TAXES CONSOLIDATION ACT, 1997

• (6) For the purposes of this section, a notice under section 884 may require the inclusion in the return to be delivered by a company under that section of particulars of any surplus advance corporation tax carried forward in relation to that company under subsection (4).

• (7) This section shall apply subject to sections 161 to 172.

161 Rectification of excessive set-off of advance corporation tax. [FA83 s40]

161.—Where an inspector discovers that any set-off of advance corporation tax under section 160 ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his or her judgment be required for recovering any tax that ought to have been paid and generally for securing that the resulting liabilities to tax (including interest on unpaid tax) of the person concerned are what they would have been if only such set-offs had been made as ought to have been made.

162 Calculation of advance corporation tax where company receives distributions. [FA83 s41]

162.—(1) In this section, references to a distribution or distributions shall not include references to a distribution or distributions—

• (a) made before the 9th day of February, 1983, or

• (b) treated under this Chapter as not being a distribution or distributions for the purposes of this section.

• (2) Where in any accounting period a company receives a distribution, the company shall not be liable to pay advance corporation tax in respect of distributions made by it in that period unless the aggregate amount of the tax credits in respect of the distributions made by the company in the period exceeds the aggregate amount of the tax credits in respect of distributions received by it in the period.

• (3) Where in any accounting period there is an excess referred to in subsection (2), the amount of advance corporation tax payable by the company in respect of distributions made by it in that period shall be equal to the excess.

• (4) Where the aggregate amount of the tax credits in respect of distributions received by a company in an accounting period exceeds the sum of—

• (a) the aggregate amount of the tax credits (if any) in respect of distributions made by the company in that period, and

• (b) the amount of any payment to the company under any provision of the Corporation Tax Acts of the tax credits in respect of distributions received by it in that period,

the excess shall be carried forward to the next accounting period and be treated for the purposes of this section (including any further application of this subsection) as a tax credit in respect of a distribution received by the company in that period.

• (5) Where an inspector discovers that, because of the payment to a company of the tax credit in respect of a distribution received by it or for any other reason, the amount carried forward under subsection (4) to an accounting period (and treated as a tax credit in respect of a distribution received by the company in that period) is or has become excessive, the inspector may make any such assessments, adjustments or set-offs as may in his or her judgment be required for securing that the amount of advance corporation tax (including interest on unpaid tax) payable by the company in respect of distributions made by it in that period is the same as it would have been if only such an amount had been so carried forward as ought to have been carried forward.

163 Tax credit recovered from company. [FA83 s42(1)]

163.—Where under the Corporation Tax Acts a company obtains payment of a tax credit in respect of a distribution received by it and that tax credit or any part of that tax credit is subsequently recovered from the company by an assessment on it to income tax under Case IV of Schedule D, the amount of the tax credit so recovered shall be treated for the purposes of section 162 as if it were a tax credit in respect of a distribution received by the company in the accounting period in which the amount is so recovered.

164 Restrictions as to payment of tax credit. [FA83 s43]

164.—(1) Where—

• (a) by virtue of section 162 the amount of advance corporation tax payable by a company in respect of distributions made by it in an accounting period is less than the amount of advance corporation tax which would have been payable by the company in respect of those distributions if that section had not been enacted, and

• (b) either—

• (i) no amount is treated under section 162(4) as a tax credit in respect of a distribution received by the company in the accounting period, or

• (ii) the aggregate amount of the tax credits in respect of distributions made by the company in the accounting period is greater than the amount which is so treated under section 162(4),

then, an amount of the tax credits in respect of distributions received by the company in the accounting period shall not be available for payment to the company under the Corporation Tax Acts, and the amount which is not so available shall be the aggregate amount of the tax credits in respect of distributions received by the company in the accounting period or, if it is less, an amount determined by the formula—

A − B

where—

A is the aggregate amount of the tax credits in respect of distributions made by the company in the accounting period, and

B is the amount (if any) so treated under section 162(4).

• (2) For the purposes of subsection (1), account shall not be taken of any distribution treated as not being a distribution for the purposes of section 159 or 162 under any provision of this Chapter.

165 Group dividends. [FA83 s44; FA92 s51(1); FA94 s55; FA96 s58(1)(a)]

165.—(1) (a) In this section—

“trading or holding company” means a trading company or a company whose business consists wholly or mainly in the holding of shares or securities of trading companies which are its 90 per cent subsidiaries;

“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades.

• (b) For the purposes of this section, a company shall be owned by a consortium if 75 per cent or more of the ordinary share capital of the company is beneficially owned between them by 5 or fewer companies of which none beneficially owns less than 5 per cent of that capital, and those companies are referred to in this section as “the members of the consortium”.

• (c) In determining for the purposes of this section whether one company is a 51 per cent subsidiary of another company, that other company shall be treated as not being the owner of—

• (i) any share capital which it owns directly or indirectly in a company not resident in the State, or

• (ii) any share capital which it owns indirectly and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt.

• (d) References in this section to a dividend or dividends received by a company shall apply to any received by another person on behalf of or in trust for the company but not to any received by the company on behalf of or in trust for another person.

• (e) References in this section to dividends shall be construed as including references to distributions on the redemption, repayment or purchase by a company of its own shares or on the acquisition of those shares by another company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963) of the company, and references to the receipt of dividends or to the payment of dividends shall be construed accordingly.

• (2)
• (a) Where a company receives dividends from another company (both being companies resident in the State) and the company paying the dividends is—

• (i) a 51 per cent subsidiary of the other company or of a company so resident of which the other company is a 51 per cent subsidiary, or

• (ii) a trading or holding company owned by a consortium the members of which include the company receiving the dividends,

then, subject to paragraph (b) and subsections (3) to (6)—

• (I) any such dividends shall be treated as not being distributions for the purposes of either section 159 or 162, and

• (II) the tax credits in respect of those dividends shall not be available for payment, under any provision of the Corporation Tax Acts, to the company by which the dividends are received.

• (b) The company paying the dividends may elect by notice in writing to the inspector that this section shall not apply in relation to any amount of dividends specified in the notice.

• (3) An election under subsection (2)(b) shall not be valid unless—

• (a) the election is made before the due date for the payment, by the company paying the dividends, of advance corporation tax for the accounting period in which the dividends are paid, and

• (b) the advance corporation tax in respect of those dividends has been paid.

• (4) Subsection (2) shall not apply to any dividend received by a company on any investments if a profit on the sale of those investments would be treated as a trading receipt of the company.

• (5) Where a company purports by virtue of subsection (2) to pay any dividend without paying advance corporation tax and advance corporation tax ought to have been paid, the inspector may make such assessments, adjustments or set-offs as may in his or her judgment be required for securing that the resulting liabilities to tax (including interest on unpaid tax) of the company paying and the company receiving the dividend are, in so far as possible, the same as they would have been if the advance corporation tax had been duly paid.

• (6) Where tax assessed under subsection (5) on the company which paid the dividend is not paid by that company before the expiry of 3 months from the date on which that tax is payable, that tax shall, without prejudice to the right to recover it from that company, be recoverable from the company which received the dividend.

166 Surrender of advance corporation tax. [FA83 s45; FA91 s69(a)]

166.—(1) Where a company (in this section referred to as “the surrendering company”) has paid an amount of advance corporation tax in respect of a dividend or dividends paid by it in an accounting period and the advance corporation tax has not been repaid, and if throughout the accounting period the surrendering company would be treated as a member of a group of companies for the purposes of group relief under Chapter 5 of Part 12, the surrendering company may, on making a claim to the inspector, surrender the benefit of the whole or any part of that amount to any company (in this section referred to as “the recipient company”) which for the purposes of group relief would be treated as a member of the same group of companies throughout that accounting period or (in such proportions as the surrendering company may determine) to any 2 or more such companies.

• (2) Subject to subsections (4) and (5), where the benefit of any amount of advance corporation tax (in this section referred to as “the surrendered amount”) is surrendered under this section to a recipient company, then—

• (a) if the advance corporation tax mentioned in subsection (1) was paid in respect of one dividend only or of dividends all of which were paid on the same date, the recipient company shall be treated for the purposes of section 160 as having paid an amount of advance corporation tax equal to the surrendered amount in respect of a distribution made by it on the date on which the dividend or dividends were paid, and

• (b) if the advance corporation tax mentioned in subsection (1) was paid in respect of dividends paid on different dates, the recipient company shall be treated for the purposes of section 160 as having paid an amount of advance corporation tax equal to the appropriate part of the surrendered amount in respect of a distribution made by it on each of those dates.

• (3) For the purposes of subsection (2)(b), “the appropriate part of the surrendered amount”, in relation to any distribution treated as made on the same date as that on which a dividend was paid, means such part of that amount as bears to the whole of that amount the same proportion as the amount of the tax credit in respect of that dividend bears to the total amount of the tax credits in respect of the dividends mentioned in that subsection.

• (4) No amount of advance corporation tax which a recipient company is treated as having paid by virtue of subsection (2) shall, under section 160(3), be set against the recipient company's liability to corporation tax; but, in determining for the purposes of subsections (3) and (4) of section 160 what amount (if any) of surplus advance corporation tax there is in any accounting period of a recipient company, an amount so treated as having been paid shall be set against the recipient company's liability to corporation tax before any advance corporation tax paid in respect of any distribution made by the recipient company.

• (5) No amount of advance corporation tax which a recipient company is treated as having paid by virtue of subsection (2) shall be set against the recipient company's liability to corporation tax for any accounting period in which, or in any part of which, the recipient company and the surrendering company would not be treated for the purposes of group relief under Chapter 5 of Part 12 as members of the same group of companies.

• (6) Any claim under this section shall be made within 2 years after the end of the accounting period to which that claim relates and shall require the consent or consents of the recipient company or companies concerned (which shall be notified to the inspector in such form as the Revenue Commissioners may require).

• (7) No amount of advance corporation tax which has been set off under section 160(2) or dealt with under section 160(3) shall be available for the purposes of a claim under this section, and no amount of advance corporation tax, the benefit of which has been surrendered under this section, shall be treated for the purposes of section 160 as advance corporation tax paid by the surrendering company.

• (8) A payment made by a recipient company to a surrendering company in pursuance of an agreement between them as respects the surrender of the benefit of an amount of advance corporation tax, being a payment not exceeding that amount—

• (a) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

• (b) shall not be regarded as a distribution or a charge on income for any of the purposes of the Corporation Tax Acts.

• (9) References in this section to dividends shall be construed as including references to distributions on the redemption, repayment or purchase by a company of its own shares or on the acquisition of those shares by another company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963) of the company, and references to the payment of dividends shall be construed accordingly.

167 Change of ownership of company: calculation and treatment of advance corporation tax. [FA83 s46(1) to (8)]

167.—(1) In this section—

“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades;

“investment company” means a company (other than a holding company) whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived from the making of investments;

“holding company” means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 90 per cent subsidiaries and which are trading companies.

• (2) This section shall apply if—

• (a) within any period of 3 years there is both a change in the ownership of a company and (either earlier or later in that period, or at the same time) a major change in the nature or conduct of a trade or business carried on by the company, or

• (b) at any time after the scale of the activities in a trade or business carried on by a company has become small or negligible, and before any considerable revival of the trade or business, there is a change in ownership of the company.

• (3) Sections 160, 162 and 171 shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership and the part after that change were 2 separate accounting periods, and for that purpose the income of the company charged to corporation tax for the accounting period (as determined in accordance with section 160(5)) shall be apportioned between those parts.

• (4) No advance corporation tax paid by the company in respect of distributions made in an accounting period beginning before the change of ownership shall be treated under section 160(4) as paid by it in respect of distributions made in an accounting period ending after the change of ownership, and this subsection shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership and the part after that change were 2 separate accounting periods.

• (5) In subsection (2)(a), “major change in the nature or conduct of a trade or business” includes—

• (a) a major change in the type of property dealt in, or services or facilities provided, in the trade or business,

• (b) a major change in customers, outlets or markets of the trade or business,

• (c) a change whereby the company ceases to be a trading company and becomes an investment company or vice versa, or

• (d) where the company is an investment company, a major change in the nature of the investments held by the company,

and this section shall apply even if the change is the result of a gradual process which began outside the period of 3 years mentioned in subsection (2)(a).

• (6) Subsection (4) shall apply to advance corporation tax which a company is treated as having paid by virtue of section 166(2) as it applies to advance corporation tax paid by the company.

• (7) Subsections (6) and (7) of section 401 shall apply for the purposes of this section as they apply for the purposes of that section and shall so apply as if—

• (a) the reference in paragraph 3 of Schedule 9 to losses or capital allowances were a reference to advance corporation tax, and

• (b) the reference in paragraph 7 of Schedule 9 to the 16th day of May, 1973, were a reference to the 9th day of February, 1983.

• (8) Section 1075 shall apply in relation to a notice given under paragraph 8 of Schedule 9 (as applied for the purposes of this section by subsection (7)) as it applies in relation to such a notice given for the purposes of section 401.

168 Distributions to certain non-resident companies. [FA83 s47(1) to (3); FA91 s69(b); FA96 s58(1)(b)]

168.—(1) (a) This section shall apply to any distribution which—

• (i) is a distribution by virtue only of section 130(2)(d)(iv), or

• (ii) is a dividend paid by a company (in this subsection referred to as “the first-mentioned company”) to another company—

• (I) (A) of which the first-mentioned company is a 75 per cent subsidiary, or

• (B) which is a member of a consortium which owns the first-mentioned company,

and

• (II) which is a resident of the United States of America or of a territory with the government of which arrangements having the force of law by virtue of section 826 have been made.

• (b) For the purposes of paragraph (a)—

a company shall be owned by a consortium if 75 per cent or more of the ordinary share capital of the company is beneficially owned between them by 5 or fewer companies of which none beneficially owns less than 5 per cent of that capital, and those companies are referred to as “members of the consortium”;

“resident of the United States of America” has the meaning assigned to it by the Convention set out in Schedule 25;

a company shall be regarded as being a resident of a territory, other than the United States of America, if it is so regarded under arrangements made with the government of that territory and having the force of law by virtue of section 826;

the reference to a dividend paid by a company shall be construed as including a reference to a distribution made by the company on the redemption, repayment or purchase of its own shares or by another company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963) of the company on the acquisition of those shares.

• (2) Where a company proves that this section applies to a distribution made by it and claims to have the distribution treated as not being a distribution for the purposes of section 159, then—

• (a) the distribution shall be so treated, and

• (b) notwithstanding any provision of the Tax Acts, the company to which the distribution is made shall not be entitled to a tax credit in respect of the distribution.

• (3) Any claim under this section shall be made in the return made under section 171 for the accounting period in which the distribution is made and shall require the consent, notified to the inspector in such form as the Revenue Commissioners may require, of the company to which the distribution is made.

169 Non-distributing investment companies. [FA83 s47A; FA95 s37]

169.—(1) In this section, “relevant company” means a company which—

• (a) is an investment company within the meaning of Part XIII of the Companies Act, 1990,

• (b) is a qualified company within the meaning of section 446, and

• (c) makes only one payment in respect of any share or security issued by it, being a payment made in the redemption, repayment or purchase of the share.

• (2) Where a company proves that it is a relevant company and claims to have every payment made by it in the redemption, repayment or purchase of shares issued by it treated as not being or including a distribution for the purposes of section 159, then—

• (a) every such payment shall be so treated, and

• (b) notwithstanding any provision of the Tax Acts, the person to whom each such payment is made shall not be entitled to a tax credit in respect of it.

• (3) A claim under this section shall be made in writing to the inspector in a form prescribed by the Revenue Commissioners and shall be submitted together with the company's return of profits for the accounting period which is the first accounting period in which the company makes any payment to which subsection (2) relates.

170 Interest in respect of certain securities. [FA83 s48(1), (2)(a), (3) and (4)]

170.—(1) Subject to subsection (2), this section shall apply to any interest which is a distribution and is paid by a company in respect of a security of the company within subparagraph (ii), (iii)(I) or (v) of section 130(2)(d), where—

• (a) the security in respect of which the interest is paid was issued by the company to another company the ordinary trading activities of which include the lending of money, and

• (b) either—

• (i) the obligation to pay the interest was entered into before the 9th day of February, 1983, or

• (ii) that obligation was entered into before the 9th day of June, 1983, pursuant to negotiations which were in progress on the 9th day of February, 1983;

but an obligation shall be treated for the purposes of paragraph (b) as having been entered into before a particular date only if before that date there was in existence a binding contract in writing under which that obligation arose and, where that contract was subject to the execution of a loan agreement, the loan agreement was duly executed before the 9th day of June, 1983.

• (2) Where a period of repayment (in this subsection referred to as “the repayment period”) of either principal or interest provided for under an obligation referred to in subsection (1)(b) is extended on or after the 9th day of February, 1983 (whether or not the right to such an extension arose out of the terms of the contract creating that obligation), this section shall not apply to any interest which is paid in respect of the period by which the repayment period is extended.

• (3) Interest to which this section applies shall not be treated as a distribution for the purposes of either section 159 or 162.

• (4) The tax credit in respect of any interest to which this section applies shall not be available under the Corporation Tax Acts for payment to the person by whom the interest is received.

171 Returns, payment and collection of advance corporation tax. [FA83 s50; FA90 s55; FA93 s41; FA97 s146(2) and Sch9 PtII]

171.—(1) This section shall apply for the purpose of regulating the time and manner in which advance corporation tax shall be accounted for and paid.

• (2) A company shall make for each of its accounting periods in accordance with this section a return to the inspector of the distributions made and distributions received by the company in that period and of the advance corporation tax (if any) payable by the company in respect of the distributions made by it.

• (3) A return for any period for which a return is required to be made under this section shall be made within 9 months from the end of that period.

• (4) A return under this section need not be made by a company for an accounting period in which it has not made a distribution.

• (5)
• (a) The return made by a company for an accounting period shall show—

• (i) the amount of the distributions made by the company in the period and the amount of the tax credits in respect of those distributions,

• (ii) the amount (if any) of the distributions received by the company in the period and the amount of the tax credits in respect of those distributions,

• (iii) the amount of any tax credit carried forward to the accounting period and treated under section 162(4) as a tax credit in respect of a distribution received by the company in that period, and

• (iv) the amount (if any) of advance corporation tax payable by the company in respect of the distributions made by it in the period.

• (b) The return shall specify whether any amount of tax credits is included pursuant to paragraph (a)(i) in respect of distributions treated under this Chapter as not being distributions for the purposes of section 159 and, if so, the amount so included.

• (c) The return shall specify whether any amount of tax credits is included pursuant to paragraph (a)(ii) in respect of distributions treated under this Chapter as not being distributions for the purposes of section 162 and, if so, the amount so included.

• (d) Where any amount is included in the return pursuant to subparagraph (ii) or (iii) of paragraph (a), the inclusion shall be treated as a claim by the company to have it taken into account in determining the amount of advance corporation tax payable, and any such claim shall be supported by such evidence as the inspector may reasonably require.

• (6)
• (a) Advance corporation tax in respect of any distribution required to be included in a return under this section shall be due within 6 months from the end of the accounting period for which the return is required to be made under subsection (3) and shall be paid to the Collector-General, and advance corporation tax so due shall be payable by the company without the making of any assessment; but advance corporation tax which has become so due may be assessed on the company (whether or not it has been paid when the assessment is made).

• (b) Notwithstanding paragraph (a), where the last day of the period within which the advance corporation tax is due is a day after the 28th day of the month in which that period ends, the advance corporation tax shall be due not later than the 28th day of that month.

• (7) Where it appears to the inspector that there is a distribution which ought to have been and has not been included in a return, or where the inspector is dissatisfied with any return, the inspector may make an assessment on the company to the best of his or her judgment, and any advance corporation tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

• (8) Where a company makes a distribution on a date which does not fall within an accounting period of the company, an accounting period of the company shall be deemed to end on that date and the company shall make a return of that distribution within 6 months from that date, and the advance corporation tax for which the company is accountable in respect of that distribution shall be due at the time by which the return is to be made.

• (9) Where any item has been incorrectly included in a return under this section as a distribution made or received by a company, the inspector may make any such assessments, adjustments or set-offs as may in his or her judgment be required for securing that the resulting liabilities to tax, including interest on unpaid tax, whether of the company or of any other person, are in so far as possible the same as they would have been if the item had not been so included.

• (10)
• (a) Advance corporation tax assessed on a company under this section shall be due within one month after the issue of the notice of assessment (unless due earlier under subsection (6) or (8)), subject to any appeal against the assessment; but no such appeal shall affect the date when tax is due under subsection (6) or (8).

• (b) On the determination of an appeal against an assessment under this section, any tax overpaid shall be repaid.

• (11)
• (a) The provisions of the Corporation Tax Acts relating to—

• (i) assessments to corporation tax,

• (ii) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and

• (iii) the collection and recovery of corporation tax,

shall, in so far as they are applicable, apply to the assessment, collection and recovery of advance corporation tax under this section.

• (b) Any tax payable in accordance with this section without the making of an assessment shall carry interest at the rate of 1.25 per cent for each month or part of a month from the date when the tax becomes due and payable until payment.

• (c) Subsections (2) to (4) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under section 1080.

• (d) In its application to any tax charged by any assessment to advance corporation tax in accordance with this section, section 1080 shall apply as if subsection (1)(b) of that section were deleted.

• (12) Sections 861(2)(b), 884(5), 1071 and 1072 shall, with any necessary modifications, apply in relation to a return under this section as they apply in relation to a return under section 884.

• (13) In this section, references to a distribution or distributions do not include references to a distribution or distributions made by a company not resident in the State.

172 Application of Corporation Tax Acts. [FA83 s53]

172.—The provisions of the Corporation Tax Acts as to the charge, calculation and payment of corporation tax (including provisions conferring any relief or exemption) shall not be construed as affecting the charge, calculation or payment of advance corporation tax.

CHAPTER 9 Taxation of acquisition by a company of its own shares

173 Interpretation (Chapter 9). [FA91 s59; FA97 s39(1)(a)]

173.—(1) In this Chapter—

“chargeable period” means an accounting period of a company or a year of assessment;

“control” shall be construed in accordance with section 11;

“group” means a company which has one or more 51 per cent subsidiaries together with those subsidiaries;

“holding company” means a company whose business, disregarding any trade carried on by it, consists wholly or mainly of the holding of the shares or securities of one or more companies which are its 51 per cent subsidiaries;

“inspector”, in relation to any matter, means an inspector of taxes appointed under section 852, and includes such other officer as the Revenue Commissioners shall appoint in that behalf;

“personal representative” has the same meaning as in section 799;

“quoted company” means a company whose shares, or any class of whose shares, are listed in the official list of a stock exchange or dealt in on an unlisted securities market;

“shares” includes stock;

“trade” does not include dealing in shares, securities, land, futures or traded options, and

“trading activities” shall be construed accordingly;

“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades;

“trading group” means a group the business of whose members taken together consists wholly or mainly of the carrying on of a trade or trades.

• (2) References in this Chapter to the owner of shares shall be treated as references to the beneficial owner except where the shares are held on trusts other than bare trusts, or are comprised in the estate of a deceased person, and in such a case shall be treated as references to the trustees or, as the case may be, to the deceased's personal representatives.

• (3) References in this Chapter to a payment made by a company include references to anything else that is, or but for section 175 or 176 would be, a distribution.

• (4) References in this Chapter to a company being unquoted shall be treated as references to a company which is neither a quoted company nor a 51 per cent subsidiary of a quoted company.

174 Taxation of dealer's receipts on purchase of shares by issuing company or by its subsidiary. [FA91 s60]

174.—(1) In this section—

“fixed-rate preference shares” means shares which—

• (a) were issued wholly for new consideration,

• (b) do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities,

• (c) do not carry any right to dividends other than dividends which are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and

• (d) carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares quoted on a stock exchange in the State;

“new consideration” has the meaning assigned to it by section 135.

• (2) Where—

• (a) a company purchases its own shares from a dealer, or

• (b) a company, which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963) of another company, purchases the other company's shares from a dealer,

the purchase price shall be taken into account in computing the profits of the dealer chargeable to tax under Case I or II of Schedule D, and accordingly—

• (i) tax shall not be chargeable under Schedule F in respect of any distribution represented by any part of the price,

• (ii) the dealer shall not be entitled to a tax credit in respect of the distribution under section 136, and

• (iii) sections 129 and 152 shall not apply to the distribution.

• (3) For the purposes of subsection (2), a person shall be a dealer in relation to shares of a company if the price received on their sale by the person other than to the company, or to a company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963) of the company, would be taken into account in computing the person's profits chargeable to tax under Case I or II of Schedule D.

• (4) Subject to subsection (5), in subsection (2)—

• (a) the reference to the purchase of shares includes a reference to the redemption or repayment of shares and the purchase of rights to acquire shares, and

• (b) the reference to the purchase price includes a reference to any sum payable on redemption or repayment.

• (5) Subsection (2) shall not apply in relation to—

• (a) the redemption of fixed-rate preference shares, or

• (b) the redemption, on binding terms settled before the 18th day of April, 1991, of other preference shares issued before that date,

if in either case the shares were issued to and continuously held by the person from whom they are redeemed.

175 Purchase of own shares by quoted company. [FA91 s60A; FA97 s39(1)(b) and (2)]

175.—(1) Notwithstanding Chapter 2 of this Part, references in the Tax Acts to distributions of a company shall be construed so as not to include references to a payment made on or after the 26th day of March, 1997, by a quoted company on the redemption, repayment or purchase of its own shares.

• (2) References in subsection (1) to a quoted company shall include references to a company which is a member of a group of which a quoted company is a member.

176 Purchase of unquoted shares by issuing company or its subsidiary. [FA91 s61]

176.—(1) Notwithstanding Chapter 2 of this Part, references in the Tax Acts to distributions of a company, other than any such references in sections 440 and 441, shall be construed so as not to include references to a payment made by a company on the redemption, repayment or purchase of its own shares if the company is an unquoted trading company or the unquoted holding company of a trading group and either—

• (a) (i) the redemption, repayment or purchase—

• (I) is made wholly or mainly for the purpose of benefiting a trade carried on by the company or by any of its 51 per cent subsidiaries, and

• (II) does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is to enable the owner of the shares to participate in the profits of the company or of any of its 51 per cent subsidiaries without receiving a dividend,

and

• (ii) the conditions specified in sections 177 to 181, in so far as applicable, are satisfied in relation to the owner of the shares, or

• (b) the person to whom the payment is made—

• (i) applies the whole or substantially the whole of the payment (apart from any sum applied in discharging that person's liability to capital gains tax, if any, in respect of the redemption, repayment or purchase) to discharging—

• (I) within 4 months of the valuation date (within the meaning of section 21 of the Capital Acquisitions Tax Act, 1976) of a taxable inheritance of the company's shares taken by that person, a liability to inheritance tax in respect of that inheritance, or

• (II) within one week of the day on which the payment is made, a debt incurred by that person for the purpose of discharging that liability to inheritance tax,

and

• (ii) could not without undue hardship have otherwise discharged that liability to inheritance tax and, where appropriate, the debt so incurred.

• (2) Where subsection (1) would apply to a payment made by a company which is a subsidiary (within the meaning of section 155 of the Companies Act, 1963) of another company on the acquisition of shares of the other company if for the purposes of the Tax Acts other than this subsection—

• (a) the payment were to be treated as a payment by the other company on the purchase of its own shares, and

• (b) the acquisition by the subsidiary of the shares were to be treated as a purchase by the other company of its own shares,

then, notwithstanding Chapter 2 of this Part, references in the Tax Acts to distributions of a company, other than references in sections 440 and 441, shall be construed so as not to include references to the payment made by the subsidiary.

177 Conditions as to residence and period of ownership. [FA91 s62]

177.—(1) In this section and in sections 178 to 181—

“the purchase” means the redemption, repayment or purchase referred to in section 176(1)(a);

“the vendor” means the owner of the shares immediately before the purchase is made.

• (2) The vendor shall be resident and ordinarily resident in the State for the chargeable period in which the purchase is made and, if the shares are held through a nominee, the nominee shall also be so resident and ordinarily resident.

• (3) The residence and ordinary residence of trustees shall be determined for the purposes of this section as they are determined under section 574 for the purposes of the Capital Gains Tax Acts.

• (4) The residence and ordinary residence of personal representatives shall be taken for the purposes of this section to be the same as the residence and ordinary residence of the deceased immediately before his or her death.

• (5) The references in this section to a person's ordinary residence shall be disregarded in the case of a company.

• (6) The shares shall have been owned by the vendor throughout the period of 5 years ending on the date of the purchase.

• (7) Where at any time during that period the shares were transferred to the vendor by a person who was then the vendor's spouse living with the vendor, then, unless that person is alive at the date of the purchase but is no longer the vendor's spouse living with the vendor, any period during which the shares were owned by that person shall be treated for the purposes of subsection (6) as a period of ownership by the vendor.

• (8) Where the vendor became entitled to the shares under the will or on the intestacy of a previous owner or is the personal representative of a previous owner—

• (a) any period during which the shares were owned by the previous owner or the previous owner's personal representatives shall be treated for the purposes of subsection (6) as a period of ownership by the vendor, and

• (b) that subsection shall apply as if it referred to 3 years instead of 5 years.

• (9) In determining whether the condition in subsection (6) is satisfied in a case where the vendor acquired shares of the same class at different times—

• (a) shares acquired earlier shall be taken into account before shares acquired later, and

• (b) any previous disposal by the vendor of shares of that class shall be assumed to be a disposal of shares acquired later rather than of shares acquired earlier.

• (10) Where for the purposes of capital gains tax the time when a person acquired shares would be determined under section 584, 585, 586, 587 or 600, then, unless the person is to be treated under section 584(4) as giving or becoming liable to give any consideration, other than the old holding, for the acquisition of those shares, it shall be determined in the same way for the purposes of this section.

178 Conditions as to reduction of vendor's interest as shareholder. [FA91 s63]

178.—(1) Where immediately after the purchase the vendor owns shares in the company, the vendor's interest as a shareholder shall, subject to section 181, be substantially reduced.

• (2) Where immediately after the purchase any associate of the vendor owns shares in the company, the combined interest as shareholders of the vendor and the vendor's associates shall, subject to section 181, be substantially reduced.

• (3) The question whether the combined interests as shareholders of the vendor and the vendor's associates are substantially reduced shall be determined in the same way as is (under subsections (4) to (7)) the question whether a vendor's interest as a shareholder is substantially reduced, except that the vendor shall be assumed to have the interests of the vendor's associates as well as the vendor's own interests.

• (4) Subject to subsection (5), the vendor's interest as a shareholder shall be taken to be substantially reduced only if the total nominal value of the shares owned by the vendor immediately after the purchase, expressed as a percentage of the issued share capital of the company at that time, does not exceed 75 per cent of the corresponding percentage immediately before the purchase.

• (5) The vendor's interest as a shareholder shall not be taken to be substantially reduced where—

• (a) the vendor would, if the company distributed all its profits available for the distribution immediately after the purchase, be entitled to a share of those profits, and

• (b) that share, expressed as a percentage of the total of those profits, exceeds 75 per cent of the corresponding percentage immediately before the purchase.

• (6) In determining for the purposes of subsection (5) the division of profits among the persons entitled to them, a person entitled to periodic distributions calculated by reference to fixed rates or amounts shall be regarded as entitled to a distribution of the amount or maximum amount to which the person would be entitled for a year.

• (7) In subsection (5), “profits available for distribution” has the same meaning as it has for the purposes of Part IV of the Companies (Amendment) Act, 1983, except that for the purposes of that subsection the amount of the profits available for distribution (whether immediately before or immediately after the purchase) shall be treated as increased—

• (a) in the case of every company, by £100, and

• (b) in the case of a company from which any person is entitled to periodic distributions of the kind mentioned in subsection (6), by a further amount equal to that required to make the distribution to which that person is entitled in accordance with that subsection,

and, where the aggregate of the sums payable by the company on the purchase and on any contemporaneous redemption, repayment or purchase of other shares of the company exceeds the amount of the profits available for distribution immediately before the purchase, that amount shall be treated as further increased by an amount equal to the excess.

• (8) References in this section to entitlement are, except in the case of trustees and personal representatives, references to beneficial entitlement.

179 Conditions applicable where purchasing company is member of a group. [FA91 s64]

179.—(1) Subject to subsections (2) to (4), in this section, “group” means a company which has one or more 51 per cent subsidiaries but is not itself a 51 per cent subsidiary of any other company, together with those subsidiaries.

• (2) Where the whole or a significant part of the business carried on by an unquoted company (in this section referred to as “the successor company”) was previously carried on by—

• (a) the company making the purchase, or

• (b) a company which apart from this subsection is a member of a group to which the company making the purchase belongs,

the successor company and any company of which it is a 51 per cent subsidiary shall be treated as being a member of the same group as the company making the purchase, whether or not apart from this subsection the company making the purchase is a member of a group.

• (3) Subsection (2) shall not apply if the successor company first carried on the business referred to in that subsection more than 3 years before the time of the purchase.

• (4) For the purposes of this section, a company which has ceased to be a 51 per cent subsidiary of another company before the time of the purchase shall be treated as continuing to be such a subsidiary if at that time there exist arrangements under which it could again become such a subsidiary.

• (5) Subject to section 181, where the company making the purchase is immediately before the purchase a member of a group and immediately after the purchase—

• (a) the vendor owns shares in one or more other members of the group, whether or not the vendor then owns shares in the company making the purchase, or

• (b) the vendor owns shares in the company making the purchase and immediately before the purchase the vendor owned shares in one or more members of the group,

the vendor's interest as a shareholder in the group shall be substantially reduced.

• (6) Subject to section 181, where the company making the purchase is immediately before the purchase a member of a group, and at that time an associate of the vendor owns shares in any member of the group, the combined interests as shareholders in the group of the vendor and the vendor's associates shall be substantially reduced.

• (7) Subject to subsection (8), in subsections (9) to (11), “relevant company” means the company making the purchase and any other company—

• (a) in which the vendor owns shares, and

• (b) which is a member of the same group as the company making the purchase,

immediately before or immediately after the purchase.

• (8) The question whether the combined interests as shareholders in the group of the vendor and the vendor's associates are substantially reduced shall be determined in the same way as is (under this section) the question whether a vendor's interest as a shareholder in a group is substantially reduced, except that the vendor shall be assumed to have the interests of the vendor's associates as well as the vendor's own interests, and references in subsections (9) to (11) to a relevant company shall be construed accordingly.

• (9) The vendor's interest as a shareholder in the group shall be ascertained by—

• (a) expressing the total nominal value of the shares owned by the vendor in each relevant company as a percentage of the issued share capital of the company,

• (b) adding together the percentages so obtained, and

• (c) dividing the result by the number of relevant companies (including any in which the vendor owns no shares).

• (10) Subject to subsection (11), the vendor's interest as a shareholder in the group shall be taken to be substantially reduced only if it does not exceed 75 per cent of the corresponding interest immediately before the purchase.

• (11) The vendor's interest as a shareholder in the group shall not be taken to be substantially reduced where—

• (a) the vendor would, if every member of the group distributed all its profits available for distribution immediately after the purchase (including any profits received by it on a distribution by another member), be entitled to a share of the profits of one or more or them, and

• (b) that share, or the aggregate of those shares, expressed as a percentage of the aggregate of the profits available for distribution of every member of the group which is—

• (i) a relevant company, or

• (ii) a 51 per cent subsidiary of a relevant company,

exceeds 75 per cent of the corresponding percentage immediately before the purchase.

• (12) Subsections (6) and (7) of section 178 shall apply for the purposes of subsection (11) as they apply for the purposes of subsection (5) of that section.

180 Additional conditions. [FA91 s65]

180.—(1) In this section, “group” has the same meaning as in section 179.

• (2) Subject to section 181, the vendor shall not immediately after the purchase be connected with the company making the purchase or with any company which is a member of the same group as that company.

• (3) Subject to section 181, the purchase shall not be part of a scheme or arrangement which is designed or likely to result in the vendor or any associate of the vendor having interests in any company such that, if the vendor or any associate of the vendor had those interests immediately after the purchase, any of the conditions in sections 178 and 179 and subsection (2) could not be satisfied.

• (4) A transaction occurring within one year after the purchase shall be deemed for the purposes of subsection (3) to be part of a scheme or arrangement of which the purchase is also part.

181 Relaxation of conditions in certain cases. [FA91 s66]

181.—Where—

• (a) any of the conditions in sections 178 to 180 which are applicable are not satisfied in relation to the vendor, but

• (b) the vendor proposed or agreed to the purchase in order to produce the result that the condition in section 178(2) or 179(6), which could not otherwise be satisfied in respect of the redemption, repayment or purchase of shares owned by a person of whom the vendor is an associate, could be satisfied in that respect,

then, if that result is produced by virtue of the purchase, section 176(1)(a) shall apply, as respects so much of the purchase as was necessary to produce that result, as if the conditions in sections 178 to 180 were satisfied in relation to the vendor.

182 Returns. [FA91 s67]

182.—(1) In this section, “appropriate inspector” and “prescribed form” have the same meanings respectively as in Part 41.

• (2) Where a company makes a payment which it treats as one to which subsection (1) or (2) of section 176 applies, the company shall make a return in a prescribed form to the appropriate inspector of—

• (a) the payment,

• (b) the circumstances by reason of which that subsection is regarded as applying to it, and

• (c) such further particulars as may be required by the prescribed form.

• (3) A company shall make a return under this section—

• (a) within 9 months from the end of the accounting period in which it makes the payment, or

• (b) if, at any time after the payment is made, the inspector by notice in writing requests such a form, within the time (which shall not be less than 30 days) limited by such notice.

• (4) Section 1071 shall, with any necessary modifications, apply in relation to a return under this section as it applies in relation to a return under section 884.

183 Information. [FA91 s68(1) to (3)]

183.—(1) Where a company treats a payment made by it as one to which subsection (1)(a) or (2) of section 176 applies, any person connected with the company who knows of any such scheme or arrangement affecting the payment as is mentioned in section 180(3) shall, within 60 days after that person first knows of both the payment and the scheme or arrangement, give a notice to the inspector containing particulars of the scheme or arrangement.

• (2) Where the inspector has reason to believe that a payment treated by the company making it as one to which subsection (1)(a) or (2) of section 176 applies may form part of a scheme or arrangement of the kind referred to in that section or in section 180(3), the inspector may by notice require the company or any person connected with the company to furnish to the inspector within such time, not being less than 60 days, as may be specified in the notice—

• (a) a declaration in writing stating whether or not, according to information which the company or that person has or can reasonably obtain, any such scheme or arrangement exists or has existed, and

• (b) such other information as the inspector may reasonably require for the purposes of the provision in question and the company or that person has or can reasonably obtain.

• (3)
• (a) The recipient of a payment treated by the company making it as a payment to which subsection (1)(a) or (2) of section 176 applies shall, if so required by the inspector, state whether the payment in question is received on behalf of any person other than such recipient and, if so, the name and address of that person.

• (b) Any person on whose behalf a payment referred to in paragraph (a) is received shall, if so required by the inspector, state whether the payment in question is received on behalf of any person other than that person and, if so, the name and address of that other person.

184 Treasury shares. [FA91 s70]

184.—(1) For the purposes of the Tax Acts and the Capital Gains Tax Acts—

• (a) any shares which are—

• (i) held by the company as treasury shares, and

• (ii) not cancelled by the company,

shall be deemed to be cancelled immediately on their acquisition by the company,

• (b) a deemed or actual cancellation of shares shall be treated as giving rise to neither a chargeable gain nor an allowable loss, and

• (c) a reissue by the company of treasury shares shall be treated as an issue of new shares by it.

• (2) For the purposes of this section, a reference to treasury shares shall be a reference to treasury shares within the meaning of section 209 of the Companies Act, 1990.

185 Associated persons. [FA91 s71]

185.—(1) Any question whether a person is an associate of another person in relation to a company shall be determined for the purposes of sections 176 to 183 and section 186 in accordance with the following provisions:

• (a) a husband and wife living together shall be associates of one another, a person under the age of 18 shall be an associate of his or her parents, and his or her parents shall be the person's associates;

• (b) a person who has control of a company shall be an associate of the company and the company shall be the person's associate;

• (c) where a person who has control of one company has control of another company, the second company shall be an associate of the first company;

• (d) where shares in a company are held by trustees other than bare trustees, then, in relation to that company but subject to subsection (2), the trustees shall be associates of—

• (i) any person who directly or indirectly provided property to the trustees or has made a reciprocal arrangement for another person to do so,

• (ii) any person who is by virtue of paragraph (a) an associate of a person within subparagraph (i), and

• (iii) any person who is or may become beneficially entitled to a material interest in the shares,

and any such person shall be an associate of the trustees;

• (e) where shares in a company are comprised in the estate of a deceased person, then, in relation to that company, the deceased's personal representatives shall be associates of any person who is or may become beneficially entitled to a material interest in the shares, and any such person shall be an associate of the personal representatives;

• (f) where one person is accustomed to act on the directions of another person in relation to the affairs of a company, then, in relation to that company, the 2 persons shall be associates of one another.

• (2) Subsection (1)(d) shall not apply to shares held on trusts which—

• (a) relate exclusively to an exempt approved scheme within the meaning of Chapter 1 of Part 30, or

• (b) are exclusively for the benefit of the employees, or the employees and directors, of the company referred to in subsection (1)(d) or of companies in a group to which that company belongs, or their dependants, and are not wholly or mainly for the benefit of directors or their relatives,

and for the purposes of this subsection “group” means a company which has one or more 51 per cent subsidiaries, together with those subsidiaries.

• (3) For the purposes of paragraphs (d) and (e) of subsection (1), a person's interest shall be a material interest if its value exceeds 5 per cent of the value of all the property held on the trusts or, as the case may be, comprised in the estate concerned, excluding any property in which the person is not and cannot become beneficially entitled to an interest.

186 Connected persons. [FA91 s72; FA96 s131(9)(a)]

186.—(1) Any question whether a person is connected with a company shall, notwithstanding section 10, be determined for the purposes of sections 176 to 183 in accordance with the following provisions:

• (a) a person shall, subject to subsection (2), be connected with a company if the person directly or indirectly possesses or is entitled to acquire more than 30 per cent of—

• (i) the issued ordinary share capital of the company,

• (ii) the loan capital and issued share capital of the company, or

• (iii) the voting power in the company;

• (b) a person shall be connected with a company if the person directly or indirectly possesses or is entitled to acquire such rights as would, in the event of the winding up of the company or in any other circumstances, entitle the person to receive more than 30 per cent of the assets of the company which would then be available for distribution to equity holders of the company, and for the purposes of this paragraph—

• (i) the persons who are equity holders of the company, and

• (ii) the percentage of the assets of the company to which a person would be entitled,

shall be determined in accordance with sections 413 and 415, but construing references in section 415 to the first company as references to an equity holder and references to a winding up as including references to other circumstances in which assets of the company are available for distribution to its equity holders;

• (c) a person shall be connected with a company if the person has control of the company.

• (2) Where a person—

• (a) acquired or became entitled to acquire loan capital of a company in the ordinary course of a business carried on by the person, being a business which includes the lending of money, and

• (b) takes no part in the management or conduct of the company,

the person's interest in that loan capital shall be disregarded for the purposes of subsection (1)(a).

• (3) References in this section to the loan capital of a company are references to any debt incurred by the company—

• (a) for any money borrowed or capital assets acquired by the company,

• (b) for any right to receive income created in favour of the company, or