Attribution to trustees of gains of non-resident companies.

Finance Act 2000

2000 Chapter 17 - continued

PART III, INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX - continued

Capital gains tax: gifts and trusts - continued

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Attribution to trustees of gains of non-resident companies.

94. - (1) After section 79A of the Taxation of Chargeable Gains Act 1992 (inserted by section 93 above), insert-

For this purpose "participator" has the same meaning as in section 13.

"Attribution to trustees of gains of non-resident companies.	79B. - (1) This section applies where trustees of a settlement are participators-
	(a) in a close company, or
	(b) in a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom.
	(2) Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing a charge to tax arising by virtue of the attribution to the trustees under section 13, by reason of their participation in the company mentioned in subsection (1) above, of any part of a chargeable gain accruing to a company that is not resident in the United Kingdom.
	(3) Where this section applies and-
	(a) a chargeable gain accrues to a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom, and
	(b) all or part of the chargeable gain is treated under section 13(2) as accruing to a close company which is not chargeable to corporation tax in respect of the gain by reason of double taxation relief arrangements, and
	(c) had the company mentioned in paragraph (b) (and any other relevant company) not been resident in the United Kingdom, all or part of the chargeable gain would have been attributed to the trustees by reason of their participation in the company mentioned in subsection (1) above,
	section 13(9) shall apply as if the company mentioned in paragraph (b) above (and any other relevant company) were not resident in the United Kingdom.
	(4) The references in subsection (3) above to "any other relevant company" are to any other company which if it were not resident in the United Kingdom would be a company in relation to which section 13(9) applied with the result that all or part of the chargeable gain was attributed to the trustees as mentioned in that subsection.".

(2) This section applies where a chargeable gain accrues on or after 21st March 2000 to a company that is not resident in the United Kingdom.

Disposal of interest in non-resident settlement.

95. - (1) Section 85 of the Taxation of Chargeable Gains Act 1992 (disposal of interest in non-resident settlements) is amended as follows.

(2) In subsection (2) (market value uplift for interest where trustees become non-resident) for "Subject to subsections (4) and (9) below," substitute "Subject to subsections (4), (9) and (10) below,".

(3) In subsection (5) (market value uplift for interest where trustees become treaty non-resident), at the beginning insert "Subject to subsection (10) below,".

(4) After subsection (9) add-

The material time is-

	"(10) Subsection (3) or (7) above does not apply to the disposal of an interest created by or arising under a settlement which has relevant offshore gains at the material time.
	(a) in relation to subsection (3) above, the relevant time within the meaning of section 80;
	(b) in relation to subsection (7) above, the time found under subsection (8) above.
	(11) For the purposes of subsection (10) above, a settlement has relevant offshore gains at any time if, were the year of assessment to end at that time, there would be an amount of trust gains which by virtue of section 89(2) or paragraph 8(3) of Schedule 4C would be available to be treated as chargeable gains accruing to any beneficiaries of the settlement receiving capital payments in the following year of assessment.".

(5) This section applies where the material time (within the meaning of section 85(10) of the Taxation of Chargeable Gains Act 1992, inserted by subsection (4) above) falls on or after 21st March 2000.

Payments by trustees to non-resident companies.

96. - (1) In section 96(5) of the Taxation of Chargeable Gains Act 1992 (capital payments by trustees to non-resident company), in the opening words (which refer to the persons by whom the company is controlled), omit "and each of them is then resident or ordinarily resident in the United Kingdom".

(2) This section applies to payments received on or after 21st March 2000.

Groups and group relief

Group relief for non-resident companies etc.

97. Schedule 27 to this Act has effect.

In that Schedule-

Part I makes amendments of Chapter IV of Part X of the Taxes Act 1988 (group relief), and

Part II contains consequential amendments.

Recovery of tax payable by non-resident company.

98. - (1) Schedule 28 to this Act has effect with respect to the recovery of unpaid corporation tax payable by a company not resident in the United Kingdom.

(2) The provisions of that Schedule have effect in relation to corporation tax for accounting periods ending on or after 1st April 2000.

Joint arrangements for claims.

99. In paragraph 77 of Schedule 18 to the Finance Act 1998 (power to make provision by regulations about joint arrangements for group relief), in sub-paragraph (1)(a) (arrangements permitting claim for relief without copy of notice of consent to surrender), after "the surrendering company" insert ", provided authority for the claim being so made is given by a company which is authorised in relation to the claimant company as mentioned in paragraph (b)".

Limit on amount of group relief in case of consortium claim.

100. - (1) For section 403C of the Taxes Act 1988 (special rules for consortium cases) substitute-

That fraction is whichever is the lowest in that period of the following percentages-
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
That fraction is whichever is the lowest in that period of the following percentages-
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.

"Amount of relief in consortium cases.	403C. - (1) In the case of a consortium claim the amount that may be set off against the total profits of the claimant company is limited by this section.
	(2) Where the claimant company is a member of the consortium, the amount that may be set off against the total profits of that company for the overlapping period is limited to the relevant fraction of the surrenderable amount.
	(a) the percentage of the ordinary share capital of the surrendering company that is beneficially owned by the claimant company;
	(b) the percentage to which the claimant company is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and
	(c) the percentage to which the claimant company would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding-up.
	(3) Where the surrendering company is a member of the consortium, the amount that may be set off against the total profits of the claimant company for the overlapping period is limited to the relevant fraction of the claimant company's total profits for the overlapping period.
	(a) the percentage of the ordinary share capital of the claimant company that is beneficially owned by the surrendering company;
	(b) the percentage to which the surrendering company is beneficially entitled of any profits available for distribution to equity holders of the claimant company; and
	(c) the percentage to which the surrendering company would be beneficially entitled of any assets of the claimant company available for distribution to its equity holders on a winding-up.
	(4) In any case where the claimant or surrendering company is a subsidiary of a holding company which is owned by a consortium, for the references in subsection (2) or (3) above to the claimant or surrendering company there shall be substituted references to the holding company.
	(5) Expressions used in this section and in section 403A have the same meanings in this section as in that section.
	(6) Schedule 18 has effect for supplementing this section.".

(2) In section 406(6) of the Taxes Act 1988 (claims relating to losses etc. of consortium company or group member), for "accounting period in respect of which the member's share in the consortium" substitute "overlapping period in respect of which the relevant fraction".

(3) The following provisions shall cease to have effect-

(a) in section 402(4) of the Taxes Act 1988, the words from "if the share in the consortium" to "is nil or"; and

(b) in section 413 of that Act, subsections (8) and (9).

(4) In Schedule 18 to the Taxes Act 1988-

(a) in paragraphs 1(1), 2(1), 3(1), 4(3) and (4), 5A(3) and (4), 5C(3) and (4), 5D(3) and (4), 5E(3) and (4) and 6, for "section 413(7) to (9)" substitute "sections 403C and 413(7)"; and

(b) in paragraph 7(1)(b), for "subsection (8) of that section" substitute "section 403C".

(5) The amendments in this section shall be deemed always to have had effect.

Prepared 7 August 2000