Details of the Section
Amendment to Section 156ZB TCGA 1992
2.Subsection (1) amends subsection (1) of section 156ZB of the Taxation of Chargeable Gains Act 1992 (TCGA) to restrict its application to subsection (2) so that subsection (3) operates independently. This amendment prevents capital gains rollover relief claims where the disposal proceeds are applied on the acquisition of new chargeable intangible assets within Part 8 of the Corporation Tax Act 2009 (CTA 2009).
New section 870A CTA 2009
3.Subsection (2) inserts new section 870A into Part 8 CTA 2009.
4.Subsection (1) of new section 870A explains when subsection (2) applies. It provides that subsection (2) applies whenever a claim to capital gains rollover relief is made in the circumstances where the proceeds are applied in acquiring an intangible fixed asset within Part 8 CTA 2009.
5.Subsection (2) of new section 870A provides for a reduction in the tax cost of the asset under Part 8 CTA 2009 by the amount of the capital gains rollover relief claim. This ensures that any future debits and credits under Part 8 CTA 2009 reflect the capital gains rollover relief given, preventing relief being given twice. The reduction to tax cost is made on 19 March 2014.
6.Subsection (3) of new section 870A restricts the adjustment in subsection (2) so that the asset cannot have a negative written down value.
7.Subsection (4) of new section 870A ensures that the reduction in subsection (2) is also applied when calculating the tax written-down value of the asset in subsequent accounting periods.
Commencement
8.Subsection (3) provides the effective date for the amendment to section 156ZB TCGA is 19 March 2014 for all claims under section 152 or 153 TCGA.
9.Subsection (4) provides the effective date for new section 870A CTA 2009 is accounting periods beginning on or after 19 March 2014.
10.Subsection (5) provides that an accounting period straddling 19 March 2014 is treated as two separate accounting periods. The consequence of subsections (4) and (5) is that where new section 870A CTA 2009 applies, an accounting period will always commence on 19 April 2014 and the tax cost of the asset will be adjusted to reflect a claim made under section 152 or 153 TCGA on the first day of that accounting period.
