Finance Act 2013

Relevant finance leases etc U.K.

1 U.K. Part 9A of TIOPA 2010 (controlled foreign companies) is amended as follows.

2 U.K. Chapter 5 (the CFC charge gateway: non-trading finance profits) is amended as follows.

3 U.K. In section 371ED (arrangements in lieu of dividends) in subsection (1) omit “(other than a relevant finance lease)”.

4 (1) Section 371EE (leases to UK resident companies etc) is amended as follows. U.K.

(2) In subsection (2)(b)(i) for “which is the subject of the lease” substitute “ (“the relevant asset”) which is the subject of the lease or making (directly or indirectly) an arrangement which would fall within subsection (3) ”.

(3) After subsection (2) insert—

“(3) An arrangement would fall within this subsection if—

(a) the arrangement would meet one or both of the following requirements—

(i) it would not be a relevant finance lease;

(ii) it would not involve the CFC, and

(b) under the arrangement the other company would (directly or indirectly) purchase rights to use the relevant asset.”

5 U.K. Chapter 22 (supplementary provision) is amended as follows.

6 U.K. In section 371VA (definitions) for the definition of “relevant finance lease” substitute—

““relevant finance lease” is to be read in accordance with section 371VIA,”.

7 (1) Section 371VG (finance profits) is amended as follows. U.K.

(2) In subsection (1) for paragraph (b) substitute—

“(b) which are included in the CFC's assumed total profits for the accounting period in question and which—

(i) arise from a relevant finance lease, but

(ii) are not trading profits.”

(3) In subsection (4)(b) omit “an arrangement which would be”.

8 (1) Section 371VH (interests in companies) is amended as follows. U.K.

(2) In subsection (9) omit the second sentence.

(3) After subsection (10) insert—

“(10A) For the purposes of subsection (9), if for any relevant period accounts for a loan creditor are not prepared in accordance with international accounting standards or UK generally accepted accounting practice, any question relating to generally accepted accounting practice is to be determined in relation to the loan creditor for that period by reference to generally accepted accounting practice in relation to accounts prepared in accordance with international accounting standards.”

9 U.K. After section 371VI insert—

“371VIA Relevant finance leases

(1) In this Part “relevant finance lease” means an arrangement falling within subsection (2) or (3).

(An arrangement which is a loan relationship of any company does not fall within either of those subsections.)

(2) An arrangement falls within this subsection if—

(a) it provides for an asset to be leased or otherwise made available by a person (“the lessor”) to another person, and

(b) in accordance with generally accepted accounting practice, it falls (or would fall) to be treated in the accounts of the lessor, or of a person connected with the lessor, as a finance lease or a loan.

(3) A hire-purchase, conditional sale or other arrangement relating to an asset falls within this subsection if it does not fall within subsection (2) but is of a similar character to an arrangement which would fall within that subsection.

(4) If for any relevant period accounts for a person are not prepared in accordance with international accounting standards or UK generally accepted accounting practice, any question relating to generally accepted accounting practice is to be determined for the purposes of this section in relation to that person for that period by reference to generally accepted accounting practice in relation to accounts prepared in accordance with international accounting standards.

(5) In this section “accounts”, in relation to a company, includes accounts relating to two or more companies of which that company is one.”