Finance Act 2012

CTA 2009 U.K.

24 U.K. CTA 2009 is amended as follows.

25 U.K. In section A1 (overview of the Corporation Tax Acts) in subsection (2)—

(a) omit paragraph (b), and

(b) before paragraph (k) (as inserted by paragraph 136 of Schedule 16 to this Act) insert—

“(ja) Part 9A of that Act (controlled foreign companies),”.

26 U.K. In section 486D (disguised interest: arrangement with no tax avoidance purpose) omit subsections (5) and (6).

27 (1) Section 486E (disguised interest: excluded shares) is amended as follows. U.K.

(2) In subsection (7)(c) for “relevant controlled foreign company” substitute “ CFC within the meaning of Part 9A of TIOPA 2010 ”.

(3) For subsections (9) and (10) substitute—

“(9) For the purposes of subsection (7)(b) a company (“C”) is a relevant joint venture company if—

(a) the holding company is one of two persons who, taken together, control C,

(b) the holding company has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C, and

(c) the second person has interests, rights and powers representing—

(i) at least 40%, but

(ii) no more than 55%,

of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C.

(10) For the purposes of subsection (9)—

(a) section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purpose of determining if two persons, taken together, control a company, and

(b) section 371RD of that Act applies for the purpose of determining if the requirements of paragraphs (b) and (c) are met in any case.”

(4) Omit subsection (11).

28 U.K. In section 521E (unallowable purpose) omit subsections (5) and (6).

29 U.K. Omit section 870 (intangible fixed assets: assumptions to be made in the case of a controlled foreign company) and the cross-heading before it.

30 U.K. In Chapter 2 of Part 9A (exemption of distributions received by small companies) after section 931C insert—

“931CA Further exemption where distribution received from CFC

(1) Subsection (2) applies if—

(a) under Part 9A of TIOPA 2010 (controlled foreign companies), the CFC charge is charged in relation to a CFC's accounting period,

(b) a dividend or other distribution of the CFC is received in an accounting period (for corporation tax purposes) of the recipient in which the recipient is a small company,

(c) the whole or a part of the distribution is paid in respect of profits which are chargeable profits of the CFC for its accounting period mentioned in paragraph (a), and

(d) the requirements of section 931B(b) to (d) are met in relation to the distribution.

(2) The distribution is exempt.

(3) If part of the distribution is not paid in respect of chargeable profits—

(a) for the purposes of this Part and Part 2 of TIOPA 2010 that part of the distribution is treated as a separate distribution, and

(b) subsection (2) does not apply to that separate distribution.

(4) In this section references to chargeable profits of the CFC are limited to chargeable profits so far as apportioned to chargeable companies at step 3 in section 371BC(1) of TIOPA 2010.”

31 U.K. In section 931E (distributions from controlled companies) for subsections (3) to (5) substitute—

“(3) Condition B is that—

(a) the recipient is one of two persons who, taken together, control the payer,

(b) the recipient has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer, and

(c) the second person has interests, rights and powers representing—

(i) at least 40%, but

(ii) no more than 55%,

of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer.

(4) Section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purposes of this section.

(5) Section 371RD of TIOPA 2010 applies for the purpose of determining if the requirements of subsection (3)(b) and (c) are met in any case.

(6) In subsections (4) and (5) references to section 371RD of TIOPA 2010 are to that section omitting subsection (3)(c) and (d).”