Finance Act 2002

SCHEDULE 5AA Meaning of “scheme of reconstruction" (1) In section 136 “scheme of reconstruction” means a scheme of merger, division or other restructuring that meets the first and second, and either the third or the fourth, of the following conditions. (2) The first condition is that the scheme involves the issue of ordinary share capital of a company (“the successor company”) or of more than one company (“the successor companies”)— (a) to holders of ordinary share capital of another company (“the original company”) or, where there are different classes of ordinary share capital of that company, to holders of one or more classes of ordinary share capital of that company (the classes “involved in the scheme of reconstruction”), or (b) to holders of ordinary share capital of more than one other company (“the original companies”) or, where there are different classes of ordinary share capital of one or more of the original company or companies, to holders of ordinary share capital of any of those companies or of one or more classes of ordinary share capital of any of those companies (the classes “involved in the scheme of reconstruction”), and does not involve the issue of ordinary share capital of the successor company, or (as the case may be) any of the successor companies, to anyone else. (3) (1) The second condition is that under the scheme the entitlement of any person to acquire ordinary share capital of the successor company or companies by virtue of holding relevant shares, or relevant shares of any class, is the same as that of any other person holding such shares or shares of that class. (2) For this purpose “relevant shares” means shares comprised— (a) where there is one original company, in the ordinary share capital of that company or, as the case may be, in the ordinary share capital of that company of a class involved in the scheme of reconstruction; (b) where there is more than one original company, in the ordinary share capital of any of those companies or, as the case may be, in the ordinary share capital of any of those companies of a class involved in the scheme of reconstruction. (4) (1) The third condition is that the effect of the restructuring is— (a) where there is one original company, that the business or substantially the whole of the business carried on by the company is carried on— (i) by a successor company which is not the original company, or (ii) by two or more successor companies (which may include the original company); (b) where there is more than one original company, that all or part of the business or businesses carried on by one or more of the original companies is carried on by a different company, and the whole or substantially the whole of the businesses carried on by the original companies are carried on— (i) where there is one successor company, by that company (which may be one of the original companies), or (ii) where there are two or more successor companies, by those companies (which may be the same as the original companies or include any of those companies). (2) The reference in sub-paragraph (1)(a)(ii) or (b)(ii) to the whole or substantially the whole of a business, or businesses, being carried on by two or more companies includes the case where the activities of those companies taken together embrace the whole or substantially the whole of the business, or businesses, in question. (3) For the purposes of this paragraph a business carried on by a company that is under the control of another company is treated as carried on by the controlling company as well as by the controlled company. Section 840 of the Taxes Act (meaning of “control") applies for the purposes of this sub-paragraph. (4) For the purposes of this paragraph the holding and management of assets that are retained by the original company, or any of the original companies, for the purpose of making a capital distribution in respect of shares in the company shall be disregarded. In this sub-paragraph “capital distribution” has the same meaning as in section 122. (5) The fourth condition is that— (a) the scheme is carried out in pursuance of a compromise or arrangement— (i) under section 425 of the Companies Act 1985 or Article 418 of the Companies (Northern Ireland) Order 1986, or (ii) under any corresponding provision of the law of a country or territory outside the United Kingdom, and (b) no part of the business of the original company, or of any of the original companies, is transferred under the scheme to any other person. (6) Where a reorganisation of the share capital of the original company, or of any of the original companies, is carried out for the purposes of the scheme of reconstruction, the provisions of the first and second conditions apply in relation to the position after the reorganisation. (7) An issue of shares in or debentures of the successor company, or any of the successor companies, after the latest date on which any ordinary share capital of the successor company, or any of them, is issued— (a) in consideration of the transfer of any business, or part of a business, under the scheme, or (b) in pursuance of the compromise or arrangement mentioned in paragraph 5(a), shall be disregarded for the purposes of the first and second conditions. (8) (1) In this Schedule “ordinary share capital” has the meaning given by section 832(1) of the Taxes Act and also includes— (a) in relation to a unit trust scheme, any rights that are treated by section 99(1)(b) of this Act (application of Act to unit trust schemes) as shares in a company, and (b) in relation to a company that has no share capital, any interests in the company possessed by members of the company. (2) Any reference in this Schedule to a reorganisation of a company’s share capital is to a reorganisation within the meaning of section 126.

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Part 2 — Consequential amendments

Taxes Act 1988

4

• (1) The Taxes Act 1988 is amended as follows.

• (2) In section 299 (disposal of shares)—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) in subsection (4C), as that section applies to shares issued before 1st January 1994 (business expansion scheme),

for “(whether or not by virtue of section 135(3) of that Act)" substitute “ (including a case where that section applies by virtue of any enactment relating to chargeable gains) ”, and for the words from “shall be construed" to the end substitute “ have the same meaning as in section 127 of the 1992 Act (or, as the case may be, that section as applied by virtue of the enactment concerned) ”.

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

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

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

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

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

Taxation of Chargeable Gains Act 1992

5

• (1) The Taxation of Chargeable Gains Act 1992 (c. 12) is amended as follows.

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

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

• (4) In section 102 (collective investment schemes with property divided into separate parts), in subsection (3)(b) after “135" insert “ or 136 ”.

• (5) In section 137 (restriction on application of sections 135 and 136)—

• (a) in subsection (1), for “, reconstruction or amalgamation" substitute “ or scheme of reconstruction ”; and

• (b) in subsection (6), for “section 136(3)" substitute “ section 135(5), 136(5) ”.

• (6) In section 138(1) (procedure for clearance in advance), for “, reconstruction or amalgamation" substitute “ or scheme of reconstruction ”.

• (7) In section 139 (reconstruction involving transfer of business), for subsection (9) substitute—

(9) In this section “scheme of reconstruction” has the same meaning as in section 136.

.

• (8) In section 147 (quoted options treated as part of new holdings)—

• (a) in subsection (1) for “or amalgamation" substitute “ , exchange or scheme of reconstruction ”; and

• (b) in subsection (2) at the end insert “ and “scheme of reconstruction" has the same meaning as in section 136 ”.

• (9) In section 151B (venture capital trusts: supplementary), in subsection (8) for paragraph (c) substitute—

(c) a reference to the exchanged holding is, in relation to section 135 or 136, to the shares in the company referred to in that section as company A.

.

• (10) In section 171(3) (transfers within a group) for “by virtue of sections 127 and 135" substitute “ by section 127 as it applies by virtue of section 135 ”.

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

• (12) In section 251 (debts: general provisions)—

• (a) in subsection (2) for “132 and 135" substitute “ 132, 135 and 136 ”;

• (b) in subsection (3)—

• (i) for “132 and 135" substitute “ 132, 135 and 136 ”, and

• (ii) for “either section 132 or 135" substitute “ section 132, 135 or 136 ”;

• (c) in subsection (6)(b) for the words from “unaffected" to the end substitute “ to which section 135 applies and which is unaffected by section 137(1) ”.

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

• (14) In Schedule 6 (retirement relief: supplementary provisions), in paragraph 2(2) for “section 135(3)" substitute “ section 135 or 136 ”.

Finance Act 2000

6

• (1) Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme) is amended as follows.

• (2) In paragraph 71 (tax avoidance), in sub-paragraph (1)(b)(ii) for “reconstructions and amalgamations" substitute “ schemes of reconstruction ”.

• (3) In paragraph 82(1) (company reconstructions and amalgamations), in the closing words for “company reconstructions and amalgamations" substitute “ share exchanges and company reconstructions ”.

• (4) In paragraph 93(7) (identification of shares on a disposal: cases to which section 127 applies)—

• (a) for “(whether or not by virtue of section 135(3) of that Act)" substitute “ (including a case where that section applies by virtue of any enactment relating to chargeable gains) ”; and

• (b) for the words from “shall be construed" to the end substitute “ have the same meaning as in section 127 of the 1992 Act (or, as the case may be, that section as applied by virtue of the enactment concerned) ”.

• (5) In paragraph 96 (meaning of “disposal")—

• (a) in sub-paragraph (2)(a) for “section 136(1)" substitute “ section 136 ”;

• (b) in sub-paragraph (2)(b) for “sections 135 and 136 of that Act to bona fide reconstructions and amalgamations" substitute “ section 136 of that Act to bona fide schemes of reconstruction ”.

Part 3 — Commencement

General commencement date

7

• (1) Subject to paragraph 8, the provisions of this Schedule have effect in relation to shares or debentures issued on or after 17th April 2002 (“the commencement date”).

• (2) The reference in sub-paragraph (1) to shares or debentures includes any interests falling to be treated as shares or debentures for the purposes of section 135 or 136 of the Taxation of Chargeable Gains Act 1992 (c. 12) as substituted by this Schedule.

Commencement provision for certain consequential amendments

8

• (1) Paragraph 4(2), (3) and (5) and paragraph 6(2), (4) and (5) have effect in relation to disposals on or after the commencement date.

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

• (3) Paragraph 4(6) has effect in relation to events occurring on or after the commencement date.

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

SCHEDULE 10

Introduction

1

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Periods of share ownership that do not count because of change of activity by company

2

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Periods of share ownership not to count where company is not active

3

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Meaning of “holding company”

4

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Meaning of “interest in shares”

5

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Meaning of “joint venture company” and “qualifying shareholding”

6

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Meaning of “ordinary share capital”

7

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Debentures to be treated as shares

8

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Meaning of “trading company”

9

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Meaning of “trading group”

10

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Joint venture companies

11

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Joint enterprise companies

12

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SCHEDULE 11

Introduction

1

The Taxation of Chargeable Gains Act 1992 (c. 12) is amended in accordance with paragraphs 2 to 6.

Section 2

2

• (1) Section 2 (persons and gains chargeable to capital gains tax, and allowable losses) is amended as follows.

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

• (3) In paragraph (b) of that subsection, omit “77, 86,".

• (4) After that subsection insert—

(6) Allowable losses must (notwithstanding section 2A(6)) be deducted under paragraph (a)(i) of subsection (5) above before any may be deducted under paragraph (aa)(i) of that subsection. (7) Where in any year of assessment— (a) there are amounts treated as accruing to a person by virtue of section 77 or 86, (b) two or more of those amounts, or elements of them— (i) relate to different settlements, and (ii) attract taper relief (by virtue of subsection (5)(aa)(ii) above) at the same rate, or are not eligible for taper relief, and (c) losses are deductible from the amounts or elements mentioned in paragraph (b) above (“the equal-tapered amounts”) but are not enough to exhaust them all, the deduction applicable to each of the equal-tapered amounts shall be the appropriate proportion of the aggregate of those losses. The “appropriate proportion” is that given by dividing the equal-tapered amount in question by the total of the equal-tapered amounts. (8) The references to section 86 in subsection (5)(aa) above (in the opening words) and subsection (7)(a) above include references to that section read with section 10A.

.

Section 77

3

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Section 86

4

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Section 86A

5

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Section 87

6

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Commencement

7

This Schedule applies in relation to chargeable gains treated as accruing to a person by virtue of section 77 or 86 (read, where appropriate, with section 10A) of the Taxation of Chargeable Gains Act 1992 (c. 12) in the year 2003-04 and subsequent years of assessment.

Election for Schedule to apply for years earlier than 2003-04

8

• (1) This Schedule also applies, if the person so elects, in relation to chargeable gains so accruing to a person in any of the years of assessment 2000-01, 2001-02 and 2002-03.

• (2) An election under this paragraph—

• (a) must be made by a notice given to an officer of the Board no later than 31st January 2005;

• (b) where chargeable gains are treated as accruing in respect of two or more settlements, may be restricted to those treated as accruing in respect of the settlement or settlements specified in the election.

• (3) All such adjustments shall be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under this paragraph.

• (4) Where—

• (a) a person makes an election under this paragraph for any one or more of the years of assessment 2000-01, 2001-02 and 2002-03, and

• (b) the effect of the election, or (as the case may be) both or all of them taken together, is to increase the total amount of tax that the person is entitled to recover from the trustees of a particular settlement for those three years under section 78(1)(a) of the Taxation of Chargeable Gains Act 1992 or paragraph 6 of Schedule 5 to that Act,

the trustees of that settlement must join in the election, or (as the case may be) each of them that has that effect or contributes to it.

SCHEDULE 12

Part 1 — Entitlement to relief for R&D expenditure: large companies

Entitlement to relief under this Part

1

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Meaning of “large company” and “small or medium-sized enterprise”

2

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Qualifying R&D expenditure

3

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Qualifying expenditure on direct research and development

4

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Expenditure on research and development directly undertaken on company’s behalf

5

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Qualifying expenditure on contributions to independent research and development

6

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

Part 2 — Entitlement to relief for R&D expenditure: work subcontracted to small or medium-sized enterprise

Entitlement to relief under this Part

7

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Qualifying sub-contracted R&D expenditure

8

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Expenditure on research and development directly undertaken by the SME

9

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Expenditure on research and development directly undertaken on SME’s behalf

10

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Part 3 — The relief

Deduction in computing profits of trade

11

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Part 4 — Special provision for giving relief to insurance companies

Treated as large companies

12

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Entitlement to relief in respect of “I minus E” basis

13

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Part 5 — Supplementary provisions

Research and development expenditure of group companies

14

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Refunds of contributions to independent research and development etc

15

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Artificially inflated claims for deduction

16

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Part 6 — General provisions

Meaning of “relevant research and development”, “staffing costs” and “consumable stores”

17

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Meaning of “qualifying body”

18

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Other definitions etc

19

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Transitional provision

20

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SCHEDULE 13

Part 1 — Entitlement to relief

Entitlement to relief under this Schedule

1

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Qualifying expenditure

2

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Qualifying expenditure on direct research and development

3

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Qualifying R&D activity

4

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Meaning of “relevant R&D”, “small or medium-sized enterprise”, “staffing costs”, “consumable stores” and “subsidised”.

5

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Qualifying expenditure on sub-contracted research and development

6

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Conditions that must be satisfied by qualifying expenditure on sub-contracted research and development

7

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Treatment of sub-contractor payment where principal and sub-contractor are connected persons

8

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Relevant expenditure of the sub-contractor

9

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Election for connected persons treatment

10

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Treatment of sub-contractor payment in other cases

11

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Qualifying expenditure on contributions to independent research and development

12

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Part 2 — Manner of giving effect to relief: small and medium-sized companies

Application of this Part

13

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Deduction in computing profits of trade

14

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Alternative treatment of pre-trading expenditure: deemed trading loss

15

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Entitlement to tax credit

16

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Amount of credit

17

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Payment in respect of tax credit

18

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Restriction on losses carried forward

19

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Payment in respect of tax credit not income

20

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Part 3 — Manner of giving effect to relief: large companies

Deduction in computing profits of trade

21

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Part 4 — Special provision for giving relief to insurance companies

Treated as large companies

22

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Entitlement to relief in respect of “I minus E” basis

23

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Part 5 — Supplementary provisions

Artificially inflated claims for deduction or tax credit

24

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Refunds of contributions to independent research and development

25

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Funding of tax credits

26

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Interpretation

27

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Commencement and transitional provision

28

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SCHEDULE 14

Interest

1

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Claim must be made in tax return

2

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Recovery of excessive tax credits

3

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Claims for tax credits

4

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Commencement

5

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SCHEDULE 15

1

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2

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3

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4

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5

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SCHEDULE 16

Part 1 — Introduction

Eligibility for tax relief

1

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Meaning of “investment”

2

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Meaning of “the five year period”

3

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Part 2 — Accredited community development finance institutions

Application and criteria for accreditation

4

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Terms and conditions of accreditation

5

• (1) An accreditation under this Schedule shall—

• (a) be made on—

• (i) such terms as regulations may require, and

• (ii) such other terms as the Secretary of State considers appropriate, and

• (b) be made conditional upon compliance with—

• (i) such requirements as regulations may require, and

• (ii) such other requirements as the Secretary of State considers appropriate.

• (2) The requirements that may be imposed by virtue of sub-paragraph (1)(b) include requirements relating to the provision of information.

• (3) Regulations may—

• (a) make provision for appeals to the Special Commissioners against refusals to grant accreditation under this Schedule;

• (b) make provision about the consequences of a failure to comply with any requirement of an accreditation, including—

• (i) provision for the withdrawal of the accreditation with effect from the time of the failure or a later time; and

• (ii) provision for the imposition of penalties;

• (c) make provision for the making of decisions by the Secretary of State as to any matter required to be decided for the purposes of the regulations;

• (d) make different provision for different cases or circumstances or in relation to different areas; and

• (e) make such incidental, supplemental, transitional and consequential provision as appears to the Treasury to be necessary or expedient.

• (4) In this paragraph “regulations” means regulations made by the Treasury.

Delegation of Secretary of State’s functions

6

The Secretary of State may delegate any functions conferred on him by or under this Part.

Period of accreditation

7

• (1) An accreditation has effect for a period of three years beginning on such day as may be specified in the accreditation, being a day which is no earlier than—

• (a) if the body is not accredited under this Schedule at the time the application is made, the day the accreditation is granted, and

• (b) if the body is so accredited, the time the body’s current accreditation expires.

This is subject to sub-paragraphs (2) and (3).

• (2) Where the application for an accreditation is made before 6th April 2003, the accreditation may specify that it is to have effect for a period—

• (a) beginning on 17th April 2002 or such later day as may be specified in the accreditation, and

• (b) ending immediately before the third anniversary of the day the accreditation is granted.

• (3) Where the body is accredited at the time the application is made and it makes a request under this sub-paragraph, the new accreditation may specify that the existing accreditation is to be treated for the purposes of this Schedule (including sub-paragraph (1)(b) above) as expiring immediately before the grant of the new accreditation (if it would otherwise expire at a later time).

• (4) This paragraph has effect subject to paragraph 5(3)(b) (power to provide for the withdrawal of accreditation).

Part 3 — Qualifying investments

Introduction

8

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

Conditions to be satisfied in relation to loans

9

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

Conditions to be satisfied in relation to securities

10

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

Conditions to be satisfied in relation to shares

11

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

Tax relief certificates

12

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

Pre-arranged protection against risks

13

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

Part 4 — General conditions

No control of CDFI by investor

14

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

Beneficial ownership

15

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

Investor must not be accredited

16

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

No acquisition of share in partnership

17

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

No tax avoidance purpose

18

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

Part 5 — Form of relief

Individual investors

19

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

Company investors

20

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

Determination of “the invested amount”

21

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

Loans: no claim after disposal or excessive repayments or receipts of value

22

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

Securities or shares: no claim after disposal or excessive receipts of value

23

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

Loss of accreditation by the CDFI

24

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

Accreditation of the investor

25

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

Attribution

26

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

Part 6 — Withdrawal of relief

Manner of withdrawal of relief

27

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

Disposal of loan during five year period

28

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

Disposal of shares or securities during five year period

29

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

Repayments of loan capital

30

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

Value received treated as repayment of loan

31

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

Value received by investor where the investment consists of securities or shares

32

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

Meaning of “period of restriction”

33

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

Aggregation of receipts of insignificant value

34

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

When value is received

35

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

The amount of value received

36

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

Value received where there is more than one investment

37

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

Effect of receipt of value on future claims for relief

38

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

Receipts of value by and from connected persons

39

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

Part 7 — Restructuring of CDFI

Rights issues etc

40

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

Company reconstructions etc

41

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

Part 8 — Supplementary and general

Information to be provided by the investor

42

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

Disclosure

43

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

Nominees

44

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

Application for postponement of tax pending appeal

45

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

Meaning of “issue of securities or shares”

46

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

Identification of securities or shares on a disposal

47

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

Meaning of “disposal”

48

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

Construction of references to investment being “held continuously”

49

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

Meaning of “associate”

50

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

Minor definitions etc

51

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

Index of defined expressions

52

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

SCHEDULE 17

1

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

2

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

3

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

4

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

5

In Schedule 18 to the Finance Act 1998 (c. 36) (company tax returns, assessments and related matters), in paragraph 8 (calculation of tax payable), after paragraph 1A of the second step of the calculation in sub-paragraph (1) insert—

(1B) Any relief under Part 5 of Schedule 16 to the Finance Act 2002 (community investment tax relief).

.

SCHEDULE 18

Part 1 — Clubs entitled to be registered

The requirements

1

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

Open to the whole community

2

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

Organised on an amateur basis

3

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

Part 2 — Exemptions for registered clubs

Exemption for trading income

4

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

Exemption for interest and gift aid income

5

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

Exemption for property income

6

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

Exemption for chargeable gains

7

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

Exemption reduced where club incurs non-qualifying expenditure

8

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

Part 3 — Reliefs for donors

9

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

Part 4 — Chargeable gains: property ceasing to be held for qualifying purposes

10

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

Part 5 — Registration

Registration and termination

11

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

Information etc

12

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

Appeals

13

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

Part 6 — Interpretation

“Eligible sport”

14

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

“Inland Revenue”

15

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

Other expressions

16

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

SCHEDULE 19

Introductory

1

The Capital Allowances Act 2001 (c. 2) is amended as follows.

Types of expenditure for which first-year allowances available

2

In section 39, after the entry relating to section 45A add,

section 45D	expenditure on cars with low CO₂ emissions,

.

First-year qualifying expenditure: car with low carbon dioxide emissions

3

After section 45C insert—

(45D) (1) Expenditure is first-year qualifying expenditure if— (a) it is incurred in the period beginning with 17th April 2002 and ending with 31st March 2008, (b) it is expenditure on a car which is first registered on or after 17th April 2002 and which is unused and not second-hand, (c) the car— (i) is an electrically-propelled car, or (ii) is a car with low CO₂ emissions, and (d) the expenditure is not excluded by section 46 (general exclusions). (2) For the purposes of this section a car with low CO₂ emissions is a car which satisfies the conditions in subsections (3) and (4). (3) The first condition is that, when the car is first registered, it is so registered on the basis of an EC certificate of conformity, or a UK approval certificate, that specifies— (a) in the case of a car other than a bi-fuel car, a CO₂ emissions figure in terms of grams per kilometre driven, or (b) in the case of a bi-fuel car, separate CO₂ emissions figures in terms of grams per kilometre driven for different fuels. (4) The second condition is that the applicable CO₂ emissions figure in the case of the car does not exceed 120 grams per kilometre driven. (5) For the purposes of subsection (4) the applicable CO₂ emissions figure in the case of a car other than a bi-fuel car is— (a) where the EC certificate of conformity or UK approval certificate specifies only one CO₂ emissions figure, that figure, and (b) where the certificate specifies more than one CO₂ emissions figure, the figure specified as the CO₂ emissions (combined) figure. (6) For the purposes of subsection (4) the applicable CO₂ emissions figure in the case of a bi-fuel car is— (a) where the EC certificate of conformity or UK approval certificate specifies more than one CO₂ emissions figure in relation to each fuel, the lowest CO₂ emissions (combined) figure specified, and (b) in any other case, the lowest CO₂ figure specified by the certificate. (7) The Treasury may by order amend the amount from time to time specified in subsection (4). (8) In this section any reference to a car— (a) includes a reference to a mechanically propelled road vehicle of a type commonly used as a hackney carriage, but (b) does not include a reference to a motorcycle. (9) For the purposes of this section, a car is an electrically-propelled car only if— (a) it is propelled solely by electrical power, and (b) that power is derived from— (i) a source external to the vehicle, or (ii) an electrical storage battery which is not connected to any source of power when the vehicle is in motion. (10) In this section— - “bi-fuel car” means a car which is capable of being propelled by— 1. petrol and road fuel gas, or 2. diesel and road fuel gas; - “car” has the meaning given by section 81 (extended meaning of “car"); - “diesel” means any diesel fuel within the definition in Article 2 of Directive 98/70/EC of the European Parliament and of the Council; - “EC certificate of conformity” means a certificate of conformity issued by a manufacturer under any provision of the law of a member State implementing Article 6 of Council Directive 70/156/EEC, as amended; - “petrol” has the meaning given by Article 2 of Directive 98/70/ EC of the European Parliament and of the Council; - “road fuel gas” has the same meaning as in section 168AB of ICTA; - “UK approval certificate” means a certificate issued under— 1. section 58(1) or (4) of the Road Traffic Act 1988, or 2. Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981.

.

General exclusions affecting first-year qualifying expenditure

4

• (1) Section 46 is amended as follows.

• (2) In subsection (1) (expenditure which is subject to the general exclusions) after the entry relating to section 45A add

,

section 45D	(expenditure on cars with low CO₂ emissions),

.

• (3) After subsection (2) (general exclusions listed for the purposes of subsection (1)) insert—

(3) Subsection (1) is subject to the following provisions of this section. (4) General exclusion 2 does not prevent expenditure being first-year qualifying expenditure under section 45D.

.

Amount of first-year allowances

5

In section 52(3), in the Table, after the entry relating to expenditure qualifying under section 45A add—

Expenditure qualifying under section 45D (expenditure on cars with low CO₂ emissions)	100%

.

Single asset pool in relation to cars above cost threshold

6

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

SCHEDULE 20

Introductory

1

The Capital Allowances Act 2001 (c. 2) is amended as follows.

Types of expenditure for which first-year allowances available

2

In section 39, after the entry relating to section 45D (which is inserted by Schedule 19 to this Act) add—

section 45E	expenditure on plant or machinery for gas refuelling station

.

First-year qualifying expenditure: plant or machinery for gas refuelling station

3

After section 45D (which is added by Schedule 19 to this Act) insert—

(45E) (1) Expenditure is first-year qualifying expenditure if— (a) it is incurred in the period beginning with 17th April 2002 and ending with 31st March 2008, (b) it is expenditure on plant or machinery for a gas refuelling station where the plant or machinery is unused and not second-hand, and (c) it is not excluded by section 46 (general exclusions). (2) For the purposes of this section expenditure on plant or machinery for a gas refuelling station is expenditure on plant or machinery installed at a gas refuelling station for use solely for or in connection with refuelling vehicles with natural gas or hydrogen fuel. (3) For the purposes of subsection (2) the plant or machinery which is for use for or in connection with refuelling vehicles with natural gas or hydrogen fuel includes— (a) any storage tank for natural gas or hydrogen fuel, (b) any compressor, pump, control or meter used for or in connection with refuelling vehicles with natural gas or hydrogen fuel, and (c) any equipment for dispensing natural gas or hydrogen fuel to the fuel tank of a vehicle. (4) For the purposes of this section— - “gas refuelling station” means any premises, or that part of any premises, where vehicles are refuelled with natural gas or hydrogen fuel; - “hydrogen fuel” means a fuel consisting of gaseous or cryogenic liquid hydrogen which is used for propelling vehicles; - “vehicle” means a mechanically propelled road vehicle.

.

General exclusions affecting first-year qualifying expenditure

4

In section 46, in subsection (1) (expenditure which is subject to the general exclusions) after the entry relating to section 45D (which is added by Schedule 19 to this Act) add—

section 45E	(expenditure on plant or machinery for gas refuelling station)

.

Amount of first-year allowance

5

In section 52(3), in the Table, after the entry relating to expenditure qualifying under section 45D (which is added by Schedule 19 to this Act) add—

Expenditure qualifying under section 45E (expenditure on plant or machinery for gas refuelling station)	100%

.

SCHEDULE 21

Part 1 — Plant and machinery

Introductory

1

Part 2 of the Capital Allowances Act 2001 (c. 2) (plant and machinery allowances) is amended as follows.

Types of expenditure for which first-year allowances available

2

In section 39, after the entry relating to section 45E (which is added by Schedule 20 to this Act) add

, or

section 45F	expenditure on plant and machinery for use wholly in a ring fence trade.

.

First-year qualifying expenditure: plant and machinery for use wholly in a ring fence trade

3

After section 45E (which is inserted by Schedule 20 to this Act) insert—

(45F) (1) Expenditure is first-year qualifying expenditure if— (a) it is incurred on or after 17th April 2002, (b) it is incurred by a company, (c) it is incurred on the provision of plant or machinery for use wholly for the purposes of a ring fence trade, and (d) it is not excluded by section 46 (general exclusions). (2) This section is subject to section 45G (plant or machinery used for less than five years in a ring fence trade). (3) In this section “ring fence trade” means a ring fence trade in respect of which tax is chargeable under section 501A of the Taxes Act 1988 (supplementary charge in respect of ring fence trades).

.

Plant or machinery used for less than five years in a ring fence trade

4

After section 45F insert—

(45G) (1) Expenditure incurred by a company on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45F if the plant or machinery— (a) is at no time in the relevant period used in a ring fence trade carried on by the company or a company connected with it, or (b) is at any time in the relevant period used for a purpose other than that of a ring fence trade carried on by the company or a company connected with it. (2) For the purposes of this section “the relevant period” means whichever of the following periods, beginning with the incurring of the expenditure, first ends, namely— (a) the period ending with the fifth anniversary of the incurring of the expenditure, or (b) the period ending with the day preceding the first occasion on which the plant or machinery, after becoming owned by the company which incurred the expenditure, is not owned by a company which is either that company or a company connected with it. (3) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1). (4) If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, he must give notice to the Inland Revenue specifying how the return needs to be amended. (5) The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section. (6) In this section “ring fence trade” has the same meaning as in section 45F.

.

General exclusions affecting first-year qualifying expenditure

5

In section 46, in subsection (1) (expenditure which is subject to the general exclusions) after the entry relating to section 45E (which is added by Schedule 20 to this Act) add

, or

section 45F	(expenditure on plant and machinery for use wholly in a ring fence trade).

.

Amount of first-year allowances

6

In section 52(3), in the Table, after the entry relating to expenditure qualifying under section 45E (which is added by Schedule 20 to this Act) add—

Expenditure qualifying under section 45F (expenditure on plant and machinery for use wholly in a ring fence trade) which is long-life asset expenditure	24%
Expenditure qualifying under section 45F (expenditure on plant and machinery for use wholly in a ring fence trade) other than long-life asset expenditure	100%

.

Penalty for failure to provide information etc

7

• (1) The Taxes Management Act 1970 (c. 9) is amended as follows.

• (2) In the second column of the Table in section 98, in the entry relating to requirements imposed by provisions of the Capital Allowances Act, after “45B(5) and (6)," insert “ 45G(4) and (5), ”.

Part 2 — Mineral extraction allowances

Introductory

8

Part 5 of the Capital Allowances Act 2001 (c. 2) (mineral extraction allowances) is amended as follows.

First-year qualifying expenditure

9

After section 416, insert the following Chapter—

First-year qualifying expenditure General (416A) A first-year allowance is not available unless the qualifying expenditure is first-year qualifying expenditure under section 416B (expenditure incurred wholly for purposes of a ring fence trade). Types of expenditure which may qualify for first year allowances (416B) (1) Expenditure is first-year qualifying expenditure if— (a) it is incurred on or after 17th April 2002, (b) it is incurred by a company, (c) it is incurred wholly for the purposes of a ring fence trade, and (d) it is not excluded by— (i) subsection (2) (acquisition of mineral asset), or (ii) subsection (3) (acquisition of asset representing expenditure of connected company). (2) Expenditure is not first-year qualifying expenditure under this section if it is expenditure on acquiring a mineral asset. (3) Expenditure is not first-year qualifying expenditure under this section if it is expenditure incurred by a company on the acquisition of an asset representing expenditure incurred by a company connected with that company. (4) To the extent that references in this section to an asset representing expenditure incurred by a company include a reference to an asset representing expenditure on mineral exploration and access, they also include a reference to any results obtained from any search, exploration or inquiry on which any such expenditure was incurred. (5) In this section “ring fence trade” means a ring fence trade in respect of which tax is chargeable under section 501A of the Taxes Act 1988 (supplementary charge in respect of ring fence trades). Supplementary (416C) (1) In determining whether expenditure is first-year qualifying expenditure under this Chapter, any effect of the provisions specified in subsection (2) on the time at which the expenditure is to be treated as incurred is to be disregarded. (2) The provisions are— (a) section 400(4) (which treats certain pre-trading expenditure as incurred on the first day of trading), and (b) section 434 (which treats certain other expenditure incurred for the purposes of a trade about to be carried on as incurred on that day).

.

First-year allowances

10

At the beginning of Chapter 6 (allowances and charges) insert—

First-year allowances (416D) (1) A person is entitled to a first-year allowance in respect of first-year qualifying expenditure if the expenditure is incurred in a chargeable period to which this Act applies. (2) Any first-year allowance is made for the chargeable period in which the first-year qualifying expenditure is incurred. (3) The amount of the allowance is a percentage of the first-year qualifying expenditure in respect of which the allowance is made, as shown in the Table—

Type of first-year qualifying expenditure	Amount
Expenditure qualifying under section 416B (expenditure incurred wholly for the purposes of a ring fence trade)	100%

(4) A person who is entitled to a first-year allowance may claim the allowance in respect of the whole or a part of the first-year qualifying expenditure. (5) This section is subject to section 416E (artificially inflated claims for first-year allowances).

.

Artificially inflated claims for first-year allowances

11

After section 416D insert—

(416E) (1) To the extent that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it shall be disregarded in determining for a chargeable period the amount of any first-year allowance to which a person is entitled. (2) For the purposes of this section, arrangements are entered into wholly or mainly for a “disqualifying purpose” if their main object, or one of their main objects, is to enable a person to obtain— (a) a first-year allowance to which he would not otherwise be entitled, or (b) a first-year allowance of a greater amount than that to which he would otherwise be entitled. (3) In this section “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

.

Amount of allowances and charges: balancing charge for period in which expenditure incurred

12

• (1) Section 418 is amended as follows.

• (2) In subsection (4) (amount of balancing charge) after paragraph (b) insert the following as a second sentence—

Where a person is liable to a balancing charge in respect of first-year qualifying expenditure for the chargeable period in which he incurred the expenditure, any first-year allowance made in respect of the expenditure shall be treated for the purposes of paragraph (b) as if it were an allowance for an earlier chargeable period.

.

Unrelieved qualifying expenditure: effect of first-year qualifying expenditure

13

• (1) Section 419 is amended as follows.

• (2) In subsection (1) (amount of qualifying expenditure which is unrelieved qualifying expenditure for the chargeable period in which the expenditure is incurred) for “the whole of it" substitute—

(a) the whole of it, unless the expenditure is first-year qualifying expenditure, or (b) if the expenditure is first-year qualifying expenditure, none of it, but paragraph (b) is subject to subsections (3) to (5).

.

• (3) After subsection (2) insert—

(3) If, in the case of expenditure which is first-year qualifying expenditure, a disposal receipt falls to be brought into account for the chargeable period in which the expenditure is incurred (“the initial period”), subsection (4) below applies. (4) Where this subsection applies, the unrelieved balance of the expenditure shall be taken to be unrelieved qualifying expenditure for the initial period, but only for the purpose specified in subsection (5). (5) The purpose is that of determining in accordance with sections 417 and 418— (a) any question whether the person who incurred the expenditure— (i) is entitled to a balancing allowance for the initial period, or (ii) is liable to a balancing charge for that period, and (b) if so, the amount of that balancing allowance or balancing charge. (6) In this section “the unrelieved balance of the expenditure” means so much of the first-year qualifying expenditure in question as remains after deducting the amount of any first-year allowance given in respect of the whole or any part of that expenditure.

.

SCHEDULE 22

Part 1 — Introduction

General scheme

1

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

Part 2 — General rules

Calculation of adjustment

2

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

Meaning of items being brought into account

3

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

Giving effect to positive adjustment

4

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

Giving effect to negative adjustment

5

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

Part 3 — Special rules for certain cases

No adjustment for certain expenses previously brought into account

6

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

Cases where adjustment not required until asset realised or written off

7

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

Change from realisation basis to mark to market

8

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

Election for spreading where paragraph 8 applies

9

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

Application of paragraphs 8 and 9 in case of transfer of insurance business

10

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

Spreading of adjustment charge on ending of exemption for barristers and advocates

11

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

Election to accelerate payment of adjustment charge under paragraph 11

12

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

Part 4 — Supplementary provisions

Application of provisions to partnerships

13

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

Liability of personal representatives in case of death of person chargeable

14

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

Interpretation

15

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

Part 5 — Commencement

General rule

16

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

Application of provisions to certain earlier changes of basis

17

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

Period in which change of basis takes effect

18

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

SCHEDULE 23

Part 1 — Amendments of the Finance Act 1996

Introductory

1

Chapter 2 of Part 4 of the Finance Act 1996 (c. 8) (loan relationships) is amended in accordance with the following provisions of this Part.

Meaning of “related transaction”

2

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

Exchange gains and losses from loan relationships etc

3

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

Authorised accounting methods

4

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

Convertible securities etc: exchange gains and losses

5

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

Extension of section 100 to exchange gains and losses and to items other than money debts

6

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

Interpretation

7

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

Bad debt etc: cases where departure allowed from assumption of prompt payment in full

8

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

Bad debts etc where parties have a connection

9

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

Transactions not at arm’s length

10

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

Exchange gains and losses where loan not on arm’s length terms

11

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

Continuity of treatment: groups etc

12

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

Loan relationships for unallowable purposes

13

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

Life assurance business

14

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

Special provisions for insurers: apportionments

15

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

Savings and transitional provisions in the Finance Act 1996

16

In Schedule 15 (savings and transitional provisions) omit paragraphs 22 to 24.

Part 2 — Amendments of other legislation

The Income and Corporation Taxes Act 1988

Charges on income

17

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

Supplementary charge in respect of ring fence trades

18

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

Controlled foreign companies

19

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

Double taxation relief

20

• (1) Section 798B of the Taxes Act 1988 (adjustments of interest and dividends for spared tax etc) is amended as follows.

• (2) In subsection (5) (meaning of “qualifying losses”) for paragraph (a) (exchange losses under Finance Act 1993) substitute—

(a) exchange losses falling to be brought into account as debits for the purposes of Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships); and

.

Provision not at arm’s length: foreign exchange gains and losses

21

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

The Finance Act 1995

Miscellaneous amendments

22

• (1) The Finance Act 1995 (c. 4) is amended as follows.

• (2) Omit section 131(which made transitional provision in relation to exchange gains and losses and which is spent).

• (3) In Part 2 of Schedule 24 (amendments of certain enactments) in paragraph 7 (commencement on day appointed under section 165(7)(b) of Finance Act 1993) for the words following “come into force on” substitute “ 23rd March 1995 ”.

The Finance Act 2000

Tonnage tax

23

• (1) Schedule 22 to the Finance Act 2000 (c. 17) is amended as follows.

• (2) In paragraph 50 (relevant shipping income: certain interests etc) in sub-paragraph (2) (income to which paragraph 50 applies) at the end of paragraph (a) insert “ and ”.

• (3) In paragraph 63 (meaning of “finance costs”) in sub-paragraph (2)(c) (exchange gain or loss) for “within the meaning of Chapter II of Part II of the Finance Act 1993” substitute “ within the meaning given by section 103(1A) of the Finance Act 1996 ”.

The Finance Act 2002

Intangible fixed assets: assets entirely excluded: financial assets

24

• (1) Schedule 29 to the Finance Act 2002 (gains and losses of a company from intangible fixed assets) is amended as follows.

• (2) In paragraph 75 (assets entirely excluded: financial assets) in sub-paragraph (3) for paragraph (a) (money debts) substitute—

(a) loan relationships;

.

Part 3 — Transitional provisions etc

Anti-avoidance: change of accounting period

25

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

Deferred foreign exchange gains

26

• (1) The repeal of sections 139 to 143 of the Finance Act 1993 (c. 34) (foreign exchange gains and losses) does not prevent the making of a claim under section 139 of that Act (deferral of unrealised gains) by a company in respect of a gain accruing in an accrual period which begins with, or at any time in, the last accounting period of the company which begins before 1st October 2002; but any such claim shall have effect subject to the following provisions of this paragraph and (subject to regulations under section 81) regulations under Chapter 2 of Part 2 of that Act.

• (2) Amounts which, but for the repeal of subsections (4) to (10) of section 140 of the Finance Act 1993, would fall to be treated by virtue of those subsections as exchange gains for an accrual period which consists of, or falls in, an accounting period beginning on or after 1st October 2002—

• (a) shall be brought into account for that accounting period as if they were credits falling for the purposes of Part 5 of the Corporation Tax Act 2009 to be brought into account in respect of the company’s loan relationships;

• (b) shall be treated for the purposes of that Part as non-trading credits, to the extent that they would, but for the repeal of subsections (5), (8) and (9) of section 140 of the Finance Act 1993, have fallen to be treated by virtue of those subsections as non-trading exchange gains; and

• (c) except as provided by paragraph (b), shall be brought into account under section 297(2) of the Corporation Tax Act 2009 (trading credits).

• (3) Before the expiration of the period of 2 years following the end of its first accounting period beginning on or after 1st October 2002, a company may elect for any amounts that would otherwise fall to be brought into account for that accounting period in accordance with paragraph (a) of sub-paragraph (2) instead to be brought into account in accordance with that sub-paragraph, but—

• (a) over the first 6 accounting periods of the company which begin on or after 1st October 2002; and

• (b) in instalments of an equal amount for each such accounting period.

• (4) If a company—

• (a) makes an election under sub-paragraph (3), but

• (b) ceases to be within the charge to corporation tax before six accounting periods of the company which begin on or after 1st October 2002 have elapsed,

any instalment under that sub-paragraph which does not fall to be brought into account for an earlier accounting period shall be brought into account for the accounting period in which the company ceases to be within the charge to corporation tax.

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

SCHEDULE 24

The Finance Act 1993

Introductory

1

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

The basic rule: sterling to be used

2

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

Use of currency other than sterling: accounts as a whole etc in foreign currency

3

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

Use of currency other than sterling: accounts etc partly from statements in foreign currency

4

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

Rules for ascertaining currency equivalents: general

5

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

Rules for ascertaining sterling equivalent for section 93(4) or (5)

6

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

The Finance Act 1994

Lloyd’s underwriters: corporations etc

7

• (1) Section 226 of the Finance Act 1994 (c. 9) (provisions which are not to apply to corporate members of Lloyd’s) is amended as follows.

• (2) Subsection (1) (which prevents sections 92 to 95 of the Finance Act 1993 (c. 34) from applying) shall cease to have effect (and sections 92 to 94AB of that Act shall accordingly apply for the purposes of computing for the purposes of corporation tax the profits or losses of a corporate member’s underwriting business).

SCHEDULE 25

Part 1 — Amendments of the Finance Act 1996

Introductory

1

Chapter 2 of Part 4 of the Finance Act 1996 (c. 8) (loan relationships) is amended in accordance with the following provisions of this Part of this Schedule.

Meaning of “loan relationship” etc: method of settlement

2

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

Non-trading deficit on loan relationships

3

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

Debits and credits brought into account

4

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

Authorised accounting methods

5

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

Application of accounting methods

6

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

Accounting method where parties have a connection

7

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

Meaning of “control” in section 87

8

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

Inconsistent application of accounting methods

9

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

Changes of accounting method

10

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

Payments subject to deduction of tax

11

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

Indexed gilt-edged securities

12

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

Manufactured interest

13

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

Interpretation: “shares” not to include building society shares

14

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

Interpretation: miscellaneous

15

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

Provision continuing to be made on accruals basis after company ceases to be party

16

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

Claims to treat deficit as eligible for group relief

17

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

Claim to carry back deficit to previous accounting periods

18

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

Deficit carried forward and set against non-trading profits of succeeding accounting periods

19

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

Distributions

20

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

Life assurance policies and capital redemption policies

21

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

Late interest: further cases where paragraph 2 of Schedule 9 applies

22

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

Bad debts and consortium relief

23

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

Bad debt etc where parties have a connection

24

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

Bad debt etc: parties having connection and creditor company in insolvent liquidation etc

25

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

Bad debt etc: companies becoming connected

26

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

Bad debt etc: departure not permitted by paragraph 6: subsequent cessation of connection

27

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

Imported losses etc

28

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

Continuity of treatment: groups etc

29

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

Loan relationships for unallowable purposes

30

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

Debits and credits treated as relating to capital expenditure

31

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

Repo transactions and stock lending

32

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

Discounted securities where companies have a connection

33

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

Discounted securities of close companies

34

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

Partnerships involving companies

35

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

Interpretation of Schedule 9: “major interest”

36

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

Investment trusts and venture capital trusts: treatment of capital reserves

37

• (1) Schedule 10 (collective investment schemes) is amended as follows.

• (2) For paragraph 1 substitute—

(1A) (1) Where any profits, gains or losses arising to an investment trust from a creditor relationship for an accounting period are carried to or sustained by a capital reserve in accordance with the Statement of Recommended Practice used for that accounting period, those profits, gains or losses must not be brought into account as credits or debits for the purposes of this Chapter, notwithstanding section 84(2)(b) of this Act. (2) Where any profits, gains or losses arising to a venture capital trust from a creditor relationship for an accounting period— (a) are carried to or sustained by a capital reserve in accordance with the Statement of Recommended Practice used for the accounting period as if the venture capital trust were an investment trust, or (b) would be carried to or sustained by a capital reserve if the venture capital trust were an investment trust and were using that Statement of Recommended Practice, those profits, gains or losses must not be brought into account as credits or debits for the purposes of this Chapter, notwithstanding section 84(2)(b) of this Act. (3) For the purposes of this paragraph, the “Statement of Recommended Practice” used for an accounting period is— (a) in relation to an accounting period for which it is permitted to be used, the Statement of Recommended Practice relating to Investment Trust Companies, issued by the Association of Investment Trust Companies in December 1995, as from time to time modified, amended or revised, or (b) in relation to any accounting period for which it is permitted to be used, any subsequent Statement of Recommended Practice relating to investment trusts, as from time to time modified, amended or revised.

.

Authorised unit trusts and open-ended investment companies

38

• (1) Schedule 10 (collective investment schemes) is amended as follows.

• (2) For paragraph 2 (which makes special provision in relation to authorised unit trusts and is applied to open-ended investment companies by regulations under section 152 of the Finance Act 1995 (c. 4)) and the heading immediately preceding it substitute—