Amendments proposed to the Finance Bill - continued House of Commons

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Mr Michael Howard [R]
Mr John Bercow
Mr Howard Flight [R]
Mr Christopher Chope
Mr Peter Luff

119

Schedule     26,     page     324,     line     31,     at end insert—

    '(3)   Nothing in this Schedule shall cause or require the recognition of income chargeable to tax by reason of any transactions involving futures or options by the trustees of an authorised unit trust or by an open-ended investment company, and "company" and "derivative contract" shall be interpreted accordingly.'.

   

Mr Paul Boateng

174

Schedule     26,     page     332,     line     27,     leave out from 'which' to 'or' in line 28 and insert ', if the future were to run to delivery, would fall to be delivered at the date and price agreed when the contract is made,'.

   

Mr Paul Boateng

175

Schedule     26,     page     332,     line     33,     leave out paragraph (a) and insert—

            '(a)   where the contract for differences relates to fluctuations in the value or price of property described in the contract, the property so described, or'.

   

Mr Paul Boateng

176

Schedule     26,     page     333,     line     18,     leave out 'referred to' and insert 'described'.

   

Mr Paul Boateng

177

Schedule     26,     page     333,     line     23,     at end insert—

            '()   a future;

            ()   an option;'.

   

Mr Paul Boateng

178

Schedule     26,     page     334,     line     4,     leave out from 'terms' to 'not' in line 8 and insert 'provide—

            (a)   that, after setting off their obligations to each other under the contract, a cash payment is to be made by one party to the other in respect of the excess, if any, or

            (b)   that each party is liable to make to the other party a cash payment in respect of all that party's obligations to the other under the contract,

     and do'.

   

Mr Andrew Smith

121

Schedule     26,     page     337,     line     13,     leave out second 'or' and insert—

            '(aa)   so much of any exchange gain or loss arising to a company as results from any translation from one currency to another pursuant to section 93A(4) of the Finance Act 1993 (c.34) of the profit or loss of part of the company's business and falls within sub-paragraph (5A), or'.

   

Mr Andrew Smith

122

Schedule     26,     page     337,     line     18,     at beginning insert 'For the purposes of sub-paragraph (3)(a),'.

   

Mr Andrew Smith

123

Schedule     26,     page     337,     line     29,     at end insert—

    '(5A) For the purposes of sub-paragraph (3)(aa), an exchange gain or loss falls within this sub-paragraph to the extent that, in accordance with generally accepted accounting practice, an amount representing the whole or part of it is carried to or sustained by a reserve maintained by the company.'.

   

Mr Andrew Smith

124

Schedule     26,     page     341,     line     28,     at end insert—

    '(3) Sub-paragraph (4) has effect where, in the case of a derivative contract of a company,—

            (a)   the company uses, as respects the contract, a basis of accounting other than an authorised mark to market basis of accounting for an accounting period (the "preceding period"), but

            (b)   by virtue of sub-paragraph (2), the company must for the succeeding accounting period (the "first mark to market period") use, as respects the contract, an authorised mark to market basis of accounting as its authorised accounting method for the purposes of this Schedule.

    (4) Where this sub-paragraph has effect in relation to a derivative contract of a company, the company shall be deemed—

            (a)   to have disposed of the contract immediately before the end of the preceding period for a consideration of an amount equal to the fair value of the contract at that time, and

            (b)   to have reacquired it for the same consideration immediately after the beginning of the first mark to market period.'.

   

Mr Andrew Smith

125

Schedule     26,     page     344,     line     40,     at end insert—

    '(3) No debit may be brought into account by virtue of this paragraph if it is taken into account in arriving at the amount of expenditure in relation to which a debit may be given by Schedule 29 to the Finance Act 2002.'.

   

Mr Andrew Smith

126

Schedule     26,     page     345,     line     17,     at end insert—

    '(4A) In this paragraph "option" has the same meaning as in paragraph 12, apart from sub-paragraph (10).'.

   

Mr Andrew Smith

120

Schedule     26,     page     360,     line     42,     leave out sub-paragraph (3) and insert—

    '(3) Where—

            (a)   a company ceases to be party to a derivative contract in an accounting period (the "cessation period"),

            (b)   profits or losses arise to the company from the derivative contract or a related transaction in the cessation period, and

            (c)   the credits or debits brought into account for the purposes of this Schedule for the cessation period do not include credits or debits which represent the whole of those profits or losses,

    credits or debits in respect of so much of those profits or losses as are not represented by credits or debits brought into account for the cessation period shall continue to be brought into account under this Schedule over one or more subsequent accounting periods ("post-cessation periods") as in the case of a derivative contract to which the company is party in those periods and sub-paragraphs (3A) and (3B) shall apply.

    (3A) In any case falling within sub-paragraph (3), any question—

            (a)   whether, in a post-cessation period, the company is, or is to any extent, party to the contract for the purposes of a trade carried on by it, or

            (b)   whether, in a post-cessation period, the contract is to any extent referable to a particular business, or a particular class, category or description of business, carried on by the company,

    shall be determined by reference to the circumstances immediately before the company ceased to be party to the contract instead of the circumstances in the post-cessation period.

    (3B) In any case falling within sub-paragraph (3), any question—

            (a)   whether the contract has to any extent a particular purpose in a post-cessation period, or

            (b)   whether there is a connection between the company and any other person for a post-cessation period,

    shall be determined by reference to the circumstances in the cessation period instead of the circumstances in the post-cessation period.'.


   

Mr Michael Howard
Mr John Bercow
Mr Howard Flight
Mr Christopher Chope
Mr Peter Luff

167

Clause     102,     page     80,     line     15,     at end insert 'or for the transfer of the whole or part of a business or interest in a business carried on by him or by him and others in partnership;'.


   

Mr Michael Howard
Mr John Bercow
Mr Howard Flight
Mr Christopher Chope
Mr Peter Luff

182

Schedule     29,     page     373,     line     33,     at end insert 'except for those assets that are subject to Part 4, paragraph (26) (Realisation of a pre-commencement asset).'.

   

Mr Michael Howard [R]
Mr John Bercow
Mr Howard Flight [R]
Mr Christopher Chope
Mr Peter Luff

183

Schedule     29,     page     383,     line     11,     at end insert—

'Realisation of a pre-commencement asset

    26.—(1)   This paragraph applies where there is a realisation of a "pre-commencement asset" that is an intangible fixed asset—

      (a) that was held by the company, or in the same worldwide group, before commencement, as defined by Part 14 of this Schedule, and

      (b) on which no deduction has been claimed under Part 2 of this Schedule.

    (2)   The company can elect to tax the realisation of the pre-commencement asset under the "existing law", as defined by Part 14 of this Schedule.

    (3)   The election must be made in writing to the Board of the Inland Revenue within two years of the end of the accounting period during which the realisation takes place.

    (4)   In particular, the making of the election will allow the company to roll over the proceeds on realisation of the pre-commencement asset under the replacement of business assets rules in section 152 of the Taxation of Chargeable Gains Act 1992.

    (5)   Where the creation of an intangible fixed asset straddles the commencement date the election may be made only in respect of the pre-commencement portion. The proceeds on realisation should be apportioned between pre and post commencement on a just and reasonable basis.'.

   

Mr Michael Howard [R]
Mr John Bercow
Mr Howard Flight [R]
Mr Christopher Chope
Mr Peter Luff

184

Schedule     29,     page     405,     line     44,     at end insert—

    '71A   (1) This paragraph makes provision for the application of this Schedule where a controlling interest is acquired in a company (the first company) by another company (the second company), such that the first company becomes a member of a group of companies of which the second company—

      (a) was already a member; or

      (b) is or becomes the principal company.

    (2)   Immediately before the time when the second company acquires a controlling interest in the first company, where the first company owns intangible fixed assets, the first company shall immediately before that time be deemed to have disposed of those intangible fixed assets for a sum equal to such amount as shall result in neither a gain nor loss for capital gains tax purposes nor a credit or debit for the purposes of this Schedule as the case may be.

    (3)   Immediately after the time when the second company acquires a controlling interest in the first company, such part of the expenditure (the apportioned expenditure) by the second company on the acquisition of a controlling interest in the first company shall be treated as expenditure on acquiring the intangible fixed assets of the first company, as shall be just and reasonable. The tax written down value of the intangible fixed assets of the first company shall be deemed to be equal to the expenditure so apportioned.

    (4)   The third person is a company or other person from whom the second company acquired the controlling interest in the first company. Where this paragraph applies—

      (a) the third person shall be deemed to have disposed of an intangible fixed asset for a sum equal to the expenditure deemed to have been incurred by the second company pursuant to sub-paragraph (3) above;

      (b) the disposal by the third person of the intangible fixed asset pursuant to this sub-paragraph shall be deemed to be a separate asset from the shares in the first company; and

      (c) any chargeable gain that accrues to the third person as a result of the disposal of the shares in the first company shall be treated for all the purposes of the Tax Acts as reduced by an amount equal to the expenditure deemed to have been incurred by the second company pursuant to sub-paragraph (3) above (and an allowable loss will be deemed to be increased by a like amount, as the case may be).

    (5)   The intangible fixed asset deemed to have been disposed of by the third person for the purposes of sub-paragraph (4) above shall be treated as having been created or acquired (as the case may be) at the time that the intangible fixed asset owned by the first company was acquired or created by the first company.

    (6)   In sub-paragraph (2), (3) and (5) above, references to the first company shall include references to one or more companies that were not in the same group as the second company before its acquisition of a controlling interest in the first company but as a result of that acquisition are in the same group as the second company after the acquisition.

    (7)   For the purposes of this paragraph, the second company acquires a controlling interest in the first company if the two companies are not in the same group and there is an acquisition by the second company of shares in the first company such that those two companies are in the same group immediately after the acquisition.

    (8)   This paragraph shall apply only if an election in writing is made jointly by the second company and the third person, such election to be made within the period commencing with the acquisition of the controlling interest in the first company and ending two years later.'.

 
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