Finance Act 1994 (c. 9)

(The document as of February, 2008)

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(4) In a case where paragraph 11 below applies (or would apply if an election were accepted) sub-paragraphs (1) and (2) above shall require the electing participator additionally to furnish copies of the same documents to the old participator referred to in that paragraph.

Penalties for incorrect information

6 Where a participator fraudulently or negligently furnishes any incorrect information or makes any incorrect declaration in or in connection with an election he shall be liable to a penalty not exceeding--

(a) in the case of negligence, £50,000, and

(b) in the case of fraud, £100,000.

Re-opening election decisions on grounds of incorrect information

7 (1) Without prejudice to paragraph 6 above, this paragraph applies if, at any time after notice of the acceptance of an election has been served by the Board, it appears to the Board that, as a result of an error in the information furnished to the Board, the election should not have been accepted.

(2) If, in a case where this paragraph applies, either--

(a) the error was attributable, in whole or in part, to the fraudulent or negligent conduct of the electing participator or a person acting on his behalf, or

(b) on the error coming to the notice of the electing participator, or a person acting on his behalf, the error was not remedied without unreasonable delay,

the Board may serve on the electing participator and on the responsible person for the field to which the election applies a notice rescinding the acceptance and stating what appears to the Board to be the correct position.

(3) When a notice under sub-paragraph (2) above becomes effective, the election shall be treated as having been rejected in accordance with paragraph 3 above.

(4) If, in a case where this paragraph applies,--

(a) neither of the conditions in sub-paragraph (2) above is fulfilled, and

(b) the Board are of the opinion that, if the correct information had been furnished, the election could have been accepted,

the election shall be treated as having been made and accepted subject to such modifications (being modifications to correct the effect of the error) as the Board may direct, by notice served on the electing participator and on the responsible person for the field to which the election applies.

(5) A notice served under sub-paragraph (2) or sub-paragraph (4) above shall become effective either--

(a) on the expiry of the period during which notice of appeal against the notice may be served on the Board under paragraph 8 below without such notice of appeal being served; or

(b) where such notice of appeal is served, when the notice can no longer be varied or quashed by the Special Commissioners or by the order of any court.

Appeals against re-opening notices

8 (1) This paragraph applies where the Board serve notice under sub-paragraph (2) or sub-paragraph (4) of paragraph 7 above; and in the following provisions of this paragraph such a notice is referred to as a "re-opening notice".

(2) The electing participator may, by notice of appeal served on the Board within thirty days beginning on the date of the re-opening notice, appeal to the Special Commissioners against the re-opening notice.

(3) A notice of appeal under sub-paragraph (2) above shall state the grounds on which the appeal is brought.

(4) An appeal under this paragraph may at any time be abandoned by notice served on the Board by the electing participator.

(5) A re-opening notice may be withdrawn at any time before it becomes effective.

(6) In any case where--

(a) the electing participator serves notice of appeal against a re-opening notice served under sub-paragraph (4) of paragraph 7 above, and

(b) before the appeal is determined by the Special Commissioners, the Board and the electing participator agree as to the modifications necessary to correct the effect of the error concerned,

the re-opening notice shall take effect subject to such modifications as may be necessary to give effect to that agreement; and thereupon the appeal shall be treated as having been abandoned.

(7) Subject to sub-paragraph (8) below, on an appeal against a re-opening notice the Special Commissioners may vary the notice, quash the notice or dismiss the appeal; and the notice may be varied whether or not the variation is to the advantage of the electing participator.

(8) The provisions relating to the variation of a re-opening notice referred to in sub-paragraph (7) above shall not apply in respect of any such notice served under sub-paragraph (2) of paragraph 7 above.

Part II Supplementary provisions

Assets used in connection with more than one taxable field

9 (1) The provisions of this paragraph apply where--

(a) an election is in operation; and

(b) any of the assets to which the election applies is used or expected to be used in connection with two or more taxable fields.

(2) Any reference in this paragraph to allowable expenditure has the same meaning as in Part II of Schedule 1 to the 1983 Act and is a reference to expenditure incurred on an asset to which the election applies.

(3) Sub-paragraph (4) below applies if, by virtue of paragraph 5 of Schedule 1 to the 1983 Act (which, in a case falling within this paragraph, provides for the apportionment of allowable expenditure between two or more fields), any part of the allowable expenditure is apportioned to a taxable field (a "non-chargeable field") other than the field to which the election applies.

(4) Where this sub-paragraph applies, then, so far as concerns the electing participator (as a participator in a non-chargeable field), section 232 of this Act shall apply in relation to that part of the allowable expenditure which is apportioned to the non-chargeable field as it applies in relation to the part apportioned to the field to which the election applies.

Transfer of interests

10 (1) If, while an election is in operation, the electing participator (or a person who is treated as an electing participator by virtue of this paragraph) transfers the whole or part of his interest in the field to which the election applies, then, so far as concerns that interest or part, the new participator shall thereafter be treated as the electing participator for the purposes of this Chapter, other than paragraph 11 below, and, in particular,--

(a) any restriction on the amount of expenditure allowed or allowable by virtue of section 232 of this Act shall continue to apply to any expenditure relief transferred to the new participator under paragraph 6 of Schedule 17 to the [1980 c. 48.] Finance Act 1980; and

(b) any relief from tax under section 233 of this Act shall apply in relation to the new participator as it applied in relation to the old participator.

(2) If, in a case where paragraph 9 above applies, the electing participator, as a participator in the non-chargeable field (within the meaning of that paragraph) transfers the whole or part of his interest in that field, sub-paragraph (1) above (except paragraph (b)) shall apply in relation to that transfer as if--

(a) any reference to the field to which the election applies were a reference to the non-chargeable field; and

(b) any reference to the electing participator were a reference to him in his capacity as a participator in the non-chargeable field.

(3) In sub-paragraph (1) above the expressions "the old participator" and "the new participator" have the same meaning as in Schedule 17 to the Finance Act 1980.

11 (1) This paragraph applies in any case where--

(a) the electing participator acquired the whole or any part of his interest in the field to which the election applies as a result of a transfer to which Part I of Schedule 17 to the [1980 c. 48.] Finance Act 1980 applies (so that the electing participator is the new participator); and

(b) some or all of the relief in respect of any expenditure incurred (before the transfer) on any asset to which the election applies did not fall to be transferred to the electing participator (whether by virtue of paragraph 6 or paragraph 7 of that Schedule).

(2) With regard to so much of the expenditure referred to in sub-paragraph (1)(b) above as falls to be taken into account under paragraph (b)(i) or paragraph (c)(i) of subsection (9) of section 2 of the principal Act in computing, for any chargeable period ending before the transfer period, the assessable profit or allowable loss accruing to the old participator or any predecessor of his, section 232 of this Act shall apply in the case of the old participator or, as the case may be, his predecessor as it is expressed to apply in the case of the electing participator.

(3) If, as a result of the operation of sub-paragraph (2) above, there is a reduction in the amount which would otherwise be the accumulated capital expenditure of the old participator at the end of the last chargeable period before the transfer period, paragraph 8 of Schedule 17 to the Finance Act 1980 shall be taken to have transferred a correspondingly reduced amount to the electing participator.

(4) In this paragraph--

(a) the expressions "the old participator", "the new participator" and "the transfer period" have the same meaning as in Schedule 17 to the Finance Act 1980; and

(b) any reference to a predecessor of the old participator is a reference to a person who (before the transfer referred to in sub-paragraph (1)(a) above) transferred the whole or part of his interest in the field to which the election applies either to the old participator or to another person who is a predecessor in title of the old participator in respect of that interest or part.

Transfer of elected assets

12 (1) This paragraph applies if there is a disposal of an asset which, immediately before the disposal or at an earlier time, was an asset to which an election applies; and in this paragraph--

(a) "the asset transferred" means the asset so disposed of;

(b) "the vendor" means the electing participator or other person by whom the asset is disposed of.

(2) Where a person has incurred expenditure on the acquisition of a transferred asset, he shall be treated for the purposes of the expenditure relief provisions as having incurred that expenditure only to the extent that it does not exceed the amount which, having regard to section 232 of this Act or the previous operation of this paragraph, was (in the case of the vendor) allowable under those provisions immediately before the disposal in respect of his expenditure on the asset.

(3) Any expenditure incurred on the asset after the disposal shall be left out of account for the purposes of the expenditure relief provisions.

Restriction of relief for expenditure incurred after 30th November 1993 and before the date of an election

13 (1) This paragraph applies if, after 30th November 1993 and before the date of an election, expenditure was incurred by the electing participator under a contract--

(a) for the acquisition from any other person of, or of an interest in, an asset to which the election applies; or

(b) for the provision by any other person of services or other business facilities of whatever kind in connection with the use of an asset to which the election applies.

(2) If, in a case where this paragraph applies, the other person referred to in paragraph (a) or paragraph (b) of sub-paragraph (1) above ("the contractor") has performed his obligations by entering into one or more further contracts, the contractor shall be treated for the purposes of subsection (2) of section 191 of the [1993 c. 34.] Finance Act 1993 (time when expenditure is incurred) as having performed his obligations under the contract only to the extent that, at that time, the asset or interest in question has been acquired by or, as the case may be, the services or other business facilities have been provided to, the electing participator.

Section 236.

SCHEDULE 23 Amendments of the principal Act relating to valuation of light gases

1 (1) In section 2 (assessable profits and allowable losses), in subsection (5) (amounts to be included in calculation of gross profit or loss) in each of paragraphs (b) and (c), after the word "oil", in the first place where it occurs, there shall be inserted "(not being light gases)" and after paragraph (c) there shall be inserted--

" (ca) the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won and disposed of by him otherwise than in sales at arm's length as was delivered by him in the period; and

(cb) the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won as was relevantly appropriated by him in the period without being disposed of; and " .

(2) In subsection (9) of that section (amounts to be taken into account in determining amount of debit or credit in respect of expenditure), in paragraph (a)--

(a) in sub-paragraph (i) the words "or, as the case may be" shall be omitted;

(b) in that sub-paragraph after the words "delivery was made" there shall be inserted the words "or (in the case of light gases) its market value as determined in accordance with paragraph 3A of Schedule 3 to this Act, as the case may require"; and

(c) at the end of sub-paragraph (ii) there shall be inserted the words "or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act".

2 In Schedule 2 (management and collection of PRT), in paragraph 2(2) (returns by participators), in paragraph (a)(iii) after the words "delivery was made" and in paragraph (b)(ii) after the word "made" there shall be inserted the words "or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act".

3 (1) In Schedule 3 (miscellaneous provisions relating to PRT), in paragraph 2 (definition of market value of oil)--

(a) at the beginning of sub-paragraph (1) there shall be inserted the words "Except in the case of light gases"; and

(b) at the end of that sub-paragraph there shall be added the words "and, accordingly, references in the following provisions of this paragraph to oil do not apply to light gases".

(2) In paragraph 2A of that Schedule (definition of market value of oil consisting of or including gas), after sub-paragraph (1) there shall be inserted the following sub-paragraph--

" (1A) Sub-paragraphs (2) and (3) below also apply where the market value of any light gases falls to be ascertained under paragraph 3A below. "

(3) In sub-paragraph (2) of paragraph 2A, after the words "paragraph 2 above", in each place where they occur, there shall be inserted "or, as the case may require, sub-paragraph (2)(b) of paragraph 3A below".

(4) In sub-paragraph (3) of paragraph 2A, after the words "paragraph 2", in the first place where they occur, there shall be inserted "or, as the case may require, in accordance with paragraph 3A below".

(5) Sub-paragraph (4) of paragraph 2A shall be omitted.

4 After paragraph 3 of Schedule 3 (aggregate market value of oil) there shall be inserted--

" Definition of market value of light gases

3A (1) The market value of any light gases for the purposes of this Part of this Act is the price at which, having regard to all the circumstances relevant to the disposal or appropriation in question, light gases of that kind might reasonably have been expected to be sold under a contract of sale satisfying the conditions specified in sub-paragraph (2) below.

(2) The conditions referred to in sub-paragraph (1) above are that--

(a) the contract is for the sale of the gases at arm's length to a willing buyer;

(b) the contract requires the gases to have been subjected to appropriate initial treatment before delivery; and

(i) in the case of gases extracted in the United Kingdom, at the place of extraction; or

(ii) in the case of gases extracted from strata in the sea bed and subsoil of the territorial sea of the United Kingdom or of a designated area, at the place in the United Kingdom or another country at which the seller could reasonably be expected to deliver the gases or, if there is more than one such place, the one nearest to the place of extraction.

(3) If the circumstances referred to in sub-paragraph (1) above are such that the price referred to in that sub-paragraph might reasonably be expected to include--

(a) any such payments as are referred to in subsection (2) of section 114 of the Finance Act 1984 (treatment of certain payments relating to gas sales), or

(b) any capacity payments, as defined in subsection (5) of that section,

section 114 of the Finance Act 1984 shall apply accordingly in relation to the notional contract specified in sub-paragraph (1) above as it applies in relation to an actual contract.

(4) This paragraph has effect subject to sub-paragraphs (2) and (3) of paragraph 2A above. "

Section 252.

SCHEDULE 24 Provisions relating to the Railways Act 1993

Interpretation

1 (1) In this Schedule--

"the Allowances Act" means the [1990 c. 1.] Capital Allowances Act 1990;
"the Board" means the British Railways Board;
"fixture" has the same meaning as it has in Chapter VI of Part II of the Allowances Act;
"franchise company" has the meaning given by section 85(8) of the [1993 c. 43.] Railways Act 1993;
"the Franchising Director" means the Director of Passenger Rail Franchising;
"the Gains Act" means the [1992 c. 12.] Taxation of Chargeable Gains Act 1992;
"predecessor", in relation to any relevant transfer, means the body from which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;
"property", "rights" and "liabilities" have the same meaning as they have in Part II of the Railways Act 1993;
"publicly owned railway company" has the same meaning as it has in the Railways Act 1993;
"relevant transfer" means a transfer of any property, rights or liabilities by virtue of a restructuring scheme;
"restructuring scheme" means a section 85 transfer scheme made by, or pursuant to a direction of, the Secretary of State, if and to the extent that the transfer scheme provides for the transfer of property, rights or liabilities from--
(a)
the Board,
(b)
a wholly owned subsidiary of the Board,
(c)
a publicly owned railway company, or
(d)
a company which is wholly owned by the Franchising Director,

to any other body falling within paragraphs (a) to (d) above;
"section 85 transfer scheme" means a scheme made under or by virtue of section 85 of the Railways Act 1993;
"subsidiary" has the meaning given by section 736 of the [1985 c. 6.] Companies Act 1985;
"successor company" has the same meaning as it has in Part II of the Railways Act 1993;
"transfer date" shall be construed in accordance with section 85(6) of the Railways Act 1993;
"transfer scheme" means a scheme made under or by virtue of section 85 or 86 of the Railways Act 1993;
"transferee", in relation to a relevant transfer, means the body to which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;
"wholly owned subsidiary" has the meaning given by section 736 of the [1985 c. 6.] Companies Act 1985.

(2) Section 151(2) and (3) of the [1993 c. 43.] Railways Act 1993 (companies wholly owned by the Crown or the Franchising Director) shall have effect for the purposes of this Schedule as it has effect for the purposes of that Act.

(3) Any reference in this Schedule to "assignment" shall be construed in Scotland as a reference to "assignation".

(4) This Schedule--

(a) so far as it relates to income tax, shall be construed as one with the Income Tax Acts,

(b) so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts, and

Chargeable gains: transfer to be without gain or loss

2 (1) For the purposes of the Gains Act, where there is a relevant transfer, the disposal of property, rights and liabilities which is constituted by that transfer shall, subject to the following provisions of this Schedule, be taken, in relation to the transferee as well as the predecessor, to be for a consideration such that no gain or loss accrues to the predecessor.

(2) Section 35(3)(d) of the Gains Act (list of provisions for transfers without gain or loss for purposes of provisions applying to assets held on 31st March 1982) shall have effect with the omission of the word "and" at the end of sub-paragraph (vii) and with the insertion, after sub-paragraph (viii), of the following sub-paragraph--

" (ix) paragraphs 2(1), 7(2), 11(3) and (4) and 25(2) of Schedule 24 to the Finance Act 1994; " .

(3) Section 171(1) of the Gains Act (which makes provision in relation to the disposal of assets from one member of a group of companies to another member of the group) shall not apply where the disposal in question is a relevant transfer.

Chargeable gains: receipt of compensation or insurance policies

3 (1) Subsection (4) of section 23 of the Gains Act (adjustments where compensation or insurance money used for purchase of replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where--

(a) there is a relevant transfer such that--

(i) any capital sum received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; or

(ii) any right of the predecessor to receive such a sum is transferred to the transferee, and the transferee receives that sum; and

(b) the transferee acquires an asset in circumstances where--

(i) had there been no such relevant transfer, and

(ii) had the predecessor acquired the asset by the application of that sum,

the predecessor would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.

(2) Subsection (5) of that section (adjustments where a part of any compensation or insurance money is used for the purchase of a replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where--

(a) there is a relevant transfer such that--

(ii) any right of the predecessor to receive such a sum is transferred to the transferee, and the transferee receives that sum; and

(b) the transferee acquires an asset in circumstances where--

(i) had there been no such relevant transfer, and

(ii) had the predecessor acquired the asset by the application of all of that sum except for a part which was less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the asset lost or destroyed,

the predecessor would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.

(3) In a case falling within sub-paragraph (1) or (2) above, subsection (4) or, as the case may be, subsection (5) of section 23 of the Gains Act shall have effect as if the transferee and the predecessor were the same person, except that--

(a) in a case falling within sub-paragraph (1)(a)(i) or (2)(a)(i) above--

(i) any claim under the subsection in question must be made by the predecessor and the transferee; and

(ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the predecessor; and

(b) in a case falling within sub-paragraph (1)(a)(ii) or (2)(a)(ii) above--

(i) any claim under the subsection in question must be made by the transferee; and

(ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the transferee.

Chargeable gains: section 30 of the Gains Act

4 (1) Nothing in Part II or III of the [1993 c. 43.] Railways Act 1993, and no instrument or agreement made, or other thing done, under or by virtue of either of those Parts, shall be regarded as a scheme or arrangement for the purposes of section 30 of the Gains Act (value-shifting).

(2) In any case where--

(a) an asset which is the subject of a relevant transfer or qualifying disposal has previously been the subject of a scheme or arrangements falling within subsection (1) of that section,

(b) in consequence, subsection (5) of that section (consideration on disposal to be treated as increased for certain purposes) would, apart from sub-paragraph (3) below, have had effect in relation to the consideration for the relevant transfer or qualifying disposal, and

(c) the consideration for the relevant transfer or qualifying disposal falls to be determined under paragraph 2 above or paragraph 7(2), 11(3) or 25(2) below,

sub-paragraph (3) below shall apply.

(3) Where this sub-paragraph applies--

(a) the said subsection (5) shall not have effect in relation to the consideration for the relevant transfer or qualifying disposal; but

(b) on the first subsequent disposal of the asset which is neither a relevant transfer or qualifying disposal nor a group disposal--

(i) that subsection shall have effect in relation to the consideration for that disposal (whether or not it would otherwise have done so); and

(ii) the increase that falls to be made under that subsection shall be so calculated as to include any increase which would, but for paragraph (a) above, have fallen to be made in relation to the relevant transfer or qualifying disposal.

(4) In this paragraph--

"group disposal" means a disposal which falls to be treated by virtue of section 171(1) of the Gains Act as made for a consideration such that no gain or loss accrues to the person making the disposal;
"qualifying disposal" means--
(a)
a disposal to which paragraph 7(2) below applies; or
(b)
a disposal falling within paragraph 11(3) or 25(2) below.

Chargeable gains: section 41 of the Gains Act

5 Subsection (1) of section 174 of the Gains Act (which applies section 41 of that Act to cases where assets have been acquired without gain or loss) shall have effect, without prejudice to paragraph 2 above or paragraph 7(2), 11(3) or (4) or 25(2) below, where there has been--

(a) a relevant transfer,

(b) a disposal to which paragraph 7(2) below applies, or

as if the asset to which the transfer or disposal relates had thereby been transferred and acquired in relevant circumstances, within the meaning of that subsection.

Chargeable gains: roll-over relief

6 (1) Subject to the following provisions of this paragraph, where any asset, or any interest in an asset, is the subject of a relevant transfer, sections 152 to 160 of the Gains Act (roll-over relief on replacement of business assets) shall have effect as if--

(a) the asset or interest had been acquired by the transferee--

(i) at the time at which, and for the consideration for which, the predecessor acquired it; and

(ii) for the purpose of the asset's use in a trade carried on by the transferee (and not wholly or partly for the purpose of realising a gain from the disposal of the asset or interest), but only to the extent that the predecessor's acquisition was for the purpose of the asset's use in a trade carried on by him (and not wholly or partly for the purpose of realising a gain from the disposal of the asset or interest);

(b) throughout the period during which the asset or interest was owned by the predecessor, it had been owned by the transferee; and

(i) used the asset, or

(ii) in the case of an asset falling within head A of Class 1 in section 155 of that Act, used and occupied the asset,

during that period for the purposes of a trade carried on by him, the transferee had used or, as the case may be, used and occupied the asset for the purposes of a trade carried on by him.

(2) In any case where--

(a) a held-over gain would, but for the provisions of section 154 of the Gains Act (depreciating assets), have been carried forward to a depreciating asset, and

(b) that asset is the subject of a relevant transfer,

that section shall have effect as if the gain had accrued to, and the claim for it to be held over had been made by, the transferee and as if the predecessor's acquisition of the depreciating asset had been the transferee's acquisition of that asset.

(3) Where an asset, or an interest in an asset, is the subject of a relevant transfer, the predecessor shall not be entitled at any time after the coming into force of the relevant transfer to make any claim under section 152 or 153 of the Gains Act in respect of his acquisition of the asset or interest.

(4) Where an asset, or an interest in an asset, is the subject of a relevant transfer, the transferee shall not, by virtue of any provision of this Schedule, be treated for the purposes of sections 152 to 154 of the Gains Act as having applied the whole or any part of the consideration for any disposal--

(a) in acquiring the asset or interest by virtue of the relevant transfer; or

(b) in acquiring the asset or interest as postulated in sub-paragraph (1)(a) above, if the predecessor has made a claim under section 152 or 153 of that Act in respect of his acquisition of the asset or interest.

(5) Without prejudice to paragraph 1(4)(b) above, expressions used in sub-paragraph (2) above and in section 154 of the Gains Act have the same meaning in that sub-paragraph as they have in that section.

Chargeable gains: agreements and instruments by virtue of section 91(1)(c) of the Railways Act 1993

7 (1) Sub-paragraph (2) below applies to any disposal effected pursuant to an obligation imposed by a section 85 transfer scheme by virtue of section 91(1)(c) of the [1993 c. 43.] Railways Act 1993 (obligations to enter into agreements or execute instruments) if the person making the disposal is--

(a) the Board,

(b) a wholly owned subsidiary of the Board,

(d) a company which is wholly owned by the Franchising Director,

and the person to whom the disposal is made is either a person falling within paragraphs (a) to (d) above or the Franchising Director.

(2) A disposal to which this sub-paragraph applies shall be taken for the purposes of corporation tax on chargeable gains, in relation to the person to whom the disposal is made as well as the person making the disposal, to be effected for a consideration such that no gain or loss accrues to the person making the disposal.

(3) Section 171(1) of the Gains Act (transfers within a group) shall not apply where the disposal in question is one to which sub-paragraph (2) above applies.

(4) Section 17 of that Act (disposals and acquisitions treated as made at market value) shall not have effect in relation to a disposal or the corresponding acquisition if--

(a) the disposal is effected pursuant to an obligation imposed by a section 85 transfer scheme by virtue of section 91(1)(c) of the [1993 c. 43.] Railways Act 1993,

(b) the person making the disposal is either a person falling within paragraphs (a) to (d) of sub-paragraph (1) above or the Franchising Director, and

(c) the person making the corresponding acquisition is neither a person falling within those paragraphs nor the Franchising Director,

unless the person making the disposal is connected with the person to whom the disposal is made.

(5) In this paragraph, "the corresponding acquisition", in the case of any disposal, means the acquisition made by the person to whom the disposal is made.

Chargeable gains: group transactions

8 (1) For the purposes of section 179 of the Gains Act (company ceasing to be a member of a group), where any company ("the degrouped company") ceases, by virtue of a qualifying transaction, to be a member of a group of companies, the degrouped company shall not, by virtue of that qualifying transaction, be treated under that section as having sold, and immediately reacquired, any asset acquired from a company which was at the time of acquisition a member of that group.

(2) Where sub-paragraph (1) above applies in relation to any asset, section 179 of the Gains Act shall have effect on the first subsequent occasion on which the degrouped company ceases to be a member of a group of companies (the "subsequent group"), otherwise than by virtue of a qualifying transaction, as if both the degrouped company and the company from which the asset was acquired had been members of the subsequent group at the time of acquisition.

(3) Where, disregarding any preparatory transactions, a company would be regarded for the purposes of section 179 of the Gains Act (and, accordingly, of this paragraph) as ceasing to be, or becoming, a member of a group of companies by virtue of a qualifying transaction, it shall be regarded for those purposes as so doing by virtue of the qualifying transaction and not by virtue of any preparatory transactions.

(4) In this paragraph--

"preparatory transaction" means anything done under or by virtue of Part II of the Railways Act 1993 for the purpose of initiating, advancing or facilitating the qualifying transaction in question;
"qualifying transaction" means--
(a)
a relevant transfer;
(b)
any other transfer or disposal under or by virtue of section 85, 88(6) or (7) or 89 of the Railways Act 1993.

(5) Expressions used in this paragraph and in section 179 of the Gains Act have the same meaning in this paragraph as they have in that section.

Chargeable gains: disposal of debts

9 (1) Where by virtue of any relevant transfer--

(a) any debt owed to the predecessor is transferred to the transferee, and

(b) the predecessor would, apart from this sub-paragraph, be the original creditor in relation to that debt for the purposes of section 251 of the Gains Act (disposal of debts),

that Act shall have effect as if the transferee and not the predecessor were the original creditor for those purposes.

(2) Where, by virtue of any relevant transfer, any obligations of the predecessor under a guarantee of the repayment of a loan are transferred to the transferee, the transferee shall be treated for the purposes of section 253(4) of the Gains Act (relief for guarantors) as a person who gave the guarantee.

(3) In any case where--

(a) by virtue of any relevant transfer, a debt owed to the predecessor is transferred to the transferee,

(b) that debt is either--

(i) a right to the repayment of any amount outstanding as principal on a loan which is a qualifying loan for the purposes of either of sections 253 and 254 of the Gains Act (relief for irrecoverable debts owed by traders and payments under guarantees), or

(ii) a right to recover any amount paid under a guarantee of the repayment of such a loan or of a loan which would be such a loan but for section 253(1)(c) of that Act (exclusion of debts not on security), and

(c) no allowable loss in respect of the amount mentioned in paragraph (b)(i) or (ii) above has been claimed by the predecessor under either of sections 253 and 254 of that Act before the coming into force of the relevant transfer,

those sections shall have effect with the modifications set out in sub-paragraph (4) below.

(4) Those modifications are--

(a) that the loan or, as the case may be, the guarantee shall be treated as if it had been made or given by the transferee, and

(b) that any payment made under the guarantee by the predecessor shall be treated as if it had been made by the transferee,

and those sections shall accordingly have effect as if there had been no assignment of the right to recover the principal of the loan or of any right to recover an amount paid under the guarantee.

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