Finance Act 2006

(148A) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade for a period of account in which he is the lessor of any plant or machinery under a long funding finance lease. (2) The amount to be brought into account as the lessor's taxable income from the lease for the period of account is the amount of the rental earnings in respect of the lease for the period of account. (3) The “rental earnings” for any period is the amount which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment for that period in respect of the long funding lease where it meets the finance lease test. (4) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan in the accounts in question, so much of the rentals under the lease as fall (or would fall) to be treated as interest are to be treated for the purposes of this section as rental earnings. (148B) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade for a period of account if he is or has been the lessor under a long funding finance lease. (2) This section has effect where a profit or loss (whether of an income or capital nature)— (a) arises to the person in connection with the lease, and (b) in accordance with generally accepted accounting practice falls to be recognised for accounting purposes in a period of account, but (c) would not, apart from this section, be brought into account in calculating the profits of the person. (3) The profit or loss is to be treated— (a) in the case of a profit, as income of the person that is attributable to the lease, (b) in the case of a loss, as a revenue expense incurred by the person in connection with the lease. (4) Any reference in this section to an amount falling to be recognised for accounting purposes in a period of account is a reference to an amount falling to be recognised for accounting purposes— (a) in the person's profit and loss account or income statement, (b) in the person's statement of recognised gains and losses or statement of changes in equity, or (c) in any other statement of items brought into account in computing the person's profits or losses for that period. (148C) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade for a period of account if he is or has been the lessor under a long funding finance lease. (2) Where— (a) the lease terminates, and (b) a sum calculated by reference to the termination value is paid to the lessee, no deduction in respect of the sum paid to the lessee is allowed in calculating the profits of the person. (3) This section does not prevent a deduction in respect of a sum to the extent that the sum is brought into account in determining the person's rental earnings. (148D) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade in a period of account— (a) for the whole of which, or (b) for any part of which, the person is the lessor of any plant or machinery under a long funding operating lease. (2) A deduction is allowed in calculating the profits of the person for the period of account. (3) The amount of the deduction for any period of account is determined as follows. (4) First, find the “relevant value” for the purposes of subsection (6)(a), which is— (a) if the only use of the plant or machinery by the lessor has been the leasing of it under the long funding operating lease as a qualifying activity, cost; (b) if the last previous use of the plant or machinery by the lessor was the leasing of it under another long funding operating lease as a qualifying activity, market value; (c) if the last previous use of the plant or machinery by the lessor was the leasing of it under a long funding finance lease as a qualifying activity, the recognised value; (d) if the last previous use of the plant or machinery by the lessor was for the purposes of a qualifying activity other than leasing under a long funding lease, the lower of cost and market value; (e) if the lessor owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but— (i) the plant or machinery is brought into use by the lessor for the purposes of a qualifying activity on or after 1st April 2006, and (ii) that qualifying activity is the leasing of the plant or machinery under the long funding lease, the relevant value is the lower of first use market value and first use amortised value. (5) In subsection (4)— - “cost” means the amount of the expenditure incurred by the lessor on the provision of the plant or machinery; - “first use amortised value” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity, on the assumption that— 1. the cost of acquiring the plant or machinery had been written off on a straight line basis over the remaining useful economic life of the plant or machinery, and 2. any further capital expenditure incurred had been written off on a straight line basis over so much of the remaining economic life of the plant or machinery as remains at the time when the expenditure is incurred; - “first use market value” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity; - “market value” means the market value of the plant or machinery at the commencement of the term of the long funding operating lease; - “recognised value” means the value at which the plant or machinery is recognised in the books or other financial records of the lessor at the commencement of the long funding operating lease. (6) From— (a) the relevant value determined in accordance with subsection (4), subtract (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(e), would have been) expected to be the residual value of the plant or machinery, to find the expected gross reduction in value over the term of the lease. (7) Apportion the amount of that expected gross reduction in value to each period of account in which any part of the term of the lease falls. (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account. (9) The amount of the deduction for any period of account is the amount so apportioned to that period. (148E) (1) This section applies if, in a period of account,— (a) a person carrying on a trade is the lessor of any plant or machinery under a long funding operating lease, (b) the person incurs capital expenditure in relation to the plant or machinery, and (c) that capital expenditure (the “additional expenditure”) is not reflected in the market value of the plant or machinery at the commencement of the term of the lease. (2) In a case falling within section 148D(4)(e), subsection (1)(c) has effect as if the reference to the commencement of the term of the lease were a reference to the time when the plant or machinery is first brought into use by the lessor for the purposes of the qualifying activity. (3) Where this section applies, an additional deduction is allowed in calculating the profits of the person for each post-expenditure period of account in which the person is the lessor of the plant or machinery under the lease. (4) The amount of the deduction for any such period of account is to be determined as follows. (5) Find ARV, CRV, PRV and TRV where— - “ARV” is the amount which, at the time when the additional expenditure is incurred, is expected to be the residual value of the plant or machinery; - “CRV” is the amount which, at the commencement of the term of the lease, is expected to be the residual value of the plant or machinery; - “PRV” is the sum of any amounts that fell to be taken into account as RRV (see subsection (6)) in the application of this section in relation to any previous additional expenditure incurred by the person in relation to the leased plant or machinery; - “TRV” is the total of CRV and PRV. (6) Find RRV, where— (a) if ARV exceeds CRV, RRV is the portion of the excess that is a result of the additional expenditure, but (b) if ARV does not exceed CRV, RRV is nil. (7) From— (a) the amount of the additional expenditure, subtract (b) RRV, to find the expected partial reduction in value over the remainder of the term of the lease. (8) Apportion the amount of that expected partial reduction in value to each post-expenditure period of account in which any part of the term of the lease falls. (9) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each post-expenditure period of account. (10) The amount of the additional deduction for any period of account is the amount so apportioned to that period. (11) In this section “post-expenditure period of account” means any period of account ending after the incurring of the additional expenditure. (148F) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade in a period of account if— (a) a long funding operating lease terminates in that period of account, and (b) the person is the lessor under that lease immediately before the termination. (2) Step 1 is to find— (a) the termination amount (TA); (b) the total of any sums paid to the lessee that are calculated by reference to the termination value (LP). (3) Step 2 is to find— (a) the relevant value for the purposes of section 148D(6)(a) (RV); (b) the total of the deductions allowable under section 148D for periods of account for the whole or part of which the person was the lessor before the termination of the lease (TD1); (c) the amount, if any, (ERV) by which RV exceeds TD1. (4) Step 3 is to find— (a) the total of any amounts of capital expenditure incurred by the person which constitute additional expenditure for the purposes of section 148E in the case of the lease (TAE); (b) the total of any deductions allowable under section 148E for periods of account for the whole or part of which the person was the lessor before the termination of the lease (TD2); (c) the amount, if any, (EAE) by which TAE exceeds TD2. (5) Step 4 is to find the total of ERV and EAE (T). (6) If (TA – LP) exceeds T, treat a profit of an amount equal to the excess as arising to the person in the period of account in which the lease terminates. (7) If T exceeds (TA – LP), treat a loss of an amount equal to the excess as arising to the person in that period of account. (8) A profit or loss treated as arising to the person under subsection (6) or (7) is to be treated— (a) in the case of a profit, as income of the person attributable to the lease, (b) in the case of a loss, as a revenue expense incurred by the person in connection with the lease. (9) In calculating the profits of the person for the period, no deduction is allowed in respect of any sums paid to the lessee that are calculated by reference to the termination value. (148G) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade, profession or vocation for a period of account in which the person is the lessee of any plant or machinery under a long funding finance lease. (2) In calculating the person's profits for the period of account,— (a) the amount deducted in respect of amounts payable under the lease, must not exceed (b) the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the person's accounts as finance charges in respect of the lease. (3) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, subsection (2) applies as if the lease were one which, under generally accepted accounting practice, fell to be treated as a finance lease. (148H) (1) This section applies where— (a) a person carrying on a trade, profession or vocation is or has been the lessee under a long funding finance lease, and (b) in connection with the termination of the lease, a payment calculated by reference to the termination value falls to be made to the person. (2) The payment is not to be brought into account in calculating the profits of the person for any period of account. (3) Subsection (2) does not affect the amount of any disposal value that falls to be brought into account by the person under CAA 2001. (148I) (1) This section applies for the purpose of calculating the profits of a person carrying on a trade, profession or vocation for a period of account in which the person is the lessee of any plant or machinery under a long funding operating lease. (2) The deductions that may be allowed in calculating the profits of the person for the period of account are to be reduced in accordance with the following provisions of this section. (3) The amount of the reduction for any period of account is to be determined as follows. (4) First, find the “relevant value” for the purposes of subsection (6)(a), which is— (a) the market value of the plant or machinery at the commencement of the term of the lease, unless paragraph (b) applies; (b) if the lessee— (i) owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but (ii) brings the plant or machinery into use for the purposes of a qualifying activity on or after 1st April 2006, the lower of first use market value and first use amortised market value. (5) In subsection (4)— - “first use amortised market value” means the value that the plant or machinery would have— 1. at the time when it is first brought into use for the purposes of the qualifying activity, but 2. on the assumption that the market value of the plant or machinery at the commencement of the term of the lease had been written off on a straight line basis over the remaining useful economic life of the plant or machinery; - “first use market value” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity. (6) From— (a) the relevant value determined in accordance with subsection (4), subtract (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(b), would have been) expected to be the market value of the plant or machinery at the end of the term of the lease, to find the expected gross reduction over the term of the lease. (7) Apportion the amount of that expected gross reduction to each period of account in which any part of the term of the lease falls. (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account. (9) The amount of the reduction for any period of account is the amount so apportioned to that period. (148J) (1) This section has effect for the interpretation of this Chapter. (2) In this Chapter— - “qualifying activity” has the same meaning as in Part 2 of CAA 2001; - “residual value”, in relation to any plant or machinery leased under a long funding operating lease, means— 1. the estimated market value of the plant or machinery on a disposal at the end of the term of the lease, 1. the estimated costs of that disposal. (3) Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to— (a) the sum being apportioned between each of the periods of account in which any part of the writing-off period falls, (b) that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and (c) the sum being written off accordingly. (4) Chapter 6A of Part 2 of CAA 2001 (interpretation of that Part so far as relating to long funding leases) also applies for the purposes of this Chapter.

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Application of Chapter 10A for calculating the profits of a property business

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• (1) Section 272 is amended as follows.

• (2) In the Table in subsection (2), insert at the appropriate place—

In Chapter 10A (long funding leases)—Sections 148A to 148JLeases of plant or machinery: special rules for long funding leases
In Chapter 10A (long funding leases)—	In Chapter 10A (long funding leases)—
Sections 148A to 148J	Leases of plant or machinery: special rules for long funding leases

Part 4 — Commencement and transitional provisions

Commencement

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• (1) The amendments made by this Schedule have effect in the case of a lease if—

• (a) Condition A is met, or

• (b) if Condition A is not met, Condition B is met,

unless the lease was finalised (see paragraph 23) before 21st July 2005 and on 17th May 2006 the lessor was within the charge to tax.

As respects any time before 18th May 2006, this sub-paragraph has effect with the omission of the words “and on 17th May 2006 the lessor was within the charge to tax”.

This sub-paragraph is subject to sub-paragraphs (5) and (6).

• (2) Condition A is that—

• (a) the lease is finalised on or after 1st April 2006, or

• (b) the commencement of the term of the lease is on or after that date,

and the lease is not an excepted lease (see paragraph 17).

• (3) Condition B is that—

• (a) the commencement of the term of the lease was before 1st April 2006, but

• (b) the plant or machinery is on or after that date brought into use for the purposes of a qualifying activity carried on by the person concerned.

• (4) The amendments made by this Schedule also have effect in relation to a lease, in the case of the lessor, if—

• (a) an election under paragraph 16 is in force in the case of the lease, and

• (b) the election has effect in the case of the lessor.

• (5) Where the amendments made by this Schedule do not have effect in relation to a lease in the case of the lessor but—

• (a) there is a transfer of plant or machinery,

• (b) immediately before the transfer, the lessor is within the charge to tax, and

• (c) the transfer is in circumstances such that, if the amendments made by this Schedule did apply in relation to the lease, section 70W(4)(b) of CAA 2001 (transfers, assignments etc by lessor) would have effect in relation to the new lessor to treat the new lease as a lease which is not a long funding lease,

the amendments made by this Schedule do not have effect in relation to the new lease in the case of the new lessor.

In this sub-paragraph—

• “the new lease” means the lease that would be the new lease for the purposes of section 70W of CAA 2001, if that section applied;

• “the new lessor” means the person who would be the new lessor for the purposes of that section, if that section applied;

and section 70W(7) of CAA 2001 (construction of references to transfer of plant or machinery) also has effect for the purposes of this sub-paragraph.

• (6) Where the amendments made by this Schedule do not have effect in relation to a lease in the case of the lessee but—

• (a) there is a transfer of plant or machinery,

• (b) immediately before the transfer, the lessee is within the charge to tax, and

• (c) the transfer is in circumstances such that, if the amendments made by this Schedule did apply in relation to the lease, section 70X(4)(b) of CAA 2001 (transfers, assignments etc by lessee) would have effect in relation to the new lessee to treat the new lease as a lease which is not a long funding lease,

the amendments made by this Schedule do not have effect in relation to the new lease in the case of the new lessee.

In this sub-paragraph—

• “the new lease” means the lease that would be the new lease for the purposes of section 70X of CAA 2001, if that section applied;

• “the new lessee” means the person who would be the new lessee for the purposes of that section, if that section applied;

and section 70X(7) of CAA 2001 (construction of references to transfer of plant or machinery) also has effect for the purposes of this sub-paragraph.

• (7) In the application of section 70W(4)(b) or 70X(4)(b) of CAA 2001 for the purposes of sub-paragraph (5) or (6), the lease mentioned in the opening words of the sub-paragraph in question is to be regarded as a lease which is not a long funding lease.

Election for lease to be treated as long funding lease for tax purposes

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• (1) The Treasury may by regulations make provision enabling a person of a prescribed description who is, or is to be, the lessor under a plant or machinery lease of a prescribed description to make an election for the lease to be treated in his case as a long funding lease.

• (2) The power to make regulations under this paragraph includes power to make provision for or in connection with any of the following—

• (a) any conditions that must be met if an election is, or is to be, made;

• (b) whether an election is irrevocable;

• (c) the date on and after which an election has effect;

• (d) the manner in which an election is to be made.

• (3) The power to make regulations under this paragraph includes—

• (a) power to make provision having effect in relation to times before the making of the regulations (but not before 1st April 2006),

• (b) power to make different provision for different cases,

• (c) power to make incidental, consequential, supplemental, or transitional provision or savings.

• (4) In this paragraph—

• “election” means an election under this paragraph;

• “long funding lease” means a lease which is a long funding lease for the purposes of Part 2 of CAA 2001;

• “prescribed” means specified in, or determined in accordance with, regulations under this paragraph.

Excepted leases

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• (1) A lease is an excepted lease if the following conditions are met.

• (2) Condition 1 is that before 21st July 2005 there was evidence in writing that there was agreement, or a common understanding, between the lessor's side and the lessee's side as to the principal terms of the lease (the “pre-existing heads of agreement”).

The definitions of “the lessor's side”, “the lessee's side” and “the principal terms” are in paragraph 27.

• (3) Condition 2 is that the leased plant or machinery was under construction (see paragraph 24) before 1st April 2006.

• (4) Condition 3 is that the lease has been finalised before 1st April 2007 (but see sub-paragraph (8)).

• (5) Condition 4 is that the commencement of the term of the lease is before 1st April 2007 (but see sub-paragraph (8)).

• (6) Condition 5 is that the lessee is the particular person or persons identified as such in the pre-existing heads of agreement.

• (7) Condition 6 is that the principal terms of the lease are not (or, apart from section 70M of CAA 2001, would not be) materially different from those in the pre-existing heads of agreement.

• (8) Sub-paragraphs (4) and (5) have effect with the substitution of “ 2009 ” for “2007” if the additional conditions in paragraph 18 are met.

Extended time limit: the additional conditions

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• (1) The additional conditions mentioned in paragraph 17(8) are as follows.

• (2) Condition A is that the commencement of the term of the lease is before 1st April 2009.

• (3) Condition B is that, at the latest, the commencement of the term of the lease is as soon as is reasonably practicable after construction of the asset is substantially complete.

• (4) Condition C is that construction of the asset proceeded continuously on and after 1st April 2006.

• (5) Condition D is that construction of the asset proceeded at the normal pace for an asset of its type.

For this purpose, “normal pace” is the pace required to construct the asset in a reasonable time without delays or interruptions and consistent with normal business practice.

• (6) This paragraph is supplemented by paragraph 19.

Events beyond the control of the parties etc

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• (1) Condition B, C or D in paragraph 18 is not failed by reason only of breaches due to events that meet the conditions in sub-paragraph (2).

• (2) The conditions are that—

• (a) the event is abnormal or unusual,

• (b) the event is unforeseen, and could not reasonably have been foreseen, at the date when the main contract for the construction of the leased asset is entered into,

• (c) the event is beyond the control of each of the principal parties,

• (d) as respects the Condition in question, the consequences of the event could not have been avoided by the exercise of all due care, or the taking of all reasonable steps, by the principal parties or any of them.

• (3) In this paragraph “the principal parties” are—

• (a) the lessor's side,

• (b) the lessee's side,

• (c) the main constructor (see the definition in paragraph 27).

Pre-existing heads of agreement relating to two or more assets

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• (1) This paragraph has effect for the purposes of this Part in any case where the pre-existing heads of agreement relates to two or more assets.

• (2) The treatment of any of the assets varies according to whether the asset—

• (a) is for use individually (see sub-paragraph (3)), or

• (b) is a constituent asset of a combined asset (see sub-paragraph (4)).

• (3) Where any of the assets is for use individually, this Part has effect in relation to that asset separately, as if it were the subject of—

• (a) its own separate pre-existing heads of agreement, and

• (b) if there is a finalised lease, its own separate finalised lease.

See sub-paragraph (5) for the method of determining the terms.

• (4) Where any of the assets are constituent assets of a combined asset—

• (a) the combined asset is to be regarded as a single asset, and

• (b) the constituent assets are to be regarded as if they were instead component parts of that single asset,

and sub-paragraph (3) applies accordingly.

• (5) For the purposes of sub-paragraph (3), the principles in sections 70L and 70M of CAA 2001 are to be applied, with any necessary modifications, for the purpose of determining the terms of—

• (a) the deemed separate pre-existing heads of agreement, and

• (b) the deemed separate finalised lease (if any).

Expenditure incurred before passing of this Act where lease is not an excepted lease

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• (1) This paragraph applies where the following conditions are met—

• (a) a person incurs expenditure on the provision of plant or machinery for leasing under a long funding lease,

• (b) some or all of that expenditure was incurred before the day on which this Act is passed,

• (c) the long funding lease is not an excepted lease,

• (d) before 21st July 2005 there was a pre-existing heads of agreement in the case of the long funding lease.

• (2) In this paragraph—

• (a) “the old expenditure” means so much of the expenditure as is expenditure incurred before the day on which this Act is passed, and

• (b) “the new expenditure” means so much of the expenditure as is expenditure incurred on or after that day.

• (3) Treat the old expenditure—

• (a) as if it had been incurred on the provision of a separate asset for leasing under a separate long funding lease, and

• (b) as if that separate long funding lease were an excepted lease.

• (4) Treat the new expenditure as if it had been incurred on the provision of a separate asset for leasing under a separate long funding lease in relation to which the amendments made by this Schedule have effect.

That is without prejudice to the application of any provisions of this Part which treat that deemed separate long funding lease as if it were two or more leases.

• (5) The rentals under the actual long funding lease are to be apportioned between the two deemed leases in such manner as is just and reasonable.

• (6) This paragraph has effect for the purpose of determining liability to income tax or corporation tax in the case of any person who is or has been the lessor or the lessee under the actual long funding lease.

• (7) Paragraph 22 has effect for determining when an amount of expenditure is to be treated for the purposes of this paragraph as incurred by the person mentioned in sub-paragraph (1).

When expenditure is incurred for the purposes of paragraph 21

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• (1) This paragraph has effect for determining, for the purposes of paragraph 21, when an amount of expenditure is to be treated as incurred by the person mentioned in sub-paragraph (1) of that paragraph.

• (2) The general rule is that an amount of expenditure is to be treated as incurred as soon as there is an unconditional obligation to pay it.

• (3) The general rule applies even if the whole or a part of the expenditure is not required to be paid until a later date.

• (4) There are the following exceptions to the general rule.

• (5) If, under an agreement,—

• (a) an unconditional obligation to pay an amount of expenditure comes into being as a result of the giving of a certificate or any other event, and

• (b) the giving of the certificate, or other event, occurs before the day that falls one month after the passing of this Act,

the expenditure is to be treated as incurred on the day before the passing of this Act.

• (6) If, under an agreement,—

• (a) there is an unconditional obligation to pay an amount of expenditure on a date earlier than accords with normal commercial usage, and

• (b) the sole or main benefit which might have been expected to be obtained thereby is that the amount would be treated, under the general rule, as incurred at an earlier time,

the amount is to be treated as incurred on the date on or before which it is required to be paid.

• (7) If the terms of an agreement are varied on or after 22nd March 2006 with respect to the times for payment and—

• (a) apart from the variation, an unconditional obligation to pay an amount of expenditure would have come into being on or after the day on which this Act is passed, but

• (b) as a result of the variation, the unconditional obligation to pay the amount comes into being before that day,

the amount is to be treated as incurred on the date on which it would have been treated as incurred apart from the variation.

• (8) Sub-paragraph (7) does not apply if the long funding lease mentioned in paragraph 21 was finalised before 22nd March 2006.

When a lease is “finalised”

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• (1) For the purposes of this Part, a lease is “finalised” on the earliest day on which the following conditions are met.

• (2) Condition 1 is that there is a contract in writing for the lease between the lessor and the lessee.

• (3) Condition 2 is that either—

• (a) the contract is unconditional, or

• (b) if it is conditional, the conditions have been met.

• (4) Condition 3 is that no terms remain to be agreed.

When an asset is “under construction”

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• (1) An asset is “under construction” at any time in the period which—

• (a) begins when construction of the asset begins, and

• (b) ends when construction of the asset is completed.

• (2) An asset consisting of two or more component parts is to be taken to be under construction at any time after the start of construction of any of those component parts which meets the condition in subsection (3).

• (3) The condition is that the component part has been identified as a component part of the particular asset before construction of the component part begins.

• (4) Sub-paragraphs (1) and (2) are subject to sub-paragraph (5).

• (5) The leased asset is not to be regarded as under construction at any time after the commencement of the term of the lease.

• (6) This paragraph has effect for the purposes of this Part.

Combined assets and constituent assets

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• (1) A “combined asset” is an asset which meets the conditions in sub-paragraph (2).

• (2) The conditions are that—

• (a) the asset is for use individually,

• (b) it consists of two or more items of plant or machinery (“constituent assets”),

• (c) each of the constituent assets is constructed with a view to its use in conjunction with the others as a single asset (namely, the combined asset).

• (3) Plant or machinery that can be used individually is not a constituent asset just because—

• (a) it is one of a number of assets of the same or a similar description,

• (b) each of those assets is intended for use individually, and

• (c) the use individually of those assets is to be co-ordinated to any extent.

• (4) This paragraph has effect for the purposes of this Part.

Mixed leases

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• (1) This paragraph applies in any case where there is a mixed lease (see section 70L of CAA 2001).

• (2) In any such case, determine whether the mixed lease is an excepted lease.

• (3) If the mixed lease is an excepted lease, section 70L of CAA 2001 and the amendments made by this Schedule accordingly do not have effect in relation to it.

• (4) If the mixed lease is not an excepted lease, then apply sections 70L and 70M of CAA 2001 and determine separately in the case of each derived lease whether that derived lease is an excepted lease.

Interpretation of this Part

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• (1) In this Part—

• “combined asset” is to be construed in accordance with paragraph 25;

• “constituent asset” is to be construed in accordance with paragraph 25;

• “finalise”, in relation to a lease, is to be construed in accordance with paragraph 23;

• “lease” includes—a plant or machinery lease, anda mixed lease,and “lessor”, “lessee” and other related expressions are to be construed accordingly;

• “the lessee's side” means any of the following—the lessee,a person who controls (or is to control) the lessee,any two or more persons who together control (or are to control) the lessee,and for this purpose “control” has the meaning given by section 574 of CAA 2001 ;

• “the lessor's side” means any of the following—the lessor,a person who controls (or is to control) the lessor,any two or more persons who together control (or are to control) the lessor,and for this purpose “control” has the meaning given by section 574 of CAA 2001 ;

• “the main constructor” means the contractor under the main contract for the construction of the plant or machinery;

• “pre-existing heads of agreement” is to be construed in accordance with paragraph 17(2);

• “the principal terms”, in relation to a lease, are the following—the identity of the lessee;the identity or description of the asset to be leased;particulars, or a description, of the rentals payable under the lease;particulars, or a description, of the term of the lease;

• “qualifying activity” has the same meaning as in Part 2 of CAA 2001;

• “under construction”, in the case of an asset, is to be construed in accordance with paragraph 24.

• (2) Chapter 6A of Part 2 of CAA 2001 (interpretation of that Part so far as relating to long funding leases) also applies for the purposes of this Part.

SCHEDULE 9

Income and Corporation Taxes Act 1988

Petroleum extraction activities: sale and leaseback

1

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

Supplementary charge in respect of ring fence trades

2

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

Leased assets: special cases

3

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

Taxation of Chargeable Gains Act 1992

Long funding leases: deemed disposals and re-acquisitions

4

• (1) After section 25 of TCGA 1992 (non-residents: deemed disposals) insert—

(25A) (1) This section applies where plant or machinery is used for the purpose of leasing under a long funding lease. (2) The lessor shall be deemed for all purposes of this Act— (a) to have disposed of the plant or machinery at the commencement of the term of the lease at the value described in subsection (4)(a) or (b), and (b) to have immediately reacquired it at the same value. (3) The lessor shall also be deemed for all purposes of this Act— (a) to have disposed of the plant or machinery on the termination of the lease for a consideration equal to the termination amount, and (b) to have immediately reacquired it for the same consideration. (4) The value mentioned in subsection (2)(a) is— (a) where the lease is a long funding finance lease, an amount equal to that which would fall to be recognised as the lessor's net investment in the lease if accounts were prepared in accordance with generally accepted accounting practice on the date on which the lessor's net investment in the lease is first recognised in the books or other financial records of the lessor, or (b) where the lease is a long funding operating lease, an amount equal to the market value of the plant or machinery at the commencement of the term of the lease. (5) For the purposes of this section, the following expressions have the meaning given in Chapter 6A of Part 2 of the Capital Allowances Act (interpretation of provisions about long funding leases)— - “commencement”, in relation to the term of a lease, - “lessor”, - “long funding lease”, - “long funding finance lease”, - “long funding operating lease”, - “market value”, - “the term”, in relation to a lease, - “termination”, - “termination amount”.

• (2) The amendment made by this paragraph has effect where the commencement of the term of the lease is on or after 1st April 2006.

Restriction of losses: long funding leases of plant or machinery

5

• (1) After section 41 of TCGA 1992 (restriction of losses by reference to capital allowances and renewals allowances) insert—

(41A) (1) This section applies where a person disposes of an asset— (a) which includes plant or machinery which is a fixture for the purposes of Chapter 6A of Part 2 of the Capital Allowances Act, and (b) which he has used for the purpose of leasing under one or more long funding leases. (2) In the computation of the amount of a loss accruing to the person on the disposal there shall be excluded from the sums allowable as a deduction by virtue of section 38(1)(a) and (b) (acquisition and enhancement costs) an amount determined in accordance with subsection (3) or (4). (3) Where the person has used the plant or machinery for the purpose of leasing under one long funding lease, the amount is equal to the fall in value of the plant or machinery during the period of the lease. (4) Where the person has used the plant or machinery for the purpose of leasing under more than one long funding lease, the amount is equal to the sum of the fall in value of the plant or machinery during the period of each lease. (5) In this section, references to the fall in value of plant or machinery during the period of a lease are references to the amount (if any) by which— (a) the market value of the plant or machinery at the commencement of the term of the lease, exceeds (b) its market value at the termination of the lease. (6) For the purposes of this section, the following expressions have the meaning given in Chapter 6A of Part 2 of the Capital Allowances Act (interpretation of provisions about long funding leases)— - “commencement”, in relation to the term of a lease, - “long funding lease”, - “market value”, - “the term”, in relation to a lease, - “termination”.

• (2) The amendment made by this paragraph has effect in relation to disposals on or after 1st April 2006.

Definition of market value

6

• (1) Section 272 of TCGA 1992 (valuation: general) is amended as follows.

• (2) In subsection (6) (subjection to other provisions) after “subject to” insert “ sections 25A and 41A and ”.

Finance Act 1997

Leasing arrangements

7

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

Finance Act 2000

Tonnage tax: introductory

8

Schedule 22 to FA 2000 (tonnage tax) is amended as follows.

Meaning of “finance costs”

9

• (1) In Part 7 (the ring fence: general provisions) paragraph 63 (meaning of finance costs) is amended as follows.

• (2) In sub-paragraph (2), for the word “and” at the end of paragraph (d) substitute the following paragraph—

(dd) where the tonnage tax company is the lessee under a long funding operating lease, the amount deductible (or the total amount that could, if there were no tonnage tax election, be deductible) in respect of payments under the lease in computing the profits of the lessee for the purposes of corporation tax (after first making against any such amount any reductions falling to be made by virtue of section 502K of the Taxes Act 1988); and

.

• (3) At the end of the paragraph insert—

(4) In this paragraph “long funding operating lease” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act).

.

• (4) The amendments made by this paragraph have effect in relation to payments due on or after 1st April 2006.

Capital allowances: ship leasing

10

• (1) Part 10 (the ring fence: capital allowances: ship leasing) is amended as follows.

• (2) In paragraph 89 (introduction), in sub-paragraph (1), after the paragraph relating to paragraphs 90 and 91 (defeased leasing) insert— “ paragraphs 91A to 91F (long funding leases), ”.

• (3) After paragraph 91 (defeased leasing: excepted forms of security) insert—

(91A) (1) This paragraph applies if the lease would fall to be regarded as a long funding lease for the purposes of Part 2 of the Capital Allowances Act 2001, apart from this paragraph. (2) The lease is to be treated for tax purposes as not being a long funding lease at any time when the lease— (a) meets the conditions in sub-paragraph (3), or (b) is expected to meet those conditions when the ship is first brought into use under the lease, but this is subject to the qualification in sub-paragraph (4) and the exception in sub-paragraph (5). (3) The conditions are— (a) that the lease falls within paragraph 91B (lease to tonnage tax company or group), (b) that the lease falls within paragraph 91C (tonnage tax company to operate and manage qualifying ship), (c) that the lease falls within paragraph 91D (period and rate of sublease of qualifying ship). (4) The condition in paragraph (c) of sub-paragraph (3) has to be met, or be expected to be met, only at times when the company within tonnage tax is leasing the ship to a company not within tonnage tax. (5) The conditions in paragraphs (b) and (c) of sub-paragraph (3) do not have to be met, or be expected to be met, if the lease was finalised (within the meaning of Part 4 of Schedule 8 to the Finance Act 2006) before 1st April 2006. (6) Sub-paragraph (2) is subject to paragraph 91E (anti-avoidance). (91B) (1) A lease falls within this paragraph if— (a) it is a lease of a qualifying ship provided directly to a company within tonnage tax, or (b) it is a lease of a qualifying ship provided indirectly to a company within tonnage tax (“T”) and sub-paragraph (2) applies. (2) This sub-paragraph applies where— (a) the owner of the qualifying ship provides it directly to a company (“C”) under a lease, (b) C provides the qualifying ship directly to T under a lease, and (c) C and T are in the same group. (91C) (1) A lease of a qualifying ship provided, directly or indirectly, to a company within tonnage tax (“T”) falls within this paragraph if T is responsible— (a) for the operation of the ship, including the appointment of the master and those members of the crew engaged in navigation, and (b) for defraying all expenses in connection with the ship, or substantially all such expenses other than those directly incidental to a particular voyage or to the employment of the ship during any period for which the ship is leased by T to another person. (2) For the purposes of this paragraph, T is “responsible” if— (a) he is responsible as principal, or (b) he appoints another person (“P”) to be responsible in his place and the condition in sub-paragraph (3) is met. (3) The condition is that— (a) P is not a person to whom the ship is leased by T and is not connected with such a person, or (b) P is a company within tonnage tax. (4) Any reference in this paragraph to a lease by T includes a reference to a contract of affreightment entered into by T that provides for the carriage of goods by the qualifying ship. (5) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this paragraph. (91D) (1) A lease of a qualifying ship provided, directly or indirectly, to a company within tonnage tax (“T”) falls within this paragraph if each lease of the ship by T (a “sublease”) to a company not within tonnage tax meets the conditions in sub-paragraph (2). (2) The conditions are— (a) that the amount payable under the sublease is the market rate, and (b) that the period of the sublease does not exceed 7 years. (3) For the purposes of this paragraph the market rate is the rate at which the qualifying ship could reasonably be expected to be leased, taking into account all the circumstances of the lease including the period of the lease, the date at which the lease commences and the size and description of the qualifying ship. (4) For the purposes of this paragraph the period of a sublease is the period comprising— (a) the term specified in the sublease, and (b) any subsequent periods which meet the conditions in sub-paragraph (5). (5) The conditions are that— (a) there is an option to continue the sublease for that period, and (b) the amount payable under the sublease for that period is not the market rate applicable at the start of that period. (6) Where— (a) an option to continue a sublease for a period is exercised, and (b) the amount payable under the sublease for that period is the market rate applicable at the start of that period, the parties to the sublease are to be treated for the purposes of this paragraph as if the sublease had terminated immediately before the commencement of the period and a new sublease had immediately been entered into. (7) Where a sublease is for an indefinite period, the period of the sublease is to be taken for the purposes of this paragraph to be a period of more than 7 years, unless the condition in sub-paragraph (8) is met. (8) The condition is that— (a) the amount payable under the sublease must be reviewed at least once every 7 years, and (b) if the amount payable under the sublease is found on such a review not to be the market rate applicable at the time of the review, it must be changed to the market rate applicable at that time. (9) Where there is an option to continue a sublease for an indefinite period, the period of the sublease is to be taken for the purposes of this paragraph to be a period of more than 7 years, unless the condition in sub-paragraph (10) is met. (10) The condition is that the amount payable under the sublease for any period for which the option may be exercised is the market rate applicable at the start of that period, except that— (a) the amount for the time being payable under the sublease may subsequently be changed at any time to the market rate applicable at that time, (b) the amount payable under the sublease must be reviewed at least once every 7 years, and (c) if the amount payable under the sublease is found on such a review not to be the market rate applicable at the time of the review, it must be changed to the market rate applicable at that time. (11) Any reference in this paragraph to a lease by T includes a reference to a contract of affreightment entered into by T that provides for the carriage of goods by the qualifying ship. (91E) Paragraph 91A(2) does not have effect in the case of the lease if the main purpose, or one of the main purposes— (a) of the leasing of the ship, (b) of a series of transactions of which the leasing of the ship is one, or (c) of any of the transactions in such a series, was to obtain a writing down allowance determined without regard to any of paragraphs 90, 92 and 94 to 102 in respect of expenditure incurred by any person on the provision of the ship. (91F) (1) This paragraph applies if sub-paragraph (2) of paragraph 91A ceases to have effect in relation to a lease (the “existing lease”) because one or more of the conditions in sub-paragraph (3) of that paragraph cease to be met. (2) In any such case it is to be assumed for tax purposes that— (a) the existing lease terminates at the time of the cessation; (b) another lease (the “new lease”) is entered into immediately after the cessation; (c) the term of the new lease is the portion of the term of the existing lease that remains unexpired at the time of the cessation; (d) the date on which the cessation occurs is the date of both— (i) the inception of the new lease, and (ii) the commencement of the term of the new lease. (3) Where this paragraph applies, subsection (4) of section 70X of the Capital Allowances Act 2001 (transfers, assignments etc by lessee) does not. (4) For the purposes of this paragraph, the following expressions have the meaning given in Chapter 6A of Part 2 of the Capital Allowances Act 2001 (interpretation of provisions about long funding leases)— - “commencement”, in relation to the term of a lease; - “inception”, in relation to a lease; - “term”, in relation to a lease; - “terminate”.

.

• (4) In paragraph 93 (certificates required to support claim by lessor), in sub-paragraph (1)(b) after “in relation to the lease” insert “ and, if the lease is one that would (apart from paragraph 91A) fall to be regarded as a long funding lease for the purposes of Part 2 of the Capital Allowances Act 2001, that paragraph 91A(2) has effect in relation to the lease. ”

• (5) Paragraph 15 of Schedule 8 (commencement) also has effect in relation to the amendments made by this paragraph.

Capital Allowances Act 2001

Withdrawal of first year allowances for lessors of certain plant or machinery

11

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

Plant or machinery treated as owned by person entitled to benefit of contract etc

12

• (1) Section 67 of CAA 2001 is amended as follows.

• (2) After “qualifying activity”, in each place where those words occur in the section, insert “ or corresponding overseas activity ”.

• (3) In subsection (2), insert at the end— “ This subsection has effect subject to, and in accordance with, subsections (2A) to (2C). ”.

• (4) After subsection (2) insert—

(2A) If the contract is one which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as a lease, subsection (2B) applies. (2B) Where that is the case, the plant or machinery is to be treated under subsection (2) as owned by the person at any time only if the contract falls (or would fall) to be treated by that person in accordance with generally accepted accounting practice as a finance lease. (2C) Where at any time the plant or machinery— (a) is not treated under subsection (2) as owned by the person, but (b) would be treated under that subsection as owned by the person, but for subsection (2B), the plant or machinery is nevertheless to be treated under subsection (2) as not owned by any other person at that time.

.

• (5) Renumber subsection (5) as subsection (7).

• (6) Before that subsection, as so renumbered, insert—

(6) If— (a) a person enters into two or more agreements, and (b) those agreements are such that, if they together constituted a single contract, the condition in subsection (1)(b) would be met in relation to that person and that contract, the agreements are to be treated for the purposes of this section as parts of a single contract. In this subsection, any reference to an agreement includes a reference to an undertaking, whether or not legally enforceable.

.

• (7) At the end of the section insert—

(8) In this section “corresponding overseas activity” means an activity that would be a qualifying activity if the person carrying it on were resident in the United Kingdom.

.

• (8) The amendments made by this paragraph have effect in relation to contracts that are finalised (within the meaning of Part 4 of Schedule 8) on or after 1st April 2006.

Phasing out of overseas leasing rules

13

• (1) Section 105 of CAA 2001 (basic terms: “leasing”, “overseas leasing” etc) is amended as follows.

• (2) After subsection (2) (“overseas leasing”) insert—

(2A) In determining whether plant or machinery is used for overseas leasing, no account shall be taken of any lease finalised, within the meaning of Part 4 of Schedule 8 to the Finance Act 2006, on or after 1st April 2006.

.

Anti-avoidance: meaning of “finance lease”

14

• (1) Section 219 of CAA 2001 (meaning of “finance lease” in Chapter 17 of Part 2) is amended as follows.

• (2) In subsection (1)(b), after sub-paragraph (ii) insert— “ and which are not a long funding lease in the case of the lessor. ”.

• (3) Paragraph 15 of Schedule 8 (commencement) also has effect in relation to the amendment made by this paragraph.

Capital allowances: allocation of expenditure to a chargeable period

15

• (1) Section 220 of CAA 2001 is amended as follows.

• (2) Before subsection (1) insert—

(A1) Subsection (1) applies to a company for a chargeable period if— (a) at the end of the ICTA period of account which is the basis period for the chargeable period, the company is a member of a group, and (b) the last day of that ICTA period of account is not also the last day of an ICTA period of account of the principal company of the group.

.

• (3) In subsection (1)—

• (a) for “a person” substitute “ the company ”,

• (b) for “a chargeable period” substitute “ the chargeable period ”,

• (c) after “under a finance lease” insert “ or under a qualifying operating lease (see subsection (4)) ”, and

• (d) for “person's”, in both places, substitute “ company's ”.

• (4) After subsection (2) insert—

(3) The following provisions have effect for the interpretation of this section. (4) A “qualifying operating lease” is a plant or machinery lease that meets the following conditions— (a) it is not a finance lease, (b) it is a funding lease, (c) its term is longer than 4 years but not longer than 5 years. (5) An ICTA period of account is the basis period for a chargeable period if the chargeable period coincides with, or falls within, the ICTA period of account. (6) An “ICTA period of account” is a period of account as defined in section 832(1) of ICTA. (7) The provisions of section 170(3) to (6) of TCGA 1992 apply to determine for the purposes of this section— (a) whether a company is member of a group, and (b) which company is the principal company of the group. (8) But, in applying those provisions for the purposes of this section, a company (“the subsidiary company”) that does not have ordinary share capital is to be treated as being a qualifying 75% subsidiary of another company (“the parent company”) if the parent company— (a) has control of the subsidiary company, within the meaning of section 840 of ICTA, and (b) is beneficially entitled to the appropriate proportion of profits and assets. (9) The parent company is beneficially entitled to the appropriate proportion of profits and assets if (and only if) it— (a) is beneficially entitled to at least 75% of any profits available for distribution to equity holders of the subsidiary company, and (b) would be beneficially entitled to at least 75% of any assets of the subsidiary company available for distribution to its equity holders on a winding-up. (10) The provisions of Schedule 18 to ICTA (equity holders and profits or assets etc) also apply for the purposes of this section. (11) In this section, the following expressions have the same meaning as in Chapter 6A of Part 2 (interpretation of provisions about long funding leases)— - “funding lease”, - “plant or machinery lease”, - “term”, in relation to a lease.

.

• (5) In consequence of the amendments made by this paragraph, the italic cross-heading preceding section 219 becomes “ Finance leases and certain operating leases ”.

• (6) The amendments made by this paragraph have effect in relation to expenditure incurred on or after 1st April 2006.

SCHEDULE 10

Part 1 — Introduction

Contents of Schedule

1

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

Commencement

2

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

Part 2 — Leasing business carried on by a company alone

Income and matching expense in different accounting periods

3

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

Amount of income and expense

4

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

No carry back of the expense

5

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

Meaning of “business of leasing plant or machinery”

6

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

Provision for the purposes of condition A in paragraph 6

7

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

Provision for the purposes of condition B in paragraph 6

8

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

Meaning of “associated company”

9

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

Meaning of “a qualifying change of ownership” in relation to a company

10

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

Qualifying 75% subsidiaries

11

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

Consortium relationships

12

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

No qualifying change of ownership in the case of certain intra-group reorganisations

13

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

Meaning of “company owned by a consortium” etc

14

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

Meaning of qualifying 75% or 90% subsidiary etc

15

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

The amount of the income: the basic amount

16

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

Meaning of “PM” in paragraph 16

17

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

Meaning of “TWDV” in paragraph 16

18

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

Amount to be nil if basic amount negative

19

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

Adjustment to basic amount: qualifying 75% subsidiaries

20

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

Adjustment to the basic amount: consortium relationships

21

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

Migration

22

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

Part 3 — Leasing business carried on by a company in partnership

Change in company’s interest in business: income treated as received etc

23

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

Amount of income and expense

24

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

Meaning of “business of leasing plant or machinery”

25

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

Meaning of “associated company”

26

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

Meaning of “qualifying change” in company’s interest in a business

27

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

Determining the percentage share in the profits or loss of business

28

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

The amount of the income: the basic amount

29

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

Amount to be nil if basic amount negative

30

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

Adjustment of basic amount

31

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

Amount of expense

32

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

Income and matching expense in different accounting periods

33

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

Amount of income and expense

34

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

No carry back of the expense

35

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

Amount of the income

36

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

Meaning of “profits” etc

37

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

Part 4 — Miscellaneous

Anti-avoidance

38

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

Relief for expense under paragraph 3 or 33 otherwise giving rise to carried forward loss

39

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

Relationship of Schedule with section 228K of CAA 2001

40

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

Definitions for purposes of Schedule

41

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

Index of definitions

42

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

Consequential amendments

43

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

SCHEDULE 11

Continuing the effect of orders under section 431A(3) of ICTA

1

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

Section 432B apportionment: participating funds

2

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

Transfers of business: excess of assets or liabilities

3

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

Transfers of business: modification of s. 83(2B) of FA 1989

4

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

Surpluses of mutual and former mutual businesses

5

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

Receipts to be taken into account

6

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

Changes in value of assets brought into account: non-profit companies

7

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

Contingent loans

8

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

SCHEDULE 12

Part 1 — Settlors, trustees and settlements

Basic trust concepts

1

• (1) In section 68 of TCGA 1992 for the definition of “settled property” substitute “ “settled property” means any property held in trust other than property to which section 60 applies (and references, however expressed, to property comprised in a settlement are references to settled property). ”

• (2) After section 68 of TCGA 1992 insert—