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Finance Act 2012

Part 4.Commencement Provision

568.Part 4 contains the commencement provisions relating to CFCs and PEs.

569.Paragraphs 49 and 50 provide the main commencement rules for CFCs.

570.Paragraph 49(1) provides for the CFC charge to be charged in relation to accounting periods of CFCs beginning on or after 1 January 2013 and paragraph 49(2) provides that the first accounting period of a company which is a CFC at the beginning of 1 January 2013 begins at that time.

571.Sub-paragraph (3) provides that the application of sub-paragraph (2) is subject to paragraph 50.

572.Paragraph 50(1) provides for the CFC rules under Chapter 4 of Part 17 ICTA (i.e. the current CFC rules) to continue to apply to accounting periods of CFCs beginning before 1 January 2013.

573.Sub-paragraphs (3) and (4) are applied by sub-paragraph (2) to a company that has an accounting period within the current CFC rules beginning before 1 January 2013 but ending on or after that date. Such a company will not fall within the new CFC rules in Part 9A of TIOPA until its accounting period ends. If the company is a CFC immediately after the end of this accounting period, its first accounting period under the new CFC rules will begin when that period ends. These sub-paragraphs however do not apply to a company which is a life assurance subsidiary at the end of 31 December 2012.

574.Sub-paragraph (5) applies sub-paragraph (6) to a company that is a life assurance subsidiary at the end of 31 December 2012 and, apart from sub-paragraph (6), would have an accounting period within the current CFC rules beginning before 1 January 2013 but ending on or after that date.

575.Sub-paragraph (6) ends the life assurance subsidiary’s accounting period mentioned above on 31 December 2012 and the first accounting period under the new CFC rules begins on 1 January 2013 if the subsidiary is a CFC on that date.

576.Sub-paragraph (7) defines a “life assurance subsidiary” as a company in which a life assurance company has a relevant interest as determined in accordance with Chapter 15 of Part 9A of TIOPA.

577.Sub-paragraph (8) defines a “life assurance company” as a company carrying on life assurance business within the meaning of Part 2 of FA 2012.

578.Sub-paragraph (9) provides that the amendments specified there (being the majority of the consequential amendments made in Part 3 to other parts of the Taxes Acts) should be ignored as appropriate in applying the commencement provisions under paragraph 49. This broadly means that the amendments made under Part 3 will not take effect until an accounting period under Part 9A of TIOPA (i.e. under the new CFC rules) begins.

579.Paragraph 51 disapplies the amendment made by paragraph 27(3) of Part 3 (disguised interest: excluded shares) for relevant periods beginning before 1 January 2013 and the current CFC rules will continue to have effect for this period.

580.Paragraph 52 states that the amendment made by paragraph 30 of Part 3 (exemption of distributions received by small companies) will not apply to dividends or distributions received before 1 January 2013.

581.Paragraph 53 provides that the amendment made by paragraph 31 of Part 3 will not apply to dividends or distributions received before 1 January 2013 and that the current CFC rules will continue to have effect.

582.Paragraph 54 treats paragraphs 33 to 36 as having come into force on 30 June 2012.

583.Paragraph 55(1) provides that the amendments made in paragraphs 3, 5 and 9 of Part 2 to the PE provisions at Chapter 3A of Part 2 of CTA 2009 come into force on 1 January 2013 but that the amendment made by paragraph 5(3) has no effect in relation to elections made before this date.

584.Paragraph 55(2) provides that amendments to Chapter 3A of Part 2 of CTA 2009 made by paragraphs 4 and 6 to 8 of Part 2 will have effect for relevant accounting periods beginning on or after 1 January 2013.

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