Taxation (International and Other Provisions) Act 2010

[F1 Supplementary U.K.

Textual Amendments

F1 Pt. 10: the existing Pt. 10 renumbered as Pt. 11 (except for ss. 375, 376 which are repealed), the existing ss. 372-374, 377-382 renumbered as ss. 499-507 and a new Pt. 10 (ss. 372-498) inserted (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1, 10(1)(2)(a)(3) (with Sch. 5 paras. 27, 32-34)

444 Joint venture companies U.K.

(1) This section makes modifications of this Part in relation to an accounting period of a qualifying infrastructure company (“the joint venture company”) [F2 which is the ultimate parent of a worldwide group at all times in that period] where—

(a) one or more qualifying infrastructure companies (“the qualifying investor or investors”) have shares in the joint venture company,

(b) other persons (“the other investors”) who are not qualifying infrastructure companies have all the other shares in the joint venture company,

(c) each of the investors (that is to say, the qualifying investor or investors and the other investors) has lent money to the joint venture company,

(d) the amounts each of the investors has lent stand in the same, or substantially the same, proportion as the shares in the joint venture company that each of them has,

(e) at all times in the accounting period the investors have the same rights in relation to the shares in or assets of the joint venture company and the same rights in relation to the money debt or debts in question, and

(f) the joint venture company makes an election for the purposes of this section that has effect for the accounting period (but see section 445 for further provision about elections).

(2) Section 401 has effect as if the qualifying investor or investors were not investors in the group for times in the accounting period falling in the relevant period of account.

(3) Section 427 has effect as if, in determining the appropriate proportion in relation to an associated worldwide group, it is assumed that the qualifying investor or investors were not investors in the group for times in the accounting period falling in the relevant period of account.

(4) In consequence of subsection (2) or (3), the shares of the qualifying investor or investors in the group are treated as distributed for times in the accounting period falling in the relevant period of account among the other investors in proportion to the actual shares of the other investors in the group.

(5) For the purposes of section 438 there is a reduction in any amount that would otherwise qualify as an exempt amount in the accounting period where—

(a) the exemption operates by reference to creditors being within subsection (3) of that section, and

(b) the creditor in relation to the amount is not an investor.

(6) The amount qualifying as an exempt amount is to be reduced so that only the qualifying proportion of it qualifies.

(7) For the purposes of this section—

• “the qualifying proportion” means the proportion of the shares that the qualifying investor or investors have in the joint venture company in the accounting period, and

• “the non-qualifying proportion” means the proportion of the shares that the other investors have in the joint venture company in the accounting period.

(8) The treatment mentioned in section 440(2) is to extend only to the qualifying proportion of the tax-interest income amounts in the accounting period.

(9) Section 441(2) has effect as if the tax-EBITDA of the company for the accounting period were the amount determined as follows.

• Step 1 Find the tax-EBIDTA of the company for the accounting period if section 441 were ignored.

• Step 2 The tax-EBITDA of the company for the accounting period is equal to the non-qualifying proportion of that amount.

(10) Section 442(3) has effect as if for the words “the group did not include the company” there were substituted “ amounts of the company were limited to the non-qualifying proportion of those amounts ”.

Textual Amendments

F2 Words in s. 444(1) inserted (with effect in accordance with Sch. 8 para. 24 of the amending Act) by Finance Act 2018 (c. 3), Sch. 8 para. 11

445 Joint venture groups U.K.

(1) This section applies if the joint venture company is the ultimate parent of a multi-company worldwide group at any time in the accounting period.

(2) An election made by the joint venture company under section 444 in relation to the accounting period is of no effect unless all the other members of the group—

(a) are qualifying infrastructure companies for the accounting period,

(b) are wholly-owned subsidiaries of the joint venture company throughout the accounting period, and

(c) have the same accounting periods as the joint venture company.

(3) In determining whether the conditions in section 444(1)(c) to (e) are met in relation to the accounting period of the joint venture company, any loans made to any of the other members of the group are treated as if they were made to the joint venture company.

(4) If the joint venture company makes an election under section 444 for the accounting period, the modifications made by subsections (5) to (10) of that section are also to apply in relation to each of the other members of the group.

446 Joint ventures: supplementary U.K.

(1) If—

(a) the joint venture company makes an election under section 444 in relation to an accounting period,

(b) that company, or any member of the worldwide group of which it is a member, is the creditor for the purposes of section 438 in any case, and

(c) the company mentioned in that section in that case is a not a member of that group at any time in the accounting period,

section 438 has effect in that case as if subsection (3)(b) were of no effect in relation to that time.

(2) Section 434(1) to (5) apply to an election under section 444 as they apply to an election under section 433.

(3) For the purposes of section 444 the investors are not to be regarded as having the same rights in relation to the shares in or assets of the joint venture company, or in relation to the money debt or debts in question, at any time if—

(a) provision is in force at that time in respect of any of the relevant matters that differs in relation to different persons or has, or is capable of having, a different effect in relation to different persons (whether at that or any subsequent time),

(b) arrangements are in place at that time the effect of which is that, at that or any subsequent time, the rights of some persons in relation to any of the relevant matters differ, or will or may differ, from the rights of others in relation to the matters in question, or

(c) any other circumstances exist at that time as a result of which the rights of some persons in relation to any of the relevant matters cannot reasonably be regarded as being, in substance, the same rights as others in relation to the matters in question at that or any subsequent time.

(4) In this section—

(a) “the relevant matters” means the shares in or assets of the joint venture company or the money debt or debts in question,

(b) “rights” includes powers,

(c) “different persons” includes persons of a different class or description, and

(d) “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

447 Partnerships and other transparent entities U.K.

(1) Subsections (2) to (4) apply where a company is a member of a partnership.

(2) For the purposes of section 433 the cases in which assets recognised in a balance sheet of the company are regarded as deriving their value from the matters mentioned in subsection (5)(a) to (e) of that section include any case where—

(a) the company's interest in the partnership is recognised in the balance sheet of the company, and

(b) that partnership interest derives its value from those matters.

(3) For the purposes of section 436 the cases in which an entry in respect of an asset is (or would be) recognised in a balance sheet of the company include any case where—

(a) the asset is (or would be) recognised in a balance sheet of the partnership, and

(b) the company has a significant interest in the partnership.

(4) For the purposes of section 438(4)—

(a) the obligations mentioned there include any case where the obligations are those of the partnership, and

(b) references to a qualifying infrastructure company in that case include the partnership.

(5) Subsections (2) to (4) apply (with any necessary modifications) in relation to transparent entities that are not partnerships as they apply in relation to partnerships.

[F3 (6) For the purposes of this section an entity is “transparent” if—

(a) it is not chargeable to corporation tax or income tax as a person (ignoring any exemptions), or

(b) it is a collective investment vehicle which is “transparent for income tax purposes” for the purposes of paragraph 8 of Schedule 5AAA to TCGA 1992 (see paragraph 8(7) of that Schedule).]

Textual Amendments

F3 S. 447(6) substituted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 17

448 Decommissioning U.K.

(1) This Chapter applies in relation to an activity consisting of the decommissioning of a public infrastructure asset as it applies in relation to its provision.

(2) In determining whether a company is a qualifying infrastructure company the following assets of the company are ignored (and the income arising from them is, accordingly, also ignored)—

(a) any shares in a decommissioning fund, and

(b) any loan relationships or other financing arrangements to which a decommissioning fund is party.

(3) A decommissioning fund is to be regarded as a qualifying infrastructure company.

(4) For the purposes of this section “a decommissioning fund” means a fund which—

(a) holds particular investments for the sole purpose of funding activities for, or in connection with, the decommissioning or other provision of public infrastructure assets, and

(b) is prevented from using the proceeds of the investments, or the income arising from them, for any purpose other than the purpose mentioned in paragraph (a) or returning surplus funds.

(5) In this section “decommissioning” includes demolishing and putting out of use.

449 Minor definitions for purposes of this Chapter U.K.

(1) For the purposes of this Chapter—

• “balance sheet” means a balance sheet that is drawn up in accordance with generally accepted accounting practice,

• “financial asset” has the same meaning as it has for accounting purposes,

• “loan relationships or other financing arrangements” means—

  (a)

  loan relationships,

  (b)

  derivative contracts in relation to which the condition in section 387(4) is met (underlying subject matter to be interest rates etc),

  (c)

  finance leases, or

  (d)

  debt factoring or similar transactions, and

• “the UK sector of the continental shelf” means the areas designated by Order in Council under section 1(7) of the Continental Shelf Act 1964.

(2) For the purposes of this Chapter references to a company which is “associated” with another company at any time are references to companies that are members of the same worldwide group at that time.]