Legalize / United Kingdom / Public General Act

Corporation Tax Act 2009

Type Public General Act

Publication 2009-03-26

Last updated 2025-04-01

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(850) (1) For any period of account a partner's share of a profit or loss of a trade carried on by a firm is determined for income tax purposes in accordance with the firm's profit-sharing arrangements during that period. This is subject to sections 850A and 850B. (2) In this section and sections 850A and 850B “profit-sharing arrangements” means the rights of the partners to share in the profits of the trade and the liabilities of the partners to share in the losses of the trade. (850A) (1) For any period of account, if— (a) the calculation under section 849 in relation to a partner (“A”) produces a profit, and (b) A's share determined under section 850 is a loss, A's share of the profit of the trade is neither a profit nor a loss. (2) For any period of account, if— (a) the calculation under section 849 in relation to A produces a profit, (b) A's share determined under section 850 is a profit, and (c) the comparable amount for at least one other partner is a loss, A's share of the profit of the trade is the amount produced by the formula in subsection (3). (3) The formula is— $$FP×PPPP+TCP$where—FP is the amount of the firm's profit calculated under section 849 in relation to A,PP is the amount determined under section 850 to be A's profit, andTCP is the total of the comparable amounts attributed to other partners under step 3 in subsection (4) that are profits.$ (4) The comparable amount for each partner other than A is determined as follows. Step 1 Take the firm's profit calculated under section 849 in relation to A. Step 2 Determine in accordance with the firm's profit-sharing arrangements during the relevant period of account the shares of that profit that are attributable to each of the other partners. Step 3 Each such share is the comparable amount for the partner to whom it is attributed. (5) In subsections (2) to (4) “partner” means any partner in the firm, whether or not chargeable to income tax. (850B) (1) For any period of account, if— (a) the calculation under section 849 in relation to a partner (“A”) produces a loss, and (b) A's share determined under section 850 is a profit, A's share of the loss of the trade is neither a profit nor a loss. (2) For any period of account, if— (a) the calculation under section 849 in relation to A produces a loss, (b) A's share determined under section 850 is a loss, and (c) the comparable amount for at least one other partner is a profit, A's share of the loss of the trade is the amount produced by the formula in subsection (3). (3) The formula is— $$FL×PLPL+TCL$where—FL is the amount of the firm's loss calculated under section 849 in relation to A,PL is the amount determined under section 850 to be A's loss, andTCL is the total of the comparable amounts attributed to other partners under step 3 in subsection (4) that are losses.$ (4) The comparable amount for each partner other than A is determined as follows. Step 1 Take the firm's loss calculated under section 849 in relation to A. Step 2 Determine in accordance with the firm's profit-sharing arrangements during the relevant period of account the shares of that loss that are attributable to each of the other partners. Step 3 Each such share is the comparable amount for the partner to whom it is attributed. (5) In subsections (2) to (4) “partner” means any partner in the firm, whether or not chargeable to income tax.

641

(1) Amend section 860 (adjustment income) as follows.

(2) After subsection (1) insert—

(1A) A change in the persons carrying on a property business from one period of account to the next does not prevent Chapter 7 of Part 3 (adjustment income) applying in relation to the property business so long as a person carrying on the property business immediately before the change continues to carry on the property business immediately after the change.

(3) In subsection (3)—

(a) after “trade” insert “ or property business ”, and

(b) after “Chapter 17 of Part 2” insert “ , or Chapter 7 of Part 3, ”.

(4) In subsection (6)—

(a) in paragraph (a), at the end insert “ or Chapter 7 of Part 3 (as the case requires) ”, and

(b) in paragraph (b) after “trade” insert “ or property business (as the case requires) ”.

642

For section 861 (sale of patent rights: effect of partnership changes) substitute—

(861) (1) This section applies if each of the following conditions is met— (a) a person (“the trader”) sells the whole or part of any patent rights in carrying on a trade, (b) tax is chargeable under section 587 of this Act or section 912 of CTA 2009 on the proceeds of the sale or on any instalment of those proceeds, (c) the tax is chargeable in one or more tax years or accounting periods (referred to in this section as “the tax charge periods”), (d) there is a change in the persons carrying on the trade at any time between the beginning of the first of those tax charge periods and the end of the last of them, and (e) the partnership condition and the continuity condition are met. (2) The partnership condition is that— (a) the trader is a firm at the time of the sale, or (b) the trade is carried on in partnership at any time between the beginning of the first of the tax charge periods and the end of the last of them. (3) The continuity condition is— (a) in the case of an amount chargeable under section 587, that a person who carried on the trade immediately before the change continues to carry it on after the change, or (b) in the case of an amount chargeable under section 912 of CTA 2009, that a company which carried on the trade in partnership immediately before the change continues to carry it on in partnership after the change. (4) Any amounts chargeable in respect of the proceeds or instalment that would (apart from this section) be treated in accordance with Chapter 2 of Part 5 of this Act or Chapter 3 of Part 9 of CTA 2009 as profits of the seller of the patent rights chargeable in tax charge periods falling wholly after the change are treated for income tax purposes— (a) as proceeds, arising at a constant daily rate during the remainder of the relevant period, of a sale of patent rights by the person or persons carrying on the trade after the change, and (b) if the trade is carried on in partnership after the change, as arising to the partners in shares calculated in accordance with the firm's profit-sharing arrangements. (5) If the change occurs during the course of a tax charge period— (a) any person who would, but for this section, have been charged to income tax in that period on a sum (“S”) in respect of the proceeds or instalment is so charged on a fraction of S proportionate to the length of the part of the period before the change, and (b) the balance of S not dealt with under paragraph (a) is treated for the purposes of this section and section 1271 of CTA 2009 (sale of patent rights: effect of partnership changes) as if it were an amount such as is described in subsection (4). (6) In this section “the remainder of the relevant period” means— (a) if one or more tax charge periods begins after the tax charge period in which the change occurs, the period beginning immediately after the change and ending 6 years after the beginning of the first of the tax charge periods, or (b) otherwise, the period beginning immediately after the change and ending at the end of the tax charge period in which the change occurs. (7) In this section “profit-sharing arrangements” means the rights of the partners to share in the profits of the trade.

643

(1) Amend section 862 (sale of patent rights: effect of later cessation of trade) as follows.

(2) For subsections (1) and (2) substitute—

(1) This section applies if— (a) a person (“the trader”) sells the whole or part of any patent rights in carrying on a trade, (b) by virtue of section 861 amounts are chargeable to income tax under section 587 as profits of one or more persons for the time being carrying on the trade in partnership, (c) a partner permanently ceases to carry on the trade after that, and (d) no person who carried on the trade immediately before the cessation continues to carry on the trade immediately after the cessation. (2) Any amounts mentioned in subsection (1)(b) which would have been chargeable in any tax year later than that in which the cessation occurred are charged in the tax year in which the cessation occurred.

(3) Omit subsections (3) and (7).

644

Omit section 881 (disapplication of corporation tax: section 9 of ICTA).

645

(1) Amend Schedule 1 (consequential amendments) as follows.

(2) Omit paragraph 312(4)(b) and the “and” immediately before it.

646

(1) Amend Schedule 2 (transitionals and savings etc) as follows.

(2) In paragraph 70(2) for “term” substitute “ terms ”.

(3) In paragraph 71(2) for “term” substitute “ terms ”.

(4) In paragraph 109(5) for “section 12 of ICTA” substitute “ Chapter 2 of Part 2 of CTA 2009 ”.

647

(1) Amend Schedule 4 (abbreviations and defined expressions) as follows.

(2) In Part 1 at the end insert—

CTA 2009	The Corporation Tax Act 2009

(3) In Part 2—

(a) in the entry for “accounting period”, in the second column—

(i) for “sections 12 and” substitute “ section ”, and

(ii) at the end insert “ and Chapter 2 of Part 2 of CTA 2009 ”, and

(b) omit the entry for “Schedule A business”.

Finance Act 2005 (c. 7)

648

The Finance Act 2005 is amended as follows.

649

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654

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655

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656

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657

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658

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659

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660

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661

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662

In section 83(8) (application of accounting standards to securitisation companies) in the definition of “asset” for “Schedule 26 to FA 2002 (derivative contracts) (see paragraph 12 of that Schedule)” substitute “ Part 7 of CTA 2009 (derivative contracts) (see sections 580, 581 and 582 of that Act) ”.

663

In section 105 (interpretation) after the definition of “CAA 2001” insert—

“CTA 2009” means the Corporation Tax Act 2009;

664

(1) Amend Schedule 2 (alternative finance arrangements: further provisions) as follows.

(2) Omit paragraph 2.

(3) Omit paragraph 7.

(4) In paragraphs 8, 10, 11(c), 12 and 13 omit “or profit share return”.

665

In Schedule 4 (accounting practice and related matters) omit paragraphs 27 and 52.

Railways Act 2005 (c. 14)

666

The Railways Act 2005 is amended as follows.

667

(1) Amend Schedule 10 (taxation provisions relating to transfer schemes) as follows.

(2) In paragraph 7—

(a) in sub-paragraph (a) for “Chapter 2 of Part 4 of the Finance Act 1996 (c. 8)” substitute “ Part 5 of the Corporation Tax Act 2009 ”, and

(b) in sub-paragraph (b) for “Schedule 26 to the Finance Act 2002 (derivative contracts)” substitute “ Part 7 of the Corporation Tax Act 2009 (derivative contracts) ”.

(3) In paragraph 10(5) for the words from “under” to the end substitute “ under Part 3 of the Corporation Tax Act 2009 in respect of the trade or part of a trade in question for periods in which the trade was carried on wholly or partly in the United Kingdom. ”

(4) In paragraph 17—

(a) in sub-paragraph (1) for “Schedule 29 to the Finance Act 2002 (c. 23) ” and “an existing asset”, in both places where it occurs, substitute “ Part 8 of the Corporation Tax Act 2009 ” and “ a pre-FA 2002 asset ” respectively, and

(b) in sub-paragraph (2) for “that Schedule”, in both places where it occurs, substitute “ that Part ”.

(5) In paragraph 18—

(a) in sub-paragraph (1) for “Chapter 2 of Part 4 of the Finance Act 1996 (c. 8)” substitute “ Part 5 of the Corporation Tax Act 2009 ”, and

(b) in sub-paragraph (2) for “paragraph 12(8) of Schedule 9 to” substitute “ section 335(6) of ”.

(6) In paragraph 19—

(a) in sub-paragraph (1) for “Schedule 26 to the Finance Act 2002 (derivative contracts)” substitute “ Part 7 of the Corporation Tax Act 2009 (derivative contracts) ”, and

(b) in sub-paragraph (2) for “paragraph 28(6) of that Schedule” substitute “ section 624(3) of that Act ”.

(7) In paragraph 28—

(a) in sub-paragraph (1) for “paragraph 11 of Schedule 9 to the Finance Act 1996 (c. 8)” substitute “ section 444 of the Corporation Tax Act 2009 ”, and

(b) in sub-paragraph (2) for “Chapter 2 of Part 4 of the Finance Act 1996” and “that Chapter” substitute “ Part 5 of the Corporation Tax Act 2009 ” and “ that Part ” respectively.

Finance (No. 2) Act 2005 (c. 22)

668

The Finance (No. 2) Act 2005 is amended as follows.

669

In section 18 (section 17(3): specific powers) for subsection (2)(c) substitute—

(c) modify the meaning of “relevant holding” for the purposes of— (i) sections 490 and 492 of the Corporation Tax Act 2009 (loan relationships), and (ii) section 587 of that Act (derivative contracts).

670

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671

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672

In section 71 (interpretation) after the definition of “CAA 2001” insert—

CTA 2009” means the Corporation Tax Act 2009;

673

In Schedule 6 (accounting practice and related matters)—

(a) omit paragraph 7 (loan relationships with embedded derivatives), and

(b) omit paragraph 9 (exchange gains and losses).

674

In Schedule 7 (avoidance involving financial arrangements) in paragraph 14—

(a) in sub-paragraph (4)(b) after “1996” insert “ or Part 5 of CTA 2009 ”, and

(b) in sub-paragraph (5) after “1996” insert “ and Part 5 of CTA 2009 ”.

Finance Act 2006 (c. 25)

675

The Finance Act 2006 is amended as follows.

676

Omit sections 31 to 41 (provisions about films, in particular film tax relief).

677

In section 42(2) (film tax relief: further provisions) omit—

(a) “Part 1 deals with entitlement to the relief;”, and

(b) “Part 4 is about provisional entitlement to relief”.

678

Omit sections 43 to 45 (film losses).

679

At the end of each of sections 46 and 47 insert—

(6) The provisions of sections 1181 to 1187 of CTA 2009 apply for the purposes of this section as if this section were contained in Part 15 of that Act.

680

Omit sections 48 to 50 (sound recordings).

681

Omit section 52 (films: application of provisions to certain films already in production).

682

Omit section 53(2) (films and sound recordings: commencement etc).

683

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684

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685

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686

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687

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688

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689

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690

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691

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692

In section 179 (interpretation) after the definition of “CAA 2001” insert—

“CTA 2009” means the Corporation Tax Act 2009;

693

Omit Schedule 4 (taxation of activities of film production company).

694

In Schedule 5 (film tax relief: further provisions)—

(a) omit Part 1 (entitlement to film tax relief),

(b) omit paragraphs 24 and 25, and

695

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696

(1) Amend Schedule 15 (accountancy change: spreading of adjustment), Part 2 (corporation tax) as follows.

(2) In paragraph 9(1), in the words after paragraph (c), for “section 64 of and Schedule 22 to FA 2002” substitute “ Chapter 14 of Part 3 of or section 262 of CTA 2009 ”.

(3) In paragraph 10(5)(a) for “Schedule 22 to FA 2002” substitute “ Chapter 14 of Part 3 of or section 262 of CTA 2009 ”.

(4) In paragraph 11(1)(b) for “section 12(7ZA) of ICTA” substitute “ section 10 of CTA 2009 ”.

(5) In paragraph 12(1)(b) for “section 12(7) of ICTA” substitute “ section 12 of CTA 2009 ”.

(6) In paragraph 14(1)(b) for “Schedule A business” substitute “ UK property business ”.

697

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698

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Income Tax Act 2007 (c. 3)

699

The Income Tax Act 2007 is amended as follows.

700

For section 5 substitute—

(5) Section 3 of CTA 2009 disapplies the provisions of the Income Tax Acts relating to the charge to income tax in relation to income of a company (not accruing to it in a fiduciary or representative capacity) if— (a) the company is UK resident, or (b) the company is non-UK resident and the income is within its chargeable profits as defined by section 19 of that Act (profits attributable to its permanent establishment in the United Kingdom).

701

In section 276(3) (conditions relating to income) for “paragraph 14(3) of Schedule 26 to FA 2002 as if they were non-trading credits or non-trading debits” substitute “ section 574 of CTA 2009 (non-trading credits and debits to be brought into account under Part 5 of that Act) ”.

702

In section 489(6) (the “applicable period” in relation to shares) for “paragraph 9 of Schedule 4AA to ICTA” substitute “ section 989 of CTA 2009 ”.

703

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704

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705

(1) Amend section 835 (residence rules for trustees and companies) as follows.

(2) Omit subsection (2).

(3) In the title omit “and companies”.

706

After section 835 insert—

(835A) Chapter 3 of Part 2 of CTA 2009 (rules for determining residence of companies) applies for the purposes of the Income Tax Acts as it applies for the purposes of the Corporation Tax Acts.

707

In section 899(4)(b) (meaning of “qualifying annual payment”) for “charged to corporation tax under Case III of Schedule D” substitute

which is— (i) required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit, or (ii) from a source in the United Kingdom and chargeable to corporation tax under Chapter 5 of Part 10 of that Act (distribution from unauthorised unit trusts) or Chapter 7 of that Part (annual payments not otherwise charged).

708

In section 904 (annual payments for dividends or non-taxable consideration) for subsection (2) substitute—

(2) The payment must be— (a) a payment charged to income tax under Part 5 of ITTOIA 2005 (miscellaneous income), or (b) a payment which is— (i) required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit, or (ii) from a source in the United Kingdom and chargeable to corporation tax under Chapter 5 of Part 10 of that Act (distributions from unauthorised unit trusts) or Chapter 7 of that Part (annual payments not otherwise charged).

709

(1) Amend section 910 (proceeds of a sale of patent rights: payments to non-UK residents) as follows.

(2) In subsection (1)(b) for “section 524(3) of ICTA” substitute “ section 912 of CTA 2009 ”.

(3) In subsection (6)(b) for “section 524(9) of ICTA” substitute “ section 919 of CTA 2009 ”.

710

In section 934(4) (non-UK resident companies) for “section 11(2) of ICTA” substitute “ section 19 of CTA 2009 ”.

711

In section 937(5)(c) (partnerships)—

(a) for “section 11(2) of ICTA” substitute “ section 19 of CTA 2009 ”, and

(b) for “sections 114 and 115 of ICTA” substitute “ Part 17 of that Act ”.

712

In section 939(1)(b) (duty to retain bonds where issue treated as payment of interest) for “section 582(1)(a) of ICTA” substitute “ section 413 of CTA 2009 ”.

713

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714

In section 948(2) (meaning of “accounting period”) for the words from “section” to “assessment)” substitute “ Chapter 2 of Part 2 of CTA 2009 (accounting periods) ”.

715

In section 965(2) (overview of sections 966 to 970) for “section 556 of ICTA” substitute “ section 1309 of CTA 2009 ”.

716

(1) Amend section 971 (income tax in respect of non-resident landlords) as follows.

(2) In subsection (2) for the words from “chargeable” to the end substitute “ chargeable as the profits of a UK property business under Chapter 3 of Part 3 of ITTOIA 2005 or Chapter 3 of Part 4 of CTA 2009. ”

(3) In subsection (3)(a) for “Schedule A business, or a UK property business,” substitute “ UK property business (within the meaning of Chapter 2 of Part 3 of ITTOIA 2005 or Chapter 2 of Part 4 of CTA 2009) ”.

717

In section 976(6) (arrangements for payments of interest less tax or at a specified net rate) for paragraph (b) substitute—

(b) interest which is required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit of the recipient.

718

In section 980(2) (derivative contracts: exception from duties to deduct) for “Schedule 26 to FA 2002” substitute “ Part 7 of CTA 2009 ”.

719

In section 989 (definitions) omit the definition of “Schedule A business”.

720

In section 1017 (abbreviated references to Acts) after the definition of “CAA 2001” insert—

“CTA 2009” means the Corporation Tax Act 2009,

721

In Schedule 4 (index of defined expressions) omit the entry for “Schedule A business”.

Finance Act 2007 (c. 11)

722

The Finance Act 2007 is amended as follows.

723

In section 113 (interpretation) after the definition of “CRCA 2005” insert—

“CTA 2009” means the Corporation Tax Act 2009;

724

In Schedule 3 (managed service companies) omit paragraph 10.

725

(1) Amend Schedule 7 (insurance business: gross roll-up business etc) as follows.

(2) In paragraph 85—

(a) in sub-paragraph (1) omit “(a “Case VI loss”)” and “(a “Case I loss”)”, and

(b) in sub-paragraph (2)—

(i) for “Case VI losses” substitute “ losses so treated ”, and

(ii) for “Case I losses” substitute “ losses of the transferee ”.

(3) For the italic cross-heading before paragraph 85 substitute “ Losses transferred under section 444AZA ”.

(4) In paragraph 86(4) and (5) for “Case VI” substitute “ gross roll-up business ”.

(5) For the italic cross-heading before paragraph 86 substitute “ Losses transferred under section 444AZB ”.

726

(1) Amend Schedule 13 (sale and repurchase of securities) as follows.

(2) In paragraph 1(1) after “in that case” insert “ in respect of chargeable gains ”.

(3) Omit paragraphs 2 to 5, 7 to 10 and 12.

(4) In paragraph 14—

(a) in the definition of “creditor quasi-repo” for “paragraph 8” substitute “ section 544 of CTA 2009 ”,

(b) in the definition of “creditor repo” for “paragraph 7” substitute “ section 543 of CTA 2009 ”,

(d) in the definition of “debtor repo” for “paragraph 2” substitute “ section 548 of CTA 2009 ”, and

(e) in the definition of “the loan relationship rules” for “Chapter 2 of Part 4 of FA 1996” substitute “ Part 5 of CTA 2009 ”.

(5) In paragraph 15(9)(b) for “paragraph 12” and “paragraph 10” substitute “ section 547 of CTA 2009 ” and “ section 546 of that Act ” respectively.

727

In paragraph 28(fa) of Schedule 24 (penalties for errors)—

(a) in paragraph (i) for “Schedule 20 to FA 2000” substitute “ Chapter 2 or 7 of Part 13 of CTA 2009 ”,

(b) in paragraph (ii) for “Schedule 22 to FA 2001” substitute “ Chapter 3 or 4 respectively of Part 14 of CTA 2009 ”,

(d) in paragraph (iv) for “Schedule 5 to FA 2006” substitute “ Chapter 3 of Part 15 of CTA 2009 ”.

Finance Act 2008 (c. 9)

728

The Finance Act 2008 is amended as follows.

729

Omit section 29 (cap on R&D aid).

730

Omit section 36(1) (company gains from investment life insurance contracts etc).

731

In section 77(6), in the words after paragraph (b) for “section 578A of ICTA and section 50 of ITTOIA 2005 apply” substitute “ section 50 of ITTOIA 2005 applies ”.

732

In section 154(6) (stamp duty and stamp duty reserve tax: alternative investment bonds) after “2005” insert “ or section 507 of CTA 2009 ”.

733

In section 165(1) (interpretation) after the definition of “CRCA 2005” insert—

“CTA 2009” means the Corporation Tax Act 2009,

734

In Schedule 10 (cap on R&D aid), omit paragraphs 1 to 7.

735

Omit Schedule 13 (company gains from investment life insurance contracts).

736

In Schedule 15 (changes in trading stock), omit Part 2.

737

In Schedule 25 (first-year tax credits)—

(a) in paragraph 14(6)(b) for “paragraph 4(4) of Schedule 11 to FA 1996” substitute “ section 391(3)(b) of CTA 2009 ”, and

(b) in paragraph 16(3)(b) for “paragraph 4(4) of Schedule 11 to FA 1996” substitute “ section 391(3)(b) of CTA 2009 ”.

Crossrail Act 2008 (c. 18)

738

The Crossrail Act 2008 is amended as follows.

739

(1) Amend Schedule 13 (transfer schemes: tax provisions) as follows.

(2) In paragraph 3 (interpretation: supplementary) after the definition of “CAA 2001” insert—

“CTA 2009” means the Corporation Tax Act 2009;

(3) In paragraph 5(5) (computation of profits and losses in respect of transfer of trade) for the words from “under” to the end substitute “ under Part 3 of CTA 2009 in respect of the trade or part of a trade in question for periods in which the trade was carried on wholly or partly in the United Kingdom. ”

(4) In paragraph 6(5) (transfers of trading stock) for “has the same meaning as in section 100 of ICTA” substitute “ has the meaning given by section 163 of CTA 2009 ”.

(5) In paragraph 13 (continuity in relation to transfer of intangible assets)—

(a) in sub-paragraph (1) for “Schedule 29 to FA 2002” substitute “ Part 8 of CTA 2009 ”, and

(b) in sub-paragraph (2) for “Schedule”, in both places where it occurs, substitute “ Part ”.

(6) In paragraph 14 (continuity in relation to loan relationships)—

(a) in sub-paragraph (1) for “Chapter 2 of Part 4 of FA 1996” substitute “ Part 5 of CTA 2009 ”, and

(b) in sub-paragraph (2) for “paragraph 12(8) of Schedule 9 to” substitute “ section 335(6) of ”.

(7) In paragraph 15 (continuity in relation to derivative contracts)—

(a) in sub-paragraph (1) for “Schedule 26 to FA 2002” substitute “ Part 7 of CTA 2009 ”, and

(b) in sub-paragraph (2) for “paragraph 28(6) of that Schedule” substitute “ section 624(3) of that Act ”.

(8) In paragraph 18(6) (transfers of trading stock) for “has the same meaning as in section 100 of ICTA” substitute “ has the meaning given by section 163 of CTA 2009 ”.

(9) In paragraph 23 (neutral effect of transfer of intangible assets)—

(a) in sub-paragraph (1) for “Schedule 29 to FA 2002” substitute “ Part 8 of CTA 2009 ”, and

(b) in sub-paragraph (2) for “Schedule”, in both places where it occurs, substitute “ Part ”.

(10) In paragraph 24 (neutral effect of transfer for loan relationships and derivative contracts)—

(a) in sub-paragraph (a) for “Chapter 2 of Part 4 of FA 1996” substitute “ Part 5 of CTA 2009 ”, and

(b) in sub-paragraph (b) for “Schedule 26 to FA 2002” substitute “ Part 7 of that Act ”.

(11) In paragraph 34(6) (transfers of trading stock) for the words from “has” to the end substitute “ has the meaning given by section 174 of ITTOIA 2005 (as respects income tax) or section 163 of CTA 2009 (as respects corporation tax). ”

(12) In paragraph 40 (transfers involving private persons: loan relationships)—

(a) in sub-paragraph (1) for “Paragraph 11 of Schedule 9 to FA 1996” substitute “ Section 444 of CTA 2009 ”, and

(b) in sub-paragraph (2) for “Chapter 2 of Part 4 of FA 1996” and “that Chapter” substitute “ Part 5 of CTA 2009 ” and “ that Part ” respectively.

SCHEDULE 2

Part 1 — General provisions

Continuity of the law: general

1

The repeal of provisions and their enactment in a rewritten form by this Act does not affect the continuity of the law.

2

Paragraph 1 does not apply to any change made by this Act in the effect of the law.

3

Any subordinate legislation or other thing which—

(a) has been made or done, or has effect as if made or done, under or for the purposes of a superseded enactment so far as it applied for relevant tax purposes, and

(b) is in force or effective immediately before the commencement of the corresponding rewritten provision,

has effect after that commencement as if made or done under or for the purposes of the rewritten provision.

4

(1) Any reference (express or implied) in this Act, another enactment or an instrument or document to a rewritten provision is to be read as including, in relation to times, circumstances or purposes in relation to which any corresponding superseded enactment had effect for relevant tax purposes, a reference to the superseded enactment so far as applying for those relevant tax purposes.

(2) In particular, any reference (express or implied) in this Act, another enactment or an instrument or document to—

(a) the profits of a UK property business, or

(b) similar concepts created by this Act,

is to be read as including, in relation to times, circumstances or purposes in relation to which any corresponding concept in a superseded enactment had effect for corporation tax purposes, a reference to that concept so far as applying for corporation tax purposes.

(3) Any reference (express or implied) in this Act, another enactment or an instrument or document to—

(a) things done under or for the purposes of a rewritten provision, or

(b) things falling to be done under or for the purposes of a rewritten provision,

is to be read as including, in relation to times, circumstances or purposes in relation to which any corresponding superseded enactment had effect for relevant tax purposes, a reference to things done or falling to be done under or for the purposes of the superseded enactment so far as applying for those relevant tax purposes.

5

(1) Any reference (express or implied) in any enactment, instrument or document to a superseded enactment in its application for relevant tax purposes is to be read, so far as is required for those relevant tax purposes, as including, in relation to times, circumstances or purposes in relation to which any corresponding rewritten provision has effect, a reference to the rewritten provision.

(2) In particular, any reference (express or implied) in any enactment, instrument or document to Schedule A or D or the Cases of Schedule D in their application for corporation tax purposes is to be read, so far as is required for corporation tax purposes, as including, in relation to times, circumstances or purposes in relation to which any corresponding rewritten concept has effect, as a reference to the rewritten concept.

(3) Any reference (express or implied) in any enactment, instrument or document to—

(a) things done under or for the purposes of a superseded enactment in its application for relevant tax purposes, or

(b) things falling to be done under or for the purposes of a superseded enactment in its application for relevant tax purposes,

is to be read, so far as is required for those relevant tax purposes, as including, in relation to times, circumstances or purposes in relation to which any corresponding rewritten provision has effect, a reference to things done or falling to be done under or for the purposes of the rewritten provision.

6

Paragraphs 1 to 5 have effect instead of section 17(2) of the Interpretation Act 1978 (c. 30) (but are without prejudice to any other provision of that Act).

7

Paragraphs 4 and 5 apply only so far as the context permits.

General saving for old transitional provisions and savings

8

(1) The repeal by this Act of a transitional or saving provision relating to the coming into force of a provision rewritten in this Act does not affect the operation of the transitional or saving provision, so far as it is not specifically rewritten in this Act but remains capable of having effect in relation to the corresponding provision of this Act.

(2) The repeal by this Act of an enactment previously repealed subject to savings does not affect the continued operation of those savings.

(3) The repeal by this Act of a saving on the previous repeal of an enactment does not affect the operation of the saving so far as it is not specifically rewritten in this Act but remains capable of having effect.

Interpretation

9

(1) In this Part—

“enactment” includes subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)),

“relevant tax purposes” means, in relation to a superseded enactment, tax purposes for which the enactment has been rewritten by this Act, and

“superseded enactment” means an earlier enactment which has been rewritten by this Act for certain tax purposes (whether it applied only for those purposes or for those and other tax purposes).

(2) References in this Part to the repeal of a provision include references to its revocation and to its express or implied disapplication for corporation tax purposes.

(3) References in this Part to tax purposes are not limited to corporation tax purposes.

Part 2 — Changes in the law

10

(1) This paragraph applies if, in the case of any person—

(a) a thing is done or an event occurs before 1 April 2009, and

(b) because of a change in the law made by this Act, the corporation tax consequences of that thing or event for the relevant period are different from what they would otherwise have been.

(2) This paragraph also applies if, in the case of any person—

(a) a thing is done or an event occurs before 6 April 2009, and

(b) because of a change in the law made by this Act, the income tax consequences of that thing or event for the relevant period are different from what they would otherwise have been.

(3) If the person mentioned in sub-paragraph (1) or (2) so elects, this Act applies with such modifications as may be necessary to secure that the corporation tax or (as the case may be) income tax consequences for the relevant period are the same as they would have been if the change in the law had not been made.

(4) In sub-paragraphs (1) to (3) “the relevant period” means—

(a) for corporation tax purposes, any accounting period beginning before and ending on or after 1 April 2009, and

(b) for income tax purposes, any period of account beginning before and ending on or after 6 April 2009.

(5) If this paragraph applies in the case of two or more persons in relation to the same thing or event, an election made under this paragraph by any one of those persons is of no effect unless a corresponding election is made by the other or each of the others.

(6) An election under this paragraph must be made—

(a) for corporation tax purposes, not later than two years after the end of the accounting period, and

(b) for income tax purposes, on or before the first anniversary of the normal self-assessment filing date for the tax year in which the period of account ends.

Part 3 — Charge to corporation tax on income

Effect of repeal of section 9(1) of ICTA on relevance of case law

11

The repeal by this Act of section 9(1) of ICTA does not affect the relevance for corporation tax purposes of any case law that was relevant for those purposes immediately before the repeal.

Part 4 — Accounting periods

Companies in administration

12

Section 10(1)(i) and (j), (2), (3) and (4) apply only in relation to companies that enter administration (under the Insolvency Act 1986 (c. 45) or otherwise) on or after 15 September 2003.

Part 5 — Company residence: exceptions to section 14

13

(1) Subject to sub-paragraph (2), section 14 does not apply to a company if—

(a) immediately before 15 March 1988 the company was non-UK resident, having ceased to be UK resident under a Treasury consent, and

(b) immediately before 1 April 2009 section 66(1) of FA 1988 did not apply to the company because of paragraph 1(1) of Schedule 7 to that Act (certain companies which ceased to be UK resident before 15 March 1988 in pursuance of a Treasury consent).

(2) If at any time a company falling within sub-paragraph (1)—

(a) ceases to carry on business,

(b) becomes UK resident, or

section 14 applies in relation to the company after that time.

14

(1) Subject to sub-paragraph (2), section 14 does not apply to a company if immediately before 1 April 2009 section 66(1) of FA 1988 did not apply to the company because of paragraph 2(1) of Schedule 7 to that Act (certain companies which ceased to be UK resident on or after 15 March 1988 in pursuance of a Treasury consent).

(2) If at any time a company falling within sub-paragraph (1)—

(a) ceases to carry on business, or

(b) becomes UK resident,

section 14 applies in relation to the company after that time.

15

(1) In paragraph 13—

“general consent” means a consent under a section to which sub-paragraph (2) applies which is given generally within the meaning of subsection (4) of the section in question,

“taxable” means liable to tax on income by reason of domicile, residence or place of management,

“Treasury consent” means a consent under a section to which sub-paragraph (2) applies which is given for the purposes of subsection (1)(a) of the section in question.

(2) This sub-paragraph applies to the following sections (restrictions on the migration etc of companies)—

section 765 of ICTA,

section 482 of the Income and Corporation Taxes Act 1970,

section 468 of the Income Tax Act 1952, and

section 36 of FA 1951.

Part 6 — Trading income

Hiring cars with low CO2 emissions before 1 April 2013

16

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

17

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

Tenants under taxed leases

18

(1) This paragraph relates to the operation of sections 62 to 67 where, in respect of a lease—

(a) there is a receipt of a Schedule A business or an overseas property business (within the meaning of section 65A(4) or 70A(4) of ICTA) as a result of section 34 or 35 of ICTA (treatment of premiums etc as rent and assignments for profit of lease granted at an undervalue) for a tax year before the tax year 2005-06 or an accounting period ending before 1 April 2009, or

(b) there would be such a receipt, but for the operation of section 37(2) or (3) of ICTA (reductions in certain receipts under section 34 or 35 of ICTA).

In this paragraph and paragraphs 19 and 20 a receipt falling within paragraph (a) or (b) is referred to as an “ICTA pre-commencement receipt”.

(2) For the purposes of sections 62 to 67—

(a) the lease is treated as a taxed lease, and

(b) the ICTA pre-commencement receipt is treated as a taxed receipt.

(3) For the purposes of those sections, the “receipt period” of a taxed receipt which is an ICTA pre-commencement receipt is—

(a) in the case of an ICTA pre-commencement receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and

(b) in the case of an ICTA pre-commencement receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment.

(4) For the purposes of sections 62 to 67 the “unreduced amount” of a taxed receipt which is an ICTA pre-commencement receipt is the amount of the ICTA pre-commencement receipt as a result of section 34 or 35 of ICTA, before the operation of section 37(2) or (3) of ICTA.

(5) Sub-paragraph (6) applies to a taxed receipt which is an ICTA pre-commencement receipt arising as a result of section 34(2) of ICTA (obligation on tenant to carry out work under lease).

(6) If the obligation to carry out work included the carrying out of work which gave or will give rise to expenditure for which an allowance has been, or may be, made under the enactments relating to capital allowances, the unreduced amount of the taxed receipt is calculated as if the obligation had not included the carrying out of that work.

19

(1) This paragraph provides for the application of section 63 as a result of section 65 if—

(a) a lease is a taxed lease as a result of paragraph 18,

(b) another lease is granted out of the taxed lease,

(c) in calculating the amount of an ICTA pre-commencement receipt in respect of the other lease, there is a reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest for the purposes of that section, and

(d) as a result of paragraph 18 the amount chargeable on the superior interest is the taxed receipt for the purposes of section 63.

(2) Sections 63 to 67 apply as follows—

(a) the ICTA pre-commencement receipt is treated as if it were a lease premium receipt for the purposes of sections 66 and 67,

(b) references in those sections to the reduction under section 228 by reference to the taxed receipt are, in relation to the ICTA pre-commencement receipt, to the reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest, and

(i) in the case of an ICTA pre-commencement receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and

(ii) in the case of an ICTA pre-commencement receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment.

(3) References in this paragraph and paragraph 20 to a reduction under section 37(2) or (3) of ICTA in an ICTA pre-commencement receipt by reference to the amount chargeable on the superior interest are to the difference between—

(a) the amount of the ICTA pre-commencement receipt before the operation of section 37(2) or (3) of ICTA, and

(b) the amount of the receipt after the operation of that subsection,

so far as attributable to the amount chargeable on the superior interest for the purposes of section 37 of ICTA.

20

(1) This paragraph provides for the application of section 63 as a result of section 65 if—

(a) the taxed lease referred to in those sections is a taxed lease as a result of section 227(4)(c) or (d) (lease taxed under ITTOIA 2005),

(b) another lease is granted out of the taxed lease, and

(c) in calculating the amount of an ICTA pre-commencement receipt in respect of the other lease, there is a reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest for the purposes of that section.

(2) Sections 63 to 67 apply as follows—

(a) the ICTA pre-commencement receipt is treated as if it were a lease premium receipt for the purposes of sections 66 and 67,

(b) references in those sections to the reduction under section 228 by reference to the taxed receipt are, in relation to the ICTA pre-commencement receipt, to the reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest, and

(i) in the case of an ICTA pre-commencement receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and

(ii) in the case of an ICTA pre-commencement receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment.

Local enterprise agencies

21

To the extent that any function of the Scottish Ministers under section 79 of ICTA was, before 1 April 2009, also exercisable by the Secretary of State for the purposes specified in section 2(2) of the European Communities Act 1972 (c. 68) that function as rewritten in—

(a) section 83(2) (meaning of “local enterprise agency”),

(b) section 84 (approval of local enterprise agencies), or

continues to be also exercisable by the Secretary of State for those purposes.

Expenses connected with patents, designs and trade marks

22

(1) This paragraph applies if—

(a) fees have been incurred, but not paid, for the purposes of a trade in connection with any of the matters mentioned in section 89 or 90,

(b) the fees were incurred in a period of account no part of which falls in an accounting period ending after 31 March 2009, and

(2) A deduction is allowed for the fees in calculating the profits of the period of account in which they are paid.

Payments to Export Credits Guarantee Department

23

(1) This paragraph applies if—

(a) a sum is payable, but not paid, by the company carrying on a trade to the Export Credits Guarantee Department under an agreement mentioned in section 91(a) or with a view to entering into such an agreement,

(b) the sum was incurred in a period of account no part of which falls in an accounting period ending after 31 March 2009, and

(2) A deduction is allowed for the sum in calculating the profits of the period of account in which it is paid.

Reverse premiums

24

(1) Sections 98 and 99 do not apply to a reverse premium—

(a) which was received before 9 March 1999, or

(b) to which the recipient was entitled immediately before that date.

(2) In determining whether a reverse premium was one to which the recipient was entitled immediately before 9 March 1999, no account is to be taken of any arrangements made on or after that date.

Sums recovered under insurance policies etc

25

Section 103 does not apply if—

(a) a company carrying on a trade recovers a sum mentioned in that section, and

(b) the sum has been taken into account in calculating the profits of the trade of an accounting period ending before 1 April 2009.

Meaning of “designated educational establishment”

26

To the extent that the power of the Welsh Ministers to make regulations under section 84(5) of ICTA was, before 1 April 2009, also exercisable by the Secretary of State for the purposes specified in section 2(2) of the European Communities Act 1972 (c. 68), that power as rewritten in section 106 continues to be also exercisable by the Secretary of State for those purposes.

27

The reference in section 106(1)(a) to regulations made for England and Scotland by the Secretary of State includes a reference to regulations made for Great Britain by the Secretary of State before 1 July 1999.

Dealers in securities etc

28

The repeal by this Act of section 473(2B) of ICTA (conversion etc of securities held as circulating capital) does not affect any election made under section 66 of FA 2002 (election to continue postponement of mark to market) before the repeal takes effect.

Purchase or sale of woodlands

29

Section 134 does not apply if the purchase mentioned in subsection (2) of that section was made under a contract entered into before 1 May 1963.

Waste disposal

30

If the predecessor ceased to carry on the trade carried on by the trader, or ceased to carry on a trade so far as relating to the site, before 21 March 2000, section 142 applies as if—

(a) “, or a predecessor,” in subsection (1) were omitted, and

(b) subsections (3) and (4) were omitted.

31

If the trade carried on by the trader was started before 1 April 1993, section 144(1) (definition of “waste disposal licence”) applies for the purposes of sections 142 and 143 as if paragraphs (d) and (e) of that subsection were omitted (radioactive waste and nuclear site authorisations or licences).

32

Section 144(3) does not apply for the purposes of sections 142 and 143 if the trade was started before 1 April 1993.

Reserves of marketing authorities etc

33

In section 153(5) “approved scheme or arrangement” includes a scheme or arrangement—

(a) approved by the National Assembly for Wales, or

(b) made with the National Assembly for Wales,

before 26 May 2007.

Adjustment on change of basis

34

Chapter 14 of Part 3 applies to a change of basis only if the first day of the first period of account for which the new basis is adopted falls within an accounting period that ends after 31 March 2009.

Part 7 — Property income

Lease premiums

35

Section 217 does not apply in relation to a lease granted pursuant to a contract entered into before 4 April 1963.

Lease premiums: sums payable instead of rent

36

Section 219 does not apply in relation to a lease granted—

(a) before 6 April 1963, or

(b) pursuant to a contract entered into before 4 April 1963.

Lease premiums: sums payable for surrender of lease

37

Section 220 does not apply in relation to a lease granted—

(a) before 6 April 1963, or

(b) pursuant to a contract entered into before 4 April 1963.

Lease premiums: assignments for profit of lease granted at undervalue

38

Section 222 does not apply in relation to a lease granted—

(a) before 6 April 1963, or

(b) pursuant to a contract entered into before 4 April 1963.

Lease premiums: pre-commencement receipts under ICTA treated as taxed receipts

39

(1) This paragraph relates to the operation of sections 227 to 235 where, in respect of a lease—

(a) there is a receipt of a Schedule A business or an overseas property business (within the meaning of section 65A(4) or 70A(4) of ICTA) as a result of section 34 or 35 of ICTA (treatment of premiums etc as rent and assignments for profit of lease granted at an undervalue) for a tax year before the tax year 2005-06 or an accounting period ending before 1 April 2009, or

(b) there would be such a receipt, but for the operation of section 37(2) or (3) of ICTA (reductions in certain receipts under section 34 or 35 of ICTA).

In this paragraph and paragraph 40 a receipt falling within paragraph (a) or (b) is referred to as an “ICTA pre-commencement receipt”.

(2) For the purposes of Chapter 4 of Part 4—

(a) the lease is treated as a taxed lease, and

(b) the ICTA pre-commencement receipt is treated as a taxed receipt.

(3) For the purposes of that Chapter, the “receipt period” of a taxed receipt which is an ICTA pre-commencement receipt is—

(a) in the case of an ICTA pre-commencement receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and

(b) in the case of an ICTA pre-commencement receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment.

(4) For the purposes of that Chapter the “unreduced amount” of a taxed receipt which is an ICTA pre-commencement receipt is the amount of the ICTA pre-commencement receipt as a result of section 34 or 35 of ICTA, before the operation of section 37(2) or (3) of ICTA.

(5) Sub-paragraph (6) applies to a taxed receipt which is an ICTA pre-commencement receipt arising as a result of section 34(2) of ICTA (obligation on tenant to carry out work under lease).

(6) If the obligation to carry out work included the carrying out of work which gave or will give rise to expenditure for which an allowance has been, or may be, made under the enactments relating to capital allowances, the unreduced amount of the taxed receipt is calculated as if the obligation had not included the carrying out of that work.

Lease premiums: taking account of reductions under section 37(2) or (3) of ICTA

40

(1) This paragraph applies if—

(a) in calculating the amount of an ICTA pre-commencement receipt, there is a reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest for the purposes of that section, and

(b) as a result of paragraph 39(1) and (2) or section 227(4)(c) or (d) (lease taxed under ITTOIA 2005) the amount chargeable on the superior interest is the taxed receipt for the purposes of Chapter 4 of Part 4.

(2) References to a reduction under section 37(2) or (3) of ICTA in an ICTA pre-commencement receipt by reference to the amount chargeable on the superior interest are to the difference between—

(a) the amount of the ICTA pre-commencement receipt before the operation of section 37(2) or (3) of ICTA, and

(b) the amount of the receipt after the operation of that subsection,

so far as attributable to the amount chargeable on the superior interest for the purposes of section 37 of ICTA.

(3) In sections 230(5)(a) (meaning of “unused amount”) and 235(3)(a) (limit on reductions and deductions) references to reductions under section 288 of ITTOIA 2005 by reference to the taxed receipt include references to reductions under section 37(2) or (3) of ICTA in ICTA pre-commencement receipts by reference to the amount chargeable on the superior interest.

(4) Sections 232 to 234 apply as follows—

(a) the ICTA pre-commencement receipt is treated as if it were a lease premium receipt for the purposes of sections 233 and 234,

(b) references in those sections to the reduction under section 228 by reference to the taxed receipt are, in relation to the ICTA pre-commencement receipt, to the reduction under section 37(2) or (3) of ICTA by reference to the amount chargeable on the superior interest, and

(i) in the case of an ICTA pre-commencement receipt as a result of section 34 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease, and

(ii) in the case of an ICTA pre-commencement receipt as a result of section 35 of ICTA, the period treated in calculating the amount of the receipt as being the duration of the lease remaining at the date of the assignment.

Lease premiums: taking account of deductions for rent as a result of section 37(4) or 87(2) of ICTA

41

(1) Sub-paragraph (2) applies if—

(a) in calculating the profits of a trade, profession or vocation for a tax year before the tax year 2005-06 or an accounting period ending before 1 April 2009, a person is treated as paying rent under section 87(2) of ICTA by reference to the amount chargeable for the purposes of that section, and

(b) as a result of paragraph 39(1) and (2) or section 227(4)(c) or (d) (lease taxed under ITTOIA 2005) the amount chargeable is the taxed receipt for the purposes of Chapter 4 of Part 4.

(2) References in sections 230(5)(b) and 235(3)(c) to the deductions allowed for expenses under section 63 by reference to the taxed receipt include references to the deductions allowed in calculating the profits of the trade, profession or vocation for the rent that the person is treated as paying under section 87(2) of ICTA by reference to the amount chargeable.

(3) Sub-paragraph (4) applies if—

(a) in calculating the profits of a Schedule A business or an overseas property business (within the meaning of section 65A(4) or 70A(4) of ICTA) for a tax year before the tax year 2005-06 or an accounting period ending before 1 April 2009, a person is treated as paying rent as a result of section 37(4) of ICTA by reference to the amount chargeable on the superior interest for the purposes of that section, and

(b) as a result of paragraph 39(1) and (2) or section 227(4)(c) or (d) (lease taxed under ITTOIA 2005) the amount chargeable on the superior interest is the taxed receipt for the purposes of Chapter 4 of Part 4.

(4) References in sections 230(5)(c) and 235(3)(b) to the deductions allowed for expenses under section 292 of ITTOIA 2005 by reference to the taxed receipt include references to the deductions allowed in calculating the profits of the Schedule A business or overseas property business (within the meaning of section 65A(4) or 70A(4) of ICTA) for the rent that the person is treated as paying as a result of section 37(4) of ICTA by reference to the amount chargeable on the superior interest.

Lease premiums: time limits for claims for repayment of tax

42

(1) Until the Treasury by order appoints a day under this paragraph—

(a) section 238 has effect as if “ 6 years ” were substituted for “4 years” in subsection (3) of that section, and

(b) section 239 has effect as if “ 6 years ” were substituted for “4 years” in subsection (3) of that section.

(2) An order under this paragraph—

(a) may appoint different days for different purposes, and

(b) may include transitional provision and savings.

Lease premiums: rules for determining effective duration of lease

43

(1) In relation to a lease granted after 24 August 1971 and before 1 April 2009, section 243 applies with the following modifications.

(2) In subsection (1) for Rule 1 substitute—

Rule 1: A lease is not to be treated as having been granted for a term longer than one ending on a date before the end of the term for which the lease was granted if— (a) the terms of the lease or any other circumstances make it unlikely that the lease will continue beyond that date, and (b) the premium was not substantially greater than it would have been had the term been one ending on that date.

(3) Omit subsection (3).

44

The amendments made by paragraph 626 of Schedule 1 (amendments of section 303 of ITTOIA 2005, which provides rules for determining the effective duration of a lease) do not have effect in relation to leases granted before 1 April 2009.

45

(1) In relation to a lease granted after 12 June 1969 and before 25 August 1971, for sections 243 and 244 substitute—

(243) (1) The following rules apply for determining the effective duration of a lease for the purposes of this Chapter. Rule 1: Where the terms of a lease include provision for the determination of the lease by notice given by the landlord, the lease is not to be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice so given. Rule 2: A lease is not to be treated as having been granted for a term longer than one ending on a date before the end of the term for which the lease was granted, if the terms of the lease or any other circumstances make it unlikely that the lease will continue beyond that date. Rule 3: Where the terms of the lease include provision for the extension of the lease beyond a given date by notice given by the tenant, account may be taken of any circumstances making it likely that the lease will be so extended. (2) Rule 2 applies by reference to the facts known or ascertainable at the time of the grant of the lease. (3) In applying the rules, it is assumed that all parties concerned, whatever their relationship, act as if they were at arm's length. (4) In this section, in relation to Scotland, “term”, where referring to the duration of a lease, means period.

(2) This paragraph does not apply if the determination is for the purposes of section 221 (sums payable for variation or waiver of terms of lease).

46

(1) In relation to a lease granted before 13 June 1969, for sections 243 to 245 substitute—

(243) (1) The following rules apply for determining the effective duration of a lease for the purposes of this Chapter. Rule 1: Where the effective duration of a lease is being determined after the date on which the lease has for any reason come to an end, the duration is taken to have extended from its commencement to that date. Rule 2: Where the terms of the lease include provision for the determination of the lease by notice given either by the landlord or by the tenant, the lease is not to be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice. Rule 3: A lease is not to be treated as having been granted for a term longer than one ending on a date before the end of the term for which the lease was granted, if the terms of the lease or any other circumstances make it unlikely that the lease will continue beyond that date. (2) Rules 2 and 3 are subject to Rule 1. (3) Rules 2 and 3 apply in accordance with circumstances prevailing at the time of the determination. (4) In this section, in relation to Scotland, “term”, where referring to the duration of a lease, means period.

(2) This paragraph does not apply if the determination is for the purposes of section 221 (sums payable for variation or waiver of terms of lease).

47

The amendments made by paragraphs 498 and 506 of Schedule 1 (amendments of sections 291(3)(a) and 393J(3)(a) of CAA 2001) do not have effect in relation to leases granted before 1 April 2009.

Lease premiums: meaning of “premium”

48

(1) In relation to a lease granted after 12 June 1969 and before 25 August 1971 sections 246 and 247 have effect with the following modifications.

(2) Section 246 has effect with the omission of subsections (4) and (5).

(3) Section 247 has effect with the omission of—

(a) the words “or to a person connected with such a person” in subsection (1), and

(b) subsection (2).

Reverse premiums

49

(1) Section 250 does not apply to a reverse premium—

(a) which was received before 9 March 1999, or

(b) to which the recipient was entitled immediately before that date.

(2) In determining whether a reverse premium was one to which the recipient was entitled immediately before 9 March 1999, no account is to be taken of any arrangements made on or after that date.

Deductions for expenditure on energy-saving items

50

Sections 251 to 253 do not apply to expenditure incurred before 8 July 2008.

Adjustment on change of basis

51

(1) Sections 261 and 262 apply to a change of basis taking effect for a period of account which ends after 31 March 2009.

(2) For this purpose the period of account for which a change of basis takes effect is the first period of account for which the new basis is adopted.

Meaning of “mineral royalties”

52

The definition of “mineral royalties” in section 274(2) does not include any rent receivable before 6 April 1970.

Part 8 — Loan relationships

Interpretation

53

Except as provided in this Part of this Schedule, expressions used in this Part of this Schedule and in Part 5 of this Act have the same meaning as in Part 5.

Opening and closing values determined under Schedule 15 to the Finance Act 1996

54

So far as immediately before the commencement of this Act any opening value or closing value is to be determined by reference to Schedule 15 to FA 1996 (loan relationships: savings and transitional provisions), the determination of that value is not affected by the repeal by this Act of any provision in that Schedule or any provision affecting such a provision.

References to Part 5 to include Schedule 15 to FA 1996

55

Except where the context indicates otherwise, references to Part 5 of this Act in any enactment other than Schedule 15 to FA 1996 include references to that Schedule.

Exemption for interest on tax overpaid for accounting periods ending before 1 July 1999

56

No liability to corporation tax arises in respect of interest paid under section 826(1) of ICTA (interest on tax overpaid) if the accounting period mentioned in the paragraph of that section as a result of which it is paid ends before 1 July 1999.

Regulations under section 81 of FA 2002

57

The repeal by this Act of any provision in Schedule 23 to FA 2002 (transitional provision) does not affect the power in section 81 of that Act so far as relating to that provision.

Continuity on transfers: transferees becoming party to loan relationship before 9 April 2003

58

(1) In determining whether Chapter 4 of Part 5 (continuity on transfers within groups or on reorganisations) applies in the case mentioned in section 336 or 337 where the transferee became party to the loan relationship before 9 April 2003, section 338 (meaning of company replacing another as party to loan relationship) applies with the following omissions.

(2) In subsection (1) omit paragraphs (b) and (c).

(3) In subsection (2) omit “or obligations”.

(4) Omit subsections (5) and (6).

(5) This paragraph must be read as if it were in Chapter 4 of Part 5.

Deeply discounted securities held before 1 October 2002

59

(1) This sub-paragraph applies if—

(a) the condition in paragraph 17(1)(c) of Schedule 9 to FA 1996 (connection between issuing company and another company) is met as respects an accounting period beginning on or after 1 October 2002 as a result of the amendments made by paragraph 33 of Schedule 25 to FA 2002, but would not have been met in an accounting period beginning before that date, and

(b) the debtor relationship in question was a debtor relationship of the issuing company (within the meaning of section 407) on the first day of the company's first accounting period beginning on or after that date.

(2) If sub-paragraph (1) applies, section 407 does not apply in relation to that debtor relationship as a result of those amendments.

(3) This sub-paragraph applies if section 409 applies in a case where—

(a) the relevant period began before 1 October 2002,

(b) as a result of paragraph 18 of Schedule 9 to FA 1996 an amount (“the deferred amount”) was not brought into account by a company for the purposes of Chapter 2 of Part 4 of that Act in respect of a debtor relationship for an accounting period beginning before that date, and

(c) the deeply discounted security concerned has not been redeemed before the beginning of the company's first accounting period to which this Act applies.

(4) If sub-paragraph (3) applies, as regards any accounting period to which this Act applies, section 409(2) applies as if paragraph 18(2) of Schedule 9 to FA 1996, instead of preventing the bringing of amounts into account for any accounting period before that in which the security was redeemed, had provided for the deferred amount to be brought into account for the accounting period in which the security was redeemed rather than for the relevant period.

(5) In this paragraph—

“deeply discounted security” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see section 430 of that Act), and

“the relevant period” has the same meaning as in section 409.

60

(1) This paragraph applies if—

(a) an authorised unit trust or open-ended investment company holds a deeply discounted security on the last day of the unit trust's or company's last accounting period beginning before 1 October 2002 (“the last old day”),

(b) the security was not transferred or redeemed on that day,

(c) there is an amount which, if the unit trust or company had made a transfer of that security on that day, by selling it for its adjusted closing value—

(i) would have been charged under paragraph 1 of Schedule 13 to FA 1996 under Case III or IV of Schedule D, or

(ii) would have been eligible for relief from tax on a claim for the purposes of paragraph 2 of Schedule 13 to FA 1996, and

(d) that amount has not fallen to be brought into account under paragraph 64(3) of Schedule 25 to FA 2002.

(2) That amount must be brought into account as a non-trading credit, or (as the case may be) a non-trading debit, for the purposes of Part 5 (loan relationships) for the relevant accounting period.

(3) The relevant accounting period is the accounting period in which falls the earliest of—

(a) the first day that falls after the last old day and is a day on which, under the terms on which the security was issued, the holder of the security is entitled to require it to be redeemed,

(b) the day on which the security is redeemed, and

(4) For the purposes of sub-paragraph (1)(c), the “adjusted closing value” of a deeply discounted security held by the unit trust or company on the last old day is the amount which for the purposes of Chapter 2 of Part 4 of FA 1996 was the opening value, as at the first day of the unit trust's or company's first accounting period beginning on or after 1 October 2002, of the unit trust's or company's rights and liabilities under the relationship represented by that security.

(5) Paragraph 5(7) of Schedule 15 to FA 1996 (determination of opening value where accruals basis of accounting is used) applies for the purposes of sub-paragraph (4) as it applies for the purposes of paragraph 5 of that Schedule, but—

(a) taking the reference to 1 April 1996 as a reference to the first day of the unit trust's or company's first accounting period beginning on or after 1 October 2002, and

(b) applying paragraph 4 of that Schedule (determination of amounts treated as accruing on or after 1 April 1996) (as it had effect immediately before 1 April 2009) for these purposes with the same modification.

(6) In this paragraph—

“creditor relationship” has the same meaning as in Part 5,

“deeply discounted security” has the same meaning as in that Chapter (see section 430 of that Act),

“open-ended investment company” has the same meaning as in section 468A of ICTA,

“redeem” means—make a disposal, within the meaning of Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities), except by a transfer within the meaning of that Chapter, orconvert as mentioned in section 437(1)(c) of that Act, and

“transfer” has the same meaning as in that Chapter.

(7) In this paragraph “the relevant period” has the same meaning as in section 409.

Restriction on bringing into account credits resulting from reversal of debits disallowed in a period of account beginning before 1 January 2005

61

(1) No credit is to be brought into account for the purposes of Part 5 in respect of the reversal of a debit that was disallowed for tax purposes in a period of account beginning before 1 January 2005—

(a) because of the assumption required by paragraph 5(1) of Schedule 9 to FA 1996, or

(b) because the exceptions in section 74(1)(j) of ICTA did not apply.

(2) This paragraph does not apply if fair value accounting is used.

Disregard of pre-2005 disallowed debits

62

(1) This paragraph applies if in a period of account of a company beginning before 1 January 2005 (“the earlier period”) a debit was disallowed for tax purposes—

(a) because of the assumption required by paragraph 5(1) of Schedule 9 to FA 1996, or

(b) because the exceptions in section 74(1)(j) of ICTA did not apply.

(2) The debit is ignored in determining the accounting value of an asset of the company at the end of the earlier period for the purposes of section 316 (change of accounting policy involving change of value).

Bringing into account losses on overseas sovereign debt etc

63

(1) This paragraph applies if at the end of the last period of account of a company before paragraph 17(1)(b) of Schedule 4 to FA 2005 (which repealed paragraph 9 of Schedule 9 to FA 1996) had effect—

(a) the company had ceased to be a party to a loan relationship, and

(b) the effect of paragraph 9 of Schedule 9 to FA 1996 (restrictions on bringing into account losses on overseas sovereign debt) (or a corresponding earlier enactment) was that part of the loss arising had not been brought into account for tax purposes.

(2) Despite the repeal by this Act of paragraph 17(3) of Schedule 4 to FA 2005, any debit that, as a result of that paragraph, immediately before its repeal could have been brought into account for the purposes of Chapter 2 of Part 4 of FA 1996 (loan relationships) under paragraph 9(4) or (5) of Schedule 9 to FA 1996 in a subsequent period of account of the company may be brought into account in such a period for the purposes of Part 5 (loan relationships).

Saving for old elections for treating loan relationships with embedded derivatives as two assets

64

(1) The repeal by this Act of paragraph 7 of Schedule 6 to F(No.2)A 2005 (loan relationships with embedded derivatives) does not affect—

(a) any election made under that paragraph immediately before the repeal takes effect, or

(b) any election which immediately before the repeal takes effect had effect as if so made as a result of sub-paragraph (8) of that paragraph (elections made under paragraph 28(3) of Schedule 4 to FA 2005).

(2) This Act applies to those elections as if they had been made under section 416 (election for application of sections 415 and 585).

Deeply discounted securities of close companies: discounts for accounting periods beginning before 1 April 2007

65

(1) This paragraph applies as regards a debtor relationship entered into in pursuance of a contract—

(a) made before 4 March 2005, and

(b) not varied after that date, or not varied until after that date.

(2) A debit is not allowed or required, as a result of the amendments made by paragraph 3(2) and (4) to (7) of Schedule 8 to F(No.2)A 2005, to be brought into account under Part 5 for an accounting period in respect of any amount of discount in respect of which a debit is so brought into account for any earlier accounting period.

(3) In sub-paragraph (2) “earlier accounting period” means an accounting period that began before—

(a) 1 April 2007, or

(b) if the contract mentioned in sub-paragraph (1) was varied before that date, the date of variation.

(4) The references in this paragraph to the variation of a contract do not include references to a variation that does not affect the terms of the debtor relationship in question.

Repo, stock lending and other transactions before 1 October 2007: disapplication of section 332

66

Section 332 (repo, stock lending and other transactions) does not apply in relation to cases where there is—

(a) an arrangement to which Chapter 10 of Part 6 would apply if the arrangement had not come into force before 1 October 2007,

(b) a stock lending arrangement (within the meaning of section 263B(1) of TCGA 1992), which came into force before that date and under which the lender transfers securities to the borrower otherwise than by way of sale, or

Avoidance relying on continuity of treatment provisions: transactions before 16 May 2008

67

Section 347 (disapplication of Chapter 4 of Part 5 where transferor party to avoidance) does not have effect in relation to transactions taking place, or a series of transactions of which the first takes place, before 16 May 2008.

Disposals for consideration not fully recognised by accounting practice: disposals before 16 May 2008

68

Section 455 (disposals for consideration not fully recognised by accounting practice) does not have effect in relation to disposals before 16 May 2008.

5½% Treasury Stock 2008-2012 not redeemed before 6 April 2009

69

(1) This paragraph applies if any loan relationship of a company—

(a) is represented by any 5½% Treasury Stock 2008-2012, and

(b) is one to which the company is a party otherwise than in the course of activities that form an integral part of a trade it carries on.

(2) No amounts fall to be brought into account for the purposes of Part 5 in respect of the loan relationship unless they relate to interest.

References to Companies Act 2006

70

Until section 658 of the Companies Act 2006 (c. 46) (rule against limited company acquiring own shares) comes into force, references to that section in sections 421(4)(g)(ii) and 431(7)(b) have effect as if they were references to section 143 of the Companies Act 1985 (c. 6).

Prospective repeal of provisions concerning exchange gains and losses from loan relationships

71

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

Part 9 — Relationships treated as loan relationships

Relevant non-lending relationships: discounts accruing and profits arising before 16 March 2005

72

(1) None of the following is to be brought into account for the purposes of Part 5 as a result of any of the provisions specified in sub-paragraph (2) or any reference to that provision in any other provision—

(a) credits in respect of a discount arising from a money debt, so far as the discount accrued before 16 March 2005,

(b) credits in respect of profits arising as mentioned in 481(3)(c) or (5)(c) where the related transaction took place before that date,

(c) debits in respect of any impairment arising in respect of a discount arising from a money debt, so far as the discount accrued before that date,

(d) credits in respect of any reversal of any such impairment, so far as the discount accrued before that date.

(2) The provisions are—

(a) section 480 (relevant non-lending relationships involving discounts),

(b) section 481(3)(c) and (5) to (8) (application of Part 5 to relevant non-lending loan relationships), and

(3) This paragraph is to be read as if it were in Chapter 2 of Part 6.

Alternative finance arrangements entered into before 6 April 2005

73

(1) Chapter 6 of Part 6 (alternative finance arrangements) does not apply to purchase and resale arrangements entered into before 6 April 2005.

(1A) That Chapter only applies to deposit arrangements entered into before that date (“pre-6 April 2005 arrangements”) if they are relevant deposit arrangements and then only so far as provided by this paragraph.

(2) In this paragraph “relevant deposit arrangements” means deposit arrangements under which alternative finance return is payable on or after 6 April 2005.

(3) For the purposes of Part 5 (loan relationships) the loan that is treated under section 509 (application of Part 5: general) as made by or to a company that is party to the pre-6 April 2005 arrangements is a loan made on 6 April 2005 of an amount equal to the notional carrying value of the asset or liability representing the arrangements.

(4) For the purposes of sub-paragraph (3) that notional carrying value is the amount that would have been the carrying value of the asset or liability in the accounts of the company (prepared in accordance with generally accepted accounting practice) if a period of account had ended immediately before 6 April 2005.

74

(1) Chapter 6 of Part 6 (alternative finance arrangements) does not apply to diminishing shared ownership arrangements entered into before 1 April 2006.

(1A) That Chapter only applies to profit share agency arrangements entered into before that date (“pre-1 April 2006 arrangements”) if they are relevant profit share agency arrangements and then only so far as provided by this paragraph.

(2) In this paragraph “relevant profit share agency arrangements” means profit share agency arrangements under which alternative finance return is payable on or after 1 April 2006.

(3) For the purposes of Part 5 (loan relationships) the loan that is treated under section 509 (application of Part 5: general) as made by or to a company that is party to the pre-1 April 2006 arrangements is a loan made on 1 April 2006 of an amount equal to the notional carrying value of the asset or liability representing the arrangements.

(4) For the purposes of sub-paragraph (3) that notional carrying value is the amount that would have been the carrying value of the asset or liability in the accounts of the company (prepared in accordance with generally accepted accounting practice) if a period of account had ended immediately before 1 April 2006.

Investment bond arrangements entered into before 1 April 2007

75

(1) Chapter 6 of Part 6 (alternative finance arrangements) only applies to investment bond arrangements entered into before 1 April 2007 (“pre-1 April 2007 arrangements”) if they are relevant investment bond arrangements and then only so far as provided by this paragraph.

(2) In this paragraph “relevant investment bond arrangements” means investment bond arrangements under which alternative finance return is payable on or after 1 April 2007.

(3) For the purposes of Part 5 (loan relationships) the loan that is treated under section 509 (application of Part 5: general) as made by or to a company that is party to the pre-1 April 2007 arrangements is a loan made on 1 April 2007 of an amount equal to the notional carrying value of the asset or liability representing the arrangements.

(4) For the purposes of sub-paragraph (3) that notional carrying value is the amount that would have been the carrying value of the asset or liability in the accounts of the company (prepared in accordance with generally accepted accounting practice) if a period of account had ended immediately before 1 April 2007.

(5) So far as section 519(2) has effect for income tax or capital gains tax purposes in relation to the disposal after 6 April 2007 of investment bond arrangements (whenever entered into), it is treated as always having had effect.

Shares with guaranteed returns: redeemable shares where public issue before 22 March 2006

76

In relation to any case where the public issue (within the meaning of section 530(4) and (5)) is before 22 March 2006 for “7 days” in subsections (4)(b) and (5)(a) of section 530 (the redemption return condition: excepted shares) substitute “ 24 hours ”.

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