Amendments proposed to the Finance Bill - continued House of Commons

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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.'.

   

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

197

Schedule     29,     page     433,     line     18,     leave out from 'acquisition' to end of line 19.

   

Mr Paul Boateng

212

Schedule     29,     page     438,     line     19,     leave out 'group relief' and insert 'relief against total profits'.

   

Mr Paul Boateng

213

Schedule     29,     page     439,     line     3,     at end insert—

       'existing asset                         paragraph 118(3)'.


   

Mr Paul Boateng

214

Schedule     30,     page     442,     line     26,     leave out 'royalties in respect of'.


   

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

186

Clause     104,     page     81,     line     25,     leave out Clause 104.


   

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

185

Clause     104,     page     81,     line     29,     after 'assets', insert 'to a connected person'.

   

Mr Paul Boateng

215

Schedule     31,     page     447,     line     32,     leave out to end of line 19 on page 448 and insert—

'Meaning of "venture capital investment partnership"

    (1) A "venture capital investment partnership" means a partnership in relation to which the following conditions are met.

    (2) The first condition is that the sole or main purpose of the partnership is to invest in unquoted shares or securities.

    This condition shall not be regarded as met unless it appears from—

            (a)   the agreement constituting the partnership, or

            (b)   any prospectus issued to prospective partners,

    that that is the sole or main purpose of the partnership.

    (3) The second condition is that the partnership does not carry on a trade.

    (4) The third condition is that not less than 90% of the book value of the partnership's investments is attributable to investments that are either—

            (a)   shares or securities that were unquoted at the time of their acquisition by the partnership, or

            (b)   shares that were quoted at the time of their acquisition by the partnership but which it was reasonable to believe would cease to be quoted within the next twelve months.

    (5) For the purposes of the third condition—

            (a)   the following shall be disregarded—

            (i) any holding of cash, including cash deposited in a bank account or similar account but not cash acquired wholly or partly for the purpose of realising a gain on its disposal;

            (ii) any holding of quoted shares or securities acquired by the partnership in exchange for unquoted shares or securities;

            (b)   whether the 90% test is met shall be determined by reference to the values shown in the partnership's accounts at the end of a period of account of the partnership.

    (6) Where a partnership ceases to meet the above conditions, the company shall be treated as if the partnership had continued to be a venture capital investment partnership until the end of the period of account of the partnership during which it ceased to meet the conditions.

    (7) A partnership that ceases to meet those conditions cannot qualify again as a venture capital investment partnership.

    For this purpose a partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member.'.

   

Mr Paul Boateng

216

Schedule     31,     page     449,     line     3,     leave out sub-paragraph (3).

   

Mr Paul Boateng

217

Schedule     31,     page     449,     line     44,     at end insert—

    '(3A) The operation of sub-paragraph (3) is not affected by the partnership having ceased to be a venture capital investment partnership before the time at which the distribution is treated as received by the company.'.

 
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Prepared 13 Jun 2002