Finance Act 2013

(1217A) (1) This Part is about video games development. (2) Sections 1217AA to 1217AF contain definitions and other provisions about interpretation that apply for the purposes of this Part. See, in particular— (a) section 1217AA, which contains provision about the meaning of “video game”, and (b) section 1217AB, which explains how a company comes to be treated as the video games development company in relation to a video game. (3) Chapter 2 is about the taxation of the activities of a video games development company and includes— (a) provision for the company's activities in relation to its video game to be treated as a separate trade, and (b) provision about the calculation of the profits and losses of that trade. (4) Chapter 3 is about relief (called “video games tax relief”) which can be given to a video games development company— (a) by way of additional deductions to be made in calculating the profits or losses of the company's separate trade, or (b) by way of a payment (a “video game tax credit”) to be made on the company's surrender of losses from that trade. (5) Chapter 4 is about the relief which can be given for losses made by a video games development company in its separate trade, including provision for certain such losses to be transferred to other separate trades. (6) Chapter 5 provides— (a) for relief under Chapters 3 and 4 to be given on a provisional basis, and (b) for such relief to be withdrawn if it turns out that conditions that must be met for such relief to be given are not actually met. (1217AA) (1) This section applies for the purposes of this Part. (2) “Video game” does not include— (a) anything produced for advertising or promotional purposes, or (b) anything produced for the purposes of gambling (within the meaning of the Gambling Act 2005). (3) References to a video game include the game's soundtrack. (4) A video game is completed when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and made available to the general public. (1217AB) (1) For the purposes of this Part “video games development company” is to be read in accordance with this section. (2) There cannot be more than one video games development company in relation to a video game. (3) A company is the video games development company in relation to a video game if the company (otherwise than in partnership)— (a) is responsible for designing, producing and testing the video game, (b) is actively engaged in planning and decision-making during the design, production and testing of the video game, and (c) directly negotiates, contracts and pays for rights, goods and services in relation to the video game. (4) If there is more than one company meeting the description in subsection (3), the company that is most directly engaged in the activities referred to in that subsection is the video games development company in relation to the video game. (5) If there is no company meeting the description in subsection (3), there is no video games development company in relation to the video game. (6) A company may elect to be regarded as a company which does not meet the description in subsection (3). (7) The election— (a) must be made by the company by being included in its company tax return for an accounting period (and may be included in the return originally made or by amendment), and (b) may be withdrawn by the company only by amending its company tax return for that accounting period. (8) The election has effect in relation to video games which begin to be produced in that or any subsequent accounting period. (1217AC) (1) In this Part “video game development activities”, in relation to a video game, means the activities involved in designing, producing and testing the video game. (2) The Treasury may by regulations— (a) amend subsection (1), (b) provide that specified activities are or are not to be regarded as video game development activities or as video game development activities of a particular description, and (c) provide that, in relation to a specified description of video game, references to video game development activities of a particular description are to be read as references to such activities as may be specified. “Specified” means specified in the regulations. (1217AD) (1) In this Part “core expenditure”, in relation to a video game, means expenditure on designing, producing and testing the video game. (2) But the following descriptions of expenditure are not to be regarded as core expenditure for the purposes of this Part— (a) any expenditure incurred in designing the initial concept for a video game; (b) any expenditure incurred in debugging a completed video game or carrying out any maintenance in connection with such a video game. (1217AE) (1) In this Part “UK expenditure”, in relation to a video game, means expenditure on goods or services that are used or consumed in the United Kingdom. (2) Any apportionment of expenditure as between UK expenditure and non-UK expenditure for the purposes of this Part is to be made on a just and reasonable basis. (3) The Treasury may by regulations amend subsection (1). (1217AF) In this Part “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1)). (1217B) (1) This Chapter applies for corporation tax purposes to a company that is the video games development company in relation to a video game. (2) The company's activities in relation to the video game are treated as a trade separate from any other activities of the company (including any activities in relation to any other video game). (3) In this Chapter the separate trade is called “the separate video game trade”. (4) The company is treated as beginning to carry on the separate video game trade— (a) when the design of the video game begins, or (b) if earlier, when any income from the video game is received by the company. (1217BA) (1) This section applies for the purpose of calculating the profits or losses of the separate video game trade. (2) For the first period of account the following are brought into account— (a) as a debit, the costs of the video game incurred (and represented in work done) to date, and (b) as a credit, the proportion of the estimated total income from the video game treated as earned at the end of that period. (3) For subsequent periods of account the following are brought into account— (a) as a debit, the difference between the amount of the costs of the video game incurred (and represented in work done) to date and the corresponding amount for the previous period, and (b) as a credit, the difference between the proportion of the estimated total income from the video game treated as earned at the end of that period and the corresponding amount for the previous period. (4) The proportion of the estimated total income treated as earned at the end of a period of account is given by— $$C T × I$where—C is the total to date of costs incurred (and represented in work done),T is the estimated total cost of the video game, andI is the estimated total income from the video game.$ (1217BB) (1) References in this Chapter to income from the video game are to any receipts by the company in connection with the production or exploitation of the video game. (2) This includes— (a) receipts from the sale of the video game or rights in it, (b) royalties or other payments for use of the video game or aspects of it (for example, characters or music), (c) payments for rights to produce games or other merchandise, and (d) receipts by the company by way of a profit share agreement. (3) Receipts that (apart from this subsection) would be regarded as of a capital nature are treated as being of a revenue nature. (1217BC) (1) References in this Chapter to the costs of the video game are to expenditure incurred by the company on— (a) video game development activities in connection with the video game, or (b) activities with a view to exploiting the video game. (2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade. (3) Expenditure that (apart from this subsection) would be regarded as of a capital nature by reason only of being incurred on the creation of an asset (the video game) is treated as being of a revenue nature. (1217BD) (1) For the purposes of this Chapter costs are incurred when they are represented in the state of completion of the work in progress. (2) Accordingly— (a) payments in advance for work to be done are ignored until the work has been carried out, and (b) deferred payments are recognised to the extent that the work is represented in the state of completion. (3) The costs incurred on the video game are taken to include an amount that has not been paid only if it is the subject of an unconditional obligation to pay. (4) If an obligation is linked to income being earned from the video game, no amount is to be brought into account in respect of the costs of the obligation unless an appropriate amount of income is or has been brought into account. (1217BE) Estimates for the purposes of this Chapter must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances. (1217C) (1) This Chapter applies for corporation tax purposes to a company that is the video games development company in relation to a video game. (2) Relief under this Chapter (“video games tax relief”) is available to the company if the conditions specified in the following sections are met in relation to the video game— (a) section 1217CA (intended for supply), (b) section 1217CB (British video game), and (c) section 1217CE (UK expenditure). (3) Video games tax relief is given by way of— (a) additional deductions (see sections 1217CF and 1217CG), and (b) video game tax credits (see sections 1217CH to 1217CJ). (4) But video games tax relief is not available in respect of any expenditure if— (a) the company is entitled to an R&D expenditure credit under Chapter 6A of Part 3 in respect of the expenditure, or (b) the company has obtained relief under Part 13 (additional relief for expenditure on research and development) in respect of the expenditure. (5) Sections 1217CK to 1217CN contain provision about unpaid costs, artificially inflated claims and confidentiality of information. (6) In this Chapter “the separate video game trade” means the company's separate trade in relation to the video game (see section 1217B). (7) See Schedule 18 to FA 1998 (in particular, Part 9D) for information about the procedure for making claims for video games tax relief. (1217CA) (1) The video game must be intended for supply to the general public. (2) Whether this condition is met is determined when video game production activities begin, so that— (a) where a video game is originally intended for supply, this condition continues to be met even if that ceases to be the intention, and (b) where a video game is not originally intended for supply, this condition is not met even if that becomes the intention. (1217CB) (1) The video game must be certified by the Secretary of State as a British video game. (2) The Secretary of State, with the approval of the Treasury, may by regulations specify conditions which must be met by a video game before it may be certified as a British video game. These conditions are known as the “cultural test”. (3) Regulations under subsection (2) may— (a) specify different conditions in relation to different descriptions of video game, (b) provide that specified descriptions of video game may not be certified as a British video game, and (c) enable the Secretary of State to direct that any provision made by virtue of paragraph (b) does not apply to a video game that meets specified conditions. “Specified” means specified in the regulations. (4) Regulations under subsection (2) are to be made by statutory instrument. (5) A statutory instrument containing regulations under subsection (2) is subject to annulment in pursuance of a resolution of the House of Commons. (6) Sections 1217CC and 1217CD contain further provision about certification of video games as British video games, including provision about applications for, and withdrawal of, certification. (1217CC) (1) An application for certification of a video game as a British video game is to be made to the Secretary of State by the video games development company. (2) The application may be for an interim or final certificate. (3) An interim certificate is a certificate that— (a) is granted before the video game is completed, and (b) states that the video game, if completed in accordance with the proposals set out in the application, will be a British video game. (4) A final certificate is a certificate that— (a) is granted after the video game is completed, and (b) states that the video game is a British video game. (5) The applicant must provide the Secretary of State with any documents or information which the Secretary of State requires in order to determine the application. (6) The Secretary of State may require information provided for the purposes of the application to be accompanied by a statutory declaration, made by the person providing it, as to the truth of the information. (7) The Secretary of State may by regulations make provision supplementing this section, including— (a) provision about the form of applications, (b) provision about the particulars and evidence necessary for satisfying the Secretary of State that a video game meets the cultural test, and (c) provision that any statutory declaration which is required by subsection (6) to be made by any person may be made on the person's behalf by such person as is specified in the regulations. (8) Regulations under subsection (7) are to be made by statutory instrument. (9) A statutory instrument containing regulations under subsection (7) is subject to annulment in pursuance of a resolution of the House of Commons. (1217CD) (1) If the Secretary of State is satisfied that the requirements are met for interim or final certification of a video game as a British video game, the Secretary of State must certify the video game accordingly. (2) If the Secretary of State is not satisfied that those requirements are met, the Secretary of State must refuse the application. (3) An interim certificate— (a) may be given subject to conditions, and (unless the Secretary of State directs otherwise) is of no effect if the conditions are not met, and (b) may be expressed to expire after a specified period, and (unless the Secretary of State directs otherwise) ceases to have effect at the end of that period. (4) An interim certificate ceases to have effect when a final certificate is issued. (5) If it appears to the Secretary of State that a video game certified under this Part ought not to have been certified, the Secretary of State may revoke its certification. (6) Unless the Secretary of State directs otherwise, a certificate that is revoked is treated as never having had effect. (1217CE) (1) At least 25% of the core expenditure on the video game incurred by the company must be UK expenditure. (2) The Treasury may by regulations amend the percentage specified in subsection (1). (1217CF) (1) If video games tax relief is available to the company, it may (on making a claim) make an additional deduction in respect of qualifying expenditure on the video game. (2) The deduction is made in calculating the profit or loss of the separate video game trade. (3) In this Chapter “qualifying expenditure” means core expenditure on the video game that falls to be taken into account under Chapter 2 in calculating the profit or loss of the separate video game trade for tax purposes. (4) The Treasury may by regulations— (a) amend subsection (3), and (b) provide that expenditure of a specified description is or is not to be regarded as qualifying expenditure. (1217CG) (1) For the first period of account during which the separate video game trade is carried on, the amount of the additional deduction is— $$E$where E is—so much of the qualifying expenditure as is UK expenditure, orif less, 80% of the total amount of qualifying expenditure.$ (2) For any period of account after the first, the amount of the additional deduction is given by— $$E − P$where—E is—so much of the qualifying expenditure incurred to date as is UK expenditure, orif less, 80% of the total amount of qualifying expenditure incurred to date, andP is the total amount of the additional deductions given for previous periods.$ (3) The Treasury may by regulations amend this section. (1217CH) (1) If video games tax relief is available to the company, it may claim a video game tax credit for an accounting period in which it has a surrenderable loss. (2) The company's surrenderable loss in an accounting period is— (a) the company's available loss for the period in the separate video game trade (see subsection (3)), or (b) if less, the available qualifying expenditure for the period (see subsections (5) and (6)). (3) The company's available loss for an accounting period is given by— $$L + RUL$where—L is the amount of the company's loss for the period in the separate video game trade, andRUL is the amount of any relevant unused loss of the company (see subsection (4)).$ (4) The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been— (a) surrendered under section 1217CI(1), or (b) carried forward under section 45 of CTA 2010 and set against profits of the separate video game trade. (5) For the first period of account during which the separate video game trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1217CG(1). (6) For any period of account after the first, the available qualifying expenditure is given by— $$E − S$where—E is the amount that is E for that period for the purposes of section 1217CG(2), andS is the total amount previously surrendered under section 1217CI(1).$ (7) If a period of account of the separate video game trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned. (1217CI) (1) The company may surrender the whole or part of its surrenderable loss in an accounting period. (2) If the company surrenders the whole or part of that loss, the amount of the video game tax credit to which it is entitled for the accounting period is 25% of the amount of the loss surrendered. (3) The company's available loss for the accounting period is reduced by the amount surrendered. (1217CJ) (1) If the company— (a) is entitled to a video game tax credit for a period, and (b) makes a claim, the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) must pay to the company the amount of the credit. (2) An amount payable in respect of— (a) a video game tax credit, or (b) interest on a video game tax credit under section 826 of ICTA, may be applied in discharging any liability of the company to pay corporation tax. To the extent that it is so applied the Commissioners' liability under subsection (1) is discharged. (3) If the company's company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of a video game tax credit for that period need be made before the Commissioners' enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998). In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate. (4) No payment need be made in respect of a video game tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period— (a) under PAYE regulations, (b) under section 966 of ITA 2007 (visiting performers), or (c) in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992. (5) A payment in respect of a video game tax credit is not income of the company for any tax purpose. (1217CK) (1) In determining for the purposes of this Chapter the amount of costs incurred on a video game at the end of a period of account, ignore any amount that has not been paid 4 months after the end of that period. (2) This is without prejudice to the operation of section 1217BD (when costs are taken to be incurred). (1217CL) (1) So far as a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it is to be ignored in determining for any period— (a) any additional deduction which a company may make under this Chapter, and (b) any video game tax credit to be given to a company. (2) Arrangements are entered into wholly or mainly for a disqualifying purpose if their main object, or one of their main objects, is to enable a company to obtain— (a) an additional deduction under this Chapter to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled, or (b) a video game tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled. (3) “Arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable. (1217CM) (1) Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (restriction on disclosure by Revenue and Customs officials) does not prevent disclosure to the Secretary of State for the purposes of the Secretary of State's functions under any of the provisions listed in subsection (2). (2) The provisions referred to in subsection (1) are— (a) sections 1216CB to 1216CD (certification of relevant programmes as British), (b) sections 1217CB to 1217CD (certification of video games as British), and (c) Schedule 1 to the Films Act 1985 (certification of films as British). (3) Information so disclosed may be disclosed to the British Film Institute. (4) The Treasury may by order amend subsection (3)— (a) so as to substitute for the person or body specified in that subsection a different person or body, or (b) in consequence of a change in the name of the person or body so specified. (5) A person to whom information is disclosed under subsection (1) or (3) may not otherwise disclose it except— (a) for the purposes of the Secretary of State's functions under any of the provisions listed in subsection (2), (b) if the disclosure is authorised by an enactment, (c) in pursuance of an order of a court, (d) for the purposes of a criminal investigation or legal proceedings (whether civil or criminal) connected with the operation of any of Parts 15 to 15B of this Act or Schedule 1 to the Films Act 1985, (e) with the consent of the Commissioners for Her Majesty's Revenue and Customs, or (f) with the consent of each person to whom the information relates. (1217CN) (1) A person (“X”) commits an offence if— (a) X discloses revenue and customs information relating to a person (as defined in section 19(2) of the Commissioners for Revenue and Customs Act 2005), (b) the identity of the person to whom the information relates is specified in the disclosure or can be deduced from it, and (c) the disclosure contravenes section 1217CM(5). (2) If a person (“Y”) is charged with an offence under subsection (1), it is a defence for Y to prove that Y reasonably believed— (a) that the disclosure was lawful, or (b) that the information had already and lawfully been made available to the public. (3) A person guilty of an offence under subsection (1) is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both, or (b) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum or both. (4) A prosecution for an offence under subsection (1) may be brought in England and Wales only— (a) by the Director of Revenue and Customs Prosecutions, or (b) with the consent of the Director of Public Prosecutions. (5) A prosecution for an offence under subsection (1) may be brought in Northern Ireland only— (a) by the Commissioners for Her Majesty's Revenue and Customs, or (b) with the consent of the Director of Public Prosecutions for Northern Ireland. (6) In the application of this section— (a) in England and Wales, in relation to an offence committed before the commencement of section 282 of the Criminal Justice Act 2003, or (b) in Northern Ireland, the reference in subsection (3)(b) to 12 months is to be read as a reference to 6 months. (1217D) (1) Sections 1217DA and 1217DB apply to a company that is the video games development company in relation to a video game. (2) In those sections— - “the completion period” means the accounting period of the company— 1. in which the video game is completed, or 2. if the company does not complete the video game, in which it abandons video game development activities in relation to the video game, - “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which the company, or any other person, is chargeable to tax, - “pre-completion period” means an accounting period of the company before the completion period, and - “the separate video game trade” means the company's separate trade in relation to the video game (see section 1217B). (1217DA) (1) This section applies if in a pre-completion period a loss is made in the separate video game trade. (2) The loss is not available for loss relief except to the extent that it may be carried forward under section 45 of CTA 2010 to be set against profits of the separate video game trade in a subsequent period. (1217DB) (1) This section applies to the following accounting periods of the company (“relevant later periods”)— (a) the completion period, and (b) any subsequent accounting period during which the separate video game trade continues. (2) Subsection (3) applies if a loss made in the separate video game trade is carried forward under section 45 of CTA 2010 from a pre-completion period to a relevant later period. (3) So much (if any) of the loss as is not attributable to video games tax relief (see subsection (6)) may be treated for the purposes of loss relief as if it were a loss made in the period to which it is carried forward. (4) Subsection (5) applies if in a relevant later period a loss is made in the separate video game trade. (5) The amount of the loss that may be— (a) deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or (b) surrendered as group relief under Part 5 of that Act, is restricted to the amount (if any) that is not attributable to video games tax relief (see subsection (6)). (6) The amount of a loss in any period that is attributable to video games tax relief is calculated by deducting from the total amount of the loss the amount there would have been if there had been no additional deduction under Chapter 3 in that or any earlier period. (7) This section does not apply to a loss to the extent that it is carried forward or surrendered under section 1217DC. (1217DC) (1) This section applies if— (a) a company (“company A”) is the video games development company in relation to a qualifying video game, (b) company A ceases to carry on its separate trade in relation to that video game (“trade X”) (see section 1217B), and (c) if company A had not ceased to carry on trade X, it could have carried forward an amount under section 45 of CTA 2010 to be set against profits of trade X in a later period (“the terminal loss”). (2) If on cessation of trade X company A— (a) is the video games development company in relation to another qualifying video game, and (b) is carrying on its separate trade in relation to that video game (“trade Y”), it may (on making a claim) make an election under subsection (3). (3) The election is to have the terminal loss (or a part of it) treated as if it were a loss brought forward under section 45 of CTA 2010 to be set against the profits of trade Y in the first accounting period beginning after the cessation and so on. (4) Subsection (5) applies if on cessation of trade X— (a) there is another company (“company B”) that is the video games development company in relation to a qualifying video game, (b) company B is carrying on its separate trade in relation to that video game (“trade Z”), and (c) company B is in the same group as company A for the purposes of Part 5 of CTA 2010 (group relief). (5) Company A may surrender the terminal loss (or a part of it) to company B. (6) On the making of a claim by company B the amount surrendered is treated as if it were a loss brought forward by company B under section 45 of CTA 2010 to be set against the profits of trade Z of the first accounting period of that company beginning after the cessation and so on. (7) The Treasury may, in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6), make provision by regulations corresponding, subject to such adaptations or other modifications as appear to them to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief). (8) “Qualifying video game” means a video game in relation to which the conditions for video games tax relief are met (see 1217C(2)). (1217E) (1) In this Chapter— - “the company” means the video games development company in relation to a video game, - “the completion period” means the accounting period of the company— 1. in which the video game is completed, or 2. if the company does not complete the video game, in which it abandons video game development activities in relation to it, - “interim accounting period” means any earlier accounting period of the company during which video game development activities are carried on in relation to the video game, - “interim certificate” and “final certificate” have the meaning given by section 1217CC, - “the separate video game trade” means the company's separate trade in relation to the video game (see section 1217B), and - “special video games relief” means— 1. video games tax relief, or 2. relief under section 1217DC (transfer of terminal losses from one video game to another). (2) The company's company tax return for the completion period must state that the video game has been completed or that the company has abandoned video game development activities in relation to it (as the case may be). (1217EA) (1) The company is not entitled to special video games relief for an interim accounting period unless its company tax return for the period is accompanied by an interim certificate. (2) If an interim certificate ceases to be in force (otherwise than on being superseded by a final certificate) or is revoked, the company— (a) is not entitled to special video games relief for any period for which its entitlement depended on the certificate, and (b) must amend accordingly its company tax return for any such period. (3) If the video game is completed by the company— (a) its company tax return for the completion period must be accompanied by a final certificate, (b) if that requirement is met, the final certificate has effect for the completion period and for any interim accounting period, and (c) if that requirement is not met, the company— (i) is not entitled to special video games relief for any period, and (ii) must amend accordingly its company tax return for any period for which such relief was claimed. (4) If the company abandons video game development activities in relation to the video game— (a) its company tax return for the completion period may be accompanied by an interim certificate, and (b) the abandonment of video game development activities does not affect any entitlement to special video games relief in that or any previous accounting period. (5) If a final certificate is revoked, the company— (a) is not entitled to special video games relief for any period, and (b) must amend accordingly its company tax return for any period for which such relief was claimed. (1217EB) (1) The company is not entitled to special video games relief for an interim accounting period unless— (a) its company tax return for the period states the amount of planned core expenditure on the video game that is UK expenditure, and (b) that amount is such as to indicate that the condition in section 1217CE (the UK expenditure condition) will be met on completion of the video game. If those requirements are met, the company is provisionally treated in relation to that period as if that condition was met. (2) If such a statement is made but it subsequently appears that the condition will not be met on completion of the video game, the company— (a) is not entitled to special video games relief for any period for which its entitlement depended on such a statement, and (b) must amend accordingly its company tax return for any such period. (3) When the video game is completed or the company abandons video game development activities in relation to it (as the case may be), the company's company tax return for the completion period must be accompanied by a final statement of the amount of core expenditure on the video game that is UK expenditure. (4) If that statement shows that the condition in section 1217CE is not met, the company— (a) is not entitled to special video games relief for any period, and (b) must amend accordingly its company tax return for any period for which such relief was claimed. (1217EC) Any amendment or assessment necessary to give effect to the provisions of this Chapter may be made despite any limitation on the time within which an amendment or assessment may normally be made.

PART 2 — Commencement

2

• (1) Any power conferred on the Secretary of State or the Treasury by virtue of this Schedule to make regulations or an order comes into force on the day on which this Act is passed.

• (2) So far as not already brought into force by sub-paragraph (1), the amendments made by this Schedule come into force in accordance with provision contained in an order made by the Treasury.

• (3) An order under sub-paragraph (2)—

• (a) may make different provision for different purposes;

• (b) may provide for those amendments to be treated as having come into force on a day earlier than the day on which the order is made or this Act is passed;

• (c) may make such adaptations of Part 15B of CTA 2009 as appear to be necessary or expedient in consequence of other provisions of this Act not yet having come into force.

3

• (1) The amendments made by this Schedule have effect in relation to accounting periods beginning on or after the day specified for the purposes of this paragraph in an order made by the Treasury (“the specified day”).

• (2) An order under sub-paragraph (1) may specify a day earlier than the day on which the order is made or this Act is passed.

• (3) Sub-paragraph (4) applies where a company has an accounting period beginning before the specified day and ending on or after that day (“the straddling period”).

• (4) For the purposes of Part 15B of CTA 2009—

• (a) so much of the straddling period as falls before the specified day, and so much of that period as falls on or after that day, are treated as separate accounting periods, and

• (b) any amounts brought into account for the purposes of calculating for corporation tax purposes the profits of any trade of the company for the straddling period are apportioned to the two separate accounting periods on such basis as is just and reasonable.

4

• (1) The Treasury may by order make such amendments of this Schedule as are necessary for the purpose of complying with any undertakings given to the European Commission, or any conditions imposed by the Commission, in connection with an application for State aid approval.

• (2) In this paragraph “State aid approval” means approval that the provision made by Part 15B of CTA 2009, to the extent that it constitutes the granting of aid to which any of the provisions of Article 107 or 108 of the Treaty on the Functioning of the European Union applies, is, or would be, compatible with the internal market, within the meaning of Article 107 of that Treaty.

• (3) An order under this paragraph may—

• (a) make incidental, supplemental, consequential, transitional or saving provision, including provision amending Schedule 18;

• (b) contain provision having effect in relation to times before the order is made or this Act is passed.

• (4) A statutory instrument that contains (whether alone or with other provisions) an order under this paragraph may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

SCHEDULE 18

ICTA

1

• (1) Section 826 of ICTA (interest on tax overpaid) is amended as follows.

• (2) In subsection (1), after paragraph (f) insert—

(fa) a payment of television tax credit falls to be made to a company; or (fb) a payment of video game tax credit falls to be made to a company; or

.

• (3) In subsection (3C), after “film tax credit” insert “ , television tax credit or video game tax credit ”.

• (4) In subsection (8A)(b)(ii), after “film tax credit” insert “ or television tax credit or video game tax credit ”.

• (5) In subsection (8BA), after “film tax credit” (in both places) insert “ or television tax credit or video game tax credit ”.

FA 1998

2

Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

3

• (1) Paragraph 10 (other claims and elections to be included in return) is amended as follows.

• (2) In sub-paragraph (4), for “film tax relief” substitute “ tax relief under Part 15, 15A or 15B of the Corporation Tax Act 2009 ”.

• (3) After sub-paragraph (5) insert—

(6) An election under section 1216AE(7) of the Corporation Tax Act 2009 (election not to be a television production company) can only be made by being included in a company tax return (see section 1216AE(8)(a) of that Act). (7) An election under section 1217AB(6) of the Corporation Tax Act 2009 (election not to be a video games development company) can only be made by being included in a company tax return (see section 1217AB(7)(a) of that Act).

4

• (1) Paragraph 52 (recovery of excessive overpayments etc) is amended as follows.

• (2) In sub-paragraph (2), after paragraph (bd) insert—

(be) television tax credit under Part 15A of that Act, (bf) video game tax credit under Part 15B of that Act,

.

• (3) In sub-paragraph (5)—

• (a) after paragraph (af) insert—

(ag) an amount of television tax credit paid to a company for an accounting period, (ah) an amount of video game tax credit paid to a company for an accounting period,

;

• (b) after “(ae)” insert “ , (ag), (ah) ”.

5

• (1) Part 9D (claims for film tax relief) is amended as follows.

• (2) In paragraph 83S (introduction), for “film tax relief” substitute

the following reliefs— (a) film tax relief, (b) television tax relief, (c) video games tax relief.

• (3) The heading of that Part becomes “ Claims for tax relief under Part 15, 15A or 15B of the Corporation Tax Act 2009 ”.

CAA 2001

6

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

FA 2007

7

In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (meaning of “corporation tax credit”), omit the “or” at the end of sub-paragraph (iv) and after that sub-paragraph insert—

(iva) a television tax credit under Chapter 3 of Part 15A of that Act, (ivb) a video game tax credit under Chapter 3 of Part 15B of that Act, or

.

CTA 2009

8

In Chapter 6A of Part 3 of CTA 2009 (trade profits: R&D expenditure credits), after section 104B insert—

(104BA) (1) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15 (film tax relief), see section 1195(3A). (2) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15A (television tax relief), see section 1216C(4). (3) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15B (video games tax relief), see section 1217C(4).

9

In Part 8 of CTA 2009 (intangible fixed assets), in Chapter 10 (excluded assets), after section 808 insert—

(808A) (1) This Part does not apply to an intangible fixed asset held by a television production company so far as it represents production expenditure on a television programme to which Chapter 2 of Part 15A (taxation of activities of television production company) applies. (2) In this section— (a) “television programme” has the same meaning as in Part 15A (see section 1216AA), (b) “television production company” has the same meaning as in that Part (see section 1216AE), and (c) “production expenditure” has the same meaning as in that Part (see section 1216AG(2)). (808B) (1) This Part does not apply to an intangible fixed asset held by a video games development company so far as it represents core expenditure on a video game to which Chapter 2 of Part 15B (taxation of activities of video games development company) applies. (2) In this section— (a) “video game” has the same meaning as in Part 15B (see section 1217AA), (b) “video games development company” has the same meaning as in that Part (see section 1217AB), and (c) “core expenditure” has the same meaning as in that Part (see section 1217AD).

10

In Part 13 of CTA 2009 (additional relief for expenditure on research and development), after section 1040 insert—

(1040ZA) (1) For provision prohibiting relief being given under this Part and under Chapter 3 of Part 15 (film tax relief), see section 1195(3A). (2) For provision prohibiting relief being given under this Part and under Chapter 3 of Part 15A (television tax relief), see section 1216C(4). (3) For provision prohibiting relief being given under this Part and under Chapter 3 of Part 15B (video games tax relief), see section 1217C(4).

11

Part 15 of CTA 2009 (film tax relief) is amended as follows.

12

In section 1195 (availability and overview of film tax relief), after subsection (3) insert—

(3A) But film tax relief is not available in respect of any expenditure if— (a) the company is entitled to an R&D expenditure credit under Chapter 6A of Part 3 in respect of the expenditure, or (b) the company has obtained relief under Part 13 (additional relief for expenditure on research and development) in respect of the expenditure.

13

• (1) Section 1206 (confidentiality of information) is amended as follows.

• (2) In subsection (1), for the words from “Schedule 1” to the end substitute “ any of the provisions listed in subsection (1A) ”.

• (3) After subsection (1) insert—

(1A) The provisions referred to in subsection (1) are— (a) sections 1216CB to 1216CD (certification of relevant programmes as British), (b) sections 1217CB to 1217CD (certification of video games as British), and (c) Schedule 1 to the Films Act 1985 (certification of films as British).

• (4) In subsection (2), for “UK Film Council” substitute “ British Film Institute ”.

• (5) After that subsection insert—

(2A) The Treasury may by order amend subsection (2)— (a) so as to substitute for the person or body specified in that subsection a different person or body, or (b) in consequence of a change in the name of the person or body so specified.

• (6) In subsection (3)—

• (a) in paragraph (a), for the words from “Schedule 1” to the end substitute “ any of the provisions listed in subsection (1A) ”;

• (b) in paragraph (d), for “that Schedule or this Part” substitute “ any of Parts 15 to 15B of this Act or Schedule 1 to the Films Act 1985 ”.

14

• (1) In section 1310 of CTA 2009 (orders and regulations), subsection (4) is amended as follows.

• (2) Omit the “or” at the end of paragraph (e) and after that paragraph insert—

(ea) section 1216AF(3) (meaning of “television production activities” etc), (eb) section 1216AH(3) (meaning of “UK expenditure” etc), (ec) section 1216CE(2) (UK expenditure), (ed) section 1216CF(4) (additional deduction for qualifying expenditure), (ee) section 1216CG(3) (amount of additional deduction), (ef) section 1217AC(2) (meaning of “video games development activities” etc), (eg) section 1217AE(3) (meaning of “UK expenditure” etc), (eh) section 1217CE(2) (UK expenditure), (ei) section 1217CF(4) (additional deduction for qualifying expenditure), (ej) section 1217CG(3) (amount of additional deduction),

.

15

• (1) Schedule 4 to CTA 2009 (index of defined expressions) is amended as follows.

• (2) At the appropriate place insert—

the company (in Chapter 5 of Part 15A)	section 1216E(1)

;

company tax return (in Part 15A)	section 1216AJ

;

the completion period (in Chapter 5 of Part 15A)	section 1216E(1)

;

co-producer (in Part 15A)	section 1216AI

;

core expenditure (in Part 15A)	section 1216AG(3)

;

costs of the relevant programme (in Chapter 2 of Part 15A)	section 1216BC

;

final certificate (in Chapter 5 of Part 15A)	section 1216CC

;

income from the relevant programme (in Chapter 2 of Part 15A)	section 1216BB

;

interim accounting period (in Chapter 5 of Part 15A)	section 1216E(1)

;

interim certificate (in Chapter 5 of Part 15A)	section 1216CC

;

principal photography (in Part 15A)	section 1216AF(2)

;

production expenditure (in Part 15A)	section 1216AG(2)

;

qualifying co-production (in Part 15A)	section 1216AI

;

qualifying expenditure (in Chapter 3 of Part 15A)	section 1216CF(3)

;

relevant programme (in Part 15A)	section 1216AB

;

the separate programme trade (in Chapters 2, 3 and 5 of Part 15A)	section 1216B(3)

;

special television relief (in Chapter 5 of Part 15A)	section 1216E(1)

;

television production activities (in Part 15A)	section 1216AF

;

television production company (in Part 15A)	section 1216AE

;

television programme (in Part 15A)	section 1216AA

;

television tax relief (in Part 15A)	section 1216C(2)

;

UK expenditure (in Part 15A)	section 1216AH

.

• (3) At the appropriate place insert—

the company (in Chapter 5 of Part 15B)	section 1217E(1)

;

company tax return (in Part 15B)	section 1217AF

;

the completion period (in Chapter 5 of Part 15B)	section 1217E(1)

;

core expenditure (in Part 15B)	section 1217AD

;

costs of the video game (in Chapter 2 of Part 15B)	section 1217BC

;

final certificate (in Chapter 5 of Part 15B)	section 1217CC

;

income from the video game (in Chapter 2 of Part 15B)	section 1217BB

;

interim accounting period (in Chapter 5 of Part 15B)	section 1217E(1)

;

interim certificate (in Chapter 5 of Part 15B)	section 1217CC

;

qualifying expenditure (in Chapter 3 of Part 15B)	section 1217CF(3)

;

the separate video game trade (in Chapters 2, 3 and 5 of Part 15B)	section 1217B(3)

;

special video games relief (in Chapter 5 of Part 15B)	section 1217E(1)

;

UK expenditure (in Part 15B)	section 1217AE

;

video game (in Part 15B)	section 1217AA

;

video games development activities (in Part 15B)	section 1217AC

;

video games development company (in Part 15B)	section 1217AB

;

video games tax relief (in Part 15B)	section 1217C(2)

.

FA 2009

16

In Schedule 54A to FA 2009 (further provision as to late payment interest and repayment interest), in paragraph 2(2), omit the “or” at the end of paragraph (d) and after paragraph (e) insert—

(f) a payment of television tax credit under Chapter 3 of Part 15 of CTA 2009 for an accounting period, or (g) a payment of video game tax credit under Chapter 3 of Part 15B of CTA 2009 for an accounting period.

CTA 2010

17

Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is amended as follows.

18

• (1) Section 357CG (adjustments in calculating profits of trade) is amended as follows.

• (2) In subsection (3), omit the “and” at the end of paragraph (a) and after paragraph (b) insert—

(c) the amount of any additional deduction for the accounting period obtained by the company under Part 15A of CTA 2009 in respect of qualifying expenditure on a television programme, and (d) the amount of any additional deduction for the accounting period obtained by the company under Part 15B of CTA 2009 in respect of qualifying expenditure on a video game.

• (3) After subsection (5) insert—

(5A) In a case where— (a) the company is— (i) a television production company in relation to a television programme, or (ii) a video games development company in relation to a video game, and (b) there is a shortfall in qualifying expenditure in relation to the separate programme trade or (as the case may be) the separate video game trade for a relevant accounting period (see section 357CHA), the amount of qualifying expenditure brought into account in calculating the profits of the trade for that accounting period is to be increased by the amount mentioned in section 357CHA(2).

• (4) In subsection (6)—

• (a) for “subsection (5)” substitute “ subsections (5) and (5A) ”;

• (b) before the definition of “R&D expenditure” insert—

“qualifying expenditure”— (a) in relation to a company that is a television production company, has the same meaning as in Chapter 3 of Part 15A of CTA 2009, and (b) in relation to a company that is a video games development company, has the same meaning as in Chapter 3 of Part 15B of that Act,

;

• (c) omit the “and” before the definition of “research and development”;

• (d) after that definition insert—

• “the separate programme trade”, in relation to a television production company, has the same meaning as in Chapter 2 of Part 15A of CTA 2009 (see section 1216B),
• “the separate video game trade”, in relation to a video games development company, has the same meaning as in Chapter 2 of Part 15B of CTA 2009 (see section 1217B),
• “television production company” has the same meaning as in Part 15A of CTA 2009 (see section 1216AE), and
• “video games development company” has the same meaning as in Part 15B of CTA 2009 (see section 1217AB).

19

After section 357CH insert—

(357CHA) (1) There is a shortfall in qualifying expenditure in relation to the separate programme trade of a television production company or (as the case may be) the separate video game trade of a video games development company for a relevant accounting period if the actual qualifying expenditure of the trade for the accounting period (as adjusted under subsections (8) to (11)) is less than 75% of the average amount of qualifying expenditure. (2) The amount that is to be added to the actual qualifying expenditure for the purposes of section 357CG(5A) is an amount equal to the difference between— (a) 75% of the average amount of qualifying expenditure, and (b) the actual qualifying expenditure, as adjusted under subsections (8) to (11). (3) In this section— (a) the “actual qualifying expenditure” of a trade of a company for an accounting period is the amount of qualifying expenditure that (ignoring section 357CG(5A)) is brought into account in calculating the profits of the trade for the accounting period, and (b) the following terms have the meaning given by section 357CG(6)— - “qualifying expenditure”, - “relevant accounting period”, - “the separate programme trade”, - “the separate video game trade”, - “television production company”, - “video games development company”. (4) The average amount of qualifying expenditure is— $$E N × 365$where—E is the amount of qualifying expenditure that—has been incurred by the company during the relevant period, andhas been brought into account in calculating the profits of the trade for any accounting period ending before the first relevant accounting period, andN is the number of days in the relevant period.$ (5) The relevant period is the shorter of— (a) the period of 4 years ending immediately before the first relevant accounting period, and (b) the period beginning with the day on which the company begins to carry on the trade and ending immediately before the first relevant accounting period. (6) For a relevant accounting period of less than 12 months, the average amount of qualifying expenditure is proportionately reduced. (7) Subsections (8) to (11) apply for the purposes of determining— (a) whether there is a shortfall in qualifying expenditure for a relevant accounting period, and (b) if there is such a shortfall, the amount to be added by virtue of subsection (2). (8) If the amount of the actual qualifying expenditure for a relevant accounting period is greater than the average amount of qualifying expenditure, the difference between the two amounts is to be added to the actual qualifying expenditure for the next relevant accounting period. (9) If— (a) there is not a shortfall in qualifying expenditure for a relevant accounting period, but (b) in the absence of any additional amount, there would be a shortfall in qualifying expenditure for that accounting period, the remaining portion of the additional amount is to be added to the actual qualifying expenditure for the next relevant accounting period. (10) For the purposes of this section— - “additional amount”, in relation to a relevant accounting period, means any amount added to the actual qualifying expenditure for that accounting period by virtue of subsection (8), (9) or (11), and - “the remaining portion” of an additional amount is so much of that amount as exceeds the difference between— 1. the actual qualifying expenditure for the relevant accounting period in the absence of the additional amount, and 2. 75% of the average amount of qualifying expenditure. (11) If— (a) there is not a shortfall in qualifying expenditure for a relevant accounting period, and (b) there would not be a shortfall in qualifying expenditure for that accounting period in the absence of any additional amount, the additional amount is to be added to the actual qualifying expenditure for the next relevant accounting period (in addition to any additional amount so added by virtue of subsection (8)).

20

• (1) Section 357CK (deductions that are not routine deductions) is amended as follows.

• (2) In subsection (1), at the end insert—

(e) subsection (7A) (television production expenditure), (f) subsection (7B) (video games development expenditure).

• (3) After subsection (7) insert—

(7A) Head 5 is— (a) the amount of any qualifying expenditure on a television programme for which an additional deduction for the accounting period is obtained by the company under Part 15A of CTA 2009, and (b) the amount of that additional deduction. (7B) Head 6 is— (a) the amount of any qualifying expenditure on a video game for which an additional deduction for the accounting period is obtained by the company under Part 15B of CTA 2009, and (b) the amount of that additional deduction.

Consequential renumbering

21

• (1) Sections 1217 and 1218 of CTA 2009 are renumbered as follows—

• (a) section 1217 becomes section 1218A, and

• (b) section 1218 becomes section 1218B.

• (2) In the following provisions of CTA 2009, for “section 1218” substitute “ section 1218B ”

• section 985(3),

• section 999(4),

• section 1000(3),

• section 1013(3), and

• section 1021(3).

• (3) In Schedule 4 to CTA 2009—

• (a) in the entry for “company with investment business (in Part 16)”, for “section 1218(1) and (2)” substitute “ section 1218B(1) and (2) ”, and

• (b) in the entry for “investment business in a company (in Part 16)”, for “section 1218(3)” substitute “ section 1218B(3) ”.

• (4) In section 18 of CAA 2001, for “section 1218” substitute “ section 1218B ”.

Commencement

22

• (1) The amendments made by this Schedule come into force in accordance with provision contained in an order made by the Treasury.

• (2) An order under sub-paragraph (1)—

• (a) may make different provision for different purposes;

• (b) may provide for any of those amendments to be treated as having come into force on a day earlier than the day on which the order is made or this Act is passed;

• (c) may make such adaptations of provisions of this Schedule brought into force as appear to be necessary or expedient in consequence of other provisions of this Act not yet having come into force.

23

• (1) The amendments made by this Schedule have effect in relation to accounting periods beginning on or after the relevant day.

• (2) “The relevant day” is—

• (a) in the case of amendments relating to Part 15A of CTA 2009, 1 April 2013, and

• (b) in the case of amendments relating to Part 15B of that Act, the day specified by order for the purposes of paragraph 3 of Schedule 17.

• (3) For provision about the case where a company has an accounting period beginning before the relevant day and ending on or after that day, see paragraph 3(3) of Schedule 16 or (as the case may be) paragraph 3(4) of Schedule 17.

SCHEDULE 19

1

Part 12 of CTA 2010 (real estate investment trusts) is amended as follows.

2

• (1) Section 530 (condition as to distribution of profits) is amended as follows.

• (2) For subsection (1) substitute—

(1) In the case of a group UK REIT, the condition in this section is met in relation to an accounting period if— (a) so much of the group's UK profits arising in the period as are UK REIT investment profits (see section 549A), and (b) at least 90% of the rest of the group's UK profits arising in the period, are distributed by the principal company of the group on or before the filing date for the principal company's tax return for the period (see paragraph 14 of Schedule 18 to FA 1998).

• (3) For subsection (4) substitute—

(4) In the case of a company UK REIT, the condition in this section is met in relation to an accounting period if— (a) so much of the profits of the company's property rental business arising in the period as are UK REIT investment profits (see section 549A), and (b) at least 90% of the rest of the profits of the company's property rental business arising in the period, are distributed on or before the filing date for the company's tax return for the period (see paragraph 14 of Schedule 18 to FA 1998). (4A) For the purposes of subsection (4) profits of the company's property rental business are to be calculated in accordance with section 599.

3

• (1) Section 530A (condition as to distribution of profits: increase in profits after delivery of tax return) is amended as follows.

• (2) In subsection (2) for “530(1)(c)” substitute “ 530(1) ”.

• (3) In subsection (6) for “530(4)(b)” substitute “ 530(4) ”.

• (4) After subsection (9) insert—

(10) This section cannot be relied upon to satisfy the requirement of section 530(1)(a) or (4)(a).

4

• (1) Section 531 (conditions as to balance of business) is amended as follows.

• (2) After subsection (4) insert—

(4A) In the case of a group, for the purposes of subsections (1) and (2) a distribution falling within section 549A(6) or (8) received by a member of the group is to be treated as profits of a property rental business in accordance with section 549A(1) notwithstanding section 549A(5). (4B) In the case of a company, for the purposes of subsections (1) and (3) a distribution falling within section 549A(6) or (8) received by the company is to be treated as profits of a property rental business in accordance with section 549A(1) notwithstanding section 549A(5).

• (3) In subsection (5)(b) after “cash” insert “ or relevant UK REIT shares ”.

• (4) In subsection (6)(b) after “cash” insert “ and relevant UK REIT shares ”.

• (5) After subsection (8) insert—

(9) In this section “relevant UK REIT shares” means— (a) in the case of a group UK REIT, shares held by a member of the group in the principal company of another group UK REIT or in a company UK REIT, and (b) in the case of a company UK REIT, shares held by the company in the principal company of a group UK REIT or in another company UK REIT.

5

• (1) Section 548 (distributions: liability to tax) is amended as follows.

• (2) In subsection (5) after “2009)” insert “ so far as the distribution is a distribution of exempt profits ”.

• (3) In subsection (6) after “2005)” insert “ so far as the distribution is a distribution of exempt profits ”.

• (4) After subsection (8) insert—

(9) This section does not apply in relation to a distribution falling within section 549A(6) or (8) so far as the distribution is a distribution of exempt profits. (10) For the purposes of this Chapter a distribution is a “distribution of exempt profits” so far as the distribution falls within section 550(2)(a), (aa), (c) or (d). (11) In applying section 550 for the purposes of subsection (10) in relation to a distribution made by the principal company of a post-cessation group or by a post-cessation company— (a) subsection (1)(a) is to be read as referring to the principal company of the post-cessation group, or (as the case may be) (b) subsection (1)(b) is to be read as referring to the post-cessation company.

6

• (1) Section 549 (distributions: supplementary) is amended as follows.

• (2) In subsection (2A) after “shareholder” insert “ so far as they are distributions of exempt profits ”.

• (3) After subsection (3) insert—

(3A) Relevant distribution” does not include a distribution falling within section 549A(6) or (8) so far as the distribution is a distribution of exempt profits.

• (4) In subsection (4) after the first “shareholder” insert “ (so far as they are distributions of exempt profits) ”.

7

After section 549 insert—

(549A) (1) If a company receives a distribution falling within subsection (6) or (8), the distribution is to be treated as profits of a property rental business carried on by the company in the United Kingdom. Such profits are referred to in this Part as “UK REIT investment profits”. (2) The property rental business mentioned in subsection (1) is to be treated as separate from any other property rental business of the company. (3) References to profits of property rental business or UK property rental business are to be read as including UK REIT investment profits accordingly, including where the profits referred to are otherwise profits calculated in accordance with international accounting standards or section 599. (4) Section 549(2) and (2A) applies in relation to distributions falling within subsection (6) or (8) as it applies in relation to relevant distributions. (5) Subsection (1) applies in relation to a distribution only so far as the distribution is a distribution of exempt profits. This is subject to section 531(4A) and (4B). (6) A distribution falls within this subsection if— (a) it is made by the principal company of a group UK REIT to a shareholder of the company which is— (i) a member of another group UK REIT, or (ii) a company UK REIT, and (b) it is a distribution of amounts shown in the financial statements under section 532(2)(a) (statement of group's property rental business) as— (i) profits or gains (or both) of UK members of the group, or (ii) profits or gains (or both) of UK property rental business of non-UK members of the group. (7) In subsection (6) the reference to a distribution made by the principal company includes a reference to a distribution made by the principal company of the post-cessation group. (8) A distribution falls within this subsection if— (a) it is made by a company UK REIT to a shareholder of the company which is— (i) a member of a group UK REIT, or (ii) another company UK REIT, and (b) it is a distribution in respect of profits or gains (or both) of property rental business of the company. (9) In subsection (8) the reference to a distribution made by a company UK REIT includes a reference to a distribution made by the post-cessation company.

8

In section 550 (attribution of distributions) in subsection (2)—

• (a) for paragraph (a) substitute—

(a) first, to distributions in satisfaction of the requirement of section 530(1)(a) or 530(4)(a) (as the case may be), (aa) second, to distributions in satisfaction of the requirement of section 530(1)(b) or 530(4)(b) (as the case may be),

,

• (b) in paragraph (b) for “second” substitute “ third ”,

• (c) in paragraph (c) for “third” substitute “ fourth ”,

• (d) in paragraph (d) for “fourth” substitute “ fifth ”, and

• (e) in paragraph (e) for “fifth” substitute “ sixth ”.

9

In section 588 (joint ventures: effect of notice under section 586) after subsection (6) insert—

(7) Subsections (3) to (6) apply (in particular) for the purpose of interpreting section 549A(6)(a)(i) and (8)(a)(i).

10

In section 589 (joint ventures: effect of notice under section 587) after subsection (6) insert—

(7) Subsections (3) to (6) apply (in particular) for the purpose of interpreting section 549A(6)(a)(i) and (8)(a)(i).

11

In section 605 (property rental business: exclusion of business producing listed income) after subsection (1) insert—

(1A) But see section 549A which treats income falling within class 7 of the table as profits of property rental business.

12

In Chapter 18 of Part 15 of ITA 2007 (deduction of income tax at source) in sections 973 and 974 (which relate to distributions made by UK REITs) after subsection (6) insert—

(7) In relation to references to profits of property rental business, see section 549A of CTA 2010.

13

• (1) The amendments made by paragraph 4(3) to (5) above have effect for accounting periods beginning on or after the day on which this Act is passed.

• (2) Subject to what follows, the amendments made by paragraphs 5 to 7 above have effect in relation to distributions received on or after the day on which this Act is passed.

• (3) A distribution received by a member of a group UK REIT does not fall within section 549A(6) or (8) of CTA 2010 if it is received in an accounting period of the principal company of the group beginning before the day on which this Act is passed.

• (4) A distribution received by a company UK REIT does not fall within section 549A(6) or (8) of CTA 2010 if it is received in an accounting period of the company beginning before the day on which this Act is passed.

SCHEDULE 20

1

CTA 2010 is amended in accordance with paragraphs 2 to 4.

2

In section 1(4) (overview of Act), after paragraph (j) insert—

(ja) tax mismatch schemes (see Part 21BA),

.

3

After Part 21B insert—