Finance Act 2009

Section 29

SCHEDULE 10 Sale of lessor companies etc: reforms

Introduction

1 Schedule 10 to FA 2006 (sale etc of lessor companies etc) is amended as follows.

Paragraph 7

2 (1) Paragraph 7 (provision for purposes of condition A in paragraph 6) is amended as follows.

(2) In sub-paragraph (8)(b), for “acquires any plant or machinery directly or indirectly from a person who is connected with the company” substitute “acquired any plant or machinery in circumstances in which this paragraph applies”.

(3) For sub-paragraph (9) substitute—

“(9) Paragraph (b) of sub-paragraph (8) above applies if—

(a) the relevant day falls on or after 22 March 2006,

(b) the plant or machinery was acquired directly or indirectly from a person who was connected with the company when the acquisition took place, and

(c) either the acquisition took place on or after 5 December 2005 or the person from whom the plant or machinery was so acquired was also connected with the company on that date.”

Paragraph 13A

3 After paragraph 13 insert—

“No qualifying change of ownership where principal company’s interest in consortium company unchanged

13A (1) This paragraph applies if—

(a) a company (“company A”) is owned by a consortium, and

(b) a relevant change in the relationship between company A and a principal company of company A occurs on any day,

but the principal company’s interest in company A remains unchanged.

(2) For the purposes of this Schedule, there is no qualifying change of ownership in relation to company A on that day as a result of that change in that relationship.

(3) For the purposes of this paragraph the principal company’s interest in company A remains unchanged if the percentage of the ordinary share capital of company A that is beneficially owned directly or indirectly by the principal company is the same at the beginning and end of that day.

(4) Section 838(2) and (4) to (10) of ICTA apply for construing sub-paragraph (3).”

Paragraph 17

4 (1) Paragraph 17 (meaning of “PM” in paragraph 16) is amended as follows.

(2) In sub-paragraph (7)(b), for “acquires any plant or machinery directly or indirectly from a person who is connected with the company” substitute “acquired any plant or machinery in circumstances in which this paragraph applies”.

(3) For sub-paragraph (8) substitute—

“(8) Paragraph (b) of sub-paragraph (7) above applies if—

(a) the relevant day falls on or after 22 March 2006,

(b) the plant or machinery was acquired directly or indirectly from a person who was connected with the company when the acquisition took place, and

(c) either the acquisition took place on or after 5 December 2005 or the person from whom the plant or machinery was so acquired was also connected with the company on that date.”

Paragraph 23

5 In paragraph 23 (leasing business carried on by company in partnership: change in company’s interest in business), for sub-paragraph (6) substitute—

“(6) This paragraph is subject to paragraph 23A and is supplemented by paragraph 24.”

Paragraph 23A

6 After that paragraph insert—

“23A (1) Paragraph 23 does not apply where conditions A, B and C are met.

(2) Condition A is that at the end of the relevant day none of the companies by which the business was carried on any longer have any share in the profits or loss of the business.

(3) Condition B is that, in consequence of what happens on the relevant day, the disposal value of all of the plant and machinery which was used for the purposes of the business and in respect of which capital allowances have been claimed is to be brought into account under section 61 of CAA 2001.

(4) Condition C is that the disposal value to be brought into account in relation to all of the plant or machinery is the price which the plant or machinery would fetch in the open market on that day.”

Paragraph 32

7 (1) Paragraph 32 (leasing business carried on by a company in partnership: amount of expense) is amended as follows.

(2) In sub-paragraph (1)—

(a) in sub-paragraph (c), for “increases at any time on” substitute “is greater at the end of that day than at the start of”, and

(b) in sub-paragraph (d), omit “at that time” (in both places).

(3) For sub-paragraph (3) substitute—

“(3) The appropriate percentage is—

where—

• OCI is the increase in the other company’s percentage share in the profits or losses of the business which is wholly attributable to the change in the partner company’s interest in the business, and

• PCD is the decrease in the partner company’s percentage share in the profits or losses of the business.”

Paragraph 39

8 (1) Paragraph 39 (relief for expense otherwise giving rise to carried forward loss) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (c), insert at the end “or a later accounting period,”,

(b) in paragraph (d), after “company” insert “after the accounting period in which the loss is made”, and

(c) in paragraph (e), for “12 months beginning with” substitute “5 years beginning immediately after”.

(3) In subsection (1A)—

(a) in paragraph (b), for “, and” substitute “or a later accounting period,”,

(b) in paragraph (c), after “company” insert “after the accounting period in which the loss is made”, and

(c) after that paragraph insert “and

(d) the subsequent accounting period starts within the period of 5 years beginning with the day that is the relevant day within the meaning of paragraph 23(1) and does not start as a result of paragraph 3 or 33.”

(4) In sub-paragraph (2)—

(a) after “33” insert “or this sub-paragraph”, and

(b) for “an expense” substitute “giving rise to an expense of the relevant amount”.

(5) After that sub-paragraph insert—

“(2A) The relevant amount is the amount of the loss treated as an expense increased by—

where—

• D is the number of days in the accounting period in which the loss is made, and

• R is the percentage rate applicable to section 826 of ICTA under section 178 of FA 1989.”

(6) In sub-paragraph (3), after “The” insert “amount of the”.

(7) In sub-paragraph (4)—

(a) after “33” insert “or this paragraph”, and

(b) for “the expense under that paragraph” substitute “that expense”.

Commencement

9 (1) The amendments made by paragraph 8 have effect in relation to losses incurred in accounting periods ending on or after 22 April 2009.

(2) The other amendments made by this Schedule have effect where the relevant day is on or after that date.