Schedule 25 - Loan relationships

Finance Bill – in a Public Bill Committee at 6:45 pm on 11th June 2002.

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Amendments made: No. 127, in page 286, line 7, leave out sub-paragraph (4).

No. 128, in page 289, line 14, at end insert

'and the shares are not, within the meaning of Chapter 1 of Part 12 of the Taxes Act 1988, assets of an insurance company's long-term insurance fund (see section 431(2) of that Act)'.

No. 129, in page 292, leave out lines 1 to 11 and insert—

' ''(6) Where—

(a) a company ceases to be a party to a loan relationship in an accounting period (the ''cessation period''),

(b) profits, gains or losses arise to the company from the loan relationship or a related transaction in that accounting period, and

(c) the credits or debits brought into account for the purposes of this Chapter for that accounting period do not include credits or debits which represent the whole of those profits, gains or losses, credits or debits in respect of so much of those profits, gains 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 Chapter over one or more subsequent accounting periods (''post-cessation periods'') as in the case of a loan relationship to which the company is a party in those periods and subsections (7) and (8) below shall apply.

(7) In any case falling within subsection (6) above, any question—

(a) whether, in a post-cessation period, the company is to any extent a party to the loan relationship—

(i) for the purposes of a trade carried on by it, or

(ii) for any other particular purpose or purposes, or

(b) whether, in a post-cessation period, the loan relationship 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 a party to the loan relationship instead of the circumstances in the post-cessation period.

(8) In any case falling within subsection (6) above, any question—

(a) whether the loan relationship 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.''.'.

No. 130, in page 294, line 9, at end insert—

'and the debt is not one that is owed to, or to persons acting for, a limited partnership which is a collective investment scheme within the meaning of section 235 of the Financial Services and Markets Act 2000'.

No. 131, in page 298, line 3, leave out '2001' and insert '2002'.

No. 132, in page 299, line 41, leave out 'Article 21' and insert 'Part 3'.

No. 133, in page 300, line 38, leave out '(9)' and insert '(7)'.

No. 134, in page 300, line 40, after 'if' insert '(a)'.

No. 135, in page 300, line 43, leave out

'(within the meaning of section 87 of this Act)'.

No. 136, in page 300, line 45, at end insert

'; and

(b) the first accounting period of the creditor company for which there is or was such a connection is an accounting period beginning on or after 1st October 2002'.

No. 137, in page 301, line 8, leave out from 'the' to end of line 10 and insert

'accounting period mentioned in sub-paragraph (2)(b) above.'.

No. 138, page 301, line 19, leave out from 'connection' to 'between' in line 20.

No. 139, in page 301, line 37, leave out 'sub-paragraph (6) above' and insert 'this paragraph'.

No. 140, in page 301, line 41, at end insert 'or'.

No. 141, in page 301, line 43, leave out from 'person' to end of line 46.

No. 142, in page 301, line 49, leave out 'paragraphs (a) to (c)' and insert 'paragraph (a) or (b)'.

No. 143, in page 302, line 1, leave out from 'above' to end of line 10 and insert

' ''control'' has the meaning given for the purposes of section 87 by section 87A of this Act.''.'.

No. 144, in page 304, line 2, at end insert—

'but nothing in sub-paragraph (1) or paragraph (b) above shall prevent any credit in respect of interest from being brought into account for the purposes of this Chapter by the person described in that paragraph.'.

No. 145, in page 304, line 9, at end insert—

'(1A) In sub-paragraph (1) (accounting periods to which the paragraph applies) for paragraph (b) substitute—

''(b) at any time in that period another company stands in the position of a creditor as respects that security;''.'.

No. 146, in page 304, line 18, at end insert—

'(3A) For sub-paragraph (8) (which defines what it is for the benefit of a security to be available to a company) substitute—

''(8) Any reference in this paragraph to a person who stands in the position of a creditor as respects a relevant discounted security includes a reference to a person who indirectly stands in that position by reference to a series of relevant discounted securities

(8A) Where this paragraph applies by virtue of sub-paragraph (8) above, the reference to the corresponding creditor relationship in sub-paragraph (1)(d) above is a reference to the creditor

relationship of the company which indirectly stands in the position of a creditor as respects the relevant discounted security.''.'.

No. 147, in page 304, line 28, leave out 'and'.

No. 148, in page 304, line 30, at end insert

'; and

(c) omit the word ''and'' immediately preceding paragraph (b)'.

No. 149, in page 304, line 36, at end insert—

'(3A) At the end of paragraph (b) of that sub-paragraph add ''; and

(c) the debt is not one that is owed to, or to persons acting for, a limited partnership which is a collective investment scheme within the meaning of section 235 of the Financial Services and Markets Act 2000.''.'.

No. 150, in page 304, line 43, leave out from beginning to second 'and' in line 44.

No. 151, in page 309, line 12, after 'if' insert '(a)'.

No. 152, in page 309, line 14, at end insert

'; and

(b) the shares are not, within the meaning of Chapter1 of Part12 of the Taxes Act 1988, assets of an insurance company's long-term insurance fund (see section 431(2) of that Act)''.'.

No. 153, in page 313, line 46, at end insert—

'Life assurance business

39A (1) In Schedule 11 (loan relationships: special provisions for insurers) Part 1 (insurance companies) is amended as follows

(2) In paragraph 1 (I minus E basis) after sub-paragraph (1) (which provides that nothing in the Chapter prevents profits and gains from loan relationships of insurance companies referable to life assurance business from being included in profits and gains chargeable in accordance with the I minus E basis) insert—

''(1A) Where—

(a) the I minus E basis is applied for any accounting period in respect of any life assurance business carried on by an insurance company, and

(b) in that accounting period the insurance company is a party to a loan relationship which is to any extent referable to that business, then, in applying the I minus E basis to that business, sections 92(1)(f), 93(1)(a) and (b) and 96(1)(b) of this Act shall be disregarded in relation to that loan relationship to that extent.''.'.—[Dawn Primarolo.]

Schedule 25, as amended, agreed to.

Clause 82 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Sutcliffe.]

Adjourned accordingly at two minutes to Seven o'clock till Thursday 13 June at half-past Nine o'clock.