Income Tax (Trading and Other Income) Act 2005 (c. 5)

(The document as of February, 2008)

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(a) in subsection (1) for "a person" substitute "a company", and

(b) in subsection (2)(a) for ", profession or vocation" substitute "or profession".

62 (1) Amend section 87 (taxable premiums etc.) as follows.

(2) In subsection (1)--

(a) for "trade, profession or vocation" substitute "trade or profession",

(b) omit "or" at the end of paragraph (a),

" (c) any amount falls to be treated as a receipt of a UK property business by virtue of any of sections 277 to 282 of ITTOIA 2005 (receipts in respect of lease premiums, sums payable instead of rent, for surrender of lease and for variation or waiver of term of lease and assignments), or

(d) any amount would fall to be so treated but for the operation of the rule in section 288 of that Act (the additional calculation rule), " , and

(d) after "below" insert "and in section 87A".

(3) In subsection (2)--

(a) for "the person" substitute "a company which is",

(b) for "trade, profession or vocation", in both places where it occurs, substitute "trade or profession",

(d) for "he" substitute "the company", and

(e) for "tax" substitute "corporation tax".

(4) In subsection (4)--

(a) for "person" substitute "company",

(b) for "his" substitute "the company's",

(d) for "him", in both places where it occurs, substitute "the company".

(5) In subsection (6)--

(a) for "chargeable period", wherever it occurs, substitute "accounting period",

(b) for "person" substitute "company", and

(6) In subsection (7)--

(a) for "his" substitute "the company's",

(b) for "person" substitute "company",

(d) for "him", in both places where it occurs, substitute "the company".

(7) In subsection (8) after "section 34(2)" insert "or under section 277 of ITTOIA 2005 by virtue of section 278 of that Act (amount treated as lease premium where work required)".

(8) In subsection (9) after paragraph (b) insert--

" (c) where the amount chargeable arose under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.), its receipt period (within the meaning of that Chapter (see section 288(6)). "

(9) After subsection (9) insert--

" (9A) In the application of this section and section 87A to Scotland--

(a) the reference to a lease being granted out of the interest referred to in subsection (4) above is to the grant of a sublease of land subject to that interest, and

(b) references to the lease so granted are to be construed as references to the sublease. "

63 After section 87 insert--

" 87A Section 87(2) and (3) and reductions in receipts under ITTOIA 2005

(1) This section applies if--

(a) a lease has been granted out of the interest referred to in section 87(4),

(b) in calculating the amount that falls to be treated as a receipt of a UK property business under Chapter 4 of Part 3 of ITTOIA 2005 in respect of the lease, there is a reduction under section 288 of that Act by reference to a taxed receipt, and

(2) Section 37A (section 37(4) and reductions in receipts under ITTOIA 2005) shall apply for modifying the operation of section 87(2) and (3) as it applies for modifying the operation of section 37(4).

(3) In this section the following expressions have the same meaning as in Chapter 4 of Part 3 of ITTOIA 2005--

"reduction under section 288 by reference to a taxed receipt" (see section 290(6) of that Act), and
"taxed receipt" (see section 287(4) of that Act). "

64 In section 88 (payments to Export Credits Guarantee Department)--

(a) for "a person" substitute "a company",

(b) for "trade, profession or vocation carried on by that person" substitute "trade or profession carried on by that company", and

65 For section 89 (debts proving irrecoverable after event treated as discontinuance) substitute--

" 89 Debts proving to be irrecoverable after discontinuance etc

(1) This section applies if--

(a) section 337(1) applies to treat a trade as discontinued by reason of any event, or

(b) a person permanently ceases to carry on a trade or profession,

and a company carries on the trade or profession after that event or cessation.

(2) In computing for corporation tax purposes the profits of the trade or profession in any period after the event or cessation, there may be deducted a sum equal to any amount proved during that period to be irrecoverable in respect of any debts--

(a) which were credited in computing for tax purposes the profits for any period before the event or cessation, and

(b) in respect of which the benefit was assigned to the company carrying on the trade or profession after the event or cessation.

(3) Subsection (2) applies only so far as the total amount proved to be irrecoverable in respect of the debts exceeds any deduction allowed in respect of them under--

(a) section 74(1)(j), or

(b) section 35 of ITTOIA 2005,

in a computation for any period before the event or cessation. "

66 (1) Amend section 90 (additional payments to redundant employees) as follows.

(2) In subsection (1)--

(a) for ", profession or vocation" substitute "or profession", and

(b) for "profession, vocation or business", in both places, substitute "profession or business".

(3) In subsection (3)--

(a) for "profession, vocation or business" substitute "profession or business", and

(b) omit "113(1) or".

67 (1) Amend section 91 (cemeteries) as follows.

(2) In subsection (1)--

(a) after "computing" insert "for corporation tax purposes", and

(b) for "the person" substitute "the company".

(3) In subsection (2) for "the person" substitute "the company".

(4) In subsection (4)(a)(i)--

(a) after "above" insert ", or under section 170(2)(b) of ITTOIA 2005 (relief for income tax purposes)", and

(b) after "computing" insert "for tax purposes".

(5) In subsection (4)(a)(ii)--

(a) for "the person" substitute "the company", and

(b) for "him" substitute "it".

(6) In subsection (5)--

(a) for "the persons carrying on the trade after the change" substitute "the company carrying on the trade after the change",

(b) for "they" substitute "the company",

(d) for "them" substitute "it".

(7) For subsection (6) substitute--

" (6) No expenditure shall be taken into account--

(a) under both paragraphs (a) and (b) of subsection (1) above, or

(b) under both subsection (1)(a) above and section 170(2)(b) of ITTOIA 2005 or under both subsection (1)(b) above and section 170(2)(a) of ITTOIA 2005,

whether for the same or different periods. "

68 In section 91A (waste disposal: restoration payments)--

(a) in subsection (1) for "person" substitute "company", and

(b) in subsection (2) omit "income tax or".

69 In section 91B (waste: disposal: preparation expenditure)--

(a) in subsection (1) for "person", in both places where it occurs, substitute "company",

(b) in subsection (2) omit "income tax or",

(d) in subsection (5)(a) after "computing" insert "for the purposes of corporation tax or income tax",

(e) in subsection (5)(b) after "made" insert "for the purposes of corporation tax or income tax",

(f) in subsection (6) after "this section" insert "or section 165 of ITTOIA 2005 (relief for income tax purposes)" and after "computing" insert "for the purposes of corporation tax or income tax", and

(g) in subsection (10A) for "person", in both places where it occurs, substitute "company" and for "he" substitute "it".

70 In section 91BA (waste disposal: entitlement of successor to allowances)--

(a) in subsection (1) after "another person" insert "that is a company", and

(b) in subsection (4) for "he" substitute "it".

71 In section 91C (mineral exploration and access) for "person" substitute "company" and for "tax" substitute "corporation tax".

72 In section 93(1) (other grants under Industrial Development Act 1982 etc.)--

(a) for "person" substitute "company", and

(b) after "chargeable" insert "to corporation tax".

73 In section 94(1) (debts deducted and subsequently released)--

(a) for "tax purposes" substitute "corporation tax purposes", and

(b) for "trade, profession or vocation", wherever it occurs, substitute "trade or profession".

74 (1) Amend section 95 (taxation of dealers in respect of distributions etc.) as follows.

(2) In subsection (1) for "tax" substitute "corporation tax".

(3) In subsection (1A) omit paragraph (a).

(4) In subsection (2) for "tax" substitute "corporation tax".

75 Omit section 95A (creative artists: relief for fluctuating profits).

76 Omit section 96 (farming and market gardening: relief for fluctuating profits).

77 In section 98(1) (tied premises: receipts and expenses treated as those of a trade)--

(a) after "This section applies" insert "for corporation tax purposes",

(b) for "a person ("the trader")" substitute "a company ("the trader")", and

78 (1) Amend section 99 (dealers in land) as follows.

(2) In subsection (1) for "tax purposes" substitute "corporation tax purposes".

(3) In subsection (2) for "tax" substitute "corporation tax".

(4) In subsection (3)--

(a) for "tax", in each place where it occurs, substitute "corporation tax",

(b) for "chargeable periods" substitute "accounting periods", and

79 (1) Amend section 100 (valuation of trading stock at discontinuance of trade) as follows.

(2) In subsection (1) for "any tax purpose", in the first place where it occurs, substitute "any corporation tax purpose".

(3) In subsection (1A)--

(a) for "the person who" substitute "the company which", and

(b) for "those persons" substitute "that person and that company".

(4) In subsection (1C)(c) for "chargeable period" substitute "accounting period".

(5) In subsection (1D) after "in computing for any" insert "corporation".

(6) In subsection (1E)--

(a) for the words from the beginning to "subsections (1A) to (1C) above to be" substitute "Where the value of the trading stock is determined in accordance with subsections (1A) to (1C) above, or sections 176 to 178 of ITTOIA 2005 or section 127 of that Act (by virtue of section 175(3)) (corresponding provisions for income tax purposes)," and

(b) after "for the purpose of making" insert "for corporation tax purposes".

(7) In subsection (2)(b) omit "or vocation" in both places where it occurs.

80 (1) Amend section 101 (valuation of work in progress at discontinuance of profession or vocation) as follows.

(2) In subsection (1)--

(a) for "any tax purpose", in the first place where it occurs, substitute "any corporation tax purpose", and

(b) omit "or vocation", wherever it occurs.

(3) In subsection (2) omit "or vocation" and for "person by whom" substitute "company by which".

(4) In subsection (2A)--

(a) omit paragraph (a), and

(b) in paragraph (b), omit "in the case of an election for the purposes of corporation tax," and "or vocation".

(5) In subsection (3) omit "or vocation", wherever it occurs.

81 (1) Amend section 102 (provisions supplementary to sections 100 and 101) as follows.

(2) In subsection (1)--

(a) omit "or vocations", and

(b) for "trade, profession or vocation" substitute "trade or profession".

(3) In subsection (2)--

(a) omit "113 or",

(b) for "trade, profession or vocation" substitute "trade or profession",

(d) omit the words from "but those sections" to the end.

82 (1) Amend section 103 (receipts after discontinuance: earnings basis charge and related charge affecting conventional basis) as follows.

(2) In subsection (1)--

(a) after "vocation" insert "carried on wholly or partly in the United Kingdom",

(b) omit "under Case I or II of Schedule D", and

(c) for "tax shall be charged under Case VI of that Schedule" substitute "corporation tax shall be charged under Case VI of Schedule D".

(3) In subsection (3)--

(a) in paragraph (a)--

(i) for "person", in the first place where it occurs, substitute "company",

(ii) for "who" substitute "which", and

(iii) for "his" substitute "its",

(b) omit paragraphs (b) and (bb), and

(4) In subsection (5) at the end insert "above or under section 35 of ITTOIA 2005".

83 (1) Amend section 104 (conventional basis: general charge on receipts after discontinuance or change of basis) as follows.

(2) In subsection (1)--

(a) after "vocation" insert "carried on wholly or partly in the United Kingdom",

(b) omit "under Case I or II of Schedule D", and

(c) for "tax shall be charged under Case VI of that Schedule" substitute "corporation tax shall be charged under Case VI of Schedule D".

(3) In subsection (3)--

(a) for "tax", in the second place where it occurs, substitute "corporation tax", and

(b) omit "and (b)".

84 (1) Amend section 105 (allowable deductions) as follows.

(2) In subsection (1)--

(a) for "tax", in the first three places where it occurs, substitute "corporation tax",

(b) for "person", in the first place where it occurs, substitute "company", and

(3) In subsection (3) for "chargeable period", in each place where it occurs, substitute "accounting period".

85 (1) Amend section 106 (application of charges where rights to payments transferred) as follows.

(2) In subsection (1) for "tax" substitute "corporation tax".

(3) In subsection (2)--

(a) for "the persons carrying on the trade," substitute "the company carrying on the trade,"

(b) for "tax" substitute "corporation tax",

(d) for "all purposes" substitute "corporation tax purposes".

86 Omit section 107 (treatment of receipts as earned income).

87 Omit section 108 (election for carry-back).

88 Omit section 109 (charge under section 104: relief for individuals born before 6th April 1917).

89 (1) Amend section 109A (relief for post-cessation expenditure) as follows.

(2) Omit subsection (3).

(3) In subsection (4) omit the unnumbered paragraph beginning with "If any sum".

(4) In subsection (4A) omit the unnumbered paragraph beginning with "If any sum".

(5) In subsection (6) for "section 105" substitute "section 254 of ITTOIA 2005 (allowable deductions against post-cessation receipts charged to income tax)".

(6) After subsection (6) insert--

" (6A) This section applies in relation to a UK property business as it applies in relation to a trade, profession or vocation. "

90 In section 110 (interpretation etc) for subsection (2) substitute--

" (1A) In the case of a trade carried on by a person other than a company or a profession or vocation within the charge to income tax carried on by any person, any reference to the permanent discontinuance of a trade, profession or vocation includes a reference to--

(a) a person permanently ceasing to carry on a trade, profession or vocation, or

(b) in relation to a trade or profession carried on by a person in partnership with other persons, the occurrence of an event treated under section 246(4) of ITTOIA 2005 (basic meaning of "post-cessation receipt") as a person permanently ceasing to carry on a trade or profession.

(1B) In the case of a trade carried on by a company, any reference to the permanent discontinuance of a trade includes a reference to the occurrence of an event treated under section 337(1) below as a discontinuance or treated under section 18 of ITTOIA 2005 (companies beginning or ceasing to carry on trade) as the company permanently ceasing to carry on the trade.

(1C) In the case of a UK property business carried on by a person other than a company, any reference to the permanent discontinuance of a UK property business includes a reference to--

(a) a person permanently ceasing to carry on a UK property business, or

(b) in relation to a UK property business carried on by a person in partnership with other persons, the occurrence of an event treated under section 353(3) of ITTOIA 2005 (basic meaning of "post-cessation receipt") as a person permanently ceasing to carry on a UK property business.

(1D) In the case of a UK property business carried on by a company, any reference to the permanent discontinuance of a UK property business includes a reference to the occurrence of an event treated under section 362 of ITTOIA 2005 (companies beginning or ceasing to be within the charge to income tax) as the company permanently ceasing to carry on the business. "

91 Omit section 110A (change of residence) and the italic cross-heading before it.

92 (1) Amend section 111 (treatment of partnerships) as follows.

(2) In subsection (1) for "the purposes of the Tax Acts" substitute "corporation tax purposes".

(3) Omit subsections (2) to (13).

93 Omit section 112 (partnerships controlled abroad).

94 Omit section 113 (effect for income tax of change in ownership of trade, profession or vocation).

95 (1) Amend section 115 (provisions supplementary to section 114) as follows.

(2) For subsection (5) substitute--

" (5) Subsections (5A) and (5B) apply if--

(a) a company resident in the United Kingdom ("the resident partner") is a member of a partnership which resides outside the United Kingdom or which carries on any trade, profession or business the control and management of which is situated outside the United Kingdom, and

(b) by virtue of any arrangements falling within section 788 ("the arrangements") any of the income or capital gains of the partnership is relieved from corporation tax in the United Kingdom.

(5A) The arrangements do not affect any liability to corporation tax in respect of the resident partner's share of any income or capital gains of the partnership (and section 114 has effect accordingly).

(5B) If the resident partner's share of the income of the partnership consists of or includes a share in a qualifying distribution made by a company resident in the United Kingdom, the resident partner (and not the partnership) is, despite the arrangements, entitled to the share of the tax credit in respect of the distribution which corresponds to the partner's share of the distribution (and section 114 has effect accordingly). "

96 In section 116(4) (arrangements for transferring relief) before "tax" insert "corporation".

97 In section 118ZA (treatment of limited liability partnerships)--

(a) in subsection (1) for "the purposes of the Tax Acts" substitute "corporation tax purposes", and

(b) in subsection (2) for "the Tax Acts" substitute "the Corporation Tax Acts".

98 (1) Amend section 118ZE (restriction on relief for non-active partners) as follows.

(2) In subsection (5) for the words from "sections 60 to 63" to the end substitute "Chapter 15 of Part 2 of ITTOIA 2005 as applied by section 853 of that Act".

(3) In subsection (6)--

(a) for "section 61(1)" substitute "section 199(1) of ITTOIA 2005", and

(b) after "to 118ZK" insert "below".

99 In section 118ZH(3) ("a significant amount of time": recovery of relief) for "under Case VI of Schedule D" substitute "to income tax".

100 In section 118ZK(2)(b) and (5) (transitional provision for years after the first restricted year) after "1992" insert "or any of sections 138 to 140 of ITTOIA 2005".

101 In section 118ZL(6) (partnerships exploiting films)--

(a) in paragraph (b)--

(i) for "section 111(2)" substitute "section 849 of ITTOIA 2005 (calculation of firm's profits or losses)", and

(ii) for "section 41 or 42 of the Finance (No. 2) Act 1992" substitute "any of sections 137 to 140 of ITTOIA 2005", and

(b) in paragraph (c)--

(i) for "section 41 or 42 of that Act" substitute "sections 137 to 140 of that Act", and

(ii) for "either of" substitute "any of".

102 In section 118ZM(4) (partnerships exploiting films: supplementary) for "the acquisition of the master negative" to the end substitute "the acquisition of the original master version of the film; and this subsection is to be construed as if contained in Chapter 9 of Part 2 of ITTOIA 2005."

103 In section 119(1) (rent etc. payable in connection with mines, quarries and similar concerns) after "charged to" insert "corporation".

104 In section 120 (rent etc. payable in respect of electric line wayleaves)--

(a) in subsection (1) after "charged to" insert "corporation",

(b) in subsection (1A) for "chargeable period" substitute "accounting period", and

105 In section 121 (management expenses of owner or mineral rights) omit subsection (1).

106 (1) Amend section 122 (relief in respect of mineral royalties) as follows.

(2) In subsection (1)--

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