Chapter 9: Other miscellaneous provisions
Overview
2940.This Chapter amends in certain cases the way in which the normal corporation tax rules apply.
Section 990: European Economic Interest Groupings
2941.This section sets out the basic rules that determine how corporation tax is to be charged on the members of a European Economic Interest Grouping (EEIG). It is based on section 510A of ICTA.
2942.Members of a grouping may be companies, individuals or partnerships. See section 842 of ITA for the income tax rules that apply to the non-corporate members of an EEIG.
Section 991: Harbour reorganisation schemes: corporation tax
2943.This section provides that if certain conditions are met, a trade transferred to a harbour authority as a result of a harbour reorganisation scheme is certified as not having ceased; and losses which would have been available to the transferor for relief may be used by the transferee. It is based on section 518(1), (2) and (3) of ICTA.
2944.The section is the first of five sections that deal with the corporation tax consequences of the transfer of a trade under a harbour reorganisation scheme.
2945.One of the conditions set out in subsection (1) is that the section applies only if the trade is transferred from a body corporate that is not a limited liability company. It is therefore clear that the section and those that follow can apply only in very limited circumstances.
Section 992: Harbour reorganisation schemes: capital allowances etc
2946.This section sets out the rules relating to capital allowances that apply when a trade is transferred to a harbour authority under a harbour reorganisation scheme. It is based on section 518(4) and (5) of ICTA.
Section 993: Harbour reorganisation schemes: chargeable gains
2947.This section sets out the rules relating to loss relief against chargeable gains that apply when a trade is transferred to a harbour authority under a harbour reorganisation scheme. It is based on section 518(7) of ICTA.
Section 994: Transfer of part of trade
2948.This section modifies the rules in section 991 if only part of a trade is transferred to a harbour authority under a certified harbour reorganisation scheme. It is based on section 518(8) and (9) of ICTA.
2949.Subsection (4)(b) refers to the need to make “just and reasonable apportionments” in certain circumstances and includes a minor change in the law. The change is made to bring the corporation tax code into line with that for income tax. See Change 33 in Annex 1.
Section 995: Interpretation of sections 991 to 994
2950.This section provides a number of definitions for sections 991 to 994. It is based on section 518(10) of ICTA.
Section 996: Use of different accounting practices within a group of companies
2951.This section deals with the use of different accounting practices within a group of companies. It is based on section 51 of FA 2004.
2952.If the accounting treatments for a transaction under international accounting standards and UK GAAP are different, this could give rise to a tax mismatch: for example, one company might recognise a (deductible) loss before the other company recognised the corresponding (taxable) gain. If the two companies were members of the same group, the intra-group gain and loss would be cancelled out in arriving at the group’s consolidated profit before tax – but the group would still have the tax advantage of obtaining the deduction before having to recognise the taxable income.
2953.Accordingly, a tie-breaker provision is needed to deal with such cases. This section of the Act gives UK GAAP the priority, whether the tax advantage arises by accident or design.
