Annex 1: Minor Changes in the Law Change 12: Requiring an apportionment to be just and reasonable: sections 63, 67, 78, 229, 234, 255, 1185, 1194 and 1241 and Schedule 1
This change requires certain apportionments that are not required to be made on a just and reasonable basis in the source legislation to be made on that basis.
It brings the income tax and corporation tax codes back into line. It also applies to management expenses.
Apportionments are sometimes to be made on a specified basis, such as time apportionment. But often they are left to be made according to what is reasonable in the particular circumstances. This change is concerned with such apportionments.
In some cases where there is an apportionment under legislation rewritten in this Act, the apportionment is required by the source legislation to be made on a just and reasonable basis. In other cases, it is required to be made only on a just basis or only on a reasonable basis, or there are no requirements. It is now the practice to require an apportionment to be just and reasonable. There is no reason why an apportionment should not be on a just and reasonable basis. And it is desirable that all apportionments of this nature should be made on the same basis.
Accordingly, where an apportionment under legislation rewritten in this Act is not required to be made on a just and reasonable basis, the rewritten provision requires the apportionment to be made on a just and reasonable basis. The changes are as follows:
	section 30(2)(a) of ICTA (apportionment of deemed payment in respect of expenditure on sea walls, as may be just) (see section 255(2));
	section 37(3) of ICTA (apportionment of appropriate fraction of the amount chargeable on the superior interest attributable to a part of premises required to be just) (see section 229(3));
	section 37(6) of ICTA (amount chargeable on the superior interest to be proportionately adjusted between parts of premises; no explicit requirements as to the basis on which the adjustment is to be made) (see section 234(7));
	section 87(3) of ICTA (apportionment of deemed rent attributable to part of land not occupied for the purposes of a trade, profession or vocation required to be just) (see section 63(5));
	section 87(5) of ICTA, which applies section 37(6) of ICTA (amount chargeable on the superior interest to be proportionately adjusted between parts of premises; no explicit requirements as to the basis on which the adjustment is to be made) (see section 67(6));
	section 579(5) of ICTA (apportionment of a redundancy payment where the employee is employed in different capacities; no requirements as to the basis on which the apportionment is to be made) (see sections 78(2) and 1241(2));
	section 35(2) of FA 2006 (apportionment of expenditure as between UK expenditure and non-UK expenditure, for purposes of film production provisions, required to be fair and reasonable) (see section 1185(2)); and
	paragraph 8 of Schedule 4 to FA 2006 (estimates for purposes of film production company provisions required to be fair and reasonable) (see section 1194).
This change applies also to the corresponding rule for expenses of insurance companies in section 76ZH of ICTA (inserted by Schedule 1 to this Act).
It is difficult to identify even a theoretical difference between a just and reasonable apportionment and an apportionment on another basis. But this change is presented on the basis that there may be such a difference.
This change makes minor amendments to a number of existing rules, but is expected to have no practical effect as it is in line with generally accepted practice.