Income Tax (Trading and Other Income) Act 2005

Section 882

SCHEDULE 1U.K.Consequential amendments

Part 1 U.K.Income and Corporation Taxes Act 1988

1U.K.The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

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5U.K.In section 4 (construction of references in Income Tax Acts to deduction of tax), omit subsection (1B).

6U.K.After section 6(4) (the charge to corporation tax and exclusion of income tax and capital gains tax) insert—

“(4A)In sections 74(1), 79(1), 79A(1), 79B(1), 83A(1), 84(1), 86(1), 86A(2)(a), 87(1), (2) and (4), 88, 89, 90(1) and (3), 94(1), 100(2)(b), 101, 102, 401(1), 491(10), 577(7)(b), 579(2), 588(3), 589A(8) and 817(2), and in paragraph 5(11) of Schedule 30, “profession” includes vocation.”

7(1)Amend section 9 (computation of income: application of income tax principles) as follows.U.K.

(2)After subsection (2) insert—

“(2A)But no income shall be computed, and no assessment shall be made, for purposes of corporation tax under ITTOIA 2005.

(2B)Instead, income shall continue to be computed, and the assessment shall continue to be made, for purposes of corporation tax under Schedules A and D and the Cases of Schedule D.

(2C)For (but only for) the purpose of continuing to apply for purposes of corporation tax, those Schedules and Cases are treated as if they were still part of income tax law (and therefore applied in accordance with subsection (1) above for purposes of corporation tax).”

(3)In subsection (3)(a)—

(a)for “, D and F,” substitute “ and D ”,

(b)for “those Schedules” substitute “ Schedule D ”, and

(c)omit “, as they apply for purposes of income tax”.

(4)In subsection (4) after “Acts” insert “ (other than ITTOIA 2005) ”.

(5)In subsection (6) omit “60 to 69,”.

8(1)Amend section 15 (Schedule A) as follows.U.K.

(2)In subsection (1A)—

(a)in paragraph (b) for “within the charge to income tax under Schedule A” substitute “ the profits of a UK property business within the charge to income tax under Chapter 3 of Part 3 of ITTOIA 2005 ”, and

(b)for “as separate Schedule A businesses” substitute “ for the purposes of those charges as separate businesses ”.

(3)Before subsection (4) insert—

“(3A)Subsection (1) applies for corporation tax purposes (and does not apply for income tax purposes except so far as necessary to ensure its application for corporation tax purposes by virtue of section 9).”

(4)In subsection (4) at the end insert “ and under Chapter 3 of Part 3 of ITTOIA 2005 (profits of a property business) ”.

9(1)Amend section 18 (Schedule D) as follows.U.K.

(2)After subsection (4) insert—

“(4A)Subsections (1) to (4) apply for corporation tax purposes (and do not apply for income tax purposes except so far as necessary to ensure their application for corporation tax purposes by virtue of section 9).”

(3)In subsection (5) at the end insert “ and under ITTOIA 2005 (see, in particular, the charge under Chapter 2 of Part 2 of that Act (trade profits)) ”.

(4)Omit subsection (6).

10U.K.Omit section 20 (Schedule F).

11U.K.Omit section 21 (persons chargeable and basis of assessment under Schedule A).

12(1)Amend section 21A (computation of amount chargeable under Schedule A) as follows.U.K.

(2)In subsection (2) omit “sections 112 and 113 of that Act (expenditure in connection with provision of security asset or service);”.

(3)In subsection (4)—

(a)omit “section 82 (interest paid to non-residents),”, and

(b)omit “section 96 (farming and market gardening: relief for fluctuating profits),”.

13U.K.In section 21B (application of other rules applicable to Case I of Schedule D)—

(a)omit “, 108, 109A”,

(b)after “(post-cessation receipts and expenses, etc)” insert “ , with any reference to a trade within the charge to income tax being read as a reference to a UK property business ”, and

(c)omit “section 113 (effect for income tax purposes of change in the persons engaged on trade);”.

14U.K.In section 21C (the Schedule A charge and mutual business)—

(a)in subsection (1) after “the charge to” insert “ corporation ”, and

(b)in subsection (4) from the beginning to “the person who would” substitute “ The company to which the profit arises is the company which would ”.

15(1)Amend section 30 (expenditure on making sea walls) as follows.U.K.

(2)In subsection (1) for “he shall be” substitute “ that person shall be ”.

(3)In subsection (2) for “he would be” substitute “ that person would be ”.

(4)After that subsection insert—

“(2A)If—

(a)the transferor is a company within the charge to corporation tax and the transferee is a person within the charge to income tax, or

(b)the transferor is a person within the charge to income tax and the transferee is a company within the charge to corporation tax,

subsection (2) above shall apply only for the purpose of determining the amount of the payment which the company is treated as making in any year of assessment.

For any entitlement of the person within the charge to income tax to a deduction for any of the expenditure, see sections 316 and 318 of ITTOIA 2005 (corresponding income tax provision).”

16U.K.Omit sections 31A and 31B (deductions for expenditure by landlords on energy-saving items).

17(1)Amend section 34 (treatment of premiums etc. as rent) as follows.U.K.

(2)In subsection (1) for “the purposes of the Tax Acts” substitute “ corporation tax purposes ”.

(3)In subsection (6)—

(a)for “that other person” substitute “ if that other person is a company, the company ”,

(b)for “tax” substitute “ corporation tax ”,

(c)for “he” substitute “ the company ”, and

(d)for “his” substitute “ its ”.

(4)In subsection (7A) for “chargeable” substitute “ accounting ”.

(5)In subsection (8)—

(a)for “person” substitute “ company ”,

(b)for “tax”, wherever it occurs, substitute “ corporation tax ”, and

(c)for “his” substitute “ the company's ”.

18(1)Amend section 35 (charge on assignment of lease granted at an undervalue) as follows.U.K.

(2)In subsection (2) for “him in consequence of his” substitute “ the assignor in consequence of the assignor's ”.

(3)In subsection (2A)(b) for “chargeable” substitute “ accounting ”.

(4)In subsection (3) for “tax” substitute “ corporation tax ”.

19(1)Amend section 36 (charge on sale of land with right to reconveyance) as follows.U.K.

(2)In subsection (1)—

(a)for “him”, in both places where it occurs, substitute “ the vendor ”, and

(b)for “his” substitute “ the vendor's ”.

(3)In subsection (2)(b)—

(a)for “tax” substitute “ corporation tax ”, and

(b)for “him” substitute “ the vendor ”.

(4)In subsection (3) for “him” substitute “ the vendor ”.

(5)In subsection (4A)(b) for “chargeable” substitute “ accounting ”.

20(1)Amend section 37 (premiums paid etc: deductions from premiums and rent received) as follows.U.K.

(2)In subsection (1)—

(a)omit “or” at the end of paragraph (a),

(b)after paragraph (b) insert—

“(c)any amount falls to be treated as a receipt of a UK property business by virtue of any of sections 277 to 282 of ITTOIA 2005 (receipts in respect of lease premiums, sums payable instead of rent, for surrender of lease and for variation or waiver of term of lease and assignments), or

(d)any amount would fall to be so treated but for the operation of the rule in section 288 of that Act (the additional calculation rule),”, and

(c)after “this section” insert “ and section 37A ”.

(3)In subsection (2)—

(a)for “person” substitute “ company ”, and

(b)for “he” substitute “ the company ”.

(4)In subsection (3)—

(a)for “person” substitute “ company ”, and

(b)for “he” substitute “ the company ”.

(5)In subsection (4)—

(a)for “the person” substitute “ a company which is ”, and

(b)for “he” substitute “ the company ”.

(6)In subsection (7)(b) after sub-paragraph (ii) insert—

“(iii)where it arose under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.), shall be its receipt period (within the meaning of that Chapter (see section 288(6)).”

(7)In subsection (8) after “section 34(2)” insert “ or under section 277 of ITTOIA 2005 by virtue of section 278 of that Act (amount treated as lease premium where work required) ”.

(8)In subsection (9)—

(a)for “tax” substitute “ income tax or corporation tax ”, and

(b)at the end insert “ or if it has been deducted under the rule in section 288 of ITTOIA 2005 (the additional calculation rule) in calculating the amount of a receipt of a property business (within the meaning of that Act) under Chapter 4 of Part 3 of that Act. ”

(9)At end insert—

“(10)In the application of this section to Scotland the reference to a lease being granted out of the head lease is to the grant of a sublease of land subject to the head lease.”

21U.K.After section 37 insert—

“37ASection 37(4) and reductions in receipts under ITTOIA 2005

(1)This section applies if—

(a)in calculating the amount that falls to be treated as a receipt of a UK property business under Chapter 4 of Part 3 of ITTOIA 2005 (“the ITTOIA receipt”), there is a reduction under section 288 of that Act by reference to a taxed receipt, and

(b)the taxed receipt is the amount chargeable on the superior interest for the purposes of section 37.

(2)Section 37(4) shall apply for the period in respect of which the ITTOIA receipt arose only if the appropriate fraction of the amount chargeable on the superior interest exceeds the amount of the ITTOIA receipt given by the formula in section 277, 279, 280, 281 or 282 of ITTOIA 2005, as the case may be.

(3)Section 37(4) shall then apply as if the amount chargeable on the superior interest were reduced in the proportion which that excess bears to that appropriate fraction.

(4)Subsection (5) applies if—

(a)the ITTOIA receipt is in respect of a lease granted out of the taxed lease,

(b)the taxed lease is the head lease for the purposes of section 37, and

(c)the lease granted as mentioned in paragraph (a) does not extend to the whole of the premises subject to the head lease.

(5)Section 37(4) and subsections (2) and (3) above shall be applied separately to the part of the premises subject to the lease and to the remainder of the premises, but as if for any reference to the amount chargeable on the superior interest there were a reference to that amount proportionately adjusted.

(6)For the purposes of this section the appropriate fraction of the amount chargeable on the superior interest is the fraction—

(7)For the purposes of this section the period in respect of which an ITTOIA receipt arose is its receipt period (within the meaning of Chapter 4 of Part 3 of ITTOIA 2005 (see section 288(6))).

(8)In this section the following expressions have the same meaning as in Chapter 4 of Part 3 of ITTOIA 2005—

• “reduction under section 288 by reference to a taxed receipt” (see section 290(6) of that Act),

• “taxed lease” (see section 287(4) of that Act), and

• “taxed receipt” (see section 287(4) of that Act).

(9)In the application of this section to Scotland, references to a lease granted out of a taxed lease are to be construed as references to a sublease of land subject to the taxed lease.”

22(1)Amend section 38 (rules for ascertaining duration of leases) as follows.U.K.

(2)In subsection (2) for “tax” substitute “ corporation tax ”.

(3)In subsection (4) for “tax advantage in the application of this Part” substitute “ corporation tax advantage in the application of this Part or an income tax advantage in the application of Chapter 4 of Part 3 of ITTOIA 2005 ”.

23U.K.In section 40 (tax treatment of receipts and outgoings on sale of land)—

(a)in subsection (1)—

(i)after “for the purposes of” insert “ corporation ”, and

(ii)for “him” substitute “ the purchaser ”,

(b)in subsection (2) after “for the purposes of” insert “ corporation ”, and

(c)in subsection (3)—

(i)after “for the purposes of” insert “ corporation ”, and

(ii)for “him” substitute “ the vendor ”.

24(1)Amend section 42 (appeals against determinations under sections 34 to 36) as follows.U.K.

(2)In subsection (1)—

(a)after “determination of” insert “—

(a) ”,

(b)for “to tax” substitute “ to corporation tax ”, and

(c)after “35 or 36” insert “, or

(b)any amount that under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.) is brought into account as a receipt in calculating the profits of a property business (within the meaning of that Act),”.

(3)At the end of the side-note insert “ or Chapter 4 of Part 3 of ITTOIA 2005 ”.

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31(1)Amend section 46 (savings certificates and tax reserve certificates) as follows.U.K.

(2)In subsection (1) after “liable to” insert “ corporation ”.

(3)In subsection (2) for “Tax” substitute “ Corporation tax ”.

(4)In subsection (4)(b) for “him and he” substitute “ the holder and the holder ”.

(5)After subsection (6) insert—

“(7)In this section “Ulster Savings Certificates” means savings certificates issued or treated as issued under section 15 of the Exchequer and Financial Provisions Act (Northern Ireland) 1950.”

32(1)Amend section 53 (farming and other commercial occupation of land (except woodlands)) as follows.U.K.

(2)In subsection (1) after “charged to” insert “ corporation ”.

(3)In subsection (2)—

(a)for “person or partnership or body of persons” substitute “ company or partnership ”, and

(b)after “trade” insert “ for corporation tax purposes ”.

(4)In subsection (3) after “charged to” insert “ corporation ”.

33U.K.In section 55(1) (mines, quarries and other concerns) after “charged to” insert “ corporation ”.

34(1)Amend section 56 (transactions in deposits with and without certificates or in debts) as follows.U.K.

(2)In subsection (2)—

(a)for “person”, in the first place where it occurs, substitute “ company ”, and

(b)for “tax” substitute “ corporation tax ”.

(3)In subsection (3)

(a)for “does” substitute “ and section 551 of ITTOIA 2005 (charge to income tax on profits from disposal of deposit rights) do ”, and

(b)in paragraph (a) for “person” substitute “ company ”.

35(1)Amend section 59 (persons chargeable: Schedule D) as follows.U.K.

(2)Omit subsections (1) and (2).

(3)In subsection (3)—

(a)for “that section” substitute “ section 12 of ITTOIA 2005 ”, and

(b)omit “under Schedule D”.

(4)In subsection (4) for “Subsections (1) to (3)” substitute “ Subsection (3) ”.

36U.K.Omit sections 60 to 63A (basis of assessment for income tax: Cases I and II of Schedule D).

37U.K.Omit section 64 (Case III assessments).

38U.K.Omit section 65 (Cases IV and V assessments: general).

39U.K.Omit section 65A (Case V income from land outside UK: income tax).

40U.K.Omit section 68 (special rules where property etc. situated in Republic of Ireland).

41U.K.Omit sections 68A to 68C (share incentive plans).

42U.K.Omit section 69 (Case VI assessments).

43U.K.Omit section 71 (computation of income tax where no profits in year of assessment).

44U.K.In section 72(1) (apportionments etc for purposes of Cases I, II and VI)—

(a)after “chargeable” insert “ to corporation tax ”, and

(b)omit “income tax or” and “year of assessment,”.

45U.K.In section 74(1) (general rules as to deductions not allowable)—

(a)for “the Tax Acts” substitute “ the Corporation Tax Acts ”,

(b)after “computing the amount of the profits to be charged” insert “ to corporation tax ”,

(c)for “, profession or vocation”, in each place where it occurs, substitute “ or profession ”,

(d)omit paragraph (b),

(e)in paragraph (j) for “his” substitute “ the creditor's ”, and

(f)omit paragraph (o).

46U.K.In section 76A(1) (levies and repayments under FISMA 2000) after “to be charged” insert “ to corporation tax ”.

47U.K.Omit section 77 (incidental costs of obtaining loan finance).

48(1)Amend section 79 (contributions to local enterprise agencies) as follows.U.K.

(2)In subsection (1)—

(a)for “person” substitute “ company ”,

(b)for “trade, profession or vocation”, in both places where it occurs, substitute “ trade or profession ”,

(c)for “him” substitute “ the company ”, and

(d)before “tax” insert “ corporation ”.

(3)In subsection (3) for “any person if either he or any person connected with him” substitute “ any company if either the company or any person connected with the company ”.

(4)In subsection (9)—

(a)after “has been made” insert “ by a company ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “the contributor or any person connected with him” substitute “ the company or any person connected with the company ”,

(d)for “the contributor shall” substitute “ the company shall ”,

(e)before “tax”, in both places where it occurs, insert “ corporation ”, and

(f)for “he” substitute “ the company ”.

49(1)Amend section 79A (contributions to training and enterprise councils and local enterprise companies) as follows.U.K.

(2)In subsection (1)—

(a)for “person” substitute “ company ”,

(b)for “trade, profession or vocation”, in both places where it occurs, substitute “ trade or profession ”,

(c)for “him” substitute “ the company ”, and

(d)before “tax” insert “ corporation ”.

(3)In subsection (3) for “any person if either he or any person connected with him” substitute “ any company if either the company or any person connected with the company ”.

(4)In subsection (4)—

(a)after “in respect of a contribution” insert “ made by a company ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “the contributor or any person connected with him” substitute “ the company or any person connected with the company ”,

(d)for “the contributor shall” substitute “ the company shall ”,

(e)before “tax”, in both places where it occurs, insert “ corporation ”, and

(f)for “he” substitute “ the company ”.

50(1)Amend section 79B (contributions to urban regeneration companies) as follows.U.K.

(2)In subsection (1)—

(a)for “person” substitute “ company ”,

(b)for “trade, profession or vocation”, in both places where it occurs, substitute “ trade or profession ”,

(c)for “him” substitute “ the company ”, and

(d)before “if it would” insert “ for the purposes of corporation tax ”.

(3)In subsection (3) for “any person if either he or any person connected with him” substitute “ any company if either the company or any person connected with the company ”.

(4)In subsection (4)—

(a)after “in respect of a contribution” insert “ made by a company ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “the contributor or any person connected with him” substitute “ the company or any person connected with the company ”,

(d)for “the contributor shall” substitute “ the company shall ”,

(e)before “tax”, in both places where it occurs, insert “ corporation ”, and

(f)for “he” substitute “ the company ”.

51U.K.Omit section 80 (expenses connected with foreign trades etc).

52U.K.Omit section 81 (travel between trades etc).

53U.K.Omit section 82 (interest paid to non-residents).

54U.K.In section 82A(1) (expenditure on research and development)—

(a)for “person” substitute “ company ”,

(b)for “by him or on his behalf” substitute “ by the company or on the company's behalf ”, and

(c)before “tax” insert “ corporation ”.

55U.K.In section 82B(1) (payments to research associations, universities etc.)—

(a)for “person” substitute “ company ”,

(b)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)before “tax” insert “ corporation ”.

56U.K.In section 83 (patent fees etc. and expenses) after “the profits of a trade” insert “ for the purposes of corporation tax ”.

57(1)Amend section 83A (gifts in kind to charities etc.) as follows.U.K.

(2)In subsection (1) for “a person carrying on a trade, profession or vocation” substitute “ a company carrying on a trade or profession ”.

(3)In subsection (2) for “the donor in the course of his trade” substitute “ the company in the course of its trade ”.

(4)In subsection (3)—

(a)for “the donor's” substitute “ the company's ”,

(b)for “the purposes of the Tax Acts” substitute “ corporation tax purposes ”, and

(c)for “the donor” substitute “ the company ”.

(5)In subsection (4)—

(a)after “in respect of the gift of an article” insert “ made by a company ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “the donor or any person connected with him” substitute “ the company or any person connected with the company ”,

(d)for “the donor shall” substitute “ the company shall ”,

(e)before “tax”, in both places where it occurs, insert “ corporation ”, and

(f)for “he” substitute “ the company ”.

58(1)Amend section 84 (gifts to educational establishments) as follows.U.K.

(2)In subsection (1)—

(a)for “a person carrying on a trade, profession or vocation” substitute “ a company carrying on a trade or profession ”, and

(b)for “his trade” substitute “ its trade ”.

(3)In subsection (3)—

(a)for “the purposes of the Tax Acts” substitute “ corporation tax purposes ”, and

(b)for “his disposal” substitute “ its disposal ”.

(4)In subsection (3A) for “above is—” to the end substitute “ the period of two years beginning at the end of the accounting period in which the gift is made. ”

(5)Omit subsection (3B).

(6)In subsection (4)—

(a)after “in respect of the gift of an article” insert “ made by the donor ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “him” substitute “ the donor ”,

(d)before “tax”, in both places where it occurs, insert “ corporation ”, and

(e)for “he” substitute “ the donor ”.

59U.K.In section 84A(2)(a) (costs of establishing share option or profit sharing schemes: relief) after “Schedule D” insert “ or Part 2 of ITTOIA 2005 ”.

60(1)Amend section 86 (employees seconded to charities and educational establishments) as follows.U.K.

(2)In subsection (1)—

(a)for “If a person (“the employer”) carrying on a trade, profession, vocation or business for the purposes of which he” substitute “ If a company (“the employer”) carrying on a trade, profession or business for the purposes of which it ”, and

(b)for “, profession or vocation” substitute “ or profession ”.

(3)In subsection (2), in the definition of “deductible”, after “charged” insert “ to corporation tax ”.

61U.K.In section 86A (charitable donations: contributions to agent's expenses) —

(a)in subsection (1) for “a person” substitute “ a company ”, and

(b)in subsection (2)(a) for “, profession or vocation” substitute “ or profession ”.

62(1)Amend section 87 (taxable premiums etc.) as follows.U.K.

(2)In subsection (1)—

(a)for “trade, profession or vocation” substitute “ trade or profession ”,

(b)omit “or” at the end of paragraph (a),

(c)after paragraph (b) insert—

“(c)any amount falls to be treated as a receipt of a UK property business by virtue of any of sections 277 to 282 of ITTOIA 2005 (receipts in respect of lease premiums, sums payable instead of rent, for surrender of lease and for variation or waiver of term of lease and assignments), or

(d)any amount would fall to be so treated but for the operation of the rule in section 288 of that Act (the additional calculation rule),”, and

(d)after “below” insert “ and in section 87A ”.

(3)In subsection (2)—

(a)for “the person” substitute “ a company which is ”,

(b)for “trade, profession or vocation”, in both places where it occurs, substitute “ trade or profession ”,

(c)for “him” substitute “ the company ”,

(d)for “he” substitute “ the company ”, and

(e)for “tax” substitute “ corporation tax ”.

(4)In subsection (4)—

(a)for “person” substitute “ company ”,

(b)for “his” substitute “ the company's ”,

(c)for “trade, profession or vocation” substitute “ trade or profession ”, and

(d)for “him”, in both places where it occurs, substitute “ the company ”.

(5)In subsection (6)—

(a)for “chargeable period”, wherever it occurs, substitute “ accounting period ”,

(b)for “person” substitute “ company ”, and

(c)for “him” substitute “ the company ”.

(6)In subsection (7)—

(a)for “his” substitute “ the company's ”,

(b)for “person” substitute “ company ”,

(c)for “chargeable period”, wherever it occurs, substitute “ accounting period ”, and

(d)for “him”, in both places where it occurs, substitute “ the company ”.

(7)In subsection (8) after “section 34(2)” insert “ or under section 277 of ITTOIA 2005 by virtue of section 278 of that Act (amount treated as lease premium where work required) ”.

(8)In subsection (9) after paragraph (b) insert—

“(c)where the amount chargeable arose under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.), its receipt period (within the meaning of that Chapter (see section 288(6)).”

(9)After subsection (9) insert—

“(9A)In the application of this section and section 87A to Scotland—

(a)the reference to a lease being granted out of the interest referred to in subsection (4) above is to the grant of a sublease of land subject to that interest, and

(b)references to the lease so granted are to be construed as references to the sublease.”

63U.K.After section 87 insert—

“87ASection 87(2) and (3) and reductions in receipts under ITTOIA 2005

(1)This section applies if—

(a)a lease has been granted out of the interest referred to in section 87(4),

(b)in calculating the amount that falls to be treated as a receipt of a UK property business under Chapter 4 of Part 3 of ITTOIA 2005 in respect of the lease, there is a reduction under section 288 of that Act by reference to a taxed receipt, and

(c)the taxed receipt is the amount chargeable for the purposes of section 87.

(2)Section 37A (section 37(4) and reductions in receipts under ITTOIA 2005) shall apply for modifying the operation of section 87(2) and (3) as it applies for modifying the operation of section 37(4).

(3)In this section the following expressions have the same meaning as in Chapter 4 of Part 3 of ITTOIA 2005—

• “reduction under section 288 by reference to a taxed receipt” (see section 290(6) of that Act), and

• “taxed receipt” (see section 287(4) of that Act).”

64U.K.In section 88 (payments to Export Credits Guarantee Department)—

(a)for “a person” substitute “ a company ”,

(b)for “trade, profession or vocation carried on by that person” substitute “ trade or profession carried on by that company ”, and

(c)for “if that person” substitute “ if that company ”.

65U.K.For section 89 (debts proving irrecoverable after event treated as discontinuance) substitute—

“89Debts proving to be irrecoverable after discontinuance etc

(1)This section applies if—

(a)section 337(1) applies to treat a trade as discontinued by reason of any event, or

(b)a person permanently ceases to carry on a trade or profession,

and a company carries on the trade or profession after that event or cessation.

(2)In computing for corporation tax purposes the profits of the trade or profession in any period after the event or cessation, there may be deducted a sum equal to any amount proved during that period to be irrecoverable in respect of any debts—

(a)which were credited in computing for tax purposes the profits for any period before the event or cessation, and

(b)in respect of which the benefit was assigned to the company carrying on the trade or profession after the event or cessation.

(3)Subsection (2) applies only so far as the total amount proved to be irrecoverable in respect of the debts exceeds any deduction allowed in respect of them under—

(a)section 74(1)(j), or

(b)section 35 of ITTOIA 2005,

in a computation for any period before the event or cessation.”

66(1)Amend section 90 (additional payments to redundant employees) as follows.U.K.

(2)In subsection (1)—

(a)for “, profession or vocation” substitute “ or profession ”, and

(b)for “profession, vocation or business”, in both places, substitute “ profession or business ”.

(3)In subsection (3)—

(a)for “profession, vocation or business” substitute “ profession or business ”, and

(b)omit “113(1) or”.

67(1)Amend section 91 (cemeteries) as follows.U.K.

(2)In subsection (1)—

(a)after “computing” insert “ for corporation tax purposes ”, and

(b)for “the person” substitute “ the company ”.

(3)In subsection (2) for “the person” substitute “ the company ”.

(4)In subsection (4)(a)(i)—

(a)after “above” insert “ , or under section 170(2)(b) of ITTOIA 2005 (relief for income tax purposes) ”, and

(b)after “computing” insert “ for tax purposes ”.

(5)In subsection (4)(a)(ii)—

(a)for “the person” substitute “ the company ”, and

(b)for “him” substitute “ it ”.

(6)In subsection (5)—

(a)for “the persons carrying on the trade after the change” substitute “ the company carrying on the trade after the change ”,

(b)for “they” substitute “ the company ”,

(c)for “their” substitute “ its ”, and

(d)for “them” substitute “ it ”.

(7)For subsection (6) substitute—

“(6)No expenditure shall be taken into account—

(a)under both paragraphs (a) and (b) of subsection (1) above, or

(b)under both subsection (1)(a) above and section 170(2)(b) of ITTOIA 2005 or under both subsection (1)(b) above and section 170(2)(a) of ITTOIA 2005,

whether for the same or different periods.”

68U.K.In section 91A (waste disposal: restoration payments)—

(a)in subsection (1) for “person” substitute “ company ”, and

(b)in subsection (2) omit “income tax or”.

69U.K.In section 91B (waste: disposal: preparation expenditure)—

(a)in subsection (1) for “person”, in both places where it occurs, substitute “ company ”,

(b)in subsection (2) omit “income tax or”,

(c)in subsection (4) for “person” substitute “ company ”,

(d)in subsection (5)(a) after “computing” insert “ for the purposes of corporation tax or income tax ”,

(e)in subsection (5)(b) after “made” insert “ for the purposes of corporation tax or income tax ”,

(f)in subsection (6) after “this section” insert “ or section 165 of ITTOIA 2005 (relief for income tax purposes) ” and after “computing” insert “ for the purposes of corporation tax or income tax ”, and

(g)in subsection (10A) for “person”, in both places where it occurs, substitute “ company ” and for “he” substitute “ it ”.

70U.K.In section 91BA (waste disposal: entitlement of successor to allowances)—

(a)in subsection (1) after “another person” insert “ that is a company ”, and

(b)in subsection (4) for “he” substitute “ it ”.

71U.K.In section 91C (mineral exploration and access) for “person” substitute “ company ” and for “tax” substitute “ corporation tax ”.

72U.K.In section 93(1) (other grants under Industrial Development Act 1982 etc.)—

(a)for “person” substitute “ company ”, and

(b)after “chargeable” insert “ to corporation tax ”.

73U.K.In section 94(1) (debts deducted and subsequently released)—

(a)for “tax purposes” substitute “ corporation tax purposes ”, and

(b)for “trade, profession or vocation”, wherever it occurs, substitute “ trade or profession ”.

74(1)Amend section 95 (taxation of dealers in respect of distributions etc.) as follows.U.K.

(2)In subsection (1) for “tax” substitute “ corporation tax ”.

(3)In subsection (1A) omit paragraph (a).

(4)In subsection (2) for “tax” substitute “ corporation tax ”.

75U.K.Omit section 95A (creative artists: relief for fluctuating profits).

76U.K.Omit section 96 (farming and market gardening: relief for fluctuating profits).

77U.K.In section 98(1) (tied premises: receipts and expenses treated as those of a trade)—

(a)after “This section applies” insert “ for corporation tax purposes ”,

(b)for “a person (“the trader”)” substitute “ a company (“the trader”) ”, and

(c)for “another person” substitute “ a person other than the trader ”.

78(1)Amend section 99 (dealers in land) as follows.U.K.

(2)In subsection (1) for “tax purposes” substitute “ corporation tax purposes ”.

(3)In subsection (2) for “tax” substitute “ corporation tax ”.

(4)In subsection (3)—

(a)for “tax”, in each place where it occurs, substitute “ corporation tax ”,

(b)for “chargeable periods” substitute “ accounting periods ”, and

(c)for “chargeable period” substitute “ accounting period ”.

79(1)Amend section 100 (valuation of trading stock at discontinuance of trade) as follows.U.K.

(2)In subsection (1) for “any tax purpose”, in the first place where it occurs, substitute “ any corporation tax purpose ”.

(3)In subsection (1A)—

(a)for “the person who” substitute “ the company which ”, and

(b)for “those persons” substitute “ that person and that company ”.

(4)In subsection (1C)(c) for “chargeable period” substitute “ accounting period ”.

(5)In subsection (1D) after “in computing for any” insert “ corporation ”.

(6)In subsection (1E)—

(a)for the words from the beginning to “subsections (1A) to (1C) above to be” substitute “ Where the value of the trading stock is determined in accordance with subsections (1A) to (1C) above, or sections 176 to 178 of ITTOIA 2005 or section 127 of that Act (by virtue of section 175(3)) (corresponding provisions for income tax purposes), ” and

(b)after “for the purpose of making” insert “ for corporation tax purposes ”.

(7)In subsection (2)(b) omit “or vocation” in both places where it occurs.

80(1)Amend section 101 (valuation of work in progress at discontinuance of profession or vocation) as follows.U.K.

(2)In subsection (1)—

(a)for “any tax purpose”, in the first place where it occurs, substitute “ any corporation tax purpose ”, and

(b)omit “or vocation”, wherever it occurs.

(3)In subsection (2) omit “or vocation” and for “person by whom” substitute “ company by which ”.

(4)In subsection (2A)—

(a)omit paragraph (a), and

(b)in paragraph (b), omit “in the case of an election for the purposes of corporation tax,” and “or vocation”.

(5)In subsection (3) omit “or vocation”, wherever it occurs.

81(1)Amend section 102 (provisions supplementary to sections 100 and 101) as follows.U.K.

(2)In subsection (1)—

(a)omit “or vocations”, and

(b)for “trade, profession or vocation” substitute “ trade or profession ”.

(3)In subsection (2)—

(a)omit “113 or”,

(b)for “trade, profession or vocation” substitute “ trade or profession ”,

(c)after “computing” insert “ corporation ”, and

(d)omit the words from “but those sections” to the end.

82(1)Amend section 103 (receipts after discontinuance: earnings basis charge and related charge affecting conventional basis) as follows.U.K.

(2)In subsection (1)—

(a)after “vocation” insert “ carried on wholly or partly in the United Kingdom ”,

(b)omit “under Case I or II of Schedule D”, and

(c)for “tax shall be charged under Case VI of that Schedule” substitute “ corporation tax shall be charged under Case VI of Schedule D ”.

(3)In subsection (3)—

(a)in paragraph (a)—

(i)for “person”, in the first place where it occurs, substitute “ company ”,

(ii)for “who” substitute “ which ”, and

(iii)for “his” substitute “ its ”,

(b)omit paragraphs (b) and (bb), and

(c)omit the words from “Paragraph (b) above shall” to the end.

(4)In subsection (5) at the end insert “ above or under section 35 of ITTOIA 2005 ”.

83(1)Amend section 104 (conventional basis: general charge on receipts after discontinuance or change of basis) as follows.U.K.

(2)In subsection (1)—

(a)after “vocation” insert “ carried on wholly or partly in the United Kingdom ”,

(b)omit “under Case I or II of Schedule D”, and

(c)for “tax shall be charged under Case VI of that Schedule” substitute “ corporation tax shall be charged under Case VI of Schedule D ”.

(3)In subsection (3)—

(a)for “tax”, in the second place where it occurs, substitute “ corporation tax ”, and

(b)omit “and (b)”.

84(1)Amend section 105 (allowable deductions) as follows.U.K.

(2)In subsection (1)—

(a)for “tax”, in the first three places where it occurs, substitute “ corporation tax ”,

(b)for “person”, in the first place where it occurs, substitute “ company ”, and

(c)for “him” substitute “ it ”.

(3)In subsection (3) for “chargeable period”, in each place where it occurs, substitute “ accounting period ”.

85(1)Amend section 106 (application of charges where rights to payments transferred) as follows.U.K.

(2)In subsection (1) for “tax” substitute “ corporation tax ”.

(3)In subsection (2)—

(a)for “the persons carrying on the trade,” substitute “ the company carrying on the trade, ”

(b)for “tax” substitute “ corporation tax ”,

(c)for “those persons” substitute “ that company ”, and

(d)for “all purposes” substitute “ corporation tax purposes ”.

86U.K.Omit section 107 (treatment of receipts as earned income).

87U.K.Omit section 108 (election for carry-back).

88U.K.Omit section 109 (charge under section 104: relief for individuals born before 6th April 1917).

89(1)Amend section 109A (relief for post-cessation expenditure) as follows.U.K.

(2)Omit subsection (3).

(3)In subsection (4) omit the unnumbered paragraph beginning with “If any sum”.

(4)In subsection (4A) omit the unnumbered paragraph beginning with “If any sum”.

(5)F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90U.K.In section 110 (interpretation etc) for subsection (2) substitute—

“(1A)In the case of a trade carried on by a person other than a company or a profession or vocation within the charge to income tax carried on by any person, any reference to the permanent discontinuance of a trade, profession or vocation includes a reference to—

(a)a person permanently ceasing to carry on a trade, profession or vocation, or

(b)in relation to a trade or profession carried on by a person in partnership with other persons, the occurrence of an event treated under section 246(4) of ITTOIA 2005 (basic meaning of “post-cessation receipt”) as a person permanently ceasing to carry on a trade or profession.

(1B)In the case of a trade carried on by a company, any reference to the permanent discontinuance of a trade includes a reference to the occurrence of an event treated under section 337(1) below as a discontinuance or treated under section 18 of ITTOIA 2005 (companies beginning or ceasing to carry on trade) as the company permanently ceasing to carry on the trade.

(1C)In the case of a UK property business carried on by a person other than a company, any reference to the permanent discontinuance of a UK property business includes a reference to—

(a)a person permanently ceasing to carry on a UK property business, or

(b)in relation to a UK property business carried on by a person in partnership with other persons, the occurrence of an event treated under section 353(3) of ITTOIA 2005 (basic meaning of “post-cessation receipt”) as a person permanently ceasing to carry on a UK property business.

(1D)In the case of a UK property business carried on by a company, any reference to the permanent discontinuance of a UK property business includes a reference to the occurrence of an event treated under section 362 of ITTOIA 2005 (companies beginning or ceasing to be within the charge to income tax) as the company permanently ceasing to carry on the business.”

91U.K.Omit section 110A (change of residence) and the italic cross-heading before it.

92(1)Amend section 111 (treatment of partnerships) as follows.U.K.

(2)In subsection (1) for “the purposes of the Tax Acts” substitute “ corporation tax purposes ”.

(3)Omit subsections (2) to (13).

93U.K.Omit section 112 (partnerships controlled abroad).

94U.K.Omit section 113 (effect for income tax of change in ownership of trade, profession or vocation).

95(1)Amend section 115 (provisions supplementary to section 114) as follows.U.K.

(2)For subsection (5) substitute—

“(5)Subsections (5A) and (5B) apply if—

(a)a company resident in the United Kingdom (“the resident partner”) is a member of a partnership which resides outside the United Kingdom or which carries on any trade, profession or business the control and management of which is situated outside the United Kingdom, and

(b)by virtue of any arrangements falling within section 788 (“the arrangements”) any of the income or capital gains of the partnership is relieved from corporation tax in the United Kingdom.

(5A)The arrangements do not affect any liability to corporation tax in respect of the resident partner's share of any income or capital gains of the partnership (and section 114 has effect accordingly).

(5B)If the resident partner's share of the income of the partnership consists of or includes a share in a qualifying distribution made by a company resident in the United Kingdom, the resident partner (and not the partnership) is, despite the arrangements, entitled to the share of the tax credit in respect of the distribution which corresponds to the partner's share of the distribution (and section 114 has effect accordingly).”

96U.K.In section 116(4) (arrangements for transferring relief) before “tax” insert “ corporation ”.

97U.K.In section 118ZA (treatment of limited liability partnerships)—

(a)in subsection (1) for “the purposes of the Tax Acts” substitute “ corporation tax purposes ”, and

(b)in subsection (2) for “the Tax Acts” substitute “ the Corporation Tax Acts ”.

98U.K.F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99U.K.F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100U.K.F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101U.K.F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102U.K.F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103U.K.In section 119(1) (rent etc. payable in connection with mines, quarries and similar concerns) after “charged to” insert “ corporation ”.

104U.K.In section 120 (rent etc. payable in respect of electric line wayleaves)—

(a)in subsection (1) after “charged to” insert “ corporation ”,

(b)in subsection (1A) for “chargeable period” substitute “ accounting period ”, and

(c)in subsection (1A) after “charged to”, in both places where it occurs, insert “ corporation ”.

105U.K.In section 121 (management expenses of owner or mineral rights) omit subsection (1).

106(1)Amend section 122 (relief in respect of mineral royalties) as follows.U.K.

(2)In subsection (1)—

(a)for the words from “a person resident” to “year of assessment or” substitute “ a company resident in the United Kingdom which in any ”,

(b)omit “for the purposes of income tax, or as the case may be”,

(c)for “him” substitute “ it ”, and

(d)omit “year or” in both places where it occurs.

(3)In subsection (2)—

(a)omit the words from “brought into account” to “may be,”, and

(b)for “subsection (2)” substitute “ subsection (3) ”.

(4)Omit subsection (4).

107(1)Amend section 125 (annual payments for non-taxable consideration) as follows.U.K.

(2)In subsection (2) for paragraph (a) and the word “and” at the end of the paragraph substitute—

“(a)is not interest but is—

(i)an annuity or other annual payment charged with income tax under Part 5 of ITTOIA 2005 otherwise than as relevant foreign income; or

(ii)an annuity or other annual payment charged with corporation tax under Case III of Schedule D; and”.

(3)In subsection (3)(a) for “section 660A(8) or (9)(a)” substitute “ section 627(1) or (2)(a) of ITTOIA 2005 ”.

108U.K.Omit section 127 (enterprise allowance).

109U.K.Omit section 127A (futures and options: transactions with guaranteed returns).

110U.K.In section 128 (commodity and financial futures etc: losses and gains) omit subsection (1).

111(1)Amend section 214 (chargeable payments connected with exempt distributions) as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a) omit “chargeable to tax under Case VI of Schedule D”, and

(b)after that paragraph insert—

“(ab)that income shall be chargeable to tax;”.

(3)After subsection (1) insert—

“(1A)Income tax chargeable by virtue of subsection (1) shall be charged on the full amount or value of the payment made in the year of assessment; and the person liable for any tax so charged is the person receiving or entitled to the payment.

(1B)Corporation tax chargeable by virtue of subsection (1) shall be charged under Case VI of Schedule D.”

112U.K.In section 230 (stock dividends: distributions) for the words from “as mentioned” to “that section)” substitute “ in a case where section 410(2), (3) or (4) of ITTOIA 2005 applies ”.

113(1)Amend section 231 (tax credits for certain recipients of qualifying distributions) as follows.U.K.

(2)In subsection (1)—

(a)for “sections” to “1993” substitute “ sections 231AA and 231AB of this Act ”,

(b)for the words from “where” to “charged” substitute “ for corporation tax purposes where ”, and

(c)omit “or a person resident in the United Kingdom, not being a company”.

(3)Omit subsections (3) and (3AA).

(4)In subsection (4) for “he” in both places where it occurs substitute “ that person ”.

114U.K.F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115U.K.F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

116U.K.In section 231B(4)(b) (consequences of certain arrangements to pass on value of a tax credit) for “section 231(3)” substitute “ section 397(2) of ITTOIA 2005 ”.

117U.K.Omit section 232 (tax credits for non-UK residents).

118U.K.Omit section 233 (taxation of certain recipients of distributions and in respect of non-qualifying distributions).

119(1)Amend section 249 (stock dividends treated as income) as follows.U.K.

(2)In subsection (1) for “subsections (7) to (9) below, this section applies” substitute “ subsections (8) and (9) below, this section applies (and accordingly section 230 above and section 410 of ITTOIA 2005 apply) ”.

(3)Omit subsections (4) to (7).

(4)In subsection (8)—

(a)for “subsection (4)” substitute “ section 410(2), (3) or (4) of ITTOIA 2005 ”, and

(b)omit the words from “and subsections (5)” onwards.

(5)In subsection (9)(b) for “an individual” to “an amount of income” substitute “ income to be treated as arising to an individual as a result of section 410(2) of ITTOIA 2005 ”.

120(1)Amend section 250 (returns) as follows.U.K.

(2)In subsection (5)(c) for “the appropriate amount in cash” substitute “ the cash equivalent of the share capital in accordance with section 412 of ITTOIA 2005 ”.

(3)In subsection (7) at the end insert “ of this Act or Chapter 5 of Part 4 of ITTOIA 2005 ”.

121U.K.In section 251 (interpretation of sections 249 and 250), omit subsections (2) to (6).

122U.K.Omit sections 251A to 251D (approved share incentive plans).

123U.K.In section 271(1)(a) (deemed surrender in cases of certain loans) for “under section 547” substitute “ by virtue of section 465 of ITTOIA 2005 ”.

124U.K.In section 273 (payments securing annuities)—

(a)renumber the existing text as subsection (1),

(b)in that subsection after “Subject to” insert “ subsection (2) and ”,

(c)in that subsection omit “, 617(3)”, and

(d)after that subsection insert—

“(2)No deduction may be made under this section in respect of any contribution paid by any person under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.”

125U.K.F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126U.K.F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127U.K.F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

128U.K.Omit section 314 (divers and diving supervisors).

129U.K.Omit section 322 (consular officers and employees).

130U.K.Omit section 324 (designated international organisations).

131U.K.Omit section 325 (interest on deposits with National Savings Bank).

132U.K.Omit section 326 (interest etc. under contractual savings schemes).

133U.K.Omit sections 326A to 326D (tax-exempt special savings accounts).

134U.K.Omit section 327 (disabled person's vehicle maintenance grant).

135U.K.Omit section 327A (payments to adopters).

136U.K.Omit sections 329 to 329AB (exemption of interest on damages for personal injury and personal injury damages in the form of periodical payments).

137U.K.Omit section 331 (scholarship income).

138U.K.Omit section 331A (student loans: certain interest to be disregarded).

139U.K.Omit section 332(3) (expenditure and houses of ministers of religion).

140U.K.In section 332A (venture capital trusts: reliefs) omit “and distributions by such trusts”.

141U.K.For section 333 substitute—

“333Investment plan regulations

Regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) may include provision generally for the purpose of the administration of corporation tax in relation to plans.”

142U.K.Omit section 333A (personal equity plans: tax representatives).

143U.K.F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

144U.K.F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

145(1)Amend section 337 (company beginning or ceasing to carry on trade) as follows.U.K.

(2)In subsection (1) after “shall be computed” insert “ for the purposes of corporation tax ”.

(3)In subsection (2) after “overseas property business” insert “ (within the meaning given by section 70A(4)) ”.

146(1)Amend section 347A (general rule: annual payments) as follows.U.K.

(2)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Omit subsections (4) and (5).

(5)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

147U.K.F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

148U.K.F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

149U.K.F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

150U.K.F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151U.K.F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

152U.K.In section 353(1) (relief for payments of interest) after “sections 359 to 368” insert “ of this Act and section 52 of ITTOIA 2005 ”.

153U.K.F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

154U.K.F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

155U.K.In section 370(2)(b) (relevant loan interest) for the words from “either” to the end substitute “ would be eligible for relief under section 353 ”.

156U.K.F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

157U.K.F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

158U.K.In section 382(3) (provisions supplementary to sections 380 and 381) omit “under the provisions of the Income Tax Acts applicable to Case I or II of Schedule D”.

159U.K.F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

160U.K.F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

161U.K.In section 385(4) (carry-forward against subsequent profits) omit “under Case I of Schedule D” and, in both places where it occurs, “under that Case”.

162U.K.In section 386(1) (carry-forward where business transferred to a company) omit “under Schedule D”.

163U.K.F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

164U.K.F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165U.K.F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

166U.K.F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

167U.K.F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

168U.K.F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

169(1)Amend section 397 (restriction of relief in case of farming and market gardening) as follows.U.K.

(2)In subsection (5) (restriction of relief in case of farming and market gardening) for the definitions of “farming” and “market gardening” substitute—

““farming” and “market gardening” shall be construed—

(a)for income tax purposes, in accordance with the definitions in section 876 of ITTOIA 2005, and

(b)for corporation tax purposes, in accordance with the definitions in section 832 but as if those definitions were not restricted to activities in the United Kingdom.”

(3)F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In subsection (8) for the words from “, a trade shall be treated” to the end substitute “—

(a)a trade shall be treated as discontinued, and a new trade set up, in any event which under any of the provisions of the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade; and

(b)without prejudice to paragraph (a), a trade shall be treated as discontinued, and a new trade set up, at any time when there is a change in the persons carrying on the trade which involves all of the persons carrying it on before the change permanently ceasing to carry it on.”

(5)In subsection (10) for the words from the beginning to “any discontinuance, and as if” substitute “ Where at any time there has been a change in the persons carrying on a trade, this section shall, notwithstanding subsection (8) above, apply as if ”.

170U.K.In section 398 (loss relief for transactions in deposits with and without certificates or in debts)—

(a)F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)for “tax under Schedule D” substitute “ corporation tax under Schedule D or income tax under that Act ”.

171(1)Amend section 399 (dealings in commodity futures etc: withdrawal of loss relief) as follows.U.K.

(2)Omit subsections (1) and (1A).

(3)F44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In subsection (5) omit the words from “and the reference” to the end.

172U.K.In section 401(1) (relief for pre-trading expenditure)—

(a)for “person” substitute “ company ”,

(b)for “trade, profession or vocation”, wherever it occurs, substitute “ trade or profession ”,

(c)for “he” substitute “ the company ”,

(d)for “his” substitute “ the company's ”, and

(e)for “him” substitute “ the company ”.

173U.K.In section 417(3)(b) (meaning of “associate” etc.) for “Chapter 1A of Part XV (see section 660G(1) and (2))” substitute “ Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act) ”.

174(1)Amend section 421 (taxation of borrower where loan under section 419 released etc.) as follows.U.K.

(2)In subsection (1)—

(a)for “advance and” substitute “ advance made to the trustees of a trust and after the trust has ended ”,

(b)in paragraph (a) for “the total income of the person to whom the loan or advance was made”, “him” and “Schedule F” substitute “ the income of the person from whom the debt was due (“the debtor”) for corporation tax purposes ”, “ the debtor ” and “ dividend ” respectively,

(c)in paragraph (b) for “he shall not be liable to pay income tax at the Schedule F” substitute “ the debtor shall not be liable to pay corporation tax at the dividend ”, and

(d)omit paragraphs (c) and (d).

(3)Omit subsections (2) and (3).

175U.K.F45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

176U.K.In section 431D(3)(b) (meaning of “overseas life assurance business”) after “Chapter II of Part XIII” insert “ or Chapter 9 of Part 4 of ITTOIA 2005 ”.

177U.K.In section 434 (franked investment income etc.) omit subsection (1A).

178(1)Amend section 437 (general annuity business) as follows.U.K.

(2)In subsection (1C)(b)(ii) after “capital elements” insert “ and amounts exempt under section 717 of ITTOIA 2005 ”.

(3)Omit “and” at the end of subsection (1C)(b).

(4)After subsection (1C)(c) insert “and

(d)the amounts exempt under section 717 of ITTOIA 2005 shall be determined in accordance with Chapter 7 of Part 6 of that Act, but for this purpose—

(i)it is immaterial whether or not an annuitant claims any relief to which the annuitant is entitled under that section; and

(ii)where, by virtue of section 718 of that Act, section 717 does not apply to an annuity, the annuity shall be treated as being exempt to the same extent that it would have been apart from that section.”

179(1)Section 468J (dividend distributions of authorised unit trusts) is amended as follows.U.K.

(2)In subsection (2) for “Tax Acts” substitute “ Corporation Tax Acts ”.

(3)At the end of subsection (4) insert “(including a dividend treated as paid to a unit holder who is not liable to corporation tax)”.

180(1)Section 468L (interest distributions of authorised unit trusts) is amended as follows.U.K.

(2)In subsection (1A) after “this Chapter” insert “ and Chapter 2 of Part 4 of ITTOIA 2005 (interest) ”.

(3)In subsection (2) for “Tax Acts” substitute “ Corporation Tax Acts ”.

(4)At the end of subsection (3) insert “(including a payment of interest treated as made to a unit holder who is not liable to corporation tax)”.

181U.K.F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

182U.K.In section 472A (trading profits etc. from securities: taxation of amounts taken to reserves)—

(a)in subsection (1) for “person” substitute “ company ”, and

(b)in subsection (2) for “person's” substitute “ company's ”.

183U.K.In section 473(1) and (4) (conversion etc. of securities held as circulating capital) for “person” substitute “ company ”.

184(1)Amend section 477A (building societies: regulations for deduction of tax) as follows.U.K.

(2)In subsection (4)—

(a)for “terminal bonus” substitute “ interest ”, and

(b)for “contractual savings scheme” substitute “ SAYE savings arrangement ”.

(3)Omit subsections (5) and (6).

(4)In subsection (9) omit the words from “but” to the end of the subsection.

(5)In subsection (10) after “this section—” insert—

““certified SAYE savings arrangement” has the meaning given by section 703 of ITTOIA 2005”.

185U.K.Omit section 480C (relevant deposits: computation of tax on interest).

186U.K.F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187U.K.F48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

188(1)Section 486 (industrial and provident societies and co-operative associations) is amended as follows.U.K.

(2)In subsection (1)—

(a)after “distribution” insert “ for the purposes of corporation tax ”, and

(b)for “the purposes of corporation tax” substitute “ those purposes ”.

(3)In subsection (4) at the end insert “for the purposes of corporation tax”.

(4)Omit subsection (5).

189(1)Amend section 491 (distribution of assets of body corporate carrying on mutual business) as follows.U.K.

(2)In subsection (1) for “any person” substitute “ any company ”.

(3)In subsection (2) for “the person” substitute “ the company ”.

(4)In subsection (3)—

(a)for “the purposes of tax”, wherever it occurs, substitute “ the purposes of corporation tax ”,

(b)for “the recipient”, wherever it occurs, substitute “ the recipient company ”,

(c)after “be charged” insert “ to corporation tax ”, and

(d)for “chargeable period” substitute “ accounting period ”.

(5)In subsection (4) omit “113 or”.

(6)Omit subsection (5).

(7)In subsection (10) omit “or vocation”.

190(1)Amend section 492 (treatment of oil extraction activities etc for tax purposes) as follows.U.K.

(2)In subsection (1) for “for all purposes of income tax, and for the purposes of the charge of corporation tax on income,” substitute “ for the purposes of the charge of corporation tax on income ”.

(3)In subsection (4)—

(a)in paragraph (a) after “are treated by virtue of” insert “ section 16(1) of ITTOIA 2005 or ”,

(b)in paragraph (a) for “the purposes specified in that subsection” substitute “ income tax purposes or (as the case may be) for the purposes of the charge of corporation tax on income ”,

(c)in paragraph (b) after “but which, apart from” insert “ section 16(1) of ITTOIA 2005 or ”, and

(d)after “notwithstanding anything in that” insert “ section or ”.

191U.K.In section 493(2)(a)(i) (valuation of oil disposed of or appropriated in certain circumstances) for “falling within section 492(1)(a) or (b)” substitute “ falling within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1)(a) or (b) above ”.

192U.K.In section 495(2) (regional development grants) for “section 492(1)” substitute “ section 16(1) of ITTOIA 2005 or section 492(1) above ”.

193U.K.In section 496(1)(c) (tariff receipts and tax-exempt tariffing receipts) for “section 492(1)” substitute “ section 16(1) of ITTOIA 2005 or section 492(1) above ”.

194U.K.In section 502(1) (interpretation of Chapter 5), in the definition of “ring fence trade”—

(a)in paragraph (a) for “any of paragraphs (a) to (c) of subsection (1) of section 492” substitute “ the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1) above ”, and

(b)in paragraph (b) for “that subsection” substitute “ section 16(1) of ITTOIA 2005 or section 492(1) above ”.

195(1)Amend section 503 (letting of furnished holiday accommodation treated as a trade for certain purposes) as follows.U.K.

(2)In subsection (1)—

(a)for “specified in subsection (2)” substitute “ of Chapter 2 of Part 10 (loss relief for corporation tax) ”,

(b)omit “in the United Kingdom”,

(c)after “chargeable to” insert “ corporation ”, and

(d)for “particular person or partnership or body of persons” substitute “ particular company or partnership ”.

(3)Omit subsections (2) and (3).

(4)In subsection (5)—

(a)for “Part X” substitute “ Chapter 2 of Part 10 ”, and

(b)after “other provision of the” insert “ Corporation ”.

(5)In the side-note after “certain” insert “ corporation tax ”.

196(1)Amend section 504 (meaning of the “commercial letting of furnished accommodation”) as follows.U.K.

(2)Omit subsection (4).

(3)In subsection (6)—

(a)omit “year of assessment or”,

(b)for “person” substitute “ company ”,

(c)omit “year or” in each place where it occurs,

(d)for “he” substitute “ the company ”, and

(e)for “him” substitute “ the company ”.

(4)In subsection (6A) for “above is—” to the end substitute “ above is the period of two years beginning at the end of the accounting period in which the accommodation was let. ”

(5)In subsection (7)—

(a)omit “year of assessment or”, and

(b)omit “year or” in both places where it occurs.

(6)In subsection (8) omit “year of assessment or”.

(7)In subsection (9)—

(a)for “a person” substitute “ a company ”, and

(b)for “he” substitute “ it ”.

197U.K.F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

198(1)Amend section 505 (charities: general) as follows.U.K.

(2)In subsection (1)—

(a)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)in paragraph (c)(iia) omit “IV or”,

(d)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)in paragraph (c)(iib) from “income” to “and” at the end of sub-paragraph (iib) substitute “ such dividends as would, in the case of income tax, be chargeable to tax under Chapter 4 of Part 4 of ITTOIA 2005 or such distributions (other than dividends) as would, in the case of income tax, be chargeable to tax under Chapter 8 of Part 5 of that Act so far as it would apply to what would be a relevant foreign distribution, ”,

(f)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(i)F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)After subsection (1) insert—

“(1AA)In subsection (1)(c)(iiaa) and (iib) “relevant foreign distribution” means any distribution of a company not resident in the United Kingdom which—

(a)is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but

(b)would be chargeable under Chapter 3 of that Part of that Act if the company were resident in the United Kingdom.”

(4)In subsection (2) after “chargeable to”, in the second place where it occurs, insert “ income tax under Chapter 7 of Part 5 of ITTOIA 2005 (annual payments not otherwise charged) so far as it does not apply to relevant foreign income and shall be chargeable to corporation ”.

199U.K.F51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200U.K.Omit section 514 (funds for reducing the national debt).

201(1)Amend section 524 (taxation of receipts from sale of patent rights) as follows.U.K.

(2)In subsection (1)—

(a)for “person”, “he” and “him” substitute “ company ”, “ the company ” and “ it ” respectively,

(b)for “tax” substitute “ corporation tax ”, and

(c)for “chargeable”, in both places where it occurs, substitute “ accounting ”.

(3)In subsection (2)—

(a)for “person” substitute “ company ”,

(b)after “charged to”, in both places where it occurs, insert “ corporation ”, and

(c)for “chargeable” substitute “ accounting ”.

(4)In subsection (2A)—

(a)omit paragraph (a), and

(b)in paragraph (b) omit “in the case of an election for the purposes of corporation tax,”.

(5)In subsection (3)—

(a)for the words from the beginning to “in the United Kingdom” substitute “ Where a relevant non-resident company ”, and

(b)in paragraph (a), for “he shall be chargeable to tax” substitute “ the company shall be chargeable to corporation tax ”.

(6)Omit subsection (4).

(7)For subsection (5) substitute—

“(5)In subsection (3) above “relevant non-resident company” means a company not resident in the United Kingdom which would be within the charge to corporation tax in respect of any proceeds of the sale of the patent rights not consisting of a capital sum.”

(8)In subsection (6) omit “subsection (4) shall not apply, but”.

(9)In subsection (7)—

(a)for “person” substitute “ company ”,

(b)for “him”, in both places where it occurs, substitute “ it ”, and

(c)for “he” substitute “ it ”.

(10)In subsection (8) for “him” substitute “ it ”.

202(1)Amend section 525 (receipts from sale of patent right: death, winding up or partnership change) as follows.U.K.

(2)For subsection (1) substitute—

“(1)Where a body corporate on which, by reason of the receipt of a capital sum, a charge falls or would otherwise fall to be made under section 524 commences to be wound up—

(a)no sums shall be charged under that section on that body for any accounting period subsequent to that in which the winding up commences; and

(b)the amount falling to be charged for the accounting period in which the winding up commences shall be increased by the total amounts which, but for the winding up, would have fallen to be charged for subsequent accounting periods.”

(3)Omit subsection (2).

(4)In subsection (4)—

(a)in paragraph (a)—

(i)for “chargeable period” substitute “ accounting period ”,

(ii)omit “(or, if he is dead, his personal representatives)”, and

(iii)for “his” substitute “ its ”, and

(b)omit paragraph (b) and the word “and” immediately preceding it.

(5)In the sidenote omit “death,”.

203(1)Amend section 526 (relief for expenses) as follows.U.K.

(2)In subsection (1)—

(a)for “person” substitute “ company ”,

(b)for “him”, in the first place where it occurs, substitute “ it ”,

(c)for “him”, in the second place where it occurs, substitute “ the company for the purposes of corporation tax ”, and

(d)for “chargeable” substitute “ accounting ”.

(3)Omit subsection (2).

204U.K.In section 527(4) (spreading of royalties over several years) at the end insert “ of this Act or by virtue of section 595 of ITTOIA 2005 ”.

205(1)Amend section 528 (manner of making allowances under section 526) as follows.U.K.

(2)Omit subsection (2).

(3)In subsection (3) omit “as that provision applies for the purposes of corporation tax”.

(4)In subsection (3A) omit “a person's or” and “479 or”.

206U.K.Omit section 529 (patent income to be earned income in certain cases).

207(1)Amend section 531 (disposals of know-how) as follows.U.K.

(2)In subsection (1)—

(a)for “a person” substitute “ a company ”,

(b)for “him”, in both places where it occurs, substitute “ the company ”,

(c)for “tax”, in both places where it occurs, substitute “ corporation tax ”, and

(d)for “all purposes” substitute “ the purposes of corporation tax ”.

(3)For subsection (2) substitute—

“(2)Subject to subsection (3) below, where—

(a)a person carrying on a trade receives consideration for the disposal of know-how which has been used in the trade, and

(b)the know-how is disposed of as part of the disposal of all or part of the trade,

the consideration shall for the purposes of corporation tax be treated as a payment for goodwill in relation both to the person making the disposal and to the person acquiring the know-how (if that person provided the consideration).”

(4)In subsection (3)(a) for “to either of the persons concerned if they so elect” substitute “ if, in the case of the person disposing of the know-how being within the charge to corporation tax, that person and the person acquiring the know-how (whether or not within the charge to corporation tax) elect for that subsection not to apply ”.

(5)After subsection (3) insert—

“(3A)If—

(a)an election is made under section 194 of ITTOIA 2005 (provision corresponding to subsections (2) and (3) of this section for the purposes of income tax), and

(b)the person making the acquisition mentioned in that section is within the charge to corporation tax,

the persons making the election under that section are treated as also making an election under subsection (3) of this section (even though the person disposing of the know-how is not within the charge to corporation tax).”

(6)In subsection (4)—

(a)for “person” substitute “ company ”,

(b)for “him” substitute “ the company ”, and

(c)for “tax”, in both places where it occurs, substitute “ corporation tax ”.

(7)In subsection (5)—

(a)for “person” substitute “ company ”, and

(b)for “tax” substitute “ corporation tax ”.

(8)Omit subsection (6).

(9)In subsection (7) for “(6)” substitute “ (5) ”.

208U.K.In section 532 (application of Capital Allowances Act) for “529” substitute “ 528 ”.

209(1)Amend section 533 (interpretation of intellectual property provisions) as follows.U.K.

(2)In subsection (1)—

(a)for “529” substitute “ 528 ”, and

(b)for the definition of “income from patents” substitute—

““income from patents” means—

(a)any royalty or other sum paid in respect of the use of a patent; and

(b)any amount on which tax is payable for any accounting period by virtue of section 524 or 525 above or section 472(5) of, or paragraph 100 of Schedule 3 to, the Capital Allowances Act,

but does not include any amount chargeable to income tax.”

(3)In each of subsections (2) to (5) for “529” substitute “ 528 ”.

210(1)Amend section 539 (life policies, life annuities and capital redemption policies: introductory) as follows.U.K.

(2)In subsection (1) for “tax” substitute “ corporation tax ”.

(3)In subsection (3) for the definition of “life annuity” substitute—

““life annuity” means—

(a)any annuity to which section 656 (as read with section 657) applies, or

(b)any annuity that—

(i)is a purchased life annuity for the purposes of Chapter 7 of Part 4 of ITTOIA 2005 (see section 423 of that Act), and

(ii)is not specified in section 718 of that Act (annuities the payments under which are not within section 717 of that Act (exemption for part of purchased life annuity payments));”.

(4)Omit subsection (8).

211U.K.After that section insert—

“539ZAApplication of this Chapter etc. to policies and contracts in which persons other than companies are interested

(1)This section applies where, for the purposes of determining the application of this Chapter in relation to a policy or contract at any time, it is necessary to have regard to its application at another time.

(2)It makes no difference to the application of this Chapter at that other time whether liability in respect of a gain arising at that time would have arisen or (as the case may be) would arise because of the application of this Chapter or Chapter 9 of Part 4 of ITTOIA 2005 (which makes provision for income tax purposes corresponding to that made by this Chapter).

(3)References in this section to this Chapter include references to paragraph 20 of Schedule 15 to this Act and section 79 of the Finance Act 1997 (payments under certain life insurance policies).”

212U.K.In section 543(1)(a)(i) (life annuity contracts: computation of gain) for “one or more payments” to the end of the sub-paragraph substitute “ any payments have been made on account of the annuity, by so much of those payments as is determined to be the capital element in them under section 656 of this Act or is exempt under section 717 of ITTOIA 2005; and ”.

213U.K.In section 544(6)(a) (second and subsequent assignment of life policies and contracts) for “section 547(1)(a)” substitute “ section 547A(17) ”.

214U.K.In section 545(1)(a) (capital redemption policies) for “to tax” to the end of the paragraph substitute “—

(i)to corporation tax under Schedule D,

(ii)to income tax under Part 9 of ITEPA 2003 (pension income) because section 609, 610 or 611 of that Act applies to them (certain employment related annuities), or

(iii)to income tax under Chapter 7 of Part 4 (purchased life annuity payments) or Chapter 7 of Part 5 (annual payments not otherwise charged) of ITTOIA 2005;”.

215U.K.In section 546C(8) (charging the section 546 excess to tax where section 546B applies)—

(a)for “any provision of section 547” substitute “ section 547(1)(b) ”,

(b)for “body or person” substitute “ company ”,

(c)omit paragraph (a) and the word “or” at the end of it,

(d)in paragraph (b) for “it” substitute “ the chargeable event in question ”, and

(e)omit “year of assessment or”.

216(1)Amend section 547 (method of charging gain to tax) as follows.U.K.

(2)In subsection (1) omit paragraph (a) and paragraphs (c) to (e).

(3)In paragraph (b) of that subsection for “that event, those rights” substitute “ the chargeable event in question, the rights conferred by the policy or contract ”.

(4)In subsection (1A)—

(a)for “their” substitute “ its ”, and

(b)for “and subsections (9) to (11) below are” substitute “ is ”.

(5)Omit subsections (4A) to (7A) and (9) to (14).

217(1)Amend section 547A (method of charging gain to tax: multiple interests) as follows.U.K.

(2)For subsection (1) substitute—

“(1)If—

(a)immediately before the happening of a chargeable event, two or more persons have relevant interests in the rights conferred by the policy or contract in question, and

(b)any of those persons is a company,

section 547 shall have effect in relation to each such company as if it had been the only person with a relevant interest in those rights, but with references to the amount of the gain construed as references to the company's proportionate share of the amount of the gain.”

(3)In subsection (15) for the definition of “foreign institution” substitute—

““foreign institution” means a person which is a company or other institution resident or domiciled outside the United Kingdom;”.

(4)For subsection (16) substitute—

“(16)For the purposes of this section, property held for the purposes of a foreign institution shall be regarded as in the beneficial ownership of the foreign institution.

(17)Any reference in this section to trusts created by an individual includes a reference to trusts arising under—

(a)section 11 of the Married Women's Property Act 1882;

(b)section 2 of the Married Women's Policies of Assurance (Scotland) Act 1880; or

(c)section 4 of the Law Reform (Husband and Wife) Act (Northern Ireland) 1964;

and references to the settlor or to the person creating the trusts shall be construed accordingly.”

218U.K.In section 548(1) (deemed surrender of certain loans) for paragraph (a) substitute—

“(a)a gain arising in connection with a policy or contract would be—

(i)treated as forming part of the income of a company under section 547(1)(b), or

(ii)a gain for which an individual is, or any trustees are, liable to tax under Chapter 9 of Part 4 of ITTOIA 2005; and”.

219U.K.Omit section 549 (certain deficiencies allowable as deductions).

220U.K.Omit section 550 (relief where gain charged at a higher rate).

221U.K.Omit section 551 (right of individual to recover tax from trustees).

222(1)Amend section 552 (information: duty of insurers) as follows.U.K.

(2)In subsection (1) omit “within the meaning of this Chapter”.

(3)In subsection (5)—

(a)in paragraph (b)(ii) for “, the date” to the end of the sub-paragraph substitute “ of this Act and section 514(1) of ITTOIA 2005 (chargeable events where transaction-related calculations show gains), the date on which the year and the insurance year end; ”,

(b)in paragraph (c)—

(i)after “this Chapter” insert “ and Chapter 9 of Part 4 of ITTOIA 2005 ”,

(ii)after “relevant capital payments” insert “ and the amount or value of any capital sums of a kind referred to in section 492(1)(b) to (e) of ITTOIA 2005 ”,

(iii)in sub-paragraph (iii) after “annuity” insert “ determined in accordance with section 656 and the amount of so much of any payment previously made on account of an annuity as is exempt under section 717 of ITTOIA 2005 ”, and

(iv)in sub-paragraph (v) after “year” insert “ and the total of the amounts of gains treated as arising on previous chargeable events within section 509(1) or 514(1) of ITTOIA 2005 ”,

(c)for paragraph (e) substitute—

“(e)the number of years relevant for computing the annual equivalent of the amount of the gain for the purposes of subsection (1) of section 536 of ITTOIA 2005 (top slicing relieved liability: one chargeable event), apart from subsections (6) and (8) of that section;”, and

(d)for paragraph (f) substitute—

“(f)on the assumption that section 465 of ITTOIA 2005 (person liable: individuals) has effect in relation to the gain —

(i)whether an individual would fall to be treated as having paid income tax at the lower rate on the amount of the gain in accordance with section 530 of that Act; and

(ii)if so, except in a case where paragraph (c) above applies, the amount of such tax that would fall to be so treated as paid.”

(4)In subsection (6)—

(a)in paragraph (b)—

(i)after “section 546C(7)(a)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”, and

(ii)after “year” insert “ (and the insurance year) ”, and

(b)in paragraph (c) after “section 546C(7)(a)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”.

(5)In subsection (7)(b)—

(a)after “section 546C(7)(a)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”, and

(b)after “year” insert “ (and the insurance year) ”.

(6)In subsection (9)(a)—

(a)after “section 546C(7)(b)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”, and

(b)after “occurs” insert “ (and the end of the insurance year mentioned in section 514(3) and (4) of ITTOIA 2005) ”.

(7)In subsection (10)—

(a)in the definition of “amount” after “section 553(3)” insert “ of this Act and section 528 of ITTOIA 2005 ”, and

(b)insert in the appropriate place—

““chargeable event” means an event which is a chargeable event within the meaning of this Chapter and Chapter 9 of Part 4 of ITTOIA 2005;”.

223U.K.In section 552ZA(3) (information: supplementary provisions) after “section 546C(7)(a)” insert “ of this Act and section 514(1) of ITTOIA 2005 ”.

224(1)Amend section 552A (tax representatives) as follows.U.K.

(2)In subsection (5) omit “in relation to which this Chapter has effect and”.

(3)In subsection (12) insert in the appropriate place—

““capital redemption policy” means a capital redemption policy in relation to which this Chapter and Chapter 9 of Part 4 of ITTOIA 2005 have effect;”,

““contract for a life annuity” means a contract for a life annuity in relation to which this Chapter and Chapter 9 of Part 4 of ITTOIA 2005 have effect;”, and

““policy of life insurance” means a policy of life insurance in relation to which this Chapter and Chapter 9 of Part 4 of ITTOIA 2005 have effect;”.

225U.K.In section 552B (duties of overseas insurers' tax representatives) after subsection (5) insert—

“(5A)In subsection (5) “chargeable event” has the same meaning as in section 552 (see subsection (10) of that section).”

226(1)Amend section 553 (non-resident policies and off-shore capital redemption policies) as follows.U.K.

(2)For subsection (4) substitute—

“(4)The number of days in the period referred to in subsection (3) shall be calculated, where appropriate, from the issue of the earliest related policy, that is, any policy in relation to which the policy is a new policy within the meaning of paragraph 17 of Schedule 15, any policy in relation to which that policy is such a policy, and so on.”

(3)Omit subsections (6) to (9).

(4)In subsection (10) in the definition of “foreign institution” for “section 547” substitute “ section 547A ”.

227(1)Amend section 553A (overseas life insurance business) as follows.U.K.

(2)Omit subsection (3).

(3)In subsection (4), in the definition of “new non-resident policy”, for “subsections (2) and (3)” substitute “ subsection (2) ”.

228(1)Amend section 553C (personal portfolio bonds) as follows.U.K.

(2)In subsection (1) for “tax” substitute “ corporation tax ”.

(3)In subsection (2) for “tax”, in both places where it occurs, substitute “ corporation tax ”.

(4)In subsection (3)(a) for “tax”, in the first place where it occurs, substitute “ corporation tax ”.

(5)In subsection (4)—

(a)for “tax” substitute “ corporation tax ”,

(b)after paragraph (b) insert “ or ”,

(c)in paragraph (c) for the words from “person or body of persons” to the end of the paragraph substitute “ company ”, and

(d)omit paragraph (d) and the word “or” before it.

(6)After subsection (9) insert—

“(9A)The Treasury may by regulations make provision, in relation to any policy or contract to which this subsection applies, for—

(a)treating an event described in the regulations as if it were a chargeable event, and

(b)treating an amount determined in accordance with the regulations as if it were a gain treated as arising on the happening of a chargeable event.

(9B)Regulations under subsection (9A) may make such provision for the purposes only of enabling the gain to be taken into account in the application of this Chapter to the policy or contract on the later happening of a chargeable event.

(9C)Regulations under subsection (9A) may make any provision for the calculation of the amount of the gain which regulations under subsection (1) may make for the calculation of the amount charged to corporation tax by virtue of regulations under that subsection.

(9D)Subsections (6), (8) and (9) apply to regulations under subsection (9A).

(9E)Subsection (9A) applies to a policy or contract if—

(a)it is a personal portfolio bond, and

(b)liability in respect of a gain arising in relation to it would arise by virtue of any of sections 464 to 468 of ITTOIA 2005 (persons liable for tax under Chapter 9 of Part 4 of that Act).”

229U.K.Omit section 554 (borrowings on life policies to be treated as income in certain cases).

230(1)Amend section 556 (activity treated as trade etc. and attribution of income) as follows.U.K.

(2)Omit subsection (1).

(3)For subsection (2) substitute—

“(2)If—

(a)under section 13(5) of ITTOIA 2005 a payment made to a person is treated as made instead to the performer, and

(b)the person to whom the payment is actually made is a company within the charge to corporation tax,

the company is treated for corporation tax purposes as if the payment had not been made to it.”

(4)In subsection (3)—

(a)omit paragraph (a), and

(b)in paragraph (b) for “tax (whether of the entertainer or sportsman or of another person)” substitute “ corporation tax ”.

231U.K.Omit section 557 (charge on profits).

232U.K.In section 568(1) (deductions from profits of contributions paid under certified schemes)—

(a)after “section 74” insert “ of this Act or section 33 of ITTOIA 2005 ”, and

(b)after “Case I of Schedule D,” insert “ or under Part 2 of ITTOIA 2005, ”.

233U.K.In section 570(4) (payments under certified schemes which are not repayments of contributions) for “any of the provisions of section 113 or section 337(1)” substitute “ section 337(1) above or section 18 of ITTOIA 2005 (companies beginning or ceasing to carry on trade) ”.

234U.K.In section 571(1) (cancellation of certificates) for “under Case VI of Schedule D” substitute “ (in the case of corporation tax, under Case VI of Schedule D) ”.

235(1)Amend section 577 (business entertaining expenses) as follows.U.K.

(2)In subsection (1)(a)—

(a)for “tax” substitute “ corporation tax ”, and

(b)for “the Tax Acts” substitute “ the Corporation Tax Acts ”.

(3)In subsection (3)—

(a)for “any person” substitute “ any company ”,

(b)for “by him”, in the first and second places where it occurs, substitute “ by the company ”, and

(c)for “a member of his staff” substitute “ an employee of the company ”.

(4)In subsection (5)—

(a)for “a person” substitute “ a company ”,

(b)for “a member of his staff” substitute “ an employee of the company ”,

(c)for “that person” substitute “ the company ”,

(d)for “him” substitute “ the company ”, and

(e)for “members of his staff” substitute “ employees of the company ”.

(5)In subsection (7)—

(a)in paragraph (b) for “, profession or vocation” substitute “ or profession ”, and

(b)in paragraph (c)—

(i)for “the members of a person's staff” substitute “ a company's employees ”,

(ii)for “that person” substitute “ the company ”, and

(iii)for “a company”, in both places where it occurs, substitute “ the company ”.

(6)In subsection (8)(b)—

(a)for “him”, in both places where it occurs, substitute “ the donor ”, and

(b)for “relevant tax period” substitute “ accounting period ”.

(7)Omit subsection (8A).

(8)In subsection (10)—

(a)for “any person” substitute “ any company ”,

(b)for “his trade” substitute “ its trade ”, and

(c)for “by him” substitute “ by the company ”.

236(1)Amend section 577A (expenditure involving crime) as follows.U.K.

(2)In subsections (1) and (1A) for “tax” substitute “ corporation tax ”.

(3)In subsection (2)(a) for “the Tax Acts” substitute “ the Corporation Tax Acts ”.

237U.K.In section 578(1) (housing grants) for “any tax purpose” substitute “ corporation tax purposes ”.

238U.K.In section 578A(1) (expenditure on car hire) for “tax” substitute “ corporation tax ”.

239(1)Amend section 579 (statutory redundancy payments) as follows.U.K.

(2)In subsection (2)—

(a)after “payment is made” insert “ by a company ”,

(b)for “trade, profession or vocation”, in each place, substitute “ trade or profession ”, and

(c)for “the employer” substitute “ the company ”.

(3)In subsection (3)—

(a)after “payment is made” insert “ by a company ”, and

(b)for “the employer” substitute “ the company ”.

(4)In subsection (5) for “tax purposes” substitute “ corporation tax purposes ”.

(5)In subsection (6) for “the employer”, in both places, substitute “ the company ”.

240U.K.Omit sections 580A to 580C (relief from tax on annual payments under certain insurance policies and immediate needs annuities).

241U.K.Omit section 581 (borrowing in foreign currency by local authorities and statutory corporations).

242U.K.F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

243(1)Section 582 (funding bonds issued in respect of interest on certain debts) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a) for “all the purposes of the Tax Acts” substitute “ all the purposes of the Corporation Tax Acts ”, and

(b)in paragraph (b) at the beginning insert “ where paragraph (a) above or section 380 of ITTOIA 2005 (which makes provision similar to that paragraph for income tax purposes) applies ”.

(3)F53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

244U.K.Omit section 583 (Inter-American Development Bank).

245(1)Section 584 (relief for unremittable overseas income) is amended as follows.U.K.

(2)In subsection (1)—

(a)for “a person is chargeable to tax” substitute “ a company is chargeable to corporation tax ”,

(b)for “for the purposes of tax” substitute “ for the purposes of corporation tax ”, and

(c)for “he”, in each place where it occurs, substitute “ the company ”.

(3)In subsection (2)—

(a)for “a person” substitute “ a company ”,

(b)for “his” substitute “ its ”, and

(c)for the words from “and tax” to “assessable,” substitute “ and corporation tax shall be assessable ”.

(4)In subsection (4) for “a person becomes chargeable to income tax or” substitute “ a company becomes chargeable to ”.

(5)Omit subsections (6)(a) and (7).

246U.K.Omit section 585 (relief from tax on delayed remittances).

247U.K.In section 586(1) (disallowance of deductions for war risk premiums) for “tax purpose” substitute “ corporation tax purpose ”.

248(1)Amend section 587 (disallowance of certain payments in respect of war injuries to employees) as follows.U.K.

(2)In subsection (1) omit “, or total income,” and for “tax purpose” substitute “ corporation tax purpose ”.

(3)In subsection (2)(b) for “section 121” substitute “ section 121(3). ”

249U.K.F54. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

250(1)Amend section 588 (training courses for employees) as follows.U.K.

(2)In subsection (1) for “person” substitute “ company ”.

(3)In subsection (3) for “trade, profession or vocation” substitute “ trade or profession ”.

(4)In subsection (5)—

(a)for “tax” substitute “ corporation tax ”,

(b)for “year” substitute “ accounting period ”,

(c)for “he” substitute “ it ”,

(d)omit “section 29(1) of the Management Act, or”, and

(e)for “chargeable period” substitute “ accounting period ”.

(5)In subsection (7) for “he” substitute “ it ”.

251(1)Amend section 589A (counselling services for employees) as follows.U.K.

(2)In subsection (7)—

(a)for “(8) to (10)” substitute “ (8) and (9) ”, and

(b)for “person under whom” substitute “ company under which ”.

(3)In subsection (8) for “trade, profession or vocation” substitute “ trade or profession ”.

252(1)Amend section 591C (cessation of approval: tax on certain schemes) as follows.U.K.

(2)In subsection (1) for “tax shall be charged” substitute “ income tax shall be charged under and ”.

(3)In subsection (2) omit “under Case VI of Schedule D”.

(4)In subsection (6A)(c)(iii) for “Schedule D” substitute “ Part 2 of ITTOIA 2005 ”.

253(1)Amend section 592 (exempt approved schemes) as follows.U.K.

(2)In subsection (3)—

(a)after “the schemes” insert “ , are not relevant foreign income ”, and

(b)for “Case VI of Schedule D” substitute “ Chapter 8 of Part 5 of ITTOIA 2005 (income not otherwise charged) ”.

(3)In subsection (4)(a) after “for the purposes of” insert “ Part 2 of ITTOIA 2005 or ”.

254(1)Amend section 598 (charge to tax: repayment of employee's contributions) as follows.U.K.

(2)In subsection (1) after “this section,” insert “ income ”.

(3)In subsection (2) for the words from the beginning to “Schedule D” substitute “ The person liable for any tax chargeable under this section shall be the administrator of the scheme ”.

255(1)Amend section 599 (charge to tax: commutation of entire pension in special circumstances) as follows.U.K.

(2)In subsection (1) after “whether wholly or not, under the rule,” insert “ income ”.

(3)In subsection (1B) before “tax” insert “ income ”.

(4)In subsection (3) for the words from the beginning to “Schedule D on that amount,” substitute “ The person liable for any tax chargeable under this section shall be the administrator of the scheme ”.

256U.K.In section 599A (charge to tax: payments out of surplus funds) for subsection (2) substitute—

“(2)On the making of a payment to which subsection (1) above applies—

(a)income tax is charged at the relevant rate on such amount as, after deduction of tax at that rate, would equal the amount of the payment, and

(b)the person liable for the tax so charged is the administrator of the scheme.”

257U.K.In section 601(5)(b) (charge to tax: payments to employers) for “to tax on the amount of the payment under Case VI of Schedule D” substitute “—

(i)to income tax on the full amount of the payment arising in the year of assessment; or

(ii)to corporation tax on the amount of the payment under Case VI of Schedule D”.

258U.K.In section 602(1)(a) (regulations relating to pension fund surpluses) omit “under Case VI of Schedule D”.

259(1)Amend section 607 (pilots' benefit fund) as follows.U.K.

(2)In subsection (2)(c) for “the provisions of Case II of Schedule D” substitute “ such of the provisions of Part 2 of ITTOIA 2005 as apply in calculating the profits of a profession ”.

(3)In subsection (3)(a) for “in assessing tax under Schedule D” substitute “ in calculating the profits of the profession ”.

260U.K.In section 608(2) (superannuation funds approved before 6th April 1980)—

(a)in paragraph (b)—

(i)after “commissions” insert “ which are not relevant foreign income and ”, and

(ii)for “Case VI of Schedule D” substitute “ Chapter 8 of Part 5 of ITTOIA 2005 ”, and

(b)in paragraph (c) for the words from “under” onwards substitute “ under Chapter 11 of Part 4 of ITTOIA 2005 (transactions in deposits) by virtue of a disposal of deposit rights falling within section 552(1)(a) or (b) of that Act ”.

261U.K.In section 614(2A) (exemptions and reliefs in respect of income from investments etc. of certain pension schemes) for the words from “paragraph 1” to “(relevant” substitute “ Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply ”.

262(1)Amend section 617 (social security benefits and contributions) as follows.U.K.

(2)In subsection (3)—

(a)for “subsection (4) below” substitute “ subsections (4) and (5) below ”, and

(b)after “allowed” insert “ for corporation tax purposes ”.

(3)In subsection (4)—

(a)at the end of paragraph (b) insert “ or ”, and

(b)omit paragraphs (d) and (e).

(4)After subsection (4) insert—

“(5)Subsection (3) above shall not apply for the purposes of deductions under Chapter 2 of Part 5 of ITEPA 2003 (in relation to which section 360A of that Act applies).”

263(1)Amend section 623 (relevant earnings) as follows.U.K.

(2)In subsection (2)—

(a)in paragraph (c) for “Schedule D” substitute “ Part 2 of ITTOIA 2005 ”, and

(b)for paragraph (d) substitute—

“(d)income to which section 833(5B) (patent income) applies;”.

(3)In subsection (6)—

(a)in paragraph (a) for “section 74(m), (p) or (q)” substitute “ section 51 of ITTOIA 2005 ”, and

(b)after the “or” at the end of that paragraph insert—

“(aa)deductions in respect of any annuity or other annual payment (other than interest) payable out of his profits; or”.

264U.K.In section 644(2) (meaning of “relevant earnings”)—

(a)in paragraph (c) for “Schedule D” substitute “ Part 2 of ITTOIA 2005 ”, and

(b)for paragraph (d) substitute—

“(d)income to which section 833(5B) (patent income) applies.”

265U.K.In section 646(2) (meaning of “relevant net earnings”)—

(a)in paragraph (a) for “section 74(m), (p) or (q)” substitute “ section 51 of ITTOIA 2005 ”,

(b)after that paragraph insert—

“(aa)deductions in respect of any annuity or other annual payment (other than interest) payable out of his profits;”, and

(c)in paragraph (bb) for “section 332(3) of this Act” substitute “ section 159 of ITTOIA 2005 ”.

266(1)Amend section 648B (return of contributions after pension date) as follows.U.K.

(2)In subsection (1) for “Tax” substitute “ Income tax ”.

(3)In subsection (2) for the words from the beginning to “Schedule D” substitute “ The person liable for any tax chargeable under this section shall be the administrator of the scheme ”.

267(1)Amend section 650A (charge on withdrawal of approval from arrangements) as follows.U.K.

(2)In subsection (1) for “tax shall be charged” substitute “ income tax shall be charged under and ”.

(3)In subsection (2) omit “under Case VI of Schedule D”.

268(1)Amend section 656 (purchased life annuities other than retirement annuities) as follows.U.K.

(2)In subsection (1)—

(a)for “Tax Acts”, in the first place where it occurs, substitute “ Corporation Tax Acts ”, and

(b)for “other purposes of the Tax Acts” substitute “ other corporation tax purposes ”.

(3)F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

269U.K.In section 657(2)(a) (purchased life annuities to which section 656 does not apply) for “Tax Acts” substitute “ Corporation Tax Acts ”.

270U.K.F56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

271U.K.Omit sections 660A and 660B (income arising under settlement where settlor retains an interest and payments to unmarried minor children of settlor).

272(1)Amend section 660C (nature of charge on settlor) as follows.U.K.

(2)Omit subsections (1) to (2).

(3)F57. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)F58. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

273U.K.Omit sections 660D to 660G (settlements: supplementary provisions etc.).

274U.K.Omit section 677 (sums paid to settlor otherwise than as income).

275U.K.Omit section 678 (capital sums paid by body connected with settlement).

276U.K.Omit sections 682 and 682A (ascertainment of undistributed income and supplementary provisions for Chapter 1B).

277U.K.F59. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

278F60U.K.

279U.K.Omit section 688 (schemes for employees and directors to acquire shares).

280(1)Amend section 689B (order in which expenses to be set against income: trust management expenses) as follows.U.K.

(2)In subsection (2) for paragraphs (za) to (c) substitute—

“(a)so much of the income of the trustees as is income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.);

(b)income treated as arising to the trustees under Chapter 5 of that Part (stock dividends from UK resident companies); or

(c)income chargeable under Chapter 6 of that Part (release of loan to participator in close company).”

(3)In subsection (2A) for “income to which section 1A applies” to the end substitute “—

(a)income chargeable under Chapter 4 of Part 4 of ITTOIA 2005 (dividends from non-UK resident companies); or

(b)a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged).”

(4)After that subsection insert—

“(2B)In subsection (2A) “relevant foreign distribution” means any distribution of a company not resident in the United Kingdom which—

(a)is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but

(b)would be chargeable under Chapter 3 of that Part if the company were resident in the United Kingdom.”

281F61U.K.

282U.K.F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

283U.K.F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

284(1)Amend section 695 (estates of deceased persons in course of administration: limited interests in residue) as follows.U.K.

(2)In subsection (1) for “person who” substitute “ company which ”.

(3)In subsection (2)—

(a)for “all tax” substitute “ corporation tax ”,

(b)for “person” substitute “ company ”, and

(c)for “year of assessment”, in both places where it occurs, substitute “ accounting period ”.

(4)In subsection (3)—

(a)for “all tax” substitute “ corporation tax ”,

(b)for “person” substitute “ company ”,

(c)for “year of assessment”, in both places where it occurs, substitute “ accounting period ”, and

(d)for “that period” substitute “ the administration period ”.

(5)In subsection (4)—

(a)for “person” substitute “ company ”,

(b)for “for any year” substitute “ for any accounting period ”,

(c)in paragraph (a) for “that year” substitute “ the relevant year of assessment ”, and

(d)in paragraph (b), omit the words from “and shall” to the end of the paragraph.

(6)In subsection (5)—

(a)for “person” substitute “company

(b)for “income tax for any year” substitute “ corporation tax for any accounting period ”,

(c)for “him”, in both places where it occurs, substitute “ it ”, and

(d)for “that year” substitute “ the relevant year of assessment ”.

(7)In subsection (6)—

(a)for “he” substitute “ the company ”,

(b)for “to income tax” substitute “ to corporation tax ”, and

(c)omit “, for the purpose of computing his total income,”.

(8)After subsection (6) insert—

“(7)In this section “the relevant year of assessment”, in relation to an amount deemed to have been paid to a company as income for an accounting period by virtue of this section, means the year of assessment for which the amount would have been deemed to have been paid as income if references to accounting periods in subsections (2) and (3) were references to years of assessment.”

285(1)Amend section 696 (absolute interests in residue) as follows.U.K.

(2)In subsection (1) for “person who” substitute “ company which ”.

(3)In subsection (2)—

(a)for “person”, wherever it occurs, substitute “ company ”, and

(b)at the end add “; and references to the residuary income of a company for an accounting period are to be construed in accordance with subsection (8)”.

(4)In subsection (3)—

(a)for “all tax” substitute “ corporation tax ”,

(b)for “person” substitute “ company ”, and

(c)for “year of assessment” substitute “ accounting period ”.

(5)In subsection (3A)—

(a)for “person”, in both places where it occurs, substitute “ company ”,

(b)at the end of paragraph (b) insert “ (whether or not the company was a company liable to corporation tax at the time of payment) ”, and

(c)for “year of assessment” substitute “ accounting period ”.

(6)In subsection (3B) for—

(a)“person”, in both places where it occurs,

(b)“year of assessment”, in both places where it occurs,

(c)“years of assessment”,

(d)“each year”,

(e)“his”, in both places where it occurs, and

(f)“that year”, wherever it occurs in paragraph (a) and (b),

substitute “ company ”, “ accounting period ”, “ accounting periods ”, “ each accounting period ”, “ its ” and “ that accounting period ” respectively.

(7)In subsection (4) for “person”, “any year” and “that year” substitute “ company ”, “ any accounting period ” and “ that accounting period ” respectively.

(8)In subsection (5) for—

(a)“person”, in both places where it occurs, and

(b)“year of assessment”,

substitute “ company ” and “ accounting period ” respectively.

(9)In subsection (6)—

(a)for “person” substitute “ company ”,

(b)for “year” substitute “ accounting period ”, and

(c)omit the words from “and shall” to the end of the subsection.

(10)In subsection (7) for—

(a)“person”,

(b)“income tax for any year”,

(c)“that year”, and

(d)“him”, in both places where it occurs,

substitute “ company ”, “ corporation tax for any accounting period ”, “ the relevant year of assessment ” and “ it ” respectively.

(11)In subsection (8) omit the words from the beginning to “this section”.

(12)After subsection (8) insert—

“(9)In subsection (7) “the relevant year of assessment”, in relation to an amount deemed to have been paid to a company as income for an accounting period by virtue of this section, means the year of assessment for which the amount would have been deemed to have been paid as income if references in subsections (3) to (6) to accounting periods were references to years of assessment.”

286(1)Amend section 697 (supplementary provisions as to absolute interests in residue) as follows.U.K.

(2)In subsection (2)—

(a)for “person”, in both places, substitute “ company ”, and

(b)for “his”, in both places where it occurs, substitute “ its ”.

(3)In subsection (4), omit the words from “, and the residuary income” to the end of the subsection.

(4)After that subsection insert—

“(5)If the amount resulting from the computation mentioned in subsection (4) is greater than the total amount of the reduction which can be made under subsection (2), the share of the residuary income of the estate of the last previous holder of the interest for the last year in which that person had that interest is to be reduced, and so on.”

287(1)Amend section 698 (special provisions as to certain interests in residue) as follows.U.K.

(2)In subsection (1B)(c)(ii) for “year of assessment” substitute “ accounting period ”.

(3)In subsection (2)(b) for “year” substitute “ accounting period ”.

(4)In subsection (3)—

(a)for “all tax” substitute “ corporation tax ”, and

(b)for “year of assessment” substitute “ accounting period ”.

(5)After subsection (3) insert—

“(4)Subsection (5) applies in any case where—

(a)successively during the administration period there are different persons with absolute interests in the residue of the estate of a deceased person, or in parts of such a residue, and

(b)some, but not all are companies liable to corporation tax in respect of income within this Part.

(5)References in this section—

(a)to sums deemed to be paid as income for an accounting period to a person who is not such a company,

(b)to the residuary income for any accounting period of such a person, or

(c)to amounts deemed to be paid to such a person as income,

are references to sums that would be so deemed, to the income that would be such residuary income or, as the case may be, to the amounts that would be so deemed if the assumptions in subsection (6) were made.

(6)The assumptions are—

(a)that each of the persons who is not a company liable to corporation tax in respect of income within this Part is such a company, and

(b)that in the case of each person who is not a company, the person's accounting periods correspond with years of assessment.”

288U.K.F64. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

289U.K.Omit section 699 (relief from higher rate tax for inheritance tax on accrued income).

290(1)Amend section 699A (untaxed sums comprised in the income of the estate) as follows.U.K.

(2)In subsection (1)(a) for “sections 249(5), 421(2) and 547(1)(c)” substitute “ paragraphs (c) to (e) of section 701(8) below ”.

(3)In subsection (1A)—

(a)in paragraph (a) for “Schedule F” substitute “ Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.) ”, and

(b)omit paragraph (b) and the word “or” immediately preceding it.

(4)In subsection (4)—

(a)in paragraph (a) for “section 249(5) or 421(2), at the Schedule F” substitute “ section 701(8)(c) or (d), at the dividend ”,

(b)in paragraph (b) for “section 547(1)(c)” substitute “ section 701(8)(e) ”, and

(c)in paragraph (c) for “Schedule F” substitute “ dividend ”.

(5)Omit subsection (6).

291(1)Amend section 700 (adjustments and information) as follows.U.K.

(2)In subsection (1)—

(a)for “person” substitute “ company ”,

(b)for “year of assessment” substitute “ accounting period ”,

(c)for “him”, wherever it occurs, substitute “ it ”,

(d)for “that year”, wherever it occurs, substitute “ that accounting period ”,

(e)for “tax” substitute “ corporation tax ”, and

(f)for “he” substitute “ it ”.

(3)In subsection (2)—

(a)for “person”, in both places where it occurs, substitute “ company ”,

(b)for “year of assessment” substitute “ accounting period ”,

(c)for “him”, wherever it occurs, substitute “ it ”,

(d)for “that year”, wherever it occurs, substitute “ that accounting period ”, and

(e)for “tax” substitute “ corporation tax ”.

(4)In subsection (3) for “year of assessment” substitute “ accounting period ”.

(5)In subsection (4) after “this Part” insert “ or Chapter 6 of Part 5 of ITTOIA 2005 ”.

(6)In subsection (5)—

(a)in paragraph (a) for “a year of assessment” substitute “ an accounting period ”,

(b)omit “and” at the end of paragraph (a),

(c)after paragraph (a) insert—

“(aa)the amount treated as estate income under Chapter 6 of Part 5 of ITTOIA 2005 in respect of that interest or the exercise of that discretion for which he is liable to income tax for a year of assessment, and”,

(d)in paragraph (b) after “paragraph (a)” insert “ or (aa) ”,

(e)for “any year of assessment” substitute “ any accounting period under this Part or treated as estate income under that Chapter ”,

(f)after “the purposes of this Part” insert “ or that Chapter ”, and

(g)for “paragraphs (a) and (b)” substitute “ paragraphs (a) to (b) ”.

292(1)Amend section 701 (interpretation) as follows.U.K.

(2)In subsection (3A) for “Schedule F”, wherever it occurs, substitute “ dividend ”.

(3)In subsection (8)—

(a)omit “and” at the end of paragraph (a),

(b)after paragraph (b) insert—

“(c)any amount of income treated as arising to the personal representatives under section 410(4) of ITTOIA 2005 (stock dividends) that would be charged to income tax under Chapter 5 of Part 4 of that Act if income arising to personal representatives were so charged (see section 413 of that Act);

(d)in a case where section 419(2) of that Act applies (release of loans to participator in close company: debts due from personal representatives), the amount that would be charged to income tax under Chapter 6 of Part 4 apart from that section; and

(e)any amount that would have been treated as income of the personal representatives as such under section 466 of that Act if the condition in section 466(2) had been met (gains from contracts for life insurance);”, and

(c)omit the second sentence.

(4)In subsection (9) after “year of assessment” insert “ or accounting period ”.

(5)In subsection (10) after “year of assessment” insert “ or accounting period ”.

293U.K.F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

294U.K.F66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

295U.K.F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .