Finance Act 2013

Amendments of Part 14 of CTA 2010

1(1)Part 14 of CTA 2010 (change in company ownership) is amended as follows.

(2)In section 672 (overview of Part)—

(a)after subsection (3) insert—

“(3A)Chapter 5A restricts relief for certain non-trading deficits and losses where there is a change of ownership of a shell company.”;

(b)in subsection (7), omit the “and” at the end of paragraph (b) and after that paragraph insert—

“(ba)shell company”, see section 705A, and”.

(3)After Chapter 5 insert—

“CHAPTER 5AShell companies: restrictions on relief

Introduction

705AIntroduction to Chapter

(1)This Chapter applies where there is a change in the ownership of a shell company.

(2)In this Chapter—

• “the change in ownership” means the change in ownership mentioned in subsection (1);

• “the company” means the company mentioned in subsection (1);

• “shell company” means a company that—

  (a)

  is not carrying on a trade,

  (b)

  is not a company with investment business, and

  (c)

  is not carrying on a UK property business.

705BNotional split of accounting period in which change in ownership occurs

(1)This section applies for the purposes of this Chapter.

(2)The accounting period in which the change in ownership occurs (“the actual accounting period”) is treated as two separate accounting periods (“notional accounting periods”), the first ending with the change and the second consisting of the remainder of the period.

(3)The amounts for the actual accounting period in column 1 of the table in section 705F(2) are apportioned to the two notional accounting periods in accordance with section 705F.

(4)In this Chapter “the actual accounting period” and “notional accounting periods” have the same meaning as in this section.

Restrictions on relief

705CRestriction on debits to be brought into account

(1)This section has effect for the purpose of restricting the debits to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the company’s loan relationships.

(2)The debits to be brought into account for the purposes of Part 5 of CTA 2009 for—

(a)the accounting period beginning immediately after the change in ownership, or

(b)any subsequent accounting period,

do not include relevant non-trading debits so far as amount A exceeds amount B.

(3)Amount A is the sum of—

(a)the amount of those relevant non-trading debits, and

(b)the amount of any relevant non-trading debits which have been brought into account for the purposes of that Part for any previous accounting period ending after the change in ownership.

(4)Amount B is the amount of the taxable total profits of the accounting period ending with the change in ownership.

(5)For the meaning of “relevant non-trading debit”, see section 730.

705DRestriction on carry forward of non-trading deficit from loan relationships

(1)This section has effect for the purpose of restricting the carry forward of a non-trading deficit from the company’s loan relationships under Part 5 of CTA 2009 (loan relationships).

(2)Subsection (3) applies if the non-trading deficit in column 1 of row 4 of the table in section 705F(2) is apportioned in accordance with section 705F to the first notional accounting period.

(3)None of that non-trading deficit may be carried forward to—

(a)the accounting period beginning immediately after the change in ownership, or

(b)any subsequent accounting period.

705ERestriction on relief for non-trading loss on intangible fixed assets

(1)This section has effect for the purpose of restricting relief under section 753 of CTA 2009 (treatment of non-trading losses) in respect of a non-trading loss on intangible fixed assets.

(2)Relief under section 753 of CTA 2009 against the total profits of the same accounting period is available only in relation to each of the notional accounting periods considered separately.

(3)A non-trading loss on intangible fixed assets for an accounting period beginning before the change in ownership may not be—

(a)carried forward under section 753(3) of that Act to an accounting period ending after the change in ownership, or

(b)treated under that section as if it were a non-trading debit of that period.

Apportionment of amounts

705FApportionment of amounts

(1)This section applies for the purposes of this Chapter.

(2)Any amount for the actual accounting period in column 1 of the following table is to be apportioned to the two notional accounting periods in accordance with the corresponding method of apportionment in column 2 of the table.

(3)If any method of apportionment in column 2 of the table in subsection (2) would work unjustly or unreasonably in any case, such other method is to be used as is just and reasonable.

(4)For the meaning of certain expressions used in this section, see section 705G.

705GMeaning of certain expressions in section 705F

(1)This section applies for the purposes of the table in section 705F(2).

(2)For the purposes of column 1 of row 1 of the table, the amount for the actual accounting period of any adjusted non-trading profits from the company’s loan relationships is the amount which would be the amount of the profits from those relationships chargeable under section 299 of CTA 2009 (charge to tax on non-trading profits) if, in calculating that amount, amounts for that period within column 1 of row 3 or 4 of the table were disregarded.

(3)For the purposes of column 1 of row 2 of the table, the amount for the actual accounting period of any adjusted non-trading deficit from the company’s loan relationships is the amount which would be the amount of the non-trading deficit from those relationships if, in calculating that amount, amounts for that period within column 1 of row 3 or 4 of the table were disregarded.

(4)Condition A is that—

(a)the amount in column 1 of row 3 of the table is determined on an amortised cost basis of accounting, and

(b)none of the following provisions applies—

(i)section 373 of CTA 2009 (late interest treated as not accruing until paid in some cases),

(ii)section 407 of that Act (postponement until redemption of debits for connected companies’ deeply discounted securities), or

(iii)section 409 of that Act (postponement until redemption of debits for close companies’ deeply discounted securities).

(5)Condition B is that—

(a)the amount in column 1 of row 3 of the table is determined on an amortised cost basis of accounting, and

(b)any of the provisions mentioned in subsection (4)(b) applies.”

(4)In section 721 (when things other than share capital may be taken into account: Chapters 2 to 5)—

(a)in the heading, for “5” substitute “5A”;

(b)in subsection (1), for “5” substitute “5A”;

(c)in subsection (4), for “or 5” substitute “, 5 or 5A”.

(5)In section 725 (provision applying for the purposes of Chapters 2 to 5)—

(a)in the heading, for “5” substitute “5A”;

(b)in subsection (1), for “5” substitute “5A”.

(6)In section 730 (meaning of “relevant non-trading debit”)—

(a)in subsection (1), for “and 696” substitute “, 696 and 705C”;

(b)in subsections (3)(c), (4)(c) and (5)(b) for “or 696” substitute “, 696 or 705C”.