Finance (No. 2) Act 2017

PART 3 — Consequential amendments

TMA 1970

3

• (1) In section 98 of TMA 1970 (special returns, etc), in the table in subsection (5), in the first column, the entry relating to regulations under section 283, 284, 285, 295 or 297 of TIOPA 2010 is repealed.

• (2) In consequence of sub-paragraph (1), paragraph 157(3) of Schedule 8 to TIOPA 2010 is repealed.

FA 1998

4

In paragraph 88 of Schedule 18 to FA 1998 (conclusiveness of amounts stated in company tax returns), at the end insert—

(9) Nothing in this paragraph affects the operation of any provision of Part 10 of TIOPA 2010 (corporate interest restriction).

CTA 2009

5

In section A1 of CTA 2009 (overview of the Corporation Tax Acts), in subsection (2)—

• (a) omit paragraph (i), and

• (b) after paragraph (ja) insert—

(jb) Part 10 of that Act (corporate interest restriction),

.

CTA 2010

6

CTA 2010 is amended as follows.

7

After section 937N (risk transfer schemes) insert—

(937NA) For the purposes of this Part, the provisions of Part 10 of TIOPA 2010 (corporate interest restriction) are to be treated as of no effect.

8

In section 938N (group mismatch schemes: priority), for paragraph (e) substitute—

(e) Part 10 of that Act (corporate interest restriction).

9

In section 938V (tax mismatch schemes: priority), for paragraph (d) substitute—

(d) Part 10 of that Act (corporate interest restriction).

TIOPA 2010: consequential renumbering

10

• (1) In consequence of the insertion of a new Part 10 of TIOPA 2010 by Part 1 of this Schedule, the existing Part 10 of that Act becomes a new Part 11.

• (2) The following provisions of TIOPA 2010 are repealed—

• (a) the existing sections 375 and 376 (which contain powers that are no longer exercisable), and

• (b) the existing section 381(2)(e) and (f) (which refer to those sections);

but the repeals made by this sub-paragraph do not affect any orders made under section 375 or 376 before the passing of this Act.

• (3) As a result of the provision made by sub-paragraphs (1) and (2), the following provisions of TIOPA 2010 are renumbered as follows—

• (a) the existing section 372 becomes section 499;

• (b) the existing section 373 becomes section 500;

• (c) the existing section 374 becomes section 501;

• (d) the existing section 377 becomes section 502;

• (e) the existing section 378 becomes section 503;

• (f) the existing section 379 becomes section 504;

• (g) the existing section 380 becomes section 505;

• (h) the existing section 381 becomes section 506;

• (i) the existing section 382 becomes section 507.

• (4) Consequently—

• (a) in section 287(2A) of TCGA 1992, for “372” substitute “ 499 ”;

• (b) in section 1014(2)(fa) of ITA 2007, for “372” substitute “ 499 ”;

• (c) in section 1171(2)(f) of CTA 2010, for “372” substitute “ 499 ”;

• (d) in section 1 of TIOPA 2010—

• (i) in subsection (4), for “10” substitute “ 11 ”;

• (ii) in subsection (5), for “373” substitute “ 500 ”;

• (e) in section 381(2) of TIOPA 2010—

• (i) in paragraph (a), for “372” substitute “ 499 ”;

• (ii) in paragraph (b), for “373” substitute “ 500 ”;

• (iii) in paragraph (d), for “374” substitute “ 501 ”;

• (iv) in paragraph (g), for “377(2) and (3)” substitute “ 502(2) and (3) ”;

• (v) in paragraph (h), for “380” substitute “ 505 ”;

• (vi) in paragraph (i), for “382” substitute “ 507 ”.

• (5) In section 379(1) and (2) of TIOPA 2010 (index of defined expressions), for “8” substitute “ 10 ”.

TIOPA 2010: repeal of Part 7

11

• (1) Part 7 of TIOPA 2010 (tax treatment of financing costs and income) is repealed; and accordingly the following provisions of that Act are also repealed—

• (a) section 1(1)(d) (overview);

• (b) in Schedule 9, Part 7 (transitional provision);

• (c) in Schedule 11, Part 5 (index of defined expressions).

• (2) In consequence of sub-paragraph (1), the following enactments (which amend provisions repealed by that sub-paragraph) are repealed—

• (a) in F(No.3)A 2010, section 11 and Schedule 5;

• (b) in FA 2011, in Schedule 13, paragraphs 29 and 30;

• (c) in FA 2012—

• (i) section 31 and Schedule 5;

• (ii) in Schedule 16, paragraphs 242 and 243(a);

• (iii) in Schedule 20, paragraphs 43 to 45;

• (d) in FA 2013, section 44;

• (e) in FA 2014, section 39.

• (3) The following regulations were made under powers contained in Part 7 of TIOPA 2010 and are therefore revoked by virtue of sub-paragraph (1)—

• (a) the Corporation Tax (Financing Costs and Income) Regulations 2009 (S.I. 2009/3173);

• (b) the Corporation Tax (Tax Treatment of Financing Costs and Income) (Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217);

• (c) the Corporation Tax (Exclusion from Short-Term Loan Relationships) Regulations 2009 (S.I. 2009/3313);

• (d) the Tax Treatment of Financing Costs and Income (Available Amount) Regulations 2010 (S.I. 2010/2929);

• (e) the Tax Treatment of Financing Costs and Income (Correction of Mismatches) Regulations 2010 (S.I. 2010/3025);

• (f) the Taxation (International and Other Provisions) Act 2010 (Part 7) (Amendment) Regulations 2012 (S.I. 2012/3045);

• (g) the Tax Treatment of Financing Costs and Income (Correction of Mismatches: Partnerships and Pensions) Regulations 2012 (S.I. 2012/3111);

• (h) the Tax Treatment of Financing Costs and Income (Excluded Schemes) Regulations 2013 (S.I. 2013/2892);

• (i) the Tax Treatment of Financing Costs and Income (Change of Accounting Standards: Investment Entities) Regulations 2015 (S.I. 2015/662).

TIOPA 2010: other amendments

12

TIOPA 2010 is amended as follows.

13

In section 1 (overview of Act), in subsection (1)—

• (a) omit the “and” at the end of paragraph (d), and

• (b) after paragraph (e) insert—

(f) Part 9A (controlled foreign companies), and (g) Part 10 (corporate interest restriction).

14

In section 155 (transfer pricing: “potential advantage” in relation to United Kingdom taxation), in subsection (6), for paragraph (a) substitute—

(a) Part 10 (corporate interest restriction),

.

15

In section 157 (direct participation), in subsection (1)—

• (a) omit the “and” at the end of paragraph (c), and

• (b) after paragraph (d) insert

, and (e) in Part 10, section 463(4).

16

In section 159 (indirect participation: potential direct participant), in subsection (1)—

• (a) omit the “and” at the end of paragraph (c), and

• (b) after paragraph (d) insert

, and (e) in Part 10, section 463(4).

17

In section 160 (indirect participation: one of several major participants), in subsection (1)—

• (a) omit the “and” at the end of paragraph (c), and

• (b) after paragraph (d) insert

, and (e) in Part 10, section 463(4).

18

In section 259CB (financial instruments: hybrid or otherwise impermissible deduction/non-inclusion mismatches and their extent), in subsection (6), for paragraph (e) substitute—

(e) Part 10 (corporate interest restriction).

19

In section 259DC (hybrid transfer deduction/non-inclusion mismatches and their extent), in subsection (5), for paragraph (d) substitute—

(d) Part 10 (corporate interest restriction).

20

After section 259NE (treatment of a person who is a member of a partnership) insert—

(259NEA) For the purposes of this Part, the provisions of Part 10 (corporate interest restriction) are to be treated as of no effect.

21

• (1) Chapter 3 of Part 9A (CFCs: the CFC charge gateway) is amended as follows.

• (2) In section 371CE (which makes provision for determining whether Chapter 6 of Part 9A applies)—

• (a) in subsection (2)(a), after “period” insert “ (see section 371CEA) ”, and

• (b) omit subsections (4) and (5).

• (3) After section 371CE insert—

(371CEA) (1) This section makes provision for determining whether the CFC is a group treasury company in the accounting period for the purposes of section 371CE. (2) The CFC is a group treasury company in the accounting period if— (a) it is a member of a worldwide group in relation to a period of account in which the accounting period wholly or partly falls, (b) throughout the accounting period— (i) all, or substantially all, of the activities undertaken by it consist of treasury activities undertaken for the group, and (ii) all, or substantially all, of its assets and liabilities relate to such activities, and (c) at least 90% of its relevant income for the accounting period is group treasury revenue. (3) For the purposes of this section a company undertakes treasury activities for the group if it does one or more of the following in relation to, or on behalf of, the group or any of its members— (a) managing surplus deposits of money or overdrafts, (b) making or receiving deposits of money, (c) lending money, (d) subscribing for or holding shares in a company which is a UK group company undertaking treasury activities for the group at least 90% of whose relevant income is group treasury revenue for its relevant accounting period, (e) investing in debt securities, and (f) hedging assets, liabilities, income or expenses. (4) For the purposes of this section “group treasury revenue”, in relation to a company, means revenue— (a) arising from the treasury activities that the company undertakes for the group, and (b) accounted for as such under generally accepted accounting practice, before any deduction (whether for expenses or otherwise). (5) But revenue consisting of a dividend or other distribution is not group treasury revenue of the company unless it is from a company that meets the conditions in subsection (3)(d). (6) In this section— - “debt security” has the same meaning as in the Handbook made by the Financial Conduct Authority or Prudential Regulation Authority under the Financial Services and Markets Act 2000 (as the Handbook in question has effect from time to time), - “period of account” has the same meaning as in Part 10, - “relevant accounting period” has the same meaning as in Part 10, - “relevant income”, in relation to a company, means income— 1. arising from the activities of the company, and 2. accounted for as such under generally accepted accounting practice, - “UK group company” has the same meaning as in Part 10, and - “worldwide group” has the same meaning as in Part 10.

• (4) In consequence of the amendments made by this paragraph, in Schedule 47 to FA 2013, omit paragraph 17.

22

• (1) Chapter 9 of Part 9A (CFCs: exemption for profits from qualifying loan relationships) is amended as follows.

• (2) For section 371IE substitute—

(371IE) (1) This section applies if— (a) there are profits of qualifying loan relationships which are not exempt after sections 371IB and 371ID have been applied to each qualifying loan relationship, (b) the relevant corporation tax accounting period (as defined in section 371BC(3)) of company C is a relevant accounting period of it in relation to a period of account of a worldwide group, (c) the CFC's accounting period ends in that period of account, and (d) apart from this section, the profits mentioned in paragraph (a) would be included in the chargeable profits of the CFC. (2) In this section “the matched interest profits” means so much of the profits mentioned in subsection (1)(a) as remain after excluded credits and excluded debits are left out of account. (3) If the aggregate net tax-interest expense of the group for the period is nil, all of the matched interest profits are exempt. (4) Otherwise, there is a more limited exemption if the relevant proportion of the matched interest profits apportioned to C or other relevant chargeable companies exceeds the aggregate net tax-interest expense of the group for the period. (5) For the purposes of this section “the relevant proportion of the matched interest profits apportioned to C or other relevant chargeable companies” is determined as follows. - Step 1 For each relevant chargeable company (including C) determine the percentage (P%) of the CFC's chargeable profits that are apportioned to the company under step 5 of section 371BC(1). - Step 2 For each relevant chargeable company (including C) multiply P% by the matched interest profits. - Step 3 The sum of the amounts for each company found under step 2 is “the relevant proportion of the matched interest profits apportioned to C or other relevant chargeable companies”. (6) For the purposes of this section a company is a relevant chargeable company if the relevant corporation tax accounting period of the company is a relevant accounting period in relation to the period of account of the group. (7) The limited exemption is given effect by treating the matched interest profits as equal to the amount found by multiplying the amount that they would otherwise be by— $$E RPMIP$where—E is the amount of the excess mentioned in subsection (4), andRPMIP is the relevant proportion of the matched interest profits apportioned to C or other relevant chargeable companies.$ (8) For the purposes of this section the aggregate net tax-interest expense of a worldwide group for a period of account is determined in accordance with Part 10 (corporate interest restriction) but without regard to debits, credits or other amounts arising from— (a) banking business carried on by a company within the charge to corporation tax, or (b) insurance business carried on by a company within the charge to corporation tax. (9) For the purposes of this section— - “excluded credit” has the meaning given by section 386(3), - “excluded debit” has the meaning given by section 383(3), and - “period of account”, “relevant accounting period” and “worldwide group” have the same meanings as in Part 10.

• (3) In section 371IJ (claims), in subsection (6), for “the tested income amount or the tested expense amount mentioned in section 371IE(2)” substitute “ the aggregate net tax-interest expense that is mentioned in section 371IE ”.

23

• (1) Chapter 19 of Part 9A (CFCs: assumed taxable total profits, assumed total profits and the corporation tax assumptions) is amended as follows.

• (2) In section 371SL (group relief etc), at the end insert—

(4) This section is subject to section 371SLA (corporate interest restriction).

• (3) After section 371SL insert—

(371SLA) (1) This section applies for the purpose of applying Part 10 (corporate interest restriction). (2) Assume— (a) that the CFC is a member of a worldwide group for a period of account of which it would be a member if section 371SL were ignored, and (b) that the CFC is the only UK group company in the period (within the meaning of that Part). (3) Assume also that Part 10 applies as if subsections (2) and (3) of section 392 (interest capacity of the group: the de minimis amount) were omitted.

24

In Schedule 11, at the end insert—

abbreviated interest restriction return (in Part 10)	paragraph 20 of Schedule 7A
abbreviated return election (in Part 10)	paragraph 19 of Schedule 7A
accounting period (in Part 10)	Chapter 2 of Part 2 of CTA 2009 (applied by section 1119 of CTA 2010)
adjusted net group-interest expense of a worldwide group (in Part 10)	section 413
aggregate net tax-interest expense of a worldwide group (in Part 10)	section 390
aggregate net tax-interest income of a worldwide group (in Part 10)	section 390
aggregate tax-EBITDA of a worldwide group (in Part 10)	section 405
allocated reactivation of company for period of account (in Part 10)	paragraph 25 of Schedule 7A
allowable loss (in Part 10)	TCGA 1992 (applied by section 1119 of CTA 2010)
associated (in Chapter 8 of Part 10)	section 449(2)
amount available for reactivation of company in period of account (in Part 10)	paragraph 26 of Schedule 7A
available, in relation to interest allowance (in Chapter 4 of Part 10)	section 393
balance sheet (in Chapter 8 of Part 10)	section 449(1)
chargeable gain (in Part 10)	TCGA 1992 (applied by section 1119 of CTA 2010)
the Commissioners (in Part 10)	section 494(1)
company (in Part 10)	section 1121 of CTA 2010
company tax return (in Schedule 7A)	paragraph 73 of Schedule 7A
consenting company (in Part 10)	paragraph 10 of Schedule 7A
consolidated partnership (in Part 10)	section 430
consolidated subsidiary of another entity (in Part 10)	section 475
derivative contract (in Part 10)	Part 7 of CTA 2009 (applied by section 1119 of CTA 2010)
disallowed, in relation to tax-interest expense amount (in Part 10)	section 378
drawn up on acceptable principles, in relation to financial statements (in Chapter 11 of Part 10)	section 481
fair value accounting (in Part 10)	section 494(1)
fair value (in Part 10)	section 494(1)
filing date, in relation to a period of account of a worldwide group (in Part 10)	paragraph 7(5) of Schedule 7A
finance lease (in Part 10)	section 494(1)
financial asset (in Chapter 8 of Part 10)	section 449(1)
financial statements of a worldwide group (in Part 10)	section 479
fixed ratio method (in Part 10)	section 397
for accounting purposes (in Part 10)	section 1127(4) of CTA 2010
full interest restriction return (in Part 10)	paragraph 20 of Schedule 7A
generally accepted accounting practice (in Part 10)	section 1127(1) and (3) of CTA 2010
group-EBITDA (chargeable gains) election (in Part 10)	paragraph 15 of Schedule 7A
group ratio election (in Part 10)	paragraph 13 of Schedule 7A
group ratio (blended) election (in Part 10)	paragraph 14 of Schedule 7A
group ratio method (in Part 10)	section 398
group ratio percentage (in Part 10)	section 399
IAS financial statements (in Part 10)	section 488
impairment loss (in Part 10)	section 391
income (in Part 10)	section 1119 of CTA 2010
insurance company (in Part 10)	section 141 of FA 2012
interest allowance of a worldwide group (in Part 10)	section 396
interest allowance (alternative calculation) election (in Part 10)	paragraph 16 of Schedule 7A
interest allowance (consolidated partnerships) election (in Part 10)	paragraph 18 of Schedule 7A
interest allowance (non-consolidated investment) election (in Part 10)	paragraph 17 of Schedule 7A
interest capacity of a worldwide group (in Part 10)	section 392
interest reactivation cap of a worldwide group (in Part 10)	section 373
interest restriction return (in Part 10)	section 494(1)
international accounting standards (in Part 10)	section 1127(5) of CTA 2010
investor in a worldwide group (in Part 10)	section 404
loan relationship (in Part 10)	Part 5 of CTA 2009 (applied by section 1119 of CTA 2010)
loan relationships or other financing arrangements (in Chapter 8 of Part 10)	section 449(1)
local authority (in Part 10)	section 1130 of CTA 2010
local authority association (in Part 10)	section 1131 of CTA 2010
member of a worldwide group (in Part 10)	section 473(4)(a)
multi-company worldwide group (in Part 10)	section 473(4)(d)
net group-interest expense of a worldwide group (in Part 10)	section 410
net tax-interest expense of a company (in Part 10)	section 389
net tax-interest income of a company (in Part 10)	section 389
non-consenting company (in Part 10)	paragraph 10 of Schedule 7A
non-consolidated associate of a worldwide group (in Part 10)	section 429
non-consolidated subsidiary of an entity (in Part 10)	section 475
notice (in Part 10)	section 1119 of CTA 2010
party to a loan relationship (in Part 10)	section 494(2)
period of account of a worldwide group (in Part 10)	section 480
profit before tax, of a worldwide group (in Chapter 7 of Part 10)	section 416
pro-rata share of company (of total disallowed amount) (in Part 10)	paragraph 23 of Schedule 7A
pro-rata share of accounting period (of total disallowed amount) (in Part 10)	paragraph 24 of Schedule 7A
provision (in relation to a public infrastructure asset) (in Chapter 8 of Part 10)	section 436
public infrastructure asset (in Chapter 8 of Part 10)	section 436
qualifying charitable donation (in Part 10)	Part 6 of CTA 2010 (applied by section 1119 of CTA 2010)
qualifying infrastructure company (in Chapter 8 of Part 10)	section 433
qualifying infrastructure activity (in Chapter 8 of Part 10)	section 436
qualifying net group-interest expense of a worldwide group (in Part 10)	section 414
recognised, in financial statements (in Part 10)	section 489
recognised stock exchange (in Part 10)	section 1137 of CTA 2010
registered pension scheme (in Part 10)	section 150(2) of FA 2004 (applied by section 1119 of CTA 2010)
related party (in Part 10)	sections 462 to 472
related party investor (in Part 10)	section 404
relevant asset (in Chapter 7 of Part 10)	section 417
relevant accounting period (in Part 10)	section 490
relevant expense amount (in Chapter 7 of Part 10)	section 411
relevant income amount (in Chapter 7 of Part 10)	section 411
relevant public body (in Part 10)	section 491
reporting company (in Part 10)	section 494(1)
the return period (in Part 10)	section 494(1)
service concession agreement (in Part 10)	section 494(1)
share, of an investor in a worldwide group (in Part 10)	section 404
single-company worldwide group (in Part 10)	section 473(4)(c)
subject to interest reactivations (in Part 10)	section 373
subject to interest restrictions (in Part 10)	section 373
tax (in Part 10)	section 1119 of CTA 2010
tax-EBITDA of a company (in Part 10)	section 406
tax-interest expense amount of a company (in Part 10)	section 382
tax-interest income amount of a company (in Part 10)	section 385
trade (in Part 10)	section 1119 of CTA 2010
total disallowed amount of a worldwide group (in Part 10)	section 373
UK generally accepted accounting practice (in Part 10)	section 1127(2) of CTA 2010
UK group company (in Part 10)	section 492
UK property business (in Part 10)	Chapter 2 of Part 4 of CTA 2009 (applied by section 1119 of CTA 2010)
the UK sector of the continental shelf (in Chapter 8 of Part 10)	section 449(1)
the ultimate parent, of a worldwide group (in Part 10)	section 473(4)(b)
unexpired (in Chapter 4 of Part 10)	section 395
United Kingdom (in Part 10)	section 1170 of CTA 2010
used (in Chapter 4 of Part 10)	section 394
within the charge to corporation tax (in Part 10)	section 1167 of CTA 2010
wholly-owned subsidiary (in Part 10)	section 494(1)
a worldwide group (in Part 10)	section 473

PART 4 — Commencement and transitional provision

Commencement: new Part 10 of TIOPA

25

• (1) The corporate interest restriction amendments have effect in relation to periods of account of worldwide groups that begin on or after 1 April 2017.

• (2) In this paragraph “the corporate interest restriction amendments” means the amendments made by Parts 1 to 3 of this Schedule, apart from those made by paragraph 11 (repeal of Part 7 of TIOPA 2010).

• (3) Any regulations made by the Treasury or Commissioners under Part 10 of TIOPA 2010 before 1 April 2018 may have effect in relation to periods of account of worldwide groups that begin on or after 1 April 2017.

• (4) Sub-paragraphs (6) to (11) apply if—

• (a) financial statements of a worldwide group are drawn up by or on behalf of the ultimate parent in respect of a period that begins before, and ends on or after, 1 April 2017,

• (b) the period in respect of which the financial statements are drawn up is 18 months or less, and

• (c) the financial statements are drawn up before the end of the period of 30 months beginning with the beginning of the period in respect of which they are drawn up.

• (5) In sub-paragraphs (6) to (11)—

• (a) “the group's actual financial statements” means the financial statements mentioned in sub-paragraph (4);

• (b) “the straddling period of account” means the period in respect of which those financial statements are drawn up.

• (6) For the purposes of Part 10 of TIOPA 2010, the group's actual financial statements are treated as not having been drawn up.

• (7) Instead, financial statements of the worldwide group are treated for those purposes as having been drawn up in respect of each of the following periods—

• (a) the period beginning at the time the straddling period of account begins and ending with 31 March 2017, and

• (b) the period beginning with 1 April 2017 and ending at the time the straddling period of account ends.

• (8) Where condition C or D in section 481 of TIOPA 2010 is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (7) are treated as drawn up in accordance with the generally accepted accounting principles and practice with which the group's actual financial statements were drawn up.

• (9) Where neither of those conditions is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (7) are IAS financial statements.

• (10) Where, for the purpose of determining amounts recognised in the financial statements treated as drawn up by sub-paragraph (7), it is expedient to apportion any amount that is recognised in the group's actual financial statements, the apportionment is to be made in accordance with section 1172 of CTA 2010 (apportionment on a time basis).

• (11) But if it appears that apportionment in accordance with that section would work unjustly or unreasonably, the apportionment is to be made on a just and reasonable basis.

• (12) Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.

Commencement: repeal of Part 7 of TIOPA 2010

26

• (1) The repeals and revocations made by paragraph 11 of this Schedule have effect in relation to periods of account of the worldwide group that begin on or after 1 April 2017.

• (2) Sub-paragraphs (4) to (10) apply if financial statements of the worldwide group are drawn up in respect of a period that begins before, and ends on or after, 1 April 2017.

• (3) In sub-paragraphs (4) to (10)—

• (a) “the group's actual financial statements” means the financial statements mentioned in sub-paragraph (2);

• (b) “the straddling period of account” means the period in respect of which those financial statements are drawn up.

• (4) For the purposes of Part 7 of TIOPA 2010, the group's actual financial statements are treated as not having been drawn up.

• (5) Instead, financial statements of the worldwide group are treated for those purposes as having been drawn up in respect of each of the following periods—

• (a) the period beginning at the time the straddling period of account begins and ending with 31 March 2017, and

• (b) the period beginning with 1 April 2017 and ending at the time the straddling period of account ends.

• (6) Where condition B, C or D in regulation 2 of the Acceptable Financial Statements Regulations is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (5) are treated as drawn up in accordance with the generally accepted accounting principles and practice with which the group's actual financial statements were drawn up.

• (7) Where none of those conditions is met in relation to the group's actual financial statements, the financial statements treated as drawn up by sub-paragraph (5) are IAS financial statements.

• (8) Where, for the purpose of determining amounts recognised in the financial statements treated as drawn up by sub-paragraph (5), it is expedient to apportion any amount that is recognised in the group's actual financial statements, the apportionment is to be made in accordance with section 1172 of CTA 2010 (apportionment on a time basis).

• (9) But if it appears that apportionment in accordance with that section would work unjustly or unreasonably, the apportionment is to be made on a just and reasonable basis.

• (10) In sub-paragraph (6), “the Acceptable Financial Statements Regulations” means the Corporation Tax (Tax Treatment of Financing Costs and Income) (Acceptable Financial Statements) Regulations 2009 (S.I. 2009/3217).

• (11) Expressions used in this paragraph and in Part 7 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.

Time limits for elections relating to financial statements of a worldwide group

27

• (1) In section 484 of TIOPA 2010, subsection (5) (which requires the date specified in an election under subsection (3) of that section to be on or after the day on which the election is made) does not apply in relation to an election made on or before 31 March 2018.

• (2) In section 486 of that Act, subsection (5)(a) (which requires an election under that section to be made before the end-day of the new period of account) does not apply in relation to an election made on or before 31 March 2018.

Time limit relating to appointment of reporting company or filing interest restriction return

28

• (1) Paragraph 1(4)(a) of Schedule 7A to TIOPA 2010 (notice of the appointment of reporting company ineffective if given outside the period specified in that provision) does not apply to a notice that—

• (a) is given on or before 31 March 2018, and

• (b) would otherwise be of no effect by reason only of the expiry of the period specified in that provision.

• (2) Paragraph 2(4)(a) of that Schedule (notice of the revocation of the appointment of reporting company ineffective if given outside the period specified in that provision) does not apply to a notice that—

• (a) is given on or before 31 March 2018, and

• (b) would otherwise be of no effect by reason only of the expiry of the period specified in that provision.

• (3) Where the date determined under paragraph 7(5) of that Schedule as the filing date in relation to a period of account of a worldwide group would (apart from this sub-paragraph) be a date before 30 June 2018, that provision has effect as if it provided for the filing date in relation to the period to be 30 June 2018.

Change of accounting policy

29

• (1) For the purposes of Part 10 of TIOPA 2010 a debit or credit to which this paragraph applies is to be ignored.

• (2) This paragraph applies to a debit or credit if—

• (a) it is brought into account under the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271), and

• (b) the later period, in relation to the change of accounting policy to which the debit or credit relates, begins before 1 April 2017.

• (3) In sub-paragraph (2) “the later period” has the same meaning as in the regulations mentioned in that sub-paragraph.

Adjustments under Schedule 7 to F(No.2)A 2015

30

• (1) For the purposes of Part 10 of TIOPA 2010 a debit or credit to which this paragraph applies is to be ignored.

• (2) This paragraph applies to a debit or credit if—

• (a) it is brought into account for the purposes of Part 5 of CTA 2009 by virtue of paragraphs 115 and 116 of Schedule 7 to F(No.2)A 2015 (transitional adjustments relating to loan relationships), or

• (b) it is brought into account for the purposes of Part 7 of CTA 2009 by virtue of paragraphs 120 and 121 of that Schedule (transitional adjustments relating to derivative contracts).

Power to make elections under Disregard Regulations for pre-1 April 2020 derivative contracts

31

• (1) A company which is a UK group company of a worldwide group on 1 April 2017 may elect for the Disregard Regulations to have effect as if—

• (a) the company had made an election (“the disregard election”) under regulation 6A of those Regulations for the purposes of regulation 6(1)(a) of those Regulations,

• (b) the disregard election applied to regulations 7, 8 and 9 of those Regulations, and

• (c) the disregard election had effect in relation to derivative contracts entered into by the company before 1 April 2020.

• (2) The election has effect for the calculation under Part 10 of TIOPA 2010 of—

• (a) the tax-interest expense amounts and tax-interest income amounts of the company and any relevant transferee company, and

• (b) the adjusted corporation tax earnings under section 406 of that Act of the company and any relevant transferee company.

• (3) A company is a “relevant transferee company” if regulation 6B or 6C of the Disregard Regulations applies in relation to the company as the transferee mentioned in the regulation (on the assumption that an election has been made before the transfer under this paragraph).

• (4) An election under this paragraph has effect only if every company which was a UK group company of the worldwide group on 1 April 2017 (other than one which was dormant on that date or at the time the election is made) also makes an election under this paragraph.

• (5) An election under this paragraph—

• (a) must be made before 1 April 2018, and

• (b) is irrevocable.

• (6) Section 457 of TIOPA 2010 is to apply in relation to debits resulting from an election under this paragraph.

• (7) In this paragraph “the Disregard Regulations” means the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256).

• (8) Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.

Qualifying infrastructure companies

32

• (1) In the case of an accounting period of a company beginning before 1 April 2018, the company may make an election under section 433 or 444 of TIOPA 2010 before that date.

• (2) Companies making an election under section 435 of TIOPA 2010 before 1 April 2018 may specify a date in the election from which it has effect which is before the date on which the election is made.

33

• (1) This paragraph applies in the case of an accounting period of a company beginning before 1 April 2018 (“the transitional accounting period”) if—

• (a) the company does not meet the public infrastructure assets test, or the public infrastructure income test, for the transitional accounting period, but

• (b) in the case of each test that it does not meet as mentioned in paragraph (a), the company would meet the test for an accounting period that includes that date and is at least 3 months long.

• (2) For the purposes of section 433 of TIOPA 2010 the company is treated as meeting the test (or tests) for the transitional accounting period.

• (3) For the purposes of sections 438 and 440 to 442 of TIOPA 2010 such adjustments to the relevant amounts are to be made as are just and reasonable, having regard to the extent to which, but for this paragraph, the company would not have met the public infrastructure assets test, or the public infrastructure income test, for the transitional accounting period.

• (4) For this purpose “the relevant amounts” means—

• (a) amounts that would otherwise have qualified as exempt amounts under section 438,

• (b) amounts that would otherwise have been treated as mentioned in section 440,

• (c) the tax-EBITDA of the company, and

• (d) the amounts that would otherwise have been left of account as a result of section 442.

• (5) Expressions used in this paragraph and in section 433 of TIOPA 2010 have the same meaning in this paragraph as they have in that section.

Counteracting effect of avoidance arrangements

34

• (1) This paragraph applies in relation to section 461 of TIOPA 2010.

• (2) Section 461 applies in relation to arrangements whenever entered into.

• (3) Arrangements are not “relevant avoidance arrangements” for the purposes of section 461 so far as—

• (a) they secure that an amount paid before 1 April 2017 is brought into account in an accounting period ending before that date, and

• (b) directly in consequence of the amount being brought into account as mentioned in paragraph (a), there is a reduction in the tax-interest expense amounts that could otherwise have been left out of account under Part 10 of TIOPA 2010.

• (4) If an accounting period begins before 1 April 2017 and ends on or after that date, sub-paragraph (3) is to have effect as if so much of the accounting period as falls before that date, and so much of that period as falls on or after that date, were treated as separate accounting periods.

• (5) Arrangements are not “relevant avoidance arrangements” for the purposes of section 461 if the obtaining of any tax advantages that would otherwise arise from them can reasonably be regarded as arising wholly from commercial restructuring arrangements entered into in connection with the commencement of Part 10 of TIOPA 2010.

• (6) For this purpose “commercial restructuring arrangements” means—

• (a) arrangements that, but for that Part, would have resulted in significantly more corporation tax becoming payable as a result of one or more loan relationships being brought within the charge to corporation tax, or

• (b) arrangements that—

• (i) are designed to secure, in a way that is wholly consistent with its policy objectives, the benefit of a relief expressly conferred by a provision of that Part, and

• (ii) are effected by taking only ordinary commercial steps in accordance with a generally prevailing commercial practice.

• (7) This paragraph is to be read as if it formed part of section 461.

Commencement of orders or regulations containing consequential provision

35

• (1) This paragraph applies in relation to any order or regulations made before 1 April 2018 by the Treasury or Commissioners containing provision that is consequential on provision made by this Schedule.

• (2) Any order or regulations to which this paragraph applies may contain provision (however expressed) for securing that the consequential provision made by the order or regulations has effect in accordance with paragraph 25 (commencement) as if the consequential provision were included in the corporate interest restriction amendments mentioned in that paragraph.

Interpretation

36

References in this Part of this Schedule to Part 10 of TIOPA 2010 are to Part 10 of that Act as inserted by Parts 1 and 2 of this Schedule.

SCHEDULE 6

PART 1 — Amendment of CTA 2009

1

After Part 15D of CTA 2009 insert—

(1218ZA) (1) This Part is about the production of museum and gallery exhibitions, and applies for corporation tax purposes. (2) This Chapter explains what is meant by “exhibition” and “touring exhibition” and how a company comes to be treated as the primary production company or a secondary production company for an exhibition. (3) Chapter 2 is about the taxation of the activities of a production company and includes— (a) provision for the company's activities in relation to its exhibition 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 “museums and galleries exhibition tax relief”) which may be given to a production company in relation to an exhibition— (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 “museums and galleries exhibition tax credit”) to be made on the company's surrender of losses from that trade, and describes the conditions a company must meet to qualify for museums and galleries exhibition tax relief. (5) Chapter 4 contains provision about the use of losses of the separate trade (including provision about relief for terminal losses). (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. (1218ZAA) (1) In this Part “exhibition” means a curated public display of an organised collection of objects or works (or of a single object or work) considered to be of scientific, historic, artistic or cultural interest. (2) But a display is not an exhibition if— (a) it is organised in connection with a competition of any kind, (b) its main purpose, or one of its main purposes, is to sell anything displayed or to advertise or promote any goods or services, (c) it includes a live performance by any person, (d) anything displayed is for sale, or (e) anything displayed is alive. (3) Subsection (2) does not prevent a display being an exhibition if it includes a live performance by a person which is merely incidental to, or forms a merely incidental part of, the collection displayed. (4) A display is “public” if the general public is admitted to it, whether or not the public is charged for admission. (5) A display does not fall outside subsection (4) just because visitors other than the general public are admitted to it for a single session or a small number of sessions. (1218ZAB) (1) In this Part an exhibition is a “touring exhibition” if conditions A to E are met. (2) Condition A is that— (a) there is a primary production company for the exhibition (see section 1218ZAC), and (b) the primary production company is within the charge to corporation tax. (3) Condition B is that the primary production company intends, when planning the exhibition, that conditions C, D and E should be met in relation to it. (4) Condition C is that the exhibition is held at two or more venues. (5) Condition D is that at least 25% of the objects or works displayed at the first venue at which the exhibition is held are also displayed at every subsequent venue at which the exhibition is held. (6) Condition E is that the period between the deinstalling of the exhibition at one venue and the installation of the exhibition at the next venue does not exceed 6 months. (1218ZAC) (1) In this Part a company is the primary production company for an exhibition if the company (acting otherwise than in partnership) meets conditions A and B. (2) Condition A is that the company— (a) makes an effective creative, technical or artistic contribution to the exhibition, and (b) directly negotiates for, contracts for and pays for rights, goods and services in relation to the exhibition. (3) Condition B is that— (a) where the exhibition is held at just one venue, the company is responsible for the production of the exhibition at that venue; (b) where the exhibition is held at two or more venues, the company is responsible for the production of the exhibition at (at least) the first of those venues. (4) For the purposes of this section and section 1218ZAD, a company is responsible for the production of the exhibition at a venue if— (a) it is responsible for producing and running the exhibition at the venue, (b) where the exhibition is at the venue for a limited time, it is responsible for deinstalling and closing the exhibition at the venue, and (c) it is actively engaged in decision-making in relation to the exhibition at the venue. (5) If more than one company meets conditions A and B in relation to the production of the exhibition, the company that most directly meets those conditions is the primary production company for the exhibition. (6) If no company meets conditions A and B in relation to the production of the exhibition, there is no primary production company for the exhibition. (1218ZAD) (1) If an exhibition is held at two or more venues, there may be one or more secondary production companies for the exhibition. (2) In this Part a company is the secondary production company for an exhibition at a venue if the company meets conditions C and D. (3) Condition C is that the company (acting otherwise than in partnership) is responsible for the production of the exhibition at the venue. (4) Condition D is that the company is not the primary production company. (5) If more than one company meets conditions C and D in relation to the production of the exhibition at the venue, the company that is most directly responsible for the production of the exhibition at the venue is the secondary production company for the exhibition at the venue. (6) If no company meets conditions C and D in relation to the production of the exhibition at the venue, there is no secondary production company for the exhibition at the venue. (1218ZB) (1) Subsection (2) applies to a company in relation to an exhibition if, and only for so long as, the company qualifies for museums and galleries exhibition tax relief in relation to the production of the exhibition (see section 1218ZCA). (2) The company's activities in relation to the production of the exhibition are treated as a trade separate from any other activities of the company (including activities in relation to the production of any other exhibition). (3) In this Part the separate trade mentioned in subsection (2) is called “the separate exhibition trade”. (4) Subsections (5) and (6) apply where the company is the primary production company for the exhibition. (5) The company is treated as beginning to carry on the separate exhibition trade— (a) at the beginning of the production stage of the exhibition at the first venue at which it is held, or (b) if earlier, at the time of the first receipt by the company of any income from the production of the exhibition. (6) The company is treated as ceasing to carry on the separate trade when the exhibition closes at the last venue at which it is held. (7) Subsections (8) and (9) apply where the company is a secondary production company for the exhibition. (8) The company is treated as beginning to carry on the separate exhibition trade— (a) at the beginning of the production stage of the exhibition at the first venue for which the company is the secondary production company, or (b) if earlier, at the time of the first receipt by the company of any income from the production of the exhibition. (9) The company is treated as ceasing to carry on the separate trade when the exhibition closes at the last venue for which the company is the secondary production company. (1218ZBA) (1) This section applies for the purpose of calculating the profits or losses of the separate exhibition trade. (2) For the first period of account during which the separate exhibition trade is carried on, the following are brought into account— (a) as a debit, the costs of the production of the exhibition incurred to date; (b) as a credit, the proportion of the estimated total income from that production 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 (“C”) of the costs of the production of the exhibition incurred to date and the amount corresponding to C for the previous period, and (b) as a credit, the difference between the proportion (“PI”) of the estimated total income from that production treated as earned at the end of that period and the amount corresponding to PI for the previous period. (4) The proportion of the estimated total income treated as earned at the end of a period of account is— $$C T ÿ I$where—C is the total to date of costs incurred;T is the estimated total cost of the production of the exhibition;I is the estimated total income from the production of the exhibition.$ (1218ZBB) (1) References in this Chapter to income from a production of an exhibition are to any receipts by the company in connection with the production or exploitation of the exhibition. (2) This includes— (a) receipts from the sale of tickets or of rights in the exhibition; (b) royalties or other payments in connection with the exploitation of the exhibition or aspects of it (such as a particular exhibit); (c) payments for rights to produce merchandise; (d) a grant designated as made for the purposes of the exhibition; (e) receipts by the company by way of a profit share agreement. (1218ZBC) (1) References in this Chapter to the costs of a production of an exhibition are to expenditure incurred by the company on— (a) activities involved in developing, producing, running, deinstalling and closing the exhibition, or (b) activities with a view to exploiting the exhibition. (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. (1218ZBD) (1) For the purposes of this Chapter, the costs that have been incurred on a production of an exhibition at a given time do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay. (2) Where an obligation to pay an amount is linked to income being earned from the production of the exhibition, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1218ZBA. (1218ZBE) (1) This section applies if, before the company begins to carry on the separate exhibition trade, it incurs expenditure on activities falling within section 1218ZBC(1)(a). (2) The expenditure may be treated as expenditure of the separate exhibition trade and as if incurred immediately after the company begins to carry on that trade. (3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly. (4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made. (1218ZBF) Estimates for the purposes of section 1218ZBA 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. (1218ZC) (1) Relief under this Chapter (“museums and galleries exhibition tax relief”) is given by way of— (a) additional deductions (see sections 1218ZCE to 1218ZCG), and (b) museums and galleries exhibition tax credits (see sections 1218ZCH to 1218ZCK). (2) See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims for museums and galleries exhibition tax relief. (1218ZCA) (1) A company qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition if conditions A to D are met. (2) Condition A is that the company is— (a) the primary production company for the exhibition, or (b) a secondary production company for the exhibition. (3) Condition B is that the company is— (a) a charitable company which maintains a museum or gallery, (b) wholly owned by a charity which maintains a museum or gallery, or (c) wholly owned by a local authority which maintains a museum or gallery. See section 1218ZCB for the interpretation of paragraphs (b) and (c). (4) Condition C is that at the beginning of the planning stage, the company intends that the exhibition should be public (within the meaning given by section 1218ZAA). (5) Condition D is that the EEA expenditure condition is met (see section 1218ZCC). (6) For the purposes of subsection (3) “museum or gallery” includes— (a) a library or archive, and (b) a site where a collection of objects or works (or a single object or work) considered to be of scientific, historic, artistic or cultural interest is exhibited outdoors (or partly outdoors). (7) There is further related provision in section 1218ZCM (tax avoidance arrangements). (1218ZCB) (1) For the purposes of section 1218ZCA(3)(b) a company is “wholly owned by a charity which maintains a museum or gallery” if condition A or B is met. (2) Condition A is that— (a) the company has an ordinary share capital, and (b) every part of that share capital is owned by— (i) a charity which maintains a museum or gallery, or (ii) two charities, each of which maintains a museum or gallery. (3) Condition B is that— (a) the company is limited by guarantee, (b) there are no more than two beneficiaries of the company, and (c) the beneficiary, or each beneficiary, is— (i) a charity which maintains a museum or gallery, or (ii) a company wholly owned by a charity which maintains a museum or gallery. (4) For the purposes of section 1218ZCA(3)(c) a company is “wholly owned by a local authority” if— (a) where the company has an ordinary share capital, every part of that share capital is owned by the local authority, or (b) where the company is limited by guarantee, the local authority is the sole beneficiary of the company. (5) Ordinary share capital of a company is treated as owned by a charity or a local authority if the charity or local authority (as the case may be)— (a) directly or indirectly owns that share capital within the meaning of Chapter 3 of Part 24 of CTA 2010, or (b) would be taken so to own it if references in that Chapter to a body corporate included references to a charity or local authority which is not a body corporate. (6) A beneficiary of a company is a person who— (a) is beneficially entitled to participate in the company's divisible profits, or (b) will be beneficially entitled to share in any of the company's net assets available for distribution on its winding up. (7) In this section “museum or gallery” has the same meaning it has for the purposes of section 1218ZCA. (1218ZCC) (1) The “EEA expenditure condition” is that at least 25% of the core expenditure on the production of the exhibition incurred by the company is EEA expenditure. (2) In this Part “EEA expenditure” means expenditure on goods or services that are provided from within the European Economic Area. (3) Any apportionment of expenditure as between EEA and non-EEA expenditure for the purposes of this Part is to be made on a just and reasonable basis. (4) The Treasury may by regulations— (a) amend the percentage specified in subsection (1); (b) amend subsection (2). (5) See also sections 1218ZE and 1218ZEA (which are about the giving of relief provisionally on the basis that the EEA expenditure condition will be met). (1218ZCD) (1) Subject to the following provisions of this section, in this Part “core expenditure”, in relation to a company's production of an exhibition, means expenditure on the activities involved in producing, deinstalling and closing the exhibition at every relevant venue. (2) For the purposes of subsection (1) a venue is a “relevant venue” in relation to a company if the company's activities in relation to the exhibition at the venue form part of the company's separate exhibition trade. (3) Expenditure on the activities involved in deinstalling and closing the exhibition at a venue is core expenditure only if the period between the opening and closing of the exhibition at the venue is 12 months or less. (4) Expenditure on the storage of exhibits for an exhibition which is held at just one venue is not core expenditure. (5) Where a company incurs expenditure on the storage of exhibits for an exhibition which is held at two or more venues, the amount of such expenditure which is core expenditure is limited to the amount of relevant storage expenditure (if any) incurred by the company in respect of a period of 4 months or less. (6) For the purposes of subsection (5) expenditure in relation to the exhibition is “relevant storage expenditure” if— (a) the expenditure is incurred in respect of the storage of exhibits between the deinstallation of the exhibition at one venue and the opening of the exhibition at the next venue, and (b) the exhibits are not stored at a venue at which the exhibition has been held or is to be held. (7) Expenditure of the following kinds is not core expenditure— (a) expenditure on any matters not directly involved with putting on the exhibition (for instance, financing, marketing, legal services and promotional events), (b) speculative development expenditure on initial exhibition concepts and feasibility, (c) expenditure on the ordinary running of the exhibition (for instance, invigilation and the maintenance of exhibits), (d) expenditure in relation to any live performance, (e) expenditure on further development of the exhibition during the running stage, (f) expenditure on purchasing the exhibits, and (g) expenditure on infrastructure, unless that expenditure is incurred solely for the purposes of the exhibition. (1218ZCE) (1) A company which qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition may claim an additional deduction in relation to the production. (2) A claim under subsection (1) is made with respect to an accounting period. (3) Where a company has made a claim, the company is entitled to make an additional deduction, in accordance with section 1218ZCF, in calculating the profit or loss of the separate exhibition trade for the accounting period concerned. (4) Where the company tax return in which a claim is made is for an accounting period later than that in which the company begins to carry on the separate exhibition trade, the company must make any amendments of company tax returns for earlier periods that may be necessary. (5) Any amendment or assessment necessary to give effect to subsection (4) may be made despite any limitation on the time within which an amendment or assessment may normally be made. (1218ZCF) (1) The amount of an additional deduction to which a company is entitled as a result of a claim under section 1218ZCE is calculated as follows. (2) For the first period of account during which the separate exhibition trade is carried on, the amount of the additional deduction is E, where E is— (a) so much of the qualifying expenditure incurred to date as is EEA expenditure, or (b) if less, 80% of the total amount of qualifying expenditure incurred to date. (3) For any period of account after the first, the amount of the additional deduction is— $$E ⿿ P$where E is—so much of the qualifying expenditure incurred to date as is EEA expenditure, orif less, 80% of the total amount of qualifying expenditure incurred to date, andP is the total amount of the additional deductions given for previous periods.$ (4) The Treasury may by regulations amend the percentage specified in subsection (2) or (3). (5) If a period of account of the separate exhibition 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. (1218ZCG) (1) In this Chapter “qualifying expenditure”, in relation to the production of an exhibition, means core expenditure (see section 1218ZCD) on the production that— (a) falls to be taken into account under sections 1218ZBA to 1218ZBF in calculating the profit or loss of the separate exhibition trade for tax purposes, (b) is not expenditure which is otherwise relievable, and (c) is incurred on or before 31 March 2022. (2) For the purposes of this section expenditure is “otherwise relievable” if it is expenditure in respect of which (assuming a claim were made) the company would be entitled to— (a) an R&D expenditure credit under Chapter 6A of Part 3, (b) relief under Part 13 (additional relief for expenditure on research and development), (c) film tax relief under Chapter 3 of Part 15, (d) television tax relief under Chapter 3 of Part 15A, (e) video games tax relief under Chapter 3 of Part 15B, (f) an additional deduction under Part 15C (theatrical productions), (g) a theatre tax credit under Part 15C, or (h) orchestra tax relief under Chapter 3 of Part 15D. (3) The Treasury may by regulations amend paragraph (c) of subsection (1) so as to substitute a later date for the date for the time being specified in that paragraph. (1218ZCH) (1) A company which qualifies for museums and galleries exhibition tax relief in relation to the production of an exhibition may claim a museums and galleries exhibition tax credit in relation to the production for an accounting period in which the company has a surrenderable loss. (2) Section 1218ZCI sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period. (3) A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period. (4) Subject to section 1218ZCK, the amount of the museums and galleries exhibition tax credit to which a company making a claim is entitled for the accounting period is— (a) 25% of the amount of the loss surrendered if the exhibition is a touring exhibition (see section 1218ZAB), or (b) 20% of the amount of the loss surrendered if the exhibition is not a touring exhibition. (5) The company's available loss for the accounting period (see section 1218ZCI(2)) is reduced by the amount surrendered. (1218ZCI) (1) The company's surrenderable loss in the accounting period is— (a) the company's available loss for the period in the separate exhibition trade (see subsections (2) and (3)), or (b) if less, the available qualifying expenditure for the period (see subsections (4) and (5)). (2) The company's available loss for an accounting period is— $$L + RUL$where—L is the amount of the company's loss for the period in the separate exhibition trade, andRUL is the amount of any relevant unused loss of the company (see subsection (3)).$ (3) The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been— (a) surrendered under section 1218ZCH, or (b) carried forward under section 45 or 45B of CTA 2010 and set against profits of the separate exhibition trade. (4) For the first period of account during which the separate exhibition trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1218ZCF(2). (5) For any period of account after the first, the available qualifying expenditure is— $$E ⿿ S$where—E is the amount that is E for that period for the purposes of section 1218ZCF(3), andS is the total amount previously surrendered under section 1218ZCH.$ (6) If a period of account of the separate exhibition 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. (1218ZCJ) (1) If a company— (a) is entitled to a museums and galleries exhibition tax credit for an accounting period, and (b) makes a claim, the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company. (2) An amount payable in respect of— (a) a museums and galleries exhibition tax credit, or (b) interest on a museums and galleries exhibition 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 museums and galleries exhibition 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 museums and galleries exhibition 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, or (b) 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 museums and galleries exhibition tax credit is not income of the company for any tax purpose. (1218ZCK) (1) Subsections (2) and (3) prescribe the maximum amount of museums and galleries exhibition tax credits which may be paid to a company under section 1218ZCJ in respect of the company's separate exhibition trade. (2) Where the separate exhibition trade relates to the production of a touring exhibition, the maximum amount which may be paid to the company is £100,000. (3) Where the separate exhibition trade relates to the production of an exhibition which is not a touring exhibition, the maximum amount which may be paid to the company is £80,000. (4) In accordance with Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market, the total amount of museums and galleries exhibition tax credits payable under section 1218ZCJ in the case of any undertaking is not to exceed 75 million euros per year. (1218ZCL) (1) In determining for the purposes of this Chapter the amount of costs incurred on a production of an exhibition 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 1218ZBD (when costs are taken to be incurred). (1218ZCM) (1) A company does not qualify for museums and galleries exhibition tax relief in relation to the production of an exhibition if there are any tax avoidance arrangements relating to the production. (2) Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage. (3) In this section— - “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable; - “tax advantage” has the meaning given by section 1139 of CTA 2010. (1218ZCN) (1) A transaction is to be ignored for the purpose of determining museums and galleries exhibition tax relief so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons. (2) In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1218ZCM. (1218ZD) (1) Sections 1218ZDA to 1218ZDC apply to a company which is treated under section 1218ZB(2) as carrying on a separate trade in relation to the production of an exhibition. (2) In those sections “the completion period” means the accounting period in which the company ceases to carry on the separate exhibition trade. (1218ZDA) (1) This section applies if a loss is made by the company in the separate exhibition trade in an accounting period preceding the completion period. (2) The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 or 45B of CTA 2010 to be deducted from profits of the separate exhibition trade in a subsequent period. (3) If the loss is carried forward under section 45 or 45B of CTA 2010 and deducted from profits of the separate exhibition trade in a subsequent period, the deduction is to be ignored for the purposes of section 269ZB of CTA 2010 (restriction on deductions from trading profits). (4) In this section “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax. (1218ZDB) (1) Subsection (2) applies if a loss made in the separate exhibition trade is carried forward under section 45 or 45B of CTA 2010 to the completion period. (2) So much (if any) of the loss as is not attributable to museums and galleries exhibition tax relief (see subsection (4)) may be treated for the purposes of section 37 and Part 5 of CTA 2010 as if it were a loss made in the completion period. (3) If a loss is made in the separate exhibition trade in the completion period, 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 museums and galleries exhibition tax relief (see subsection (4)). (4) The amount of a loss in any period that is attributable to museums and galleries exhibition tax relief is found by— (a) calculating what the amount of the loss would have been if there had been no additional deduction under Chapter 3 in that or any earlier period, and (b) deducting that amount from the total amount of the loss. (5) This section does not apply to a loss surrendered, or treated as carried forward, under section 1218ZDC (terminal losses). (1218ZDC) (1) This section applies if— (a) the company ceases to carry on the separate exhibition trade, and (b) if the company had not ceased to carry on that trade, it could have carried forward an amount under section 45 or 45B of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”). Below in this section the company is referred to as “company A” and the separate exhibition trade is referred to as “trade 1”. (2) If company A— (a) is treated under section 1218ZB(2) as carrying on a separate trade in relation to the production of another exhibition (“trade 2”), and (b) is carrying on trade 2 when it ceases to carry on trade 1, company A 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— (a) in a case where the loss could have been carried forward under section 45 of CTA 2010 had trade 1 not ceased, as if it were a loss carried forward under that section to be set against the profits of trade 2 of the first accounting period beginning after the cessation and so on, and (b) in a case where the loss could have been carried forward under section 45B of CTA 2010 had trade 1 not ceased, as if it were a loss made in trade 2 which has been carried forward under that section to the first accounting period beginning after the cessation. (4) Subsection (5) applies if— (a) another company (“company B”) is treated under section 1218ZB(2) as carrying on a separate trade (“company B's trade”) in relation to the production of— (i) the exhibition which is the subject of trade 1, or (ii) another exhibition, (b) company B is carrying on company B's trade when company A ceases to carry on trade 1, 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 loss (or a part of it) to company B. (6) On the making of a claim by company B the amount surrendered is treated— (a) in a case where the amount could have been carried forward under section 45 of CTA 2010 had trade 1 not ceased, as if it were a loss carried forward by company B under that section to be set against the profits of company B's trade of the first accounting period beginning after the cessation and so on, and (b) in a case where the amount could have been carried forward under section 45B of CTA 2010 had trade 1 not ceased, as if it were a loss made in company B's trade which has been carried forward under that section to the first accounting period beginning after the cessation. (7) The Treasury may by regulations make administrative provision in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6). (8) “Administrative provision” means provision corresponding, subject to such adaptations or other modifications as appear to the Treasury to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief). (9) A deduction under section 45 or 45B of CTA 2010 which is made in reliance on this section is to be ignored for the purposes of section 269ZB of that Act (restriction on deductions from trading profits). (1218ZE) (1) In relation to a company and the production of an exhibition, “interim accounting period” means any accounting period that— (a) is one in which the company carries on the separate exhibition trade, and (b) precedes the accounting period in which it ceases to do so. (2) A company is not entitled to museums and galleries exhibition tax relief for an interim accounting period unless— (a) its company tax return for the period states the amount of planned core expenditure on the production of the exhibition that is EEA expenditure (see section 1218ZCC(2)), and (b) that amount is such as to indicate that the EEA expenditure condition (see section 1218ZCC) will be met. If those requirements are met, the company is provisionally treated in relation to that period as if the EEA expenditure condition were met. (1218ZEA) (1) If a statement is made under section 1218ZE(2) but it subsequently appears that the EEA expenditure condition will not be met on the company's ceasing to carry on the separate exhibition trade, the company— (a) is not entitled to museums and galleries exhibition tax 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. (2) When a company ceases to carry on the separate exhibition trade, the company's company tax return for the period in which that cessation occurs must— (a) state that the company has ceased to carry on the separate exhibition trade, and (b) be accompanied by a final statement of the amount of the core expenditure on the production of the exhibition that is EEA expenditure. (3) If that statement shows that the EEA expenditure condition is not met— (a) the company is not entitled to museums and galleries exhibition tax relief or to relief under section 1218ZDC (transfer of terminal losses) for any period, and (b) must amend accordingly its company tax return for any period for which such relief was claimed. (4) Any amendment or assessment necessary to give effect to this section may be made despite any limitation on the time within which an amendment or assessment may normally be made. (1218ZF) The Treasury may by regulations amend section 1218ZBC (costs of the production) or 1218ZCD (“core expenditure”) for the purpose of providing that activities of a specified description are, or are not, to be regarded as activities involved in developing or (as the case may be) producing, running, deinstalling or closing— (a) an exhibition, or (b) an exhibition of a specified description. (1218ZFA) In this Part— - “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1) of that Schedule); - “core expenditure” has the meaning given by section 1218ZCD; - “costs”, in relation to an exhibition, has the meaning given by section 1218ZBC; - “EEA expenditure” has the meaning given by section 1218ZCC(2); - “EEA expenditure condition” has the meaning given by section 1218ZCC; - “exhibition” has the meaning given by section 1218ZAA; - “income”, in relation to an exhibition, has the meaning given by section 1218ZBB; - “museums and galleries exhibition tax relief” is to be read in accordance with Chapter 3 (see in particular section 1218ZC(1)); - “primary production company” has the meaning given by section 1218ZAC; - “qualifying expenditure” has the meaning given by section 1218ZCG; - “secondary production company” has the meaning given by section 1218ZAD; - “the separate exhibition trade” is to be read in accordance with section 1218ZB; - “touring exhibition” has the meaning given by section 1218ZAB.

PART 2 — Consequential amendments

ICTA

2

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

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

(fe) a payment of museums and galleries exhibition tax credit falls to be made to a company; or

.

• (3) In subsection (3C), for “or orchestra tax credit” substitute “ , orchestra tax credit or museums and galleries exhibition tax credit ”.

• (4) In subsection (8A)—

• (a) in paragraph (a), for “or (fd)” substitute “ , (fd) or (fe) ”, and

• (b) in paragraph (b)(ii), after “orchestra tax credit” insert “ or museums and galleries exhibition tax credit ”.

• (5) In subsection (8BA), after “orchestra tax credit” (in both places) insert “ or museums and galleries exhibition tax credit ”.

FA 1998

3

Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended in accordance with paragraphs 4 to 6.

4

In paragraph 10 (other claims and elections to be included in return), in sub-paragraph (4), for “or 15D” substitute “ , 15D or 15E ”.

5

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

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

(bi) museums and galleries exhibition tax credit under Part 15E of that Act,

.

• (3) In sub-paragraph (5)—

• (a) after paragraph (aj) insert—

(ak) an amount of museums and galleries exhibition tax credit paid to a company for an accounting period,

, and

• (b) in the words after paragraph (b), after “(aj)” insert “ , (ak) ”.

6

In Part 9D (certain claims for tax relief)—

• (a) in the heading, for “or 15D” substitute “ , 15D or 15E ”, and

• (b) in paragraph 83S (introduction), after sub-paragraph (f) insert—

(g) museums and galleries exhibition tax relief.

CAA 2001

7

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

FA 2007

8

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 paragraph (ivd) and after that paragraph insert—

(ive) a museums and galleries exhibition tax credit under Chapter 3 of Part 15E of that Act, or

.

CTA 2009

9

CTA 2009 is amended in accordance with paragraphs 10 to 14.

10

In section 104BA (restriction on claiming other tax reliefs), after subsection (4) insert—

(5) For provision prohibiting an R&D expenditure credit being given under this Chapter and relief being given under Chapter 3 of Part 15E (museums and galleries exhibition tax relief), see section 1218ZCG(2).

11

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

(808E) (1) This Part does not apply to an intangible fixed asset held by a museums and galleries exhibition production company so far as the asset represents expenditure on an exhibition that is treated under Part 15E as expenditure of a separate trade (see particularly sections 1218ZB and 1218ZBE). (2) In this section— - “exhibition” has the same meaning as in Part 15E (see section 1218ZAA); - “museums and galleries exhibition production company” means a company which, for the purposes of that Part, is the primary production company or a secondary production company for an exhibition (see sections 1218ZAC and 1218ZAD).

12

In section 1040ZA (restriction on claiming other tax reliefs), after subsection (4) insert—

(5) For provision prohibiting relief being given under this Part and under Chapter 3 of Part 15E (museums and galleries exhibition tax relief), see section 1218ZCG(2).

13

In section 1310 (orders and regulations), in subsection (4), after paragraph (eo) insert—

(ep) section 1218ZCC (EEA expenditure condition), (eq) section 1218ZCF (amount of additional deduction), (er) section 1218ZF (regulations about activities in relation to exhibition),

.

14

In Schedule 4 (index of defined expressions), insert at the appropriate places—

company tax return (in Part 15E)	section 1218ZFA
core expenditure (in Part 15E)	section 1218ZCD
---	---
costs, in relation to an exhibition (in Part 15E)	section 1218ZBC
---	---
EEA expenditure (in Part 15E)	section 1218ZCC(2)
---	---
EEA expenditure condition (in Part 15E)	section 1218ZCC
---	---
exhibition (in Part 15E)	section 1218ZAA
---	---
income, in relation to an exhibition (in Part 15E)	section 1218ZBB
---	---
museums and galleries exhibition tax relief (in Part 15E)	section 1218ZC(1)
---	---
primary production company (in Part 15E)	section 1218ZAC
---	---
qualifying expenditure (in Part 15E)	section 1218ZCG
---	---
secondary production company (in Part 15E)	section 1218ZAD
---	---
separate exhibition trade (in Part 15E)	section 1218ZB
---	---
touring exhibition (in Part 15E)	section 1218ZAB
---	---

.

FA 2009

15

In Schedule 54A to FA 2009 (which is prospectively inserted by F(No. 3)A 2010 and contains provision about the recovery of certain amounts of interest paid by HMRC), in paragraph 2—

• (a) in sub-paragraph (2), omit the “or” at the end of paragraph (h) and after paragraph (i) insert

, or (j) a payment of museums and galleries exhibition tax credit under Chapter 3 of Part 15E of CTA 2009 for an accounting period.

;

• (b) in sub-paragraph (4), for “(i)” substitute “ (j) ”.

CTA 2010

16

In Part 8B of CTA 2010 (trading profits taxable at Northern Ireland rate), in section 357H(7) (introduction), after “Chapter 14A for provision about orchestra tax relief;” insert “ Chapter 14B for provision about museums and galleries exhibition tax relief; ”.

17

In Part 8B of CTA 2010, after section 357UQ insert—