Schedule 7 - Accounting practice and related matters
Finance Bill
7:00 pm
Nicholas Winterton (Macclesfield, Conservative)
With this it will be convenient to discuss the following amendments: No. 137, in schedule 7, page 109, line 10, at end insert—
‘(2A)Where two or more associated companies cease to be members of a group at the same time, sub-paragraph (2) does not have effect in relation to a transfer between those companies.
(2B)But where—
(a)a company (“the transferee”) that has ceased to be a member of a group of companies (“the first group”) has been assigned an asset or liability from another company (“the transferor”) which was a member of that group at the time of the transfer, and
(b)sub-paragraph (3) applies in relation to the transferee’s ceasing to be a member of the first group so that sub-paragraph (2) does not have effect, and
(c)the transferee subsequently ceases to be a member of another group of companies (“the second group”), and
(d)there is a relevant connection between the two groups (see sub-paragraph (5)),
sub-paragraph (2) has effect in relation to the transferee’s ceasing to be a member of the second group as if it were the second group of which both companies had been members at the time of the transfer.
(2C)For the purposes of sub-paragraph (4) there is a relevant connection between the first group and the second group if, at the time when the transferee ceases to be a member of the second group, the company which is the principal company of that group is under the control of—
(a)the company that is the principal company of the first group or, if that group no longer exists, was the principal company of that group when the transferee ceased to be a member of it; or
(b)any person or persons who control the company mentioned in paragraph (a) or who have had it under their control at any time in the period since the transferee ceased to be an member of the first group; or
(c)any person or persons who have, at any time in that period, had under their control either—
(i)a company that would have been a person falling within paragraph (b) if it had continued to exist, or
(ii)a company that would have been a person falling within this paragraph (whether by reference to a company that would have been a person falling within paragraph (b) or by reference to a company or series of companies falling within this provision).
(2D)The provisions of section 416(2) to (6) of the Taxes Act 1988 (meaning of control) have effect for the purposes of sub-paragraph (5) as they have effect for the purposes of Part 11 of that Act.But a person carrying on a business of banking shall not be regarded for those purposes as having control of a company by reason only of having, or of the consequences of having exercised, any rights in respect of loan capital or debt issued or incurred by the company for money lent by that person to the company in the ordinary course of that business.’.
No. 138, in schedule 7, page 117, line 37, leave out from beginning to end of line 8 on page 118.
No. 139, in schedule 7, page 117, line 38, at end insert—
‘(2A)Where two or more associated companies cease to be members of a group at the same time, sub-paragraph (2) does not have effect in relation to a transfer between those companies.
(2B)But where—
(a)a company (“the transferee”) that has ceased to be a member of a group of companies (“the first group”) has been assigned an asset or liability from another company (“the transferor”) which was a member of that group at the time of the transfer,
(b)sub-paragraph (3) applies in relation to the transferee’s ceasing to be a member of the first group so that sub-paragraph (2) does not have effect,
(c)the transferee subsequently ceases to be a member of another group of companies (“the second group”), and
(d)there is a relevant connection between the two groups (see sub-paragraph (5)),
sub-paragraph (2) has effect in relation to the transferee’s ceasing to be a member of the second group as if it were the second group of which both companies had been members at the time of the transfer.
(2C)For the purposes of sub-paragraph (4) there is a relevant connection between the first group and the second group if, at the time when the transferee ceases to be a member of the second group, the company which is the principal company of that group is under the control of—
(a)the company that is the principal company of the first group or, if that group no longer exists, was the principal company of that group, when the transferee ceased to be a member of it; or
(b)any person or persons who control the company mentioned in paragraph (a) or who have had it under their control at any time in the period since the transferee cease to be a member of the first group; or
(c)any person or persons who have, at any time in that period, had under their control either—
(i)a company that would have been a person falling within paragraph (b) if it had continued to exist, or
(ii)a company that would have been a person falling within this paragraph (whether by reference to a company that would have been a person falling within paragraph (b) or by reference to a company or a series of companies falling within this provision).
(2D)The provisions of section 416(2) to (6) of the Taxes Act 1988 (meaning of control) have effect for the purposes of sub-paragraph (5) as they have effect for the purposes of Part 11 of that Act.But a person carrying on a business of banking shall not be regarded for those purposes as having control of a company by reason only of having, or of the consequences of having exercised, any rights in respect of loan capital or debt issued or incurred by the company for money lent by that person to the company in the ordinary course of that business.’.
No. 140, in schedule 7, page 119, line 12, at end insert—
‘Degrouping: principal company becoming member of another group 24A(1)Paragraphs 18 and 24 do not apply where a company ceases to be a member of a group by reason only of the fact that the principal company of the group becomes a member of another group (“the second group”). (2)But if, in a case where paragraphs 18 and 24 would have applied but for sub-paragraph (1) above, after the assignment and before the end of the period of six years after the date of the assignment— (a)the transferee ceases to satisfy the condition that it is both a 75% subsidiary and an effective 51% subsidiary of one or more members of the second group (“the qualifying condition”), and (b)at the time at which the transferee ceases to satisfy that condition, the relevant loan relationship or derivative contract is held by the transferee or another company in the same group,
24A(1)Paragraphs 18 and 24 do not apply where a company ceases to be a member of a group by reason only of the fact that the principal company of the group becomes a member of another group (“the second group”).
(2)But if, in a case where paragraphs 18 and 24 would have applied but for sub-paragraph (1) above, after the assignment and before the end of the period of six years after the date of the assignment—
(a)the transferee ceases to satisfy the condition that it is both a 75% subsidiary and an effective 51% subsidiary of one or more members of the second group (“the qualifying condition”), and
this Schedule has effect as if the transferee, immediately after the assignment to it of the relevant loan relationship or derivative contract, had realised the loan relationship or derivative contract for its market value at that time and immediately reacquired the asset at that value.
(3)The adjustments required to be made in consequence of sub-paragraph (2), by the transferee or a company to which the relevant loan relationship or derivative contract has been subsequently assigned, in relation to the period between—
(a)the assignment of the relevant loan relationship or derivative contract to the transferee, and
(b)the transferee ceasing to satisfy the qualifying condition,
shall be made by bringing the aggregate net credit or debit into account as if it had arisen immediately before the transferee ceased to satisfy the qualifying condition.
(4)For the purposes of section 82 of this Finance Act 1996 (Method of bringing amounts into account) and paragraph 14 of Schedule 26 to the Finance Act 2002 (Method of bringing amounts into account), credits or debits brought into account by virtue of this paragraph take their character from the purposes for which the relevant loan relationship or derivative contract was held by the transferee immediately after the assignment.’.