Part 1: Income and Corporation Taxes Act 1988
Section 342: Tax on company in liquidation
3361.Section 342(9) of ICTA applies to an assessment made by virtue of section 8(4) of that Act. It should have been repealed when sections 206(1) and 213 of, and Schedule 23 to, FA 1993 repealed section 8(4) of ICTA. Section 8(4) dealt with a situation where rates of tax were uncertain. Section 342(9) is obsolete and is repealed without replacement.
Section 343: Company reconstructions without a change of ownership
3362.Section 343(11) of ICTA predates Corporation Tax Self Assessment and is now redundant. It is repealed without replacement.
3363.Section 343(12) of ICTA is a saving for the amendments made to the predecessor of section 343(9) and (10) of that Act by FA 1986. It is now spent, and is repealed without replacement.
Section 505: Charitable companies: general
3364.Section 505(1AA) defines “relevant foreign distribution” for section 505(1)(c)(iib). Subsection (1)(c) was repealed by paragraph 4(3) of Schedule 14 to FA 2009 leaving the definition otiose. The repeal of section 505(1AA) was overlooked by FA 2009 and that is now being corrected.
Section 511: The Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council
3365.The section deals with the Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council. None of these bodies now exists. The only part of the section that has not so far been repealed is subsection (7). This deals with the application of the Corporation Tax Acts to the Gas Council. It is obsolete and is repealed without replacement.
Section 513: British Airways Board and National Freight Corporation
3366.The section ensures continuity of tax treatment for the successor company of the British Airways Board and the successor company of the National Freight Organisation. The section is obsolete and is repealed without replacement.
Section 767B: Change of company ownership: supplementary
3367.Section 767B(1) and (3) of ICTA refer to section 86 of TMA (interest on overdue tax) in so far as it has effect in relation to accounting periods ending on or before 30 September 1993. These references are spent and are repealed without replacement.
Section 768A: Change in ownership: disallowance of carry back of trading losses
3368.Section 768A(3) of ICTA is the commencement provision for that section. It is spent and is repealed without replacement.
Section 768B: Change in ownership of company with investment business: deductions generally
3369.Under paragraph 6(b) of Schedule 28A to ICTA, the amounts to be apportioned between notional accounting periods in section 768B(4)(c) of ICTA include excess business charges.
3370.Paragraph 7(1)(aa) of Schedule 28A to ICTA states how the apportionment of excess business charges is to be made.
3371.Section 768B(7) and (9)(b) of ICTA states how the apportioned charges are to be treated for the purposes of sections 75 and 338 of that Act.
3372.Paragraphs 13(1)(c) and 16(1)(aa) of Schedule 28A to ICTA are the provisions corresponding to paragraphs 6(b) and 7(1)(aa) of that Schedule which apply in a case which comes within section 768C, rather than section 768B, of that Act.
3373.The “charges” in section 768B(7) and (9)(b) of ICTA and paragraphs 6(b), 7(1)(aa), 13(1)(c) and 16(1)(aa) of Schedule 28A to that Act are charges on income. The scope of corporation tax relief for “charges on income” has been progressively cut down, and nowadays only charitable donations can rank as charges: see section 338A of ICTA, which is rewritten in Part 6 of this Act.
3374.To come within paragraph 6(b) or paragraph 13(1)(c) of Schedule 28A to ICTA, a payment must meet three conditions.
It must be a charitable donation within section 338A(2)(b) or (c) of that Act.
It must be wholly and exclusively for the purposes of the company’s business.
It must not be deductible in computing profits or any description of profits for the purposes of corporation tax (for example, as an expense of management within Part 16 of CTA 2009). See section 338A(3) of ICTA.
3375.It is not possible for a payment to meet all three of those conditions. Section 768B(7) and (9)(b) of ICTA and paragraphs 6(b), 7(1)(aa), 13(1)(c) and 16(1)(aa) of Schedule 28A to that Act are therefore obsolete, and are repealed without replacement.
Section 774: Transactions between dealing company and associated company
3376.Section 774 of ICTA is not rewritten, as it is obsolete. This Schedule consequentially amends it, because its repeal is outside the scope of this Act. HMRC will refer section 774 of ICTA to the Law Commission for inclusion in a future Statute Law (Repeals) Bill.
Section 776: Transactions in land: taxation of capital gains
3377.Like section 772 of ITA, section 833 does not rewrite the second limb of the definition of “land” in section 776(13)(a) of ICTA. That limb is repealed without replacement.
3378.In Schedule 1 to the Interpretation Act 1978 land is defined as including “buildings and other structures, land covered with water, and any estate, interest, easement, servitude or right in or over land”. Although the Interpretation Act 1978 was largely a consolidation, the definition of land was new and only applies from the commencement of that Act.
3379.The origin of section 776(13)(a) of ICTA is section 32(12)(a) of FA 1969. This definition therefore predates the definition of land in Schedule 1 to the Interpretation Act 1978.
3380.The definition of “land” in force in 1969 was that contained in the Interpretation Act 1889. In section 3 of that Act land was defined as including “messuages, tenements, and hereditaments, houses and buildings of any tenure”. This section was derived from section 4 of Lord Brougham’s Act of 1850. The definition was never appropriate for Scotland, where messuages and hereditaments were unknown to the law.
3381.There is nothing in the definition of “land” in the Interpretation Act 1978 which is not also within the definition of “land” in section 776(13)(a) of ICTA.
3382.The Interpretation Act 1978 refers to “buildings and other structures”. Section 776(13)(a) of ICTA merely refers to “buildings”. But this cannot be read as excluding “structures”, because what is a building is a question of degree and circumstance and case law makes it clear that virtually any kind of structure is capable of being a building.
3383.Adopting the Interpretation Act definition of “land” for the purposes of this Chapter would only be a change in the law if a “structure” (a) was not, a matter of normal English usage, “land”, (b) was not a “building” (and was therefore not brought within “land” by the second limb of section 776(13)(a) of ICTA), and (c) was nevertheless brought within “land” by the provision in the Interpretation Act that “land” includes buildings and other structures. There is no reason to believe that there are such “structures”.
3384.The Interpretation Act 1978 refers to “land covered with water”; section 776(13)(a) of ICTA does not. But there is no doubt that for legal purposes land includes every species of ground as well as waters and marshes. The term “land covered with water” has been used in legislation to distinguish, for rating purposes, land covered by artificial bodies of water such as reservoirs, filter beds belonging to water companies, canals, dry docks etc; no such distinction would be appropriate in the context of section 776 of ICTA, and therefore none is made.
3385.Finally, section 776(13)(a) of ICTA refers to “any estate or interest in land or buildings”, whereas the Interpretation Act 1978 is more specific, referring to “any estate, interest, easement, servitude or right in or over land” (emphasis added). Nonetheless, the section 776(13)(a) definition of land includes the rights italicised above. It is couched in generic terms and does not need to mention specific interests in land, including those particular to Scots law.
3386.It is therefore a matter of historical accident that section 776 of ICTA includes its own non-exhaustive definition of “land”, rather than using the standard non-exhaustive definition in the Interpretation Act 1978. This Act therefore omits the second limb of section 776(13)(a) of ICTA as redundant.
3387.This Act does not rewrite the first limb of section 776(13)(a) of ICTA as a Chapter-wide definition. Instead, references to “the land” are expanded to “all or part of the land” where appropriate.
3388.See also the commentary on the amendments made by this Schedule to paragraph 21A of Schedule 15 to FA 2000 and paragraph 11A of Schedule 5 to ITEPA.
Section 777: Provisions supplementary to section 776
3389.Section 777(4) of ICTA provides (to summarise) that documents are not conclusive evidence of persons’ intentions. It is repealed without replacement, because it merely declares what the courts would hold anyway.
Schedule 23A: Manufactured dividends and interest
3390.Paragraph 7A(9) of Schedule 23A to ICTA is repealed without replacement. Following paragraph 5 of Schedule 13 to FA 2007 and the repeal of section 737A of ICTA, it is not possible for a deemed manufactured payment to give rise to “relevant tax relief” within the meaning of paragraph 7A(10) of Schedule 23A to ICTA. So it is not necessary to extend the disallowance of relief in paragraph 7A(2) to deemed manufactured payments.
3391.Paragraph 8(3)(a) of Schedule 23A to ICTA is repealed without replacement, as it is unnecessary. See Change 51 in Annex 1.
Schedule 28A: Change in ownership of company with investment business: deductions
3392.Paragraphs 6(b), 7(1)(aa), 13(1)(c) and 16(1)(aa) of Schedule 28A to ICTA are repealed without replacement, on the ground that they are obsolete. See the commentary on the repeal by this Schedule of section 768B(7) and (9)(b) of ICTA.
3393.Paragraph 11(4) of Schedule 28A to ICTA defines “post-change accounting period” for the purposes of that paragraph. This expression no longer appears in that paragraph, therefore paragraph 11(4) of that Schedule is now otiose. It is repealed without replacement.