TAXES CONSOLIDATION ACT, 1997

• (c) shares in a company under the control of a company (other than a company which is, or if resident in the State would be, a close company within the meaning of section 430) whose shares are quoted on a recognised stock exchange.

• (a) fully paid up,

• (b) not redeemable, and

• (c) not subject to any restrictions other than restrictions which attach to all shares of the same class or, as respects a profit sharing scheme approved on or after the 10th day of May, 1997, a restriction authorised by subparagraph (2).

• (2) Subject to subparagraphs (3) and (4), the shares may be subject to a restriction imposed by the company's articles of association—

• (a) requiring all shares held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held, and

• (b) requiring all shares acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

• (3) A restriction is not authorised by subparagraph (2) unless—

• (a) any disposal required by the restriction will be by means of sale for a consideration in money on terms specified in the articles of association, and

• (b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in paragraph (a).

• (4) Nothing in subparagraph (2) authorises a restriction which would require a person, before the release date, to dispose of his or her beneficial interest in shares the ownership of which has not been transferred to him or her.

• (a) persons who acquired their shares—

• (i) in pursuance of a right conferred on them or an opportunity afforded to them as a director or employee of the company concerned or any other company, and

• (ii) not in pursuance of an offer to the public,

• (b) trustees holding shares on behalf of persons who acquired their beneficial interests in the shares in pursuance of a right or opportunity mentioned in subparagraph (a), and

• (c) in a case where the shares are within paragraph 9(c) and are not within paragraph 9(a), companies which have control of the company whose shares are in question or of which that company is an associated company within the meaning of section 432.

PART 4

Individuals ineligible to participate

• (a) a company which controls or is controlled by the company concerned or which is controlled by a company which also controls the company concerned, or

• (b) a company which is a member of a consortium owning the company concerned or which is owned in part by the company concerned as a member of a consortium.

• (a) the company whose shares are to be appropriated, or

• (b) a company which has control of that company or is a member of a consortium which owns that company.

• (2) Subparagraph (1) shall apply in relation to a company which would be a close company but for section 430(1) (a) or 431.

• (3)
• (a) In this paragraph, “close company” has the meaning assigned to it by section 430.

• (b) For the purpose of this paragraph—

• (i) subsection (3) of section 433 shall apply—

• (I) in a case where the scheme in question is a group scheme, with the substitution of a reference to all participating companies for the first reference to the company in paragraph (c) (ii) of that subsection, and

• (II) with the substitution of a reference to 15 per cent for the reference in that paragraph to 5 per cent, and

• (ii) section 437(2) shall apply, with the substitution of a reference to 15 per cent for the reference in that section to 5 per cent, for the purpose of determining whether a person has or had a material interest in a company.

PART 5

Provisions as to the trust instrument

• (a) specifying the number and description of those shares, and

• (b) stating their initial market value.

• (2) The trust instrument shall contain a provision prohibiting the trustees from disposing of any shares after the end of the period of retention and before the release date except—

• (a) pursuant to a direction given by or on behalf of the participant or any person in whom the beneficial interest in the participant's shares is for the time being vested, and

• (b) by a transaction which would not involve a breach of the participant's obligation under paragraph (c) or (d) of section 511(4).

• (a) subject to any direction referred to in section 513(3), to pay over to the participant any money or money's worth received by them in respect of, or by reference to, any of the participant's shares, other than money consisting of a sum referred to in section 511 (4) (c) or money's worth consisting of new shares within the meaning of section 514, and

• (b) to deal only pursuant to a direction given by or on behalf of the participant (or any person referred to in paragraph 16(2) (a)) with any right conferred in respect of any of the participant's shares to be allotted other shares, securities or rights of any description.

• (a) to maintain such records as may be necessary to enable the trustees to carry out their obligations under Chapter 1 of Part 17, and

• (b) where the participant becomes liable to income tax under Schedule E by reason of the occurrence of any event, to inform the participant of any facts relevant to determining that liability.

SCHEDULE 12 Employee Share Ownership Trusts

[FA97 Sch 3].

Interpretation

“ordinary share capital” has the same meaning as in section 2;

“securities” means shares (including stock) and debentures.

• (2) For the purposes of this Schedule, the question whether one company is controlled by another shall be construed in accordance with section 432.

• (3) For the purposes of this Schedule, a person shall be regarded as an employee or a director of a company within the founding company's group at a particular time if, at the time or within 18 months before the time, that person is or was an employee or director of—

• (a) the founding company, being a company resident in the State,

• (b) a company resident in the State and controlled by the founding company, or

• (c) a company, being the founding company or a company controlled by the founding company, which carries on a trade in the State through a branch or agency in which that person is employed.

• (4)
• (a) In this subparagraph—

“associate” has the meaning assigned to it by section 433;

“control” shall be construed in accordance with section 432.

• (b) For the purposes of this Schedule, a person shall be treated as having a material interest in a company if the person, either on his or her own or with any one or more of his or her associates, or if any associate of his or her with or without any such other associates, is the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 5 per cent of the ordinary share capital of the company.

• (5) For the purposes of this Schedule, a trust shall be established when the deed under which it is established is executed.

Approval of Qualifying Trusts

• (a) there is with respect to the operation of the trust any contravention of the conditions in paragraphs 6 to 18, or

• (b) any shares of a class of which shares have been acquired by the trustees receive different treatment in any respect from the other shares of that class, in particular, different treatment in respect of—

• (i) the dividend payable,

• (ii) repayment,

• (iii) the restrictions attaching to the shares, or

• (iv) any offer of substituted or additional shares, securities or rights of any description in respect of the shares,

the Revenue Commissioners may, subject to subparagraph (3), withdraw the approval with effect from that time or from such later time as they may specify.

• (2) Where at any time after the Revenue Commissioners have approved of a trust an alteration is made to the terms of the trust, the approval shall not have effect after the date of the alteration unless the Revenue Commissioners have approved of the alteration.

• (3) It shall not be a ground for withdrawal of approval of a trust that shares which have been newly issued receive, in respect of dividends payable with respect to a period beginning before the date on which the shares were issued, treatment which is less favourable than that accorded to shares issued before that date.

• (4) The Revenue Commissioners may by notice in writing require any person to furnish to them, within such time as they may direct which is not less than 30 days, such information as they think necessary to enable them to either or both—

• (a) determine whether to approve of an employee share ownership trust or withdraw an approval already given, and

• (b) determine the liability to tax of any beneficiary under an approved employee share ownership trust.

• (a) the failure of the Revenue Commissioners to approve of an employee share ownership trust,

• (b) the failure of the Revenue Commissioners to approve of an alteration as mentioned in paragraph 3(2), or

• (c) the withdrawal of approval,

the company may, by notice in writing given to the Revenue Commissioners within 30 days from the date on which it is notified of their decision, make an application to have its claim for relief heard and determined by the Appeal Commissioners.

• (2) Where an application is made under subparagraph (1), the Appeal Commissioners shall hear and determine the claim in the like manner as an appeal made to them against an assessment and the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

General

• (2) The trust shall be established by the founding company which at the time the trust is established is not controlled by another company.

Trustees

• (a) appoint the initial trustees;

• (b) contain rules for the retirement and removal of trustees;

• (c) contain rules for the appointment of replacement and additional trustees.

• (2) The trust deed shall provide that at any time while the trust subsists (in this subparagraph referred to as “the relevant time”)—

• (a) the number of trustees shall not be less than 3;

• (b) all the trustees shall be resident in the State;

• (c) the trustees shall include one person who is a trust corporation, a solicitor, or a member of such other professional body as the Revenue Commissioners may from time to time allow for the purposes of this paragraph;

• (d) the majority of the trustees shall be persons who are not and have never been directors of any company within the founding company's group at the relevant time;

• (e) the majority of the trustees shall be representatives of the employees of the companies within the founding company's group at the relevant time, and who do not have and have never had a material interest in any such company;

• (f) the trustees to whom subparagraph (e) relates shall, before being appointed as trustees, have been selected by a majority of the employees of the companies within the founding company's group at the time of the selection.

• (a) appoint the initial trustees;

• (b) contain rules for the retirement and removal of trustees;

• (c) contain rules for the appointment of replacement and additional trustees.

• (2) The trust deed shall be so framed that at any time while the trust subsists the conditions in subparagraph (3) are fulfilled as regards the persons who are then trustees, and in that subparagraph “the relevant time” means that time.

• (3) The conditions referred to in subparagraph (2) are that—

• (a) the number of trustees is not less than 3;

• (b) all the trustees are resident in the State;

• (c) the trustees include at least one person who is a professional trustee and at least 2 persons who are non-professional trustees;

• (d) at least half of the non-professional trustees were, before being appointed as trustees, selected in accordance with subparagraph (6) or (7);

• (e) all the trustees so selected are persons who are employees of companies within the founding company's group at the relevant time, and who do not have and have never had a material interest in any such company.

• (4) For the purposes of this paragraph, a trustee shall be a professional trustee at a particular time if—

• (a) the trustee is then a trust corporation, a solicitor, or a member of such other professional body as the Revenue Commissioners allow for the purposes of this subparagraph,

• (b) the trustee is not then an employee or director of any company then within the founding company's group, and

• (c) the trustee meets the requirements of subparagraph (5),

and for the purposes of this paragraph a trustee shall be a non-professional trustee at a particular time if the trustee is not then a professional trustee for those purposes.

• (5) A trustee shall meet the requirements of this subparagraph if—

• (a) he or she was appointed as an initial trustee and, before being appointed as trustee, was selected only by the persons who later became the non-professional initial trustees, or

• (b) he or she was appointed as a replacement or additional trustee and, before being appointed as trustee, was selected only by the persons who were the non-professional trustees at the time of the selection.

• (6) Trustees shall be selected in accordance with this subparagraph if the process of selection is one under which—

• (a) all the persons who are employees of the companies within the founding company's group at the time of the selection, and who do not have and have never had a material interest in any such company, are, in so far as is reasonably practicable, given the opportunity to stand for selection,

• (b) all the employees of the companies within the founding company's group at the time of the selection are, in so far as is reasonably practicable, given the opportunity to vote, and

• (c) persons gaining more votes are preferred to those gaining less.

• (7) Trustees shall be selected in accordance with this subparagraph if they are selected by persons elected to represent the employees of the companies within the founding company's group at the time of the selection.

• (2) The trust deed shall—

• (a) be so framed that at any time while the trust subsists the trustee is a company which at that time is resident in the State and controlled by the founding company;

• (b) appoint the initial trustee;

• (c) contain rules for the removal of any trustee and for the appointment of a replacement trustee.

• (3) The trust deed shall be so framed that at any time while the trust subsists the company which is then the trustee is a company so constituted that the conditions in subparagraph (4) are then fulfilled as regards the persons who are then directors of the company, and in that subparagraph “the relevant time” means that time and “the trust company” means that company.

• (4) The conditions referred to in subparagraph (3) are that—

• (a) the number of directors is not less than 3;

• (b) all the directors are resident in the State;

• (c) the directors include at least one person who is a professional director and at least 2 persons who are non-professional directors;

• (d) at least half of the non-professional directors were, before being appointed as directors, selected in accordance with subparagraph (7) or (8);

• (e) all the directors so selected are persons who are employees of companies within the founding company's group at the relevant time, and who do not have and have never had a material interest in any such company.

• (5) For the purposes of this paragraph, a director shall be a professional director at a particular time if—

• (a) the director is then a solicitor or a member of such other professional body as the Revenue Commissioners may at that time allow for the purposes of this subparagraph,

• (b) the director is not then an employee of any company then within the founding company's group,

• (c) the director is not then a director of any such company other than the trust company, and

• (d) the director meets the requirements of subparagraph (6),

and for the purposes of this paragraph a director shall be a nonprofessional director at a particular time if the director is not then a professional director for those purposes.

• (6) A director shall meet the requirements of this subparagraph if—

• (a) he or she was appointed as an initial director and, before being appointed as director, was selected only by the persons who later became the non-professional initial directors, or

• (b) he or she was appointed as a replacement or additional director and, before being appointed as director, was selected only by the persons who were the non-professional directors at the time of the selection.

• (7) Directors shall be selected in accordance with this subparagraph if the process of selection is one under which—

• (a) all the persons who are employees of the companies within the founding company's group at the time of the selection, and who do not have and have never had a material interest in any such company, are, in so far as is reasonably practicable, given the opportunity to stand for selection,

• (b) all the employees of the companies within the founding company's group at the time of the selection are, in so far as is reasonably practicable, given the opportunity to vote, and

• (c) persons gaining more votes are preferred to those gaining less.

• (8) Directors shall be selected in accordance with this subparagraph if they are selected by persons elected to represent the employees of the companies within the founding company's group at the time of the selection.

Beneficiaries

• (2) The trust deed shall provide that a person is a beneficiary at a particular time (in this subparagraph referred to as “the relevant time”) if—

• (a) the person is at the relevant time an employee or director of a company at that time within the founding company's group,

• (b) at each given time in a qualifying period the person was such an employee or director of a company within the founding company's group at that given time, and

• (c) in the case of a director, at that given time the person worked as a director of the company concerned at the rate of at least 20 hours a week (disregarding such matters as holidays and sickness).

• (3) The trust deed may provide that a person is a beneficiary at a particular time (in this subparagraph referred to as “the relevant time”) if—

• (a) the person has at each given time in a qualifying period been an employee or director of a company within the founding company's group at that given time,

• (b) the person has ceased to be an employee or director of the company or the company has ceased to be within that group, and

• (c) at the relevant time a period of not more than 18 months has elapsed since the person so ceased or the company so ceased, as the case may be.

• (4) The trust deed may provide for a person to be a beneficiary if the person is a charity and the circumstances are such that—

• (a) there is no person who is a beneficiary within the rule which is included in the deed and conforms with subparagraph (2) or with any rule which is so included and conforms with subparagraph (3), and

• (b) the trust is in consequence being wound up.

• (5) For the purposes of subparagraph (2), a qualifying period shall be a period—

• (a) whose length is not more than 5 years,

• (b) whose length is specified in the trust deed, and

• (c) which ends with the relevant time (within the meaning of that subparagraph).

• (6) For the purposes of subparagraph (3), a qualifying period shall be a period—

• (a) whose length is equal to that of the period specified in the trust deed for the purposes of a rule which conforms with subparagraph (2), and

• (b) which ends when the person or company, as the case may be, ceased as mentioned in subparagraph (3) (b).

• (7) The trust deed shall not provide for a person to be a beneficiary unless the person is within the rule which is included in the deed and conforms with subparagraph (2) or any rule which is so included and conforms with subparagraph (3) or (4).

• (8) The trust deed shall provide that, notwithstanding any other rule which is included in it, a person cannot be a beneficiary at a particular time (in this subparagraph referred to as “the relevant time”) by virtue of a rule which conforms with subparagraph (2), (3) or (4) if—

• (a) at the relevant time the person has a material interest in the founding company, or

• (b) at any time in the period of one year preceding the relevant time the person has had a material interest in that company.

• (9) For the purposes of this paragraph, “charity” means any body of persons or trust established for charitable purposes only.

Trustees' functions

• (2) The functions of the trustees shall be so expressed that it is apparent that their general functions are—

• (a) to receive sums from the founding company and other sums, by means of loan or otherwise;

• (b) to acquire securities;

• (c) to grant rights to acquire shares to persons who are beneficiaries under the terms of the trust deed;

• (d) to transfer either or both securities and sums to persons who are beneficiaries under the terms of the trust deed;

• (e) to transfer securities to the trustees of profit sharing schemes approved under Part 2 of Schedule 11;

• (f) pending transfer, to retain the securities and to manage them, whether by exercising voting rights or otherwise.

Sums

• (a) shall be expended within the expenditure period,

• (b) may be expended only for one or more of the qualifying purposes, and

• (c) shall, while it is retained by them, be kept as cash, or be kept in an account with a relevant deposit taker (within the meaning of section 256).

• (2) For the purposes of subparagraph (1), the expenditure period shall be the period of 9 months beginning on the day determined as follows—

• (a) in a case where the sum is received from the founding company, or a company which is controlled by that company at the time the sum is received, the day following the end of the accounting period in which the sum is expended by the company from which it is received;

• (b) in any other case, the day the sum is received.

• (3) For the purposes of subparagraph (1), each of the following shall be a qualifying purpose—

• (a) the acquisition of shares in the founding company;

• (b) the repayment of sums borrowed;

• (c) the payment of interest on sums borrowed;

• (d) the payment of any sum to a person who is a beneficiary under the terms of the trust deed;

• (e) the meeting of expenses.

• (4) The trust deed shall provide that, in ascertaining for the purposes of a relevant rule (being a provision which is included in the trust deed and conforms with subparagraph (1)) whether a particular sum has been expended, sums received earlier by the trustees shall be treated as expended before sums received by them later.

• (5) The trust deed shall provide that, where the trustees pay sums to different beneficiaries at the same time, all the sums shall be paid on similar terms.

• (6) For the purposes of subparagraph (5), the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service or similar factors shall not be regarded as meaning that the terms are not similar.

Securities

• (a) form part of the ordinary share capital of the company,

• (b) are fully paid up,

• (c) are not redeemable, and

• (d) are not subject to any restrictions other than restrictions which attach to all shares of the same class or a restriction authorised by subparagraph (2).

• (2) Subject to subparagraph (3), a restriction shall be authorised by this subparagraph if—

• (a) it is imposed by the founding company's articles of association,

• (b) it requires all shares held by directors or employees of the founding company, or of any other company which it controls for the time being, to be disposed of on ceasing to be so held, and

• (c) it requires all shares acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

• (3) A restriction shall not be authorised by subparagraph (2) unless—

• (a) any disposal required by the restriction will be by means of sale for a consideration in money on terms specified in the articles of association, and

• (b) the articles also contain general provisions by virtue of which any person disposing of shares of the same class (whether or not held or acquired as mentioned in subparagraph (2)) may be required to sell them on terms which are the same as those mentioned in clause (a).

• (4) The trust deed shall provide that shares in the founding company may not be acquired by the trustees at a price exceeding the price they might reasonably be expected to fetch on a sale in the open market.

• (5) The trust deed shall provide that shares in the founding company may not be acquired by the trustees at a time when that company is controlled by another company.

• (a) if they are securities acquired by the trustees as a result of a reorganisation or reduction of share capital, and the original shares the securities represent are shares in the founding company (construing “reorganisation or reduction of share capital” and “original shares” in accordance with section 584), or

• (b) if they are securities issued to the trustees in exchange in circumstances mentioned in section 586.

• (a) where the trustees transfer securities to a beneficiary, they shall do so on qualifying terms;

• (b) the trustees shall transfer securities before the expiry of 20 years beginning on the date on which they acquired them.

• (2) For the purposes of subparagraph (1), a transfer of securities shall be made on qualifying terms if—

• (a) all the securities transferred at the same time are transferred on similar terms,

• (b) securities have been offered to all the persons who are beneficiaries under the terms of the trust deed when the transfer is made, and

• (c) securities are transferred to all such beneficiaries who have accepted.

• (3) For the purposes of subparagraph (2), the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service or similar factors shall not be regarded as meaning that the terms are not similar.

• (4) The trust deed shall provide that, in ascertaining for the purposes of a relevant rule (being a provision which is included in the trust deed and conforms with subparagraph (1)) whether particular securities are transferred, securities acquired earlier by the trustees shall be treated as transferred by them before securities acquired by them later.

Other features

• (a) acquire securities when they become entitled to them;

• (b) transfer securities to another person when that other person becomes entitled to them;

• (c) retain securities if they remain entitled to them.

• (2) Where the trust deed provides for the matter set out in paragraph 15, the trust deed shall provide for the following exceptions to any rule which is included in it and conforms with subparagraph (1) (a), namely—

• (a) if the trustees become entitled to securities as a result of a reorganisation or reduction of share capital, they shall be treated as having acquired them when they became entitled to the original shares which those securities represent (construing “reorganisation or reduction of share capital” and “original shares” in accordance with section 584);

• (b) if securities are issued to the trustees in exchange in circumstances mentioned in section 586, they shall be treated as having acquired them when they became entitled to the securities for which they are exchanged.

• (3) The trust deed shall provide that—

• (a) if the trustees agree to take a transfer of securities, for the purposes of the deed they become entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement;

• (b) if the trustees agree to transfer securities to another person, for the purposes of the deed the other person becomes entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement.

SCHEDULE 13 Accountable Persons for Purposes of Chapter 1 of Part 18

[FA92 Sch2; FA94 s11; FA96 s8]

SCHEDULE 14 Capital Gains Tax: Leases

[CGTA75 Sch3; CTA76 s140(2) and Sch2 PtII Par11]

Interpretation

Leases of land as wasting assets: restriction of allowable expenditure

• (2) Where at the beginning of the period of ownership of a lease of land it is subject to a sub-lease not at a rent representing the full value of the land together with any buildings on the land, and the value of the lease at the end of the duration of the sub-lease, estimated as at the beginning of the period of ownership, exceeds the expenditure allowable under section 552(1) (a) in computing the gain accruing on a disposal of the lease, the lease shall not be a wasting asset until the end of the duration of the sub-lease.

• (3) In the case of a wasting asset which is a lease of land, the rate at which expenditure is assumed to be written off shall, instead of being a uniform rate as provided by section 560(3), be a rate fixed in accordance with the Table to this paragraph.

• (4) Accordingly, for the purposes of the computation under Chapter 2 of Part 19 of the gain accruing on a disposal of a lease, and where—

• (a) the percentage derived from the Table to this paragraph for the duration of the lease at the beginning of the period of ownership is P (1),

• (b) the percentage so derived for the duration of the lease at the time when any item of expenditure attributable to the lease under section 552(1) (b) is first reflected in the nature of the lease is P (2), and

• (c) the percentage so derived for the duration of the lease at the time of the disposal is P (3),

then—

• (i) there shall be excluded from the expenditure attributable to the lease under section 552(1) (a) a fraction equal to—

P(1) − P(3) ___ P(1)

and

• (ii) there shall be excluded from any item of expenditure attributable to the lease under section 552(1) (b) a fraction equal to—

P(2) − P(3) __ P(2)

• (5) This paragraph shall apply notwithstanding that the period of ownership of the lease is a period exceeding 50 years, and accordingly no expenditure shall be written off under this paragraph in respect of any period earlier than the time when the lease becomes a wasting asset.

• (6) Section 561 shall apply in relation to this paragraph as it applies in relation to subsections (3) to (5) of section 560.

• (7) Where the duration of the lease is not an exact number of years, the percentage to be derived from the Table to this paragraph shall be the percentage for the whole number of years plus one-twelfth of the difference between that percentage and the percentage for the next higher number of years for each odd month, counting an odd 14 days or more as one month.

TABLE

Years	Percentage	Years	Percentage
50 (or more)	100.0	25	81.1
49	99.7	24	79.6
48	99.3	23	78.1
47	98.9	22	76.4
46	98.5	21	74.6
45	98.1	20	72.8
44	97.6	19	70.8
43	97.1	18	68.7
42	96.6	17	66.5
41	96.0	16	64.1
40	95.5	15	61.6
39	94.8	14	59.0
38	94.2	13	56.2
37	93.5	12	53.2
36	92.8	11	50.0
35	92.0	10	46.7
34	91.2	9	43.2
33	90.3	8	39.4
32	89.4	7	35.4
31	88.4	6	31.2
30	87.3	5	26.7
29	86.2	4	22.0
28	85.1	3	17.0
27	83.8	2	11.6
26	82.5	1	6.0
		0	0.0

Premiums for leases

• (2) In applying section 557 to such a part disposal, the property which remains undisposed of shall include a right to any rent or other payments (other than a premium) payable under the lease, and that right shall be valued as at the time of the part disposal.

Payments during currency of lease treated as premium

• (2) Where as consideration for the variation or waiver of any of the terms of a lease of land a sum becomes payable by the lessee otherwise than as rent, the lease shall be deemed for the purposes of this Schedule to have required the payment of a premium to the lessor (in addition to any other premium) of an amount equal to that sum for the period from the time when the variation or waiver takes effect to the time when it ceases to have effect.

• (3) Where under subparagraph (1) or (2) a premium is deemed to have been received by the lessor otherwise than as consideration for the surrender of the lease, then—

• (a) subject to clause (b), both the lessor and the lessee shall be treated as if that premium were or were part of the consideration for the grant of the lease due at the time when the lease was granted, but

• (b) if the lessor is a lessee under a lease the duration of which does not exceed 50 years, this Schedule shall apply as if—

• (i) that premium had been given as consideration for the grant of the part of the sub-lease covered by the period in respect of which the premium is deemed to have been paid, and

• (ii) that consideration were expenditure incurred by the sub-lessee and attributable to that part of the sublease under section 552(1) (b).

• (4) Where subparagraph (3) (a) applies, the gain accruing to the lessor on the disposal by means of the grant of the lease shall be recomputed and any necessary adjustments of capital gains tax shall be made accordingly, whether by means of assessment for the year in which the premium is deemed to have been received or by means of discharge or repayment of tax.

• (5) Where under subparagraph (1) a premium is deemed to have been received as consideration for the surrender of a lease, that premium shall be regarded as consideration for a separate transaction consisting of the disposal by the lessor of the lessor's interest in the lease.

• (6) Subparagraph (2) shall apply in relation to a transaction not at arm's length, and in particular in relation to a transaction entered into gratuitously, as if such sum had become payable by the tenant otherwise than as rent as might have been required of the tenant if the transaction had been at arm's length.

• (7) Subparagraph (4) shall apply for the purposes of corporation tax as it applies for the purposes of capital gains tax.

Sub-leases out of short leases

• (2) In the computation under Chapter 2 of Part 19 of the gain accruing on the part disposal of a lease by means of the grant of a sub-lease for a premium (in this paragraph referred to as “the actual premium”), the expenditure attributable to the lease under paragraphs (a) and (b) of section 552(1) shall be apportioned in accordance with this paragraph, and section 557 shall not apply.

• (3) Out of each item of the expenditure attributable to the lease under paragraphs (a) and (b) of section 552(1) there shall be apportioned to the part disposal—

• (a) if the amount of the actual premium is not less than the amount which would be obtainable by means of a premium for the sub-lease if the rent payable under the sub-lease were the same as the rent payable under the lease (in this paragraph referred to as “the full premium”), the amount (in this paragraph referred to as “the allowable amount”) which under paragraph 2(3) is to be written off over the period which is the duration of the sub-lease, and

• (b) if the amount of the actual premium is less than the full premium, such proportion of the allowable amount as is equal to the proportion which the actual premium bears to the full premium.

• (4) Where the sub-lease is a sub-lease of only part of the land comprised in the lease, this paragraph shall apply only in relation to a proportion of the expenditure attributable to the lease under paragraphs (a) and (b) of section 552(1) which is the same as the proportion which the value of the land comprised in the sub-lease at the time when the sub-lease is granted bears to the value of that land and the other land comprised in the lease at that time, and the remainder of that expenditure shall be apportioned to the other land.

Exclusion of premiums taxed under Case V of Schedule D

• (2) Where by reference to any premium in respect of a sub-lease granted out of a lease, being a lease the duration of which does not at the time of granting the lease exceed 50 years, income tax has become chargeable under section 98 on any amount, that amount shall be deducted from any gain (as computed in accordance with the provisions of the Capital Gains Tax Acts apart from this subparagraph) accruing on the disposal for which the premium is consideration, but not so as to convert the gain into a loss or to increase any loss.

• (3)
• (a) Subject to clause (b), where income tax has become chargeable under section 100 on any amount (in this subparagraph referred to as “the relevant amount”), the relevant amount shall be excluded from the consideration taken into account in the computation under Chapter 2 of Part 19 of a gain accruing on the disposal of the estate or interest in respect of which income tax becomes so chargeable, except where in an apportionment made under section 557 the value of the consideration is taken into account in the aggregate of that value and the market value of the property which remains undisposed of.

• (b) If the part or interest disposed of is the remainder of a lease or a sub-lease out of a lease the duration of which does not exceed 50 years, clause (a) shall not apply, but the relevant amount shall be deducted from any gain (as computed in accordance with the provisions of the Capital Gains Tax Acts apart from this subparagraph) accruing on the disposal, but not so as to convert the gain into a loss or to increase any loss.

• (4) References in subparagraphs (1) and (2) to a premium include references to a premium deemed to have been received under subsection (3) or (4) of section 98.

• (5) Section 551 shall not be taken as authorising the exclusion of any amount from the consideration for a disposal of assets taken into account in the computation of the gain under Chapter 2 of Part 19 by reference to any amount chargeable to tax under section 75 and Chapter 8 of Part 4.

Disallowance of premium treated as rent under superior lease

• (2) Nothing in section 551 shall be taken as applying in relation to any amount on which tax is paid under section 99.

• (3) Where any adjustment is made under paragraph (b) of section 100(2), on a claim under that paragraph, any necessary adjustment shall be made to give effect to the consequences of the claim on the operation of this paragraph or paragraph 6.

Expenditure by lessee under terms of lease

Duration of leases

• (2) Where the terms of the lease include provision for the determination of the lease by notice given by the lessor, the lease shall not be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice given by the lessor.

• (3) Where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstances render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease, the lease shall not be treated as having been granted for a term longer than one ending on that date, and this subparagraph shall apply in particular where the lease provides for the rent to be increased after a given date, or for the lessee's obligations to become in any other respect more onerous after a given date, but includes provision for the determination of the lease on that date by notice given by the lessee, and those provisions render it unlikely that the lease will continue beyond that date.

• (4) Where the terms of the lease include provision for the extension of the lease beyond a given date by notice given by the lessee, this paragraph shall apply as if the term of the lease extended for as long as it could be extended by the lessee, but subject to any right of the lessor by notice to determine the lease.

• (5) The duration of a lease shall be decided in relation to the grant or any disposal of the lease by reference to the facts which were known or ascertainable at the time when the lease was acquired or created.

Leases of property other than land

• (2) In the case of a lease of a wasting asset which is movable property, the lease shall be assumed to terminate not later than the end of the life of the wasting asset.

SCHEDULE 15 List of Bodies for Purposes of Section 610

[CGTA75 s23; FA89 s33; FA91 s20(2) and s44; FA94 s32(5); FA95 s44(1) and (3); FA96 s39(1) and (6) and s64]

PART 1

PART 2

SCHEDULE 16 Building Societies: Change of Status

[FA90 Sch3]

Capital allowances

• (2) There shall be made to or on the successor company in accordance with sections 307 and 308 all such allowances and charges as would have been made to or on the society if the society had continued to carry on the trade, and the amount of any such allowance or charge shall be computed as if the successor company had been carrying on the trade since the society began to do so and as if everything done to or by the society had been done to or by the successor company.

• (3) The conversion of the society into the successor company shall not be treated as giving rise to any such allowance or charge.

Financial assets

“financial assets” means assets held by the society in accordance with subsections (1) and (3) of section 39 of the Building Societies Act, 1989;

“financial trading stock” means such of the financial assets of the society as would constitute trading stock for the purposes of section 89.

• (2) For the purposes of section 89, the financial trading stock of the society concerned shall be valued at an amount equal to its cost to the society.

• (3) Where a society converts itself into the successor company, the vesting in the successor company of any financial assets, the profits or gains on the disposal of which would be chargeable to tax under Case I of Schedule D, shall be treated for the purposes of corporation tax as not constituting a disposal of those assets by the society; but, on the disposal of any of those assets by the successor company, the profits or gains accruing to the successor company shall be calculated (for the purposes of corporation tax) as if those assets had been acquired by the successor company at their cost to the society.

Capital gains: assets vested in the successor company, etc

• (a) a disposal by the society of assets owned by it immediately before the conversion, or

• (b) the acquisition at that time by the successor company of assets which immediately before the conversion were owned by the society.

• (2) The Capital Gains Tax Acts, and the Corporation Tax Acts in so far as those Acts relate to chargeable gains, shall apply where a society has converted itself into the successor company as if the successor company had—

• (a) acquired the assets which vested in the successor company on conversion at the same time and for the same consideration at which they were acquired by the society,

• (b) been in existence as a company at all times since the society was incorporated,

• (c) done all things done by the society relating to the acquisition and disposal of the assets which vested in the successor company on conversion, and

• (d) done all other things done by the society before the conversion.

Capital gains: shares, and rights to shares, in successor company

“free shares”, in relation to a member of the society, means any shares issued by the successor company to that member in connection with the conversion but for no new consideration;

“member”, in relation to the society, means a person who is or has been a member of the society, in that capacity, and any reference to a member includes a reference to a member of any particular class or description;

“new consideration” means consideration other than—

• (a) consideration provided directly or indirectly out of the assets of the society or the successor company, or

• (b) consideration derived from a member's shares or other rights in the society or the successor company.

• (2) Where in connection with the conversion there are conferred on members of the society concerned any rights—

• (a) to acquire shares in the successor company in priority to other persons,

• (b) to acquire shares in that company for consideration of an amount or value lower than the market value of the shares, or

• (c) to free shares in that company,

any such rights so conferred on a member shall be regarded for the purposes of capital gains tax as an option (within the meaning of section 540) granted to and acquired by the member for no consideration and having no value at the time of that grant and acquisition.

• (3) Where in connection with the conversion shares in the successor company are issued by that company to a member of the society concerned, those shares shall be regarded for the purposes of capital gains tax—

• (a) as acquired by the member for a consideration of an amount or value equal to the amount or value of any new consideration given by the member for the shares or, if no new consideration is given, as acquired for no consideration, and

• (b) as having at the time of their acquisition by the member a value equal to the amount or value of the new consideration so given or, if no new consideration is given, as having no value;

but this subparagraph is without prejudice to the application where appropriate of subparagraph (2).

• (4) Subparagraph (5) shall apply in any case where—

• (a) in connection with the conversion, shares in the successor company are issued by that company to trustees on terms which provide for the transfer of those shares to members of the society for no new consideration, and

• (b) the circumstances are such that in the hands of the trustees the shares constitute settled property within the meaning of the Capital Gains Tax Acts.

• (5) Where this subparagraph applies, then, for the purposes of capital gains tax—

• (a) the shares shall be regarded as acquired by the trustees for no consideration,

• (b) the interest of any member in the settled property constituted by the shares shall be regarded as acquired by that member for no consideration and as having no value at the time of its acquisition, and

• (c) where on the occasion of a member becoming absolutely entitled as against the trustees to any of the settled property, both the trustees and the member shall be treated as if, on the member becoming so entitled, the shares in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 567(2), for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees and, accordingly, section 576(1) shall not apply in relation to that occasion.

• (6) References in this paragraph to the case where a member becomes absolutely entitled to settled property as against the trustees shall be taken to include references to the case where the member would become so entitled but for being a minor or otherwise under a legal disability.

SCHEDULE 17 Reorganisation into Companies of Trustee Savings Banks

[FA90 Sch4]

Interpretation

“bank” means either or both a trustee savings bank and a bank within the meaning of section 57(3) (c) (i) of the Trustee Savings Banks Act, 1989, as the context requires;

“successor” means the company to which any property, rights, liabilities and obligations are transferred in the course of a transfer;

“transfer” means the transfer by a trustee savings bank of all or part of its property and rights and all of its liabilities or obligations under an order made by the Minister for Finance under section 57 of the Trustee Savings Banks Act, 1989, authorising the reorganisation of one or more trustee savings banks into a company or the reorganisation of a company referred to in subsection (3) (c) (i) of that section into a company referred to in subsection (3) (c) (ii) of that section.

Capital allowances

• (a) allowances and charges provided for in Part 9, section 670, Chapter 1 of Part 29 and sections 765 and 769, or any other provision of the Tax Acts relating to the making of allowances or charges under or in accordance with that Part or Chapter or those sections, and

• (b) allowances or charges provided for by sections 307 and 308.

• (2) The transfer shall not be treated as giving rise to any allowance or charge provided for under subparagraph (1).