Explanatory note

This Order deals with tax consequences of a transfer (“a relevant transfer”) of property, rights and liabilities from the British Waterways Board (“BWB”) to the Canal & River Trust (“CRT”), or to the Canal & River Trading CIC (“CRT CIC”), made under the British Waterways Board Transfer Scheme 2012.

Article 1 provides for citation and commencement.

Article 2 provides for interpretation.

Article 3 provides that for the purposes of the Capital Allowances Act 2001 (c. 2) where as a result of a relevant transfer BWB ceases to carry on a trade and CRT, or CRT CIC, begins to carry on that trade, the trade is not to be treated as permanently discontinued, nor a new trade set up. In light of this, paragraph (3) of the article provides that all such allowances and charges that would have been applicable to BWB, are to apply to CRT or CRT CIC as appropriate. Albeit by paragraph (4) such allowances and charges are to be computed, in so far as they relate to assets in use for the purposes of the trade, as not giving rise to an allowance or charge.

Article 4 applies article 3 for a relevant transfer involving transfer of part of a trade from BWB to CRT, or CRT CIC, as the case may be. Paragraph (3) of the article provides for a just and reasonable apportionment of receipts, expenses, assets and liabilities for such purposes.

Article 5 provides that for the purposes of the Taxation of Chargeable Gains Act 1992 (c. 12) (“TCGA”) a disposal under a relevant transfer is to be treated as being for a consideration such that no gain or loss accrues to BWB. The article also provides that such a disposal is to be treated as one of the no gain/no loss provisions within section 288(3A) TCGA.

Article 6 provides, for corporation tax purposes, continuity of treatment of the trade, or part trade (as the case may be), carried on by either CRT or CRT CIC following a relevant transfer, which was previously carried on by BWB. This is done by providing that, for the purposes of computing the trading profits or losses of BWB, CRT or CRT CIC, the transferred trade, or part trade, was always a separate trade and was always carried on by CRT, or CRT CIC, as appropriate. In light of this, paragraph (3) of the article provides for a just and reasonable apportionment of receipts, expenses, assets and liabilities for the purposes of computing the trading profits or losses of BWB, CRT or CRT CIC.

Article 7 provides, for corporation tax purposes, continuity of treatment of loan relationships transferred as part of a relevant transfer. This is done by providing that for the purposes of Part 5 of the Corporation Tax Act 2009 (c. 4) BWB and CRT, or CRT CIC, are treated as if, for the purposes of the relevant transfer, they were members of the same group.

Article 8 provides that stamp duty is not chargeable on an instrument making or effecting a relevant transfer.

Paragraph (1) of article 9 provides that any land transaction entered into on, or in consequence of, or in connection with, a relevant transfer is exempt from the charge to stamp duty land tax. Paragraph (2) however provides that in certain circumstances the exemption provided by paragraph (1) is withdrawn in whole, or in part in certain cases for CRT, and stamp duty land tax is chargeable in an amount that would have been chargeable in respect of the transaction but for the exemption or, as the case may be, in an appropriate proportion of the tax that would have been so chargeable.

A Tax Information and Impact Note covering this Order will be published on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm.