Finance Act 2000

• (b) at any time during the period of six years immediately preceding that day when the company was a tonnage tax company.

• (3) Where sub-paragraph (1) operates to increase the amount of the chargeable gain on a disposal made at a time within the period mentioned in sub-paragraph (2)(b), the gain is treated to the extent of the increase—

• (a) as arising immediately before the company ceased to be a tonnage tax company, and

• (b) as not being relevant shipping profits of the company.

• (4) No relief, deduction or set-off of any description is allowed against the amount of that increase or the corporation tax on that amount.

Exit charge: balancing charges

139

• (1) This paragraph applies if in a relevant accounting period during which the company was a tonnage tax company it was liable to a balancing charge in relation to which paragraph 78 (phasing-out of balancing charges) applied to reduce the amount of the charge.

• (2) For this purpose a “relevant accounting period” means an accounting period ending not more than six years before the day on which the company ceased to be a tonnage tax company.

• (3) The company is treated as having received an additional amount of profits chargeable to corporation tax equal to the aggregate of the amounts by which those balancing charges were reduced.

• (4) Those additional profits are treated—

• (a) as arising immediately before the company ceased to be a tonnage tax company, and

• (b) as not being relevant shipping profits of the company.

• (5) No relief, deduction or set-off of any description is allowed against those profits or against corporation tax on them.

Ten year disqualification from re-entry into tonnage tax

140

• (1) A company election made by a former tonnage tax company is ineffective if made before the end of the period of ten years beginning with the date on which the company ceased to be a tonnage tax company.

• (2) A group election that—

• (a) is made in respect of a group whose members include a former tonnage tax company, and

• (b) would result in that company becoming a tonnage tax company,

is ineffective if made before the end of the period of ten years beginning with the date on which that company ceased to be a tonnage tax company.

• (3) Sub-paragraphs (1) and (2) do not prevent a company becoming a tonnage tax company under and in accordance with the rules in Part XII of this Schedule (groups, mergers and related matters).

• (4) In this paragraph “former tonnage tax company” means a company that is not a tonnage tax company but has previously been a tonnage tax company.

Second or subsequent application of this Part

141

Where this Part of this Schedule applies on a second or subsequent occasion on which a company ceases to be a tonnage tax company (whether or not this Part applied on any of the previous occasions)—

• (a) the references to the company ceasing to be a tonnage tax company shall be read as references to the last occasion on which it did so, and

• (b) the references to the period during which the company was a tonnage tax company do not include any period before its most recent entry into tonnage tax.

Part XV — Supplementary provisions

Meaning of “ship"

142

In this Schedule “ship” means any vessel used in navigation, and includes a hovercraft.

Meaning of “on bareboat charter terms"

143

In this Schedule a charter “on bareboat charter terms” means a hiring of a ship for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint the master and crew.

Meaning of “associate"

144

• (1) In this Schedule “associate”, in relation to an individual, means—

• (a) a relative of that individual;

• (b) a partner of that individual;

• (c) the trustee or trustees of any settlement in relation to which—

• (i) that individual, or

• (ii) any relative (whether living or dead) of that individual,

is or was a settlor;

• (d) where that individual is interested in any shares or obligations of a company that are subject to a trust, the trustee or trustees of the settlement concerned;

• (e) where that individual is interested in any shares or obligations of a company that are part of the estate of a deceased person, the personal representatives of the deceased.

• (2) In sub-paragraph (1)(a) and (c)(ii) “relative” means spouse or civil partner, parent or remoter forebear, child or remoter issue, or brother or sister.

Section 831(4) of the Taxes Act 1988 applies for the purposes of this paragraph as it applies for the purposes of that Act.

• (3) In sub-paragraph (1)(c) and (d) “settlement” and “settlor” have the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).

Exercise of functions conferred on “the Inland Revenue"

145

• (1) Any power to make regulations conferred by this Schedule on “the Inland Revenue" is exercisable only by the Board.

• (2) Subject to that, references in this Schedule to “the Inland Revenue" are to any officer of the Board.

Meaning of “company" and related expressions

146

In this Schedule—

• “company” means a body corporate or unincorporated association, but does not include a partnership;

• “controlled foreign company” has the same meaning as in Chapter IV of Part XVII of the Taxes Act 1988 (tax avoidance: controlled foreign companies);

• “single company” means a company that is not a member of a group.

Index of defined expressions

147

In this Schedule the following expressions are defined or otherwise explained by the provisions indicated:

SCHEDULE 23

Rights to which this Schedule applies

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax treatment of expenditure on acquisition and receipts from disposal

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax treatment of amounts arising from revaluation

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax treatment must accord with accounting approach in relevant group accounts

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transitional provision in relation to IRUs

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 24

The Schedule inserted after Schedule 4 to the Taxation of Chargeable Gains Act 1992 is as follows:

SCHEDULE 25

The Schedule inserted after Schedule 4A to the Taxation of Chargeable Gains Act 1992 is as follows:

SCHEDULE 26

Part I — New Schedule 4C to the Taxation of Chargeable Gains Act 1992

1

The Schedule inserted after Schedule 4B to the Taxation of Chargeable Gains Act 1992 is as follows:

Schedule 4C (1) (1) This Schedule applies where in any year of assessment a chargeable gain or allowable loss accrues by virtue of Schedule 4B to trustees of a settlement within section 87. For this purpose a settlement is “within section 87" for a year of assessment if in that year the conditions specified in section 87(1) or section 88(1) are met in relation to the trustees of the settlement. (2) The provisions of this Schedule have effect in relation to any such chargeable gain or allowable loss as is mentioned in sub-paragraph (1) above in place of the provisions of sections 86A to 95. (3) No account shall be taken— (a) of any such chargeable gain or allowable loss in computing the trust gains for a year of assessment in accordance with sections 87 to 89; or (b) of any chargeable gain or allowable loss to which those sections apply in computing the Schedule 4B trust gains in accordance with this Schedule. (2) The general scheme of this Schedule is that— (a) Schedule 4B trust gains are attributed to beneficiaries— (i) of the transferor settlement, or (ii) of any transferee settlement, who have received capital payments from the trustees; and (b) any allowable loss accruing by virtue of Schedule 4B may only be set against a chargeable gain so accruing. (3) (1) This paragraph explains what is meant for the purposes of this Schedule by “Schedule 4B trust gains”. (2) The Schedule 4B trust gains are computed in relation to each transfer of value to which that Schedule applies. (3) In relation to a transfer of value the amount of the Schedule 4B trust gains for the purposes of this Schedule is given by— $$CA-SG-AL$where—CA is the chargeable amount computed under paragraph 4 or 5 below,SG is the amount of any gains attributed to the settlor that fall to be deducted under paragraph 6 below, andAL is the amount of any allowable losses that may be deducted under paragraph 7 below.$ (4) (1) If the transfer of value is made in a year of assessment during which the trustees of the transferor settlement are at no time resident or ordinarily resident in the United Kingdom the chargeable amount is computed under this paragraph. (2) Where this paragraph applies the chargeable amount is the amount on which the trustees would have been chargeable to tax under section 2(2) by virtue of Schedule 4B if they had been resident or ordinarily resident in the United Kingdom in the year. (5) (1) If the transfer of value is made in a year of assessment where— (a) the trustees of the transferor settlement are resident in the United Kingdom during any part of the year or ordinarily resident in the United Kingdom during the year, and (b) at any time of such residence or ordinary residence they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom, the chargeable amount is computed under this paragraph. (2) Where this paragraph applies the chargeable amount is the lesser of— (a) the amount on which the trustees would be chargeable to tax under section 2(2) by virtue of Schedule 4B on the assumption that the double taxation relief arrangements did not apply, and (b) the amount on which the trustees would be so chargeable to tax by virtue of disposals of protected assets. (3) For this purpose “protected assets” has the meaning given by section 88(4). (6) (1) For the purposes of this Schedule the chargeable amount in relation to a transfer of value shall be reduced by the amount of any chargeable gains arising by virtue of that transfer of value that— (a) are by virtue of section 86(4) treated as accruing to the settlor, or (b) where section 10A applies, are treated by virtue of that section (as it has effect subject to paragraph 12 below) as accruing to the settlor in the year of return. (2) In determining for the purposes of sub-paragraph (1)(a) the amount of chargeable gains arising by virtue of a transfer of value that are treated as accruing to the settlor, there shall be disregarded any losses which arise otherwise than by virtue of Schedule 4B. (3) In computing the chargeable amount in relation to a transfer of value the effect of sections 77 to 79 shall be ignored. (7) (1) An allowable loss arising under Schedule 4B in relation to a transfer of value by the trustees of a settlement may be taken into account in accordance with this paragraph to reduce for the purposes of this Schedule the chargeable amount in relation to another transfer of value by those trustees. (2) Any such allowable loss goes first to reduce chargeable amounts arising from other transfers of value made in the same year of assessment. If there is more than one chargeable amount and the aggregate amount of the allowable losses is less than the aggregate of the chargeable amounts, each of the chargeable amounts is reduced proportionately. (3) If in any year of assessment the aggregate amount of the allowable losses exceeds the aggregate of the chargeable amounts, the excess shall be carried forward to the next year of assessment and treated for the purposes of this paragraph as if it were an allowable loss arising in relation to a transfer of value made in that year. (4) Any reduction of a chargeable amount under this paragraph is made after any deduction under paragraph 6. (8) (1) The Schedule 4B trust gains relating to a transfer of value shall be treated as chargeable gains accruing to beneficiaries— (a) of the transferor settlement, and (b) of any transferee settlement, in accordance with the following rules. (2) The Schedule 4B trust gains shall be treated as chargeable gains accruing to beneficiaries who— (a) receive capital payments from the trustees in the year of assessment in which the transfer of value is made, or (b) have received such payments in any earlier year, to the extent that such payments exceed the amount of any gains attributed to the beneficiaries under section 87(4) or 89(2). (3) Any Schedule 4B trust gains remaining after the application of sub-paragraph (2) in relation to the year of assessment in which the transfer of value was made shall be carried forward to the following year of assessment and treated for the purposes of this paragraph as if they were gains from a transfer of value made in that year. (4) The attribution of chargeable gains to beneficiaries under this paragraph shall be made in proportion to, but shall not exceed, the amounts of the capital payments received by them. (9) (1) A capital payment shall be left out of account— (a) for the purposes of paragraph 8, to the extent that chargeable gains have, by reason of it, been treated as accruing to the recipient in an earlier year of assessment; and (b) for the purposes of sections 87(4) and (5) and 89(2), to the extent that chargeable gains have, by reason of it, been treated as accruing to the recipient under paragraph 8. (2) A beneficiary shall not be charged to tax on chargeable gains treated by virtue of paragraph 8 as accruing to him in any year unless he is domiciled in the United Kingdom at some time in that year. (3) For the purposes of paragraph 8 capital payments received— (a) before 21st March 2000, or (b) before the year of assessment preceding the year of assessment in which the transfer of value is made, shall be disregarded. (10) (1) Subject to sub-paragraph (2) below, it is immaterial for the purposes of paragraph 8 that the trustees of the transferor settlement, or any transferee settlement, are or have at any time been resident or ordinarily resident in the United Kingdom. (2) A capital payment received by a beneficiary of a settlement from the trustees in a year of assessment— (a) during the whole of which the trustees are resident in the United Kingdom, or (b) in which the trustees are ordinarily resident in the United Kingdom, shall be disregarded for the purposes of paragraph 8 if it was made before, but was not made in anticipation of, chargeable gains accruing under Schedule 4B or of a transfer of value being made to which that Schedule applies. (3) For the purposes of sub-paragraph (2) the trustees of a settlement shall not be regarded as resident or ordinarily resident in the United Kingdom at any time when they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom. (11) Without prejudice to so much of this Schedule as requires section 2A to be applied in the computation of the amount of Schedule 4B trust gains, chargeable gains that are treated as accruing to beneficiaries under this Schedule shall not be eligible for taper relief. (12) (1) This paragraph applies where by virtue of section 10A an amount of gains— (a) arising under Schedule 4B in an intervening year, and (b) falling within section 86(1)(e), would (apart from this Schedule) be treated as accruing to a person (“the settlor”) in the year of return. (2) Where this paragraph applies, only so much (if any) of the Schedule 4B trust gains falling within section 86(1)(e) as exceeds the amount charged to beneficiaries shall fall in accordance with section 10A to be attributed to the settlor for the year of return. (3) The “amount charged to beneficiaries” means, subject to sub-paragraph (4) below, the total of the amounts on which beneficiaries of the transferor or transferee settlements are charged to tax under this Schedule by reference to those gains for all the intervening years. (4) Where the property comprised in the transferor settlement has at any time included property not originating from the settlor, only so much (if any) of any capital payment taken into account for the purposes of paragraph 8 above as, on a just and reasonable apportionment, is properly referable to property originating from the settlor shall be taken into account in computing the amount charged to beneficiaries. (5) Expressions used in this paragraph and section 10A have the same meanings in this paragraph as in that section; and paragraph 8 of Schedule 5 shall apply for the construction of the references in sub-paragraph (4) above to property originating from the settlor as it applies for the purposes of that Schedule. (13) (1) This paragraph applies where— (a) a capital payment is made by the trustees of a settlement, (b) the payment is made in circumstances where paragraph 8 above treats chargeable gains as accruing in respect of the payment, and (c) a beneficiary is charged to tax in respect of the payment by virtue of that paragraph. (2) The tax payable by the beneficiary in respect of the payment shall be increased by the amount found under sub-paragraph (3) below, except that it shall not be increased beyond the amount of the payment; and an assessment may charge tax accordingly. (3) The amount is one equal to the interest that would be yielded if an amount equal to the tax which would be payable by the beneficiary in respect of the payment (apart from this paragraph) carried interest for the chargeable period at the specified rate. The “specified rate” means the rate for the time being specified in section 91(3). (4) The chargeable period is the period which— (a) begins with the later of the 2 days specified in sub-paragraph (5) below, and (b) ends with 30th November in the year of assessment following that in which the capital payment is made. (5) The 2 days are— (a) 1st December in the year of assessment following that in which the transfer of value was made, and (b) 1st December falling 6 years before 1st December in the year of assessment following that in which the capital payment is made. (14) (1) In this Schedule— (a) “transfer of value” has the same meaning as in Schedule 4B; and (b) references to the time at which a transfer of value was made are to the time which is the material time for the purposes of that Schedule. (2) In this Schedule, in relation to a transfer of value— (a) references to the transferor settlement are to the settlement the trustees of which made the transfer of value; and (b) references to a transferee settlement are to any settlement of which the settled property includes property representing, directly or indirectly, the proceeds of the transfer of value. (3) References in this Schedule to beneficiaries of a settlement include— (a) persons who have ceased to be beneficiaries by the time the chargeable gains accrue, and (b) persons who were beneficiaries of the settlement before it ceased to exist, but who were beneficiaries of the settlement at a time in a previous year of assessment when a capital payment was made to them.

.

Part II — Consequential amendments

Taxation of Chargeable Gains Act 1992 (c. 12)

2

In section 90 of the Taxation of Chargeable Gains Act 1992 (transfers between settlements), after subsection (4) add—

(5) This section shall not apply— (a) to a transfer to the extent that it is in accordance with Schedule 4B treated as linked with trustee borrowing; or (b) to any chargeable gains arising by virtue of that Schedule.

.

3

In section 96 of the Taxation of Chargeable Gains Act 1992 (payments by and to companies), in subsections (1) and (2) after “sections 87 to 90" insert “ and Schedule 4C ”

4

In section 97 of the Taxation of Chargeable Gains Act 1992 (supplementary provisions)—

• (a) in subsections (1), (3)(a), (4) and (7), after “sections 86A to 96", and

• (b) in subsections (5) and (8), after “sections 86A to 90",

insert “ and Schedule 4C ”.

5

In section 98 of the Taxation of Chargeable Gains Act 1992, after subsection (2) add—

(3) The provisions of subsections (1) and (2) above have effect as if the references to sections 87 to 90 included references to Schedule 4C.

.

Taxes Act 1988

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 27

Part I — Amendments of Chapter IV of Part X of the Taxes Act 1988

Availability of relief

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limits on amount of relief

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amendments of Schedule 18 to the Taxes Act 1988

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II — Consequential amendments

Section 76 of the Taxes Act 1988

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 434A of the Taxes Act 1988

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 502 of the Taxes Act 1988

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 24 to the Taxes Act 1988

10

In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits etc. of foreign companies), make paragraph 5 sub-paragraph (1) of that paragraph; and after that sub-paragraph insert—

(2) Where, under Chapter IV of Part X, any relief is in fact surrendered by the company and allowed to another company by way of group relief, it shall be assumed that the chargeable profits of the company, apart from this paragraph, are to be increased by an amount of additional profits equal to the amount of the relief so surrendered and allowed.

.

Schedule 18 to the Finance Act 1998

11

In paragraph 68 of Schedule 18 to the Finance Act 1998 (contents of claim for group relief), after sub-paragraph (2) insert—

(3) A claim for group relief must also state whether or not there is a company mentioned in sub-paragraph (4) that was not resident in the United Kingdom in either or both of the following periods— (a) the accounting period of the surrendering company to which the surrender relates, (b) the corresponding accounting period of the claimant company. (4) Those companies are the claimant company, the surrendering company and any other company by reference to which— (a) the claimant company and the surrendering company are members of the same group, or (b) the conditions specified in section 402(3) of the Taxes Act 1988 for the making of the claim are satisfied in the case of the claimant company and the surrendering company.

.

Commencement

12

• (1) Paragraphs 7, 8, 10 and 11 have effect in relation to accounting periods ending on or after 1st April 2000.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 28

Introduction

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies that may be required to pay unpaid tax

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notice requiring payment of unpaid tax

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Time limit for giving notice

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limit on amount payable in consortium case

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 29

Part I — Application of Taxation of Chargeable Gains Act 1992

Main amendments

1

• (1) In section 170 of the Taxation of Chargeable Gains Act 1992 (groups of companies: interpretation), the following provisions shall cease to have effect—

• (a) paragraph (a) of subsection (2) (which provides that references to companies apply only to companies resident in the United Kingdom); and

• (b) in subsection (9)(b) the words “(although resident in the United Kingdom)".

• (2) The above amendments (referred to in this Schedule as “the main amendments”) have effect in accordance with the following provisions of this Schedule.

Transfers within a group

2

• (1) Section 171 of the Taxation of Chargeable Gains Act 1992 (transfers within a group: general provisions) is amended as follows.

• (2) For subsection (1) (treatment for corporation tax purposes of transfer of asset within group) substitute—

(1) Where— (a) a company (“company A”) disposes of an asset to another company (“company B”) at a time when both companies are members of the same group, and (b) the conditions in subsection (1A) below are met, company A and company B are treated for the purposes of corporation tax on chargeable gains as if the asset were acquired by company B for a consideration of such amount as would secure that neither a gain nor a loss would accrue to company A on the disposal. (1A) The conditions referred to in subsection (1)(b) above are— (a) that company A is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately before that time, and (b) that company B is resident in the United Kingdom at the time of the disposal, or the asset is a chargeable asset in relation to that company immediately after that time. For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.

.

• (3) In subsection (2)—

• (a) in paragraph (a), for “a member of a group of companies" substitute “ company B ”, and

• (b) in the closing words, for “a member of a group of companies" substitute “ company A ”.

• (4) In subsection (3) for “the company first mentioned in that subsection" substitute “ company A ”.

• (5) After subsection (5) add—

(6) Subsection (1) above applies notwithstanding any provision in this Act fixing the amount of the consideration deemed to be received on a disposal or given on an acquisition. But where it is assumed for any purpose that a member of a group of companies has sold or acquired an asset, it shall be assumed also that it was not a sale or acquisition to which this section applies.

.

• (6) The above amendments, and the main amendments so far as they apply for the purposes of section 171, have effect in relation to disposals on or after 1st April 2000.

Transfer of United Kingdom branch or agency

3

• (1) Section 172 of the Taxation of Chargeable Gains Act 1992 (transfer of United Kingdom branch or agency) shall cease to have effect.

• (2) The above amendment has effect in relation to disposals on or after 1st April 2000.

De-grouping charge

4

• (1) Section 179 of the Taxation of Chargeable Gains Act 1992 (company ceasing to be member of group) is amended as follows.

• (2) For subsection (1) substitute—

(1) This section applies where— (a) a company (“company A”) acquires an asset from another company (“company B”) at a time when company B is a member of a group, (b) the conditions in subsection (1A) below are met, and (c) company A ceases to be a member of that group within the period of six years after the time of the acquisition. References in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group in consequence of another member of the group ceasing to exist. (1A) The conditions referred to in subsection (1)(b) above are— (a) that company A is resident in the United Kingdom at the time it acquires the asset, or the asset is a chargeable asset in relation to that company immediately after that time, and (b) that company B is resident in the United Kingdom at the time of that acquisition, or the asset is a chargeable asset in relation to that company immediately before that time. For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.

.

• (3) In subsection (2A)—

• (a) in paragraph (a)—

• (i) after “a company" insert “ (“company A”) ”, and

• (ii) after “another company" insert “ (“company B”) ”,

• (b) in paragraph (b) for “that company’s" substitute “ company A’s ”,

• (c) in paragraph (c) for “the company that made the acquisition" substitute “ company A ”, and

• (d) in the closing words for “the company’s" substitute “ company A’s ”.

• (4) In subsections (2B) (three times), (2C), (2D), (3) (three times), (4) (twice), (10)(c) and (13) for “the chargeable company" substitute “ company A ”.

• (5) Subsections (11) and (12) (which are superseded by the provision made by paragraph 9 below) shall cease to have effect.

• (6) The amendments made by sub-paragraphs (2) to (4) above, and the main amendments so far as they apply for the purposes of section 179, have effect in relation to assets acquired on or after 1st April 2000.

• (7) The amendments made by sub-paragraph (5) above have effect in relation to gains accruing on or after 1st April 2000.

Reconstruction or amalgamation involving transfer of business

5

• (1) Section 139 of the Taxation of Chargeable Gains Act 1992 (reconstruction or amalgamation involving transfer of business) is amended as follows.

• (2) In subsection (1) (transfer of business on basis of no gain and no loss) for paragraph (b) (requirement that both companies are resident in the United Kingdom) substitute—

(b) the conditions in subsection (1A) below are met in relation to the assets included in the transfer, and

.

• (3) After subsection (1) insert—

(1A) The conditions referred to in subsection (1)(b) above are— (a) that the company acquiring the assets is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time, and (b) that the company from which the assets are acquired is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately before that time. For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.

.

• (4) The above amendments have effect in relation to disposals made on or after 1st April 2000.

Deemed disposal on non-resident ceasing to carry on trade in United Kingdom through branch or agency

6

• (1) Section 25 of the Taxation of Chargeable Gains Act 1992 (non-residents: deemed disposals) is amended as follows.

• (2) After subsection (3) insert—

(3A) Subsection (3) above shall not apply if— (a) the person ceasing to carry on the trade is a company, and (b) the trade is transferred to another company in circumstances in which section 139 or 171 applies in relation to the assets transferred.

.

• (3) Subsection (4) shall cease to have effect.

• (4) The amendment in sub-paragraph (2) above has effect in relation to cases where section 139 or, as the case may be, section 171 has effect as amended by this Schedule.

• (5) The amendment in sub-paragraph (3) above has effect in relation to cases where section 139 has effect as amended by this Schedule.

Restriction on set-off of pre-entry losses

7

• (1) In Schedule 7A to the Taxation of Chargeable Gains Act 1992 (restriction on set-off of pre-entry losses), paragraph 1 (application and construction of Schedule) is amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) The above amendments, and the main amendments so far as they apply for the purposes of Schedule 7A, have effect in relation to the amount to be included in respect of chargeable gains in a company’s total profits for any accounting period ending on or after 21st March 2000.

• (7) Any question whether a company was, in relation to times before 21st March 2000, a member of a group shall be determined by reference to the position under the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.

• (8) Any question whether a company was, in relation to times before 6th April 1992, a member of a group shall be determined by reference to the position under the Capital Gains Tax Act 1979.

• (9) Where—

• (a) immediately before the time when the main amendments have effect in relation to a company in accordance with sub-paragraph (6), the company was not a member of a group of companies for the purposes of section 170 of the Taxation of Chargeable Gains Act 1992 (as it stood before the main amendments), and

• (b) immediately after that time, the company is a member of a group of companies for the purposes of that section (as amended by the main amendments),

Schedule 7A to that Act shall not have effect in relation to any losses accruing to the company before that time or any chargeable assets (within the meaning of paragraph 1(3A) of that Schedule) held by it immediately before that time.

Restrictions on setting losses against pre-entry gains

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recovery of unpaid tax

9

• (1) For sections 190 and 191 of the Taxation of Chargeable Gains Act 1992 substitute—

(190) (1) This section applies where— (a) a chargeable gain has accrued to a company (“the taxpayer company”), (b) the condition in subsection (2) below is met, and (c) the whole or part of the corporation tax assessed on the company for the accounting period in which the gain accrued (“the relevant accounting period”) is unpaid at the end of the period of six months after it became payable. (2) The condition referred to in subsection (1)(b) above is— (a) that the taxpayer company is resident in the United Kingdom at the time when the gain accrued, or (b) that the gain forms part of the taxpayer company’s chargeable profits for corporation tax purposes by virtue of section 10(3). (3) The following persons may, by notice under this section, be required to pay the unpaid tax— (a) if the taxpayer company was a member of a group at the time when the gain accrued— (i) a company which was at that time the principal company of the group, and (ii) any other company which in any part of the period of twelve months ending with that time was a member of that group and owned the asset disposed of, or any part of it, or where that asset is an interest or right in or over another asset, owned either asset or any part of either asset; and (b) if the gain forms part of the chargeable profits of the taxpayer company for corporation tax purposes by virtue of section 10(3), any person who is, or during the period of twelve months ending with the time when the gain accrued was, a controlling director of the taxpayer company or of a company which has, or within that period had, control over the taxpayer company. (4) The Board may serve a notice on a person within subsection (3) above requiring him, within 30 days of the service of the notice, to pay— (a) the amount which remains unpaid of the corporation tax assessed on the taxpayer company for the relevant accounting period, or (b) if less, an amount equal to corporation tax on the amount of the chargeable gain at the rate in force when the gain accrued. (5) The notice must state— (a) the amount of corporation tax assessed on the taxpayer company for the relevant accounting period that remains unpaid, (b) the date when it first became payable, and (c) the amount required to be paid by the person on whom the notice is served. (6) The notice has effect— (a) for the purposes of the recovery from that person of the amount required to be paid and of interest on that amount, and (b) for the purposes of appeals, as if it were a notice of assessment and that amount were an amount of tax due from that person. (7) Any notice under this section must be served before the end of the period of three years beginning with the date on which the liability of the taxpayer company to corporation tax for the relevant accounting period is finally determined. (8) Where the unpaid tax is charged in consequence of a determination under paragraph 36 or 37 of Schedule 18 to the Finance Act 1998 (determination where no return delivered or return incomplete), the date mentioned in subsection (7) above shall be taken to be the date on which the determination was made. (9) Where the unpaid tax is charged in a self-assessment, including a self-assessment that supersedes a determination (see paragraph 40 of Schedule 18 to the Finance Act 1998), the date mentioned in subsection (7) above shall be taken to be the latest of— (a) the last date on which notice of enquiry may be given into the return containing the self-assessment; (b) if notice of enquiry is given, 30 days after the enquiry is completed; (c) if more than one notice of enquiry is given, 30 days after the last notice of completion; (d) if after such an enquiry the Inland Revenue amend the return, 30 days after notice of the amendment is issued; (e) if an appeal is brought against such an amendment, 30 days after the appeal is finally determined. (10) If the unpaid tax is charged in a discovery assessment, the date mentioned in subsection (7) above shall be taken to be— (a) where there is no appeal against the assessment, the date when the tax becomes due and payable; (b) where there is such an appeal, the date on which the appeal is finally determined. (11) A person who has paid an amount in pursuance of a notice under this section may recover that amount from the taxpayer company. (12) A payment in pursuance of a notice under this section is not allowed as a deduction in computing any income, profits or losses for any tax purposes. (13) In this section— - “director”, in relation to a company, has the meaning given by section 168(8) of the Taxes Act (read with subsection (9) of that section) and includes any person falling within section 417(5) of that Act (read with subsection (6) of that section); - “controlling director”, in relation to a company, means a director of the company who has control of it (construing control in accordance with section 416 of the Taxes Act);“group" and “principal company" have the meaning which would be given by section 170 if in that section for references to 75 per cent. subsidiaries there were substituted references to 51 per cent. subsidiaries.

.

• (2) In section 87A(3) of the Taxes Management Act 1970 (date from which interest runs in the case of an assessment of a company’s tax on another person)—

• (a) after “In relation to corporation tax assessed" insert “ or treated as assessed ”, and

• (b) after “139(7)" insert “ or 190 ”.

• (3) The above amendments, and the main amendments so far as they apply for the purposes of section 190 (as substituted by sub-paragraph (1) above), have effect in relation to gains accruing on or after 1st April 2000.

• (4) Any question whether a company was a member of a group during the period of twelve months ending when such a gain accrued shall be determined in accordance with section 170 as amended by the main amendments.

Replacement of business assets by members of group

10

• (1) Section 175 of the Taxation of Chargeable Gains Act 1992 is amended as follows.

• (2) In subsection (1) after “all the trades" insert “ to which this section applies ”.

• (3) After subsection (1) insert—

(1A) The trades to which this section applies are— (a) any trade carried on by a company that is resident in the United Kingdom, and (b) any trade carried on in the United Kingdom through a branch or agency by a company not so resident.

.

• (4) In subsection (2A), after paragraph (b) insert—

(ba) the conditions in subsection (2AA) below are met, and

.

• (5) After subsection (2A) insert—

(2AA) The conditions referred to in subsection (2A)(ba) above are— (a) that the company making the disposal is resident in the United Kingdom at the time of the disposal, or the assets are chargeable assets in relation to that company immediately before that time, and (b) that the acquiring company is resident in the United Kingdom at the time of the acquisition, or the assets are chargeable assets in relation to that company immediately after that time. For this purpose an asset is a “chargeable asset” in relation to a company at any time if, were the asset to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes.

.

• (6) For subsection (3) substitute—

(3) Section 154(2) applies where the company making the claim is a member of a group of companies— (a) as if all members of the group for the time being carrying on a trade to which this section applies were the same person, and (b) in accordance with subsection (1) above, as if all those trades were the same trade; so that the gain accrues to the member of the group holding the asset concerned on the occurrence of the event mentioned in section 154(2).

.

• (7) The above amendments, and the main amendments so far as they apply for the purposes of section 175, have effect in relation to cases in which—

• (a) either the disposal or acquisition is on or after 1st April 2000, or

• (b) both the disposal and acquisition are on or after that date.

• (8) In a case falling within paragraph (a) of sub-paragraph (7) above, any question whether a company was, at the time of the acquisition or disposal corresponding to the disposal or acquisition referred to in that paragraph, a member of a group shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as amended by the main amendments.

Transfers of assets within a group: trading stock

11

• (1) For section 173 of the Taxation of Chargeable Gains Act 1992 substitute—

(173) (1) Where— (a) a company (“company A”) acquires an asset as trading stock of a trade to which this section applies, (b) the acquisition is from a company (“company B”) that at the time of the acquisition is a member of the same group of companies, and (c) the asset did not form part of the trading stock of any such trade carried on by company B, company A is treated for the purposes of section 161 as having acquired the asset otherwise than as trading stock and immediately appropriated it for the purposes of the trade as trading stock. (2) Where— (a) a company (“company C”) disposes of an asset forming part of the trading stock of a trade to which this section applies carried on by that company, (b) the disposal is to another company (“company D”) that at the time of the disposal is a member of the same group of companies, and (c) the asset is acquired by company D otherwise than as trading stock of any such trade carried on by it, company C is treated for the purposes of section 161 as having appropriated the asset immediately before the disposal for some purpose other than the purpose of use as trading stock. (3) The trades to which this section applies are— (a) any trade carried on by a company resident in the United Kingdom, and (b) any trade carried on in the United Kingdom through a branch or agency by a company not so resident.

.

• (2) The above amendment, and the main amendments so far as they apply for the purposes of section 173 (as substituted by sub-paragraph (1) above), have effect in relation to acquisitions and disposals on or after 1st April 2000.

Restriction of losses by reference to capital allowances

12

• (1) In section 41 of the Taxation of Chargeable Gains Act 1992, after subsection (7) add—

(8) Where there is a disposal of an asset acquired in circumstances in which— (a) section 140A applies, or (b) section 171 applies or would apply but for subsection (2) of that section, this section has effect in relation to capital allowances made to the person from which it was acquired (so far as not taken into account in relation to a disposal of the asset by that person), and so on as respects previous transfers of the asset in such circumstances. This does not affect the consideration for which an asset is deemed under section 140A or 171 to be acquired.

.

• (2) The above amendment has effect in relation to cases where the disposal first referred to in section 41(8) (as inserted by sub-paragraph (1) above) is on or after 1st April 2000.

Assets held on 6th April 1965: disposal outside group

13

• (1) Section 174 of the Taxation of Chargeable Gains Act 1992 is amended as follows.

• (2) In subsection (4) for “at a time when both were members of the group" substitute “ in a transfer to which section 171(1) applied ”.

• (3) Subsection (5) shall cease to have effect.

• (4) The above amendments, and the main amendments so far as they apply for the purposes of section 174, have effect in relation to acquisitions on or after 1st April 2000.

• (5) Any question whether a company was, in relation to times before 1st April 2000, a member of a group shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.

Part II — Minor and consequential amendments

Section 97 of the Inheritance Tax Act 1984

14

The main amendments have effect for the purposes of section 97 of the Inheritance Tax Act 1984 (transfer of asset within a group of companies) in relation to disposals on or after 1st April 2000.

Section 132 of the Finance Act 1988

15

• (1) In section 132 of the Finance Act 1988 (recovery of tax from another group company or controlling director), in subsection (6), in the definition of “group", the words “references to residence in the United Kingdom were omitted and" shall cease to have effect.

• (2) The above amendment, and the main amendments so far as they apply for the purposes of section 132, have effect in relation to cases in which the migrating company ceases to be resident in the United Kingdom on or after 1st April 2000.

• (3) Any question whether a company was a member of a group during the period of twelve months ending when the migrating company ceased to be so resident shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as amended by the main amendments.

Section 14 of the Taxation of Chargeable Gains Act 1992

16

• (1) Section 14 of the Taxation of Chargeable Gains Act 1992 (non-resident groups of companies) is amended as follows.

• (2) For subsection (2) substitute—

(2) The following provisions— (a) section 41(8), (b) section 171 (except subsections (1)(b) and (1A)), (c) section 173 (with the omission of the words “to which this section applies" in subsections (1)(a) and (2)(a) and “such" in subsections (1)(c) and (2)(c) and with the omission of subsection (3)), (d) section 174(4) (with the substitution of “ at a time when both were members of the group" for “in a transfer to which section 171(1) applied”), and (e) section 175(1) (with the omission of the words “to which this section applies”), shall apply in relation to non-resident companies which are members of a non-resident group of companies as they apply in relation to companies which are members of a group of companies.

• (3) In subsection (3), for “Sections 178 to 180" substitute “ Section 179 (except subsections (1)(b) and (1A)) ”.

• (4) In subsection (4)(b), the words “without subsections (2)(a), (9) and (12) to (14)" shall cease to have effect.

• (5) The above amendments, and the main amendments so far as they apply for the purposes of section 14, have effect in cases in which section 41, 171, 173, 174(4), 175(1) or 179, as the case may be, have effect as amended by this Schedule.

Section 31A of the Taxation of Chargeable Gains Act 1992

17

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 106 of the Taxation of Chargeable Gains Act 1992

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 116 of the Taxation of Chargeable Gains Act 1992

19

• (1) In section 116 of the Taxation of Chargeable Gains Act 1992 (reorganisations, conversions and reconstructions), in subsection (11) for “171(1) or 172" substitute “ or 171(1) ”.

• (2) The above amendment has effect in accordance with paragraph 3(2).

Section 117A of the Taxation of Chargeable Gains Act 1992

20

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 117B of the Taxation of Chargeable Gains Act 1992

21

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 138A of the Taxation of Chargeable Gains Act 1992

22

The main amendments have effect for the purposes of section 138A of the Taxation of Chargeable Gains Act 1992 (use of earn-out rights for exchange of securities) in relation to rights conferred on or after 1st April 2000.

Section 140 of the Taxation of Chargeable Gains Act 1992

23

• (1) In section 140 of the Taxation of Chargeable Gains Act 1992 (postponement of charge on transfer of assets to non-resident company), in subsection (6)(b) for “apart from section 170(2)(a) and (9)" substitute “ if subsections (1)(b) and (1A) of that section and section 170(9) were disregarded ”.

• (2) The above amendment has effect in relation to disposals on or after 1st April 2000.

Section 176 of the Taxation of Chargeable Gains Act 1992

24

• (1) In section 176 of the Taxation of Chargeable Gains Act 1992 (depreciatory transactions within a group), in subsection (7), paragraph (c) and the word “and" immediately preceding it shall cease to have effect.

• (2) The above amendment, and the main amendments so far as they apply for the purposes of section 176, have effect in relation to cases in which the depreciatory transaction (within the meaning of that section) is on or after 1st April 2000.

Section 177 of the Taxation of Chargeable Gains Act 1992

25

• (1) In section 177 of the Taxation of Chargeable Gains Act 1992 (dividend stripping), in subsection (2) for “171 or 172" substitute “ or 171 ”.

• (2) The above amendment, and the main amendments so far as they apply for the purposes of section 177, have effect in relation to disposals on or after 1st April 2000.

Section 178 of the Taxation of Chargeable Gains Act 1992

26

Section 178 of the Taxation of Chargeable Gains Act 1992 (which is spent) shall cease to have effect.

Section 180 of the Taxation of Chargeable Gains Act 1992

27

Section 180 of the Taxation of Chargeable Gains Act 1992 (which is spent) shall cease to have effect.

Section 181 of the Taxation of Chargeable Gains Act 1992

28

• (1) In section 181 of the Taxation of Chargeable Gains Act 1992 (exemption from de-grouping charge in the case of certain mergers)—

• (a) in subsection (1), for “neither section 178 nor section 179 shall" substitute “ section 179 shall not ”; and

• (b) subsection (5) shall cease to have effect.

• (2) The amendment made by sub-paragraph (1)(b) above, and the main amendments so far as they apply for the purposes of section 181, have effect in relation to cases in which the company ceases to be a member of a group on or after 1st April 2000.

Section 192 of the Taxation of Chargeable Gains Act 1992

29

In section 192 of the Taxation of Chargeable Gains Act 1992 (tax exempt distributions), in subsection (3) for “neither section 178 nor 179 shall" substitute “ section 179 shall not ”.

Section 211 of the Taxation of Chargeable Gains Act 1992

30

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 216 of the Taxation of Chargeable Gains Act 1992

31

The main amendments have effect for the purposes of section 216 of the Taxation of Chargeable Gains Act 1992 (assets transferred from building society to company) in relation to transfers on or after 1st April 2000.

Section 217C of the Taxation of Chargeable Gains Act 1992

32

• (1) In section 217C of the Taxation of Chargeable Gains Act 1992 (disposal of assets by incorporated friendly society), for subsection (2) substitute—

(2) If the disposal by the incorporated society is in the circumstances mentioned in subsection (8) of section 41, the disposal to which section 217A(3) applies shall for the purposes of that subsection be taken to have been a previous transfer of the asset in such circumstances.

.

• (2) The above amendment has effect in relation to cases in which the disposal by the incorporated society is on or after 1st April 2000.

Section 228 of the Taxation of Chargeable Gains Act 1992

33

The main amendments have effect for the purposes of section 228 of the Taxation of Chargeable Gains Act 1992 (conditions for roll-over relief: supplementary) in relation to disposals on or after 1st April 2000.

Section 253 of the Taxation of Chargeable Gains Act 1992

34

The main amendments have effect for the purposes of section 253 of the Taxation of Chargeable Gains Act 1992 (relief for loans to traders)—

• (a) in relation to loans made on or after 1st April 2000;

• (b) in relation to guarantees given on or after that date.

Section 276 of the Taxation of Chargeable Gains Act 1992

35

• (1) In section 276 of the Taxation of Chargeable Gains Act 1992 (application of the 1992 Act to the territorial sea and the continental shelf), for subsection (8) substitute—

(8) The provisions specified in subsection (9) below shall apply in relation to a disposal of exploration or exploitation rights or exploration or exploitation assets if (and only if) the disposal is— (a) by a company resident in a territory outside the United Kingdom to a company resident in the same territory, (b) by a company resident in the United Kingdom to another company which is so resident, or (c) by a company which is not resident in the United Kingdom to another company which is resident there. (9) Those provisions are— (a) section 41(8), (b) section 171 (except subsections (1)(b) and (1A)), (c) section 173 (with the omission of the words “to which this section applies" in subsections (1)(a) and (2)(a) and “such" in subsections (1)(c) and (2)(c) and with the omission of subsection (3)), (d) section 174(4) (with the substitution of “at a time when both were members of the group" for “in a transfer to which section 171(1) applied”), (e) section 179 (except subsections (1)(b) and (1A)), and (f) section 181. (10) The provisions specified in subsection (9) above shall apply in accordance with subsection (8) above with the following modifications— (a) for the purposes of paragraph (a) of subsection (9) above, section 41(8) applies as if section 170 applied, for the purposes of section 171, with the omission of subsection (9), and (b) for the purposes of paragraphs (b) to (f) of subsection (9) above, the provisions specified in those paragraphs apply as if in section 170 subsection (9) were omitted.

• (2) The above amendment has effect in cases in which section 41, 171, 173, 174(4), 179 or 181, as the case may be, has effect as amended by this Schedule.

Schedule A1 to the Taxation of Chargeable Gains Act 1992

36

The main amendments have effect for the purposes of paragraph 11 of Schedule A1 to the Taxation of Chargeable Gains Act 1992 (rules for application of taper relief) in relation to any determination whether, at any time on or after 1st April 2000, a company is a 51 per cent subsidiary of another company.

Schedule 2 to the Taxation of Chargeable Gains Act 1992

37

The main amendments have effect for the purposes of paragraph 5 of Schedule 2 to the Taxation of Chargeable Gains Act 1992 (disposals of assets held on 6th April 1965) in relation to any determination whether, at any time on or after 1st April 2000, a company is a member, or the principal company, of a group of companies.

Schedule 3 to the Taxation of Chargeable Gains Act 1992

38

The main amendments have effect for the purposes of paragraphs 8 and 9 of Schedule 3 to the Taxation of Chargeable Gains Act 1992 (disposals of assets held on 31st March 1982: supplementary provisions) in relation to any determination whether, at any time on or after 1st April 2000, a company is a member, or the principal company, of a group of companies.

Schedule 7B to the Taxation of Chargeable Gains Act 1992

39

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 7C to the Taxation of Chargeable Gains Act 1992

40

The main amendments have effect for the purposes of Schedule 7C to the Taxation of Chargeable Gains Act 1992 (which is inserted by virtue of section 48 of this Act).

Section 136 of the Finance Act 1993

41

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 136A of the Finance Act 1993

42

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 17 to the Finance Act 1993

43

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 9 to the Finance Act 1996

44

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 15 to the Finance Act 1996

45

• (1) In Schedule 15 to the Finance Act 1996 (loan relationships: savings and transitional provisions), in paragraph 8(2) for “171(1) or 172" substitute “ or 171(1) ”.

• (2) The above amendment has effect in accordance with paragraph 3(2) above.

Part III — Transitional provisions

46

• (1) For the purposes of this paragraph—

• (a) references to a company which was a member of an old group are references to it being, immediately before the time when the main amendments have effect in accordance with the preceding provisions of this Schedule, a member of a group for the purposes of section 170 of the Taxation of Chargeable Gains Act 1992 (as it stood before the main amendments), and

• (b) references to a company which is a member of a new group are references to it being, immediately after that time, a member of a group for the purposes of that section (as amended by the main amendments).

• (2) Where the same two or more companies were members of an old group and are members of a new group, those groups shall be regarded as the same group for the purposes of the provisions amended by this Schedule in relation to which the main amendments have effect.

• (3) Sub-paragraph (2) above applies irrespective of whether the new group includes companies which were not members of the old group.

• (4) Sub-paragraph (5) below applies in relation to a company which—

• (a) was a member of an old group, but

• (b) is not a member of a new group by reason only that—

• (i) the principal company of the old group is not the principal company of the new group, and

• (ii) the company in question is not an effective 51 per cent subsidiary of the principal company of the new group.

• (5) For the purposes of the provisions amended by this Schedule in relation to which the main amendments have effect, section 170(3)(b) of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to the company for so long as it remains an effective 51 per cent subsidiary of the company which was the principal company of the old group.

• (6) Expressions used in this paragraph and in section 170 of the Taxation of Chargeable Gains Act 1992 shall be construed for the purposes of this paragraph in accordance with that section.

SCHEDULE 30

Power to make treaty provision for matching credit for tax spared in foreign country

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matching credit for tax spared below immediate overseas subsidiary: treaty relief

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matching credit for tax spared below immediate overseas subsidiary: unilateral relief

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for persons resident outside the UK who have branches or agencies in the UK

4

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No double relief etc.

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limits on credit: minimisation of the foreign tax

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign tax on amounts underlying non-trading credits

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction of relief for underlying tax

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Computation of underlying tax: the relevant profits

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends paid between related companies but not covered by arrangements

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction of relief for underlying tax: dividends paid between related companies

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends paid out of transferred profits

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Separate streaming of dividend so far as representing an ADP dividend of a CFC

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

UK insurance companies trading overseas: repeal of section 802

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Underlying tax: foreign taxation of group as a single entity

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life assurance companies with overseas branches etc: restriction of credit

16

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of foreign tax to different categories of insurance business

17

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of expenses etc in a computation under Case I of Schedule D

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 804A to 804E

19

• (1) After section 804E of the Taxes Act 1988 insert—

(804F) Expressions used in sections 804A to 804E and in Chapter I of Part XII have the same meaning in those sections as in that Chapter.

• (2) The section inserted by sub-paragraph (1)—

• (a) so far as relating to sections 804A and 804B, has effect in relation to accounting periods beginning on or after 1st April 2000; and

• (b) so far as relating to sections 804C to 804E, has effect in relation to periods of account beginning on or after 1st April 2000.

Time limits for claims for credit relief

20

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign dividends: onshore pooling and utilisation of certain unrelieved foreign tax

21

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere

22

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrelieved foreign tax: profits of overseas branch or agency

23

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign tax on amounts underlying non-trading credits

24

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Royalties: special relationship

25

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postponement of capital allowances to obtain double taxation relief

26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Time limits where reduction under s.811 rendered excessive or insufficient

27

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mutual agreement procedure

28

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction of interest on repayment of tax resulting from carry back of relievable tax

29

• (1) Amend section 826 of the Taxes Act 1988 as follows.

• (2) After subsection (7B) insert—

(7BB) Subject to subsection (7BC) below, in any case where— (a) within the meaning of section 806D, any relievable underlying tax or relievable withholding tax arises in an accounting period of a company (“the later period”), (b) pursuant to a claim under section 806G, the whole or any part of that tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an earlier accounting period (“the earlier period”), and (c) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period, then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under section 806G, except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (7D) below). (7BC) Where, in a case falling within subsection (7A)(a) and (b) above— (a) as a result of the claim under section 393A(1), an amount or increased amount of eligible unrelieved foreign tax arises for the purposes of section 806A(1), and (b) pursuant to a claim under section 806G, the whole or any part of an amount of relievable underlying tax or relievable withholding tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an accounting period before the earlier period, then subsection (7BB) above shall have effect in relation to the claim under section 806G as if the reference in the words after paragraph (c) to the later period within the meaning of that subsection were a reference to the period which, in relation to the claim under section 393A(1), would be the later period for the purposes of subsection (7A) above.

• (3) In subsection (7D) (date on which corporation tax is due and payable for the purposes of certain provisions) after “(7B)" insert “ , (7BB) ”.

• (4) In subsection (7E) (which, for the purposes of certain provisions, restricts the power in section 59A of the Taxes Management Act 1970 to alter the date on which corporation tax is due and payable) after “(7B),", in both places where it occurs, insert “ (7BB), ”.

Time limits where deduction under s.278 of the 1992 Act rendered excessive or insufficient

30

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SCHEDULE 31

Introductory

1

Amend Chapter IV of Part XVII of the Taxes Act 1988 as follows.

Conditions for company to be controlled foreign company

2

• (1) Amend section 747 as follows.

• (2) After subsection (1) insert—