SCHEDULES
SCHEDULE 7Transfer schemes: tax
Overview
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This Schedule makes provision about the fiscal effect of transfers under schemes made under sections 51 and 65.
Key concepts
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1
In this Schedule—
a
“transfer scheme” means a scheme under section 51 or 65, and
b
“transfer” means a transfer under a transfer scheme.
2
In this Schedule “transfer between bodies” means a transfer—
a
from the Urban Regeneration Agency, the Commission for the New Towns or the Housing Corporation, and
b
to the HCA or the Regulator of Social Housing.
3
In this Schedule “transfer to government” means a transfer to—
a
a Minister of the Crown, or
b
the Welsh Ministers.
Other definitions
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1
In this Schedule—
a
ICTA means the Income and Corporation Taxes Act 1988 (c. 1),
b
TCGA means the Taxation of Chargeable Gains Act 1992 (c. 12),
c
FA 1996 means the Finance Act 1996 (c. 8),
d
FA 2002 means the Finance Act 2002 (c. 23), and
e
HMRC means the Commissioners for Her Majesty's Revenue and Customs.
2
In this Schedule a reference to a trade includes a reference to part of a trade.
Corporation tax: continuity of trade
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1
This paragraph applies if as the result of a transfer scheme—
a
a transferor ceases a trade, and
b
a transferee commences it.
2
In connection with the computation of profits and losses for the purpose of corporation tax in respect of periods wholly or partly after the commencement of the transfer scheme—
a
the transferee shall be treated as having always carried on the trade, and
b
the trade shall be considered separately from any other trade of the transferee (with any necessary apportionment being made).
Corporation tax: capital allowances
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1
This paragraph applies in respect of property transferred under a transfer scheme from—
a
the Urban Regeneration Agency, or
b
the Commission for the New Towns.
2
Where the property was used by the transferor, and is to be used by the transferee, in connection with a trade, section 343(2) of ICTA (company reconstructions: capital allowances) shall apply.
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The following transfers shall be treated as giving rise to neither allowance nor charge for the purposes of capital allowances in respect of a trade (and allowances shall be calculated as if the transferee had always carried on the trade)—
a
a transfer from the Housing Corporation, and
b
a transfer to government.
Corporation tax: capital gains
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1
This paragraph applies in respect of property transferred under a transfer scheme from—
a
the Urban Regeneration Agency,
b
the Commission for the New Towns, or
c
the Housing Corporation.
2
Section 17 of TCGA (disposals and acquisitions treated as at market value) shall not apply.
3
For the purposes of TCGA the transfer (in relation to the transferor and the transferee) is to be taken as being a disposal for a consideration such that neither gain nor loss accrues.
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A transfer shall be disregarded for the purposes of section 30 of TCGA (value-shifting: tax-free benefits).
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Corporation tax: intangible assets
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1
This paragraph applies for the purposes of Schedule 29 to FA 2002 (intangible assets).
2
Expressions used in this paragraph have the same meaning as in that Schedule.
3
A transfer between bodies of a chargeable intangible asset is a tax-neutral transfer.
4
An intangible fixed asset which is an existing asset of the transferor at the time of a transfer between bodies is to be treated, on and after the transfer, as an existing asset of the transferee.
5
A transfer to government of a chargeable intangible asset is to be treated as not involving a realisation of the asset by the transferor.
Corporation tax: loan relationships
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1
If as a result of a transfer the transferee replaces the transferor as a party to a loan relationship, paragraph 12(2) of Schedule 9 to FA 1996 (transfer within group: continuity of treatment) shall apply (whether or not the transferor and transferee are bodies corporate).
2
Expressions used in this paragraph have the same meaning as in that Schedule.
Stamp duty
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1
Stamp duty shall not be chargeable on a transfer scheme.
2
Stamp duty shall not be chargeable on a document certified by HMRC as connected with a transfer scheme.
3
A document which is not chargeable by virtue of this paragraph must be stamped in accordance with section 12 of the Stamp Act 1891 (c. 39) with a stamp denoting that it is not chargeable.