Finance Act 2000 (c. 17)

(The document as of February, 2008)

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(a) a company ("company C") disposes of an asset forming part of the trading stock of a trade to which this section applies carried on by that company,

(b) the disposal is to another company ("company D") that at the time of the disposal is a member of the same group of companies, and

company C is treated for the purposes of section 161 as having appropriated the asset immediately before the disposal for some purpose other than the purpose of use as trading stock.

(3) The trades to which this section applies are--

(a) any trade carried on by a company resident in the United Kingdom, and

(b) any trade carried on in the United Kingdom through a branch or agency by a company not so resident. " .

(2) The above amendment, and the main amendments so far as they apply for the purposes of section 173 (as substituted by sub-paragraph (1) above), have effect in relation to acquisitions and disposals on or after 1st April 2000.

Restriction of losses by reference to capital allowances

12 (1) In section 41 of the Taxation of Chargeable Gains Act 1992, after subsection (7) add--

" (8) Where there is a disposal of an asset acquired in circumstances in which--

(a) section 140A applies, or

(b) section 171 applies or would apply but for subsection (2) of that section,

this section has effect in relation to capital allowances made to the person from which it was acquired (so far as not taken into account in relation to a disposal of the asset by that person), and so on as respects previous transfers of the asset in such circumstances.

This does not affect the consideration for which an asset is deemed under section 140A or 171 to be acquired. " .

(2) The above amendment has effect in relation to cases where the disposal first referred to in section 41(8) (as inserted by sub-paragraph (1) above) is on or after 1st April 2000.

Assets held on 6th April 1965: disposal outside group

13 (1) Section 174 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 is amended as follows.

(2) In subsection (4) for "at a time when both were members of the group" substitute "in a transfer to which section 171(1) applied".

(3) Subsection (5) shall cease to have effect.

(4) The above amendments, and the main amendments so far as they apply for the purposes of section 174, have effect in relation to acquisitions on or after 1st April 2000.

(5) Any question whether a company was, in relation to times before 1st April 2000, a member of a group shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as it stood before the main amendments.

Part II Minor and consequential amendments

Section 97 of the [1984 c. 51.] Inheritance Tax Act 1984

14 The main amendments have effect for the purposes of section 97 of the Inheritance Tax Act 1984 (transfer of asset within a group of companies) in relation to disposals on or after 1st April 2000.

Section 132 of the [1988 c. 39.] Finance Act 1988

15 (1) In section 132 of the Finance Act 1988 (recovery of tax from another group company or controlling director), in subsection (6), in the definition of "group", the words "references to residence in the United Kingdom were omitted and" shall cease to have effect.

(2) The above amendment, and the main amendments so far as they apply for the purposes of section 132, have effect in relation to cases in which the migrating company ceases to be resident in the United Kingdom on or after 1st April 2000.

(3) Any question whether a company was a member of a group during the period of twelve months ending when the migrating company ceased to be so resident shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992 as amended by the main amendments.

Section 14 of the Taxation of Chargeable Gains Act 1992

16 (1) Section 14 of the Taxation of Chargeable Gains Act 1992 (non-resident groups of companies) is amended as follows.

(2) For subsection (2) substitute--

" (2) The following provisions--

(a) section 41(8),

(b) section 171 (except subsections (1)(b) and (1A)),

(c) section 173 (with the omission of the words "to which this section applies" in subsections (1)(a) and (2)(a) and "such" in subsections (1)(c) and (2)(c) and with the omission of subsection (3)),

(d) section 174(4) (with the substitution of "at a time when both were members of the group" for "in a transfer to which section 171(1) applied"), and

(e) section 175(1) (with the omission of the words "to which this section applies"),

shall apply in relation to non-resident companies which are members of a non-resident group of companies as they apply in relation to companies which are members of a group of companies. "

(3) In subsection (3), for "Sections 178 to 180" substitute "Section 179 (except subsections (1)(b) and (1A))".

(4) In subsection (4)(b), the words "without subsections (2)(a), (9) and (12) to (14)" shall cease to have effect.

(5) The above amendments, and the main amendments so far as they apply for the purposes of section 14, have effect in cases in which section 41, 171, 173, 174(4), 175(1) or 179, as the case may be, have effect as amended by this Schedule.

Section 31A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992

17 (1) Section 31A of the Taxation of Chargeable Gains Act 1992 (asset-holding company leaving a group of companies) is amended as follows.

(2) In subsection (9)(b) for "the principal company of that group" substitute--

" any other company which--

(i) is a member of that group immediately before that event, and

(ii) is designated as the chargeable company for the purposes of this section in a notice served on the company by an officer of the Board. "

(3) After subsection (10) add--

" (11) Where a notice is served on a company under subsection (9)(b) above, the Inland Revenue may make an assessment to tax in the amount which in their opinion ought to be charged under this section. "

(4) The above amendments, and the main amendments so far as they apply for the purposes of sections 30 to 34 of that Act, have effect in relation to disposals on or after 1st April 2000.

Section 106 of the Taxation of Chargeable Gains Act 1992

18 (1) Section 106 of the Taxation of Chargeable Gains Act 1992 (disposal of shares and securities within prescribed period of acquisition) is amended as follows.

(2) For subsection (2) substitute--

" (2) Subsections (2A) to (2C) below apply where the company making the disposal is a member of a group.

(2A) Where--

(a) shares of the class in question are held by another member of the group, and

(b) at any time during the prescribed period before the disposal, the condition in subsection (2D) below is met,

those shares shall be treated for the purposes of paragraph (a) of subsection (1) above as held by the company making the disposal.

(2B) Where--

(a) shares of the class in question are acquired by another member of the group, and

(b) at the time of the acquisition, the condition in subsection (2D) below is met,

those shares shall be treated for the purposes of paragraph (b) of subsection (1) above as acquired by the company making the disposal.

(2C) Where--

(a) shares of the class in question are acquired by the company making the disposal from another company which was a member of the group throughout the prescribed period before and after the disposal, and

(b) throughout the part of the prescribed period before or after the disposal for which the other member of the group held the shares, the condition in subsection (2D) below is met,

those shares shall be disregarded for the purposes of paragraph (b) of subsection (1) above.

(2D) The condition referred to in subsections (2A) to (2C) above is--

(a) that the other member of the group is resident in the United Kingdom, or

(b) that the shares are chargeable shares in relation to that other member. "

(3) In subsection (10), after the definition of "prescribed period" insert-- " and for the purposes of this section shares are "chargeable shares" in relation to a company at any time if, were the shares to be disposed of by the company at that time, any gain accruing to the company would be a chargeable gain and would by virtue of section 10(3) form part of its chargeable profits for corporation tax purposes. "

(4) The above amendments, and the main amendments so far as they apply for the purposes of section 106, have effect in relation to cases in which the prescribed period before the disposal (within the meaning of that section) begins on or after 1st April 2000.

Section 116 of the Taxation of Chargeable Gains Act 1992

19 (1) In section 116 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (reorganisations, conversions and reconstructions), in subsection (11) for "171(1) or 172" substitute "or 171(1)".

(2) The above amendment has effect in accordance with paragraph 3(2).

Section 117A of the Taxation of Chargeable Gains Act 1992

20 (1) In section 117A of the Taxation of Chargeable Gains Act 1992 (assets that are not qualifying corporate bonds for corporation tax purposes), in subsection (8)(a) for "171 and 172" substitute "and 171".

(2) The above amendment has effect in accordance with paragraph 3(2).

Section 117B of the Taxation of Chargeable Gains Act 1992

21 (1) In section 117B of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (holdings in unit trusts etc excluded from treatment as qualifying corporate bonds), in subsection (6)(a) for "171 and 172" substitute "and 171".

(2) The above amendment has effect in accordance with paragraph 3(2).

Section 138A of the Taxation of Chargeable Gains Act 1992

22 The main amendments have effect for the purposes of section 138A of the Taxation of Chargeable Gains Act 1992 (use of earn-out rights for exchange of securities) in relation to rights conferred on or after 1st April 2000.

Section 140 of the Taxation of Chargeable Gains Act 1992

23 (1) In section 140 of the Taxation of Chargeable Gains Act 1992 (postponement of charge on transfer of assets to non-resident company), in subsection (6)(b) for "apart from section 170(2)(a) and (9)" substitute "if subsections (1)(b) and (1A) of that section and section 170(9) were disregarded".

(2) The above amendment has effect in relation to disposals on or after 1st April 2000.

Section 176 of the Taxation of Chargeable Gains Act 1992

24 (1) In section 176 of the Taxation of Chargeable Gains Act 1992 (depreciatory transactions within a group), in subsection (7), paragraph (c) and the word "and" immediately preceding it shall cease to have effect.

(2) The above amendment, and the main amendments so far as they apply for the purposes of section 176, have effect in relation to cases in which the depreciatory transaction (within the meaning of that section) is on or after 1st April 2000.

Section 177 of the Taxation of Chargeable Gains Act 1992

25 (1) In section 177 of the Taxation of Chargeable Gains Act 1992 (dividend stripping), in subsection (2) for "171 or 172" substitute "or 171".

(2) The above amendment, and the main amendments so far as they apply for the purposes of section 177, have effect in relation to disposals on or after 1st April 2000.

Section 178 of the Taxation of Chargeable Gains Act 1992

26 Section 178 of the Taxation of Chargeable Gains Act 1992 (which is spent) shall cease to have effect.

Section 180 of the Taxation of Chargeable Gains Act 1992

27 Section 180 of the Taxation of Chargeable Gains Act 1992 (which is spent) shall cease to have effect.

Section 181 of the Taxation of Chargeable Gains Act 1992

28 (1) In section 181 of the Taxation of Chargeable Gains Act 1992 (exemption from de-grouping charge in the case of certain mergers)--

(a) in subsection (1), for "neither section 178 nor section 179 shall" substitute "section 179 shall not"; and

(b) subsection (5) shall cease to have effect.

(2) The amendment made by sub-paragraph (1)(b) above, and the main amendments so far as they apply for the purposes of section 181, have effect in relation to cases in which the company ceases to be a member of a group on or after 1st April 2000.

Section 192 of the Taxation of Chargeable Gains Act 1992

29 In section 192 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (tax exempt distributions), in subsection (3) for "neither section 178 nor 179 shall" substitute "section 179 shall not".

Section 211 of the Taxation of Chargeable Gains Act 1992

30 (1) Section 211 of the Taxation of Chargeable Gains Act 1992 (transfer of long term business of an insurance company) shall be amended as follows.

(2) In subsection (2)--

(a) the words "Subject to subsection (3) below" shall cease to have effect,

(b) after paragraph (a) insert "or", and

(3) After subsection (2) insert--

" (2A) Where section 139 has effect in relation to an asset by virtue of subsection (2) above, the reference in subsection (1A) of that section to section 10(3) shall be construed as a reference to section 11(2)(b), (c), (d) or (e) of the Taxes Act. "

(4) Subsection (3) shall cease to have effect.

(5) The above amendments have effect in accordance with paragraph 5(4).

Section 216 of the Taxation of Chargeable Gains Act 1992

31 The main amendments have effect for the purposes of section 216 of the Taxation of Chargeable Gains Act 1992 (assets transferred from building society to company) in relation to transfers on or after 1st April 2000.

Section 217C of the Taxation of Chargeable Gains Act 1992

32 (1) In section 217C of the Taxation of Chargeable Gains Act 1992 (disposal of assets by incorporated friendly society), for subsection (2) substitute--

" (2) If the disposal by the incorporated society is in the circumstances mentioned in subsection (8) of section 41, the disposal to which section 217A(3) applies shall for the purposes of that subsection be taken to have been a previous transfer of the asset in such circumstances. " .

(2) The above amendment has effect in relation to cases in which the disposal by the incorporated society is on or after 1st April 2000.

Section 228 of the Taxation of Chargeable Gains Act 1992

33 The main amendments have effect for the purposes of section 228 of the Taxation of Chargeable Gains Act 1992 (conditions for roll-over relief: supplementary) in relation to disposals on or after 1st April 2000.

Section 253 of the Taxation of Chargeable Gains Act 1992

34 The main amendments have effect for the purposes of section 253 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (relief for loans to traders)--

(a) in relation to loans made on or after 1st April 2000;

(b) in relation to guarantees given on or after that date.

Section 276 of the Taxation of Chargeable Gains Act 1992

35 (1) In section 276 of the Taxation of Chargeable Gains Act 1992 (application of the 1992 Act to the territorial sea and the continental shelf), for subsection (8) substitute--

" (8) The provisions specified in subsection (9) below shall apply in relation to a disposal of exploration or exploitation rights or exploration or exploitation assets if (and only if) the disposal is--

(a) by a company resident in a territory outside the United Kingdom to a company resident in the same territory,

(b) by a company resident in the United Kingdom to another company which is so resident, or

(9) Those provisions are--

(a) section 41(8),

(b) section 171 (except subsections (1)(b) and (1A)),

(c) section 173 (with the omission of the words "to which this section applies" in subsections (1)(a) and (2)(a) and "such" in subsections (1)(c) and (2)(c) and with the omission of subsection (3)),

(d) section 174(4) (with the substitution of "at a time when both were members of the group" for "in a transfer to which section 171(1) applied"),

(e) section 179 (except subsections (1)(b) and (1A)), and

(f) section 181.

(10) The provisions specified in subsection (9) above shall apply in accordance with subsection (8) above with the following modifications--

(a) for the purposes of paragraph (a) of subsection (9) above, section 41(8) applies as if section 170 applied, for the purposes of section 171, with the omission of subsection (9), and

(b) for the purposes of paragraphs (b) to (f) of subsection (9) above, the provisions specified in those paragraphs apply as if in section 170 subsection (9) were omitted. "

(2) The above amendment has effect in cases in which section 41, 171, 173, 174(4), 179 or 181, as the case may be, has effect as amended by this Schedule.

Schedule A1 to the Taxation of Chargeable Gains Act 1992

36 The main amendments have effect for the purposes of paragraph 11 of Schedule A1 to the Taxation of Chargeable Gains Act 1992 (rules for application of taper relief) in relation to any determination whether, at any time on or after 1st April 2000, a company is a 51 per cent subsidiary of another company.

Schedule 2 to the Taxation of Chargeable Gains Act 1992

37 The main amendments have effect for the purposes of paragraph 5 of Schedule 2 to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (disposals of assets held on 6th April 1965) in relation to any determination whether, at any time on or after 1st April 2000, a company is a member, or the principal company, of a group of companies.

Schedule 3 to the Taxation of Chargeable Gains Act 1992

38 The main amendments have effect for the purposes of paragraphs 8 and 9 of Schedule 3 to the Taxation of Chargeable Gains Act 1992 (disposals of assets held on 31st March 1982: supplementary provisions) in relation to any determination whether, at any time on or after 1st April 2000, a company is a member, or the principal company, of a group of companies.

Schedule 7B to the Taxation of Chargeable Gains Act 1992

39 (1) Schedule 7B to the Taxation of Chargeable Gains Act 1992 (modification of that Act in relation to overseas life insurance companies) is amended as follows.

(2) After paragraph 6 insert--

" 6A In section 171(1A), the words "section 11(2)(b), (c), (d) or (e) of the Taxes Act" shall be treated as substituted for the words "section 10(3)".

6B In section 175(2AA), the words "section 11(2)(b), (c), (d) or (e) of the Taxes Act" shall be treated as substituted for the words "section 10(3)". " .

(3) In paragraph 9 for "section 191(1)(b)" substitute "section 190(2)(b)".

(4) After paragraph 14 add--

" 15 (1) In Schedule 7A, in sub-paragraph (3A) of paragraph 1, the words "section 11(2)(b), (c), (d) or (e) of the Taxes Act" shall be treated as substituted for the words "section 10(3)".

(2) In that paragraph, the following sub-paragraph shall be treated as inserted after sub-paragraph (4)--

" (4A) Where--

(a) an asset is held by an overseas life insurance company, and

(b) section 440 of the Taxes Act applies at any time in relation to the asset,

the asset shall not be treated for the purposes of sub-paragraph (3A)(b) above as having become a chargeable asset at that time. " "

(5) The amendment made by sub-paragraph (2) above has effect in relation to cases where section 171 or, as the case may be, section 175 has effect as amended by this Schedule.

(6) The amendment made by sub-paragraph (3) above has effect in relation to cases where section 190 has effect as amended by this Schedule.

(7) The amendment made by sub-paragraph (4) above has effect in relation to cases where Schedule 7A has effect as amended by this Schedule.

Schedule 7C to the Taxation of Chargeable Gains Act 1992

40 The main amendments have effect for the purposes of Schedule 7C to the Taxation of Chargeable Gains Act 1992 (which is inserted by virtue of section 48 of this Act).

Section 136 of the Finance Act 1993

41 (1) In section 136 of the [1993 c. 34.] Finance Act 1993 (exchange gains and losses: arm's length test in relation to assets and liabilities), for subsection (12)(d) substitute--

" (d) any question whether companies are members of the same group shall be determined in accordance with section 170 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992. "

(2) The above amendment, and the main amendments so far as they apply for the purposes of section 136, have effect in relation to accrual periods beginning on or after 1st April 2000.

Section 136A of the Finance Act 1993

42 (1) In section 136A of the Finance Act 1993 (exchange gains and losses: arm's length test in relation to debts of varying amounts), for subsection (10)(d) substitute--

" (d) any question whether companies are members of the same group shall be determined in accordance with section 170 of the Taxation of Chargeable Gains Act 1992. "

(2) The above amendment, and the main amendments so far as they apply for the purposes of section 136A, have effect in relation to accrual periods beginning on or after 1st April 2000.

Schedule 17 to the Finance Act 1993

43 (1) In Schedule 17 to the Finance Act 1993 (exchange gains and losses: chargeable gains), in paragraph 7(2)(b) for "171 or 172" substitute "or 171".

(2) The above amendment has effect in accordance with paragraph 3(2) above.

Schedule 9 to the Finance Act 1996

44 (1) Schedule 9 to the [1996 c. 8.] Finance Act 1996 (computational provisions in relation to loan relationships) is amended as follows.

(2) In paragraph 11 (transactions not at arm's length), in sub-paragraph (3) for paragraphs (a) and (b) substitute--

" (a) in the case of any related transaction between two companies that are--

(i) members of the same group, and

(ii) within the charge to corporation tax in respect of that transaction; or

(b) in relation to a member of a group of companies, in the case of any transaction which is part of a series of transactions having the same effect as a transaction falling within paragraph (a) above. "

(3) In that paragraph, for sub-paragraph (5) substitute--

" (5) In this paragraph references to a company which is a member of a group of companies shall be construed in accordance with section 170 of the Taxation of Chargeable Gains Act 1992. "

(4) In paragraph 12 (continuity of treatment), in sub-paragraph (1), for paragraphs (a) and (b) substitute--

" (a) a related transaction between two companies that are--

(i) members of the same group, and

(ii) within the charge to corporation tax in respect of that transaction,

(b) a series of transactions having the same effect as a related transaction between two companies each of which--

(i) has been a member of the same group at any time in the course of that series of transactions, and

(ii) is within the charge to corporation tax in respect of the related transaction, " .

(5) The above amendments, and the main amendments so far as they apply for the purposes of paragraphs 11 and 12 of Schedule 9 to the [1996 c. 8.] Finance Act 1996, have effect in relation to transactions entered into, or series of transactions begun, on or after 1st April 2000.

Schedule 15 to the Finance Act 1996

45 (1) In Schedule 15 to the Finance Act 1996 (loan relationships: savings and transitional provisions), in paragraph 8(2) for "171(1) or 172" substitute "or 171(1)".

(2) The above amendment has effect in accordance with paragraph 3(2) above.

Part III Transitional provisions

46 (1) For the purposes of this paragraph--

(a) references to a company which was a member of an old group are references to it being, immediately before the time when the main amendments have effect in accordance with the preceding provisions of this Schedule, a member of a group for the purposes of section 170 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (as it stood before the main amendments), and

(b) references to a company which is a member of a new group are references to it being, immediately after that time, a member of a group for the purposes of that section (as amended by the main amendments).

(2) Where the same two or more companies were members of an old group and are members of a new group, those groups shall be regarded as the same group for the purposes of the provisions amended by this Schedule in relation to which the main amendments have effect.

(3) Sub-paragraph (2) above applies irrespective of whether the new group includes companies which were not members of the old group.

(4) Sub-paragraph (5) below applies in relation to a company which--

(a) was a member of an old group, but

(b) is not a member of a new group by reason only that--

(i) the principal company of the old group is not the principal company of the new group, and

(ii) the company in question is not an effective 51 per cent subsidiary of the principal company of the new group.

(5) For the purposes of the provisions amended by this Schedule in relation to which the main amendments have effect, section 170(3)(b) of the Taxation of Chargeable Gains Act 1992 shall not apply in relation to the company for so long as it remains an effective 51 per cent subsidiary of the company which was the principal company of the old group.

(6) Expressions used in this paragraph and in section 170 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall be construed for the purposes of this paragraph in accordance with that section.

Section 103.

SCHEDULE 30 Double taxation relief

Power to make treaty provision for matching credit for tax spared in foreign country

1 (1) In section 788 of the Taxes Act 1988 (relief by agreement with other countries) in subsection (5) (matching credit for tax spared in foreign country) in the second sentence, paragraph (b) (power to provide for relief in the arrangements themselves) shall cease to have effect.

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