1906.This Part contains rules for special types of company etc.
1907.Chapter 1 is about corporate beneficiaries under trusts.
1908.Chapter 2 is about authorised investment funds.
1909.Chapter 3 is about unauthorised unit trusts.
1910.Chapter 4 is about securitisation companies.
1911.Chapter 5 is about companies in liquidation or administration.
1912.Chapter 6 is about banks in compulsory liquidation.
1913.Chapter 7 is about co-operative housing associations.
1914.Chapter 8 is about self-build societies.
1915.Chapter 9 is about community amateur sports clubs.
1916.This Chapter contains rules that apply to the income of corporate beneficiaries of settlements. The first section concerns payments made at the discretion of the trustees. The second section concerns cases where the beneficiary is entitled to a share of the settlement income as it arises (often described as having an “interest in possession”).
1917.This section provides that discretionary payments by trustees to which sections 494 and 495 of ITA apply are ignored in calculating the beneficiary’s liability to corporation tax. It is based on section 687A of ICTA.
1918.Under subsection (2), this provision does not apply to payments made to charitable and similar bodies. These bodies have their own rules (see Part 11).
1919.The word “profits” in section 687A of ICTA does not have a defined meaning: the interpretation in section 6(4)(a) of ICTA does not apply to this section. Subsections (3) and (4) of this section refer to the “income” of the company for corporation tax purposes instead as this fits with the charge to corporation tax on income (see for example section 4(3) of this Act) and with Chapter 7 of Part 9 of ITA (discretionary payments).
1920.Under subsection (3)(b), the payments are income for corporation tax purposes under section 493 of ITA but are ignored for the purpose of determining the income that is chargeable to corporation tax.
1921.The beneficiary is treated under section 494 of ITA as having paid income tax on the grossed-up amount of the discretionary payment and the trustees are liable for that tax under section 496 of ITA. But subsection (3)(a) provides that the tax is not available for set-off against corporation tax or any other income tax for which the beneficiary has to account and subsection (3)(c) provides that the deemed income tax is not repaid to the company.
1922.This section applies the rules in sections 500 and 503 of ITA. It is based on section 698B of ICTA. These provisions are concerned with the treatment of trustees’ expenses in a case where the beneficiary is entitled to trust income as it arises. This is where the beneficiary has an interest in possession (IIP).
1923.It is very rare for a company to be an IIP beneficiary of a trust so this is a case where it seems preferable to have this section read across to, rather than duplicate, the income tax provisions.
1924.Much of the content of sections 500 and 503 ITA was new as there was very little statutory guidance about how trustees’ expenses affect the measure of a beneficiary’s income. The principles were mainly derived from trust and tax law, but are well understood and are the subject of guidance issued by HMRC. See Change 45in Annex 1.
1925.This Chapter rewrites sections 468, 468A and 469A of ICTA and provides rules about authorised investment funds.
1926.The term “authorised investment funds” is not defined in this Chapter because it is not used in the body of the sections. But it is defined in other legislation and is commonly understood to refer to both open-ended investment companies (OEICs) and authorised unit trusts (AUTs). The Chapter also provides rules about court investment funds, which are treated as AUTs.
1927.This section provides an overview of what is in the Chapter. It is new.
1928.This section sets out the definition of an “open-ended investment company” (an OEIC). It is based on section 468A(2) of ICTA.
1929.This section, which is based on section 468A(1) of ICTA, provides that the rate of corporation tax applicable to an OEIC is the income tax basic rate (see section 6 of ITA).
1930.This section sets out the definition of “umbrella company” and how such a company is treated. It is based on section 468A(3) and (4) of ICTA.
1931.An umbrella company is an OEIC whose investments are pooled separately in sub-funds which may have different investment objectives. As in section 235 of FISMA, this practice is referred to in this section in terms of separate pooling and separate parts. References in the section to a part of an umbrella company are to a separate pool (subsection (2)).
1932.Each separate part of an umbrella company is treated as a separate OEIC while the umbrella company as a whole is not treated as an OEIC. This mirrors the provision made for umbrella schemes by section 619.
1933.This section defines these terms for the purposes of the Chapter. It is based on section 468(6) of ICTA.
1934.This section provides that the Tax Acts have effect as if the trustees of an AUT were a UK resident company, and as if the rights of the unit holders were shares in the company. It is based on section 468(1) and (3) of ICTA.
1935.Detailed rules for the taxation of both an AUT as an institution, and unit holders as investors, are set out in the Authorised Investment Funds (Tax) Regulations 2006 (SI 2006/964).
1936.Subsection (3) makes it clear that the treatment in subsection (1)(b) does not affect the rules which enable an AUT to make distributions which are interest distributions to unit holders. The term “interest distribution” is currently defined in regulation 18(3) of SI 2006/964.
1937.This section states that a special rate of corporation tax is applicable to AUTs. It is based on section 468(1A) of ICTA.
1938.The applicable rate is the income tax basic rate (see section 6 of ITA).
1939.This section sets out the definition of an “umbrella scheme” and how such a scheme is treated. It is based on section 468(7), (8) and (9) of ICTA.
1940.An umbrella scheme is a fund which is divided into sub-funds which may have different investment objectives. As in section 235 of FISMA, this practice is referred to in this section in terms of separate pooling and separate parts. References in the section to a part of an umbrella scheme are to the pooling arrangements that relate to a separate pool.
1941.Each separate part of an umbrella scheme is treated as a separate AUT while the umbrella scheme as a whole is not treated as an AUT. This mirrors the provision made for umbrella companies by section 615.
1942.This section sets out the treatment of court investment funds. It is based on section 469A of ICTA.
1943.In section 469A of ICTA the fund is described as a court common investment fund but for capital gains tax purposes (see section 100(3) of TCGA) the same kind of account is named a court investment fund. We have changed the term to be consistent with the simpler and clearer description in TCGA.
1944.A court investment fund is defined in subsection (1) as a fund set up under section 42 of the Administration of Justice Act 1982.
1945.The effect of the section is that the Tax Acts apply to a court investment fund as if it were an AUT (with the investment manager of the fund in the role of trustee) and as if the persons with qualifying interests in the fund (see the table insubsection (3)) were unit holders in the AUT.
1946.This Chapter contains special rules relating to the income and capital expenditure of unit trusts. It is based on section 469 of ICTA. The corresponding income tax provisions are in Chapter 9 of Part 9 of ITA.
1947.This section is based on sections 469(1) and (2) of ICTA. The corresponding rule for income tax is in section 504 of ITA.
1948.Subsection (2) provides that for the purposes of the Corporation Tax Acts income arising to the trustees is treated as their income and not as the income of the unit holders.
1949.This section is based on sections 469(1) and (2) of ICTA. The corresponding rule for income tax is in section 504A of ITA, as inserted by the Income Tax Act 2007 (Amendment) Order 2009 (SI 2009/23).
1950.The effect of this special rule is that all allowances and charges under rules relating to capital expenditure are enjoyed or suffered by the trustees and not the unit holders.
1951.This Chapter deals with securitisation companies. It is based on section 84 of FA 2005.
1952.Section 84 of FA 2005 consisted primarily of a Treasury power to determine how the Corporation Tax Acts were to apply to securitisation companies. It also contained a Treasury power to refine, for the purposes of those regulations, the basic section 84 definition of a securitisation company .
1953.The rewritten sections separate the two regulation making powers. The power to refine the definition of a securitisation company is in subsection (2)(b) of section 623. The power to make regulations governing the taxation of securitisation companies comprises the whole of section 624.
1954.Section 83 of FA 2005 also deals with securitisation companies although the definition of “securitisation companies” for the purposes of section 83 is not the same as that for section 84. Section 83 governs the application of accounting standards to certain securitisation companies for periods of account beginning on or after 1January2005 and ending before 1January 2008. That period has,however, now been extended, (in accordance with the power in subsection (7A)) by the Securitisation Companies (Application of section 83(1) of the Finance Act 2005: Accounting Standards) Regulations 2007(SI 2007/3338), to 1 January 2017 in a limited number of cases. As section 83 has a finite life and a limited application it is not rewritten.
1955.This section provides a definition of “securitisation company”. It is based on section 84(2) and (6) of FA 2005.
1956.Subsections (3) to (5) set out the conditions that must be met if a company is to be a “securitisation company”. Subsection (2) includes the proviso that in addition to meeting the conditions in subsections (3) to (5) the company must also meet any conditions set out in regulations. Such conditions are in regulation 4 of the Taxation of Securitisation Companies Regulations 2006 (SI 2006/3296).
1957.This section sets out how the Treasury may make regulations governing the taxation of securitisation companies. It is based on section 84(1), (3) and (6) of FA 2005.
1958.This section contains provisions that supplement the regulation-making powers conferred by sections 623 and 624. It is based on section 84(4) and (5) of FA 2005.
1959.This Chapter deals with the taxation of companies in liquidation or administration. It is based on sections 342 and 342A of ICTA.
1960.The rules governing the accounting periods of such companies are in Chapter2 of Part 2 of CTA 2009.
1961.This section defines a number of the terms used in the Chapter. It is based on sections 6(4), 342(1) and 342A(1) of ICTA.
1962.This section defines “rate of corporation tax” for companies with small profits subject to this Chapter. It is based on section 342(2) and (3) and section 342A(2) and (3) of ICTA.
1963.This section sets out the corporation tax rates that are to be applied in the final or penultimate year of the liquidation period of a company that is being wound up. It is based on section 342(2), (3) and (8) of ICTA.
1964.If the rates of corporation tax have been either fixed or proposed for the final year or the penultimate year then the proposed or fixed rates are to be used. Accordingly in the vast majority of cases the normal corporation tax rates apply.
1965.Corporation tax rates are generally proposed in the PBR (Pre-Budget Report). The PBR takes place in autumn. The PBR in the autumn of Financial Year 1 proposes corporation tax rates for Financial Year 3. The same PBR proposes the rate of corporation tax for companies with small profits and fractions for Financial Year 2. The associated Finance Act usually becomes law in July of Financial Year 2. The corporation tax rates for Financial Year 3 become fixed in Financial Year 2 and the rate for companies with small profits and fractions for Financial Year 2 also become fixed in Financial Year 2.
1966.The section assists liquidators seeking to finalise a company’s liability in advance of a formal winding up by setting out the rates to be used even in those rare cases where corporation tax rates have not been fixed at the time when a liquidator wishes to make an assessment to tax.
1967.This section enables a liquidator to make a corporation tax self-assessment for an accounting period that has not finished. It is based on section 342(4), (5) and (6) of ICTA.
1968.In normal circumstances it is not possible to make a corporation tax self-assessment before the end of an accounting period. In the majority of instances the profits for the period are not known in advance and the relevant corporation tax rates may not have been fixed.
1969.Liquidators may seek to finalise a company’s liability to corporation tax in advance of the completion of a formal winding up. This section enables the liquidator to do so by making a corporation tax self-assessment before the end of an accounting period.
1970.The rules about accounting periods for companies being wound up are in section 12 of CTA 2009 (see in particular subsection (3)).
1971.This section sets out the corporation tax rates that are to be applied in the final year and the penultimate year of an administration period that concludes with the company’s dissolution. It is based on section 342A(2), (3) and (10) of ICTA.
1972.If the rates of corporation tax have been either fixed or proposed for the final year or the penultimate year then the proposed or fixed rates are to be used. Accordingly in the vast majority of cases the normal corporation tax rates apply.
1973.The section assists administrators seeking to finalise a company’s liability in advance of an anticipated dissolution date by setting out the rates to be used even in those rare cases where corporation tax rates have not been fixed at the time when the administrator wishes to make an assessment to tax.
1974.This section enables an administrator to make a corporation tax self-assessment for an accounting period that has not finished. It is based on section 342A(6), (7) and (8) of ICTA.
1975.In normal circumstances it is not possible to make a corporation tax self-assessment before the end of an accounting period. In the majority of instances the profits for the period are not known in advance and the relevant corporation tax rates may not have been fixed.
1976.Administrators may seek to finalise a company’s liability to corporation tax in advance of an anticipated dissolution date. This section enables the administrator to do so by making a corporation tax self-assessment before the end of an accounting period.
1977.The rules about determining the end of an accounting period are in section 10 of CTA 2009 (see particularly subsection (3)).
1978.This section defines terms used in the previous sections. It is based on section 342(7) and 342A(9) of ICTA.
1979.This section provides a limited exemption for interest on overpaid tax received or paid in the final accounting period. It is based on sections 342(3A) and 342A(4), (5) of ICTA.
1980.The rules about accounting periods for companies being wound up are in section 12 of CTA 2009 (see in particular subsection (4)).
1981.This Chapter deals with the taxation of banks in compulsory liquidation. It is based on Schedule 12 to F(No 2)A 1992.
1982.This section gives an overview of the Chapter. It is new.
1983.This section sets out the conditions that a company must meet in order for the Chapter to apply. It is based on paragraph 1 of Schedule 12 to F(No 2)A 1992.
1984.Subsection (6) refers to an EEA firm with permission under paragraph 15 of Schedule 3 to FISMA. The source qualified this by adding “(as a result of qualifying for authorisation by virtue of paragraph 12 of that Schedule)”. This qualification is considered unnecessary as the only way in which permission under paragraph 15 may be given is by virtue of paragraph 12. These words are therefore repealed without replacement.
1985.This section charges amounts received during the winding up period. It is based on paragraph 3(1), (1A), (2) and (3) of Schedule 12 to F(No 2)A 1992.
1986.This section charges sums received in respect of transfers of rights as if those sums were winding up receipts. It is based on paragraph 5 of Schedule 12 to F(No 2)A1992.
1987.In the case of a non-arm’s length transaction the source provided that market value was to be substituted for the consideration received. However, the tax charge was based on amounts received. In relation to the deemed amounts arising from non-arm’s length transactions the source,therefore, stated that “references … to sums received shall be construed accordingly.”
1988.Although the meaning was not in doubt the source was not as clear as it might have been. In the rewritten section a slightly different approach is adopted by explicitly treating the value of transferred rights as winding up receipts.
1989.This section provides rules for setting allowable deductions against winding up receipts. It is based on paragraph 4 of Schedule 12 to F(No 2)A 1992.
1990.This section gives a company the right to elect to carry back a winding up receipt to the date that the business ceased. It is based on paragraph 6 of Schedule 12 to F(No 2)A 1992.
1991.This section gives priority to a charge under this Chapter over potential charges arising under other provisions. It is based on paragraph 3(4) and (5) of Schedule 12 to F(No 2)A 1992.
1992.This section sets out a number of definitions and interpretations relevant to the Chapter. It is based on paragraph 2 of Schedule 12 to F(No 2)A 1992.
1993.This Chapter rewrites section 488 of ICTA. It provides tax rules forco-operative housing associations and an approvals process that underpins those rules. The approvals process has been modified significantly for Scotland and Wales as a result of devolution. The rewritten legislation incorporates these effects.
1994.This sectionprovides that, where an approved housing association makes a claim, any rent that it receives from its members is ignored for tax purposes and any interest that it pays is treated by the association as not payable. It is based on section 488(1) and (2) of ICTA.
1995.The source legislation is based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings the disregard of rent and interest into line with the chargeable gains exemption in section 643. See Change 46 in Annex 1.
1996.This section exempts an approved housing association from corporation tax on gains on sales of property to its members. It is based on section 488(5) of ICTA.
1997.This section sets out the process by which housing associations are approved for the purposes of this Chapter. It is based on section 488(6) and (7) of ICTA.
1998.Since section 488 of ICTA was enacted, a number of changes to the approvals regime have been made as a result of devolution.
1999.Specified functions have been transferred:
to the Scottish Ministers by the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc) Order 2004 (SI 2004/2030), articles2(1) and 3; and
to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act2006,paragraphs 30(1) and (2) of Schedule 11.
2000.The effects of these modifications are included explicitly in this Chapter.
2001.In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development, the approvals process for Northern Ireland refers to the Department for Social Development instead of the Head of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.
2002.Subsection (4) provides a signpost to a saving provision in Schedule 2 concerning the concurrent exercise of these functions in relation to Wales by the Secretary of State and the Welsh Ministers where the association is a “cross-border body”.
2003.This section sets out the tests which housing associations have to satisfy in order to be approved for the purposes of this Chapter. It is based on section 488(6) of ICTA.
2004.As mentioned in relation to section 644, since section 488 of ICTA was enacted, a number of changes to the approvals regime have been made as a result of devolution.
2005.So far as exercisable in relation to Wales, the functions under section 488(6) have been transferred to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and(2) of Schedule 11.
2006.Article 5 of the Scotland Act 1988 (Transfer of Functions to the Scottish Ministers etc) Order 2004 (SI 2004/2030) amended section 488(6)(iii). The effect of the amendment on the approvals process for Northern Irelandis discussed inChange 47 in Annex 1.
2007.This section permits the Secretary of State’s functions under section 644 or 645 to be delegated to the Regulator of Social Housing. It is based on section 488(7A) of ICTA.
2008.The Housing and Regeneration Act 2008 established the Regulator of Social Housing in place of the Housing Corporation as the body responsible for regulating social housing in England. This section incorporates the prospective amendments made by paragraph 13 of Schedule 9 to the Housing and Regeneration Act 2008 which come into force from a day to be appointed by Order (section 325(1) of that Act). Until the Order is made this section is subject to the provisions for co-operative housing associations and self-build societies in Schedule 2.
2009.This section sets out the conditions that must be met for a claim under section 642 or 643 to be made. It is based on section 488(9), (10) and (11) of ICTA.
2010.Claims under the source legislation in relation to rent and interest are based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings those claims into line with the claim for the chargeable gains exemption in section 643. See Change 46 in Annex 1.
2011.This section sets out how adjustments to an association’s corporation tax liability may be made as a result of a claim or an amendment of a claim. It is based on section 488(4) and (11A) of ICTA.
2012.Adjustments under the source legislation as a result of claims in relation to rent and interest may be based on tax years or accounting periods, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. See Change 46 in Annex 1.
2013.This section sets out the power to make further provision by statutory instrument or, in Northern Ireland, by statutory rule. It is based on section 488(8) of ICTA.
2014.Powers to make regulations under this provision in relation to Wales were transferred to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and (2) of Schedule 11.
2015.In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development,the powers to make regulations under this provision for the purposes of housing associations in Northern Ireland refer to the Department for Social Development rather than the Head of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.
2016.This Chapter rewrites section 489 of ICTA. It provides tax rules for self-build societies and an approvals process that underpins those rules. The approvals process has been modified significantly for Wales as a result of devolution. The draft legislation incorporates these effects on the face of the legislation.
2017.This section sets out the meaning of “self-build society” for the purposes of the Chapter. It is based on section 489(11) of ICTA.
2018.This section sets out that where a self-build society is approved and makes a claim, any rent that it receives from its members is ignored for tax purposes. It is based on section 489(1) and (11) of ICTA.
2019.The source legislation is based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings the disregard for rent into line with the chargeable gains exemption in section 652. See Change 46 in Annex 1.
2020.This section exempts an approved society from corporation tax on chargeable gains on sales of property to its members. It is based on section 489(3) of ICTA.
2021.This section sets out the process by which self-build societies become approved for the purposes of this Chapter. It is based on section 489(4), (5) and (12) of ICTA.
2022.Approvals under this section for self-build societies in Wales have been transferred to the Welsh Ministers by article 2 of and Schedule 1 to the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), and paragraphs 30(1) and (2) of Schedule 11 to the Government of Wales Act 2006.The effects of these modifications are included explicitly in this Chapter.
2023.In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development, the approvals process for Northern Ireland refers to the Department for Social Development instead of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.
2024.Subsection (5) provides a signpost to a saving provision in Schedule 2 concerning the concurrent exercise of these functions in relation to Wales by the Secretary of State and the Welsh Ministers where the society is a “cross-border body”.
2025.This section permits the Secretary of State’s functions under section 653 to be delegated to the Regulator of Social Housing. It is based on section 489(5A) of ICTA.
2026.The Housing and Regeneration Act 2008 established the Regulator of Social Housing in place of the Housing Corporation as the body responsible for regulating social housing in England. This section incorporates the prospective amendments made by paragraph 14 of Schedule 9 to the Housing and Regeneration Act 2008 which come into force from a day to be appointed by Order (section 325(1) of that Act). Until the Order is made this section is subject to the provisions for co-operative housing associations and self-build societies in Schedule 2.
2027.This section sets out the conditions that must be met for a claim under section 651 or 652 to be made. It is based on section 489(7) to (10) of ICTA.
2028.Claims under the source legislation in relation to rent are based on tax years, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. Moving to this basis also brings those claims into line with the claim for the chargeable gains exemption in section 652. See Change 46 in Annex 1.
2029.This section sets out how adjustments to a society’s corporation tax liability may be made as a result of a claim or an amendment of a claim. It is based on section 489(2) and (9A) of ICTA.
2030.Adjustments under the source legislation as a result of claims in relation to rent may be based on tax years or accounting periods, but as these bodies are subject to corporation tax it is more appropriate to operate on the basis of accounting periods. See Change 46 in Annex 1.
2031.This section sets out the power to make further provision by statutory instrument or, in Northern Ireland, by statutory rule. It is based on section 489(6) and (12) of ICTA.
2032.Powers to make regulations under this provision for the purposes of self-build societies in Wales were transferred to the Welsh Ministers by the National Assembly for Wales (Transfer of Functions) Order 1999 (SI 1999/672), article 2 and Schedule 1 and by the Government of Wales Act 2006, paragraphs 30(1) and (2) of Schedule 11.
2033.In order to reflect changes in the responsibilities of the Department of the Environment and the Department for Social Development,powers to make regulations under this provision for the purposes of self-build societies in Northern Irelandrefer to the Department for Social Development instead of the Head of the Department of the Environment for Northern Ireland. See Change 47 in Annex 1.
2034.This Chapter provides for the registration of community amateur sports clubs (CASCs) and exemptions from tax of registered clubs. It is based on Schedule 18 to FA 2002.
2035.Paragraph 9 of that Schedule has not been rewritten in this Chapter.
2036.Paragraph 9(1) is merely a signpost to Chapter 2 of Part 8 of ITA (gift aid) which treats a registered club as a charity (see section 430 of ITA). Paragraph 9(1) is not rewritten as it is unnecessary.
2037.The remaining provisions of paragraph 9 are rewritten in this Act by amending the provisions of IHTA, TCGA and CAA to which they cross–refer. See Schedule 1.
2038.This section sets out the three qualifying conditions which must be met for a club to be entitled to be registered as a CASC and be able to obtain an exemption from tax on relevant income or gains. It is based on paragraphs 1, 11(1) to (3) and (5) and 15(2) of Schedule 18 to FA 2002.
2039.In subsections (2) to (4) there is a reference to “an officer of Revenue and Customs”. This is a change from the source legislation in Schedule 18 to FA 2002 where the reference is to “the Inland Revenue” which is a reference to “the Board” under paragraph 15(2) of Schedule 18 to FA 2002. See Change 5 in Annex 1.
2040.There is also a change in the words used in subsection (5). In this case the change is to replace a reference to “Inland Revenue” which is a reference to “the Board” under paragraph 15(2) in the source legislation witha reference to “Her Majesty’s Revenue and Customs” for the publication of the names and addresses of clubs.See Change 5 in Annex 1.
2041.This section defines the term “open to the whole community”, which is the first of the qualifying conditions for being a registered club. It is based on paragraph 2 of Schedule 18 to FA 2002.
2042.This section defines the term “organised on an amateur basis”, which is the second of the qualifying conditions for being a registered club. It is based on paragraph 3 of Schedule 18 to FA 2002.
2043.“Match officials” in subsection (4)(h) includes coaches.
2044.This section does not rewrite the requirement in paragraph 3 of Schedule 18 to FA 2002 for certain formalities to apply if a club member supplies goods or services to the club or is employed by the club. See Change 48 in Annex 1.
2045.This section sets out the definitions of “eligible sport”, “qualifying purposes”, “non-qualifying purposes” and “non-qualifying expenditure” specific to this Chapter. It is based on paragraphs 8(1) and (7), 14(1), and 16 of Schedule 18 to FA 2002.
2046.There is an additional definition for “non-qualifying expenditure” which is implicit in the source legislation but this is now made explicit in the rewritten legislation.
2047.This section omits the provision in paragraph 14(2) of Schedule 18 to FA 2002 that a Treasury order designating a sport as an “eligible sport” is subject to annulment in pursuance of a resolution of the House of Commons. That provision is unnecessary as this Act contains general provisions to the same effect in section 1171.
2048.This section provides for the trading income of a registered club to be exempt from tax if the relevant conditions are met. It is based on paragraph 4 of Schedule 18 to FA 2002.
2049.This section provides for the property income of a registered club to be exempt from tax if the relevant conditions are met. It is based on paragraph 6 of Schedule 18 to FA 2002.
2050.This section provides for the interest and gift aid income of a registered club to be exempt from tax if the relevant conditions are met. It is based on paragraph 5 of Schedule 18 to FA 2002.
2051.Subsection (2) provides that if a club is registered for only part of an accounting period, that part is treated as a separate accounting period and the club’s interest income for that separate period is proportionately reduced. This approach follows that of the source legislation.
2052.In subsection (3) thedefinition of “gift aid income” now relies on Chapter 2 of Part 8 of ITA rather than section 25(10) of FA 1990 (see paragraph 5(3)(b) of Schedule 18 to FA 2002). Paragraph 5(4) of that Schedule is not now necessary because section 430 of ITA itself includes CASCs within the definition of charities for the purposes of gift aid.
2053.This section provides for the chargeable gains of a registered club to be exempt from tax. It is based on paragraphs 7 and 16 of Schedule 18 to FA 2002.
2054.This section provides for exemptions to be restricted if the club incurs expenditure for non-qualifying purposes. It is based on paragraphs 8 and 16 of Schedule 18 to FA 2002.
2055.The reference to “income receipts” replaces the reference in paragraph 8 to “income (whether taxable or not and before deduction of expenses)”.
2056.Paragraph 8(5) of Schedule 18 to FA 2002 provides a formula to ascertain the relevant surplus amount of non-qualifying expenditure. This is unpacked and set out in narrative form.
2057.This section supplements section 666. It is based on paragraph 8(5) to (8) of Schedule 18 to FA 2002.
2058.This section provides that a club may specify or be required to specify how the exempted income and gains are to be reduced in accordance with section 666. It is based on paragraphs 8(9) and 15(1) of Schedule 18 to FA 2002.
2059.This section provides that the exemption for chargeable gains on assets is not available if the club ceases to be registered or to hold the asset for qualifying purposes. It is based on paragraphs 10 and 16 of Schedule 18 to FA 2002.
2060.Paragraph 10 of Schedule 18 to FA 2002 refers to “property” but TCGA refers to disposals of “assets”. Consequently, the section refers to disposals of “assets” for the purposes of TCGA rather than disposals of “property”.
2061.Subsections (5) and (6) separate and clarify the process for making assessments and the time limit for doing so. These are dealt with together in paragraph 10(3) of Schedule 18 to FA 2002.
2062.This section provides for the notification of the decision by HMRC for registering a club, the refusal to register a club and the cancellation of the registration of a club. It is based on paragraphs 11(4) and 15(2) of Schedule 18 to FA 2002.
2063.Reference to “the Inland Revenue”, which is a reference to “the Board” under paragraph 15(2) in the source legislation,is replaced with a reference to “an officer of Revenue and Customs”. See Change 5 in Annex 1.
2064.This section sets out the provisions relating to appeals against decisions concerning a club’s application or registration. It is based on paragraphs 13 and 15 of Schedule 18 to FA 2002.
2065.In subsections (1), (5) and (6), reference to “the Inland Revenue”,which is a reference to “the Board” under paragraph 15(2) in the source legislation, has been replaced with a reference to “an officer of Revenue and Customs”. See Change 5in Annex 1.