the purposes of section 393A(1).
- (2) That section does not apply to a trading loss which would be excluded from section 393A(1) by—
- (a) section 393A(3) (foreign trades and certain trades not carried on with a view to gain), or
- (b) section 397 (farming and market gardening: restriction on loss relief).
- (3) Where a company owned by a consortium—
- (a) has in any relevant accounting period incurred a trading loss, and
- (b) has profits (of whatever description) of that accounting period against which that loss could be set off under section 393A(1),
the amount of the loss available to a member of the consortium on a consortium claim shall be determined on the assumption that the company has made a claim under section 393A(1) requiring the loss to be so set off.
- (4) Where the company mentioned in subsection (3) is a group/consortium company, the amount of the loss available under that subsection shall be determined before any reduction is made under section 405(1) to (3).
##### 403ZB
- (1) For the purposes of section 403 excess capital allowances means capital allowances falling to be made to the surrendering company for the surrender period to the extent that they are to be given effect under section 260 of the Capital Allowances Act (special leasing: excess allowance).
- (2) In determining the amount of the allowances falling to be made for the surrender period, no account shall be taken of any allowances carried forward from an earlier period.
- (3) The amount of the company’s income of the relevant class means its amount before deduction of—
- (a) losses of any other period, or
- (b) capital allowances.
##### 403ZC
- (1) For the purposes of section 403 a non-trading deficit on its loan relationships means a deficit of the surrendering company to which section 83 of the Finance Act 1996 applies.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403ZD
- (1) References in section 403 to charges on income, Schedule A losses and management expenses shall be construed as follows.
- (2) Charges on income means the aggregate of the amounts paid by the surrendering company in the surrender period by way of charges on income.
- (3) A Schedule A loss means a loss incurred by the surrendering company in the surrender period in a Schedule A business carried on by the company.
It does not include—
- (a) an amount treated as such a loss by section 392A(2) (losses carried forward from earlier period), or
- (b) a loss which would be excluded from section 392A by subsection (5) of that section (certain businesses not carried on with a view to gain).
- (4) Management expenses means the aggregate of the amounts deductible under section 75(1) (expenses of management of company with investment business) by the surrendering company for this period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) A non-trading loss on intangible fixed assets means a non-trading loss on intangible fixed assets, within the meaning of Schedule 29 to the Finance Act 2002, for the surrender period.
It does not include so much of any such loss as is attributable to an amount being carried forward under paragraph 35(3) of that Schedule (amounts carried forward from earlier periods).
##### 403ZE
- (1) For the purposes of section 403 the surrendering company’s gross profits of the surrender period means its profits for that period—
- (a) without any deduction in respect of such losses, allowances and other amounts as are mentioned in paragraph (a) or (b) of subsection (1) of that section, and
- (b) without any deduction falling to be made—
- (i) in respect of losses, allowances or other amounts of any other period (whether or not of a description within subsection (1) of that section), or
- (ii) by virtue of section 75(9) or 392A(3) (other amounts carried forward).
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403A
- (1) The amount which, on a claim for group relief, may be set off against the total profits of the claimant company for an accounting period (“*the claim period*”), and accordingly the amount to which any consent required in respect of that claim may relate, shall not exceed whichever is the smaller of the following amounts—
- (a) the unused part of the surrenderable amount for the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period.
- (2) For the purposes of any claim for group relief—
- (a) the unused part of the surrenderable amount for the overlapping period is the surrenderable amount for that period reduced by the amount of any prior surrenders attributable to the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period is the amount of its total profits for that period reduced by the amount of any previously claimed group relief attributable to the overlapping period.
- (3) For the purposes of any claim for group relief—
- (a) the surrenderable amount for the overlapping period is so much of the surrenderable amount for the accounting period of the surrendering company to which the claim relates as is attributable, on an apportionment in accordance with section 403B, to the overlapping period;
- (b) the surrenderable amount for an accounting period of the surrendering company is the total amount for that accounting period of the losses and other amounts which (disregarding this section and section 403C) are available in that company’s case for set off by way of group relief; and
- (c) the amount of the claimant company’s total profits for the overlapping period is so much of its total profits for the claim period as is attributable, on an apportionment in accordance with section 403B, to the overlapping period.
- (4) In relation to any claim for group relief (“*the relevant claim*”) the amount of the prior surrenders attributable to the period which is the overlapping period in the case of the relevant claim is equal to the aggregate amount (if any) produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was made in respect of the whole or any part of the amount which, in relation to the relevant claim, is the surrenderable amount for the accounting period of the surrendering company to which the claim relates, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (5) In relation to any claim for group relief (“*the relevant claim*”), the amount of previously claimed group relief attributable to the period which is the overlapping period in the case of that claim is the aggregate amount produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was a claim to set off an amount by way of group relief against the claimant company’s total profits for the period which, in relation to the relevant claim, is the claim period, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (6) For the purposes of this section the amount of group relief allowable on any claim (“*the finalised claim*”) shall fall to be determined as at the time when that claim ceases to be capable of being withdrawn as if—
- (a) every claim that became incapable of being withdrawn before that time were a claim made before the finalised claim; and
- (b) every claim that remains capable of being withdrawn at that time were a claim made after the finalised claim.
- (7) Subject to subsection (6) above and without prejudice to any power to withdraw and resubmit claims, where (but for this subsection) more than one claim for group relief would be taken for the purposes of subsections (4) and (5) above to have been made at the same time, those claims shall be deemed, instead, to have been made—
- (a) in such order as the company or companies making them may, by notice to any officer of the Board, elect or, as the case may be, jointly elect; and
- (b) if there is no such election, in such order as an officer of the Board may direct.
- (8) In this section “*the overlapping period*”, in relation to a claim for group relief, means (subject to subsection (9) below and section 406(3) and (7)) the period which is common to both—
- (a) the claim period; and
- (b) the accounting period of the surrendering company to which the claim relates.
- (9) For the purposes of this section any time in the period which, in relation to any claim for group relief, is common to both the accounting periods mentioned in subsection (8) above but which is a time when the qualifying conditions were not satisfied—
- (a) shall be treated as not comprised in the period which is the overlapping period in the case of that claim; and
- (b) shall be treated instead, in relation to each of those accounting periods, as if it constituted a part of that accounting period which was not common to both periods.
- (10) For the purposes of subsection (9) above the qualifying conditions are satisfied in relation to any claim for group relief at the following times, that is to say—
- (a) if (or so far as) the claim is a group claim for the surrender of any loss or other amount other than a qualifying overseas loss, whenever the conditions in paragraphs (a) to (c) of section 402(2) are satisfied;
- (ab) if (or so far as) the claim is a group claim for the surrender of a qualifying overseas loss, whenever the condition specified in section 402(2A) is satisfied; and
- (b) if the claim is a consortium claim, whenever the conditions specified in section 402(3) for the making of that claim and the condition specified in section 402(3B) are satisfied in the case of the claimant company and the surrendering company.
- (11) For the purposes of subsection (10) above a “*qualifying overseas loss*” means a loss or other amount that is available for surrender by way of group relief in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403B
- (1) Subject to subsection (2) below, where an apportionment falls to be made under section 403A for the purpose of determining how much of an amount for any period (“*the first period*”) is attributable to any other period (“*the second period*”) which comprises the whole or a part of the first period—
- (a) the whole of that amount shall be attributed to the second period if the first and second periods begin and end at the same times; and
- (b) in any other case, the apportionment shall be made on a time basis according to how much of the first period coincides with the second period.
- (2) Where the circumstances of a particular case are such that the making on the time basis mentioned in subsection (1)(b) above of some or all of the apportionments to be made in that case would work in a manner that would be unjust or unreasonable in relation to any person, those apportionments shall be made instead (to the extent only that is necessary in order to avoid injustice and unreasonableness) in such other manner as may be just and reasonable.
##### 403C
- (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.
##### 403D
- (1) In determining for the purposes of this Chapter the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by a non-resident company carrying on a trade in the United Kingdom through a permanent establishment, no loss or other amount shall be treated as so available (but see also subsection (11) below) except in so far as—
- (a) it is attributable to activities of that company the income and gains from which for that period are, or (were there any) would be, brought into account in computing the company’s chargeable profits for that period for corporation tax purposes;
- (b) it is not attributable to activities of the company which are made exempt from corporation tax for that period by any double taxation arrangements; and
- (c) no part of—
- (i) the loss or other amount, or
- (ii) any amount brought into account in computing it,
corresponds to, or is represented in, any amount which, for the purposes of any foreign tax, is (in any period) deductible from or otherwise allowable against non-UK profits of the company or any other person.
- (2) In determining for the purposes of sections 403A and 403C the total profits for an accounting period of a non-resident company, there shall be disregarded—
- (a) amounts not falling to be comprised for corporation tax purposes in the chargeable profits of the company for that accounting period, and
- (b) so far as not falling within paragraph (a) above, any amounts arising from activities which are made exempt from corporation tax for that period by any double taxation arrangements.
- (3) In this section “*non-UK profits*”, in relation to any person, means amounts which—
- (a) are taken for the purposes of any foreign tax to be the amount of the profits, income or gains on which (after allowing for deductions) that person is charged with that tax, and
- (b) are not amounts corresponding to, and are not represented in, the total profits (of that or any other person) for any accounting period,
or amounts taken into account in computing such amounts.
- (4) Subsection (2) above applies for the purposes of subsection (3)(b) above as it applies for the purposes of sections 403A and 403C.
- (5) For the purposes of this section an amount shall not be taken to be an amount which for the purposes of any foreign tax is deductible from or otherwise allowable against any non-UK profits of any person by reason only that it is—
- (a) an amount of profits brought into account for the purpose of being excluded from the profits that are non-UK profits of that person by reference to that foreign tax; or
- (b) an amount brought into account in computing the amount of any profits falling to be so excluded.
- (6) So much of the law of any territory outside the United Kingdom as for the purposes of any foreign tax makes the deductibility of any amount dependent on whether or not it is deductible for tax purposes in the United Kingdom shall be disregarded for the purposes of this section.
- (7) For the purposes of this section activities of a company are made exempt from corporation tax for any period by double taxation arrangements if the effect of any such arrangements is that the income and gains (if any) arising for that period from those activities is to be disregarded in computing the company’s chargeable profits.
- (8) In this section “*double taxation arrangements*” means any arrangements having effect by virtue of section 788.
- (9) In this section “*foreign tax*” means any tax chargeable under the law of any territory outside the United Kingdom which—
- (a) is charged on income and corresponds to United Kingdom income tax; or
- (b) is charged on income or chargeable gains or both and corresponds to United Kingdom corporation tax;
but for the purposes of this section a tax shall not be treated as failing to correspond to income tax or corporation tax by reason only that it is chargeable under the law of a province, state or other part of a country, or is levied by or on behalf of a municipality or other local body.
- (10) In determining for the purposes of this section whether any activities are made exempt from corporation tax for any period by any double taxation arrangements any requirement that a claim is made before effect is given to any provision of the arrangements shall be disregarded.
- (11) Any loss or other amount that is available for surrender by way of group relief in accordance with this section is in addition to any loss or other amount that is so available in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403E
- (1) In determining, for the purposes of this Chapter, the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by any company resident in the United Kingdom (“*the resident company*”), a loss or other amount shall be treated as not so available in so far as it—
- (a) is attributable to an overseas permanent establishment of that company, and
- (b) is a loss or other amount falling within subsection (2) below.
- (2) Subject to subsection (3) below, a loss or other amount attributable to an overseas permanent establishment falls within this subsection if the whole or any part of it is, or represents, an amount which, for the purposes of foreign tax under the law of the territory where that permanent establishment is situated, is (in any period) deductible from or otherwise allowable against non-UK profits of a person other than the resident company.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The reference in subsections (1) and (2) above to a loss or other amount attributable to an overseas permanent establishment of a company is a reference to the loss or other amount (if any) that would be surrenderable by that company by way of group relief if the amount surrenderable by that company were computed—
- (a) by reference only to that permanent establishment, and
- (b) by the application in relation to that permanent establishment of principles corresponding in all material respects to those applicable for the purposes of corporation tax to the computation of the equivalent losses or other amounts in the case of the UK permanent establishment of a non-resident company.
- (5) In subsection (4)(b) above the reference to the UK permanent establishment of a non-resident company is a reference to any permanent establishment through which a company which is not resident in the United Kingdom carries on a trade in the United Kingdom.
- (6) References in this section to an overseas permanent establishment of a company are references to any permanent establishment through which that company carries on a trade in a territory outside the United Kingdom.
- (7) In this section “*foreign tax*” and “*non-UK profits*” have the same meaning as in section 403D.
- (8) Where the deductibility of any amount for the purposes of any foreign tax is dependent on whether or not that amount, or a corresponding amount, is deductible for tax purposes in the United Kingdom, this section shall have effect as if that amount were deductible for the purposes of that foreign tax if, and only if, the resident company is treated for the purposes of that tax as resident in the territory where that tax is charged.
##### 403F
- (1) This section has effect for determining for the purposes of this Chapter the extent to which a loss or other amount is available for surrender by way of group relief by a non-resident company—
- (a) which is resident in an EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
in a case where a group claim may be made as a result of the condition in section 402(2A) being satisfied.
- (2) A loss or other amount is not available for surrender by way of group relief by the non-resident company except in so far as, in relation to the EEA territory, the amount meets—
- (a) the equivalence condition,
- (b) the EEA tax loss condition,
- (c) the qualifying loss condition, and
- (d) the precedence condition.
- (3) Part 1 of Schedule 18A determines, in the case of any amount and any EEA territory, the extent to which those conditions are met.
- (4) In so far as a loss or other amount meets those conditions, Part 2 of Schedule 18A applies—
- (a) for calculating the amount of the loss or other amount (if any) that is available for surrender by way of group relief, and
- (b) otherwise for making provision in relation to the application of this Chapter to the non-resident company.
- (5) This section is subject to section 403G (unallowable overseas losses of non-resident companies).
##### 403G
- (1) This section applies in the case of a loss or other amount arising to a non-resident company—
- (a) which is resident in any EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
where the amount is not attributable for corporation tax purposes to any UK permanent establishment of the non-resident company.
- (2) The amount is not available for surrender by way of group relief by the non-resident company in so far as conditions A and B are met.
- (3) Condition A is that—
- (a) the amount would not qualify for group relief but for any relevant arrangements, or
- (b) the amount would not have arisen to the non-resident company but for any relevant arrangements.
- (4) Condition B is that the main purpose, or one of the main purposes, of the relevant arrangements was to secure that the amount would qualify for group relief.
- (5) In this section references to relevant arrangements, in relation to any amount, are to—
- (a) arrangements made on or after 20th February 2006, or
- (b) arrangements made before that date where the amount would (but for this section) first qualify for group relief on or after that date or (as the case may be) the amount arises on or after that date.
- (6) In this section—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),
- “*UK permanent establishment*”, in relation to the non-resident company, means any permanent establishment through which it carries on a trade in the United Kingdom.
##### 411ZA
- (1) This section applies if the surrendering company is prevented from obtaining a deduction in respect of an amount by section 520 of CTA 2009 (provision not at arm's length: non-deductibility of relevant return).
- (2) The amount may not be surrendered by way of group relief.
##### 411A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Losses etc. which may be surrendered by way of group relief.
#### Further interpretation of sections 135 to 139.
#### Close companies.
#### Relief for contributions in respect of share option gains.
#### Exceptions from section 419.
##### 431ZA
- (1) An insurance company may, in its company tax return for the first accounting period of the company beginning on or after 1 January 2008 in which any of the assets of the company's long-term insurance fund would (apart from this section) be foreign business assets, elect that none of the assets of the company's long-term insurance fund are to be regarded for the purposes of this Act as being foreign business assets.
- (2) The election has effect for that accounting period and all subsequent accounting periods of the company.
- (3) An election under subsection (1) is irrevocable.
##### 431A
- (1) The Treasury may by order amend any of the life assurance provisions of the Corporation Tax Acts where it is expedient to do so in consequence of the exercise of any power under the Financial Services and Markets Act 2000, in so far as that Act relates to insurance companies.
- (2) Where any exercise of a power under that Act has effect for a period ending on or before, or beginning before and ending after, the day on which an order containing an amendment in consequence of that exercise is made under subsection (1) above, the power conferred by that subsection includes power to provide for the amendment to have effect in relation to that period.
- (2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
- (2B) An order under subsection (2A) above may in particular contain provision—
- (a) making amendments of any provision of the Corporation Tax Acts, or
- (b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
- (2C) An order under subsection (2A) above—
- (a) may make provision having effect in relation to accounting periods current when it is made, and
- (b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument.
- (3) The Treasury may by order amend any of the following provisions—
- (a) sections 432ZA, 432A, 432B to 432G and 755A . . . ;
- (b) sections 83A, 85, 88 and 89 of the Finance Act 1989;
- (c) section 210A of the Taxation of Chargeable Gains Act 1992.
- (4) An order under subsection (3) above may only be made so as to have effect in relation to periods of account—
- (a) beginning on or after 1st January 2005, and
- (b) ending before 1st October 2006.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Any power conferred by this section to make an order includes power to make—
- (a) different provision for different cases or different purposes, and
- (b) incidental, supplemental, consequential or transitional provision and savings.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 431AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432A
- (1) Subject to section 432B, this section has effect for determining for the purposes of any provision of the Corporation Tax Acts in relation to any period for which an insurance company carries on business what parts of—
- (a) income or losses arising from the assets of the company’s long-term insurance fund, or
- (b) gains or losses accruing on the disposal of such assets in accordance with the provisions of the 1992 Act,
are referable to any category of business.
- (1ZA) In subsection (1)(a) above “*income*” means—
- (a) income chargeable under Schedule A in respect of any separate Schedule A businesses treated as carried on by the company under section 432AA,
- (b) income chargeable under Schedule A in respect of distributions treated by section 121(1)(a) of the Finance Act 2006 as profits of a Schedule A business carried on by the company,
- (c) income chargeable under Case V of Schedule D in respect of any overseas property business treated as carried on by the company under section 432AA,
- (d) other income of the company chargeable under Case V of Schedule D,
- (e) distributions received by the company from companies resident in the United Kingdom,
- (f) credits in respect of any creditor relationships (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company,
- (g) credits in respect of any derivative contracts (within the meaning of Schedule 26 to the Finance Act 2002) of the company,
- (h) any income of the company chargeable under Case III of Schedule D in respect of annuities and other annual payments within paragraph (b) of Case III of Schedule D as substituted by section 18(3A),
- (i) any credits brought into account by the company under Part 3 of Schedule 29 to the Finance Act 2002 (intangible fixed assets), and
- (j) any income of the company chargeable under Case VI of Schedule D, other than profits of the company chargeable under section 436A (gross roll-up business).
- (1ZB) In subsection (1)(a) above “*losses*” means—
- (a) losses in respect of any separate Schedule A businesses treated as carried on by the company under section 432AA,
- (b) losses in respect of any overseas property businesses treated as carried on by the company under that section,
- (c) debits in respect of any creditor relationships (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company,
- (d) debits in respect of any derivative contracts (within the meaning of Schedule 26 to the Finance Act 2002) of the company,
- (e) any debits brought into account by the company under Part 2 of Schedule 29 to the Finance Act 2002 (intangible fixed assets), and
- (f) any losses of the company computed in the same way as profits chargeable under Case VI of Schedule D, other than any losses of gross roll-up business.
- (1ZC) For determining as mentioned in subsection (1) above what parts of income or gains arising from the assets of the company's long-term insurance fund are referable to PHI business (to the extent that it would not be the case by virtue of subsections (1ZA) and (1ZB))—
- (a) “income” also includes profits shown in the technical account, and
- (b) “losses” also includes losses so shown.
- (1A) If the company carries on only one category of business in the period—
- (a) all of the income and losses referred to in paragraph (a) of subsection (1) above, and
- (b) all of the gains and losses referred to in paragraph (b) of that subsection,
are referable to that category of business; but if the company carries on more than one category of business in the period, the following provisions shall apply.
- (2) The categories of business referred to in subsections (1) and (1A) above are—
- (a) basic life assurance and general annuity business,
- (b) gross roll-up business, and
- (c) PHI business.
- (3) Income or losses arising from, and gains or losses accruing on the disposal of, assets linked to any category of business is referable to that category of business.
- (3A) Amounts falling within—
- (a) section 442A,
- (b) section 85(2C) of the Finance Act 1989, or
- (c) section 85A of that Act,
are directly referable to basic life assurance and general annuity business.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) Income or losses arising from, and gains or losses accruing on the disposal of, foreign business assets is referable to gross roll-up business.
- (5) There is referable to any category of business . . . the relevant fraction of any income and losses referred to in paragraph (a) of subsection (1) above, and any gains and losses referred to in paragraph (b) of that subsection, not directly referable to any category of business.
- (6) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to basic life assurance and general annuity business, is—
$$AA+B+C$where—A is the aggregate of—(a) the mean of the opening and closing liabilities of the basic life assurance and general annuity business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business,(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and(c) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts;B is the aggregate of—(a) the mean of the opening and closing liabilities of the gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts; andC is the aggregate of—(a) the mean of the opening and closing liabilities of the PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts.$
- (6A) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to gross roll-up business, is—
$$BA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6B) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to PHI business, is—
$$CA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6C) But if the denominator found in accordance with subsection (6), (6A) or (6B) above is nil, the relevant fraction for the purposes of subsection (5) above in relation to the category of business in question is such fraction as is just and reasonable.
- (7) For the purposes of subsections (5), (6) , (6A) and (6B) above—
- (a) income and losses referred to in paragraph (a) of subsection (1) above, and gains and losses referred to in paragraph (b) of that subsection, are directly referable to a category of business if referable to that category by virtue of subsection (3) or (4A) above, . . . and
- (b) assets are directly referable to a category of business if income and losses arising from the assets, and gains and losses accruing on the disposal of the assets, are so referable by virtue of subsection (3) or (4A) above,. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In subsection (6) above—
- (a) “*appropriate part*”, in relation to the free assets amount, means—
- (i) where none (or none but an insignificant proportion) of the liabilities of the long-term business are with-profits liabilities, the part of that amount which bears to the whole the proportion A/B where—
A is the amount of the liabilities of the category of business in question (but taking that amount to be nil if it would otherwise be below nil);
B is the whole amount of the liabilities of the long-term business; and
- (ii) in any other case the part of the free assets amount which bears to the whole the proportion C/D where—
C is the amount of the with-profits liabilities of the category of business in question;
D is the whole amount of the with-profits liabilities of the long-term business; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This is subject to subsection (8ZA) below.
- (8ZA) If for the purposes of subsection (8)(a) above either B or D is nil then, in paragraph (c) of the definition of A and paragraph (b) of the definitions of B and C in subsection (6) above, “*appropriate part*”, in relation to the free assets amount, means the part of that amount which bears to the whole such proportion as is just and reasonable.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432B
- (1) This section and sections 432C to 432G have effect where it is necessary in accordance with section 83 of the Finance Act 1989 to determine what parts of any items brought into account, within the meaning of that section, are referable to life assurance business or gross roll-up business.
- (2) Where for that purpose reference falls to be made to more than one account recognised for the purposes of that section, the provisions of sections 432C to 432G apply separately in relation to each account.
- (3) Section 432C applies where the business with which an account is concerned (“*the relevant business*”) relates exclusively to policies or contracts under which the policy holders or annuitants are not eligible to participate in surplus; and sections 432E and 432F apply where the relevant business relates wholly or partly to other policies or contracts (and section 432G applies in either case).
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432C
- (1) This section specifies the extent to which the net amount is referable to life assurance business or to gross roll-up business.
- (2) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (3) To the extent that the net amount is attributable to—
- (a) assets linked to life assurance business, or
- (b) foreign business assets,
it is referable to life assurance business.
- (4) There is also referable to life assurance business the appropriate fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (5) For the purposes of subsection (4) above “the appropriate fraction” is—
$$AA+B$where—A is the mean of the opening and closing liabilities of the relevant business so far as referable to life assurance business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of assets linked to the relevant business so far as so referable and foreign business assets; andB is the mean of the opening and closing liabilities of the relevant business so far as referable to PHI business, reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to PHI business.$
- (6) But if the denominator found in accordance with subsection (5) above is nil, the appropriate fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
- (7) To the extent that the net amount is attributable to—
- (a) assets linked to gross roll-up business, or
- (b) foreign business assets,
it is referable to gross roll-up business.
- (8) There is also referable to gross roll-up business the relevant fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (9) For the purposes of subsection (8) above “the relevant fraction” is—
$$CC+D$where—C is the mean of the opening and closing liabilities of the relevant business so far as referable to gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of any assets linked to gross roll-up business and foreign business assets; andD is the mean of the opening and closing liabilities of the relevant business so far as referable to basic life assurance and general annuity business or PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to either of those categories of business.$
- (10) But if the denominator found in accordance with subsection (9) above is nil, the relevant fraction for the purposes of subsection (8) above is such fraction as is just and reasonable.
- (11) For the purposes of this section, so much of the net amount—
- (a) as is brought into account as other income in an internal linked fund of the company, and
- (b) as is not attributable to assets of that fund,
is to be treated as linked to a category of business to the same extent as income attributable to an asset of the fund would, by virtue of section 432ZA, be referable to that category of business.
##### 432D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432E
- (1) The part of the net amount which is referable to life assurance business or to gross roll-up business is—
- (a) the amount determined in accordance with subsections (2) and (2A) below, or
- (b) if greater, the amount determined in accordance with subsection (3) below.
- (1A) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (2) For the purposes of subsection (1) above there shall be determined the amount which is such as to secure—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . that
$$CS-CAS=(S-AS)×CASAS$where—S is the surplus of the relevant business;AS is so much of that surplus as is allocated to persons entitled to the benefits provided for by the policies or contracts to which the relevant business relates;CAS is so much of the surplus so allocated as is attributable to policies or contracts of life assurance business or of gross roll-up business; andCS is so much of the surplus of the relevant business as would remain if the relevant business were confined to life assurance business or to gross roll-up business.$
- (2A) In a case where an amount or amounts are taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of subsection (2B) of that section or by virtue of section . . . 444AB, . . . 444AEA,444AECA, 444AF(2) or 444AK(2) of this Act, the amount determined under subsection (2) above is increased by—
$$CASAS×RP$where—CAS and AS have the same meanings as in subsection (2) above; andRP is the amount or the aggregate of the amounts taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of any of the following provisions—subsection (2B) of that section;section 444AB . . . of this Act;section 444AEA or 444AECA of this Act;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .subsection (2) of section 444AF of this Act (and see subsections (5) and (6) of that section);subsection (2) of section 444AK of this Act (but only for the purposes mentioned in subsection (3) of that section).$
- (3) For the purposes of subsection (1) above there shall also be determined the aggregate of—
- (a) the applicable percentage of what is left of the mean of the opening and closing liabilities of the relevant business so far as referable to the category of business concerned (but taking that mean to be nil if it would otherwise be below nil) after deducting from it the mean of the opening and closing values of any assets of the relevant business linked to that category of business and foreign business assets, and
- (b) the part of the net amount . . . that is attributable to assets linked to that category of business . . . .
- (4) Subject to subsection (4A) below, for the purposes of subsection (3) above “*the applicable percentage*”, in any case, is—
$$AB×100$where—A is so much of the net amount as is brought into account in respect of the relevant business less such part of it as is attributable to linked assets and foreign business assets; andB is the mean of the opening and closing liabilities of the relevant business reduced by the mean of the opening and closing values of any assets of the relevant business which are linked assets . . . .$
- (4A) If the mean of the opening and closing liabilities of the relevant business reduced by the opening and closing values of any assets of the relevant business which are linked assets or foreign business assets is nil then, for the purposes of subsection (3) above, “*the applicable percentage*” is such percentage as is just and reasonable.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Apportionment of certain income, deductions and interest.
#### Interpretation.
##### 434A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the provisions of this Act applicable to Case I of Schedule D—
- (a) the loss resulting from the computation shall be reduced (but not below nil) by . . . —
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) any relevant non-trading deficit for that period on the company’s debtor relationships; and
- (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) if the whole or any part of that loss as so reduced is set off—
- (i) under section 393A, or
- (ii) under section 403(1),
any loss for that period under section 436A shall be reduced (but not below nil) by the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above.
- (2A) The reference in subsection (2)(a)(ii) above to a relevant non-trading deficit for any period on a company’s debtor relationships is a reference to the non-trading deficit on the company’s loan relationships which would be produced by any separate computation made under paragraph 2(1) of Schedule 11 to the Finance Act 1996 for the company’s basic life assurance and general annuity business if credits and debits given in respect of the company’s creditor relationships (within the meaning of Chapter II of Part IV of that Act) were disregarded.
- (3) In the case of a company carrying on life assurance business, no relief shall be allowable —
- (a) under Chapter II (loss relief) or Chapter IV (group relief) of Part X,
- (aa) (where the company's life assurance business is not mutual business) in respect of any amount which is a charge on income for the purposes of corporation tax, or
- (b) in respect of any amount representing a non-trading deficit on the company’s loan relationships that has been computed otherwise than by reference to debits and credits referable to that business,
against the policy holders’ share of the relevant profits for any accounting period.
- For the purposes of this subsection “*the policy holders’ share of the relevant profits*” has the same meaning as in section 89 of the Finance Act 1989.
- (4) For the purposes of section 403, where the surrendering company is an insurance company which is charged to tax under the I minus E basis in respect of its life assurance business for the surrender period, the company's gross profits of that period do not include its relevant profits (within the meaning of section 88 of the Finance Act 1989) for that period; and expressions used in this subsection and section 403 have the same meaning here as there.
#### Meaning of “distribution”.
##### 438A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 209(3AA): link to shares of company or associated company
##### 440A
- (1) Subsection (2) below applies where the assets of an insurance company include securities of a class all of which would apart from this section be regarded for the purposes of corporation tax on chargeable gains as one holding.
- (2) Where this subsection applies—
- (a) so many of the securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of—
- (i) basic life assurance and general annuity business, or
- (ii) gross roll-up business,
shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) so many of the securities as are included in the company’s long-term insurance fund but do not fall within paragraph (a) shall be treated for those purposes as a separate holding which is an asset of that fund (but not of the description mentioned in that paragraph), and
- (e) any remaining securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.
- (3) Subsection (2) above also applies where the assets of an insurance company include securities of a class and apart from this section some of them would be regarded as a 1982 holding, and the rest as a section 104 holding, for the purposes of corporation tax on chargeable gains.
- (4) In a case within subsection (3) above—
- (a) the reference in any paragraph of subsection (2) above to a separate holding shall be construed, where necessary, as a reference to a separate 1982 holding and a separate section 104 holding, and
- (b) the questions whether such a construction is necessary in the case of any paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings shall be determined in accordance with paragraph 12 of Schedule 6 to the Finance Act 1990 and the identification rules applying on any subsequent acquisitions and disposals.
- (5) Section 105 of the 1992 Act shall have effect where subsection (2) above applies as if securities regarded as included in different holdings by virtue of that subsection were securities of different kinds.
- (6) In this section—
- “*1982 holding*” has the same meaning as in section 109 of the 1992 Act;
- “*section 104 holding*” has the same meaning as in section 104(3) of that Act; and
- “*securities*” means shares, or securities of a company, and any other assets where they are of a nature to be dealt in without identifying the particular assets disposed or acquired.
- (7) In a case where the profits of a company’s life assurance business are charged to tax in accordance with Case I of Schedule D this section has effect with the modification specified in section 440B(4).
##### 441A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444A
- (1) . . . This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).
- (2) Any expenses payable which (making the assumptions in subsection (3B) below) would have fallen to be brought into account by the transferor in determining the deduction for expenses payable to be allowed under section 76 in computing profits for an accounting period following the period which ends with the day on which the transfer takes place shall, instead, be brought into account under and in accordance with that section by the transferee as expenses payable by him (and giving effect in the case of acquisition expenses, to section 86(6) to (9) of the Finance Act 1989).
- (3) Any loss which (making the assumptions in subsection (3B) below)—
- (a) would have been available under section 436A(4) to be set off against profits of the transferor for the accounting period following that which ends with the day on which transfer takes place, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall, instead, be treated as a loss of the transferee (and available to be set off against profits of gross roll-up business)if the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to the transfer).
- (3ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) Any subsection (2) excess (within the meaning of section 432F(2)) which (making the assumptions in subsection (3B) below) would have been available under section 432F(3) or (4) to reduce a subsection (3) figure (within the meaning of section 432F(1)) of the transferor in an accounting period following that which ends with the day on which transfer takes place—
- (a) shall, instead, be treated as a subsection (2) excess of the transferee, and
- (b) shall be taken into account in the first accounting period of the transferee ending after the date of the transfer (to reduce the subsection (3) figure or, as the case may be, to produce or increase a subsection (2) excess for that period),
in relation to the revenue account of the transferee dealing with or including the business transferred.
- (3B) The assumptions referred to in subsections (2), (3) and (3A) above are—
- (a) that the transferor had continued to carry on the business transferred after the transfer, and
- (b) where there is no accounting period of the transferor ending with the transfer date, that there was such an accounting period.
- (4) Where acquisition expenses are treated as expenses payable by the transferee by virtue of subsection (2) above, the amount deductible for the first accounting period of the transferee ending after the transfer takes place shall be calculated as if that accounting period began with the day after the transfer.
- (5) Where the transfer is of part only of the transferor’s long-term business, subsection (2), (3) or (3A) above shall apply only to such part of any amount to which it would otherwise apply as is appropriate.
- (6) Any question arising as to the operation of subsection (5) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and transferee shall be entitled to appear and be heard or to make representations in writing.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Classes of life assurance business
##### 431B
- (1) In this Chapter “*pension business*” means so much of a company’s life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme or is the reinsurance of such business.
- (2) Where a pension scheme ceases to be a registered pension scheme by virtue of the withdrawal of registration of the pension scheme under section 157 of the Finance Act 2004, any of the company’s life assurance business that was pension business when the pension scheme was a registered pension scheme is to be treated as ceasing to be pension business at the beginning of the period of account of the company in which the pension scheme so ceases to be a registered pension scheme.
- (3) Where—
- (a) immediately before 6th April 2006 an annuity contract falls within any of the descriptions of contracts specified in subsection (2) of this section as it had effect immediately before that date, but
- (b) on or after that date the contract does not fall to be regarded for the purposes of this section as having been entered into for the purposes of a registered pension scheme,
the contract is to be treated for the purposes of this section as having been entered into for such purposes.
##### 431BA
- (1) In this Chapter “*child trust fund business*” means so much of a company's life assurance business as is referable to child trust fund policies (but not including the reinsurance of such business).
- (2) In this section “*child trust fund policy*” means a policy of life insurance which is an investment under a child trust fund (within the meaning of the Child Trust Funds Act 2004).
##### 431BB
- (1) In this Chapter “*individual savings account business*” means so much of a company's life assurance business as is referable to individual savings account policies (but not including the reinsurance of such business).
- (2) In this section “*individual savings account policy*” means a policy of life insurance which is an investment of a kind specified in regulations made by virtue of section 695(1) of ITTOIA 2005.
##### 431C
- (1) In this Chapter “*life reinsurance business*” means reinsurance of life assurance business other than pension business or business of any description excluded from this section by regulations made by the Board.
- (2) Regulations under subsection (1) above may describe the excluded business by reference to any circumstances appearing to the Board to be relevant.
##### 431D
- (1) In this Chapter “*overseas life assurance business*” means so much of a company's relevant life assurance business as is with a policy holder or annuitant not residing in the United Kingdom (but not including the reinsurance of such business).
- (1A) In subsection (1) above “*relevant life assurance business*” means life assurance business other than—
- (a) pension business
- (b) individual savings account business,
- (c) child trust fund business, and
- (d) business of any description prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.
- (2) Regulations under subsection (1A) above may describe the excluded business by reference to any circumstances appearing to the Commissioners to be relevant.
- (3) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
- (a) make provision as to the circumstances in which a trustee who is a policy holder or annuitant residing in the United Kingdom is to be treated for the purposes of this section as not so residing; and
- (b) provide that nothing in Chapter II of Part XIII or Chapter 9 of Part 4 of ITTOIA 2005 shall apply to a policy or contract which constitutes overseas life assurance business by virtue of any such provision as is mentioned in paragraph (a) above.
- (4) Regulations under subsection (1A) or (3) above may contain such supplementary, incidental, consequential or transitional provision as appears to the Commissioners to be appropriate (including provision amending any enactment or any instrument made under an enactment).
##### 431E
- (1) The Board may by regulations make provision for giving effect to section 431D.
- (2) Such regulations may, in particular—
- (a) provide that, in such circumstances as may be prescribed, any prescribed issue as to whether business is or is not overseas life assurance business (or overseas life assurance business of a particular kind) shall be determined by reference to such matters (including the giving of certificates or undertakings, the giving or possession of information or the making of declarations) as may be prescribed,
- (b) require companies to obtain certificates, undertakings, information or declarations from policy holders or annuitants, or from trustees or other companies, for the purposes of the regulations,
- (c) make provision for dealing with cases where any issue such as is mentioned in paragraph (a) above is (for any reason) wrongly determined, including provision allowing for the imposition of charges to tax (with or without limits on time) on the insurance company concerned or on the policy holders or annuitants concerned,
- (d) require companies to supply information and make available books, documents and other records for inspection on behalf of the Board, and
- (e) make provision (including provision imposing penalties) for contravention of, or non-compliance with, the regulations.
- (3) The regulations may—
- (a) make different provision for different cases, and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 431EA
In this Chapter “*gross roll-up business*” means business of any of the following kinds—
- (a) pension business;
- (b) child trust fund business;
- (c) individual savings account business;
- (d) life reinsurance business; and
- (e) overseas life assurance business.
##### 431F
In this Chapter “*basic life assurance and general annuity business*” means life assurance business other than gross roll-up business.
### Basis of taxation etc
##### 431G
- (1) This section applies in relation to an insurance company which carries on life assurance business (whether or not it also carries on insurance business of any other kind).
- (2) Subject as follows, the profits of the life assurance business for any accounting period shall be charged to tax under the I minus E basis.
- (3) Where in the case of an insurance company for an accounting period either—
- (a) all of its life assurance business is reinsurance business and none of that business is of a type excluded from this subsection by regulations made by the Board, or
- (b) all, or substantially all, of its life assurance business is gross roll-up business,
the profits of that business for the accounting period shall be charged to tax in accordance with Case I of Schedule D and not otherwise.
- (4) Where—
- (a) the profits of the life assurance business of an insurance company for any accounting period are charged to tax under the I minus E basis, and
- (b) had those profits been charged to tax in accordance with Case I of Schedule D, a loss would have arisen to the company from that business for the period,
the loss (after being reduced in accordance with section 434A(2)(a)) may be set-off under section 393A or section 403(1).
- (5) The application, in relation to the life assurance business of an insurance company, of any provision of Case I of Schedule D is not to be taken—
- (a) to prevent the application of the I minus E basis in relation to that business of the company for any accounting period, or
- (b) to affect the operation of the I minus E basis in relation to the that business of the company for any accounting period except as specifically provided by the Corporation Tax Acts.
##### 431H
- (1) This section applies in relation to an insurance company which carries on life assurance business and insurance business of any other kind.
- (2) For the purposes of the Corporation Tax Acts—
- (a) the life assurance business, and
- (b) the other insurance business,
are to be treated as separate businesses.
- (3) The profits of the other insurance business shall be charged to tax under Case I of Schedule D as the profits of a separate trade.
- (4) But subsection (3) above does not apply where that business is mutual business.
- (5) As to the profits of the life assurance business, see section 431G.
##### 432YA
- (1) This section applies in the case of—
- (a) a company which is a non-profit company, or
- (b) the non-profit fund of a company which is not a non-profit company,
if an amount (“*the relevant amount*”) is shown in paragraph 4(12) of Appendix 9.4 to the periodical return for the company for a period of account which ends on or after 31st December 2006 but before 1st January 2009 (a “relevant period of account”).
- (2) In computing profits of PHI business in accordance with the provisions applicable to Case I of Schedule D—
- (a) X shall be added to the closing long term business provision of the company for the relevant period of account; and
- (b) XA shall be brought into account as a trading receipt of the company for each subsequent period of account until the total sum of the amounts so bought into account is equal to X (and if that total sum would otherwise exceed X, the excess shall be ignored).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) X is—
- (a) where the relevant period of account ends before 1st April 2007, the whole of the relevant amount;
- (b) where the relevant period of account ends on or after 1st April 2007 but before 1st January 2008, two-thirds of the relevant amount;
- (c) where the relevant period of account ends on or after 1st January 2008, one-third of the relevant amount.
- (2C) XA is the amount found by applying the following formula—
$$Y12×Z$Here—Y is the number of months of the period of account in question (part of a month being counted as a month); andZ is—(a) where X is the whole of the relevant amount, one-third of X;(b) where X is two thirds of the relevant amount, one-half of X;(c) where X is one third of the relevant amount, the whole of X.$
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In this section—
- “*long term business provision*” has the same meaning as in Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) This section is subject to sections 82E and 82F of the Finance Act 1989 (treatment of transferors and transferees under insurance business transfer schemes) and those sections shall apply in relation to this section as if—
- (a) any reference in them to a provision of section 82D of that Act (treatment of profits: life assurance – adjustment consequent on change in Insurance Prudential Sourcebook) were a reference to the corresponding provision of this section, and
- (b) the reference to life assurance business in section 82E was a reference to PHI business.
##### 432ZA
- (1) In this Chapter “*linked assets*” means assets of an insurance company which are identified in its records as assets by reference to the value of which benefits provided for under a policy or contract are to be determined and in a case where only part of an asset is so identified, references to a linked asset are references to that part.
- (2) Linked assets shall be taken—
- (a) to be linked to long-term business of a particular category if the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category; and
- (b) to be linked solely to long-term business of a particular category if all (or all but an insignificant proportion) of the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category.
- (3) Where an asset is linked to more than one category of long-term business, a part of the asset shall be taken to be linked to each category; and references in this Chapter to assets linked (but not solely linked) to any category of business shall be construed accordingly.
- (4) Where subsection (3) above applies, the part of the asset linked to any category of business shall be a proportion determined as follows—
- (a) where in the records of the company values are shown for the asset in funds referable to particular categories of business, the proportion shall be determined by reference to those values;
- (b) in any other case the proportion shall be equal to the proportion A/B where—
A is the total of the linked liabilities of the company which are liabilities of the internal linked fund in which the asset is held and are referable to that category of business;
B is the total of the linked liabilities of the company which are liabilities of that fund.
- (5) For the purposes of sections 432A to 432E—
- (a) income arising in any period from assets linked but not solely linked to a category of business,
- (b) gains arising in any period from the disposal of such assets, and
- (c) increases and decreases in the value of such assets,
shall be treated as arising to that category of business in the proportion which is the mean of the proportions determined under subsection (4) above at the beginning and end of the period.
- (6) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*linked liabilities*” means liabilities in respect of benefits to be determined by reference to the value of linked assets.
- (7) In the case of a policy or contract the effecting of which constitutes a class of life assurance business the fact that it also constitutes PHI business shall be disregarded for the purposes of this section unless the benefits to be provided which constitute PHI business are to be determined by reference to the value of assets.
##### 432AA
- (1) An insurance company is treated as carrying on separate Schedule A businesses, or overseas property businesses, in accordance with the following rules.
- (2) The exploitation of land held as an asset of the company’s long-term insurance fund is treated as a separate business from the exploitation of land not so held.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The exploitation of land held as an asset linked to any of the following categories of business is regarded as a separate business—
- (a) basic life assurance and general annuity business;
- (b) gross roll-up business; and
- (c) PHI business.
- (5) Accordingly, the exploitation of land held as an asset of the company’s long-term insurance fund otherwise than as mentioned in subsection . . . (4) is treated as a separate business from any other.
- (6) In this section “*land*” means any estate, interest or rights in or over land.
##### 432AB
- (1) This section applies to any loss arising in a Schedule A business or overseas property business.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) So far as a loss is referable to basic life assurance and general annuity business, it shall be treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 3 in subsection (7) of that section.
- (4) Where a company is treated under section 432AA as carrying on—
- (a) more than one Schedule A business, or
- (b) more than one overseas property business,
then, in relation to either kind of business, the reference in subsection (3) above to a loss referable to basic life assurance and general annuity business shall be construed as a reference to any aggregate net loss after setting the losses from those businesses which are so referable against any profits from those businesses that are so referable.
- (5) The provisions of sections 392A and 503, or section 392B, (loss relief) do not apply to a loss referable to life assurance business or any category of life assurance business.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432CA
- (1) This section applies where—
- (a) an insurance company is not a non-profit company in relation to a period of account (“the current period of account”),
- (b) in the case of any business with which an account of the company for the current period of account is concerned (“the relevant business”), an amount is a relevant brought into account amount for that period of account (see subsection (2)),
- (c) section 432C applies for determining the extent to which the relevant brought into account amount is referable to life assurance business or to gross roll-up business, and
- (d) the line 51 reduction condition is met (see subsection (3)).
- (2) An amount is a relevant brought into account amount for a period of account if—
- (a) it is brought into account as mentioned in subsection (2)(b) of section 83 of the Finance Act 1989 (increases in value of non-linked assets) for that period,
- (b) it is deemed to be brought into account for that period by subsection (2B) of that section in consequence of the transfer of non-linked assets, or
- (c) it is taken into account under subsection (2) of that section for that period by virtue of section 444AB as being the relevant amount in relation to non-linked assets.
- (3) The line 51 reduction condition is met if—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for the current period of account, is less than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant reduction”.
- (4) Section 432C applies in relation to so much of the relevant brought into account amount as does not exceed the relevant reduction (“the affected amount”) as if it were brought into account as an increase in the value of assets in the case of the relevant business for the applicable appropriate period of account of the company.
- (5) A period of account is an “appropriate period of account” if it ended before the current period of account and—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for it, was more than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant increase.”
- (6) The “applicable” appropriate period of account is the one which ended most recently (“the most recent appropriate period of account”).
- (7) But if the relevant increase in the case of the most recent appropriate period of account is less than the affected amount, the most recent appropriate period of account is the applicable appropriate period of account in relation to only so much of the affected amount as does not exceed that relevant increase.
- (8) In that case, the appropriate period of account which ended most recently before the most recent appropriate period of account is the applicable appropriate period of account in relation to so much of the remainder as does not exceed the relevant increase in the case of that appropriate period of account (and, where necessary, so on until the applicable appropriate period of account is established in relation to all of the affected amount or there are no more appropriate periods of account).
- (9) If the current period of account is not the first in relation to which this section has applied in the case of the business concerned, the amount of the relevant increase in the case of any appropriate period of account (“*the period in question*”) is to be treated as reduced by the relevant aggregate.
- (10) The “relevant aggregate” is the aggregate of so much of the affected amount for any period or periods of account earlier than the current period of account as was an amount to which section 432C applied as if it were brought into account as mentioned in subsection (4) for the period in question.
- (11) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
##### 432CB
- (1) This section applies where, under an insurance business transfer scheme, there is a transfer of long-term business—
- (a) from a non-profit fund of an insurance company (“*the transferor*”) which is not a non-profit company in relation to the relevant period of account,
- (b) to another insurance company (“*the transferee*”) to constitute or form part of a non-profit fund of the transferee (“*the transferee's non-profit fund*”),
(“*the transfer*”) and conditions A and B are met.
- (2) Condition A is that the fair value of the assets transferred by the transfer exceeds by an amount (“the chargeable excess”) the amount of the relevant liabilities transferred by the transfer.
For this purpose “relevant” liabilities are liabilities of a type shown (or treated as shown) in any of lines 14, 17, 21 to 23 and 31 to 38 of Form 14 of a periodical return of an insurance company.
- (3) Condition B is that the main purpose, or one of the main purposes, of the transferor or the transferee (or both) in entering into any part of the transfer scheme arrangements is to secure a reduction in tax as a result of section 432C having effect in the case of the transferee, rather than the transferor, in relation to the business transferred by the transfer.
- (4) The chargeable excess is to be brought into account by the transferor as mentioned in section 83(2)(b) of the Finance Act 1989 for the relevant period of account.
- (5) Where there is no amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first period of account of the transferee ending on or after the transfer date (“the first post-transfer period of account”), the chargeable excess is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the first post-transfer period of account.
- (6) Where—
- (a) there is an amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first post-transfer period of account, and
- (b) the amount so shown in column 1 of line 51 of Form 14 of the periodical return of the transferee for that period of account, or for any other period of account of the transferee ending after the transfer date, (an “affected period of account”) is less than the total chargeable excess amount,
the relevant amount is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the affected period of account.
- (7) For this purpose “the relevant amount” is the amount by which—
- (a) the amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the affected period of account, is less than
- (b) the total chargeable excess amount less any amount brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for any earlier period of account by virtue of the operation of this section in relation to the transferee's non-profit fund.
- (8) In subsections (6) and (7) “*the total chargeable excess amount*” means the aggregate of—
- (a) the chargeable excess, and
- (b) any amount which is the chargeable excess in relation to any other transfer of business to the transferee's non-profit fund.
- (9) In this section “*the relevant period of account*” means—
- (a) the period of account of the transferor ending immediately before the transfer date, or
- (b) if no period of account of the transferor so ends, the period of account of the transferor covering the transfer date.
- (10) In this section “*the transfer scheme arrangements*” means the insurance business transfer scheme and any relevant associated operations; and for this purpose “*relevant associated operations*” means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance, or
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee,
which is effected in connection with the insurance business transfer scheme.
- (11) In subsection (10)—
- “dependant”, and
- “insurance undertaking”,
have the same meaning as in the Insurance Prudential Sourcebook.
- (12) In this section “*the transfer date*” means the date on which the insurance business transfer scheme takes effect.
- (13) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
#### Section 432B apportionment: business transfers-in
##### 432F
- (1) The provisions of this section provide for the reduction of the amount determined in accordance with section 432E(3) (“the subsection (3) figure”) for an accounting period in which that amount exceeds, or would otherwise exceed, the amount determined in accordance with section 432E(2) (“the subsection (2) figure”).
- (2) . . . There shall be determined for each accounting period the amount (if any) by which the subsection (2) figure . . . exceeds the subsection (3) figure (“the subsection (2) excess”).
- (3) Where there is a subsection (2) excess, the amount shall be carried forward and if in any subsequent accounting period the subsection (3) figure exceeds, or would otherwise exceed, the subsection (2) figure, it shall be reduced by the amount or cumulative amount of subsection (2) excesses so far as not previously used under this subsection.
- (4) Where in an accounting period that amount is greater than is required to bring the subsection (3) figure down to the subsection (2) figure, the balance shall be carried forward and aggregated with any subsequent subsection (2) excess for use in subsequent accounting periods.
##### 432G
- (1) There is referable to the life assurance business of the transferee the appropriate fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (2) For the purposes of subsection (1) above “the appropriate fraction” is—
$$LABLTL$where—LABL is the amount of the liabilities transferred that are referable to the life assurance business (but is nil if it would otherwise be below nil); andTL is the whole of the liabilities transferred.$
- (3) But if the amount of the liabilities transferred is nil, the appropriate fraction for the purposes of subsection (1) above is such fraction as is just and reasonable.
- (4) There is referable to the gross roll-up business of the transferee the relevant fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (5) For the purposes of subsection (4) above “the relevant fraction” is—
$$GRBLTL$where—GRBL is the amount of the liabilities transferred that are referable to the gross roll-up business (but is nil if it would otherwise be below nil); andTL has the same meaning as in subsection (2) above.$
- (6) But if the amount of the liabilities transferred is nil, the relevant fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
### Miscellaneous provisions relating to life assurance business
##### 434AZA
- (1) Where this section applies in the case of a company carrying on life assurance business, relief allowable under section 393A or Chapter 4 of Part 10 in respect of losses incurred by the company in the life assurance business in an accounting period is reduced in accordance with section 434AZB.
- (2) This section applies in the case of a company where—
- (a) there has been a relevant addition to one or more non-profit funds in a period of account ending no later than the accounting period (“the relevant period of account”) (see subsection (3)),
- (b) the company is not a non-profit company in relation to the relevant period of account and has not elected under subsection (9) of section 83YA of the Finance Act 1989 to be treated for the purposes of that section as if it were, and
- (c) condition A or B is met,
and, if the relevant period of account is not the period of account ending with the accounting period (“the current period of account”), condition C is also met.
- (3) For the purposes of subsection (2), there is a relevant addition to a non-profit fund in the relevant period of account if an amount is shown as a transfer from non-technical account in line 32 of the Form 58 of the non-profit fund in the periodical return for that period of account.
- (4) Condition A is that there is a relevant book value election in relation to assets of a non-profit fund of the company.
- (5) For the purposes of subsection (4), there is a relevant book value election in relation to assets of a non-profit fund if an amount is shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account.
- (6) Condition B is that the company is party to arrangements the main purpose, or one of the main purposes, of which is to reduce the relevant admissible value of assets of a non-profit fund of the company, other than any structural assets.
- (7) For the purposes of subsection (6) (and section 434AZB), the “*relevant admissible value*” means the value reflected in line 89 of Form 13 of the periodical return for the current period of account.
- (8) Condition C is that the surplus arising since the last valuation shown in line 34 of the Form 58 of the non-profit fund, or any of the non-profit funds, in relation to which condition A or B is met in the periodical return for the current period of account is a negative amount.
#### Exempt distributions: division of business
##### 434AZB
- (1) The amount of the relief allowable as mentioned in section 434AZA(1) is reduced by whichever of the following is the least—
- (a) the amount of the loss,
- (b) the amount specified in subsection (2), and
- (c) the amount specified in subsection (4).
- (2) The amount mentioned in subsection (1)(b) is—
- (a) where only condition A in section 434AZA is met, the relevant amount relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant amounts relating to them,
- (b) where only condition B is met, the amount of the relevant reduction relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant reductions relating to them, and
- (c) where both condition A and condition B are met, the aggregate of the amounts in paragraphs (a) and (b).
- (3) In subsection (2)—
- (a) “*relevant amount*”, in relation to a non-profit fund, means the amount shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account (as reduced by any amount which has had effect to reduce relief for losses for a previous accounting period), and
- (b) “*relevant reduction*”, in relation to a non-profit fund, means the reduction of the relevant admissible value of assets of the non-profit fund (other than structural assets) which is attributable to the arrangements (as so reduced).
- (4) The amount mentioned in subsection (1)(c) is—
- (a) if the relevant period of account is the current period of account, the amount referred to in section 434AZA(3) in the case of the non-profit fund, or of each of the non-profit funds, to which there has been a relevant addition in the relevant period of account, and
- (b) otherwise, so much of the amount shown in line 31 of the Form 58 of the non-profit fund or non-profit funds in the periodical return for the current period of account as is attributable to the amount so referred to.
##### 434AZC
- (1) For the purposes of sections 434AZA and 434AZB, a non-profit fund required to support a with-profits fund is to be treated as not being a non-profit fund.
- (2) Sections 434AZA and 434AZB apply to a non-profit part of a with-profits fund as if references to something shown in the Form 14 or Form 58 of the non-profit fund in a periodical return were to what would be so shown if there were a Form 14 or Form 58 of the non-profit part of the with-profits fund in the periodical return.
- (3) In sections 434AZA and 434AZB—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
- “*structural assets*” has the same meaning as in section 83XA of the Finance Act 1989 (see subsection (3) of that section and any regulations made under it).
##### 434B
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 436A
- (1) Profits arising to an insurance company from gross roll-up business—
- (a) are to be treated as income within Schedule D, and
- (b) are chargeable under Case VI of that Schedule.
- (2) For that purpose—
- (a) the gross roll-up business is to be treated separately, and
- (b) the profits from it are to be computed in accordance with the provisions of this Act applicable to Case I of Schedule D.
- (3) In making that computation, sections 82 and 82B to 83AB 83ZA of the Finance Act 1989 apply with the necessary modifications.
- (4) If in any accounting period an insurance company incurs a loss, to be computed on the same basis as the profits, arising from its gross roll-up business—
- (a) the loss must be set off against the amount of any profits chargeable under this section for any subsequent accounting period, and
- (b) accordingly, the amount of the company's profits so charged in any such accounting period is to be treated as reduced by the amount of the loss or so much of that amount as cannot be relieved under this section against profits of an earlier accounting period.
- (5) Section 396 does not apply to a loss incurred by an insurance company on its gross roll-up business.
- (6) No loss to which section 396 applies may be set off . . . against the amount of any profits chargeable under this section.
- (7) This section does not apply in relation to an insurance company for an accounting period if the profits of its long-term business for the accounting period are charged to tax under Case I of Schedule D.
##### 436B
- (1) Gains referable to gross roll-up business are not chargeable gains.
- (2) For the purposes of this section “*gains referable to gross roll-up business*” means gains which—
- (a) accrue to an insurance company on the disposal by it of assets of its long-term insurance fund, and
- (b) are referable (in accordance with section 432A) to gross roll-up business.
##### 437A
- (1) For the purposes of section 437 an annuity is a steep-reduction annuity if—
- (a) the amount of any payment in respect of the annuity (but not the term of the annuity) depends on any contingency other than the duration of a human life or lives;
- (b) the annuitant is entitled in respect of the annuity to payments of different amounts at different times; and
- (c) those payments include a payment (“*a reduced payment*”) of an amount which is substantially smaller than the amount of at least one of the earlier payments in respect of that annuity to which the annuitant is entitled.
- (2) Where there are different intervals between payments to which an annuitant is entitled in respect of any annuity, the question whether or not the conditions in subsection (1)(b) and (c) above are satisfied in the case of that annuity shall be determined by assuming—
- (a) that the annuitant’s entitlement, after the first payment, to payments in respect of that annuity is an entitlement to payments at yearly intervals on the anniversary of the first payment; and
- (b) that the amount to which the annuitant is assumed to be entitled on each such anniversary is equal to the annuitant’s assumed entitlement for the year ending with that anniversary.
- (3) For the purposes of subsection (2) above an annuitant’s assumed entitlement for any year shall be determined as follows—
- (a) the annuitant’s entitlement to each payment in respect of the annuity shall be taken to accrue at a constant rate during the interval between the previous payment and that payment; and
- (b) his assumed entitlement for any year shall be taken to be equal to the aggregate of the amounts which, in accordance with paragraph (a) above, are treated as accruing in that year.
- (4) In the case of an annuity to which subsection (2) above applies, the reference in section 437(1CB)(a) to the making of a reduced payment shall be construed as if it were a reference to the making of a payment in respect of that annuity which (applying subsection (3)(a) above) is taken to accrue at a rate that is substantially less than the rate at which at least one of the earlier payments in respect of that annuity is taken to accrue.
- (5) Where—
- (a) any question arises for the purposes of this section whether the amount of any payment in respect of any annuity—
- (i) is substantially smaller than the amount of, or
- (ii) accrues at a rate substantially less than,
an earlier payment in respect of that annuity, and
- (b) the annuitant or, as the case may be, every annuitant is an individual who is beneficially entitled to all the rights conferred on him as such an annuitant,
that question shall be determined without regard to so much of the difference between the amounts or rates as is referable to a reduction falling to be made as a result of the occurrence of a death.
- (6) Where the amount of any one or more of the payments to which an annuitant is entitled in respect of an annuity depends on any contingency, his entitlement to payments in respect of that annuity shall be determined for the purposes of section 437(1CA) to (1CC) and this section according to whatever (applying any relevant actuarial principles) is the most likely outcome in relation to that contingency.
- (7) Where any agreement or arrangement has effect for varying the rights of an annuitant in relation to a payment in respect of any annuity, that payment shall be taken, for the purposes of section 437(1CA) to (1CC) and this section, to be a payment of the amount to which the annuitant is entitled in accordance with that agreement or arrangement.
- (8) References in this section to a contingency include references to a contingency that consists wholly or partly in the exercise by any person of any option.
##### 438B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 438C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440B
- (1) The following provisions apply where the profits of a company’s life assurance business are charged to tax in accordance with Case I of Schedule D in accordance with section 431G(3).
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Subsection (1) of section 440 applies as if the only categories set out in subsection (4) of that section were—
- (a) assets of the long-term insurance fund, and
- (b) other assets.
- (4) Section 440A applies as if for paragraphs (a), (d) and (e) of subsection (2) there were substituted—
- (“) so many of the securities as are included in the company's long-term insurance fund shall be treated for the purposes of corporation tax as a separate holding which is an asset of that fund, and
- (b) any remaining securities shall be treated for those purposes as a separate holding which is not of the description mentioned in the preceding paragraph.”.
- (4A) Section 440(2) does not apply if either the transferor or the company by which the asset is acquired is a company whose profits are charged to tax in accordance with Case I of Schedule D (or if they both are).
- (4B) Section 211 of the 1992 Act does not apply in relation to assets which are referable to the life assurance business of the transferor if the transferor is a company whose profits are charged to tax in accordance with Case I of Schedule D.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440C
- (1) Subsection (2) makes provision for a case where—
- (a) subsection (4) of section 431G applies in relation to the profits of the life assurance business of an insurance company for any accounting period, but
- (b) the profits of that business for a succeeding accounting period fall to be charged to tax in accordance with Case I of Schedule D by virtue of subsection (3) of that section.
- (2) The loss referred to in section 431G(4)(b) (less any loss for the same accounting period set off under section 436A for any intervening accounting period and any amount deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989) may be set off under section 393 against profits of that succeeding accounting period (without being reduced in accordance with section 434A(2)(a)).
- (3) In determining whether any loss has been set off under section 436A for any intervening accounting period, or whether any amount has been deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989, losses of earlier accounting periods are to be assumed to be set off before those of later accounting periods.
- (4) Subsection (5) makes provision for a case where—
- (a) a loss arises to an insurance company for an accounting period for which the profits of its life assurance business fall to be charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3)(b),
- (b) the profits of that business for a subsequent accounting period are charged to tax under the I minus E basis, and
- (c) had those profits (instead) been charged to tax in accordance with Case I of Schedule D, any of that loss would have been available to be set off against them under section 393.
- (5) The loss is to be treated for the purposes of the operation of section 436A in relation to the subsequent accounting period as if it were a loss arising from its gross roll-up business in the accounting period in which it arose.
- (6) Subsections (7) and (8) make provision for a case where—
- (a) the profits of the life assurance business of an insurance company for an accounting period are charged to tax under the I minus E basis,
- (b) the profits of that business for its next accounting period fall to be charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3), and
- (c) that prevents the giving of relief in accordance with section 86(8) of the Finance Act 1989 (acquisition expenses relieved in fractions under section 76).
- (7) Any relief which would have been so given in—
- (a) the next accounting period, or
- (b) any subsequent accounting period for which the profits of the company's life assurance business continue to be charged to tax in accordance with Case I of Schedule D,
may be given by set-off against any gains treated as accruing under section 213(1) of the 1992 Act at the end of the accounting period.
- (8) But if the profits of the company's life assurance business for a subsequent accounting period are charged to tax under the I minus E basis, any relief not previously given under subsection (7) is to be treated for the purposes of the operation of section 76 in relation to the first subsequent accounting period for which profits are so charged as if it were an amount which is to be relieved under that section by virtue of section 86(8) and (9) of the Finance Act 1989.
#### Additions to non-profit funds: amount of loss reduction
##### 440D
Schedule 19ABA (which makes modifications of this Act in relation to BLAGAB group reinsurers) shall have effect.
##### 441B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 442A
- (1) Where an insurance company reinsures any risk in respect of a policy or contract attributable to its basic life assurance and general annuity business, the investment return on the policy or contract shall be treated as accruing to the company while the risk remains reinsured by the company under the reinsurance arrangement and shall be charged to tax under Case VI of Schedule D.
- (2) The Board may make provision by regulations as to the amount of investment return to be treated as accruing in each accounting period during which the reinsurance arrangement is in force.
- (3) The regulations may, in particular, provide that the investment return to be treated as accruing to the company in respect of a policy or contract in any accounting period shall be calculated by reference to—
- (a) the aggregate of the sums paid by the company to the reinsurer during that accounting period and any earlier accounting periods by way of premium or otherwise;
- (b) the aggregate of the sums paid by the reinsurer to the company during that accounting period and any earlier accounting periods by way of commission or otherwise;
- (c) the aggregate amount of the net investment return treated as accruing to the company in any earlier accounting periods, that is to say, net of tax at such rate as may be prescribed; and
- (d) such percentage rate of return as may be prescribed.
- (3A) Where a transfer of the reinsurance arrangement from one insurance company (“*the transferor*”) to another (“*the transferee*”) is effected by novation or an insurance business transfer scheme, for the purpose of calculating the investment return to be treated as accruing to the transferee in respect of the policy or contract after the transfer, the references to the company in subsection (3)(a), (b) and (c) above include (as well as the transferee)—
- (a) the transferor, and
- (b) any insurance company from which the reinsurance arrangement was transferred on an earlier transfer effected by novation or an insurance business transfer scheme.
- (4) The regulations shall provide that the amount of investment return to be treated as accruing . . . in respect of a policy or contract in the final accounting period during which the policy or contract is in force is the amount, ascertained in accordance with regulations, by which the profit over the whole period during which the policy or contract, and the reinsurance arrangement, were in force exceeds the aggregate of the amounts treated as accruing in earlier accounting periods.
- (5) Regulations under this section—
- (a) may exclude from the operation of this section such descriptions of insurance company, such descriptions of policies or contracts and such descriptions of reinsurance arrangements as may be prescribed;
- (b) may make such supplementary provision as to the ascertainment of the investment return to be treated as accruing to the company as appears to the Board to be appropriate, including provision requiring payments made during an accounting period to be treated as made on such date or dates as may be prescribed; and
- (c) may make different provision for different cases or descriptions of case.
- (6) In this section “*prescribed*” means prescribed by regulations under this section.
##### 444AZA
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in respect of that business under the I minus E basis,
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3), and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) Any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits chargeable under section 436A (a “Case VI loss”) shall instead be treated as a loss of the transferee (a “Case I loss”) available to be set off against GRBP in relation to a period of account.
- (3) For the purposes of subsection (2) above “*GRBP*”, in relation to a period of account, is—
$P×GRBTLTL$
where—
- *P* is the amount of such profits of the transferee's life assurance business for the period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable),
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of any Case VI loss to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and the transferee shall be entitled to appear and be heard or to make representations in writing.
#### Income or gains arising from property investment LLP
##### 444AZB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3),
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under the I minus E basis, and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) The relevant fraction of any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits of that business (a “Case I loss”) shall instead be treated as a loss of the transferee (a “Case VI loss”) available to be set off against the amount of such profits chargeable under section 436A for a period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable).
- (3) For the purposes of subsection (2) above “*the relevant fraction*”, in relation to a period of account, is—
$GRBTLTL$
where—
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of the amount of any Case I loss to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and the transferee shall be entitled to appear and be heard or to make representations in writing.
##### 444AA
- (1) This section applies where the whole of the long-term business of a person (“*the transferor*”) is transferred from that person–
- (a) by one insurance business transfer scheme, or
- (b) by two or more insurance business transfer schemes which take effect on the same date.
- (2) Where (apart from this subsection) there would not be a periodical return of the transferor covering a period ending immediately before the transfer date, there is to be deemed for the purposes of corporation tax to be a periodical return of the transferor covering the period—
- (a) beginning immediately after the last period ending before the transfer date which is covered by a periodical return of the transferor, and
- (b) ending immediately before the transfer date.
- (3) The periodical return deemed to exist by subsection (2) above is to be deemed to contain—
- (a) such entries as would be included in an actual periodical return of the transferor covering the period mentioned in subsection (2) above, and
- (b) such entries as would be included in an actual periodical return of the transferor covering the period—
- (i) beginning immediately after the end of the period mentioned in subsection (2) above, and
- (ii) ending immediately before the transfer had effect,
and the period mentioned in subsection (2) above is to be deemed to be a period of account (but not an accounting period) of the transferor.
- (4) There is to be deemed for the purposes of corporation tax to be a periodical return of the transferor—
- (a) covering the transfer date, and
- (b) containing the appropriate entries.
- (5) In subsection (4) above “*appropriate entries*” means such entries as would be included in an actual periodical return covering the transfer date—
- (a) in line 32 of Form 40, and
- (b) in line 11 of Form 14, in both columns (treating references in that form to “current year” as references to the time immediately after the transfer date and to “previous year” as references to the time immediately before the transfer date).
- (6) A transfer date covered by a periodical return deemed to exist by subsection (4) above is to be deemed to be a period of account of the transferor only for the purpose of taking into account profits under section 444ABD.
- (7) Where—
- (a) a periodical return deemed to exist by subsection (4) above is preceded by an actual periodical return of the transferor covering the period immediately before the transfer date, and
- (b) profits are to be taken into account under section 444ABD in the period of account deemed to exist by subsection (6) above,
those profits are to be deemed for the purposes of corporation tax to be profits arising on the last day of the period of account covered by the actual periodical return.
- (8) Any actual periodical return of the transferor covering a period which includes the transfer date is to be ignored for the purposes of corporation tax.
- (9) In this section and sections 444AB to 444AECC “*the transfer date*”, in relation to an insurance business transfer scheme, means the date on which it takes effect.
##### 444AB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer long-term business of a person (“*the transferor*”) to another person (“*the transferee*”), and
- (b) condition A or condition B is met.
- (2) Condition A is met if any of the assets of the transferor's long-term insurance fund which are transferred . . . by the insurance business transfer scheme are not, immediately after their transfer—
- (a) if the transferee is an insurance company or an insurance special purpose vehicle, assets of the transferee's long-term insurance fund, or
- (b) if the transferee is not an insurance company , an insurance special purpose vehicleor a friendly society, assets of a fund of the transferee which would be a with-profits fund if the transferee were an insurance company,
(“relevant non-transferred assets”).
- (3) Condition B is met if, immediately after the transfer date, the transferor—
- (a) does not carry on long-term business, but
- (b) holds any assets which, immediately before the transfer date, were assets of its long-term insurance fund (“retained assets”).
- (4) If there are relevant non-transferred assets or retained assets (or both) the relevant amount in relation to them (see subsection (5) below) is to be taken into account under section 83(2) of the Finance Act 1989 as an increase in value of the assets of the long-term insurance fund of the transferor for the relevant period of account (see subsection (6) below).
- (5) Section 444ABA makes provision for the calculation of the relevant amount in relation to relevant non-transferred assets; and section 444ABB makes provision for its calculation in relation to retained assets.
- (5A) In this section references to assets held by the transferor after the transfer do not include—
- (a) assets held on trust for the transferee, or
- (b) assets held to meet liabilities which have been wholly reinsured and which are intended to be transferred under an insurance business transfer scheme to the reinsurer.
- (6) In this section and sections 444ABA to 444AC “*the relevant period of account*” means the period of account of the transferor ending, or treated by section 444AA(2) as ending, immediately before the transfer date.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
- (8) For the purpose of paragraph (2)(a), in relation to an insurance special purpose vehicle which is not an insurance company, “*long-term insurance fund*” has the meaning it has in paragraph 4(5) of Schedule 19ABA.
##### 444ABA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are relevant non-transferred assets is—
$$FVA-BTO$where—FVA is the fair value of the assets on the transfer date, andBTO is the lesser of ABTO and AL13, where—ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andAL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.$
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) See section 444AA for the meaning of “the transfer date”. . . in this section.
##### 444ABAA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are non-profit fund transferred assets is—
$$FVA-(ABTO+TL)$where—FVA is the fair value of the assets on the transfer date,ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andTL is the amount of any non-profit fund transferred liabilities which are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38, but not in line 61, in Form 14 in the periodical return for the period of account of the transferor ending (or treated as ending by section 444AA) immediately before the transfer date or, if there is no period of account of the transferor so ending (or treated as so ending), the amount of any liabilities which would be so shown if one did.$
- (2) In subsection (1) “*non-profit fund transferred liabilities*” means such of the liabilities of the transferor's long-term insurance fund as are transferred from the transferor to the transferee by the insurance business transfer scheme and were, immediately before their transfer, liabilities of a non-profit fund of the transferor.
- (3) See section 444AA for the meaning of “the transfer date” in this section.
#### Securities.
##### 444ABB
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are retained assets is—
$FVA-ABDP-RL13-RRL$
where—
- FVA is the fair value of the assets on the transfer date,
- ABDP is the amount of the profits to be taken into account as profits under section 444ABD,
- RL13 is the amount by which AL13 exceeds VE, and
- RRL is the value of any relevant retained liabilities immediately after the transfer date.
But the relevant amount is nil if it would otherwise be below nil.
- (1A) For the purposes of subsection (1) above—
- (a) AL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date;
- (b) VE is the amount (if any) by which VL32 exceeds VTL where—
- (i) VL32 is the value of the assets shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor covering (or treated as covering) the transfer date, and
- (ii) VTL means the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by the insurance business transfer scheme; and
- (c) relevant retained liabilities are any liabilities of the company's long-term business which are owed by the company immediately after the transfer date and are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38 in Form 14 in a periodical return for the period of account ending (or treated as ending by section 444AA) immediately before the transfer date.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABBA
- (1) This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“*the transferor*”) to another (“*the transferee*”).
- (2) If the transferor and the transferee jointly elect, the transferee (and not the transferor) is chargeable to any amount of additional corporation tax to which the transferor would otherwise be chargeable by virtue of section 444AB(4) in relation to relevant non-transferred assets.
- (3) An election under subsection (2) above—
- (a) is to be irrevocable, and
- (b) is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 90 days beginning with the day following the transfer date,
and a copy of the notice containing the election must accompany the tax return of the transferee for the first accounting period ending after the transfer. Paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.
- (4) Where an election under subsection (2) above has been made, the transferor must inform the transferee of—
- (a) the amount of any additional corporation tax to which the transferor considers the election to apply, and
- (b) the day on which that tax is due and payable,
no later than the end of the period of 8 months beginning with the day following the transfer date.
- (5) Tax chargeable on the transferee by virtue of an election under subsection (2) above—
- (a) is due in accordance with section 59D of the Management Act on the day on which it would have been due if no election had been made, and
- (b) for the purposes of that section, is to be treated as tax payable by the transferor (and not as tax payable by the transferee).
- (6) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ABD
- (1) Any profits representing the amount by which—
- (a) the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by an insurance business transfer scheme, exceeds
- (b) the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in line 32 of Form 40 of the periodical return of the transferor for the period of account of the transferor including the transfer date,
are to be taken into account as profits of that period of account in accordance with subsections (1A) and (1C) below.
- (1A) Where the profits of the life assurance business of the transferor for a period of account are charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3), the appropriate fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax in accordance with Case I of Schedule D (and not otherwise).
- (1B) For the purposes of subsection (1A) above “the appropriate fraction” is the appropriate fraction for the purposes of section 432G(1).
- (1C) Where the profits of the life assurance business of the transferor for a period of account are charged to tax under the I minus E basis, the relevant fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 436A (and not otherwise).
- (1D) For the purposes of subsection (1C) above “the relevant fraction” is the relevant fraction for the purposes of section 432G(4).
- (1E) Where the value mentioned in paragraph (b) of subsection (1) above exceeds the amount mentioned in paragraph (a) of that subsection, the amount of the excess is not to be taken into account as a loss of the transferor.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AC
- (1) This section applies where an insurance business transfer scheme has effect to transfer . . . long-term business of a person (“*the transferor*”) to another person (“*the transferee*”) and the condition in subsection (2) below is met.
- (2) The condition is that the transferor did not carry on life assurance business that is mutual business during the relevant period of account.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amount which (apart from this section) would be regarded as other income of the transferee for the purposes of section 83(2)(e) of the Finance Act 1989 for the period of account of the transferee which includes the transfer date is to be reduced by an amount equal to the lesser of the transferred surplus and any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.
- (5) In subsection (4) above “*the transferred surplus*”is VE – RBTO where—
- (a) VE has the same meaning as in section 444ABB, and
- (b) RBTO means so much of BTO as relates to relevant non-transferred assets transferred to the transferee where—
- (i) BTO has the same meaning as in section 444ABA, and
- (ii) “*relevant non-transferred assets*” has the same meaning as in section 444AB.
- (5A) Where the transfer is to more than one transferee, the amount of any reduction to be made in accordance with subsection (4) above is to be apportioned to each transferee on a just and reasonable basis.
- (6) See section 444AA for the meaning of “the transfer date”, and section 444AB for the meaning of “the relevant period of account”, in this section.
##### 444ACZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ACA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AE
- (1) Where an insurance business transfer scheme has effect to transfer the relevant financing arrangements entered into in relation to a non-profit fund of an insurance company (“*the transferor*”) to another person (“*the transferee*”), after the transfer—
- (a) they are to be treated for the purposes of sections 83YC and 83YD of the Finance Act 1989 as having been entered into by the transferee, but
- (b) the references in those sections to earlier periods of account of the transferee include earlier periods of account of the transferor.
- (2) But if the insurance business transfer scheme has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the transferor, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the transferor, or of the transferee or any of the transferees, ending after the transfer is to be made on a just and reasonable basis.
- (3) Subsection (4) below applies where—
- (a) relevant financing arrangements have been entered into in relation to a non-profit fund of an insurance company (“the old company”), and
- (b) as a result of any transaction other than an insurance business transfer scheme, another insurance company (“the new company”) becomes the debtor in respect of the money debt, or the cedant, under the financial reinsurance arrangements.
- (4) Where this subsection applies, after the transaction—
- (a) the relevant financing arrangements are to be treated for the purposes of sections 83YC and 83YD as having been entered into by the new company, but
- (b) the references in those sections to earlier periods of account of the new company include earlier periods of account of the old company, and
- (c) the transaction is not to be regarded as causing the condition in section 83YD(3) to be met in relation to the old company.
- (5) But if the transaction has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the old company, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the old company, or of the new company or any of the new companies, ending after the transaction is to be made on a just and reasonable basis.
- (6) Expressions used in this section and section 83YC or 83YD have the same meanings here as there.
##### 444AEA
- (1) This section applies where—
- (a) as a result of the whole . . . of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a Case I advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of the whole . . . of the transfer scheme arrangements is the obtaining of that Case I advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” means an insurance business transfer scheme (“*the relevant transfer scheme*”) together with any relevant associated operations.
- (3) If a Case I advantage is obtained by the transferor (see subsection (1) of section 444AEB), the amount of the transferor's Case I advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a Case I advantage is obtained by the transferee (see subsection (1) of section 444AEC), the amount of the transferee's Case I advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) In this section and sections 444AEB to 444AECC“*relevant associated operations*”, in relation to the relevant transfer scheme, means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance,
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee, or
- (d) any surplus-increasing transfer of assets,
which is effected in connection with the relevant transfer scheme.
- (6) In subsection (5) above—
- “*dependant*” and “*insurance undertaking*” have the same meaning as in the Insurance Prudential Sourcebook, and
- “*surplus-increasing transfer of assets*” means a transfer of assets of the transferor's long-term insurance fund to the transferee which is not brought into account for any period of account of the transferee but increases the amount of total surplus shown in line 39 of Form 58 in any periodical return of the transferee.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AEB
- (1) A Case I advantage is obtained by the transferor if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a Case I advantage is obtained by the transferor, the amount of the Case I advantage is the aggregate of—
- (a) the amounts (if any) by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, and
- (b) the amounts (if any) by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (4) In this section and sections 444AEC, 444AECB and 444AECC—
- “*Case I profits*” and “*Case I losses*” means profits and losses computed in accordance with the provisions of Case I of Schedule D, and
- “the relevant time” is the time at which any application under section 444AED is made, or, if no such application is made, the transfer date.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AEC
- (1) A Case I advantage is obtained by the transferee if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a Case I advantage is obtained by the transferee, the amount of the Case I advantage is—
- (a) the amount by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) the amount by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (4) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “Case I profits” and “Case I losses” and “the relevant time”, in this section.
##### 444AECA
- (1) This section applies where—
- (a) as a result of any part of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a Case I advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of that part of the transfer scheme arrangements is the obtaining of that Case I advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” has the same meaning as in section 444AEA.
- (3) If a Case I advantage is obtained by the transferor (see subsection (1) of section 444AECB), the amount of the transferor's Case I advantage (see subsection (3) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a Case I advantage is obtained by the transferee (see subsection (1) of section 444AECC), the amount of the transferee's Case I advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AECB
- (1) A Case I advantage is obtained by the transferor if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the Case I profits to be greater or the Case I losses to be less than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a Case I advantage is obtained by the transferor.
- (3) If a Case I advantage is obtained by the transferor, the amount of the Case I advantage is the aggregate of—
- (a) the amounts (if any) by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, and
- (b) the amounts (if any) by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (5) In this section and section 444AECC “*the relevant part of the arrangements*” means, in relation to a Case I advantage, the part of the transfer scheme arrangements as a result of which the Case I advantage is obtained.
- (6) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “Case I profits” and “Case I losses” and “the relevant time”, in this section.
##### 444AECC
- (1) A Case I advantage is obtained by the transferee if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the Case I profits to be greater, or the Case I losses to be less, than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a Case I advantage is obtained by the transferor.
- (3) If a Case I advantage is obtained by the transferee, the amount of the Case I advantage is—
- (a) the amount by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, or
- (b) the amount by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (5) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations”, section 444AEB for the meaning of “Case I profits” and “Case I losses” and “the relevant time” and section 444AECB for the meaning of “the relevant part of the arrangements”, in this section.
##### 444AED
- (1) Sections 444AEA and 444AECA do not apply in relation to the transferor or the transferee if, on an application under this section, the Commissioners for Her Majesty's Revenue and Customs (“the HMRC Commissioners”) have given a notice under subsection (2) below.
- (2) A notice under this subsection is a notice stating that the HMRC Commissioners are satisfied—
- (a) that the obtaining of a Case I advantage by the applicant is not the sole or main purpose of the whole or any part of the transfer scheme arrangements, or
- (b) that the transferor and the transferee are members of the same group of companies and that there is no advantage to the group arising from any Case I advantage obtained by the transferor or by the transferee.
- (3) For the purposes of this section there is no advantage to a group arising from any Case I advantage obtained by the transferor or by the transferee if—
- (a) as a result of transfer scheme arrangements, there is an increase in the liability to corporation tax of one or more companies which are members of the group of companies, and
- (b) the amount (or aggregate amount) of that increase is not less than the reduction in the liability to corporation tax of the transferor or the transferee (or both) arising from the obtaining of the Case I advantage.
- (4) An application under this section must be in writing and contain particulars of the transfer scheme arrangements.
- (5) The HMRC Commissioners may by notice require the applicant to provide further particulars in order to enable them to determine the application.
- (6) A requirement may be imposed under subsection (5) above within 30 days of the receipt of the application or of any further particulars required under that subsection.
- (7) If a notice under subsection (5) above is not complied with within 30 days or such longer period as the HMRC Commissioners may allow, they need not proceed further on the application.
- (8) The HMRC Commissioners must give notice of their decision on an application under this section to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of that notice being complied with.
- (9) If the HMRC Commissioners—
- (a) give notice to the applicant under subsection (8) above that they are not satisfied as mentioned in subsection (2) above, or
- (b) do not comply with subsection (8) above,
the applicant may require them to transmit the application to the Special Commissioners.
- (10) A requirement under subsection (9) above must be imposed within 30 days of the giving of the notice or the failure to comply and must be accompanied by any notice given under subsection (5) above and further particulars provided pursuant to any such notice.
- (11) Any notice given by the Special Commissioners has effect for the purposes of subsection (1) above as if it were given by the HMRC Commissioners.
- (12) If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for the decision of the HMRC Commissioners or the Special Commissioners, any resulting notice that they are satisfied as mentioned in subsection (2) above is void.
- (13) For the purposes of this section two companies are members of the same group of companies if they are for the purposes of Chapter 4 of Part 10.
### Surpluses of mutual and former mutual businesses
##### 444AF
- (1) This section applies in relation to a period of account of an insurance company (“*the relevant period*”) if—
- (a) at any time in the relevant period the company carries on life assurance business that is not mutual business,
- (b) the company has an amount of undistributed demutualisation surplus for the relevant period (see subsection (7)), and
- (c) there is a reduction in the amount of the company's unappropriated surplus over the relevant period (see section 444AI).
- (2) Where this section applies in relation to the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund whichever of the following amounts is the smallest—
- (a) the amount of the reduction mentioned in subsection (1)(c) above;
- (b) the amount of the company's undistributed demutualisation surplus for the relevant period;
- (c) the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (4) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if for “smallest” there were substituted smaller and as if paragraph (c) were omitted.
- (5) This section shall have effect—
- (a) for the purposes of computing in accordance with the provisions of this Act applicable to Case I of Schedule D the profits of the company's life assurance business, and
- (b) for the purposes of so computing profits of the company chargeable under Case VI of Schedule D under section 436A (gross roll-up business).
- (6) But for the purposes mentioned in subsection (5)(b) above, this section and section 444AG have effect subject to the modification in section 444AH; and the Corporation Tax Acts have effect accordingly (so that there may, in particular, be a difference between—
- (a) the amount deemed to be brought into account by virtue of subsection (2) above for a period of account for those purposes, and
- (b) the amount so deemed to be brought into account for that period of account for the purposes mentioned in subsection (5)(a) above).
- (7) For the purposes of this section, the undistributed demutualisation surplus of an insurance company for the relevant period is—
- (a) an amount equal to (UDSP – AD + DTSI – DTSO); or
- (b) if that amount is a negative amount, nil.
For this purpose—
- UDSP is the undistributed demutualisation surplus of the company for the period of account immediately preceding the relevant period,
- AD is any amount deemed under this section to be brought into account for the period of account immediately preceding the relevant period as an increase in the value of the assets of the company's long-term insurance fund,
- DTSI is the total amount of any demutualisation transfer surpluses accruing to the company during the relevant period (see section 444AG),
- DTSO is the total amount of any demutualisation transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
##### 444AG
- (1) For the purposes of section 444AF and this section, a demutualisation transfer surplus accrues to an insurance company where—
- (a) life assurance business is transferred to the company by a person (“*the transferor*”),
- (b) after the transfer, the company carries on the transferred business otherwise than as mutual business, and
- (c) the condition in subsection (2) below is satisfied in relation to the transfer.
- (2) The condition is that—
- (a) immediately before the transfer, the transferor carried on the transferred business as mutual business, or
- (b) where paragraph (a) above does not apply, some or all of the transferred business was carried on by an insurance company as mutual business at a time on or after 1st January 1990 and before the transfer (“former mutual business”).
- (3) The demutualisation transfer surplus accrues to the company on the date of the transfer.
- (4) The amount of the demutualisation transfer surplus is given by subsection (5) or (6) below.
- (5) Where subsection (2)(a) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer, the aggregate of—
- (i) the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer, and
- (ii) the amount of any added surplus accruing to the company in connection with the transfer (see subsection (10));
- (b) otherwise, a just and reasonable portion of that aggregate amount, having regard to how much of the transferor's life assurance business was transferred to the company under the transfer.
- (6) Where subsection (2)(b) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer and all of the transferred business is former mutual business, the former mutual surplus of the transferor on the transfer date (see subsection (7));
- (b) otherwise, so much of that former mutual surplus as it is just and reasonable to attribute to the company, having regard in particular to—
- (i) how much of the transferor's life assurance business was transferred to the company under the transfer, and
- (ii) how much of the transferred business is former mutual business.
- (7) For the purposes of subsection (6) above, the former mutual surplus of the transferor on the transfer date is—
- (a) the amount given by subsection (8) below, or
- (b) if less, the amount given by subsection (9) below.
- (8) The amount given by this subsection is the total amount of any demutualisation transfer surpluses accruing to the transferor—
- (a) on or after 1st January 1990, and
- (b) on or before the date of the transfer.
- (9) The amount given by this subsection is the lowest amount of unappropriated surplus of the transferor at the end of any period of account ending—
- (a) on or after the date of the last occasion on which a demutualisation transfer surplus accrued to it as mentioned in subsection (8) above, and
- (b) on or before the date of the transfer.
- (10) For the purposes of this section, added surplus accrues to the company in connection with the transfer if—
- (a) an amount of assets is received by the company in connection with the transfer, no later than six months after the date of the transfer,
- (b) the amount is not brought into account by the company,
- (c) the amount is added to the unappropriated surplus of the company, and
- (d) the amount does not derive from any unappropriated surplus of the transferor;
and the amount of the added surplus is the amount referred to in paragraphs (a) to (d) above.
##### 444AH
- (1) The modification in this section has effect for the purposes mentioned in section 444AF(5)(b) only.
- (2) In relation to any demutualisation transfer surplus accruing to a company in a post-2002 period of account—
- (a) the references in section 444AG(5) to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer shall be taken to be references to—
- (i) the amount of that unappropriated surplus, or
- (ii) if less, the unappropriated surplus of the transferor at the end of the period of account immediately preceding the first post-2002 period of account of the transferor; and
- (b) the references in sections 444AF and 444AG to the amount of any demutualisation transfer surplus are to have effect accordingly.
- (3) In this section “*post-2002 period of account*”, in relation to an insurance company, means a period of account of the company beginning on or after 1st January 2003 and ending on or after 9th April 2003.
##### 444AI
- (1) For the purposes of section 444AF—
- (a) there is a reduction in the amount of the company's unappropriated surplus over the relevant period if CUS is less than (OUS + TSI – TSO);
- (b) the amount of that reduction is the amount by which CUS is less than (OUS + TSI – TSO).
- (2) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- TSI is the total amount of any transfer surpluses accruing to the company during the relevant period (see subsections (3) to (7)),
- TSO is the total amount of any transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
- (3) For the purposes of this section, a transfer surplus accrues to an insurance company where life assurance business is transferred to the company by a person (“*the transferor*”).
- (4) The transfer surplus accrues to the company on the date of the transfer.
- (5) The amount of the transfer surplus is equal to so much of the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer as is transferred to the company under the transfer.
- (6) But if, immediately before the transfer, the transferor carried on the transferred business as mutual business, the amount of the transfer surplus is the aggregate of—
- (a) the amount given by subsection (5) above, and
- (b) the amount of any added surplus accruing to the company in connection with the transfer.
- (7) Subsection (10) of section 444AG applies for the purposes of subsection (6) above as it applies for the purposes of that section.
##### 444AJ
- (1) For the purposes of sections 444AF and 444AK, the amount of the company's relevant receipts reduction for the relevant period is to be calculated by—
- (a) determining, in the case of each with-profits fund of the company, the amount given by subsection (2) or (6) below for the relevant period, and
- (b) aggregating each of those amounts.
- (2) The amount, in the case of a fund other than a policy holder participation fund, is—
- (a) where the gross transfer to non-technical account for the fund for the relevant period (see subsections (3) and (4)) is greater than the post-policy holder surplus for the fund for the relevant period (see subsection (5)), the amount of the difference;
- (b) otherwise, nil.
- (3) In this section “*the gross transfer to non-technical account*” means the amount shown in line 13 of Form 58 for the fund.
- (4) But if—
- (a) there is a transfer from a with-profits fund of the company to another fund of the company (“the initial transfer”) which is shown in (or included in an amount shown in) line 14 of Form 58 for the with-profits fund,
- (b) there is a transfer from a fund of the company (whether or not the other fund mentioned in paragraph (a) above) to the non-technical account which is shown in (or included in an amount shown in) line 13 of Form 58 for that fund, and
- (c) the transfer to the non-technical account can reasonably be regarded as connected with the initial transfer,
the amount of the gross transfer to non-technical account for the relevant period given by subsection (3) above in the case of the with-profits fund is to be increased by the amount transferred to the non-technical account.
- (5) In this section “*post-policy holder surplus*” means an amount equal to—
$$SA-TAP$where—SA is—(a) the amount shown in line 34 of Form 58 for the fund (surplus arising since last valuation), or(b) if that amount is a negative amount, nil;TAP is the amount shown in line 46 of Form 58 for the fund (total allocated to policy holders).$
- (6) The amount, in the case of a policy holder participation fund, is—
- (a) where TAP is greater than SA, the amount of the difference;
- (b) otherwise, nil;
and for this purpose “*SA*” and “*TAP*” have the same meaning as in subsection (5) above.
- (7) References in this section to Form 58 are references to that Form in the periodical return of the company for the relevant period.
- (8) In this section “*policy holder participation fund*” means a fund in the case of which an amount equal to the amount shown in line 34 of Form 58 for the fund is allocated to policy holders for the relevant period.
##### 444AK
- (1) This section applies if at any time in a period of account of an insurance company (“*the relevant period*”)—
- (a) the company carries on life assurance business as mutual business, and
- (b) the company carries on gross roll-up business.
- (2) If there is a reduction in the amount of the company's unappropriated surplus over the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund—
- (a) the amount of that reduction, or
- (b) if less, the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) But subsection (2) above shall have effect only for the purposes of computing in accordance with the provisions of this Act applicable to Case I of Schedule D the profits for the relevant period of the company's gross roll-up business.
- (4) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (5) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if paragraph (b) and the word “or” before it were omitted.
- (6) For the purposes of this section, there is a reduction in the amount of the company's unappropriated surplus over the relevant period if—
- (a) CUS is less than OUS, and
- (b) CUS is less than UUS.
- (7) The amount of that reduction is—
- (a) the amount by which CUS is less than OUS, or
- (b) if OUS is greater than UUS, the amount by which CUS is less than UUS.
- (8) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- UUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the first period of account of the company to begin on or after 1st January 2003 and to end on or after 9th April 2003.
##### 444AL
- (1) This section applies for the purposes of sections 444AF to 444AK.
- (2) References to mutual business, in relation to any time, include business which at that time is treated for the purposes of section 432E as mutual business.
- (3) “*Unappropriated surplus*”, in relation to a period of account of an insurance company, means an unappropriated surplus on valuation as shown in the periodical return of the company for the period of account.
- (4) References to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer are, where a period of account of the transferor does not end at that time, references to the unappropriated surplus on valuation that would have been shown in a periodical return of the transferor for that period had such a return been drawn up.
### Provisions applying in relation to overseas life insurance companies
##### 444B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modifications where tax charged under Case I of Schedule D.
##### 444C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Equalisation reserves
##### 444BA
- (1) Subject to the following provisions of this section and to sections 444BB to 444BD, the rules in subsection (2) below shall apply in making any computation, for the purposes of Case I or V of Schedule D, of the profits or losses for any accounting period of an insurance company whose business has at any time been or included business in respect of which it was required, by virtue of equalisation reserve rules, to maintain an equalisation reserve.
- (2) Those rules are—
- (a) that amounts which, in accordance with equalisation reserve rules, are transferred into the equalisation reserve in respect of the company’s business for the accounting period in question are to be deductible;
- (b) that amounts which, in accordance with any such regulations, are transferred out of the reserve in respect of the company’s business for that period are to be treated as receipts of that business; and
- (c) that it must be assumed that all such transfers as are required by equalisation reserve rules to be made into or out of the reserve in respect of the company’s business for any period are made as required.
- (3) Where an insurance company having any business in respect of which it is required, by virtue of equalisation reserve rules, to maintain an equalisation reserve ceases to trade—
- (a) any balance which exists in the reserve at that time for the purposes of the Tax Acts shall be deemed to have been transferred out of the reserve immediately before the company ceases to trade; and
- (b) that transfer out shall be deemed to be a transfer in respect of the company’s business for the accounting period in which the company so ceases and to have been required by equalisation reserve rules.
- (4) Where—
- (a) an amount is transferred into an equalisation reserve in respect of the business of an insurance company for any accounting period,
- (b) the rule in subsection (2)(a) above would apply to the transfer of that amount but for this subsection,
- (c) that company by notice in writing to an officer of the Board makes an election in relation to that amount for the purposes of this subsection, and
- (d) the notice of the election is given not more than two years after the end of that period,
the rule mentioned in subsection (2)(a) above shall not apply to that transfer of that amount and, instead, the amount transferred (the “unrelieved transfer”) shall be carried forward for the purposes of subsection (5) below to the next accounting period and (subject to subsection (6) below) from accounting period to accounting period.
- (5) Where—
- (a) in accordance with equalisation reserve rules, a transfer is made out of an equalisation reserve in respect of an insurance company’s business for any accounting period,
- (b) the rule in subsection (2)(b) above would apply to the transfer but for this subsection, and
- (c) the accounting period is one to which any amount representing one or more unrelieved transfers has been carried forward under subsection (4) above,
that rule mentioned in subsection (2)(b) above shall not apply to that transfer except to the extent (if any) that the amount of the transfer exceeds the aggregate of the amounts representing unrelieved transfers carried forward to that period.
- (6) Where in the case of any company—
- (a) any amount representing one or more unrelieved transfers is carried forward to an accounting period in accordance with subsection (4) above, and
- (b) by virtue of subsection (5) above the rule in subsection (2)(b) above does not apply to an amount representing the whole or any part of any transfer out of an equalisation reserve in respect of the company’s business for that period,
the amount mentioned in paragraph (a) above shall not be carried forward under subsection (4) above to the next accounting period except to the extent (if any) that it exceeds the amount mentioned in paragraph (b) above.
- (7) To the extent that any actual or assumed transfer in accordance with equalisation reserve rules of any amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes—
- (a) the rule in subsection (2)(a) above shall not apply to that transfer; and
- (b) the making of that transfer shall be disregarded in determining, for the purposes of the Tax Acts, whether and to what extent there is subsequently any requirement to make a transfer into or out of the reserve in accordance with equalisation reserve rules;
and this subsection applies irrespective of whether the insurance company in question is a party to the arrangements.
- (8) For the purposes of this section the transfer of an amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes to the extent that the arrangements to which it is attributable are arrangements—
- (a) the sole or main purpose of which is, or
- (b) the sole or main benefit accruing from which might (but for subsection (7) above) be expected to be,
the reduction by virtue of this section of any liability to tax.
- (9) Where—
- (a) any transfer made into or out of an equalisation reserve maintained by an insurance company is made in accordance with equalisation reserve rules in respect of business carried on by that company over a period (“the equalisation period”), and
- (b) parts of the equalisation period are in different accounting periods,
the amount transferred shall be apportioned for the purposes of this section between the different accounting periods in the proportions that correspond to the number of days in the equalisation period that are included in each of those accounting periods.
- (10) The Treasury may by regulations provide in relation to any accounting periods ending on or after 1st April 1996 for specified transitional provisions contained in equalisation reserve rules to be disregarded for the purposes of the Tax Acts in determining how much is required, on any occasion, to be transferred into or out of any equalisation reserve in accordance with the rules.
- (11) In this section, and in sections 444BB to 444BD, “equalisation reserves rules” means the rules in chapter 1.4 of the Insurance Prudential Sourcebook.
##### 444BB
- (1) The Treasury may by regulations make provision modifying section 444BA so as, in cases mentioned in subsection (2) below—
- (a) to require—
- (i) sums by reference to which the amount of any transfer into or out of an equalisation reserve falls to be computed, or
- (ii) the amount of any such transfer,
to be apportioned between different parts of the business carried on for any period by an insurance company; and
- (b) to provide for the purposes of corporation tax for the amounts taken to be transferred into or out of an equalisation reserve to be computed disregarding any such sum or, as the case may be, any such part of a transfer as is attributed, in accordance with the regulations, to a part of the business described for the purpose in the regulations.
- (2) Those cases are cases where an insurance company which, in accordance with equalisation reserve rules, is required to make transfers into or out of an equalisation reserve in respect of any business carried on by that company for any period is carrying on, for the whole or any part of that period—
- (a) any business the income and gains of which fall to be disregarded in making a computation of the company’s profits in accordance with the rules applicable to Case I of Schedule D, or
- (b) any business by reference to which double taxation relief is afforded in respect of any income or gains.
- (3) Section 444BA shall have effect (subject to any regulations under subsection (1) above) in the case of an equalisation reserve maintained by an insurance company which—
- (a) is not resident in the United Kingdom, and
- (b) carries on business in the United Kingdom through a permanent establishment,
only if such conditions as may be prescribed by regulations made by the Treasury are satisfied in relation to that company and in relation to transfers into or out of that reserve.
- (4) Regulations under this section prescribing conditions subject to which section 444BA is to apply in the case of any equalisation reserve maintained by an insurance company may—
- (a) contain conditions imposing requirements on the company to furnish the Board with information with respect to any matters to which the regulations relate, or to produce to the Board documents or records relating to any such matters; and
- (b) provide that, where any prescribed condition is not, or ceases to be, satisfied in relation to the company or in relation to transfers into or out of that reserve, there is to be deemed for the purposes of the Tax Acts to have been a transfer out of that reserve of an amount determined under the regulations.
- (5) Regulations under this section may—
- (a) provide for apportionments under the regulations to be made in such manner, and by reference to such factors, as may be specified or described in the regulations;
- (b) make different provision for different cases;
- (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit;
- (d) make provision having retrospective effect in relation to accounting periods beginning not more than one year before the time when the regulations are made;
and the powers conferred by this section in relation to transfers into or out of any reserve shall be exercisable in relation to both actual and assumed transfers.
- (6) In this section “*double taxation relief*” means—
- (a) relief under double taxation arrangements which takes the form of a credit allowed against corporation tax, or
- (b) unilateral relief under section 790(1) which takes that form;
and “*double taxation arrangements*” here means arrangements having effect by virtue of section 788.
##### 444BC
- (1) The Treasury may by regulations make provision modifying the operation of section 444BA in relation to cases where an insurance company has, for the purpose of preparing the documents it is required to prepare for the purposes of section 9.3 of the Prudential Sourcebook (Insurers), applied for any period an accounting method described in paragraph 52 or 53 of Schedule 9A to the Companies Act 1985 (accounting on a non-annual basis).
- (2) Subsection (5) of section 444BB applies for the purposes of this section as it applies for the purposes of that section.
##### 444BD
- (1) The Treasury may by regulations provide for section 444BA to have effect, in such cases and subject to such modifications as may be specified in the regulations, in relation to any equivalent reserves as it has effect in relation to equalisation reserves maintained by virtue of equalisation reserve rules.
- (2) For the purposes of this section a reserve is an equivalent reserve if—
- (a) it is maintained, otherwise than by virtue of equalisation reserve rules, either—
- (i) by an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (ii) by a firm which has permission under paragraph 4 of Schedule 4 to that Act (as a result of qualifying for authorisation under paragraph 2 of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (iii) in respect of any business which consists of the effecting or carrying out of contracts of insurance and which is carried on outside the United Kingdom by a company resident in the United Kingdom;
- (b) the purpose for which, or the manner in which, it is maintained is such as to make it equivalent to an equalisation reserve maintained by virtue of equalisation reserve rules.
- (3) For the purposes of this section a reserve is also an equivalent reserve if it is maintained in respect of any credit insurance business in accordance with requirements imposed either—
- (a) by or under any enactment, or
- (b) under so much of the law of any territory as secures compliance with the requirements of Article 1 of the credit insurance directive (equalisation reserves for credit insurance).
- (4) Without prejudice to the generality of subsection (1) above, the modifications made by virtue of that subsection may—
- (a) provide for section 444BA to apply in the case of an equivalent reserve only where such conditions as may be specified in the regulations are satisfied in relation to the company maintaining the reserve or in relation to transfers made into or out of it; and
- (b) contain any other provision corresponding to any provision which, in the case of a reserve maintained by virtue of equalisation reserve rules, may be made under sections 444BA to 444BC.
- (5) Subsections (4) and (5) of section 444BB shall apply for the purposes of this section as they apply for the purposes of that section.
- (6) Without prejudice to the generality of section 444BB(5), the transitional provision which by virtue of subsection (5) above may be contained in regulations under this section shall include—
- (a) provision for treating the amount of any transfers made into or out of an equivalent reserve in respect of business carried on for any specified period as increased by the amount by which they would have been increased if no transfers into the reserve had been made in respect of business carried on for an earlier period; and
- (b) provision for excluding from the rule in section 444BA(2)(b) so much of any amount transferred out of an equivalent reserve as represents, in pursuance of an apportionment made under the regulations, the transfer out of that reserve of amounts in respect of which there has been no entitlement to relief by virtue of section 444BA(2)(a).
- (7) In this section—
- “credit insurance business” means business which consists of the effecting or carrying out of contracts of insurance against risks of loss to the persons insured arising from—the insolvency of debtors of theirs, orfrom the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due;
- “*the credit insurance directive*” means Council Directive [87/343/EEC](https://www.legislation.gov.uk/european/directive/1987/0343) of 22nd June 1987 amending, as regards credit insurance and suretyship insurance, First Directive 73/239 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance; . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 458A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 461A
- (1) For the purposes of sections 461B and 461C, a “*qualifying society*” is an incorporated friendly society which—
- (a) immediately before its incorporation, was a registered friendly society to which section 461(2) did not apply,
- (b) was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies and satisfies subsection (2) below, or
- (c) was formed by the amalgamation of two or more friendly societies and satisfies subsection (3) below,
and in respect of which no direction under section 461C(5) is in force.
- (2) A society satisfies this subsection if its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Board.
- (3) If at the time of the amalgamation referred to in subsection (1)(c) above—
- (a) section 461(2) applied to none of the registered friendly societies being amalgamated (if any), and
- (b) all of the incorporated friendly societies being amalgamated (if any) were qualifying societies,
the society formed by the amalgamation satisfies this subsection.
- (4) For the purposes of this section and section 461C, any group of persons which was approved for the purposes of this section (as mentioned in subsection (2) above) by the Friendly Societies Commission immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date.
##### 461B
- (1) Subject to the following provisions of this section, a qualifying society shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.
- (2) Subsection (1) above shall not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate which is a subsidiary (within the meaning of the Friendly Societies Act 1992) of the society or of which the society has joint control (within the meaning of that Act).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) If an incorporated friendly society which is not a qualifying society makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—
- (a) any previous payment so made to him by the society, and
- (b) any earlier repayment of such sums paid by him,
the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.
- (4) In relation to an incorporated friendly society which, immediately before its incorporation, was a registered friendly society to which section 461(2) applied—
- (a) the references in subsection (3) above to sums paid to the society shall include sums paid to the registered friendly society,
- (b) the reference in subsection (3)(a) above to any payment made by the society shall include any payment made by the registered friendly society after 26 March 1974 or such later date as was specified in any direction under section 461 (7) relating to it, and
- (c) the reference in subsection (3)(b) above to any repayment shall include any repayment made by the registered friendly society.
- (5) Where a qualifying society at any time ceases by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, the company into which the society is converted shall be exempt from . . . corporation tax on its profits arising from any part of its business, other than life or endowment business, which relates to contracts made before that time.
- (6) But if during an accounting period of the company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of its business, the company shall not be exempt from corporation tax by virtue of subsection (5) above for that or any subsequent accounting period.
- (6A) Where—
- (a) at any time an insurance company acquires by way of transfer of engagements from a qualifying society any business other than life or endowment business, and
- (b) immediately before that time the society was exempt from corporation tax on profits arising from that business,
the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.
- (6B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (6A) above for that or any subsequent accounting period.
- (7) Any part of a company’s business to which an exemption under subsection (5) or (6A) above relates shall be treated for the purposes of the Corporation Tax Acts as a separate business from any other business carried on by the company.
- (8) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (5) or (6A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (9) Regulations under subsection (8) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 461C
- (1) Subject to subsection (2) below, subsections (3) and (4) below apply where a qualifying society—
- (a) begins to carry on business other than life or endowment business, or
- (b) in the opinion of the Board, begins to carry on business other than life or endowment business on an enlarged scale or of a new character.
- (2) Subsections (3) and (4) below do not apply if—
- (a) the society’s business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of section 461 or 461A by the Board, or
- (b) the society’s rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as is authorised for the purposes of section 461.
- (3) If it appears to the Board, having regard to the restrictions imposed by section 461 on registered friendly societies registered after 31st May 1973, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the society under subsection (4) below.
- (4) A direction under this subsection is that (and has the effect that) the society to which it is given shall cease to be a qualifying society as from the date of the direction.
- (5) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (1) above;
- (b) subsections (3) and (4) above do not apply to it by reason of subsection (2) above; or
- (c) the direction is not necessary for the protection of the revenue.
##### 461D
- (1) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was exempt from corporation tax on profits arising from that business,
the transferee is so exempt after that time.
- (2) But if during an accounting period of the transferee there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on that business, the transferee shall not be exempt from corporation tax by virtue of subsection (1) above for that or any subsequent accounting period.
- (3) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was not exempt from corporation tax on profits arising from that business,
the transferee is not so exempt after that time.
- (4) The Treasury may by regulations provide that, where any business of a friendly society is exempt from corporation tax by virtue of subsection (1) above, or not so exempt by virtue of subsection (3) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (5) Regulations under subsection (4) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 462A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Retained assets
##### 465A
- (1) This section applies where any assets of a branch of a registered friendly society have been identified in a scheme under section 6(5) of the Friendly Societies Act 1992 (property, rights etc. excluded from transfer to the society on its incorporation).
- (2) In relation to any time after the incorporation of the society, the assets shall be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any tax liability arising in respect of them shall be a liability of the society rather than of the branch).
- (3) Where, by virtue of this section, tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.
##### 468AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer schemes: reduction of income of transferee
##### 468C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Equalisation reserves for general business.
##### 468EE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions of authorised unit trusts: general
##### 468H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Dividend and foreign income distributions
##### 468J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Interest distributions
##### 468L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of relief under section 257A.
##### 468M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468N
- (1) Subsection (2) below applies where—
- (a) an interest distribution is made for a distribution period to a unit holder; and
- (b) the gross income entered in the distribution accounts for the purposes of computing the total amount available for distribution to unit holders does not derive from eligible income entirely.
- (2) Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the relevant amount of the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
- (3) Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
- (4) This is how to calculate the relevant amount of the interest distribution—
$$R=AxBC$Where—R = the relevant amount;A = the amount of the interest distribution before deduction of tax to the unit holder in question;B = such amount of the gross income as derives from eligible income;C = the amount of the gross income.$
- (5) In subsection (4) above the references to the gross income are references to the gross income entered as mentioned in subsection (1)(b) above.
##### 468O
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468P
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468PA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468PB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions to corporate unit holder
##### 468Q
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 469A
- (1) The Tax Acts shall have effect in relation to any common investment fund established under section 42 of the Administration of Justice Act 1982 (common investment funds for money paid into court) as if—
- (a) the fund were an authorised unit trust;
- (b) the person who is for the time being the investment manager of the fund were the trustee of that authorised unit trust; and
- (c) the persons with qualifying interests were the unit holders in that authorised unit trust.
- (1A) For the purposes of subsection (1)(c) above, the persons with qualifying interests are—
- (a) in relation to shares in the fund held by the Accountant General, the persons whose interests entitle them, as against him, to share in the fund’s investments;
- (b) in relation to shares in the fund held by any other person authorised by the Lord Chancellor to hold such shares on behalf of others (an “authorised person”)—
- (i) if there are persons whose interests entitle them, as against the authorised person, to share in the fund’s investments, those persons;
- (ii) if not, the authorised person;
- (c) in relation to shares in the fund held by persons authorised by the Lord Chancellor to hold such shares on their own behalf, those persons.
- (2) In this section “*the Accountant General*” means . . . the Accountant General of the Supreme Court of Judicature in England and Wales or the Accountant General of the Supreme Court of Judicature of Northern Ireland.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 472A
- (1) This section applies in relation to securities—
- (a) which are held by a company carrying on a banking business, an insurance business or a business consisting wholly or partly in dealing in securities; and
- (b) which are such that a profit on their sale would form part of the trading profits of that business.
- (2) Profits and losses arising from such securities that in accordance with generally accepted accounting practice are—
- (a) calculated by reference to the fair value of the securities, and
- (b) recognised in that company's statement of recognised gains and losses or statement of changes in equity,
shall be brought into account in computing the profits or losses of a business in accordance with the provisions of this Act applicable to Case I of Schedule D.
- (3) Subsection (2) does not apply—
- (a) to an amount to the extent that it derives from or otherwise relates to an amount brought into account under that subsection in an earlier period of account, or
- (b) to an amount recognised for accounting purposes by way of correction of a fundamental error.
- (4) In this section, “securities”—
- (a) includes shares and any rights, interests or options that by virtue of section 99, 135(5) or 136(5) of the Taxation of Chargeable Gains Act 1992 are treated as shares for the purposes of sections 126 to 136 of that Act; but
- (b) does not include a loan relationship (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996).
##### 477A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . Dividends or interest payable in respect of shares in, or deposits with or loans to, a building society shall be dealt with for the purposes of corporation tax as follows—
- (a) to the extent that it would not otherwise fall to be so regarded, liability to pay the dividends or interest shall be treated for the purposes of Chapter II of Part IV of the Finance Act 1996 as a liability arising under a loan relationship of the building society;
- (aa) if the dividends or interest are payable to a company, then, to the extent that they would not otherwise fall to be so regarded, they shall be treated for those purposes as payable to that company in pursuance of a right arising under a loan relationship of that company;
- (b) no part of any such dividends or interest . . . shall be treated as a distribution of the society or as franked investment income of any company resident in the United Kingdom.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subsection (3)(a) above shall apply to any interest paid by the society under a certified SAYE savings arrangement as if it were a dividend on a share in the society.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) In this section “*dividend*” includes any distribution (whether or not described as a dividend).
- (10) In this section—
- “*certified SAYE savings arrangement*” has the meaning given by section 703 of ITTOIA 2005
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 477B
- (1) In computing for the purposes of corporation tax the income of a building society from the trade carried on by it, there shall be allowed as a deduction, if subsection (2) below applies, the incidental costs of obtaining finance by means of issuing shares in the society which are qualifying shares.
- (1A) A deduction shall not be allowed by virtue of subsection (1) above to the extent that the costs in question fall to be brought into account as debits for the purposes of Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships).
- (2) This subsection applies if any amount payable in respect of the shares by way of dividend or interest is deductible in computing for the purposes of corporation tax the income of the society from the trade carried on by it.
- (3) In subsection (1) above, “*the incidental costs of obtaining finance*” means expenditure on fees, commissions, advertising, printing and other incidental matters (but not including stamp duty), being expenditure wholly and exclusively incurred for the purpose of obtaining the finance (whether or not it is in fact obtained), or of providing security for it or of repaying it.
- (4) This section shall not be construed as affording relief—
- (a) for any sums paid in consequence of, or for obtaining protection against, losses resulting from changes in the rate of exchange between different currencies, or
- (b) for the cost of repaying qualifying shares so far as attributable to their being repayable at a premium or to their having been issued at a discount.
- (5) In this section—
- “*dividend*” has the same meaning as in section 477A, and
- “*qualifying share*” has the same meaning as in section 117(4) of the 1992 Act.
##### 480A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 480B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Elections as to transfer of relief under section 257A or 257AB.
##### 480C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation in respect of other business.
##### 482A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### PETROLEUM EXTRACTION ACTIVITIES
##### 494AA
- (1) This section applies where—
- (a) a company (“*the seller*”) carrying on a trade has disposed of an asset which was used for the purposes of that trade, or an interest in such an asset;
- (b) the asset is used, under a lease, by the seller or a company associated with the seller (“*the lessee*”) for the purposes of a ring fence trade carried on by the lessee; and
- (c) the lessee uses the asset before the end of the period of two years beginning with the disposal.
- (2) Subject to subsection (4) below, subsection (3) below applies to so much (if any) of the expenditure incurred by the lessee under the lease as—
- (a) falls, in accordance with generally accepted accounting practice, to be treated in the accounts of the lessee as a finance charge;. . . or
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) falls, if the case is one where the lease is a long funding operating lease, to be deductible in computing the profits of the lessee for the purposes of corporation tax (after first making against any such expenditure any reductions falling to be made by virtue of section 502K).
- (3) The expenditure shall not be allowable in computing for the purposes of Schedule D the profits of the ring fence trade.
- (4) Expenditure shall not be disallowed by virtue of subsection (3) above to the extent that the disposal referred to in subsection (1) above is made for a consideration which—
- (a) is used to meet expenditure incurred by the seller in carrying on oil extraction activities or in acquiring oil rights otherwise than from a company associated with the seller; or
- (b) is appropriated to meeting expenditure to be so incurred by the seller.
- (5) Where any expenditure—
- (a) would apart from subsection (3) above be allowable in computing for the purposes of Schedule D the profits of the ring fence trade for an accounting period, but
- (b) by virtue of that subsection is not so allowable,
that expenditure shall be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 as if it were a non-trading debit in respect of a loan relationship of the lessee for that accounting period.
- (6) In this section —
- “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act);
- “*lease*”, in relation to an asset, has the same meaning as in sections 781 to 784.
##### 494A
- (1) In section 403(3) (availability of charges, Schedule A losses and management expenses for surrender as group relief) the reference to the gross profits of the surrendering company for an accounting period does not include the company’s relevant ring fence profits for that period.
- (2) If for that period—
- (a) there are no charges on income paid by the company that are allowable under section 338, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
all the company’s ring fence profits are relevant ring fence profits.
- (3) In any other case the company’s relevant ring fence profits are so much of its ring fence profits as exceeds the amount of the charges on income paid by the company as—
- (a) are allowable under section 338 for that period, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 496A
Schedule 19B to this Act (exploration expenditure supplement) shall have effect.
##### 496B
Schedule 19C to this Act (ring fence expenditure supplement) shall have effect.
#### Taxation in respect of other business: incorporated friendly societies qualifying for exemption.
##### 501A
- (1) Where in any accounting period beginning on or after 17th April 2002 a company carries on a ring fence trade, a sum equal to 20 per cent of its adjusted ring fence profits for that period shall be charged on the company as if it were an amount of corporation tax chargeable on the company.
- (2) A company’s adjusted ring fence profits for an accounting period are the amount which, on the assumption mentioned in subsection (3) below, would be determined for that period (in accordance with this Chapter) as the profits of the company’s ring fence trade chargeable to corporation tax.
- (3) The assumption is that financing costs are left out of account in computing—
- (a) the amount of the profits or loss of any ring fence trade of the company’s for each accounting period beginning on or after 17th April 2002; and
- (b) where for any such period the whole or part of any loss relief is surrendered to the company in accordance with section 492(8), the amount of that relief or, as the case may be, that part.
- (4) For the purposes of this section, “*financing costs*” means the costs of debt finance.
- (5) In calculating the costs of debt finance for an accounting period the matters to be taken into account include—
- (a) any costs giving rise to debits in respect of debtor relationships of the company under Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships) , other than debits in respect of exchange losses from such relationships (see section 103(1A) and (1B) of that Act);
- (b) any exchange gain or loss from a debtor relationship, within the meaning of that Chapter (see section 103(1A) and (1B) of that Act), in relation to debt finance;
- (c) any credit or debit falling to be brought into account under Schedule 26 to the Finance Act 2002 (derivative contracts) in relation to debt finance;
- (d) the financing cost implicit in a payment under a finance lease;
- (dd) where the company is the lessee under a long funding operating lease, the amount deductible in respect of payments under the lease in computing the profits of the lessee for the purposes of corporation tax (after first making against any such amount any reductions falling to be made by virtue of section 502K); and
- (e) any other costs arising from what would be considered in accordance with generally accepted accounting practice to be a financing transaction.
- (6) Where an amount representing the whole or part of a payment falling to be made by a company—
- (a) falls (or would fall) to be treated as a finance charge under a finance lease for the purposes of accounts relating to that company and one or more other companies and prepared in accordance with generally accepted accounting practice, but
- (b) is not so treated in the accounts of the company,
the amount shall be treated for the purposes of this section as financing costs falling within subsection (5)(d) above.
- (7) If—
- (a) in computing the adjusted ring fence profits of a company for an accounting period, an amount falls to be left out of account by virtue of subsection (5)(d) above, but
- (b) the whole or any part of that amount is repaid,
the repayment shall also be left out of account in computing the adjusted ring fence profits of the company for any accounting period.
- (8) In this section “*finance lease*” means any arrangements—
- (a) which provide for an asset to be leased or otherwise made available by a person to another person (“*the lessee*”), and
- (b) which, under generally accepted accounting practice,—
- (i) fall (or would fall) to be treated, in the accounts of the lessee or a person connected with the lessee, as a finance lease or a loan, or
- (ii) are comprised in arrangements which fall (or would fall) to be so treated.
- (9) For the purposes of applying subsection (8)(b) above, the lessee and any person connected with the lessee are to be treated as being companies which are incorporated in a part of the United Kingdom.
- (10) In this section “*accounts*”, in relation to a company, includes any accounts which—
- (a) relate to two or more companies of which that company is one, and
- (b) are drawn up in accordance with generally accepted accounting practice.
- (11) In this section “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act).
##### 501B
- (1) Subject to subsection (3) below, the provisions of section 501A(1) relating to the charging of a sum as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Acts, and to any necessary modifications, all enactments applying generally to corporation tax, including—
- (a) those relating to returns of information and the supply of accounts, statements and reports;
- (b) those relating to the assessing, collecting and receiving of corporation tax;
- (c) those conferring or regulating a right of appeal; and
- (d) those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
- (2) Accordingly (but without prejudice to subsection (1) above) the Management Act shall have effect as if any reference to corporation tax included a reference to a sum chargeable under section 501A(1) as if it were an amount of corporation tax.
- (3) In any regulations made under section 32 of the Finance Act 1998 (as at 17th April 2002, the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations 1999)—
- (a) references to corporation tax do not include a reference to a sum chargeable on a company under section 501A(1) as if it were corporation tax; and
- (b) references to profits charged to corporation tax do not include a reference to adjusted ring fence profits, within the meaning of section 501A(1).
- (4) In this section “*the Taxes Acts*” has the same meaning as in the Management Act.
### Chapter 5A — Special rules for long funding leases of plant or machinery: corporation tax
### Introductory
##### 502A
This Chapter has effect for the purposes of corporation tax only.
### Lessors under long funding finance leases
##### 502B
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessor of any plant or machinery under a long funding finance lease.
- (2) The amount to be brought into account as the lessor's taxable income from the lease for the period of account is the amount of the rental earnings in respect of the lease for the period of account.
- (3) The “rental earnings” for any period is the amount which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment for that period in respect of the lease where it meets the finance lease test.
- (4) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan in the accounts in question, so much of the rentals under the lease as fall (or would fall) to be treated as interest are to be treated for the purposes of this section as rental earnings.
##### 502C
- (1) This section applies for determining for the purposes of corporation tax the profits of a company which is or has been the lessor under a long funding finance lease.
- (2) This section has effect where a profit or loss (whether of an income or capital nature)—
- (a) arises to the company in connection with the lease, and
- (b) in accordance with generally accepted accounting practice falls to be recognised for accounting purposes in a period of account, but
- (c) would not, apart from this section, be brought into account in computing the profits of the company for the purposes of corporation tax.
- (3) The profit or loss is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (4) Any reference in this section to an amount falling to be recognised for accounting purposes in a period of account is a reference to an amount falling to be recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in computing the company's profits or losses for that period.
##### 502D
- (1) This section applies for determining the liability to corporation tax of a company which is or has been the lessor under a long funding finance lease.
- (2) Where—
- (a) the lease terminates, and
- (b) a sum calculated by reference to the termination value is paid to the lessee,
no deduction in respect of the sum paid to the lessee is allowed in computing the profits of the company.
- (3) This section does not prevent a deduction in respect of a sum to the extent that the sum is brought into account in determining the company's rental earnings.
### Lessors under long funding operating leases
##### 502E
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account—
- (a) for the whole of which, or
- (b) for any part of which,
the company is the lessor of any plant or machinery under a long funding operating lease.
- (2) A deduction is allowed in computing the profits of the company for the period of account.
- (3) The amount of the deduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) if the only use of the plant or machinery by the lessor has been the leasing of it under the long funding operating lease as a qualifying activity, cost;
- (b) if the last previous use of the plant or machinery by the lessor was the leasing of it under another long funding operating lease as a qualifying activity, market value;
- (c) if the last previous use of the plant or machinery by the lessor was the leasing of it under a long funding finance lease as a qualifying activity, the recognised value;
- (d) if the last previous use of the plant or machinery by the lessor was for the purposes of a qualifying activity other than leasing under a long funding lease, the lower of cost and market value;
- (e) if the lessor owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but—
- (i) the plant or machinery is brought into use by the lessor for the purposes of a qualifying activity on or after 1st April 2006, and
- (ii) that qualifying activity is the leasing of the plant or machinery under the long funding operating lease,
the relevant value is the lower of first use market value and first use amortised value.
- (5) In subsection (4) above—
- “*cost*” means the amount of the expenditure incurred by the lessor on the provision of the plant or machinery;
- “*first use amortised value*” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity, on the assumption that—the cost of acquiring the plant or machinery had been written off on a straight line basis over the remaining useful economic life of the plant or machinery, andany further capital expenditure incurred had been written off on a straight line basis over so much of the remaining economic life of the plant or machinery as remains at the time when the expenditure is incurred;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity;
- “*market value*” means the market value of the plant or machinery at the commencement of the term of the long funding operating lease;
- “*recognised value*” means the value at which the plant or machinery is recognised in the books or other financial records of the lessor at the commencement of the long funding operating lease.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(e) above, would have been) expected to be the residual value of the plant or machinery,
to find the expected gross reduction in value over the term of the lease.
- (7) Apportion the amount of that expected gross reduction in value to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the deduction for any period of account is the amount so apportioned to that period.
##### 502F
- (1) This section applies if in any period of account—
- (a) a company is the lessor of any plant or machinery under a long funding operating lease,
- (b) the company incurs capital expenditure in relation to the plant or machinery, and
- (c) that capital expenditure (the “additional expenditure”) is not reflected in the market value of the plant or machinery at the commencement of the term of the lease.
- (2) In a case falling within section 502E(4)(e) above, subsection (1)(c) above has effect as if the reference to the commencement of the term of the lease were a reference to the time when the plant or machinery is first brought into use by the lessor for the purposes of the qualifying activity.
- (3) Where this section applies, an additional deduction is allowed in computing the profits of the company for each post-expenditure period of account in which the company is the lessor of the plant or machinery under the lease.
- (4) The amount of the deduction for any such period of account is to be determined as follows.
- (5) Find ARV, CRV, PRV, and TRV where—
- “ARV” is the amount which, at the time when the additional expenditure is incurred, is expected to be the residual value of the plant or machinery;
- “CRV” is the amount which, at the commencement of the term of the lease, is expected to be the residual value of the plant or machinery;
- “PRV” is the sum of any amounts that fell to be taken into account as RRV (see subsection (6)) in the application of this section in relation to any previous additional expenditure incurred by the company in relation to the leased plant or machinery;
- “TRV” is the total of CRV and PRV.
- (6) Find RRV, where—
- (a) if ARV exceeds TRV, RRV is the portion of the excess that is a result of the additional expenditure, but
- (b) if ARV does not exceed TRV, RRV is nil.
- (7) From—
- (a) the amount of the additional expenditure,
subtract
- (b) RRV,
to find the expected partial reduction in value over the remainder of the term of the lease.
- (8) Apportion the amount of that expected partial reduction in value to each post-expenditure period of account in which any part of the term of the lease falls.
- (9) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each post-expenditure period of account.
- (10) The amount of the additional deduction for any period of account is the amount so apportioned to that period.
- (11) In this section “*post-expenditure period of account*” means any period of account ending after the incurring of the additional expenditure.
##### 502G
- (1) This section applies for determining the liability to corporation tax of a company which is the lessor immediately before the termination of a long funding operating lease.
- (2) Step 1 is to find—
- (a) the termination amount (TA);
- (b) the total of any sums paid to the lessee that are calculated by reference to the termination value (LP).
- (3) Step 2 is to find—
- (a) the relevant value for the purposes of section 502E(6)(a) (RV);
- (b) the total of the deductions allowable under section 502E for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD1);
- (c) the amount, if any, (ERV) by which RV exceeds TD1.
- (4) Step 3 is to find—
- (a) the total of any amounts of capital expenditure incurred by the company which constitute additional expenditure for the purposes of section 502F in the case of the lease (TAE);
- (b) the total of any deductions allowable under section 502F for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD2);
- (c) the amount, if any, (EAE) by which TAE exceeds TD2.
- (5) Step 4 is to find the total of ERV and EAE (T).
- (6) If (TA – LP) exceeds T, treat a profit of an amount equal to the excess as arising to the company in the period of account in which the lease terminates.
- (7) If T exceeds (TA – LP), treat a loss of an amount equal to the excess as arising to the company in that period of account.
- (8) A profit or loss treated as arising to the company under subsection (6) or (7) above is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (9) In computing the profits of the company, no deduction is allowed in respect of any sums paid to the lessee that are calculated by reference to the termination value.
### Lessors under long funding finance or operating leases: avoidance etc
#### Qualifying policies.
##### 502GA
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if the following condition is met.
- (2) The condition is that any part of the expenditure incurred by the company on the acquisition of the plant or machinery for leasing under the lease—
- (a) is (apart from those sections) allowable as a deduction in calculating its profits or losses for the purposes of corporation tax, and
- (b) is so allowable as a result of the plant or machinery forming part of its trading stock.
- (3) For the purposes of this section the cases in which expenditure incurred by a company on the acquisition of any plant or machinery for leasing under a lease is allowable as such a deduction include any case where—
- (a) the company becomes entitled to the deduction at any time after the expenditure is incurred, and
- (b) the deduction arises as a result of the plant or machinery forming part of its trading stock at that time.
- (4) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) the condition in subsection (2) is met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (5) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (4).
##### 502GB
- (1) This section applies if—
- (a) a dividend or bonus is granted by a registered industrial and provident society, and
- (b) section 132 (deduction for dividends etc granted by industrial and provident societies) of CTA 2009 allows the sum representing the dividend or bonus to be deducted in calculating the profits of a trade.
- (2) The dividend, or the bonus, is not treated as a distribution for the purposes of the Corporation Tax Acts.
##### 231A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 231AA
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) he is the borrower under a stock lending arrangement or the lender under a creditor repo or creditor quasi-repo;
- (b) the qualifying distribution is, or is a payment representative of, a distribution in respect of securities to which the arrangement or repo in question relates; and
- (c) a manufactured dividend representative of that distribution is paid by that person in respect of securities to which the arrangement or repo in question relates.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*stock lending arrangement*” has the same meaning as in section 263B of the 1992 Act and, in relation to any such arrangement, any reference to the borrower, or the securities to which the arrangement relates, shall be construed accordingly.
- (3) In this section “*creditor repo*” and “*creditor quasi-repo*” have the meaning given by Schedule 13 to the Finance Act 2007.
- (4) For the purposes of this section “*manufactured dividend*” has the same meaning as in paragraph 2 of Schedule 23A (and any reference to a manufactured dividend being paid accordingly includes a reference to a payment falling by virtue of section 736B(2) . . . to be treated for the purposes of Schedule 23A as if it were made).
- (5) For the purposes of this section a person is taken to have paid a manufactured dividend representative of a distribution in respect of securities to which a creditor repo relates if (as a result of paragraph 13(1) of Schedule 13 to the Finance Act 2007) the person is treated for the purposes of Chapter 9 of Part 15 of ITA 2007 as making a payment which is representative of the income payable on the securities.
##### 231AB
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) the person is the borrower under a debtor repo or debtor quasi-repo;
- (b) the qualifying distribution is a manufactured dividend paid to the borrower in consequence of that repo; and
- (c) the arrangement or arrangements in relation to that repo are not such that the actual dividend which the manufactured dividend represents is receivable otherwise than by the borrower under that repo.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*debtor repo*” and “*debtor quasi-repo*” have the meaning given by Schedule 13 to the Finance Act 2007.
- (3) Subsection (4) of section 231AA applies for the purposes of this section as it applies for the purposes of that section.
##### 231B
- (1) This section applies in any case where—
- (a) a person (“A”) is entitled to a tax credit in respect of a qualifying distribution;
- (b) arrangements subsist such that another person (“B”) obtains, whether directly or indirectly, a payment representing any of the value of the tax credit;
- (c) the arrangements (whether or not made directly between A and B) were entered into for an unallowable purpose; and
- (d) the condition in subsection (2) below is satisfied.
- (2) The condition is that if B had been the person entitled to the tax credit and the qualifying distribution to which it relates, and had received the distribution when it was made, then—
- (a) B would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if B is a company, B could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (3) This section does not apply if and to the extent that any other provision of the Tax Acts has the effect of cancelling or reducing the tax advantage which would otherwise be obtained by virtue of the arrangements.
- (4) Where this section applies—
- (a) no claim shall be made under section 231(2) for payment of the amount of the tax credit;
- (b) no claim shall be made under section 397(2) of ITTOIA 2005. . . in respect of the tax credit;
- (c) the income consisting of the distribution in respect of which A is entitled to the tax credit shall not be regarded for the purposes of section 241 as franked investment income; and
- (d) no claim shall be made under section 35 of the Finance (No. 2) Act 1997 (transitional relief) for payment of an amount determined by reference to that distribution.
- (5) For the purposes of this section, the question whether any arrangements were entered into for an “unallowable purpose” shall be determined in accordance with subsections (6) and (7) below.
- (6) Arrangements are entered into for an unallowable purpose if the purposes for which at least one person is a party to the arrangements include a purpose which is not amongst the business or other commercial purposes of that person.
- (7) Where one of the purposes for which a person enters into any arrangements is the purpose of securing that that person or another obtains a tax advantage, that purpose shall be regarded as a business or other commercial purpose of the person only if it is neither the main purpose, nor one of the main purposes, for which the person enters into the arrangements.
- (8) Any reference in this section to a person obtaining a tax advantage includes a reference to a person obtaining a payment representing any of the value of a tax credit in circumstances where, had the person obtaining the payment been entitled to the tax credit and the qualifying distribution to which it relates, that person—
- (a) would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if that person is a company, could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (9) If an amount representing any of the value of a tax credit to which a person is entitled is applied at the direction of, or otherwise in favour of, some other person (whether by way of set off or otherwise), the case shall be treated for the purposes of this section as one where that other person obtains a payment representing any of the value of the tax credit.
- (10) In determining for the purposes of subsections (2)(b) and (8)(b) b above whether a company could have used the income consisting of the distribution in question to frank a distribution of the company, the company shall be taken to use its actual franked investment income to frank distributions before using the income consisting of the distribution in question.
- (11) References in this section to using franked investment income to frank a distribution of a company have the same meaning as in Chapter V of Part VI.
- (a) a company is the lessee of any plant or machinery under a lease (“lease A”) that is not a long funding lease,
- (b) it enters into a lease (“lease B”) of any of that plant or machinery (as lessor), and
- (c) lease B is a long funding lease.
- (2) Sections 502B to 502G do not apply in relation to lease B.
- (3) If by virtue of section 70H of the Capital Allowances Act (tax return by lessee treating lease as long funding lease) lease A becomes a long funding lease (and does not cease to be such a lease), treat this section as never having applied in relation to lease B.
##### 502GC
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if conditions A to C are met.
- (2) Condition A is that the long funding lease forms part of any arrangement entered into by the company which includes one or more other transactions (whether the arrangement is entered into before or after or at the inception of the lease).
- (3) Condition B is that the main purpose, or one of the main purposes, of the arrangement is to secure that, over the relevant period, there would be a substantial difference between—
- (a) the total amount of the amounts under the arrangement which are, in accordance with generally accepted accounting practice, recognised in determining the company's profit or loss for any period or taken into account in calculating the amounts which are so recognised, and
- (b) the total amount of the amounts under the arrangement which are taken into account in calculating the profits or losses of the company for the purposes of corporation tax.
- (4) For the purposes of condition B “*the relevant period*” means the period which begins with the inception of the lease and ends with the end of the term of the lease.
- (5) Condition C is that the difference would be attributable (wholly or partly) to the application of any of sections 502B to 502G in relation to the company by reference to the plant or machinery under the lease.
- (6) The reference in this section to an amount being recognised in determining a company's profit or loss for a period is to an amount being recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in calculating the company's profits and losses for that period.
- (7) For the purposes of this section it does not matter whether the parties to any transaction which forms part of the arrangement differ from the parties to any of the other transactions.
- (8) For the purposes of this section the cases in which two or more transactions are to be taken as forming part of an arrangement include any case in which it would be reasonable to assume that one or more of them—
- (a) would not have been entered into independently of the other or others, or
- (b) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
- (9) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) conditions A to C are met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (10) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (9).
##### 502GD
- (1) If a company is or has been a lessor under a long funding lease of a film, sections 502B to 502G do not apply in respect of the lease.
- (2) “*Film*” has the same meaning as in Part 15 of CTA 2009 (see section 1181 of that Act).
### Insurance company as lessor
##### 502H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Lessees under long funding finance leases
#### Elections as to transfer of relief under section 257A or 257AB.
##### 502I
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding finance lease.
- (2) In calculating the company's profits for the period of account,—
- (a) the amount deducted in respect of amounts payable under the lease,
must not exceed
- (b) the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company's accounts as finance charges in respect of the lease.
- (3) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, subsection (2) above applies as if the lease were one which, under generally accepted accounting practice, fell to be treated as a finance lease.
##### 502J
- (1) This section applies where—
- (a) a company is or has been the lessee under a long funding finance lease, and
- (b) in connection with the termination of the lease, a payment calculated by reference to the termination value falls to be made to the company.
- (2) The payment is not to be brought into account in determining for the purposes of corporation tax the profits of the company for any period of account.
- (3) Subsection (2) above does not affect the amount of any disposal value that falls to be brought into account by the company under the Capital Allowances Act.
### Lessees under long funding operating leases
##### 502K
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding operating lease.
- (2) The deductions that may be allowed in computing the profits of the company for the period of account are to be reduced in accordance with the following provisions of this section.
- (3) The amount of the reduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) the market value of the plant or machinery at the commencement of the term of the lease, unless paragraph (b) below applies;
- (b) if the lessee—
- (i) has the use of the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but
- (ii) brings the plant or machinery into use for the purposes of a qualifying activity on or after 1st April 2006,
the lower of first use market value and first use amortised market value.
- (5) In subsection (4) above—
- “*first use amortised market value*” means the value that the plant or machinery would have—at the time when it is first brought into use for the purposes of the qualifying activity, buton the assumption that the market value of the plant or machinery at the commencement of the term of the lease had been written off on a straight line basis over the remaining useful economic life of the plant or machinery;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(b) above, would have been) expected to be the market value of the plant or machinery at the end of the term of the lease,
to find the expected gross reduction over the term of the lease.
- (7) Apportion the amount of that expected gross reduction to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the reduction for any period of account is the amount so apportioned to that period.
### Interpretation of Chapter
##### 502L
- (1) This section has effect for the interpretation of this Chapter.
- (2) In this Chapter—
- “*qualifying activity*” has the same meaning as in Part 2 of the Capital Allowances Act;
- “*residual value*”, in relation to any plant or machinery leased under a long funding operating lease, means—the estimated market value of the plant or machinery on a disposal at the end of the term of the lease,lessthe estimated costs of that disposal.
- (3) Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to—
- (a) the sum being apportioned between each of the periods of account in which any part of the writing-off period falls,
- (b) that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and
- (c) the sum being written off accordingly.
- (4) Chapter 6A of Part 2 of the Capital Allowances Act (interpretation of provisions about long funding leases) applies in relation to this Chapter as it applies in relation to that Part.
##### 504A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Eligibility for relief.
#### Old societies.
##### 506A
- (1) This section applies to the following transactions—
- (a) the sale or letting of property by a charitable company to a substantial donor,
- (b) the sale or letting of property to a charitable company by a substantial donor,
- (c) the provision of services by a charitable company to a substantial donor,
- (d) the provision of services to a charitable company by a substantial donor,
- (e) an exchange of property between a charitable company and a substantial donor,
- (f) the provision of financial assistance by a charitable company to a substantial donor,
- (g) the provision of financial assistance to a charitable company by a substantial donor, and
- (h) investment by a charitable company in the business of a substantial donor.
- (2) For the purposes of this section a person is a substantial donor to a charitable company in respect of an accounting period if—
- (a) the charitable company receives relievable gifts of at least £25,000 from him in a period of 12 months in which the accounting period wholly or partly falls, or
- (b) the charitable company receives relievable gifts of at least £100,000 from him in a period of six years in which the accounting period wholly or partly falls;
and if a person is a substantial donor to a charitable company in respect of an accounting period by virtue of paragraph (a) or (b), he is a substantial donor to the charitable company in respect of the following five accounting periods.
- (3) A payment made by a charitable company to a substantial donor in the course of or for the purposes of a transaction to which this section applies shall be treated for the purposes of section 505 as non-charitable expenditure.
- (4) If the terms of a transaction to which this section applies are less beneficial to the charitable company than terms which might be expected in a transaction at arm's length, the charitable company shall be treated for the purposes of section 505 as incurring non-charitable expenditure equal to that amount which the Commissioners for Her Majesty's Revenue and Customs determine as the cost to the charitable company of the difference in terms.
- (5) A payment by a charitable company of remuneration to a substantial donor shall be treated for the purposes of section 505 as non-charitable expenditure unless it is remuneration, for services as a trustee, which is approved by—
- (a) the Charity Commission,
- (b) another body with responsibility for regulating charities by virtue of legislation having effect in respect of any Part of the United Kingdom, or
- (c) a court.
##### 506B
- (1) Section 506A shall not apply to a transaction within section 506A(1)(b) or (d) if the Commissioners for Her Majesty's Revenue and Customs determine that the transaction—
- (a) takes place in the course of a business carried on by the substantial donor,
- (b) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (c) is not part of an arrangement for the avoidance of any tax.
- (2) Section 506A shall not apply to the provision of services to a substantial donor if the Commissioners determine that the services are provided—
- (a) in the course of the actual carrying out of a primary purpose of the charitable company, and
- (b) on terms which are no more beneficial to the substantial donor than those on which services are provided to others.
- (3) Section 506A shall not apply to the provision of financial assistance to a charitable company by a substantial donor if the Commissioners determine that the assistance—
- (a) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (b) is not part of an arrangement for the avoidance of any tax.
- (4) Section 506A shall not apply to investment by a charitable company in the business of a substantial donor where the investment takes the form of the purchase of shares or securities listed on a recognised stock exchange.
- (5) A disposal at an undervalue in respect of which relief is available under section 587B of this Act or section 431 of ITA 2007 (gifts of shares, securities and real property to charities etc) shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (6) A disposal at an undervalue to which section 257(2) of the 1992 Act (gifts of chargeable assets) applies shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (7) In the application of section 506A payments by a charitable company, or benefits arising to a substantial donor from a transaction, shall be disregarded in so far as they relate to a donation by the donor, and—
- (a) if the donation is made by a company, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 339 because of subsection (3B)(b) of that section (restrictions on associated benefits), or
- (b) if the donation is made by an individual, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 416 of ITA 2007 because of subsection (7)(b) of that section (restrictions on associated benefits).
- (8) A company which is wholly owned by a charity within the meaning of section 339(7AB) shall not be treated as a substantial donor in relation to a charitable company which owns it (or any part of it).
- (9) A registered social landlord or housing association shall not be treated as a substantial donor in relation to a charitable company with which it is connected; and for that purpose—
- (a) “*registered social landlord or housing association*” means a body entered on a register maintained under—
- (i) section 1 of the Housing Act 1996,
- (ii) section 57 of the Housing (Scotland) Act 2001, or
- (iii) Article 14 of the Housing (Northern Ireland) Order 1992, and
- (b) a body and a charitable company are connected if (and only if)—
- (i) the one is wholly owned, or subject to control, by the other, or
- (ii) both are wholly owned, or subject to control, by the same person.
##### 506C
- (1) A gift is “*relievable*” for the purposes of section 506A(2) if relief is available in respect of it under—
- (a) section 83A,
- (b) section 339,
- (c) sections 587B and 587C,
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) section 257 of the 1992 Act (gifts of chargeable assets),
- (f) section 63 of the Capital Allowances Act (gifts of plant and machinery),
- (g) sections 713 to 715 of ITEPA 2003 (payroll giving),
- (h) section 108 of ITTOIA 2005 (gifts of trading stock), . . .
- (i) sections 628 and 630 of ITTOIA 2005 (gifts from settlor-interested trusts), or
- (j) Chapters 2 and 3 of Part 8 of ITA 2007 (gift aid and gifts of shares, securities and real property).
- (2) A charitable company is treated as incurring expenditure in accordance with section 506A(4) at such time (or times) as the Commissioners determine.
- (3) Section 506A applies to a transaction entered into in an accounting period with a person who is a substantial donor in respect of that period, even if it was not until after the transaction was entered into that he first satisfied the definition of “substantial donor” in respect of that period.
- (4) Either or both of subsections (3) and (4) of section 506A may be applied to a single transaction; but any amount of non-charitable expenditure which a charitable company is treated as incurring under section 506A(3) in respect of a transaction shall be deducted from any amount which it would otherwise be treated as incurring under section 506A(4) in respect of the transaction.
- (5) A charitable company and any other charities with which it is connected are to be treated as a single charitable company for the purposes of section 506A and 506B and this section; and for this purpose “*connected*” means connected in a matter relating to the structure, administration or control of a charity.
- (6) Where remuneration is paid otherwise than in money, section 506A(5) shall apply as to a payment in money of the amount that would, under Part 3 of ITEPA 2003, be the cash equivalent of the remuneration as a benefit.
- (7) In sections 506A and 506B and this section—
- (a) a reference to a substantial donor or other person includes a reference to a person connected with him within the meaning of section 839,
- (b) “*financial assistance*” includes, in particular—
- (i) the provision of a loan, guarantee or indemnity, and
- (ii) entering into alternative finance arrangements within the meaning of section 46 of the Finance Act 2005, and
- (c) a reference to a gift of a specified amount includes a reference to a non-monetary gift of that value.
- (8) On an appeal against an assessment the Special Commissioners may review a decision of the Commissioners in connection with section 506A.
- (9) The Treasury may by regulations vary a sum, or a period of time, specified in section 506A(2).
#### Eligibility for relief.
##### 508A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 508B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 510A
- (1) In this section “*grouping*” means a European Economic Interest Grouping formed in pursuance of Council Regulation [(EEC) No. 2137/85](https://www.legislation.gov.uk/european/regulation/1985/2137) of 25th July 1985, whether registered in Great Britain, in Northern Ireland, or elsewhere.
- (2) Subject to the following provisions of this section, for the purposes of charging corporation tax a grouping shall be regarded as acting as the agent of its members.
- (3) In accordance with subsection (2) above—
- (a) for the purposes mentioned in that subsection the activities of the grouping shall be regarded as those of its members acting jointly and each member shall be regarded as having a share of its property, rights and liabilities; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but paragraph (a) above is subject to subsection (6A) below.
- (4) Subject to subsection (5) below, for the purposes of this section a member’s share of any property, rights or liabilities of a grouping shall be determined in accordance with the contract under which the grouping is established.
- (5) Where the contract does not make provision as to the shares of members in the property, rights or liabilities in question a member’s share shall be determined by reference to the share of the profits of the grouping to which he is entitled under the contract (and if the contract makes no provision as to that, the members shall be regarded as having equal shares).
- (6) . . . Where any trade or profession is carried on by a grouping it shall be regarded for the purposes of charging corporation tax as carried on in partnership by the members of the grouping.
- (6A) Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships) shall have effect in relation to a grouping as it has effect in relation to a partnership (see in particular section 87A of, and paragraphs 19 and 20 of Schedule 9 to, that Act).
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 519A
- (1) A health service body shall be exempt from corporation tax.
- (2) In this section “*health service body*” means—
- (a) a Strategic Health Authority established under section 13 of the National Health Service Act 2006. . . . . . ;
- (aa) a Special Health Authority established under section 28 of that Act or section 22 of the National Health Service (Wales) Act 2006;
- (ab) a Primary Care Trust;
- (aba) a Local Health Board;
- (b) a National Health Service trust established under section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006;
- (bb) an NHS foundation trust
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) a Health Board or Special Health Board, the Common Services Agency for the Scottish Health Service and a National Health Service trust respectively constituted under sections 2, 10 and 12A of the National Health Service (Scotland) Act 1978;
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (g) the Scottish Dental Practice Board; . . .
- (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (i) a Health and Social Services Board and the Northern Ireland Central Services Agency for the Health and Social Services established under Articles 16 and 26 respectively of the Health and Personal Social Services (Northern Ireland) Order 1972;
- (j) a special health and social services agency established under the Health and Personal Social Services (Special Agencies) (Northern Ireland) Order 1990; and
- (k) a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991.
- (3) The Treasury may by order disapply subsection (1) in relation to a specified activity, or class of activity, of an NHS foundation trust.
- (4) An order under subsection (3) shall make provision for determining the amount of the profits relating to an activity that are to be charged to corporation tax as a result of the disapplication of subsection (1).
- (5) An order under subsection (3) may, in particular—
- (a) make provision for disregarding profits of less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (b) make provision for disregarding a specified part of profits in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (c) make provision for disregarding all or part of profits relating to activity in respect of which receipts or turnover (as defined by the order) are less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period.
- (6) An order under subsection (3)—
- (a) may apply, with or without modification, a provision of the Tax Acts,
- (b) may disapply a provision of the Tax Acts,
- (c) may make provision similar to a provision of the Tax Acts, and
- (d) may make provision generally or in relation to a specified body or class of bodies.
- (7) The Treasury may make an order under subsection (3) only—
- (a) in relation to an activity or class of activity that appears to the Treasury to be of a commercial nature,
- (b) where it appears to the Treasury to be expedient for the purpose of avoiding, removing or reducing differences between—
- (i) the fiscal treatment of the body undertaking the activity, and
- (ii) the fiscal treatment of another body or class of body which is of a commercial nature and which undertakes or might undertake the same or a similar activity, and
- (c) if a draft has been laid before, and approved by resolution of, the House of Commons.
- (8) An activity authorised under section 43(1) of the National Health Service Act 2006 shall not be treated as an activity of a commercial nature for the purposes of subsection (7)(a).
#### Transfer of relief under section 257A where relief exceeds income or 257AB.
#### Exemption for trade unions and employers’ associations.
#### Certified unit trusts: corporation tax.
#### Dividends paid to investment trusts.
#### “Deposit-taker”, “deposit” and “relevant deposit”.
### Designs
##### 537A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 537B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Savings banks: exemption from tax.
##### 539ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 539A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of oil disposed of or appropriated in certain circumstances.
##### 546A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 547A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 548A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Computation of amount available for surrender by way of group relief.
##### 548B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 551A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 552ZA
- (1) This section supplements section 552 and shall be construed as one with it.
- (2) Where the obligations under any policy or contract of the body that issued, entered into or effected it (“*the original insurer*”) are at any time the obligations of another body (“*the transferee*”) to whom there has been a transfer of the whole or any part of a business previously carried on by the original insurer, section 552 shall have effect in relation to that time, except where the chargeable event—
- (a) happened before the transfer, and
- (b) in the case of a death or an assignment, is an event of which the notification mentioned in subsection (6) or (7) of that section was given before the transfer,
as if the policy or contract had been issued, entered into or effected by the transferee.
- (3) Where, in consequence of . . . section 514(1) of ITTOIA 2005, paragraph (a) or (b) of section 552(1) requires certificates to be delivered in respect of two or more surrenders, happening in the same year, of part of or a share in the rights conferred by the policy or contract, a single certificate may be delivered under the paragraph in question in respect of all those surrenders (and may treat them as if they together constituted a single surrender) unless between the happening of the first and the happening of the last of them there has been—
- (a) an assignment of part of or a share in the rights conferred by the policy or contract; or
- (b) an assignment, otherwise than for money or money’s worth, of the whole of the rights conferred by the policy or contract.
- (4) Where the appropriate policy holder is two or more persons—
- (a) section 552(1)(a) requires a certificate to be delivered to each of them; but
- (b) nothing in section 552 or this section requires a body to deliver a certificate under subsection (1)(a) of that section to any person whose address has not been provided to the body (or to another body, at a time when the obligations under the policy or contract were obligations of that other body).
- (5) A certificate under section 552(1)(b) or (3)—
- (a) shall be in a form prescribed for the purpose by the Board; and
- (b) shall be delivered by any means prescribed for the purpose by the Board;
and different forms, or different means of delivery, may be prescribed for different cases or different purposes.
- (6) The Board may by regulations make such provision as they think fit for securing that they are able—
- (a) to ascertain whether there has been or is likely to be any contravention of the requirements of section 552 or this section; and
- (b) to verify any certificate under that section.
- (7) Regulations under subsection (6) above may include, in particular, provisions requiring persons to whom premiums under any policy are or have at any time been payable—
- (a) to supply information to the Board; and
- (b) to make available books, documents and other records for inspection on behalf of the Board.
- (8) Regulations under subsection (6) above may—
- (a) make different provision for different cases; and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 552ZB
- (1) The Commissioners for Her Majesty's Revenue and Customs may make regulations—
- (a) requiring relevant persons—
- (i) to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;
- (ii) to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;
- (b) making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—
- (i) to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;
- (ii) to verify any information provided to an officer of Revenue and Customs as required by the regulations.
- (2) The provision that may be made by virtue of subsection (1)(b) includes, in particular, provision requiring relevant persons to make available books, documents and other records for inspection by or on behalf of an officer of Revenue and Customs.
- (3) The regulations may—
- (a) make different provision for different cases or circumstances, and
- (b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
- (4) In this section—
- “*prescribed*” means prescribed by the regulations,
- “*qualifying policy*” includes a policy which would be a qualifying policy apart from—paragraph A1(2), B1(2), B2(2) or B3(3) of Schedule 15, orparagraph 17(2)(za) of that Schedule (including as applied by paragraph 18), and
- “*relevant person*” means a person—who issues, or has issued, qualifying policies, orwho is, or has been, a relevant transferee in relation to qualifying policies.
- (5) For the purposes of this section a person (“X”) is at any time a “*relevant transferee*” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.
##### 552A
- (1) This section has effect for the purpose of securing that, where it applies to an overseas insurer, another person is the overseas insurer’s tax representative.
- (2) In this section “*overseas insurer*” means a person who is not resident in the United Kingdom who carries on a business which consists of or includes the effecting and carrying out of—
- (a) policies of life insurance;
- (b) contracts for life annuities; or
- (c) capital redemption policies.
- (3) This section applies to an overseas insurer—
- (a) if the condition in subsection (4) below is satisfied on the designated day; or
- (b) where that condition is not satisfied on that day, if it has subsequently become satisfied.
- (4) The condition mentioned in subsection (3) above is that—
- (a) there are in force relevant insurances the obligations under which are obligations of the overseas insurer in question or of an overseas insurer connected with him; and
- (b) the total amount or value of the gross premiums paid under those relevant insurances is £1 million or more.
- (5) In this section “*relevant insurance*” means any policy of life insurance, contract for a life annuity or capital redemption policy . . . in the case of which—
- (a) the holder is resident in the United Kingdom;
- (b) the obligations of the insurer are obligations of a person not resident in the United Kingdom; and
- (c) those obligations are not attributable to a branch or agency of that person’s in the United Kingdom.
- (6) Before the expiration of the period of three months following the day on which this section first applies to an overseas insurer, the overseas insurer must nominate to the Board a person to be his tax representative.
- (7) A person shall not be a tax representative unless—
- (a) if he is an individual, he is resident in the United Kingdom and has a fixed place of residence there, or
- (b) if he is not an individual, he has a business establishment in the United Kingdom,
and, in either case, he satisfies such other requirements (if any) as are prescribed in regulations made for the purpose by the Board.
- (8) A person shall not be an overseas insurer’s tax representative unless—
- (a) his nomination by the overseas insurer has been approved by the Board; or
- (b) he has been appointed by the Board.
- (9) The Board may by regulations make provision supplementing this section; and the provision that may be made by any such regulations includes provision with respect to—
- (a) the making of a nomination by an overseas insurer of a person to be his tax representative;
- (b) the information which is to be provided in connection with such a nomination;
- (c) the form in which such a nomination is to be made;
- (d) the powers and duties of the Board in relation to such a nomination;
- (e) the procedure for approving, or refusing to approve, such a nomination, and any time limits applicable to doing so;
- (f) the termination, by the overseas insurer or the Board, of a person’s appointment as a tax representative;
- (g) the appointment by the Board of a person as the tax representative of an overseas insurer (including the circumstances in which such an appointment may be made);
- (h) the nomination by the overseas insurer, or the appointment by the Board, of a person to be the tax representative of an overseas insurer in place of a person ceasing to be his tax representative;
- (j) circumstances in which an overseas insurer to whom this section applies may, with the Board’s agreement, be released (subject to any conditions imposed by the Board) from the requirement that there must be a tax representative;
- (k) appeals to the Special Commissioners against decisions of the Board under this section or regulations under it.
- (10) The provision that may be made by regulations under subsection (9) above also includes provision for or in connection with the making of other arrangements between the Board and an overseas insurer for the purpose of securing the discharge by or on behalf of the overseas insurer of the relevant duties, within the meaning of section 552B.
- (11) Section 839 (connected persons) applies for the purposes of this section.
- (12) In this section—
- “*arrangements*” means arrangements of any kind, whether in writing or not (and includes a series of arrangements, whether or not between the same parties);
- “*business or other commercial purposes*” includes the efficient management of investments;
- “*franked investment income*” has the same meaning as in Chapter V of Part VI and references to income consisting of a distribution shall be construed accordingly;
- “*tax advantage*” has the meaning given by section 840ZA
#### Married couple’s allowance(pre-5th December 2005 marriages).
##### 234A
- (1) This section applies where dividend or interest is distributed by a company which is—
- (a) a company within the meaning of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986, or
- (b) a company created by letters patent or by or in pursuance of an Act.
- (2) If the company makes a payment of dividend or interest to any person, and subsection (3) below does not apply, within a reasonable period the company shall send an appropriate statement to that person.
- (3) If the company makes a payment of dividend or interest into a bank or building society account held by any person, within a reasonable period the company shall send an appropriate statement to either—
- (a) the bank or building society concerned, or
- (b) the person holding the account.
- (4) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part to the other person and subsection (5) below does not apply,
within a reasonable period the nominee shall send an appropriate statement to that person.
- (5) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part into a bank or building society account held by the other person,
within a reasonable period the nominee shall send an appropriate statement to either the bank or building society concerned or the other person.
- (6) In the case of a payment of interest which is not a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the gross amount which, after deduction of the income tax appropriate to the interest, corresponds to the net amount actually paid,
- (b) the rate and the amount of income tax appropriate to such gross amount,
- (c) the net amount actually paid, and
- (d) the date of the payment.
- (7) In the case of a payment of dividend or interest which is a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the amount of the dividend or interest paid,
- (b) the date of the payment, and
- (c) the amount of the tax credit to which a person is entitled in respect of the dividend or interest, or to which a person would be so entitled if he had a right to a tax credit in respect of the dividend or interest.
- (8) In this section “*send*” means send by post.
- (8A) In this section “*bank*” has the meaning given by section 840A.
- (9) If a person fails to comply with subsection (2), (3), (4) or (5) above, the person shall incur a penalty of £60 in respect of each offence, except that the aggregate amount of any penalties imposed under this subsection on a person in respect of offences connected with any one distribution of dividends or interest shall not exceed £600.
- (10) The Board may by regulations provide that where a person is under a duty to comply with subsection (2), (3), (4) or (5) above, the person shall be taken to comply with the subsection if the person either—
- (a) acts in accordance with the subsection concerned, or
- (b) acts in accordance with rules contained in the regulations;
and subsection (9) above shall be construed accordingly.
- (11) Regulations under subsection (10) above may make different provision for different circumstances.
##### 245A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 245B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Chapter VA — Foreign Income Dividends
### Election by company paying dividend
#### Married couple's allowance (post-5th December 2005 marriages and civil partnerships etc.)
##### 246A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Recipient of foreign income dividend
##### 246C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Companies: payments and receipts
##### 246E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Foreign source profit and distributable foreign profit
##### 246I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Matching of dividend with distributable foreign profit
##### 246J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Repayment or set-off of advance corporation tax
##### 246N
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246P
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246Q
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### International headquarters companies
##### 246S
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246T
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246U
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246V
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246W
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Adjustments
##### 246X
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Application of this Chapter
##### 246Y
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of relief under section 257A where relief exceeds income or 257AB.
### Approved share incentive plans
##### 251A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 251B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 251C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transitional relief: the elderly.
##### 251D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 256A
- (1) For the purposes of this Chapter an individual's adjusted net income for a year of assessment is calculated as follows.
*Step 1*
Take the amount of the individual's net income for the year of assessment.
*Step 2*
If in the year of assessment the individual makes, or is treated under section 426 of ITA 2007 as making, a gift that is a qualifying donation for the purposes of Chapter 2 of Part 8 of that Act (gift aid) deduct the grossed up amount of the gift.
*Step 3*
If the individual is given relief in accordance with section 192 of FA 2004 (relief at source) in respect of any contribution paid in the year of assessment under a pension scheme, deduct the gross amount of the contribution.
*Step 4*
Add back any relief under section 266 of this Act given by virtue of subsection (7) of that section (payments for life insurance etc) that was deducted in calculating the individual's net income for the year of assessment.
The result is the individual's adjusted net income for the year of assessment.
- (2) The grossed up amount of a gift is the amount of the gift grossed up by reference to the basic rate for the year of assessment.
- (3) The gross amount of a contribution is the amount of the contribution before deduction of tax under section 192(1) of FA 2004.
##### 256B
In this Chapter “*the minimum amount*” means £2,350.
##### 257AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) If the claimant is, for the whole or any part of the year of assessment, a married man whose wife is living with him and whose marriage was entered into before 5th December 2005, and either of them was born before 6th April 1935, he shall (subject to subsection (3A) below) be entitled for that year to a tax reduction calculated by reference to £2,665 . . . .
- (3) If the claimant is, for the whole or any part of the year of assessment, a married man whose wife is living with him and whose marriage was entered into before 5th December 2005, and either of them
- (a) is at any time within that year of the age of 75 or upwards, and
- (b) was born before 6th April 1935,
he shall (subject to subsection (3A) below) be entitled for that year to a tax reduction calculated by reference to £2,705 (instead of to the reduction provided for by subsection . . . (2) above).
- (3A) Subsections (2) and (3) above shall not apply in relation to the claimant for any year of assessment if an election made by the claimant and his wife under section 257AB(1)(c) has effect for that year.
- (4) For the purposes of subsection (3) above a person who would have been of or over the age of 75 within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.
- (5) In relation to a claimant whose adjusted net income for the year of assessment exceeds £12,300, subsections (2) and (3) above shall apply as if the amounts specified in them were reduced by—
- (a) one half of the excess, less
- (b) any reduction made in his allowance under section 257 by virtue of subsection (5) of that section,
. . .
- (5A) The amounts specified in subsections (2) and (3) above shall not by virtue of subsection (5) above be treated as reduced below the minimum amount.
- (6) A man shall not be entitled by virtue of this section to more than one tax reduction for any year of assessment; and in relation to a claim by a man who becomes married in the year of assessment and has not previously in the year been entitled to relief under this section, this section shall have effect as if the amounts specified in subsections (2) and (3) above were reduced by one twelfth for each month of the year ending before the date of the marriage.
- In this subsection “*month*” means a month beginning with the 6th day of a month of the calendar year.
- (6A) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257AB
- (1) This section applies if —
- (a) the claimant is, for the whole or any part of the year of assessment, living with his spouse or civil partner,
- (b) either the claimant or his spouse or civil partner was born before 6th April 1935,
- (c) the marriage or civil partnership was entered into on or after 5th December 2005 or, if the marriage was entered into before that date, an election for this section to apply has effect for that year, and
- (d) the claimant's net income for that year exceeds that of his spouse or civil partner or, if they have the same amount of net income for that year, the claimant is specified in an election as the person to be entitled to relief under this section for that year.
- (2) The claimant shall be entitled for that year to a tax reduction—
- (a) calculated by reference to £5,975 (if either the claimant or his spouse or civil partner is at any time within that year of the age of 75 or upwards), or
- (b) calculated by reference to £5,905 (in any other case).
- (3) For the purposes of subsection (2)(a) above an individual who would have been of or over the age of 75 within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.
- (4) In relation to a claimant whose adjusted net income for the year of assessment exceeds £19,500, subsection (2) above applies as if the amounts specified in it were reduced by—
- (a) one half of the excess, less
- (b) any reduction made in his allowance under section 257 by virtue of subsection (5) of that section.
- (5) The amounts specified in subsection (2) above shall not by virtue of subsection (4) above be treated as reduced below the minimum amount.
- (6) An individual shall not be entitled by virtue of this section to more than one tax reduction for any year of assessment.
- (7) In relation to a claim by an individual who —
- (a) becomes a spouse or civil partner in the year of assessment, and
- (b) has not previously in the year been entitled to relief under this section,
this section shall have effect as if the amounts specified in subsection (2) above were reduced by one twelfth for each month of the year ending before the date of the marriage or civil partnership.
- In this subsection “*month*” means a month beginning with the 6th day of a month of the calendar year.
- (8) An election under subsection (1)(c) —
- (a) shall be made jointly by the parties to the marriage,
- (b) shall be made before the first year of assessment for which it is to have effect,
- (c) shall have effect for that and each succeeding year of assessment for which any party to the marriage is entitled to relief under this section, and
- (d) shall be irrevocable.
- (9) An election under subsection (1)(d) —
- (a) shall be made jointly by the parties to the marriage or civil partnership, and
- (b) shall be made on or before the 5th anniversary of the 31st January next following the end of the year of assessment to which the election relates.
- (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
#### Early conversion or surrender of life policies.
##### 257BA
- (1) An individual may elect that for any year of assessment for which the individual's spouse or civil partner is entitled to a tax reduction under section 257A or 257AB—
- (a) the individual shall be entitled (on making a claim) to a tax reduction calculated by reference to half the minimum amount, and
- (b) the spouse or civil partner's appropriate amount shall be reduced by half the minimum amount.
- (2) An individual and the individual's spouse or civil partner may jointly elect that for any year of assessment for which the individual is entitled to a tax reduction under section 257A or 257AB—
- (a) the individual's spouse or civil partner shall be entitled (on making a claim) to a tax reduction calculated by reference to the minimum amount, and
- (b) the individual's appropriate amount shall be reduced by the minimum amount.
- (3) An individual may elect that for any year of assessment for which the individual's spouse or civil partner is entitled to a tax reduction by virtue of an election under subsection (2) above—
- (a) the individual shall be entitled (on making a claim) to a tax reduction calculated by reference to half the minimum amount (in addition to any tax reduction to which the individual is already entitled under section 257A or 257AB), and
- (b) the tax reduction to which the spouse or civil partner is entitled by virtue of that election shall be calculated by reference to half the minimum amount (instead of by reference to the minimum amount).
- (3A) In this section “*the appropriate amount*” means the amount by reference to which the calculation of the tax reduction is to be made.
- (4) An election under this section shall be made by giving notice to the inspector in such form as the Board may determine and—
- (a) subject to subsections (5) and (7) below, shall be made before the first year of assessment for which it is to have effect, and
- (b) shall have effect for that and each succeeding year of assessment for which the individual concerned is entitled to relief under section 257A or 257AB, subject to its withdrawal under subsection (8) below or a subsequent election under this section.
- (5) An election may be made during the first year of assessment for which it is to have effect if that is the year of assessment in which the marriage or civil partnership takes place.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) An election may be made within the first thirty days of the first year of assessment for which it is to have effect if before that year the inspector has been given written notification that it is intended to make the election.
- (8) The person or persons by whom an election was made may withdraw it by giving notice to the inspector in such form as the Board may determine; but the withdrawal shall not have effect until the year of assessment after the one in which the notice is given.
- (9) An individual shall not be entitled by virtue of an election under this section to more than one tax reduction for any year of assessment.
- (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
##### 257BB
- (1) Where—
- (a) an individual is entitled to a tax reduction under section 257A or 257AB, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of an election under section 257BA) to a tax reduction equal to the unused part of the individual's MCA tax reductions.
- (1A) The individual's MCA tax reductions are the sum of—
- (a) the tax reduction to which the individual is entitled under section 257A or 257AB, and
- (b) any tax reduction to which the individual is entitled by virtue of an election under section 257BA(3).
- (1B) The unused part of the individual's MCA tax reductions is equal to—
- (a) the individual's MCA tax reductions, less
- (b) the individual's comparable tax liability.
- (2) Subsection (1) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (3) Where—
- (a) an individual is entitled to a tax reduction by virtue of an election under section 257BA, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of section 257A or 257AB) to a tax reduction equal to the unused part of the individual's tax reduction.
- (3AA) The unused part of the individual's tax reduction is equal to—
- (a) the tax reduction to which the individual is entitled by virtue of the election under section 257BA, less
- (b) the individual's comparable tax liability.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subsection (3) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (5) Any notice under subsection (2) or (4) above—
- (a) shall be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
- (5A) For the purposes of this section, the comparable tax liability of an individual is the amount of the individual's tax left after Step 6 of the calculation in section 23 of ITA 2007, making that calculation with the modifications set out in subsections (5B) and (5C).
- (5B) In making that calculation, do not deduct any tax reduction under—
- (a) section 788 (double taxation arrangements: relief by agreement), or
- (b) section 790(1) (relief for foreign tax where there are no double taxation arrangements).
- (5C) If the individual's entitlement to a tax reduction under section 257A, 257AB, 257BA or this section is extinguished under section 423(4) of ITA 2007 (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (5A) and (5B) the amount by which the tax reduction is reduced.
- (5D) For the purposes of this section a person is treated as being entitled to a tax reduction under section 788 if the person is entitled to credit against income tax under arrangements which have effect under that section.
- (5E) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257B
- (1) Where—
- (a) a man is entitled to relief under section 257A, but
- (b) the amount which he is entitled to deduct from his total income by virtue of that section exceeds what is left of his total income after all other deductions have been made from it,
his wife shall be entitled to a deduction from her total income of an amount equal to the excess.
- (2) In determining for the purposes of subsection (1)(b) above the amount that is left of a person’s total income for a year of assessment after other deductions have been made from it, there shall be disregarded any deduction made—
- (a) on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or
- (b) under section 289 or
- (c) on account of any payments to which section 593(2) or 639(3) applies,or
- (d) on account of any payments to which section 54(5) of the Finance Act 1989 applies.
, or
- (e) on account of any payments to which section 32(4) of the Finance Act 1991 applies.
- (3) This section shall not apply for a year of assessment unless the claimant’s husband has given to the inspector written notice that it is to apply; and any such notice—
- (a) shall be given not later than six years after the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
##### 257C
- (1) If the retail prices index for the month of September preceding a year of assessment is higher than it was for the previous September, then, unless Parliament otherwise determines, sections 256B, 257. . . , 257A and 257AB shall apply for that year as if for each amount specified in them as they applied for the previous year (whether by virtue of this section or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index, and—
- (a) if in the case of an amount specified in sections 257(5) , 257A(5) and 257AB(4) the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple;
- (b) if in the case of any other amount the increase is not a multiple of £10, rounding the increase up to the nearest amount which is such a multiple.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) Subsection (1) above shall not require any change to be made in the amounts deductible or repayable under PAYE regulations during the period beginning with 6th April and ending with 17th May in the year of assessment.
- (3) The Treasury shall in each year of assessment make an order specifying the amounts which by virtue of subsection (1) above will be treated as specified for the following year of assessment in sections 256B, 257. . . , 257A and 257AB.
- (4) *This section shall have effect in relation to reliefs for the year* 1990-91 (*as well as for later years*);*and for that purpose it shall be assumed that sections* 257*and* 257A*applied for the year* 1989-90*as they apply, apart from this section, for the year* 1990-91.
##### 257D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 261A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 266A
- (1) This section applies if—
- (a) pursuant to an employer-financed retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for or in respect of any employee of that employer, and
- (b) the payment is made under such an insurance or contract as is mentioned in section 266.
This section applies whether or not the accrual of the relevant benefits is dependent on any contingency.
- (2) Relief, if not otherwise allowable, shall be given to that employee under section 266 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if—
- (a) the payment had been made by him, and
- (b) the insurance or contract under which the payment is made had been made with him.
- (3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse, widow or widower, children, dependants or personal representatives.
- (4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them.
- (5) The amount treated as paid for or in respect of each employee is—
$$A×BC$where—A is the sum paid,B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, andC is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.$
- (6) This section does not apply if—
- (a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or
- (b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met.
- (7) Those conditions are—
- (a) that the employment is with a foreign employer, and
- (b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme.
- (8) In subsection (6)(a) “*earnings charged on remittance*” means earnings which are taxable earnings under—
- (a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or
- (b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK).
- (9) In this section—
- “*employer-financed retirement benefits scheme*”, and
- “*relevant benefits*”,
- have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).
#### Supplementary provisions.
##### 282A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 282B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further interpretation of sections 135 to 139.
##### 289A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 289B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 290A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Credit-tokens.
##### 291A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 291B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 300A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 301A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 303AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditional acquisition of shares.
##### 303A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of reliefs.
##### 304A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 305A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 138.
#### Approved profit sharing schemes.
##### 326A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326BB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 327A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for contributions in respect of share option gains.
##### 329AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 331A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 332A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 338B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 337A
- (1) For the purposes of corporation tax, subject to any provision of the Corporation Tax Acts expressly authorising a deduction—
- (a) a company’s profits shall be computed without any deduction in respect of dividends or other distributions, and
- (b) a company’s income from any source shall be computed without any deduction in respect of charges on income.
- (2) In computing a company’s income from any source for the purposes of corporation tax—
- (a) no deduction shall be made in respect of interest except in accordance with Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships); and
- (b) no deduction shall be made in respect of losses from intangible fixed assets within Schedule 29 to the Finance Act 2002 except in accordance with that Schedule.
##### 338A
- (1) This section defines what payments or other amounts are “*charges on income*” for the purposes of corporation tax.
This section has effect subject to any express exceptions in the Corporation Tax Acts.
- (2) Subject to the following provisions of this section, the following (and only the following) are charges on income—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) qualifying donations within the meaning of section 339 (qualifying donations to charity);
- (c) amounts allowed as charges on income under section 587B(2)(a)(ii) (gifts of shares etc to charity).
- (3) No payment that is deductible in computing profits or any description of profits for the purposes of corporation tax shall be treated as a charge on income.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 339A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 342A
- (1) In this section—
- (a) references to the relevant event, in relation to a company in administration, are references—
- (i) to the administrator sending a notice in respect of the company under paragraph 84(1) of Schedule B1 to the Insolvency Act 1986 (company moving from administration to dissolution), or
- (ii) in the case of a company which enters administration otherwise than under that Act, to the doing of any other act for a like purpose, and
- (b) references to a company’s final year are references to the financial year in which the relevant event occurs, and references to the company’s penultimate year are references to the last financial year preceding its final year.
- (2) Subject to subsections (3) and (4)—
- (a) corporation tax shall be charged on the profits of the company arising in the administration in its final year at the rate of corporation tax fixed or proposed for the penultimate year, but
- (b) where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.
- (3) If, before the relevant event, any of the rates or fractions mentioned in subsection (2) has been fixed or proposed for the final year, that subsection shall have effect in relation to that rate or fraction as if for the references to the penultimate year there were substituted references to the final year.
- (4) If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.
- (5) In subsection (4) “*the company’s final accounting period*” means the last accounting period of the company before the relevant event.
- (6) An assessment on the company’s profits for an accounting period in which the company is in administration shall not be invalid because made before the end of the accounting period.
- (7) In making an assessment after the company enters administration and before the date of the relevant event, the administrator may act on an assumption as to when that date will fall so far as it governs section 12(3).
- (8) The assumption of the wrong date shall not alter the company’s final and penultimate year and, if the right date is later—
- (a) an accounting period shall end on the date assumed and a new accounting period shall begin, and
- (b) thereafter, section 12(3) shall apply as if the company had entered administration at the beginning of that new accounting period.
- (9) Subsections (7) and (9) of section 342 apply in relation to this section as they apply in relation to that section, except that in subsection (7) of that section the reference to the completion of the winding up is to be read as a reference to the relevant event.
- (10) Where the company entered administration before its final year, paragraphs (a) and (b) of subsection (2) (but not subsection (3)) apply in relation to the company’s profits arising at any time in its penultimate year.
#### Company reconstructions involving business of leasing plant or machinery
#### P.A.Y.E.: meaning of payment.
##### 343ZA
- (1) This section applies where—
- (a) a company (“the predecessor”) ceases to carry on a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that trade as its trade or as part of its trade,
- (c) in the accounting period in which the predecessor ceases to carry on the trade the predecessor would (apart from this section) be entitled under Part 2 of the Capital Allowances Act to a balancing allowance in respect of the trade, and
- (d) the predecessor's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor to that balancing allowance.
- (2) This section also applies where—
- (a) a company (“the predecessor”) ceases to carry on part of a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that part of the trade as its trade or as part of its trade, and
- (c) the predecessor's ceasing to carry on the part of the trade mentioned in paragraph (a) is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor, on cessation of the trade, to a balancing allowance in respect of the trade under Part 2 of the Capital Allowances Act.
- (3) This section does not apply where section 343 applies.
- (4) Where this section applies, the Corporation Tax Acts have effect subject to section 343(2), but as if the words “and are subject to section 343A (company reconstructions involving business of leasing plant or machinery)” were omitted.
- (5) Where this section applies because of subsection (1), and the successor carries on the activities of the trade the predecessor ceased to carry on as part of the successor's trade, for the purposes of section 343(2) that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (6) Where this section applies because of subsection (2), for the purposes of section 343(2)—
- (a) that part of the trade which the predecessor ceased to carry on is to be treated as a separate trade carried on by the predecessor, and
- (b) where the successor carries on the activities of that part of the trade as part of its trade, that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (7) Where subsection (5) or (6) applies, such apportionment of receipts, expenses, assets and liabilities is to be made as may be just.
- (8) Section 343(10) applies to an apportionment under subsection (7) as it applies to an apportionment under section 343(9).
##### 343A
- (1) This section applies if the trade is or forms part of a business of leasing plant or machinery which the predecessor or the successor carries on on the day of cessation.
- (2) If, on the day of cessation, both the predecessor and the successor carry on the trade otherwise than in partnership, section 343(2) does not apply unless—
- (a) the principal company or companies of the predecessor immediately before the cessation are the same as the principal company or companies of the successor immediately afterwards, and
- (b) if any such principal company is a consortium principal company, the relevant fraction in relation to the predecessor immediately before the cessation is the same as the relevant fraction in relation to the successor immediately afterwards (irrespective of whether the members of each consortium are the same).
- (3) If, on the day of cessation, the predecessor or the successor carries on the trade in partnership, section 343(2) does not apply unless—
- (a) the predecessor ceases to carry on the whole of its trade, and
- (b) that trade is a business of leasing plant or machinery which the predecessor carries on in partnership on the day of cessation.
- (4) In any case where section 343(2) does not apply as a result of this section, the plant or machinery belonging to the trade shall be treated for the purposes of the Corporation Tax Acts as sold by the predecessor to the successor on the day of the cessation for an amount equal to its market value as at that day.
- (5) In this section—
- “business of leasing plant or machinery”—has the same meaning as in Part 2 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc) (if the business is carried on otherwise than in partnership), andhas the same meaning as in Part 3 of that Schedule (if the business is carried on in partnership),
- “*consortium principal company*” means a company which is a principal company as a result of paragraph 12 of that Schedule,
- “*market value*”, in relation to plant or machinery, is to be construed in accordance with paragraph 41(8) of that Schedule,
- “*plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act,
- “*principal company*” is to be construed in accordance with paragraph 11 or (as the case may be) 12 of Schedule 10 to the Finance Act 2006, and
- “*relevant fraction*” has the same meaning as in paragraph 12 of that Schedule.
#### Relevant loan interest.
#### Interest ceasing to be relevant loan interest, etc.
#### Section 209(3AA): link to shares of company or associated company
##### 347A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 347B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
##### 349ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information relating to distributions.
##### 349B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 350A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule A losses.
##### 357A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 357B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 357C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 360A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Procedure for making election.
#### Returns.
##### 367A
- (1) Sections 353 and 365 have effect as if—
- (a) purchase and resale arrangements involved the making of a loan, and
- (b) alternative finance return were interest.
- (2) Section 366 has effect accordingly.
- (3) In this section—
- “*alternative finance return*” has the meaning given in sections 564I to 564L of ITA 2007, and
- “*purchase and resale arrangements*” means arrangements to which section 564C of ITA 2007 applies.
#### Interpretation of Part VI.
##### 374A
- (1) This section applies where, in the case of any loan, interest on the loan never has been relevant loan interest or the borrower never has been a qualifying borrower.
- (2) Without prejudice to subsection (3) below, in relation to a payment of interest—
- (a) as respects which either of the conditions mentioned in paragraphs (a) and (b) of section 374(1) is fulfilled, and
- (b) from which a deduction was made as mentioned in section 369(1),
section 369 shall have effect as if the payment of interest were a payment of relevant loan interest made by a qualifying borrower.
- (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to make any deduction or to retain any amount deducted and, accordingly, where any amount has been deducted, he shall be liable to make good that amount and an officer of the Board may make such assessments as may in his judgment be required for recovering that amount.
- (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made . . . .
- (5) If the borrower fraudulently or negligently makes any false statement or representation in connection with the making of any deduction, he shall be liable to a penalty not exceeding the amount deducted.
##### 375A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 376A
- (1) The Board shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of section 376(4).
- (1A) The following are entitled to be registered—
- (a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000—
- (i) to accept deposits; or
- (ii) to effect or carry out contracts of general insurance;
- (b) a 90 per cent subsidiary of a person mentioned in—
- (i) section 376(4)(e); or
- (ii) paragraph (a) above;
- (c) any other body whose activities and objects appear to the Board to qualify it for registration.
- (2) If the Board are satisfied that an applicant for registration is entitled to be registered, they may register the applicant generally or in relation to any description of loan specified in the register, with effect from such date as may be so specified; and a body which is so registered shall become a qualifying lender in accordance with the terms of its registration.
- (3) The registration of any body may be varied by the Board—
- (a) where it is general, by providing for it to be in relation to a specified description of loan, or
- (b) where it is in relation to a specified description of loan, by removing or varying the reference to that description of loan,
and where they do so, they shall give the body written notice of the variation and of the date from which it is to have effect.
- (4) If it appears to the Board at any time that a body which is registered under this section would not be entitled to be registered if it applied for registration at that time, the Board may by written notice given to the body cancel its registration with effect from such date as may be specified in the notice.
- (5) The date specified in a notice under subsection (3) or (4) above shall not be earlier than the end of the period of 30 days beginning with the date on which the notice is served.
- (6) Any body which is aggrieved by the failure of the Board to register it under this section, or by the variation or cancellation of its registration, may, by notice given to the Board before the end of the period of 30 days beginning with the date on which the body is notified of the Board’s decision, require the matter to be determined by the Special Commissioners; and the Special Commissioners shall thereupon hear and determine the matter in like manner as an appeal.
### Losses from UK property business or overseas property business
##### 379A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 379B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transactions in deposits with and without certificates or in debts.
##### 384A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Losses from Schedule A business or overseas property business
##### 392A
- (1) Where a company incurs a Schedule A loss in an accounting period, the loss shall be set off for the purposes of corporation tax against the company’s total profits for that period.
- (2) To the extent that a company’s Schedule A loss cannot be set off under subsection (1), it shall, if the company continues to carry on the Schedule A business in the succeeding accounting period, be carried forward to that period and be treated for the purposes of this section as a Schedule A loss of that period.
- (3) Where a company with investment business—
- (a) ceases to carry on a Schedule A business, but
- (b) continues to be a company with investment business,
any Schedule A loss that cannot be used under the preceding provisions shall be carried forward to the succeeding accounting period and be treated for the purposes of section 75 as if it were expenses of management deductible for that period.
- “*capital redemption policy*” means a capital redemption policy in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*contract for a life annuity*” means a contract for a life annuity in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*the designated day*” means such day as the Board may specify for the purpose in regulations;
- “*policy of life insurance*” means a policy of life insurance in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*tax representative*” means a tax representative under this section.
##### 552B
- (1) It shall be the duty of an overseas insurer’s tax representative to secure (where appropriate by acting on the overseas insurer’s behalf) that the relevant duties are discharged by or on behalf of the overseas insurer.
- (2) For the purposes of this section “*the relevant duties*” are—
- (a) the duties imposed by section 552,
- (b) the duties imposed by section 552ZA(2), (4) or (5), and
- (c) any duties imposed by regulations made under subsection (6) of section 552ZA by virtue of subsection (7) of that section,
so far as relating to relevant insurances under which the overseas insurer in question has any obligations.
- (3) An overseas insurer’s tax representative shall be personally liable—
- (a) in respect of any failure to secure the discharge of the relevant duties, and
- (b) in respect of anything done for purposes connected with acting on the overseas insurer’s behalf,
as if the relevant duties were imposed jointly and severally on the tax representative and the overseas insurer.
- (4) In the application of this section in relation to any particular tax representative, it is immaterial whether any particular relevant duty arose before or after his appointment.
- (5) This section has effect in relation to relevant duties relating to chargeable events happening on or after the day by which section 552A(6) requires the nomination of the overseas insurer’s first tax representative to be made.
- (5A) In subsection (5) “*chargeable event*” has the same meaning as in section 552 (see subsection (10) of that section).
- (6) Expressions used in this section and in section 552A have the same meaning in this section as they have in that section.
##### 553A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 559A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transactions with substantial donors
### Chapter 5A — Share loss relief
### Relief for losses on unquoted shares in trading companies
##### 576A
- (1) For the purposes of this Chapter a qualifying trading company is a company which meets each of conditions A to D.
- (2) Condition A is that the company either—
- (a) meets each of the following requirements on the date of the disposal—
- (i) the trading requirement (see section 576B),
- (ii) the control and independence requirement (see section 576D),
- (iii) the qualifying subsidiaries requirement (see section 576E), and
- (iv) the property managing subsidiaries requirement (see section 576F), or
- (b) has ceased to meet any of those requirements at a time which is not more than 3 years before that date and has not since that time been an excluded company, an investment company or a trading company.
- (3) Condition B is that the company either—
- (a) has met each of the requirements mentioned in condition A for a continuous period of 6 years ending on that date or at that time, or
- (b) has met each of those requirements for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company, an investment company or a trading company.
- (4) Condition C is that the company—
- (a) met the gross assets requirement (see section 576G) both immediately before and immediately after the issue of the shares in respect of which the relief is claimed under this Chapter, and
- (b) met the unquoted status requirement (see section 576H) at the relevant time within the meaning of that section.
- (5) Condition D is that the company has carried on its business wholly or mainly in the United Kingdom throughout the period—
- (a) beginning with the incorporation of the company or, if later, 12 months before the shares in question were issued, and
- (b) ending with the date of the disposal.
### Qualifying trading companies: the requirements
##### 576B
- (1) The trading requirement is that—
- (a) the company, disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, or
- (b) the company is a parent company and the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities.
- (2) If the company intends that one or more other companies should become its qualifying subsidiaries with a view to their carrying on one or more qualifying trades—
- (a) the company is treated as a parent company for the purposes of subsection (1)(b), and
- (b) the reference in subsection (1)(b) to the group includes the company and any existing or future company that will be its qualifying subsidiary after the intention in question is carried into effect.
This subsection does not apply at any time after the abandonment of that intention.
- (3) For the purpose of subsection (1)(b) the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
- (4) For the purpose of determining the business of a group, activities are disregarded to the extent that they are activities carried on by a mainly trading subsidiary otherwise than for its main purpose.
- (5) For the purposes of determining the business of a group, activities of a group company are disregarded to the extent that they consist in—
- (a) the holding of shares in or securities of a qualifying subsidiary of the parent company,
- (b) the making of loans to another group company,
- (c) the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by a group company, or
- (d) the holding and managing of property used by a group company for the purpose of research and development from which it is intended—
- (i) that a qualifying trade to be carried on by a group company will be derived, or
- (ii) that a qualifying trade carried on or to be carried on by a group company will benefit.
- (6) Any reference in subsection (5)(d)(i) or (ii) to a group company includes a reference to any existing or future company which will be a group company at any future time.
- (7) In this section—
- “*excluded activities*” has the meaning given by section 192 of ITA 2007 read with sections 193 to 199 of that Act,
- “*group*” means a parent company and all its qualifying subsidiaries,
- “*group company*”, in relation to a group, means the parent company or any of its qualifying subsidiaries,
- “*incidental purposes*” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question,
- “*mainly trading subsidiary*” means a subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,
- “*non-qualifying activities*” means—excluded activities, andactivities (other than research and development) carried on otherwise than in the course of a trade,
- “*parent company*” means a company that has one or more qualifying subsidiaries,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007,
- “*qualifying trade*” has the meaning given by section 189 of that Act,
- “*research and development*” has the meaning given by section 837A.
- (8) In sections 189(1)(b) and 194(4)(c) of ITA 2007 (as applied by subsection (7) for the purposes of the definitions of “excluded activities” and “qualifying trade”) “*period B*” means the continuous period that is relevant for the purposes of section 576A(3).
- (9) In section 195 of ITA 2007 as applied by subsection (7) for the purposes mentioned in subsection (8), references to the issuing company are to be read as references to the company mentioned in subsection (1).
#### Charitable and non-charitable expenditure
##### 576C
- (1) A company is not regarded as ceasing to meet the trading requirement by reason only of anything done in consequence of the company or any of its subsidiaries being in administration or receivership.
This has effect subject to subsections (2) and (3).
- (2) Subsection (1) applies only if—
- (a) the entry into administration or receivership, and
- (b) everything done as a result of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
- (3) A company ceases to meet the trading requirement if before the time that is relevant for the purposes of section 576A(2)—
- (a) a resolution is passed, or an order is made, for the winding up of the company or any of its subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose), or
- (b) the company or any of its subsidiaries is dissolved without winding up.
This is subject to subsection (4).
- (4) Subsection (3) does not apply if —
- (a) the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
- (b) the company continues, during the winding up, to be a trading company.
- (5) References in this section to a company being “in administration” or “in receivership” are to be read in accordance with section 252 of ITA 2007.
##### 576D
- (1) The control element of the requirement is that—
- (a) the company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (2) The independence element of the requirement is that—
- (a) the company must not—
- (i) be a 51% subsidiary of another company, or
- (ii) be under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (3) This section is subject to section 576J(3).
- (3A) Section 839 (connected persons) applies for the purposes of this section.
- (4) In this section—
- (a) a “*Schedule A loss*” means a loss incurred by a company in a Schedule A business carried on by it; and
- (b) “*company with investment business*” has the same meaning as in Part IV.
- (5) The preceding provisions of this section apply to a Schedule A business only to the extent that it is carried on—
- (a) on a commercial basis, or
- (b) in the exercise of statutory functions.
- (6) For the purposes of subsection (5)(a)—
- (a) a business or part is not carried on on a commercial basis unless it is carried on with a view to making a profit, but if it is carried on so as to afford a reasonable expectation of profit it is treated as carried on with a view to making a profit; and
- (b) if there is a change in the manner in which a business or part is carried on, it is treated as having been carried on throughout an accounting period in the way in which it was being carried on by the end of the period.
- (7) In subsection (5)(b) “*statutory functions*” means functions conferred by or under any enactment (including an enactment contained in a local or private Act).
##### 392B
- (1) Where in any accounting period a company incurs a loss in an overseas property business (whether carried on by it solely or in partnership)—
- (a) the loss shall be carried forward to the succeeding accounting period and set against any profits of the business for that period,
- (b) if there are no profits of the business for that period, or if the profits for that period are exceeded by the amount of the loss, the loss or the remainder of it shall be carried forward again and set against any profits of the business for the next succeeding accounting period,
and so on.
- (2) Subsections (5) to (7) of section 392A apply in relation to relief under subsection (1) above and an overseas property business as they apply in relation to relief under section 392A(1) to (3) and a Schedule A business.
##### 393A
- (1) Subject to section 492(3), where in any accounting period ending on or after 1st April 1991 a company carrying on a trade incurs a loss in the trade, then, subject to subsection (3) below, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against profits (of whatever description)—
- (a) of that accounting period, and
- (b) if the company was then carrying on the trade and the claim so requires, of preceding accounting periods falling wholly or partly within the period specified in subsection (2) below;
and, subject to that subsection and to any relief for an earlier loss, the profits of any of those accounting periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.
- (2) The period referred to in paragraph (b) of subsection (1) is (subject to subsection (2A) below) the period of twelve months immediately preceding the accounting period in which the loss is incurred; but the amount of the reduction that may be made under that subsection in the profits of an accounting period falling partly before the beginning of that period shall not exceed a part of those profits proportionate to the part of the accounting period falling within that period.
- (2A) This section shall have effect in relation to any loss to which this subsection applies as if, in subsection (2) above, the words “three years” were substituted for the words “twelve months”.
- (2B) Where a company ceases to carry on a trade at any time, subsection (2A) above applies to the following—
- (a) the whole of any loss incurred in that trade by that company in an accounting period beginning twelve months or less before that time; and
- (b) the part of any loss incurred in that trade by that company in an accounting period ending, but not beginning, in that twelve months which is proportionate to the part of that accounting period falling within those twelve months.
- (2C) Where—
- (a) a loss is incurred by a company in a ring fence trade carried on by that company, and
- (b) the accounting period in which the loss is incurred is an accounting period for which an allowance under section 164 of the Capital Allowances Act (general decommissioning expenditure incurred before cessation of ring fence trade) is made to that company,
subsection (2A) above applies to so much of the amount of that loss not falling within subsection (2B) above as does not exceed the amount of that allowance.
- (2D) Section 393B makes further provision about setting off losses in cases where subsection (2C) applies.
- (3) Subsection (1) above shall not apply to trades falling within Case V of Schedule D; and a loss incurred in a trade in any accounting period shall not be relieved under that subsection unless—
- (a) the trade is one carried on in the exercise of functions conferred by or under any enactment (including an enactment contained in a local or private Act), or
- (b) for that accounting period the trade was being carried on on a commercial basis and with a view to the realisation of gain in the trade or in any larger undertaking of which the trade formed part;
but this subsection is without prejudice to section 397.
- (4) For the purposes of subsection (3) above—
- (a) where at any time a trade is carried on so as to afford a reasonable expectation of gain, it shall be treated as being carried on at that time with a view to the realisation of gain; and
- (b) where in an accounting period there is a change in the manner in which a trade is being carried on, it shall be treated as having throughout the accounting period been carried on in the way in which it was being carried on by the end of that period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Subject to subsection (7A) below, where a company ceases to carry on a trade, subsection (9) of section 393 shall apply in computing for the purposes of this section a loss in the trade in an accounting period ending with the cessation, or ending at any time in the twelve months immediately preceding the cessation, as it applies in computing a loss in an accounting period for the purposes of subsection (1) of that section.
- (7A) For the purposes of this section where—
- (a) subsection (7) above has effect for computing the loss for any accounting period, and
- (b) that accounting period is one beginning before the beginning of the twelve months mentioned in that subsection,
the part of that loss that is not the part falling within subsection (2B)(b) above shall be treated as reduced (without any corresponding increase in the part of the loss that does fall within subsection (2B)(b) above) by an amount equal to so much of the aggregate of the charges on income treated as expenses by virtue of subsection (7) above as is proportionate to the part of the accounting period that does not fall within those twelve months.
- (8) Relief shall not be given by virtue of subsection (1)(b) above in respect of a loss incurred in a trade so as to interfere with any relief under section 338 in respect of payments made wholly and exclusively for the purposes of that trade.
- (9) For the purposes of this section—
- (a) the amount of a loss incurred in a trade in an accounting period shall be computed in the same way as trading income from the trade in that period would have been computed;
- (b) “*trading income*” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; and
- (c) references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
- (10) A claim under subsection (1) above may only be made within the period of two years immediately following the accounting period in which the loss is incurred or within such further period as the Board may allow.
- (11) Subsection (11A) applies in any case where—
- (a) by virtue of section 165 of the Capital Allowances Act (general decommissioning expenditureafter ceasing ring fence trade) the qualifying expenditure of the company for the chargeable period related to the cessation of its ring fence trade is treated as increased by any amount, or
- (b) by virtue of section 416 of that Act (expenditure on restoration within 3 years of ceasing to trade) any expenditure is treated as qualifying expenditure incurred by the company on the last day of trading.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11A) In relation to any claim under subsection (1)—
- (a) to the extent that the claim relates to an increase falling within subsection (11)(a), this section shall have effect as if—
- (i) in subsection (10), “the relevant period” were substituted for “ the period of two years ”, and
- (ii) after subsection (10) there were inserted—
> (10ZA) In subsection (10) “*relevant period*” means the period calculated by adding two years to the post-cessation period (within the meaning of section 165 of the Capital Allowances Act).
;
- (b) to the extent that the claim relates to expenditure falling within subsection (11)(b), subsection (10) shall have effect with the substitution of “ five years ” for “two years”.
- (12) In this section “*ring fence trade*” has the same meaning as in section 162 of the Capital Allowances Act.
##### 393B
- (1) This section applies if these conditions are met—
- (a) a company makes a claim under section 393A(1) requiring that a loss incurred in a ring fence trade be set off against profits;
- (b) section 393A(2A) applies in relation to that claim (three year set off period) by virtue of—
- (i) section 393A(2B) (loss precedes cessation of trade), or
- (ii) section 393A(2C) (loss arises in year when general decommissioning expenditure incurred); and
- (c) the loss incurred in the ring fence trade that may be set off under section 393A (“L”) exceeds the profits against which L may be set off under section 393A (“P”).
- (2) The profits of the ring fence trade of an accounting period are to be relieved under subsection (3) if that period—
- (a) falls wholly or partly before the three year set off period, and
- (b) ends on or after 17 April 2002.
- (3) Subject to any relief for an earlier loss, those profits of that accounting period shall be treated as reduced by—
- (a) the amount by which L exceeds P, or
- (b) so much of that amount as cannot be relieved under this subsection against profits of the ring fence trade of a later accounting period.
- (4) Subsection (3) is subject to subsection (5) in the case of an accounting period that falls partly (but not wholly) before the three year set off period.
- (5) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls before the three year set off period.
- (6) Subsection (3) is subject to subsection (7) in the case of an accounting period that begins before 17 April 2002 and ends on or after that date.
- (7) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls after 16 April 2002.
- (8) In this section—
- “*ring fence*” has the same meaning as in section 162 of the Capital Allowances Act;
- “*three year set off period*” means the period of three years that applies to the claim under section 393A(1) by virtue of section 393A(2A) and section 393A(2B) or (2C).
#### Write-off of government investment.
##### 403ZA
- (1) For the purposes of section 403 a trading loss means a loss incurred by the surrendering company in the surrender period in carrying on a trade, computed as for the purposes of section 393A(1).
- (2) That section does not apply to a trading loss which would be excluded from section 393A(1) by—
- (a) section 393A(3) (foreign trades and certain trades not carried on with a view to gain), or
- (b) section 397 (farming and market gardening: restriction on loss relief).
- (3) Where a company owned by a consortium—
- (a) has in any relevant accounting period incurred a trading loss, and
- (b) has profits (of whatever description) of that accounting period against which that loss could be set off under section 393A(1),
the amount of the loss available to a member of the consortium on a consortium claim shall be determined on the assumption that the company has made a claim under section 393A(1) requiring the loss to be so set off.
- (4) Where the company mentioned in subsection (3) is a group/consortium company, the amount of the loss available under that subsection shall be determined before any reduction is made under section 405(1) to (3).
##### 403ZB
- (1) For the purposes of section 403 excess capital allowances means capital allowances falling to be made to the surrendering company for the surrender period to the extent that they are to be given effect under section 260 of the Capital Allowances Act (special leasing: excess allowance).
- (2) In determining the amount of the allowances falling to be made for the surrender period, no account shall be taken of any allowances carried forward from an earlier period.
- (3) The amount of the company’s income of the relevant class means its amount before deduction of—
- (a) losses of any other period, or
- (b) capital allowances.
##### 403ZC
- (1) For the purposes of section 403 a non-trading deficit on its loan relationships means a deficit of the surrendering company to which section 83 of the Finance Act 1996 applies.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403ZD
- (1) References in section 403 to charges on income, Schedule A losses and management expenses shall be construed as follows.
- (2) Charges on income means the aggregate of the amounts paid by the surrendering company in the surrender period by way of charges on income.
- (3) A Schedule A loss means a loss incurred by the surrendering company in the surrender period in a Schedule A business carried on by the company.
It does not include—
- (a) an amount treated as such a loss by section 392A(2) (losses carried forward from earlier period), or
- (b) a loss which would be excluded from section 392A by subsection (5) of that section (certain businesses not carried on with a view to gain).
- (4) Management expenses means the aggregate of the amounts deductible under section 75(1) (expenses of management of company with investment business) by the surrendering company for this period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) A non-trading loss on intangible fixed assets means a non-trading loss on intangible fixed assets, within the meaning of Schedule 29 to the Finance Act 2002, for the surrender period.
It does not include so much of any such loss as is attributable to an amount being carried forward under paragraph 35(3) of that Schedule (amounts carried forward from earlier periods).
##### 403ZE
- (1) For the purposes of section 403 the surrendering company’s gross profits of the surrender period means its profits for that period—
- (a) without any deduction in respect of such losses, allowances and other amounts as are mentioned in paragraph (a) or (b) of subsection (1) of that section, and
- (b) without any deduction falling to be made—
- (i) in respect of losses, allowances or other amounts of any other period (whether or not of a description within subsection (1) of that section), or
- (ii) by virtue of section 75(9) or 392A(3) (other amounts carried forward).
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403A
- (1) The amount which, on a claim for group relief, may be set off against the total profits of the claimant company for an accounting period (“*the claim period*”), and accordingly the amount to which any consent required in respect of that claim may relate, shall not exceed whichever is the smaller of the following amounts—
- (a) the unused part of the surrenderable amount for the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period.
- (2) For the purposes of any claim for group relief—
- (a) the unused part of the surrenderable amount for the overlapping period is the surrenderable amount for that period reduced by the amount of any prior surrenders attributable to the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period is the amount of its total profits for that period reduced by the amount of any previously claimed group relief attributable to the overlapping period.
- (3) For the purposes of any claim for group relief—
- (a) the surrenderable amount for the overlapping period is so much of the surrenderable amount for the accounting period of the surrendering company to which the claim relates as is attributable, on an apportionment in accordance with section 403B, to the overlapping period;
- (b) the surrenderable amount for an accounting period of the surrendering company is the total amount for that accounting period of the losses and other amounts which (disregarding this section and section 403C) are available in that company’s case for set off by way of group relief; and
- (c) the amount of the claimant company’s total profits for the overlapping period is so much of its total profits for the claim period as is attributable, on an apportionment in accordance with section 403B, to the overlapping period.
- (4) In relation to any claim for group relief (“*the relevant claim*”) the amount of the prior surrenders attributable to the period which is the overlapping period in the case of the relevant claim is equal to the aggregate amount (if any) produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was made in respect of the whole or any part of the amount which, in relation to the relevant claim, is the surrenderable amount for the accounting period of the surrendering company to which the claim relates, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (5) In relation to any claim for group relief (“*the relevant claim*”), the amount of previously claimed group relief attributable to the period which is the overlapping period in the case of that claim is the aggregate amount produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was a claim to set off an amount by way of group relief against the claimant company’s total profits for the period which, in relation to the relevant claim, is the claim period, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (6) For the purposes of this section the amount of group relief allowable on any claim (“*the finalised claim*”) shall fall to be determined as at the time when that claim ceases to be capable of being withdrawn as if—
- (a) every claim that became incapable of being withdrawn before that time were a claim made before the finalised claim; and
- (b) every claim that remains capable of being withdrawn at that time were a claim made after the finalised claim.
- (7) Subject to subsection (6) above and without prejudice to any power to withdraw and resubmit claims, where (but for this subsection) more than one claim for group relief would be taken for the purposes of subsections (4) and (5) above to have been made at the same time, those claims shall be deemed, instead, to have been made—
- (a) in such order as the company or companies making them may, by notice to any officer of the Board, elect or, as the case may be, jointly elect; and
- (b) if there is no such election, in such order as an officer of the Board may direct.
- (8) In this section “*the overlapping period*”, in relation to a claim for group relief, means (subject to subsection (9) below and section 406(3) and (7)) the period which is common to both—
- (a) the claim period; and
- (b) the accounting period of the surrendering company to which the claim relates.
- (9) For the purposes of this section any time in the period which, in relation to any claim for group relief, is common to both the accounting periods mentioned in subsection (8) above but which is a time when the qualifying conditions were not satisfied—
- (a) shall be treated as not comprised in the period which is the overlapping period in the case of that claim; and
- (b) shall be treated instead, in relation to each of those accounting periods, as if it constituted a part of that accounting period which was not common to both periods.
- (10) For the purposes of subsection (9) above the qualifying conditions are satisfied in relation to any claim for group relief at the following times, that is to say—
- (a) if (or so far as) the claim is a group claim for the surrender of any loss or other amount other than a qualifying overseas loss, whenever the conditions in paragraphs (a) to (c) of section 402(2) are satisfied;
- (ab) if (or so far as) the claim is a group claim for the surrender of a qualifying overseas loss, whenever the condition specified in section 402(2A) is satisfied; and
- (b) if the claim is a consortium claim, whenever the conditions specified in section 402(3) for the making of that claim and the condition specified in section 402(3B) are satisfied in the case of the claimant company and the surrendering company.
- (11) For the purposes of subsection (10) above a “*qualifying overseas loss*” means a loss or other amount that is available for surrender by way of group relief in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403B
- (1) Subject to subsection (2) below, where an apportionment falls to be made under section 403A for the purpose of determining how much of an amount for any period (“*the first period*”) is attributable to any other period (“*the second period*”) which comprises the whole or a part of the first period—
- (a) the whole of that amount shall be attributed to the second period if the first and second periods begin and end at the same times; and
- (b) in any other case, the apportionment shall be made on a time basis according to how much of the first period coincides with the second period.
- (2) Where the circumstances of a particular case are such that the making on the time basis mentioned in subsection (1)(b) above of some or all of the apportionments to be made in that case would work in a manner that would be unjust or unreasonable in relation to any person, those apportionments shall be made instead (to the extent only that is necessary in order to avoid injustice and unreasonableness) in such other manner as may be just and reasonable.
##### 403C
- (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.
##### 403D
- (1) In determining for the purposes of this Chapter the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by a non-resident company carrying on a trade in the United Kingdom through a permanent establishment, no loss or other amount shall be treated as so available (but see also subsection (11) below) except in so far as—
- (a) it is attributable to activities of that company the income and gains from which for that period are, or (were there any) would be, brought into account in computing the company’s chargeable profits for that period for corporation tax purposes;
- (b) it is not attributable to activities of the company which are made exempt from corporation tax for that period by any double taxation arrangements; and
- (c) no part of—
- (i) the loss or other amount, or
- (ii) any amount brought into account in computing it,
corresponds to, or is represented in, any amount which, for the purposes of any foreign tax, is (in any period) deductible from or otherwise allowable against non-UK profits of the company or any other person.
- (2) In determining for the purposes of sections 403A and 403C the total profits for an accounting period of a non-resident company, there shall be disregarded—
- (a) amounts not falling to be comprised for corporation tax purposes in the chargeable profits of the company for that accounting period, and
- (b) so far as not falling within paragraph (a) above, any amounts arising from activities which are made exempt from corporation tax for that period by any double taxation arrangements.
- (3) In this section “*non-UK profits*”, in relation to any person, means amounts which—
- (a) are taken for the purposes of any foreign tax to be the amount of the profits, income or gains on which (after allowing for deductions) that person is charged with that tax, and
- (b) are not amounts corresponding to, and are not represented in, the total profits (of that or any other person) for any accounting period,
or amounts taken into account in computing such amounts.
- (4) Subsection (2) above applies for the purposes of subsection (3)(b) above as it applies for the purposes of sections 403A and 403C.
- (5) For the purposes of this section an amount shall not be taken to be an amount which for the purposes of any foreign tax is deductible from or otherwise allowable against any non-UK profits of any person by reason only that it is—
- (a) an amount of profits brought into account for the purpose of being excluded from the profits that are non-UK profits of that person by reference to that foreign tax; or
- (b) an amount brought into account in computing the amount of any profits falling to be so excluded.
- (6) So much of the law of any territory outside the United Kingdom as for the purposes of any foreign tax makes the deductibility of any amount dependent on whether or not it is deductible for tax purposes in the United Kingdom shall be disregarded for the purposes of this section.
- (7) For the purposes of this section activities of a company are made exempt from corporation tax for any period by double taxation arrangements if the effect of any such arrangements is that the income and gains (if any) arising for that period from those activities is to be disregarded in computing the company’s chargeable profits.
- (8) In this section “*double taxation arrangements*” means any arrangements having effect by virtue of section 788.
- (9) In this section “*foreign tax*” means any tax chargeable under the law of any territory outside the United Kingdom which—
- (a) is charged on income and corresponds to United Kingdom income tax; or
- (b) is charged on income or chargeable gains or both and corresponds to United Kingdom corporation tax;
but for the purposes of this section a tax shall not be treated as failing to correspond to income tax or corporation tax by reason only that it is chargeable under the law of a province, state or other part of a country, or is levied by or on behalf of a municipality or other local body.
- (10) In determining for the purposes of this section whether any activities are made exempt from corporation tax for any period by any double taxation arrangements any requirement that a claim is made before effect is given to any provision of the arrangements shall be disregarded.
- (11) Any loss or other amount that is available for surrender by way of group relief in accordance with this section is in addition to any loss or other amount that is so available in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403E
- (1) In determining, for the purposes of this Chapter, the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by any company resident in the United Kingdom (“*the resident company*”), a loss or other amount shall be treated as not so available in so far as it—
- (a) is attributable to an overseas permanent establishment of that company, and
- (b) is a loss or other amount falling within subsection (2) below.
- (2) Subject to subsection (3) below, a loss or other amount attributable to an overseas permanent establishment falls within this subsection if the whole or any part of it is, or represents, an amount which, for the purposes of foreign tax under the law of the territory where that permanent establishment is situated, is (in any period) deductible from or otherwise allowable against non-UK profits of a person other than the resident company.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The reference in subsections (1) and (2) above to a loss or other amount attributable to an overseas permanent establishment of a company is a reference to the loss or other amount (if any) that would be surrenderable by that company by way of group relief if the amount surrenderable by that company were computed—
- (a) by reference only to that permanent establishment, and
- (b) by the application in relation to that permanent establishment of principles corresponding in all material respects to those applicable for the purposes of corporation tax to the computation of the equivalent losses or other amounts in the case of the UK permanent establishment of a non-resident company.
- (5) In subsection (4)(b) above the reference to the UK permanent establishment of a non-resident company is a reference to any permanent establishment through which a company which is not resident in the United Kingdom carries on a trade in the United Kingdom.
- (6) References in this section to an overseas permanent establishment of a company are references to any permanent establishment through which that company carries on a trade in a territory outside the United Kingdom.
- (7) In this section “*foreign tax*” and “*non-UK profits*” have the same meaning as in section 403D.
- (8) Where the deductibility of any amount for the purposes of any foreign tax is dependent on whether or not that amount, or a corresponding amount, is deductible for tax purposes in the United Kingdom, this section shall have effect as if that amount were deductible for the purposes of that foreign tax if, and only if, the resident company is treated for the purposes of that tax as resident in the territory where that tax is charged.
##### 403F
- (1) This section has effect for determining for the purposes of this Chapter the extent to which a loss or other amount is available for surrender by way of group relief by a non-resident company—
- (a) which is resident in an EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
in a case where a group claim may be made as a result of the condition in section 402(2A) being satisfied.
- (2) A loss or other amount is not available for surrender by way of group relief by the non-resident company except in so far as, in relation to the EEA territory, the amount meets—
- (a) the equivalence condition,
- (b) the EEA tax loss condition,
- (c) the qualifying loss condition, and
- (d) the precedence condition.
- (3) Part 1 of Schedule 18A determines, in the case of any amount and any EEA territory, the extent to which those conditions are met.
- (4) In so far as a loss or other amount meets those conditions, Part 2 of Schedule 18A applies—
- (a) for calculating the amount of the loss or other amount (if any) that is available for surrender by way of group relief, and
- (b) otherwise for making provision in relation to the application of this Chapter to the non-resident company.
- (5) This section is subject to section 403G (unallowable overseas losses of non-resident companies).
##### 403G
- (1) This section applies in the case of a loss or other amount arising to a non-resident company—
- (a) which is resident in any EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
where the amount is not attributable for corporation tax purposes to any UK permanent establishment of the non-resident company.
- (2) The amount is not available for surrender by way of group relief by the non-resident company in so far as conditions A and B are met.
- (3) Condition A is that—
- (a) the amount would not qualify for group relief but for any relevant arrangements, or
- (b) the amount would not have arisen to the non-resident company but for any relevant arrangements.
- (4) Condition B is that the main purpose, or one of the main purposes, of the relevant arrangements was to secure that the amount would qualify for group relief.
- (5) In this section references to relevant arrangements, in relation to any amount, are to—
- (a) arrangements made on or after 20th February 2006, or
- (b) arrangements made before that date where the amount would (but for this section) first qualify for group relief on or after that date or (as the case may be) the amount arises on or after that date.
- (6) In this section—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),
- “*UK permanent establishment*”, in relation to the non-resident company, means any permanent establishment through which it carries on a trade in the United Kingdom.
##### 411ZA
- (1) This section applies if the surrendering company is prevented from obtaining a deduction in respect of an amount by section 520 of CTA 2009 (provision not at arm's length: non-deductibility of relevant return).
- (2) The amount may not be surrendered by way of group relief.
##### 411A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amounts eligible for group relief: trading losses.
#### Further interpretation of sections 135 to 139.
#### Close companies.
#### Relief for contributions in respect of share option gains.
#### Taxation of borrower when loan under section 419 released etc
##### 431ZA
- (1) An insurance company may, in its company tax return for the first accounting period of the company beginning on or after 1 January 2008 in which any of the assets of the company's long-term insurance fund would (apart from this section) be foreign business assets, elect that none of the assets of the company's long-term insurance fund are to be regarded for the purposes of this Act as being foreign business assets.
- (2) The election has effect for that accounting period and all subsequent accounting periods of the company.
- (3) An election under subsection (1) is irrevocable.
##### 431A
- (1) The Treasury may by order amend any of the life assurance provisions of the Corporation Tax Acts where it is expedient to do so in consequence of the exercise of any power under the Financial Services and Markets Act 2000, in so far as that Act relates to insurance companies.
- (2) Where any exercise of a power under that Act has effect for a period ending on or before, or beginning before and ending after, the day on which an order containing an amendment in consequence of that exercise is made under subsection (1) above, the power conferred by that subsection includes power to provide for the amendment to have effect in relation to that period.
- (2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
- (2B) An order under subsection (2A) above may in particular contain provision—
- (a) making amendments of any provision of the Corporation Tax Acts, or
- (b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
- (2C) An order under subsection (2A) above—
- (a) may make provision having effect in relation to accounting periods current when it is made, and
- (b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument.
- (3) The Treasury may by order amend any of the following provisions—
- (a) sections 432ZA, 432A, 432B to 432G and 755A . . . ;
- (b) sections 83A, 85, 88 and 89 of the Finance Act 1989;
- (c) section 210A of the Taxation of Chargeable Gains Act 1992.
- (4) An order under subsection (3) above may only be made so as to have effect in relation to periods of account—
- (a) beginning on or after 1st January 2005, and
- (b) ending before 1st October 2006.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Any power conferred by this section to make an order includes power to make—
- (a) different provision for different cases or different purposes, and
- (b) incidental, supplemental, consequential or transitional provision and savings.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 431AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432A
- (1) Subject to section 432B, this section has effect for determining for the purposes of any provision of the Corporation Tax Acts in relation to any period for which an insurance company carries on business what parts of—
- (a) income or losses arising from the assets of the company’s long-term insurance fund, or
- (b) gains or losses accruing on the disposal of such assets in accordance with the provisions of the 1992 Act,
are referable to any category of business.
- (1ZA) In subsection (1)(a) above “*income*” means—
- (a) income chargeable under Schedule A in respect of any separate Schedule A businesses treated as carried on by the company under section 432AA,
- (b) income chargeable under Schedule A in respect of distributions treated by section 121(1)(a) of the Finance Act 2006 as profits of a Schedule A business carried on by the company,
- (c) income chargeable under Case V of Schedule D in respect of any overseas property business treated as carried on by the company under section 432AA,
- (d) other income of the company chargeable under Case V of Schedule D,
- (e) distributions received by the company from companies resident in the United Kingdom,
- (f) credits in respect of any creditor relationships (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company,
- (g) credits in respect of any derivative contracts (within the meaning of Schedule 26 to the Finance Act 2002) of the company,
- (h) any income of the company chargeable under Case III of Schedule D in respect of annuities and other annual payments within paragraph (b) of Case III of Schedule D as substituted by section 18(3A),
- (i) any credits brought into account by the company under Part 3 of Schedule 29 to the Finance Act 2002 (intangible fixed assets), and
- (j) any income of the company chargeable under Case VI of Schedule D, other than profits of the company chargeable under section 436A (gross roll-up business).
- (1ZB) In subsection (1)(a) above “*losses*” means—
- (a) losses in respect of any separate Schedule A businesses treated as carried on by the company under section 432AA,
- (b) losses in respect of any overseas property businesses treated as carried on by the company under that section,
- (c) debits in respect of any creditor relationships (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company,
- (d) debits in respect of any derivative contracts (within the meaning of Schedule 26 to the Finance Act 2002) of the company,
- (e) any debits brought into account by the company under Part 2 of Schedule 29 to the Finance Act 2002 (intangible fixed assets), and
- (f) any losses of the company computed in the same way as profits chargeable under Case VI of Schedule D, other than any losses of gross roll-up business.
- (1ZC) For determining as mentioned in subsection (1) above what parts of income or gains arising from the assets of the company's long-term insurance fund are referable to PHI business (to the extent that it would not be the case by virtue of subsections (1ZA) and (1ZB))—
- (a) “income” also includes profits shown in the technical account, and
- (b) “losses” also includes losses so shown.
- (1A) If the company carries on only one category of business in the period—
- (a) all of the income and losses referred to in paragraph (a) of subsection (1) above, and
- (b) all of the gains and losses referred to in paragraph (b) of that subsection,
are referable to that category of business; but if the company carries on more than one category of business in the period, the following provisions shall apply.
- (2) The categories of business referred to in subsections (1) and (1A) above are—
- (a) basic life assurance and general annuity business,
- (b) gross roll-up business, and
- (c) PHI business.
- (3) Income or losses arising from, and gains or losses accruing on the disposal of, assets linked to any category of business is referable to that category of business.
- (3A) Amounts falling within—
- (a) section 442A,
- (b) section 85(2C) of the Finance Act 1989, or
- (c) section 85A of that Act,
are directly referable to basic life assurance and general annuity business.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) Income or losses arising from, and gains or losses accruing on the disposal of, foreign business assets is referable to gross roll-up business.
- (5) There is referable to any category of business . . . the relevant fraction of any income and losses referred to in paragraph (a) of subsection (1) above, and any gains and losses referred to in paragraph (b) of that subsection, not directly referable to any category of business.
- (6) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to basic life assurance and general annuity business, is—
$$AA+B+C$where—A is the aggregate of—(a) the mean of the opening and closing liabilities of the basic life assurance and general annuity business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business,(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and(c) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts;B is the aggregate of—(a) the mean of the opening and closing liabilities of the gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts; andC is the aggregate of—(a) the mean of the opening and closing liabilities of the PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts.$
- (6A) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to gross roll-up business, is—
$$BA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6B) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to PHI business, is—
$$CA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6C) But if the denominator found in accordance with subsection (6), (6A) or (6B) above is nil, the relevant fraction for the purposes of subsection (5) above in relation to the category of business in question is such fraction as is just and reasonable.
- (7) For the purposes of subsections (5), (6) , (6A) and (6B) above—
- (a) income and losses referred to in paragraph (a) of subsection (1) above, and gains and losses referred to in paragraph (b) of that subsection, are directly referable to a category of business if referable to that category by virtue of subsection (3) or (4A) above, . . . and
- (b) assets are directly referable to a category of business if income and losses arising from the assets, and gains and losses accruing on the disposal of the assets, are so referable by virtue of subsection (3) or (4A) above,. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In subsection (6) above—
- (a) “*appropriate part*”, in relation to the free assets amount, means—
- (i) where none (or none but an insignificant proportion) of the liabilities of the long-term business are with-profits liabilities, the part of that amount which bears to the whole the proportion A/B where—
A is the amount of the liabilities of the category of business in question (but taking that amount to be nil if it would otherwise be below nil);
B is the whole amount of the liabilities of the long-term business; and
- (ii) in any other case the part of the free assets amount which bears to the whole the proportion C/D where—
C is the amount of the with-profits liabilities of the category of business in question;
D is the whole amount of the with-profits liabilities of the long-term business; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This is subject to subsection (8ZA) below.
- (8ZA) If for the purposes of subsection (8)(a) above either B or D is nil then, in paragraph (c) of the definition of A and paragraph (b) of the definitions of B and C in subsection (6) above, “*appropriate part*”, in relation to the free assets amount, means the part of that amount which bears to the whole such proportion as is just and reasonable.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432B
- (1) This section and sections 432C to 432G have effect where it is necessary in accordance with section 83 of the Finance Act 1989 to determine what parts of any items brought into account, within the meaning of that section, are referable to life assurance business or gross roll-up business.
- (2) Where for that purpose reference falls to be made to more than one account recognised for the purposes of that section, the provisions of sections 432C to 432G apply separately in relation to each account.
- (3) Section 432C applies where the business with which an account is concerned (“*the relevant business*”) relates exclusively to policies or contracts under which the policy holders or annuitants are not eligible to participate in surplus; and sections 432E and 432F apply where the relevant business relates wholly or partly to other policies or contracts (and section 432G applies in either case).
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432C
- (1) This section specifies the extent to which the net amount is referable to life assurance business or to gross roll-up business.
- (2) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (3) To the extent that the net amount is attributable to—
- (a) assets linked to life assurance business, or
- (b) foreign business assets,
it is referable to life assurance business.
- (4) There is also referable to life assurance business the appropriate fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (5) For the purposes of subsection (4) above “the appropriate fraction” is—
$$AA+B$where—A is the mean of the opening and closing liabilities of the relevant business so far as referable to life assurance business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of assets linked to the relevant business so far as so referable and foreign business assets; andB is the mean of the opening and closing liabilities of the relevant business so far as referable to PHI business, reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to PHI business.$
- (6) But if the denominator found in accordance with subsection (5) above is nil, the appropriate fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
- (7) To the extent that the net amount is attributable to—
- (a) assets linked to gross roll-up business, or
- (b) foreign business assets,
it is referable to gross roll-up business.
- (8) There is also referable to gross roll-up business the relevant fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (9) For the purposes of subsection (8) above “the relevant fraction” is—
$$CC+D$where—C is the mean of the opening and closing liabilities of the relevant business so far as referable to gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of any assets linked to gross roll-up business and foreign business assets; andD is the mean of the opening and closing liabilities of the relevant business so far as referable to basic life assurance and general annuity business or PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to either of those categories of business.$
- (10) But if the denominator found in accordance with subsection (9) above is nil, the relevant fraction for the purposes of subsection (8) above is such fraction as is just and reasonable.
- (11) For the purposes of this section, so much of the net amount—
- (a) as is brought into account as other income in an internal linked fund of the company, and
- (b) as is not attributable to assets of that fund,
is to be treated as linked to a category of business to the same extent as income attributable to an asset of the fund would, by virtue of section 432ZA, be referable to that category of business.
##### 432D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432E
- (1) The part of the net amount which is referable to life assurance business or to gross roll-up business is—
- (a) the amount determined in accordance with subsections (2) and (2A) below, or
- (b) if greater, the amount determined in accordance with subsection (3) below.
- (1A) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (2) For the purposes of subsection (1) above there shall be determined the amount which is such as to secure—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . that
$$CS-CAS=(S-AS)×CASAS$where—S is the surplus of the relevant business;AS is so much of that surplus as is allocated to persons entitled to the benefits provided for by the policies or contracts to which the relevant business relates;CAS is so much of the surplus so allocated as is attributable to policies or contracts of life assurance business or of gross roll-up business; andCS is so much of the surplus of the relevant business as would remain if the relevant business were confined to life assurance business or to gross roll-up business.$
- (2A) In a case where an amount or amounts are taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of subsection (2B) of that section or by virtue of section . . . 444AB, . . . 444AEA,444AECA, 444AF(2) or 444AK(2) of this Act, the amount determined under subsection (2) above is increased by—
$$CASAS×RP$where—CAS and AS have the same meanings as in subsection (2) above; andRP is the amount or the aggregate of the amounts taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of any of the following provisions—subsection (2B) of that section;section 444AB . . . of this Act;section 444AEA or 444AECA of this Act;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .subsection (2) of section 444AF of this Act (and see subsections (5) and (6) of that section);subsection (2) of section 444AK of this Act (but only for the purposes mentioned in subsection (3) of that section).$
- (3) For the purposes of subsection (1) above there shall also be determined the aggregate of—
- (a) the applicable percentage of what is left of the mean of the opening and closing liabilities of the relevant business so far as referable to the category of business concerned (but taking that mean to be nil if it would otherwise be below nil) after deducting from it the mean of the opening and closing values of any assets of the relevant business linked to that category of business and foreign business assets, and
- (b) the part of the net amount . . . that is attributable to assets linked to that category of business . . . .
- (4) Subject to subsection (4A) below, for the purposes of subsection (3) above “*the applicable percentage*”, in any case, is—
$$AB×100$where—A is so much of the net amount as is brought into account in respect of the relevant business less such part of it as is attributable to linked assets and foreign business assets; andB is the mean of the opening and closing liabilities of the relevant business reduced by the mean of the opening and closing values of any assets of the relevant business which are linked assets . . . .$
- (4A) If the mean of the opening and closing liabilities of the relevant business reduced by the opening and closing values of any assets of the relevant business which are linked assets or foreign business assets is nil then, for the purposes of subsection (3) above, “*the applicable percentage*” is such percentage as is just and reasonable.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exclusions from section 423.
#### Interpretation.
##### 434A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the provisions of this Act applicable to Case I of Schedule D—
- (a) the loss resulting from the computation shall be reduced (but not below nil) by . . . —
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) any relevant non-trading deficit for that period on the company’s debtor relationships; and
- (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) if the whole or any part of that loss as so reduced is set off—
- (i) under section 393A, or
- (ii) under section 403(1),
any loss for that period under section 436A shall be reduced (but not below nil) by the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above.
- (2A) The reference in subsection (2)(a)(ii) above to a relevant non-trading deficit for any period on a company’s debtor relationships is a reference to the non-trading deficit on the company’s loan relationships which would be produced by any separate computation made under paragraph 2(1) of Schedule 11 to the Finance Act 1996 for the company’s basic life assurance and general annuity business if credits and debits given in respect of the company’s creditor relationships (within the meaning of Chapter II of Part IV of that Act) were disregarded.
- (3) In the case of a company carrying on life assurance business, no relief shall be allowable —
- (a) under Chapter II (loss relief) or Chapter IV (group relief) of Part X,
- (aa) (where the company's life assurance business is not mutual business) in respect of any amount which is a charge on income for the purposes of corporation tax, or
- (b) in respect of any amount representing a non-trading deficit on the company’s loan relationships that has been computed otherwise than by reference to debits and credits referable to that business,
against the policy holders’ share of the relevant profits for any accounting period.
- For the purposes of this subsection “*the policy holders’ share of the relevant profits*” has the same meaning as in section 89 of the Finance Act 1989.
- (4) For the purposes of section 403, where the surrendering company is an insurance company which is charged to tax under the I minus E basis in respect of its life assurance business for the surrender period, the company's gross profits of that period do not include its relevant profits (within the meaning of section 88 of the Finance Act 1989) for that period; and expressions used in this subsection and section 403 have the same meaning here as there.
#### Meaning of “distribution”.
##### 438A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 209(3AA): link to shares of company or associated company
##### 440A
- (1) Subsection (2) below applies where the assets of an insurance company include securities of a class all of which would apart from this section be regarded for the purposes of corporation tax on chargeable gains as one holding.
- (2) Where this subsection applies—
- (a) so many of the securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of—
- (i) basic life assurance and general annuity business, or
- (ii) gross roll-up business,
shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) so many of the securities as are included in the company’s long-term insurance fund but do not fall within paragraph (a) shall be treated for those purposes as a separate holding which is an asset of that fund (but not of the description mentioned in that paragraph), and
- (e) any remaining securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.
- (3) Subsection (2) above also applies where the assets of an insurance company include securities of a class and apart from this section some of them would be regarded as a 1982 holding, and the rest as a section 104 holding, for the purposes of corporation tax on chargeable gains.
- (4) In a case within subsection (3) above—
- (a) the reference in any paragraph of subsection (2) above to a separate holding shall be construed, where necessary, as a reference to a separate 1982 holding and a separate section 104 holding, and
- (b) the questions whether such a construction is necessary in the case of any paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings shall be determined in accordance with paragraph 12 of Schedule 6 to the Finance Act 1990 and the identification rules applying on any subsequent acquisitions and disposals.
- (5) Section 105 of the 1992 Act shall have effect where subsection (2) above applies as if securities regarded as included in different holdings by virtue of that subsection were securities of different kinds.
- (6) In this section—
- “*1982 holding*” has the same meaning as in section 109 of the 1992 Act;
- “*section 104 holding*” has the same meaning as in section 104(3) of that Act; and
- “*securities*” means shares, or securities of a company, and any other assets where they are of a nature to be dealt in without identifying the particular assets disposed or acquired.
- (7) In a case where the profits of a company’s life assurance business are charged to tax in accordance with Case I of Schedule D this section has effect with the modification specified in section 440B(4).
##### 441A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444A
- (1) . . . This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).
- (2) Any expenses payable which (making the assumptions in subsection (3B) below) would have fallen to be brought into account by the transferor in determining the deduction for expenses payable to be allowed under section 76 in computing profits for an accounting period following the period which ends with the day on which the transfer takes place shall, instead, be brought into account under and in accordance with that section by the transferee as expenses payable by him (and giving effect in the case of acquisition expenses, to section 86(6) to (9) of the Finance Act 1989).
- (3) Any loss which (making the assumptions in subsection (3B) below)—
- (a) would have been available under section 436A(4) to be set off against profits of the transferor for the accounting period following that which ends with the day on which transfer takes place, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall, instead, be treated as a loss of the transferee (and available to be set off against profits of gross roll-up business)if the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to the transfer).
- (3ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) Any subsection (2) excess (within the meaning of section 432F(2)) which (making the assumptions in subsection (3B) below) would have been available under section 432F(3) or (4) to reduce a subsection (3) figure (within the meaning of section 432F(1)) of the transferor in an accounting period following that which ends with the day on which transfer takes place—
- (a) shall, instead, be treated as a subsection (2) excess of the transferee, and
- (b) shall be taken into account in the first accounting period of the transferee ending after the date of the transfer (to reduce the subsection (3) figure or, as the case may be, to produce or increase a subsection (2) excess for that period),
in relation to the revenue account of the transferee dealing with or including the business transferred.
- (3B) The assumptions referred to in subsections (2), (3) and (3A) above are—
- (a) that the transferor had continued to carry on the business transferred after the transfer, and
- (b) where there is no accounting period of the transferor ending with the transfer date, that there was such an accounting period.
- (4) Where acquisition expenses are treated as expenses payable by the transferee by virtue of subsection (2) above, the amount deductible for the first accounting period of the transferee ending after the transfer takes place shall be calculated as if that accounting period began with the day after the transfer.
- (5) Where the transfer is of part only of the transferor’s long-term business, subsection (2), (3) or (3A) above shall apply only to such part of any amount to which it would otherwise apply as is appropriate.
- (6) Any question arising as to the operation of subsection (5) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and transferee shall be entitled to appear and be heard or to make representations in writing.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Classes of life assurance business
##### 431B
- (1) In this Chapter “*pension business*” means so much of a company’s life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme or is the reinsurance of such business.
- (2) Where a pension scheme ceases to be a registered pension scheme by virtue of the withdrawal of registration of the pension scheme under section 157 of the Finance Act 2004, any of the company’s life assurance business that was pension business when the pension scheme was a registered pension scheme is to be treated as ceasing to be pension business at the beginning of the period of account of the company in which the pension scheme so ceases to be a registered pension scheme.
- (3) Where—
- (a) immediately before 6th April 2006 an annuity contract falls within any of the descriptions of contracts specified in subsection (2) of this section as it had effect immediately before that date, but
- (b) on or after that date the contract does not fall to be regarded for the purposes of this section as having been entered into for the purposes of a registered pension scheme,
the contract is to be treated for the purposes of this section as having been entered into for such purposes.
##### 431BA
- (1) In this Chapter “*child trust fund business*” means so much of a company's life assurance business as is referable to child trust fund policies (but not including the reinsurance of such business).
- (2) In this section “*child trust fund policy*” means a policy of life insurance which is an investment under a child trust fund (within the meaning of the Child Trust Funds Act 2004).
##### 431BB
- (1) In this Chapter “*individual savings account business*” means so much of a company's life assurance business as is referable to individual savings account policies (but not including the reinsurance of such business).
- (2) In this section “*individual savings account policy*” means a policy of life insurance which is an investment of a kind specified in regulations made by virtue of section 695(1) of ITTOIA 2005.
##### 431C
- (1) In this Chapter “*life reinsurance business*” means reinsurance of life assurance business other than pension business or business of any description excluded from this section by regulations made by the Board.
- (2) Regulations under subsection (1) above may describe the excluded business by reference to any circumstances appearing to the Board to be relevant.
##### 431D
- (1) In this Chapter “*overseas life assurance business*” means so much of a company's relevant life assurance business as is with a policy holder or annuitant not residing in the United Kingdom (but not including the reinsurance of such business).
- (1A) In subsection (1) above “*relevant life assurance business*” means life assurance business other than—
- (a) pension business
- (b) individual savings account business,
- (c) child trust fund business, and
- (d) business of any description prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.
- (2) Regulations under subsection (1A) above may describe the excluded business by reference to any circumstances appearing to the Commissioners to be relevant.
- (3) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
- (a) make provision as to the circumstances in which a trustee who is a policy holder or annuitant residing in the United Kingdom is to be treated for the purposes of this section as not so residing; and
- (b) provide that nothing in Chapter II of Part XIII or Chapter 9 of Part 4 of ITTOIA 2005 shall apply to a policy or contract which constitutes overseas life assurance business by virtue of any such provision as is mentioned in paragraph (a) above.
- (4) Regulations under subsection (1A) or (3) above may contain such supplementary, incidental, consequential or transitional provision as appears to the Commissioners to be appropriate (including provision amending any enactment or any instrument made under an enactment).
##### 431E
- (1) The Board may by regulations make provision for giving effect to section 431D.
- (2) Such regulations may, in particular—
- (a) provide that, in such circumstances as may be prescribed, any prescribed issue as to whether business is or is not overseas life assurance business (or overseas life assurance business of a particular kind) shall be determined by reference to such matters (including the giving of certificates or undertakings, the giving or possession of information or the making of declarations) as may be prescribed,
- (b) require companies to obtain certificates, undertakings, information or declarations from policy holders or annuitants, or from trustees or other companies, for the purposes of the regulations,
- (c) make provision for dealing with cases where any issue such as is mentioned in paragraph (a) above is (for any reason) wrongly determined, including provision allowing for the imposition of charges to tax (with or without limits on time) on the insurance company concerned or on the policy holders or annuitants concerned,
- (d) require companies to supply information and make available books, documents and other records for inspection on behalf of the Board, and
- (e) make provision (including provision imposing penalties) for contravention of, or non-compliance with, the regulations.
- (3) The regulations may—
- (a) make different provision for different cases, and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 431EA
In this Chapter “*gross roll-up business*” means business of any of the following kinds—
- (a) pension business;
- (b) child trust fund business;
- (c) individual savings account business;
- (d) life reinsurance business; and
- (e) overseas life assurance business.
##### 431F
In this Chapter “*basic life assurance and general annuity business*” means life assurance business other than gross roll-up business.
### Basis of taxation etc
##### 431G
- (1) This section applies in relation to an insurance company which carries on life assurance business (whether or not it also carries on insurance business of any other kind).
- (2) Subject as follows, the profits of the life assurance business for any accounting period shall be charged to tax under the I minus E basis.
- (3) Where in the case of an insurance company for an accounting period either—
- (a) all of its life assurance business is reinsurance business and none of that business is of a type excluded from this subsection by regulations made by the Board, or
- (b) all, or substantially all, of its life assurance business is gross roll-up business,
the profits of that business for the accounting period shall be charged to tax in accordance with Case I of Schedule D and not otherwise.
- (4) Where—
- (a) the profits of the life assurance business of an insurance company for any accounting period are charged to tax under the I minus E basis, and
- (b) had those profits been charged to tax in accordance with Case I of Schedule D, a loss would have arisen to the company from that business for the period,
the loss (after being reduced in accordance with section 434A(2)(a)) may be set-off under section 393A or section 403(1).
- (5) The application, in relation to the life assurance business of an insurance company, of any provision of Case I of Schedule D is not to be taken—
- (a) to prevent the application of the I minus E basis in relation to that business of the company for any accounting period, or
- (b) to affect the operation of the I minus E basis in relation to the that business of the company for any accounting period except as specifically provided by the Corporation Tax Acts.
##### 431H
- (1) This section applies in relation to an insurance company which carries on life assurance business and insurance business of any other kind.
- (2) For the purposes of the Corporation Tax Acts—
- (a) the life assurance business, and
- (b) the other insurance business,
are to be treated as separate businesses.
- (3) The profits of the other insurance business shall be charged to tax under Case I of Schedule D as the profits of a separate trade.
- (4) But subsection (3) above does not apply where that business is mutual business.
- (5) As to the profits of the life assurance business, see section 431G.
##### 432YA
- (1) This section applies in the case of—
- (a) a company which is a non-profit company, or
- (b) the non-profit fund of a company which is not a non-profit company,
if an amount (“*the relevant amount*”) is shown in paragraph 4(12) of Appendix 9.4 to the periodical return for the company for a period of account which ends on or after 31st December 2006 but before 1st January 2009 (a “relevant period of account”).
- (2) In computing profits of PHI business in accordance with the provisions applicable to Case I of Schedule D—
- (a) X shall be added to the closing long term business provision of the company for the relevant period of account; and
- (b) XA shall be brought into account as a trading receipt of the company for each subsequent period of account until the total sum of the amounts so bought into account is equal to X (and if that total sum would otherwise exceed X, the excess shall be ignored).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) X is—
- (a) where the relevant period of account ends before 1st April 2007, the whole of the relevant amount;
- (b) where the relevant period of account ends on or after 1st April 2007 but before 1st January 2008, two-thirds of the relevant amount;
- (c) where the relevant period of account ends on or after 1st January 2008, one-third of the relevant amount.
- (2C) XA is the amount found by applying the following formula—
$$Y12×Z$Here—Y is the number of months of the period of account in question (part of a month being counted as a month); andZ is—(a) where X is the whole of the relevant amount, one-third of X;(b) where X is two thirds of the relevant amount, one-half of X;(c) where X is one third of the relevant amount, the whole of X.$
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In this section—
- “*long term business provision*” has the same meaning as in Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) This section is subject to sections 82E and 82F of the Finance Act 1989 (treatment of transferors and transferees under insurance business transfer schemes) and those sections shall apply in relation to this section as if—
- (a) any reference in them to a provision of section 82D of that Act (treatment of profits: life assurance – adjustment consequent on change in Insurance Prudential Sourcebook) were a reference to the corresponding provision of this section, and
- (b) the reference to life assurance business in section 82E was a reference to PHI business.
##### 432ZA
- (1) In this Chapter “*linked assets*” means assets of an insurance company which are identified in its records as assets by reference to the value of which benefits provided for under a policy or contract are to be determined and in a case where only part of an asset is so identified, references to a linked asset are references to that part.
- (2) Linked assets shall be taken—
- (a) to be linked to long-term business of a particular category if the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category; and
- (b) to be linked solely to long-term business of a particular category if all (or all but an insignificant proportion) of the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category.
- (3) Where an asset is linked to more than one category of long-term business, a part of the asset shall be taken to be linked to each category; and references in this Chapter to assets linked (but not solely linked) to any category of business shall be construed accordingly.
- (4) Where subsection (3) above applies, the part of the asset linked to any category of business shall be a proportion determined as follows—
- (a) where in the records of the company values are shown for the asset in funds referable to particular categories of business, the proportion shall be determined by reference to those values;
- (b) in any other case the proportion shall be equal to the proportion A/B where—
A is the total of the linked liabilities of the company which are liabilities of the internal linked fund in which the asset is held and are referable to that category of business;
B is the total of the linked liabilities of the company which are liabilities of that fund.
- (5) For the purposes of sections 432A to 432E—
- (a) income arising in any period from assets linked but not solely linked to a category of business,
- (b) gains arising in any period from the disposal of such assets, and
- (c) increases and decreases in the value of such assets,
shall be treated as arising to that category of business in the proportion which is the mean of the proportions determined under subsection (4) above at the beginning and end of the period.
- (6) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*linked liabilities*” means liabilities in respect of benefits to be determined by reference to the value of linked assets.
- (7) In the case of a policy or contract the effecting of which constitutes a class of life assurance business the fact that it also constitutes PHI business shall be disregarded for the purposes of this section unless the benefits to be provided which constitute PHI business are to be determined by reference to the value of assets.
##### 432AA
- (1) An insurance company is treated as carrying on separate Schedule A businesses, or overseas property businesses, in accordance with the following rules.
- (2) The exploitation of land held as an asset of the company’s long-term insurance fund is treated as a separate business from the exploitation of land not so held.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The exploitation of land held as an asset linked to any of the following categories of business is regarded as a separate business—
- (a) basic life assurance and general annuity business;
- (b) gross roll-up business; and
- (c) PHI business.
- (5) Accordingly, the exploitation of land held as an asset of the company’s long-term insurance fund otherwise than as mentioned in subsection . . . (4) is treated as a separate business from any other.
- (6) In this section “*land*” means any estate, interest or rights in or over land.
##### 432AB
- (1) This section applies to any loss arising in a Schedule A business or overseas property business.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) So far as a loss is referable to basic life assurance and general annuity business, it shall be treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 3 in subsection (7) of that section.
- (4) Where a company is treated under section 432AA as carrying on—
- (a) more than one Schedule A business, or
- (b) more than one overseas property business,
then, in relation to either kind of business, the reference in subsection (3) above to a loss referable to basic life assurance and general annuity business shall be construed as a reference to any aggregate net loss after setting the losses from those businesses which are so referable against any profits from those businesses that are so referable.
- (5) The provisions of sections 392A and 503, or section 392B, (loss relief) do not apply to a loss referable to life assurance business or any category of life assurance business.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432CA
- (1) This section applies where—
- (a) an insurance company is not a non-profit company in relation to a period of account (“the current period of account”),
- (b) in the case of any business with which an account of the company for the current period of account is concerned (“the relevant business”), an amount is a relevant brought into account amount for that period of account (see subsection (2)),
- (c) section 432C applies for determining the extent to which the relevant brought into account amount is referable to life assurance business or to gross roll-up business, and
- (d) the line 51 reduction condition is met (see subsection (3)).
- (2) An amount is a relevant brought into account amount for a period of account if—
- (a) it is brought into account as mentioned in subsection (2)(b) of section 83 of the Finance Act 1989 (increases in value of non-linked assets) for that period,
- (b) it is deemed to be brought into account for that period by subsection (2B) of that section in consequence of the transfer of non-linked assets, or
- (c) it is taken into account under subsection (2) of that section for that period by virtue of section 444AB as being the relevant amount in relation to non-linked assets.
- (3) The line 51 reduction condition is met if—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for the current period of account, is less than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant reduction”.
- (4) Section 432C applies in relation to so much of the relevant brought into account amount as does not exceed the relevant reduction (“the affected amount”) as if it were brought into account as an increase in the value of assets in the case of the relevant business for the applicable appropriate period of account of the company.
- (5) A period of account is an “appropriate period of account” if it ended before the current period of account and—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for it, was more than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant increase.”
- (6) The “applicable” appropriate period of account is the one which ended most recently (“the most recent appropriate period of account”).
- (7) But if the relevant increase in the case of the most recent appropriate period of account is less than the affected amount, the most recent appropriate period of account is the applicable appropriate period of account in relation to only so much of the affected amount as does not exceed that relevant increase.
- (8) In that case, the appropriate period of account which ended most recently before the most recent appropriate period of account is the applicable appropriate period of account in relation to so much of the remainder as does not exceed the relevant increase in the case of that appropriate period of account (and, where necessary, so on until the applicable appropriate period of account is established in relation to all of the affected amount or there are no more appropriate periods of account).
- (9) If the current period of account is not the first in relation to which this section has applied in the case of the business concerned, the amount of the relevant increase in the case of any appropriate period of account (“*the period in question*”) is to be treated as reduced by the relevant aggregate.
- (10) The “relevant aggregate” is the aggregate of so much of the affected amount for any period or periods of account earlier than the current period of account as was an amount to which section 432C applied as if it were brought into account as mentioned in subsection (4) for the period in question.
- (11) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
##### 432CB
- (1) This section applies where, under an insurance business transfer scheme, there is a transfer of long-term business—
- (a) from a non-profit fund of an insurance company (“*the transferor*”) which is not a non-profit company in relation to the relevant period of account,
- (b) to another insurance company (“*the transferee*”) to constitute or form part of a non-profit fund of the transferee (“*the transferee's non-profit fund*”),
(“*the transfer*”) and conditions A and B are met.
- (2) Condition A is that the fair value of the assets transferred by the transfer exceeds by an amount (“the chargeable excess”) the amount of the relevant liabilities transferred by the transfer.
For this purpose “relevant” liabilities are liabilities of a type shown (or treated as shown) in any of lines 14, 17, 21 to 23 and 31 to 38 of Form 14 of a periodical return of an insurance company.
- (3) Condition B is that the main purpose, or one of the main purposes, of the transferor or the transferee (or both) in entering into any part of the transfer scheme arrangements is to secure a reduction in tax as a result of section 432C having effect in the case of the transferee, rather than the transferor, in relation to the business transferred by the transfer.
- (4) The chargeable excess is to be brought into account by the transferor as mentioned in section 83(2)(b) of the Finance Act 1989 for the relevant period of account.
- (5) Where there is no amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first period of account of the transferee ending on or after the transfer date (“the first post-transfer period of account”), the chargeable excess is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the first post-transfer period of account.
- (6) Where—
- (a) there is an amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first post-transfer period of account, and
- (b) the amount so shown in column 1 of line 51 of Form 14 of the periodical return of the transferee for that period of account, or for any other period of account of the transferee ending after the transfer date, (an “affected period of account”) is less than the total chargeable excess amount,
the relevant amount is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the affected period of account.
- (7) For this purpose “the relevant amount” is the amount by which—
- (a) the amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the affected period of account, is less than
- (b) the total chargeable excess amount less any amount brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for any earlier period of account by virtue of the operation of this section in relation to the transferee's non-profit fund.
- (8) In subsections (6) and (7) “*the total chargeable excess amount*” means the aggregate of—
- (a) the chargeable excess, and
- (b) any amount which is the chargeable excess in relation to any other transfer of business to the transferee's non-profit fund.
- (9) In this section “*the relevant period of account*” means—
- (a) the period of account of the transferor ending immediately before the transfer date, or
- (b) if no period of account of the transferor so ends, the period of account of the transferor covering the transfer date.
- (10) In this section “*the transfer scheme arrangements*” means the insurance business transfer scheme and any relevant associated operations; and for this purpose “*relevant associated operations*” means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance, or
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee,
which is effected in connection with the insurance business transfer scheme.
- (11) In subsection (10)—
- “dependant”, and
- “insurance undertaking”,
have the same meaning as in the Insurance Prudential Sourcebook.
- (12) In this section “*the transfer date*” means the date on which the insurance business transfer scheme takes effect.
- (13) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
#### Profits reserved for policy holders and annuitants.
##### 432F
- (1) The provisions of this section provide for the reduction of the amount determined in accordance with section 432E(3) (“the subsection (3) figure”) for an accounting period in which that amount exceeds, or would otherwise exceed, the amount determined in accordance with section 432E(2) (“the subsection (2) figure”).
- (2) . . . There shall be determined for each accounting period the amount (if any) by which the subsection (2) figure . . . exceeds the subsection (3) figure (“the subsection (2) excess”).
- (3) Where there is a subsection (2) excess, the amount shall be carried forward and if in any subsequent accounting period the subsection (3) figure exceeds, or would otherwise exceed, the subsection (2) figure, it shall be reduced by the amount or cumulative amount of subsection (2) excesses so far as not previously used under this subsection.
- (4) Where in an accounting period that amount is greater than is required to bring the subsection (3) figure down to the subsection (2) figure, the balance shall be carried forward and aggregated with any subsequent subsection (2) excess for use in subsequent accounting periods.
##### 432G
- (1) There is referable to the life assurance business of the transferee the appropriate fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (2) For the purposes of subsection (1) above “the appropriate fraction” is—
$$LABLTL$where—LABL is the amount of the liabilities transferred that are referable to the life assurance business (but is nil if it would otherwise be below nil); andTL is the whole of the liabilities transferred.$
- (3) But if the amount of the liabilities transferred is nil, the appropriate fraction for the purposes of subsection (1) above is such fraction as is just and reasonable.
- (4) There is referable to the gross roll-up business of the transferee the relevant fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (5) For the purposes of subsection (4) above “the relevant fraction” is—
$$GRBLTL$where—GRBL is the amount of the liabilities transferred that are referable to the gross roll-up business (but is nil if it would otherwise be below nil); andTL has the same meaning as in subsection (2) above.$
- (6) But if the amount of the liabilities transferred is nil, the relevant fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
### Miscellaneous provisions relating to life assurance business
##### 434AZA
- (1) Where this section applies in the case of a company carrying on life assurance business, relief allowable under section 393A or Chapter 4 of Part 10 in respect of losses incurred by the company in the life assurance business in an accounting period is reduced in accordance with section 434AZB.
- (2) This section applies in the case of a company where—
- (a) there has been a relevant addition to one or more non-profit funds in a period of account ending no later than the accounting period (“the relevant period of account”) (see subsection (3)),
- (b) the company is not a non-profit company in relation to the relevant period of account and has not elected under subsection (9) of section 83YA of the Finance Act 1989 to be treated for the purposes of that section as if it were, and
- (c) condition A or B is met,
and, if the relevant period of account is not the period of account ending with the accounting period (“the current period of account”), condition C is also met.
- (3) For the purposes of subsection (2), there is a relevant addition to a non-profit fund in the relevant period of account if an amount is shown as a transfer from non-technical account in line 32 of the Form 58 of the non-profit fund in the periodical return for that period of account.
- (4) Condition A is that there is a relevant book value election in relation to assets of a non-profit fund of the company.
- (5) For the purposes of subsection (4), there is a relevant book value election in relation to assets of a non-profit fund if an amount is shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account.
- (6) Condition B is that the company is party to arrangements the main purpose, or one of the main purposes, of which is to reduce the relevant admissible value of assets of a non-profit fund of the company, other than any structural assets.
- (7) For the purposes of subsection (6) (and section 434AZB), the “*relevant admissible value*” means the value reflected in line 89 of Form 13 of the periodical return for the current period of account.
- (8) Condition C is that the surplus arising since the last valuation shown in line 34 of the Form 58 of the non-profit fund, or any of the non-profit funds, in relation to which condition A or B is met in the periodical return for the current period of account is a negative amount.
#### Exempt distributions: division of business
##### 434AZB
- (1) The amount of the relief allowable as mentioned in section 434AZA(1) is reduced by whichever of the following is the least—
- (a) the amount of the loss,
- (b) the amount specified in subsection (2), and
- (c) the amount specified in subsection (4).
- (2) The amount mentioned in subsection (1)(b) is—
- (a) where only condition A in section 434AZA is met, the relevant amount relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant amounts relating to them,
- (b) where only condition B is met, the amount of the relevant reduction relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant reductions relating to them, and
- (c) where both condition A and condition B are met, the aggregate of the amounts in paragraphs (a) and (b).
- (3) In subsection (2)—
- (a) “*relevant amount*”, in relation to a non-profit fund, means the amount shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account (as reduced by any amount which has had effect to reduce relief for losses for a previous accounting period), and
- (b) “*relevant reduction*”, in relation to a non-profit fund, means the reduction of the relevant admissible value of assets of the non-profit fund (other than structural assets) which is attributable to the arrangements (as so reduced).
- (4) The amount mentioned in subsection (1)(c) is—
- (a) if the relevant period of account is the current period of account, the amount referred to in section 434AZA(3) in the case of the non-profit fund, or of each of the non-profit funds, to which there has been a relevant addition in the relevant period of account, and
- (b) otherwise, so much of the amount shown in line 31 of the Form 58 of the non-profit fund or non-profit funds in the periodical return for the current period of account as is attributable to the amount so referred to.
##### 434AZC
- (1) For the purposes of sections 434AZA and 434AZB, a non-profit fund required to support a with-profits fund is to be treated as not being a non-profit fund.
- (2) Sections 434AZA and 434AZB apply to a non-profit part of a with-profits fund as if references to something shown in the Form 14 or Form 58 of the non-profit fund in a periodical return were to what would be so shown if there were a Form 14 or Form 58 of the non-profit part of the with-profits fund in the periodical return.
- (3) In sections 434AZA and 434AZB—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
- “*structural assets*” has the same meaning as in section 83XA of the Finance Act 1989 (see subsection (3) of that section and any regulations made under it).
##### 434B
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 436A
- (1) Profits arising to an insurance company from gross roll-up business—
- (a) are to be treated as income within Schedule D, and
- (b) are chargeable under Case VI of that Schedule.
- (2) For that purpose—
- (a) the gross roll-up business is to be treated separately, and
- (b) the profits from it are to be computed in accordance with the provisions of this Act applicable to Case I of Schedule D.
- (3) In making that computation, sections 82 and 82B to 83AB 83ZA of the Finance Act 1989 apply with the necessary modifications.
- (4) If in any accounting period an insurance company incurs a loss, to be computed on the same basis as the profits, arising from its gross roll-up business—
- (a) the loss must be set off against the amount of any profits chargeable under this section for any subsequent accounting period, and
- (b) accordingly, the amount of the company's profits so charged in any such accounting period is to be treated as reduced by the amount of the loss or so much of that amount as cannot be relieved under this section against profits of an earlier accounting period.
- (5) Section 396 does not apply to a loss incurred by an insurance company on its gross roll-up business.
- (6) No loss to which section 396 applies may be set off . . . against the amount of any profits chargeable under this section.
- (7) This section does not apply in relation to an insurance company for an accounting period if the profits of its long-term business for the accounting period are charged to tax under Case I of Schedule D.
##### 436B
- (1) Gains referable to gross roll-up business are not chargeable gains.
- (2) For the purposes of this section “*gains referable to gross roll-up business*” means gains which—
- (a) accrue to an insurance company on the disposal by it of assets of its long-term insurance fund, and
- (b) are referable (in accordance with section 432A) to gross roll-up business.
##### 437A
- (1) For the purposes of section 437 an annuity is a steep-reduction annuity if—
- (a) the amount of any payment in respect of the annuity (but not the term of the annuity) depends on any contingency other than the duration of a human life or lives;
- (b) the annuitant is entitled in respect of the annuity to payments of different amounts at different times; and
- (c) those payments include a payment (“*a reduced payment*”) of an amount which is substantially smaller than the amount of at least one of the earlier payments in respect of that annuity to which the annuitant is entitled.
- (2) Where there are different intervals between payments to which an annuitant is entitled in respect of any annuity, the question whether or not the conditions in subsection (1)(b) and (c) above are satisfied in the case of that annuity shall be determined by assuming—
- (a) that the annuitant’s entitlement, after the first payment, to payments in respect of that annuity is an entitlement to payments at yearly intervals on the anniversary of the first payment; and
- (b) that the amount to which the annuitant is assumed to be entitled on each such anniversary is equal to the annuitant’s assumed entitlement for the year ending with that anniversary.
- (3) For the purposes of subsection (2) above an annuitant’s assumed entitlement for any year shall be determined as follows—
- (a) the annuitant’s entitlement to each payment in respect of the annuity shall be taken to accrue at a constant rate during the interval between the previous payment and that payment; and
- (b) his assumed entitlement for any year shall be taken to be equal to the aggregate of the amounts which, in accordance with paragraph (a) above, are treated as accruing in that year.
- (4) In the case of an annuity to which subsection (2) above applies, the reference in section 437(1CB)(a) to the making of a reduced payment shall be construed as if it were a reference to the making of a payment in respect of that annuity which (applying subsection (3)(a) above) is taken to accrue at a rate that is substantially less than the rate at which at least one of the earlier payments in respect of that annuity is taken to accrue.
- (5) Where—
- (a) any question arises for the purposes of this section whether the amount of any payment in respect of any annuity—
- (i) is substantially smaller than the amount of, or
- (ii) accrues at a rate substantially less than,
an earlier payment in respect of that annuity, and
- (b) the annuitant or, as the case may be, every annuitant is an individual who is beneficially entitled to all the rights conferred on him as such an annuitant,
that question shall be determined without regard to so much of the difference between the amounts or rates as is referable to a reduction falling to be made as a result of the occurrence of a death.
- (6) Where the amount of any one or more of the payments to which an annuitant is entitled in respect of an annuity depends on any contingency, his entitlement to payments in respect of that annuity shall be determined for the purposes of section 437(1CA) to (1CC) and this section according to whatever (applying any relevant actuarial principles) is the most likely outcome in relation to that contingency.
- (7) Where any agreement or arrangement has effect for varying the rights of an annuitant in relation to a payment in respect of any annuity, that payment shall be taken, for the purposes of section 437(1CA) to (1CC) and this section, to be a payment of the amount to which the annuitant is entitled in accordance with that agreement or arrangement.
- (8) References in this section to a contingency include references to a contingency that consists wholly or partly in the exercise by any person of any option.
##### 438B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 438C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440B
- (1) The following provisions apply where the profits of a company’s life assurance business are charged to tax in accordance with Case I of Schedule D in accordance with section 431G(3).
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Subsection (1) of section 440 applies as if the only categories set out in subsection (4) of that section were—
- (a) assets of the long-term insurance fund, and
- (b) other assets.
- (4) Section 440A applies as if for paragraphs (a), (d) and (e) of subsection (2) there were substituted—
- (“) so many of the securities as are included in the company's long-term insurance fund shall be treated for the purposes of corporation tax as a separate holding which is an asset of that fund, and
- (b) any remaining securities shall be treated for those purposes as a separate holding which is not of the description mentioned in the preceding paragraph.”.
- (4A) Section 440(2) does not apply if either the transferor or the company by which the asset is acquired is a company whose profits are charged to tax in accordance with Case I of Schedule D (or if they both are).
- (4B) Section 211 of the 1992 Act does not apply in relation to assets which are referable to the life assurance business of the transferor if the transferor is a company whose profits are charged to tax in accordance with Case I of Schedule D.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440C
- (1) Subsection (2) makes provision for a case where—
- (a) subsection (4) of section 431G applies in relation to the profits of the life assurance business of an insurance company for any accounting period, but
- (b) the profits of that business for a succeeding accounting period fall to be charged to tax in accordance with Case I of Schedule D by virtue of subsection (3) of that section.
- (2) The loss referred to in section 431G(4)(b) (less any loss for the same accounting period set off under section 436A for any intervening accounting period and any amount deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989) may be set off under section 393 against profits of that succeeding accounting period (without being reduced in accordance with section 434A(2)(a)).
- (3) In determining whether any loss has been set off under section 436A for any intervening accounting period, or whether any amount has been deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989, losses of earlier accounting periods are to be assumed to be set off before those of later accounting periods.
- (4) Subsection (5) makes provision for a case where—
- (a) a loss arises to an insurance company for an accounting period for which the profits of its life assurance business fall to be charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3)(b),
- (b) the profits of that business for a subsequent accounting period are charged to tax under the I minus E basis, and
- (c) had those profits (instead) been charged to tax in accordance with Case I of Schedule D, any of that loss would have been available to be set off against them under section 393.
- (5) The loss is to be treated for the purposes of the operation of section 436A in relation to the subsequent accounting period as if it were a loss arising from its gross roll-up business in the accounting period in which it arose.
- (6) Subsections (7) and (8) make provision for a case where—
- (a) the profits of the life assurance business of an insurance company for an accounting period are charged to tax under the I minus E basis,
- (b) the profits of that business for its next accounting period fall to be charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3), and
- (c) that prevents the giving of relief in accordance with section 86(8) of the Finance Act 1989 (acquisition expenses relieved in fractions under section 76).
- (7) Any relief which would have been so given in—
- (a) the next accounting period, or
- (b) any subsequent accounting period for which the profits of the company's life assurance business continue to be charged to tax in accordance with Case I of Schedule D,
may be given by set-off against any gains treated as accruing under section 213(1) of the 1992 Act at the end of the accounting period.
- (8) But if the profits of the company's life assurance business for a subsequent accounting period are charged to tax under the I minus E basis, any relief not previously given under subsection (7) is to be treated for the purposes of the operation of section 76 in relation to the first subsequent accounting period for which profits are so charged as if it were an amount which is to be relieved under that section by virtue of section 86(8) and (9) of the Finance Act 1989.
#### Sections 434AZA and 434AZB: supplementary
##### 440D
Schedule 19ABA (which makes modifications of this Act in relation to BLAGAB group reinsurers) shall have effect.
##### 441B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 442A
- (1) Where an insurance company reinsures any risk in respect of a policy or contract attributable to its basic life assurance and general annuity business, the investment return on the policy or contract shall be treated as accruing to the company while the risk remains reinsured by the company under the reinsurance arrangement and shall be charged to tax under Case VI of Schedule D.
- (2) The Board may make provision by regulations as to the amount of investment return to be treated as accruing in each accounting period during which the reinsurance arrangement is in force.
- (3) The regulations may, in particular, provide that the investment return to be treated as accruing to the company in respect of a policy or contract in any accounting period shall be calculated by reference to—
- (a) the aggregate of the sums paid by the company to the reinsurer during that accounting period and any earlier accounting periods by way of premium or otherwise;
- (b) the aggregate of the sums paid by the reinsurer to the company during that accounting period and any earlier accounting periods by way of commission or otherwise;
- (c) the aggregate amount of the net investment return treated as accruing to the company in any earlier accounting periods, that is to say, net of tax at such rate as may be prescribed; and
- (d) such percentage rate of return as may be prescribed.
- (3A) Where a transfer of the reinsurance arrangement from one insurance company (“*the transferor*”) to another (“*the transferee*”) is effected by novation or an insurance business transfer scheme, for the purpose of calculating the investment return to be treated as accruing to the transferee in respect of the policy or contract after the transfer, the references to the company in subsection (3)(a), (b) and (c) above include (as well as the transferee)—
- (a) the transferor, and
- (b) any insurance company from which the reinsurance arrangement was transferred on an earlier transfer effected by novation or an insurance business transfer scheme.
- (4) The regulations shall provide that the amount of investment return to be treated as accruing . . . in respect of a policy or contract in the final accounting period during which the policy or contract is in force is the amount, ascertained in accordance with regulations, by which the profit over the whole period during which the policy or contract, and the reinsurance arrangement, were in force exceeds the aggregate of the amounts treated as accruing in earlier accounting periods.
- (5) Regulations under this section—
- (a) may exclude from the operation of this section such descriptions of insurance company, such descriptions of policies or contracts and such descriptions of reinsurance arrangements as may be prescribed;
- (b) may make such supplementary provision as to the ascertainment of the investment return to be treated as accruing to the company as appears to the Board to be appropriate, including provision requiring payments made during an accounting period to be treated as made on such date or dates as may be prescribed; and
- (c) may make different provision for different cases or descriptions of case.
- (6) In this section “*prescribed*” means prescribed by regulations under this section.
##### 444AZA
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in respect of that business under the I minus E basis,
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3), and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) Any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits chargeable under section 436A (a “Case VI loss”) shall instead be treated as a loss of the transferee (a “Case I loss”) available to be set off against GRBP in relation to a period of account.
- (3) For the purposes of subsection (2) above “*GRBP*”, in relation to a period of account, is—
$P×GRBTLTL$
where—
- *P* is the amount of such profits of the transferee's life assurance business for the period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable),
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of any Case VI loss to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and the transferee shall be entitled to appear and be heard or to make representations in writing.
#### Determination of policy holders’ share for purposes of s.438B
##### 444AZB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3),
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under the I minus E basis, and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) The relevant fraction of any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits of that business (a “Case I loss”) shall instead be treated as a loss of the transferee (a “Case VI loss”) available to be set off against the amount of such profits chargeable under section 436A for a period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable).
- (3) For the purposes of subsection (2) above “*the relevant fraction*”, in relation to a period of account, is—
$GRBTLTL$
where—
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of the amount of any Case I loss to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but both the transferor and the transferee shall be entitled to appear and be heard or to make representations in writing.
##### 444AA
- (1) This section applies where the whole of the long-term business of a person (“*the transferor*”) is transferred from that person–
- (a) by one insurance business transfer scheme, or
- (b) by two or more insurance business transfer schemes which take effect on the same date.
- (2) Where (apart from this subsection) there would not be a periodical return of the transferor covering a period ending immediately before the transfer date, there is to be deemed for the purposes of corporation tax to be a periodical return of the transferor covering the period—
- (a) beginning immediately after the last period ending before the transfer date which is covered by a periodical return of the transferor, and
- (b) ending immediately before the transfer date.
- (3) The periodical return deemed to exist by subsection (2) above is to be deemed to contain—
- (a) such entries as would be included in an actual periodical return of the transferor covering the period mentioned in subsection (2) above, and
- (b) such entries as would be included in an actual periodical return of the transferor covering the period—
- (i) beginning immediately after the end of the period mentioned in subsection (2) above, and
- (ii) ending immediately before the transfer had effect,
and the period mentioned in subsection (2) above is to be deemed to be a period of account (but not an accounting period) of the transferor.
- (4) There is to be deemed for the purposes of corporation tax to be a periodical return of the transferor—
- (a) covering the transfer date, and
- (b) containing the appropriate entries.
- (5) In subsection (4) above “*appropriate entries*” means such entries as would be included in an actual periodical return covering the transfer date—
- (a) in line 32 of Form 40, and
- (b) in line 11 of Form 14, in both columns (treating references in that form to “current year” as references to the time immediately after the transfer date and to “previous year” as references to the time immediately before the transfer date).
- (6) A transfer date covered by a periodical return deemed to exist by subsection (4) above is to be deemed to be a period of account of the transferor only for the purpose of taking into account profits under section 444ABD.
- (7) Where—
- (a) a periodical return deemed to exist by subsection (4) above is preceded by an actual periodical return of the transferor covering the period immediately before the transfer date, and
- (b) profits are to be taken into account under section 444ABD in the period of account deemed to exist by subsection (6) above,
those profits are to be deemed for the purposes of corporation tax to be profits arising on the last day of the period of account covered by the actual periodical return.
- (8) Any actual periodical return of the transferor covering a period which includes the transfer date is to be ignored for the purposes of corporation tax.
- (9) In this section and sections 444AB to 444AECC “*the transfer date*”, in relation to an insurance business transfer scheme, means the date on which it takes effect.
##### 444AB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer long-term business of a person (“*the transferor*”) to another person (“*the transferee*”), and
- (b) condition A or condition B is met.
- (2) Condition A is met if any of the assets of the transferor's long-term insurance fund which are transferred . . . by the insurance business transfer scheme are not, immediately after their transfer—
- (a) if the transferee is an insurance company or an insurance special purpose vehicle, assets of the transferee's long-term insurance fund, or
- (b) if the transferee is not an insurance company , an insurance special purpose vehicleor a friendly society, assets of a fund of the transferee which would be a with-profits fund if the transferee were an insurance company,
(“relevant non-transferred assets”).
- (3) Condition B is met if, immediately after the transfer date, the transferor—
- (a) does not carry on long-term business, but
- (b) holds any assets which, immediately before the transfer date, were assets of its long-term insurance fund (“retained assets”).
- (4) If there are relevant non-transferred assets or retained assets (or both) the relevant amount in relation to them (see subsection (5) below) is to be taken into account under section 83(2) of the Finance Act 1989 as an increase in value of the assets of the long-term insurance fund of the transferor for the relevant period of account (see subsection (6) below).
- (5) Section 444ABA makes provision for the calculation of the relevant amount in relation to relevant non-transferred assets; and section 444ABB makes provision for its calculation in relation to retained assets.
- (5A) In this section references to assets held by the transferor after the transfer do not include—
- (a) assets held on trust for the transferee, or
- (b) assets held to meet liabilities which have been wholly reinsured and which are intended to be transferred under an insurance business transfer scheme to the reinsurer.
- (6) In this section and sections 444ABA to 444AC “*the relevant period of account*” means the period of account of the transferor ending, or treated by section 444AA(2) as ending, immediately before the transfer date.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
- (8) For the purpose of paragraph (2)(a), in relation to an insurance special purpose vehicle which is not an insurance company, “*long-term insurance fund*” has the meaning it has in paragraph 4(5) of Schedule 19ABA.
##### 444ABA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are relevant non-transferred assets is—
$$FVA-BTO$where—FVA is the fair value of the assets on the transfer date, andBTO is the lesser of ABTO and AL13, where—ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andAL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.$
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) See section 444AA for the meaning of “the transfer date”. . . in this section.
##### 444ABAA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are non-profit fund transferred assets is—
$$FVA-(ABTO+TL)$where—FVA is the fair value of the assets on the transfer date,ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andTL is the amount of any non-profit fund transferred liabilities which are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38, but not in line 61, in Form 14 in the periodical return for the period of account of the transferor ending (or treated as ending by section 444AA) immediately before the transfer date or, if there is no period of account of the transferor so ending (or treated as so ending), the amount of any liabilities which would be so shown if one did.$
- (2) In subsection (1) “*non-profit fund transferred liabilities*” means such of the liabilities of the transferor's long-term insurance fund as are transferred from the transferor to the transferee by the insurance business transfer scheme and were, immediately before their transfer, liabilities of a non-profit fund of the transferor.
- (3) See section 444AA for the meaning of “the transfer date” in this section.
#### Securities.
##### 444ABB
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are retained assets is—
$FVA-ABDP-RL13-RRL$
where—
- FVA is the fair value of the assets on the transfer date,
- ABDP is the amount of the profits to be taken into account as profits under section 444ABD,
- RL13 is the amount by which AL13 exceeds VE, and
- RRL is the value of any relevant retained liabilities immediately after the transfer date.
But the relevant amount is nil if it would otherwise be below nil.
- (1A) For the purposes of subsection (1) above—
- (a) AL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date;
- (b) VE is the amount (if any) by which VL32 exceeds VTL where—
- (i) VL32 is the value of the assets shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor covering (or treated as covering) the transfer date, and
- (ii) VTL means the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by the insurance business transfer scheme; and
- (c) relevant retained liabilities are any liabilities of the company's long-term business which are owed by the company immediately after the transfer date and are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38 in Form 14 in a periodical return for the period of account ending (or treated as ending by section 444AA) immediately before the transfer date.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABBA
- (1) This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“*the transferor*”) to another (“*the transferee*”).
- (2) If the transferor and the transferee jointly elect, the transferee (and not the transferor) is chargeable to any amount of additional corporation tax to which the transferor would otherwise be chargeable by virtue of section 444AB(4) in relation to relevant non-transferred assets.
- (3) An election under subsection (2) above—
- (a) is to be irrevocable, and
- (b) is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 90 days beginning with the day following the transfer date,
and a copy of the notice containing the election must accompany the tax return of the transferee for the first accounting period ending after the transfer. Paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.
- (4) Where an election under subsection (2) above has been made, the transferor must inform the transferee of—
- (a) the amount of any additional corporation tax to which the transferor considers the election to apply, and
- (b) the day on which that tax is due and payable,
no later than the end of the period of 8 months beginning with the day following the transfer date.
- (5) Tax chargeable on the transferee by virtue of an election under subsection (2) above—
- (a) is due in accordance with section 59D of the Management Act on the day on which it would have been due if no election had been made, and
- (b) for the purposes of that section, is to be treated as tax payable by the transferor (and not as tax payable by the transferee).
- (6) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ABD
- (1) Any profits representing the amount by which—
- (a) the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by an insurance business transfer scheme, exceeds
- (b) the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in line 32 of Form 40 of the periodical return of the transferor for the period of account of the transferor including the transfer date,
are to be taken into account as profits of that period of account in accordance with subsections (1A) and (1C) below.
- (1A) Where the profits of the life assurance business of the transferor for a period of account are charged to tax in accordance with Case I of Schedule D by virtue of section 431G(3), the appropriate fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax in accordance with Case I of Schedule D (and not otherwise).
- (1B) For the purposes of subsection (1A) above “the appropriate fraction” is the appropriate fraction for the purposes of section 432G(1).
- (1C) Where the profits of the life assurance business of the transferor for a period of account are charged to tax under the I minus E basis, the relevant fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 436A (and not otherwise).
- (1D) For the purposes of subsection (1C) above “the relevant fraction” is the relevant fraction for the purposes of section 432G(4).
- (1E) Where the value mentioned in paragraph (b) of subsection (1) above exceeds the amount mentioned in paragraph (a) of that subsection, the amount of the excess is not to be taken into account as a loss of the transferor.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AC
- (1) This section applies where an insurance business transfer scheme has effect to transfer . . . long-term business of a person (“*the transferor*”) to another person (“*the transferee*”) and the condition in subsection (2) below is met.
- (2) The condition is that the transferor did not carry on life assurance business that is mutual business during the relevant period of account.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amount which (apart from this section) would be regarded as other income of the transferee for the purposes of section 83(2)(e) of the Finance Act 1989 for the period of account of the transferee which includes the transfer date is to be reduced by an amount equal to the lesser of the transferred surplus and any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.
- (5) In subsection (4) above “*the transferred surplus*”is VE – RBTO where—
- (a) VE has the same meaning as in section 444ABB, and
- (b) RBTO means so much of BTO as relates to relevant non-transferred assets transferred to the transferee where—
- (i) BTO has the same meaning as in section 444ABA, and
- (ii) “*relevant non-transferred assets*” has the same meaning as in section 444AB.
- (5A) Where the transfer is to more than one transferee, the amount of any reduction to be made in accordance with subsection (4) above is to be apportioned to each transferee on a just and reasonable basis.
- (6) See section 444AA for the meaning of “the transfer date”, and section 444AB for the meaning of “the relevant period of account”, in this section.
##### 444ACZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ACA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AE
- (1) Where an insurance business transfer scheme has effect to transfer the relevant financing arrangements entered into in relation to a non-profit fund of an insurance company (“*the transferor*”) to another person (“*the transferee*”), after the transfer—
- (a) they are to be treated for the purposes of sections 83YC and 83YD of the Finance Act 1989 as having been entered into by the transferee, but
- (b) the references in those sections to earlier periods of account of the transferee include earlier periods of account of the transferor.
- (2) But if the insurance business transfer scheme has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the transferor, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the transferor, or of the transferee or any of the transferees, ending after the transfer is to be made on a just and reasonable basis.
- (3) Subsection (4) below applies where—
- (a) relevant financing arrangements have been entered into in relation to a non-profit fund of an insurance company (“the old company”), and
- (b) as a result of any transaction other than an insurance business transfer scheme, another insurance company (“the new company”) becomes the debtor in respect of the money debt, or the cedant, under the financial reinsurance arrangements.
- (4) Where this subsection applies, after the transaction—
- (a) the relevant financing arrangements are to be treated for the purposes of sections 83YC and 83YD as having been entered into by the new company, but
- (b) the references in those sections to earlier periods of account of the new company include earlier periods of account of the old company, and
- (c) the transaction is not to be regarded as causing the condition in section 83YD(3) to be met in relation to the old company.
- (5) But if the transaction has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the old company, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the old company, or of the new company or any of the new companies, ending after the transaction is to be made on a just and reasonable basis.
- (6) Expressions used in this section and section 83YC or 83YD have the same meanings here as there.
##### 444AEA
- (1) This section applies where—
- (a) as a result of the whole . . . of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a Case I advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of the whole . . . of the transfer scheme arrangements is the obtaining of that Case I advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” means an insurance business transfer scheme (“*the relevant transfer scheme*”) together with any relevant associated operations.
- (3) If a Case I advantage is obtained by the transferor (see subsection (1) of section 444AEB), the amount of the transferor's Case I advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a Case I advantage is obtained by the transferee (see subsection (1) of section 444AEC), the amount of the transferee's Case I advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) In this section and sections 444AEB to 444AECC“*relevant associated operations*”, in relation to the relevant transfer scheme, means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance,
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee, or
- (d) any surplus-increasing transfer of assets,
which is effected in connection with the relevant transfer scheme.
- (6) In subsection (5) above—
- “*dependant*” and “*insurance undertaking*” have the same meaning as in the Insurance Prudential Sourcebook, and
- “*surplus-increasing transfer of assets*” means a transfer of assets of the transferor's long-term insurance fund to the transferee which is not brought into account for any period of account of the transferee but increases the amount of total surplus shown in line 39 of Form 58 in any periodical return of the transferee.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AEB
- (1) A Case I advantage is obtained by the transferor if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a Case I advantage is obtained by the transferor, the amount of the Case I advantage is the aggregate of—
- (a) the amounts (if any) by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, and
- (b) the amounts (if any) by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (4) In this section and sections 444AEC, 444AECB and 444AECC—
- “*Case I profits*” and “*Case I losses*” means profits and losses computed in accordance with the provisions of Case I of Schedule D, and
- “the relevant time” is the time at which any application under section 444AED is made, or, if no such application is made, the transfer date.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AEC
- (1) A Case I advantage is obtained by the transferee if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a Case I advantage is obtained by the transferee, the amount of the Case I advantage is—
- (a) the amount by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) the amount by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (4) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “Case I profits” and “Case I losses” and “the relevant time”, in this section.
##### 444AECA
- (1) This section applies where—
- (a) as a result of any part of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a Case I advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of that part of the transfer scheme arrangements is the obtaining of that Case I advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” has the same meaning as in section 444AEA.
- (3) If a Case I advantage is obtained by the transferor (see subsection (1) of section 444AECB), the amount of the transferor's Case I advantage (see subsection (3) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a Case I advantage is obtained by the transferee (see subsection (1) of section 444AECC), the amount of the transferee's Case I advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AECB
- (1) A Case I advantage is obtained by the transferor if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the Case I profits to be greater or the Case I losses to be less than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a Case I advantage is obtained by the transferor.
- (3) If a Case I advantage is obtained by the transferor, the amount of the Case I advantage is the aggregate of—
- (a) the amounts (if any) by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, and
- (b) the amounts (if any) by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (5) In this section and section 444AECC “*the relevant part of the arrangements*” means, in relation to a Case I advantage, the part of the transfer scheme arrangements as a result of which the Case I advantage is obtained.
- (6) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “Case I profits” and “Case I losses” and “the relevant time”, in this section.
##### 444AECC
- (1) A Case I advantage is obtained by the transferee if—
- (a) Case I profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) Case I losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the Case I profits to be greater, or the Case I losses to be less, than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a Case I advantage is obtained by the transferor.
- (3) If a Case I advantage is obtained by the transferee, the amount of the Case I advantage is—
- (a) the amount by which Case I profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, or
- (b) the amount by which Case I losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (5) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations”, section 444AEB for the meaning of “Case I profits” and “Case I losses” and “the relevant time” and section 444AECB for the meaning of “the relevant part of the arrangements”, in this section.
##### 444AED
- (1) Sections 444AEA and 444AECA do not apply in relation to the transferor or the transferee if, on an application under this section, the Commissioners for Her Majesty's Revenue and Customs (“the HMRC Commissioners”) have given a notice under subsection (2) below.
- (2) A notice under this subsection is a notice stating that the HMRC Commissioners are satisfied—
- (a) that the obtaining of a Case I advantage by the applicant is not the sole or main purpose of the whole or any part of the transfer scheme arrangements, or
- (b) that the transferor and the transferee are members of the same group of companies and that there is no advantage to the group arising from any Case I advantage obtained by the transferor or by the transferee.
- (3) For the purposes of this section there is no advantage to a group arising from any Case I advantage obtained by the transferor or by the transferee if—
- (a) as a result of transfer scheme arrangements, there is an increase in the liability to corporation tax of one or more companies which are members of the group of companies, and
- (b) the amount (or aggregate amount) of that increase is not less than the reduction in the liability to corporation tax of the transferor or the transferee (or both) arising from the obtaining of the Case I advantage.
- (4) An application under this section must be in writing and contain particulars of the transfer scheme arrangements.
- (5) The HMRC Commissioners may by notice require the applicant to provide further particulars in order to enable them to determine the application.
- (6) A requirement may be imposed under subsection (5) above within 30 days of the receipt of the application or of any further particulars required under that subsection.
- (7) If a notice under subsection (5) above is not complied with within 30 days or such longer period as the HMRC Commissioners may allow, they need not proceed further on the application.
- (8) The HMRC Commissioners must give notice of their decision on an application under this section to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of that notice being complied with.
- (9) If the HMRC Commissioners—
- (a) give notice to the applicant under subsection (8) above that they are not satisfied as mentioned in subsection (2) above, or
- (b) do not comply with subsection (8) above,
the applicant may require them to transmit the application to the Special Commissioners.
- (10) A requirement under subsection (9) above must be imposed within 30 days of the giving of the notice or the failure to comply and must be accompanied by any notice given under subsection (5) above and further particulars provided pursuant to any such notice.
- (11) Any notice given by the Special Commissioners has effect for the purposes of subsection (1) above as if it were given by the HMRC Commissioners.
- (12) If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for the decision of the HMRC Commissioners or the Special Commissioners, any resulting notice that they are satisfied as mentioned in subsection (2) above is void.
- (13) For the purposes of this section two companies are members of the same group of companies if they are for the purposes of Chapter 4 of Part 10.
### Surpluses of mutual and former mutual businesses
##### 444AF
- (1) This section applies in relation to a period of account of an insurance company (“*the relevant period*”) if—
- (a) at any time in the relevant period the company carries on life assurance business that is not mutual business,
- (b) the company has an amount of undistributed demutualisation surplus for the relevant period (see subsection (7)), and
- (c) there is a reduction in the amount of the company's unappropriated surplus over the relevant period (see section 444AI).
- (2) Where this section applies in relation to the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund whichever of the following amounts is the smallest—
- (a) the amount of the reduction mentioned in subsection (1)(c) above;
- (b) the amount of the company's undistributed demutualisation surplus for the relevant period;
- (c) the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (4) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if for “smallest” there were substituted smaller and as if paragraph (c) were omitted.
- (5) This section shall have effect—
- (a) for the purposes of computing in accordance with the provisions of this Act applicable to Case I of Schedule D the profits of the company's life assurance business, and
- (b) for the purposes of so computing profits of the company chargeable under Case VI of Schedule D under section 436A (gross roll-up business).
- (6) But for the purposes mentioned in subsection (5)(b) above, this section and section 444AG have effect subject to the modification in section 444AH; and the Corporation Tax Acts have effect accordingly (so that there may, in particular, be a difference between—
- (a) the amount deemed to be brought into account by virtue of subsection (2) above for a period of account for those purposes, and
- (b) the amount so deemed to be brought into account for that period of account for the purposes mentioned in subsection (5)(a) above).
- (7) For the purposes of this section, the undistributed demutualisation surplus of an insurance company for the relevant period is—
- (a) an amount equal to (UDSP – AD + DTSI – DTSO); or
- (b) if that amount is a negative amount, nil.
For this purpose—
- UDSP is the undistributed demutualisation surplus of the company for the period of account immediately preceding the relevant period,
- AD is any amount deemed under this section to be brought into account for the period of account immediately preceding the relevant period as an increase in the value of the assets of the company's long-term insurance fund,
- DTSI is the total amount of any demutualisation transfer surpluses accruing to the company during the relevant period (see section 444AG),
- DTSO is the total amount of any demutualisation transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
##### 444AG
- (1) For the purposes of section 444AF and this section, a demutualisation transfer surplus accrues to an insurance company where—
- (a) life assurance business is transferred to the company by a person (“*the transferor*”),
- (b) after the transfer, the company carries on the transferred business otherwise than as mutual business, and
- (c) the condition in subsection (2) below is satisfied in relation to the transfer.
- (2) The condition is that—
- (a) immediately before the transfer, the transferor carried on the transferred business as mutual business, or
- (b) where paragraph (a) above does not apply, some or all of the transferred business was carried on by an insurance company as mutual business at a time on or after 1st January 1990 and before the transfer (“former mutual business”).
- (3) The demutualisation transfer surplus accrues to the company on the date of the transfer.
- (4) The amount of the demutualisation transfer surplus is given by subsection (5) or (6) below.
- (5) Where subsection (2)(a) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer, the aggregate of—
- (i) the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer, and
- (ii) the amount of any added surplus accruing to the company in connection with the transfer (see subsection (10));
- (b) otherwise, a just and reasonable portion of that aggregate amount, having regard to how much of the transferor's life assurance business was transferred to the company under the transfer.
- (6) Where subsection (2)(b) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer and all of the transferred business is former mutual business, the former mutual surplus of the transferor on the transfer date (see subsection (7));
- (b) otherwise, so much of that former mutual surplus as it is just and reasonable to attribute to the company, having regard in particular to—
- (i) how much of the transferor's life assurance business was transferred to the company under the transfer, and
- (ii) how much of the transferred business is former mutual business.
- (7) For the purposes of subsection (6) above, the former mutual surplus of the transferor on the transfer date is—
- (a) the amount given by subsection (8) below, or
- (b) if less, the amount given by subsection (9) below.
- (8) The amount given by this subsection is the total amount of any demutualisation transfer surpluses accruing to the transferor—
- (a) on or after 1st January 1990, and
- (b) on or before the date of the transfer.
- (9) The amount given by this subsection is the lowest amount of unappropriated surplus of the transferor at the end of any period of account ending—
- (a) on or after the date of the last occasion on which a demutualisation transfer surplus accrued to it as mentioned in subsection (8) above, and
- (b) on or before the date of the transfer.
- (10) For the purposes of this section, added surplus accrues to the company in connection with the transfer if—
- (a) an amount of assets is received by the company in connection with the transfer, no later than six months after the date of the transfer,
- (b) the amount is not brought into account by the company,
- (c) the amount is added to the unappropriated surplus of the company, and
- (d) the amount does not derive from any unappropriated surplus of the transferor;
and the amount of the added surplus is the amount referred to in paragraphs (a) to (d) above.
##### 444AH
- (1) The modification in this section has effect for the purposes mentioned in section 444AF(5)(b) only.
- (2) In relation to any demutualisation transfer surplus accruing to a company in a post-2002 period of account—
- (a) the references in section 444AG(5) to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer shall be taken to be references to—
- (i) the amount of that unappropriated surplus, or
- (ii) if less, the unappropriated surplus of the transferor at the end of the period of account immediately preceding the first post-2002 period of account of the transferor; and
- (b) the references in sections 444AF and 444AG to the amount of any demutualisation transfer surplus are to have effect accordingly.
- (3) In this section “*post-2002 period of account*”, in relation to an insurance company, means a period of account of the company beginning on or after 1st January 2003 and ending on or after 9th April 2003.
##### 444AI
- (1) For the purposes of section 444AF—
- (a) there is a reduction in the amount of the company's unappropriated surplus over the relevant period if CUS is less than (OUS + TSI – TSO);
- (b) the amount of that reduction is the amount by which CUS is less than (OUS + TSI – TSO).
- (2) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- TSI is the total amount of any transfer surpluses accruing to the company during the relevant period (see subsections (3) to (7)),
- TSO is the total amount of any transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
- (3) For the purposes of this section, a transfer surplus accrues to an insurance company where life assurance business is transferred to the company by a person (“*the transferor*”).
- (4) The transfer surplus accrues to the company on the date of the transfer.
- (5) The amount of the transfer surplus is equal to so much of the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer as is transferred to the company under the transfer.
- (6) But if, immediately before the transfer, the transferor carried on the transferred business as mutual business, the amount of the transfer surplus is the aggregate of—
- (a) the amount given by subsection (5) above, and
- (b) the amount of any added surplus accruing to the company in connection with the transfer.
- (7) Subsection (10) of section 444AG applies for the purposes of subsection (6) above as it applies for the purposes of that section.
##### 444AJ
- (1) For the purposes of sections 444AF and 444AK, the amount of the company's relevant receipts reduction for the relevant period is to be calculated by—
- (a) determining, in the case of each with-profits fund of the company, the amount given by subsection (2) or (6) below for the relevant period, and
- (b) aggregating each of those amounts.
- (2) The amount, in the case of a fund other than a policy holder participation fund, is—
- (a) where the gross transfer to non-technical account for the fund for the relevant period (see subsections (3) and (4)) is greater than the post-policy holder surplus for the fund for the relevant period (see subsection (5)), the amount of the difference;
- (b) otherwise, nil.
- (3) In this section “*the gross transfer to non-technical account*” means the amount shown in line 13 of Form 58 for the fund.
- (4) But if—
- (a) there is a transfer from a with-profits fund of the company to another fund of the company (“the initial transfer”) which is shown in (or included in an amount shown in) line 14 of Form 58 for the with-profits fund,
- (b) there is a transfer from a fund of the company (whether or not the other fund mentioned in paragraph (a) above) to the non-technical account which is shown in (or included in an amount shown in) line 13 of Form 58 for that fund, and
- (c) the transfer to the non-technical account can reasonably be regarded as connected with the initial transfer,
the amount of the gross transfer to non-technical account for the relevant period given by subsection (3) above in the case of the with-profits fund is to be increased by the amount transferred to the non-technical account.
- (5) In this section “*post-policy holder surplus*” means an amount equal to—
$$SA-TAP$where—SA is—(a) the amount shown in line 34 of Form 58 for the fund (surplus arising since last valuation), or(b) if that amount is a negative amount, nil;TAP is the amount shown in line 46 of Form 58 for the fund (total allocated to policy holders).$
- (6) The amount, in the case of a policy holder participation fund, is—
- (a) where TAP is greater than SA, the amount of the difference;
- (b) otherwise, nil;
and for this purpose “*SA*” and “*TAP*” have the same meaning as in subsection (5) above.
- (7) References in this section to Form 58 are references to that Form in the periodical return of the company for the relevant period.
- (8) In this section “*policy holder participation fund*” means a fund in the case of which an amount equal to the amount shown in line 34 of Form 58 for the fund is allocated to policy holders for the relevant period.
##### 444AK
- (1) This section applies if at any time in a period of account of an insurance company (“*the relevant period*”)—
- (a) the company carries on life assurance business as mutual business, and
- (b) the company carries on gross roll-up business.
- (2) If there is a reduction in the amount of the company's unappropriated surplus over the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund—
- (a) the amount of that reduction, or
- (b) if less, the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) But subsection (2) above shall have effect only for the purposes of computing in accordance with the provisions of this Act applicable to Case I of Schedule D the profits for the relevant period of the company's gross roll-up business.
- (4) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (5) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if paragraph (b) and the word “or” before it were omitted.
- (6) For the purposes of this section, there is a reduction in the amount of the company's unappropriated surplus over the relevant period if—
- (a) CUS is less than OUS, and
- (b) CUS is less than UUS.
- (7) The amount of that reduction is—
- (a) the amount by which CUS is less than OUS, or
- (b) if OUS is greater than UUS, the amount by which CUS is less than UUS.
- (8) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- UUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the first period of account of the company to begin on or after 1st January 2003 and to end on or after 9th April 2003.
##### 444AL
- (1) This section applies for the purposes of sections 444AF to 444AK.
- (2) References to mutual business, in relation to any time, include business which at that time is treated for the purposes of section 432E as mutual business.
- (3) “*Unappropriated surplus*”, in relation to a period of account of an insurance company, means an unappropriated surplus on valuation as shown in the periodical return of the company for the period of account.
- (4) References to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer are, where a period of account of the transferor does not end at that time, references to the unappropriated surplus on valuation that would have been shown in a periodical return of the transferor for that period had such a return been drawn up.
### Provisions applying in relation to overseas life insurance companies
##### 444B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modifications for change of tax basis
##### 444C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Equalisation reserves
##### 444BA
- (1) Subject to the following provisions of this section and to sections 444BB to 444BD, the rules in subsection (2) below shall apply in making any computation, for the purposes of Case I or V of Schedule D, of the profits or losses for any accounting period of an insurance company whose business has at any time been or included business in respect of which it was required, by virtue of equalisation reserve rules, to maintain an equalisation reserve.
- (2) Those rules are—
- (a) that amounts which, in accordance with equalisation reserve rules, are transferred into the equalisation reserve in respect of the company’s business for the accounting period in question are to be deductible;
- (b) that amounts which, in accordance with any such regulations, are transferred out of the reserve in respect of the company’s business for that period are to be treated as receipts of that business; and
- (c) that it must be assumed that all such transfers as are required by equalisation reserve rules to be made into or out of the reserve in respect of the company’s business for any period are made as required.
- (3) Where an insurance company having any business in respect of which it is required, by virtue of equalisation reserve rules, to maintain an equalisation reserve ceases to trade—
- (a) any balance which exists in the reserve at that time for the purposes of the Tax Acts shall be deemed to have been transferred out of the reserve immediately before the company ceases to trade; and
- (b) that transfer out shall be deemed to be a transfer in respect of the company’s business for the accounting period in which the company so ceases and to have been required by equalisation reserve rules.
- (4) Where—
- (a) an amount is transferred into an equalisation reserve in respect of the business of an insurance company for any accounting period,
- (b) the rule in subsection (2)(a) above would apply to the transfer of that amount but for this subsection,
- (c) that company by notice in writing to an officer of the Board makes an election in relation to that amount for the purposes of this subsection, and
- (d) the notice of the election is given not more than two years after the end of that period,
the rule mentioned in subsection (2)(a) above shall not apply to that transfer of that amount and, instead, the amount transferred (the “unrelieved transfer”) shall be carried forward for the purposes of subsection (5) below to the next accounting period and (subject to subsection (6) below) from accounting period to accounting period.
- (5) Where—
- (a) in accordance with equalisation reserve rules, a transfer is made out of an equalisation reserve in respect of an insurance company’s business for any accounting period,
- (b) the rule in subsection (2)(b) above would apply to the transfer but for this subsection, and
- (c) the accounting period is one to which any amount representing one or more unrelieved transfers has been carried forward under subsection (4) above,
that rule mentioned in subsection (2)(b) above shall not apply to that transfer except to the extent (if any) that the amount of the transfer exceeds the aggregate of the amounts representing unrelieved transfers carried forward to that period.
- (6) Where in the case of any company—
- (a) any amount representing one or more unrelieved transfers is carried forward to an accounting period in accordance with subsection (4) above, and
- (b) by virtue of subsection (5) above the rule in subsection (2)(b) above does not apply to an amount representing the whole or any part of any transfer out of an equalisation reserve in respect of the company’s business for that period,
the amount mentioned in paragraph (a) above shall not be carried forward under subsection (4) above to the next accounting period except to the extent (if any) that it exceeds the amount mentioned in paragraph (b) above.
- (7) To the extent that any actual or assumed transfer in accordance with equalisation reserve rules of any amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes—
- (a) the rule in subsection (2)(a) above shall not apply to that transfer; and
- (b) the making of that transfer shall be disregarded in determining, for the purposes of the Tax Acts, whether and to what extent there is subsequently any requirement to make a transfer into or out of the reserve in accordance with equalisation reserve rules;
and this subsection applies irrespective of whether the insurance company in question is a party to the arrangements.
- (8) For the purposes of this section the transfer of an amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes to the extent that the arrangements to which it is attributable are arrangements—
- (a) the sole or main purpose of which is, or
- (b) the sole or main benefit accruing from which might (but for subsection (7) above) be expected to be,
the reduction by virtue of this section of any liability to tax.
- (9) Where—
- (a) any transfer made into or out of an equalisation reserve maintained by an insurance company is made in accordance with equalisation reserve rules in respect of business carried on by that company over a period (“the equalisation period”), and
- (b) parts of the equalisation period are in different accounting periods,
the amount transferred shall be apportioned for the purposes of this section between the different accounting periods in the proportions that correspond to the number of days in the equalisation period that are included in each of those accounting periods.
- (10) The Treasury may by regulations provide in relation to any accounting periods ending on or after 1st April 1996 for specified transitional provisions contained in equalisation reserve rules to be disregarded for the purposes of the Tax Acts in determining how much is required, on any occasion, to be transferred into or out of any equalisation reserve in accordance with the rules.
- (11) In this section, and in sections 444BB to 444BD, “equalisation reserves rules” means the rules in chapter 1.4 of the Insurance Prudential Sourcebook.
##### 444BB
- (1) The Treasury may by regulations make provision modifying section 444BA so as, in cases mentioned in subsection (2) below—
- (a) to require—
- (i) sums by reference to which the amount of any transfer into or out of an equalisation reserve falls to be computed, or
- (ii) the amount of any such transfer,
to be apportioned between different parts of the business carried on for any period by an insurance company; and
- (b) to provide for the purposes of corporation tax for the amounts taken to be transferred into or out of an equalisation reserve to be computed disregarding any such sum or, as the case may be, any such part of a transfer as is attributed, in accordance with the regulations, to a part of the business described for the purpose in the regulations.
- (2) Those cases are cases where an insurance company which, in accordance with equalisation reserve rules, is required to make transfers into or out of an equalisation reserve in respect of any business carried on by that company for any period is carrying on, for the whole or any part of that period—
- (a) any business the income and gains of which fall to be disregarded in making a computation of the company’s profits in accordance with the rules applicable to Case I of Schedule D, or
- (b) any business by reference to which double taxation relief is afforded in respect of any income or gains.
- (3) Section 444BA shall have effect (subject to any regulations under subsection (1) above) in the case of an equalisation reserve maintained by an insurance company which—
- (a) is not resident in the United Kingdom, and
- (b) carries on business in the United Kingdom through a permanent establishment,
only if such conditions as may be prescribed by regulations made by the Treasury are satisfied in relation to that company and in relation to transfers into or out of that reserve.
- (4) Regulations under this section prescribing conditions subject to which section 444BA is to apply in the case of any equalisation reserve maintained by an insurance company may—
- (a) contain conditions imposing requirements on the company to furnish the Board with information with respect to any matters to which the regulations relate, or to produce to the Board documents or records relating to any such matters; and
- (b) provide that, where any prescribed condition is not, or ceases to be, satisfied in relation to the company or in relation to transfers into or out of that reserve, there is to be deemed for the purposes of the Tax Acts to have been a transfer out of that reserve of an amount determined under the regulations.
- (5) Regulations under this section may—
- (a) provide for apportionments under the regulations to be made in such manner, and by reference to such factors, as may be specified or described in the regulations;
- (b) make different provision for different cases;
- (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit;
- (d) make provision having retrospective effect in relation to accounting periods beginning not more than one year before the time when the regulations are made;
and the powers conferred by this section in relation to transfers into or out of any reserve shall be exercisable in relation to both actual and assumed transfers.
- (6) In this section “*double taxation relief*” means—
- (a) relief under double taxation arrangements which takes the form of a credit allowed against corporation tax, or
- (b) unilateral relief under section 790(1) which takes that form;
and “*double taxation arrangements*” here means arrangements having effect by virtue of section 788.
##### 444BC
- (1) The Treasury may by regulations make provision modifying the operation of section 444BA in relation to cases where an insurance company has, for the purpose of preparing the documents it is required to prepare for the purposes of section 9.3 of the Prudential Sourcebook (Insurers), applied for any period an accounting method described in paragraph 52 or 53 of Schedule 9A to the Companies Act 1985 (accounting on a non-annual basis).
- (2) Subsection (5) of section 444BB applies for the purposes of this section as it applies for the purposes of that section.
##### 444BD
- (1) The Treasury may by regulations provide for section 444BA to have effect, in such cases and subject to such modifications as may be specified in the regulations, in relation to any equivalent reserves as it has effect in relation to equalisation reserves maintained by virtue of equalisation reserve rules.
- (2) For the purposes of this section a reserve is an equivalent reserve if—
- (a) it is maintained, otherwise than by virtue of equalisation reserve rules, either—
- (i) by an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (ii) by a firm which has permission under paragraph 4 of Schedule 4 to that Act (as a result of qualifying for authorisation under paragraph 2 of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (iii) in respect of any business which consists of the effecting or carrying out of contracts of insurance and which is carried on outside the United Kingdom by a company resident in the United Kingdom;
- (b) the purpose for which, or the manner in which, it is maintained is such as to make it equivalent to an equalisation reserve maintained by virtue of equalisation reserve rules.
- (3) For the purposes of this section a reserve is also an equivalent reserve if it is maintained in respect of any credit insurance business in accordance with requirements imposed either—
- (a) by or under any enactment, or
- (b) under so much of the law of any territory as secures compliance with the requirements of Article 1 of the credit insurance directive (equalisation reserves for credit insurance).
- (4) Without prejudice to the generality of subsection (1) above, the modifications made by virtue of that subsection may—
- (a) provide for section 444BA to apply in the case of an equivalent reserve only where such conditions as may be specified in the regulations are satisfied in relation to the company maintaining the reserve or in relation to transfers made into or out of it; and
- (b) contain any other provision corresponding to any provision which, in the case of a reserve maintained by virtue of equalisation reserve rules, may be made under sections 444BA to 444BC.
- (5) Subsections (4) and (5) of section 444BB shall apply for the purposes of this section as they apply for the purposes of that section.
- (6) Without prejudice to the generality of section 444BB(5), the transitional provision which by virtue of subsection (5) above may be contained in regulations under this section shall include—
- (a) provision for treating the amount of any transfers made into or out of an equivalent reserve in respect of business carried on for any specified period as increased by the amount by which they would have been increased if no transfers into the reserve had been made in respect of business carried on for an earlier period; and
- (b) provision for excluding from the rule in section 444BA(2)(b) so much of any amount transferred out of an equivalent reserve as represents, in pursuance of an apportionment made under the regulations, the transfer out of that reserve of amounts in respect of which there has been no entitlement to relief by virtue of section 444BA(2)(a).
- (7) In this section—
- “credit insurance business” means business which consists of the effecting or carrying out of contracts of insurance against risks of loss to the persons insured arising from—the insolvency of debtors of theirs, orfrom the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due;
- “*the credit insurance directive*” means Council Directive [87/343/EEC](https://www.legislation.gov.uk/european/directive/1987/0343) of 22nd June 1987 amending, as regards credit insurance and suretyship insurance, First Directive 73/239 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance; . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 458A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 461A
- (1) For the purposes of sections 461B and 461C, a “*qualifying society*” is an incorporated friendly society which—
- (a) immediately before its incorporation, was a registered friendly society to which section 461(2) did not apply,
- (b) was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies and satisfies subsection (2) below, or
- (c) was formed by the amalgamation of two or more friendly societies and satisfies subsection (3) below,
and in respect of which no direction under section 461C(5) is in force.
- (2) A society satisfies this subsection if its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Board.
- (3) If at the time of the amalgamation referred to in subsection (1)(c) above—
- (a) section 461(2) applied to none of the registered friendly societies being amalgamated (if any), and
- (b) all of the incorporated friendly societies being amalgamated (if any) were qualifying societies,
the society formed by the amalgamation satisfies this subsection.
- (4) For the purposes of this section and section 461C, any group of persons which was approved for the purposes of this section (as mentioned in subsection (2) above) by the Friendly Societies Commission immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date.
##### 461B
- (1) Subject to the following provisions of this section, a qualifying society shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.
- (2) Subsection (1) above shall not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate which is a subsidiary (within the meaning of the Friendly Societies Act 1992) of the society or of which the society has joint control (within the meaning of that Act).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) If an incorporated friendly society which is not a qualifying society makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—
- (a) any previous payment so made to him by the society, and
- (b) any earlier repayment of such sums paid by him,
the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.
- (4) In relation to an incorporated friendly society which, immediately before its incorporation, was a registered friendly society to which section 461(2) applied—
- (a) the references in subsection (3) above to sums paid to the society shall include sums paid to the registered friendly society,
- (b) the reference in subsection (3)(a) above to any payment made by the society shall include any payment made by the registered friendly society after 26 March 1974 or such later date as was specified in any direction under section 461 (7) relating to it, and
- (c) the reference in subsection (3)(b) above to any repayment shall include any repayment made by the registered friendly society.
- (5) Where a qualifying society at any time ceases by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, the company into which the society is converted shall be exempt from . . . corporation tax on its profits arising from any part of its business, other than life or endowment business, which relates to contracts made before that time.
- (6) But if during an accounting period of the company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of its business, the company shall not be exempt from corporation tax by virtue of subsection (5) above for that or any subsequent accounting period.
- (6A) Where—
- (a) at any time an insurance company acquires by way of transfer of engagements from a qualifying society any business other than life or endowment business, and
- (b) immediately before that time the society was exempt from corporation tax on profits arising from that business,
the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.
- (6B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (6A) above for that or any subsequent accounting period.
- (7) Any part of a company’s business to which an exemption under subsection (5) or (6A) above relates shall be treated for the purposes of the Corporation Tax Acts as a separate business from any other business carried on by the company.
- (8) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (5) or (6A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (9) Regulations under subsection (8) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 461C
- (1) Subject to subsection (2) below, subsections (3) and (4) below apply where a qualifying society—
- (a) begins to carry on business other than life or endowment business, or
- (b) in the opinion of the Board, begins to carry on business other than life or endowment business on an enlarged scale or of a new character.
- (2) Subsections (3) and (4) below do not apply if—
- (a) the society’s business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of section 461 or 461A by the Board, or
- (b) the society’s rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as is authorised for the purposes of section 461.
- (3) If it appears to the Board, having regard to the restrictions imposed by section 461 on registered friendly societies registered after 31st May 1973, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the society under subsection (4) below.
- (4) A direction under this subsection is that (and has the effect that) the society to which it is given shall cease to be a qualifying society as from the date of the direction.
- (5) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (1) above;
- (b) subsections (3) and (4) above do not apply to it by reason of subsection (2) above; or
- (c) the direction is not necessary for the protection of the revenue.
##### 461D
- (1) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was exempt from corporation tax on profits arising from that business,
the transferee is so exempt after that time.
- (2) But if during an accounting period of the transferee there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on that business, the transferee shall not be exempt from corporation tax by virtue of subsection (1) above for that or any subsequent accounting period.
- (3) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was not exempt from corporation tax on profits arising from that business,
the transferee is not so exempt after that time.
- (4) The Treasury may by regulations provide that, where any business of a friendly society is exempt from corporation tax by virtue of subsection (1) above, or not so exempt by virtue of subsection (3) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (5) Regulations under subsection (4) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 462A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of business: election for transferee to pay tax of transferor
##### 465A
- (1) This section applies where any assets of a branch of a registered friendly society have been identified in a scheme under section 6(5) of the Friendly Societies Act 1992 (property, rights etc. excluded from transfer to the society on its incorporation).
- (2) In relation to any time after the incorporation of the society, the assets shall be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any tax liability arising in respect of them shall be a liability of the society rather than of the branch).
- (3) Where, by virtue of this section, tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.
##### 468AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468B
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#### Transfer schemes transferring part of business: reduction in income of transferee
##### 468C
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##### 468D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modification of s. 444BA for mutual or overseas business and for non-resident companies.
##### 468EE
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##### 468F
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##### 468G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions of authorised unit trusts: general
##### 468H
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##### 468I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Dividend and foreign income distributions
##### 468J
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##### 468K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Interest distributions
##### 468L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of relief under section 257A.
##### 468M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468N
- (1) Subsection (2) below applies where—
- (a) an interest distribution is made for a distribution period to a unit holder; and
- (b) the gross income entered in the distribution accounts for the purposes of computing the total amount available for distribution to unit holders does not derive from eligible income entirely.
- (2) Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the relevant amount of the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
- (3) Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
- (4) This is how to calculate the relevant amount of the interest distribution—
$$R=AxBC$Where—R = the relevant amount;A = the amount of the interest distribution before deduction of tax to the unit holder in question;B = such amount of the gross income as derives from eligible income;C = the amount of the gross income.$
- (5) In subsection (4) above the references to the gross income are references to the gross income entered as mentioned in subsection (1)(b) above.
##### 468O
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##### 468P
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##### 468PA
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##### 468PB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions to corporate unit holder
##### 468Q
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##### 468R
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##### 469A
- (1) The Tax Acts shall have effect in relation to any common investment fund established under section 42 of the Administration of Justice Act 1982 (common investment funds for money paid into court) as if—
- (a) the fund were an authorised unit trust;
- (b) the person who is for the time being the investment manager of the fund were the trustee of that authorised unit trust; and
- (c) the persons with qualifying interests were the unit holders in that authorised unit trust.
- (1A) For the purposes of subsection (1)(c) above, the persons with qualifying interests are—
- (a) in relation to shares in the fund held by the Accountant General, the persons whose interests entitle them, as against him, to share in the fund’s investments;
- (b) in relation to shares in the fund held by any other person authorised by the Lord Chancellor to hold such shares on behalf of others (an “authorised person”)—
- (i) if there are persons whose interests entitle them, as against the authorised person, to share in the fund’s investments, those persons;
- (ii) if not, the authorised person;
- (c) in relation to shares in the fund held by persons authorised by the Lord Chancellor to hold such shares on their own behalf, those persons.
- (2) In this section “*the Accountant General*” means . . . the Accountant General of the Supreme Court of Judicature in England and Wales or the Accountant General of the Supreme Court of Judicature of Northern Ireland.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 472A
- (1) This section applies in relation to securities—
- (a) which are held by a company carrying on a banking business, an insurance business or a business consisting wholly or partly in dealing in securities; and
- (b) which are such that a profit on their sale would form part of the trading profits of that business.
- (2) Profits and losses arising from such securities that in accordance with generally accepted accounting practice are—
- (a) calculated by reference to the fair value of the securities, and
- (b) recognised in that company's statement of recognised gains and losses or statement of changes in equity,
shall be brought into account in computing the profits or losses of a business in accordance with the provisions of this Act applicable to Case I of Schedule D.
- (3) Subsection (2) does not apply—
- (a) to an amount to the extent that it derives from or otherwise relates to an amount brought into account under that subsection in an earlier period of account, or
- (b) to an amount recognised for accounting purposes by way of correction of a fundamental error.
- (4) In this section, “securities”—
- (a) includes shares and any rights, interests or options that by virtue of section 99, 135(5) or 136(5) of the Taxation of Chargeable Gains Act 1992 are treated as shares for the purposes of sections 126 to 136 of that Act; but
- (b) does not include a loan relationship (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996).
##### 477A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . Dividends or interest payable in respect of shares in, or deposits with or loans to, a building society shall be dealt with for the purposes of corporation tax as follows—
- (a) to the extent that it would not otherwise fall to be so regarded, liability to pay the dividends or interest shall be treated for the purposes of Chapter II of Part IV of the Finance Act 1996 as a liability arising under a loan relationship of the building society;
- (aa) if the dividends or interest are payable to a company, then, to the extent that they would not otherwise fall to be so regarded, they shall be treated for those purposes as payable to that company in pursuance of a right arising under a loan relationship of that company;
- (b) no part of any such dividends or interest . . . shall be treated as a distribution of the society or as franked investment income of any company resident in the United Kingdom.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subsection (3)(a) above shall apply to any interest paid by the society under a certified SAYE savings arrangement as if it were a dividend on a share in the society.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) In this section “*dividend*” includes any distribution (whether or not described as a dividend).
- (10) In this section—
- “*certified SAYE savings arrangement*” has the meaning given by section 703 of ITTOIA 2005
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 477B
- (1) In computing for the purposes of corporation tax the income of a building society from the trade carried on by it, there shall be allowed as a deduction, if subsection (2) below applies, the incidental costs of obtaining finance by means of issuing shares in the society which are qualifying shares.
- (1A) A deduction shall not be allowed by virtue of subsection (1) above to the extent that the costs in question fall to be brought into account as debits for the purposes of Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships).
- (2) This subsection applies if any amount payable in respect of the shares by way of dividend or interest is deductible in computing for the purposes of corporation tax the income of the society from the trade carried on by it.
- (3) In subsection (1) above, “*the incidental costs of obtaining finance*” means expenditure on fees, commissions, advertising, printing and other incidental matters (but not including stamp duty), being expenditure wholly and exclusively incurred for the purpose of obtaining the finance (whether or not it is in fact obtained), or of providing security for it or of repaying it.
- (4) This section shall not be construed as affording relief—
- (a) for any sums paid in consequence of, or for obtaining protection against, losses resulting from changes in the rate of exchange between different currencies, or
- (b) for the cost of repaying qualifying shares so far as attributable to their being repayable at a premium or to their having been issued at a discount.
- (5) In this section—
- “*dividend*” has the same meaning as in section 477A, and
- “*qualifying share*” has the same meaning as in section 117(4) of the 1992 Act.
##### 480A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 480B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Elections as to transfer of relief under section 257A or 257AB.
##### 480C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation in respect of other business.
##### 482A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### PETROLEUM EXTRACTION ACTIVITIES
##### 494AA
- (1) This section applies where—
- (a) a company (“*the seller*”) carrying on a trade has disposed of an asset which was used for the purposes of that trade, or an interest in such an asset;
- (b) the asset is used, under a lease, by the seller or a company associated with the seller (“*the lessee*”) for the purposes of a ring fence trade carried on by the lessee; and
- (c) the lessee uses the asset before the end of the period of two years beginning with the disposal.
- (2) Subject to subsection (4) below, subsection (3) below applies to so much (if any) of the expenditure incurred by the lessee under the lease as—
- (a) falls, in accordance with generally accepted accounting practice, to be treated in the accounts of the lessee as a finance charge;. . . or
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) falls, if the case is one where the lease is a long funding operating lease, to be deductible in computing the profits of the lessee for the purposes of corporation tax (after first making against any such expenditure any reductions falling to be made by virtue of section 502K).
- (3) The expenditure shall not be allowable in computing for the purposes of Schedule D the profits of the ring fence trade.
- (4) Expenditure shall not be disallowed by virtue of subsection (3) above to the extent that the disposal referred to in subsection (1) above is made for a consideration which—
- (a) is used to meet expenditure incurred by the seller in carrying on oil extraction activities or in acquiring oil rights otherwise than from a company associated with the seller; or
- (b) is appropriated to meeting expenditure to be so incurred by the seller.
- (5) Where any expenditure—
- (a) would apart from subsection (3) above be allowable in computing for the purposes of Schedule D the profits of the ring fence trade for an accounting period, but
- (b) by virtue of that subsection is not so allowable,
that expenditure shall be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 as if it were a non-trading debit in respect of a loan relationship of the lessee for that accounting period.
- (6) In this section —
- “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act);
- “*lease*”, in relation to an asset, has the same meaning as in sections 781 to 784.
##### 494A
- (1) In section 403(3) (availability of charges, Schedule A losses and management expenses for surrender as group relief) the reference to the gross profits of the surrendering company for an accounting period does not include the company’s relevant ring fence profits for that period.
- (2) If for that period—
- (a) there are no charges on income paid by the company that are allowable under section 338, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
all the company’s ring fence profits are relevant ring fence profits.
- (3) In any other case the company’s relevant ring fence profits are so much of its ring fence profits as exceeds the amount of the charges on income paid by the company as—
- (a) are allowable under section 338 for that period, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 496A
Schedule 19B to this Act (exploration expenditure supplement) shall have effect.
##### 496B
Schedule 19C to this Act (ring fence expenditure supplement) shall have effect.
#### Taxation in respect of other business: incorporated friendly societies etc.
##### 501A
- (1) Where in any accounting period beginning on or after 17th April 2002 a company carries on a ring fence trade, a sum equal to 20 per cent of its adjusted ring fence profits for that period shall be charged on the company as if it were an amount of corporation tax chargeable on the company.
- (2) A company’s adjusted ring fence profits for an accounting period are the amount which, on the assumption mentioned in subsection (3) below, would be determined for that period (in accordance with this Chapter) as the profits of the company’s ring fence trade chargeable to corporation tax.
- (3) The assumption is that financing costs are left out of account in computing—
- (a) the amount of the profits or loss of any ring fence trade of the company’s for each accounting period beginning on or after 17th April 2002; and
- (b) where for any such period the whole or part of any loss relief is surrendered to the company in accordance with section 492(8), the amount of that relief or, as the case may be, that part.
- (4) For the purposes of this section, “*financing costs*” means the costs of debt finance.
- (5) In calculating the costs of debt finance for an accounting period the matters to be taken into account include—
- (a) any costs giving rise to debits in respect of debtor relationships of the company under Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships) , other than debits in respect of exchange losses from such relationships (see section 103(1A) and (1B) of that Act);
- (b) any exchange gain or loss from a debtor relationship, within the meaning of that Chapter (see section 103(1A) and (1B) of that Act), in relation to debt finance;
- (c) any credit or debit falling to be brought into account under Schedule 26 to the Finance Act 2002 (derivative contracts) in relation to debt finance;
- (d) the financing cost implicit in a payment under a finance lease;
- (dd) where the company is the lessee under a long funding operating lease, the amount deductible in respect of payments under the lease in computing the profits of the lessee for the purposes of corporation tax (after first making against any such amount any reductions falling to be made by virtue of section 502K); and
- (e) any other costs arising from what would be considered in accordance with generally accepted accounting practice to be a financing transaction.
- (6) Where an amount representing the whole or part of a payment falling to be made by a company—
- (a) falls (or would fall) to be treated as a finance charge under a finance lease for the purposes of accounts relating to that company and one or more other companies and prepared in accordance with generally accepted accounting practice, but
- (b) is not so treated in the accounts of the company,
the amount shall be treated for the purposes of this section as financing costs falling within subsection (5)(d) above.
- (7) If—
- (a) in computing the adjusted ring fence profits of a company for an accounting period, an amount falls to be left out of account by virtue of subsection (5)(d) above, but
- (b) the whole or any part of that amount is repaid,
the repayment shall also be left out of account in computing the adjusted ring fence profits of the company for any accounting period.
- (8) In this section “*finance lease*” means any arrangements—
- (a) which provide for an asset to be leased or otherwise made available by a person to another person (“*the lessee*”), and
- (b) which, under generally accepted accounting practice,—
- (i) fall (or would fall) to be treated, in the accounts of the lessee or a person connected with the lessee, as a finance lease or a loan, or
- (ii) are comprised in arrangements which fall (or would fall) to be so treated.
- (9) For the purposes of applying subsection (8)(b) above, the lessee and any person connected with the lessee are to be treated as being companies which are incorporated in a part of the United Kingdom.
- (10) In this section “*accounts*”, in relation to a company, includes any accounts which—
- (a) relate to two or more companies of which that company is one, and
- (b) are drawn up in accordance with generally accepted accounting practice.
- (11) In this section “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act).
##### 501B
- (1) Subject to subsection (3) below, the provisions of section 501A(1) relating to the charging of a sum as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Acts, and to any necessary modifications, all enactments applying generally to corporation tax, including—
- (a) those relating to returns of information and the supply of accounts, statements and reports;
- (b) those relating to the assessing, collecting and receiving of corporation tax;
- (c) those conferring or regulating a right of appeal; and
- (d) those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
- (2) Accordingly (but without prejudice to subsection (1) above) the Management Act shall have effect as if any reference to corporation tax included a reference to a sum chargeable under section 501A(1) as if it were an amount of corporation tax.
- (3) In any regulations made under section 32 of the Finance Act 1998 (as at 17th April 2002, the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations 1999)—
- (a) references to corporation tax do not include a reference to a sum chargeable on a company under section 501A(1) as if it were corporation tax; and
- (b) references to profits charged to corporation tax do not include a reference to adjusted ring fence profits, within the meaning of section 501A(1).
- (4) In this section “*the Taxes Acts*” has the same meaning as in the Management Act.
### Chapter 5A — Special rules for long funding leases of plant or machinery: corporation tax
### Introductory
##### 502A
This Chapter has effect for the purposes of corporation tax only.
### Lessors under long funding finance leases
##### 502B
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessor of any plant or machinery under a long funding finance lease.
- (2) The amount to be brought into account as the lessor's taxable income from the lease for the period of account is the amount of the rental earnings in respect of the lease for the period of account.
- (3) The “rental earnings” for any period is the amount which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment for that period in respect of the lease where it meets the finance lease test.
- (4) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan in the accounts in question, so much of the rentals under the lease as fall (or would fall) to be treated as interest are to be treated for the purposes of this section as rental earnings.
##### 502C
- (1) This section applies for determining for the purposes of corporation tax the profits of a company which is or has been the lessor under a long funding finance lease.
- (2) This section has effect where a profit or loss (whether of an income or capital nature)—
- (a) arises to the company in connection with the lease, and
- (b) in accordance with generally accepted accounting practice falls to be recognised for accounting purposes in a period of account, but
- (c) would not, apart from this section, be brought into account in computing the profits of the company for the purposes of corporation tax.
- (3) The profit or loss is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (4) Any reference in this section to an amount falling to be recognised for accounting purposes in a period of account is a reference to an amount falling to be recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in computing the company's profits or losses for that period.
##### 502D
- (1) This section applies for determining the liability to corporation tax of a company which is or has been the lessor under a long funding finance lease.
- (2) Where—
- (a) the lease terminates, and
- (b) a sum calculated by reference to the termination value is paid to the lessee,
no deduction in respect of the sum paid to the lessee is allowed in computing the profits of the company.
- (3) This section does not prevent a deduction in respect of a sum to the extent that the sum is brought into account in determining the company's rental earnings.
### Lessors under long funding operating leases
##### 502E
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account—
- (a) for the whole of which, or
- (b) for any part of which,
the company is the lessor of any plant or machinery under a long funding operating lease.
- (2) A deduction is allowed in computing the profits of the company for the period of account.
- (3) The amount of the deduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) if the only use of the plant or machinery by the lessor has been the leasing of it under the long funding operating lease as a qualifying activity, cost;
- (b) if the last previous use of the plant or machinery by the lessor was the leasing of it under another long funding operating lease as a qualifying activity, market value;
- (c) if the last previous use of the plant or machinery by the lessor was the leasing of it under a long funding finance lease as a qualifying activity, the recognised value;
- (d) if the last previous use of the plant or machinery by the lessor was for the purposes of a qualifying activity other than leasing under a long funding lease, the lower of cost and market value;
- (e) if the lessor owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but—
- (i) the plant or machinery is brought into use by the lessor for the purposes of a qualifying activity on or after 1st April 2006, and
- (ii) that qualifying activity is the leasing of the plant or machinery under the long funding operating lease,
the relevant value is the lower of first use market value and first use amortised value.
- (5) In subsection (4) above—
- “*cost*” means the amount of the expenditure incurred by the lessor on the provision of the plant or machinery;
- “*first use amortised value*” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity, on the assumption that—the cost of acquiring the plant or machinery had been written off on a straight line basis over the remaining useful economic life of the plant or machinery, andany further capital expenditure incurred had been written off on a straight line basis over so much of the remaining economic life of the plant or machinery as remains at the time when the expenditure is incurred;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity;
- “*market value*” means the market value of the plant or machinery at the commencement of the term of the long funding operating lease;
- “*recognised value*” means the value at which the plant or machinery is recognised in the books or other financial records of the lessor at the commencement of the long funding operating lease.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(e) above, would have been) expected to be the residual value of the plant or machinery,
to find the expected gross reduction in value over the term of the lease.
- (7) Apportion the amount of that expected gross reduction in value to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the deduction for any period of account is the amount so apportioned to that period.
##### 502F
- (1) This section applies if in any period of account—
- (a) a company is the lessor of any plant or machinery under a long funding operating lease,
- (b) the company incurs capital expenditure in relation to the plant or machinery, and
- (c) that capital expenditure (the “additional expenditure”) is not reflected in the market value of the plant or machinery at the commencement of the term of the lease.
- (2) In a case falling within section 502E(4)(e) above, subsection (1)(c) above has effect as if the reference to the commencement of the term of the lease were a reference to the time when the plant or machinery is first brought into use by the lessor for the purposes of the qualifying activity.
- (3) Where this section applies, an additional deduction is allowed in computing the profits of the company for each post-expenditure period of account in which the company is the lessor of the plant or machinery under the lease.
- (4) The amount of the deduction for any such period of account is to be determined as follows.
- (5) Find ARV, CRV, PRV, and TRV where—
- “ARV” is the amount which, at the time when the additional expenditure is incurred, is expected to be the residual value of the plant or machinery;
- “CRV” is the amount which, at the commencement of the term of the lease, is expected to be the residual value of the plant or machinery;
- “PRV” is the sum of any amounts that fell to be taken into account as RRV (see subsection (6)) in the application of this section in relation to any previous additional expenditure incurred by the company in relation to the leased plant or machinery;
- “TRV” is the total of CRV and PRV.
- (6) Find RRV, where—
- (a) if ARV exceeds TRV, RRV is the portion of the excess that is a result of the additional expenditure, but
- (b) if ARV does not exceed TRV, RRV is nil.
- (7) From—
- (a) the amount of the additional expenditure,
subtract
- (b) RRV,
to find the expected partial reduction in value over the remainder of the term of the lease.
- (8) Apportion the amount of that expected partial reduction in value to each post-expenditure period of account in which any part of the term of the lease falls.
- (9) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each post-expenditure period of account.
- (10) The amount of the additional deduction for any period of account is the amount so apportioned to that period.
- (11) In this section “*post-expenditure period of account*” means any period of account ending after the incurring of the additional expenditure.
##### 502G
- (1) This section applies for determining the liability to corporation tax of a company which is the lessor immediately before the termination of a long funding operating lease.
- (2) Step 1 is to find—
- (a) the termination amount (TA);
- (b) the total of any sums paid to the lessee that are calculated by reference to the termination value (LP).
- (3) Step 2 is to find—
- (a) the relevant value for the purposes of section 502E(6)(a) (RV);
- (b) the total of the deductions allowable under section 502E for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD1);
- (c) the amount, if any, (ERV) by which RV exceeds TD1.
- (4) Step 3 is to find—
- (a) the total of any amounts of capital expenditure incurred by the company which constitute additional expenditure for the purposes of section 502F in the case of the lease (TAE);
- (b) the total of any deductions allowable under section 502F for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD2);
- (c) the amount, if any, (EAE) by which TAE exceeds TD2.
- (5) Step 4 is to find the total of ERV and EAE (T).
- (6) If (TA – LP) exceeds T, treat a profit of an amount equal to the excess as arising to the company in the period of account in which the lease terminates.
- (7) If T exceeds (TA – LP), treat a loss of an amount equal to the excess as arising to the company in that period of account.
- (8) A profit or loss treated as arising to the company under subsection (6) or (7) above is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (9) In computing the profits of the company, no deduction is allowed in respect of any sums paid to the lessee that are calculated by reference to the termination value.
### Lessors under long funding finance or operating leases: avoidance etc
#### Qualifying policies.
##### 502GA
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if the following condition is met.
- (2) The condition is that any part of the expenditure incurred by the company on the acquisition of the plant or machinery for leasing under the lease—
- (a) is (apart from those sections) allowable as a deduction in calculating its profits or losses for the purposes of corporation tax, and
- (b) is so allowable as a result of the plant or machinery forming part of its trading stock.
- (3) For the purposes of this section the cases in which expenditure incurred by a company on the acquisition of any plant or machinery for leasing under a lease is allowable as such a deduction include any case where—
- (a) the company becomes entitled to the deduction at any time after the expenditure is incurred, and
- (b) the deduction arises as a result of the plant or machinery forming part of its trading stock at that time.
- (4) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) the condition in subsection (2) is met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (5) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (4).
##### 502GB
- (1) This section applies if—
- (a) a company is the lessee of any plant or machinery under a lease (“lease A”) that is not a long funding lease,
- (b) it enters into a lease (“lease B”) of any of that plant or machinery (as lessor), and
- (c) lease B is a long funding lease.
- (2) Sections 502B to 502G do not apply in relation to lease B.
- (3) If by virtue of section 70H of the Capital Allowances Act (tax return by lessee treating lease as long funding lease) lease A becomes a long funding lease (and does not cease to be such a lease), treat this section as never having applied in relation to lease B.
##### 502GC
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if conditions A to C are met.
- (2) Condition A is that the long funding lease forms part of any arrangement entered into by the company which includes one or more other transactions (whether the arrangement is entered into before or after or at the inception of the lease).
- (3) Condition B is that the main purpose, or one of the main purposes, of the arrangement is to secure that, over the relevant period, there would be a substantial difference between—
- (a) the total amount of the amounts under the arrangement which are, in accordance with generally accepted accounting practice, recognised in determining the company's profit or loss for any period or taken into account in calculating the amounts which are so recognised, and
- (b) the total amount of the amounts under the arrangement which are taken into account in calculating the profits or losses of the company for the purposes of corporation tax.
- (4) For the purposes of condition B “*the relevant period*” means the period which begins with the inception of the lease and ends with the end of the term of the lease.
- (5) Condition C is that the difference would be attributable (wholly or partly) to the application of any of sections 502B to 502G in relation to the company by reference to the plant or machinery under the lease.
- (6) The reference in this section to an amount being recognised in determining a company's profit or loss for a period is to an amount being recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in calculating the company's profits and losses for that period.
- (7) For the purposes of this section it does not matter whether the parties to any transaction which forms part of the arrangement differ from the parties to any of the other transactions.
- (8) For the purposes of this section the cases in which two or more transactions are to be taken as forming part of an arrangement include any case in which it would be reasonable to assume that one or more of them—
- (a) would not have been entered into independently of the other or others, or
- (b) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
- (9) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) conditions A to C are met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (10) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (9).
##### 502GD
- (1) If a company is or has been a lessor under a long funding lease of a film, sections 502B to 502G do not apply in respect of the lease.
- (2) “*Film*” has the same meaning as in Part 15 of CTA 2009 (see section 1181 of that Act).
### Insurance company as lessor
##### 502H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Lessees under long funding finance leases
#### Elections as to transfer of relief under section 257A or 257AB.
##### 502I
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding finance lease.
- (2) In calculating the company's profits for the period of account,—
- (a) the amount deducted in respect of amounts payable under the lease,
must not exceed
- (b) the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company's accounts as finance charges in respect of the lease.
- (3) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, subsection (2) above applies as if the lease were one which, under generally accepted accounting practice, fell to be treated as a finance lease.
##### 502J
- (1) This section applies where—
- (a) a company is or has been the lessee under a long funding finance lease, and
- (b) in connection with the termination of the lease, a payment calculated by reference to the termination value falls to be made to the company.
- (2) The payment is not to be brought into account in determining for the purposes of corporation tax the profits of the company for any period of account.
- (3) Subsection (2) above does not affect the amount of any disposal value that falls to be brought into account by the company under the Capital Allowances Act.
### Lessees under long funding operating leases
##### 502K
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding operating lease.
- (2) The deductions that may be allowed in computing the profits of the company for the period of account are to be reduced in accordance with the following provisions of this section.
- (3) The amount of the reduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) the market value of the plant or machinery at the commencement of the term of the lease, unless paragraph (b) below applies;
- (b) if the lessee—
- (i) has the use of the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but
- (ii) brings the plant or machinery into use for the purposes of a qualifying activity on or after 1st April 2006,
the lower of first use market value and first use amortised market value.
- (5) In subsection (4) above—
- “*first use amortised market value*” means the value that the plant or machinery would have—at the time when it is first brought into use for the purposes of the qualifying activity, buton the assumption that the market value of the plant or machinery at the commencement of the term of the lease had been written off on a straight line basis over the remaining useful economic life of the plant or machinery;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(b) above, would have been) expected to be the market value of the plant or machinery at the end of the term of the lease,
to find the expected gross reduction over the term of the lease.
- (7) Apportion the amount of that expected gross reduction to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the reduction for any period of account is the amount so apportioned to that period.
### Interpretation of Chapter
##### 502L
- (1) This section has effect for the interpretation of this Chapter.
- (2) In this Chapter—
- “*qualifying activity*” has the same meaning as in Part 2 of the Capital Allowances Act;
- “*residual value*”, in relation to any plant or machinery leased under a long funding operating lease, means—the estimated market value of the plant or machinery on a disposal at the end of the term of the lease,lessthe estimated costs of that disposal.
- (3) Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to—
- (a) the sum being apportioned between each of the periods of account in which any part of the writing-off period falls,
- (b) that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and
- (c) the sum being written off accordingly.
- (4) Chapter 6A of Part 2 of the Capital Allowances Act (interpretation of provisions about long funding leases) applies in relation to this Chapter as it applies in relation to that Part.
##### 504A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Eligibility for relief.
#### Assets of branch of registered friendly society to be treated as assets of society after incorporation.
##### 506A
- (1) This section applies to the following transactions—
- (a) the sale or letting of property by a charitable company to a substantial donor,
- (b) the sale or letting of property to a charitable company by a substantial donor,
- (c) the provision of services by a charitable company to a substantial donor,
- (d) the provision of services to a charitable company by a substantial donor,
- (e) an exchange of property between a charitable company and a substantial donor,
- (f) the provision of financial assistance by a charitable company to a substantial donor,
- (g) the provision of financial assistance to a charitable company by a substantial donor, and
- (h) investment by a charitable company in the business of a substantial donor.
- (2) For the purposes of this section a person is a substantial donor to a charitable company in respect of an accounting period if—
- (a) the charitable company receives relievable gifts of at least £25,000 from him in a period of 12 months in which the accounting period wholly or partly falls, or
- (b) the charitable company receives relievable gifts of at least £100,000 from him in a period of six years in which the accounting period wholly or partly falls;
and if a person is a substantial donor to a charitable company in respect of an accounting period by virtue of paragraph (a) or (b), he is a substantial donor to the charitable company in respect of the following five accounting periods.
- (3) A payment made by a charitable company to a substantial donor in the course of or for the purposes of a transaction to which this section applies shall be treated for the purposes of section 505 as non-charitable expenditure.
- (4) If the terms of a transaction to which this section applies are less beneficial to the charitable company than terms which might be expected in a transaction at arm's length, the charitable company shall be treated for the purposes of section 505 as incurring non-charitable expenditure equal to that amount which the Commissioners for Her Majesty's Revenue and Customs determine as the cost to the charitable company of the difference in terms.
- (5) A payment by a charitable company of remuneration to a substantial donor shall be treated for the purposes of section 505 as non-charitable expenditure unless it is remuneration, for services as a trustee, which is approved by—
- (a) the Charity Commission,
- (b) another body with responsibility for regulating charities by virtue of legislation having effect in respect of any Part of the United Kingdom, or
- (c) a court.
##### 506B
- (1) Section 506A shall not apply to a transaction within section 506A(1)(b) or (d) if the Commissioners for Her Majesty's Revenue and Customs determine that the transaction—
- (a) takes place in the course of a business carried on by the substantial donor,
- (b) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (c) is not part of an arrangement for the avoidance of any tax.
- (2) Section 506A shall not apply to the provision of services to a substantial donor if the Commissioners determine that the services are provided—
- (a) in the course of the actual carrying out of a primary purpose of the charitable company, and
- (b) on terms which are no more beneficial to the substantial donor than those on which services are provided to others.
- (3) Section 506A shall not apply to the provision of financial assistance to a charitable company by a substantial donor if the Commissioners determine that the assistance—
- (a) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (b) is not part of an arrangement for the avoidance of any tax.
- (4) Section 506A shall not apply to investment by a charitable company in the business of a substantial donor where the investment takes the form of the purchase of shares or securities listed on a recognised stock exchange.
- (5) A disposal at an undervalue in respect of which relief is available under section 587B of this Act or section 431 of ITA 2007 (gifts of shares, securities and real property to charities etc) shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (6) A disposal at an undervalue to which section 257(2) of the 1992 Act (gifts of chargeable assets) applies shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (7) In the application of section 506A payments by a charitable company, or benefits arising to a substantial donor from a transaction, shall be disregarded in so far as they relate to a donation by the donor, and—
- (a) if the donation is made by a company, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 339 because of subsection (3B)(b) of that section (restrictions on associated benefits), or
- (b) if the donation is made by an individual, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 416 of ITA 2007 because of subsection (7)(b) of that section (restrictions on associated benefits).
- (8) A company which is wholly owned by a charity within the meaning of section 339(7AB) shall not be treated as a substantial donor in relation to a charitable company which owns it (or any part of it).
- (9) A registered social landlord or housing association shall not be treated as a substantial donor in relation to a charitable company with which it is connected; and for that purpose—
- (a) “*registered social landlord or housing association*” means a body entered on a register maintained under—
- (i) section 1 of the Housing Act 1996,
- (ii) section 57 of the Housing (Scotland) Act 2001, or
- (iii) Article 14 of the Housing (Northern Ireland) Order 1992, and
- (b) a body and a charitable company are connected if (and only if)—
- (i) the one is wholly owned, or subject to control, by the other, or
- (ii) both are wholly owned, or subject to control, by the same person.
##### 506C
- (1) A gift is “*relievable*” for the purposes of section 506A(2) if relief is available in respect of it under—
- (a) section 83A,
- (b) section 339,
- (c) sections 587B and 587C,
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) section 257 of the 1992 Act (gifts of chargeable assets),
- (f) section 63 of the Capital Allowances Act (gifts of plant and machinery),
- (g) sections 713 to 715 of ITEPA 2003 (payroll giving),
- (h) section 108 of ITTOIA 2005 (gifts of trading stock), . . .
- (i) sections 628 and 630 of ITTOIA 2005 (gifts from settlor-interested trusts), or
- (j) Chapters 2 and 3 of Part 8 of ITA 2007 (gift aid and gifts of shares, securities and real property).
- (2) A charitable company is treated as incurring expenditure in accordance with section 506A(4) at such time (or times) as the Commissioners determine.
- (3) Section 506A applies to a transaction entered into in an accounting period with a person who is a substantial donor in respect of that period, even if it was not until after the transaction was entered into that he first satisfied the definition of “substantial donor” in respect of that period.
- (4) Either or both of subsections (3) and (4) of section 506A may be applied to a single transaction; but any amount of non-charitable expenditure which a charitable company is treated as incurring under section 506A(3) in respect of a transaction shall be deducted from any amount which it would otherwise be treated as incurring under section 506A(4) in respect of the transaction.
- (5) A charitable company and any other charities with which it is connected are to be treated as a single charitable company for the purposes of section 506A and 506B and this section; and for this purpose “*connected*” means connected in a matter relating to the structure, administration or control of a charity.
- (6) Where remuneration is paid otherwise than in money, section 506A(5) shall apply as to a payment in money of the amount that would, under Part 3 of ITEPA 2003, be the cash equivalent of the remuneration as a benefit.
- (7) In sections 506A and 506B and this section—
- (a) a reference to a substantial donor or other person includes a reference to a person connected with him within the meaning of section 839,
- (b) “*financial assistance*” includes, in particular—
- (i) the provision of a loan, guarantee or indemnity, and
- (ii) entering into alternative finance arrangements within the meaning of section 46 of the Finance Act 2005, and
- (c) a reference to a gift of a specified amount includes a reference to a non-monetary gift of that value.
- (8) On an appeal against an assessment the Special Commissioners may review a decision of the Commissioners in connection with section 506A.
- (9) The Treasury may by regulations vary a sum, or a period of time, specified in section 506A(2).
#### Eligibility for relief.
##### 508A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 508B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 510A
- (1) In this section “*grouping*” means a European Economic Interest Grouping formed in pursuance of Council Regulation [(EEC) No. 2137/85](https://www.legislation.gov.uk/european/regulation/1985/2137) of 25th July 1985, whether registered in Great Britain, in Northern Ireland, or elsewhere.
- (2) Subject to the following provisions of this section, for the purposes of charging corporation tax a grouping shall be regarded as acting as the agent of its members.
- (3) In accordance with subsection (2) above—
- (a) for the purposes mentioned in that subsection the activities of the grouping shall be regarded as those of its members acting jointly and each member shall be regarded as having a share of its property, rights and liabilities; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but paragraph (a) above is subject to subsection (6A) below.
- (4) Subject to subsection (5) below, for the purposes of this section a member’s share of any property, rights or liabilities of a grouping shall be determined in accordance with the contract under which the grouping is established.
- (5) Where the contract does not make provision as to the shares of members in the property, rights or liabilities in question a member’s share shall be determined by reference to the share of the profits of the grouping to which he is entitled under the contract (and if the contract makes no provision as to that, the members shall be regarded as having equal shares).
- (6) . . . Where any trade or profession is carried on by a grouping it shall be regarded for the purposes of charging corporation tax as carried on in partnership by the members of the grouping.
- (6A) Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships) shall have effect in relation to a grouping as it has effect in relation to a partnership (see in particular section 87A of, and paragraphs 19 and 20 of Schedule 9 to, that Act).
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 519A
- (1) A health service body shall be exempt from corporation tax.
- (2) In this section “*health service body*” means—
- (a) a Strategic Health Authority established under section 13 of the National Health Service Act 2006. . . . . . ;
- (aa) a Special Health Authority established under section 28 of that Act or section 22 of the National Health Service (Wales) Act 2006;
- (ab) a Primary Care Trust;
- (aba) a Local Health Board;
- (b) a National Health Service trust established under section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006;
- (bb) an NHS foundation trust
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) a Health Board or Special Health Board, the Common Services Agency for the Scottish Health Service and a National Health Service trust respectively constituted under sections 2, 10 and 12A of the National Health Service (Scotland) Act 1978;
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (g) the Scottish Dental Practice Board; . . .
- (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (i) a Health and Social Services Board and the Northern Ireland Central Services Agency for the Health and Social Services established under Articles 16 and 26 respectively of the Health and Personal Social Services (Northern Ireland) Order 1972;
- (j) a special health and social services agency established under the Health and Personal Social Services (Special Agencies) (Northern Ireland) Order 1990; and
- (k) a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991.
- (3) The Treasury may by order disapply subsection (1) in relation to a specified activity, or class of activity, of an NHS foundation trust.
- (4) An order under subsection (3) shall make provision for determining the amount of the profits relating to an activity that are to be charged to corporation tax as a result of the disapplication of subsection (1).
- (5) An order under subsection (3) may, in particular—
- (a) make provision for disregarding profits of less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (b) make provision for disregarding a specified part of profits in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (c) make provision for disregarding all or part of profits relating to activity in respect of which receipts or turnover (as defined by the order) are less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period.
- (6) An order under subsection (3)—
- (a) may apply, with or without modification, a provision of the Tax Acts,
- (b) may disapply a provision of the Tax Acts,
- (c) may make provision similar to a provision of the Tax Acts, and
- (d) may make provision generally or in relation to a specified body or class of bodies.
- (7) The Treasury may make an order under subsection (3) only—
- (a) in relation to an activity or class of activity that appears to the Treasury to be of a commercial nature,
- (b) where it appears to the Treasury to be expedient for the purpose of avoiding, removing or reducing differences between—
- (i) the fiscal treatment of the body undertaking the activity, and
- (ii) the fiscal treatment of another body or class of body which is of a commercial nature and which undertakes or might undertake the same or a similar activity, and
- (c) if a draft has been laid before, and approved by resolution of, the House of Commons.
- (8) An activity authorised under section 43(1) of the National Health Service Act 2006 shall not be treated as an activity of a commercial nature for the purposes of subsection (7)(a).
#### Transfer of relief under section 257A where relief exceeds income or 257AB.
#### Authorised unit trusts.
#### Certified unit trusts: corporation tax.
#### Dividends paid to investment trusts.
#### Relevant deposits: computation of tax on interest.
### Designs
##### 537A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 537B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Determination of reduced rate for building societies and composite rate for banks etc.
##### 539ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 539A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of oil extraction activities etc. for tax purposes.
##### 546A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 547A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 548A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sale and lease-back.
##### 548B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 551A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 552ZA
- (1) This section supplements section 552 and shall be construed as one with it.
- (2) Where the obligations under any policy or contract of the body that issued, entered into or effected it (“*the original insurer*”) are at any time the obligations of another body (“*the transferee*”) to whom there has been a transfer of the whole or any part of a business previously carried on by the original insurer, section 552 shall have effect in relation to that time, except where the chargeable event—
- (a) happened before the transfer, and
- (b) in the case of a death or an assignment, is an event of which the notification mentioned in subsection (6) or (7) of that section was given before the transfer,
as if the policy or contract had been issued, entered into or effected by the transferee.
- (3) Where, in consequence of . . . section 514(1) of ITTOIA 2005, paragraph (a) or (b) of section 552(1) requires certificates to be delivered in respect of two or more surrenders, happening in the same year, of part of or a share in the rights conferred by the policy or contract, a single certificate may be delivered under the paragraph in question in respect of all those surrenders (and may treat them as if they together constituted a single surrender) unless between the happening of the first and the happening of the last of them there has been—
- (a) an assignment of part of or a share in the rights conferred by the policy or contract; or
- (b) an assignment, otherwise than for money or money’s worth, of the whole of the rights conferred by the policy or contract.
- (4) Where the appropriate policy holder is two or more persons—
- (a) section 552(1)(a) requires a certificate to be delivered to each of them; but
- (b) nothing in section 552 or this section requires a body to deliver a certificate under subsection (1)(a) of that section to any person whose address has not been provided to the body (or to another body, at a time when the obligations under the policy or contract were obligations of that other body).
- (5) A certificate under section 552(1)(b) or (3)—
- (a) shall be in a form prescribed for the purpose by the Board; and
- (b) shall be delivered by any means prescribed for the purpose by the Board;
and different forms, or different means of delivery, may be prescribed for different cases or different purposes.
- (6) The Board may by regulations make such provision as they think fit for securing that they are able—
- (a) to ascertain whether there has been or is likely to be any contravention of the requirements of section 552 or this section; and
- (b) to verify any certificate under that section.
- (7) Regulations under subsection (6) above may include, in particular, provisions requiring persons to whom premiums under any policy are or have at any time been payable—
- (a) to supply information to the Board; and
- (b) to make available books, documents and other records for inspection on behalf of the Board.
- (8) Regulations under subsection (6) above may—
- (a) make different provision for different cases; and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 552ZB
- (1) The Commissioners for Her Majesty's Revenue and Customs may make regulations—
- (a) requiring relevant persons—
- (i) to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;
- (ii) to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;
- (b) making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—
- (i) to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;
- (ii) to verify any information provided to an officer of Revenue and Customs as required by the regulations.
- (2) The provision that may be made by virtue of subsection (1)(b) includes, in particular, provision requiring relevant persons to make available books, documents and other records for inspection by or on behalf of an officer of Revenue and Customs.
- (3) The regulations may—
- (a) make different provision for different cases or circumstances, and
- (b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
- (4) In this section—
- “*prescribed*” means prescribed by the regulations,
- “*qualifying policy*” includes a policy which would be a qualifying policy apart from—paragraph A1(2), B1(2), B2(2) or B3(3) of Schedule 15, orparagraph 17(2)(za) of that Schedule (including as applied by paragraph 18), and
- “*relevant person*” means a person—who issues, or has issued, qualifying policies, orwho is, or has been, a relevant transferee in relation to qualifying policies.
- (5) For the purposes of this section a person (“X”) is at any time a “*relevant transferee*” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.
##### 552A
- (1) This section has effect for the purpose of securing that, where it applies to an overseas insurer, another person is the overseas insurer’s tax representative.
- (2) In this section “*overseas insurer*” means a person who is not resident in the United Kingdom who carries on a business which consists of or includes the effecting and carrying out of—
- (a) policies of life insurance;
- (b) contracts for life annuities; or
- (c) capital redemption policies.
- (3) This section applies to an overseas insurer—
- (a) if the condition in subsection (4) below is satisfied on the designated day; or
- (b) where that condition is not satisfied on that day, if it has subsequently become satisfied.
- (4) The condition mentioned in subsection (3) above is that—
- (a) there are in force relevant insurances the obligations under which are obligations of the overseas insurer in question or of an overseas insurer connected with him; and
- (b) the total amount or value of the gross premiums paid under those relevant insurances is £1 million or more.
- (5) In this section “*relevant insurance*” means any policy of life insurance, contract for a life annuity or capital redemption policy . . . in the case of which—
- (a) the holder is resident in the United Kingdom;
- (b) the obligations of the insurer are obligations of a person not resident in the United Kingdom; and
- (c) those obligations are not attributable to a branch or agency of that person’s in the United Kingdom.
- (6) Before the expiration of the period of three months following the day on which this section first applies to an overseas insurer, the overseas insurer must nominate to the Board a person to be his tax representative.
- (7) A person shall not be a tax representative unless—
- (a) if he is an individual, he is resident in the United Kingdom and has a fixed place of residence there, or
- (b) if he is not an individual, he has a business establishment in the United Kingdom,
and, in either case, he satisfies such other requirements (if any) as are prescribed in regulations made for the purpose by the Board.
- (8) A person shall not be an overseas insurer’s tax representative unless—
- (a) his nomination by the overseas insurer has been approved by the Board; or
- (b) he has been appointed by the Board.
- (9) The Board may by regulations make provision supplementing this section; and the provision that may be made by any such regulations includes provision with respect to—
- (a) the making of a nomination by an overseas insurer of a person to be his tax representative;
- (b) the information which is to be provided in connection with such a nomination;
- (c) the form in which such a nomination is to be made;
- (d) the powers and duties of the Board in relation to such a nomination;
- (e) the procedure for approving, or refusing to approve, such a nomination, and any time limits applicable to doing so;
- (f) the termination, by the overseas insurer or the Board, of a person’s appointment as a tax representative;
- (g) the appointment by the Board of a person as the tax representative of an overseas insurer (including the circumstances in which such an appointment may be made);
- (h) the nomination by the overseas insurer, or the appointment by the Board, of a person to be the tax representative of an overseas insurer in place of a person ceasing to be his tax representative;
- (j) circumstances in which an overseas insurer to whom this section applies may, with the Board’s agreement, be released (subject to any conditions imposed by the Board) from the requirement that there must be a tax representative;
- (k) appeals to the Special Commissioners against decisions of the Board under this section or regulations under it.
- (10) The provision that may be made by regulations under subsection (9) above also includes provision for or in connection with the making of other arrangements between the Board and an overseas insurer for the purpose of securing the discharge by or on behalf of the overseas insurer of the relevant duties, within the meaning of section 552B.
- (11) Section 839 (connected persons) applies for the purposes of this section.
- (12) In this section—
- “*capital redemption policy*” means a capital redemption policy in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*contract for a life annuity*” means a contract for a life annuity in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*the designated day*” means such day as the Board may specify for the purpose in regulations;
- “*policy of life insurance*” means a policy of life insurance in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*tax representative*” means a tax representative under this section.
##### 552B
- (1) It shall be the duty of an overseas insurer’s tax representative to secure (where appropriate by acting on the overseas insurer’s behalf) that the relevant duties are discharged by or on behalf of the overseas insurer.
- (2) For the purposes of this section “*the relevant duties*” are—
- (a) the duties imposed by section 552,
- (b) the duties imposed by section 552ZA(2), (4) or (5), and
- (c) any duties imposed by regulations made under subsection (6) of section 552ZA by virtue of subsection (7) of that section,
so far as relating to relevant insurances under which the overseas insurer in question has any obligations.
- (3) An overseas insurer’s tax representative shall be personally liable—
- (a) in respect of any failure to secure the discharge of the relevant duties, and
- (b) in respect of anything done for purposes connected with acting on the overseas insurer’s behalf,
as if the relevant duties were imposed jointly and severally on the tax representative and the overseas insurer.
- (4) In the application of this section in relation to any particular tax representative, it is immaterial whether any particular relevant duty arose before or after his appointment.
- (5) This section has effect in relation to relevant duties relating to chargeable events happening on or after the day by which section 552A(6) requires the nomination of the overseas insurer’s first tax representative to be made.
- (5A) In subsection (5) “*chargeable event*” has the same meaning as in section 552 (see subsection (10) of that section).
- (6) Expressions used in this section and in section 552A have the same meaning in this section as they have in that section.
##### 553A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 559A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charitable and non-charitable expenditure
### Chapter 5A — Share loss relief
### Relief for losses on unquoted shares in trading companies
##### 576A
- (1) For the purposes of this Chapter a qualifying trading company is a company which meets each of conditions A to D.
- (2) Condition A is that the company either—
- (a) meets each of the following requirements on the date of the disposal—
- (i) the trading requirement (see section 576B),
- (ii) the control and independence requirement (see section 576D),
- (iii) the qualifying subsidiaries requirement (see section 576E), and
- (iv) the property managing subsidiaries requirement (see section 576F), or
- (b) has ceased to meet any of those requirements at a time which is not more than 3 years before that date and has not since that time been an excluded company, an investment company or a trading company.
- (3) Condition B is that the company either—
- (a) has met each of the requirements mentioned in condition A for a continuous period of 6 years ending on that date or at that time, or
- (b) has met each of those requirements for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company, an investment company or a trading company.
- (4) Condition C is that the company—
- (a) met the gross assets requirement (see section 576G) both immediately before and immediately after the issue of the shares in respect of which the relief is claimed under this Chapter, and
- (b) met the unquoted status requirement (see section 576H) at the relevant time within the meaning of that section.
- (5) Condition D is that the company has carried on its business wholly or mainly in the United Kingdom throughout the period—
- (a) beginning with the incorporation of the company or, if later, 12 months before the shares in question were issued, and
- (b) ending with the date of the disposal.
### Qualifying trading companies: the requirements
##### 576B
- (1) The trading requirement is that—
- (a) the company, disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, or
- (b) the company is a parent company and the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities.
- (2) If the company intends that one or more other companies should become its qualifying subsidiaries with a view to their carrying on one or more qualifying trades—
- (a) the company is treated as a parent company for the purposes of subsection (1)(b), and
- (b) the reference in subsection (1)(b) to the group includes the company and any existing or future company that will be its qualifying subsidiary after the intention in question is carried into effect.
This subsection does not apply at any time after the abandonment of that intention.
- (3) For the purpose of subsection (1)(b) the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
- (4) For the purpose of determining the business of a group, activities are disregarded to the extent that they are activities carried on by a mainly trading subsidiary otherwise than for its main purpose.
- (5) For the purposes of determining the business of a group, activities of a group company are disregarded to the extent that they consist in—
- (a) the holding of shares in or securities of a qualifying subsidiary of the parent company,
- (b) the making of loans to another group company,
- (c) the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by a group company, or
- (d) the holding and managing of property used by a group company for the purpose of research and development from which it is intended—
- (i) that a qualifying trade to be carried on by a group company will be derived, or
- (ii) that a qualifying trade carried on or to be carried on by a group company will benefit.
- (6) Any reference in subsection (5)(d)(i) or (ii) to a group company includes a reference to any existing or future company which will be a group company at any future time.
- (7) In this section—
- “*excluded activities*” has the meaning given by section 192 of ITA 2007 read with sections 193 to 199 of that Act,
- “*group*” means a parent company and all its qualifying subsidiaries,
- “*group company*”, in relation to a group, means the parent company or any of its qualifying subsidiaries,
- “*incidental purposes*” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question,
- “*mainly trading subsidiary*” means a subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,
- “*non-qualifying activities*” means—excluded activities, andactivities (other than research and development) carried on otherwise than in the course of a trade,
- “*parent company*” means a company that has one or more qualifying subsidiaries,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007,
- “*qualifying trade*” has the meaning given by section 189 of that Act,
- “*research and development*” has the meaning given by section 837A.
- (8) In sections 189(1)(b) and 194(4)(c) of ITA 2007 (as applied by subsection (7) for the purposes of the definitions of “excluded activities” and “qualifying trade”) “*period B*” means the continuous period that is relevant for the purposes of section 576A(3).
- (9) In section 195 of ITA 2007 as applied by subsection (7) for the purposes mentioned in subsection (8), references to the issuing company are to be read as references to the company mentioned in subsection (1).
#### Charitable and non-charitable expenditure
##### 576C
- (1) A company is not regarded as ceasing to meet the trading requirement by reason only of anything done in consequence of the company or any of its subsidiaries being in administration or receivership.
This has effect subject to subsections (2) and (3).
- (2) Subsection (1) applies only if—
- (a) the entry into administration or receivership, and
- (b) everything done as a result of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
- (3) A company ceases to meet the trading requirement if before the time that is relevant for the purposes of section 576A(2)—
- (a) a resolution is passed, or an order is made, for the winding up of the company or any of its subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose), or
- (b) the company or any of its subsidiaries is dissolved without winding up.
This is subject to subsection (4).
- (4) Subsection (3) does not apply if —
- (a) the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
- (b) the company continues, during the winding up, to be a trading company.
- (5) References in this section to a company being “in administration” or “in receivership” are to be read in accordance with section 252 of ITA 2007.
##### 576D
- (1) The control element of the requirement is that—
- (a) the company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (2) The independence element of the requirement is that—
- (a) the company must not—
- (i) be a 51% subsidiary of another company, or
- (ii) be under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (3) This section is subject to section 576J(3).
- (3A) Section 839 (connected persons) applies for the purposes of this section.
- (4) In this section—
- “*arrangements*” includes any scheme, agreement or understanding, whether or not legally enforceable,
- “control” is to be read as follows—in subsection (1)(a), in accordance with section 416(2) to (6),in subsection (2)(a), in accordance with section 840,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007.
#### Capital sums: . . . winding up or partnership change.
#### Relief for expenses.
##### 576E
@@ -31314,7 +31314,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information: supplementary provisions
#### Regulations in relation to qualifying policies
##### 596A
@@ -31356,7 +31356,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Non-resident policies and off-shore capital redemption policies.
#### Overseas life assurance business: life policies.
#### Transactions in deposits with and without certificates or in debts.
@@ -31392,7 +31392,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 573 and 575.
#### Qualifying trading companies
##### 640A
@@ -31402,10 +31402,10 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The control and independence requirement
#### Ceasing to meet the trading requirement because of administration or receivership
#### Ceasing to meet the trading requirement because of administration or receivership
##### 646A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
@@ -31548,7 +31548,7 @@
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Termination of relief under this Chapter, and transitional provisions.
#### Exemption from tax in respect of qualifying premiums.
##### 682A
@@ -31578,7 +31578,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation.
#### Approval of schemes.
##### 685F
@@ -31588,7 +31588,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definition of insurance company.
#### Effect of appointment or arrangements under section 659B.
##### 686A
@@ -31822,13 +31822,13 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements made after 6th April 1965.
#### Settlements made before 7th April 1965 but after 9th April 1946.
##### 736A
Schedule 23A to this Act shall have effect in relation to certain cases where under a contract or other arrangements for the transfer of shares or other securities a person is required to pay to the other party an amount representative of a dividend or payment of interest on the securities.
#### Schedule 4 directions.
#### Certain income not to be income of settlor etc.
##### 736B
@@ -32264,7 +32264,7 @@
- (b) they are otherwise directed by the company to perform duties on its behalf in the territory.
#### Deemed manufactured payments in the case of stock lending arrangements.
#### Deemed interest: cash collateral under stock lending arrangements
##### 751AA
@@ -33572,7 +33572,7 @@
Schedule 28AA (which deals with provision made or imposed otherwise than at arm’s length) shall have effect.
#### Apportionment of chargeable profits and creditable tax
#### Relevant interests.
### Factoring of income receipts etc
@@ -33924,1582 +33924,1582 @@
- “*pension annuity*” means an annuity which is pension income within the meaning of Part 9 of ITEPA 2003 (see section 566(2) of that Act).
#### Income treated as arising under section 761(1): remittance basis
##### 785ZA
- (1) This section applies for corporation tax purposes if—
- (a) a company carries on a business in respect of which the company is within the charge to corporation tax,
- (b) the company carries on the business in partnership with other persons in an accounting period of the partnership,
- (c) the business (“the leasing business”) is, on any day in that period, a business of leasing plant or machinery,
- (d) the company incurs a loss in its notional business in any accounting period comprised (wholly or partly) in the accounting period of the partnership, and
- (e) the interest of the company in the leasing business during the accounting period of the partnership is not determined on an allowable basis (see subsections (2) to (4)).
- (2) The interest of the company in the leasing business during the accounting period of the partnership is determined on an allowable basis if (and only if) the following condition is met.
- (3) The condition is met if, for the purposes of section 114(2),—
- (a) the company's share in the profits or loss of the leasing business for that period is determined wholly by reference to a single percentage, and
- (b) the company's share in any relevant capital allowances for that period is determined wholly by reference to the same percentage.
- (4) For the purposes of this condition “*profits*” does not include chargeable gains.
- (5) The following restrictions apply in respect of so much of the loss incurred by the company in its notional business as derives from any relevant capital allowances (“the restricted part of the loss”).
- (6) Apart from by way of set off against any relevant leasing income, relief is not to be given to the company under any relevant loss relief provision in respect of the restricted part of the loss.
- (7) If the leasing business is a trade, relief is not to be given to the company under section 393A(1) in respect of the restricted part of the loss.
- (8) The restricted part of the loss is not available for set off by way of group relief in accordance with section 403.
- (9) For the purpose of determining how much of a loss derives from any relevant capital allowances, the loss is to be calculated on the basis that any relevant capital allowances are the final amounts to be deducted.
##### 785ZB
- (1) This section applies for the purposes of section 785ZA.
- (2) “*Business of leasing plant or machinery*” has the same meaning as in Part 3 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc).
- (3) “*Lease*” has the same meaning as in section 785A.
- (4) “*Notional business*”, in relation to a company, means the business—
- (a) from which the company's share in the profits or loss of the leasing business is treated under section 114(2) as deriving for the purposes of the charge to corporation tax, and
- (b) which is treated under that provision as carried on alone by the company for those purposes.
- (5) “*Plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act.
- (6) “*Relevant capital allowance*” means an allowance under Part 2 of the Capital Allowances Act in respect of expenditure incurred on the provision of plant or machinery wholly or partly for the purposes of the leasing business.
- (7) “*Relevant leasing income*” means any income of the company's notional business deriving from any lease—
- (a) which is a lease of plant or machinery, and
- (b) which was entered into before the end of the accounting period of the company in which the loss in its notional business was incurred.
- (8) “*Relevant loss relief provision*” means any of the following provisions—
- (a) section 392A (Schedule A losses),
- (b) section 392B (losses from overseas property businesses),
- (c) section 393 (trade losses),
- (d) section 396 (Case VI losses).
##### 785A
- (1) This section applies in any case where the following conditions are satisfied—
- (a) a person (call him “P”) is entitled to receive rentals under a lease of plant or machinery,
- (b) the rentals, so far as receivable by him, fall to be brought into account as income for the purpose of calculating his tax liability,
- (c) P enters into arrangements for the transfer of his right to receive some or all of the rentals to another person,
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In any such case, the market value of the rights transferred—
- (a) shall be treated for tax purposes as income of P,
- (b) shall be taxable as rentals receivable by P under the lease (apart from any transfer of his right to receive some or all of the rentals), and
- (c) shall be brought into account at the time of the transfer.
- (2A) But subsection (2) does not apply if and to the extent that any of the market value of the rights transferred is (apart from this section) brought into account—
- (a) as income, or
- (b) as a capital allowances disposal receipt.
- (3) Any reference to the transfer from P to another person of a right to receive rentals includes a reference to any arrangement under which rental ceases to form part of the receipts taken into account as income for the purposes of calculating P’s tax liability.
- (4) Where P is a partnership, any reference in this section to calculating P’s tax liability includes a reference to calculating the tax liability of the partners, notwithstanding that the partnership has legal personality.
- (5) A partnership has legal personality for the purposes of subsection (4) above if it is regarded as a legal person, or as a body corporate, under the law of the country or territory under which it is formed.
- (5ZA) The references in subsections (1)(c) and (3) to another person include any person in which P has an interest, including any partnership of which P is a member and the trustees of any trust of which P is a beneficiary.
- (5A) This section does not apply in so far as section 774B or 774D (structured finance arrangements) applies in relation to the arrangements mentioned in paragraph (c) of subsection (1) above as a result of the transfer mentioned in that paragraph.
- (5B) This section does not apply in relation to a relevant capital payment to which section 785B below or section 809ZA of ITA 2007 applies; and “relevant capital payment” here has the same meaning as in that section.
- (6) In this section—
- “*capital allowances disposal receipt*” means a disposal receipt within the meaning of Part 2 of the Capital Allowances Act 2001 (see section 60 of that Act);
- “*lease*” includes an underlease, sublease, tenancy or licence and an agreement for any of those things;
- “*tax liability*” means liability to income tax or corporation tax.
##### 785B
- (1) This section applies if—
- (a) there is an unconditional obligation, under a lease of plant or machinery or a relevant arrangement, to make a relevant capital payment (at any time), or
- (b) a relevant capital payment is made under such a lease or arrangement otherwise than in pursuance of such an obligation.
- (2) The lessor is treated for corporation tax purposes as receiving income attributable to the lease of an amount equal to the amount of the capital payment.
- (3) The income is treated—
- (a) if subsection (1)(a) applies, as income for the period of account in which there is first an obligation of the kind mentioned there, and
- (b) if subsection (1)(b) applies, as income for the period of account in which the payment is made.
##### 785C
- (1) The expressions used in section 785B and this section are to be interpreted as follows.
- (2) “*Capital payment*” means any payment except one which, if made to the lessor—
- (a) would fall to be included in a calculation of the lessor's income for corporation tax purposes, or
- (b) would fall to be included in such a calculation but for section 502B (rental earnings under long funding finance lease).
- (3) “*Lease*” includes—
- (a) a licence, and
- (b) the letting of a ship or aircraft on charter or the letting of any other asset on hire,
and “*lessor*” and “*lessee*” are to be read accordingly.
- (4) “*Lease of plant or machinery*” includes a lease of plant or machinery and other property but does not include—
- (a) a lease where the income attributable to the lease received by the lessor (if any) would be chargeable to tax under Schedule A, or
- (b) a lease of plant or machinery where the lessor has incurred what would (but for section 34A of the Capital Allowances Act) be qualifying expenditure (within the meaning of Part 2 of that Act) on the plant or machinery.
- (5) “*Relevant arrangement*” means any agreement or arrangement relating to a lease of plant or machinery, including one made before the lease is entered into or after it has ended (and, accordingly, “lessor” and lessee” include prospective and former lessors and lessees).
- (6) A capital payment, in relation to a lease or relevant arrangement, is “relevant” if condition A or B is met (but this is subject to subsection (9)).
- (7) Condition A is that the capital payment is payable (or paid), directly or indirectly, by (or on behalf of) the lessee to (or on behalf of) the lessor in connection with—
- (a) the grant, assignment, novation or termination of the lease, or
- (b) any provision of the lease or relevant arrangement (including the variation or waiver of any such provision).
- (8) Condition B is that rentals payable under the lease are less than (or payable later than) they might reasonably be expected to be if there were no obligation to make the capital payment (and the capital payment were not made).
- (9) A capital payment is not “relevant” if or to the extent that—
- (a) the capital payment reduces (or would but for section 536 of the Capital Allowances Act reduce) the amount of expenditure incurred by the lessor for the purposes of the Capital Allowances Act in respect of the plant or machinery in question,
- (b) the capital payment is compensation for loss resulting from damage to, or damage caused by, the plant or machinery in question, or
- (c) the capital payment would fall (or falls) to be brought into account by the lessor as a disposal receipt within the meaning of Part 2 of the Capital Allowances Act (see section 60(1) of that Act).
- (10) References to payment include the provision of value by any means other than the making of a payment, and accordingly—
- (a) references to the making of a payment include the passing of value (by any other means), and
- (b) references to the amount of the payment include the value passed.
##### 785D
- (1) This section applies if section 785B applies in relation to a lease of plant or machinery and other property (see section 785C(4)).
- (2) The relevant capital payment is to be apportioned, on a just and reasonable basis, between—
- (a) the plant and machinery, and
- (b) the other property.
- (3) If the income (if any) received by the lessor that is attributable to any of the plant or machinery is chargeable to tax under Schedule A, treat that plant or machinery as falling within subsection (2)(b) (and not subsection (2)(a)).
- (4) Section 785B(2) has effect as if the reference to the amount of the capital payment were to such amount as is apportioned under subsection (2) in respect of the plant or machinery within subsection (2)(a).
#### Offshore income gains: application of transfer of assets abroad provisions
##### 785ZA
##### 785E
- (1) This section applies for corporation tax purposes if—
- (a) a company carries on a business in respect of which the company is within the charge to corporation tax,
- (b) the company carries on the business in partnership with other persons in an accounting period of the partnership,
- (c) the business (“the leasing business”) is, on any day in that period, a business of leasing plant or machinery,
- (d) the company incurs a loss in its notional business in any accounting period comprised (wholly or partly) in the accounting period of the partnership, and
- (e) the interest of the company in the leasing business during the accounting period of the partnership is not determined on an allowable basis (see subsections (2) to (4)).
- (2) The interest of the company in the leasing business during the accounting period of the partnership is determined on an allowable basis if (and only if) the following condition is met.
- (3) The condition is met if, for the purposes of section 114(2),—
- (a) the company's share in the profits or loss of the leasing business for that period is determined wholly by reference to a single percentage, and
- (b) the company's share in any relevant capital allowances for that period is determined wholly by reference to the same percentage.
- (4) For the purposes of this condition “*profits*” does not include chargeable gains.
- (5) The following restrictions apply in respect of so much of the loss incurred by the company in its notional business as derives from any relevant capital allowances (“the restricted part of the loss”).
- (6) Apart from by way of set off against any relevant leasing income, relief is not to be given to the company under any relevant loss relief provision in respect of the restricted part of the loss.
- (7) If the leasing business is a trade, relief is not to be given to the company under section 393A(1) in respect of the restricted part of the loss.
- (8) The restricted part of the loss is not available for set off by way of group relief in accordance with section 403.
- (9) For the purpose of determining how much of a loss derives from any relevant capital allowances, the loss is to be calculated on the basis that any relevant capital allowances are the final amounts to be deducted.
##### 785ZB
- (1) This section applies for the purposes of section 785ZA.
- (2) “*Business of leasing plant or machinery*” has the same meaning as in Part 3 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc).
- (3) “*Lease*” has the same meaning as in section 785A.
- (4) “*Notional business*”, in relation to a company, means the business—
- (a) from which the company's share in the profits or loss of the leasing business is treated under section 114(2) as deriving for the purposes of the charge to corporation tax, and
- (b) which is treated under that provision as carried on alone by the company for those purposes.
- (5) “*Plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act.
- (6) “*Relevant capital allowance*” means an allowance under Part 2 of the Capital Allowances Act in respect of expenditure incurred on the provision of plant or machinery wholly or partly for the purposes of the leasing business.
- (7) “*Relevant leasing income*” means any income of the company's notional business deriving from any lease—
- (a) which is a lease of plant or machinery, and
- (b) which was entered into before the end of the accounting period of the company in which the loss in its notional business was incurred.
- (8) “*Relevant loss relief provision*” means any of the following provisions—
- (a) section 392A (Schedule A losses),
- (b) section 392B (losses from overseas property businesses),
- (c) section 393 (trade losses),
- (d) section 396 (Case VI losses).
##### 785A
- (1) This section applies in any case where the following conditions are satisfied—
- (a) a person (call him “P”) is entitled to receive rentals under a lease of plant or machinery,
- (b) the rentals, so far as receivable by him, fall to be brought into account as income for the purpose of calculating his tax liability,
- (c) P enters into arrangements for the transfer of his right to receive some or all of the rentals to another person,
- (a) section 785B applies by virtue of subsection (1)(a) of that section, and
- (b) at any time, the lessor reasonably expects that the relevant capital payment will not be paid (or will not be paid in full).
- (2) For the purposes of calculating the profits of the lessor, a deduction is allowed for the period of account which includes that time.
- (3) The amount of the deduction is equal to the amount reasonably expected not to be paid.
- (4) No other deduction is allowed in respect of the matters mentioned in subsection (1).
#### Capital sums: . . . winding up or partnership change.
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
##### 793A
- (1) Where relief in respect of an amount of tax that would otherwise be payable under the law of a territory outside the United Kingdom may be allowed—
- (a) under arrangements made in relation to that territory, or
- (b) under the law of that territory in consequence of any such arrangements,
credit may not be allowed in respect of that tax, whether the relief has been used or not.
- (2) Where, under arrangements having effect by virtue of section 788, credit may be allowed in respect of an amount of tax, credit by way of unilateral relief may not be allowed in respect of that tax.
- (3) Where arrangements made in relation to a territory outside the United Kingdom contain express provision to the effect that relief by way of credit shall not be given under the arrangements in cases or circumstances specified or described in the arrangements, then neither shall credit by way of unilateral relief be allowed in those cases or circumstances.
##### 795A
- (1) The amount of credit for foreign tax which, under any arrangements, is to be allowed against tax in respect of any income or chargeable gain shall not exceed the credit which would be allowed had all reasonable steps been taken—
- (a) under the law of the territory concerned, and
- (b) under any arrangements made in relation to that territory,
to minimise the amount of tax payable in that territory.
- (2) The steps mentioned in subsection (1) above include—
- (a) claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances; and
- (b) making elections for tax purposes.
- (3) For the purposes of subsection (1) above, any question as to the steps which it would have been reasonable for a person to take shall be determined on the basis of what the person might reasonably be expected to have done in the absence of relief under this Part against tax in the United Kingdom.
##### 797A
- (1) This section applies for the purposes of any arrangements where, in the case of any company—
- (a) any non-trading credit relating to an item is brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) for any accounting period (“the applicable accounting period”); and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that interest.
- (2) It shall be assumed that tax chargeable under paragraph (a) of Case III of Schedule D on the profits and gains arising for the applicable accounting period from the company’s loan relationships falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect (subject to subsection (7) below) as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description; and
- (b) different parts of that amount might be set against different profits.
- (4) For the purposes of this section, the adjusted amount of a company’s non-trading debits for any accounting period is the amount equal, in the case of that company, to the aggregate of the non-trading debits given for that period for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) less the aggregate of the amounts specified in subsection (5) below.
- (5) Those amounts are—
- (a) so much of any non-trading deficit for the applicable accounting period as is an amount to which a claim under subsection (2)(c) of section 83 of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act (deficit carried back and set against profits) relates; and
- (aa) so much of any non-trading deficit for that period as is surrendered as group relief by virtue of section 403 of the Taxes Act 1988; and
- (b) so much of any non-trading deficit for that period as falls to be carried forward to a subsequent period in accordance with subsection (3A) of that section or paragraph 4(4) of that Schedule; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Section 797(3) shall have effect as if any amount carried forward to the applicable accounting period under section 83(3A) of that Act were an amount capable of being allocated only to any non-trading profits of the company.
- (7) Where—
- (a) the company has a non-trading deficit for the applicable accounting period,
- (b) the amount of that deficit exceeds the aggregate of the amounts specified in subsection (5) above, and
- (c) in pursuance of a claim under—
- (i) subsection (2)(a) of section 83 of the Finance Act 1996 (deficit set against current year profits), or
- (ii) paragraph 4(2) of Schedule 11 to that Act (set-off of deficits in the case of insurance companies),
the excess falls to be set off against profits of any description,
section 797(3) shall have effect as if non-trading debits of the company which in aggregate are equal to the amount of the excess were required to be allocated to the profits against which they are set off in pursuance of the claim.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In this section “*non-trading profits*” has the same meaning as in paragraph 4 of Schedule 8 to the Finance Act 1996.
##### 797B
- (1) This section applies for the purposes of any arrangements where, in the case of a company—
- (a) a non-trading credit relating to an item is brought into account for the purposes of Schedule 29 to the Finance Act 2002 (intangible fixed assets) for an accounting period (“*the applicable accounting period*”), and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that item.
- (2) It shall be assumed that tax chargeable under Case VI of Schedule D on the profits and gains arising for the applicable accounting period from the company’s intangible fixed assets falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description, and
- (b) different parts of that amount might be set against different profits.
- (4) For this purpose the adjusted amount of a company’s non-trading debits for an accounting period is given by:
$$TotalDebits-AmountCarriedForward$where—Total Debits is the aggregate amount of the company’s non-trading debits for that accounting period under Schedule 29 to the Finance Act 2002 (intangible fixed assets), andAmount Carried Forward is the amount (if any) carried forward to the next accounting period of the company under paragraph 35(3) of that Schedule (carry-forward of non-trading loss in respect of which no claim is made for it to be set against total profits of current period).$
#### Letting of furnished holiday accommodation treated as trade for certain income tax purposes
##### 798A
- (1) This section has effect in relation to the application of section 797(1) to the allowance of credit for foreign tax against corporation tax in respect of trade income.
- (2) The reference in section 797(1) to the relevant income or gain shall be treated as referring only to income arising or gains accruing out of the transaction, arrangement or asset in connection with which the credit for foreign tax arises.
- (3) In determining for the purposes of section 797(1) the amount of corporation tax attributable to any income or gain, there shall be taken into account—
- (a) deductions or expenses which would be allowable in the computation of the taxpayer's liability,
- (b) a reasonable apportionment of allowable deductions or expenses which relate partly to the transaction, arrangement or asset from which the income or gain arises and partly to other matters, and
- (c) expenses of a company connected (within the meaning given by section 839) with the taxpayer, in so far as reasonably attributable to the income or gain.
- (4) In this section and section 798B “*trade income*” means—
- (a) income or profits chargeable to tax under Case I, II or V of Schedule D,
- (b) profits of a Schedule A business computed in same way as the profits of a trade in accordance with section 21A of ICTA,
- (c) sums charged to tax under Case VI of Schedule D in accordance with section 104 of ICTA, and
- (d) any other income or profits which by a provision of ICTA is chargeable to tax under, or computed in accordance with, Case I of Schedule D;
but this section shall not apply in relation to income to which section 804C below applies.
##### 798B
- (1) Where—
- (a) a credit for foreign tax arises in connection with an asset, and
- (b) the asset is in a hedging relationship with a derivative contract,
in the application of section 798A(2) the reference to the income arising out of the asset shall be taken as a reference to the income arising out of the asset and the derivative contract taken together (but taking account of the income or loss from the derivative contract only in so far as reasonably attributable to the hedging relationship).
- (2) For the purposes of subsection (1)(b) an asset is in a hedging relationship with a derivative contract if—
- (a) the asset is acquired as a hedge of risk in connection with the contract, or
- (b) the contract is entered into as a hedge of risk in connection with the asset;
and if an asset or a contract is wholly or partly designated as a hedge for the purposes of a person's accounts, that shall be conclusive for the purpose of this subsection.
- (3) Where royalties (as defined in arrangements having effect by virtue of section 788) are paid in respect of an asset in more than one jurisdiction outside the United Kingdom, for the purposes of section 798A(2)—
- (a) royalty income arising in more than one jurisdiction (other than the United Kingdom) in a year of assessment in respect of that asset shall be treated as income arising from a single transaction, arrangement or asset, and
- (b) credits available for foreign tax in respect of the royalty income shall be aggregated accordingly.
- (4) If a person (“A”) carrying on a trade giving rise to trade income enters into a scheme or arrangement with another person (“B”) a main purpose of which is to alter the effect of section 798A in relation to A, income received in pursuance of the scheme or arrangement shall be treated for the purposes of section 798A as trade income of B (and not as income of A).
- (5) Where—
- (a) transactions, arrangements or assets are treated by a taxpayer as a series or group (the “portfolio”),
- (b) a number of credits for foreign tax arise in respect of the portfolio, and
- (c) either—
- (i) it is not reasonably practicable to prepare a separate computation of income or gain for the purposes of section 798A(2) in respect of each transaction, arrangement or asset, or
- (ii) a separate computation of income or gain in respect of each transaction, arrangement or asset for the purposes of section 798A(2) would not, compared with an aggregated computation, make a material difference to the amount of credit for foreign tax which is allowable,
the income or gains arising from the portfolio, or part of the portfolio, may be aggregated and apportioned for the purposes of section 798A(2) in a fair and reasonable manner.
##### 798C
- (1) This section applies where the application of section 796(1) or 797(1) prevents an amount of credit for foreign tax from being allowable against income tax or corporation tax.
- (2) The taxpayer's income shall be treated as reduced by the amount of disallowed credit.
- (3) Subsection (2) applies only in so far as the amount of disallowed credit does not exceed the amount of any loss attributable to the income or gain in respect of which the foreign tax was paid.
- (4) For the purpose of subsection (3), payment of the foreign tax is to be taken into account despite section 795(2).
##### 801A
- (1) This section applies where—
- (a) a company (“*the claimant company*”) makes a claim for an allowance by way of credit in accordance with this Part;
- (b) the claim relates to underlying tax on a dividend paid to that company by a company resident outside the United Kingdom (“*the overseas company*”);
- (c) that underlying tax is or includes an amount in respect of tax (“*the high rate tax*”) payable by—
- (i) the overseas company, or
- (ii) such a third, fourth or successive company as is mentioned in section 801,
at a rate in excess of the relievable rate; and
- (d) the whole or any part of the amount in respect of the high rate tax which is or is included in the underlying tax would not be, or be included in, that underlying tax but for the existence of, or for there having been, an avoidance scheme.
- (2) Where this section applies, the amount of the credit to which the claimant company is entitled on the claim shall be determined as if the high rate tax had been tax at the relievable rate, instead of at a rate in excess of that rate.
- (3) For the purposes of this section tax shall be taken to be payable at a rate in excess of the relievable rate if, and to the extent that, the amount of that tax exceeds the amount that would represent tax on the relevant profits at the relievable rate.
- (4) In subsection (3) above “*the relevant profits*”, in relation to any tax, means the profits of the overseas company or, as the case may be, of the third, fourth or successive company which, for the purposes of this Part, are taken to bear that tax.
- (5) In this section “*the relievable rate*” means the rate of corporation tax in force when the dividend mentioned in subsection (1)(b) above was paid.
- (6) In this section “*an avoidance scheme*” means any scheme or arrangement which—
- (a) falls within subsection (7) below; and
- (b) is a scheme or arrangement the purpose, or one of the main purposes, of which is to have an amount of underlying tax taken into account on a claim for an allowance by way of credit in accordance with this Part.
- (7) A scheme or arrangement falls within this subsection if the parties to it include both—
- (a) the claimant company, a company related to that company or a person connected with the claimant company; and
- (b) a person who was not under the control of the claimant company at any time before the doing of anything as part of, or in pursuance of, the scheme or arrangement.
- (8) In this section “*arrangement*” means an arrangement of any kind, whether in writing or not.
- (9) For the purposes of this section, whether a person is connected with another is determined in accordance with section 839.
- (10) Subsection (5) of section 801 (meaning of “*related company*”) shall apply for the purposes of this section as it applies for the purposes of that section.
- (11) For the purposes of this section a person who is a party to a scheme or arrangement shall be taken to have been under the control of the claimant company at all the following times, namely—
- (a) any time when that company would have been taken (in accordance with section 416) to have had control of that person for the purposes of Part XI;
- (b) any time when that company would have been so taken if that section applied (with the necessary modifications) in the case of partnerships and unincorporated associations as it applies in the case of companies; and
- (c) any time when that person acted in relation to that scheme or arrangement, or any proposal for it, either directly or indirectly under the direction of that company.
##### 801B
- (1) This section applies where—
- (a) a company (“*company A*”) resident outside the United Kingdom has paid tax under the law of a territory outside the United Kingdom in respect of any of its profits;
- (b) some or all of those profits become profits of another company resident outside the United Kingdom (“*company B*”) otherwise than by virtue of the payment of a dividend to company B; and
- (c) company B pays a dividend out of those profits to another company (“*company C*”), wherever resident.
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid—
- (a) by any company resident outside the United Kingdom (whether or not company B),
- (b) to a company resident in the United Kingdom,
as if company B had paid the tax paid by company A in respect of those profits of company A which have become profits of company B as mentioned in subsection (1)(b) above.
- (3) But the amount of relief under this Part which is allowable to a company resident in the United Kingdom shall not exceed the amount which would have been allowable to that company had those profits become profits of company B by virtue of the payment of a dividend by company A to company B.
##### 801C
- (1) This section applies in any case where—
- (a) by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company; and
- (b) one or more of the dividends paid by the controlled foreign company by virtue of which the condition in paragraph (a) above is satisfied are dividends falling within subsection (2) below.
- (2) A dividend falls within this subsection if, for the purposes of Part I of Schedule 25, the whole or any part of it falls to be treated by virtue of paragraph 4 of that Schedule as paid by the controlled foreign company to a United Kingdom resident.
- (3) If, in a case where this section applies,—
- (a) an initial dividend is paid to a company resident outside the United Kingdom, and
- (b) that company, or any other company which is related to it, pays an intermediate dividend which for the purposes of paragraph 4 of Schedule 25 to any extent represents that initial dividend,
subsection (4) below shall have effect in relation to the UK recipient concerned.
- (4) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to that UK recipient—
- (a) that, instead of the intermediate dividend, the dividends described in subsection (5) below had been paid and the circumstances had been as described in subsection (6) or (7) below, as the case may be; and
- (b) that any tax paid under the law of any territory in respect of the intermediate dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
- (5) The dividends mentioned in subsection (4)(a) above are—
- (a) as respects each of the initial dividends which are, for the purposes of paragraph 4 of Schedule 25, to any extent represented by the intermediate dividend, a separate dividend (an “*ADP dividend*”) representing, and of an amount equal to, so much of that initial dividend as is for those purposes represented by the intermediate dividend; and
- (b) a further separate dividend (a “*residual dividend*”) representing, and of an amount equal to, the remainder (if any) of the intermediate dividend.
- (6) As respects each of the ADP dividends, the intermediate company is to be treated as if it were a separate company whose distributable profits are of a constitution corresponding to, and an amount equal to, that of the ADP dividend.
- (7) As respects the residual dividend (if any), the relevant profits out of which it is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding accordingly so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid.
- (8) If, in a case where this section applies, an intermediate company also pays a dividend which is not an intermediate dividend (an “*independent dividend*”) and either—
- (a) that dividend is paid to a United Kingdom resident, or
- (b) if it is not so paid, a dividend which to any extent represents it is paid by a company which is related to that company and resident outside the United Kingdom to a United Kingdom resident,
subsection (9) below shall have effect in relation to the United Kingdom resident.
- (9) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to the United Kingdom resident—
- (a) that the relevant profits out of which the independent dividend is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid; and
- (b) that any tax paid under the law of any territory in respect of the independent dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
- (10) For the purposes of this section—
- (a) a controlled foreign company is an “ADP controlled foreign company" as respects any of its accounting periods if the condition in paragraph (a) of subsection (1) above is satisfied as respects that accounting period;
- (b) an “initial dividend" (subject to subsection (14) below) is any of the dividends mentioned in paragraph (b) of subsection (1) above paid by an ADP controlled foreign company; and
- (c) a “*subsequent dividend*” is any dividend which, in relation to one or more initial dividends, is the subsequent dividend for the purposes of paragraph 4 of Schedule 25.
- (11) In this section—
- “*distributable profits*” means a company’s profits available for distribution, determined in accordance with section 799(6);
- “*intermediate company*” means any company resident outside the United Kingdom which pays an intermediate dividend;
- “*intermediate dividend*” means any dividend which is paid by a company resident outside the United Kingdom and which—for the purposes of paragraph 4 of Schedule 25, to any extent represents one or more initial dividends paid by other companies; andeither is the subsequent dividend in the case of those initial dividends or is itself to any extent represented for those purposes by a subsequent dividend;
- “*the UK recipient*” means the United Kingdom resident to whom a subsequent dividend is paid.
- (12) Where—
- (a) one company pays a dividend (“*dividend A*”) to another company, and
- (b) that other company, or a company which is related to it, pays a dividend (“*dividend B*”) to another company,
then, for the purposes of this section, dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
- (13) Sub-paragraph (2) of paragraph 4 of Schedule 25 (related companies) shall apply for the purposes of this section as it applies for the purposes of that paragraph.
- (14) Where an intermediate company which is an ADP controlled foreign company pays a dividend—
- (a) by virtue of which (whether taken alone or with other dividends) the condition in subsection (1)(a) above is satisfied as regards an accounting period of the company, but
- (b) which also for the purposes of paragraph 4 of Schedule 25 to any extent represents one or more initial dividends paid by other ADP controlled foreign companies,
the dividend shall not be regarded for the purposes of this section as an initial dividend paid by the company, to the extent that it so represents initial dividends paid by other ADP controlled foreign companies.
##### 803A
- (1) This section applies in any case where, under the law of a territory outside the United Kingdom, tax is payable by any one company resident in that territory (“*the responsible company*”) in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies so resident, taken together as a single taxable entity.
- (1A) Where—
- (a) a company is (within the meaning of section 801) an ADP controlled foreign company as respects any of its accounting periods, and
- (b) the whole or any part of the profits or gains of that accounting period are included in the aggregate profits, or aggregate profits or gains, mentioned in subsection (1) above,
subsection (2) below shall have effect as if the companies mentioned in subsection (1) above did not include that company.
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid by any of the companies mentioned in subsection (1) above (the “*non-resident companies*”) to another company (“*the recipient company*”), as if—
- (a) the non-resident companies, taken together, were a single company,
- (b) anything done by or in relation to any of the non-resident companies (including the payment of the dividend) were done by or in relation to that single company, and
- (c) that single company were related to the recipient company, if that one of the non-resident companies which actually pays the dividend is related to the recipient company,
(so that, in particular, the relevant profits for the purposes of section 799(1) is a single aggregate figure in respect of that single company and the foreign tax paid by the responsible company is foreign tax paid by that single company).
- (3) For the purposes of this section a company is related to another company if that other company—
- (a) controls directly or indirectly, or
- (b) is a subsidiary of a company which controls directly or indirectly,
not less than 10 per cent. of the voting power in the first-mentioned company.
##### 804ZA
- (1) If the Board consider, on reasonable grounds, that conditions A to D are or may be satisfied in relation to any income or chargeable gain taken or to be taken into account for the purposes of determining a person's liability to tax in a chargeable period, they may give the person a notice under this section.
- (2) Condition A is that, in the case of the person, there is in respect of the income or gain an amount of foreign tax for which, under any arrangements, credit is allowable against United Kingdom tax for that chargeable period.
- (3) Condition B is that there is a scheme or arrangement the main purpose, or one of the main purposes, of which is to cause an amount of foreign tax to be taken into account in the case of the person for that chargeable period.
- (4) Condition C is that the scheme or arrangement is a prescribed scheme or arrangement.
- (5) Condition D is that the amount referred to in subsection (6) is more than a minimal amount.
- (6) The amount is the aggregate of—
- (a) the aggregate amount of the claims for credit that the person has made, or is in a position to make, for the chargeable period; and
- (b) for all the persons connected to that person, the aggregate amount of the claims for credit that the connected person has made, or is in a position to make, for a corresponding chargeable period.
- (7) A chargeable period of a person (“A”) corresponds to a chargeable period of another person (“B”) if at least one day of A's chargeable period falls within B's chargeable period.
- (8) A notice under this section is a notice—
- (a) informing the person of the Board's view under subsection (1),
- (b) specifying the chargeable period in relation to which the Board formed that view,
- (c) if the amount of foreign tax considered by the Board to satisfy condition B is an amount of underlying tax, specifying the body corporate . . . whose payment of foreign tax is relevant to that underlying tax, and
- (d) informing the person that as a consequence section 804ZB has effect in relation to him.
- (9) A notice under this section may specify the adjustments of a person's tax return that, in the view of the Board, fall to be made by him under section 804ZB(2).
- (10) The adjustments specified may, in a case where the notice given to a person specifies a body corporate resident outside the United Kingdom, include treating the body corporate as having paid or being liable to pay only so much foreign tax as would have been allowed to it as a credit if it were resident in the United Kingdom and a notice under this section had been given to it as regards an amount of foreign tax.
- (11) Schedule 28AB makes provision about what constitutes a prescribed scheme or arrangement.
- (11A) In this section “*foreign tax*” includes any tax which for the purpose of allowing credit under any arrangements against corporation tax is treated by section 801 as if it were tax payable under the law of any territory outside the United Kingdom.
- (12) In this section and sections 804ZB and 804ZC “*tax return*” means—
- (a) a return under section 8, 8A or 12AA of the Management Act, or
- (b) a company tax return;
and “*company tax return*” means the return required to be delivered pursuant to a notice under paragraph 3 of Schedule 18 to the Finance Act 1998, as read with paragraph 4 of that Schedule.
##### 804ZB
- (1) This section applies in relation to a person if—
- (a) a notice under section 804ZA has been given to the person in respect of a chargeable period specified in the notice, and
- (b) the chargeable period specified is a chargeable period in relation to which conditions A to D of section 804ZA are satisfied.
- (2) The person must in his tax return for the period make (or must amend his return for the period so as to make) such adjustments as are necessary for counteracting the effects of the scheme or arrangement in that period that are referable to the purpose referred to in condition B of section 804ZA.
##### 804ZC
- (1) Subsection (2) applies if the Board give a notice to a person under section 804ZA before the person has made his tax return for the chargeable period specified in the notice.
- (2) If the person makes a tax return for that period before the end of the period of 90 days beginning with the day on which the notice is given, he may—
- (a) make a tax return that disregards the notice, and
- (b) at any time after making the return and before the end of the period of 90 days, amend the return for the purpose of complying with the notice.
- (3) If a person has made a tax return for a chargeable period, the Board may only give him a notice under section 804ZA in relation to that period if a notice of enquiry has been given to him in respect of his tax return for that period.
- (4) After any enquiries into the person's tax return for that period have been completed, the Board may only give him a notice under section 804ZA in relation to that period if the requirements in subsections (5) and (7) are satisfied.
- (5) The first requirement is that at the time the enquiries were completed, the Board could not have been reasonably expected, on the basis of the information made available to them or to an officer of theirs before that time, to have been aware that the circumstances were such that a notice under section 804ZA could have been given to the person in relation to that period.
- (6) For the purposes of subsection (5)—
- (a) section 29(6) and (7) of the Management Act (information made available) applies as it applies for the purposes of section 29(5), and
- (b) paragraph 44(2) and (3) of Schedule 18 to the Finance Act 1998 applies as it applies for the purposes of paragraph 44(1).
- (7) The second requirement is that—
- (a) the person was requested to produce, provide or furnish information during an enquiry into the return for that period, and
- (b) if the person had duly complied with the request, the Board could have been reasonably expected to give the person a notice under section 804ZA in relation to that period.
- (8) If a person is given a notice under section 804ZA in relation to a chargeable period after having made a tax return for that period, the person may amend the return for the purpose of complying with the notice at any time before the end of the period of 90 days beginning with the day on which the notice is given.
- (9) If the notice under section 804ZA is given to the person after he has been given a notice of enquiry in respect of his tax return for the period, no closure notice may be given in relation to his tax return until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (10) If the notice under section 804ZA is given to the person after any enquiries into the return for the period are completed, no discovery assessment may be made as regards the income or chargeable gain to which the notice relates until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (11) Subsections (2)(b) and (8) do not prevent a person's tax return for a chargeable period becoming incorrect if—
- (a) a notice under section 804ZA is given to the person in relation to that period,
- (b) the return is not amended in accordance with subsection (2)(b) or (8) for the purpose of complying with the notice, and
- (c) the return ought to have been so amended.
- (12) In this section—
- “*closure notice*” means a notice under—section 28A or 28B of the Management Act, orparagraph 32 of Schedule 18 to the Finance Act 1998;
- “*discovery assessment*” means an assessment under—section 29 of the Management Act, orparagraph 41 of Schedule 18 to the Finance Act 1998;
- “*notice of enquiry*” means a notice under—section 9A or 12AC of the Management Act, orparagraph 24 of Schedule 18 to the Finance Act 1998.
##### 804A
- (1) Subsection (2) below applies where credit for tax—
- (a) which is payable under the laws of a territory outside the United Kingdom in respect of insurance business carried on by a company through a permanent establishment in that territory, and
- (b) which is computed otherwise than wholly by reference to profits arising in that territory,
is to be allowed (in accordance with this Part) against corporation tax charged under Case I or Case VI of Schedule D in respect of the profits, computed in accordance with the provisions applicable to Case I of Schedule D, of life assurance business or gross roll-up business carried on by the company in an accounting period (in this section referred to as “*the relevant profits*”).
- (1A) For the purposes of paragraph (b) of subsection (1) above, the cases where tax payable under the laws of a territory outside the United Kingdom is “*computed otherwise than wholly by reference to profits arising in that territory*” are those cases where the charge to tax in that territory falls within subsection (1B) below.
- (1B) A charge to tax falls within this subsection if it is such a charge made otherwise than by reference to profits as (by disallowing their deduction in computing the amount chargeable) to require sums payable and other liabilities arising under policies to be treated as sums or liabilities falling to be met out of amounts subject to tax in the hands of the company.
- (2) Where this subsection applies, the amount of the credit shall not exceed the greater of—
- (a) any such part of the tax payable under the laws of the territory outside the United Kingdom as is charged by reference to profits arising in that territory, and
- (b) the shareholders’ share of the tax so payable.
- (3) For the purposes of subsection (2) above the shareholders’ share of tax payable under the laws of a territory outside the United Kingdom is so much of that tax as is represented by the fraction
$$AB$where— A is an amount equal to the amount of the relevant profits before making any deduction authorised by subsection (5) below; andB is an amount equal to the excess of—$
- (a) the amount taken into account as receipts of the company in computing those profits, apart from premiums and sums received by virtue of a claim under a reinsurance contract, over
- (b) the amounts taken into account as expenses . . . in computing those profits.
- (4) Where there is no such excess as is mentioned in subsection (3) above, or where the profits are greater than any excess, the whole of the tax payable under the laws of the territory outside the United Kingdom shall be the shareholders’ share; and (subject to that) where there are no profits, none of it shall be the shareholders’ share.
- (5) Where, by virtue of this section, the credit for any tax payable under the laws of a territory outside the United Kingdom is less than it otherwise would be, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the relevant profits.
##### 804B
- (1) Where—
- (a) an insurance company carries on more than one category of long-term business in an accounting period, and
- (b) there arises to the company in that period any income or gain (“*the relevant income*”) in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is allowable against corporation tax in respect of so much of the relevant income as is referable (in accordance with the provisions of sections 432ZA to 432E . . . ) to a particular category of business must not exceed the fraction of the foreign tax which, in accordance with the following provisions of this section, is attributable to that category of business.
- (3) Where the relevant income arises from an asset which is linked solely to a category of business, the whole of the foreign tax is attributable to that category of business, unless the case is one where subsection (7) below applies.
- (3A) Where the relevant income arises from foreign business assets, the whole of the foreign tax is attributable to gross roll-up business, unless the case is one where subsection (7) below applies.
- (4) Where subsection (3) above does not apply and the category of business in question is—
- (a) basic life assurance and general annuity business, or
- (b) PHI business,
the fraction of the foreign tax that is attributable to that category of business is the fraction whose numerator is the part of the relevant income which is referable to that category by virtue of any provision of section 432A . . . and whose denominator is the whole of the relevant income.
- (5) Subsections (6) and (7) below apply where the category of business in question is gross roll-up business.
- (6) Where—
- (a) subsection (3) above does not apply, and
- (b) some or all of the relevant income is taken into account in accordance with section 83 of the Finance Act 1989 in an account in relation to which the provisions of section 432C . . . apply,
the fraction of the foreign tax that is attributable to gross roll-up business is the fraction whose numerator is the part of the relevant income which is referable to gross roll-up business by virtue of any provision of section 432C . . . and whose denominator is the whole of the relevant income.
- (7) Where some or all of the relevant income falls to be taken into account in determining in accordance with section 83(2) of the Finance Act 1989 the amount referred to in section 432E(1) as the net amount, the fraction of the foreign tax that is attributable to gross roll-up business is the fraction—
- (a) whose numerator is the part of the investment income taken into account in that determination which would be referable to gross roll-up business by virtue of section 432E if the investment income were the only amount included in the net amount; and
- (b) whose denominator is the whole of that investment income.
- (7A) The Treasury may by regulations amend subsection (7) above; and the regulations may include amendments having effect in relation to accounting periods during which they are made.
- (8) No part of the foreign tax is attributable to any category of business except as provided by subsections (3) to (7) above.
- (9) Where for the purposes of this section an amount of foreign tax is attributable to gross roll-up business, credit in respect of the foreign tax so attributable shall be allowed only against corporation tax in respect of profits chargeable under section 436A.
##### 804C
- (1) Where—
- (a) an insurance company carries on any category of insurance business in a period of account,
- (b) a computation in accordance with the provisions applicable to Case I of Schedule D falls to be made in relation to that category of business for that period, and
- (c) there arises to the company in that period any income or gain in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is to be allowed against corporation tax in respect of so much of that income or gain as is referable to the category of business concerned (“*the relevant income*”) shall be limited by treating the amount of the relevant income as reduced in accordance with subsections (3) and (4) below.
- (3) The first limitation is to treat the amount of the relevant income as reduced (but not below nil) for the purposes of this Chapter by the amount of expenses (if any) attributable to the relevant income.
- (4) If—
- (a) the amount of the relevant income after any reduction under subsection (3) above,
exceeds
- (b) the relevant fraction of the profits of the category of business concerned for the period of account in question which are chargeable to corporation tax,
the second limitation is to treat the relevant income as further reduced (but not below nil) for the purposes of this Chapter to an amount equal to that fraction of those profits.
In this subsection any reference to the profits of a category of business is a reference to those profits after the set off of any losses of that category of business which have arisen in any previous accounting period.
- (5) In determining the amount of the credit for foreign tax which is to be allowed as mentioned in subsection (2) above, the relevant income shall not be reduced except in accordance with that subsection.
- (6) For the purposes of subsection (3) above, the amount of expenses attributable to the relevant income is the appropriate fraction of the total relevant expenses of the category of business concerned for the period of account in question.
- (7) In subsection (6) above, the “*appropriate fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above, and
- (b) whose denominator is the total income of the category of business concerned for the period of account in question,
unless the denominator so determined is nil, in which case the denominator shall instead be the amount described in subsection (8) below.
- (8) That amount is so much in total of the income and gains—
- (a) which arise to the company in the period of account in question, and
- (b) in respect of which credit for foreign tax falls to be allowed under any arrangements,
as are referable to the category of business concerned (before any reduction in accordance with subsection (2) above).
- (9) In subsection (4) above, the “*relevant fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above; and
- (b) whose denominator is the amount described in subsection (8) above.
- (10) Where a 75 per cent subsidiary of an insurance company is acting in accordance with a scheme or arrangement and—
- (a) the purpose, or one of the main purposes, of that scheme or arrangement is to prevent or restrict the application of subsection (2) above to the insurance company, and
- (b) the subsidiary does not carry on insurance business of any description,
the amount of corporation tax attributable (apart from this subsection) to any item of income or gain arising to the subsidiary shall be found by setting off against that item the amount of expenses that would be attributable to it under subsection (3) above if that item had arisen directly to the insurance company.
- (11) Where the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is, by virtue of subsection (2) above, less than it would be if the relevant income were not treated as reduced in accordance with that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the profits of the category of business concerned.
- (12) Where, by virtue of subsection (10) above, the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is less than it would be apart from that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the income of the 75 per cent subsidiary.
- (13) For the purposes of the operation of this section in relation to any income or gain in respect of which credit falls to be allowed under any arrangements, the amount of the income or gain that is referable to a category of insurance business is the same fraction of the income and gain as the fraction of the foreign tax that is attributable to that category of business in accordance with section 804B.
- (14) This section shall be construed—
- (a) in accordance with section 804D, where the category of business concerned is life assurance business or gross roll-up business; and
- (b) in accordance with section 804E, where the category of business concerned is not life assurance business or gross roll-up business.
##### 804D
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for the period of account in question is the amount (if any) by which—
- (a) so much of the total income shown in the revenue account in the periodical return of the company concerned for that period as is referable to that category of business,
exceeds
- (b) so much of any commissions payable and any expenses of management incurred in connection with the acquisition of the business, as shown in that return, so far as referable to that category of business.
- (3) Where any amounts fall to be brought into account in accordance with section 83 of the Finance Act 1989, the amounts that are referable to the category of business concerned shall be determined for the purposes of subsection (2) above in accordance with sections 432B to 432G.
- (4) The “total relevant expenses" of the category of business concerned for any period of account is the amount of the claims incurred—
- (a) increased by any increase in the liabilities of the company, or
- (b) reduced (but not below nil) by any decrease in the liabilities of the company.
- (5) For the purposes of subsection (4) above, the amounts to be taken into account in the case of any period of account are the amounts as shown in the company’s periodical return for the period so far as referable to the category of business concerned.
##### 804E
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is not life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for any period of account is the amount (if any) by which—
- (a) the sum of the amounts specified in subsection (3) below,
exceeds
- (b) the sum of the amounts specified in subsection (4) below.
- (3) The amounts mentioned in subsection (2)(a) above are—
- (a) earned premiums, net of reinsurance;
- (b) investment income and gains;
- (c) other technical income, net of reinsurance;
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In any such case, the market value of the rights transferred—
- (a) shall be treated for tax purposes as income of P,
- (b) shall be taxable as rentals receivable by P under the lease (apart from any transfer of his right to receive some or all of the rentals), and
- (c) shall be brought into account at the time of the transfer.
- (2A) But subsection (2) does not apply if and to the extent that any of the market value of the rights transferred is (apart from this section) brought into account—
- (a) as income, or
- (b) as a capital allowances disposal receipt.
- (3) Any reference to the transfer from P to another person of a right to receive rentals includes a reference to any arrangement under which rental ceases to form part of the receipts taken into account as income for the purposes of calculating P’s tax liability.
- (4) Where P is a partnership, any reference in this section to calculating P’s tax liability includes a reference to calculating the tax liability of the partners, notwithstanding that the partnership has legal personality.
- (5) A partnership has legal personality for the purposes of subsection (4) above if it is regarded as a legal person, or as a body corporate, under the law of the country or territory under which it is formed.
- (5ZA) The references in subsections (1)(c) and (3) to another person include any person in which P has an interest, including any partnership of which P is a member and the trustees of any trust of which P is a beneficiary.
- (5A) This section does not apply in so far as section 774B or 774D (structured finance arrangements) applies in relation to the arrangements mentioned in paragraph (c) of subsection (1) above as a result of the transfer mentioned in that paragraph.
- (5B) This section does not apply in relation to a relevant capital payment to which section 785B below or section 809ZA of ITA 2007 applies; and “relevant capital payment” here has the same meaning as in that section.
- (4) The amounts mentioned in subsection (2)(b) above are—
- (a) acquisition costs;
- (b) the change in deferred acquisition costs;
- (c) losses on investments.
- (5) The “total relevant expenses" of the category of business concerned for any period of account is the sum of—
- (a) the claims incurred, net of reinsurance,
- (b) the changes in other technical provisions, net of reinsurance,
- (c) the change in the equalisation provision, and
- (d) investment management expenses,
unless that sum is a negative amount, in which case the total relevant expenses shall be taken to be nil.
- (6) The amounts to be taken into account for the purposes of the paragraphs of subsections (3) to (5) above are the amounts taken into account for the purposes of corporation tax.
- (7) Expressions used—
- (a) in the paragraphs of subsections (3) to (5) above, and
- (b) in the provisions of section B of Part 1 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the required formats) which relate to the profit and loss account format (within the meaning of sub-paragraphs (1) and (2) of paragraph 1 of that Schedule),
have the same meaning in those paragraphs as they have in those provisions.
##### 804F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 804G
- (1) This section applies if—
- (a) credit for foreign tax falls to be allowed to a person (“P”) under any arrangements, and
- (b) a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax.
- (2) The amount of that credit is to be reduced by an amount equal to that payment.
- (3) Section 839 applies for the purposes of determining whether or not a person is connected with P.
### Foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax
##### 806A
- (1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of eligible unrelieved foreign tax arises in respect of a dividend falling within subsection (2) below paid to the company.
- (2) The dividends that fall within this subsection are any dividends chargeable under Case V of Schedule D, other than—
- (a) any dividend which is trading income for the purposes of section 393;
- (b) any dividend which, in the circumstances described in paragraphs (a) and (b) of subsection (8) of section 393, would by virtue of that subsection fall to be treated as trading income for the purposes of subsection (1) of that section;
- (c) in a case where section 801A applies, the dividend mentioned in subsection (1)(b) of that section;
- (d) in a case where section 803 applies, the dividend mentioned in subsection (1)(b) of that section;
- (e) any dividend the amount of which is, under section 811, treated as reduced.
- (3) For the purposes of this section—
- (a) the cases where an amount of eligible unrelieved foreign tax arises in respect of a dividend falling within subsection (2) above are the cases set out in subsections (4) and (5) below; and
- (b) the amounts of eligible unrelieved foreign tax which arise in any such case are those determined in accordance with section 806B.
- (4) Case A is where—
- (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of the dividend,
exceeds
- (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of the dividend.
- (5) Case B is where the amount of tax which, by virtue of any provision of any arrangements, falls to be taken into account as mentioned in section 799(1) in the case of the dividend (whether or not by virtue of section 801(2) or (3)) is less than it would be apart from the mixer cap.
But if that is so in any case by reason only of the mixer cap restricting the amount of underlying tax that is treated as mentioned in subsection (2) or (3) of section 801 in the case of a dividend paid by a company resident in the United Kingdom, the case does not fall within Case B.
- (6) In determining whether the circumstances are as set out in subsection (4) or (5) above, sections 806C and 806D shall be disregarded.
##### 806B
- (1) This section has effect for determining the amounts of eligible unrelieved foreign tax which arise in the cases set out in section 806A(4) and (5).
- (2) In Case A, the difference between—
- (a) the amount of the credit allowed as mentioned in section 806A(4)(b), and
- (b) the greater amount of the credit that would have been so allowed if, for the purposes of subsection (2) of section 797, the rate of corporation tax payable as mentioned in that subsection were the upper percentage,
shall be an amount of eligible unrelieved foreign tax.
- (3) In Case B, the amount (if any) by which—
- (a) the aggregate of the upper rate amounts falling to be brought into account for the purposes of this paragraph by virtue of subsection (4) or (5) below, exceeds
- (b) the amount of tax to be taken into account as mentioned in section 799(1) in the case of the Case V dividend, before any increase under section 801(4B),
shall be an amount of eligible unrelieved foreign tax.
- (4) In the case of the Case V dividend (but not any lower level dividend), the upper rate amount to be brought into account for the purposes of subsection (3)(a) above—
- (a) in a case where the mixer cap does not restrict the amount of tax to be taken into account as mentioned in section 799(1) (before any increase under section 801(4B)) in the case of that dividend, is that amount of tax; or
- (b) in a case where the mixer cap restricts the amount of tax to be so taken into account in the case of that dividend, is the greater amount that would have been so taken into account if, in the application of the formula in section 799(1A) in the case of that dividend (but not any lower level dividend) M% had, in relation to—
- (i) so much of D as does not represent any lower level dividend, and
- (ii) so much of U as is not underlying tax attributable to any lower level dividend,
been the upper percentage.
- (5) In the case of any dividend (the “*relevant dividend*”) received as mentioned in subsection (2) or (3) of section 801 which is a lower level dividend in relation to the Case V dividend, the upper rate amount to be brought into account for the purposes of subsection (3)(a) above—
- (a) in a case where the mixer cap does not restrict the amount of underlying tax that is treated as mentioned in subsection (2) or (3), as the case may be, of section 801 in the case of the relevant dividend, is the appropriate portion of that amount of underlying tax;
- (b) in a case where—
- (i) the relevant dividend was paid by a company resident in the United Kingdom, and
- (ii) the mixer cap restricts the amount of underlying tax that is treated as mentioned in subsection (2) or (3), as the case may be, of section 801 in the case of that dividend,
is the appropriate portion of that restricted amount of underlying tax; or
- (c) in a case where—
- (i) the relevant dividend was paid by a company resident outside the United Kingdom, and
- (ii) the mixer cap restricts the amount of underlying tax that is treated as mentioned in subsection (2) or (3), as the case may be, of section 801 in the case of that dividend,
is the appropriate portion of the greater amount of tax that would have been so treated if, in the application of the formula in section 799(1A) in the case of that dividend (but not any other dividend) M% had, in relation to so much of D as does not represent any lower level dividend, and so much of U as is not underlying tax attributable to any lower level dividend, been the upper percentage.
- (6) For the purposes of subsection (5) above, the “*appropriate portion*” of any amount there mentioned in the case of a dividend is found by multiplying that amount by the product of the reducing fractions for each of the higher level dividends.
- (7) For the purposes of subsection (6) above, the “*reducing fraction*” for any dividend is the fraction—
- (a) whose numerator is the amount of the dividend; and
- (b) whose denominator is the amount of the relevant profits (within the meaning of section 799(1)) out of which the dividend is paid.
- (8) Any reference in this section to any tax being restricted by the mixer cap in the case of any dividend is a reference to that tax being so restricted otherwise than by virtue only of the application of the mixer cap in the case of one or more lower level dividends.
- (9) For the purpose of determining the amount described in subsection (2)(b), (4)(b) or (5)(c) above, sections 806C and 806D shall be disregarded.
- (10) In this section—
- “*the Case V dividend*” means the dividend mentioned in section 806A(1);
- “*higher level dividend*”, in relation to another dividend, means any dividend—by which that other dividend is to any extent represented; andwhich either is the Case V dividend or is to any extent represented by the Case V dividend;
- “*lower level dividend*”, in relation to another dividend, means any dividend which—is received as mentioned in section 801(2) or (3); andis to any extent represented by that other dividend;
- “*the relevant tax*” means—in the case of the Case V dividend, the foreign tax to be taken into account as mentioned in section 799(1); andin the case of any other dividend, the amount of underlying tax to be treated as mentioned in section 801(2) or (3) in the case of the dividend.
##### 806C
- (1) In this section “qualifying foreign dividend" means any dividend which falls within section 806A(2), other than—
- (a) an ADP dividend paid by a controlled foreign company;
- (b) so much of any dividend paid by any company as represents an ADP dividend paid by another company which is a controlled foreign company;
- (c) a dividend in respect of which an amount of eligible unrelieved foreign tax arises.
- (2) For the purposes of this section—
- (a) a “related qualifying foreign dividend" is any qualifying foreign dividend paid to a company resident in the United Kingdom by a company which, at the time of payment of the dividend, is related to that company;
- (b) an “unrelated qualifying foreign dividend" is any qualifying foreign dividend which is not a related qualifying foreign dividend.
- (3) For the purposes of giving credit relief under this Part to a company resident in the United Kingdom—
- (a) the related qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;
- (b) the unrelated qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;
- (c) the underlying tax in relation to the related qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;
- (d) so much of the foreign tax paid in respect of the qualifying foreign dividends that arise to the company in an accounting period as is not underlying tax shall be aggregated.
- (4) Credit relief under this Part shall be given as if—
- (a) the related qualifying foreign dividends aggregated under paragraph (a) of subsection (3) above in the case of any accounting period instead together constituted a single related qualifying foreign dividend arising in that accounting period (“*the single related dividend*” arising in that accounting period);
- (b) the unrelated qualifying foreign dividends aggregated under paragraph (b) of that subsection in the case of any accounting period instead together constituted a single unrelated qualifying foreign dividend arising in that accounting period (“*the single unrelated dividend*” arising in that accounting period);
- (c) the underlying tax aggregated under paragraph (c) of that subsection for any accounting period were instead underlying tax in relation to the single related dividend arising in that accounting period (the “aggregated underlying tax" in respect of the single related dividend);
- (d) the tax aggregated under paragraph (d) of that subsection for any accounting period were instead foreign tax (other than underlying tax) paid in respect of, and computed by reference to,—
- (i) the single related dividend arising in that accounting period,
- (ii) the single unrelated dividend so arising, or
- (iii) partly the one dividend and partly the other,
(that aggregated tax being referred to as the “*aggregated withholding tax*”).
- (5) For the purposes of this section, a dividend paid by a controlled foreign company is an “*ADP dividend*” if it is a dividend by virtue of which (whether in whole or in part and whether taken alone or with one or more other dividends) no apportionment under section 747(3) falls to be made as regards an accounting period of the controlled foreign company in a case where such an apportionment would fall to be made apart from section 748(1)(a).
##### 806D
- (1) For the purposes of this section, where—
- (a) any eligible unrelieved foreign tax arises in an accounting period of a company, and
- (b) the dividend in relation to which it arises is paid by a company which, at the time of payment of the dividend, is related to that company,
that tax is “eligible underlying tax" to the extent that it consists of or represents underlying tax.
- (2) To the extent that any eligible unrelieved foreign tax is not eligible underlying tax it is for the purposes of this section “*eligible withholding tax*”.
- (3) For the purposes of giving credit relief under this Part to a company resident in the United Kingdom—
- (a) the amounts of eligible underlying tax that arise in an accounting period of the company shall be aggregated (that aggregate being referred to as the “relievable underlying tax" arising in that accounting period); and
- (b) the amounts of eligible withholding tax that arise in an accounting period of the company shall be aggregated (that aggregate being referred to as the “relievable withholding tax" arising in that accounting period).
- (4) The relievable underlying tax arising in an accounting period of the company shall be treated for the purposes of allowing credit relief under this Part as if it were—
- (a) underlying tax in relation to the single related dividend that arises in the same accounting period,
- (b) relievable underlying tax arising in the next accounting period (whether or not any related qualifying foreign dividend in fact arises to the company in that accounting period), or
- (c) underlying tax in relation to the single related dividend that arises in such one or more preceding accounting periods as result from applying the rules in section 806E,
or partly in one of those ways and partly in each or either of the others.
- (5) The relievable withholding tax arising in an accounting period of the company shall be treated for the purposes of allowing credit relief under this Part as if it were—
- (a) foreign tax (other than underlying tax) paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend that arises in the same accounting period,
- (b) relievable withholding tax arising in the next accounting period (whether or not any qualifying foreign dividend in fact arises to the company in that accounting period), or
- (c) foreign tax (other than underlying tax) paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend that arises in such one or more preceding accounting periods as result from applying the rules in section 806E,
or partly in one of those ways and partly in any one or more of the others.
- (6) The amount of relievable underlying tax or relievable withholding tax arising in an accounting period that is treated—
- (a) under subsection (4)(a) or (c) above as underlying tax in relation to the single related dividend arising in the same or any earlier accounting period, or
- (b) under subsection (5)(a) or (c) above as foreign tax paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend arising in the same or any earlier accounting period,
must not be such as would cause an amount of eligible unrelieved foreign tax to arise in respect of that dividend.
##### 806E
- (1) Where any relievable tax is to be treated as mentioned in section 806D(4)(c) or (5)(c), the rules for determining the accounting periods in question (and the amount of the relievable tax to be so treated in relation to each of them) are those set out in the following provisions of this section.
- (2) Rule 1 is that the accounting periods in question must be accounting periods beginning not more than three years before the accounting period in which the relievable tax arises.
- (3) Rule 2 is that the relievable tax must be so treated that—
- (a) credit for, or for any remaining balance of, the relievable tax is allowed against corporation tax in respect of the single dividend arising in a later one of the accounting periods beginning as mentioned in rule 1 above,
before
- (b) credit for any of the relievable tax is allowed against corporation tax in respect of the single dividend arising in any earlier such accounting period.
- (4) Rule 3 is that the relievable tax must be so treated that, before allowing credit for any of the relievable tax against corporation tax in respect of the single dividend arising in any accounting period, credit for foreign tax is allowed—
- (a) first for the aggregated foreign tax in respect of the single dividend arising in that accounting period, so far as not consisting of relievable tax arising in another accounting period; and
- (b) then for relievable tax arising in any accounting period before that in which the relievable tax in question arises.
- (5) The above rules are subject to sections 806D(6) and 806F.
- (6) In this section—
- “*capital allowances disposal receipt*” means a disposal receipt within the meaning of Part 2 of the Capital Allowances Act 2001 (see section 60 of that Act);
- “*lease*” includes an underlease, sublease, tenancy or licence and an agreement for any of those things;
- “*tax liability*” means liability to income tax or corporation tax.
##### 785B
- (1) This section applies if—
- (a) there is an unconditional obligation, under a lease of plant or machinery or a relevant arrangement, to make a relevant capital payment (at any time), or
- (b) a relevant capital payment is made under such a lease or arrangement otherwise than in pursuance of such an obligation.
- (2) The lessor is treated for corporation tax purposes as receiving income attributable to the lease of an amount equal to the amount of the capital payment.
- (3) The income is treated—
- (a) if subsection (1)(a) applies, as income for the period of account in which there is first an obligation of the kind mentioned there, and
- (b) if subsection (1)(b) applies, as income for the period of account in which the payment is made.
##### 785C
- (1) The expressions used in section 785B and this section are to be interpreted as follows.
- (2) “*Capital payment*” means any payment except one which, if made to the lessor—
- (a) would fall to be included in a calculation of the lessor's income for corporation tax purposes, or
- (b) would fall to be included in such a calculation but for section 502B (rental earnings under long funding finance lease).
- (3) “*Lease*” includes—
- (a) a licence, and
- (b) the letting of a ship or aircraft on charter or the letting of any other asset on hire,
and “*lessor*” and “*lessee*” are to be read accordingly.
- (4) “*Lease of plant or machinery*” includes a lease of plant or machinery and other property but does not include—
- (a) a lease where the income attributable to the lease received by the lessor (if any) would be chargeable to tax under Schedule A, or
- (b) a lease of plant or machinery where the lessor has incurred what would (but for section 34A of the Capital Allowances Act) be qualifying expenditure (within the meaning of Part 2 of that Act) on the plant or machinery.
- (5) “*Relevant arrangement*” means any agreement or arrangement relating to a lease of plant or machinery, including one made before the lease is entered into or after it has ended (and, accordingly, “lessor” and lessee” include prospective and former lessors and lessees).
- (6) A capital payment, in relation to a lease or relevant arrangement, is “relevant” if condition A or B is met (but this is subject to subsection (9)).
- (7) Condition A is that the capital payment is payable (or paid), directly or indirectly, by (or on behalf of) the lessee to (or on behalf of) the lessor in connection with—
- (a) the grant, assignment, novation or termination of the lease, or
- (b) any provision of the lease or relevant arrangement (including the variation or waiver of any such provision).
- (8) Condition B is that rentals payable under the lease are less than (or payable later than) they might reasonably be expected to be if there were no obligation to make the capital payment (and the capital payment were not made).
- (9) A capital payment is not “relevant” if or to the extent that—
- (a) the capital payment reduces (or would but for section 536 of the Capital Allowances Act reduce) the amount of expenditure incurred by the lessor for the purposes of the Capital Allowances Act in respect of the plant or machinery in question,
- (b) the capital payment is compensation for loss resulting from damage to, or damage caused by, the plant or machinery in question, or
- (c) the capital payment would fall (or falls) to be brought into account by the lessor as a disposal receipt within the meaning of Part 2 of the Capital Allowances Act (see section 60(1) of that Act).
- (10) References to payment include the provision of value by any means other than the making of a payment, and accordingly—
- (a) references to the making of a payment include the passing of value (by any other means), and
- (b) references to the amount of the payment include the value passed.
##### 785D
- (1) This section applies if section 785B applies in relation to a lease of plant or machinery and other property (see section 785C(4)).
- (2) The relevant capital payment is to be apportioned, on a just and reasonable basis, between—
- (a) the plant and machinery, and
- (b) the other property.
- (3) If the income (if any) received by the lessor that is attributable to any of the plant or machinery is chargeable to tax under Schedule A, treat that plant or machinery as falling within subsection (2)(b) (and not subsection (2)(a)).
- (4) Section 785B(2) has effect as if the reference to the amount of the capital payment were to such amount as is apportioned under subsection (2) in respect of the plant or machinery within subsection (2)(a).
#### Offshore income gains: application of transfer of assets abroad provisions
##### 785E
- (1) This section applies for corporation tax purposes if—
- (a) section 785B applies by virtue of subsection (1)(a) of that section, and
- (b) at any time, the lessor reasonably expects that the relevant capital payment will not be paid (or will not be paid in full).
- (2) For the purposes of calculating the profits of the lessor, a deduction is allowed for the period of account which includes that time.
- (3) The amount of the deduction is equal to the amount reasonably expected not to be paid.
- (4) No other deduction is allowed in respect of the matters mentioned in subsection (1).
#### Capital sums: . . . winding up or partnership change.
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
##### 793A
- (1) Where relief in respect of an amount of tax that would otherwise be payable under the law of a territory outside the United Kingdom may be allowed—
- (a) under arrangements made in relation to that territory, or
- (b) under the law of that territory in consequence of any such arrangements,
credit may not be allowed in respect of that tax, whether the relief has been used or not.
- (2) Where, under arrangements having effect by virtue of section 788, credit may be allowed in respect of an amount of tax, credit by way of unilateral relief may not be allowed in respect of that tax.
- (3) Where arrangements made in relation to a territory outside the United Kingdom contain express provision to the effect that relief by way of credit shall not be given under the arrangements in cases or circumstances specified or described in the arrangements, then neither shall credit by way of unilateral relief be allowed in those cases or circumstances.
##### 795A
- (1) The amount of credit for foreign tax which, under any arrangements, is to be allowed against tax in respect of any income or chargeable gain shall not exceed the credit which would be allowed had all reasonable steps been taken—
- (a) under the law of the territory concerned, and
- (b) under any arrangements made in relation to that territory,
to minimise the amount of tax payable in that territory.
- (2) The steps mentioned in subsection (1) above include—
- (a) claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances; and
- (b) making elections for tax purposes.
- (3) For the purposes of subsection (1) above, any question as to the steps which it would have been reasonable for a person to take shall be determined on the basis of what the person might reasonably be expected to have done in the absence of relief under this Part against tax in the United Kingdom.
##### 797A
- (1) This section applies for the purposes of any arrangements where, in the case of any company—
- (a) any non-trading credit relating to an item is brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) for any accounting period (“the applicable accounting period”); and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that interest.
- (2) It shall be assumed that tax chargeable under paragraph (a) of Case III of Schedule D on the profits and gains arising for the applicable accounting period from the company’s loan relationships falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect (subject to subsection (7) below) as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description; and
- (b) different parts of that amount might be set against different profits.
- (4) For the purposes of this section, the adjusted amount of a company’s non-trading debits for any accounting period is the amount equal, in the case of that company, to the aggregate of the non-trading debits given for that period for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) less the aggregate of the amounts specified in subsection (5) below.
- (5) Those amounts are—
- (a) so much of any non-trading deficit for the applicable accounting period as is an amount to which a claim under subsection (2)(c) of section 83 of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act (deficit carried back and set against profits) relates; and
- (aa) so much of any non-trading deficit for that period as is surrendered as group relief by virtue of section 403 of the Taxes Act 1988; and
- (b) so much of any non-trading deficit for that period as falls to be carried forward to a subsequent period in accordance with subsection (3A) of that section or paragraph 4(4) of that Schedule; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Section 797(3) shall have effect as if any amount carried forward to the applicable accounting period under section 83(3A) of that Act were an amount capable of being allocated only to any non-trading profits of the company.
- (7) Where—
- (a) the company has a non-trading deficit for the applicable accounting period,
- (b) the amount of that deficit exceeds the aggregate of the amounts specified in subsection (5) above, and
- (c) in pursuance of a claim under—
- (i) subsection (2)(a) of section 83 of the Finance Act 1996 (deficit set against current year profits), or
- (ii) paragraph 4(2) of Schedule 11 to that Act (set-off of deficits in the case of insurance companies),
the excess falls to be set off against profits of any description,
section 797(3) shall have effect as if non-trading debits of the company which in aggregate are equal to the amount of the excess were required to be allocated to the profits against which they are set off in pursuance of the claim.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In this section “*non-trading profits*” has the same meaning as in paragraph 4 of Schedule 8 to the Finance Act 1996.
##### 797B
- (1) This section applies for the purposes of any arrangements where, in the case of a company—
- (a) a non-trading credit relating to an item is brought into account for the purposes of Schedule 29 to the Finance Act 2002 (intangible fixed assets) for an accounting period (“*the applicable accounting period*”), and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that item.
- (2) It shall be assumed that tax chargeable under Case VI of Schedule D on the profits and gains arising for the applicable accounting period from the company’s intangible fixed assets falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description, and
- (b) different parts of that amount might be set against different profits.
- (4) For this purpose the adjusted amount of a company’s non-trading debits for an accounting period is given by:
$$TotalDebits-AmountCarriedForward$where—Total Debits is the aggregate amount of the company’s non-trading debits for that accounting period under Schedule 29 to the Finance Act 2002 (intangible fixed assets), andAmount Carried Forward is the amount (if any) carried forward to the next accounting period of the company under paragraph 35(3) of that Schedule (carry-forward of non-trading loss in respect of which no claim is made for it to be set against total profits of current period).$
#### Letting of furnished holiday accommodation treated as trade for certain income tax purposes
##### 798A
- (1) This section has effect in relation to the application of section 797(1) to the allowance of credit for foreign tax against corporation tax in respect of trade income.
- (2) The reference in section 797(1) to the relevant income or gain shall be treated as referring only to income arising or gains accruing out of the transaction, arrangement or asset in connection with which the credit for foreign tax arises.
- (3) In determining for the purposes of section 797(1) the amount of corporation tax attributable to any income or gain, there shall be taken into account—
- (a) deductions or expenses which would be allowable in the computation of the taxpayer's liability,
- (b) a reasonable apportionment of allowable deductions or expenses which relate partly to the transaction, arrangement or asset from which the income or gain arises and partly to other matters, and
- (c) expenses of a company connected (within the meaning given by section 839) with the taxpayer, in so far as reasonably attributable to the income or gain.
- (4) In this section and section 798B “*trade income*” means—
- (a) income or profits chargeable to tax under Case I, II or V of Schedule D,
- (b) profits of a Schedule A business computed in same way as the profits of a trade in accordance with section 21A of ICTA,
- (c) sums charged to tax under Case VI of Schedule D in accordance with section 104 of ICTA, and
- (d) any other income or profits which by a provision of ICTA is chargeable to tax under, or computed in accordance with, Case I of Schedule D;
but this section shall not apply in relation to income to which section 804C below applies.
##### 798B
- (1) Where—
- (a) a credit for foreign tax arises in connection with an asset, and
- (b) the asset is in a hedging relationship with a derivative contract,
in the application of section 798A(2) the reference to the income arising out of the asset shall be taken as a reference to the income arising out of the asset and the derivative contract taken together (but taking account of the income or loss from the derivative contract only in so far as reasonably attributable to the hedging relationship).
- (2) For the purposes of subsection (1)(b) an asset is in a hedging relationship with a derivative contract if—
- (a) the asset is acquired as a hedge of risk in connection with the contract, or
- (b) the contract is entered into as a hedge of risk in connection with the asset;
and if an asset or a contract is wholly or partly designated as a hedge for the purposes of a person's accounts, that shall be conclusive for the purpose of this subsection.
- (3) Where royalties (as defined in arrangements having effect by virtue of section 788) are paid in respect of an asset in more than one jurisdiction outside the United Kingdom, for the purposes of section 798A(2)—
- (a) royalty income arising in more than one jurisdiction (other than the United Kingdom) in a year of assessment in respect of that asset shall be treated as income arising from a single transaction, arrangement or asset, and
- (b) credits available for foreign tax in respect of the royalty income shall be aggregated accordingly.
- (4) If a person (“A”) carrying on a trade giving rise to trade income enters into a scheme or arrangement with another person (“B”) a main purpose of which is to alter the effect of section 798A in relation to A, income received in pursuance of the scheme or arrangement shall be treated for the purposes of section 798A as trade income of B (and not as income of A).
- (5) Where—
- (a) transactions, arrangements or assets are treated by a taxpayer as a series or group (the “portfolio”),
- (b) a number of credits for foreign tax arise in respect of the portfolio, and
- (c) either—
- (i) it is not reasonably practicable to prepare a separate computation of income or gain for the purposes of section 798A(2) in respect of each transaction, arrangement or asset, or
- (ii) a separate computation of income or gain in respect of each transaction, arrangement or asset for the purposes of section 798A(2) would not, compared with an aggregated computation, make a material difference to the amount of credit for foreign tax which is allowable,
the income or gains arising from the portfolio, or part of the portfolio, may be aggregated and apportioned for the purposes of section 798A(2) in a fair and reasonable manner.
##### 798C
- (1) This section applies where the application of section 796(1) or 797(1) prevents an amount of credit for foreign tax from being allowable against income tax or corporation tax.
- (2) The taxpayer's income shall be treated as reduced by the amount of disallowed credit.
- (3) Subsection (2) applies only in so far as the amount of disallowed credit does not exceed the amount of any loss attributable to the income or gain in respect of which the foreign tax was paid.
- (4) For the purpose of subsection (3), payment of the foreign tax is to be taken into account despite section 795(2).
##### 801A
- (1) This section applies where—
- (a) a company (“*the claimant company*”) makes a claim for an allowance by way of credit in accordance with this Part;
- (b) the claim relates to underlying tax on a dividend paid to that company by a company resident outside the United Kingdom (“*the overseas company*”);
- (c) that underlying tax is or includes an amount in respect of tax (“*the high rate tax*”) payable by—
- (i) the overseas company, or
- (ii) such a third, fourth or successive company as is mentioned in section 801,
at a rate in excess of the relievable rate; and
- (d) the whole or any part of the amount in respect of the high rate tax which is or is included in the underlying tax would not be, or be included in, that underlying tax but for the existence of, or for there having been, an avoidance scheme.
- (2) Where this section applies, the amount of the credit to which the claimant company is entitled on the claim shall be determined as if the high rate tax had been tax at the relievable rate, instead of at a rate in excess of that rate.
- (3) For the purposes of this section tax shall be taken to be payable at a rate in excess of the relievable rate if, and to the extent that, the amount of that tax exceeds the amount that would represent tax on the relevant profits at the relievable rate.
- (4) In subsection (3) above “*the relevant profits*”, in relation to any tax, means the profits of the overseas company or, as the case may be, of the third, fourth or successive company which, for the purposes of this Part, are taken to bear that tax.
- (5) In this section “*the relievable rate*” means the rate of corporation tax in force when the dividend mentioned in subsection (1)(b) above was paid.
- (6) In this section “*an avoidance scheme*” means any scheme or arrangement which—
- (a) falls within subsection (7) below; and
- (b) is a scheme or arrangement the purpose, or one of the main purposes, of which is to have an amount of underlying tax taken into account on a claim for an allowance by way of credit in accordance with this Part.
- (7) A scheme or arrangement falls within this subsection if the parties to it include both—
- (a) the claimant company, a company related to that company or a person connected with the claimant company; and
- (b) a person who was not under the control of the claimant company at any time before the doing of anything as part of, or in pursuance of, the scheme or arrangement.
- (8) In this section “*arrangement*” means an arrangement of any kind, whether in writing or not.
- (9) For the purposes of this section, whether a person is connected with another is determined in accordance with section 839.
- (10) Subsection (5) of section 801 (meaning of “*related company*”) shall apply for the purposes of this section as it applies for the purposes of that section.
- (11) For the purposes of this section a person who is a party to a scheme or arrangement shall be taken to have been under the control of the claimant company at all the following times, namely—
- (a) any time when that company would have been taken (in accordance with section 416) to have had control of that person for the purposes of Part XI;
- (b) any time when that company would have been so taken if that section applied (with the necessary modifications) in the case of partnerships and unincorporated associations as it applies in the case of companies; and
- (c) any time when that person acted in relation to that scheme or arrangement, or any proposal for it, either directly or indirectly under the direction of that company.
##### 801B
- (1) This section applies where—
- (a) a company (“*company A*”) resident outside the United Kingdom has paid tax under the law of a territory outside the United Kingdom in respect of any of its profits;
- (b) some or all of those profits become profits of another company resident outside the United Kingdom (“*company B*”) otherwise than by virtue of the payment of a dividend to company B; and
- (c) company B pays a dividend out of those profits to another company (“*company C*”), wherever resident.
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid—
- (a) by any company resident outside the United Kingdom (whether or not company B),
- (b) to a company resident in the United Kingdom,
as if company B had paid the tax paid by company A in respect of those profits of company A which have become profits of company B as mentioned in subsection (1)(b) above.
- (3) But the amount of relief under this Part which is allowable to a company resident in the United Kingdom shall not exceed the amount which would have been allowable to that company had those profits become profits of company B by virtue of the payment of a dividend by company A to company B.
##### 801C
- (1) This section applies in any case where—
- (a) by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company; and
- (b) one or more of the dividends paid by the controlled foreign company by virtue of which the condition in paragraph (a) above is satisfied are dividends falling within subsection (2) below.
- (2) A dividend falls within this subsection if, for the purposes of Part I of Schedule 25, the whole or any part of it falls to be treated by virtue of paragraph 4 of that Schedule as paid by the controlled foreign company to a United Kingdom resident.
- (3) If, in a case where this section applies,—
- (a) an initial dividend is paid to a company resident outside the United Kingdom, and
- (b) that company, or any other company which is related to it, pays an intermediate dividend which for the purposes of paragraph 4 of Schedule 25 to any extent represents that initial dividend,
subsection (4) below shall have effect in relation to the UK recipient concerned.
- (4) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to that UK recipient—
- (a) that, instead of the intermediate dividend, the dividends described in subsection (5) below had been paid and the circumstances had been as described in subsection (6) or (7) below, as the case may be; and
- (b) that any tax paid under the law of any territory in respect of the intermediate dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
- (5) The dividends mentioned in subsection (4)(a) above are—
- (a) as respects each of the initial dividends which are, for the purposes of paragraph 4 of Schedule 25, to any extent represented by the intermediate dividend, a separate dividend (an “*ADP dividend*”) representing, and of an amount equal to, so much of that initial dividend as is for those purposes represented by the intermediate dividend; and
- (b) a further separate dividend (a “*residual dividend*”) representing, and of an amount equal to, the remainder (if any) of the intermediate dividend.
- (6) As respects each of the ADP dividends, the intermediate company is to be treated as if it were a separate company whose distributable profits are of a constitution corresponding to, and an amount equal to, that of the ADP dividend.
- (7) As respects the residual dividend (if any), the relevant profits out of which it is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding accordingly so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid.
- (8) If, in a case where this section applies, an intermediate company also pays a dividend which is not an intermediate dividend (an “*independent dividend*”) and either—
- (a) that dividend is paid to a United Kingdom resident, or
- (b) if it is not so paid, a dividend which to any extent represents it is paid by a company which is related to that company and resident outside the United Kingdom to a United Kingdom resident,
subsection (9) below shall have effect in relation to the United Kingdom resident.
- (9) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to the United Kingdom resident—
- (a) that the relevant profits out of which the independent dividend is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid; and
- (b) that any tax paid under the law of any territory in respect of the independent dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).
- (10) For the purposes of this section—
- (a) a controlled foreign company is an “ADP controlled foreign company" as respects any of its accounting periods if the condition in paragraph (a) of subsection (1) above is satisfied as respects that accounting period;
- (b) an “initial dividend" (subject to subsection (14) below) is any of the dividends mentioned in paragraph (b) of subsection (1) above paid by an ADP controlled foreign company; and
- (c) a “*subsequent dividend*” is any dividend which, in relation to one or more initial dividends, is the subsequent dividend for the purposes of paragraph 4 of Schedule 25.
- (11) In this section—
- “*distributable profits*” means a company’s profits available for distribution, determined in accordance with section 799(6);
- “*intermediate company*” means any company resident outside the United Kingdom which pays an intermediate dividend;
- “*intermediate dividend*” means any dividend which is paid by a company resident outside the United Kingdom and which—for the purposes of paragraph 4 of Schedule 25, to any extent represents one or more initial dividends paid by other companies; andeither is the subsequent dividend in the case of those initial dividends or is itself to any extent represented for those purposes by a subsequent dividend;
- “*the UK recipient*” means the United Kingdom resident to whom a subsequent dividend is paid.
- (12) Where—
- “*aggregated foreign tax*” means aggregated underlying tax or aggregated withholding tax;
- “*relievable tax*” means relievable underlying tax or relievable withholding tax;
- “*the single dividend*” means—in relation to relievable underlying tax, the single related dividend; andin relation to relievable withholding tax, the single related dividend or the single unrelated dividend.
##### 806F
- (1) For the purposes of this Part, credit in accordance with any arrangements shall, in the case of any dividend, be given so far as possible—
- (a) for underlying tax (where allowable) before foreign tax other than underlying tax;
- (b) for foreign tax other than underlying tax before amounts treated as underlying tax; and
- (c) for amounts treated as underlying tax (where allowable) before amounts treated as foreign tax other than underlying tax.
- (2) Accordingly, where the amount of foreign tax to be brought into account for the purposes of allowing credit relief under this Part is subject to any limitation or restriction, the limitation or restriction shall be taken to have the effect of excluding foreign tax other than underlying tax before excluding underlying tax.
##### 806G
- (1) The relievable underlying tax or relievable withholding tax arising in any accounting period shall only be treated as mentioned in subsection (4) or (5) of section 806D on a claim.
- (2) Any such claim must specify the amount (if any) of that tax—
- (a) which is to be treated as mentioned in paragraph (a) of the subsection in question;
- (b) which is to be treated as mentioned in paragraph (b) of that subsection; and
- (c) which is to be treated as mentioned in paragraph (c) of that subsection.
- (3) A claim under subsection (1) above may only be made before the expiration of the period of—
- (a) six years after the end of the accounting period mentioned in that subsection; or
- (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.
##### 806H
- (1) The Board may by regulations make provision for, or in connection with, allowing a company which is a member of a group to surrender all or any part of the amount of the relievable tax arising to it in an accounting period to another company which is a member of that group at the time, or throughout the period, prescribed by the regulations.
- (2) The provision that may be made under subsection (1) above includes provision—
- (a) prescribing the conditions which must be satisfied if a surrender is to be made;
- (b) determining the amount of relievable tax which may be surrendered in any accounting period;
- (c) prescribing the conditions which must be satisfied if a claim to surrender is to be made;
- (d) prescribing the consequences for tax purposes of a surrender having been made;
- (e) allowing a claim to be withdrawn and prescribing the effect of such a withdrawal.
- (3) Regulations under subsection (1) above—
- (a) may make different provision for different cases; and
- (b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.
- (4) For the purposes of subsection (1) above a company is a member of a group if the conditions prescribed for that purpose in the regulations are satisfied.
##### 806J
- (1) This section has effect for the interpretation of the foreign dividend provisions of this Chapter.
- (2) In this section, “*the foreign dividend provisions of this Chapter*” means sections 806A to 806H and this section.
- (3) For the purposes of the foreign dividend provisions of this Chapter, where—
- (a) one company pays a dividend (“*dividend A*”) to another company, and
- (b) that other company, or a company which is related to it, pays a dividend (“*dividend B*”) to another company,
then, for the purposes of this section, dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
- (13) Sub-paragraph (2) of paragraph 4 of Schedule 25 (related companies) shall apply for the purposes of this section as it applies for the purposes of that paragraph.
- (14) Where an intermediate company which is an ADP controlled foreign company pays a dividend—
- (a) by virtue of which (whether taken alone or with other dividends) the condition in subsection (1)(a) above is satisfied as regards an accounting period of the company, but
- (b) which also for the purposes of paragraph 4 of Schedule 25 to any extent represents one or more initial dividends paid by other ADP controlled foreign companies,
the dividend shall not be regarded for the purposes of this section as an initial dividend paid by the company, to the extent that it so represents initial dividends paid by other ADP controlled foreign companies.
##### 803A
- (1) This section applies in any case where, under the law of a territory outside the United Kingdom, tax is payable by any one company resident in that territory (“*the responsible company*”) in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies so resident, taken together as a single taxable entity.
- (1A) Where—
- (a) a company is (within the meaning of section 801) an ADP controlled foreign company as respects any of its accounting periods, and
- (b) the whole or any part of the profits or gains of that accounting period are included in the aggregate profits, or aggregate profits or gains, mentioned in subsection (1) above,
subsection (2) below shall have effect as if the companies mentioned in subsection (1) above did not include that company.
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid by any of the companies mentioned in subsection (1) above (the “*non-resident companies*”) to another company (“*the recipient company*”), as if—
- (a) the non-resident companies, taken together, were a single company,
- (b) anything done by or in relation to any of the non-resident companies (including the payment of the dividend) were done by or in relation to that single company, and
- (c) that single company were related to the recipient company, if that one of the non-resident companies which actually pays the dividend is related to the recipient company,
(so that, in particular, the relevant profits for the purposes of section 799(1) is a single aggregate figure in respect of that single company and the foreign tax paid by the responsible company is foreign tax paid by that single company).
- (3) For the purposes of this section a company is related to another company if that other company—
- (a) controls directly or indirectly, or
- (b) is a subsidiary of a company which controls directly or indirectly,
not less than 10 per cent. of the voting power in the first-mentioned company.
##### 804ZA
- (1) If the Board consider, on reasonable grounds, that conditions A to D are or may be satisfied in relation to any income or chargeable gain taken or to be taken into account for the purposes of determining a person's liability to tax in a chargeable period, they may give the person a notice under this section.
- (2) Condition A is that, in the case of the person, there is in respect of the income or gain an amount of foreign tax for which, under any arrangements, credit is allowable against United Kingdom tax for that chargeable period.
- (3) Condition B is that there is a scheme or arrangement the main purpose, or one of the main purposes, of which is to cause an amount of foreign tax to be taken into account in the case of the person for that chargeable period.
- (4) Condition C is that the scheme or arrangement is a prescribed scheme or arrangement.
- (5) Condition D is that the amount referred to in subsection (6) is more than a minimal amount.
- (6) The amount is the aggregate of—
- (a) the aggregate amount of the claims for credit that the person has made, or is in a position to make, for the chargeable period; and
- (b) for all the persons connected to that person, the aggregate amount of the claims for credit that the connected person has made, or is in a position to make, for a corresponding chargeable period.
- (7) A chargeable period of a person (“A”) corresponds to a chargeable period of another person (“B”) if at least one day of A's chargeable period falls within B's chargeable period.
- (8) A notice under this section is a notice—
- (a) informing the person of the Board's view under subsection (1),
- (b) specifying the chargeable period in relation to which the Board formed that view,
- (c) if the amount of foreign tax considered by the Board to satisfy condition B is an amount of underlying tax, specifying the body corporate . . . whose payment of foreign tax is relevant to that underlying tax, and
- (d) informing the person that as a consequence section 804ZB has effect in relation to him.
- (9) A notice under this section may specify the adjustments of a person's tax return that, in the view of the Board, fall to be made by him under section 804ZB(2).
- (10) The adjustments specified may, in a case where the notice given to a person specifies a body corporate resident outside the United Kingdom, include treating the body corporate as having paid or being liable to pay only so much foreign tax as would have been allowed to it as a credit if it were resident in the United Kingdom and a notice under this section had been given to it as regards an amount of foreign tax.
- (11) Schedule 28AB makes provision about what constitutes a prescribed scheme or arrangement.
- (11A) In this section “*foreign tax*” includes any tax which for the purpose of allowing credit under any arrangements against corporation tax is treated by section 801 as if it were tax payable under the law of any territory outside the United Kingdom.
- (12) In this section and sections 804ZB and 804ZC “*tax return*” means—
- (a) a return under section 8, 8A or 12AA of the Management Act, or
- (b) a company tax return;
and “*company tax return*” means the return required to be delivered pursuant to a notice under paragraph 3 of Schedule 18 to the Finance Act 1998, as read with paragraph 4 of that Schedule.
##### 804ZB
- (1) This section applies in relation to a person if—
- (a) a notice under section 804ZA has been given to the person in respect of a chargeable period specified in the notice, and
- (b) the chargeable period specified is a chargeable period in relation to which conditions A to D of section 804ZA are satisfied.
- (2) The person must in his tax return for the period make (or must amend his return for the period so as to make) such adjustments as are necessary for counteracting the effects of the scheme or arrangement in that period that are referable to the purpose referred to in condition B of section 804ZA.
##### 804ZC
- (1) Subsection (2) applies if the Board give a notice to a person under section 804ZA before the person has made his tax return for the chargeable period specified in the notice.
- (2) If the person makes a tax return for that period before the end of the period of 90 days beginning with the day on which the notice is given, he may—
- (a) make a tax return that disregards the notice, and
- (b) at any time after making the return and before the end of the period of 90 days, amend the return for the purpose of complying with the notice.
- (3) If a person has made a tax return for a chargeable period, the Board may only give him a notice under section 804ZA in relation to that period if a notice of enquiry has been given to him in respect of his tax return for that period.
- (4) After any enquiries into the person's tax return for that period have been completed, the Board may only give him a notice under section 804ZA in relation to that period if the requirements in subsections (5) and (7) are satisfied.
- (5) The first requirement is that at the time the enquiries were completed, the Board could not have been reasonably expected, on the basis of the information made available to them or to an officer of theirs before that time, to have been aware that the circumstances were such that a notice under section 804ZA could have been given to the person in relation to that period.
- (6) For the purposes of subsection (5)—
- (a) section 29(6) and (7) of the Management Act (information made available) applies as it applies for the purposes of section 29(5), and
- (b) paragraph 44(2) and (3) of Schedule 18 to the Finance Act 1998 applies as it applies for the purposes of paragraph 44(1).
- (7) The second requirement is that—
- (a) the person was requested to produce, provide or furnish information during an enquiry into the return for that period, and
- (b) if the person had duly complied with the request, the Board could have been reasonably expected to give the person a notice under section 804ZA in relation to that period.
- (8) If a person is given a notice under section 804ZA in relation to a chargeable period after having made a tax return for that period, the person may amend the return for the purpose of complying with the notice at any time before the end of the period of 90 days beginning with the day on which the notice is given.
- (9) If the notice under section 804ZA is given to the person after he has been given a notice of enquiry in respect of his tax return for the period, no closure notice may be given in relation to his tax return until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (10) If the notice under section 804ZA is given to the person after any enquiries into the return for the period are completed, no discovery assessment may be made as regards the income or chargeable gain to which the notice relates until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (11) Subsections (2)(b) and (8) do not prevent a person's tax return for a chargeable period becoming incorrect if—
- (a) a notice under section 804ZA is given to the person in relation to that period,
- (b) the return is not amended in accordance with subsection (2)(b) or (8) for the purpose of complying with the notice, and
- (c) the return ought to have been so amended.
- (12) In this section—
- “*closure notice*” means a notice under—section 28A or 28B of the Management Act, orparagraph 32 of Schedule 18 to the Finance Act 1998;
- “*discovery assessment*” means an assessment under—section 29 of the Management Act, orparagraph 41 of Schedule 18 to the Finance Act 1998;
- “*notice of enquiry*” means a notice under—section 9A or 12AC of the Management Act, orparagraph 24 of Schedule 18 to the Finance Act 1998.
##### 804A
- (1) Subsection (2) below applies where credit for tax—
- (a) which is payable under the laws of a territory outside the United Kingdom in respect of insurance business carried on by a company through a permanent establishment in that territory, and
- (b) which is computed otherwise than wholly by reference to profits arising in that territory,
is to be allowed (in accordance with this Part) against corporation tax charged under Case I or Case VI of Schedule D in respect of the profits, computed in accordance with the provisions applicable to Case I of Schedule D, of life assurance business or gross roll-up business carried on by the company in an accounting period (in this section referred to as “*the relevant profits*”).
- (1A) For the purposes of paragraph (b) of subsection (1) above, the cases where tax payable under the laws of a territory outside the United Kingdom is “*computed otherwise than wholly by reference to profits arising in that territory*” are those cases where the charge to tax in that territory falls within subsection (1B) below.
- (1B) A charge to tax falls within this subsection if it is such a charge made otherwise than by reference to profits as (by disallowing their deduction in computing the amount chargeable) to require sums payable and other liabilities arising under policies to be treated as sums or liabilities falling to be met out of amounts subject to tax in the hands of the company.
- (2) Where this subsection applies, the amount of the credit shall not exceed the greater of—
- (a) any such part of the tax payable under the laws of the territory outside the United Kingdom as is charged by reference to profits arising in that territory, and
- (b) the shareholders’ share of the tax so payable.
- (3) For the purposes of subsection (2) above the shareholders’ share of tax payable under the laws of a territory outside the United Kingdom is so much of that tax as is represented by the fraction
$$AB$where— A is an amount equal to the amount of the relevant profits before making any deduction authorised by subsection (5) below; andB is an amount equal to the excess of—$
- (a) the amount taken into account as receipts of the company in computing those profits, apart from premiums and sums received by virtue of a claim under a reinsurance contract, over
- (b) the amounts taken into account as expenses . . . in computing those profits.
- (4) Where there is no such excess as is mentioned in subsection (3) above, or where the profits are greater than any excess, the whole of the tax payable under the laws of the territory outside the United Kingdom shall be the shareholders’ share; and (subject to that) where there are no profits, none of it shall be the shareholders’ share.
- (5) Where, by virtue of this section, the credit for any tax payable under the laws of a territory outside the United Kingdom is less than it otherwise would be, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the relevant profits.
##### 804B
- (1) Where—
- (a) an insurance company carries on more than one category of long-term business in an accounting period, and
- (b) there arises to the company in that period any income or gain (“*the relevant income*”) in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is allowable against corporation tax in respect of so much of the relevant income as is referable (in accordance with the provisions of sections 432ZA to 432E . . . ) to a particular category of business must not exceed the fraction of the foreign tax which, in accordance with the following provisions of this section, is attributable to that category of business.
- (3) Where the relevant income arises from an asset which is linked solely to a category of business, the whole of the foreign tax is attributable to that category of business, unless the case is one where subsection (7) below applies.
- (3A) Where the relevant income arises from foreign business assets, the whole of the foreign tax is attributable to gross roll-up business, unless the case is one where subsection (7) below applies.
- (4) Where subsection (3) above does not apply and the category of business in question is—
- (a) basic life assurance and general annuity business, or
- (b) PHI business,
the fraction of the foreign tax that is attributable to that category of business is the fraction whose numerator is the part of the relevant income which is referable to that category by virtue of any provision of section 432A . . . and whose denominator is the whole of the relevant income.
- (5) Subsections (6) and (7) below apply where the category of business in question is gross roll-up business.
- (6) Where—
- (a) subsection (3) above does not apply, and
- (b) some or all of the relevant income is taken into account in accordance with section 83 of the Finance Act 1989 in an account in relation to which the provisions of section 432C . . . apply,
the fraction of the foreign tax that is attributable to gross roll-up business is the fraction whose numerator is the part of the relevant income which is referable to gross roll-up business by virtue of any provision of section 432C . . . and whose denominator is the whole of the relevant income.
- (7) Where some or all of the relevant income falls to be taken into account in determining in accordance with section 83(2) of the Finance Act 1989 the amount referred to in section 432E(1) as the net amount, the fraction of the foreign tax that is attributable to gross roll-up business is the fraction—
- (a) whose numerator is the part of the investment income taken into account in that determination which would be referable to gross roll-up business by virtue of section 432E if the investment income were the only amount included in the net amount; and
- (b) whose denominator is the whole of that investment income.
- (7A) The Treasury may by regulations amend subsection (7) above; and the regulations may include amendments having effect in relation to accounting periods during which they are made.
- (8) No part of the foreign tax is attributable to any category of business except as provided by subsections (3) to (7) above.
- (9) Where for the purposes of this section an amount of foreign tax is attributable to gross roll-up business, credit in respect of the foreign tax so attributable shall be allowed only against corporation tax in respect of profits chargeable under section 436A.
##### 804C
- (1) Where—
- (a) an insurance company carries on any category of insurance business in a period of account,
- (b) a computation in accordance with the provisions applicable to Case I of Schedule D falls to be made in relation to that category of business for that period, and
- (c) there arises to the company in that period any income or gain in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is to be allowed against corporation tax in respect of so much of that income or gain as is referable to the category of business concerned (“*the relevant income*”) shall be limited by treating the amount of the relevant income as reduced in accordance with subsections (3) and (4) below.
- (3) The first limitation is to treat the amount of the relevant income as reduced (but not below nil) for the purposes of this Chapter by the amount of expenses (if any) attributable to the relevant income.
- (4) If—
- (a) the amount of the relevant income after any reduction under subsection (3) above,
dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
- (4) Where—
- (a) one company is related to another, and
- (b) that other is related to a third company,
the first company shall be taken for the purposes of paragraph (b) of subsection (3) above to be related to the third, and so on where there is a chain of companies, each of which is related to the next.
- (5) In any case where—
- (a) a company resident outside the United Kingdom pays a dividend to a company resident in the United Kingdom, and
- (b) the circumstances are such that subsection (6)(b) of section 790 has effect in relation to that dividend,
the foreign dividend provisions of this Chapter shall have effect as if the company resident outside the United Kingdom were related to the company resident in the United Kingdom (and subsection (10) of that section shall have effect accordingly).
- (6) Subsection (5) of section 801 (related companies) shall apply for the purposes of the foreign dividend provisions of this Chapter as it applies for the purposes of that section.
- (7) In the foreign dividend provisions of this Chapter—
- “*aggregated underlying tax*” shall be construed in accordance with section 806C(4)(c);
- “*aggregated withholding tax*” shall be construed in accordance with section 806C(4)(d);
- “*controlled foreign company*” has the same meaning as in Chapter IV of Part XVII;
- “*eligible unrelieved foreign tax*” shall be construed in accordance with sections 806A and 806B;
- “*the mixer cap*” means section 799(1)(b);
- “*qualifying foreign dividend*” has the meaning given by section 806C(1);
- “*related qualifying foreign dividend*” has the meaning given by section 806C(2)(a);
- “*relievable tax*” has the meaning given by section 806E(6);
- “*relievable underlying tax*” shall be construed in accordance with 806D(3)(a);
- “*relievable withholding tax*” shall be construed in accordance with 806D(3)(b);
- “*single related dividend*” shall be construed in accordance with section 806C(4)(a);
- “*single unrelated dividend*” shall be construed in accordance with section 806C(4)(b);“the upper percentage" is 45 per cent.
### Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
##### 806K
- (1) Sections 806A to 806J shall apply in relation to an amount of eligible unrelieved foreign tax arising in a chargeable period in respect of any of the income of a branch or agency in the United Kingdom of a person resident outside the United Kingdom as they apply in relation to eligible unrelieved foreign tax arising in an accounting period of a company resident in the United Kingdom in respect of any of the company’s income, but with the modifications specified in subsection (2) below.
- (2) Those modifications are—
- (a) take any reference to an accounting period as a reference to a chargeable period;
- (b) take any reference to corporation tax as including a reference to income tax;
- (bb) in relation to income tax, take any reference to a dividend chargeable under Case V of Schedule D as a reference to a dividend chargeable under Chapter 4 of Part 4 of ITTOIA 2005;
- (c) take the reference in section 806A(4)(a) to section 797 as a reference to sections 796 and 797;
- (d) in relation to income tax, for subsection (2) of section 806B substitute the subsection (2) set out in subsection (3) below.
- (3) That subsection is—
- (“) In Case A, the difference between—
- (a) the amount of the credit allowed as mentioned in section 806A(4)(b), and
- (b) the greater amount of credit that would have been so allowed if, for the purposes of section 796, the amount of income tax borne on the dividend as computed under that section were charged at a rate equal to the upper percentage,
shall be an amount of eligible unrelieved foreign tax. ".
### Unrelieved foreign tax: profits of overseas branch or agency
##### 806L
- (1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of unrelieved foreign tax arises in respect of any of the company’s qualifying income from an overseas permanent establishment of the company.
- (2) The amount of the unrelieved foreign tax so arising shall be treated for the purposes of allowing credit relief under this Part as if it were foreign tax paid in respect of, and computed by reference to, the company’s qualifying income from the same overseas permanent establishment—
- (a) in the next accounting period (whether or not the company in fact has any such income from that source in that accounting period), or
- (b) in such one or more preceding accounting periods, beginning not more than three years before the accounting period in which the unrelieved foreign tax arises, as result from applying the rules in subsection (3) below,
or partly in the one way and partly in the other.
- (3) Where any unrelieved foreign tax is to be treated as mentioned in paragraph (b) of subsection (2) above, the rules for determining the accounting periods in question (and the amount of the unrelieved foreign tax to be so treated in relation to each of them) are that the unrelieved foreign tax must be so treated under that paragraph—
- (1) that—
- (a) credit for, or for any remaining balance of, the unrelieved foreign tax is allowed against corporation tax in respect of income of a later one of the accounting periods beginning as mentioned in that paragraph,
before
- (b) credit for any of the unrelieved foreign tax is allowed against corporation tax in respect of income of any earlier such period;
- (2) that, before allowing credit for any of the unrelieved foreign tax against corporation tax in respect of income of any accounting period, credit for foreign tax is allowed—
- (a) first for foreign tax in respect of the income of that accounting period, other than unrelieved foreign tax arising in another accounting period; and
- (b) then for unrelieved foreign tax arising in any accounting period before that in which the unrelieved foreign tax in question arises.
- (4) For the purposes of this section, the cases where an amount of unrelieved foreign tax arises in respect of any of a company’s qualifying income from an overseas permanent establishment in an accounting period are those cases where—
- (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of that income,
exceeds
- (b) the relevant fraction of the profits of the category of business concerned for the period of account in question which are chargeable to corporation tax,
the second limitation is to treat the relevant income as further reduced (but not below nil) for the purposes of this Chapter to an amount equal to that fraction of those profits.
In this subsection any reference to the profits of a category of business is a reference to those profits after the set off of any losses of that category of business which have arisen in any previous accounting period.
- (5) In determining the amount of the credit for foreign tax which is to be allowed as mentioned in subsection (2) above, the relevant income shall not be reduced except in accordance with that subsection.
- (6) For the purposes of subsection (3) above, the amount of expenses attributable to the relevant income is the appropriate fraction of the total relevant expenses of the category of business concerned for the period of account in question.
- (7) In subsection (6) above, the “*appropriate fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above, and
- (b) whose denominator is the total income of the category of business concerned for the period of account in question,
unless the denominator so determined is nil, in which case the denominator shall instead be the amount described in subsection (8) below.
- (8) That amount is so much in total of the income and gains—
- (a) which arise to the company in the period of account in question, and
- (b) in respect of which credit for foreign tax falls to be allowed under any arrangements,
as are referable to the category of business concerned (before any reduction in accordance with subsection (2) above).
- (9) In subsection (4) above, the “*relevant fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above; and
- (b) whose denominator is the amount described in subsection (8) above.
- (10) Where a 75 per cent subsidiary of an insurance company is acting in accordance with a scheme or arrangement and—
- (a) the purpose, or one of the main purposes, of that scheme or arrangement is to prevent or restrict the application of subsection (2) above to the insurance company, and
- (b) the subsidiary does not carry on insurance business of any description,
the amount of corporation tax attributable (apart from this subsection) to any item of income or gain arising to the subsidiary shall be found by setting off against that item the amount of expenses that would be attributable to it under subsection (3) above if that item had arisen directly to the insurance company.
- (11) Where the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is, by virtue of subsection (2) above, less than it would be if the relevant income were not treated as reduced in accordance with that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the profits of the category of business concerned.
- (12) Where, by virtue of subsection (10) above, the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is less than it would be apart from that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the income of the 75 per cent subsidiary.
- (13) For the purposes of the operation of this section in relation to any income or gain in respect of which credit falls to be allowed under any arrangements, the amount of the income or gain that is referable to a category of insurance business is the same fraction of the income and gain as the fraction of the foreign tax that is attributable to that category of business in accordance with section 804B.
- (14) This section shall be construed—
- (a) in accordance with section 804D, where the category of business concerned is life assurance business or gross roll-up business; and
- (b) in accordance with section 804E, where the category of business concerned is not life assurance business or gross roll-up business.
##### 804D
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for the period of account in question is the amount (if any) by which—
- (a) so much of the total income shown in the revenue account in the periodical return of the company concerned for that period as is referable to that category of business,
exceeds
- (b) so much of any commissions payable and any expenses of management incurred in connection with the acquisition of the business, as shown in that return, so far as referable to that category of business.
- (3) Where any amounts fall to be brought into account in accordance with section 83 of the Finance Act 1989, the amounts that are referable to the category of business concerned shall be determined for the purposes of subsection (2) above in accordance with sections 432B to 432G.
- (4) The “total relevant expenses" of the category of business concerned for any period of account is the amount of the claims incurred—
- (a) increased by any increase in the liabilities of the company, or
- (b) reduced (but not below nil) by any decrease in the liabilities of the company.
- (5) For the purposes of subsection (4) above, the amounts to be taken into account in the case of any period of account are the amounts as shown in the company’s periodical return for the period so far as referable to the category of business concerned.
##### 804E
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is not life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for any period of account is the amount (if any) by which—
- (a) the sum of the amounts specified in subsection (3) below,
exceeds
- (b) the sum of the amounts specified in subsection (4) below.
- (3) The amounts mentioned in subsection (2)(a) above are—
- (a) earned premiums, net of reinsurance;
- (b) investment income and gains;
- (c) other technical income, net of reinsurance;
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amounts mentioned in subsection (2)(b) above are—
- (a) acquisition costs;
- (b) the change in deferred acquisition costs;
- (c) losses on investments.
- (5) The “total relevant expenses" of the category of business concerned for any period of account is the sum of—
- (a) the claims incurred, net of reinsurance,
- (b) the changes in other technical provisions, net of reinsurance,
- (c) the change in the equalisation provision, and
- (d) investment management expenses,
unless that sum is a negative amount, in which case the total relevant expenses shall be taken to be nil.
- (6) The amounts to be taken into account for the purposes of the paragraphs of subsections (3) to (5) above are the amounts taken into account for the purposes of corporation tax.
- (7) Expressions used—
- (a) in the paragraphs of subsections (3) to (5) above, and
- (b) in the provisions of section B of Part 1 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the required formats) which relate to the profit and loss account format (within the meaning of sub-paragraphs (1) and (2) of paragraph 1 of that Schedule),
have the same meaning in those paragraphs as they have in those provisions.
##### 804F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 804G
- (1) This section applies if—
- (a) credit for foreign tax falls to be allowed to a person (“P”) under any arrangements, and
- (b) a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax.
- (2) The amount of that credit is to be reduced by an amount equal to that payment.
- (3) Section 839 applies for the purposes of determining whether or not a person is connected with P.
### Foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax
##### 806A
- (1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of eligible unrelieved foreign tax arises in respect of a dividend falling within subsection (2) below paid to the company.
- (2) The dividends that fall within this subsection are any dividends chargeable under Case V of Schedule D, other than—
- (a) any dividend which is trading income for the purposes of section 393;
- (b) any dividend which, in the circumstances described in paragraphs (a) and (b) of subsection (8) of section 393, would by virtue of that subsection fall to be treated as trading income for the purposes of subsection (1) of that section;
- (c) in a case where section 801A applies, the dividend mentioned in subsection (1)(b) of that section;
- (d) in a case where section 803 applies, the dividend mentioned in subsection (1)(b) of that section;
- (e) any dividend the amount of which is, under section 811, treated as reduced.
- (3) For the purposes of this section—
- (a) the cases where an amount of eligible unrelieved foreign tax arises in respect of a dividend falling within subsection (2) above are the cases set out in subsections (4) and (5) below; and
- (b) the amounts of eligible unrelieved foreign tax which arise in any such case are those determined in accordance with section 806B.
- (4) Case A is where—
- (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of the dividend,
exceeds
- (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of the dividend.
- (5) Case B is where the amount of tax which, by virtue of any provision of any arrangements, falls to be taken into account as mentioned in section 799(1) in the case of the dividend (whether or not by virtue of section 801(2) or (3)) is less than it would be apart from the mixer cap.
But if that is so in any case by reason only of the mixer cap restricting the amount of underlying tax that is treated as mentioned in subsection (2) or (3) of section 801 in the case of a dividend paid by a company resident in the United Kingdom, the case does not fall within Case B.
- (6) In determining whether the circumstances are as set out in subsection (4) or (5) above, sections 806C and 806D shall be disregarded.
##### 806B
- (1) This section has effect for determining the amounts of eligible unrelieved foreign tax which arise in the cases set out in section 806A(4) and (5).
- (2) In Case A, the difference between—
- (a) the amount of the credit allowed as mentioned in section 806A(4)(b), and
- (b) the greater amount of the credit that would have been so allowed if, for the purposes of subsection (2) of section 797, the rate of corporation tax payable as mentioned in that subsection were the upper percentage,
shall be an amount of eligible unrelieved foreign tax.
- (3) In Case B, the amount (if any) by which—
- (a) the aggregate of the upper rate amounts falling to be brought into account for the purposes of this paragraph by virtue of subsection (4) or (5) below, exceeds
- (b) the amount of tax to be taken into account as mentioned in section 799(1) in the case of the Case V dividend, before any increase under section 801(4B),
shall be an amount of eligible unrelieved foreign tax.
- (4) In the case of the Case V dividend (but not any lower level dividend), the upper rate amount to be brought into account for the purposes of subsection (3)(a) above—
- (a) in a case where the mixer cap does not restrict the amount of tax to be taken into account as mentioned in section 799(1) (before any increase under section 801(4B)) in the case of that dividend, is that amount of tax; or
- (b) in a case where the mixer cap restricts the amount of tax to be so taken into account in the case of that dividend, is the greater amount that would have been so taken into account if, in the application of the formula in section 799(1A) in the case of that dividend (but not any lower level dividend) M% had, in relation to—
- (i) so much of D as does not represent any lower level dividend, and
- (ii) so much of U as is not underlying tax attributable to any lower level dividend,
been the upper percentage.
- (5) In the case of any dividend (the “*relevant dividend*”) received as mentioned in subsection (2) or (3) of section 801 which is a lower level dividend in relation to the Case V dividend, the upper rate amount to be brought into account for the purposes of subsection (3)(a) above—
- (a) in a case where the mixer cap does not restrict the amount of underlying tax that is treated as mentioned in subsection (2) or (3), as the case may be, of section 801 in the case of the relevant dividend, is the appropriate portion of that amount of underlying tax;
- (b) in a case where—
- (i) the relevant dividend was paid by a company resident in the United Kingdom, and
- (ii) the mixer cap restricts the amount of underlying tax that is treated as mentioned in subsection (2) or (3), as the case may be, of section 801 in the case of that dividend,
is the appropriate portion of that restricted amount of underlying tax; or
- (c) in a case where—
- (i) the relevant dividend was paid by a company resident outside the United Kingdom, and
- (ii) the mixer cap restricts the amount of underlying tax that is treated as mentioned in subsection (2) or (3), as the case may be, of section 801 in the case of that dividend,
is the appropriate portion of the greater amount of tax that would have been so treated if, in the application of the formula in section 799(1A) in the case of that dividend (but not any other dividend) M% had, in relation to so much of D as does not represent any lower level dividend, and so much of U as is not underlying tax attributable to any lower level dividend, been the upper percentage.
- (6) For the purposes of subsection (5) above, the “*appropriate portion*” of any amount there mentioned in the case of a dividend is found by multiplying that amount by the product of the reducing fractions for each of the higher level dividends.
- (7) For the purposes of subsection (6) above, the “*reducing fraction*” for any dividend is the fraction—
- (a) whose numerator is the amount of the dividend; and
- (b) whose denominator is the amount of the relevant profits (within the meaning of section 799(1)) out of which the dividend is paid.
- (8) Any reference in this section to any tax being restricted by the mixer cap in the case of any dividend is a reference to that tax being so restricted otherwise than by virtue only of the application of the mixer cap in the case of one or more lower level dividends.
- (9) For the purpose of determining the amount described in subsection (2)(b), (4)(b) or (5)(c) above, sections 806C and 806D shall be disregarded.
- (10) In this section—
- “*the Case V dividend*” means the dividend mentioned in section 806A(1);
- “*higher level dividend*”, in relation to another dividend, means any dividend—by which that other dividend is to any extent represented; andwhich either is the Case V dividend or is to any extent represented by the Case V dividend;
- “*lower level dividend*”, in relation to another dividend, means any dividend which—is received as mentioned in section 801(2) or (3); andis to any extent represented by that other dividend;
- “*the relevant tax*” means—in the case of the Case V dividend, the foreign tax to be taken into account as mentioned in section 799(1); andin the case of any other dividend, the amount of underlying tax to be treated as mentioned in section 801(2) or (3) in the case of the dividend.
##### 806C
- (1) In this section “qualifying foreign dividend" means any dividend which falls within section 806A(2), other than—
- (a) an ADP dividend paid by a controlled foreign company;
- (b) so much of any dividend paid by any company as represents an ADP dividend paid by another company which is a controlled foreign company;
- (c) a dividend in respect of which an amount of eligible unrelieved foreign tax arises.
- (2) For the purposes of this section—
- (a) a “related qualifying foreign dividend" is any qualifying foreign dividend paid to a company resident in the United Kingdom by a company which, at the time of payment of the dividend, is related to that company;
- (b) an “unrelated qualifying foreign dividend" is any qualifying foreign dividend which is not a related qualifying foreign dividend.
- (3) For the purposes of giving credit relief under this Part to a company resident in the United Kingdom—
- (a) the related qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;
- (b) the unrelated qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;
- (c) the underlying tax in relation to the related qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;
- (d) so much of the foreign tax paid in respect of the qualifying foreign dividends that arise to the company in an accounting period as is not underlying tax shall be aggregated.
- (4) Credit relief under this Part shall be given as if—
- (a) the related qualifying foreign dividends aggregated under paragraph (a) of subsection (3) above in the case of any accounting period instead together constituted a single related qualifying foreign dividend arising in that accounting period (“*the single related dividend*” arising in that accounting period);
- (b) the unrelated qualifying foreign dividends aggregated under paragraph (b) of that subsection in the case of any accounting period instead together constituted a single unrelated qualifying foreign dividend arising in that accounting period (“*the single unrelated dividend*” arising in that accounting period);
- (c) the underlying tax aggregated under paragraph (c) of that subsection for any accounting period were instead underlying tax in relation to the single related dividend arising in that accounting period (the “aggregated underlying tax" in respect of the single related dividend);
- (d) the tax aggregated under paragraph (d) of that subsection for any accounting period were instead foreign tax (other than underlying tax) paid in respect of, and computed by reference to,—
- (i) the single related dividend arising in that accounting period,
- (ii) the single unrelated dividend so arising, or
- (iii) partly the one dividend and partly the other,
(that aggregated tax being referred to as the “*aggregated withholding tax*”).
- (5) For the purposes of this section, a dividend paid by a controlled foreign company is an “*ADP dividend*” if it is a dividend by virtue of which (whether in whole or in part and whether taken alone or with one or more other dividends) no apportionment under section 747(3) falls to be made as regards an accounting period of the controlled foreign company in a case where such an apportionment would fall to be made apart from section 748(1)(a).
##### 806D
- (1) For the purposes of this section, where—
- (a) any eligible unrelieved foreign tax arises in an accounting period of a company, and
- (b) the dividend in relation to which it arises is paid by a company which, at the time of payment of the dividend, is related to that company,
that tax is “eligible underlying tax" to the extent that it consists of or represents underlying tax.
- (2) To the extent that any eligible unrelieved foreign tax is not eligible underlying tax it is for the purposes of this section “*eligible withholding tax*”.
- (3) For the purposes of giving credit relief under this Part to a company resident in the United Kingdom—
- (a) the amounts of eligible underlying tax that arise in an accounting period of the company shall be aggregated (that aggregate being referred to as the “relievable underlying tax" arising in that accounting period); and
- (b) the amounts of eligible withholding tax that arise in an accounting period of the company shall be aggregated (that aggregate being referred to as the “relievable withholding tax" arising in that accounting period).
- (4) The relievable underlying tax arising in an accounting period of the company shall be treated for the purposes of allowing credit relief under this Part as if it were—
- (a) underlying tax in relation to the single related dividend that arises in the same accounting period,
- (b) relievable underlying tax arising in the next accounting period (whether or not any related qualifying foreign dividend in fact arises to the company in that accounting period), or
- (c) underlying tax in relation to the single related dividend that arises in such one or more preceding accounting periods as result from applying the rules in section 806E,
or partly in one of those ways and partly in each or either of the others.
- (5) The relievable withholding tax arising in an accounting period of the company shall be treated for the purposes of allowing credit relief under this Part as if it were—
- (a) foreign tax (other than underlying tax) paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend that arises in the same accounting period,
- (b) relievable withholding tax arising in the next accounting period (whether or not any qualifying foreign dividend in fact arises to the company in that accounting period), or
- (c) foreign tax (other than underlying tax) paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend that arises in such one or more preceding accounting periods as result from applying the rules in section 806E,
or partly in one of those ways and partly in any one or more of the others.
- (6) The amount of relievable underlying tax or relievable withholding tax arising in an accounting period that is treated—
- (a) under subsection (4)(a) or (c) above as underlying tax in relation to the single related dividend arising in the same or any earlier accounting period, or
- (b) under subsection (5)(a) or (c) above as foreign tax paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend arising in the same or any earlier accounting period,
must not be such as would cause an amount of eligible unrelieved foreign tax to arise in respect of that dividend.
##### 806E
- (1) Where any relievable tax is to be treated as mentioned in section 806D(4)(c) or (5)(c), the rules for determining the accounting periods in question (and the amount of the relievable tax to be so treated in relation to each of them) are those set out in the following provisions of this section.
- (2) Rule 1 is that the accounting periods in question must be accounting periods beginning not more than three years before the accounting period in which the relievable tax arises.
- (3) Rule 2 is that the relievable tax must be so treated that—
- (a) credit for, or for any remaining balance of, the relievable tax is allowed against corporation tax in respect of the single dividend arising in a later one of the accounting periods beginning as mentioned in rule 1 above,
before
- (b) credit for any of the relievable tax is allowed against corporation tax in respect of the single dividend arising in any earlier such accounting period.
- (4) Rule 3 is that the relievable tax must be so treated that, before allowing credit for any of the relievable tax against corporation tax in respect of the single dividend arising in any accounting period, credit for foreign tax is allowed—
- (a) first for the aggregated foreign tax in respect of the single dividend arising in that accounting period, so far as not consisting of relievable tax arising in another accounting period; and
- (b) then for relievable tax arising in any accounting period before that in which the relievable tax in question arises.
- (5) The above rules are subject to sections 806D(6) and 806F.
- (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of that income;
and in any such case that excess is the amount of the unrelieved foreign tax in respect of that income.
- (5) For the purposes of this section, a company’s qualifying income from an overseas permanent establishment is the profits of the overseas permanent establishment which are—
- (a) chargeable under Case I of Schedule D; or
- (b) included in the profits of gross roll-up business chargeable under Case VI of Schedule D by virtue of section 436A.
- (6) Where (whether by virtue of this subsection or otherwise) an amount of unrelieved foreign tax arising in an accounting period falls to be treated under subsection (2) above for the purposes of allowing credit relief under this Part as foreign tax paid in respect of, and computed by reference to, qualifying income of an earlier accounting period, it shall not be so treated for the purpose of any further application of this section.
- (7) In this section—
- “*overseas permanent establishment*” means a permanent establishment through which a company carries on a trade in a territory outside the United Kingdom; and
- “*permanent establishment*”—if there are arrangements having effect under section 788 in relation to the territory concerned that define the expression, has the meaning given by those arrangements, andif there are no such arrangements, or if they do not define the expression, has the meaning given by section 148 of the Finance Act 2003.
##### 806M
- (1) This section has effect for the purposes of section 806L and shall be construed as one with that section.
- (2) If, in any accounting period, a company ceases to have a particular overseas permanent establishment, the amount of any unrelieved foreign tax which arises in that accounting period in respect of the company’s income from that overseas permanent establishment shall, to the extent that it is not treated as mentioned in section 806L(2)(b), be reduced to nil (so that no amount arises which falls to be treated as mentioned in section 806L(2)(a)).
- (3) If a company—
- (a) at any time ceases to have a particular overseas permanent establishment in a particular territory (“*the old permanent establishment*”), but
- (b) subsequently again has an overseas permanent establishment in that territory (“*the new permanent establishment*”),
the old permanent establishment and the new permanent establishment shall be regarded as different overseas permanent establishments.
- (4) If, under the law of a territory outside the United Kingdom, tax is charged in the case of a company resident in the United Kingdom in respect of the profits of two or more of its overseas permanent establishments in that territory, taken together, then, for the purposes of—
- (a) section 806L, and
- (b) subsection (3) above,
those overseas permanent establishments shall be treated as if they together constituted a single overseas permanent establishment of the company.
- (5) Unrelieved foreign tax arising in respect of qualifying income from a particular overseas permanent establishment in any accounting period shall only be treated as mentioned in subsection (2) of section 806L on a claim.
- (6) Any such claim must specify the amount (if any) of the unrelieved foreign tax—
- (a) which is to be treated as mentioned in paragraph (a) of that subsection; and
- (b) which is to be treated as mentioned in paragraph (b) of that subsection.
- (7) A claim under subsection (5) above may only be made before the expiration of the period of—
- (a) six years after the end of the accounting period mentioned in that subsection, or
- (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.
##### 807A
- (1) This Part shall have effect for the purposes of corporation tax in relation to any company as if tax falling within subsection (2) below were to be disregarded.
- (2) Subject to subsection (2A) below, tax falls within this subsection in relation to a company to the extent that it is—
- (a) tax under the law of a territory outside the United Kingdom; and
- (b) is attributable, on a just and reasonable apportionment,
- (i) to interest accruing under a loan relationship at a time when the company is not a party to the relationship ; or
- (ii) to so much of a relevant payment as, on such an apportionment, is attributable to a time when the company is not a party to the derivative contract concerned.
- (2A) Tax attributable to interest accruing to a company under a loan relationship does not fall within subsection (2) above if—
- (a) at the time when the interest accrues, that company has ceased to be a party to that relationship by reason of having made the initial transfer under or in accordance with any repo or stock-lending arrangements relating to that relationship; and
- (b) that time falls during the period for which those arrangements have effect.
- (2B) Where, in the case of any share, section 91A or 91B of the Finance Act 1996 (shares treated as loan relationships) applies in relation to a company for an accounting period, this section has effect—
- (a) in relation to a distribution in respect of the share as it has effect in relation to interest under a loan relationship, and
- (b) in relation to a distribution accruing in respect of the share at a time when the company does not (within the meaning of the section in question) hold the share as it applies in relation to interest accruing under a loan relationship at a time when the company is not a party to the loan relationship.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) In this section “*repo or stock-lending arrangements*” means—
- (a) a debtor repo within the meaning of paragraph 2 of Schedule 13 to the Finance Act 2007, or
- (b) a stock lending arrangement within the meaning of section 263B of the 1992 Act.
- (6B) In any case where a debtor repo within the meaning of that paragraph constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the sale mentioned in condition C of that paragraph; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the subsequent purchase mentioned in condition D of that paragraph takes place and the time when it becomes apparent that that subsequent purchase will not take place.
- (6C) In any case where a stock lending arrangement within the meaning of section 263B of the 1992 Act constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the transfer mentioned in subsection (1)(a) of that section; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the transfer mentioned in subsection (1)(b) of that section takes place and the time when it becomes apparent that that transfer will not take place.
- (7) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*relevant payment*” means a payment the amount of which falls to be determined (wholly or mainly) by applying to a notional principal amount specified in a derivative contract, for a period so specified, a rate the value of which at all times is the same as that of a rate of interest so specified;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 808A
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the interest paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the loan would have been made at all in the absence of the relationship,
- (b) the amount which the loan would have been in the absence of the relationship, and
- (c) the rate of interest and other terms which would have been agreed in the absence of the relationship.
- (3) The special relationship provision shall be construed as requiring the taxpayer to show that there is no special relationship or (as the case may be) to show the amount of interest which would have been paid in the absence of the special relationship.
- (4) In a case where—
- (a) a company makes a loan to another company with which it has a special relationship, and
- (b) it is not part of the first company’s business to make loans generally,
the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing subsection (2) above.
- (5) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the debt on which the interest is paid in determining the excess interest (and accordingly expressly limits the factors to be taken into account).
##### 808B
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to royalties (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the royalties paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the agreement under which the royalties are paid would have been made at all in the absence of the relationship,
- (b) the rate or amounts of royalties and other terms which would have been agreed in the absence of the relationship, and
- (c) where subsection (3) below applies, the factors specified in subsection (4) below.
- (3) This subsection applies if the asset in respect of which the royalties are paid, or any asset which that asset represents or from which it is derived, has previously been in the beneficial ownership of—
- (a) the person who is liable to pay the royalties,
- (b) a person who is, or has at any time been, an associate of the person who is liable to pay the royalties,
- (c) a person who has at any time carried on a business which, at the time when the liability to pay the royalties arises, is being carried on in whole or in part by the person liable to pay those royalties, or
- (d) a person who is, or has at any time been, an associate of a person who has at any time carried on such a business as is mentioned in paragraph (c) above.
- (4) The factors mentioned in subsection (2)(c) above are—
- (a) the amounts which were paid under the transaction, or under each of the transactions in the series of transactions, as a result of which the asset has come to be an asset of the beneficial owner for the time being,
- (b) the amounts which would have been so paid in the absence of a special relationship, and
- (c) the question whether the transaction or series of transactions would have taken place in the absence of such a relationship.
- (5) The special relationship provision shall be construed as requiring the taxpayer to show—
- (a) the absence of any special relationship, or
- (b) the rate or amount of royalties that would have been payable in the absence of the relationship,
as the case may be.
- (6) The requirement on the taxpayer to show in accordance with subsection (5)(a) above the absence of any special relationship includes a requirement—
- (a) to show that no person of any of the descriptions in paragraphs (a) to (d) of subsection (3) above has previously been the beneficial owner of the asset in respect of which the royalties are paid, or of any asset which that asset represents or from which it is derived, or
- (b) to show the matters specified in subsection (7) below,
as the case may be.
- (7) Those matters are—
- (a) that the transaction or series of transactions mentioned in subsection (4)(a) above would have taken place in the absence of a special relationship, and
- (b) the amounts which would have been paid under the transaction, or under each of the transactions in the series of transactions, in the absence of such a relationship.
- (8) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the use, right or information for which royalties are paid in determining the excess royalties (and accordingly expressly limits the factors to be taken into account).
- (9) For the purposes of this section one person (“*person A*”) is an associate of another person (“*person B*”) at a given time if—
- (a) person A was, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person B at that time, or
- (b) the same person was or same persons were, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person A and person B at that time.
#### Lessee under long funding finance lease: termination
#### Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
##### 815A
- (1) This section applies where section 269C of the 1970 Act or section 140C or 140F of the Taxation of Chargeable Gains Act 1992 applies; and references in this section to company A, the transfer and the trade shall be construed accordingly.
- (2) Where gains accruing to company A on the transfer would have been chargeable to tax under the law of the relevant member State but for the Mergers Directive, this Part, including any arrangements having effect by virtue of section 788, shall apply as if the amount of tax, calculated on the required basis, which would have been payable under that law in respect of the gains so accruing but for that Directive, were tax payable under that law.
- (5) For the purposes of this section, the required basis is that—
- (a) so far as permitted under the law of the relevant member State, any losses arising on the transfer are set against any gains so arising, and
- (b) any relief available to company A under that law has been duly claimed.
- (6) In this section—
- “*aggregated foreign tax*” means aggregated underlying tax or aggregated withholding tax;
- “*relievable tax*” means relievable underlying tax or relievable withholding tax;
- “*the single dividend*” means—in relation to relievable underlying tax, the single related dividend; andin relation to relievable withholding tax, the single related dividend or the single unrelated dividend.
##### 806F
- (1) For the purposes of this Part, credit in accordance with any arrangements shall, in the case of any dividend, be given so far as possible—
- (a) for underlying tax (where allowable) before foreign tax other than underlying tax;
- (b) for foreign tax other than underlying tax before amounts treated as underlying tax; and
- (c) for amounts treated as underlying tax (where allowable) before amounts treated as foreign tax other than underlying tax.
- (2) Accordingly, where the amount of foreign tax to be brought into account for the purposes of allowing credit relief under this Part is subject to any limitation or restriction, the limitation or restriction shall be taken to have the effect of excluding foreign tax other than underlying tax before excluding underlying tax.
##### 806G
- (1) The relievable underlying tax or relievable withholding tax arising in any accounting period shall only be treated as mentioned in subsection (4) or (5) of section 806D on a claim.
- (2) Any such claim must specify the amount (if any) of that tax—
- (a) which is to be treated as mentioned in paragraph (a) of the subsection in question;
- (b) which is to be treated as mentioned in paragraph (b) of that subsection; and
- (c) which is to be treated as mentioned in paragraph (c) of that subsection.
- (3) A claim under subsection (1) above may only be made before the expiration of the period of—
- (a) six years after the end of the accounting period mentioned in that subsection; or
- (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.
##### 806H
- (1) The Board may by regulations make provision for, or in connection with, allowing a company which is a member of a group to surrender all or any part of the amount of the relievable tax arising to it in an accounting period to another company which is a member of that group at the time, or throughout the period, prescribed by the regulations.
- (2) The provision that may be made under subsection (1) above includes provision—
- (a) prescribing the conditions which must be satisfied if a surrender is to be made;
- (b) determining the amount of relievable tax which may be surrendered in any accounting period;
- (c) prescribing the conditions which must be satisfied if a claim to surrender is to be made;
- (d) prescribing the consequences for tax purposes of a surrender having been made;
- (e) allowing a claim to be withdrawn and prescribing the effect of such a withdrawal.
- (3) Regulations under subsection (1) above—
- (a) may make different provision for different cases; and
- (b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.
- (4) For the purposes of subsection (1) above a company is a member of a group if the conditions prescribed for that purpose in the regulations are satisfied.
##### 806J
- (1) This section has effect for the interpretation of the foreign dividend provisions of this Chapter.
- (2) In this section, “*the foreign dividend provisions of this Chapter*” means sections 806A to 806H and this section.
- (3) For the purposes of the foreign dividend provisions of this Chapter, where—
- (a) one company pays a dividend (“*dividend A*”) to another company, and
- (b) that other company, or a company which is related to it, pays a dividend (“*dividend B*”) to another company,
dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
- (4) Where—
- (a) one company is related to another, and
- (b) that other is related to a third company,
the first company shall be taken for the purposes of paragraph (b) of subsection (3) above to be related to the third, and so on where there is a chain of companies, each of which is related to the next.
- (5) In any case where—
- (a) a company resident outside the United Kingdom pays a dividend to a company resident in the United Kingdom, and
- (b) the circumstances are such that subsection (6)(b) of section 790 has effect in relation to that dividend,
the foreign dividend provisions of this Chapter shall have effect as if the company resident outside the United Kingdom were related to the company resident in the United Kingdom (and subsection (10) of that section shall have effect accordingly).
- (6) Subsection (5) of section 801 (related companies) shall apply for the purposes of the foreign dividend provisions of this Chapter as it applies for the purposes of that section.
- (7) In the foreign dividend provisions of this Chapter—
- “*aggregated underlying tax*” shall be construed in accordance with section 806C(4)(c);
- “*aggregated withholding tax*” shall be construed in accordance with section 806C(4)(d);
- “*controlled foreign company*” has the same meaning as in Chapter IV of Part XVII;
- “*eligible unrelieved foreign tax*” shall be construed in accordance with sections 806A and 806B;
- “*the mixer cap*” means section 799(1)(b);
- “*qualifying foreign dividend*” has the meaning given by section 806C(1);
- “*related qualifying foreign dividend*” has the meaning given by section 806C(2)(a);
- “*relievable tax*” has the meaning given by section 806E(6);
- “*relievable underlying tax*” shall be construed in accordance with 806D(3)(a);
- “*relievable withholding tax*” shall be construed in accordance with 806D(3)(b);
- “*single related dividend*” shall be construed in accordance with section 806C(4)(a);
- “*single unrelated dividend*” shall be construed in accordance with section 806C(4)(b);“the upper percentage" is 45 per cent.
### Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
##### 806K
- (1) Sections 806A to 806J shall apply in relation to an amount of eligible unrelieved foreign tax arising in a chargeable period in respect of any of the income of a branch or agency in the United Kingdom of a person resident outside the United Kingdom as they apply in relation to eligible unrelieved foreign tax arising in an accounting period of a company resident in the United Kingdom in respect of any of the company’s income, but with the modifications specified in subsection (2) below.
- (2) Those modifications are—
- (a) take any reference to an accounting period as a reference to a chargeable period;
- (b) take any reference to corporation tax as including a reference to income tax;
- (bb) in relation to income tax, take any reference to a dividend chargeable under Case V of Schedule D as a reference to a dividend chargeable under Chapter 4 of Part 4 of ITTOIA 2005;
- (c) take the reference in section 806A(4)(a) to section 797 as a reference to sections 796 and 797;
- (d) in relation to income tax, for subsection (2) of section 806B substitute the subsection (2) set out in subsection (3) below.
- (3) That subsection is—
- (“) In Case A, the difference between—
- (a) the amount of the credit allowed as mentioned in section 806A(4)(b), and
- (b) the greater amount of credit that would have been so allowed if, for the purposes of section 796, the amount of income tax borne on the dividend as computed under that section were charged at a rate equal to the upper percentage,
shall be an amount of eligible unrelieved foreign tax. ".
### Unrelieved foreign tax: profits of overseas branch or agency
##### 806L
- (1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of unrelieved foreign tax arises in respect of any of the company’s qualifying income from an overseas permanent establishment of the company.
- (2) The amount of the unrelieved foreign tax so arising shall be treated for the purposes of allowing credit relief under this Part as if it were foreign tax paid in respect of, and computed by reference to, the company’s qualifying income from the same overseas permanent establishment—
- (a) in the next accounting period (whether or not the company in fact has any such income from that source in that accounting period), or
- (b) in such one or more preceding accounting periods, beginning not more than three years before the accounting period in which the unrelieved foreign tax arises, as result from applying the rules in subsection (3) below,
or partly in the one way and partly in the other.
- (3) Where any unrelieved foreign tax is to be treated as mentioned in paragraph (b) of subsection (2) above, the rules for determining the accounting periods in question (and the amount of the unrelieved foreign tax to be so treated in relation to each of them) are that the unrelieved foreign tax must be so treated under that paragraph—
- (1) that—
- (a) credit for, or for any remaining balance of, the unrelieved foreign tax is allowed against corporation tax in respect of income of a later one of the accounting periods beginning as mentioned in that paragraph,
before
- (b) credit for any of the unrelieved foreign tax is allowed against corporation tax in respect of income of any earlier such period;
- (2) that, before allowing credit for any of the unrelieved foreign tax against corporation tax in respect of income of any accounting period, credit for foreign tax is allowed—
- (a) first for foreign tax in respect of the income of that accounting period, other than unrelieved foreign tax arising in another accounting period; and
- (b) then for unrelieved foreign tax arising in any accounting period before that in which the unrelieved foreign tax in question arises.
- (4) For the purposes of this section, the cases where an amount of unrelieved foreign tax arises in respect of any of a company’s qualifying income from an overseas permanent establishment in an accounting period are those cases where—
- (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of that income,
exceeds
- (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of that income;
and in any such case that excess is the amount of the unrelieved foreign tax in respect of that income.
- (5) For the purposes of this section, a company’s qualifying income from an overseas permanent establishment is the profits of the overseas permanent establishment which are—
- (a) chargeable under Case I of Schedule D; or
- (b) included in the profits of gross roll-up business chargeable under Case VI of Schedule D by virtue of section 436A.
- (6) Where (whether by virtue of this subsection or otherwise) an amount of unrelieved foreign tax arising in an accounting period falls to be treated under subsection (2) above for the purposes of allowing credit relief under this Part as foreign tax paid in respect of, and computed by reference to, qualifying income of an earlier accounting period, it shall not be so treated for the purpose of any further application of this section.
- (7) In this section—
- “*overseas permanent establishment*” means a permanent establishment through which a company carries on a trade in a territory outside the United Kingdom; and
- “*permanent establishment*”—if there are arrangements having effect under section 788 in relation to the territory concerned that define the expression, has the meaning given by those arrangements, andif there are no such arrangements, or if they do not define the expression, has the meaning given by section 148 of the Finance Act 2003.
##### 806M
- (1) This section has effect for the purposes of section 806L and shall be construed as one with that section.
- (2) If, in any accounting period, a company ceases to have a particular overseas permanent establishment, the amount of any unrelieved foreign tax which arises in that accounting period in respect of the company’s income from that overseas permanent establishment shall, to the extent that it is not treated as mentioned in section 806L(2)(b), be reduced to nil (so that no amount arises which falls to be treated as mentioned in section 806L(2)(a)).
- (3) If a company—
- (a) at any time ceases to have a particular overseas permanent establishment in a particular territory (“*the old permanent establishment*”), but
- (b) subsequently again has an overseas permanent establishment in that territory (“*the new permanent establishment*”),
the old permanent establishment and the new permanent establishment shall be regarded as different overseas permanent establishments.
- (4) If, under the law of a territory outside the United Kingdom, tax is charged in the case of a company resident in the United Kingdom in respect of the profits of two or more of its overseas permanent establishments in that territory, taken together, then, for the purposes of—
- (a) section 806L, and
- (b) subsection (3) above,
those overseas permanent establishments shall be treated as if they together constituted a single overseas permanent establishment of the company.
- (5) Unrelieved foreign tax arising in respect of qualifying income from a particular overseas permanent establishment in any accounting period shall only be treated as mentioned in subsection (2) of section 806L on a claim.
- (6) Any such claim must specify the amount (if any) of the unrelieved foreign tax—
- (a) which is to be treated as mentioned in paragraph (a) of that subsection; and
- (b) which is to be treated as mentioned in paragraph (b) of that subsection.
- (7) A claim under subsection (5) above may only be made before the expiration of the period of—
- (a) six years after the end of the accounting period mentioned in that subsection, or
- (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.
##### 807A
- (1) This Part shall have effect for the purposes of corporation tax in relation to any company as if tax falling within subsection (2) below were to be disregarded.
- (2) Subject to subsection (2A) below, tax falls within this subsection in relation to a company to the extent that it is—
- (a) tax under the law of a territory outside the United Kingdom; and
- (b) is attributable, on a just and reasonable apportionment,
- (i) to interest accruing under a loan relationship at a time when the company is not a party to the relationship ; or
- (ii) to so much of a relevant payment as, on such an apportionment, is attributable to a time when the company is not a party to the derivative contract concerned.
- (2A) Tax attributable to interest accruing to a company under a loan relationship does not fall within subsection (2) above if—
- (a) at the time when the interest accrues, that company has ceased to be a party to that relationship by reason of having made the initial transfer under or in accordance with any repo or stock-lending arrangements relating to that relationship; and
- (b) that time falls during the period for which those arrangements have effect.
- (2B) Where, in the case of any share, section 91A or 91B of the Finance Act 1996 (shares treated as loan relationships) applies in relation to a company for an accounting period, this section has effect—
- (a) in relation to a distribution in respect of the share as it has effect in relation to interest under a loan relationship, and
- (b) in relation to a distribution accruing in respect of the share at a time when the company does not (within the meaning of the section in question) hold the share as it applies in relation to interest accruing under a loan relationship at a time when the company is not a party to the loan relationship.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) In this section “*repo or stock-lending arrangements*” means—
- (a) a debtor repo within the meaning of paragraph 2 of Schedule 13 to the Finance Act 2007, or
- (b) a stock lending arrangement within the meaning of section 263B of the 1992 Act.
- (6B) In any case where a debtor repo within the meaning of that paragraph constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the sale mentioned in condition C of that paragraph; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the subsequent purchase mentioned in condition D of that paragraph takes place and the time when it becomes apparent that that subsequent purchase will not take place.
- (6C) In any case where a stock lending arrangement within the meaning of section 263B of the 1992 Act constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the transfer mentioned in subsection (1)(a) of that section; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the transfer mentioned in subsection (1)(b) of that section takes place and the time when it becomes apparent that that transfer will not take place.
- (7) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*relevant payment*” means a payment the amount of which falls to be determined (wholly or mainly) by applying to a notional principal amount specified in a derivative contract, for a period so specified, a rate the value of which at all times is the same as that of a rate of interest so specified;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 808A
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the interest paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the loan would have been made at all in the absence of the relationship,
- (b) the amount which the loan would have been in the absence of the relationship, and
- (c) the rate of interest and other terms which would have been agreed in the absence of the relationship.
- (3) The special relationship provision shall be construed as requiring the taxpayer to show that there is no special relationship or (as the case may be) to show the amount of interest which would have been paid in the absence of the special relationship.
- (4) In a case where—
- (a) a company makes a loan to another company with which it has a special relationship, and
- (b) it is not part of the first company’s business to make loans generally,
the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing subsection (2) above.
- (5) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the debt on which the interest is paid in determining the excess interest (and accordingly expressly limits the factors to be taken into account).
##### 808B
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to royalties (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the royalties paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the agreement under which the royalties are paid would have been made at all in the absence of the relationship,
- (b) the rate or amounts of royalties and other terms which would have been agreed in the absence of the relationship, and
- (c) where subsection (3) below applies, the factors specified in subsection (4) below.
- (3) This subsection applies if the asset in respect of which the royalties are paid, or any asset which that asset represents or from which it is derived, has previously been in the beneficial ownership of—
- (a) the person who is liable to pay the royalties,
- (b) a person who is, or has at any time been, an associate of the person who is liable to pay the royalties,
- (c) a person who has at any time carried on a business which, at the time when the liability to pay the royalties arises, is being carried on in whole or in part by the person liable to pay those royalties, or
- (d) a person who is, or has at any time been, an associate of a person who has at any time carried on such a business as is mentioned in paragraph (c) above.
- (4) The factors mentioned in subsection (2)(c) above are—
- (a) the amounts which were paid under the transaction, or under each of the transactions in the series of transactions, as a result of which the asset has come to be an asset of the beneficial owner for the time being,
- (b) the amounts which would have been so paid in the absence of a special relationship, and
- (c) the question whether the transaction or series of transactions would have taken place in the absence of such a relationship.
- (5) The special relationship provision shall be construed as requiring the taxpayer to show—
- (a) the absence of any special relationship, or
- (b) the rate or amount of royalties that would have been payable in the absence of the relationship,
as the case may be.
- (6) The requirement on the taxpayer to show in accordance with subsection (5)(a) above the absence of any special relationship includes a requirement—
- (a) to show that no person of any of the descriptions in paragraphs (a) to (d) of subsection (3) above has previously been the beneficial owner of the asset in respect of which the royalties are paid, or of any asset which that asset represents or from which it is derived, or
- (b) to show the matters specified in subsection (7) below,
as the case may be.
- (7) Those matters are—
- (a) that the transaction or series of transactions mentioned in subsection (4)(a) above would have taken place in the absence of a special relationship, and
- (b) the amounts which would have been paid under the transaction, or under each of the transactions in the series of transactions, in the absence of such a relationship.
- (8) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the use, right or information for which royalties are paid in determining the excess royalties (and accordingly expressly limits the factors to be taken into account).
- (9) For the purposes of this section one person (“*person A*”) is an associate of another person (“*person B*”) at a given time if—
- (a) person A was, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person B at that time, or
- (b) the same person was or same persons were, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person A and person B at that time.
#### Lessee under long funding finance lease: termination
#### Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
##### 815A
- (1) This section applies where section 269C of the 1970 Act or section 140C or 140F of the Taxation of Chargeable Gains Act 1992 applies; and references in this section to company A, the transfer and the trade shall be construed accordingly.
- (2) Where gains accruing to company A on the transfer would have been chargeable to tax under the law of the relevant member State but for the Mergers Directive, this Part, including any arrangements having effect by virtue of section 788, shall apply as if the amount of tax, calculated on the required basis, which would have been payable under that law in respect of the gains so accruing but for that Directive, were tax payable under that law.
- (5) For the purposes of this section, the required basis is that—
- (a) so far as permitted under the law of the relevant member State, any losses arising on the transfer are set against any gains so arising, and
- (b) any relief available to company A under that law has been duly claimed.
- (6) In this section—
- “*the Mergers Directive*” means the Directive of the Council of the European Communities dated 23rd July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different member States (no. [90/434/EEC](https://www.legislation.gov.uk/european/directive/1990/0434));
- “*relevant member State*” means the member State in which, immediately before the time of the transfer, company A carried on the trade through a permanent establishment.
@@ -35568,7 +35568,7 @@
#### The conditions for being an excepted group life policy
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Section 796: trade income
##### 826A
@@ -35602,7 +35602,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
#### Separate streaming of dividend so far as representing an ADP dividend of a CFC.
##### 834A
@@ -35678,7 +35678,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schemes and arrangements designed to increase relief
#### Effect of notice under section 804ZA
##### 837A
@@ -36738,7 +36738,7 @@
An averaging claim must be made not later than twelve months after the 31st January next following the end of the later of the tax years to which it relates.
#### Interpretation of Income Tax Acts.
#### Interpretation of the Corporation Tax Acts.
##### 6
@@ -63705,11 +63705,11 @@
[^c23380081]: O.J. L374, 31.12.1991, p.7.
#### Treatment of cash dividend retained and then later paid out
#### Application of sections 251B and 251C
#### Section 209(3AA): link to shares of company or associated company
#### Indexation of amounts in sections 256B, 257, 257A and 257AB.
#### Transfer of relief under section 257A.
#### Life assurance premiums paid by employer
@@ -63719,565 +63719,565 @@
#### Credit-tokens.
#### Form of relief.
#### Eligibility for relief.
#### Relief for contributions in respect of share option gains.
#### Company reconstructions: supplemental.
#### Relief where borrower deceased.
#### Application of lower rate to company distributions.
#### Provisions supplementary to section 138.
#### Losses from UK property business.
#### Application of sections 251B and 251C
#### Application of sections 251B and 251C
#### Children’s tax credit.
#### Married couple's allowance (post-5th December 2005 marriages and civil partnerships etc.)
#### Meaning of “participator”, “associate”, “director” and “loan creditor”.
#### “Distribution” to include certain expenses of close companies.
#### Interpretative provisions relating to insurance companies.
#### Election that assets not be foreign business assets
#### Company carrying on life assurance business
#### U.K. company distributions not generally chargeable to corporation tax.
#### Computation of losses and limitation on relief.
#### Modifications in relation to BLAGAB group reinsurers
#### Transfers of life assurance business: Case I losses of the transferor
#### Transfer schemes: transferor
#### Transfer of relief under section 257A.
#### Transfers of other business
#### Election as to tax exempt business.
#### Long-term business: application of the Corporation Tax Acts.
#### Certified unit trusts: distributions.
#### Interpretation.
#### Loan relationships etc.
#### Exploration expenditure supplement
#### Charitable companies: general.
#### Capital sums: . . . winding up or partnership change.
#### Losses from UK property business.
#### Losses from UK property business.
#### Supplementary provisions.
#### Charge on profits.
#### The property managing subsidiaries requirement
#### The qualifying subsidiaries requirement
#### Business entertaining expenses.
#### Interpretation.
#### Definition of insurance company.
#### Section 432B apportionment: supplementary provisions.
#### Section 432B apportionment: business transfers-in
#### Payments to unmarried minor children of settlor.
#### Revocable settlements allowing reversion of property.
#### Income or gains arising from property investment LLP
#### Application to Scotland.
#### Interpretation.
#### Exception for sale and repurchase of securities.
#### Interpretation of section 730A.
#### Special rule for computing chargeable profits.
#### Reduction in chargeable profits: failure to qualify for exemptions
#### Reduction in chargeable profits following an exempt period
#### Returns where it is not established whether acceptable distribution policy applies.
#### Offshore income gains accruing to persons resident or domiciled abroad.
#### Change in company ownership: postponed corporation tax.
#### Deductions: asset transferred within group.
#### Charitable and non-charitable expenditure
#### Charitable companies: general.
#### Introductory.
#### Arrangements made under old law.
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Utilisation of eligible unrelieved foreign tax.
#### Disposals and acquisitions of company loan relationships with or without interest.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Savings, transitional provisions, consequential amendments and repeals.
#### Offshore income gains accruing to persons resident or domiciled abroad.
#### Offshore income gains: application of transfer of assets abroad provisions
#### Offshore income gains: application of transfer of assets abroad provisions
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy machinery or plant.
#### Application of lower rate to company distributions.
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provision not at arm’s length.
#### Interest paid on deposits with banks etc.
#### Cases where ss. 502B to 502G do not apply: lessor also lessee under non-long funding lease
#### Interpretation of Chapter III.
#### Statutory redundancy payments.
#### Special provisions as to certain interests in residue.
#### Determinations requiring the sanction of the Board.
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Transactions with substantial donors
#### Reduction of United Kingdom taxes by amount of credit due.
#### Interest: special relationship.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### General powers to make regulations under Chapter IV.
#### Change in ownership of company carrying on property business.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: postponed corporation tax.
#### Supplementary provisions.
#### Provisions supplementary to section 138.
#### Substitution of security: supplemental.
#### Second loans.
#### Meaning of “distribution”.
#### Losses from overseas property business.
#### Application of sections 251B and 251C
#### Application of sections 251B and 251C
#### Children’s tax credit.
#### Married couple's allowance (post-5th December 2005 marriages and civil partnerships etc.)
#### Meaning of “participator”, “associate”, “director” and “loan creditor”.
#### “Distribution” to include certain expenses of close companies.
#### Interpretative provisions relating to insurance companies.
#### Amendment of Chapter etc
#### Company carrying on life assurance business and other insurance business
#### U.K. company distributions not generally chargeable to corporation tax.
#### Reduced loss relief for additions to non-profit funds
#### Overseas life assurance business.
#### Transfers of business: deemed periodical returns
#### Relevant non-transferred assets
#### Transfer of relief under section 257A.
#### Conditions for tax exempt business.
#### Election as to tax exempt business.
#### Maximum benefits payable to members.
#### Funds of funds: distributions.
#### Distribution accounts.
#### Loan relationships etc.
#### Returns.
#### Computation of gross profits.
#### Certain quoted companies not to be close companies.
#### Section 432B apportionment: value of non-participating funds.
#### Section 209(3AA): link to shares of company or associated company
## [SCHEDULE 19A
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Relief by agreement with other territories.
#### Exceptions from the general charge.
#### Provisions supplementary to section 138.
#### Interpretation of sections 251A to 251C
#### Losses of ring fence trade: set off against profits of an earlier accounting period
#### Relief for contributions in respect of share option gains.
#### Schedule A business or overseas property business.
#### Aggregation of wife’s income with husband’s.
#### Losses from overseas property business.
#### Gifts of shares, securities and real property to charities etc
#### Supplementary provision for gifts of real property
#### Section 590: supplementary provisions.
#### Section 591C: supplementary.
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Deemed manufactured payments in the case of stock lending arrangements.
#### Provision not at arm’s length.
#### Tariff receipts and tax-exempt tariffing receipts
#### Letting of furnished holiday accommodation treated as trade for certain income tax purposes
#### Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
#### Introductory.
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Recovery of tax credits incorrectly paid.
#### Recovery of tax credits incorrectly paid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule 4 directions.
#### Settlements made after 6th April 1965.
#### Change in company ownership: postponed corporation tax.
#### Change in company ownership: corporation tax.
#### Change in ownership of company carrying on property business.
#### Provision not at arm’s length.
#### Relief by agreement with other territories.
#### Qualifying vehicles
#### Introduction
#### Company vehicles
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Counselling services for employees.
#### Qualifying counselling services etc.
#### Change in ownership of company carrying on property business.
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
#### Leased assets: special cases.
#### Interpretation of credit code.
#### The qualifying subsidiaries requirement
#### Expenditure on car hire: supplementary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule 4 directions.
#### Supplementary provisions as to absolute interests in residue.
#### Treatment of price differential on sale and repurchase of securities.
#### Sales etc. at an undervalue or overvalue.
#### Leased assets subject to hire-purchase agreements.
#### Tax year
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Dividend or bonus granted by industrial and provident society
#### Interpretation of Part VI.
#### Limited exemption for computer equipment.
#### Loans to participators etc.
#### Taxation of profit-related pay.
#### Section 432B apportionment: supplementary provisions.
#### Aggregation of wife’s income with husband’s.
#### Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
#### Appeals against Board’s notices under section 703.
#### Court common investment funds.
#### Transactions associated with loans or credit.
#### Restriction of relief for payments of interest.
#### Life policies: chargeable events.
#### Power to inspect documents.
#### The Arbitration Convention.
#### Mutual agreement procedure and presentation of cases under arrangements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing reversion of property.
#### The prescribed circumstances.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assets leased to traders and others.
#### Leased assets: special cases.
#### Leased assets subject to hire-purchase agreements.
#### The approved amount: mileage allowance payments
#### Section 796: trade income
#### Separate streaming of dividend so far as representing an ADP dividend of a CFC.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Company reconstructions without a change of ownership.
#### Provisions supplementary to section 520.
#### Sales etc. at an undervalue or overvalue.
#### Meaning of “asset”, “capital sum” and “lease” for purposes of sections 781 to 784.
#### Cessation of approval: tax on certain schemes.
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Repayment supplements: companies.
#### Section 590: supplementary provisions.
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Territorial sea and designated areas.
#### Revocable settlements allowing release of obligation.
#### Settlements made after 6th April 1965.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
#### Schemes and arrangements designed to increase relief
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### About this Schedule
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Onshore pooling.
#### Repayment supplements: companies.
#### About this Schedule
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### Schedule C.
#### Schedule F.
#### Restrictions on relief
#### Saving for pre-1963 leases, and special relief for individuals.
#### Securities of foreign states.
#### Amounts reversing expenses of management deducted: charge to tax
#### United Kingdom government securities held by non-residents.
#### Disposal or exercise of rights in pursuance of deposits.
#### Discounted bills of exchange.
#### Expenses of insurance companies
#### Costs of establishing share option or profit sharing schemes: relief.
#### Allowable deductions.
#### Tax on companies in administration
#### Exemptions from section 148.
#### Restriction of relief for payments of interest.
#### Capital sums: . . . winding up or partnership change.
#### Losses from UK property business.
#### Losses from UK property business.
#### Charge on profits.
#### Charge on profits.
#### The qualifying subsidiaries requirement
#### The qualifying subsidiaries requirement
#### Relief for individuals.
#### Interpretation.
#### Definition of insurance company.
#### Section 432B apportionment: supplementary provisions.
#### Section 432B apportionment: business transfers-in
#### Income arising under settlement where settlor retains an interest.
#### Revocable settlements allowing release of obligation.
#### Income or gains arising from property investment LLP
#### Interest on tax overpaid.
#### Interpretation of Income Tax Acts.
#### Interpretation.
#### Interpretation.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### Restriction on deduction of interest or dividends from trading income.
#### Recovery of tax credits incorrectly paid.
#### Interpretation of the Tax Acts.
#### Interpretation of Income Tax Acts.
#### Qualifying interests in land held jointly
#### Qualifying courses of training etc.
#### Interpretation of the Corporation Tax Acts etc.
#### Stock lending.
#### Treatment of price differential on sale and repurchase of securities.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Income treated as arising under section 761(1): remittance basis
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Power to inspect documents.
#### Arrangements to avoid section 812.
#### Separate streaming of dividend so far as representing an ADP dividend of a CFC.
#### Interpretation of Income Tax Acts.
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Interpretation of the Corporation Tax Acts.
#### Meaning of “UK property business” and “overseas property business”
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying counselling services etc.
#### Conditions for approval of retirement benefit schemes.
#### Repayment supplements: companies.
#### Appeals against Board’s notices under section 703.
#### The prescribed circumstances.
#### Prevention of avoidance of income tax.
#### Reduction in chargeable profits for certain financing income
#### How averaging claim is given effect
#### Adjustment of profits on averaging claim
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Company vehicles
#### The approved amount: passenger payments
#### Interpretation of credit code.
#### Repayment supplements: companies.
#### Recovery of tax credits incorrectly paid.
#### Interest on tax overpaid.
#### Interest on tax overpaid.
#### Interpretation of the Tax Acts.
#### Interpretation of Income Tax Acts.
#### Interpretation of the Tax Acts.
#### Interpretation of Income Tax Acts.
#### Interpretation of the Corporation Tax Acts.
#### Cessation of approval: general provisions.
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
#### Reduction in chargeable profits: failure to qualify for exemptions
#### Reduction in chargeable profits following an exempt period
#### Returns where it is not established whether acceptable distribution policy applies.
#### Offshore income gains accruing to persons resident or domiciled abroad.
#### Change in company ownership: corporation tax.
#### Change in ownership of company with investment business: deductions generally
#### Charitable and non-charitable expenditure
#### Charitable companies: general.
#### Introductory.
#### Relief by agreement with other territories.
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Onshore pooling.
#### Disposals and acquisitions of company loan relationships with or without interest.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Commencement.
#### Offshore income gains accruing to persons resident or domiciled abroad.
#### Offshore income gains: application of transfer of assets abroad provisions
#### Offshore income gains: application of transfer of assets abroad provisions
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provision not at arm’s length.
#### Building societies: time for payment of tax.
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
#### Interpretation of Chapter III.
#### Expenditure on car hire: supplementary
#### Supplementary provisions as to absolute interests in residue.
#### Returns where it is not established whether acceptable distribution policy applies.
#### Change in ownership of company carrying on property business.
#### Transactions with substantial donors
#### Interpretation of credit code.
#### Restriction on deduction of interest or dividends from trading income.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### General powers to make regulations under Chapter IV.
#### Change in ownership of company carrying on property business.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: postponed corporation tax.
#### Supplementary provisions.
#### Provisions supplementary to section 138.
#### Substitution of security: supplemental.
#### Home improvement loans.
#### Meaning of “distribution”.
#### Losses other than terminal losses.
#### Returns.
#### Limits on group relief.
#### Meaning of “associated company” and “control”.
#### Section 432B apportionment: participating funds.
#### Section 209(3AA): link to shares of company or associated company
## [SCHEDULE 19A
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Relief by agreement with other territories.
#### Exceptions from the general charge.
#### Provisions supplementary to section 138.
#### Interpretation of sections 251A to 251C
#### Losses of ring fence trade: set off against profits of an earlier accounting period
#### Relief for contributions in respect of share option gains.
#### Losses from Schedule A business or overseas property business.
#### Aggregation of wife’s income with husband’s.
#### Losses from overseas property business.
#### Gifts of shares, securities and real property to charities etc
#### Qualifying interests in land held jointly
#### Conditions for approval of retirement benefit schemes.
#### Cessation of approval: tax on certain schemes.
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Deemed manufactured payments in the case of stock lending arrangements.
#### Provision not at arm’s length.
#### Tariff receipts and tax-exempt tariffing receipts
#### Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
#### Introductory.
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Recovery of tax credits incorrectly paid.
#### Recovery of tax credits incorrectly paid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule 4 directions.
#### Settlements made after 6th April 1965.
#### Change in company ownership: postponed corporation tax.
#### Change in company ownership: corporation tax.
#### Change in ownership of company carrying on property business.
#### Provision not at arm’s length.
#### Relief by agreement with other territories.
#### Qualifying vehicles
#### Introduction
#### Company vehicles
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying courses of training etc.
#### Qualifying counselling services etc.
#### Change in ownership of company carrying on property business.
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
#### Assets leased to traders and others.
#### Interpretation of credit code.
#### The qualifying subsidiaries requirement
#### Expenditure on car hire: supplementary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule 4 directions.
#### Supplementary provisions as to absolute interests in residue.
#### Treatment of price differential on sale and repurchase of securities.
#### Sales etc. at an undervalue or overvalue.
#### Leased assets subject to hire-purchase agreements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 785B: expectation that relevant capital payment will not be paid
#### Tax year
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Tax credits for certain recipients of qualifying distributions.
#### “Gross rate” and “gross amount” of distributions to include ACT.
#### Limited exemption for computer equipment.
#### Loans to participators etc.
#### Taxation of profit-related pay.
#### Section 432B apportionment: supplementary provisions.
#### Aggregation of wife’s income with husband’s.
#### Introductory.
#### The prescribed circumstances.
#### Court common investment funds.
#### Section 785B: expectation that relevant capital payment will not be paid
#### Restriction of relief for payments of interest.
#### Life policies: chargeable events.
#### Arrangements to avoid section 812.
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Mutual agreement procedure and presentation of cases under arrangements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing reversion of property.
#### The prescribed circumstances.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assets leased to traders and others.
#### Leased assets: special cases.
#### Leased assets subject to hire-purchase agreements.
#### The approved amount: mileage allowance payments
#### Section 796: trade income
#### Separate streaming of dividend so far as representing an ADP dividend of a CFC.
#### Charges on income: interest payable to non-residents.
#### Company reconstructions without a change of ownership.
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
#### Provision not at arm’s length.
#### Leased assets subject to hire-purchase agreements.
#### Cessation of approval: tax on certain schemes.
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Repayment supplements: companies.
#### Section 590: supplementary provisions.
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Revocable settlements allowing release of obligation.
#### Settlements made after 6th April 1965.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
#### Schemes and arrangements designed to increase relief
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### About this Schedule
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### Supplement in respect of a post-commencement period
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Onshore pooling.
#### Repayment supplements: companies.
#### About this Schedule
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### Schedule C.
#### Schedule E.
#### Regulations
#### Rules for ascertaining duration of leases.
#### United Kingdom government securities held by non-residents.
#### Amounts reversing expenses of management deducted: charge to tax
#### United Kingdom government securities held by non-residents.
#### Disposal or exercise of rights in pursuance of deposits.
#### Discounted bills of exchange.
#### Expenses of insurance companies
#### Costs of establishing share option or profit sharing schemes: relief.
#### Allowable deductions.
#### Tax on companies in administration
#### Exemptions from section 148.
#### Restriction of relief for payments of interest.
#### Capital sums: . . . winding up or partnership change.
#### Interpretation.
#### Interest on tax overpaid.
#### Interpretation of Income Tax Acts.
#### Interpretation.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Restriction on deduction of interest or dividends from trading income.
#### Recovery of tax credits incorrectly paid.
#### Interpretation of the Tax Acts.
#### Interpretation of Income Tax Acts.
#### Qualifying interests in land held jointly
#### Qualifying courses of training etc.
#### Interpretation of the Corporation Tax Acts etc.
#### Stock lending.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Income treated as arising under section 761(1): remittance basis
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Power to inspect documents.
#### Arrangements to avoid section 812.
#### Separate streaming of dividend so far as representing an ADP dividend of a CFC.
#### Interpretation of Income Tax Acts.
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Interpretation of the Corporation Tax Acts.
#### Meaning of “UK property business” and “overseas property business”
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying counselling services etc.
#### Conditions for approval of retirement benefit schemes.
#### Repayment supplements: companies.
#### Appeals against Board’s notices under section 703.
#### The prescribed circumstances.
#### Prevention of avoidance of income tax.
#### Reduction in chargeable profits for certain financing income
#### Adjustment of profits on averaging claim
#### Adjustment of profits on averaging claim
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### The approved amount: passenger payments
#### Interpretation of credit code.
#### Repayment supplements: companies.
#### Recovery of tax credits incorrectly paid.
#### Interest on tax overpaid.
#### Interest on tax overpaid.
#### Interpretation of the Tax Acts.
#### Interpretation of Income Tax Acts.
#### Interpretation of the Tax Acts.
#### Interpretation of Income Tax Acts.
#### Interpretation of the Corporation Tax Acts.
#### Cessation of approval: general provisions.
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 785B: expectation that relevant capital payment will not be paid
#### Employment
#### Arrangements made under old law.
@@ -64501,9 +64501,9 @@
#### Tax treatment of receipts and outgoings on sale of land.
#### Costs of establishing employee share ownership trusts: relief.
#### Treatment of receipts as earned income.
#### Payments to trustees of approved profit sharing schemes.
#### Application of charges where rights to payments transferred.
#### Apportionment of income and gains.
@@ -64635,137 +64635,881 @@
#### Definition of insurance company.
#### VAT penalties etc.
#### Reduction in chargeable profits following an exempt period
#### Assets leased to traders and others.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Recovery of tax credits incorrectly paid.
#### Territorial sea and designated areas.
#### Interpretation of the Corporation Tax Acts etc.
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Levies and repayments under the Financial Services and Markets Act 2000.
#### Costs of establishing share option or profit sharing schemes: relief.
#### Taxable premiums etc.
#### Section 87(2) and (3) and reductions in receipts under ITTOIA 2005
#### Restriction on relief: individuals.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER 1B — PROVISIONS AS TO CAPITAL SUMS PAID TO SETTLOR
### CHAPTER 1C — LIABILITY OF TRUSTEES
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leased assets: special cases.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Interpretation of the Corporation Tax Acts etc.
#### Introduction
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### Introduction
#### Introduction
## Part IV — Disallowed debits and non-trading deficits
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying vehicles
#### Employment
#### The approved amount: mileage allowance payments
#### Charitable donations: contributions to agent’s expenses.
#### Charitable donations: contributions to agent’s expenses.
#### Section 87(2) and (3) and reductions in receipts under ITTOIA 2005
#### Meaning of “the aggregate amount”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of price differential on sale and repurchase of securities.
#### Manufactured dividends and interest.
#### Section 751A: supplementary
#### The approved amount: mileage allowance payments
#### Employment
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Arrangements to avoid section 812.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Unrealised interest in default
#### Interest on tax overpaid.
#### Transfers of rights to receive distributions in respect of shares
#### Offshore income gains: application of transfer of assets abroad provisions
#### Qualifying trade, profession or vocation
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: mileage allowance payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction on relief for non-active partners
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
#### Change in company ownership: corporation tax.
#### Dividends paid out of transferred profits.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Interest on tax overpaid.
#### Section 751A: supplementary
#### Introduction
#### Adjustment of profits on averaging claim
#### Tax year
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Manufactured interest on UK securities: general
### Manufactured interest on gilt-edged securities etc.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of work in progress at discontinuance of profession or vocation.
#### Definitions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of credit code.
#### Section 796: trade income
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Effect of notice under section 804ZA
#### Utilisation of eligible unrelieved foreign tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### Interpretation of the Corporation Tax Acts etc.
#### Meaning of “UK property business” and “overseas property business”
#### Income treated as arising under section 761(1): remittance basis
#### Change in company ownership: postponed corporation tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sales etc. at an undervalue or overvalue.
#### Section 785B: expectation that relevant capital payment will not be paid
#### Company vehicles
#### Introduction
#### The approved amount: mileage allowance payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of appointment or arrangements under section 659B.
#### Repayment supplements: companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Sales etc. at an undervalue or overvalue.
#### Restriction of relief for payments of interest.
#### Tax year
#### Company vehicles
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Payments to Export Credit Guarantee Department.
#### Valuation of work in progress at discontinuance of profession or vocation.
#### “A significant amount of time”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction of relief for payments of interest.
#### Introduction
#### Territorial sea and designated areas.
#### Interpretation of the Corporation Tax Acts.
#### Interpretation of Income Tax Acts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Introduction
### Introductory
### Payments and other benefits to which section 148 applies
### Payments and other benefits excluded from charge under section 148
### Application of £30,000 threshold
### Exclusion or reduction of charge in case of foreign service
### Valuation of benefits
### Notional interest treated as paid if amount charged in respect of beneficial loan
### Giving effect to the charge to tax
### Reporting requirements
### Interpretation
#### Qualifying vehicles
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a post-commencement period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Liability of non-transferors.
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Company vehicles
#### Introduction
#### Supplement in respect of a pre-commencement accounting period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to modify sections 727A, 730A, 730BB and 737A to 737C
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax year
#### Accounting periods
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Trading stock.
#### VAT penalties etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The appropriate percentage
### Car with CO2 emissions figure
### The lower threshold
### Bi-fuel cars
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### The non-qualifying pool
#### Supplement in respect of a pre-commencement accounting period
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of the Corporation Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest: special relationship.
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amount of post-commencement supplement for a post-commencement period
#### Qualifying companies
#### The non-qualifying pool
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of notice under section 804ZA
#### Utilisation of eligible unrelieved foreign tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### Amount of post-commencement supplement for a post-commencement period
#### Supplement in respect of a pre-commencement accounting period
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Interest: special relationship.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a pre-commencement accounting period
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: corporation tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Recovery of tax credits incorrectly paid.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowable deductions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits following an exempt period
#### Assets leased to traders and others.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits following an exempt period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to inspect documents.
#### The Arbitration Convention.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The non-qualifying pool
#### About this Schedule
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Income Tax Acts from year to year.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### The non-qualifying pool
#### About this Schedule
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conventional basis: general charge on receipts after discontinuance . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### Recovery of tax credits incorrectly paid.
#### Territorial sea and designated areas.
#### Interpretation of the Corporation Tax Acts etc.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### “Annual value” of land.
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### Restriction on relief: individuals.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to inspect documents.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of the Corporation Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Qualifying companies
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### Allowable deductions.
#### Relief for contributions in respect of share option gains.
#### Partners: meaning of “contribution to the trade”
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definitions.
#### Relief for necessary expenses.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definitions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “investment LLP” and “property investment LLP”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
- (1) In relation to an open-ended investment company the rate of corporation tax for the financial year 2005 and subsequent financial years shall be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned (and section 13 shall not apply).
- (2) In this section “*open-ended investment company*” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.
- (3) Each of the parts of an umbrella company shall be regarded for the purposes of this section as an open-ended investment company and the umbrella company as a whole shall not be so regarded (and shall not, unless an enactment expressly provides otherwise, be regarded as a company for any other purpose of the Tax Acts).
- (4) In subsection (3) “*umbrella company*” means an open-ended investment company—
- (a) in respect of which the instrument of incorporation provides arrangements for separate pooling of the contributions of the shareholders and the profits or income out of which payments are to be made to them, and
- (b) the shareholders of which are entitled to exchange rights in one pool for rights in another,
and a reference to part of an umbrella company is a reference to a separate pool.
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “research and development”.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Levies and repayments under the Financial Services and Markets Act 2000.
#### Costs of establishing share option or profit sharing schemes: relief.
#### Taxable premiums etc.
#### Section 87(2) and (3) and reductions in receipts under ITTOIA 2005
#### Restriction on relief: individuals.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER 1B — PROVISIONS AS TO CAPITAL SUMS PAID TO SETTLOR
### CHAPTER 1C — LIABILITY OF TRUSTEES
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leased assets: special cases.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Interpretation of the Corporation Tax Acts etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a pre-commencement accounting period
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Adjustment of profits on averaging claim
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### Introduction
#### Introduction
## Part IV — Disallowed debits and non-trading deficits
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying vehicles
#### Employment
#### The approved amount: mileage allowance payments
#### Charitable donations: contributions to agent’s expenses.
#### Charitable donations: contributions to agent’s expenses.
#### Section 87(2) and (3) and reductions in receipts under ITTOIA 2005
#### Meaning of “the aggregate amount”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of price differential on sale and repurchase of securities.
#### Manufactured dividends and interest.
#### Section 751A: supplementary
#### Qualifying vehicles
#### Employment
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Arrangements to avoid section 812.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Unrealised interest in default
#### Interest on tax overpaid.
#### Transfers of rights to receive distributions in respect of shares
#### Offshore income gains: application of transfer of assets abroad provisions
#### Qualifying trade, profession or vocation
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: mileage allowance payments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
@@ -64773,798 +65517,54 @@
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “the aggregate amount”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Meaning of “industrial assurance business”
##### 20A
In this Part of this Schedule “*industrial assurance business*” means any industrial assurance business within the meaning given by—
- (a) section 1(2) of the Industrial Assurance Act 1923, or
- (b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979,
which was carried on before 1 December 2001.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
#### Change in company ownership: corporation tax.
#### Dividends paid out of transferred profits.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Interest on tax overpaid.
#### Section 751A: supplementary
#### Introduction
#### Adjustment of profits on averaging claim
#### Tax year
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Manufactured interest on UK securities: general
### Manufactured interest on gilt-edged securities etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of work in progress at discontinuance of profession or vocation.
#### Paying agents.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of credit code.
#### Section 796: trade income
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Effect of notice under section 804ZA
#### Utilisation of eligible unrelieved foreign tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### Interpretation of the Corporation Tax Acts etc.
#### Meaning of “UK property business” and “overseas property business”
#### Income treated as arising under section 761(1): remittance basis
#### Change in company ownership: postponed corporation tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sales etc. at an undervalue or overvalue.
#### Section 785B: expectation that relevant capital payment will not be paid
#### Company vehicles
#### Introduction
#### The approved amount: mileage allowance payments
#### Meaning of “distribution”.
#### Section 209(3AA): link to shares of company or associated company
#### Stock dividends: distributions.
#### Restrictions on the use of tax credits by pension funds.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of appointment or arrangements under section 659B.
#### Repayment supplements: companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Sales etc. at an undervalue or overvalue.
#### Restriction of relief for payments of interest.
#### Tax year
#### Company vehicles
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Debts of overseas governments etc.
#### Provisions supplementary to sections 100 and 101.
#### “A significant amount of time”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction of relief for payments of interest.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Territorial sea and designated areas.
#### Interpretation of the Corporation Tax Acts.
#### Interpretation of Income Tax Acts.
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#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Introduction
### Introductory
### Payments and other benefits to which section 148 applies
### Payments and other benefits excluded from charge under section 148
### Application of £30,000 threshold
### Exclusion or reduction of charge in case of foreign service
### Valuation of benefits
### Notional interest treated as paid if amount charged in respect of beneficial loan
### Giving effect to the charge to tax
### Reporting requirements
### Interpretation
#### Qualifying vehicles
#### The approved amount: passenger payments
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#### Qualifying companies
#### Supplement in respect of a post-commencement period
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#### Adjustment of profits on averaging claim
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#### About this Schedule
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
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#### Liability of non-transferors.
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Company vehicles
#### Introduction
#### Supplement in respect of a pre-commencement accounting period
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#### Power to modify sections 727A, 730A, 730BB and 737A to 737C
#### Qualifying trade, profession or vocation
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#### Qualifying companies
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#### Tax year
#### Accounting periods
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#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Trading stock.
#### VAT penalties etc.
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### The appropriate percentage
### Car with CO2 emissions figure
### The lower threshold
### Bi-fuel cars
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#### Supplement in respect of a post-commencement period
#### The non-qualifying pool
#### Supplement in respect of a pre-commencement accounting period
#### Qualifying companies
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#### Interpretation of the Corporation Tax Acts.
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#### Interest: special relationship.
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### Amount of post-commencement supplement for a post-commencement period
#### Qualifying companies
#### The non-qualifying pool
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#### Qualifying companies
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#### Effect of notice under section 804ZA
#### Utilisation of eligible unrelieved foreign tax.
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#### Supplement in respect of a post-commencement period
#### Amount of post-commencement supplement for a post-commencement period
#### Supplement in respect of a pre-commencement accounting period
#### Supplement in respect of a post-commencement period
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#### Taxation of profit-related pay.
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#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Interest: special relationship.
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#### Supplement in respect of a pre-commencement accounting period
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
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#### Change in company ownership: corporation tax.
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#### The pool of qualifying E&A losses and the pool of non-qualifying losses
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#### About this Schedule
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### Recovery of tax credits incorrectly paid.
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#### About this Schedule
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#### Allowable deductions.
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#### Reduction in chargeable profits following an exempt period
#### Reduction in chargeable profits following an exempt period
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#### Power to inspect documents.
#### The Arbitration Convention.
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#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
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#### The non-qualifying pool
#### About this Schedule
#### About this Schedule
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#### Application of Income Tax Acts from year to year.
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#### Accounting periods
#### The non-qualifying pool
#### About this Schedule
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
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#### Conventional basis: general charge on receipts after discontinuance . . . .
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#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
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#### Introduction
#### Adjustment of profits on averaging claim
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#### About this Schedule
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#### Accounting periods
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#### The approved amount: passenger payments
#### Recovery of tax credits incorrectly paid.
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#### “Annual value” of land.
#### Qualifying trade, profession or vocation
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Supplement in respect of a pre-commencement accounting period
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#### Accounting periods
#### Restriction on relief: companies.
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#### Power to inspect documents.
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#### Interpretation of the Corporation Tax Acts.
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#### Introduction
#### Qualifying companies
#### Amount of post-commencement supplement for a post-commencement period
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#### Accounting periods
#### Supplement in respect of a post-commencement period
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### Allowable deductions.
#### Exemptions from section 148.
#### Partners: meaning of “contribution to the trade”
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#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
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#### Qualifying trade, profession or vocation
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
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#### Supplement in respect of a post-commencement period
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#### Definitions.
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#### Definitions.
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#### Meaning of “investment LLP” and “property investment LLP”
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#### Introduction
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#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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##### 468A
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##### 468A
- (1) In relation to an open-ended investment company the rate of corporation tax for the financial year 2005 and subsequent financial years shall be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned (and section 13 shall not apply).
- (2) In this section “*open-ended investment company*” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.
- (3) Each of the parts of an umbrella company shall be regarded for the purposes of this section as an open-ended investment company and the umbrella company as a whole shall not be so regarded (and shall not, unless an enactment expressly provides otherwise, be regarded as a company for any other purpose of the Tax Acts).
- (4) In subsection (3) “*umbrella company*” means an open-ended investment company—
- (a) in respect of which the instrument of incorporation provides arrangements for separate pooling of the contributions of the shareholders and the profits or income out of which payments are to be made to them, and
- (b) the shareholders of which are entitled to exchange rights in one pool for rights in another,
and a reference to part of an umbrella company is a reference to a separate pool.
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
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#### Qualifying trade, profession or vocation
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#### About this Schedule
#### About this Schedule
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#### Meaning of “research and development”.
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#### How averaging claim is given effect
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#### About this Schedule
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#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### Qualifying trade, profession or vocation
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#### Supplement in respect of a pre-commencement accounting period
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
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#### Introduction
#### Adjustment of profits on averaging claim
#### About this Schedule
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### Meaning of “industrial assurance business”
##### 20A
In this Part of this Schedule “*industrial assurance business*” means any industrial assurance business within the meaning given by—
- (a) section 1(2) of the Industrial Assurance Act 1923, or
- (b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979,
which was carried on before 1 December 2001.
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### Meaning of “distribution”.
#### Section 209(3AA): hedging arrangements
#### Stock dividends: distributions.
#### No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
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2009-02-03
Income and Corporation Taxes Act 1988
2009-01-01
Income and Corporation Taxes Act 1988
2008-12-27
Income and Corporation Taxes Act 1988
2008-12-01
Income and Corporation Taxes Act 1988
2008-10-29
Income and Corporation Taxes Act 1988
2008-10-28
Income and Corporation Taxes Act 1988
2008-09-08
Income and Corporation Taxes Act 1988
2008-08-12
Income and Corporation Taxes Act 1988
2008-07-22
Income and Corporation Taxes Act 1988
2008-07-21
Income and Corporation Taxes Act 1988
2008-07-08
Income and Corporation Taxes Act 1988
2008-07-01
Income and Corporation Taxes Act 1988
2008-04-06
Income and Corporation Taxes Act 1988
2008-04-01
Income and Corporation Taxes Act 1988
2008-02-19
Income and Corporation Taxes Act 1988
2008-01-03
Income and Corporation Taxes Act 1988
2008-01-01
Income and Corporation Taxes Act 1988
2007-12-28
Income and Corporation Taxes Act 1988
2007-12-27
Income and Corporation Taxes Act 1988
2007-12-06
Income and Corporation Taxes Act 1988
2007-11-29
Income and Corporation Taxes Act 1988
2007-10-01
Income and Corporation Taxes Act 1988
2007-09-01
Income and Corporation Taxes Act 1988
2007-08-14
Income and Corporation Taxes Act 1988
2007-08-13
Income and Corporation Taxes Act 1988
2007-07-19
Income and Corporation Taxes Act 1988
2007-07-17
Income and Corporation Taxes Act 1988
2007-04-17
Income and Corporation Taxes Act 1988
2007-04-06
Income and Corporation Taxes Act 1988
2007-04-01
Income and Corporation Taxes Act 1988
2007-03-29
Income and Corporation Taxes Act 1988
2007-03-21
Income and Corporation Taxes Act 1988
2007-03-01
Income and Corporation Taxes Act 1988
2007-01-08
Income and Corporation Taxes Act 1988
2007-01-01
Income and Corporation Taxes Act 1988
2006-12-31
Income and Corporation Taxes Act 1988
2006-12-26
Income and Corporation Taxes Act 1988
2006-12-12
Income and Corporation Taxes Act 1988
2006-12-06
Income and Corporation Taxes Act 1988
2006-08-11
Income and Corporation Taxes Act 1988
2006-07-19
Income and Corporation Taxes Act 1988
2006-06-09
Income and Corporation Taxes Act 1988
2006-04-06
Income and Corporation Taxes Act 1988
2006-04-01
Income and Corporation Taxes Act 1988
2006-03-22
Income and Corporation Taxes Act 1988
2006-01-06
Income and Corporation Taxes Act 1988
2005-12-27
Income and Corporation Taxes Act 1988
2005-12-05
Income and Corporation Taxes Act 1988
2005-11-01
Income and Corporation Taxes Act 1988
2005-10-05
Income and Corporation Taxes Act 1988
2005-09-27
Income and Corporation Taxes Act 1988
2005-08-12
Income and Corporation Taxes Act 1988
2005-08-11
Income and Corporation Taxes Act 1988
2005-08-03
Income and Corporation Taxes Act 1988
2005-07-24
Income and Corporation Taxes Act 1988
2005-07-20
Income and Corporation Taxes Act 1988
2005-06-08
Income and Corporation Taxes Act 1988
2005-04-07
Income and Corporation Taxes Act 1988
2005-04-06
Income and Corporation Taxes Act 1988
original version
Text at this date