Citation, commencement and effect

1. —(1) This Order may be cited as the Income Tax (Trading and Other Income) Act 2005 (Consequential Amendments) Order 2006.

(2) This Order shall come into force on 30th March 2006.

(3) This Order has effect—

(a) for income tax purposes for the tax year 2006-07 and subsequent tax years, and

(b) for corporation tax purposes, for accounting periods ending after 5th April 2006.

(4) This Order shall be deemed to have had effect—

(a) for income tax purposes, for the tax year 2005-06, and

(b) for corporation tax purposes, for accounting periods ending after 5th April 2005 and before 6th April 2006.

Consequential amendments to legislation

2. —(1) In section 836B(2) of the Income and Corporation Taxes Act 1988( 2 ) (table of provisions to which that section applies), in Part 3 of the Table—

(a) in column 1, after the entry “Section 71(4) of the Finance Act 1989”, insert the following entry—

“ Paragraph 3(1) of Schedule 12 to the Finance ( No. 2) Act 1992 ” , and

(b) in column 2, after the entry “Employee share ownership trust (borrowing)”, insert the following entry—

“ Banks etc. in compulsory liquidation (taxation of certain receipts) ” .

3. —(1)The Taxation of Chargeable Gains Act 1992( 3 ) is amended as follows.

(2) In section 143(1) (commodity and financial futures and qualifying options)—

(a) after “section 128 of the Taxes Act” insert “and section 779 of ITTOIA 2005”, and

(b) for “chargeable to tax under Schedule D otherwise than as the profits of a trade, then” substitute—

“ chargeable to tax—

(a) under Schedule D otherwise than as the profits of a trade, or

(b) under Chapter 8 of Part 5 of ITTOIA 2005,

then ”

(3) In section 161(3) (appropriations to and from stock) for the words from “if” to “, and elects” substitute—

“ if—

(a) he is chargeable to corporation tax in respect of the profits of the trade under Case I of Schedule D, or

(b) he is chargeable to income tax in respect of the profits of the trade under Chapter 2 of Part 2 of ITTOIA 2005 and the trade is carried on wholly or partly in the United Kingdom,

and he elects ” .

4. —(1) In the Finance (No. 2) Act 1992( 4 ) amend paragraph 3 of Schedule 12 (banks etc. in compulsory liquidation: taxation of certain receipts) as follows.

(2) In sub-paragraph (1) for “under Case VI of Schedule D” substitute “(in the case of corporation tax, under Case VI of Schedule D)”.

(3) In sub-paragraph (3)(b) after “under section 100 of the Taxes Act 1988” insert “or section 173 of the Income Tax (Trading and Other Income) Act 2005”.

5. —(1) In the Finance Act 2002( 5 ) amend Schedule 12 (tax relief for expenditure on research and development) as follows.

(2) In paragraph 4(6)(b)—

(a) after “trade, profession or vocation” insert “(i)”, and

(b) after “Schedule D” insert—

“ , or

(ii) which is carried on wholly or partly in the United Kingdom and the profits of which are chargeable to tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 ” .

(3) In paragraph 5(6)(b)—

(a) after “trade, profession or vocation” insert “(i)”, and

(b) after “Schedule D” insert—

“ , or

(ii) which is carried on wholly or partly in the United Kingdom and the profits of which are chargeable to tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 ” .

(4) In paragraph 8(a) after “Schedule D” insert—

“ , or

(iii) by any person otherwise than in the course of carrying on wholly or partly in the United Kingdom a trade, profession or vocation the profits of which are chargeable to tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 ” .