49 Election to forgo roll-over relief on transfer of business
(1) After section 162 of the Taxation of Chargeable Gains Act 1992 (c. 12) (roll-over relief on transfer of business) insert—
Election for section 162 not to apply
162A (1) Section 162 shall not apply where the transferor makes an election under this section.
(2) An election under this section must be made by a notice given to an officer of the Board no later than the relevant date.
(3) Except where subsection (4) below applies, the relevant date is the second anniversary of the 31st January next following the year of assessment in which the transfer of the business took place.
(4) Where, by the end of the year of assessment following the one in which the transfer of the business took place, the transferor has disposed of all the new assets, the relevant date is the first anniversary of the 31st January next following the year of assessment in which the transfer of the business took place.
(5) For the purposes of subsection (4) above—
(a) a disposal of any of the new assets by the transferor shall be disregarded if it falls within section 58(1) (transfers between husband and wife); but
(b) where a disposal of any assets to a person is disregarded by virtue of paragraph (a) above, a subsequent disposal by that person of any of those assets (other than a disposal to the transferor) shall be regarded as a disposal by the transferor.
(6) All such adjustments shall be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under this section.
(7) Where, immediately before it was transferred, the business was owned by two or more persons—
(a) each of them has a separate entitlement to make an election under this section;
(b) an election made by a person by virtue of paragraph (a) above shall apply only to—
(i) the share of the amount of the gain on the old assets, and
(ii) the share of the new assets,
that is attributable to that person for the purposes of this Act.
(8) The reference in subsection (7) above to ownership by two or more persons includes, in Scotland as well as elsewhere in the United Kingdom, a reference to ownership by a partnership consisting of two or more persons.
(9) Expressions used in this section and in section 162 have the same meaning in this section as in that one.
But references in this section to new assets also include any shares or debentures that are treated by virtue of one or more applications of section 127 (including that section as applied by virtue of any enactment relating to chargeable gains) as the same asset as the new assets.
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(2) This section applies in relation to a transfer of a business on or after 6th April 2002.
50 Shares acquired on same day: election for alternative treatment
(1) After section 105 of the Taxation of Chargeable Gains Act 1992 (c. 12) (disposal on or before day of acquisition of shares and other unidentified assets) insert—
Shares acquired on same day: election for alternative treatment
105A (1) Subsection (2) below applies where an individual—
(a) acquires shares (“the relevant shares”) of the same class, on the same day and in the same capacity, and
(b) some of the relevant shares (“the approved-scheme shares”) are shares acquired by him as a result of—
(i) the exercise of a qualifying option within the meaning of paragraph 1(1) of Schedule 14 to the Finance Act 2000 (enterprise management incentives) in circumstances where paragraph 44, 45 or 46 of that Schedule (exercise of option to acquire shares) applies, or
(ii) the exercise of an option to which subsection (1) of section 185 of the Taxes Act (approved share option schemes) applies in circumstances where paragraphs (a) and (b) of subsection (3) of that section apply.
(2) Where the individual first makes a disposal of any of the relevant shares, he may elect for subsections (3) to (5) below to have effect in relation to that disposal and all subsequent disposals of any of those shares.
(3) In circumstances where section 105 applies, that section shall have effect as if—
(a) paragraph (a) of subsection (1) of that section required the approved-scheme shares to be treated as acquired by the individual by a single transaction separate from the remainder of the relevant shares (which shall also be treated by virtue of that paragraph as acquired by the individual by a single transaction), and
(b) subsection (1) of that section required the approved-scheme shares to be treated as disposed of after the remainder of the relevant shares.
(4) If the relevant shares include shares to which relief under Chapter 3 of Part 7 of the Taxes Act or deferral relief (within the meaning of Schedule 5B to this Act) is attributable—
(a) paragraph 4(4) of that Schedule has effect as if it required the approved-scheme shares falling within paragraph (a), (b), (c) or (d) of that provision to be treated as disposed of after the remainder of the relevant shares falling within the paragraph in question, and
(b) section 299 of the Taxes Act has effect for the purposes of section 150A(4) below as if it required—
(i) the approved-scheme shares falling within paragraph (a), (b), (c) or (d) of subsection (6A) of section 299 of that Act to be treated as disposed of after the remainder of the relevant shares falling within the paragraph in question, and
(ii) the approved-scheme shares to which subsection (6B) of that section applies to be treated as disposed of after the remainder of the relevant shares to which that subsection applies.
(5) Where section 127 applies in relation to any of the relevant shares (“the reorganisation shares”), that section shall apply separately to such of those shares as are approved-scheme shares and to the remainder of the reorganisation shares (so that those approved-scheme shares and the remainder of the reorganisation shares are treated as comprised in separate holdings of original shares and identified with separate new holdings).
(6) In subsection (5)—
(a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and
(b) “original shares” and “new holding” have the same meaning as in section 127 or (as the case may be) that section as applied by virtue of the enactment in question.
(7) For the purposes of subsection (1) above—
(a) any shares to which relief under Chapter 3 of Part 7 of the Taxes Act is attributable and which were transferred to an individual as mentioned in section 304 of that Act, and
(b) any shares to which deferral relief (within the meaning of Schedule 5B to this Act), but not relief under that Chapter, is attributable and which were acquired by an individual on a disposal to which section 58 above applies,
shall be treated as acquired by the individual on the day on which they were issued.
(8) In this section the references to Chapter 3 of Part 7, section 299 and section 304 of the Taxes Act shall be read as references to those provisions as they apply to shares issued after 31st December 1993 (enterprise investment scheme).
Provision supplementary to section 105A
105B (1) The provisions of section 105A have effect in the case of any disposal notwithstanding that some or all of the securities disposed of are otherwise identified—
(a) by the disposal, or
(b) by a transfer or delivery giving effect to it.
(2) An election must be made, by a notice given to an officer of the Board, on or before the first anniversary of the 31st January next following the year of assessment in which the individual first makes a disposal of any of the relevant shares.
(3) Where—
(a) an election is made in respect of the relevant shares, and
(b) any shares (“the other shares”) acquired by the individual on the same day and in the same capacity as the relevant shares cease to be treated under section 104(4) as shares of a different class from the relevant shares,
the election shall have effect in respect of the other shares from the time they cease to be so treated.
(4) In determining for the purposes of section 105A(2) and subsection (2) above whether the individual has made a disposal of any of the relevant shares, sections 122(1) and 128(3) shall be disregarded.
(5) No election may be made in respect of ordinary shares in a venture capital trust.
For this purpose “ordinary shares” has the meaning given in section 151A(7).
(6) For the purposes of section 105A, shares in a company shall not be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange, or would be so treated if dealt with on that recognised stock exchange.
(7) In section 105A(2) to (5) and subsections (2) to (4) above, any reference to the relevant shares or to the approved-scheme shares includes a reference to the securities (if any) directly or indirectly derived from the shares in question by virtue of one or more applications of section 127 (including that section as applied by virtue of any enactment relating to chargeable gains).
(8) In this section—
“the approved-scheme shares” has the same meaning as in section 105A;
“election” means an election under that section;
“the relevant shares” has the same meaning as in that section; and
“securities” has the meaning given in section 104(3);
and in subsection (4) the reference to section 128(3) includes a reference to that provision as it is applied by virtue of any enactment relating to chargeable gains.
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(2) The amendment made by subsection (1) has effect in relation to shares acquired by an individual on or after 6th April 2002.
(3) For this purpose—
(a) any shares to which relief under Chapter 3 of Part 7 of the Taxes Act 1988 is attributable and which were transferred to an individual as mentioned in section 304 of that Act, and
(b) any shares to which deferral relief (within the meaning of Schedule 5B to the Taxation of Chargeable Gains Act 1992 (c. 12)), but not relief under that Chapter, is attributable and which were acquired by an individual on a disposal to which section 58 of that Act applies,
shall be treated as acquired by the individual on the day on which they were issued.
(4) In subsection (3)(a), the references to Chapter 3 of Part 7 and section 304 of the Taxes Act 1988 shall be read as references to those provisions as they apply to shares issued after 31st December 1993 (enterprise investment scheme).
52 Capital gains tax: variation of dispositions taking effect on death
(1) In section 62(7) of the Taxation of Chargeable Gains Act 1992 (c. 12) (election to treat subsequent variation of dispositions taking effect on death as if effected by deceased) for the words from “unless” to the end of the subsection substitute “ unless the instrument contains a statement by the persons making the instrument to the effect that they intend the subsection to apply to the variation. ”.
(2) This section applies in relation to instruments made on or after 1st August 2002.
56 R&D tax relief for small and medium-sized enterprises: minor and consequential amendments
Schedule 15 to this Act (which makes minor amendments to Schedule 20 to the Finance Act 2000 (tax relief for R&D expenditure of small and medium-sized enterprises), including amendments consequential on Schedules 12 and 13 to this Act) has effect for accounting periods ending on or after 1st April 2002.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Schedule 17 to this Act (which makes provision consequential on the introduction of community investment tax relief) has effect.
(3) Schedules 16 and 17 shall come into force on such day as the Treasury may by order appoint.
(4) On and after that day—
(a) Schedule 16 shall have effect in relation to—
(i) investments made on or after such day as the Treasury may so appoint, being a day not earlier than 17th April 2002, and
(ii) claims made on or after such day as the Treasury may so appoint,
(b) paragraphs 2 to 4 of Schedule 17 shall have effect for years of assessment ending on or after the day appointed under paragraph (a)(i), and
(c) paragraph 5 of that Schedule shall have effect for accounting periods ending on or after that day.
Schedule 19 to this Act (first-year allowances in respect of expenditure on cars with low CO2 emissions and exemption from single asset pool rules) has effect in relation to expenditure incurred on or after 17th April 2002.
61 Plant or machinery for gas refuelling station: first-year allowances
Schedule 20 to this Act (first-year allowances in respect of expenditure on plant or machinery for gas refuelling station) has effect in relation to expenditure incurred on or after 17th April 2002.
63 First-year allowances for expenditure wholly for a ring fence trade
(1) Schedule 21 to this Act shall have effect.
(2) In that Schedule—
(a) Part 1 makes provision for and in connection with first-year allowances under Part 2 of the Capital Allowances Act 2001 in respect of expenditure incurred by a company on the provision of plant or machinery for use wholly for the purposes of a ring fence trade chargeable to tax under section 330(1) of the Corporation Tax Act 2010; and
(b) Part 2 makes provision for and in connection with first-year allowances under Part 5 of that Act (mineral extraction allowances) in respect of expenditure incurred by a company wholly for the purposes of such a trade.
(3) The amendments made by that Schedule have effect in relation to expenditure incurred on or after 17th April 2002.
65 Postponement of change to mark to market in certain cases
(1) This section applies in relation to the computation in accordance with the provisions applicable for the purposes of section 35 of the Corporation Tax Act 2009 (charge on trade profits) of the profits of the insurance business, other than life assurance business, of—
(a) an insurance company,
(b) a corporate member of Lloyd’s, or
(c) a controlled foreign company.
(2) For periods of account to which this section applies nothing in—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) section 46 of the Corporation Tax Act 2009 (computation of profits to be on basis giving true and fair view),
prevents the company from computing the profits of that business on a realisation basis rather than a mark to market basis.
A “realisation basis” means not recognising a profit or loss on an asset until it is realised, and a “mark to market basis” means bringing assets into account in each period of account at a fair value.
(3) Subject to subsection (4), this section applies in relation to any period of account that—
(a) began before 1st August 2001, and
(b) ends before 31st July 2002.
(4) This section does not apply if—
(a) an earlier period of account beginning on or after 1st January 2001 ended with an accounting date different from that with which the previous period of account ended,
(b) the change of accounting date was notified—
(i) to the registrar of companies, or
(ii) in the case of a company established under the law of a country or territory outside the United Kingdom, to the corresponding authority of that country or territory,
on or after 17th April 2002, and
(c) the purpose, or one of the purposes, for which the change was made was so that a subsequent period of account would be one to which section 64 above applies (computation of profits: adjustment on change of basis).
(5) In this section—
“controlled foreign company” has the same meaning as in Chapter 4 of Part 17 of the Taxes Act 1988; and
“corporate member of Lloyd’s” means a corporate member as defined in section 230(1) of the Finance Act 1994 (c. 9).
66 Election to continue postponement of mark to market
(1) Where section 65 (postponement of change to mark to market in certain cases) applies in relation to a period of account, the company may elect that it shall continue to apply in relation to subsequent periods of account as regards assets held by it on 1st January 2002.
Any such election must be made within twelve months after the end of the accounting period of the company current on that date.
(2) An insurance company that carries on both long-term business and business other than long-term business may make an election under this section limited to assets held by the company otherwise than in the company’s long-term insurance fund.
(3) For the purpose of determining whether an election under this section applies to an asset in a case where—
(a) assets are realised by the company in an accounting period beginning on or after 1st January 2002,
(b) the assets are of such a kind that the particular assets realised are not readily identifiable,
(c) the realisation does not exhaust the company’s holding, and
(d) some but not all of the company’s holding was acquired after 1st January 2002,
assets realised shall be identified with assets acquired on the same basis as that used by the company for accounting purposes, unless the basis used by the company is “last in, first out” in which case assets realised shall be identified with assets acquired on or before 1st January 2002 in priority to assets acquired after that day.
(4) Where a company has made an election under this section and—
(a) an asset in relation to which the election has effect is transferred to another company (“the transferee company”) in pursuance of an insurance business transfer scheme, and
(b) immediately after the transfer either—
(i) the transferee company is resident in the United Kingdom, or
(ii) the asset is held for the purposes of a business carried on by the transferee company in the United Kingdom through a branch or agency,
this section applies as if the transferee company had made an election under this section in relation to that asset.
(5) ...
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(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In section 81 of the Finance Act 1999 (c. 16) (acquisitions disregarded under insurance companies concession), at the end add—
(13) If the relevant company changes from—
(a) not recognising a profit or loss on an asset until it is realised, to
(b) bringing assets into account in each period of account at a fair value,
then, in calculating the amount of any adjustment required under Schedule 22 to the Finance Act 2002 (calculation of adjustment on change of basis), the amount to be taken into account as the cost of the asset in relation to a period of account before the change is the cost of the previous acquisition.
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(4) The provisions of this section come into force as follows—
(a) the amendments in subsections (1) and (2) apply in relation to periods of account ending on or after 1st August 2001;
(b) the amendment in subsection (3) applies wherever an adjustment falls to be made under Schedule 22 to the Finance Act 2002 (see Part 5 of that Schedule).
79 Forex and exchange gains and losses from loan relationships etc
(1) The following provisions shall cease to have effect—
(a) paragraph 4 of Schedule 9 to the Finance Act 1996 (c. 8) (which excludes foreign exchange gains and losses from the computation of credits and debits under the loan relationships legislation); and
(b) in consequence, sections 125 to 169 of the Finance Act 1993 (c. 34) (taxation of foreign exchange gains and losses).
(2) Schedule 23 to this Act (which makes provision in relation to exchange gains and losses from loan relationships etc) shall have effect.
(3) The amendments made by subsection (1) and by Parts 1 and 2 of Schedule 23 have effect in relation to accounting periods beginning on or after 1st October 2002.
(1) Schedule 24 to this Act (which makes provision in relation to corporation tax and currency) shall have effect.
(2) This section has effect in relation to accounting periods beginning on or after 1st October 2002.
(1) The Treasury may by regulations make such transitional or consequential provision, or such savings (with or without modifications), as they may from time to time consider appropriate in consequence of, or otherwise in connection with, any provision of section 79 or 80 or Schedule 23 or 24 (or any repeal consequential on any such provision).
(2) The power conferred by subsection (1) includes power—
(a) to make different provision for different cases or different purposes;
(b) to amend any statutory instrument; and
(c) to make incidental or supplementary provision.
(3) The provision that may be made by virtue of subsection (1) or (2) includes provision for or in connection with bringing amounts into account—
(a) for the purposes of the Taxation of Chargeable Gains Act 1992 (c. 12), as if they were chargeable gains or allowable losses; or
(b) for the purposes of Part 5 of the Corporation Tax Act 2009, as if they were credits or debits in respect of a loan relationship or a related transaction of the company concerned.
(4) Nothing in any provision of Schedule 23 or 24 shall prejudice the operation of this section.
(5) Nothing in this section or in Schedule 23 or 24 limits the operation of section 16 or 17 of the Interpretation Act 1978 (c. 30) (effect of repeals).
(1) Schedule 25 to this Act (which makes provision in relation to loan relationships) shall have effect.
(2) The amendments made by Parts 1 and 2 of that Schedule have effect in relation to accounting periods beginning on or after 1st October 2002.
(1) The following shall have effect—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Schedule 27 to this Act (which makes minor and consequential amendments relating to the taxation of derivative contracts); and
(c) Schedule 28 to this Act (which contains transitional provisions etc in connection with the coming into force of this section and Schedules 26 and 27).
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) This section has effect in relation to accounting periods beginning on or after 1st October 2002.
(4) Subsection (3) is subject to any specific provision of Schedule 28.
85 Gains of insurance company from venture capital investment partnership
(1) In Chapter 3 of Part 6 of the Taxation of Chargeable Gains Act 1992 (c. 12) (insurance), after section 211 insert—
Gains of insurance company from venture capital investment partnership
211A Schedule 7AD to this Act has effect with respect to the gains of an insurance company from a venture capital investment partnership.
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(2) After Schedule 7AC to that Act (inserted by Part 1 of Schedule 8 to this Act) insert the Schedule 7AD set out in Schedule 31 to this Act.
(1) Schedule 32 to this Act (which makes provision about the taxation of Lloyd’s underwriters) has effect.
(2) The amendments in that Schedule have effect in relation to quota share contracts (within the meaning of section 178 of the Finance Act 1993 (c. 34) or section 225 of the Finance Act 1994) entered into on or after 17th April 2002.
89 Controlled foreign companies: territorial exclusions from s.748 exemptions
(1) In section 748 of the Taxes Act 1988 (controlled foreign companies: cases where no apportionment falls to be made under section 747(3)) after subsection (5) insert—
(6) This section is subject to section 748A.
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(2) After section 748 of the Taxes Act 1988 insert—
748A Territorial exclusions from exemption under section 748
(1) Nothing in section 748 prevents an apportionment under section 747(3) falling to be made as regards an accounting period of a controlled foreign company if the company—
(a) is a company incorporated in a territory to which this section applies as respects that accounting period; or
(b) is at any time in that accounting period liable to tax in such a territory by reason of domicile, residence or place of management; or
(c) at any time in that accounting period carries on business through a branch or agency in such a territory.
(2) The condition in subsection (1)(c) above is not satisfied as regards an accounting period of a controlled foreign company if the business carried on by the company in that period through branches or agencies in territories to which this section applies, taken as a whole, is only a minimal part of the whole of the business carried on by the company in that period.
(3) The territories to which this section applies as respects an accounting period of a controlled foreign company are those specified as such in regulations made by the Treasury.
(4) Regulations under subsection (3) above—
(a) may make different provision for different cases or with respect to different territories; and
(b) may contain such incidental, supplemental, consequential or transitional provision as the Treasury may think fit.
(5) A statutory instrument containing regulations under subsection (3) above shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
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(3) This section has effect in relation to accounting periods of controlled foreign companies beginning on or after the day on which this Act is passed.
(4) In this section “accounting period” and “controlled foreign company” have the same meaning as in Chapter 4 of Part 17 of the Taxes Act 1988.