Coal industry Act 1994 (c. 21)

(The document as of February, 2008)

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(b) an arbiter appointed by the Lord President of the Court of Session.

(7) This paragraph shall have effect in relation to the provisions of any agreement or instrument entered into or executed in pursuance of an obligation imposed by virtue of paragraph 2(1)(g) above, and to any modification agreement, as it has effect in relation to the provisions of a restructuring scheme.

(8) In this paragraph "third party", in relation to provisions capable of giving rise to a right to compensation under this paragraph, means any person other than--

(a) the Corporation or any of its wholly-owned subsidiaries;

(b) the Authority or the Secretary of State;

(d) where the provisions in question are the provisions of a restructuring scheme, any person whose consent to those provisions has been given for the purposes of section 12(4) of this Act or who has agreed to those provisions by virtue of being a party to an agreement under section 13 of this Act or a modification agreement.

Notice to persons affected by scheme

9 (1) It shall be the duty of the Secretary of State, where it appears to him in the case of any restructuring scheme or modification agreement that there are persons whose property, rights or liabilities are affected in a manner that may give rise to an entitlement to compensation under paragraph 8 above, to give notice under this paragraph to every such person.

(2) A notice to be given by the Secretary of State under this paragraph shall be given as soon as reasonably practicable after he makes the scheme or, as the case may be, gives his approval in relation to the agreement.

(3) A notice under this paragraph shall set out the general effect of the scheme or, as the case may be, of the agreement and shall describe the respects in which it appears to the Secretary of State that the property, rights or liabilities of the person to whom it is given are affected.

(4) For the purposes of section 63(3) of this Act, so far as it relates to the service of a notice under this paragraph, any address which--

(a) has been specified to the Corporation or any of its wholly-owned subsidiaries, and

(b) is notified to the Secretary of State in pursuance of the Corporation's duty under section 14 of this Act,

shall be deemed to have been specified to the Secretary of State.

(5) Where it is not reasonably practicable for the notice under this section to any person to be given to that person in accordance with section 63 of this Act, the Secretary of State shall, instead, take such steps for publishing the contents of the notice as he may consider appropriate for the purpose of bringing the matters to which the notice relates to the attention of that person.

Section 15.

SCHEDULE 3 Financial structure of successor companies

Meaning of "relevant successor company"

1 In this Schedule "relevant successor company" means any successor company which is limited by shares.

Initial Government holding in companies

2 (1) As a consequence of the vesting in a relevant successor company, at a time when it is wholly owned by the Crown and in accordance with any restructuring scheme, of any property, rights and liabilities, that company shall issue such securities of the company as the Secretary of State may from time to time direct--

(a) to the Treasury or the Secretary of State; or

(b) to any person entitled to require the issue of the securities following their initial allotment, in accordance with directions of the Secretary of State, to the Treasury or the Secretary of State.

(2) The Secretary of State shall not give a direction under sub-paragraph (1) above at a time when the relevant successor company in question has ceased to be wholly owned by the Crown.

(3) Securities to be issued in pursuance of this paragraph shall be issued at such time or times, and (subject to sub-paragraph (4) below) on such terms, as the Secretary of State may direct.

(4) Any shares of a relevant successor company issued in pursuance of this paragraph--

(a) shall be of such nominal value as the Secretary of State may direct; and

(b) shall be issued as fully paid and treated for the purposes of the [1985 c. 6.] Companies Act 1985 as if they had been paid up by virtue of the payment to the company of their nominal value in cash.

(5) The Secretary of State may not exercise any power conferred on him by this paragraph, or dispose of any securities issued or of any rights to securities initially allotted to him in pursuance of this paragraph, without the consent of the Treasury.

Government investment in companies

3 (1) Subject to section 16 of this Act, the Treasury or, with the consent of the Treasury, the Secretary of State may at any time acquire--

(a) securities of a relevant successor company; or

(b) rights to subscribe for any such securities.

(2) The Secretary of State shall not dispose of any securities or rights acquired by him by virtue of this paragraph without the consent of the Treasury.

(3) Any expenses incurred by the Treasury or the Secretary of State in consequence of the provisions of this paragraph shall be paid out of money provided by Parliament.

Exercise of functions through nominees

4 (1) The Treasury or, with the consent of the Treasury, the Secretary of State may, for the purposes of paragraphs 2 and 3 above, appoint any person to act as the nominee, or one of the nominees, of the Treasury or the Secretary of State; but--

(a) the issue or allotment in pursuance of paragraph 2 above of securities of a relevant successor company to any nominee of the Treasury or the Secretary of State appointed for the purposes of that paragraph,

(b) the issue in pursuance of that paragraph of any such securities to any person entitled to be issued with the securities following their initial allotment to any such nominee, and

(c) the acquisition under paragraph 3 above by any nominee of the Treasury or the Secretary of State appointed for the purposes of that paragraph 3 of any securities or rights,

shall be in accordance with such directions as may be given from time to time by the Treasury or, with the consent of the Treasury, by the Secretary of State.

(2) Any person holding any securities or rights as a nominee of the Treasury or the Secretary of State by virtue of this paragraph shall hold and deal with them (or any of them) on such terms and in such manner as the Treasury or, with the consent of the Treasury, the Secretary of State may direct.

Payment of dividends etc. into Consolidated Fund

5 Any dividends or other sums received by the Treasury or the Secretary of State in right of, or on the disposal of, any securities or rights acquired by virtue of paragraph 2 or 3 above shall be paid into the Consolidated Fund.

Distributable reserves of companies

6 (1) Where statutory accounts of a relevant successor company prepared as at any time would show the company as having net assets in excess of the aggregate of--

(a) its called-up share capital, and

(b) the amount, apart from any property, rights and liabilities to which the company has become entitled or subject in accordance with any restructuring scheme, of its undistributable reserves,

then, for the purposes of section 263 of the [1985 c. 6.] Companies Act 1985 (profits available for distribution) and of the preparation as at that time of any statutory accounts of the company, that excess shall be treated, except so far as the Secretary of State may otherwise direct, as representing an excess of the company's accumulated realised profits over its accumulated realised losses.

(2) For the purposes of section 264 of the [1985 c. 6.] Companies Act 1985 (restriction on distribution of assets) so much of any excess of a company's net assets as falls, in accordance with a direction under sub-paragraph (1) above, to be treated otherwise than as representing an excess of the company's accumulated realised profits over its accumulated realised losses shall be treated (subject to any modification of that direction by a subsequent direction under this paragraph) as comprised in the company's undistributable reserves.

(3) A direction under this paragraph may provide, in relation to any amount to which it applies, that, on the realisation (whether before or after the company in question ceases to be wholly owned by the Crown) of such profits and losses as may be specified or described in the direction, so much of that amount as may be determined in accordance with the direction is to cease to be treated as mentioned in sub-paragraph (2) above and is to fall to be treated as comprised in the company's accumulated realised profits.

(4) The Secretary of State shall not give a direction under this paragraph in relation to a relevant successor company at any time after the company has ceased to be wholly owned by the Crown.

(5) In exercising his power to give a direction under this paragraph, the Secretary of State shall have regard, in particular, to the provisions of Schedule 4 to this Act and to any provision contained in any restructuring scheme by virtue of any provision of that Schedule.

(6) The consent of the Treasury shall be required for the giving of a direction under this paragraph.

(7) In this paragraph--

"called-up share capital" has the same meaning as in the [1985 c. 6.] Companies Act 1985;
"net assets" has the meaning given by subsection (2) of section 264 of that Act; and
"undistributable reserves" has the meaning given by subsection (3) of that section;

and references in this paragraph, in relation to a company, to statutory accounts are references to accounts of that company prepared in respect of any period in accordance with the requirements of that Act, or with those requirements applied with such modifications as are necessary where that period is not an accounting reference period.

Temporary restrictions on borrowing of companies

7 (1) If articles of association of a relevant successor company confer on the Secretary of State powers exercisable with the consent of the Treasury for, or in connection with, restricting the sums of money which may be borrowed or raised during any period by the group to which that company belongs, those powers shall be exercisable in the national interest notwithstanding any rule of law and the provisions of any enactment.

(2) For the purposes of this paragraph an alteration of the articles of association of a relevant successor company shall be disregarded if the alteration--

(a) has the effect of conferring or extending any such power as is mentioned in sub-paragraph (1) above; and

(b) is made at a time when that company has ceased to be wholly owned by the Crown.

(3) In this paragraph "group", in relation to a company, means that company and all of its subsidiaries taken together.

Government lending to the companies

8 (1) Subject to the following provisions of this Schedule, the Secretary of State may, with the approval of the Treasury, make loans of such amounts as he thinks fit to a relevant successor company.

(2) The Secretary of State shall not make a loan to a company under this paragraph except at a time when it is wholly owned by the Crown.

(3) Any loans which the Secretary of State makes under this paragraph shall be repaid to him at such times and by such methods, and interest thereon shall be paid to him at such rates and at such times, as he may, with the approval of the Treasury, from time to time direct.

(4) The Treasury may issue out of the National Loans Fund to the Secretary of State such sums as are required by him for making loans under this paragraph.

(5) Any sums received under sub-paragraph (3) above by the Secretary of State shall be paid into the National Loans Fund.

(6) It shall be the duty of the Secretary of State as respects each financial year--

(a) to prepare, in such form as the Treasury may direct, an account of sums issued to him in pursuance of sub-paragraph (4) above and of sums received by him under sub-paragraph (3) above and of the disposal by him of the sums so issued or received; and

(b) to send the account to the Comptroller and Auditor General not later than the end of the month of August in the following financial year;

and the Comptroller and Auditor General shall examine, certify and report on the account and shall lay copies of it, and of his report, before each House of Parliament.

Treasury guarantees for loans made to companies

9 (1) Subject to the following provisions of this Schedule, the Treasury may guarantee, in such manner and on such terms as they may think fit, the repayment of the principal of, the payment of interest on, and the discharge of any other financial obligation in connection with, any sums which are borrowed from a person other than the Secretary of State by any relevant successor company.

(2) The Treasury shall not give a guarantee under this paragraph except at a time when the company in question is wholly owned by the Crown.

(3) Immediately after a guarantee is given under this paragraph, the Treasury shall lay a statement of the guarantee before each House of Parliament; and immediately after any sum is issued for fulfilling a guarantee so given, the Treasury shall so lay a statement relating to that sum.

(4) Any sums required by the Treasury for fulfilling a guarantee under this paragraph shall be charged on and issued out of the Consolidated Fund.

(5) If any sums are issued in fulfilment of a guarantee given under this paragraph, the company whose obligations are so fulfilled shall make to the Treasury, at such times and in such manner as the Treasury may from time to time direct--

(a) payments of such amounts as the Treasury may so direct in or towards repayment of the sums so issued; and

(b) payments of interest on what is outstanding for the time being in respect of sums so issued at such rate as the Treasury may so direct.

(6) Any sums received under sub-paragraph (5) above by the Treasury shall be paid into the Consolidated Fund.

Limit on Government financial assistance for companies

10 The aggregate of--

(a) any amounts outstanding by way of principal in respect of loans made by the Secretary of State under paragraph 8 above, and

(b) sums issued under paragraph 9 above in fulfilment of guarantees given under that paragraph,

shall not exceed £3,000 million.

Section 21.

SCHEDULE 4 Taxation Provisions

Part I Corporation Tax

Interpretation of Part I

1 (1) Subject to paragraph 24 below, in this Part of this Schedule "a relevant transfer" means any transfer in accordance with a restructuring scheme to a public-sector body of any property, rights or liabilities.

(2) Subject to paragraph 24 below, in this Part of this Schedule--

"the 1988 Act" means the [1988 c. 1.] Income and Corporation Taxes Act 1988;
"fixture" has the same meaning as in Chapter VI of Part II of the 1990 Act;
"predecessor", in relation to any relevant transfer, means the person from whom the property, rights or liabilities in question are transferred;
"public-sector body" means the Treasury or any Minister of the Crown, the Authority, a local authority, any company which is wholly owned by the Crown or any body which is not a company but is established by or under any enactment for the purpose of carrying out functions conferred on it by any enactment or subordinate legislation; and
"transferee", in relation to any relevant transfer, means the person to whom the property, rights or liabilities are transferred;

and this Part of this Schedule shall be construed as one with the 1988 Act.

(3) Subject to paragraph 7(8) below, in determining in relation to any transfer whether any such provision of this Schedule applies as is a provision applying if, by virtue of the coming into force of any relevant transfer, the predecessor is to be treated as having ceased to carry on any trade or the transferee is to be treated as having begun to carry one on, where--

(a) the predecessor continues to carry on any trade or part of a trade after the coming into force of the transfer,

(b) the predecessor ceases, by virtue of any provisions of a restructuring scheme coming into force at the same time as the transfer, to carry on any trade or part of a trade which is not transferred to the transferee, or

the trade or part of a trade which is continued or ceases to be carried on by the predecessor or, as the case may be, was being carried on shall for the purposes of that provision be treated in relation to any trade or part of a trade which is transferred by virtue of the transfer as a separate trade and, accordingly, shall be disregarded.

(4) References in this Schedule to any provision of the 1992 Act shall have effect, in relation to times in any chargeable period beginning before 6th April 1992, as references to the corresponding enactment having effect in relation to that time.

Chargeable gains: general

2 (1) For the purposes of the 1992 Act, where there is a relevant transfer, the transfer of the property, rights and liabilities to which it relates shall (subject to the following provisions of this Part of this Schedule) be deemed, in relation to the transferee as well as the predecessor, to be for a consideration such that no gain or loss accrues to the predecessor.

(2) Section 28 of the 1992 Act (time of disposal or acquisition in pursuance of contract) shall have effect in relation to any disposal or acquisition in pursuance of an obligation imposed by virtue of paragraph 2(1)(g) of Schedule 2 to this Act as it would apply if the obligation were contained in a contract made at the time when the scheme containing the obligation comes into force.

(3) Paragraph (d) of section 35(3) of the 1992 Act (list of provisions for transfers treated as made without gain or loss) shall have effect with the insertion, at the end of the paragraph, of the following sub-paragraph--

" (xi) paragraph 2(1) of Schedule 4 to the Coal Industry Act 1994; " .

Chargeable gains: compensation and insurance money

3 (1) Subsections (4) and (5) of section 23 of the 1992 Act (adjustments where compensation or insurance money used for purchase of replacement asset) shall have effect in accordance with sub-paragraph (2) below where--

(a) there is a relevant transfer such that any capital sum which has been or (but for the transfer) would have been received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; and

(b) the transferee acquires any asset in circumstances where, if the predecessor had acquired it, the predecessor would be treated for the purposes of that section as having acquired it by the application of the whole or any part of that sum in replacement for the asset lost or destroyed.

(2) In a case falling within sub-paragraph (1) above, subsection (4) or, as the case may require, subsection (5) of section 23 of the 1992 Act shall have effect as if the transferee and the predecessor were the same person except that--

(a) it shall, subject to paragraph (b) below, be the transferee who shall be entitled as owner to make a claim for that subsection to be applied in relation to the transactions;

(b) any adjustment falling to be made under paragraph (a) of subsection (4) or, as the case may be, subsection (5) of that section shall have effect for the purposes only of the taxation of whichever of the predecessor and the transferee received the capital sum; and

(c) any adjustment falling, on a claim by the transferee, to be made under paragraph (b) of subsection (4) or, as the case may be, subsection (5) of that section shall have effect for the purposes only of the taxation of the transferee.

(3) Sub-paragraph (2) above shall have effect for the purposes of any such adjustment as is mentioned in paragraph (c) of that sub-paragraph so as to require any residual or scrap value received by the predecessor to be treated as received by the transferee.

Chargeable gains: section 30 of the 1992 Act

4 Section 30 of the 1992 Act (tax-free benefits) shall not apply in any case where--

(a) a reduction in the value of any asset, or

(b) the conferring of any tax-free benefit,

results from any provision made by or under so much of any restructuring scheme as relates to a relevant transfer.

Chargeable gains: section 41 of the 1992 Act

5 Subject to paragraph 21 below, section 174(1) of the 1992 Act (which applies section 41 of that Act to cases where assets have been acquired without gain or loss) shall have effect, without prejudice to paragraph 2 above, where there has been a relevant transfer as if the property to which the transfer relates had been transferred to the transferee, and acquired by him, in relevant circumstances (within the meaning of that section).

Chargeable gains: options

6 (1) Where in the case of any relevant transfer the transferee becomes entitled, in consequence of the transfer, to any option granted to the predecessor, section 144 of the 1992 Act (options), so far as it requires an option to be treated as part of a larger transaction, shall have effect as if the option had originally been granted to the transferee for the consideration for which it was granted to the predecessor.

(2) Where in the case of any relevant transfer the transferee is bound, in consequence of the transfer, by an option granted by the predecessor, that section, so far as it requires any option to be treated as part of a larger transaction, shall have effect as if the option had originally been granted by the transferee for the consideration for which it was granted by the predecessor and, if the case so requires, as if the transferee had entered into that transaction.

(3) Sub-paragraph (2) above shall not apply in the case of any option in so far as any disposal made by the transferee by virtue of any exercise of that option before the time when the relevant transfer comes into force is one which falls, under section 28 of the 1992 Act (time of disposal etc.), to be treated as made before that time; and, accordingly, any disposal by the transferee which falls to be treated as so made and also, as mentioned in that sub-paragraph, to be treated as part of a larger transaction, shall be assumed for the purposes of the 1992 Act to be a disposal by the predecessor.

(4) The preceding provisions of this paragraph shall not affect the rights and liabilities of the predecessor, or confer any rights or liabilities on the transferee, in respect of any adjustment falling to be made in consequence of the option in question having been differently treated, for the purposes of the taxation of the predecessor, in relation to a time before the conditions for its being treated as part of a larger transaction were satisfied.

Chargeable gains: roll-over relief

7 (1) Where, apart from this sub-paragraph--

(a) the predecessor would be treated for the purposes of section 152 of the 1992 Act as having ceased, by virtue of the coming into force of any relevant transfer, to carry on any trade, and

(b) the transferee would be treated as having begun, on the coming into force of that transfer, to carry it on,

that section shall have effect as if any assets to which the transfer relates which, for the purposes of that section and in accordance with sub-paragraph (8) below, would fall immediately before the transfer comes into force to be treated in relation to the period of ownership as assets that have been used to any extent by the predecessor for the purposes of the trade were, as at the time immediately after the coming into force of the transfer, to be treated in relation to the period of ownership as assets that the transferee has used to the same extent for the purposes of that trade.

(2) Where any assets vest by virtue of a relevant transfer in the transferee--

(a) the predecessor shall not be entitled, at any time after the coming into force of the transfer, to make any claim under section 152 or 153 of the 1992 Act in respect of the acquisition by the predecessor of those assets; and

(b) subject to sub-paragraph (3) below, the transferee shall not be treated for the purposes of either of those sections or section 154 of that Act as having applied the whole or any part of the consideration for any disposal in acquiring those assets by means of that transfer.

(3) Where, in the case of any relevant transfer--

(a) the predecessor acquired any assets or any interest in any assets before the coming into force of the transfer,

(b) the assets or interest vest or vests in the transferee by virtue of the transfer,

(c) the acquisition is not one in respect of which the predecessor has made a claim under section 152 or 153 of the 1992 Act before the coming into force of the transfer,

(d) after the coming into force of the transfer the transferee disposes of, or of an interest in, any other assets, and

(e) the acquisition was such that, if the predecessor had been able to make and had made the disposal and obtained the consideration for it, the predecessor would have been regarded for the purposes of section 152 or 153 of that Act as having applied the consideration, or any part of it, in making the acquisition,

then, on a claim by the transferee, section 152 and, so far as necessary, section 153 of that Act shall have effect for the purposes of paragraph 2 above in relation to the acquisition as they would have effect if the acquisition had been made by the transferee and the assumptions specified in sub-paragraph (4) below applied.

(4) Those assumptions are--

(a) that the acquisition was made by the application by the transferee of the consideration or, as the case may be, the part of it mentioned in sub-paragraph (3)(e) above;

(b) that any period of ownership by the predecessor of any assets was a period of ownership of those assets by the transferee;

(c) that any use by the predecessor of any assets for the purposes of any trade which was, at the time, being carried on by the predecessor had been use by the transferee for the purposes of that trade; and

(d) that any trade for the purposes of which the transferee is assumed by virtue of paragraph (c) above to have used any asset was a trade which was being carried on by the transferee at the time.

(5) Where--

(a) a held-over gain would, but for the provisions of section 154 of the 1992 Act, have been carried forward to a depreciating asset, and

(b) that asset is transferred by a relevant transfer and immediately after the coming into force of that transfer is used by the transferee for the purposes of a trade carried on by him,

that section shall have effect as if the gain had accrued to, and the claim for it to be held over had been made by, the transferee and, accordingly, as if the transferee had acquired the depreciating asset at the time when the predecessor acquired it and as if the assumptions specified in sub-paragraph (4)(c) and (d) above applied.

(6) Expressions used in sub-paragraph (5) above which are also used in section 154 of the 1992 Act have the same meanings in that sub-paragraph as in that section.

(7) Section 158 of the 1992 Act (extension of references to trade) shall have effect, subject to sub-paragraph (8) below, in relation to this paragraph as it has effect in relation to sections 152 to 157 of that Act.

(8) For the purposes of this paragraph, any assets so far as used by the predecessor--

(a) for the purposes of any part of a trade, or

(b) for the purposes of the whole or any part of any trade which is treated by virtue of subsection (8) of section 152 of the 1992 Act as forming a single trade with any one or more other trades,

shall be treated as used for the purposes of every part of the trade carried on by the predecessor or, as the case may be, for the purposes of every part of every trade so carried on.

Chargeable gains: group transactions

8 (1) For the purposes of section 179 of the 1992 Act (company ceasing to be a member of a group) where by virtue of any relevant transfer any company--

(a) ceases to be a member of the same group of companies as the predecessor, but

(b) becomes a member of the same group of companies as the transferee,

that company shall not under that section be treated, in consequence of having so ceased, as at any time having sold, and immediately reacquired, any asset acquired from a company which is or has been a member of the former group.

(2) Subject to sub-paragraph (3) below, where sub-paragraph (1) above applies, or but for subsection (2) of section 179 of the 1992 Act would apply, as respects any acquisition of any asset and the company that acquired the asset ceases to be a member of the same group of companies as the transferee, that section shall have effect as if--

(a) that asset had been acquired from the transferee; and

(b) that company had been a member of the same group of companies as the transferee when it was so acquired;

and where, for the purposes of that subsection, this sub-paragraph applies as respects more than one of a number of successive acquisitions of any asset, the fact that each is to be treated as an acquisition from the same person shall be disregarded.

(3) Where--

(a) any asset has been acquired by any company ("the leaving company") from another company,

(b) both of those companies cease at the same time to be members of the same group of companies as the transferee, and

sub-paragraph (2) above shall not apply as respects the acquisition of the asset by the leaving company.

(4) Expressions used in this paragraph and in section 179 of the 1992 Act shall have the same meanings in this paragraph as in that section.

Chargeable gains: disposal of debts

9 (1) Where in the case of any relevant transfer--

(a) any debt owed to the predecessor is transferred by virtue of the transfer to the transferee, and

(b) the predecessor would, apart from this sub-paragraph, be the original creditor in relation to that debt for the purposes of section 251 of the 1992 Act (disposal of debts),

that Act shall have effect as if the transferee and not the predecessor were the original creditor for those purposes.

(2) Subject to the following provisions of this paragraph, where in the case of any relevant transfer--

(a) there is transferred by virtue of the transfer to the transferee either a debt owed to the predecessor or the rights and liabilities of the predecessor under any guarantee, and

(b) the transferred debt is, or any debt arising by virtue of those rights and liabilities would be, either--

(i) a right to the repayment of any amount outstanding as principal on a loan which is a qualifying loan for the purposes of either of sections 253 and 254 of the 1992 Act, or

(ii) a right to recover any amount paid under a guarantee for the repayment of such a loan or of any loan which would be such a loan but for section 253(1)(c) of that Act,

those sections shall have effect as if the loan or, as the case may be, the guarantee and any payment by the predecessor under the guarantee had been made or given by the transferee and, accordingly, as if there had been no assignment of the right to recover the principal of the loan or of any right to recover an amount paid under the guarantee.

(3) Where sub-paragraph (2) above applies, sections 253 and 254 of the 1992 Act and this paragraph shall have effect as if the companies which, in relation to times before the relevant transfer comes into force, are to be treated as having been members of the same group of companies as the transferee included the predecessor and any company which at any such time was a member of the same group of companies as the predecessor.

(4) Where--

(a) any right to the recovery of any amount is transferred by virtue of any relevant transfer,

(b) any amount outstanding in respect of that right is recovered at any time by the transferee or by a company in the same group of companies as the transferee, and

(c) that amount is such that, if that transfer had not come into force and the amount in question had been recovered by the predecessor or a company in the same group as the predecessor, a chargeable gain would be treated as having accrued to the predecessor or that company under section 253(5) to (8) or 254(9) or (10) of the 1992 Act,

then a chargeable gain of the same amount shall be treated, instead, as having accrued at that time to the transferee, or as the case may be, the company in the same group as the transferee.

(5) Sub-paragraph (2) above shall not, in relation to any relevant transfer--

(a) affect the allowable losses that have been or are to be treated, in pursuance of any claim made under section 253(3) or (4) or 254(2) of the 1992 Act before the coming into force of the transfer, as having accrued to the predecessor in respect of any amount; or

(b) entitle the transferee to make any claim under section 253(3) or (4) or 254(2) of that Act for the purpose of requiring any allowable loss to be treated as having accrued to the transferee in respect of any amount in respect of which an allowable loss to which paragraph (a) above applies has been or is to be treated as having accrued;

and a relevant transfer shall be disregarded for the purposes of section 253(9) of the 1992 Act.

(6) For the purposes of subsection (10) of section 253 of the 1992 Act, where there is a relevant transfer, any amount taken into account as mentioned in that subsection in the case of the predecessor shall be deemed also to have been so taken into account in the case of the transferee.

(7) Section 253(13) and section 255(3) of the 1992 Act shall apply in relation to sub-paragraph (4) above for the purposes, respectively, of cases corresponding to those falling within subsections (7) and (8) of section 253 of that Act and cases corresponding to those falling within subsection (10) of section 254 of that Act, as they apply for the purposes of those subsections.

Chargeable gains: assets held before 6th April 1965

10 Schedule 2 to the 1992 Act (assets held on 6th April 1965) shall have effect in relation to any assets which vest in the transferee by virtue of a relevant transfer as if--

(a) the predecessor and the transferee were the same person; and

(b) those assets, so far as they were in fact acquired or provided by the predecessor, were acquired or provided by the transferee.

Transfers of trading stock

11 (1) For the purposes of the Corporation Tax Acts if, in the case of any relevant transfer, any trading stock of the predecessor--

(a) is vested in the transferee by virtue of the transfer, and

(b) falls, immediately after the time when the transfer comes into force, to be treated as trading stock of the transferee,

then, for the purpose of computing the profits and gains both of the trade in relation to which it is trading stock immediately before that time and of the trade in relation to which it is trading stock after that time, sub-paragraph (2) below shall apply to the stock.

(2) Where this sub-paragraph applies to any stock, that stock--

(a) shall be deemed--

(i) to have been disposed of by the predecessor in the course of the trade that is carried on by the predecessor;

(ii) to have been acquired by the transferee in the course of the trade that is carried on by the transferee; and

(iii) subject to that, to have been disposed of and acquired at the time when the transfer comes into force;

and

(b) shall be valued for the purposes of each of the trades mentioned in sub-paragraph (1) above as if the disposal and acquisition had been for a consideration which in relation to the predecessor would have resulted in neither a profit nor a loss being brought into account in respect of the disposal in the accounting period of the predecessor which ends with, or is current at, that time.

(3) In this paragraph "trading stock" has the same meaning as in section 100 of the 1988 Act.

Transfer of rights to receipts

12 Where by virtue of any relevant transfer there is transferred any right of the predecessor to receive any amount which is for the purposes of corporation tax--

(a) an amount brought into account as a trading receipt of the predecessor for any accounting period ending before the time when the transfer comes into force, or

(b) an amount falling to be so brought into account if it is assumed that the last such accounting period of the predecessor ended immediately before that time,

the transfer shall not require any modification of the way that amount has been and is to be treated in relation to the predecessor for those purposes or entitle any amount due or paid in respect of that right to be treated as a trading receipt of the transferee for any accounting period.

Transfer of liabilities

13 (1) If, by virtue of any relevant transfer, there is transferred any liability the amount of which is for the purposes of corporation tax--

(a) an amount brought into account as deductible in computing the predecessor's profits, or any description of the predecessor's profits, for any accounting period ending before the time when the transfer comes into force, or

(b) an amount falling to be so brought into account if it is assumed, where it is not the case, that the accounting period of the predecessor current on the day before the transfer comes into force ends immediately before that time,

then that transfer shall not require any modification of the way that amount has been or is to be treated in relation to the predecessor for those purposes or entitle any amount due or paid in respect of that liability to be deductible in computing the transferee's profits, or any description of the transferee's profits, for any accounting period.

(2) Where the amount of any liability which in consequence of any relevant transfer falls to be discharged by the transferee is an amount which would (but for that and any other transfer) have fallen to be deductible in computing the predecessor's profits, or any description of the predecessor's profits, for any accounting period beginning with the coming into force of the transfer or at any subsequent time, that amount--

(a) shall not be so deductible; but

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