LegalizeReform history
Income and Corporation Taxes Act 1988
100 versions
· 1988-02-09
2022-07-14
Income and Corporation Taxes Act 1988
2019-07-05
Income and Corporation Taxes Act 1988
2019-02-12
Income and Corporation Taxes Act 1988
2017-11-16
Income and Corporation Taxes Act 1988
2017-04-27
Income and Corporation Taxes Act 1988
2017-04-06
Income and Corporation Taxes Act 1988
2016-12-14
Income and Corporation Taxes Act 1988
2016-09-15
Income and Corporation Taxes Act 1988
2016-08-12
Income and Corporation Taxes Act 1988
2016-06-16
Income and Corporation Taxes Act 1988
2015-03-26
Income and Corporation Taxes Act 1988
2015-02-12
Income and Corporation Taxes Act 1988
2014-08-01
Income and Corporation Taxes Act 1988
2014-07-17
Income and Corporation Taxes Act 1988
2014-01-01
Income and Corporation Taxes Act 1988
2013-07-17
Income and Corporation Taxes Act 1988
2013-04-06
Income and Corporation Taxes Act 1988
2012-07-17
Income and Corporation Taxes Act 1988
2012-04-01
Income and Corporation Taxes Act 1988
2012-03-14
Income and Corporation Taxes Act 1988
2011-08-11
Income and Corporation Taxes Act 1988
2011-07-19
Income and Corporation Taxes Act 1988
2011-06-16
Income and Corporation Taxes Act 1988
2011-02-25
Income and Corporation Taxes Act 1988
2010-12-16
Income and Corporation Taxes Act 1988
2010-10-01
Income and Corporation Taxes Act 1988
2010-07-27
Income and Corporation Taxes Act 1988
2010-04-08
Income and Corporation Taxes Act 1988
2010-04-01
Income and Corporation Taxes Act 1988
2009-12-01
Income and Corporation Taxes Act 1988
Changes on 2009-12-01
@@ -4,41 +4,131 @@
### Income tax
#### Relief for necessary expenses.
##### 1
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#### Limited exemption for computer equipment.
##### 2
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#### “Distribution” to include certain expenses of close companies.
##### 3
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#### Modifications where tax charged under section 35 of CTA 2009.
##### 4
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#### Building societies: time for payment of tax.
##### 5
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### Corporation tax
#### Section 591C: supplementary.
##### 6
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) In this section . . . , Part VIII, Chapter IV of Part X and Part XI, except in so far as the context otherwise requires—
- (a) “*profits*” means income and chargeable gains; and
- (b) “*trade*” includes “*vocation*”, and also includes an office or employment or the occupation of woodlands in any context in which the expression is applied to that in the Income Tax Acts.
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Part VIII contains general provisions relating to the taxation of profits of companies.
#### Sections 774B and 774D: power to provide further exceptions
##### 7
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Subject to the provisions of the Corporation Tax Acts, where a company resident in the United Kingdom receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company . . . for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.
- (3) Subsection (2) above does not apply to a payment of relevant loan interest to which section 369 applies.
- (4) References in this section to payments received by a company 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.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Onshore pooling.
##### 8
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#### Appeals against Board’s notices under section 703.
##### 9
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Where . . . any enactment applies both to income tax and to corporation tax—
- (a) it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and
- (b) for that purpose references in any such enactment to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief by agreement with other territories.
##### 10
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#### Reduction in chargeable profits: failure to qualify for exemptions
##### 11
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . Where a company not resident in the United Kingdom receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company’s income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income . . . for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.
- (4) Subsection (3) above does not apply to a payment of relevant loan interest to which section 369 applies.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 1
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#### Limited exemption for computer equipment.
##### 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### “Distribution” to include certain expenses of close companies.
##### 3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modifications where tax charged under section 35 of CTA 2009.
##### 4
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#### Interest paid on deposits with banks etc.
##### 5
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### Corporation tax
#### Section 591C: supplementary.
##### 6
##### 12
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
@@ -46,10566 +136,10476 @@
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) In this section . . . , Part VIII, Chapter IV of Part X and Part XI, except in so far as the context otherwise requires—
- (a) “*profits*” means income and chargeable gains; and
- (b) “*trade*” includes “*vocation*”, and also includes an office or employment or the occupation of woodlands in any context in which the expression is applied to that in the Income Tax Acts.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7B) . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding 12 months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either—
- (a) the inspector on further facts coming to his knowledge sees fit to revise it; or
- (b) on an appeal against the assessment in respect of some other matter the company shows the true accounting periods;
and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods, the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Small companies’ rate
#### Qualifying vehicles
##### 13
- (1) Where in any accounting period the profits of a company which—
- (a) is resident in the United Kingdom, and
- (b) is not a close investment-holding company (as defined in section 13A) at the end of that period.
do not exceed the lower relevant maximum amount, the company may claim that the corporation tax charged on its basic profits for that period shall be calculated as if the rate of corporation tax (instead of being the rate fixed for companies generally) were such lower rate (to be known as the “*small companies’ rate*”) as Parliament may from time to time determine.
- (2) Where in any accounting period the profits of any such company exceed the lower relevant maximum amount but do not exceed the upper relevant maximum amount, the company may claim that the corporation tax charged on its basic profits for that period shall be reduced by a sum equal to such fraction as Parliament may from time to time determine of the following amount—
$$(M-P)xIP$where—$
M is the upper relevant maximum amount;
P is the amount of the profits; and
I is the amount of the basic profits.
- (3) The lower and upper relevant maximum amounts mentioned above shall be determined as follows—
- (a) where the company has no associated company in the accounting period, those amounts are £300,000 and £1,500,000 respectively;
- (b) where the company has one or more associated companies in the accounting period, the lower relevant maximum amount is £300,000 divided by one plus the number of those associated companies, and the upper relevant maximum amount is £1,500,000 divided by one plus the number of those associated companies.
- (4) In applying subsection (3) above to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded and for the purposes of this section a company is to be treated as an “*associated company*” of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.
- In this subsection “*control*” shall be construed in accordance with section 416 except that, in the application of subsection (6) of that section in relation to the company (“the taxpayer company”) and another company or companies for the purposes of this section, the references to an associate of a person (“P”) include a partner of the person only if the condition in subsection (4A) below is met.
- (4A) The condition referred to in subsection (4) above is that relevant tax planning arrangements have at any time had effect in relation to the taxpayer company (whether in connection with its formation or otherwise).
- (4B) In subsection (4A) above “*relevant tax planning arrangements*” means arrangements which—
- (a) involve P and the partner, and
- (b) secure a relevant tax advantage.
- (4C) In subsection (4B) above—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), other than any guarantee, security or charge given to or taken by a bank, and
- “*relevant tax advantage*” means a reduction of the taxpayer company's liability to corporation tax by virtue of an increase in relief under this section.
- (5) In determining how many associated companies a company has got in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period .
- (6) For an accounting period of less than 12 months the relevant maximum amounts determined in accordance with subsection (3) above shall be proportionately reduced.
- (7) For the purposes of this section the profits (but not the basic profits) of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income other than franked investment income (if any) which the company (“the receiving company") receives from a company . . . which is—
- (a) a 51 per cent. subsidiary of the receiving company or of a company . . . of which the receiving company is a 51 per cent. subsidiary; or
- (b) a trading or holding company which does not fall within subsection (7A) below and which is owned by a consortium the members of which include the receiving company.
which the company (if a member of a group) receives from companies within the group . . . ; and for this purpose distributions received by the company from another are to be treated as coming from within the company’s group if, but only if, dividends so received are group income or would be group income if the companies so elected.
- (7A) A company falls within this subsection if—
- (a) it is a 75 per cent subsidiary of any other company, or
- (b) arrangements of any kind (whether in writing or not) are in existence by virtue of which it could become such a subsidiary.
- (8) For the purposes of this section the basic profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne.
- (8AA) Section 13ZA applies for the interpretation of subsection (7) above.
- (8AB) The reference in subsection (7) above to franked investment income received by a company applies to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Advance corporation tax
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 14
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this Act “*qualifying distribution*” means any distribution other than—
- (a) a distribution which, in relation to the company making it, is a distribution by virtue only of section 209(2)(c); or
- (b) a distribution consisting of any share capital or security which the company making the distribution has directly or indirectly received from the company by which the share capital or security was issued and which, in relation to the latter company, is a distribution by virtue only of section 209(2)(c).
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The six Schedules
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 15
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#### Schedule B
##### 16
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#### Schedule C
##### 17
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#### Schedule D
##### 18
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#### Schedule E
##### 19
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#### Schedule F
##### 20
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## PART II — PROVISIONS RELATING TO THE SCHEDULE A CHARGE
### General
#### Persons chargeable
##### 21
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#### Assessments
##### 22
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#### Collection from lessees and agents
##### 23
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#### Construction of Part II
##### 24
- (1) In this Part, except where the context otherwise requires—
- “*lease*” includes an agreement for a lease, and any tenancy, but does not include a mortgage or heritable security, and “*lessee*”, “*lessor*” and “*letting*” shall be construed accordingly;
- “*lessee*” and “*lessor*” include respectively the successors in title of a lessee or a lessor; and
- “*premises*” includes any land; and
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In the application of this Part to Scotland—
- “*assignment*” means an assignation;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) In Schedule A and in sections 25 to 31—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) “*rent*” includes a payment by the tenant to defray the cost of work of maintenance of, or repairs to, the demised premises, not being work required by the lease to be carried out by the tenant; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Deductions and other allowances
#### Deductions from rent: general rules
##### 25
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#### Deductions from rent: land managed as one estate
##### 26
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#### Deductions from rent: maintenance funds for historic buildings
##### 27
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#### Deductions from receipts other than rent
##### 28
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#### Sporting rights
##### 29
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#### Expenditure on making sea walls
##### 30
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#### Provisions supplementary to sections 25 to 30
##### 31
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#### Capital allowances for machinery and plant used in estate management
##### 32
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#### Agricultural land: allowance for excess expenditure on maintenance
##### 33
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### Premiums, leases at undervalue etc
#### Treatment of premiums etc. as rent or Schedule D profits
##### 34
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#### Schedule D charge on assignment of lease granted at an undervalue
##### 35
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#### Schedule D charge on sale of land with right to reconveyance
##### 36
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#### Premiums paid etc: deductions from premiums and rent received
##### 37
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#### Rules for ascertaining duration of leases
##### 38
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#### Saving for pre-1963 leases, and special relief for individuals
##### 39
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### Supplementary provisions
#### Tax treatment of receipts and outgoings on sale of land
##### 40
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#### Relief for rent etc. not paid
##### 41
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#### Appeals against determinations under sections 34 to 36
##### 42
- (1) Where it appears to the inspector that the determination of —
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) any amount that under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.) is brought into account as a receipt in calculating the profits of a property business (within the meaning of that Act),
may affect the liability to income tax, corporation tax or capital gains tax of other persons he may give notice to those persons as well as to the first-mentioned person of the determination he proposes to make and of the rights conferred on them by this section.
- (2) Any person to whom such a notice is given may, within 30 days after the date on which it is given, object to the proposed determination by notice given to the inspector.
- (3) Where notices have been given under subsection (1) above and no notice of objection is duly given under subsection (2) above the inspector shall make the determination as proposed in his notices and the determination shall not be called in question in any proceedings.
- (4) Where a notice of objection is duly given the amount mentioned in subsection (1) above shall be determined in like manner as an appeal . . . .
- (5) All persons to whom notices have been given under subsection (1) above may be a party to any proceedings under subsection (4) above and in any appeal arising out of those proceedings and shall be bound by the determination made in the proceedings or on appeal, whether or not they have taken part in the proceedings; and their successors in title shall also be so bound.
- (6) A notice under subsection (1) above may, notwithstanding any obligation as to secrecy or other restriction on the disclosure of information, include a statement of the grounds on which the inspector proposes to make the determination.
- (7) An inspector may by notice require any person to give within the time specified in the notice such information as appears to the inspector to be required for deciding whether to give a notice under subsection (1) above to any person.
#### Non-residents
##### 43
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## PART III — GOVERNMENT SECURITIES
### General
#### Income tax: mode of charge
##### 44
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#### Interpretation of Part III
##### 45
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### Government securities: exemptions from tax
#### Savings certificates and tax reserve certificates
##### 46
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#### United Kingdom government securities held by non-residents
##### 47
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#### Securities of foreign states
##### 48
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#### Stock and dividends in name of Treasury etc
##### 49
- (1) No tax shall be chargeable in respect of the stock or dividends—
- (a) transferred, in pursuance of any Act of Parliament, to accounts in the books of the Bank of England in the name of the Treasury or the National Debt Commissioners, or
- (b) transferred, in pursuance of any Act of Parliament, to the Treasury or the National Debt Commissioners and in respect of which the Treasury or those Commissioners are entered as holder in the registers kept by the Registrar of Government Stock,
but the Bank of England and the Registrar of Government Stock shall each transmit to the Board an account of the total amount thereof in those books or registers as the case may be.
- (2) No tax shall be chargeable in respect of the stock or dividends belonging to the Crown, in whatever name they may stand in the books of the Bank of England or in the registers kept by the Registrar of Government Stock.
- (3) In this section “dividends” means any interest, public annuities, dividends or shares of annuities.
- (4) In this section “*Registrar of Government Stock*” means the person or persons appointed in accordance with regulations under section 47(1)(b) of the Finance Act 1942 (see regulation 3 of the Government Stock Regulations 2004).
### Government securities: interest payable without deduction of tax
#### United Kingdom securities: Treasury directions for payment without deduction of tax
##### 50
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treasury directions as respects Northern Ireland securities
##### 51
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of interest on converted government securities and interest which becomes subject to deduction
##### 52
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART IV — PROVISIONS RELATING TO THE SCHEDULE D CHARGE
### CHAPTER I — SUPPLEMENTARY CHARGING PROVISIONS
#### Farming and other commercial occupation of land (except woodlands)
##### 53
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Woodlands managed on a commercial basis
##### 54
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Mines, quarries and other concerns
##### 55
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transactions in deposits with and without certificates or in debts
##### 56
- (1) Subsection (2) below applies to the following rights—
- (a) the right to receive the amount, with or without interest, stated in a certificate of deposit;
- (b) the right to receive an amount payable with interest—
- (i) in a transaction in which no certificate of deposit or security is issued, and
- (ii) which is payable by a bank or similar institution or a person regularly engaging in similar transactions;
and the right to receive that interest.
- (2) Profits or gains arising to a company from the disposal of a right to which this subsection applies or, except so far as it is a right to receive interest, from the exercise of any such right (whether by the person to whom the certificate was issued or by some other person, or, as the case may be, by the person who acquired the right in the transaction referred to in subsection (1) above or by some person acquiring it directly or indirectly from that person), shall, if not falling to be taken into account as a trading receipt, be treated as an amount to which the charge to corporation tax on income applies.
- (3) Subsection (2) above and section 551 of ITTOIA 2005 (charge to income tax on profits from disposal of deposit rights) do not apply in the case of the disposal or exercise of a right to receive an amount stated in a certificate of deposit or interest on such an amount—
- (a) if the company disposing of the right acquired it before 7th March 1973;
- (b) to any profits or gains arising to a fund or scheme in the case of which provision is made by section 613(4) or 614(2) or (3) or section 186 of the Finance Act 2004 for exempting the whole or part of its income from income tax;
- (c) in so far as they are applied to charitable purposes only, to any profits or gains arising to a charitable company within the meaning of section 506.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) This section and section 56A shall not apply for the purposes of corporation tax except in relation to rights in existence before 1st April 1996.
- (4B) For the purposes of corporation tax, where any profits or gains arising from the disposal or exercise of a right in existence before 1st April 1996 are, or (if there were any) would be, chargeable under this section, nothing in Part 5 of CTA 2009 (loan relationships) shall require any amount relating to that disposal, or to the exercise of that right, to be brought into account for the purposes of that Part.
- (5) In this section—
- “*certificate of deposit*” means a document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable; and
- “*security*” has the same meaning as in section 132 of the 1992 Act.
#### Deep discount securities
##### 57
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign pensions
##### 58
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons chargeable
##### 59
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Where, in accordance with section 12 of ITTOIA 2005, income tax is charged . . . on the profits of markets or fairs, or on tolls, fisheries or any other annual or casual profits not distrainable, the owner or occupier or receiver of the profits thereof shall be answerable for the tax so charged, and may retain and deduct the same out of any such profits.
- (4) Subsection (3) above shall not apply for the purposes of corporation tax.
### CHAPTER II — INCOME TAX: BASIS OF ASSESSMENT ETC.
### Cases I and II
#### Assessment on preceding year basis
##### 60
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special basis at commencement of trade, profession or vocation
##### 61
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special basis for early years following commencement
##### 62
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special basis on discontinuance
##### 63
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Cases III, IV and V
#### Case III assessments: general
##### 64
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cases IV and V assessments: general
##### 65
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special rules for fresh income
##### 66
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special rules where source of income disposed of or yield ceases
##### 67
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special rules where property etc. situated in Republic of Ireland
##### 68
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Case VI
#### Assessment on current year basis unless otherwise directed
##### 69
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — CORPORATION TAX: BASIS OF ASSESSMENT ETC
#### Basis of assessment etc
##### 70
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — PROVISIONS SUPPLEMENTARY TO CHAPTERS II AND III
#### Computation of income tax where no profits in year of assessment
##### 71
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Apportionments etc. for purposes of Cases I, II and VI
##### 72
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Single assessments for purposes of Cases III, IV and V
##### 73
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — COMPUTATIONAL PROVISIONS
### Deductions
#### General rules as to deductions not allowable
##### 74
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of management: investment companies
##### 75
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of management: insurance companies
##### 76
- (1) In computing for the purposes of corporation tax the profits for any accounting period of a company—
- (a) which carries on life assurance business, and
- (b) which is charged to tax in respect of that business under the I minus E basis,
sections 1219 to 1223 of CTA 2009 (expenses of management of a company's investment business) do not apply in computing the profits of that business, but a deduction for expenses payable (the “expenses deduction”) is to be allowed in accordance with the following provisions of this section.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) The expenses deduction is to be made from so much of the income and gains of the accounting period referable to basic life assurance and general annuity business as remains after any deduction falling to be made by virtue of section 388 of CTA 2009 (basic rule: deficit set off against income and gains of deficit period).
- (3) For the purposes of this section “*expenses payable*” means expenses brought into account in line 12, 22 or 25 of Form 40 (the revenue account) in the periodical return of the company for a period of account, but does not include any of the amounts falling within subsection (4), (5) or (6) below.
- (4) The amounts falling within this subsection are the following—
- (a) reinsurance premiums,
- (b) refunds of premiums,
- (c) profit commissions and profit participations (however described),
- (d) expenses or other amounts payable, to the extent that the company’s purpose in incurring the liability to make the payment is not a business or other commercial purpose of the company.
For the purposes of paragraph (d) above, it is not one of the business or commercial purposes of a company to incur a liability to pay an amount of commission or other expenses which exceeds the amount which it could reasonably be expected to pay if the company were charged to tax under section 35 of CTA 2009 (charge on trade profits) in respect of its life assurance business.
- (5) The amounts falling within this subsection are any amounts payable in connection with a policy or contract to—
- (a) a policy holder or annuitant under the policy or contract (except where the policy holder is an insurance company),
- (b) any other person who is entitled to receive benefits under the policy or contract,
- (c) any person acting on behalf of a person falling within paragraph (a) or (b) above,
- (d) the personal representatives of a deceased person who fell within paragraphs (a) to (c) above.
- (6) The amounts falling within this subsection are expenses of a capital nature.
But this subsection does not apply in the case of an amount which, by virtue of any provision of the Tax Acts other than this section, falls to be treated for the purposes of this section as expenses payable which fall to be brought into account at Step 1 in subsection (7) below (the reference to Step 1 being express in the provision).
- (7) The amount of the expenses deduction for an accounting period is found by taking the following steps—
- *Step 1*
- Find so much of the expenses payable as are—attributable to basic life assurance and general annuity business (see subsection (8) below), andreferable to the accounting period (see subsection (9) below).
- *Step 2*
- Reduce each of the amounts found at Step 1 by excluding so much of the amount as is—deductible in computing, for corporation tax purposes, the profits of a UK property business,deductible by virtue of section 85(2B) of the Finance Act 1989, . . . deductible by virtue of section 272 of CTA 2009 in computing income from the letting of rights to work minerals in the United Kingdom, orrequired to be deducted by subsection (9A) below.
- *Step 3*
- Find the amounts (so far as not included at Step 1) which fall to be treated for the purposes of this section as expenses payable for the accounting period by virtue of any of the following provisions—
- section 432AB(3) (Schedule A loss or an overseas property business loss referable to basic life assurance and general annuity business);
- section 437(1A) (relief for income element of new annuities);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- paragraph 16(1) of Schedule 7 to the Finance Act 1991 (transitional relief for old annuities);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- section 256(2)(a) of the Capital Allowances Act (capital allowances on plant and machinery used in the management of life assurance business);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- section 391(3)(b) of CTA 2009 (carried forward non-trading deficit on loan relationships);
- section 1080(2) of CTA 2009 (30% additional deduction for qualifying R&D expenditure of company carrying on life assurance business);
- section 1162 of CTA 2009 (50% additional relief for remediation expenditure on contaminated or derelict land owned by company carrying on life assurance business).
- *Step 4*
- Give effect to the provisions specified in Step 3 by adding together—so much of the amounts found at Step 1 as remains after making any reductions at Step 2, andthe amounts found at Step 3,
- and then deduct the amount of any reversal (wherever brought into account) of an expense included at Step 1 in a previous period,
- to give Subtotal 1.
- *Step 5*
- If the whole or any part of a loss arising to the company in respect of its life assurance business in the accounting period is set off under section 393A or 403(1)—find the amount (“amount L”) that is equal to so much of the loss as, in the aggregate, is so set off,find the amount (“amount S”) by which any losses for that period under section 436A fall to be reduced under section 434A(2)(b),from amount L deduct amount S, to give the adjusted loss deduction,
- then reduce Subtotal 1 by deducting from it the adjusted loss deduction,
- to give Subtotal 2.
- *Step 6*
- Give effect to subsection (6) of section 86 of the Finance Act 1989 (spreading of acquisition expenses) by—finding the amount that is equal to six-sevenths of the adjusted amount of the acquisition expenses (within the meaning of that section) for the accounting period, anddeducting that amount from Subtotal 2,
- to give Subtotal 3.
- *Step 7*
- Add together the following amounts—Subtotal 3, andany amounts carried forward to the accounting period under subsection (12) or (13) below (unrelieved excesses from earlier accounting periods),
- to give Subtotal 4.
- *Step 8*
- Give effect to subsections (8) and (9) of section 86 of the Finance Act 1989 (fraction of adjusted amount of acquisition expenses for earlier accounting periods) by adding together—Subtotal 4, andany amounts which are to be relieved under this section by virtue of those subsections,
- to give the expenses deduction.
- *Step 9*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- *Step 10: the amount of the expenses deduction*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) For the purposes of Step 1, the expenses that are attributable to basic life assurance and general annuity business are the expenses which are attributable to that business in accordance with proper internal accounting practice.
In this subsection “*proper internal accounting practice*” means the practice of insurance companies in allocating all the expenses of the company to particular categories of business in accordance with any applicable requirements of—
- (a) generally accepted accounting practice, . . .
- (b) the Prudential Sourcebook (Insurers), or
- (c) the Insurance Prudential Sourcebook.
- (9) The following rules have effect for determining for the purposes of Step 1 the expenses that are referable to an accounting period.
*Rule A*
Where a period of account coincides with an accounting period, the expenses brought into account for the period of account are the expenses referable to the accounting period.
*Rule B*
Where—
- (a) two or more accounting periods fall within the same period of account, and
- (b) that period of account is longer than 12 months,
section 834(4) (apportionment on time basis) is to apply.
*Rule C*
In any other case where two or more accounting periods fall within the same period of account, the expenses referable to any of those accounting periods are the expenses that would have been referable to that accounting period if—
- (a) the accounting period had coincided with a period of account, and
- (b) a separate periodical return had been made for that period of account,
and section 834(4) (apportionment on time basis) is not to apply.
*Rule D*
Rules A to C are subject to any provision of the Corporation Tax Acts which provides for an amount to be treated as expenses payable for, or referable to, a particular period.
- (9A) The amount required to be deducted at paragraph (d) of Step 2 is the total of the amounts (if any) arrived at under subsection (9C) below in relation to the fronting reinsurance contracts (if any) made by the company.
- (9B) A fronting reinsurance contract is a contract of reinsurance forming part of a fronting reinsurance arrangement; and a fronting reinsurance arrangement is an arrangement under which the company—
- (a) enters into a contract constituting term assurance with a person, and
- (b) reinsures all, or substantially all, of the liabilities under that contract with a reinsurer which—
- (i) does not meet the BLAGAB group reinsurance conditions in paragraph 1(3) of Schedule 19ABA to this Act, and
- (ii) is connected with that person or with a person entitled to commission from the company in respect of the contract.
- (9C) The amount referred to in subsection (9A) above in relation to any fronting reinsurance contract made by the company is the relevant reinsurance fraction of so much of the amount found at Step 1 as relates to policies and contracts which are relevant reinsured policies and contracts in relation to the fronting reinsurance contract.
- (9D) For the purposes of subsection (9C) above “the relevant reinsurance fraction” is—
$$RLTL$where—RL is so much of TL as is reinsured under the fronting reinsurance contract, andTL is the amount of the total liabilities under the relevant reinsured policies and contracts at the end of the accounting period.$
- (9E) For the purposes of subsections (9B) and (9C) above policies and contracts are relevant reinsured policies and contracts in relation to a fronting reinsurance contract if—
- (a) they are attributable to the company's basic life assurance and general annuity business, and
- (b) any or all of the risks under them are reinsured under the fronting reinsurance contract.
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) Where for any accounting period—
- (a) the amount of the expenses deduction (see Step 8), exceeds
- (b) the amount from which that deduction is to be made (see subsection (2) above),
the excess is to be carried forward to the next accounting period for which the company is charged to tax in respect of its life assurance business under the I minus E basis and brought into account for that period in accordance with Step 7.
- (13) Where for any accounting period excess adjusted Case I profits are charged to tax under section 85A of the Finance Act 1989, an amount equal to the profits is to be carried forward to the next accounting period for which the company is charged to tax in respect of its life assurance business under the I minus E basis and brought into account for that period in accordance with Step 7.
- (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (15) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*expenses payable*” has the meaning given by subsection (3) above;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Incidental costs of obtaining loan finance
##### 77
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Discounted bills of exchange
##### 78
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Contributions to local enterprise agencies
##### 79
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses connected with foreign trades etc
##### 80
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Travel between trades etc
##### 81
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest paid to non-residents
##### 82
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Patent fees etc. and expenses
##### 83
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments for technical education
##### 84
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to trustees of approved profit sharing schemes
##### 85
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employees seconded to charities and educational establishments
##### 86
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxable premiums etc
##### 87
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to Export Credit Guarantee Department
##### 88
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Debts proving irrecoverable after event treated as discontinuance
##### 89
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional payments to redundant employees
##### 90
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cemeteries
##### 91
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Treatment of regional development and other grants and debts released etc.
#### Regional development grants
##### 92
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other grants under Industrial Development Act 1982 etc
##### 93
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Debts deducted and subsequently released
##### 94
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of dealer’s receipts on purchase by company of own shares
##### 95
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Special provisions
#### Farming and market gardening: relief for fluctuating profits
##### 96
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of farm animals etc
##### 97
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tied premises
##### 98
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dealers in land
##### 99
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VI — DISCONTINUANCE . . .
### Valuation of trading stock etc.
#### Valuation of trading stock at discontinuance of trade
##### 100
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of work in progress at discontinuance of profession or vocation
##### 101
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 100 and 101
##### 102
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Case VI charges on receipts
#### Receipts after discontinuance: earnings basis charge and related charge affecting conventional basis
##### 103
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conventional basis: general charge on receipts after discontinuance or change of basis
##### 104
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowable deductions
##### 105
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of charges where rights to payments transferred
##### 106
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Reliefs
#### Treatment of receipts as earned income
##### 107
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Election for carry-back
##### 108
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge under section 104: relief for individuals born before 6th April 1917
##### 109
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplemental
#### Interpretation etc
##### 110
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VII — PARTNERSHIPS AND SUCCESSIONS
### General
#### Partnership assessments to income tax
##### 111
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Partnerships controlled abroad
##### 112
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect, for income tax, of change in ownership of trade, profession or vocation
##### 113
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Partnerships involving companies
#### Special rules for computing profits and losses
##### 114
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 114
##### 115
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Arrangements for transferring relief
##### 116
- (1) The provisions of subsection (2) below shall apply in relation to a company (“the partner company”) which is a member of a partnership carrying on a trade if arrangements are in existence (whether as part of the terms of the partnership or otherwise) whereby—
- (a) in respect of the whole or any part of the value of, or of any portion of, the partner company’s share in the profits or loss of any accounting period of the partnership, another member of the partnership or any person connected with another member of the partnership receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money’s worth; or
- (b) in respect of the whole or any part of the cost of, or of any portion of, the partner company’s share in the loss of any accounting period of the partnership, the partner company or any person connected with that company receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money’s worth, other than a payment in respect of group relief to the partner company by a company which is a member of the same group as the partner company for the purposes of group relief.
- (2) In any case where the provisions of this subsection apply in relation to the partner company—
- (a) the company’s share in the loss of the relevant accounting period of the partnership and its share in any charges on income, within the meaning of section 338, paid by the partnership in that accounting period shall not be available for set-off for the purposes of corporation tax except against its share in the profits of the trade carried on by the partnership; and
- (b) except in accordance with paragraph (a) above, no trading losses shall be available for set-off for the purposes of corporation tax against the company’s share in the profits of the relevant accounting period of the partnership; and
- (c) except in accordance with paragraphs (a) and (b) above, no amount which, apart from this subsection, would be available for relief against profits shall be available for set-off for the purposes of corporation tax against so much of the company’s total profits as consists of its share in the profits of the relevant accounting period of the partnership; and
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) In subsection (2) above “*relevant accounting period of the partnership*” means any accounting period of the partnership in which any such arrangements as are specified in subsection (1) above are in existence or to which any such arrangements apply.
- (4) If a company is a member of a partnership and corporation tax in respect of any profits of the partnership is chargeable under or by virtue of any provision to which section 834A (miscellaneous charges) applies, this section shall apply in relation to the company’s share in the profits or loss of the partnership as if—
- (a) the profits or loss to which the company’s share is attributable were the profits of, or the loss incurred in, a trade carried on by the partnership; and
- (b) any allowance to be given effect under Part 2 of the Capital Allowances Act in respect of a special leasing of plant or machinery were an allowance to be given effect in calculating the profits of that trade.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) In this section “*arrangements*” means arrangements of any kind whether in writing or not.
- (7) Section 839 shall apply for the purposes of this section.
### Limited partners
#### Restriction on relief: individuals
##### 117
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction on relief: companies
##### 118
- (1) An amount which may be given . . . under section 338, 393A(1) or 403 below . . . —
- (a) in respect of a loss incurred by a company in a trade, or of charges paid by a company in connection with the carrying on of a trade, in a relevant accounting period; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
may be given . . . to that company (“the partner company”) otherwise than against profits arising from the trade, or to another company, only to the extent that the amount given . . . or (as the case may be) the aggregate amount does not exceed the relevant sum.
- (2) In this section—
- “*limited partner*” means—a company which is carrying on a trade as a limited partner in a limited partnership registered under the Limited Partnerships Act 1907;a company which—is carrying on a trade as a general partner in a partnership;is not entitled to take part in the management of the trade; andis entitled to have its liabilities, or its liabilities beyond a certain limit, for debts or obligations incurred for the purposes of the trade discharged or reimbursed by some other person; ora company which carries on a trade jointly with others and which, under the law of any territory outside the United Kingdom—is not entitled to take part in the management of the trade; andis not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade;
- “*relevant accounting period*” means an accounting period of the partner company at any time during which it carried on the trade as a limited partner . . . ;
- “*the aggregate amount*” means the aggregate of any amounts given . . . to the partner company or another company at any time under section 338, 393A(1) or 403 below . . . —in respect of a loss incurred by the partner company in the trade, or of charges paid by it in connection with carrying it on, in any relevant accounting period; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*the relevant sum*” means the amount of the partner company’s contribution . . . to the trade as at the appropriate time; and
- “*the appropriate time*” is the end of the relevant accounting period in which the loss is incurred or the charges paid or for which the allowance falls to be made (except that where the partner company ceased to carry on the trade during that accounting period it is the time when it so ceased).
- (3) A partner company's contribution to a trade at any time is the aggregate of—
- (a) the amount which the partner company has contributed to the trade as capital and has not, directly or indirectly, drawn out or received back (other than anything which it is or may be entitled so to draw out or receive back at any time when it carries on the trade as a limited partner or which it is or may be entitled to require another person to reimburse to it), and
- (b) the amount of any profits of the trade to which the partner company is entitled but which it has not received in money or money's worth.
### CHAPTER VIII — MISCELLANEOUS AND SUPPLEMENTAL
#### Rent etc. payable in connection with mines, quarries and similar concerns
##### 119
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Rent etc. payable in respect of electric line wayleaves
##### 120
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Management expenses of owner of mineral rights
##### 121
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief in respect of mineral royalties
##### 122
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign dividends
##### 123
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on quoted Eurobonds
##### 124
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annual payments for non-taxable consideration
##### 125
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treasury securities issued at a discount
##### 126
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Enterprise allowance
##### 127
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commodity and financial futures etc.: losses and gains
##### 128
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Stock lending
##### 129
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “investment company” for purposes of Part IV
##### 130
In this Part of this Act —
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*investment company*”, means any company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings except any which, for the purposes of the Trustee Savings Bank Act 1985, is a successor or a further successor to a trustee savings bank.
## PART V — PROVISIONS RELATING TO THE SCHEDULE E CHARGE
### CHAPTER I — SUPPLEMENTARY CHARGING PROVISIONS OF GENERAL APPLICATION
### Miscellaneous provisions
#### Chargeable emoluments
##### 131
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Place of performance, and meaning of emoluments received in the U.K
##### 132
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Voluntary pensions
##### 133
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Workers supplied by agencies
##### 134
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Shareholdings, loans etc.
#### Gains by directors and employees from share options
##### 135
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 135
##### 136
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payment of tax under section 135 by instalments
##### 137
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Share acquisitions by directors and employees
##### 138
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 138
##### 139
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further interpretation of sections 135 to 139
##### 140
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Vouchers etc.
#### Non-cash vouchers
##### 141
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Credit-tokens
##### 142
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cash vouchers taxable under P.A.Y.E
##### 143
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions
##### 144
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Living accommodation
#### Living accommodation provided for employee
##### 145
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional charge in respect of certain living accommodation
##### 146
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Occupation of Chevening House
##### 147
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Payments on retirement, sick pay etc.
#### Payments on retirement or removal from office or employment
##### 148
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sick pay
##### 149
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Job release scheme allowances, maternity pay and statutory sick pay
##### 150
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Income support etc
##### 151
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Notification of amount taxable under section 151
##### 152
- (1) A benefit officer may by notice notify a person who is taxable in respect of any unemployment benefit , Jobseeker’s allowance or income support of the amount on which he is taxable and any such notification shall state the date on which it is issued and shall inform the person to whom it is given that he may object to the notification by notice given within 60 days after the date of issue of the notification.
- (2) Where—
- (a) no objection is made to a notification of an amount under subsection (1) above within the period specified in that subsection (or such further period as may be allowed by virtue of subsection (5) below); or
- (b) an objection is made but is withdrawn by the objector by notice,
that amount shall not be questioned in any appeal against any assessment in respect of income including that amount.
- (3) Where—
- (a) an objection is made to a notification of an amount under subsection (1) above within the period specified in that subsection (or such further period as may be allowed by virtue of subsection (5) below), and
- (b) the benefit officer and the objector come to an agreement that the amount notified should be varied in a particular manner, and
- (c) the officer confirms the agreement to vary in writing,
then, subject to subsection (4) below, that amount as so varied shall not be questioned in any appeal against any assessment in respect of income including that amount.
- (4) Subsection (3) above shall not apply if, within 60 days from the date when the agreement was come to, the objector gives notice to the benefit officer that he wishes to repudiate or resile from the agreement.
- (5) An objection to a notification may be made later than 60 days after the date of the issue of the notification if, on an application for the purpose—
- (a) a benefit officer is satisfied that there was a reasonable excuse for not objecting within that time, and
- (b) the objection was made thereafter without unreasonable delay, and
- (c) the officer gives consent in writing;
and if the officer is not so satisfied he shall refer the application for determination by the tribunal.
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Where a benefit officer has notified an amount to a person under subsection (1) above, he may by another notice notify the person of an alteration in the amount previously notified and, if he does so, the original notification shall be cancelled and this section shall apply to such a subsequent notification as it applies to the original notification.
- (7) In this section “*benefit officer*” means the appropriate officer, in Great Britain, of the Department for Work and Pensions, or, in Northern Ireland, of the Department of Health and Social Services.
### CHAPTER II — EMPLOYEES EARNING £8,500 OR MORE AND DIRECTORS
### Expenses
#### Payments in respect of expenses
##### 153
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Benefits in kind
#### General charging provision
##### 154
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from the general charge
##### 155
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cash equivalents of benefits charged under section 154
##### 156
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cars available for private use
##### 157
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Car fuel
##### 158
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Pooled cars
##### 159
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Beneficial loan arrangements
##### 160
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from section 160
##### 161
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employee shareholdings
##### 162
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses connected with living accommodation
##### 163
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Director’s tax paid by employer
##### 164
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scholarships
##### 165
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### General supplementary provisions
#### Notice of nil liability under this Chapter
##### 166
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “director’s or higher-paid employment”
##### 167
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other interpretative provisions
##### 168
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — PROFIT-RELATED PAY
### Preliminary
#### Interpretation
##### 169
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of profit-related pay
##### 170
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The relief
#### Relief from tax
##### 171
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from tax
##### 172
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Registration
#### Persons who may apply for registration
##### 173
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Excluded employments
##### 174
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Applications for registration
##### 175
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Registration
##### 176
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change of scheme employer
##### 177
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cancellation of registration
##### 178
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Administration
#### Recovery of tax from scheme employer
##### 179
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annual returns etc
##### 180
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other information
##### 181
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals
##### 182
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary
#### Partnerships
##### 183
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Independent accountants
##### 184
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — OTHER EXEMPTIONS AND RELIEFS
### Share option and profit sharing schemes
#### Approved share option schemes
##### 185
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Approved profit sharing schemes
##### 186
- (1) The provisions of this section apply where, after 5th April 1979 and before 1st January 2003, the trustees of an approved profit sharing scheme appropriate shares—
- (a) which have previously been acquired by the trustees, and
- (b) as to which the conditions in Part II of Schedule 9 are fulfilled,
to an individual who participates in the scheme (“the participant”).
- (2) Notwithstanding that, by virtue of such an appropriation of shares as is mentioned in subsection (1) above, the beneficial interest in the shares passes to the participant to whom they are appropriated—
- (a) the value of the shares at the time of the appropriation shall be treated as not being income of his chargeable to tax under Schedule E; and
- (b) he shall not be chargeable to income tax under that Schedule by virtue of section 78 or 79 of the Finance Act 1988 in respect of the shares or by virtue of section 162 in any case where the shares are appropriated to him at an undervalue within the meaning of that section.
- (3) Subject to the provisions of this section and paragraph 4 of Schedule 10, if, in respect of or by reference to any of a participant’s shares, the trustees become or the participant becomes entitled, before the release date, to receive any money or money’s worth (“a capital receipt”), . . . the appropriate percentage (determined as at the time the trustees become or the participant becomes so entitled) of so much of the amount or value of the receipt as exceeds the appropriate allowance for that year, as determined under subsection (12) below counts as employment income of the participant for the year of assessment in which the entitlement arises.
- (4) If the trustees dispose of any of a participant’s shares at any time before the release date or, if it is earlier, the date of the participant’s death, then, subject to subsections (6) and (7) below, . . . the appropriate percentage of the locked-in value of the shares at the time of the disposal counts as employment income of the participant for the year of assessment in which the disposal takes place.
- (5) Subject to paragraphs 5 and 6(6) of Schedule 10, the locked-in value of a participant’s shares at any time is—
- (a) if prior to that time he has become entitled to a capital receipt (within the meaning of subsection (3) above) which is referable to those shares and—
- (i) an amount calculated by reference to that capital receipt counts as his employment income by virtue of subsection (3) above, or
- (ii) if the entitlement to the capital receipt arose before 6th April 2003, he was chargeable to income tax by virtue of that subsection (as it had effect before that date) in respect of that capital receipt,
the amount by which their initial market value exceeds the amount or value of that capital receipt or, if there has been more than one such receipt, the aggregate of them; and
- (b) in any other case, their initial market value.
- (6) Subject to subsection (7) below, if, on a disposal of shares falling within subsection (4) above, the proceeds of the disposal are less than the locked-in value of the shares at the time of the disposal, subsection (4) above shall have effect as if that locked-in value were reduced to an amount equal to the proceeds of the disposal.
- (7) If, at any time prior to the disposal of any of a participant’s shares, a payment was made to the trustees to enable them to exercise rights arising under a rights issue, then, subject to subsection (8) below, subsections (4) and (6) above shall have effect as if the proceeds of the disposal were reduced by an amount equal to that proportion of that payment or, if there was more than one, of the aggregate of those payments which, immediately before the disposal, the market value of the shares disposed of bore to the market value of all the participant’s shares held by the trustees at that time.
- (8) For the purposes of subsection (7) above—
- (a) no account shall be taken of any payment to the trustees if or to the extent that it consists of the proceeds of a disposal of rights arising under a rights issue; and
- (b) in relation to a particular disposal the amount of the payment or, as the case may be, of the aggregate of the payments referred to in that subsection shall be taken to be reduced by an amount equal to the total of the reduction (if any) previously made under that subsection in relation to earlier disposals;
and any reference in subsection (7) or paragraph (a) above to the rights arising under a rights issue is a reference to rights conferred in respect of a participant’s shares, being rights to be allotted, on payment, other shares or securities or rights of any description in the same company.
- (9) If at any time the participant’s beneficial interest in any of his shares is disposed of, the shares in question shall be treated for the purposes of the relevant provisions as having been disposed of at that time by the trustees for (subject to subsection (10) below) the like consideration as was obtained for the disposal of the beneficial interest; and for the purposes of this subsection there is no disposal of the participant’s beneficial interest if and at the time when—
- (a) in England and Wales or Northern Ireland, that interest becomes vested in any person on the insolvency of the participant or otherwise by operation of law, or
- (b) in Scotland, that interest becomes vested in a judicial factor, in a trustee on the participant’s sequestrated estate or in a trustee for the benefit of the participant’s creditors.
- (10) If—
- (a) a disposal of shares falling within subsection (4) above is a transfer to which paragraph 2(2)(c) of Schedule 9 applies, or
- (b) any other disposal falling within that subsection is not at arm’s length,
- (c) a disposal of shares falling within that subsection is one which is treated as taking place by virtue of subsection (9) above and takes place within the period of retention,
then for the purposes of the relevant provisions the proceeds of the disposal shall be taken to be equal to the market value of the shares at the time of the disposal.
- (11) Where the trustees of an approved scheme acquire any shares as to which the requirements of Part II of Schedule 9 are fulfilled and, within the period of 18 months beginning with the date of their acquisition, those shares are appropriated in accordance with the scheme, section 686 shall not apply to income consisting of dividends on those shares received by the trustees; and, for the purpose of determining whether any shares are appropriated within that period, shares which were acquired at an earlier time shall be taken to be appropriated before shares of the same class which were acquired at a later time.
- (12) For the purposes of subsection (3) above, “*the appropriate allowance*”, in relation to any year of assessment, means a sum which, subject to a maximum of £60, is the product of multiplying £20 by 1 plus the number of years which fall within the period of three years immediately preceding the year in question and in which shares were appropriated to the participant under the scheme; and if in any year (and before the release date) the trustees become or the participant becomes entitled, in respect of or by reference to any of his shares, to more than one capital receipt, the receipts shall be set against the appropriate allowance for that year in the order in which they are received.
- (13) Schedule 10 shall have effect with respect to profit sharing schemes.
#### Interpretation of sections 185 and 186 and Schedules 9 and 10
##### 187
- (1) In sections 185 and 186, this section and Schedules 9 and 10 “*the relevant provisions*” means those sections (including this section) and Schedules.
- (2) For the purposes of the relevant provisions, except where the context otherwise requires—
- “*appropriate percentage*” shall be construed in accordance with paragraph 3 of Schedule 10;
- “*approved*”, in relation to a scheme, means approved under Schedule 9;
- “*associated company*” has the same meaning as in section 416, except that, for the purposes of paragraph 23 of Schedule 9, subsection (1) of that section shall have effect with the omission of the words “ or at any time within one year previously ”;
- “*bonus date*” has the meaning given by paragraph 17 of Schedule 9;
- “*capital receipt*” means money or money’s worth to which the trustees of or a participant in a profit sharing scheme become or becomes entitled as mentioned in section 186(3), but subject to paragraph 4 of Schedule 10;
- “*certified contractual savings scheme*” has the meaning given by section 326;
- “*control*” has the same meaning as in section 840;
- “*grantor*”, in relation to any scheme, means the company which has established the scheme;
- “*group scheme*” and, in relation to such a scheme, “*participating company*” have the meanings given by paragraph 1(3) and (4) of Schedule 9;
- “*initial market value*”, in relation to shares in a profit sharing scheme, has the meaning given by paragraph 30(4) of Schedule 9;
- “*locked-in value*”, in relation to any shares, shall be construed in accordance with section 186(5);
- “*market value*” has the same meaning as in Part VIII of the 1992 Act;
- “*new holding*” has the meaning given by section 126(1)(b) of the 1992 Act;
- “*participant*”, in relation to a profit sharing scheme, means an individual to whom the trustees of the scheme have appropriated shares;
- “*participant’s shares*”, in relation to a participant in a profit sharing scheme, means, subject to paragraph 5(4) of Schedule 10, shares which have been appropriated to the participant by the trustees;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*period of retention*” has the meaning given by paragraph 2 of Schedule 10;
- “*release date*”, in relation to any of the shares of a participant in a profit sharing scheme, means the third anniversary of the date on which they were appropriated to him;
- “*relevant amount*”, in relation to a participant in a profit sharing scheme, means an amount which is not less than £3,000 and not more than £8,000 but which, subject to that, is 10 per cent. of his salary (determined under subsection (5) below) for the year of assessment in question or the preceding year of assessment, whichever is the greater;
- “*relevant requirements*” has the meaning given by paragraph 1 of Schedule 9;
- “*savings-related share option scheme*” has the meaning given by paragraph 1 of Schedule 9;
- “*scheme*” means a savings-related share option scheme, a share option scheme which is not a savings-related share option scheme or a profit sharing scheme, as the context may require;
- “*shares*” includes stock;
- “*specified age*”, in relation to a scheme, means the age specified in pursuance of paragraph 8A of Schedule 9 as the specified age for the purposes of the scheme;
- “*the trustees*”, in relation to an approved profit sharing scheme or the shares of a participant in such a scheme, means the body of persons for the establishment of which the scheme must provide as mentioned in paragraph 30 of Schedule 9; and
- “*just instrument*”, in relation to an approved profit sharing scheme, means the instrument referred to in paragraph 30(1)(c) of Schedule 9.
- (3) For the purposes of the application of the relevant provisions in relation to any share option scheme or profit sharing scheme, a person has a material interest in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,—
- (a) 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 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the ordinary share capital of the company, or
- (b) where the company is a close company, 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, give an entitlement to receive more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the assets which would then be available for distribution among the participators.
- In this subsection “*associate*” has the meaning given by section 417(3) and (4) and “*participator*” has the meaning given by section 417(1).
- (4) Subsection (3) above shall have effect subject to the provisions of Part VI of Schedule 9.
- (5) For the purposes of subsection (2) above, a participant’s salary for a year of assessment means such of the emoluments of the office or employment by virtue of which he is entitled to participate in a profit sharing scheme as are liable to be paid in that year under deduction of tax pursuant to section 203 after deducting therefrom amounts included by virtue of Chapter II of this Part.
- (6) Section 839 shall apply for the purposes of the relevant provisions.
- (7) For the purposes of the relevant provisions a company is a member of a consortium owning another company if it is one of a number of companies which between them beneficially own not less than three-quarters of the other company’s ordinary share capital and each of which beneficially owns not less than one-twentieth of that capital.
- (8) Where the disposal referred to in section 186(4) is made from a holding of shares which were appropriated to the participant at different times, then, in determining for the purposes of the relevant provisions—
- (a) the initial market value and the locked-in value of each of those shares, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) Any of the relevant provisions with respect to—
- (a) the order in which any of a participant’s shares are to be treated as disposed of for the purposes of those provisions, or
- (b) the shares in relation to which an event is to be treated as occurring for any such purpose,
shall have effect in relation to a profit sharing scheme notwithstanding any direction given to the trustees with respect to shares of a particular description or to shares appropriated to the participant at a particular time.
- (10) In the relevant provisions “*workers’ cooperative*” means a registered industrial and provident society , as defined in section 834(1), which is a cooperative society and the rules of which include provisions which secure—
- (a) that the only persons who may be members of it are those who are employed by, or by a subsidiary of, the society and those who are the trustees of its profit sharing scheme; and
- (b) that, subject to any provision about qualifications for membership which is from time to time made by the members of the society by reference to age, length of service or other factors of any description, all such persons may be members of the society;
and in this subsection “*cooperative society*” has the same meaning as in section 1 of the Industrial and Provident Societies Act 1965 or, as the case may be, the Industrial and Provident Societies Act (Northern Ireland) 1969.
### Retirement benefits etc.
#### Exemptions from section 148
##### 188
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lump sum benefits on retirement
##### 189
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to Members of Parliament, Representatives to the European Parliament and others
##### 190
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Job release scheme allowances not to be treated as income
##### 191
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Foreign emoluments and earnings, pensions and certain travel facilities
#### Relief from tax for foreign emoluments
##### 192
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign earnings and travel expenses
##### 193
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other foreign travel expenses
##### 194
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Travel expenses of employees not domiciled in the United Kingdom
##### 195
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign pensions
##### 196
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leave travel facilities for the armed forces
##### 197
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Other expenses, subscriptions etc.
#### Relief for necessary expenses
##### 198
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses necessarily incurred and defrayed from official emoluments
##### 199
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of Members of Parliament
##### 200
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Fees and subscriptions to professional bodies, learned societies etc
##### 201
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Donations to charity: payroll deduction scheme
##### 202
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — ASSESSMENT, COLLECTION, RECOVERY AND APPEALS
#### Pay as you earn
##### 203
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### P.A.Y.E repayments
##### 204
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessments unnecessary in certain circumstances
##### 205
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional provision for certain assessments
##### 206
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disputes as to domicile or ordinary residence
##### 207
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART VI — COMPANY DISTRIBUTIONS, TAX CREDITS ETC
### CHAPTER I — TAXATION OF COMPANY DISTRIBUTIONS
#### U.K. company distributions not generally chargeable to corporation tax
##### 208
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — MATTERS WHICH ARE DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
#### Meaning of “distribution”
##### 209
- (1) The following provisions of this Chapter, together with section 418, shall, subject to any express exceptions, have effect with respect to the meaning of “distribution” and for determining the persons to whom certain distributions are to be treated as made, but references in the Corporation Tax Acts to distributions of a company shall not apply to distributions made in respect of share capital in a winding up.
- (1A) If a company making a distribution as part of a merger to which section 140E or section 140F of the 1992 Act (cross-border mergers) applies ceases to exist in the course of the merger (without being wound up), the distribution shall be treated for the purposes of subsection (1) as a distribution in respect of share capital in a winding up.
- (2) In the Corporation Tax Acts “*distribution*”, in relation to any company, means—
- (a) any dividend paid by the company, including a capital dividend;
- (b) subject to subsections (5) and (6) below, any other distribution out of assets of the company (whether in cash or otherwise) in respect of shares in the company, except so much of the distribution, if any, as represents repayment of capital on the shares or is, when it is made, equal in amount or value to any new consideration received by the company for the distribution;
- (c) subject to section 230, any redeemable share capital or any security issued by the company in respect of shares in or securities of the company otherwise than wholly for new consideration, or such part of any redeemable share capital or any security so issued as is not properly referable to new consideration;
- (d) any interest or other distribution out of assets of the company in respect of securities of the company, where they are securities under which the consideration given by the company for the use of the principal thereby secured represents more than a reasonable commercial return for the use of that principal, except so much, if any, of any such distribution as represents that principal and so much as represents a reasonable commercial return for the use of that principal;
- (da) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) subject to subsection (6A), any interest or other distribution out of assets of the company in respect of securities of the company (except so much, if any, of any such distribution as represents the principal thereby secured and except so much of any distribution as falls within paragraph (d) . . . above), where the securities are—
- (i) securities issued as mentioned in paragraph (c) above, but excluding securities issued before 6th April 1965 in respect of shares and securities issued before 6th April 1972 in respect of securities; or
- (ii) securities convertible directly or indirectly into shares in the company or securities issued after 5th April 1972 and carrying any right to receive shares in or securities of the company, not being (in either case) securities listed on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities so listed; or
- (iii) securities under which the consideration given by the company for the use of the principal secured is to any extent dependent on the results of the company’s business or any part of it; or
- (iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (v) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (vi) securities which are connected with shares in the company, and for this purpose securities are so connected if, in consequence of the nature of the rights attaching to the securities or shares and in particular of any terms or conditions attaching to the right to transfer the shares or securities, it is necessary or advantageous for a person who has, or disposes of or acquires, any of the securities also to have, or to dispose of or to acquire, a proportionate holding of the shares or;
- (vii) equity notes issued by the company (“*the issuing company*”) and held by a company which is associated with the issuing company or is a funded company;
- (f) any such amount as is required to be treated as a distribution by subsection (4) below or section 210.
- (3) Without prejudice to section 254(11), no amount shall be regarded for the purposes of subsection (2)(d) . . . and (e) above as representing the principal secured by a security issued after 5th April 1972 in so far as it exceeds any new consideration which has been received by the company for the issue of the security.
- (3A) Where any security of a company is issued at a premium representing new consideration—
- (a) the references in subsection (2)(d) . . . and (e) above to so much of any distribution as represents, or is an amount representing, the principal secured by a security shall be construed, in relation to a distribution in respect of the security issued at a premium, as references to the aggregate of—
- (i) so much of the distribution as represents, or is an amount representing, that principal, and
- (ii) so much of it as represents, or is an amount representing, the premium;
- (b) the reference in subsection (2)(d) above to so much of any distribution as represents a reasonable commercial return for the use of the principal secured by a security shall be construed, in relation to a distribution in respect of the security issued at a premium, as a reference to the aggregate of—
- (i) so much of the distribution as represents a reasonable commercial return for the use of that principal, and
- (ii) so much of it as (when regard is had to the extent to which distributions represent the premium) represents a reasonable commercial return for the use of the premium.
- (3AA) If, in the case of any security issued by a company, the amount of new consideration received by the company for the issue of the security exceeds the amount of the principal secured by the security—
- (a) the amount of the principal so secured shall be treated for the purposes of paragraph (d) of subsection (2) above as increased to the amount of the new consideration so received; and
- (b) subsection (3A) above, so far as relating to that paragraph, shall not have effect in relation to the security;
but this subsection is subject to sections 209A and 209B.
- (3B) For the purposes of subsection (2)(e)(iii) above the consideration given by the company for the use of the principal secured shall not be treated as being to any extent dependent on the results of the company’s business or any part of it by reason only of the fact that the terms of the security provide—
- (a) for the consideration to be reduced in the event of the results improving, or
- (b) for the consideration to be increased in the event of the results deteriorating.
- (4) Where on a transfer of assets or liabilities by a company to its members or to a company by its members, the amount or value of the benefit received by a member (taken according to its market value) exceeds the amount or value (so taken) of any new consideration given by him, the company shall, subject to subsections (5) and (6) below, be treated as making a distribution to him of an amount equal to the difference.
- (5) Subsection (4) above shall not apply where the company and the member receiving the benefit are both resident in the United Kingdom and either the former is a subsidiary of the latter or both are subsidiaries of a third company also so resident; and any amount which would apart from this subsection be a distribution shall not constitute a distribution by virtue of subsection (2)(b) above.
- (6) No transfer of assets (other than cash) or of liabilities between one company and another shall constitute, or be treated as giving rise to, a distribution by virtue of subsection (2)(b) or (4) above if they are companies—
- (a) both of which are resident in the United Kingdom and neither of which is a 51 per cent. subsidiary of a company not so resident; and
- (b) which, neither at the time of the transfer nor as a result of it, are under common control.
- (6A) Relevant alternative finance return shall not be treated as a distribution for the purposes of the Corporation Tax Acts by virtue of subsection (2)(e)(iii).
In this subsection “*relevant alternative finance return*”—
- (a) for corporation tax purposes means anything that is alternative finance return for the purposes of Part 6 of CTA 2009 as a result of section 513 of that Act or any part of the redemption payment under arrangements to which section 507 of that Act applies (investment bond arrangements), and
- (b) for income tax purposes means anything that is alternative finance return for the purposes of Chapter 5 of Part 2 of the Finance Act 2005 as a result of section 48B(1), 49(2) or 49A(2) of that Act or any part of the redemption payment under arrangements to which section 48A of that Act applies (alternative finance investment bonds).
- (7) The question whether one body corporate is a subsidiary of another for the purpose of subsection (5) above shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—
- (a) of any share capital which it owns directly in a body corporate, if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt; or
- (c) of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom.
- (8) For the purposes of subsection (2)(c) above—
- (a) the value of any redeemable share capital shall be taken to be the amount of the share capital together with any premium payable on redemption, or in a winding up, or in any other circumstances; and
- (b) the value of any security shall be taken to be the amount of the principal thereby secured (including any premium payable at maturity or in a winding up, or in any other circumstances);
and in determining the amount of the distribution constituted by the issue of any redeemable share capital or any security, the capital or security shall be taken at that value.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) For the purposes of subsection (2)(e)(vii) above a security is an equity note if as regards the whole of the principal or as regards any part of it—
- (a) the security’s terms contain no particular date by which it is to be redeemed,
- (b) under the security’s terms the date for redemption, or the latest date for redemption, falls after the expiry of the permitted period,
- (c) under the security’s terms redemption is to occur after the expiry of the permitted period if a particular event occurs and the event is one which (judged at the time of the security’s issue) is certain or likely to occur, or
- (d) the issuing company can secure that there is no particular date by which the security is to be redeemed or that the date for redemption falls after the expiry of the permitted period;
and the permitted period is the period of 50 years beginning with the date of the security’s issue.
- (10) For the purposes of subsection (2)(e)(vii) above and subsection (11) below a company is associated with the issuing company if—
- (a) the issuing company is a 75 per cent. subsidiary of the other company,
- (b) the other company is a 75 per cent. subsidiary of the issuing company, or
- (c) both are 75 per cent. subsidiaries of a third company.
- (11) For the purposes of subsection (2)(e)(vii) above a company is a funded company if there are arrangements involving the company being put in funds (directly or indirectly) by the issuing company or a company associated with the issuing company.
#### Bonus issue following repayment of share capital
##### 210
- (1) Where a company—
- (a) repays any share capital or has done so at any time after 6th April 1965, and
- (b) at or after the time of that repayment issues any share capital as paid up otherwise than by the receipt of new consideration,
the amount so paid up shall, except as provided by any provision of the Corporation Tax Acts, be treated as a distribution made in respect of the shares on which it is paid up, except in so far as that amount exceeds the amount or aggregate amount of share capital so repaid less any amounts previously so paid up and treated by virtue of this subsection as distributions.
- (2) Subsection (1) above shall not apply where the repaid share capital consists of fully paid preference shares—
- (a) if those shares existed as issued and fully paid preference shares on 6th April 1965 and throughout the period from that date until the repayment those shares continued to be fully paid preference shares, or
- (b) if those shares were issued after 6th April 1965 as fully paid preference shares wholly for new consideration not derived from ordinary shares and throughout the period from their issue until the repayment those shares continued to be fully paid preference shares.
- (3) Except in relation to a company within paragraph D of section 704, subsection (1) above shall not apply if the issue of share capital mentioned in paragraph (b) of that subsection—
- (a) is of share capital other than redeemable share capital; and
- (b) takes place after 5th April 1973 and more than ten years after the repayment of share capital mentioned in paragraph (a) of that subsection.
- (4) In this section—
- “*ordinary shares*” means shares other than preference shares;
- “*preference shares*” means shares—which do not carry any right to dividends other than dividends at a rate per cent. of the nominal value of the shares which is fixed, andwhich carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares included in the official UK list; and
- “*new consideration not derived from ordinary shares*” means new consideration other than consideration—consisting of the surrender, transfer or cancellation of ordinary shares of the company or any other company or consisting of the variation of rights in ordinary shares of the company or any other company, orderived from a repayment of share capital paid in respect of ordinary shares of the company or of any other company.
#### Matters to be treated or not to be treated as repayments of share capital
##### 211
- (1) Where—
- (a) a company issues any share capital as paid up otherwise than by the receipt of new consideration, or has done so after 6th April 1965; and
- (b) any amount so paid up does not fall to be treated as a qualifying distribution or, where the issue took place before 6th April 1973, did not fall to be treated as a distribution;
then, except as otherwise provided by any provision of the Corporation Tax Acts, for the purposes of sections 209 and 210, distributions afterwards made by the company in respect of shares representing that share capital shall not be treated as repayments of share capital, except to the extent to which those distributions, together with any relevant distributions previously so made, exceed the amounts so paid up (then or previously) on such shares after 6th April 1965 and not falling to be treated as qualifying distributions or, where the share capital was issued before 6th April 1973, as distributions.
- (2) Except in relation to a company within paragraph D of section 704, subsection (1) above shall not prevent a distribution being treated as a repayment of share capital if it is made—
- (a) more than ten years after the issue of share capital mentioned in paragraph (a) of that subsection; and
- (b) in respect of share capital other than redeemable share capital.
- (3) In subsection (1) above “*relevant distribution*” means so much of any distribution made in respect of shares representing the relevant share capital as apart from that subsection would be treated as a repayment of share capital, but by virtue of that subsection cannot be so treated.
- (4) For the purposes of subsection (1) above all shares of the same class shall be treated as representing the same share capital, and where shares are issued in respect of other shares, or are directly or indirectly converted into or exchanged for other shares, all such shares shall be treated as representing the same share capital.
- (5) Where share capital is issued at a premium representing new consideration, the amount of the premium is to be treated as forming part of that share capital for the purpose of determining under this Chapter whether any distribution made in respect of shares representing the share capital is to be treated as a repayment of share capital.
- (6) Subsection (5) above shall not have effect in relation to any part of the premium after that part has been applied in paying up share capital.
- (7) Subject to subsection (5) above, premiums paid on redemption of share capital are not to be treated as repayments of capital.
### CHAPTER III — MATTERS WHICH ARE NOT DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
### Payments of interest
#### Interest etc. paid in respect of certain securities
##### 212
- (1) Any interest or other distribution—
- (a) which is paid out of the assets of a company (“the borrower”) to another company which is within the charge to corporation tax; and
- (b) which is so paid in respect of securities of the borrower which fall within . . . any of sub-paragraphs (i) to (iii) and (vi) and (vii) of paragraph (e) of section 209(2); and
- (c) which does not fall within paragraph (d) of section 209(2),
shall not be a distribution for the purposes of the Corporation Tax Acts unless the application of this subsection is excluded by subsection (2) or (3) below.
- (2) Subsection (1) above does not apply in the case of any interest or other distribution which is paid in respect of a security of the borrower falling within section 209(2)(e)(iii) if—
- (a) the principal secured does not exceed £100,000; and
- (b) the borrower is under an obligation to repay the principal and interest before the expiry of the period of five years beginning on the date on which the principal was paid to the borrower; and
- (c) that obligation either was entered into before 9th March 1982 or was entered into before 1st July 1982 pursuant to negotiations which were in progress on 9th March 1982; and
- (d) where the period for repayment of either principal or interest is extended after 8th March 1982 (but paragraph (b) above still applies), the interest or other distribution is paid within the period which was applicable immediately before that date;
and for the purposes of paragraph (c) above negotiations shall not be regarded as having been in progress on 9th March 1982 unless, before that date, the borrower had applied to the lender for a loan and had supplied the lender with any documents required by him to support the application.
- (3) . . . Subsection (1) above does not apply in a case where the company to which the interest or other distribution is paid is entitled under any enactment, other than section 1285 of CTA 2009 (exemption for UK company distributions), to an exemption from tax in respect of that interest or distribution . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Demergers
#### Exempt distributions
##### 213
- (1) The provisions of this section and sections 214 to 218 have effect for facilitating certain transactions whereby trading activities carried on by a single company or group are divided so as to be carried on by two or more companies not belonging to the same group or by two or more independent groups.
- (2) References in the Corporation Tax Acts to distributions of a company shall not apply to any distribution—
- (a) which falls within subsection (3) below, and
- (b) in respect of which the conditions specified in subsections (4) to (12) below are satisfied;
and any such distribution is referred to in this section as an “exempt distribution”.
- (3) The following distributions fall within this subsection—
- (a) a distribution consisting of the transfer to all or any of its members by a company (“the distributing company”) of shares in one or more companies which are its 75 per cent. subsidiaries;
- (b) a distribution consisting of the transfer by a company (“the distributing company”) to one or more other companies (“the transferee company or companies”) of—
- (i) a trade or trades; or
- (ii) shares in one or more companies which are 75 per cent. subsidiaries of the distributing company,
and the issue of shares by the transferee company or companies to all or any of the members of the distributing company;
and in this section and sections 214 to 217 references to a relevant company are to the distributing company, to each subsidiary whose shares are transferred as mentioned in paragraph (a) or (b) (ii) above and to each transferee company mentioned in paragraph (b) above.
- (4) Each relevant company must be resident in a member State at the time of the distribution.
- (5) The distributing company must at the time of the distribution be either a trading company or a member of a trading group and each subsidiary whose shares are transferred as mentioned in subsection (3)(a) or (b)(ii) above must at that time be either a trading company or the holding company of a trading group.
- (6) In a case within subsection (3)(a) above—
- (a) the shares must not be redeemable, must constitute the whole or substantially the whole of the distributing company’s holding of the ordinary share capital of the subsidiary and must confer the whole or substantially the whole of the distributing company’s voting rights in the subsidiary; and
- (b) subject to subsections (7) and (12)(b) below, the distributing company must after the distribution be either a trading company or the holding company of a trading group.
- (7) Subsection (6)(b) above does not apply if the transfer relates to two or more 75 per cent. subsidiaries of the distributing company and that company is dissolved without there having been after the distribution any net assets of the company available for distribution in a winding up or otherwise.
- (8) In a case within subsection (3)(b) above—
- (a) if a trade is transferred the distributing company must either not retain any interest or retain only a minor interest in that trade;
- (b) if shares in a subsidiary are transferred those shares must constitute the whole or substantially the whole of the distributing company’s holding of the ordinary share capital of the subsidiary and must confer the whole or substantially the whole of the distributing company’s voting rights in the subsidiary;
- (c) the only or main activity of the transferee company or each transferee company after the distribution must be the carrying on of the trade or the holding of the shares transferred to it;
- (d) the shares issued by the transferee company or each transferee company must not be redeemable, must constitute the whole or substantially the whole of its issued ordinary share capital and must confer the whole or substantially the whole of the voting rights in that company; and
- (e) subject to subsections (9) and (12)(b) below, the distributing company must after the distribution be either a trading company or the holding company of a trading group.
- (9) Subsection (8)(e) above does not apply if there are two or more transferee companies each of which has a trade or shares in a separate 75 per cent. subsidiary of the distributing company transferred to it and the distributing company is dissolved without there having been after the distribution any net assets of the company available for distribution in a winding up or otherwise.
- (10) The distribution must be made wholly or mainly for the purpose of benefiting some or all of the trading activities which before the distribution are carried on by a single company or group and after the distribution will be carried on by two or more companies or groups.
- (11) The distribution must not form part of a scheme or arrangements the main purpose or one of the main purposes of which is—
- (a) the avoidance of tax (including stamp duty or stamp duty land tax); or
- (b) without prejudice to paragraph (a) above, the making of a chargeable payment, as defined by section 214, or what would be such a payment if any of the companies mentioned in that section were an unquoted company; or
- (c) the acquisition by any person or persons other than members of the distributing company of control of that company, of any other relevant company or of any company which belongs to the same group as any such company; or
- (d) the cessation of a trade or its sale after the distribution.
- In paragraph (c) above “*group*” means a company which has one or more 51 per cent. subsidiaries together with that or those subsidiaries.
- (12) Where the distributing company is a 75 per cent. subsidiary of another company—
- (a) the group (or, if more than one, the largest group) to which the distributing company belongs at the time of the distribution must be a trading group;
- (b) subsections (6)(b) and (8)(e) above shall not apply; and
- (c) the distribution must be followed by one or more other distributions falling within subsection (3)(a) or (b)(ii) above which satisfy the conditions of this section and result in members of the holding company of the group (or, if more than one, the largest group) to which the distributing company belonged at the time of the distribution becoming members of—
- (i) the transferee company or each transferee company to which a trade was transferred by the distributing company; or
- (ii) the subsidiary or each subsidiary whose shares were transferred by the distributing company; or
- (iii) a company (other than that holding company) of which the company or companies mentioned in sub-paragraph (i) or (ii) above are 75 per cent. subsidiaries.
#### Chargeable payments connected with exempt distributions
##### 214
- (1) If within five years after the making of an exempt distribution there is a chargeable payment—
- (a) the amount or value of the payment shall be treated as income . . . ;
- (ab) that income shall be chargeable to tax;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) the payment shall be regarded as a distribution for the purposes of section 1305(1) of CTA 2009 (denial of deduction for distributions); and
- (d) the payment shall not (if it otherwise would) be treated as a repayment of capital for the purposes of section 210 or 211.
- (1A) Income tax chargeable by virtue of subsection (1) shall be charged on the full amount or value of the payment made in the year of assessment; and the person liable for any tax so charged is the person receiving or entitled to the payment.
- (1B) So far as relating to corporation tax, the charge to tax under subsection (1) has effect as an application of the charge to corporation tax on income.
- (2) In this section “*a chargeable payment*” means any payment made otherwise than for bona fide commercial reasons or forming part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax (including stamp duty or stamp duty land tax), being a payment which—
- (a) a company concerned in an exempt distribution makes directly or indirectly to a member of that company or of any other company concerned in that distribution; and
- (b) is made in connection with, or with any transaction affecting, the shares in that or any such company; and
- (c) is not a distribution or exempt distribution or made to another company which belongs to the same group as the company making the payment.
- (3) Where a company concerned in an exempt distribution is an unquoted company subsection (2)(a) above shall have effect as if any reference to the making of a payment by, or to a member of, a company concerned in the exempt distribution included a reference to the making of a payment by or to any other person in pursuance of a scheme or arrangements made with the unquoted company or, if the unquoted company is—
- (a) under the control of five or fewer persons; and
- (b) not under the control of (and only of) a company which is not itself under the control of five or fewer persons,
with any of the persons mentioned in paragraph (a) above.
- (4) References in this section to a company concerned in an exempt distribution are to any relevant company and to any other company which was connected with any such company for the whole or any part of the period beginning with the exempt distribution and ending with the making of the payment which is in question under this section.
- (5) For the purposes of subsection (4) above and this subsection a company shall be deemed to have been connected in the period referred to in that subsection with each company to which a company connected with it was connected in that period.
- (6) References in this section to a payment include references to a transfer of money’s worth including the assumption of a liability.
#### Advance clearance by Board of distributions and payments
##### 215
- (1) A distribution shall be treated as an exempt distribution in any case in which, before the distribution is made, the Board have, on the application of the distributing company, notified that company that the Board are satisfied that it will be such a distribution.
- (2) A payment shall not be treated as a chargeable payment in any case in which, before the payment is made, the Board have, on the application of the person intending to make it, notified him that they are satisfied that it will be made for bona fide commercial reasons and will not form part of any scheme or arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax (including stamp duty or stamp duty land tax).
- (3) A company which becomes or ceases to be connected with another company may make an application under subsection (2) above as respects any payments that may be made by it at any time after becoming or ceasing to be so connected (whether or not there is any present intention to make any payments); and where a notification is given by the Board on such an application no payment to which the notification relates shall be treated as a chargeable payment by reason only of the company being or having been connected with the other company.
- (4) References in subsections (2) and (3) above to a payment shall be construed as in section 214.
- (5) Any application under this section shall be in writing and shall contain particulars of the relevant transactions and the Board may, within 30 days of the receipt of the application or of any further particulars previously required under this subsection, by notice require the applicant to furnish further particulars for the purposes of enabling the Board to make their decision; and if any such notice is not complied with within 30 days or such longer period as the Board may allow, the Board need not proceed further on the application.
- (6) The Board shall notify their decision to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of the notice being complied with.
- (7) If the Board notify the applicant that they are not satisfied as mentioned in subsection (1) or (2) above or do not notify their decision to the applicant within the time required by subsection (6) above, the applicant may within 30 days of the notification or of that time require the Board to transmit the application, together with any notice given and further particulars furnished under subsection (5) above, to the tribunal; and in that event any notification by the tribunal shall have effect for the purposes of this section as if it were a notification by the Board.
- (8) If any particulars furnished under this section do not fully and accurately disclose all facts and circumstances material for the decision of the Board or the tribunal, any resulting notification that the Board or the tribunal are satisfied as mentioned in subsection (1) or (2) above shall be void.
#### Returns
##### 216
- (1) Where a company makes an exempt distribution it shall within 30 days after the distribution make a return to the inspector giving particulars of the distribution and of the circumstances by reason of which it is exempt.
- (2) Where within five years after the making of an exempt distribution a person makes a chargeable payment which consists of a transfer of money’s worth, he shall within 30 days after the transfer make a return to the inspector giving particulars—
- (a) of the transaction effecting the transfer;
- (b) of the name and address of the recipient or each recipient and the value of what is transferred to him or each of them; and
- (c) if the transfer is accompanied by a chargeable payment consisting of a payment of money, of that payment.
- (3) Subject to subsection (4) below, where within five years after the making of an exempt distribution a person makes a payment or a transfer of money’s worth which would be a chargeable payment but for the fact that it is made for bona fide commercial reasons and does not form part of any such scheme or arrangements as are mentioned in section 214(2), that person shall within 30 days after making the payment or transfer make a return to the inspector giving particulars—
- (a) in the case of a transfer, of the transaction by which it is effected;
- (b) of the name and address of the recipient or each recipient and the amount of the payment made, or the value of what is transferred, to him or each of them; and
- (c) of the circumstances by reason of which the payment or transfer is not a chargeable payment.
- (4) Subsection (3) above does not apply where the payment or transfer is one in relation to which a notification under section 215(3) has effect.
#### Information
##### 217
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Any recipient of a chargeable payment and any person on whose behalf such a payment is received shall, if so required by the inspector, state whether the payment received by him or on his behalf is received on behalf of any person other than himself and, if so, the name and address of that person.
#### Interpretation of sections 213 to 217
##### 218
- (1) In sections 213 to 217—
- “*chargeable payment*” has the meaning given by section 214(2);
- “*control*” shall be construed in accordance with section 416(2) to (6);
- “*distributing company*” means a company to which section 213(3)(b) or 213A(1)(a) applies;
- “*exempt distribution*” means a distribution falling within section 213(2) or 213A;
- “*group*”, except in section 213(11)(c), means a company which has one or more 75 per cent. subsidiaries together with that or those subsidiaries;
- “*holding company*” means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 75 per cent. subsidiaries;
- “member”, where the reference is to a member of a company, does not, except in section 214(2)(a), include a person who is a member otherwise than by virtue of holding shares forming part of the company’s ordinary share capital;
- “*relevant company*” means a company falling within section 213(3) or 213A(3);
- “*shares*” includes stock;
- “*trade*”, except in subsection (3) below, does not include dealing in shares, securities, land, trades or commodity futures 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 in the carrying on of a trade or trades; and
- “*unquoted company*” means a company which does not satisfy the condition that its shares or some class thereof (disregarding debenture or loan stock, preferred shares or preferred stock) are listed in the Official List of the Stock Exchange and are dealt in on the Stock Exchange regularly or from time to time, so however that this definition does not apply to a company under the control of (and only of) one or more companies to which this definition does not apply.
- (2) In determining for the purposes of section 213(3) to (9) whether a company whose shares are transferred by the distributing company is a 75 per cent. subsidiary of the distributing company there shall be disregarded any share capital of the first-mentioned company which is owned indirectly by the distributing company.
- (3) In determining for the purposes of sections 213 to 217 whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner of—
- (a) any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) any share capital which it owns indirectly and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.
- (4) Section 839 applies for the purposes of sections 213 to 217.
### Purchase of own shares
#### Purchase by unquoted trading company of own shares
##### 219
- (1) References in the Corporation Tax Acts to distributions of a company shall not 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) the redemption, repayment or purchase is made wholly or mainly for the purpose of benefiting a trade carried on by the company or by any of its 75 per cent. subsidiaries, and does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is—
- (i) to enable the owner of the shares to participate in the profits of the company without receiving a dividend, or
- (ii) the avoidance of tax; and
the conditions specified in sections 220 to 224, so far as applicable, are satisfied in relation to the owner of the shares; or
- (b) the whole or substantially the whole of the payment (apart from any sum applied in paying capital gains tax charged on the redemption, repayment or purchase) is applied by the person to whom it is made in discharging a liability of his for inheritance tax charged on a death and is so applied within the period of two years after the death;
and in sections 220 to 224—
- “*the purchase*” means the redemption, repayment or purchase referred to in subsection (1)(a) above; and
- “*the vendor*” means the owner of the shares at the time it is made.
- (2) Where, apart from this subsection, a payment falls within subsection (1)(b) above, subsection (1) above shall not apply to the extent that the liability in question could without undue hardship have been discharged otherwise than through the redemption, repayment or purchase of shares in the company or another unquoted company which is a trading company or the holding company of a trading group.
#### Conditions as to residence and period of ownership
##### 220
- (1) The vendor must be resident and ordinarily resident in the United Kingdom in the year of assessment in which the purchase is made and if the shares are held through a nominee the nominee must also be so resident and ordinarily resident.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) 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 death.
- (4) The references in this section to a person’s ordinary residence shall be disregarded in the case of a company.
- (5) The shares must have been owned by the vendor throughout the period of five years ending with the date of the purchase.
- (6) If at any time during that period the shares were transferred to the vendor by a person who was then his spouse or civil partner living with him then, unless that person is alive at the date of the purchase but is no longer the vendor’s spouse or civil partner living with him, any period during which the shares were owned by that person shall be treated for the purposes of subsection (5) above as a period of ownership by the vendor.
- (7) 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 his personal representatives shall be treated for the purposes of subsection (5) above as a period of ownership by the vendor, and
- (b) that subsection shall have effect as if it referred to three years instead of five.
- (8) In determining whether the condition in subsection (5) above 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 him of shares of that class shall be assumed to be a disposal of shares acquired later rather than of shares acquired earlier.
- (9) If for the purposes of capital gains tax the time when shares were acquired would be determined under any provision of Chapter II of Part IV of the 1992 Act (reorganisation of share capital, conversion of securities, etc.) then, unless the shares were allotted for payment or were comprised in share capital to which section 249 applies, it shall be determined in the same way for the purposes of this section.
#### Reduction of vendor’s interest as shareholder
##### 221
- (1) If immediately after the purchase the vendor owns shares in the company, then, subject to section 224, the vendor’s interest as a shareholder must be substantially reduced.
- (2) If immediately after the purchase any associate of the vendor owns shares in the company then, subject to section 224, the combined interests as shareholders of the vendor and his associates must be substantially reduced.
- (3) The question whether the combined interests as shareholders of the vendor and his associates are substantially reduced shall be determined in the same way as is (under the following subsections) 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 his associates as well as his own.
- (4) Subject to subsection (5) below, the vendor’s interest as a shareholder shall be taken to be substantially reduced if and only if the total nominal value of the shares owned by him immediately after the purchase, expressed as a fraction of the issued share capital of the company at that time, does not exceed 75 per cent. of the corresponding fraction immediately before the purchase.
- (5) The vendor’s interest as a shareholder shall not be taken to be substantially reduced where—
- (a) he would, if the company distributed all its profits available for distribution immediately after the purchase, be entitled to a share of those profits, and
- (b) that share, expressed as a fraction of the total of those profits, exceeds 75 per cent. of the corresponding fraction immediately before the purchase.
- (6) In determining for the purposes of subsection (5) above 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 he would be entitled for a year.
- (7) In subsection (5) above “*profits available for distribution*” has the same meaning as it has for the purposes of Part 23 of the Companies Act 2006, 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) above, by a further amount equal to that required to make the distribution to which he 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.
#### Conditions applicable where purchasing company is member of group
##### 222
- (1) Subject to section 224, where the company making the purchase is immediately before the purchase a member of a group and—
- (a) immediately after the purchase the vendor owns shares in one or more other members of the group (whether or not he then owns shares in the company making the purchase), or
- (b) immediately after the purchase the vendor owns shares in the company making the purchase and immediately before the purchase he owned shares in one or more other members of the group,
the vendor’s interest as a shareholder in the group must be substantially reduced.
- (2) In subsections (5) to (7) below “*relevant company*” means the company making the purchase and any other member of the group in which the vendor owns shares immediately before or immediately after the purchase, but subject to subsection (4) below.
- (3) Subject to section 224, 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 his associates must be substantially reduced.
- (4) The question whether the combined interests as shareholders in the group of the vendor and his associates are substantially reduced shall be determined in the same way as is (under the following subsections) 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 his associates as well as his own (and references in subsections (5) to (7) below to a relevant company shall be construed accordingly).
- (5) 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 him in each relevant company as a fraction of the issued share capital of the company,
- (b) adding together the fractions so obtained, and
- (c) dividing the result by the number of relevant companies (including any in which he owns no shares).
- (6) Subject to subsection (7) below, the vendor’s interest as a shareholder in the group shall be taken to be substantially reduced if and only if it does not exceed 75 per cent. of the corresponding interest immediately before the purchase.
- (7) The vendor’s interest as a shareholder in the group shall not be taken to be substantially reduced if—
- (a) he 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 of them, and
- (b) that share, or the aggregate of those shares, expressed as a fraction 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 fraction immediately before the purchase.
- (8) Subsections (6) and (7) of section 221 shall apply for the purposes of subsection (7) above as they apply for the purposes of subsection (5) of that section.
- (9) Subject to the following subsections, 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.
- (10) Where the whole or a significant part of the business carried on by an unquoted company (“the successor company”) was previously carried on by—
- (a) the company making the purchase, or
- (b) a company which is (apart from this subsection) 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).
- (11) Subsection (10) above shall not apply if the successor company first carried on the business there referred to more than three years before the time of the purchase.
- (12) 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.
#### Other conditions
##### 223
- (1) Subject to section 224, the vendor must 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.
- In this subsection “*group*” has the same meaning as it has for the purposes of section 222.
- (2) Subject to section 224, the purchase must not be part of a scheme or arrangement which is designed or likely to result in the vendor or any associate of his having interests in any company such that, if he had those interests immediately after the purchase, any of the conditions in sections 221 and 222 and subsection (1) above could not be satisfied.
- (3) A transaction occurring within one year after the purchase shall be deemed for the purposes of subsection (2) above to be part of a scheme or arrangement of which the purchase is also part.
#### Relaxation of conditions in certain cases
##### 224
Where—
- (a) any of the conditions in sections 221 to 223 which are applicable are not satisfied in relation to the vendor, but
- (b) he proposed or agreed to the purchase in order that the condition in section 221(2) or 222(3) could be satisfied in respect of the redemption, repayment or purchase of shares owned by a person of whom he is an associate,
then, to the extent that that result is produced by virtue of the purchase, section 219(1)(a) shall have effect as if the conditions in sections 221 to 223 were satisfied in relation to the vendor.
#### Advance clearance of payments by Board
##### 225
- (1) A payment made by a company on the redemption, repayment or purchase of its own shares shall be deemed—
- (a) to be one to which section 219 applies if, before it is made, the Board have on the application of the company notified the company that they are satisfied that the section will apply; and
- (b) to be one to which section 219 does not apply if, before it is made, the Board have on the application of the company notified the company that they are satisfied that the section will not apply.
- (2) An application under this section shall be in writing and shall contain particulars of the relevant transactions; and the Board may, within 30 days of the receipt of the application or of any further particulars previously required under this subsection, by notice require the applicant to furnish further particulars for the purpose of enabling the Board to make their decision.
- (3) If a notice under subsection (2) above is not complied with within 30 days or such longer period as the Board may allow, the Board need not proceed further on the application.
- (4) The Board shall notify their decision to the applicant within 30 days of receiving the application or, if they give a notice under subsection (2) above, within 30 days of the notice being complied with.
- (5) If particulars furnished under this section do not fully and accurately disclose all facts and circumstances material for the decision of the Board, any resulting notification by the Board shall be void.
#### Returns and information
##### 226
- (1) A company which treats a payment made by it as one to which section 219 applies shall within 60 days after making the payment make a return to the inspector giving particulars of the payment and of the circumstances by reason of which that section is regarded as applying to it.
- (2) Where a company treats a payment made by it as one to which section 219(1)(a) applies, any person connected with the company who knows of any such scheme or arrangement affecting the payment as is mentioned in section 223(2) shall, within 60 days after he first knows of both the payment and the scheme or arrangement, give a notice to the inspector containing particulars of the scheme or arrangement.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The recipient of a payment treated by the company making it as one to which section 219 applies, and any person on whose behalf such a payment is received, shall if so required by the inspector state whether the payment received by him or on his behalf is received on behalf of any person other than himself and, if so, the name and address of that person.
#### Associated persons
##### 227
- (1) Any question whether a person is an associate of another in relation to a company shall be determined for the purposes of sections 219 to 226 and 228 in accordance with the following provisions of this section.
- (2) A husband and wife living together , or civil partners of each other living together, are associates of one another, a person under the age of 18 is an associate of his parents, and his parents are his associates.
- (3) A person connected with a company is an associate of the company and of any company controlled by it, and the company and any company controlled by it are his associates.
- (4) Where a person connected with one company has control of another company, the second company is an associate of the first.
- (5) Where shares in a company are held by the trustees of a settlement then in relation to that company, but subject to subsection (8) below, the trustees are associates of—
- (a) any person who directly or indirectly provided property to the trustees or has made a reciprocal arrangement for another to do so,
- (b) any person who is, by virtue of subsection (2) above, an associate of a person within paragraph (a) above, and
- (c) any person who is or may become beneficially entitled to a significant interest in the shares;
and any such person is an associate of the trustees.
- (6) 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 are associates of any person who is or may become beneficially entitled to a significant interest in the shares, and any such person is an associate of the personal representatives.
- (7) Where one person is accustomed to act on the directions of another in relation to the affairs of a company, then in relation to that company the two persons are associates of one another.
- (8) Subsection (5) above shall not apply to shares held on trusts which—
- (a) relate exclusively to a registered pension scheme, or
- (b) are exclusively for the benefit of the employees, or the employees and directors, of the company referred to in that subsection 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.
- (9) For the purposes of subsections (5) and (6) above a person’s interest is significant if its value exceeds 5 per cent. of the value of all the the settled property or, as the case may be, comprised in the estate concerned, excluding any property in which he is not and cannot become beneficially entitled to an interest.
#### Connected persons
##### 228
- (1) Any question whether a person is connected with a company shall be determined for the purposes of sections 219 to 227 in accordance with the following provisions of this section.
- (2) A person is connected with a company if he directly or indirectly possesses or is entitled to acquire more than 30 per cent. of—
- (a) the issued ordinary share capital of the company, or
- (b) the loan capital and issued share capital of the company, or
- (c) the voting power in the company.
- (3) 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 him, being a business which includes the lending of money, and
- (b) takes no part in the management or conduct of the company,
his interest in that loan capital shall be disregarded for the purposes of subsection (2) above.
- (4) A person is connected with a company if he 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 him 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 subsection—
- (a) the persons who are equity holders of the company, and
- (b) the percentage of the assets of the company to which a person would be entitled,
shall be determined in accordance with paragraphs 1 and 3 of Schedule 18, taking references in paragraph 3 to the first company as references to an equity holder and references to a winding up as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.
- (5) A person is connected with a company if he has control of it.
- (6) 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, or
- (b) for any right to receive income created in favour of the company, or
- (c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon).
- (7) For the purposes of this section a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date or will at a future date be entitled to acquire.
- (8) For the purposes of this section a person shall be assumed to have the rights or powers of his associates as well as his own.
#### Other interpretative provisions
##### 229
- (1) In sections 219 to 228—
- “*control*” has the meaning given by section 840;
- “*holding company*” means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 75 per cent. subsidiaries;
- “*personal representatives*” means persons responsible for administering the estate of a deceased person;
- “*quoted company*” means a company whose shares (or any class of whose shares) are listed in the official list of a stock exchange;
- “*shares*” includes stock;
- “*trade*” does not include dealing in shares, securities, land or futures 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, and for this purpose “*group*” means a company which has one or more 75 per cent. subsidiaries together with those subsidiaries; and
- “*unquoted company*” means a company which is neither a quoted company nor a 51 per cent. subsidiary of a quoted company.
- (2) References in sections 219 to 228 to the owner of shares are references to the beneficial owner except where the shares are settled property or are comprised in the estate of a deceased person, and in such a case are references to the trustees of the settlement or, as the case may be, to the deceased’s personal representatives.
- (3) References in sections 219 to 228 to a payment made by a company include references to anything else that is, or would but for section 219 be, a distribution.
### Stock dividends
#### Stock dividends: distributions
##### 230
Any share capital to which section 249 applies and which is issued by a company . . . in a case where section 410(2), (3) or (4) of ITTOIA 2005 applies—
- (a) shall, notwithstanding section 209(2)(c), not constitute a distribution within the meaning of section 209(2); and
- (b) for purposes of sections 210 and 211 shall not be treated as issued “as paid up otherwise than by the receipt of new consideration”.
### CHAPTER IV — TAX CREDITS
#### Tax credits for certain recipients of qualifying distributions
##### 231
- (1) Subject to sections 231AA and 231AB of this Act. . . , for corporation tax purposes where a company (whether resident in the United Kingdom or outside the United Kingdom) makes an exempt qualifying distribution and the person receiving the distribution is a company resident in the United Kingdom. . . , the recipient of the distribution shall be entitled to a tax credit equal to such proportion of the amount or value of the distribution as corresponds to the tax credit fraction in force when the distribution is made.
- (1A) The tax credit fraction is one-ninth.
- (1B) For the purposes of subsection (1) a qualifying distribution is “exempt” if it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3AA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where a distribution mentioned in subsection (1) above is, or falls to be treated as, or under any provision of the Tax Acts is deemed to be, the income of a person other than the recipient, that person shall be treated for the purposes of this section as receiving the distribution (and accordingly the question whether that person is entitled to a tax credit in respect of it shall be determined by reference to where that person, and not the actual recipient, is resident);*and where any such distribution is income of a United Kingdom trust the trustees shall be entitled to a tax credit in respect of it if no other person falls to be treated for the purposes of this section as receiving the distribution*.
- (5) *In subsection* (4)*above “*United Kingdom trust*” means a trust administered under the law of any part of the United Kingdom, not being a trust the general administration of which is ordinarily carried on outside the United Kingdom and the trustees, or a majority of the trustees, of which are resident or ordinarily resident outside the United Kingdom*.
#### Tax credits for non-U.K. residents
##### 232
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of certain recipients of distributions and in respect of non-qualifying distributions
##### 233
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information relating to distributions
##### 234
- (1) Without prejudice to section 234A. . . , a company which makes a qualifying distribution shall, if the recipient so requests in writing, furnish to him a statement in writing showing the amount or value of the distribution and (whether or not the recipient is a person entitled to a tax credit in respect of the distribution) the amount of the tax credit to which a recipient who is such a person is entitled in respect of that distribution.
- (2) The duty imposed by subsection (1) above shall be enforceable at the suit or instance of the person requesting the information.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Where a company makes a distribution which is not a qualifying distribution it shall make a return to the inspector—
- (a) within 14 days from the end of the accounting period in which the distribution is made; or
- (b) if the distribution is made on a date not falling in an accounting period, within 14 days from that date.
- (6) A return under subsection (5) above shall contain—
- (a) particulars of the transaction giving rise to the distribution; and
- (b) the name and address of the person, or each of the persons, receiving the distribution, and the amount or value of the distribution received by him or by each of them.
- (7) Where it is not in the circumstances apparent whether a transaction gives rise to a distribution in respect of which a return is required to be made under subsection (5) above, the company shall—
- (a) within the time within which such a return would be required to be made if the transaction did give rise to such a distribution, make a return to the inspector containing particulars of the transaction in question; and
- (b) if required by a notice served on the company by the inspector, furnish him within the time specified in the notice with such further information in relation to the transaction as he may reasonably require.
- (8) If it appears to the inspector that particulars of any transaction ought to have been and have not been included in a return under subsection (5) or (7) above, he may by a notice served on the company require the company to furnish him within the time specified in the notice with such information relating thereto as he may reasonably require.
- (9) Any power which the inspector may exercise under paragraphs 3 and 4 of Schedule 12 to the Finance Act 1989 for the purposes of the relevant provisions (as defined in paragraph 1 of that Schedule) may be exercised by him for the purposes of subsections (5) to (8) above.
#### Distributions of exempt funds etc
##### 235
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 235
##### 236
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of reliefs in respect of bonus issues
##### 237
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — ADVANCE CORPORATION TAX AND FRANKED INVESTMENT INCOME
#### Interpretation of terms and collection of ACT
##### 238
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of ACT against liability to corporation tax
##### 239
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of company’s surplus ACT against subsidiary’s liability to corporation tax
##### 240
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Calculation of ACT where company receives franked investment income
##### 241
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of losses etc. against surplus of franked investment income
##### 242
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of loss brought forward, or terminal loss
##### 243
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further provisions relating to claims under section 242 or 243
##### 244
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Calculation etc. of ACT on change of ownership of company
##### 245
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge of ACT at previous rate until new rate fixed, and changes of rate
##### 246
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VI — MISCELLANEOUS AND SUPPLEMENTAL
### Group income
#### Dividends etc. paid by one member of a group to another
##### 247
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 247
##### 248
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Stock dividends
#### Stock dividends treated as income
##### 249
- (1) Subject to subsections (8) and (9) below, this section applies (and accordingly section 230 above and section 410 of ITTOIA 2005 apply) to any of the following share capital, that is to say—
- (a) any share capital issued by a company resident in the United Kingdom in consequence of the exercise by any person of an option conferred on him to receive in respect of shares in the company (whether the last-mentioned shares were issued before or after the coming into force of this section) either a dividend in cash or additional share capital; and
- (b) any bonus share capital issued by a company so resident in respect of any shares in the company of a relevant class (whether the last-mentioned shares were issued before or after the coming into force of this section).
- (2) For the purposes of subsection (1)(b) above a class of shares is a relevant class if—
- (a) shares of that class carry the right to receive bonus share capital in the company of the same or a different class; and
- (b) that right is conferred by the terms on which shares of that class were originally issued or by those terms as subsequently extended or otherwise varied.
- (3) Where a company issues any share capital in a case in which two or more persons are entitled thereto, the following provisions of this section*and paragraph* 12(1)*to* (3)*of Schedule* 19 shall have effect as if the company had issued to each of those persons separately a part of that share capital proportionate to his interest therein on the due date of issue.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) Where, in a case within section 410(2), (3) or (4) of ITTOIA 2005, the share capital in question is issued in respect of shares in the company issued before 6th April 1975 which confer on the holder a right to convert or exchange them into or for shares of a different class, this section shall not apply to so much (if any) of any bonus share capital issued by the company after 5th April 1976 in connection with an exercise of that right as would have been issued if that right had been exercised so as to effect the conversion or exchange of the shares on the earliest possible date after 5th April 1975; . . . .
- (9) Where any bonus share capital falling within subsection (1)(b) above is after 5th April 1975 converted into or exchanged for shares in the company in question of a different class, then—
- (a) this section shall not apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of that bonus share capital; but
- (b) section 230(a) and (b) shall apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of so much of that bonus share capital as caused income to be treated as arising to an individual as a result of section 410(2) of ITTOIA 2005 on the due date of issue (or would have done so if the case had been one in which an individual was beneficially entitled to that share capital).
#### Returns
##### 250
- (1) A company shall for each of its accounting periods make, in accordance with this section, returns to the inspector of all share capital to which section 249 applies (“relevant share capital”) and which was issued by it in that period.
- (2) A return shall be made for—
- (a) each complete quarter falling within the accounting period, that is to say, each of the periods of three months ending with 31st March, 30th June, 30th September or 31st December which falls within that period;
- (b) each part of the accounting period which is not a complete quarter and ends on the first (or only), or begins immediately after the last (or only), of those dates which falls within the accounting period;
- (c) if none of those dates falls within the accounting period, the whole accounting period.
- (3) A return for any period for which a return is required to be made under this section (a “return period”) shall be made within 30 days from the end of that period.
- (4) No return need be made under this section by a company for any period in which it has issued no relevant share capital.
- (5) The return made by a company for any return period shall state—
- (a) the date on which any relevant share capital issued by it in the period was issued and, if different, the date on which the company was first required to issue it;
- (b) particulars of the terms on which any such share capital so issued by it was issued; and
- (c) what is, in relation to any such share capital so issued, the cash equivalent of the share capital in accordance with section 412 of ITTOIA 2005.
- (6) If it appears to the inspector that a company ought to have, but has not, made a return for any return period, he may (notwithstanding subsection (4) above) by notice require the company to make a return for that period within such time (not being less than 30 days) as may be specified in the notice; and a return required to be made under this subsection shall, if such be the case, state that no relevant share capital was issued in the period in question.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 249 and 250
##### 251
- (1) For the purposes of sections 249 and 250 —
- (a) “*bonus share capital*”, in relation to a company, means share capital issued by the company otherwise than wholly for new consideration or such part of any share capital so issued as is not properly referable to new consideration;
- (b) “*due date of issue*”, in relation to any share capital issued by a company, means the earliest date on which the company was required to issue that share capital;
- (c) an option to receive either a dividend in cash or additional share capital is conferred on a person not only where he is required to choose one or the other, but also where he is offered the one subject to a right, however expressed, to choose the other instead, and a person’s abandonment of, or failure to exercise, such a right is to be treated as an exercise of the option;
and in section 254 the definition of “*security*” (in subsection (1)) and subsections (5) and (11) shall not apply.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplemental
#### Rectification of excessive set-off etc. of ACT or tax credit
##### 252
- (1) If an inspector discovers that—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) any set-off or payment of tax credit,
ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax (including interest on unpaid tax) of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.
- (2) In any case where—
- (a) interest has been paid under section 826 on a payment of tax credit; and
- (b) interest ought not to have been paid on that payment, either at all or to any extent,
an assessment under this section may be made for recovering any interest that ought not to have been paid.
- (3) Where—
- (a) an assessment is made under this section to recover tax credit paid to a company in respect of franked investment income received by the company in an accounting period; and
- (b) more than one payment of tax credit has been made in respect of that period,
any sum recovered shall as far as possible be treated as relating to a payment of tax credit made later rather than to a payment made earlier.
- (4) Subsections (2) and (3) above shall have effect in relation to payments of tax credit claimed in respect of accounting periods ending after such day as may be appointed for the purpose of those subsections by order made by the Treasury, not being earlier than 31st March 1992.
- (5) The Management Act shall apply to any assessment under this section for recovering a payment of tax credit or interest on such a payment as if it were an assessment to income tax for the year of assessment, or in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed, and as if that payment represented a loss of tax to the Crown; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within 14 days after the issue of the notice of assessment.
#### Power to modify or replace section 234(5) to (9) and Schedule 13
##### 253
- (1) The Board may by regulations—
- (a) modify, supplement or replace any of the provisions of subsections (5) to (9) of section 234 for the purpose of requiring companies resident in the United Kingdom to make returns and give information to the inspector in respect of distributions made by them, whether before or after the passing of this Act, which are not qualifying distributions;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and references in this Act and in any other enactment to section 234(5) to (9) . . . shall be construed as including references to any such regulations.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Regulations under this section may—
- (a) make different provision for different descriptions of companies and for different circumstances and may authorise the Board, where in their opinion there are special circumstances justifying it, to make special arrangements as respects . . . the repayment of income tax borne by a company or the payment to a company of amounts in respect of any tax credit to which it is entitled;
- (b) include such transitional and other supplemental provisions as appear to the Board to be expedient or necessary.
- (4) The Board shall not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.
#### Interpretation of Part VI
##### 254
- (1) In this Part, except where the context otherwise requires—
- “*new consideration*” means, subject to subsections (5) and (6) below, consideration not provided directly or indirectly out of the assets of the company, and in particular does not include amounts retained by the company by way of capitalising a distribution;
- “*security*” includes securities not creating or evidencing a charge on assets, and interest paid by a company on money advanced without the issue of a security for the advance, or other consideration given by a company for the use of money so advanced, shall be treated as if paid or given in respect of a security issued for the advance by the company;
- “*share*” includes stock, and any other interest of a member in a company;
and in this section “*a 90 per cent. group*” means a company and all of its 90 per cent. subsidiaries.
- (2) In this Part, the expressions “*in respect of shares in the company*” and “*in respect of securities of the company*”, in relation to a company which is a member of a 90 per cent. group, mean respectively in respect of shares in that company or any other company in the group and in respect of securities of that company or any other company in the group.
- (3) Without prejudice to section 209(2)(b) as extended by subsection (2) above, in relation to a company which is a member of a 90 per cent. group, “*distribution*” includes anything distributed out of assets of the company (whether in cash or otherwise) in respect of shares in or securities of another company in the group.
- (4) Nothing in subsections (2) and (3) above shall require a company to be treated as making a distribution to any other company which is in the same group and is resident in the United Kingdom.
- (5) Where share capital has been issued at a premium representing new consideration, any part of that premium afterwards applied in paying up share capital shall be treated as new consideration also for that share capital, except in so far as the premium has been taken into account under section 211(5) so as to enable a distribution to be treated as a repayment of share capital.
- (6) Subject to subsection (7) below, no consideration derived from the value of any share capital or security of a company, or from voting or other rights in a company, shall be regarded for the purposes of this Part as new consideration received by the company unless the consideration consists of—
- (a) money or value received from the company as a qualifying distribution;
- (b) money received from the company as a payment which for those purposes constitutes a repayment of that share capital or of the principal secured by the security; or
- (c) the giving up of the right to the share capital or security on its cancellation, extinguishment or acquisition by the company.
- (7) No amount shall be regarded as new consideration by virtue of subsection (6)(b) or (c) above in so far as it exceeds any new consideration received by the company for the issue of the share capital or security in question or, in the case of share capital which constituted a qualifying distribution on issue, the nominal value of that share capital.
- (8) Where two or more companies enter into arrangements to make distributions to each other’s members, all parties concerned (however many) may for the purposes of this Part be treated as if anything done by any one of those companies had been done by any of the others.
- (9) A distribution shall be treated under this Part as made, or consideration as provided, out of assets of a company if the cost falls on the company.
- (10) References in this Part to issuing share capital as paid up apply also to the paying up of any issued share capital.
- (11) Where securities are issued at a price less than the amount repayable on them, and are not listed on a recognised stock exchange, the principal secured shall not be taken for the purposes of this Part to exceed the issue price, unless the securities are issued on terms reasonably comparable with the terms of issue of securities so listed.
- (12) For the purposes of this Part a thing is to be regarded as done in respect of a share if it is done to a person as being the holder of the share, or as having at a particular time been the holder, or is done in pursuance of a right granted or offer made in respect of a share; and anything done in respect of shares by reference to share holdings at a particular time is to be regarded as done to the then holders of the shares or the personal representatives of any share holder then dead.
#### “Gross rate” and “gross amount” of distributions to include ACT
##### 255
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART VII — GENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS
### CHAPTER I — PERSONAL RELIEFS
### The reliefs
#### General
##### 256
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Personal relief
##### 257
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Widower’s or widow’s housekeeper
##### 258
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional relief in respect of children
##### 259
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Apportionment of relief under section 259
##### 260
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Claims under sections 258 and 259 for year of marriage
##### 261
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Widows' bereavement allowance
##### 262
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dependent relatives
##### 263
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Claimant depending on services of a son or daughter
##### 264
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for blind persons
##### 265
- (1) If the claimant . . . is a registered blind person for the whole or any part of the year of assessment, he shall be entitled to a blind person's allowance of £1,280. . . .
- (1A) Section 257C (indexation) shall have effect (using the rounding up rule in subsection (1)(b) of that section) for the application of this section for the year 1998-99 and any subsequent year of assessment as it has effect for the application of sections 257 and 257A.
- (2) Where—
- (a) a person entitled to an allowance under subsection (1) above is a person whose spouse or civil partner is living with him for the whole of any part of the year of assessment, but
- (b) the amount to which the person is entitled exceeds the person's remaining relievable income,
his spouse or civil partner shall be entitled to an allowance of an amount equal to the excess.
- (2A) The person's remaining relievable income is the amount found by—
- (a) taking the amount of the individual's net income, and
- (b) subtracting any personal allowance to which the person is entitled.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Subsection (2) above shall not apply for a year of assessment unless the person entitled to an allowance under subsection (1) has given to the inspector written notice that it is to apply; and any such notice—
- (a) shall be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
- (6) A notice given under subsection (5) above in relation to a year of assessment by a spouse or civil partner shall have effect also as a notice under section 257BB(2).
- (7) In this section “*registered blind person*” means a person registered as a blind person in a register compiled under section 29 of the National Assistance Act 1948 or, in the case of a person ordinarily resident in Scotland or Northern Ireland, a person who is a blind person within the meaning of section 64(1) of that Act.
- (8) An allowance under this section is given effect at Step 3 of the calculation in section 23 of ITA 2007.
#### Life assurance premiums
##### 266
- (1) Subject to the provisions of this section, section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004, an eligible individual who pays any such premium as is specified in subsection (2) below . . . shall (without making any claim) be entitled to relief under this section.
- (1A) For the purposes of subsection (1) above an individual is an eligible individual if the individual—
- (a) is resident in the United Kingdom, or
- (b) meets the conditions in section 56(3) of ITA 2007.
- (2) The premiums referred to in subsection (1) above are any premiums paid by an individual under a policy of insurance or contract for a deferred annuity, where—
- (a) the payments are made to —
- (i) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 or under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of long-term insurance; or
- (ii) a member of the Society who effects or carries out contracts of long-term insurance in accordance with Part 19 of the Financial Services and Markets Act 2000;
- (iv) in the case of a deferred annuity, the National Debt Commissioners; and
- (b) the insurance or, as the case may be, the deferred annuity is on the life of the individual or on the life of his spouse or civil partner; and
- (c) the insurance or contract was made by him or his spouse or civil partner.
- (3) Subject to subsections . . . (10) and (11) below, no relief under this section shall be given—
- (a) except in respect of premiums payable under policies for securing a capital sum on death, whether in conjunction with any other benefit or not;
- (b) in respect of premiums payable under any policy issued in respect of an insurance made after 19th March 1968 unless the policy is a qualifying policy;
- (c) in respect of premiums payable under any policy issued in respect of an insurance made after 13th March 1984 . . . ;
- (d) in respect of premiums payable during the period of deferment in respect of a policy of deferred assurance.
- (4) Subject to subsection (8) below, relief under this section in respect of any premiums paid by an individual in a year of assessment shall be given by making good to the person to whom they are paid any deficiency arising from the deductions authorised under subsection (5) below; and this section and Schedule 14 shall have effect in relation to any premium or part of a premium which is paid otherwise than in the year of assessment in which it becomes due and payable as if it were paid in that year.
- (5) Subject to the provisions of Schedule 14—
- (a) an individual resident in the United Kingdom who is entitled to relief under this section in respect of any premium may deduct from any payment in respect of the premium and retain an amount equal to 12.5 per cent of the payment; and
- (b) the person to whom the payment is made shall accept the amount paid after the deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made and may recover the deficiency from the Board.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) Where the individual is not resident in the United Kingdom (but is entitled to relief by virtue of subsection (1A)(b)), subsection (4) above shall not apply but . . . the like relief shall be given to him under paragraph 6 of Schedule 14.
- (9) Subsections (5) and (8) above shall apply in relation to an individual who is not resident in the United Kingdom but is a member of the armed forces of the Crown or the spouseor civil partner of such a member as if the individual were so resident.
- (10) Subsection (3)(b) above shall not apply—
- (a) to any policy of life insurance having as its sole object the provision on an individual’s death or disability of a sum substantially the same as any amount then outstanding under a mortgage of his residence, or of any premises occupied by him for the purposes of a business, being a mortgage the principal amount secured by which is repayable by instalments payable annually or at shorter regular intervals; or
- (b) to any policy of life insurance issued in connection with an approved scheme as defined in Chapter I of Part XIV.
- (11) Subsection (3)(a) and (d) above shall not affect premiums payable—
- (a) under policies or contracts made in connection with any superannuation or bona fide pension scheme for the benefit of the employees of any employer, or of persons engaged in any particular trade, profession, vocation or business, or for the benefit of the spouse, civil partner, widow, widower , surviving civil partner or children or other dependants of any such employee or person, or
- (b) under policies taken out by teachers in the schools known in the year 1918 as secondary schools, pending the establishment of a superannuation or pension scheme for those teachers.
- (12) Schedule 14 shall have effect for the purpose of modifying, for certain cases, and supplementing the provisions of this section.
- (13) In . . . Schedule 14, “*friendly society*” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act).
- (14) In subsection (2)(a)—
- “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and
- “member of the society” has the same meaning as in Lloyd’s Act 1982 .
#### Qualifying policies
##### 267
Schedule 15, Part I of which contains the basic rules for determining whether or not a policy is a qualifying policy, Part II of which makes provision for the certification etc. of policies as qualifying policies and Part III of which modifies Parts I and II in their application to certain policies issued by non-resident companies, shall have effect for the purpose of determining whether or not a policy is a qualifying policy; and, accordingly, any reference in this Act to a qualifying policy shall be construed in accordance with that Schedule.
#### Early conversion or surrender of life policies
##### 268
- (1) Where a policy of life insurance to which this section applies has been issued and, within four years from the making of the insurance in respect of which it was issued, any of the following events happens, that is to say—
- (a) the surrender of the whole or part of the rights conferred by the policy;
- (b) the falling due (otherwise than on death) of a sum payable in pursuance of a right conferred by the policy to participate in profits; and
- (c) the conversion of the policy into a paid-up or partly paid-up policy;
the body by whom the policy was issued shall pay to the Board, out of the sums payable by reason of the surrender or, as the case may be, out of the sum falling due or out of the fund available to pay the sums which will be due on death or on the maturity of the policy, a sum determined in accordance with the following provisions of this section, unless the body is wound up and the event is a surrender or conversion effected in connection with the winding-up.
- (2) The sum payable under subsection (1) above shall, subject to the following provisions of this section, be equal to the lower of the following, that is to say—
- (a) the appropriate percentage of the premiums payable under the policy up to the happening of the event; and
- (b) the surrender value of the policy at the time of the happening of the event less the complementary percentage of the premiums mentioned in paragraph (a) above.
- (3) If the event is one of those mentioned below, the sum payable to the Board shall not exceed the following limit, that is to say—
- (a) if it is the surrender of part of the rights conferred by the policy, the value of the rights surrendered at the time of the surrender;
- (b) if it is the conversion of the policy into a partly paid-up policy, the surrender value at the time of the conversion, of so much of the policy as is paid up; and
- (c) if it is the falling due of a sum, that sum.
- (4) If the event was preceded by the happening of such an event as is mentioned in subsection (1) above, subsection (2) above shall apply—
- (a) as if the lower of the amounts mentioned therein were reduced by the sum paid under this section in respect of the earlier event; and
- (b) if the earlier event was such an event as is mentioned in paragraph (a) or (c) of subsection (3) above, as if the surrender value of the policy were increased by the amount which, under that paragraph, limited or might have limited the sum payable under this section in respect of the earlier event.
- (5) For the purposes of this section the appropriate percentage, in relation to any event, is the percentage equal to the following fraction of the percentage found by doubling that mentioned in section 266(5)(a) as in force for the year of assessment in which the event happened, that is to say—
- (a) if the event happens in the first two of the four years mentioned in subsection (1) above, three-sixths;
- (b) if it happens in the third of those years, two-sixths; and
- (c) if it happens in the last of those years, one-sixth;
and the complementary percentage, in relation to any event, is 100 per cent. less the appropriate percentage.
- (6) Where the annual amount of the premiums payable under a policy of life insurance is at any time increased (whether under the policy or by any contract made after its issue) so as to exceed by more than 25 per cent.—
- (a) if the insurance was made on or before 26th March 1974, the annual amount as at that date, or
- (b) in the case of any other insurance, the first annual amount so payable,
the additional rights attributable to the excess shall be treated for the purposes of this section as conferred by a new policy issued in respect of an insurance made at that time, and the excess shall be treated as premiums payable under the new policy.
- (7) This section applies to any policy of life insurance which is a qualifying policy unless—
- (a) it is a policy in respect of the premiums on which relief under section 266 is not available by virtue of subsection (3)(c) of that section; or
- (b) it is a policy of life insurance issued in connection with a registered pension scheme;
and in relation to a policy of life insurance issued in respect of an insurance made before 27th March 1974 applies only in accordance with subsection (6) above.
#### Surrender etc. of policies after four years
##### 269
- (1) Where a policy of life insurance to which this section applies has been issued and, in the fifth or any later year from the making of the insurance in respect of which it was issued, either of the following events happens, that is to say—
- (a) the surrender of the whole or part of the rights conferred by the policy; and
- (b) the falling due (otherwise than on death or maturity) of a sum payable in pursuance of a right conferred by the policy to participate in profits;
then, if either of those events has happened before, the body by whom the policy was issued shall pay to the Board, out of the sums payable by reason of the surrender, or, as the case may be, out of the sum falling due, a sum determined in accordance with the following provisions of this section.
- (2) The sum payable under subsection (1) above shall, subject to the following provisions of this section, be equal to the applicable percentage of the lower of the following—
- (a) the total of the premiums which are payable in that year under the policy; and
- (b) the sums payable by reason of the surrender or, as the case may be, the sum falling due;
and the percentage to be applied for this purpose shall be a percentage equal to that mentioned in section 266(5)(a) as in force for the year of assessment in which the event happens.
- (3) Where, after a sum has become payable under subsection (1) above, and within the same year from the making of the insurance, another such event happens as is mentioned therein, the sums payable under that subsection in respect of both or all of the events shall not exceed the applicable percentage of the total mentioned in subsection (2)(a) above.
- (4) Where, on the happening of an event in the fifth or any later year from the making of the insurance, any sum is payable under subsection (1) of section 268 as applied by subsection (6) of that section as well as under subsection (1) above, subsection (2) above shall apply as if the sums or sum mentioned in paragraph (b) thereof were reduced by the sum payable under that section.
- (5) This section applies to any policy of life insurance which is a qualifying policy unless—
- (a) it is a policy in respect of the premiums on which relief under section 266 is not available by virtue of subsection (3)(c) of that section; or
- (b) it is a policy issued in the course of an industrial insurance business; or
- (c) it was issued in respect of an insurance made before 27th March 1974.
#### Provisions supplementary to sections 268 and 269
##### 270
- (1) Where on the happening of an event in relation to a policy of life insurance a sum is payable under section 268 or 269, relief under section 266 in respect of the relevant premiums paid under the policy shall be reduced by the sum so payable or, as the case may be, by so much of the sum as does not exceed the amount of that relief (or as does not exceed so much of that amount as remains after any previous reduction under this section).
- (2) For the purposes of this section the relevant premiums are—
- (a) in relation to a sum payable under section 268, the premiums payable under the policy up to the happening of the event by reason of which the sum is payable; and
- (b) in relation to a sum payable under section 269, the premiums payable in the year (from the making of the insurance) in which the event happens by reason of which the sum is payable.
- (3) Where the relevant premiums are payable in more than one year of assessment the reduction in relief under this section shall, so far as possible, reduce relief for an earlier year of assessment before reducing relief for a later one.
- (4) Any sum paid under section 268 or 269 by reason of any event shall be treated—
- (a) as between the parties, as received by the person by whom the premiums under the policy were paid; and
- (b) for the purposes of section 266, as a sum paid by that person in satisfaction of his liability resulting from the reduction of relief under this section;
and where that sum exceeds that liability he shall be entitled, on a claim made by him not later than six years after the end of the year of assessment in which the event happens, to repayment of the excess.
#### Deemed surrender in cases of certain loans
##### 271
- (1) Where—
- (a) by virtue of section 465 of ITTOIA 2005 a gain arising in connection with a policy . . . would be treated as forming part of an individual’s total income; and
- (b) the policy was issued in respect of an insurance made after 26th March 1974 . . .; and
- (c) any sum is at any time after the making of the insurance . . . lent to or at the direction of that individual by or by arrangement with the body issuing the policy . . .;
then, subject to subsection (2) below, the same results shall follow under sections 268 to 270 as if at the time the sum was lent there had been a surrender of part of the rights conferred by the policy . . . and the sum had been paid as consideration for the surrender (and if the policy is a qualifying policy, whether or not the premiums under it are eligible for relief under section 266, those results shall follow under section 269, whether or not a gain would be treated as arising on the surrender).
- (2) Subsection (1) above does not apply—
- (a) in relation to a policy if—
- (i) it is a qualifying policy; and
- (ii) either interest at a commercial rate is payable on the sum lent or the sum is lent to a full-time employee of the body issuing the policy for the purpose of assisting him in the purchase or improvement of a dwelling used or to be used as his only or main residence; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Collection of sums payable under sections 268 and 269
##### 272
- (1) Any body by whom a policy to which section 268 or 269 applies has been issued shall, within 30 days of the end of each period of 12 months ending with 31st March in every year, make a return to the collector of the sums which, in that period, have become payable by it under either of those sections.
- (2) Any sum which is to be included in a return made under subsection (1) above shall be due at the time by which the return is to be made and shall be paid without being demanded.
- (3) Where any sum which was or ought to have been included in such a return is not paid by the end of the period for which the return was to be made, it may be recovered by an assessment as if it were income tax for the year of assessment in which that period ends; and where it appears to the inspector that a sum which ought to have been so included had not been included or that a return is not correct he may make such an assessment to the best of his judgment.
- (4) All the provisions of the Income Tax Acts relating to the assessment and collection of tax, interest on unpaid tax, appeals and penalties shall, with the necessary modifications, apply in relation to sums due under this section; and for the purposes of those provisions so far as they relate to interest on unpaid tax, a sum assessed in pursuance of this section shall be treated as having been payable when it would have been payable had it been included in a return under subsection (1) above.
- (5) Where, on an appeal against an assessment made in pursuance of this section, it is determined that a greater sum has been assessed than was payable, the excess, if paid, shall be repaid.
- (6) Where a body has paid a sum which is payable under section 268 or 269 it shall give within 30 days to the person by whom the sum is, under section 270(4), treated as received a statement specifying that sum and showing how it has been arrived at.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments securing widows' and children’s annuities
##### 273
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Limits on relief under sections 266 and 273
##### 274
- (1) The aggregate of the premiums . . . in respect of which relief is given to any person under section 266 shall not exceed £1,500 in any year of assessment or one-sixth of that person’s total income, whichever is the greater.
- (2) The aggregate of the relief given under section 266 in respect of premiums . . . payable for securing any benefits other than capital sums on death shall not exceed the amount of the income tax calculated at 12.5% on £100.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) War insurance premiums shall not be taken into account in calculating the limits of one-sixth of total income or of £100 mentioned in this section.
### Supplemental
#### Meaning of “relative”
##### 275
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect on relief of charges on income
##### 276
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Partners
##### 277
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Non-residents
##### 278
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — TAXATION OF INCOME OF SPOUSES AND CIVIL PARTNERS
### General rules
#### Aggregation of wife’s income with husband's
##### 279
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of reliefs
##### 280
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax repayments to wives
##### 281
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Construction of references to married women living with their husbands
##### 282
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Separate assessments
#### Option for separate assessment
##### 283
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of separate assessment on personal reliefs
##### 284
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Collection from wife of tax assessed on husband but attributable to her income
##### 285
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Right of husband to disclaim liability for tax on deceased wife’s income
##### 286
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Separate taxation
#### Separate taxation of wife’s earnings
##### 287
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Elections under section 287
##### 288
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — ENTERPRISE INVESTMENT SCHEME
#### The relief
##### 289
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Minimum and maximum subscriptions
##### 290
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Individuals qualifying for relief
##### 291
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Parallel trades
##### 292
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
##### 293
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Companies with interests in land
##### 294
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of interests in land for purposes of section 294(1)(b)
##### 295
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 294 disapplied where amounts raised total £50,000 or less
##### 296
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trades
##### 297
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 293 and 297
##### 298
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disposal of shares
##### 299
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Value received from company
##### 300
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 300
##### 301
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Replacement capital
##### 302
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Value received by persons other than claimants
##### 303
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Husband and wife
##### 304
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reorganisation of share capital
##### 305
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Claims
##### 306
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of relief
##### 307
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application to subsidiaries
##### 308
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further provisions as to subsidiaries
##### 309
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information
##### 310
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Nominees, bare trustees and approved investment funds
##### 311
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter III
##### 312
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — SPECIAL PROVISIONS
#### Taxation of consideration for certain restrictive undertakings
##### 313
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Divers and diving supervisors
##### 314
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Wounds and disability pensions
##### 315
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances, bounties and gratuities
##### 316
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Victoria Cross and other awards
##### 317
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other pensions in respect of death due to war service etc
##### 318
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Crown servants: foreign service allowance
##### 319
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commonwealth Agents-General and official agents etc
##### 320
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Consuls and other official agents
##### 321
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Consular officers and employees
##### 322
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Visiting forces
##### 323
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Designated international organisations
##### 324
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on deposits with National Savings Bank
##### 325
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest etc. under contractual savings schemes
##### 326
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disabled person’s vehicle maintenance grant
##### 327
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Funds in court
##### 328
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on damages for personal injuries
##### 329
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Compensation for National-Socialist persecution
##### 330
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scholarship income
##### 331
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenditure and houses of ministers of religion
##### 332
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Personal equity plans
##### 333
Regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) may include provision generally for the purpose of the administration of corporation tax in relation to plans.
### CHAPTER V — RESIDENCE OF INDIVIDUALS
#### Commonwealth citizens and others temporarily abroad
##### 334
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Residence of persons working abroad
##### 335
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Temporary residents in the United Kingdom
##### 336
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART VIII — TAXATION OF INCOME AND CHARGEABLE GAINS OF COMPANIES
### Taxation of income
#### Companies beginning or ceasing to carry on a trade
##### 337
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowance of charges on income and capital
##### 338
- (1) Charges on income are allowed as deductions from a company’s total profits in computing the corporation tax chargeable for an accounting period.
- (2) They are deducted from the company’s total profits for the period as reduced by any other relief from tax other than group relief.
- (3) The amount of the deduction is limited to the amount that reduces the company’s total profits for the period to nil.
- (4) Except as otherwise provided, a deduction is allowed only in respect of payments made by the company in the accounting period concerned.
- (5) The above provisions are subject to any express exceptions in the Corporation Tax Acts.
#### Charges on income: donations to charity
##### 339
- (1) A qualifying donation is a payment made by a company to a charity, other than—
- (a) a payment which, by reason of any provision of the Taxes Acts (within the meaning of the Management Act) except section 209(4), is to be regarded as a distribution (but see subsections (1A) and (1B) below); and
- (b) a payment which is deductible in computing profits or any description of profits for purposes of corporation tax.
- (1A) In determining whether a payment is to be regarded as a distribution for the purposes of subsection (1)(a) above, the words in section 209(5) from “; and any amount” to the end are to be disregarded.
- (1B) A payment (other than a dividend) made by a company which is wholly owned by a charity is not to be regarded as a distribution for the purposes of subsection (1)(a) above.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) A payment made by a company is not a qualifying donation if—
- (a) it is made subject to a condition as to repayment, or
- (b) the company or a connected person receives a benefit in consequence of making it and either the relevant value in relation to the payment exceeds the limit imposed by subsection (3DA) below or the amount to be taken into account for the purposes of this paragraph in relation to the payment exceeds £500.
- (3C) For the purposes of subsections (3B) above and (3D) below, the relevant value in relation to a payment to a charity is—
- (a) where there is one benefit received in consequence of making it which is received by the company or a connected person, the value of that benefit;
- (b) where there is more than one benefit received in consequence of making it which is received by the company or a connected person, the aggregate value of all the benefits received in consequence of making it which are received by the company or a connected person.
- (3D) The amount to be taken into account for the purposes of subsection (3B)(b) above in relation to a payment to a charity is an amount equal to the aggregate of—
- (a) the relevant value in relation to the payment, and
- (b) the relevant value in relation to each payment already made to the charity by the company in the accounting period in which the payment is made which is a qualifying donation within the meaning of this section.
- (3DA) The limit imposed by this subsection is—
- (a) where the amount of the payment does not exceed £100, 25 per cent of the amount of the payment;
- (b) where the amount of the payment exceeds £100 but does not exceed £1,000, £25;
- (c) where the amount of the payment exceeds £1,000, 5 per cent of the amount of the payment.
- (3DB) Where a benefit received in consequence of making a payment—
- (a) consists of the right to receive benefits at intervals over a period of less than twelve months;
- (b) relates to a period of less than twelve months; or
- (c) is one of a series of benefits received at intervals in consequence of making a series of payments at intervals of less than twelve months,
the value of the benefit shall be adjusted for the purposes of subsection (3C) above and the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.
- (3DC) Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a payment which is one of a series of payments made at intervals of less than twelve months, the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.
- (3DD) Where the value of a benefit, or the amount of a payment, falls to be adjusted under subsection (3DB) or (3DC) above, the value or amount shall be multiplied by 365 and the result shall be divided by—
- (a) in a case falling within subsection (3DB)(a) or (b) above, the number of days in the period of less than twelve months;
- (b) in a case falling within subsection (3DB)(c) or (3DC) above, the average number of days in the intervals of less than twelve months;
and the reference in subsection (3DB) to subsection (3C) above is a reference to that subsection as it applies for the purposes of subsection (3B) above.
- (3E) A payment made by a company is not a qualifying donation if it is conditional on, or associated with, or part of an arrangement involving, the acquisition of property by the charity, otherwise than by way of gift, from the company or a connected person.
- (3F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3G) A payment made by a company is not a qualifying donation if the company is itself a charity.
- (4) Where a company gives a sum of money to a charity—
- (a) if the charity is a charitable company, a body mentioned in section 507 or an Association of a description specified in section 508, the gift shall in the hands of the charitable company be treated for the purposes of this Act as if it were an annual payment, and
- (b) if the charity is a trust established for charitable purposes only, see section 522 of ITA 2007 (gifts of money from companies).
- (5) *In any accounting period of a company, the maximum amount allowable under section* 338*by virtue of subsection* (2)(b)*of that section in respect of qualifying donations made by the company shall be a sum equal to* 3*per cent. of the dividends paid on the company’s ordinary share capital in that accounting period* .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7AA) Where—
- (a) a qualifying donation to a charity is made by a company which is wholly owned by a charity, and
- (b) the company makes a claim for the donation, or any part of it, to be deemed for the purposes of section 338 to be a charge on income paid in an accounting period falling wholly or partly within the period of nine months ending with the date of the making of the donation,
the donation or part shall be deemed for those purposes to be a charge on income paid in that accounting period, and not in any later period.
A claim under this subsection must be made within the period of two years immediately following the accounting period in which the donation is made, or such longer period as the Board may allow.
- (7AB) For the purposes of this section a company is wholly owned by a charity if it is either—
- (a) a company with an ordinary share capital every part of which is owned by a charity (whether or not the same charity); or
- (b) a company limited by guarantee in whose case every person who—
- (i) is beneficially entitled to participate in the divisible profits of the company, or
- (ii) will be beneficially entitled to share in any net assets of the company available for distribution on its winding up,
is or must be a charity or a company wholly owned by a charity.
- (7AC) For the purposes of subsection (7AB) above ordinary share capital of a company shall be taken to be owned by a charity if there is a charity which—
- (a) within the meaning of section 838 directly or indirectly owns that share capital; or
- (b) would be taken so to own that share capital if references in that section to a body corporate included references to a charity which is not a body corporate.
- (7A) In subsections (3B) to (3E) above references to a connected person are to a person connected with—
- (a) the company, or
- (b) a person connected with the company;
and section 839 applies for the purposes of this subsection.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) For the purposes of this section “charity” includes each of the bodies mentioned in section 507, and . . . any Association of a description specified in section 508, but, subject to that, in this section “charity” has the same meaning as in section 506.
- (10) In this section “*charitable company*” has the same meaning as in section 506.
#### Charges on income: interest payable to non-residents
##### 340
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments of interest etc. between related companies
##### 341
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax on company in liquidation
##### 342
- (1) In this section references to a company’s final year are references to the financial year in which the affairs of the company are completely wound up, and references to a company’s penultimate year are references to the last financial year preceding its final year.
- (2) Subject to subsection (3) or (3A) below—
- (a) corporation tax shall be charged on the profits of the company arising in the winding-up in its final year at the rate of corporation tax fixed or proposed for the penultimate year; but
- (b) where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.
- (3) If, before the affairs of the company are completely wound up, any of the rates or fractions mentioned in subsection (2) above has been fixed or proposed for the final year, that subsection shall have effect in relation to that rate or fraction as if for the references to the penultimate year there were substituted references to the final year.
- (3A) If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.
In this subsection “*the company’s final accounting period*” means the accounting period of the company which, in accordance with section 12(4) of CTA 2009, ends by reason of the completion of the winding up.
- (4) An assessment on the company’s profits for an accounting period which falls after the commencement of the winding-up shall not be invalid because made before the end of the accounting period.
- (5) In making an assessment after the commencement of the winding-up of the company but before the date when its affairs are completely wound up, the liquidator may act on an assumption as to when that date will fall, so far as it governs section 12(4) of CTA 2009.
- (6) The assumption of the wrong date shall not alter the company’s final and penultimate year, and, if the right date is later, an accounting period shall end on the date assumed, and a new accounting period shall begin and section 12(4) of CTA 2009 shall thereafter apply as if the winding-up had commenced with the beginning of that new accounting period.
- (7) References in this section to a rate or fraction fixed or proposed are references to a rate or fraction fixed by an Act passed before the completion of the winding-up or, if not so fixed, proposed by a Budget resolution (and without regard to any subsequent Act); except that if a rate or fraction so fixed is proposed to be altered by a Budget resolution any such reference to it is a reference to it as proposed to be so altered.
- In this subsection “*Budget resolution*” means a resolution of the House of Commons for fixing any such rate or fraction as is mentioned in this section.
- (8) Where the winding-up commenced before the company’s final year, paragraphs (a) and (b) of subsection (2) (but not subsection (3)) above shall apply in relation to the company’s profits arising at any time in its penultimate year.
- (9) Any assessment made by virtue of section 8(4) shall be subject to any such adjustment by discharge or repayment of tax or by a further assessment as may be required to give effect to this section.
#### Company reconstructions without a change of ownership
##### 343
- (1) Where, on a company (“*the predecessor*”) ceasing to carry on a trade, another company (“*the successor*”) begins to carry it on, and—
- (a) on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and
- (b) the trade is not, within the period taken for the comparison under paragraph (a) above, carried on otherwise than by a company which is within the charge to tax in respect of it;
then the Corporation Tax Acts shall have effect subject to subsections (2) to (6) below.
- (2) In the circumstances mentioned in subsection (1)—
- (a) there shall be made to or on the successor in accordance with the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act) all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it; and
- (b) the amount of any such allowance or charge shall be computed as if—
- (i) the successor had been carrying on the trade since the predecessor began to do so, and
- (ii) everything done to or by the predecessor had been done to or by the successor (but so that no sale or transfer which on the transfer of the trade is made to the successor by the predecessor of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge).
- (3) . . . Subject to subsection (4) below and to any claim made by the predecessor under section 393A(1)(including a case where section 393B applies), the successor shall be entitled to relief under section 393(1), as for a loss sustained by the successor in carrying on the trade, for any amount for which the predecessor would have been entitled to . . . relief if it had continued to carry on the trade.
- (4) Where the amount of relevant liabilities exceeds the value of relevant assets, the successor shall be entitled to relief by virtue of subsection (3) above only if, and only to the extent that, the amount of that excess is less than the amount mentioned in that subsection.
- (4A) Subsection (2A) of section 393A shall not apply to any loss which (but for this subsection) would fall within subsection (2B) of that section by virtue of the predecessor’s ceasing to carry on the trade, and subsection (7) of that section shall not apply for the computation of any such loss.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Where the successor ceases to carry on the trade within the period taken for the comparison under subsection (1)(a) above and on its doing so a third company begins to carry on the trade, . . ., subsections (2) to (5) above shall apply both in relation to that event (together with the new predecessor and successor) and to the earlier event (together with the original predecessor and successor), but so that—
- (a) in relation to the earlier event “successor” shall include the successor at either event; and
- (b) in relation to the later event “predecessor” shall include the predecessor at either event;
and if the conditions of this subsection are thereafter again satisfied, it shall apply again in like manner.
- (8) Where, on a company ceasing to carry on a trade, another company begins to carry on the activities of the trade as part of its trade, then that part of the trade carried on by the successor shall be treated for the purposes of this section as a separate trade, if the effect of so treating it is that subsection (1) or (7) above has effect on that event in relation to that separate trade; and where, on a company ceasing to carry on part of a trade, another company begins to carry on the activities of that part as its trade or part of its trade, the predecessor shall for purposes of this section be treated as having carried on that part of its trade as a separate trade if the effect of so treating it is that subsection (1) or (7) above has effect on that event in relation to that separate trade.
- (9) Where under subsection (8) above any activities of a company’s trade fall, on the company ceasing or beginning to carry them on, to be treated as a separate trade, such apportionments of receipts, expenses, assets or liabilities shall be made as may be just.
- (10) Where, by virtue of subsection (9) above, any item falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to tax (for whatever period) of two or more companies, any question which arises as to the manner in which the item is to be apportioned shall be determined, for the purposes of the tax of all those companies in like manner as an appeal, and all those companies shall be entitled to be a party to those proceedings.
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) Any relief obtainable under this section by way of discharge or repayment of tax shall be given on the making of a claim.
- (12) In the application of this section to any case in relation to which subsection (4) above does not apply—
- (a) subsection (9) above shall have effect with the substitution for the words following “separate trade” of the words “ any necessary apportionment shall be made of receipts or expenses ”; and
- (b) subsection (10) above shall have effect with the substitution for “item” of “ sum ”.
#### Company reconstructions: supplemental
##### 344
- (1) For the purposes of section 343—
- (a) a trade carried on by two or more persons shall be treated as belonging to them in the shares in which they are entitled to the profits of the trade;
- (b) a trade or interest in a trade belonging to any person as trustee (otherwise than for charitable or public purposes) shall be treated as belonging to the persons for the time being entitled to the income under the trust; and
- (c) a trade or interest in a trade belonging to a company shall, where the result of so doing is that subsection (1) or (7) of section 343 has effect in relation to an event, be treated in any of the ways permitted by subsection (2) below.
- (2) For the purposes of section 343, a trade or interest in a trade which belongs to a company engaged in carrying it on may be regarded—
- (a) as belonging to the persons owning the ordinary share capital of the company and as belonging to them in proportion to the amount of their holdings of that capital, or
- (b) in the case of a company which is a subsidiary company, as belonging to a company which is its parent company, or as belonging to the persons owning the ordinary share capital of that parent company, and as belonging to them in proportion to the amount of their holdings of that capital,
and any ordinary share capital owned by a company may, if any person or body of persons has the power to secure by means of the holding of shares or the possession of voting power in or in relation to any company, or by virtue of any power conferred by the articles of association or other document regulating any company, that the affairs of the company owning the share capital are conducted in accordance with his or their wishes, be regarded as owned by the person or body of persons having that power.
- (3) For the purposes of subsection (2) above—
- (a) references to ownership shall be construed as references to beneficial ownership;
- (b) a company shall be deemed to be a subsidiary of another company if and so long as not less than three-quarters of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies;
- (c) the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with section 838(5) to (10); and
- (d) where any company is a subsidiary of another company, that other company shall be considered as its parent company unless both are subsidiaries of a third company.
- (4) In determining, for the purposes of section 343, whether or to what extent a trade belongs at different times to the same persons, persons who are relatives of one another and the persons from time to time entitled to the income under any trust shall respectively be treated as a single person, and for this purpose “*relative*” means husband, wife, civil partner, ancestor, lineal descendant, brother or sister.
- (5) For the purposes of section 343(4), relevant assets are—
- (a) assets which were vested in the predecessor immediately before it ceased to carry on the trade, which were not transferred to the successor and which, in a case where the predecessor was the predecessor on a previous application of section 343, were not by virtue of subsection (9) of that section apportioned to a trade carried on by the company which was the successor on that application; and
- (b) consideration given to the predecessor by the successor in respect of the change of company carrying on the trade;
and for the purposes of paragraph (b) above the assumption by the successor of any liabilities of the predecessor shall not be treated as the giving of consideration to the predecessor by the successor.
- (6) For the purposes of section 343(4), relevant liabilities are liabilities which were outstanding and vested in the predecessor immediately before it ceased to carry on the trade, which were not transferred to the successor and which, in a case where the predecessor was the predecessor on a previous application of section 343, were not by virtue of subsection (9) of that section apportioned to a trade carried on by the company which was the successor on that application; but a liability representing the predecessor’s share capital, share premium account, reserves or relevant loan stock is not a relevant liability.
- (7) For the purposes of section 343(4)—
- (a) the value of assets (other than money) shall be taken to be the price which they might reasonably be expected to have fetched on a sale in the open market immediately before the predecessor ceased to carry on the trade; and
- (b) the amount of liabilities shall be taken to be their amount at that time.
- (8) Where the predecessor transferred a liability to the successor but the creditor concerned agreed to accept settlement of part of the liability as settlement of the whole, the liability shall be treated for the purposes of subsection (6) above as not having been transferred to the successor except as to that part.
- (9) A liability representing the predecessor’s share capital, share premium account, reserves or relevant loan stock shall, for the purposes of subsection (6) above, be treated as not doing so if, in the period of one year ending with the day on which the predecessor ceased to carry on the trade, the liability arose on a conversion of a liability not representing its share capital, share premium account, reserves or relevant loan stock.
- (10) Where a liability of the predecessor representing its relevant loan stock is not a relevant liability for the purposes of section 343(4) but is secured on an asset of the predecessor not transferred to the successor, the value of the asset shall, for the purposes of section 343(4), be reduced by an amount equal to the amount of the liability.
- (11) In this section “*relevant loan stock*” means any loan stock or similar security (whether secured or unsecured) except any in the case of which subsection (12) below applies.
- (12) This subsection applies where, at the time the liability giving rise to the loan stock or other security was incurred, the person who was the creditor was carrying on a trade of lending money.
### Chargeable gains
#### Computation of chargeable gains
##### 345
#### Capital distribution of chargeable gains: recovery of tax from shareholder
##### 346
#### Tax on one member of group recoverable from another member
##### 347
## PART IX — ANNUAL PAYMENTS AND INTEREST
### Annual payments
#### Payments out of profits or gains brought into charge to income tax: deduction of tax
##### 348
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments not out of profits or gains brought into charge to income tax, and annual interest
##### 349
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax where payments made under section 349
##### 350
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Small maintenance payments
##### 351
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certificates of deduction of tax
##### 352
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Relief for payments of interest (excluding MIRAS)
#### General provision
##### 353
- (1) Where a person pays interest in any year of assessment, that person, if he makes a claim to the relief, shall for that year of assessment be entitled (subject to . . . section 52 of ITTOIA 2005) to relief in accordance with this section in respect of so much (if any) of the amount of that interest as is eligible for relief under this section by virtue of section 365.
- (1A) Where a person is entitled for a year of assessment to relief under this section in respect of an amount of interest which is eligible for relief by virtue of section 365, the relief is given as a tax reduction for that tax year.
- (1AA) The amount of the tax reduction is 23% of the amount of the interest.
- (1AB) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1E) Where any person is entitled for any year of assessment to relief . . . in respect of any amount of interest as is eligible for that relief partly as mentioned in subsection (1A) above and partly as mentioned in section 383 of ITA 2007 (relief for interest payments), that amount of interest shall be apportioned between the cases to which each of those provisions applies without regard to what parts of the total amount borrowed remain outstanding but according to . . . —
- (a) the proportions of the total amount borrowed which were applied for different purposes; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and subsection (1A) above or section 383 of ITA 2007 shall apply accordingly to the case in which that subsection or section applies.
- (1F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) This section does not apply to a payment of relevant loan interest to which section 369 applies.
- (3) Relief under this section shall not be given in respect of—
- (a) interest on a debt incurred by overdrawing an account or by debiting the account of any person as the holder of a credit card or under similar arrangements; or
- (b) where interest is paid at a rate in excess of a reasonable commercial rate, so much of the interest as represents the excess.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loans to buy land etc
##### 354
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Matters excluded from section 354
##### 355
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Job-related accommodation
##### 356
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Limit on amount of loan eligible for relief by virtue of section 354
##### 357
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief where borrower deceased
##### 358
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy machinery or plant
##### 359
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy interest in close company
##### 360
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy interest in co-operative or employee-controlled company
##### 361
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy into partnership
##### 362
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 360 to 362
##### 363
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to pay inheritance tax
##### 364
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy life annuity
##### 365
- (1) Subject to the following provisions of this section, interest is eligible for relief under section 353 if it is interest on a loan in respect of which the following conditions are satisfied—
- (aa) that the loan was made before 9th March 1999;
- (a) that the loan was made as part of a scheme under which not less than nine-tenths of the proceeds of the loan were applied to the purchase by the person to whom it was made of an annuity ending with his life or with the life of the survivor of two or more persons (“*the annuitants*”) who include the person to whom the loan was made;
- (b) that at the time the loan was made the person to whom it was made or each of the annuitants had attained the age of 65 years;
- (c) that the loan was secured on land in the United Kingdom or the Republic of Ireland and the person to whom it was made or one of the annuitants owns an estate or interest in that land; and
- (d) that, if the loan was made after 26th March 1974, the person to whom it was made or each of the annuitants used the land on which it was secured as his only or main residence immediately before 9th March 1999 .
- (1AA) Where—
- (a) a loan made on or after 9th March 1999 was made in pursuance of an offer made by the lender before that date, and
- (b) the offer was either in writing or evidenced by a note or memorandum made by the lender before that date,
the loan shall be deemed for the purposes of subsection (1)(aa) above to have been made before that date.
- (1AB) Subject to subsection (1AC) below, the conditions in paragraphs (aa) and (a) of subsection (1) above shall be treated as satisfied in relation to a loan (“*the new loan*”) if—
- (a) the new loan was made on or after the day on which the Finance Act 1999 was passed;
- (b) the new loan was made as part of a scheme (“*the scheme*”) under which the whole or any part of the proceeds of the loan was used to defray money applied in paying off another loan (“*the old loan*”); and
- (c) the conditions in subsection (1) above were, or were treated by virtue of this subsection as, satisfied with respect to the old loan.
- (1AC) If only part of the proceeds of the new loan was used to defray money applied in paying off the old loan, subsection (1AB) above applies only if, under the scheme, not less than nine-tenths of the remaining part of the proceeds of the new loan was applied to the purchase by the person to whom it was made of an annuity ending with his life or with the life of the survivor of two or more persons who include him.
- (1AD) In subsection (1AC) above “*the remaining part*” means the part of the proceeds of the new loan that was not used to defray money applied in paying off the old loan.
- (1A) The condition in subsection (1)(d) above shall be treated as satisfied in relation to a loan if—
- (a) the person to whom the loan was made, or any of the annuitants, ceased to use the land as his only or main residence at a time falling within the period of twelve months ending with 8th March 1999, and
- (b) the intention at that time of the person to whom the loan was made, or each of the annuitants owning an estate or interest in the land, was to take steps, before the end of the period of twelve months after the day on which the land ceased to be so used, with a view to the disposal of his estate or interest.
- (1B) If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case.
- (2) Interest is not eligible for relief by virtue of this section unless it is payable by the person to whom the loan was made or by one of the annuitants.
- (3) If the loan was made after 26th March 1974 interest on it is eligible for relief by virtue of this section only to the extent that the amount on which it is payable does not exceed the sum of £30,000; and if the interest is payable by two or more persons the interest payable by each of them is so eligible only to the extent that the amount on which it is payable does not exceed such amount as bears to that sum the same proportion as the interest payable by him bears to the interest payable by both or all of them.
#### Information
##### 366
- (1) A person who claims relief under section 353 in respect of any payment of interest shall furnish to the inspector a statement in writing by the person to whom the payment is made, showing—
- (a) the date when the debt was incurred;
- (b) the amount of the debt when incurred;
- (c) the interest paid in the year of assessment for which the claim is made . . . ; and
- (d) the name and address of the debtor.
- (2) Where any such interest as is mentioned in section 353 is paid, the person to whom it is paid shall, if the person who pays it so requests in writing, furnish him with such statement as regards that interest as is mentioned in subsection (1) above; and the duty imposed by this subsection shall be enforceable at the suit or instance of the person making the request.
- (3) Subsections (1) and (2) above do not apply to interest paid to a building society, or to a local authority.
#### Provisions supplementary to sections 354 to 366
##### 367
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In section 365(3) references to the qualifying maximum for the year of assessment are references to such sum as Parliament may determine for the purpose for that year.
#### Exclusion of double relief etc
##### 368
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mortgage interest relief at source
#### Mortgage interest payable under deduction of tax
##### 369
- (1) If a person who is a qualifying borrower makes a payment of relevant loan interest to which this section applies, he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to the applicable percentage thereof.
- (1A) In subsection (1) above “*the applicable percentage*” means 23 per cent..
- (2) Where a sum is deducted under subsection (1) above from a payment of relevant loan interest—
- (a) the person to whom the payment is made shall allow the deduction on receipt of the residue;
- (b) the borrower shall be acquitted and discharged of so much money as is represented by the deduction as if the sum had been actually paid; and
- (c) the sum deducted shall be treated as income tax paid by the person to whom the payment is made.
- (3) The following payments, that is to say—
- (a) payments of relevant loan interest to which this section applies, and
- (b) payments which would be such payments but for section 373(5),
shall not be allowable as deductions for any purpose of the Income Tax Acts except in so far as they fall to be treated as such payments by virtue only of section 375(2) and would be allowable apart from this subsection.
- (6) Any person by whom a payment of relevant loan interest to which this section applies is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (2)(c) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the payment of relevant loan interest to which it relates.
- (7) The following provisions of the Management Act, namely—
- (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act;
- (b) section 30 (tax repaid in error etc.) apart from subsection (1B) ,
- (c) section 86 (interest), and
- (d) section 95 (incorrect return or accounts),
shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.
- (8) In the application of section 86 of the Management Act by virtue of subsection (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment (“the relevant year of assessment”) under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—
- (a) is 1st January in the relevant year of assessment in a case where the person falling within subsection (6) above has made a relevant interim claim; and
- (b) in any other case, is the later of the following dates, that is to say—
- (i) 1st January in the relevant year of assessment; or
- (ii) the date of the making of the payment by the Board which gives rise to the assessment.
- (9) In this section—
- “*financial year*”, in relation to any person, means a financial year of that person for the purposes of the relevant regulations;
- “*interim claim*” means an interim claim within the meaning of the relevant regulations;
- “*relevant interim claim*” means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person’s financial year, an interim claim made for a period falling wholly or partly within that financial year; and
- “*the relevant regulations*” means regulations made under section 378(3) for the purposes of subsection (6) above.
#### Relevant loan interest
##### 370
- (1) Subject to this section and sections 373 to 376, in this Part “*relevant loan interest*” means interest which is paid and payable in the United Kingdom to a qualifying lender and to which subsection (2) . . . below applies.
- (2) Subject to subsection (4) below, this subsection applies to interest if, disregarding section 353(2) and any other provision applying to interest falling to be treated as relevant loan interest—
- (a) it is interest falling within section . . . 365; and
- (b) apart (where applicable) from section . . . 365(3), the whole of the interest would be eligible for relief under section 353;. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In determining whether subsection (2) above applies to any interest, section 365 shall have effect as if the words “or the Republic of Ireland” were omitted.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Second loans
##### 371
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Home improvement loans
##### 372
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loans in excess of the qualifying maximum, and joint borrowers
##### 373
- (1) The provisions of this section have effect in relation to a loan where, by virtue of . . . section 365(3), only part of the interest on the loan would (apart from section 353(2)) be eligible for relief under section 353; and in this section any such loan is referred to as a “*limited loan*”.
- (2) None of the interest on a limited loan is relevant loan interest unless—
- (a) the loan is made on or after 6th April 1987; or
- (b) the qualifying lender to whom the interest is payable has given notice to the Board in accordance with regulations that he is prepared to have limited loans of a description which includes that limited loan brought within the tax deduction scheme.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Where the condition in paragraph (a) or (b) of subsection (2) above is fulfilled . . . only so much of the interest as (apart from section 353(2)) would be eligible for relief under section 353 is relevant loan interest.
- (6) Where a loan on which interest is payable by the borrower was made jointly to the borrower and another person who is not the borrower’s husband or wife, the interest on the loan is not relevant loan interest unless—
- (a) each of the persons to whom the loan was made is a qualifying borrower; and
- (b) in relation to each of them considered separately, the whole of that interest is relevant loan interest, in accordance with section 370 and this section.
- (7) In subsection (6) above references to the borrower’s husband or wife do not include references to a separated husband or wife . . . .
#### Conditions for application of section 369
##### 374
- (1) Section 369 does not apply to any relevant loan interest unless—
- (a) in the case of a loan of a description specified by regulations for the purposes of this paragraph, the borrower or, in the case of joint borrowers, each of them has given notice to the lender in the prescribed form certifying—
- (i) that he is a qualifying borrower; and
- (ii) that the interest is relevant loan interest; and
- (iii) such other matters as may be prescribed; or
- (b) the Board have given notice to the lender and the borrower that the interest may be paid under deduction of tax; or
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) the loan to which the interest relates is of a description specified by regulations for the purposes of this paragraph and was made—
- (i) if sub-paragraph (2) of paragraph 2 of Schedule 7 to the Finance Act 1982 applied to interest on the loan which became due on or after a date earlier than 6th April 1983, being a date specified by the Board in pursuance of sub-paragraph (5) of that paragraph, before that earlier date; or
- (ii) if the qualifying lender is a building society or a local authority, before 1st April 1983; or
- (iii) if sub-paragraphs (i) and (ii) above do not apply and the interest falls within section 370(2), before 6th April 1983.
- (2) Where notice has been given as mentioned in paragraph (a) or (b) of subsection (1) above, section 369 applies to any relevant loan interest to which the notice relates and which becomes due on or after the relevant date, as defined by subsection (3) below; and in a case falling within paragraph . . . (d) of subsection (1) above, section 369 applies to the relevant loan interest referred to in that paragraph.
- (3) In subsection (2) above “*the relevant date*” means—
- (a) in the case of a notice under subsection (1)(a) above, the date the notice is given, and
- (b) in the case of a notice under subsection (1)(b) above, a date specified in the notice as being the relevant date (which may be earlier than the date so specified as the date from which the interest may be paid under deduction of tax).
#### Interest ceasing to be relevant loan interest, etc
##### 375
- (1) If at any time—
- (a) the interest on a loan ceases to be relevant loan interest; or
- (b) a person making payments of relevant loan interest ceases to be a qualifying borrower;
the borrower shall give notice of the fact to the lender.
- (2) Without prejudice to subsection (3) below, in relation to a payment of interest—
- (a) which is due after the time referred to in subsection (1) above and before the date on which notice is given under that subsection, and
- (aa) as respects which any of the conditions mentioned in section 374(1) is fulfilled, and
- (b) from which a deduction was made as mentioned in section 369(1),
section 369 shall have effect as if the payment were a payment of relevant loan interest made by a qualifying borrower.
- (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to any deduction or to retain any amount deducted and, accordingly, where any amount that has been deducted exceeds the amount which ought to have been deducted, he shall be liable to make good the excess and an inspector may make such assessments as may in his judgment be required for recovering the excess.
- (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made.
- (4A) If there is any unreasonable delay in the giving of a notice under subsection (1) above, the borrower shall be liable to a penalty not exceeding so much of the aggregate amount that he is liable to make good under subsection (3) above as is attributable to that delay.
- (5) If, as a result of receiving a notice under subsection (1) above or otherwise, a qualifying lender has reason to believe that any interest is no longer relevant loan interest or that a borrower is no longer a qualifying borrower, the lender shall furnish the Board with such information as is in his possession with respect to those matters.
- (6) Where it appears to the Board that any of the provisions of sections 370 to 373 is not or may not be fulfilled with respect to any interest, or that a qualifying borrower has or may have ceased to be a qualifying borrower, they shall give notice of that fact to the lender and the borrower specifying the description of relevant loan interest concerned or, as the case may be, that the borrower has or may have ceased to be a qualifying borrower.
- (7) Section 369 shall not apply to any payment of relevant loan interest of a description to which a notice under subsection (6) above relates and which becomes due or is made after such date as may be specified in the notice and before such date as may be specified in a further notice given by the Board to the lender and the borrower.
- (8) In any case where—
- (a) section 369 applies to any relevant loan interest by virtue of a notice under section 374(1)(b), and
- (b) the relevant date specified in the notice is earlier than the date from which the interest begins to be paid under deduction of tax, and
- (c) a payment of that interest was made on or after the relevant date but not under deduction of tax,
regulations may provide for a sum to be paid by the Board of an amount equal to that which the borrower would have been able to deduct from that payment by virtue of section 369 if it had been made after the relevant date.
- (8A) In any case where an amount to which a person is not entitled is paid to him by the Board in pursuance of regulations made by virtue of subsection (8) above, regulations may—
- (a) provide for an officer of the Board to make such assessments as may in his judgment be required for recovering that amount from that person; and
- (b) make provision corresponding to that made by subsection (4A) above and subsections (4) and (5) of section 374A.
- (8B) Subsections (1), (5) and (6) above shall not apply where interest ceases to be relevant loan interest by virtue of section 38 of the Finance Act 1999.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying borrowers and qualifying lenders
##### 376
- (1) Subject to subsection (2) below, an individual is a qualifying borrower with respect to the interest on any loan.
- (2) In relation to interest paid at a time when the borrower or the borrower’s husband or wife holds an office or employment which would, but for some special exemption or immunity from tax, be a taxable employment under Part 2 of ITEPA 2003 (as defined by section 66(3) of that Act), the borrower is not a qualifying borrower.
- (3) In subsection (2) above references to the borrower’s husband or wife do not include references to a separated husband or wife . . . .
- (4) The following bodies are qualifying lenders:—
- (a) a building society;
- (b) a local authority;
- (c) the Bank of England;
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance;
- (f) any company to which property and rights belonging to a trustee savings bank were transferred by section 3 of the Trustee Savings Bank Act 1985;
- (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (h) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968;
- (j) the Homes and Communities Agency;
- (k) the Housing Corporation;
- (ka) the Secretary of State if the loan is made by him under section 79 of the Housing Associations Act 1985;
- (l) the Northern Ireland Housing Executive;
- (m) the Scottish Special Housing Association;
- (n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (o) the Church of England Pensions Board;
- (p) any body which is for the time being registered under section 376A.
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Part VIII contains general provisions relating to the taxation of profits of companies.
#### Sections 774B and 774D: power to provide further exceptions
##### 7
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Variation of terms of repayment of certain loans
##### 377
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary regulations
##### 378
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Subject to the provisions of the Corporation Tax Acts, where a company resident in the United Kingdom receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company . . . for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.
- (3) Subsection (2) above does not apply to a payment of relevant loan interest to which section 369 applies.
- (4) References in this section to payments received by a company 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.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) The Board may by regulations make provision—
- (a) for the purposes of any provision of sections 369 to 376A which relates to any matter or thing to be specified by or done in accordance with regulations;
- (b) for the application of those sections in relation to loan interest paid by personal representatives and trustees;
- (c) with respect to the furnishing of information by borrowers or lenders, including, in the case of lenders, the inspection of books, documents and other records on behalf of the Board;
- (d) for, and with respect to, appeals to the tribunal against the refusal of the Board to issue a notice under section 374(1)(b) or the issue of a notice under section 375(6) or (7); and
- (e) generally for giving effect to sections 369 to 376A.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 369 to 378
##### 379
In sections 369 to 378—
- “contracts of general insurance” means contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contracts of long-term insurance” means contracts which fall within Part II of that Schedule;
- “*prescribed*” . . . means prescribed by the Board;
- “*qualifying borrower*” has the meaning given by section 376(1) to (3);
- “*qualifying lender*” has the meaning given by section 376(4) . . . ;
- “*regulations*” . . . means regulations made by the Board under section 378;
- “*relevant loan interest*” has the meaning given by section 370(1);
- “*separated*” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent.
## PART X — LOSS RELIEF AND GROUP RELIEF
### CHAPTER I — LOSS RELIEF: INCOME TAX
### Trade etc. losses
#### Set-off against general income
##### 380
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further relief for individuals for losses in early years of trade
##### 381
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 380 and 381
##### 382
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Extension of right of set-off to capital allowances
##### 383
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restrictions on right of set-off
##### 384
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward against subsequent profits
##### 385
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward where business transferred to a company
##### 386
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward as losses of amounts taxed under section 350
##### 387
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-back of terminal losses
##### 388
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions relating to carry-back of terminal losses
##### 389
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of interest as a loss for purposes of carry-forward and carry-back
##### 390
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Losses from trade etc. carried on abroad
##### 391
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Case VI losses
#### Case VI losses
##### 392
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — LOSS RELIEF: CORPORATION TAX
### Trade etc. losses
#### Losses other than terminal losses
##### 393
- (1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection, or (if a claim is made under section 393A(1)) under section 393A(1) or 393B(3), against income or profits of an earlier accounting period.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) The amount of a loss incurred in a trade in an accounting period shall be computed for the purposes of this section in the same way as trading income from the trade in that period would have been computed.
- (8) For the purposes of this section “*trading income*” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; but where—
- (a) in an accounting period a company incurs a loss in a trade in respect of which it is within the charge to corporation tax under Chapter 2 of Part 3 of CTA 2009, and
- (b) in any later accounting period to which the loss or any part of it is carried forward under subsection (1) above relief in respect thereof cannot be given, or cannot wholly be given, because the amount of the trading income of the trade is insufficient,
any interest or dividends on investments which would fall to be taken into account as trading receipts in computing that trading income but for the fact that they have been subjected to tax under other provisions shall be treated for the purposes of subsection (1) above as if they were trading income of the trade.
- (9) Where in an accounting period the charges on income paid by a company—
- (a) exceed the amount of the profits against which they are deductible, and
- (b) include payments made wholly and exclusively for the purposes of a trade carried on by the company,
then, up to the amount of that excess or of those payments, whichever is the less, the charges on income so paid shall in computing a loss for the purposes of subsection (1) above be deductible as if they were trading expenses of the trade.
- (10) In this section references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
- (11) A claim under subsection (1) above must be made within six years after the end of the accounting period in which the loss is incurred, and must be so made notwithstanding that relief cannot be given in respect of the loss until after the end of that period of six years; . . ..
#### Terminal losses
##### 394
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leasing contracts and company reconstructions
##### 395
- (1) Subject to the provisions of this section, if—
- (a) under a contract entered into on or after 6th March 1973 a company (“*the first company*”) incurs capital expenditure on the provision of plant or machinery which the first company lets to another person by another contract (a “*leasing contract*”); and
- (b) apart from this subsection, the first company would be entitled under section 393(1) or in pursuance of a claim under section 393A(1) to relief in respect of losses incurred on the leasing contract; and
- (c) in the accounting period for which an annual investment allowance or a first-year allowance, within the meaning of Part 2 of the Capital Allowances Act, in respect of the expenditure referred to in paragraph (a) above is made to the first company, arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period, a successor company will be able to carry on any part of the first company’s trade which consists of or includes the performance of all or any of the obligations which, apart from the arrangements, would be the first company’s obligations under the leasing contract,
then, in the accounting period specified in paragraph (c) above and in any subsequent accounting period, the first company shall not be entitled . . . as mentioned in paragraph (b) above except in computing its profits (if any) arising under the leasing contract.
- (2) For the purposes of this section a company is a successor of the first company if the circumstances are such that—
- (a) section 343 applies in relation to the first company and the other company as the predecessor and the successor within the meaning of that section; or
- (b) the two companies are connected with each other within the terms of section 839.
- (3) For the purposes of this section losses incurred on a leasing contract and profits arising under such a contract shall be computed as if the performance of the leasing contract were a trade begun to be carried on by the first company, separately from any other trade which it may carry on, at the commencement of the letting under the leasing contract.
- (4) In determining whether the first company would be entitled . . . as mentioned in subsection (1)(b) above, any losses incurred on the leasing contract shall be treated as incurred in a trade carried on by that company separately from any other trade which it may carry on.
- (5) In this section “*arrangements*” means arrangements of any kind whether in writing or not.
### Case VI losses
#### Case VI losses
##### 396
- (1) Subject to subsection (2) below, where in any accounting period a company incurs a loss in a transaction in respect of which the company is within the charge to corporation tax under or by virtue of a relevant provision, the company may make a claim requiring that the loss be set off against the amount of any income arising from transactions in respect of which the company is assessed to corporation tax charged under or by virtue of a provision to which section 834A (miscellaneous charges) applies for the same or any subsequent accounting period; and the company’s income in any accounting period from such transactions shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against income of an earlier accounting period.
- (2) In this section “*relevant provision*” means any provision to which section 834A applies, except regulation 18(4) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (offshore income gains).
- (2A) Subsection (2B) applies to any loss made by a company in a transaction if—
- (a) the transaction was of such a nature that, if any profits had arisen from it, the company would have been liable to corporation tax in respect of the profits under Case VI of Schedule D for an accounting period ending before 1 April 2009, and
- (b) the transaction—
- (i) did not fall within section 34, 35 or 36 (lease premiums etc), and
- (ii) was not a disposal made after 31 March 2007 to which Chapter 5 of Part 17 (offshore funds) applied.
- (2B) So far as relief for the loss has not previously been given, the loss is to be treated as a loss to be set off against income in accordance with subsection (1).
- (3) A claim under this section must be made within six years after the end of the accounting period in which the loss is incurred and must be so made notwithstanding that relief cannot be given in respect of the loss until after the end of that period of six years .
### CHAPTER III — LOSS RELIEF: MISCELLANEOUS PROVISIONS
#### Restriction of relief in case of farming and market gardening
##### 397
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Any loss incurred in any accounting period by a company in carrying on a trade of farming or market gardening shall be excluded from section 393(2) if a loss, computed without regard to capital allowances, was incurred in carrying on that trade in that accounting period, and in each of the chargeable periods wholly or partly comprised in the prior five years.
- (3) This section shall not restrict relief for any loss or for any capital allowance in any case—
- (a) where the whole of the farming or market gardening activities in the year next following the prior five years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but
- (b) where, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, that farmer or market gardener could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss.
- (4) This section shall not restrict relief where the carrying on of the trade forms part of, and is ancillary to, a larger trading undertaking.
- (5) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*prior five years*” means, in relation to a loss incurred in a company's accounting period, the last five years before the beginning of that period;
- “*prior period of loss*” means the prior five years, except that, if losses were incurred in the trade in successive . . . chargeable periods amounting in all to a period longer than five years (and ending when the prior five years end), it means that longer period, and for this purpose“*losses*” means losses computed without regard to capital allowances; and
- “*farming*” and “*market gardening*” shall be construed in accordance with the definitions in section 832, but as if those definitions were not restricted to activities in the United Kingdom.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) In ascertaining for the purposes of this section whether a loss was incurred in any part of the prior five years or earlier, the rules applicable to the calculation of the profits of a trade in Part 3 of CTA 2009 (or in Part 2 of ITTOIA 2005) shall be applied; and in this section “*loss computed without regard to capital allowances*” means . . . a loss so ascertained, but disregarding—
- (a) any allowance or charge under the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act); and
- (b) any provision of that Act requiring allowances and charges to be treated as expenses and receipts of the trade.
- (8) This section shall not restrict relief for any loss or capital allowance if the trade was set up and commenced within the prior five years, and, for the purposes of this subsection a trade shall be treated as discontinued, and a new trade set up in the event of any of the following—
- (a) a company starting or ceasing to be within the charge to corporation tax in respect of a trade;
- (b) a change in the persons carrying on a trade which involves all of the persons carrying it on before the change permanently ceasing to carry it on; or
- (c) a change in the persons carrying on a trade not falling within paragraph (b) if—
- (i) immediately before the change, the trade is carried on by persons who include a company and after the change, no company that carried on the trade in partnership immediately before the change continues to carry it on in partnership, or
- (ii) immediately before the change, no company carries on the trade in partnership, and immediately after the change, the trade is carried on in partnership by persons who include a company.
- (9) For the purposes of subsection (8) above a trade shall not be treated as discontinued if the change in the persons carrying on the trade is a cessation to which section 343(1) applies.
- (10) Where at any time there has been a change in the persons carrying on a trade, this section shall, notwithstanding subsection (8) above, apply as if—
- (a) a husband and his wife were the same person, . . .
- (ab) two civil partners of each other were the same person,
- (b) a husband or his wife were the same person as any company of which either the husband or the wife has control, or of which the two of them have control; and
- (c) a civil partner of another were the same person as any company of which either of the civil partners has control, or of which the two of them have control;
and accordingly relief . . . may be restricted under this section by reference to losses (computed without regard to capital allowances) some of which are incurred in an accounting period wholly or partly comprised in the prior five years and some of which are incurred in a year of assessment wholly or partly comprised in the prior five years.
#### Transactions in deposits with and without certificates or in debts
##### 398
Where a company sustains a loss on the exercise or disposal of a right to receive any amount, being a right to which section 56(2) . . . applies, in a case where—
- (a) if a profit had arisen from that exercise or disposal, that profit would have been chargeable to corporation tax by virtue of section 56(2) . . . , and
- (b) the company is chargeable to corporation tax under Part 5 of CTA 2009 (loan relationships) in respect of interest payable on that amount,
then the amount of that interest shall be included in the amounts against which the amount of its loss may be set off under section 396..
#### Dealings in commodity futures etc: withdrawal of loss relief
##### 399
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Relief shall not be given to any company under section393A(1) in respect of a loss sustained in a trade of dealing in commodity futures if—
- (a) the loss was sustained in a trade carried on in partnership . . . ; and
- (b) a scheme has been effected or arrangements have been made (whether by the partnership agreement or otherwise) such that the sole or main benefit that might be expected to accrue to that company from its interest in the partnership was the obtaining of a reduction in corporation tax liability by means of any such relief.
- (3) Where relief has been given in a case to which subsection (2) above applies it shall be withdrawn by the making of an assessment to corporation tax . . . .
- (4) Subsection (2) above does not apply where the scheme was effected or the arrangements were made wholly before 6th April 1976.
- (5) In this section “*commodity futures*”, “*financial futures*” and “*qualifying options*” have the same meanings as in section 143 of the 1992 Act. . . .
#### Write-off of government investment
##### 400
- (1) Where any amount of government investment in a body corporate is written-off on or after 6th April 1988, an amount equal to the amount written-off shall be set off against the body’s tax losses as at the end of the accounting period ending last before the write-off date and, to the extent to which that amount exceeds those losses, against the body’s tax losses as at the end of the next accounting period and so on.
- (2) For the purposes of subsection (1) above a body’s tax losses as at the end of an accounting period are—
- (a) any losses which under section 393(1) are . . . available for relief against its trading income for the next accounting period;
- (b) in the case of a company with investment business, within the meaning of Part 16 of CTA 2009, any excess that falls to be deducted under section 1223(3) of that Act;
- (bb) any losses which—
- (i) under section 392A(2) or 392B are carried forward to the next accounting period, or
- (ii) under section 392A(3) are to be carried forward to the next accounting period and treated for the purposes of Chapter 2 of Part 16 of CTA 2009 as if they were expenses of management deductible for that period;
- (c) any allowances which under section 260(2) of the Capital Allowances Act are available for carry forward to the next accounting period;
- (d) any amount paid by way of charges on income so far as it exceeds the company’s profit for the period and is not taken into account under section 393(9) of this Act or section 1223 of CTA 2009; and
- (e) any allowable losses available under 8 of the 1992 Act so far as not allowed in that or a previous accounting period.
- (3) The set off to be made under subsection (1) above for any accounting period shall be made first against the amounts in paragraphs (a) to (d) of subsection (2) above and, so far as it cannot be so made, against the amount in paragraph (e) of that subsection.
- (4) For the purposes of subsection (1) above there shall be excluded from a body’s tax losses as at the end of the accounting period ending last before the write-off date any amounts in respect of which a claim has been made before the write-off date under section 393A(1) or 402 of this Act or section 260(3) of the Capital Allowances Act but the body’s tax losses as at the end of any subsequent accounting period shall be determined as if no such claim had been made on or after that date.
- (5) Any amount that could be set off under subsection (1) above against a body’s tax losses as at the end of an accounting period (or could be so set off if that body then had any such losses) may be set off against the tax losses of any other body corporate which at the end of that period is a member of the same group as the first-mentioned body, or partly against the tax losses of one member of that group and partly against those of the other or any of the others, as may be just and reasonable.
- (6) Expenditure shall not be treated for the purposes of section 532 or 536 of the Capital Allowances Act or section 50 of the 1992 Act as met by the Crown by reason only of the writing-off of any government investment in the body in question and a sum shall not by reason only of any such writing-off be treated as not having been deductible in computing the profits of that body for the purposes of Part 3 of CTA 2009.
- (7) For the purposes of this section an amount of government investment in a body corporate is written-off—
- (a) if its liability to repay any money lent to it out of public funds by a Minister of the Crown or the Scottish Ministers is extinguished;
- (b) if any of its shares for which a Minister of the Crown has , or the Scottish Ministers have, subscribed out of public funds are cancelled; or
- (c) if its commencing capital debt is reduced otherwise than by being paid off or its public dividend capital is reduced otherwise than by being repaid (including, in either case, a reduction to nil);
and the amount written-off and the write-off date are the amount in respect of which the liability is extinguished and the date on which it is extinguished, the amount subscribed for the shares that are cancelled and the date of cancellation or the amount of reduction in the commencing capital debt or public dividend capital and the date of the reduction, as the case may be.
- (8) In subsection (7) above “*commencing capital debt*” means any debt to a Minister of the Crown or the Scottish Ministers assumed as such under an enactment and “*public dividend capital*” means any amount paid by a Minister of the Crown or the Scottish Ministers under an enactment in which that amount is so described or under an enactment corresponding to an enactment in which a payment made on similar terms to another body is so described.
- (9) This section shall not have effect in relation to any amount written-off if and to the extent to which it is replaced by money lent, or a payment made, out of public funds or by shares subscribed for, whether for money or money’s worth, by a Minister of the Crown or the Scottish Ministers.
- (9A) Nothing in section 464(1) of CTA 2009 (matters to be brought into account in the case of loan relationships only under Part 5 of that Act) shall be construed as preventing this section from applying where a government investment in a body corporate is written off by the extinguishment, in whole or in part, of any liability under a loan relationship.
- (10) In this section—
- “*body corporate*” means any body corporate which is a company for the purposes of corporation tax;
- “*group*” means a company having one or more 51 per cent. subsidiaries and that or those subsidiaries; and
- “*Minister of the Crown*” includes a Northern Ireland department.
#### Relief for pre-trading expenditure
##### 401
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — GROUP RELIEF
#### Surrender of relief between members of groups and consortia
##### 402
- (1) Subject to and in accordance with this Chapter and section 492(8)—
- (a) relief for trading losses and other amounts eligible for relief from corporation tax, or
- (b) losses and other amounts not eligible for relief from corporation tax,
may, in the cases set out in subsections (2) and (3) below, be surrendered by a company (“*the surrendering company*”) and, on the making of a claim by another company (“*the claimant company*”) may be allowed to the claimant company by way of a relief from corporation tax called “*group relief*”.
- (2) In respect of amounts falling within subsection (1)(a) above, group relief shall be available in a case where—
- (a) the surrendering company and the claimant company are both members of the same group,
- (b) the surrendering company is resident in the United Kingdom or is not so resident but carries on a trade there through a permanent establishment, and
- (c) the claimant company is resident in the United Kingdom or is not so resident but carries on a trade there through a permanent establishment,
and, in respect of amounts falling within subsection (1)(b) above, group relief shall be available in a case where the condition in subsection (2A) below is satisfied.
A claim made by virtue of this subsection is referred to as a “*group claim*”.
- (2A) The condition in this subsection is satisfied if the surrendering company is within the charge to tax under the law of any EEA territory and—
- (a) the surrendering company is a 75 per cent. subsidiary of the claimant company and the claimant company is resident in the United Kingdom, or
- (b) both the surrendering company and the claimant company are 75 per cent. subsidiaries of a third company that is resident in the United Kingdom.
- (2B) For the purposes of subsection (2A) above, the surrendering company is within the charge to tax under the law of any EEA territory if—
- (a) it is a non-resident company which is resident in any EEA territory, or
- (b) it is a non-resident company which is not resident in any EEA territory but which carries on a trade in any EEA territory through a permanent establishment.
- (3A) A consortium claim shall not be made unless the following condition is satisfied in the case of both the surrendering company and the claimant company.
- (3B) The condition is that the company is resident in the United Kingdom or is a non-resident company carrying on a trade in the United Kingdom through a permanent establishment.
- (4) A consortium claim shall not be made . . . if a profit on a sale of the share capital of the other company or its holding company which the member owns would be treated as a trading receipt of that member.
- (5) Subject to the provisions of this Chapter, two or more claimant companies may make claims relating to the same surrendering company, and to the same accounting period of that surrendering company.
- (6) A payment for group relief—
- (a) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and
- (b) shall not for any of the purposes of the Corporation Tax Acts be regarded as a distribution . . . ;
and in this subsection “*a payment for group relief*” means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered by way of group relief, being a payment not exceeding that amount.
#### Losses etc. which may be surrendered by way of group relief
##### 403
- (1) If in an accounting period (the “surrender period") the surrendering company has—
- (a) trading losses, excess capital allowances or a non-trading deficit on its loan relationships, or
- (b) charges on income, UK property business losses, management expenses or a non-trading loss on intangible fixed assets available for group relief,
the amount may, subject to the provisions of this Chapter, be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.
- (2) Trading losses, excess capital allowances and a non-trading deficit on the company’s loan relationships are eligible for surrender as group relief even if the surrendering company has other profits of the surrender period against which they could be set.
Further provision about relief in respect of amounts eligible for surrender under this subsection is contained in sections 403ZA to 403ZC.
- (3) Charges on income, UK property business losses, management expenses and a non-trading loss on intangible fixed assets are available for surrender as group relief only to the extent that in aggregate they exceed the surrendering company’s gross profits for the surrender period.
Any excess surrendered shall be taken to consist first of charges on income, then UK property business losses, management expenses and finally a non-trading loss on intangible fixed assets.
Further provision about relief in respect of amounts available for surrender under this subsection is contained in section 403ZD.
- (4) This section has effect subject to—
- section 404 (limitation of group relief in relation to certain dual resident companies), and
- sections 492(8) and 494A (oil extraction activities: availability of group relief against ring fence profits), and
- section 785ZA (restrictions on use of losses: leasing partnerships), and
- paragraph 38 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc: anti-avoidance).
#### Limitation of group relief in relation to certain dual resident companies
##### 404
- (1) Notwithstanding any other provision of this Chapter, no loss or other amount shall be available for set off by way of group relief in accordance with section 403 if, in the material accounting period of the company which would otherwise be the surrendering company, that company is for the purposes of this section a dual resident investing company.
- (2) In this section “*the material accounting period*” means, according to the kind of group relief which would be appropriate, the accounting period—
- (a) in which the trading loss or UK property business loss is incurred; or
- (aa) in which the non-trading deficit on the company’s loan relationships arises; or
- (b) for which the capital allowances fall to be made; or
- (c) for which the expenses of management are deductible; or
- (d) for which the amount is paid by way of charges on income;
but subsection (1) above does not have effect unless the material accounting period begins on or after 1st April 1987.
- (3) In Schedule 17—
- (a) Part I has effect where an accounting period of a company in which it is a dual resident investing company begins before and ends on or after 1st April 1987 and references in subsections (1) and (2) above to the material accounting period shall be construed accordingly; and
- (b) Part II has effect with respect to the time at which certain interest and other payments are to be treated as paid.
- (4) A company is for the purposes of this section a dual resident company in any accounting period in which—
- (a) it is resident in the United Kingdom; and
- (b) it is also within a charge to tax under the laws of a territory outside the United Kingdom—
- (i) because it derives its status as a company from those laws; or
- (ii) because its place of management is in that territory; or
- (iii) because under those laws it is for any other reason regarded as resident in that territory for the purposes of that charge.
- (5) In any accounting period throughout which it is not a trading company, a dual resident company is for the purposes of this section an investing company.
- (6) In any accounting period of a dual resident company in which it is a trading company, the company is nevertheless for the purposes of this section an investing company if—
- (a) in that period it carries on a trade of such a description that its main function or one of its main functions consists of all or any of the following, namely—
- (i) acquiring and holding, directly or indirectly, shares, securities or investments of any other description, including interests in companies (resident outside, as well as in, the United Kingdom) with which the dual resident company is connected, within the terms of section 839;
- (ia) making payments in relation to which, being payments under loan relationships, any debits fall to be brought into account for the purposes of Part 5 of CTA 2009;
- (ii) making payments which, by virtue of any enactment, are charges on income for the purposes of corporation tax;
- (iii) making payments (of interest or other sums) which are similar to those referred to in sub-paragraph (ii) above but which are deductible in computing the profits of the company for the purposes of corporation tax;
- (iv) obtaining funds (by borrowing or in any other manner whatsoever) for the purpose of, or otherwise in connection with, any of the activities referred to in sub-paragraphs (i) to (iii) above; or
- (b) it does not fall within paragraph (a) above, but in that accounting period it carries on all or any of the activities referred to in sub-paragraphs (i) to (iv) of that paragraph and does so—
- (i) to an extent which does not appear to be justified by any trade which it does carry on; or
- (ii) for a purpose which does not appear to be appropriate to any such trade; or
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) In this section “*debtor relationship*” has the same meaning as in Part 5 of CTA 2009 (see section 302(6) of that Act).
#### Claims relating to losses etc. of members of both group and consortium
##### 405
- (1) For the purposes of a consortium claim in respect of the loss or other amount of any relevant accounting period of a group/consortium company, that loss or other amount shall be treated as reduced (or, as the case may be, extinguished) by first deducting therefrom the potential relief attributable to group claims.
- (2) Subject to subsection (3) below, in relation to the loss or other amount of a relevant accounting period of a group/consortium company, the potential relief attributable to group claims is the aggregate amount of group relief that would be claimed if every company which, as a member of the same group of companies as the group/consortium company, could make a group claim in respect of that loss or other amount made such a claim for an amount which, when set against the claimant company’s total profits for its corresponding accounting period, would equal those profits.
- (3) Where for any accounting period another member of the group of companies of which the group/consortium company is a member has a loss or other amount available for relief and one or more group claims is or are in fact made in respect of that loss or other amount, account shall be taken of the relief so claimed before determining (in relation to the loss or other amount of the group/consortium company) the potential relief attributable to group claims under subsection (2) above.
- (4) In any case where—
- (a) a consortium claim is made by a group/consortium company in respect of a loss or other amount of an accounting period of a member of the consortium, and
- (b) the corresponding accounting period of the group/consortium company is a relevant accounting period,
the total profits of the corresponding accounting period of the group/consortium company against which an amount may by virtue of that claim be set off by way of group relief shall be treated as reduced (or as the case may be extinguished) by deducting therefrom the potential relief available to the group/consortium company by way of group claims.
- (5) Subject to subsection (6) below, in relation to a relevant accounting period of a group/consortium company, the potential relief available to the company by way of group claims is the maximum amount of group relief that could be claimed by the company for that accounting period on group claims relating to the losses or other amounts available for relief of other members of the group of companies of which the group/consortium company is a member.
- (6) Where another member of the group of companies of which the group/consortium company is a member in fact makes one or more group claims in respect of losses or other amounts of other members of the group, account shall be taken of the relief already claimed by that company in determining the potential relief available to the group/consortium company by way of group claims under subsection (5) above.
#### Claims relating to losses etc. of consortium company or group member
##### 406
- (1) In this section—
- (a) “*link company*” means a company which is a member of a consortium and is also a member of a group of companies; and
- (b) “*consortium company*”, in relation to a link company, means a company owned by the consortium of which the link company is a member; and
- (c) “*group member*”, in relation to a link company, means a company which is a member of the group of which the link company is also a member but is not itself a member of the consortium of which the link company is a member.
- (2) Subject to subsections (3) and (4) below, where the link company could (disregarding any deficiency of profits) make a consortium claim in respect of the loss or other amount eligible for relief of a relevant accounting period of a consortium company, a group member may make any consortium claim which could be made by the link company; and the fraction which is the relevant fraction for the purposes of section 403C where a group member is the claimant company shall be the same as it would be if the link company were the claimant company.
- (3) Sections 403A to 403C shall have effect in relation to a consortium claim made by a group member by virtue of subsection (2) above as if any time when the claimant company was not a member of the group—
- (a) were not comprised in the period which is the overlapping period in the case of that claim; and
- (b) were to be treated instead as if it constituted a part of the claim period which did not coincide with any part of the accounting period of the surrendering company to which the claim relates.
- (4) The maximum amount of relief which, in the aggregate, may be claimed by group members and the link company by consortium claims relating to the loss or other amount of a relevant accounting period of a consortium company shall not exceed the relief which could have been claimed by the link company (disregarding any deficiency of profits) if subsections (2) and (3) above had not been enacted.
- (5) Subject to subsections (6) to (8) below, where a group member has for a relevant accounting period a loss or other amount available for relief, a consortium company may make any claim in respect of that loss or other amount which it could make if the group member were a member of the consortium at all times when the link company was such a member, but not at any other time.
- (6) The fraction which is the relevant fraction for the purposes of section 403C in relation to a consortium claim made by virtue of subsection (5) above shall be the same as it would be if the link company were the surrendering company, except that the overlapping period in respect of which the relevant fraction is to be ascertained shall be that of the group member which is in fact the surrendering company.
- (7) Sections 403A to 403C shall have effect in relation to a consortium claim made by a consortium company by virtue of subsection (5) above as if any time when the surrendering company was not a member of the group—
- (a) were not comprised in the period which is the overlapping period in the case of that claim; and
- (b) were to be treated instead as if it constituted a part of the claim period that did not coincide with any part of the accounting period of the surrendering company to which the claim relates.
- (8) For any accounting period of a consortium company (“*the claimant company’s accounting period*”) the maximum amount of relief which, in the aggregate, may be claimed by that company by consortium claims relating to the losses or other amounts of accounting periods of the link company and group members shall not exceed the maximum amount of relief available to the claimant company on a consortium claim in respect of which—
- (a) the link company was the surrendering company; and
- (b) the link company’s accounting period was the same as the claimant company’s accounting period.
#### Relationship between group relief and other relief
##### 407
- (1) Group relief for an accounting period shall be allowed as a deduction against the claimant company’s total profits for the period—
- (a) before reduction by any relief derived from a subsequent accounting period, but
- (b) as reduced by any other relief from tax (including relief in respect of charges on income under section 338(1) of this Act or by virtue of section 388, 389 or 391 or Chapter 16 of Part 5 of CTA 2009 (non-trading deficits)) determined on the assumption that the company makes all relevant claims under section 393A(1) of this Act and section 260(3) of the Capital Allowances Act(set-off of capital allowances against total profits).
- (2) For the purposes of this section “*relief derived from a subsequent accounting period*” means—
- (a) relief under section 393A(1)(b) in respect of a loss incurred in an accounting period after the accounting period the profits of which are being computed; and
- (b) relief under section 260(3) of the Capital Allowances Act in respect of capital allowances falling to be made for an accounting period after the accounting period the profits of which are being computed; and
- (c) relief in pursuance of a claim under section 389 or 459 of CTA 2009 (non-trading deficits) in respect of any deficit for a deficit period after the accounting period the profits of which are being computed.
- (3) The reductions to be made in total profits of an accounting period against which any relief derived from a subsequent accounting period is to be set off shall include any group relief for that first-mentioned accounting period.
#### Corresponding accounting periods
##### 408
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Companies joining or leaving group or consortium
##### 409
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Arrangements for transfer of company to another group or consortium
##### 410
- (1) If, apart from this section, two companies (“*the first company*” and “*the second company*”) would be treated as members of the same group of companies and—
- (a) in an accounting period one of the two companies has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender by way of group relief; and
- (b) arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period—
- (i) the first company or any successor of it could cease to be a member of the same group of companies as the second company and could become a member of the same group of companies as a third company; or
- (ii) any person has or could obtain, or any persons together have or could obtain, control of the first company but not of the second; or
- (iii) a third company could begin to carry on the whole or any part of a trade which, at any time in that accounting period, is carried on by the first company and could do so either as a successor of the first company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade;
then, for the purposes of this Chapter, the first company shall be treated as not being a member of the same group of companies as the second company.
- (2) If a trading company is owned by a consortium or is a 90 per cent. subsidiary of a holding company which is owned by a consortium and—
- (a) in any accounting period the trading company or a member of the consortium has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender by way of group relief; and
- (b) arrangements are in existence by virtue of which—
- (i) the trading company or any successor of it could, at some time during or after the expiry of that accounting period, become a 75 per cent. subsidiary of a third company; or
- (ii) any person who owns, or any persons who together own, less than 50 per cent. of the ordinary share capital of the trading company has or together have, or could at some time during or after the expiry of that accounting period obtain, control of the trading company; or
- (iii) any person, other than a holding company of which the trading company is a 90 per cent. subsidiary, either alone or together with connected persons, holds or could obtain, or controls or could control the exercise of not less than 75 per cent. of the votes which may be cast on a poll taken at a general meeting of that trading company in that accounting period or in any subsequent accounting period; or
- (iv) a third company could begin to carry on, at some time during or after the expiry of that accounting period, the whole or any part of a trade which, at any time in that accounting period, is carried on by the trading company and could do so either as a successor of the trading company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade;
then, for the purposes of this Chapter, the trading company shall be treated as though it did not (as the surrendering company or the claimant company) fall within section 402(3).
- (3) In any case where a trading company is a 90 per cent. subsidiary of a holding company which is owned by a consortium, any reference in subsection (2) above to the trading company, other than a reference in paragraph (b)(iv), shall be construed as including a reference to the holding company.
- (4) In this section “*third company*” means a company which, apart from any provision made by or under any such arrangements as are specified in paragraph (b) of either subsection (1) or subsection (2) above, is not a member of the same group of companies as the first company or, as the case may be, the trading company or the holding company to which subsection (2) above applies.
- (5) In subsections (1) and (2) above—
- “*arrangements*” means arrangements of any kind whether in writing or not;
- “*connected persons*” shall be construed in accordance with section 839 but as if subsection (7) of that section (persons acting together to control a company are connected) were omitted; and
- “*control*” has the meaning assigned by section 840.
- (6) For the purposes of subsections (1) and (2) above a company is the successor of another if it carries on a trade which, in whole or in part, the other company has ceased to carry on and the circumstances are such that—
- (a) section 343 applies in relation to the two companies as the predecessor and the successor within the meaning of that section; or
- (b) the two companies are connected with each other within the meaning of section 839.
- (7) Where by virtue of any enactment a Minister of the Crown or Northern Ireland department has power to give directions to a statutory body as to the disposal of assets belonging to, or to a subsidiary of, that body, the existence of that power shall not be regarded as constituting or as having at any time constituted an arrangement within the meaning of this section.
#### Exclusion of double allowances
##### 411
- (1) Relief shall not be given more than once in respect of the same amount, whether by giving group relief and by giving some other relief (in any accounting period) to the surrendering company, or by giving group relief more than once.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Onshore pooling.
##### 8
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against Board’s notices under section 703.
##### 9
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . Any reference in the Capital Allowances Act, except Parts 6 and 10, to an allowance made includes a reference to an allowance which would be made but for the granting of group relief, or but for that and but for an insufficiency of profits or other income against which to make it.
#### Claims and adjustments
##### 412
- (1) Claims for group relief are dealt with in Part VIII of Schedule 18 to the Finance Act 1998.
- (2) Paragraph 76 of that Schedule provides for assessments or other adjustments where group relief has been given which is or has become excessive.
#### Interpretation of Chapter IV
##### 413
- (1) The following provisions of this section have effect for the interpretation of this Chapter.
- (2) In this Chapter—
- “*claimant company*” has the meaning given by section 402(1);
- “*company*” means any body corporate;
- “*consortium claim*” means a claim for group relief made by virtue of section 402(3);
- “*EEA territory*”, in relation to any time, means a territory outside the United Kingdom which is within the European Economic Area at that time;
- “*group claim*” means a claim for group relief made by virtue of section 402(2);
- “*group/consortium company*” means a company which is both a member of a group of companies and a company owned by a consortium;
- “*group relief*” has the meaning given by section 402(1);
- “*non-resident company*” means a company that is not resident in the United Kingdom;
- “*relevant accounting period*” means an accounting period beginning after 31st July 1985; and
- “*surrendering company*” has the meaning given by section 402(1).
- (2A) For the purposes of group relief an accounting period of the claimant company which falls wholly or partly within an accounting period of the surrendering company shall be taken to correspond to that accounting period of the surrendering company.
- (3) For the purposes of this Chapter—
- (a) two companies shall be deemed to be members of a group of companies if one is the 75 per cent. subsidiary of the other or both are 75 per cent. subsidiaries of a third company;
- (b) “*holding company*” means a company the business of which 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; and
- (c) “*trading company*” means a company the business of which consists wholly or mainly in the carrying on of a trade or trades.
- (4) In applying for the purposes of this Chapter the definition of “*75 per cent. subsidiary*” in section 838, any share capital of a registered industrial and provident society shall be treated as ordinary share capital.
- (5) . . . In determining for the purposes of this Chapter whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—
- (a) of any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on a sale of the shares would be a trading receipt;. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) References to a company being owned by a consortium shall be construed in accordance with paragraph (a) below except for the purposes of the definition of “*group consortium company*” in subsection (2) above and of sections 403ZA(3), 406(1)(b) and 409(5), (6) and (7), and for those purposes shall be construed in accordance with paragraph (b) below—
- (a) a company is owned by a consortium if three-quarters or more of the ordinary share capital of the company is beneficially owned between them by companies of which none beneficially owns less than one-twentieth of that capital;
- (b) a company is owned by a consortium if—
- (i) it is either such a trading company as is referred to in paragraph (a) or (b) of subsection (3) of section 402 or such a holding company as is referred to in paragraph (c) of that subsection, and
- (ii) three-quarters or more of the ordinary share capital of the company or, in the case of a company within section 402(3)(b), of its holding company is beneficially owned between them by companies of which none beneficially owns less than one-twentieth of that capital;
and the companies which so own three-quarters or more of that ordinary share capital are in this Chapter called the members of the consortium.
- (7) Notwithstanding that at any time a company (“*the subsidiary company*”) is a 75 per cent. subsidiary or a 90 per cent. subsidiary of another company (“*the parent company*”) it shall not be treated at that time as such a subsidiary for the purposes of this Chapter unless, additionally at that time—
- (a) the parent company is beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any profits available for distribution to equity holders of the subsidiary company; and
- (b) the parent company would be beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) Schedule 18 shall have effect for supplementing this section.
## PART XI — CLOSE COMPANIES
### CHAPTER I — INTERPRETATIVE PROVISIONS
#### Close companies
##### 414
- (1) For the purposes of the Corporation Tax Acts, a “*close company*” is one which is under the control of five or fewer participators, or of participators who are directors, except that the expression does not apply—
- (a) to a company not resident in the United Kingdom;
- (b) to a registered industrial and provident society . . . or to a building society;
- (c) to a company controlled by or on behalf of the Crown, and not otherwise a close company; or
- (d) to a company falling within section 415 or subsection (5) below.
- (2) Subject to section 415 and subsection (5) below, a company resident in the United Kingdom (but not falling within subsection (1)(b) above) is also a close company if five or fewer participators, or participators who are directors, together possess or are entitled to acquire—
- (a) such rights as would, in the event of the winding-up of the company (“*the relevant company*”) on the basis set out in subsection (2A) below, entitle them to receive the greater part of the assets of the relevant company which would then be available for distribution among the participators, or
- (b) such rights as would in that event so entitle them if any rights which any of them or any other person has as a loan creditor (in relation to the relevant company or any other company) were disregarded.
- (2A) In the notional winding-up of the relevant company, the part of the assets available for distribution among the participators which any person is entitled to receive is the aggregate of—
- (a) any part of those assets which he would be entitled to receive in the event of the winding-up of the company, and
- (b) any part of those assets which he would be entitled to receive if—
- (i) any other company which is a participator in the relevant company and is entitled to receive any assets in the notional winding-up were also wound up on the basis set out in this subsection, and
- (ii) the part of the assets of the relevant company to which the other company is entitled were distributed among the participators in the other company in proportion to their respective entitlement to the assets of the other company available for distribution among the participators.
- (2B) In the application of subsection (2A) above to the notional winding-up of the other company and to any further notional winding-up required by paragraph (b) of that subsection (or by any further application of that paragraph), references to “*the relevant company*” shall have effect as references to the company concerned.
- (2C) In ascertaining under subsection (2) above whether five or fewer participators, or participators who are directors, together possess or are entitled to acquire rights such as are mentioned in paragraph (a) or (b) of that subsection—
- (a) a person shall be treated as a participator in or director of the relevant company if he is a participator in or director of any other company which would be entitled to receive assets in the notional winding-up of the relevant company on the basis set out in subsection (2A) above, and
- (b) except in the application of subsection (2A) above, no account shall be taken of a participator which is a company unless the company possesses or is entitled to acquire the rights in a fiduciary or representative capacity.
- (2D) Subsections (4) to (6) of section 416 apply for the purposes of subsections (2) and (2A) above as they apply for the purposes of subsection (2) of that sections.
- (3) *In ascertaining under subsection* (2)*above whether any amount could be apportioned among five or fewer participators or among participators who are directors, account shall, in cases where an original apportionment and any sub-apportionment are involved, be taken only of persons among whom that amount could finally be apportioned as the result of the whole process of original apportionment and sub-apportionment and those persons shall be treated as participators or directors if they are participators or directors of any company in the case of which either an original apportionment or any sub-apportionment could be made*.
- (4) For the purposes of this section—
- (a) a company is to be treated as controlled by or on behalf of the Crown if, but only if, it is under the control of the Crown or of persons acting on behalf of the Crown, independently of any other person, and
- (b) where a company is so controlled, it shall not be treated as being otherwise a close company unless it can be treated as a close company as being under the control of persons acting independently of the Crown.
- (5) A company is not to be treated as a close company—
- (a) if—
- (i) it is controlled by a company which is not a close company, or by two or more companies none of which is a close company; and
- (ii) it cannot be treated as a close company except by taking as one of the five or fewer participators requisite for its being so treated a company which is not a close company;
- (b) if it cannot be treated as a close company except by virtue of paragraph (a) of subsection (2) above or paragraph (c) of section 416(2) and it would not be a close company if the references in those paragraphs to participators did not include loan creditors who are companies other than close companies.
- (6) References in subsection (5) above to a close company shall be treated as applying to any company which, if resident in the United Kingdom, would be a close company.
- (7) If shares in any company (“*the first company*”) are held on trust for a registered pension scheme, then, unless the scheme is established wholly or mainly for the benefit of persons who are, or are dependants of, directors or employees or past directors or employees of—
- (a) the first company; or
- (b) an associated company of the first company; or
- (c) a company which is under the control of any director or associate of a director of the first company or of two or more persons each of whom is such a director or associate; or
- (d) a close company;
the persons holding the shares shall, for the purposes of subsection (5) above, be deemed to be the beneficial owners of the shares and, in that capacity, to be a company which is not a close company.
#### Certain quoted companies not to be close companies
##### 415
- (1) Subject to the following provisions of this section, a company is not to be treated as being at any time a close company if—
- (a) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, and are at that time beneficially held by, the public, and
- (b) any such shares have within the preceding 12 months been the subject of dealings on a recognised stock exchange, and the shares have within those 12 months been listedon a recognised stock exchange.
- (2) Subsection (1) above shall not apply to a company at any time when the total percentage of the voting power in the company possessed by all of the company’s principal members exceeds 85 per cent.
- (3) For the purposes of subsection (1) above shares in a company shall be deemed to be beneficially held by the public if, and only if, they—
- (a) fall within subsection (4) below, and
- (b) are not within the exceptions in subsection (5) below,
and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.
- (4) Shares shall fall within this subsection (as being beneficially held by the public)—
- (a) if beneficially held by a company resident in the United Kingdom which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or
- (b) if held on trust for a registered pension scheme, or
- (c) If they are not comprised in a principal member’s holding.
- (5) Shares shall not be deemed to be held by the public if they are held—
- (a) by any director or associate of a director of the company, or
- (b) by any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate, or
- (c) by any associated company of the company, or
- (d) as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c) above.
- (6) For the purposes of this section—
- (a) a person is a principal member of a company if he possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages, and
- (b) a principal member’s holding consists of the shares which carry the voting power possessed by him.
- (7) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 416, would be attributed to him under subsection (5) or (6) of that section.
- (8) In this section “*shares*” include stock.
#### Meaning of “associated company” and “control”
##### 416
- (1) For the purposes of this Part,*except paragraphs* 2*and* 9(1)(a), (2)(a)*and* (3)(a)*of Schedule* 19 , a company is to be treated as another’s “*associated company*” at a given time if, at that time or at any other time within one year previously, one of the two has control of the other, or both are under the control of the same person or persons.
- (2) For the purposes of this Part, a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire, direct or indirect control over the company’s affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire—
- (a) the greater part of the share capital or issued share capital of the company or of the voting power in the company; or
- (b) such part of the issued share capital of the company as would, if the whole of the income of the company were in fact distributed among the participators (without regard to any rights which he or any other person has as a loan creditor), entitle him to receive the greater part of the amount so distributed; or
- (c) such rights as would, in the event of the winding-up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.
- (3) Where two or more persons together satisfy any of the conditions of subsection (2) above, they shall be taken to have control of the company.
- (4) For the purposes of subsection (2) above a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date, or will at a future date be entitled to acquire.
- (5) For the purposes of subsections (2) and (3) above, there shall be attributed to any person any rights or powers of a nominee for him, that is to say, any rights or powers which another person possesses on his behalf or may be required to exercise on his direction or behalf.
- (6) For the purposes of subsections (2) and (3) above, there may also be attributed to any person all the rights and powers of any company of which he has, or he and associates of his have, control or any two or more such companies, or of any associate of his or of any two or more associates of his, including those attributed to a company or associate under subsection (5) above, but not those attributed to an associate under this subsection; and such attributions shall be made under this subsection as will result in the company being treated as under the control of five or fewer participators if it can be so treated.
#### Meaning of “participator”, “associate”, “director” and “loan creditor”
##### 417
- (1) For the purposes of this Part, a “*participator*” is, in relation to any company, a person having a share or interest in the capital or income of the company, and, without prejudice to the generality of the preceding words, includes—
- (a) any person who possesses, or is entitled to acquire, share capital or voting rights in the company;
- (b) any loan creditor of the company;
- (c) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company (construing “distributions” without regard to section 418) or any amounts payable by the company (in cash or in kind) to loan creditors by way of premium on redemption; and
- (d) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit.
- (2) The provisions of subsection (1) above are without prejudice to any particular provision of this Part requiring a participator in one company to be treated as being also a participator in another company.
- (3) “*associate*” means, in relation to a participator—
- (a) any relative or partner of the participator;
- (b) the . . . trustees of any settlement in relation to which the participator is, or any relative of his (living or dead) is or was, a settlor . . . ; and
- (c) where the participator is interested in any shares or obligations of the company which are subject to any trust, or are part of the estate of a deceased person—
- (i) the . . . trustees of the settlement concerned or, as the case may be, the personal representatives of the deceased; and
- (ii) if the participator is a company, any other company interested in those shares or obligations;
and has a corresponding meaning in relation to a person other than a participator.
- (4) In subsection (3) above “*relative*” means spouse or civil partner, parent or remoter forebear, child or remoter issue, or brother or sister.
- (5) For the purposes of this Part “*director*” includes any person occupying the position of director by whatever name called, any person in accordance with whose directions or instructions the directors are accustomed to act, and any person who—
- (a) is a manager of the company or otherwise concerned in the management of the company’s trade or business, and
- (b) is, either on his own or with one or more associates, the beneficial owner of, or able, directly or through the medium of other companies or by any other indirect means, to control 20 per cent. or over of the ordinary share capital of the company.
- (6) In subsection (5)(b) above the expression “*either on his own or with one or more associates*” requires a person to be treated as owning or, as the case may be, controlling what any associate owns or controls, even if he does not own or control share capital on his own.
- (7) Subject to subsection (9) below, for the purposes of this Part “*loan creditor*”, in relation to a company, means a creditor in respect of any debt incurred by the company—
- (a) for any money borrowed or capital assets acquired by the company; or
- (b) for any right to receive income created in favour of the company; or
- (c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon);
or in respect of any redeemable loan capital issued by the company.
- (8) Subject to subsection (9) below, a person who is not the creditor in respect of any debt or loan capital to which subsection (7) above applies but nevertheless has a beneficial interest therein shall, to the extent of that interest, be treated for the purposes of this Part as a loan creditor in respect of that debt or loan capital.
- (9) A person carrying on a business of banking shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by him to the company in the ordinary course of that business.
### Additional matters to be treated as distributions
#### “Distribution” to include certain expenses of close companies
##### 418
- (1) Subject to such exceptions as are mentioned in section 209(1), in the Corporation Tax Acts “*distribution*”, in relation to a close company, includes, unless otherwise stated, any such amount as is required to be treated as a distribution by subsection (2) below.
- (2) Subject to subsection (3) below, where a close company incurs expense in or in connection with the provision for any participator of living or other accommodation, of entertainment, of domestic or other services, or of other benefits or facilities of whatever nature, the company shall be treated as making a distribution to him of an amount equal to so much of that expense as is not made good to the company by the participator.
- (3) Subsection (2) above shall not apply to expense incurred in or in connection with the provision—
- (a) for a person employed in employment to which Part 3 of ITEPA 2003 applies (earnings and benefits etc. treated as employment income) without the exclusion in section 216 of that Act (provisions not applicable to lower-paid employment) of such benefits as are mentioned in any of Chapters 6 to 10 of Part 3 and section 223 of that Act (cars and vans, loans, shares, other benefits, and payments on account of director’s tax); or
- (b) of living accommodation for any person if the accommodation is (within the meaning of Chapter 5 of Part 3 of ITEPA 2003) provided by reason of his employment; or
- (c) for the spouse or civil partner, children or dependants of a person employed by the company of any pension, annuity, lump sum, gratuity or other like benefit to be given on that person’s death or retirement.
- (4) The amount of the expense to be taken into account under subsection (2) above as a distribution shall be the same as would under Chapters 6 to 10 of Part 3 of ITEPA 2003 be the cash equivalent of the resultant benefit to the participator.
- (5) Subsection (2) above shall not apply if the company and the participator are both resident in the United Kingdom and—
- (a) one is a subsidiary of the other or both are subsidiaries of a third company also so resident, and
- (b) the benefit to the participator arises on or in connection with a transfer of assets or liabilities by the company to him, or to the company by him.
- (6) The question whether one body corporate is a subsidiary of another for the purposes of subsection (5) above shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—
- (a) of any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on a sale of the shares would be a trading receipt; or
- (c) of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom.
- (7) Where each of two or more close companies makes a payment to a person who is not a participator in that company, but is a participator in another of those companies, and the companies are acting in concert or under arrangements made by any person, then each of those companies and any participator in it shall be treated as if the payment made to him had been made by that company.
- (8) For the purposes of this section any reference to a participator includes an associate of a participator, and any participator in a company which controls another company shall be treated as being also a participator in that other company.
### CHAPTER II — CHARGES TO TAX IN CONNECTION WITH LOANS
#### Loans to participators etc
##### 419
- (1) Subject to the following provisions of this section and section 420, where a close company, otherwise than in the ordinary course of a business carried on by it which includes the lending of money, makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, there shall be assessed on and recoverable from the company, as if it were an amount of corporation tax chargeable on the company for the accounting period in which the loan or advance is made, an amount equal to 25 per cent. of the amount of the loan or advance.
- (2) For the purposes of this section the cases in which a close company is to be regarded as making a loan to any person include a case where—
- (a) that person incurs a debt to the close company; or
- (b) a debt due from that person to a third party is assigned to the close company;
and then the close company shall be regarded as making a loan of an amount equal to the debt.
- (3) Tax due by virtue of this section in relation to any loan or advance shall be due and payable in accordance with section 59D of the Management Act on the day following the expiry of nine months from the end of the accounting period in which the loan or advance was made.
- (4) Where a close company has made a loan or advance which gave rise to a charge to tax on the company under subsection (1) above and
- (a) the loan or advance or any part of it is repaid to the company,or
- (b) the whole or part of the debt in respect of the loan or advance is released or written off,
relief shall be given from that tax, or a proportionate part of it . . . .
- (4A) Where
- (a) the repayment of the whole or any part of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance, or
- (b) the release or writing off of the whole or any part of the debt in respect of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance,
relief in respect of the repayment , release or writing off shall not be given under subsection (4) above at any time before the expiry of nine months from the end of the accounting period in which the repayment , release or writing off occurred.
- (4B) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in return) applies to a claim for relief under subsection (4) above unless—
- (a) the claim is included (by amendment or otherwise) in the return for the period in which the loan or advance was made, and
- (b) the relief may be given at the time the claim is made.
- (5) Where, under arrangements made by any person otherwise than in the ordinary course of a business carried on by him—
- (a) a close company makes a loan or advance which, apart from this subsection, does not give rise to any charge on the company under subsection (1) above, and
- (b) some person other than the close company makes a payment or transfers property to, or releases or satisfies (in whole or in part) a liability of, an individual who is a participator in the company or an associate of a participator,
then, unless in respect of the matter referred to in paragraph (b) above there falls to be included in the total income of the participator or associate an amount not less than the loan or advance, this section shall apply as if the loan or advance had been made to him.
- (6) In subsections (1) and (5)(b) above the references to an individual shall apply also to a company receiving the loan or advance in a fiduciary or representative capacity . . . .
- (7) For the purposes of this section any participator in a company which controls another company shall be treated as being also a participator in that other company.
#### Exceptions from section 419
##### 420
- (1) Section 419(2)(a) shall not apply to a debt incurred for the supply by the close company of goods or services in the ordinary course of its trade or business unless the credit given exceeds six months or is longer than that normally given to the company’s customers.
- (2) Section 419(1) shall not apply to a loan made to a director or employee of a close company, or of an associated company of the close company, if—
- (a) neither the amount of the loan, nor that amount when taken together with any other outstanding loans which—
- (i) were made by the close company or any of its associated companies to the borrower*or the wife or husband of the borrower* ; and
- (ii) if made before 31st March 1971, were made for the purpose of purchasing a dwelling which was or was to be the borrower’s only or main residence;
exceeds £15,000 and the outstanding loans falling within sub-paragraph (ii) above do not together exceed £10,000; and
- (b) the borrower works full-time for the close company or any of its associated companies; and
- (c) the borrower does not have a material interest in the close company or in any associated company of the close company;
but if the borrower acquires such a material interest at a time when the whole or part of any such loan made after 30th March 1971 remains outstanding the close company shall be regarded as making to him at that time a loan of an amount equal to the sum outstanding.
#### Taxation of borrower when loan under section 419 released etc
##### 421
- (1) Subject to the following provisions of this section, where a company is assessed or liable to be assessed under section 419 in respect of a loan or advance made to the trustees of a settlement and after the settlement has ended releases or writes off the whole or part of the debt in respect of it, then—
- (a) for the purpose of computing the income of the person from whom the debt was due (“*the debtor*”) for corporation tax purposes, a sum equal to the amount so released or written off shall be treated as income received by the debtor after deduction of income tax at the dividend ordinary rate from a corresponding gross amount;
- (b) no repayment of income tax shall be made in respect of that income and the debtor shall not be liable to pay corporation tax at the dividend ordinary rate on that income;
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) This section shall be construed as one with section 419.
#### Extension of section 419 to loans by companies controlled by close companies
##### 422
- (1) Subject to subsection (4) below, where a company which is controlled by a close company makes a loan which, apart from this section, does not give rise to a charge under subsection (1) of section 419, that section and section 420 shall apply as if the loan had been made by the close company.
- (2) Subject to subsection (4) below, where a company which is not controlled by a close company makes a loan which, apart from this section, does not give rise to a charge under subsection (1) of section 419 and a close company subsequently acquires control of it, that section and section 420 shall apply as if the loan had been made by the close company immediately after the time when it acquired control.
- (3) Where two or more close companies together control the company that makes or has made the loan, subsections (1) and (2) above shall have effect—
- (a) as if each of them controlled that company; and
- (b) as if the loan had been made by each of those close companies,
but the loan shall be apportioned between those close companies in such proportion as may be appropriate having regard to the nature and amount of their respective interests in the company that makes or has made the loan.
- (4) Subsections (1) and (2) above do not apply if it is shown that no person has made any arrangements (otherwise than in the ordinary course of a business carried on by him) as a result of which there is a connection—
- (a) between the making of the loan and the acquisition of control; or
- (b) between the making of the loan and the provision by the close company of funds for the company making the loan;
and the close company shall be regarded as providing funds for the company making the loan if it directly or indirectly makes any payment or transfers any property to, or releases or satisfies (in whole or in part) a liability of, the company making the loan.
- (5) Where, by virtue of this section, sections 419 and 420 have effect as if a loan made by one company had been made by another, any question under those sections or section 421 whether—
- (a) the company making the loan did so otherwise than in the ordinary course of a business carried on by it which includes the lending of money;
- (b) the loan or any part of it has been repaid to the company;
- (c) the company has released or written off the whole or part of the debt in respect of the loan,
shall be determined by reference to the company that makes the loan.
- (6) This section shall be construed as one with section 419 and section 420 and in this section—
- (a) “*loan*” includes advance; and
- (b) references to a company making a loan include references to cases in which the company is, or if it were a close company would be, regarded as making a loan by virtue of section 419(2).
### CHAPTER III — APPORTIONMENT OF UNDISTRIBUTED INCOME ETC.
#### Apportionment of certain income, deductions and interest
##### 423
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exclusions from section 423
##### 424
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manner of apportionment
##### 425
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to income tax where apportionment is to an individual
##### 426
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction of charge under section 426 in certain cases
##### 427
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Increase of apportioned sum etc. by reference to ACT
##### 428
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payment and collection of income tax
##### 429
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Consequences of apportionment: ACT
##### 430
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XII — SPECIAL CLASSES OF COMPANIES AND BUSINESSES
### CHAPTER I — INSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS
### Insurance companies: general
#### Interpretative provisions relating to insurance companies
##### 431
- (1) This section has effect for the interpretation of the life assurance provisions of the Corporation Tax Acts.
- (2) Unless the context otherwise requires—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*basic life assurance and general annuity business*” has the meaning given by section 431F;
- “*brought into account*” has the meaning given by section 83A of the Finance Act 1989;
- “*child trust fund business*” has the meaning given by section 431BA;
- “*closing*” and “*opening*”, in relation to a period of account, refer respectively to the position at the end and at the beginning of the period and, in relation to an accounting period, refer respectively to the position at the end and at the beginning of the period of account in which the accounting period falls;
- “*closing liabilities*” includes liabilities assumed at the end of the period of account concerned in consequence of the declaration of reversionary bonuses or a reduction in premiums;
- “contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contract of long-term insurance” means any contract which falls within Part II of Schedule 1 to that Order;
- “*deposit back arrangements*” means arrangements by which an amount is deposited by the reinsurer under a contract of reinsurance with the cedant;
- “*fair value*”, in relation to assets, means the amount which would be obtained from an independent person purchasing them or, if the assets are money, its amount;
- “*foreign business assets*”, in relation to an insurance company, means assets, other than linked assets, which either—are shown in the records of the company as being primarily attributable to liabilities of the company's foreign business, orare attributable, under the law of a country or territory outside the United Kingdom, to a permanent establishment of the company in that country or territory through which it carries on foreign business;and for this purpose “*foreign business*” means overseas life assurance business or life reinsurance business to the extent that it consists of the reinsurance of overseas life assurance business;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*free assets amount*”, in relation to an insurance company, means the excess of the value of the assets of the company's long-term business , other than any structural assets (within the meaning of section 83XA of the Finance Act 1989), over the aggregate of —the value of the liabilities of that business,any money debts (within the meaning of Part 5 of CTA 2009 (see section 303 of that Act)) of the company not within paragraph (a) above which are owed in respect of that business, andthe amount of the shareholders' excess assets within the meaning given by section 432A(8)(b));
- “*General Prudential Sourcebook*” means the General Prudential Sourcebook made by the Financial Services Authority under the Financial Services and Markets Act 2000 ;
- “*gross roll-up business*” has the meaning given by section 431EA;
- “*the I minus E basis*” means the basis under which a company carrying on life assurance business is charged to tax on the relevant profits (within the meaning of section 88(3) of the Finance Act 1989) of that business otherwise than under section 35 of CTA 2009 (charge on trade profits);
- “*immediate needs annuities business*” means business which consists of the effecting or carrying out of immediate needs annuities (within the meaning of section 725 of ITTOIA 2005);
- “*individual savings account business*” has the meaning given by section 431BB;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*insurance business transfer scheme*” means—a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 , 4 or 5 of subsection (3) of that section, ora scheme which would fall within that section but for subsection (1)(b) of that section;
- “insurance company” means—a person (other than a friendly society) who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance, oran EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act or a firm qualifying for authorisation under Schedule 4 to that Act which—carries on business which consists of the effecting or carrying out of contracts of insurance, andcarries on that business through a branch or agency in the United Kingdom,but does not include an insurance special purpose vehicle;
- “*the Insurance Prudential Sourcebook*” means the Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000;
- “*insurance special purpose vehicle*” means any undertaking which assumes risks from insurance or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issue or some other financing mechanism where the repayment rights of the providers of such debt or other financing mechanism are subordinated to the reinsurance obligations of the undertaking;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*internal linked fund*”, in relation to an insurance company, means an account—to which linked assets are appropriated by the company, andwhich may be divided into units the value of which is determined by the company by reference to the value of those assets;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*liabilities*”, in relation to an insurance company, means—the mathematical reserves of the company as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook, andliabilities of the company (whose value falls to be determined in accordance with section 1.3 of the General Prudential Sourcebook) which arise from deposit back arrangements;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*life assurance business*” means business which—consists of the effecting or carrying out of contracts of insurance which fall within paragraph I, II, III or VII(b) of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, oris capital redemption business,other than immediate needs annuities business;
- “*the life assurance provisions of the Corporation Tax Acts*” means—the provisions of this Chapter so far as relating to life assurance business, companies carrying on such business and friendly societies, andany other provisions of the Corporation Tax Acts making separate provision by reference to whether or not the business of a company is or includes life assurance business or any category of business that includes life assurance business;
- “*life assurance trade profits provisions*” means the provisions applicable for the purposes of the taxation under section 35 of CTA 2009 (charge on trade profits) of the profits of life assurance business carried on by an insurance company;
- “*life reinsurance business*” has the meaning given by section 431C;
- “*linked assets*”, and related expressions, shall be construed in accordance with section 432ZA;
- “long-term business” means business which consists of the effecting or carrying out of contracts of long-term insurance;
- “*long-term insurance fund*” means the fund maintained by an insurance company in respect of its long-term business . . . ;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*net value*”, in relation to any assets, means the excess of the value of the assets over the value of money debts (within the meaning of Part 5 of CTA 2009: see section 303 of that Act) attributable to an internal linked fund which are not owed in respect of liabilities;
- “*non-profit company*”, in relation to a period of account, means a company carrying on long-term business where, at the end of the period—none of the liabilities of that business, ornone but an insignificant proportion of those liabilities,are with-profits liabilities;
- “*non-profit fund*” means a fund that is not a with-profits fund;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*overseas life assurance business*” has the meaning given by section 431D;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*overseas life insurance company*” means an insurance company not resident in the United Kingdom but carrying on life assurance business through a branch or agency in the United Kingdom; . . .
- “*pension business*” has the meaning given by section 431B;
- “*periodical return*”, in relation to an insurance company, means a return deposited with the Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers)(and does not include the Forms mentioned in Rule 9.3(5)).
- “*period of account*” means the period covered by a periodical return;
- “*PHI business*” means long-term business other than life assurance business (including the reinsurance of such long-term business);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000;
- “*reinsurance*” includes retrocession;
- “*shareholders' excess assets*” has the meaning given by section 432A(8)(b));
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*value*”, in relation to an asset of an insurance company, means the value of the asset as determined in accordance with section 1.3 of the General Prudential Sourcebook, as read with section 2.1 of the Insurance Prudential Sourcebook;
- “*with-profits fund*” has the meaning given by the Prudential Sourcebook (Insurers);
- “*with-profits liabilities*” means liabilities in respect of policies or contracts under which the policy holders or annuitants are eligible to participate in surplus;
- (2YA) Where an insurance company becomes an insurance special purpose vehicle otherwise than on the last day of a period of account, it shall be treated as an insurance special purpose vehicle from the beginning of that period.
- (2YB) “*BLAGAB profits*”, in relation to an accounting period of an insurance company, means the company's BLAGAB income and gains for the period reduced (but not below nil) by the company's BLAGAB deductions for the period.
- (2YC) “*BLAGAB income and gains*”, in relation to an accounting period of an insurance company, means the aggregate of—
- (a) income chargeable for the period . . . so far as referable (in accordance with section 432A) to the company's basic life assurance and general annuity business, and
- (b) chargeable gains so far as so referable accruing to the company in the period, but (subject to section 210A of the 1992 Act) after deducting—
- (i) any allowable losses so referable and so accruing, and
- (ii) so far as they have not been allowed as a deduction from chargeable gains in any previous accounting period, any allowable losses so referable previously accruing to the company.
- (2YD) “*BLAGAB deductions*”, in relation to an accounting period of an insurance company, means the aggregate of—
- (a) amounts falling in respect of any non-trading deficits on the company's loan relationships to be brought into account in the period in accordance with sections 387 to 391 of CTA 2009, and
- (b) the expenses deduction given by Step 8 in section 76(7) for the period.
- (2ZA) Subsections (2ZB) and (2ZC) below apply where an insurance business transfer scheme has effect to transfer long-term business from one person (“*the transferor*”) to another (“*the transferee*”).
- (2ZB) If the transfer takes place otherwise than on the last day of a period of account of the transferor, references to—
- (a) opening liabilities of the transferor,
- (b) opening values or net values of assets of the transferor, . . . or
- (c) the opening amount of the free assets amount of the transferor, . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
for the period of account, so far as relating to the business transferred, are to the part of those liabilities, values or amounts which bears to the whole the proportion A/C.
- (2ZC) If the transfer takes place otherwise than on the first day of a period of account of the transferee, references to—
- (a) closing liabilities of the transferee,
- (b) closing values or net values of assets of the transferee, . . . or
- (c) the closing amount of the free assets amount of the transferee, . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
for the period of account, so far as relating to the business transferred, are to the part of those liabilities, values or amounts which bears to the whole the proportion B/C.
- (2ZD) For the purposes of subsection (2ZC) above—
- (a) closing liabilities of the transferee are to be taken not to relate to the business transferred to the extent that they are liabilities which, immediately before the transfer, were reinsured by the transferor with the transferee, but
- (b) closing liabilities of the transferee are to be taken to relate to the business transferred to the extent that they are liabilities which, immediately before the transfer, were reinsured by the transferee with the transferor if the business transferred consists of or includes that reinsurance business.
- (2ZE) In subsections (2ZB) and (2ZC) above—
- A is the number of days in the period beginning with the period of account and ending with the day of the transfer,
- B is the number of days in the period beginning with the day of the transfer and ending with the period of account, and
- C is one-half of the number of days in the period of account.
- (2ZF) In this Chapter “*capital redemption business*” means any business of a company carrying on insurance business in so far as it consists of the effecting on the basis of actuarial calculations, and the carrying out, of contracts under which, in return for one or more fixed payments, a sum or series of sums of a specified amount become payable at a future time or over a period.
- (2ZG) The Treasury may by order amend the definition of “insurance business transfer scheme” given by subsection (2) above where it is expedient to do so in consequence of any amendment of section 105 of the Financial Services and Markets Act 2000.
- (2ZH) The power conferred by subsection (2ZG) above includes power to make incidental, supplementary, consequential or transitional provisions and savings (including provision amending any provision of the Corporation Tax Acts relating to insurance companies).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Separation of different classes of business
##### 432
- (1) Where an insurance company carries on life assurance business in conjunction with insurance business of any other category, the life assurance business shall, for the purposes of the Corporation Tax Acts, be treated as a separate business from any other category of business carried on by the company.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Profits reserved for policy holders and annuitants
##### 433
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Franked investment income etc
##### 434
- (1) Where an insurance company makes a payment representative of a distribution made by a company resident in the United Kingdom in respect of an asset of its long-term insurance fund, the payment is to be taken into account in computing its profits in accordance with the life assurance trade profits provisions unless the amount taken into account in accordance with section 83(2)(a) of the Finance Act 1989 includes the amount of the payment.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) So much of the policy holders' share of the franked investment income from investments of a company’s long-term insurance fund as is referable to its life assurance business shall be left out of account in determining, under subsection (7) of section 13, the franked investment income forming part of the company’s profits for the purposes of that section.
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) *Subject to subsection* (5)*below, the specified part shall be, in the case of any unrelieved income, the same fraction of it as the fraction which, on a computation of the profits of the company in respect of its life assurance business in accordance with the provisions applicable to Case* I*of Schedule D* (*whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods*),*would be connoted by the words in section* 433 “*such part of those profits as belongs or is allocated to, or is reserved for, or expended on behalf of, policy holders or annuitants*”.
- (5) *If the income exceeds the profits as computed in accordance with the provisions applicable to Case* I*of Schedule D other than section 433, the specified part shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess*.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) For the purposes of this section—
- (a) “*the policy holders’ share*” of any franked investment income is so much of that income as is not the shareholders’ share within the meaning of section 89 of the Finance Act 1989, . . .
- (aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ab) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ac) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of gains reserved for policy holders and annuitants
##### 435
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity business and pension business: separate charge on profits
##### 436
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### General annuity business
##### 437
- (1A) In the computation under the I minus E basis of the relevant profits (within the meaning of section 88(1) of the Finance Act 1989) of an insurance company for any accounting period, new annuities paid by the company in that period shall be brought into account by treating an amount equal to the income limit for that period as expenses payable which fall to be brought into account for that period at Step 3 in section 76(7).
- (1C) For the purposes of this section (but subject to subsections (1CA) to (1CD) below)—
- (a) “*new annuity*” means any annuity, so far as paid under a contract made by an insurance company in an accounting period beginning on or after 1st January 1992 and so far as referable to the company’s basic life assurance and general annuity business;
- (b) “*the income limit*” for an accounting period of an insurance company is the difference between—
- (i) the total amount of the new annuities paid by the company in that accounting period; and
- (ii) the total of the . . . amounts exempt under section 717 of ITTOIA 2005 contained in the new annuities so paid; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .and
- (d) the amounts exempt under section 717 of ITTOIA 2005 are so much of the payments under the new annuities as would be within the exemption in subsection (1) of that section if—
- (i) section 718 of that Act were omitted, and
- (ii) that exemption were an exemption applying in relation to companies as well as individuals.
- (1CA) Where a new annuity (“*the actual annuity*”) is a steep-reduction annuity, the income limit for an accounting period of the company paying the annuity shall be computed for the purposes of this section as if—
- (a) the contract providing for the actual annuity provided instead for the annuities identified by subsections (1CB) and (1CC) below; and
- (b) the consideration for each of those annuities were to be determined by the making of a just and reasonable apportionment of the consideration for the actual annuity.
- (1CB) The annuities mentioned in subsection (1CA)(a) above are—
- (a) an annuity the payments in respect of which are confined to the payments in respect of the actual annuity that fall to be made before the earliest time for the making in respect of the actual annuity of a reduced payment such as is mentioned in section 437A(1)(c); and
- (b) subject to subsection (1CC) below, an annuity the payments in respect of which are all the payments in respect of the actual annuity other than those mentioned in paragraph (a) above.
- (1CC) Where an annuity identified by paragraph (b) of subsection (1CB) above (“*the later annuity*”) would itself be a steep-reduction annuity, the annuities mentioned in subsection (1CA)(a) above—
- (a) shall not include the later annuity; but
- (b) shall include, instead, the annuities which would be identified by subsection (1CB) above (with as many further applications of this subsection as may be necessary for securing that none of the annuities mentioned in subsection (1CA)(a) above is a steep-reduction annuity) if references in that subsection to the actual annuity were references to the later annuity.
- (1CD) Subsections (1CA) to (1CC) above shall be construed in accordance with section 437A.
- (1D) In any case where—
- (a) a payment in respect of an annuity is made by an insurance company under a group annuity contract made in an accounting period beginning before 1st January 1992,
- (b) the company’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
- (c) the company’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall be treated for the purposes of this section, other than this subsection, as if the group annuity contract had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
- (1E) In any case where—
- (a) a payment in respect of an annuity is made by a reinsurer under a reinsurance treaty made in an accounting period beginning before 1st January 1992,
- (b) the reinsurer’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
- (c) the reinsurer’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall, as respects the reinsurer, be treated for the purposes of this section, other than this subsection, as if the reinsurance treaty had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
- (1F) In this section—
- “*group annuity contract*” means a contract between an insurance company and some other person under which the company undertakes to become liable to pay annuities to or in respect of such persons as may subsequently be specified or otherwise ascertained under or in accordance with the contract (whether or not annuities under the contract are also payable to or in respect of persons who are specified or ascertained at the time the contract is made);
- “*reinsurance treaty*” means a contract under which one insurance company is obliged to cede, and another (in this section referred to as a “*reinsurer*”) to accept, the whole or part of a risk of a class or description to which the contract relates.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Pension business: exemption from tax
##### 438
- (1) Exemption from corporation tax shall be allowed in respect of income from assets solely linked to pension business.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3AA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restricted government securities
##### 439
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Identification or exchange of long term assets
##### 440
- (1) If at any time an asset (or a part of an asset) held by an insurance company ceases to be within one of the categories set out in subsection (4) below and comes within another of those categories, the company shall for the purposes of corporation tax be deemed to have disposed of and immediately re-acquired the asset (or part) for a consideration equal to its fair value at that time.
- (2) Where—
- (a) an asset is acquired by a company as a result of an insurance business transfer scheme which has effect to transfer long-term business from any person (“the transferor”) to the company, and
- (b) the asset (or part of it) is within one of the categories set out in subsection (4) below immediately before the acquisition and is within another of those categories immediately afterwards,
the transferor shall for the purposes of corporation tax be deemed to have disposed of and immediately re-acquired the asset (or part) immediately before the acquisition for a consideration equal to its fair value at that time.
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Where, apart from this subsection, section 171 or 173 the 1992 Act (transfers within a group) would apply to a disposal or acquisition by an insurance company of an asset (or part of an asset) which, immediately before the disposal or (as the case may be) immediately after the acquisition, is within one of the categories set out in paragraphs (a), (d) and (e) of subsection (4) below, that section shall not apply to the disposal or acquisition.
- (4) The categories referred to in subsections (1) to (3) above are—
- (a) assets which are linked solely to gross roll-up business or are foreign business assets;
- (d) assets linked solely to basic life assurance and general annuity business;
- (e) assets of the long-term insurance fund not within either of the preceding paragraphs;
- (f) other assets.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) In a case where the profits of a company’s life assurance business are charged to tax under section 35 of CTA 2009 (charge on trade profits) this section has effect with the modification specified in section 440B(3).
#### Foreign life assurance funds
##### 441
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Overseas business of U.K. companies
##### 442
- (1) Subsections (2) and (3) below apply where a company resident in the United Kingdom carries on insurance business outside the United Kingdom through a permanent establishment and—
- (a) that business, or part of it, together with the whole assets of the company used for the purposes of that business or part (or together with the whole of those assets other than cash), is transferred to a company not resident in the United Kingdom;
- (b) the business or part is so transferred wholly or partly in exchange for shares, or for shares and loan stock, issued by the transferee company to the transferor company; and
- (c) the shares so issued, either alone or taken together with any other shares in the transferee company already held by the transferor company, amount in all to not less than one quarter of the ordinary share capital of the transferee company.
- (2) In making any computation in accordance with the provisions applicable for the purposes of section 35 of CTA 2009 (charge on trade profits) of the profits or losses of the transferor company for the accounting period in which the transfer occurs, there shall be disregarded any profit or loss in respect of any asset transferred which, apart from this subsection, would fall to be taken into account in making that computation.
- (3) Where by virtue of subsection (2) above any profit or loss is disregarded in making any computation . . . the profit or loss shall be treated for the purposes of the 1992 Act as a chargeable gain or allowable loss accruing to the transferor company on the transfer.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies carrying rights not in money
##### 443
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies issued before 5th August 1965
##### 444
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Provisions applying only to overseas life insurance companies
#### Charge to tax on investment income
##### 445
#### Annuity business
##### 446
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of income tax and tax credits against corporation tax
##### 447
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying distributions and tax credits
##### 448
#### Double taxation agreements
##### 449
### Underwriters
#### Assessment, set-off of losses and reinsurance
##### 450
#### Regulations
##### 451
#### Special reserve funds
##### 452
#### Payments into premiums trust fund on account of losses
##### 453
#### Income tax consequences on payments into and out of special reserve fund
##### 454
#### Income tax consequences on death of underwriter
##### 455
#### Unearned income, variation of arrangements and cancellation of approval etc
##### 456
#### Interpretation of sections 450 to 456
##### 457
### Capital redemption business
#### Capital redemption business
##### 458
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — FRIENDLY SOCIETIES, TRADE UNIONS AND EMPLOYERS’ ASSOCIATIONS
### Unregistered friendly societies
#### Exemption from tax
##### 459
An unregistered friendly society (that is, a friendly society which is neither an incorporated friendly society nor a registered friendly society) whose income does not exceed £160 a year shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains).
### Registered friendly societies
#### Exemption from tax in respect of life or endowment business
##### 460
- (1) Subject to subsection (2) below, a friendly society shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits arising from life or endowment business.
- (2) Subsection (1) above—
- (a) shall not, subject to section 462, exempt a registered friendly society registered after 31st December 1957 which at any time in the period of three months ending 3rd May 1966 entered into any transaction in return for a single premium, being a transaction forming part of its life or endowment business;
- (aa) shall not, subject to section 462, exempt an incorporated friendly society which, before its incorporation, was a registered friendly society such as is mentioned in paragraph (a) above;
- (b) shall not apply to profits arising from gross roll-up business;
- (c) shall not apply to profits arising from life or endowment business consisting—
- (zai) where the profits relate to contracts made on or after the day on which the Finance Act 1995 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £270 or of the granting of annuities of annual amounts exceeding £156;
- (ai) where the profits relate to contracts made on or after the day on which the Finance Act 1991 was passed but before the day on which the Finance Act 1995 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £200 or of the granting of annuities of annual amounts exceeding £156;
- (i) where the profits relate to contracts made after 31st August 1990 but before the day on which the Finance Act 1991 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £150 or of the granting of annuities of annual amounts exceeding £156;
- (ia) where the profits relate to contracts made after 31st August 1987 but before 1st September 1990, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £100 or of the granting of annuities of annual amounts exceeding £156.
- (ii) where the profits relate to contracts made after 13th March 1984 but before 1st September 1987, of the assurance of gross sums exceeding £750 or of the granting of annuities of annual amounts exceeding £156;
- (iii) where the profits relate to contracts made before 14th March 1984, of the assurance of gross sums exceeding £500 or of the granting of annuities of annual amounts exceeding £104;
- (ca) shall not apply to so much of the profits arising from life or endowment business as is attributable to contracts for the assurance of gross sums made on or after 20th March 1991 and expressed at the outset not to be made in the course of tax exempt life or endowment business;and
- (cb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) as respects other life or endowment business (“tax exempt life or endowment business”), has effect subject to the following provisions of this Chapter.
- (3) In determining for the purposes of subsection (2)(c)(zai), (ai), (i) or (ia) above the total premiums payable in any period of 12 months—
- (a) where those premiums are payable more frequently than annually, there shall be disregarded an amount equal to 10 per cent. of those premiums; and
- (b) so much of any premium as is charged on the ground that an exceptional risk of death or disability is involved shall be disregarded;
and in applying the limit of £156 in subsection (2)(c)(zai), (ai), (i) or (ia) above, any bonus or addition declared upon an annuity shall be disregarded.
- (4) In applying the limits referred to in subsection (2)(c)(ii) and (iii) above, any bonus or addition which either is declared upon an assurance of a gross sum or annuity or accrues upon such an assurance by reference to an increase in the value of any investments shall be disregarded.
- (4A) Subsection (4B) below applies to contracts for the assurance of gross sums under tax exempt life or endowment business made after 31st August 1987 and before the day on which the the Finance Act 1995 was passed.
- (4B) Where the amount payable by way of premium under a contract to which this subsection applies is increased by virtue of a variation made—
- (a) in the period beginning with 25th July 1991 and ending with 31st July 1992, or
- (b) in the period beginning with the day on which the Finance Act 1995 was passed and ending with 31st March 1996,
the contract shall, for the purposes of subsection (2)(c) above, be treated, in relation to any profits relating to it as varied, as made at the time of the variation.
- (5) A friendly society is within this subsection if its rules make no provision for it to carry on life or endowment business consisting of the assurance of gross sums exceeding £2,000 or of the granting of annuities of annual amounts exceeding £416.
- (6) In the case of a friendly society within subsection (5) above—
- (a) subsection (2)(c)(iii) above shall have effect with the substitution of references to £2,000 and £416 respectively for the references to £500 and £104; and
- (b) references in this Chapter to tax exempt life or endowment business shall be construed accordingly.
- (7) Where at any time a friendly society within subsection (5) above amends its rules so as to cease to be within that subsection, any part of its life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
shall thereafter continue to be tax exempt life or endowment business for the purposes of this Chapter.
- (8) Where at any time a friendly society not within subsection (5) above amends its rules so as to bring itself within that subsection, any part of its life or endowment business consisting of business which—
- (a) related to contracts made before that time; and
- (b) immediately before that time was not tax exempt life or endowment business,
shall thereafter continue not to be tax exempt life or endowment business for the purposes of this Chapter.
- (9) Where at any time a friendly society not within subsection (5) above acquires by way of transfer of engagements or amalgamation from another friendly society any life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
that business shall thereafter continue to be tax exempt life or endowment business for the purposes of this Chapter.
- (10) Where at any time a friendly society within subsection (5) above acquires by way of transfer of engagements or amalgamation from another friendly society any life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was not tax exempt life or endowment business,
that business shall thereafter continue not to be tax exempt life or endowment business for the purposes of this Chapter.
- (10A) Where at any time an insurance business transfer scheme has effect to transfer to a friendly society long-term business, any life or endowment business which relates to contracts included in the transfer , other than any to which subsection (11) or (12) below applied immediately before the transfer had effect, shall not thereafter be tax exempt life or endowment business for the purposes of this Chapter.
- (10B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) Where at any time a friendly society ceases . . . by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, any part of its life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
shall continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
- (12) Where at any time an insurance company acquires by way of transfer of engagements from a friendly society any life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
that business shall continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
- (13) But if any contracts constituting or forming part of the business of a company covered by subsection (11) or (12) above are varied during an accounting period of the company so as to increase the premiums payable under them, the business relating to those contracts is not exempt from corporation tax for that or any subsequent accounting period.
- (14) For the purposes of the Corporation Tax Acts any part of a company's business which is exempt from corporation tax by virtue of subsection (11) or (12) above shall be treated as a separate business from any other business carried on by the company.
- (15) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (11) or (12) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (16) Regulations under subsection (15) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
#### Taxation in respect of other business
##### 461
- (1) Subject to the following provisions of this section, a registered friendly society other than a society to which subsection (2) below applies shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.
- (2) This subsection applies to any society registered after 31st May 1973 unless—
- (a) its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Board; or
- (b) it was registered before 27th March 1974 and its rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as the Board may authorise for the purposes of this section;
and also applies to any society registered before 1st June 1973 with respect to which a direction under subsection (7) below is in force.
- (3) If a society to which subsection (2) above applies, after 26th March 1974 or such later date as may be specified in a direction under this section, makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—
- (a) any previous payment so made to him by the society after that date, and
- (b) any earlier repayment of such sums paid by him,
the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where a registered friendly society—
- (a) at any time ceases . . . by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act; and
- (b) immediately before that time was exempt from . . . corporation tax on profits arising from any business carried on by it other than life or endowment business,
the company into which the society is converted shall be so exempt on its profits arising from any part of that business which relates to contracts made before that time so long as there is no increase in the scale of benefits which it undertakes to provide in the course of carrying on that part of its business.
- (4A) Where—
- (a) at any time an insurance company acquires by way of transfer of engagements from a registered friendly society any business other than life or endowment business, and
- (b) immediately before that time the society was exempt from corporation tax on profits arising from that business,
the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.
- (4B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (4A) above for that or any subsequent accounting period.
- (5) For the purposes of the Corporation Tax Acts any part of a company’s business in respect of the profits from which the company is exempt by virtue of subsection (4) or (4A) above shall be treated as a separate business from any other business carried on by the company.
- (6) If—
- (a) a friendly society registered before 1st June 1973 begins after 26th March 1974 to carry on business other than life or endowment business or, in the opinion of the Board, begins to carry on business other than life or endowment business on an enlarged scale or of a new character; and
- (b) it appears to the Board, having regard to the restrictions imposed by this section on friendly societies registered later, that for the protection of the revenue it is expedient to do so;
the Board may give a direction to the society under subsection (7) below.
- (7) A direction under this subsection is that (and has the effect that) the society to which it is given is to be treated for the purposes of this Act as a society registered after 31st May 1973 with respect to business carried on after the date of the direction.
- (8) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction . . . on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (6)(a) above; or
- (b) the direction is not necessary for the protection of the revenue.
- (9) If a registered friendly society in respect of which a direction is in force under subsection (7) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a society registered after 31st May 1973.
- (10) For the purposes of this section a registered friendly society formed on the amalgamation of two or more friendly societies shall be treated as registered before 1st June 1973 if at the time of the amalgamation subsection (2) above did not apply to any of the societies amalgamated, but otherwise shall be treated as registered at that time.
- (11) For the purposes of this section and section 461C—
- (a) any group of persons which was approved for the purposes of this section (as mentioned in subsection (2)(a) above) immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date;
- (b) any greater amount which was authorised for the purposes of this section (as mentioned in subsection (2)(b) above) immediately before 1st December 2001 shall be treated as having been authorised for the purposes of this section by the Board on that date; and
- (c) where a direction that subsection (2) above applies to a society was in force immediately before 1st December 2001, a direction in relation to that society shall be treated as having been made under subsection (7) above by the Board on that date.
- (12) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (4) or (4A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (13) Regulations under subsection (12) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
#### Conditions for tax exempt business
##### 462
- (1) Subject to subsection (2) below, section 460 does not afford any exemption from corporation tax in relation to so much of the profits arising to a friendly society or insurance company from any business as is attributable to a policy which—
- (a) is not a qualifying policy (by virtue of sub-paragraph (2) of paragraph 6 of Schedule 15) and is not an excluded policy, and
- (b) would not be a qualifying policy (by virtue of that sub-paragraph) if all excluded policies were left out of account.
- (1A) For the purposes of subsection (1) above a policy is an excluded policy if—
- (a) it is a policy held otherwise than with the friendly society or insurance company, or
- (b) the person who has the contract effecting the policy acquired the rights under it on an assignment (or, in Scotland, assignation) otherwise than for money or money's worth.
- (2) Section 460(2)(a) or (aa) and subsection (1) above shall not withdraw exemption in relation to profits arising from any part of a business relating to contracts made not later than 3rd May 1966.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life or endowment business: application of the Corporation Tax Acts
##### 463
- (1) Subject to section 460(1), the Corporation Tax Acts shall apply to long-term business carried on by friendly societies in the same way as they apply to mutual life assurance business (or other long-term business) carried on by insurance companies, so however that the Treasury may by regulations provide that those Acts as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations, and those regulations may in particular require any part of any business to be treated as a separate business.
- (2) The provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the long-term business of an insurance company shall apply in the same way—
- (a) on the transfer of the whole or part of the business of a friendly society to another friendly society (and on the amalgamation of friendly societies), and
- (b) on the transfer of the whole or part of the business of a friendly society to a company which is not a friendly society (and on the conversion of a friendly society into such a company),
so however that the Treasury may by regulations provide that those provisions as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations.
- (3) The Treasury may by regulations provide that the provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the long-term business of an insurance company to another company shall have effect where the transferee is a friendly society subject to such modifications and exceptions as may be prescribed by the regulations.
- (4) Regulations under this section may make different provision for different cases and may include provision having retrospective effect.
#### Maximum benefits payable to members
##### 464
- (1) Subject to subsections (2) and (3) below, a person is not entitled to have at any time outstanding contracts with any one or more friendly societies, registered branches or insurance companies which (taking them all together) are for the assurance of—
- (a) more than £750 by way of gross sum under business which is afforded exemption from corporation tax by section 460, or
- (b) more than £156 by way of annuity under such business.
In any case where the member’s outstanding contracts were all made before 14th March 1984 this subsection shall have effect with the substitution for “£750” and “£156” of “ £2,000 ” and “ £416 ” respectively.
- (2) Subsection (1)(a) above shall not apply as respects sums assured under contracts made after 31st August 1987.
- (3) With respect to contracts for the assurance of gross sums under business which is afforded exemption from corporation tax by section 460, a person is not entitled to have outstanding at any time with any one or more friendly societies, registered branches or insurance companies—
- (zza) contracts under which the total premiums payable in any period of 12 months exceed £270; or
- (za) contracts made before the day on which the Finance Act 1995 was passed and under which the total premiums payable in any period of 12 months exceed £200; or
- (a) contracts made before the day on which the Finance Act 1991 was passed and under which the total premiums payable in any period of 12 months exceed £150; or
- (b) contracts made before 1st September 1990 under which the total premiums payable in any period of 12 months exceed £100,
unless all those contracts were made before 1st September 1987.
- (4) In applying the limits in subsection (3) above, the premiums under any contract for an annuity which was made before 1st June 1984 by a new society shall be brought into account as if the contract were for the assurance of a gross sum.
- (4A) Subsection (4B) below applies to contracts for the assurance of gross sums under business which is afforded exemption from corporation tax by section 460 if they are made after 31st August 1987 and before the day on which the Finance Act 1995 was passed.
- (4B) Where the amount payable by way of premium under a contract to which this subsection applies is increased by virtue of a variation made—
- (a) in the period beginning with 25th July 1991 and ending with 31st July 1992, or
- (b) in the period beginning with the day on which the Finance Act 1995 was passed and ending with 31st March 1996,
the contract shall, for the purposes of subsection (3) above, be treated, in relation to times when the contract has effect as varied, as made at the time of the variation.
- (5) In applying the limits in this section there shall be disregarded—
- (a) any bonus or addition which either is declared upon assurance of a gross sum or annuity or accrues upon such an assurance by reference to an increase in the value of any investments;
- (b) any policy of insurance or annuity contract by means of which the benefits to be provided under an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) are secured or any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than such an occupational pension scheme;
- (c) any increase in a benefit under a friendly society contract, as defined in section 6 of the Decimal Currency Act 1969, resulting from the adoption of a scheme prescribed or approved in pursuance of subsection (3) of that section; and
- (d) so far as concerns the total premiums payable in any period of 12 months—
- (i) 10 per cent. of the premiums payable under any contract under which the premiums are payable more frequently than annually; and
- (ii) £10 of the premiums payable under any contract made before 1st September 1987 by a friendly society other than a new society; and
- (iii) so much of any premium as is charged on the ground that an exceptional risk of death is involved.
- (6) In applying the limits in this section in any case where a person has outstanding with one or more societies, branches or companies one or more contracts made after 13th March 1984 and one or more contracts made on or before that date, any contract for an annuity which was made before 1st June 1984 by a new society shall be regarded not only as a contract for the annual amount concerned but also as a contract for the assurance of a gross sum equal to 75 per cent. of the total premiums which would be payable under the contract if it were to run for its full term or, as the case may be, if the member concerned were to die at the age of 75 years.
- (7) A friendly society , registered branch or insurance company may require a person to make and sign a statutory declaration that the total amount assured under outstanding contracts entered into by that person with any one or more friendly societies, registered branches or insurance companies (taken together) does not exceed the limits applicable by virtue of this section and that the total premiums under those contracts do not exceed those limits.
#### Old societies
##### 465
- (1) In this section “*old society*” means a friendly society which is not a new society.
- (2) This section applies if, on or after 19th March 1985, an old society—
- (a) begins to carry on tax exempt life or endowment business; or
- (b) in the opinion of the Board begins to carry on such business on an enlarged scale or of a new character.
- (3) If it appears to the Board, having regard to the restrictions placed on qualifying policies issued by new societies by paragraphs 3(1)(b) . . . and 4(3)(b) of Schedule 15, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the old society under subsection (4) below.
- (4) A direction under this subsection is that (and has the effect that) the old society to which it is given is to be treated for the purposes of this Act as a new society with respect to business carried on after the date of the direction.
- (5) An old society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction . . . on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (2) above; or
- (b) that the direction is not necessary for the protection of the revenue.
- (6) If a registered friendly society in respect of which a direction is in force under subsection (4) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a new society.
#### Interpretation of Chapter II
##### 466
- (1) In this Chapter “*life or endowment business*” means, subject to subsections (1A) and (1B) below—
- (a) any life assurance business, and
- (b) any PHI business (as defined in section 431) if—
- (i) the contract is one made before 1 September 1996, or
- (ii) the contract is one made on or after that date and the effecting and carrying out of the business also constitutes business within paragraphs I, II or III of Part II of Schedule 1 to the Financial Services and Markets Act (Regulated Activities) Order 2001.
- (1A) Life or endowment business does not include the issue, in respect of a contract made before 1st September 1996, of a policy affording provision for sickness or other infirmity (whether bodily or mental), unless—
- (a) the policy also affords assurance for a gross sum independent of sickness or other infirmity;
- (b) not less than 60 per cent. of the amount of the premiums is attributable to the provision afforded during sickness or other infirmity; and
- (c) there is no bonus or addition which may be declared or accrue upon the assurance of the gross sum.
- (1B) Life or endowment business does not include the assurance of any annuity the consideration for which consists of sums obtainable on the maturity, or on the surrender, of any other policy of assurance issued by the friendly society, being a policy of assurance forming part of the tax exempt life or endowment business of the friendly society.
- (2) In this Chapter—
- “*friendly society*”, without qualification, means (except in section 459) an incorporated friendly society or a registered friendly society;
- “*gross roll-up business*” shall be construed in accordance with section 431;
- “*incorporated friendly society*” means a society incorporated under the Friendly Societies Act 1992;
- “*insurance company*” shall be construed in accordance with section 431;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*long-term business*” shall be construed in accordance with section 431;
- “*new society*” means—a registered friendly society which was registered after 3rd May 1966 or which was registered in the period of three months ending on that date but which at no time earlier than that date carried on any life or endowment business, oran incorporated friendly society other than one which, before its incorporation, was a registered friendly society not within paragraph (a) above;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*policy*”, in relation to life or endowment business, includes an instrument evidencing a contract to pay an annuity upon human life;
- “*registered branch*” means the same as in the Friendly Societies Act 1992 (and includes any branch that by virtue of section 96(3) of that Act is to be treated as a registered branch);
- “*registered friendly society*” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society);
- . . .
- “*tax exempt life or endowment business*” has, subject to subsections (7) to (10A) of section 460, the meaning given by subsection (2)(d) of that section, that is to say, it means (subject to those subsections) life or endowment business other than business profits arising from which are excluded from subsection (1) of that section by subsection (2)(b) or (c) of that section (read, where appropriate, with subsection (6) of that section);
and references in sections 460 to 465 and this subsection to a friendly society include, in the case of a registered friendly society, references to any branch of that society.
- (2ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) It is hereby declared that for the purposes of this Chapter (except where provision to the contrary is made) a friendly society formed on the amalgamation of two or more friendly societies is to be treated as different from the amalgamated societies.
- (4) A registered friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as registered not later than 3rd May 1966 if at the time of the amalgamation—
- (a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and
- (b) at least one of them was not a new society;
or, if the amalgamation took place before 19th March 1985, the society was treated as registered not later than 3rd May 1966 by virtue of the proviso to section 337(4) of the 1970 Act.
- (5) An incorporated friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as a society which, before its incorporation, was a registered friendly society registered not later than 3rd May 1966 if at the time of the amalgamation—
- (a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and
- (b) at least one of them was not a new society.
### Trade unions and employers’ associations
#### Exemption for trade unions and employers' associations
##### 467
- (1) A trade union which is precluded by Act of Parliament or by its rules from assuring to any person a sum exceeding £4,000 by way of gross sum or £825 by way of annuity shall on making a claim be entitled to exemption from corporation tax—
- (a) . . . in respect of its income which is not trading income and which is applicable and applied for the purpose of provident benefits;
- (b) . . . in respect of chargeable gains which are applicable and applied for the purpose of provident benefits.
- (2) In this section “*provident benefits*” includes any payment, expressly authorised by the rules of the trade union, which is made to a member during sickness or incapacity from personal injury or while out of work, or to an aged member by way of superannuation, or to a member who has met with an accident, or has lost his tools by fire or theft, and includes a payment in discharge or aid of funeral expenses on the death of a member or the spouseor civil partner of a member or as provision for the children of a deceased member.
- (3) In determining for the purposes of this section whether a trade union is by Act of Parliament or its rules precluded from assuring to any person a sum exceeding £825 by way of annuity, there shall be disregarded any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004).
- (3A) The Treasury may by order substitute for any figure for the time being specified in this section such greater figure as may be specified in the order; and any amendment made in exercise of the power conferred by this subsection shall have effect in relation to such income or gains as may be specified in the order.
- (4) In this section “*trade union*” means—
- (a) any trade union the name of which is entered in the list of trade unions maintained by the Certification Officer under section 2 of the Trade Union and Labour Relations (Consolidation) Act 1992;
- (b) any employers’ association the name of which is entered in the list of employers’ associations maintained by the Certification Officer under section 123 of the Trade Union and Labour Relations (Consolidation) Act 1992 and which on 30th September 1971 was a registered trade union for the purposes of section 338 of the 1970 Act;
- (ba) any trade union the name of which is entered in the list of trade unions maintained by the Certification Officer for Northern Ireland under Article 5 of the Industrial Relations (Northern Ireland) Order 1992;
- (bb) any employers’ association the name of which is entered in the list of employers’ associations maintained by the Certification Officer for Northern Ireland under Article 5 of the Industrial Relations (Northern Ireland) Order 1992 and which immediately before the coming into operation of that Article was a trade union for the purposes of this section; and
- (c) the Police Federation for England and Wales, the Police Federation for Scotland, the Police Federation for Northern Ireland and any other organisation of persons in police service which has similar functions.
### CHAPTER III — UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.
### Unit trust schemes
#### Authorised unit trusts
##### 468
- (1) In respect of income arising to the trustees of an authorised unit trust, and for the purposes of the provisions relating to relief for capital expenditure, the Tax Acts shall have effect as if—
- (a) the trustees were a company resident in the United Kingdom; and
- (b) the rights of the unit holders were shares in the company;
but paragraph (b) above is without prejudice to the making of distributions which are interest distributions (within the meaning of regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 18(3) of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964))) to unit holders.
- (1A) In relation to any authorised unit trust the rate of corporation tax for the financial year 1996 and subsequent financial years shall be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned and section 13 shall not apply.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) References in the Corporation Tax Acts to a body corporate shall be construed in accordance with subsection (1) above, and section 234A shall apply with any necessary modifications.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Subject to subsections (7) to (9) below in this section—
- “*authorised unit trust*” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that accounting period;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*unit holder*” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme; . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Each of the parts of an umbrella scheme shall be regarded for the purposes of this Chapter as an authorised unit trust and the scheme as a whole shall not be so regarded.
- (8) In this section, “*umbrella scheme*” means a unit trust scheme—
- (a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them;
- (b) under which the participants are entitled to exchange rights in one pool for rights in another; and
- (c) in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force;
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
- (9) In relation to a part of an umbrella scheme, any reference—
- (a) to investments subject to the trusts of an authorised unit trust, shall have effect as a reference to such of the investments as under the arrangements form part of the separate pool to which the part of the umbrella scheme relates; and
- (b) to a unit holder, shall have effect as a reference to a person for the time being having rights in that separate pool.
#### Other unit trusts
##### 469
- (1) This section applies to—
- (a) any unit trust scheme that is an unauthorised unit trust within the meaning of section 989 of ITA 2007; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
except where the trustees of the scheme are not resident in the United Kingdom.
- (2) Income arising to the trustees of the scheme shall be regarded for the purposes of the Corporation Tax Acts as income of the trustees (and not as income of the unit holders) ; and the trustees (and not the unit holders) shall be regarded as the persons to or on whom allowances or charges are to be made under the provisions of those Acts relating to relief for capital expenditure. . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) This section shall have effect in relation to distribution periods beginning on or after 6th April 1987.
#### Transitional provisions relating to unit trusts
##### 470
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Dealers in securities, banks and insurance businesses
#### Exchange of securities in connection with conversion operations, nationalisation etc
##### 471
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Distribution of securities issued in connection with nationalisation etc
##### 472
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conversion etc. of securities held as circulating capital
##### 473
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of tax-free income
##### 474
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax-free Treasury securities: exclusion of interest on borrowed money
##### 475
- (1) This section has effect where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities—
- (a) is carried on in the United Kingdom by a person not ordinarily resident there; and
- (b) in computing for any of the purposes of the Income Tax Acts the profits arising from, or loss sustained, in the business, any amount which would otherwise be brought into account is disregarded by virtue of a condition subject to which any 3½% War Loan 1952 or after was issued;
and for this purpose insurance business includes insurance business of any category.
- (2) Up to the amount determined under this section (“*the amount ineligible for relief*”), interest on money borrowed for the purposes of the business—
- (a) shall be excluded in any computation under the Income Tax Acts of the profits (or losses) arising from the business . . . , . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Subject to subsection (4) below, in determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which is outstanding in the accounting or basis period, up to the total cost of the 3½% War Loan 1952 or after held for the purpose of the business in that period.
- (4) Where the person carrying on the business is a company, account shall not be taken of any borrowed money carrying interest which, apart from subsection (2) above, does not fall to be included in the computations under paragraph (a) of that subsection . . . .
- (5) . . . The amount ineligible for relief shall be equal to a year’s interest on the amount of money borrowed which is to be taken into account under subsection (3) above at a rate equal to the average rate of interest in the accounting or basis period on money borrowed for the purposes of the business, except that in the case of a period of less than 12 months interest shall be taken for that shorter period instead of for a year.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) For the purposes of this section the cost of a holding of 3½% War Loan 1952 or after which has fluctuated in the accounting or basis period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting or basis period, applied to the average amount of the holding in the accounting or basis period, . . . .
- (9) In this section “*accounting or basis period*” means the company’s accounting period or the period by reference to which the profits or gains arising in the year of assessment are to be computed.
### CHAPTER IV — BUILDING SOCIETIES, BANKS, SAVINGS BANKS, INDUSTRIAL AND PROVIDENT SOCIETIES AND OTHERS
#### Building societies: regulations for payment of tax
##### 476
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Investments becoming or ceasing to be relevant building society investments
##### 477
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Building societies: time for payment of tax
##### 478
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest paid on deposits with banks etc
##### 479
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deposits becoming or ceasing to be composite rate deposits
##### 480
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### “Deposit-taker”, “deposit” and “relevant deposit”
##### 481
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions
##### 482
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Determination of reduced rate for building societies and composite rate for banks etc
##### 483
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) If the order made under section 26 of the Finance Act 1984 in the year 1987-88 is made in pursuance of subsection (4) of that section, that order shall, notwithstanding that that subsection is not re-enacted by this Act, apply for the purposes of sections 476 and 479 for the year 1988-89.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Savings banks: exemption from tax
##### 484
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Savings banks: supplemental
##### 485
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Industrial and provident societies and co-operative associations
##### 486
- (1) Notwithstanding anything in the Tax Acts, share interest or loan interest paid by a registered industrial and provident society shall not be treated as a distribution for the purposes of corporation tax. . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) If in the course of, or as part of, a union or amalgamation of two or more registered industrial and provident societies, or a transfer of engagements from one registered industrial and provident society to another, there is a disposal of an asset by one society to another, both shall be treated for the purposes of corporation tax in respect of chargeable gains as if the asset were acquired from the society making the disposal for a consideration of such amount as would secure that neither a gain nor a loss would accrue to that society on the disposal.
- (9) Subsections (1) and (8) above shall have effect as if references to a registered industrial and provident society included any co-operative association established and resident in the United Kingdom, and having as its object or primary object to assist its members in the carrying on of agricultural or horticultural businesses on land occupied by them in the United Kingdom or in the carrying on of businesses consisting in the catching or taking of fish or shellfish.
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) In this section—
- “*co-operative association*” means a body of persons having a written constitution from which the Minister is satisfied, having regard to the provision made as to the manner in which the income of the body is to be applied for the benefit of its members and all other relevant provisions, that the body is in substance a co-operative association;
- “*the Minister*” means—
- the Secretary of State, as regards England and Wales;
- the Secretary of State, as regards Scotland; and
- the Department of Agriculture for Northern Ireland, as regards Northern Ireland;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*share interest*” means any interest, dividend, bonus or other sum payable to a shareholder of the society by reference to the amount of his holding in the share capital of the society;
- “*loan interest*” means any interest payable by the society in respect of any mortgage, loan, loan stock or deposit;
and references to the payment of share interest or loan interest include references to the crediting of such interest.
#### Credit unions
##### 487
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Co-operative housing associations
##### 488
- (1) Where a housing association makes a claim in that behalf for any year or part of a year of assessment during which the association was approved for the purposes of this section—
- (a) rent to which the association was entitled from its members for the year or part shall be disregarded for tax purposes; and
- (b) any yearly interest payable by the association for the year or part shall be treated for tax purposes in relation to the association as if there were no interest so payable.
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where the property, or any of the properties, to which any such interest as is mentioned in paragraph (b) of subsection (1) above relates is for any period not subject to a tenancy—
- (a) that paragraph shall not apply in relation to so much of the interest as is attributable to the property not subject to a tenancy;. . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where a claim under subsection (1) above has effect, any adjustment of the liability to tax of . . . the association which is required in consequence of the claim may be made by an assessment or by repayment or otherwise, as the case may require.
- (5) Where a housing association makes a claim in that behalf for an accounting period or part of an accounting period during which it was approved for the purposes of this section, the housing association shall be exempt from corporation tax on chargeable gains accruing to it in the accounting period or part on the disposal by way of sale of any property which has been or is being occupied by a tenant of the housing association.
- (6) References in this section to the approval of an association shall be construed as references to approval—
- (a) by the Secretary of State in the case of a housing association in Great Britain;
- (b) by the Head of the Department of the Environment for Northern Ireland in the case of a housing association in Northern Ireland;
and an association shall not be approved unless the approving authority is satisfied—
- (i) that the association is, or is deemed to be, duly registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969, and is a housing association within the meaning of the Housing Associations Act 1985 or Article 3 of the Housing (Northern Ireland) Order 1992;
- (ii) that the rules of the association restrict membership to persons who are tenants or prospective tenants of the association, and preclude the granting or assignment (or, in Scotland, the granting or assignation) of tenancies to persons other than members; and
- (iii) that the association satisfies such other requirements as may be prescribed by the Secretary of State as respects Great Britain, or the Head of the Department for Social Development for Northern Ireland as respects Northern Ireland, and will comply with such conditions as may for the time being be so prescribed.
- (7) An approval given for the purposes of this section shall have effect as from such date (whether before or after the giving of the approval) as may be specified by the approving authority and shall cease to have effect if revoked.
- (7A) The Secretary of State may delegate any of his functions under subsections (6) and (7)—
- (a) to the Housing Corporation, in the case of a body registered as a social landlord in the register maintained by the Housing Corporation under Part I of the Housing Act 1996, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
to such extent and subject to such conditions as he may specify.
- (8) The Secretary of State as respects Great Britain, or the Head of the Department of the Environment for Northern Ireland as respects Northern Ireland, may make regulations for the purpose of carrying out the provisions of this section; and, from the coming into operation of regulations under this subsection prescribing requirements or conditions for the purposes of subsection (6)(iii) above, “prescribed” in subsection (6)(iii) above shall mean prescribed by or under such regulations.
- (9) A claim under this section may be made at any time not later than two years after the end of the year of assessment or accounting period to which, or to a part of which, it relates.
- (10) Subject to subsection (11) below, no claim shall be made under this section unless during the year or accounting period, or part thereof, to which the claim relates—
- (a) no property belonging to the association making the claim was let otherwise than to a member of the association;
- (b) no property let by the association, and no part of such property, was occupied, whether solely or as joint occupier, by a person not being a member of the association;
- (c) the association making the claim satisfies the conditions specified in subsection (6)(i) and (ii) above and has complied with the conditions prescribed under subsection (6)(iii) for the time being in force; and
- (d) any covenants required to be included in grants of tenancies by those conditions have been observed.
- (11) A housing association may make a claim under this section notwithstanding anything in subsection (10) above, if the association reasonably considers that the requirements of that subsection are substantially complied with.
- (11A) If as a result of an enquiry—
- (a) into a company tax return, in which a claim under this section by a housing association is included, or
- (b) under paragraph 5 of Schedule 1A to that Act into a claim under this section by a housing association, or an amendment of such a claim,
an amendment is made to the association’s return or, as the case may be, to the claim, the liability of the association to tax for all relevant years or accounting periods may also be adjusted by the making of assessments or otherwise.
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Self-build societies
##### 489
- (1) Where a self-build society makes a claim in that behalf for any year or part of a year of assessment during which the society was approved for the purposes of this section, rent to which the society was entitled from its members for the year or part shall be disregarded for tax purposes.
- (2) Where a claim under subsection (1) above has effect, any adjustment of the society’s liability to tax which is required in consequence of the claim may be made by an assessment or by repayment or otherwise, as the case may require.
- (3) Where a self-build society makes a claim in that behalf for an accounting period or part during which it was approved for the purposes of this section, the society shall be exempt from corporation tax on chargeable gains accruing to it in the accounting period or part thereof on the disposal of any land to a member of the society.
- (4) References in this section to the approval of a self-build society are references to its approval by the Secretary of State, and the Secretary of State shall not approve a self-build society for the purposes of this section unless he is satisfied—
- (a) that the society is, or is deemed to be, duly registered under the Industrial and Provident Societies Act 1965; and
- (b) that the society satisfies such other requirements as may be prescribed by or under regulations under subsection (6) below and will comply with such conditions as may for the time being be so prescribed.
- (5) An approval given for the purposes of this section shall have effect as from such date (whether before or after the giving of the approval) as may be specified by the Secretary of State and shall cease to have effect if revoked by him.
- (5A) The Secretary of State may delegate any of his functions under subsections (4) and (5) to—
- (a) the Housing Corporation, where the society has its registered office in England for the purposes of the Industrial and Provident Societies Act 1965,. . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
to such extent and subject to such conditions as he may specify.
- (6) The Secretary of State may by statutory instrument make regulations for the purpose of carrying out the provisions of this section; and a statutory instrument containing any such regulations shall be subject to annulment in pursuance of a resolution of the House of Commons.
- (7) A claim under this section may be made at any time not later than two years after the end of the year of assessment or accounting period to which, or to a part of which, it relates.
- (8) Subject to subsection (9) below, no claim shall be made under this section unless during the year or accounting period, or part thereof, to which the claim relates—
- (a) no land owned by the society was occupied, in whole or in part and whether solely or as joint occupier, by a person who was not, at the time of his occupation, a member of the society; and
- (b) the society making the claim satisfies the condition specified in paragraph (a) of subsection (4) above and has complied with the conditions prescribed under paragraph (b) of that subsection and for the time being in force;
and for the purposes of paragraph (a) above, occupation by any other person in accordance with the will, or the provisions applicable on the intestacy, of a deceased member, shall be treated during the first six months after the death as if it were occupation by a member.
- (9) A self-build society may make a claim under this section notwithstanding anything in subsection (8) above, if the society reasonably considers that the requirements of that subsection are substantially complied with.
- (9A) If as a result of an enquiry—
- (a) into a company tax return, in which a claim under this section by a self-build society is included, or
- (b) under paragraph 5 of Schedule 1A to that Act into a claim under this section by a self-build society or an amendment of such a claim,
an amendment is made to the society’s return or, as the case may be, to the claim, the society’s liability to tax for all relevant years or accounting periods may also be adjusted by the making of assessments or otherwise.
- (10) A claim under this section shall be in such form and contain such particulars as may be prescribed by the Board.
- (11) In this section—
- “*self-build society*” has the same meaning as in the Housing Associations Act 1985 or, in Northern Ireland, Part VII of the Housing (Northern Ireland) Order 1981; and
- “*rent*” includes any sums to which a self-build society is entitled in respect of the occupation of any of its land under a licence or otherwise.
- (12) In the application of this section to Northern Ireland—
- (a) any reference in subsections (4) and (5) above to the Secretary of State shall be construed as a reference to the Department of the Environment for Northern Ireland;
- (b) the reference in subsection (4)(a) to the Industrial and Provident Societies Act 1965 shall be construed as a reference to the Industrial and Provident Societies Act (Northern Ireland) 1969; and
- (c) for subsection (6) there shall be substituted the following subsection—
> (6) the Department of the Environment for Northern Ireland may by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 make regulations for the purpose of carrying out the provisions of this section; and a statutory rule containing any such regulations shall be subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954.
#### Companies carrying on a mutual business or not carrying on a business
##### 490
- (1) Subject to subsection (2) below, where a company carries on any business of mutual trading or mutual insurance or other mutual business the provisions of the Tax Acts relating to distributions shall apply to distributions made by the company notwithstanding that they are made to persons participating in the mutual activities of that business and derive from those activities, but shall so apply only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income . . . . . . .
- (2) In the case of a company carrying on any mutual life assurance business, the provisions of the Tax Acts relating to distributions shall not apply to distributions made to persons participating in the mutual activities of that business and derived from those activities . . . .
- (3) Subject to subsections (1) and (2) above, the fact that a distribution made by a company carrying on any such business is derived from the mutual activities of that business and the recipient is a person participating in those activities shall not affect the character which the payment or other receipt has for purposes of corporation tax or income tax in the hands of the recipient.
- (4) Where a company does not carry on, and never has carried on, a trade or a business of holding investments, and is not established for purposes which include the carrying on of a trade or of such a business, the provisions of the Tax Acts relating to distributions shall apply to distributions made by the company only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Distribution of assets of body corporate carrying on mutual business
##### 491
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V
#### Treatment of oil extraction activities etc. for tax purposes
##### 492
those activities shall be treated for the purposes of the charge of corporation tax on income as a separate trade, distinct from all other activities carried on by him as part of the trade.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Relief in respect of a loss incurred by a person shall not be given under section 393A(1) against his ring fence profits except to the extent that the loss arises from oil extraction activities or from oil rights.
- (3A) No deduction under section 1219 of CTA 2009 (expenses of management of investment business) shall be allowed from a company's ring fence profits.
- (4) In any case where—
- (a) in any accounting period a company incurs a loss in activities (“separate activities”) which, for that or any subsequent accounting period, are treated by virtue of subsection (1) above as a separate trade for the purposes specified in that subsection, and
- (b) in any subsequent accounting period any of its trading income is derived from activities (“related activities”) which are not part of the separate activities but which, apart from subsection (1) above, would together with those activities constitute a single trade,
then, notwithstanding anything in subsection (1) above, the amount of the loss may be set off, in accordance with section 393(1), against so much of its trading income in any subsequent accounting period as is derived from the related activities.
- (5) Subject to subsection (7) below, a capital allowance which is to be given to any person by discharge or repayment of tax shall not to any extent be given effect under section 258 of the Capital Allowances Act by deduction from or set off against his ring fence income.
- (6) Subject to subsection (7) below, a capital allowance which is to be given to any person by discharge or repayment of tax shall not to any extent be given effect under section 259 or 260 of the Capital Allowances Act by deduction from or set off against his ring fence profits.
- (7) Subsection (5) or (6) above shall not apply to a capital allowance which falls to be made to a company for any accounting period in respect of an asset used in the relevant accounting period by a company associated with it and so used in carrying on oil extraction activities. For the purposes of this subsection, the relevant accounting period is that in which the allowance in question first falls to be made to the company (whether or not it can to any extent be given effect in that period under section 259 of the Capital Allowances Act.
- (8) On a claim for group relief made by a claimant company in relation to a surrendering company, group relief shall not be allowed against the claimant company’s ring fence profits except to the extent that the claim relates to losses incurred by the surrendering company that arose from oil extraction activities or from oil rights.
#### Valuation of oil disposed of or appropriated in certain circumstances
##### 493
- (A1) Where the conditions in subsection (A2) below are met in the case of a disposal of oil by a person, section 2(5A) of the Oil Taxation Act 1975 (“*the 1975 Act*”) (transportation etc) is to apply in determining the amount which the person is to bring into account for the purposes of the charge to corporation tax on income in respect of the disposal as it applies (or would apply) for the purposes of petroleum revenue tax.
- (A2) The conditions are that—
- (a) the oil is oil won from an oil field in the United Kingdom,
- (b) the disposal is a disposal of the oil by the person crude in a sale at arm's length, as defined in paragraph 1 of Schedule 3 to the 1975 Act,
- (c) the circumstances are such that the price received or receivable—
- (i) falls to be taken into account under section 2(5)(a) of that Act in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to the person in any chargeable period from the oil field, or
- (ii) would fall to be so taken into account, had the oil field been a taxable field, as defined in section 185 of the Finance Act 1993,
- (d) the terms of the contract are such as are described in the opening words of section 2(5A) of the 1975 Act,
- (e) apart from subsection (A1) above, the person is not entitled to a transportation allowance in respect of the oil (see subsection (A3)) in computing his ring fence profits,
- (f) the person does not claim a transportation allowance in respect of the oil in computing for the purposes of corporation tax any profits of his that are not ring fence profits.
- (A3) In subsection (A2) above “*transportation allowance*”, in relation to any oil, means any of the following—
- (a) a deduction in respect of the expense of transporting the oil as mentioned in the opening words of section 2(5A) of the 1975 Act,
- (b) a deduction in respect of any costs of or incidental to the transportation of the oil as there mentioned,
- (c) any such reduction in the price to be regarded as received or receivable for the oil as would result from the application of section 2(5A) of the 1975 Act, if that provision applied for the purposes of corporation tax.
- (1) Where a person disposes of any oil in circumstances such that the market value of that oil . . . falls to be taken into account under section 2 of the 1975 Act, otherwise than by virtue of paragraph 6 of Schedule 3 to that Act, in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to him in any chargeable period from an oil field (or as would so fall but for section 10 of that Act), then—
- (a) for all purposes of income tax, and
- (b) for the purposes of the charge of corporation tax on income,
the disposal of the oil and its acquisition by the person to whom it was disposed of shall be treated as having been for a consideration equal to the market value of the oil as so taken into account under section 2 of that Act (or as would have been so taken into account under that section but for section 10 of that Act).
- (1A) Where an excess of nominated proceeds in a chargeable period (within the meaning given by section 61 of the Finance Act 1987) is taken into account in computing a person's profits under section 2(5)(e) of the 1975 Act (or would be taken into account if the person were chargeable to tax under that Act in respect of a field)—
- (a) for the purposes of subsection (1) the amount of the excess shall be added to the consideration which the person is deemed to have received in respect of oil disposed of by him in the period, and
- (b) for the purposes of corporation tax, that amount shall be available to the person as a deduction in computing the profits of any trade to which section 492(1) does not apply.
- (2) Where a person makes a relevant appropriation of any oil without disposing of it and does so in circumstances such that the market value of that oil . . . falls to be taken into account under section 2 of the 1975 Act in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to him in any chargeable period from an oil field (or would so fall but for section 10 of that Act), then for all the purposes of income tax and for the purposes of the charge of corporation tax on income, he shall be treated—
- (a) as having, at the time of the appropriation—
- (i) sold the oil in the course of the separate trade consisting of activities falling within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1)(a) or (b) above; and
- (ii) bought it in the course of the separate trade consisting of activities not so falling; and
- (b) as having so sold and bought it at a price equal to its market value as so taken into account under section 2 of the 1975 Act (or as would have been so taken into account under that section but for section 10 of that Act).
In this subsection “*relevant appropriation*” has the meaning given by section 12(1) of the 1975 Act.
- (3) Where—
- (a) a person disposes otherwise than in a sale at arm’s length (as defined in paragraph 1 of Schedule 3 to the 1975 Act) of oil acquired by him in the course of oil extraction activities carried on by him or by virtue of oil rights held by him, and
- (b) subsection (1) above does not apply in relation to the disposal,
then, for all purposes of income tax and for the purposes of the charge of corporation tax on income, the disposal of the oil and its acquisition by the person to whom it was disposed of shall be treated as having been for a consideration equal to the market value of the oil . . . .
- (4) If a person appropriates oil acquired by him in the course of oil extraction activities carried on by him or by virtue of oil rights held by him and the appropriation is to refining or to any use except for production purposes of an oil field, within the meaning of Part I of the 1975 Act, then, unless subsection (2) above applies, for all purposes of income tax and for the purposes of the charge of corporation tax on income—
- (a) he shall be treated as having, at the time of the appropriation, sold and bought the oil as mentioned in subsection (2)(a)(i) and (ii) above; and
- (b) that sale and purchase shall be deemed to have been at a price equal to the market value of the oil . . . .
- (5) For the purposes of subsections (3) and (4) above, paragraph 2 of Schedule 3 to the 1975 Act shall apply as it applies for the purposes of Part 1 of that Act, but with the following modifications—
- (a) sub-paragraph (4) shall be treated as omitted;
- (b) any reference in paragraphs 2 and 2A to oil being relevantly appropriated shall be construed as a reference to its being appropriated as mentioned in section 493(4) of the Taxes Act; and
- (c) any reference in paragraph 2 to the notional delivery day for the actual oil shall be construed as a reference to the day on which the oil is disposed of or appropriated as mentioned in subsection (3) or (4) above.
- (6) In subsections (3) and (4) above the references to the market value of any oil in the calendar month in which a disposal of the oil was made or, as the case may be, in which it was appropriated shall each have effect in relation to light gases (within the meaning of the 1975 Act) as a reference to the amount which, if paragraph 3A of Schedule 3 to the 1975 Act applied, would be the market value of that oil in relation to the disposal or appropriation in question.
#### Charges on income
##### 494
- (1) . . . Part 5 of CTA 2009 (loan relationships) shall have effect subject to the following provisions of this section.
- (2) Debits shall not be brought into account for the purposes of Part 5 of CTA 2009 in respect of any loan relationship of a company in any manner that results in a reduction of what would otherwise be the company’s ring fence profits except—
- (a) to the extent that the loan relationship is in respect of money borrowed by the company which has been—
- (i) used to meet expenditure incurred by the company in carrying on oil extraction activities or in acquiring oil rights otherwise than from a connected person; or
- (ii) appropriated to meeting expenditure to be so incurred by the company;
- (b) in the case of debits falling to be brought into account by virtue of section 329 of that Act in respect of a loan relationship that has not been entered into, to the extent that the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned in paragraph (a) above; and
- (c) in the case of debits in respect of a relationship to which Chapter 2 of Part 6 (relevant non-lending relationships) of that Act applies, to the extent that—
- (i) the payment of interest under that relationship is expenditure incurred as mentioned in sub-paragraph (i) of paragraph (a) above; or
- (ii) the exchange loss arising from that relationship is in respect of a money debt on which the interest payable (if any) is, or would be, such expenditure;
as the case may be;. . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- In this subsection “*debtor relationship*” and “*creditor relationship*” have the same meanings as in Part 5 of CTA 2009, and references to a loan relationship, in relation to the borrowing of money, do not include references to any relationship to which Chapter 2 of Part 6 (relevant non-lending relationships) of that Act applies.
- Section 839 shall apply for the purposes of this subsection.
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2ZA) Credits in respect of exchange gains from a company’s loan relationships shall not be brought into account for the purposes of Part 5 of CTA 2009 in respect of any loan relationship of a company in any manner that results in an increase of what would otherwise be the company’s ring fence profits, except to the extent that, if the credit had been a debit in respect of an exchange loss from the relationship, it would have been brought into account by virtue of any of paragraphs (a) to (c) of subsection (2) above.
- (2A) Where any debit or credit—
- (a) falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of any loan relationship of a company, but
- (b) in accordance with subsection (2) or (2ZA) above cannot be brought into account in a manner that results in any reduction or, as the case may be, increase of what would otherwise be the company’s ring fence profits,
then (notwithstanding anything in section 297 of that Act) that debit or credit shall be brought into account for those purposes as a non-trading debit or, as the case may be, non-trading credit.
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Regional development grants
##### 495
- (1) Subsection (2) below applies in any case where—
- (a) a person has incurred expenditure (by way of purchase, rent or otherwise) on the acquisition of an asset in a transaction to which paragraph 2 of Schedule 4 to the 1975 Act applies (transactions between connected persons and otherwise than at arm’s length), and
- (b) the expenditure incurred by the other person referred to in that paragraph in acquiring, bringing into existence or enhancing the value of the asset as mentioned in that paragraph has been or is to be met by a regional development grant and, in whole or in part, falls to be taken into account Part 2 . . . or 6 of the Capital Allowances Act (capital allowances relating to plant and machinery . . . or research and development).
- (2) Where this subsection applies, for the purposes of the charge of income tax or corporation tax on the income arising from those activities of the person referred to in paragraph (a) of subsection (1) above which are treated by virtue of section 16(1) of ITTOIA 2005 or section 492(1) above as a separate trade for those purposes, the expenditure referred to in that paragraph shall be treated as reduced by the amount of the regional development grant referred to in paragraph (b) of that subsection.
- (3) Subsections (4) to (6) below apply where—
- (a) expenditure incurred by any person in relation to an asset in any relevant period (“*the initial period*”) has been or is to be met by a regional development grant; and
- (b) notwithstanding the provisions of section 137 of the Finance Act 1982 and subsections (1) and (2) above, in determining that person’s liability to income tax or corporation tax for the initial period the whole or some part of that expenditure falls to be taken into account Part 2 . . . or 6 of the Capital Allowances Act; and
- (c) in a relevant period subsequent to the initial period either expenditure on the asset becomes allowable under section 3 or 4 of the 1975 Act or the proportion of any such expenditure which is allowable is different as compared with the initial period;
and in subsections (4) to (6) below the subsequent relevant period referred to in paragraph (c) above is referred to as “*the adjustment period*”.
- (4) Where this subsection applies—
- (a) there shall be redetermined for the purposes of subsections (5) and (6) below the amount of the expenditure referred to in subsection (3)(a) above which would have been taken into account as mentioned in subsection (3)(b) if the circumstances referred to in subsection (3)(c) had existed in the initial period; and
- (b) according to whether the amount as so redetermined is greater or less than the amount actually taken into account as mentioned in subsection (3)(b), the difference is in subsections (5) and (6) below referred to as the increase or the reduction in the allowance.
- (5) If there is an increase in the allowance, then, for the purposes of the provisions referred to in subsection (3)(b) above, an amount of capital expenditure equal to the increase shall be deemed to have been incurred by the person concerned in the adjustment period on an extension of or addition to the asset referred to in subsection (3)(a) above.
- (6) If there is a reduction in the allowance, then, for the purpose of determining the liability to income tax or corporation tax of the person concerned, he shall be treated as having received in the adjustment period, as income of the trade in connection with which the expenditure referred to in subsection (3)(a) above was incurred, a sum equal to the amount of the reduction in the allowance.
- (7) In this section—
- “*regional development grant*” means a grant falling within section 534(1) of the Capital Allowances Act; and
- “*relevant period*” means an accounting period of a company or a year of assessment.
#### Tariff receipts
##### 496
- (1) Any sum which—
- (a) constitutes a tariff receipt or tax-exempt tariffing receipt of a person who is a participator in an oil field, and
- (b) constitutes consideration in the nature of income rather than capital, and
- (c) would not, apart from this subsection, be treated for the purposes of this Chapter as a receipt of the separate trade referred to in section 16(1) of ITTOIA 2005 or section 492(1) above,
shall be so treated for those purposes.
- (2) To the extent that they would not otherwise be so treated, the activities of a participator in an oil field or a person connected with him in making available an asset in a way which gives rise to tariff receipts or tax-exempt tariffing receipts of the participator shall be treated for the purposes of this Chapter as oil extraction activities.
- (3) In determining for the purposes of subsection (1) above whether any sum constitutes a tariff receipt or tax-exempt tariffing receipt of a person who is a participator, no account shall be taken of any sum which—
- (a) is in fact received or receivable by a person connected with the participator, and
- (b) constitutes a tariff receipt or tax-exempt tariffing receipt of the participator,
but in relation to the person by whom such a sum is actually received, subsection (1) above shall have effect as if he were a participator and as if the condition in paragraph (a) of that subsection were fulfilled.
- (4) References in this section to a person connected with a participator include references to a person with whom the person is associated within the meaning of paragraph 11 of Schedule 2 to the Oil Taxation Act 1983.
#### Restriction on setting ACT against income from oil extraction activities etc
##### 497
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Limited right to carry back surrendered ACT
##### 498
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Surrender of ACT where oil extraction company etc. owned by a consortium
##### 499
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deduction of PRT in computing income for corporation tax purposes
##### 500
- (1) Where a participator in an oil field has paid any petroleum revenue tax with which he was chargeable for a chargeable period, then, in computing for corporation tax the amount of his income arising in the relevant accounting period from oil extraction activities or oil rights, there shall be deducted an amount equal to that petroleum revenue tax.
- (2) There shall be made all such adjustments of assessments to corporation tax as are required in order to give effect to subsection (1) above.
- (3) For the purposes of subsection (1) above, the relevant accounting period, in relation to any petroleum revenue tax paid by a company, is—
- (a) the accounting period of the company in or at the end of which the chargeable period for which that tax was charged ends; or
- (b) if that chargeable period ends after the accounting period of the company in or at the end of which the company—
- (i) ceases to carry on the trade giving rise to the income referred to above, or
- (ii) ceases to be within the charge to corporation tax in respect of that trade,
that accounting period.
- (4) Subject to the following provisions of this section if some or all of the petroleum revenue tax in respect of which a deduction has been made under subsection (1) above is subsequently repaid, that deduction shall be reduced or extinguished accordingly; and any additional assessment to corporation tax required in order to give effect to this subsection may be made at any time not later than six years after the end of the calendar year in which the first-mentioned tax was repaid.
- (5) If, in a case where paragraph 17 of Schedule 2 to the 1975 Act applies, an amount of petroleum revenue tax in respect of which a deduction has been made under subsection (1) above is repaid by virtue of an assessment under that Schedule or an amendment of such an assessment, then, so far as concerns so much of that repayment as constitutes the appropriate repayment,—
- (a) subsection (4) above shall not apply; and
- (b) the following provisions of this section shall apply in relation to the company which is entitled to the repayment.
- (6) In subsection (5) above and the following provisions of this section—
- (a) “*the appropriate repayment*” has the meaning assigned by sub-paragraph (2) of paragraph 17 of Schedule 2 to the 1975 Act;
- (b) in relation to the appropriate repayment, a “*carried back loss*” means an allowable loss which falls within sub-paragraph (1)(a) of that paragraph and which (alone or together with one or more other carried back losses) gives rise to the appropriate repayment;
- (c) in relation to a carried back loss, “*the operative chargeable period*” means the chargeable period in which the loss accrued; and
- (d) in relation to the company which is entitled to the appropriate repayment, “*the relevant accounting period*”means—
- (i) the accounting period in or at the end of which ends the operative chargeable period, or
- (ii) if the company ceases to carry on its ring fence trade (or to be within the charge to corporation tax in respect of that trade) before the end of the operative chargeable period, the last accounting period of that trade (or, as the case requires, the accounting period during or at the end of which the company ceased to be within the charge to corporation tax in respect of that trade).
- (7) In computing for corporation tax the amount of the company’s income arising in the relevant accounting period from oil extraction activities or oil rights there shall be added an amount equal to the appropriate repayment; but this subsection has effect subject to subsection (8) below in any case where—
- (a) two or more carried back losses give rise to the appropriate repayment; and
- (b) the operative chargeable period in relation to each of the carried back losses is not the same; and
- (c) if subsection (6)(d) above were applied separately in relation to each of the carried back losses there would be more than one relevant accounting period.
- (8) Where paragraphs (a) to (c) of subsection (7) above apply, the appropriate repayment shall be treated as apportioned between each of the relevant accounting periods referred to in paragraph (c) of that subsection in such manner as to secure that the amount added by virtue of that subsection in relation to each of those relevant accounting periods is what it would have been if—
- (a) relief for each of the carried back losses for which there is a different operative chargeable period had been given by a separate assessment or amendment of an assessment under Schedule 2 to the 1975 Act; and
- (b) relief for a carried back loss accruing in an earlier chargeable period had been so given before relief for a carried back loss accruing in a later chargeable period.
- (9) Any additional assessment to corporation tax required in order to give effect to the addition of an amount by virtue of subsection (7) above may be made at any time not later than six years after the end of the calendar year in which is made the repayment of petroleum revenue tax comprising the appropriate repayment.
- (10) In this section “*allowable loss*” and “*chargeable period*” have the same meaning as in Part I of the 1975 Act and “*calendar year*” means a period of twelve months beginning on 1st January.
#### Interest on repayment of PRT
##### 501
Where any amount of petroleum revenue tax paid by a participator in an oil field is, under any provision of Part I of the 1975 Act, repaid to him with interest, the amount of the interest paid to him shall be disregarded in computing the amount of his income for the purposes of corporation tax.
#### Interpretation of Chapter V
##### 502
- (1) In this Chapter—
- “*the 1975 Act*” means the Oil Taxation Act 1975 ;
- “*oil*” means any substance won or capable of being won under the authority of a licence granted under either Part I of the Petroleum Act 1998 or the Petroleum (Production) Act (Northern Ireland) 1964, other than methane gas won in the course of operations for making and keeping mines safe;
- “*oil extraction activities*” means any activities of a person—in searching for oil in the United Kingdom or a designated area or causing such searching to be carried out for him; orin extracting or causing to be extracted for him oil at any place in the United Kingdom or a designated area under rights authorising the extraction and held by him or, if the person in question is a company, by the company or a company associated with it; orin transporting or causing to be transported for him . . . oil extracted at any such place not on dry land under rights authorising the extraction and so held where the transportation is—to the place where the oil is first landed in the United Kingdom, orto the place in the United Kingdom or, in the case of oil first landed in another country, the place in that or any other country (other than the United Kingdom) at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one such place, the one nearest to the place of extraction; orin effecting or causing to be effected for him the initial treatment or initial storage of oil won from any oil field under rights authorising its extraction and so held;
- “*oil field*” has the same meaning as in Part I of the 1975 Act;
- “*oil rights*” means rights to oil to be extracted at any place in the United Kingdom or a designated area, or to interests in or to the benefit of such oil;
- “*participator*” has the same meaning as in Part I of the 1975 Act; and
- “*ring fence income*” means income arising from oil extraction activities or oil rights; and
- “*ring fence profits*” has the meaning given by subsection (1A) below or, in any case where that subsection does not apply, means ring fence income; and
- “*ring fence trade*” means activities which—fall within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1) above; andconstitute a separate trade (whether by virtue of section 16(1) of ITTOIA 2005 or section 492(1) above or otherwise).
- (1A) Where in accordance with section 197(3) of the 1992 Act a person has an aggregate gain for any chargeable period, that gain and his ring fence income (if any) for that period together constitute his ring fence profits for the purposes of this Chapter.
- (2) For the purposes of subsection (1) above—
- (a) “*designated area*” means an area designated by Order in Council under section 1(7) of the Continental Shelf Act 1964;
- (b) “*initial treatment*” has the same meaning as in Part I of the 1975 Act; and
- (c) the definition of “*initial storage*” in section 12(1) of the 1975 Act shall apply but, in its application for those purposes in relation to the person mentioned in subsection (1)(d) above and to oil won from any one oil field shall have effect as if the reference to the maximum daily production rate of oil for the field as there mentioned were a reference to that person’s share of that maximum daily production rate, that is to say, a share thereof proportionate to his share of the oil won from that field.
- (3) For the purposes of this Chapter two companies are associated with one another if—
- (a) one is a 51 per cent. subsidiary of the other;
- (b) each is a 51 per cent. subsidiary of a third company; or
- (c) one is owned by a consortium of which the other is a member.
- (3A) Section 413(6) applies for the purposes of subsection (3)(c) above . . . .
- (4) Without prejudice to subsection (3) above, for the purposes of this Chapter, two companies are also associated with one another if one has control of the other or both are under the control of the same person or persons; and in this subsection “control” shall be construed in accordance with section 416.
### CHAPTER VI — MISCELLANEOUS BUSINESSES AND BODIES
#### Letting of furnished holiday accommodation treated as a trade
##### 503
- (1) For the purposes of Chapter 2 of Part 10 (loss relief for corporation tax)—
- (a) a UK property business which consists in, or so far as it consists in, the commercial letting of furnished holiday accommodation . . . shall be treated as if it were a trade carried on wholly or partly in the United Kingdom the profits of which are chargeable to corporation tax under Part 3 of CTA 2009, and
- (b) all such lettings made by a particular company or partnership shall be treated as one trade.
The “*commercial letting of furnished holiday accommodation*” is defined below in section 504.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where there is a letting of accommodation only part of which is holiday accommodation, such apportionments shall be made for the purposes of this section as are just and reasonable.
- (5) Relief shall not be given for the same loss, or the same portion of a loss, both under a provision of Chapter 2 of Part 10 as applied by this section and under any other provision of the Corporation Tax Acts.
#### Supplementary provisions
##### 504
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charities: general
##### 505
- (1) Subject to subsections (2) and (3) below, the following exemptions shall be granted on a claim in that behalf to the Board—
- (a) exemption from tax under Parts 3 and 4 of CTA 2009. . . in respect of any profits or gains arising in respect of rents or other receipts from an estate, interest or right in or over any land (whether situated in the United Kingdom or elsewhere) to the extent that the profits or gains—
- (i) arise in respect of rents or receipts from an estate, interest or right vested in any person for charitable purposes; and
- (ii) are applied to charitable purposes only;
- (aa) exemption from tax under Parts 3 and 4 of CTA 2009, or under Parts 2 and 3 of ITTOIA 2005, in respect of distributions to which section 121 of the Finance Act 2006 (Real Estate Investment Trusts: distributions) applies to the extent that the distributions—
- (i) arise in respect of shares vested in a person for charitable purposes; and
- (ii) are applied to charitable purposes only;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) exemption—
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) from tax under section 299 of CTA 2009 (non-trading profits in respect of loan relationships),
- (iizza) from tax under Part 9A of CTA 2009 (company distributions),
- (iiza) from tax under Chapter 5 of Part 10 of that Act (distributions from unauthorised unit trusts),
- (iizb) from tax under Chapter 7 of that Part (annual payments not otherwise charged),
- (iia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (iiaa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (iib) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (iic) from tax under Part 8 of CTA 2009 in respect of non-trading gains on intangible fixed assets,
- (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
where the income in question forms part of the income of a charitable company, or is, according to rules or regulations established by Act of Parliament, charter, decree, deed of trust or will, applicable to charitable purposes only, and so far as it is applied to charitable purposes only;
- (d) exemption from tax . . . . . . in respect of public revenue dividends on securities which are in the name of trustees, to the extent that the dividends are applicable and applied only for the repair of—
- (i) any cathedral, college, church or chapel, or
- (ii) any building used only for the purposes of divine worship;
- (e) exemption from tax under Part 3 of CTA 2009. . . in respect of the profits of any trade carried on by a charitable company(whether in the United Kingdom or elsewhere), if the profits are applied solely to the purposes of the charitable company and either—
- (i) the trade is exercised in the course of the actual carrying out of a primary purpose of the charitable company; or
- (ii) the work in connection with the trade is mainly carried out by beneficiaries of the charitable company;
- (f) exemption from tax under Schedule D . . . in respect of profits accruing to a charitable company from a lottery if the profits are applied solely to the charitable company's purposes and—
- (i) the lottery is an exempt lottery within the meaning of the Gambling Act 2005 by virtue of Part 1 or 4 of Schedule 11 to that Act;
- (ii) the lottery is promoted in accordance with a lottery operating licence within the meaning of Part 5 of that Act; or
- (iii) the lottery is promoted and conducted in accordance with Article 133 or 135 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985.
- (1AA) In subsection (1)(c)(iib)“*relevant foreign distribution*” means any distribution of a company not resident in the United Kingdom which is not chargeable under Chapter 2 of Part 10 of CTA 2009.
- (1A) In subsection (1)(d) above “*public revenue dividends*” means—
- (a) income from securities which is payable out of the public revenue of the United Kingdom or Northern Ireland;
- (b) income from securities issued by or on behalf of a government or a public or local authority in a country outside the United Kingdom.
- (1B) For the purpose of subsection (1)(e)—
- (a) where a trade is exercised partly in the course of the actual carrying out of a primary purpose of the charitable company and partly otherwise, each part shall be treated as a separate trade (for which purpose reasonable apportionment of expenses and receipts shall be made), and
- (b) where the work in connection with the trade is carried out partly but not mainly by beneficiaries, the part in connection with which work is carried on by beneficiaries and the other part shall be treated as separate trades (for which purpose reasonable apportionment of expenses and receipts shall be made).
- (2) Any payment which—
- (a) is received by a charitable company from another charity; and
- (b) is not made for full consideration in money or money’s worth; and
- (c) is not chargeable to corporation tax apart from this subsection; and
- (d) is not, apart from this subsection, of a description which (on a claim) would be eligible for relief from tax by virtue of any provision of subsection (1) above;
shall be . . . chargeable to corporation tax under the charge to corporation tax on income but shall be eligible for relief from tax under subsection (1)(c) above as if it were an annual payment.
- (3) In subsections (4) to (7)—
- (a) “*charitable expenditure*” has the meaning given by section 506,
- (b) “*relief*” means relief or exemption under—
- (i) subsection (1) above,
- (ii) section 56(3)(c) above,
- (iii) regulation 31 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001),
- (iv) section 256 of the 1992 Act (charities), or
- (v) section 46 of the Finance Act 2000 (small trades),
- (c) “*relievable income and gains*” means income and gains which would be eligible for relief or exemption under any of those provisions (disregarding subsections (4) to (6)), and
- (d) “*total income and gains*” means the aggregate of—
- (i) relievable income and gains,
- (ii) income and gains, other than relievable income and gains, chargeable to tax, and
- (iii) donations, legacies and other similar receipts that are not chargeable to tax.
- (4) If a charitable company incurs (or is treated as incurring) non-charitable expenditure in an accounting period, relief shall be disallowed in respect of such amount of relievable income and gains as equals the amount of the non-charitable expenditure.
- (5) If in an accounting period a charitable company's non-charitable expenditure exceeds its total income and gains the excess shall be treated as non-charitable expenditure of the previous period for the purposes of subsection (4); and any necessary adjustments shall be made, whether by making assessments or otherwise.
- (6) Subsection (5) may apply to an accounting period wholly or partly as a result of the application of that subsection in respect of a later period; but no excess of non-charitable expenditure shall be treated as non-charitable expenditure of an accounting period which ended more than six years before the end of the period in which the expenditure was actually incurred.
- (7) Where an amount of a charitable company's relievable income and gains is disallowed for relief by subsection (4) (whether or not as a result of the application of subsection (5))—
- (a) the charitable company may by notice to the Board specify which items of income or gains are to be disallowed, but
- (b) if the Board requires the charitable company to give a notice under paragraph (a) and the charitable company fails to comply within the period of 30 days beginning with the date on which the requirement is imposed, the Board shall determine which items to disallow.
#### Qualifying expenditure and non-qualifying expenditure
##### 506
- (1) In this section, section 505 and Schedule 20—
- “*charity*” means any body of persons or trust established for charitable purposes only;
- “*charitable company*” means any body of persons established for charitable purposes only;
- “*charitable expenditure*” means (subject to subsections (3) to (5) below) expenditure which is exclusively for charitable purposes.
- (2) For the purposes of section 505 . . . , where expenditure which is not actually incurred in a particular accounting period properly falls to be charged against the income of that accounting period as being referable to commitments (whether or not of a contractual nature) which the charitable company has entered into before or during that period, it shall be treated as incurred in that period.
- (3) A payment made (or to be made) to a body situated outside the United Kingdom shall not be charitable expenditure by virtue of this section unless the charitable company concerned has taken such steps as may be reasonable in the circumstances to ensure that the payment will be applied for charitable purposes.
- (4) If in any accounting period a charitable company—
- (a) invests any of its funds in an investment which is not a qualifying investment, as defined in Part I of Schedule 20; or
- (b) makes a loan (not being an investment) which is not a qualifying loan, as defined in Part II of that Schedule;
then, subject to subsection (5) below, the amount so invested or lent in that period shall be treated for the purposes of this section as being an amount of expenditure incurred by the charitable company, and, accordingly, as being non-charitable expenditure.
- (5) If, in any accounting period, a charitable company which has in that period made an investment or loan falling within subsection (4) above—
- (a) realises the whole or part of that investment; or
- (b) is repaid the whole or part of that loan;
any further investment or lending in that period of the sum realised or repaid shall, to the extent that it does not exceed the sum originally invested or lent, be left out of account in determining the amount which, by virtue of subsection (4) above, is treated as non-charitable expenditure incurred in that period.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The National Heritage Memorial Fund, the Historic Buildings and Monuments Commission for England and the British Museum
##### 507
- (1) There shall on a claim in that behalf to the Board be allowed in the case of—
- (a) the Trustees of the National Heritage Memorial Fund;
- (b) the Historic Buildings and Monuments Commission for England;
- (c) the Trustees of the British Museum;
- (d) the Trustees of the Natural History Museum;
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) the National Endowment for Science, Technology and the Arts;
such exemption from tax as falls to be allowed under section 505 in the case of a charitable company the whole income of which is applied to charitable purposes.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scientific research organisations
##### 508
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reserves of marketing boards and certain other statutory bodies
##### 509
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Agricultural societies
##### 510
- (1) Profits or gains arising to an agricultural society from any exhibition or show held for the purposes of the society shall be exempt from tax if applied solely to the purposes of the society.
- (2) In this section “*agricultural society*” means any society or institution established for the purpose of promoting the interests of agriculture, horticulture, livestock breeding or forestry.
#### The Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council
##### 511
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) The Corporation Tax Acts shall apply in relation to the trade of the Gas Council as if before the beginning of April 1962 it had consisted of the trades of the Area Boards (within the meaning of the Gas Act 1948), and (without prejudice to the generality of the foregoing) allowances and balancing charges shall be made to or on the Gas Council accordingly by reference to the capital expenditure of Area Boards and to the allowances made to Area Boards in respect of that expenditure.
#### Atomic Energy Authority and National Radiological Protection Board
##### 512
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### British Airways Board and National Freight Corporation
##### 513
- (1) Subject to subsection (2) below, the successor company in which the property, rights, liabilities and obligations of the British Airways Board are vested by the Civil Aviation Act 1980 shall be treated for all purposes of corporation tax as if it were the same person as the British Airways Board; and the successor company to which the undertaking of the National Freight Corporation is transferred by the Transport Act 1980 shall be treated for those purposes as if it were the same person as the National Freight Corporation.
- (2) The transfer by the Civil Aviation Act 1980 from the British Airways Board to the successor company of liability for any loan made to the Board shall not affect any direction in respect of the loan which has been given by the Treasury under section 581.
- (3) A successor company shall not by virtue of subsection (1) above be regarded as a body falling within section 170(12) of the 1992 Act.
#### Funds for reducing the National Debt
##### 514
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Signatories to Operating Agreement for INMARSAT
##### 515
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Government securities held by non-resident central banks
##### 516
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Issue departments of the Reserve Bank of India and the State Bank of Pakistan
##### 517
There shall be exempt from corporation tax any profits or income arising or accruing to the issue department of the Reserve Bank of India constituted under an Act of the Indian legislature called the Reserve Bank of India Act 1934, or to the issue department of the State Bank of Pakistan constituted under certain orders made under section 9 of the Indian Independence Act 1947.
#### Harbour reorganisation schemes
##### 518
- (1) This section has effect where the trade of any body corporate other than a limited liability company is transferred to a harbour authority by or under a certified harbour reorganisation scheme which provides also for the dissolution of the transferor.
- (2) For the purposes of provisions of the Corporation Tax Acts that apply—
- (a) only if a person starts to carry on a trade, or
- (b) only if a person ceases to carry on a trade,
the transferor is not treated as ceasing to carry on the trade, and the transferee is not treated as starting to carry it on.
- (3) The transferee shall be entitled to relief from corporation tax under section 393(1), as for a loss sustained by it in carrying on the transferred trade or any trade of which it comes to form part, for any amount which, if the transferor had continued to carry it on, would have been available to the transferor for carry-forward against chargeable profits of succeeding accounting periods, but subject to any claim made by the transferor under section 393A(1).
- (4) There shall be made to or on the transferee in accordance with the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act) all such allowances and charges as would, if the transferor had continued to carry on the trade, have fallen to be made to or on it under those Acts and the amount of any such allowance or charge shall be computed as if the transferee had been carrying on the trade since the transferor had begun to do so and as if everything done to or by the transferor had been done to or by the transferee.
- (5) No sale or transfer which on the transfer of the trade is made by the transferor to the transferee of any assets in use for the purposes of the trade shall be treated as giving rise to any such allowance or charge as is mentioned in subsection (4) above.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) The transferee shall be entitled to relief from corporation tax in respect of chargeable gains for any amount for which the transferor would have been entitled to claim relief in respect of allowable losses if it had continued to carry on the trade.
- (8) Where part only of such trade is transferred to a harbour authority by or under a certified harbour organisation scheme, and the transferor continues to carry on the remainder of the trade, or any such trade is, by or under a certified harbour reorganisation scheme which provides also for the dissolution of the transferor, transferred in parts to two or more harbour authorities, this section shall apply as if the transferred part, or each of the transferred parts, had at all times been a separate trade.
- (9) Where a part of any trade is to be treated by virtue of subsection (8) above as having been a separate trade over any period there shall be made any necessary adjustments of accounting periods, and such apportionments as may be just of receipts, expenses, allowances or charges.
- (10) In this section—
- “*harbour authority*” has the same meaning as in the Harbours Act 1964;
- “*harbour reorganisation scheme*” means any statutory provision providing for the management by a harbour authority of any harbour or group of harbours in the United Kingdom, and “*certified*”, in relation to any harbour reorganisation scheme, means certified by a Minister of the Crown or government department as so providing with a view to securing, in the public interest, the efficient and economical development of the harbour or harbours in question;
- “*limited liability company*” means a company having a limit on the liability of its members;
- “*statutory provision*” means any enactment, or any scheme, order or other instrument having effect under an enactment, and includes an enactment confirming a provisional order; and
- “*transferor*”, in relation to a trade, means the body from whom the trade is transferred, whether or not the transfer is effected by that body.
#### Local authorities
##### 519
- (1) A local authority in the United Kingdom shall be exempt from corporation tax.
- (2) Subsection (1) above shall apply to a local authority association as it applies to a local authority.
- (3) In this Act “*local authority association*” means any incorporated or unincorporated association—
- (a) of which all the constituent members are local authorities, groups of local authorities or local authority associations, and
- (b) which has for its object or primary object the protection and furtherance of the interests in general of local authorities or any description of local authorities;
and for this purpose, if a member of an association is a representative of or appointed by any authority, group of authorities or association, that authority, group or association (and not he) shall be treated as a constituent member of the association.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XIII — MISCELLANEOUS SPECIAL PROVISIONS
### CHAPTER I — INTELLECTUAL PROPERTY
### Patents and know-how
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure
##### 520
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 520
##### 521
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances for expenditure on purchase of patent rights: pre-1st April 1986 expenditure
##### 522
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lapses of patent rights, sales etc
##### 523
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of receipts from sale of patent rights
##### 524
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital sums: death, winding up or partnership change
##### 525
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for expenses
##### 526
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Spreading of royalties over several years
##### 527
- (1) Where—
- (a) a royalty or other sum is paid to a company in respect of the user of a patent,
- (b) the user extended over a period of six complete years or more, and
- (c) the payment is one from which a sum representing income tax must be deducted under section 903 of ITA 2007,
the company may on the making of a claim require that the corporation tax payable by it by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of corporation tax which would have been payable by it if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.
- (2) Subsection (1) above shall apply in relation to a royalty or other sum where the period of the user is two complete years or more but less than six complete years as it applies to the royalties and sums mentioned in that subsection, but with the substitution for the reference to six equal instalments of a reference to so many equal instalments as there are complete years comprised in that period.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manner of making allowances and charges
##### 528
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Patent income to be earned income in certain cases
##### 529
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disposal of know-how
##### 530
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 530
##### 531
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of the 1968 Act
##### 532
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 520 to 532
##### 533
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Copyright and public lending right
#### Relief for copyright payments etc
##### 534
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief where copyright sold after ten years or more
##### 535
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of royalties where owner abroad
##### 536
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Public lending right
##### 537
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Artists’ receipts
#### Relief for painters, sculptors and other artists
##### 538
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — LIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES
#### Introductory
##### 539
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies: chargeable events
##### 540
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies: computation of gain
##### 541
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life annuity contracts: chargeable events
##### 542
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life annuity contracts: computation of gain
##### 543
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Second and subsequent assignment of life policies and contracts
##### 544
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital redemption policies
##### 545
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Calculation of certain amounts for purposes of sections 540, 542 and 545
##### 546
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Method of charging gain to tax
##### 547
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deemed surrender of certain loans
##### 548
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certain deficiencies allowable as deductions
##### 549
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief where gain charged at a higher rate
##### 550
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Right of individual to recover tax from trustees
##### 551
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information: duty of insurers
##### 552
- (1) Where a chargeable event . . . has happened in relation to any policy or contract, the body by or with whom the policy or contract was issued, entered into or effected shall—
- (a) unless satisfied that no gain is to be treated as arising by reason of the event, deliver to the appropriate policy holder before the end of the relevant three month period a certificate specifying the information described in subsection (5) below; and
- (b) if the condition in paragraph (a) or (b) of subsection (2) below is satisfied, deliver to the inspector before the end of the relevant three month period a certificate specifying the information described in subsection (5) below together with the name and address of the appropriate policy holder.
- (2) For the purposes of this section—
- (a) the condition in this paragraph is that the event is an assignment for money or money’s worth of the whole of the rights conferred by the policy or contract; or
- (b) the condition in this paragraph is that the amount of the gain, or the aggregate amount of the gain and any gains connected with it, exceeds one half of the basic rate limit for the relevant year of assessment.
- (3) If, in the case of every certificate which a body delivers under subsection (1)(a) above which relates to a gain attributable to a year of assessment . . . , the body also delivers to the inspector—
- (a) before the end of the relevant three month period for the purposes of subsection (1)(b) above,
- (b) by a means prescribed by the Board for the purposes of this subsection under section 552ZA(5), and
- (c) in a form so prescribed in the case of that means,
a certificate specifying the same information as the certificate under subsection (1)(a) together with the name and address of the appropriate policy holder, the body shall be taken to have complied with the requirements of subsection (1)(b) above in relation to that year of assessment . . . so far as relating to the chargeable events to which the certificates relate.
- (4) Where a certificate is not required to be delivered under subsection (1)(b) above in the case of any chargeable event—
- (a) the inspector may by notice require the body to deliver to him a copy of any certificate that the body was required to deliver under subsection (1)(a) above which relates to the chargeable event; and
- (b) it shall be the duty of the body to deliver such a copy within 30 days of receipt of the notice.
- (5) The information to be given to the appropriate policy holder pursuant to subsection (1)(a) above or the inspector pursuant to subsection (1)(b) above is—
- (a) any unique identifying designation given to the policy or contract;
- (b) the nature of the chargeable event and—
- (i) the date on which it happened; and
- (ii) if it is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 (chargeable events where transaction-related calculations show gains), the date on which the insurance year ends;
- (c) if the event is the assignment of all the rights conferred by the policy or contract, such of the following as may be required for computing the amount of the gain to be treated as arising by virtue of . . . Chapter 9 of Part 4 of ITTOIA 2005—
- (i) . . . the amount or value of any capital sums of a kind referred to in section 492(1)(b) to (e) of ITTOIA 2005;
- (ii) the amounts previously paid under the policy or contract by way of premiums or otherwise by way of consideration for an annuity;
- (iii) . . . the amount of so much of any payment previously made on account of an annuity as is exempt under section 717 of ITTOIA 2005;
- (iv) the value of any previously assigned parts of or shares in the rights conferred by the policy or contract;
- (v) . . . the total of the amounts of gains treated as arising on previous chargeable events within section 509(1) or 514(1) of ITTOIA 2005;
- (d) except where paragraph (c) above applies, the amount of the gain treated as arising by reason of the event;
- (e) the number of years relevant for computing the annual equivalent of the amount of the gain for the purposes of subsection (1) of section 536 of ITTOIA 2005 (top slicing relieved liability: one chargeable event), apart from subsections (6) and (8) of that section;
- (f) on the assumption that section 465 of ITTOIA 2005 (person liable: individuals) has effect in relation to the gain —
- (i) whether an individual would fall to be treated as having paid income tax at the basic rate on the amount of the gain in accordance with section 530 of that Act; and
- (ii) if so, except in a case where paragraph (c) above applies, the amount of such tax that would fall to be so treated as paid.
- (6) For the purposes of subsection (1)(a) above, the relevant three month period is whichever of the following periods ends the latest—
- (a) the period of three months following the happening of the chargeable event;
- (b) if the event is a surrender or assignment which is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 . . . , the period of three months following the end of the insurance year in which the event happens;
- (c) if the event is a death or an assignment of the whole of the rights or a surrender or assignment which is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 . . . , the period of three months beginning with receipt of written notification of the event.
- (7) For the purposes of subsection (1)(b) above, the relevant three month period is whichever of the following periods ends the latest—
- (a) the period of three months following the end of the year of assessment . . . in which the event happened;
- (b) if the event is a surrender or assignment which is a chargeable event by virtue of section 514(1) of ITTOIA 2005, the period of three months following the end of the insurance year in which the event happens;
- (c) if the event is a death or an assignment, the period of three months beginning with receipt of written notification of the event;
- (d) if a certificate under subsection (1)(b) above would not be required in respect of the event apart from the happening of another event, and that other event is one of those mentioned in paragraph (c) above, the period of three months beginning with receipt of written notification of that other event.
- (8) For the purposes of this section the cases where a gain is connected with another gain are those cases where—
- (a) both gains arise in connection with policies or contracts containing obligations which, immediately before the chargeable event, were obligations of the same body;
- (b) the policy holder of those policies or contracts is the same;
- (c) both gains are attributable to the same year of assessment . . . ;
- (d) the terms of the policies or contracts are the same, apart from any difference in their maturity dates; and
- (e) the policies or contracts were issued in respect of insurances made, or were entered into or effected, on the same date.
- (9) For the purposes of this section, the year of assessment . . . to which a gain is attributable is—
- (a) in the case of a gain treated as arising by virtue of subsection (1) of section 514 of ITTOIA 2005, the year of assessment which includes the end of the insurance year mentioned in subsection (3) and (4) of that section; or
- (b) in any other case, the year of assessment . . . in which happens the chargeable event by reason of which the gain is treated as arising.
- (10) In this section—
- “*amount*”, in relation to any gain, means the amount of the gain apart from . . . section 528 of ITTOIA 2005;
- “*appropriate policy holder*” means—in relation to an assignment of part of or a share in the rights conferred by a policy or contract, any person who is both—the policy holder, or one of the policy holders, immediately before the assignment; andthe assignor or one of the assignors; andin relation to any other chargeable event, the person who is the policy holder immediately before the happening of the event;
- “*chargeable event*” means an event which is a chargeable event within the meaning of . . . Chapter 9 of Part 4 of ITTOIA 2005;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*insurance year*” has the same meaning as in Chapter 9 of Part 4 of ITTOIA 2005 (see section 499 of that Act);
- “*the relevant year of assessment*”, in the case of any gain, means—the year of assessment to which the gain is attributable, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) This section is supplemented by section 552ZA.
- (13) For the purposes of this section, no account is to be taken of the effect of . . . section 541A of ITTOIA 2005.
#### Non-resident policies and off-shore capital redemption policies
##### 553
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Borrowings on life policies to be treated as income in certain cases
##### 554
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — ENTERTAINERS AND SPORTSMEN
#### Payment of tax
##### 555
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Activity treated as trade etc. and attribution of income
##### 556
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge on profits or gains
##### 557
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions
##### 558
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY
#### Deductions on account of tax etc. from payments to certain sub-contractors
##### 559
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons who are sub-contractors or contractors for purposes of Chapter IV
##### 560
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from section 559
##### 561
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by individuals
##### 562
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by partners who are individuals
##### 563
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by firms
##### 564
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by companies
##### 565
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### General powers to make regulations under Chapter IV
##### 566
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “construction operations”
##### 567
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — SCHEMES FOR RATIONALIZING INDUSTRY
#### Deductions from profits of contributions paid under certified schemes
##### 568
- (1) Notwithstanding anything contained in . . . section 33 of ITTOIA 2005or section 53 of CTA 2009 (no deduction for capital expenditure) but subject to the following provisions of this Chapter, where a person pays, wholly and exclusively for the purposes of a trade in respect of which he is chargeable under Part 2 of ITTOIA 2005 or Part 3 of CTA 2009, a contribution in furtherance of a scheme which is for the time being certified by the Secretary of State under this section, the contribution shall, in so far as it is paid in furtherance of the primary object of the scheme, be allowed to be deducted as an expense in computing the profits of that trade.
- (2) The Secretary of State shall certify a scheme under this section if he is satisfied—
- (a) that the primary object of the scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom; and
- (b) that the scheme is in the national interest and in the interests of that industry as a whole; and
- (c) that such number of persons engaged in that industry as are substantially representative of the industry are liable to pay contributions in furtherance of the primary object of the scheme by agreement between them and the body of persons carrying out the scheme.
- (3) The Secretary of State shall cancel any certificate granted under this section if he ceases to be satisfied as to any of the matters referred to in subsection (2) above.
- (4) The Secretary of State may at any time require the body of persons carrying out a scheme certified under this section to produce any books or documents of whatever nature relating to the scheme and, if the requirement is not complied with, he may cancel the certificate.
- (5) In this section and in section 569 “*contribution*”, in relation to a scheme, does not include a sum paid by a person by way of loan or subscription of share capital, or in consideration of the transfer of assets to him, or by way of a penalty for contravening or failing to comply with the scheme.
#### Repayment of contributions
##### 569
- (1) In the event of the repayment, whether directly or by way of distribution of assets on a winding up or otherwise, of a contribution or any part of a contribution which has been allowed to be deducted under section 568, the deduction of the contribution, or so much of it as has been repaid, shall be deemed to be an unauthorised deduction in respect of which an assessment shall be made, and, notwithstanding the provisions of the Tax Acts requiring assessments to be made within six years after the end of the chargeable period to which they relate, any such assessment and any consequential assessment may be made at any time within three years after the end of the chargeable period in which the repayment was made.
- (2) For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.
#### Payments under certified schemes which are not repayments of contributions
##### 570
- (1) Subject to the provisions of this section, where, under any scheme which is for the time being certified or has at any time been certified by the Secretary of State under section 568, any payment (not being a payment made by way of repayment of contributions) is made to a person carrying on a trade to which the scheme relates, that payment shall be treated for the purposes of the Tax Acts as a trading receipt of the trade, and shall accordingly be taken into account in computing the profits of the trade for those purposes.
- (2) Where . . . the payments which have been made under such a scheme in respect of a trade (not being payments made by way of repayment of contributions) have been made wholly or partly in respect of damage in respect of which no relief may be given under the Tax Acts, and a claim is made to that effect, then, subject to and in accordance with the provisions of Schedule 21—
- (a) relief shall be given in respect of those payments by reducing the amounts which are to be treated as trading receipts of the trade under subsection (1) above; but
- (b) where such relief is given, section 568 shall, in relation to contributions subsequently paid under the scheme in respect of the trade, have effect subject to the modifications specified in Part III of that Schedule,
and paragraph 6 of that Schedule applies for the purposes of this subsection as it applies for the purposes of that Schedule.
- (3) The provisions of this section and Schedule 21 shall apply in relation to any payment made to a person who has ceased to carry on a trade to which any such scheme as is mentioned in subsection (1) above relates as they apply in relation to payments made to a person carrying on such a trade, subject to the modification that so much of that payment as falls to be treated as a trading receipt by virtue of those provisions shall be deemed for the purposes of those provisions to have been made to him on the last day on which he was engaged in carrying on the trade.
- (4) In determining for the purposes of this section and of Schedule 21—
- (a) whether any trade has ceased to be carried on; or
- (b) whether any contribution is paid in respect of a trade in respect of which a payment has been made; or
- (c) whether any payment is made in respect of a trade in respect of which a contribution has been paid,
no regard shall be had to any event which, by virtue of section 18 of ITTOIA 2005 or section 41 of CTA 2009 (company starting or ceasing to be within charge to corporation tax) is to be treated as effecting a cessation of trading.
#### Cancellation of certificates
##### 571
- (1) Where any certificate granted with respect to a scheme under section 568 is cancelled by the Secretary of State, and any deductible contributions paid in furtherance of the scheme have not been repaid at the expiration of one year from the cancellation, the body of persons carrying out the scheme shall, for the chargeable period in which that year expires, be charged to tax . . . upon the aggregate amount of the deductible contributions which have not been repaid at that time.
- (1A) An amount charged to income tax under subsection (1) above is treated for income tax purposes as an amount of income.
- (1B) So far as relating to corporation tax, the charge to tax under subsection (1) has effect as an application of the charge to corporation tax on income.
- (2) The charge to tax under subsection (1) above shall not be made if the total amount of any contributions, other than deductible contributions, which have been paid under the scheme and have not been repaid before that time is greater than the available resources of the scheme, and shall not in any case be made upon an amount greater than the excess, if any, of those resources over that total amount.
- (3) In subsection (2) above “*the available resources*”, in relation to any scheme, means a sum representing the total funds held for the purposes of the scheme at the expiration of one year from the cancellation of the certificate plus a sum representing any funds held for the purposes of the scheme which, during that year, have been applied otherwise than in accordance with the provisions of the scheme as in force when the certificate was granted.
- (4) Where the body of persons carrying out a scheme are charged to tax by virtue of subsection (1) above, and, after the expiration of one year from the cancellation of the certificate, any deductible contribution paid in furtherance of the scheme is repaid, the amount upon which the charge is made shall on the making of a claim be reduced by the amount repaid, and all such repayments of tax shall be made as are necessary to give effect to the provisions of this subsection.
- (5) In this section “*contribution*” includes a part of a contribution, and “*deductible contribution*” means a contribution allowed to be deducted under section 568, any reduction under Part III of Schedule 21 being left out of account.
- (6) For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.
#### Application to statutory redundancy schemes
##### 572
- (1) Sections 569 to 571 and Schedule 21 shall, subject to the adaptations specified in subsection (2) below, apply in relation to a statutory redundancy scheme as they apply in relation to a scheme certified under section 568.
- (2) The adaptations referred to above are as follows, that is to say—
- (a) for any reference to a contribution allowed to be deducted under section 568 there shall be substituted a reference to a contribution allowed to be deducted under any provision of the Tax Acts other than that section;
- (b) any provision that section 568 shall, in relation to contributions, have effect subject to modifications, shall be construed as a provision that so much of any provision of the Tax Acts other than that section as authorises the deduction of contributions shall, in relation to the contributions in question, have effect subject to the modifications in question;
- (c) for any reference to the cancellation of a certificate with respect to a scheme there shall be substituted a reference to the scheme ceasing to have effect; and
- (d) for any reference to the provisions of the scheme as in force when the certificate was granted there shall be substituted a reference to the provisions of the scheme as in force when the contributions were first paid thereunder.
- (3) In this section “*statutory redundancy scheme*” means a scheme for the elimination or reduction of redundant works, machinery or plant, or for other similar purposes, to which effect is given by or under any Act, whether passed before or after this Act.
### CHAPTER VI — OTHER PROVISIONS
### Relief for losses on unquoted shares in trading companies
#### Relief for companies
##### 573
- (1) Subsection (2) below has effect where a company which has subscribed for shares in a qualifying trading company incurs an allowable loss (for the purpose of corporation tax on chargeable gains) on the disposal of the shares in any accounting period and the company disposing of the shares—
- (a) is an investment company on the date of the disposal and either—
- (i) has been an investment company for a continuous period of six years ending on that date; or
- (ii) has been an investment company for a shorter continuous period ending on that date and has not before the beginning of that period been a trading company or an excluded company; and
- (b) was not associated with, or a member of the same group as, the qualifying trading company at any time in the period beginning with the date when it subscribed for the shares and ending with the date of the disposal.
- (2) The company disposing of the shares may, within two years after the end of the accounting period in which the loss was incurred, make a claim requiring that the loss be set off for the purposes of corporation tax against income—
- (a) of that accounting period; and
- (b) if the company was then an investment company and the claim so requires, of preceding accounting periods ending within the time specified in subsection (3) below;
and, subject to any relief for an earlier loss, the income of any of those periods shall then be treated as reduced by the amount of the loss or by so much of it as cannot be relieved under this subsection against income of a later accounting period.
- (3) The time referred to in subsection (2) above is the period of 12 months ending immediately before the accounting period in which the loss is incurred; but the amount of the reduction which may be made under that subsection in the income of an accounting period falling partly before that time shall not exceed a part of that income proportionate to the part of the accounting period falling within that time.
- (4) Where relief is claimed under subsection (2) above, it must be claimed before any deduction is made for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of any description; . . . .
This subsection is subject to subsection (4A) below.
- (4A) Paragraph 70 of Schedule 15 to the Finance Act 2000 (priority of loss relief) provides that where relief under Part VII of that Schedule (relief for losses on disposals of shares to which investment relief is attributable) is claimed it must be claimed in priority to relief under subsection (2) above.
- (5) For the purposes of subsection (1)(b) above companies are associated with each other if one controls the other or both are under the control of the same person or persons; and section 416(2) to (6) shall apply for the purposes of this subsection.
- (6) For the purposes of this section a company subscribes for shares in another company if they are issued to it by that other company in consideration of money or money’s worth.
#### Relief for individuals
##### 574
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exclusion of relief under section 573 or 574 in certain cases
##### 575
- (1) Section 573 does not apply unless the disposal is—
- (a) by way of a bargain made at arm’s length for full consideration; or
- (b) by way of a distribution in the course of dissolving or winding up the company; or
- (ba) a disposal within section 24(1) of the 1992 Act (entire loss, destruction, dissipation or extinction of asset); or
- (c) a deemed disposal under section 24(2) of the 1992 Act (claim that value of asset has become negligible).
- (2) Where a company disposes of shares (“*the new shares*”) which by virtue of section 127 of the 1992 Act (reorganisation etc. treated as not involving disposal) are identified with other shares (“*the old shares*”) previously held by it, relief shall not be given under section 573 . . . on the disposal of the new shares unless—
- (a) relief under section 573 . . . could (or if this section had been in force could) have been given on a disposal of the old shares if it had incurred an allowable loss in disposing of them as mentioned in subsection (1)(a) above on the occasion of the disposal that would have occurred but for section 127 of the 1992 Act; or
- (b) it gave new consideration for the new shares;
but in a case within paragraph (b) above the amount of relief under section 573 . . . on the disposal of the new shares shall not exceed the amount or value of the new consideration taken into account as a deduction in computing the loss incurred on their disposal.
- (3) Where the shares are the subject of an exchange or arrangement of the kind mentioned in section 135 or 136 of the 1992 Act (company reconstructions etc.) which by reason of section 137 of that Act involves a disposal of the shares, section 573 . . . shall not apply to any allowable loss incurred on the disposal.
- (4) In this section “*new consideration*” means consideration in money or money's worth other than consideration of the kind excluded by paragraph (a) or (b) of section 128(2) of the 1992 Act.
#### Provisions supplementary to sections 573 to 575
##### 576
- (1) Subject to subsection (1C) below, where a company holds shares in another company which constitute a holding and comprise—
- (a) shares for which it has subscribed (“*qualifying shares*”); and
- (b) shares which it has acquired otherwise than by subscription,
any question whether a disposal by it of shares forming part of the holding is of qualifying shares shall be determined by treating that and any previous disposal by it out of the holding as relating to shares acquired later rather than earlier; and if a disposal by it is of qualifying shares forming part of a holding and it makes a claim under section 573 . . . in respect of a loss incurred on their disposal, the amount of relief under that section on the disposal shall not exceed the sums that would be allowed as deductions in computing the loss if the shares had not been part of the holding.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1C) Where the holding mentioned in subsection (1) above comprises any shares—
- (a) to which investment relief is attributable under Schedule 15 to the Finance Act 2000 (corporate venturing scheme), and
- (b) which have been held continuously (within the meaning of paragraph 97 of that Schedule) from the time they were issued until the disposal,
any such question as is mentioned in that subsection shall not be determined as provided by that subsection, but shall be determined instead as provided by paragraph 93 of that Schedule (identification of shares on a disposal of part of a holding where investment relief is attributable to any shares in the holding held continuously by the disposing company).
For this purpose paragraph 93 of that Schedule shall have effect as if the references in it to a disposal had the same meaning as in subsection (1) above.
- (1D) In this section “*holding*” means any number of shares of the same class held by one company in one capacity, growing or diminishing as shares of that class are acquired or disposed of.
For this purpose—
- (a) shares are not to be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt in on such an exchange, and
- (b) subsection (4) of section 104 of the 1992 Act applies as it applies for the purposes of subsection (1) of that section.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Miscellaneous
#### Business entertaining expenses
##### 577
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Housing grants
##### 578
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Statutory redundancy payments
##### 579
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 579
##### 580
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Borrowing in foreign currency by local authorities and statutory corporations
##### 581
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Funding bonds issued in respect of interest on certain debts
##### 582
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Inter-American Development Bank
##### 583
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for unremittable overseas income
##### 584
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief from tax on delayed remittances
##### 585
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of deductions for war risk premiums
##### 586
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of certain payments in respect of war injuries to employees
##### 587
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Training courses for employees
##### 588
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying courses of training etc
##### 589
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XIV — PENSION SCHEMES, SOCIAL SECURITY BENEFITS, LIFE ANNUITIES ETC.
### CHAPTER I — RETIREMENT BENEFIT SCHEMES
### Approval of schemes
#### Conditions for approval of retirement benefit schemes
##### 590
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Discretionary approval
##### 591
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Tax reliefs
#### Exempt approved schemes
##### 592
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief by way of deductions from contributions
##### 593
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exempt statutory schemes
##### 594
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Charge to tax in certain cases
#### Charge to tax in respect of certain sums paid by employer etc
##### 595
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from section 595
##### 596
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: pensions
##### 597
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: repayment of employee’s contributions
##### 598
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: commutation of entire pension in special circumstances
##### 599
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: unauthorised payments to or for employees
##### 600
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: payments to employers
##### 601
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Regulations relating to pension fund surpluses
##### 602
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction of surpluses
##### 603
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary provisions
#### Application for approval of a scheme
##### 604
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information
##### 605
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Responsibilities of administrator of scheme, and employer
##### 606
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Pilots' benefit fund
##### 607
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Superannuation funds approved before 6th April 1980
##### 608
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schemes approved before 23rd July 1987
##### 609
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amendments of schemes
##### 610
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definition of “retirement benefits scheme”
##### 611
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other interpretative provisions, and regulations for purposes of this Chapter
##### 612
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — OTHER PENSION FUNDS AND SOCIAL SECURITY BENEFITS AND CONTRIBUTIONS
#### Parliamentary pension funds
##### 613
- (1) The salary of a Member of the House of Commons shall, for all the purposes of the Income Tax Acts, be treated as reduced by the amounts deducted in pursuance of section 1 of the House of Commons Members’ Fund Act 1939; but a Member shall not by reason of any such deduction be entitled to relief under any other provision of the Income Tax Acts.
- (2) In subsection (1) above the reference to salary shall be construed as mentioned in subsection (3) of section 1 of the House of Commons Members’ Fund Act 1939, the reference to amounts deducted includes a reference to amounts required to be set aside under that subsection, and “deduction” shall be construed accordingly.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The . . . trustees of—
- (a) the House of Commons Members’ Fund established under section 1 of that Act of 1939;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (bb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall be entitled to exemption from income tax in respect of all income derived from that Fund or any investment of that Fund.
#### Exemptions and reliefs in respect of income from investments etc. of certain pension schemes
##### 614
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Any interest or dividends received by the person in whom is vested any of the Family Pension Funds mentioned in section 273 of the Government of India Act 1935, and having effect as a scheme made under section 2 of the Overseas Pensions Act 1973, on sums forming part of that fund shall be exempt from income tax.
- (2A) The reference in subsection (2) above to interest on sums forming part of a fund include references to any amount which is treated as income by virtue of Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) and derives from any investment forming part of that fund.
- (3) Income derived from investments or deposits of any fund referred to in section 648, 649, 650 or 651 of ITEPA 2003 shall not be charged to income tax, and any income tax deducted from any such income shall be repaid by the Board to the persons entitled to receive the income.
- (4) In respect of income derived from investments or deposits of the Overseas Service Pensions Fund established pursuant to section 7(1) of the Overseas Aid Act 1966, the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled, ordinarily resident or resident in the United Kingdom.
- (5) In respect of dividends and other income derived from investments, deposits or other property of a superannuation fund to which section 615(3) applies the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled, ordinarily resident or resident in the United Kingdom.
- (6) A claim under this section shall be made to the Board.
#### Exemption from tax in respect of certain pensions
##### 615
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Where an annuity is paid from a superannuation fund to which this subsection applies to a person who is not resident in the United Kingdom, income tax shall not be deducted from any payment of the annuity or accounted for under Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and patent royalties) by the trustees or other persons having the control of the fund.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Subsection (3) above applies to any superannuation fund which—
- (a) is bona fide established under irrevocable trusts in connection with some trade or undertaking carried on wholly or partly outside the United Kingdom;
- (b) has for its sole purpose (subject to any enactment or Northern Ireland legislation requiring or allowing provision for the value of any rights to be transferred between schemes or between members of the same scheme) the provision of superannuation benefits in respect of persons’ employment in the trade or undertaking wholly outside the United Kingdom; and
- (c) is recognised by the employer and employed persons in the trade or undertaking;
and for the purposes of this subsection duties performed in the United Kingdom the performance of which is merely incidental to the performance of other duties outside the United Kingdom shall be treated as performed outside the United Kingdom.
- (7) In this section—
- “*pension*” includes a gratuity or any sum payable on or in respect of death or, in the case of a pension falling within subsection (2)(g) above, ill-health, and a return of contributions with or without interest thereon or any other addition thereto;
- “*overseas territory*” means any territory or country outside the United Kingdom;
- “*the Pensions (Increase) Acts*” means the Pensions (Increase) Act 1971 and any Act passed after that Act for purposes corresponding to the purposes of that Act;
- “*United Kingdom trust territory*” means a territory administered by the government of the United Kingdom under the trusteeship system of the United Nations.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) For the purposes of this section, a person shall be taken to be employed in the public service of an overseas territory at any time when—
- (a) he is employed in any capacity under the government of that territory, or under any municipal or other local authority in it,
- (b) he is employed, in circumstances not falling within paragraph (a) above, by a body corporate established for any public purpose in that territory by an enactment of a legislature empowered to make laws for that territory, or
- (c) he is the holder of a public office in that territory in circumstances not falling within either paragraph (a) or (b).
- (10) For the purposes of subsection (9), references to the government of an overseas territory include references to a government constituted for two or more overseas territories, and to any authority established for the purpose of providing or administering services which are common to, or relate to matters of common interest to, two or more such territories.
#### Other overseas pensions
##### 616
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Social security benefits and contributions
##### 617
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — RETIREMENT ANNUITIES
#### Termination of relief under this Chapter, and transitional provisions
##### 618
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from tax in respect of qualifying premiums
##### 619
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying premiums
##### 620
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other approved contracts
##### 621
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Substituted retirement annuity contracts
##### 622
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relevant earnings
##### 623
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sponsored superannuation schemes and controlling directors
##### 624
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward of unused relief under section 619
##### 625
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modification of section 619 in relation to persons over 50
##### 626
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lloyd’s underwriters
##### 627
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Partnership retirement annuities
##### 628
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity premiums of Ministers and other officers
##### 629
- (1) For the purposes of this Chapter so much of any salary which—
- (a) is payable to the holder of a qualifying office who is also a Member of the House of Commons, and
- (b) is payable for a period in respect of which the holder is not a participant in relation to that office in arrangements contained in the Parliamentary pension scheme but is a participant in relation to his membership of the House of Commons in any such arrangements, or for any part of such a period,
as is equal to the difference between a Member’s pensionable salary and the salary which (in accordance with any such resolution as is mentioned in subsection (3)(a) below) is payable to him as a Member holding that qualifying office shall be treated as remuneration from the office of Member and not from the qualifying office.
- (2) In this section—
- “*Member’s pensionable salary*” means a Member’s ordinary salary under any resolution of the House of Commons which, being framed otherwise than as an expression of opinion, is for the time being in force relating to the remuneration of Members or, if the resolution provides for a Member’s ordinary salary thereunder to be treated for pension purposes as being at a higher rate, a notional yearly salary at that higher rate;
- “*qualifying office*” means an office mentioned in section 2(2)(b), (c) or (d) of the Parliamentary and other Pensions Act 1987;
- “*the Parliamentary pension scheme*” has the same meaning as in that Act;
and without prejudice to the power conferred by virtue of paragraph 13 of Schedule 1 to that Act, regulations under section 2 of that Act may make provision specifying the circumstances in which a person is to be regarded for the purposes of this section as being or not being a participant in relation to his Membership of the House of Commons, or in relation to any office, in arrangements contained in the Parliamentary pension scheme.
- (3) In subsection (2) above “*a Member’s ordinary salary*”, in relation to any resolution of the House of Commons, means—
- (a) if the resolution provides for salary to be paid to Members at different rates according to whether or not they are holders of particular offices, or are in receipt of salaries or pensions as the holders or former holders of particular offices, a Member’s yearly salary at the higher or highest rate; and
- (b) in any other case, a Member’s yearly salary at the rate specified in or determined under the resolution.
### CHAPTER IV — PERSONAL PENSION SCHEMES
### Preliminary
#### Interpretation
##### 630
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Approval of schemes
##### 631
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Restrictions on approval
#### Establishment of schemes
##### 632
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scope of benefits
##### 633
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity to member
##### 634
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lump sum to member
##### 635
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity after death of member
##### 636
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lump sum on death of member
##### 637
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other restrictions on approval
##### 638
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Tax reliefs
#### Member’s contributions
##### 639
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Maximum amount of deductions
##### 640
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-back of contributions
##### 641
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward of relief
##### 642
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employer’s contributions and personal pension income etc
##### 643
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “relevant earnings”
##### 644
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Earnings from pensionable employment
##### 645
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “net relevant earnings”
##### 646
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Charge to tax
#### Unauthorised payments
##### 647
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Contributions under unapproved arrangements
##### 648
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Miscellaneous
#### Minimum contributions under Social Security Act 1986
##### 649
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of approval
##### 650
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals
##### 651
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information about payments
##### 652
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information: penalties
##### 653
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Remuneration of Ministers and other officers
##### 654
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transitional provisions
##### 655
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — PURCHASED LIFE ANNUITIES
#### Purchased life annuities other than retirement annuities
##### 656
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Purchased life annuities to which section 656 applies
##### 657
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary
##### 658
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VI — MISCELLANEOUS
#### Financial futures and traded options
##### 659
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XV — SETTLEMENTS
### CHAPTER I — DISPOSITIONS FOR SHORT PERIODS
#### Dispositions for period which cannot exceed six years
##### 660
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustments between disponor and trustees
##### 661
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Chapter I to dispositions by two or more disponors
##### 662
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — SETTLEMENTS ON CHILDREN
#### The general rule
##### 663
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accumulation settlements
##### 664
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “irrevocable”
##### 665
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest paid by trustees
##### 666
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustments between disponor and trustees
##### 667
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Chapter II to settlements by two or more settlors
##### 668
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to obtain information under Chapter II
##### 669
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter II
##### 670
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — REVOCABLE SETTLEMENTS ETC.
#### Revocable settlements allowing release of obligation
##### 671
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing reversion of property
##### 672
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements where settlor retains an interest
##### 673
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements: discretionary power for benefit of settlor etc
##### 674
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 671 to 674
##### 675
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of deduction from total income of certain sums paid by settlor
##### 676
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sums paid to settlor otherwise than as income
##### 677
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital sums paid by body connected with settlement
##### 678
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Chapter III to settlements by two or more settlors
##### 679
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to obtain information for purposes of Chapter III
##### 680
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter III
##### 681
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Ascertainment of undistributed income
##### 682
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — LIABILITY TO HIGHER RATE AND ADDITIONAL RATE TAX
### Liability of settlors
#### Settlements made after 6th April 1965
##### 683
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements made before 7th April 1965 but after 9th April 1946
##### 684
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 683 and 684
##### 685
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Liability of trustees
#### Liability to additional rate tax of certain income of discretionary trusts
##### 686
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments under discretionary trusts
##### 687
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schemes for employees and directors to acquire shares
##### 688
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Recovery from trustees of discretionary trusts of higher rate tax due from beneficiaries
##### 689
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — MAINTENANCE FUNDS FOR HISTORIC BUILDINGS
#### Schedule 4 directions
##### 690
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certain income not to be income of settlor etc
##### 691
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reimbursement of settlor
##### 692
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Severance of settled property for certain purposes
##### 693
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Trustees chargeable to income tax at 30 per cent. in certain cases
##### 694
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XVI — ESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION
#### Limited interests in residue
##### 695
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Absolute interests in residue
##### 696
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions as to absolute interests in residue
##### 697
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special provisions as to certain interests in residue
##### 698
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief from higher rate tax for inheritance tax on accrued income
##### 699
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustments and information
##### 700
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) It shall be the duty of a personal representative of a deceased person, if a request to do so is made in writing by a person who has, or has had, an absolute or limited interest in the residue of the estate of the deceased or by a person to whom any of the income of the residue of that estate has been paid in the exercise of any discretion, to furnish the person making the request with a statement in writing setting out—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (aa) the amount treated as estate income under Chapter 6 of Part 5 of ITTOIA 2005 in respect of that interest or the exercise of that discretion for which he is liable to income tax for a year of assessment, and
- (b) the amount of any tax at the applicable rate which any amount falling within paragraph . . . (aa) above is deemed to have borne;
and, where an amount . . . treated as estate income under that Chapter is deemed for any of the purposes of . . . that Chapter to have borne tax on different parts of it at different applicable rates, the matters to be set out in pursuance of paragraphs (aa) and (b) above shall be set out separately as respects each part of that amount.
- (6) The duty imposed by subsection (5) above shall be enforceable at the suit or instance of the person making the request.
- (7) This section is to be read as if it were in Chapter 6 of Part 5 of ITTOIA 2005.
#### Interpretation
##### 701
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application to Scotland
##### 702
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XVII — TAX AVOIDANCE
### CHAPTER I — CANCELLATION OF CORPORATION TAX ADVANTAGES FROM CERTAIN TRANSACTIONS IN SECURITIES
#### Cancellation of tax advantage
##### 703
- (1) Where—
- (a) in any such circumstances as are mentioned in section 704, and
- (b) in consequence of a transaction in securities or of the combined effect of two or more such transactions,
a company is in a position to obtain, or has obtained, a corporation tax advantage, then unless it shows that the transaction or transactions were carried out either for bona fide commercial reasons or in the ordinary course of making or managing investments, and that none of them had as their main object, or one of their main objects, to enable corporation tax advantages to be obtained, this section shall apply to it in respect of that transaction or those transactions.
- (2) For the purposes of this Chapter a corporation tax advantage obtained or obtainable by a company shall be deemed to be obtained or obtainable by it in consequence of a transaction in securities or of the combined effect of two or more such transactions, if it is obtained or obtainable in consequence of the combined effect of the transaction or transactions and the liquidation of a company.
- (3) Where this section applies to a company in respect of any transaction or transactions, the corporation tax advantage obtained or obtainable by it in consequence thereof shall be counteracted by such of the following adjustments, that is to say an assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made . . . , or the computation or recomputation of profits or gains, or liability to corporation tax, on such basis as the Board may specify by notice served on it as being requisite for counteracting the corporation tax advantage so obtained or obtainable.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) *In the case of a man and his wife living with him (whether or not she is separately assessed to tax), this Chapter shall, subject to subsection* (8)*below, be treated as applying to him in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the wife were his property, rights or liabilities in relation to which she had acted only as nominee for him, and shall be treated as applying to the wife in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the man were her property, rights or liabilities in relation to which he had acted only as nominee for her*.
- (8) *No adjustment made under subsection* (3)*above by reference to any transaction or transactions to counteract any tax advantage shall by virtue of subsection* (7)*above be so made that a person bears more tax than if the transaction or transactions had not had as a consequence that any relief or increased relief from, or repayment or increased repayment of, income tax, or any deduction in computing profits or gains, was obtained or obtainable, or that the way in which receipts accrued was such that the recipient did not pay or bear tax on them*.
- (9) The Board shall not give a notice under subsection (3) above until they have notified the company in question that they have reason to believe that this section may apply to it in respect of a transaction or transactions specified in the notification; and if within 30 days of the issue of the notification that company, being of opinion that this section does not so apply to it, makes a statutory declaration to that effect stating the facts and circumstances upon which its opinion is based, and sends it to the Board, then subject to subsection (10) below, this section shall not apply to it in respect of the transaction or transactions.
- (10) If, when a statutory declaration has been sent to the Board under subsection (9) above, they see reason to take further action in the matter—
- (a) the Board shall send to the tribunal a certificate to that effect, together with the statutory declaration, and may also send therewith a counter-statement with reference to the matter;
- (b) the tribunal shall take into consideration the declaration and the certificate, and the counter-statement, if any, and shall determine whether there is or is not a prima facie case for proceeding in the matter, and if it determines that there is no such case this section shall not apply to the company in question in respect of the transaction or transactions;
but any such determination shall not affect the operation of this section in respect of transactions which include that transaction or some or all of those transactions and also include another transaction or other transactions.
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) This section applies whether the corporation tax advantage in question relates to a chargeable period ending before or after the commencement of this Act, but nothing in this section shall authorise the making of an assessment later than six years after the accounting period to which the corporation tax advantage relates; and no other provision contained in the Corporation Tax Acts shall be construed as limiting the powers conferred by this section.
#### The prescribed circumstances
##### 704
The circumstances mentioned in section 703(1) are as follows (and in this section references to “*the section 703(1) company*” are references to the company referred to in that section)
- (A) That in connection with the distribution of profits of a company, or in connection with the sale or purchase of securities being a sale or purchase followed by the purchase or sale of the same or other securities, the section 703(1) company receives an abnormal amount by way of dividend, and the amount so received is taken into account for any of the following purposes—
- (a) any exemption from corporation tax, or
- (b) the setting-off of losses against profits or income, or
- (c) the giving of group relief, or
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against Board’s notices under section 703
##### 705
- (1) Any company to which notice has been given under section 703(3) may within 30 days by notice to the Board appeal . . . on the grounds that section 703 does not apply to it in respect of the transaction or transactions in question, or that the adjustments directed to be made are inappropriate.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) On an appeal under subsection (1) above the tribunal shall have power to cancel or vary a notice under subsection (3) of section 703 or to vary or quash an assessment made in accordance with such a notice, but the bringing of an appeal . . . shall not affect the validity of a notice given or of any other thing done in pursuance of that subsection pending the determination of the proceedings.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The tribunal
##### 706
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Procedure for clearance in advance
##### 707
- (1) The following provisions shall have effect where in pursuance of this section a company furnishes to the Board particulars of a transaction or transactions effected or to be effected by it , that is to say—
- (a) if the Board are of opinion that the particulars, or any further information furnished in pursuance of this paragraph, are not sufficient for the purposes of this section, they shall within 30 days of the receipt thereof notify to that company what further information they require for those purposes, and unless that further information is furnished to the Board within 30 days from the notification, or such further time as the Board may allow, they shall not be required to proceed further under this section;
- (b) subject to paragraph (a) above, the Board shall within 30 days of the receipt of the particulars, or, where that paragraph has effect, of all further information required, notify that company whether or not they are satisfied that the transaction or transactions as described in the particulars were or will be such that no notice under section 703(3) ought to be given in respect of it or them;
and, subject to the following provisions of this section, if the Board notify it that they are so satisfied, section 703 shall not apply to it in respect of that transaction or those transactions.
- (2) If the particulars, and any further information given under this section with respect to any transaction or transactions, are not such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Board, any notification given by the Board under this section shall be void.
- (3) In no event shall the giving of a notification under this section with respect to any transaction or transactions prevent section 703 applying to a company in respect of transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.
#### Power to obtain information
##### 708
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “tax advantage” and other expressions
##### 709
- (1) In this Chapter “*corporation tax advantage*” means a relief or increased relief from, or repayment or increased repayment of, corporation tax, or the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax or the avoidance of a possible assessment thereto, whether the avoidance or reduction is effected by receipts accruing in such a way that the recipient does not pay or bear corporation tax on them, or by a deduction in computing profits or gains.
- (2) In this Chapter—
- “*company*” includes any body corporate,
- “*securities*”—includes shares and stock, andin relation to a company not limited by shares (whether or not it has a share capital) includes also a reference to the interest of a member of the company as such, whatever the form of that interest;
- “*trading stock*” has the meaning given by section 163 of CTA 2009;
- “*transaction in securities*” includes transactions, of whatever description, relating to securities, and in particular—the purchase, sale or exchange of securities;the issuing or securing the issue of, or applying or subscribing for, new securities;the altering, or securing the alteration of, the rights attached to securities;and references to dividends include references to other qualifying distributions and to interest.
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) In section 704—
- (a) references to profits include references to income, reserves or other assets;
- (b) references to distribution include references to transfer or realisation (including application in discharge of liabilities); and
- (c) references to the receipt of consideration include references to the receipt of any money or money’s worth.
- (4) For the purposes of section 704 an amount received by way of dividend shall be treated as abnormal if the Board . . . or the tribunal, as the case may be, are satisfied—
- (a) in the case of a dividend at a fixed rate, that it substantially exceeds the amount which the recipient would have received if the dividend had accrued from day to day and the recipient had been entitled only to so much of the dividend as accrued while the recipient held the securities, so however that an amount shall not be treated as abnormal by virtue only of this paragraph if during the six months beginning with the purchase of the securities the recipient does not sell or otherwise dispose of, or acquire an option to sell, any of those securities or any securities similar to those securities; or
- (b) in any case, that it substantially exceeds a normal return on the consideration provided by the recipient for the relevant securities, that is to say, the securities in respect of which the dividend was received and, if those securities are derived from securities previously acquired by the recipient, the securities which were previously acquired.
- (5) For the purposes of subsection (4)(a) above securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred, and for those purposes rights guaranteed by the Treasury shall be treated as rights against the Treasury.
- (6) For the purposes of subsection (4)(b) above—
- (a) if the consideration provided by the recipient for any of the relevant securities was in excess of their market value at the time the recipient acquired them, or if no consideration was provided by the recipient for any of the relevant securities, the recipient shall be taken to have provided for those securities consideration equal to their market value at the time the recipient acquired them; and
- (b) in determining whether an amount received by way of dividend exceeds a normal return, regard shall be had to the length of time previous to the receipt of that amount that the recipient first acquired any of the relevant securities and to any dividends and other distributions made in respect of them during that time.
### CHAPTER II — TRANSFERS OF SECURITIES
### Transfers with or without accrued interest: introductory
#### Meaning of “securities”, “transfer” etc. for purposes of sections 711 to 728
##### 710
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “interest”, “transfers with or without accrued interest” etc
##### 711
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “settlement day” for purposes of sections 711 to 728
##### 712
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Transfers with or without accrued interest: charge to tax and reliefs
#### Deemed sums and reliefs
##### 713
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of deemed sums and reliefs
##### 714
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from sections 713 and 714
##### 715
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of unrealised interest
##### 716
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Variable interest rate
##### 717
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest in default
##### 718
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Unrealised interest in default
##### 719
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Transfers with or without accrued interest: supplemental
#### Nominees, trustees etc
##### 720
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Death
##### 721
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Trading stock
##### 722
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign securities: delayed remittances
##### 723
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies
##### 724
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lloyd’s underwriters
##### 725
#### Building societies
##### 726
#### Stock lending
##### 727
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information
##### 728
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Other transfers of securities
#### Sale and repurchase of securities
##### 729
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of income arising from securities
##### 730
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Purchase and sale of securities
#### Application and interpretation of sections 732 to 734
##### 731
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dealers in securities
##### 732
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons entitled to exemptions
##### 733
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons other than dealers in securities
##### 734
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “appropriate amount in respect of” interest
##### 735
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Miscellaneous provisions relating to securities
#### Company dealing in securities: distribution materially reducing value of holding
##### 736
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manufactured dividends: treatment of tax deducted
##### 737
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplemental
#### Power to amend sections 732, 735 and 737
##### 738
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — TRANSFER OF ASSETS ABROAD
#### Prevention of avoidance of income tax
##### 739
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Liability of non-transferors
##### 740
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from sections 739 and 740
##### 741
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 739 to 741
##### 742
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplemental provisions
##### 743
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### No duplication of charge
##### 744
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to obtain information
##### 745
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons resident in the Republic of Ireland
##### 746
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — CONTROLLED FOREIGN COMPANIES
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
##### 747
- (1) If . . . in any accounting period a company—
- (a) is resident outside the United Kingdom, and
- (b) is controlled by persons resident in the United Kingdom, and
- (c) is subject to a lower level of taxation in the territory in which it is resident,
. . . the provisions of this Chapter shall apply in relation to that accounting period.
- (1A) A company which would not, apart from this subsection, fall to be regarded as controlled by persons resident in the United Kingdom shall be taken for the purposes of this Chapter to be so controlled if—
- (a) there are two persons who, taken together, control the company;
- (b) one of those persons is resident in the United Kingdom and is a person in whose case the 40 per cent test in section 755D(3) is satisfied; and
- (c) the other is a person in whose case the 40 per cent test in section 755D(4) is satisfied.
- (1B) In determining, for the purposes of any provision of this Chapter except subsection (1)(a) above, whether a company is a person resident in the United Kingdom, section 18 of CTA 2009 (under which a company is treated as non-resident if it is so treated for double taxation relief purposes) shall be disregarded.
- (2) A company which falls within paragraphs (a) to (c) of subsection (1) above is in this Chapter referred to as a “*controlled foreign company*”.
- (3) Subject to section 748, where the provisions of this Chapter apply in relation to an accounting period of a controlled foreign company, the chargeable profits of that company for that period and its creditable tax (if any) for that period shall each be apportioned in accordance with section 752 among the persons (whether resident in the United Kingdom or not) who had an interest in that company at any time during that accounting period.
- (3A) In the case of an apportionment to a company resident in the United Kingdom which has made an application under section 751A or 751AA which has been granted, subsection (3) above has effect subject to that section.
- (4) Where, on such an apportionment of a controlled foreign company’s chargeable profits for an accounting period as is referred to in subsection (3) above, an amount of those profits is apportioned to a company resident in the United Kingdom then, subject to subsection (5) below—
- (a) a sum equal to corporation tax at the appropriate rate on that apportioned amount of profits, less the portion of the controlled foreign company’s creditable tax for that period (if any) which is apportioned to the resident company, shall be chargeable on the resident company as if it were an amount of corporation tax chargeable on that company; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and for the purposes of paragraph (a) above “*the appropriate rate*” means the rate of corporation tax applicable to profits of that accounting period of the resident company in which ends the accounting period of the controlled foreign company which is mentioned in subsection (1) above or, if there is more than one such rate, the average rate over the whole of that accounting period of the resident company.
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Tax shall not, by virtue of subsection (4) above, be chargeable on a company resident in the United Kingdom unless, on the apportionment in question, the aggregate of—
- (a) the amount of the controlled foreign company’s chargeable profits for the accounting period in question which is apportioned to the resident company, and
- (b) any amounts of those chargeable profits which are apportioned to persons who are connected or associated with the resident company,
is at least 25 per cent. of the total of those chargeable profits.
- (5A) Where the resident company has made an application under section 751A or 751AA which has been granted, it shall be assumed for the purposes of subsection (5) above that—
- (a) each of the persons who are connected or associated with the resident company has made an application under that section to the same effect, and
- (b) all the applications have been granted.
- (6) In relation to a company resident outside the United Kingdom—
- (a) any reference in this Chapter to its chargeable profits for an accounting period is a reference to the amount which, on the assumptions in Schedule 24, would be the amount of the total profits of the company for that period on which, after allowing for any deductions available against those profits, corporation tax would be chargeable;
- (aa) any reference in this Chapter to its chargeable profits for an accounting period includes (subject to subsections (7) to (9)) income which accrues during that accounting period to the trustees of a settlement in relation to which the company is a settlor or a beneficiary; and
- (b) any reference in this Chapter to profits does not include a reference to chargeable gains but otherwise (except as provided by paragraph (a) above) has the same meaning as it has for the purposes of corporation tax.
- (7) Where there is more than one settlor or beneficiary in relation to the settlement mentioned in subsection (6)(aa), the income is to be apportioned between the company and the other settlors or beneficiaries on a just and reasonable basis.
- (8) Where income within subsection (6)(aa) is included in the chargeable profits of a company, any dividend or other distribution received by the company which derives from that income is not included in the chargeable profits of the company to the extent that it is so derived.
- (9) Any income within subsection (6)(aa) which would (apart from this subsection)—
- (a) be included in the chargeable profits of a company which is a beneficiary in relation to a settlement and apportioned under subsection (3), and
- (b) be included in the chargeable profits of a company which is a settlor in relation to the settlement and apportioned under that subsection,
is not to be included in the chargeable profits of the company which is a settlor.
#### Limitations on direction-making power
##### 748
- (1) No apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company if—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) throughout that period the company is, within the meaning of Part II of that Schedule, engaged in exempt activities; or
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) the chargeable profits of the accounting period do not exceed £50,000 or, if the accounting period is less than 12 months, a proportionately reduced amount; or
- (e) as respects the accounting period, the company is, within the meaning of regulations made by the Board for the purposes of this paragraph, resident in a territory specified in the regulations and satisfies—
- (i) such conditions with respect to its income or gains as may be so specified; and
- (ii) such other conditions (if any) as may be so specified.
- (1A) Regulations under paragraph (e) of subsection (1) above may—
- (a) make different provision for different cases or with respect to different territories;
- (b) make provision having effect in relation to accounting periods of controlled foreign companies ending not more than one year before the date on which the regulations are made; and
- (c) contain such supplementary, incidental, consequential and transitional provision as the Board may think fit.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Notwithstanding that none of paragraphs (a) to (e) of subsection (1) above applies to an accounting period of a controlled foreign company, no apportionment under section 747(3) falls to be made as regards that accounting period if it is the case that—
- (a) in so far as any of the transactions the results of which are reflected in the profits arising in that accounting period, or any two or more transactions taken together, the results of at least one of which are so reflected, achieved a reduction in United Kingdom tax, either the reduction so achieved was minimal or it was not the main purpose or one of the main purposes of that transaction or, as the case may be, of those transactions taken together to achieve that reduction, and
- (b) it was not the main reason or, as the case may be, one of the main reasons for the company’s existence in that accounting period to achieve a reduction in United Kingdom tax by a diversion of profits from the United Kingdom,
and Part IV of Schedule 25 shall have effect with respect to the preceding provisions of this subsection.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) This section is subject to section 748A.
#### Residence and interest
##### 749
- (1) Subject to subsections (2) to (4) and (6) below, in any accounting period in which a company is resident outside the United Kingdom, it shall be regarded for the purposes of this Chapter as resident in that territory in which, throughout that period, it is liable to tax by reason of domicile, residence or place of management.
- (2) If, in the case of any company,—
- (a) there are in any accounting period two or more territories falling within subsection (1) above, and
- (b) no election or designation made under paragraph (d) or (e) of subsection (3) below in relation to an earlier accounting period of the company has effect by virtue of section 749A(1) in relation to that accounting period,
subsection (3) below shall apply with respect to that company and that accounting period.
- (3) Where this subsection applies, the company shall in that accounting period be regarded for the purposes of this Chapter as resident in only one of those territories, namely—
- (a) if, throughout the accounting period, the company’s place of effective management is situated in one of those territories only, in that territory;
- (b) if, throughout the accounting period, the company’s place of effective management is situated in two or more of those territories, in that one of them in which, at the end of the accounting period, the greater amount of the company’s assets is situated;
- (c) if neither paragraph (a) nor paragraph (b) above applies, in that one of the territories falling within subsection (1) above in which, at the end of the accounting period, the greater amount of the company’s assets is situated;
- (d) if—
- (i) paragraph (a) above does not apply, and
- (ii) neither paragraph (b) nor paragraph (c) above produces one, and only one, of those territories,
in that one of them (if any) which is specified in an election made in relation to that accounting period by any one or more persons who together have a majority assessable interest in the company in that accounting period; and
- (e) if, in a case falling within paragraph (d) above, the time by which any election under that paragraph in relation to that accounting period must be made in accordance with section 749A(3)(b) expires without such an election having been made, in that one of those territories which the Board justly and reasonably designates in relation to that accounting period.
- (4) If, in the case of any company,—
- (a) there are in any accounting period two or more territories falling within subsection (1) above, and
- (b) an election or designation made under paragraph (d) or (e) of subsection (3) above in relation to an earlier accounting period of the company has effect by virtue of section 749A(1) in relation to the accounting period mentioned in paragraph (a) above,
the company shall in that accounting period be regarded for the purposes of this Chapter as resident in that one of those territories which is the subject of the election or designation.
- (5) If, in the case of any company, there is in any accounting period no territory falling within subsection (1) above, then, for the purposes of this Chapter, it shall be conclusively presumed that the company is in that accounting period resident in a territory in which it is subject to a lower level of taxation.
- (6) In any case where it becomes necessary for the purposes of subsection (3) above to determine in which of two or more territories the greater amount of a company’s assets is situated at the end of an accounting period—
- (a) account shall be taken only of those assets which, immediately before the end of that period, are situated in those territories; and
- (b) the amount of them shall be determined by reference to their market value at that time.
- (7) This section is without prejudice to the provision that may be made in regulations under section 748(1)(e).
- (8) For the purposes of this section, one or more persons together have a “majority assessable interest" in a controlled foreign company in an accounting period of the company if—
- (a) each of them has an assessable interest in the company in that accounting period; and
- (b) it is likely that, were an apportionment of the chargeable profits of the company for that accounting period made under section 747(3), the aggregate of the amounts which would be apportioned to them is greater than 50 per cent. of the aggregate of the amounts which would be apportioned to all the persons who have an assessable interest in the company in that accounting period.
- (9) For the purposes of subsection (8) above, a person has an “assessable interest" in a controlled foreign company in an accounting period of the company if he is one of the persons who it is likely would be chargeable to tax under section 747(4)(a) on an apportionment of the chargeable profits and creditable tax (if any) of the company for that accounting period under section 747(3).
- (10) For the purposes of subsection (8) and (9) above, the effect of any application under section 751A or 751AA shall be disregarded.
#### Territories with a lower level of taxation
##### 750
- (1) Without prejudice to subsection (5) of section 749, a company which, by virtue of any of subsections (1) to (4) of that section, is to be regarded as resident in a particular territory outside the United Kingdom shall be considered to be subject to a lower level of taxation in that territory if , after giving effect to subsections (1A) and (1B) below, the amount of tax (“the local tax”) which is paid under the law of that territory in respect of the profits of the company which arise in any accounting period is less than three-quarters of the corresponding United Kingdom tax on those profits.
- (1A) If in the case of that accounting period there is any income, or any income and any expenditure, of the company—
- (a) which is brought into account in determining the profits of the company in respect of which tax is paid under the law of that territory, but
- (b) which does not also fall to be brought into account in determining the chargeable profits of the company,
the local tax shall be treated for the purposes of this Chapter as reduced to what it would have been had that income and any such expenditure not been so brought into account.
- (1B) If—
- (a) under the law of that territory any tax (“the company's tax”) falls to be paid by the company in respect of profits of the company arising in that accounting period,
- (b) under that law, any repayment of tax, or any payment in respect of a credit for tax, is made to a person other than the company, and
- (c) that payment or repayment is directly or indirectly in respect of the company's tax,
the local tax shall be treated for the purposes of this Chapter as reduced (or further reduced) by the amount of that payment or repayment.
- (2) For the purposes of this Chapter, the amount of the corresponding United Kingdom tax on the profits arising in an accounting period of a company resident outside the United Kingdom is the amount of corporation tax which, on the assumptions set out in Schedule 24 and subject to subsection (3) below, would be chargeable in respect of the chargeable profits of the company for that accounting period.
- (3) In determining the amount of corporation tax which, in accordance with subsection (2) above, would be chargeable in respect of the chargeable profits of an accounting period of a company resident outside the United Kingdom—
- (a) it shall be assumed for the purposes of Schedule 24 that an apportionment under section 747(3) falls to be made as regards that period; and
- (ab) there shall be disregarded the effect of any application under section 751A or 751AA; and
- (b) there shall be disregarded so much of any relief from corporation tax in respect of income as would be attributable to the local tax and would fall to be given by virtue of any provision of Part XVIII . . . ; and
- (c) there shall be deducted from what would otherwise be the amount of that corporation tax—
- (i) any amount which (on the assumptions set out in Schedule 24) would fall to be set off against corporation tax by virtue of section 7(2); and
- (ii) any amount of income tax or corporation tax actually charged in respect of any of those chargeable profits.
- (4) The references in subsection (3)(c) above to an amount falling to be set off or an amount actually charged do not include so much of any such amount as has been or falls to be repaid to the company whether on the making of a claim or otherwise.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods and creditable tax
##### 751
- (1) For the purposes of this Chapter, an accounting period of a company resident outside the United Kingdom shall begin—
- (a) whenever the company comes under the control of persons resident in the United Kingdom;
- (b) whenever the company . . . commences to carry on business unless an accounting period of the company has previously begun as respects which an apportionment under section 747(3) falls or has fallen to be made; and
- (c) whenever an accounting period of the company ends without the company then ceasing either to carry on business or to have any source of income whatsoever.
- (2) For the purposes of this Chapter, an accounting period of a company resident outside the United Kingdom shall end if and at the time when—
- (a) the company ceases to be under the control of persons resident in the United Kingdom; or
- (b) the company becomes, or ceases to be, liable to tax in a territory; or
- (bb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) the company ceases to have any source of income whatsoever;
and for the purposes of paragraph (b) above “*liable to tax*” means liable to tax by reason of domicile, residence or place of management.
- (3) Without prejudice to subsections (1) and (2) above, sections 10(1) and (5), 11(1) and (2) and 12 of CTA 2009 shall apply for the purposes of this Chapter as they apply for the purposes of corporation tax, but with the omission of so much of those provisions as relates to a company coming or ceasing to be within the charge to corporation tax.
- (4) Where it appears to the Board that the beginning or end of any accounting period of a company resident outside the United Kingdom is uncertain, the Board may by notice specify as an accounting period of the company such period, not exceeding 12 months, as appears to the Board to be appropriate, and that period shall be treated for the purposes of this Chapter as an accounting period of the company unless the notice is subsequently amended under subsection (5) below.
- (5) If, on further facts coming to the knowledge of the Board after the giving of a notice under subsection (4) above, it appears to the Board that any accounting period specified in the notice is not the true accounting period, the Board shall amend the notice so as to specify the true period.
- (5A) Any notice under subsection (4) above, and notice of any amendment of such a notice under subsection (5) above, shall be given to every person who has an assessable interest (as defined in section 749(9)) in the company in the accounting period in question.
- (6) In this Chapter, in relation to an accounting period of a controlled foreign company as regards which an apportionment under section 747(3) falls to be made, the creditable tax means the aggregate of—
- (a) the amount of any relief from corporation tax in respect of income which (on the assumptions set out in Schedule 24 and assuming the company to be liable for corporation tax on the chargeable profits of that accounting period) would fall to be given to the company by virtue of any provision of Part XVIII in respect of foreign tax attributable to any income which is brought into account in determining those chargeable profits; and
- (b) any amount which (on those assumptions) would fall to be set off against corporation tax on those chargeable profits by virtue of section 7(2); and
- (c) the amount of any income tax or corporation tax actually charged in respect of the chargeable profits of that accounting period, less any of that tax which has been or falls to be repaid to the company, whether on the making of a claim or otherwise.
#### Apportionment of chargeable profits and creditable tax
##### 752
- (1) This section applies in any case where an apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company.
- (2) Where—
- (a) the persons who have relevant interests in the controlled foreign company at any time in the relevant accounting period have those interests by virtue only of directly or indirectly holding ordinary shares of the company,
- (b) each of those persons satisfies the condition that he is either—
- (i) resident in the United Kingdom throughout that accounting period, or
- (ii) resident in the United Kingdom at no time in that accounting period, and
- (c) no company which has an intermediate interest in the controlled foreign company at any time in the relevant accounting period has that interest otherwise than by virtue of directly or indirectly holding ordinary shares of the controlled foreign company,
subsection (3) below shall apply.
- (3) Where this subsection applies, the apportionment of the controlled foreign company’s chargeable profits and creditable tax (if any) for the relevant accounting period shall be made among the persons who have relevant interests in the company at any time in that period in direct proportion to the percentage of the issued ordinary shares of the controlled foreign company which, in accordance with section 752B, each of those relevant interests represents.
- (4) Where subsection (3) above does not apply, the apportionment of the controlled foreign company’s chargeable profits and creditable tax (if any) for the relevant accounting period shall be made on a just and reasonable basis among the persons who have relevant interests in the company at any time in that period.
#### Notices and appeals
##### 753
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessment, recovery and postponement of tax
##### 754
- (1) Subject to the following provisions of this section, the provisions of section 747(4)(a) relating to the charging of a sum as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Acts, and to any necessary modifications, all enactments applying generally to corporation tax, including those relating to company tax returns, those relating to the assessing, collecting and receiving of corporation tax, those conferring or regulating a right of appeal and those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
- (1A) Accordingly (but without prejudice to subsection (1) above) the Management Act shall have effect as if—
- (a) any reference to corporation tax included a reference to a sum chargeable under section 747(4)(a) as if it were an amount of corporation tax; and
- (b) any reference to profits of a company included a reference to an amount of chargeable profits of a controlled foreign company which falls to be apportioned to a company under section 747(3).
- (2) For the purposes of the Taxes Acts, any sum chargeable on a company under section 747(4)(a) is chargeable for the accounting period of the company in which ends that one of the controlled foreign company’s accounting periods the chargeable profits of which give rise to that sum.
- (2A) Where—
- (a) an apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company, and
- (b) the apportionment falls to be made in accordance with section 752(4) on a just and reasonable basis, and
- (c) a company tax return is made or amended using for the apportionment a particular basis adopted by the company making the return,
the Board may determine that another basis is to be used for the apportionment.
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2D) Once the Board have determined under subsection (2A) above the basis to be used for the apportionment, matters shall proceed as if that were the only basis allowed by the Tax Acts.
- (2E) A determination under subsection (2A) above may be questioned on an appeal against an amendment, made under paragraph 30 or 34(2) of Schedule 18 to the Finance Act 1998, of the company’s company tax return, but only on the ground that the basis of apportionment determined by the Board is not just and reasonable.
- (3) Subsection (3B) shall apply where any appeal—
- (a) under paragraph 34(3) of Schedule 18 to the Finance Act 1998 against an amendment of a company tax return, or
- (b) under paragraph 48 of that Schedule against a discovery assessment or discovery determination under paragraph 41 of that Schedule (including an assessment by virtue of paragraph 52 of that Schedule),
involves any question concerning the application of this Chapter in relation to any particular person, and the question is one whose resolution is likely to affect the liability of more than one person under this Chapter in respect of the controlled foreign company concerned.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) Where this subsection applies—
- (a) each of the persons whose liability under this Chapter in respect of the controlled foreign company concerned is likely to be affected by the resolution of the question shall be entitled to be a party to any proceedings;
- (b) the tribunal shall determine that question separately from any other questions in those proceedings; and
- (c) the tribunal's determination on that question shall have effect as if made in an appeal to which each of those persons was a party.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Where . . . any enactment applies both to income tax and to corporation tax—
- (a) it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and
- (b) for that purpose references in any such enactment to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief by agreement with other territories.
##### 10
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits: failure to qualify for exemptions
##### 11
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . Where a company not resident in the United Kingdom receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company’s income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income . . . for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.
- (4) Subsection (3) above does not apply to a payment of relevant loan interest to which section 369 applies.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 12
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7B) . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding 12 months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either—
- (a) the inspector on further facts coming to his knowledge sees fit to revise it; or
- (b) on an appeal against the assessment in respect of some other matter the company shows the true accounting periods;
and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods, the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Small companies’ rate
#### Qualifying vehicles
##### 13
- (1) Where in any accounting period the profits of a company which—
- (a) is resident in the United Kingdom, and
- (b) is not a close investment-holding company (as defined in section 13A) at the end of that period.
do not exceed the lower relevant maximum amount, the company may claim that the corporation tax charged on its basic profits for that period shall be calculated as if the rate of corporation tax (instead of being the rate fixed for companies generally) were such lower rate (to be known as the “*small companies’ rate*”) as Parliament may from time to time determine.
- (2) Where in any accounting period the profits of any such company exceed the lower relevant maximum amount but do not exceed the upper relevant maximum amount, the company may claim that the corporation tax charged on its basic profits for that period shall be reduced by a sum equal to such fraction as Parliament may from time to time determine of the following amount—
$$(M-P)xIP$where—$
M is the upper relevant maximum amount;
P is the amount of the profits; and
I is the amount of the basic profits.
- (3) The lower and upper relevant maximum amounts mentioned above shall be determined as follows—
- (a) where the company has no associated company in the accounting period, those amounts are £300,000 and £1,500,000 respectively;
- (b) where the company has one or more associated companies in the accounting period, the lower relevant maximum amount is £300,000 divided by one plus the number of those associated companies, and the upper relevant maximum amount is £1,500,000 divided by one plus the number of those associated companies.
- (4) In applying subsection (3) above to any accounting period of a company, an associated company which has not carried on any trade or business at any time in that accounting period (or, if an associated company during part only of that accounting period, at any time in that part of that accounting period) shall be disregarded and for the purposes of this section a company is to be treated as an “*associated company*” of another at a given time if at that time one of the two has control of the other or both are under the control of the same person or persons.
- In this subsection “*control*” shall be construed in accordance with section 416 except that, in the application of subsection (6) of that section in relation to the company (“the taxpayer company”) and another company or companies for the purposes of this section, the references to an associate of a person (“P”) include a partner of the person only if the condition in subsection (4A) below is met.
- (4A) The condition referred to in subsection (4) above is that relevant tax planning arrangements have at any time had effect in relation to the taxpayer company (whether in connection with its formation or otherwise).
- (4B) In subsection (4A) above “*relevant tax planning arrangements*” means arrangements which—
- (a) involve P and the partner, and
- (b) secure a relevant tax advantage.
- (4C) In subsection (4B) above—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), other than any guarantee, security or charge given to or taken by a bank, and
- “*relevant tax advantage*” means a reduction of the taxpayer company's liability to corporation tax by virtue of an increase in relief under this section.
- (5) In determining how many associated companies a company has got in an accounting period or whether a company has an associated company in an accounting period, an associated company shall be counted even if it was an associated company for part only of the accounting period, and two or more associated companies shall be counted even if they were associated companies for different parts of the accounting period .
- (6) For an accounting period of less than 12 months the relevant maximum amounts determined in accordance with subsection (3) above shall be proportionately reduced.
- (7) For the purposes of this section the profits (but not the basic profits) of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne, with the addition of franked investment income other than franked investment income (if any) which the company (“the receiving company") receives from a company . . . which is—
- (a) a 51 per cent. subsidiary of the receiving company or of a company . . . of which the receiving company is a 51 per cent. subsidiary; or
- (b) a trading or holding company which does not fall within subsection (7A) below and which is owned by a consortium the members of which include the receiving company.
which the company (if a member of a group) receives from companies within the group . . . ; and for this purpose distributions received by the company from another are to be treated as coming from within the company’s group if, but only if, dividends so received are group income or would be group income if the companies so elected.
- (7A) A company falls within this subsection if—
- (a) it is a 75 per cent subsidiary of any other company, or
- (b) arrangements of any kind (whether in writing or not) are in existence by virtue of which it could become such a subsidiary.
- (8) For the purposes of this section the basic profits of a company for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne.
- (8AA) Section 13ZA applies for the interpretation of subsection (7) above.
- (8AB) The reference in subsection (7) above to franked investment income received by a company applies to any such income received by another person on behalf of or in trust for the company, but not to any such income received by the company on behalf of or in trust for another person.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Advance corporation tax
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 14
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this Act “*qualifying distribution*” means any distribution other than—
- (a) a distribution which, in relation to the company making it, is a distribution by virtue only of section 209(2)(c); or
- (b) a distribution consisting of any share capital or security which the company making the distribution has directly or indirectly received from the company by which the share capital or security was issued and which, in relation to the latter company, is a distribution by virtue only of section 209(2)(c).
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The six Schedules
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 15
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule B
##### 16
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule C
##### 17
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule D
##### 18
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule E
##### 19
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule F
##### 20
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART II — PROVISIONS RELATING TO THE SCHEDULE A CHARGE
### General
#### Persons chargeable
##### 21
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessments
##### 22
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Collection from lessees and agents
##### 23
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Construction of Part II
##### 24
- (1) In this Part, except where the context otherwise requires—
- “*lease*” includes an agreement for a lease, and any tenancy, but does not include a mortgage or heritable security, and “*lessee*”, “*lessor*” and “*letting*” shall be construed accordingly;
- “*lessee*” and “*lessor*” include respectively the successors in title of a lessee or a lessor; and
- “*premises*” includes any land; and
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In the application of this Part to Scotland—
- “*assignment*” means an assignation;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) In Schedule A and in sections 25 to 31—
- (5) Schedule 26 shall have effect with respect to the reliefs which may be claimed by a company resident in the United Kingdom which has a liability for tax in respect of an amount of chargeable profits; and no reliefs other than those provided for by that Schedule shall be allowed against any such liability.
- (6) In any case where—
- (a) the whole or any part of the tax chargeable on a company (“the chargeable company”) by virtue of section 747(4)(a) is not paid before the date on which it is due and payable in accordance with this Act or, as the case may be, the Management Act; and
- (b) the Board serve a notice of liability to tax under this subsection on another company (“the responsible company”) which is resident in the United Kingdom and holds or has held (whether directly or indirectly) the whole or any part of the same interest in the controlled foreign company as is or was held by the chargeable company,
the whole or, as the case may be, the corresponding part of the tax chargeable on the chargeable company or, as the case may be, so much of it as remains unpaid shall be payable by the responsible company upon service of the notice.
- (7) Where a notice of liability is served under subsection (6) above—
- (a) the whole, or (as the case may be) the corresponding part, of any interest due on the tax chargeable on the chargeable company and not paid; and
- (b) any interest accruing due on that tax after the date of service,
shall be payable by the responsible company (so far as referable to tax payable by the responsible company by virtue of the notice).
- (8) In any case where—
- (a) a notice of liability is served on the responsible company under subsection (6) above, and
- (b) the relevant tax and any interest payable by the responsible company under subsection (7) above is not paid by that company before the expiry of the period of three months beginning on the date of service of the notice,
that tax and interest may, without prejudice to the right of recovery from the responsible company, be recovered from the chargeable company.
- (9) In this section “*the Taxes Acts*” has the same meaning as in the Management Act.
#### Information relating to controlled foreign companies
##### 755
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation and construction of Chapter IV
##### 756
- (1) In this Chapter—
- “*company tax return*” means a return required to be made under Schedule 18 to the Finance Act 1998;
- “*trading company*” means a company whose business consists wholly or mainly of the carrying on of a trade or trades.
- (1A) In this Chapter “*EEA territory*”, in relation to any time, means a territory which is an EEA state at that time other than the United Kingdom.
- (1B) But a territory is not to be regarded for the purposes of subsection (1A) above as an EEA state at any time if—
- (a) it is not a member State at that time, and
- (b) there are no arrangements made in relation to the territory having effect by virtue of section 173 of the Finance Act 2006 (international tax enforcement arrangements) at that time.
- (2) For the purposes of this Chapter—
- (a) section 839 applies; and
- (b) subsection (10) of section 783 applies as it applies for the purposes of that section.
- (3) The following provisions of Part XI apply for the purposes of this Chapter as they apply for the purposes of that Part—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) “*rent*” includes a payment by the tenant to defray the cost of work of maintenance of, or repairs to, the demised premises, not being work required by the lease to be carried out by the tenant; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Deductions and other allowances
#### Deductions from rent: general rules
##### 25
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deductions from rent: land managed as one estate
##### 26
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deductions from rent: maintenance funds for historic buildings
##### 27
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deductions from receipts other than rent
##### 28
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sporting rights
##### 29
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenditure on making sea walls
##### 30
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 25 to 30
##### 31
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital allowances for machinery and plant used in estate management
##### 32
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Agricultural land: allowance for excess expenditure on maintenance
##### 33
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Premiums, leases at undervalue etc
#### Treatment of premiums etc. as rent or Schedule D profits
##### 34
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule D charge on assignment of lease granted at an undervalue
##### 35
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule D charge on sale of land with right to reconveyance
##### 36
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Premiums paid etc: deductions from premiums and rent received
##### 37
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Rules for ascertaining duration of leases
##### 38
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Saving for pre-1963 leases, and special relief for individuals
##### 39
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary provisions
#### Tax treatment of receipts and outgoings on sale of land
##### 40
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for rent etc. not paid
##### 41
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against determinations under sections 34 to 36
##### 42
- (1) Where it appears to the inspector that the determination of —
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) any amount that under Chapter 4 of Part 3 of ITTOIA 2005 (profits of property businesses: lease premiums etc.) is brought into account as a receipt in calculating the profits of a property business (within the meaning of that Act),
may affect the liability to income tax, corporation tax or capital gains tax of other persons he may give notice to those persons as well as to the first-mentioned person of the determination he proposes to make and of the rights conferred on them by this section.
- (2) Any person to whom such a notice is given may, within 30 days after the date on which it is given, object to the proposed determination by notice given to the inspector.
- (3) Where notices have been given under subsection (1) above and no notice of objection is duly given under subsection (2) above the inspector shall make the determination as proposed in his notices and the determination shall not be called in question in any proceedings.
- (4) Where a notice of objection is duly given the amount mentioned in subsection (1) above shall be determined in like manner as an appeal . . . .
- (5) All persons to whom notices have been given under subsection (1) above may be a party to any proceedings under subsection (4) above and in any appeal arising out of those proceedings and shall be bound by the determination made in the proceedings or on appeal, whether or not they have taken part in the proceedings; and their successors in title shall also be so bound.
- (6) A notice under subsection (1) above may, notwithstanding any obligation as to secrecy or other restriction on the disclosure of information, include a statement of the grounds on which the inspector proposes to make the determination.
- (7) An inspector may by notice require any person to give within the time specified in the notice such information as appears to the inspector to be required for deciding whether to give a notice under subsection (1) above to any person.
#### Non-residents
##### 43
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART III — GOVERNMENT SECURITIES
### General
#### Income tax: mode of charge
##### 44
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Part III
##### 45
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Government securities: exemptions from tax
#### Savings certificates and tax reserve certificates
##### 46
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### United Kingdom government securities held by non-residents
##### 47
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Securities of foreign states
##### 48
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Stock and dividends in name of Treasury etc
##### 49
- (1) No tax shall be chargeable in respect of the stock or dividends—
- (a) transferred, in pursuance of any Act of Parliament, to accounts in the books of the Bank of England in the name of the Treasury or the National Debt Commissioners, or
- (b) transferred, in pursuance of any Act of Parliament, to the Treasury or the National Debt Commissioners and in respect of which the Treasury or those Commissioners are entered as holder in the registers kept by the Registrar of Government Stock,
but the Bank of England and the Registrar of Government Stock shall each transmit to the Board an account of the total amount thereof in those books or registers as the case may be.
- (2) No tax shall be chargeable in respect of the stock or dividends belonging to the Crown, in whatever name they may stand in the books of the Bank of England or in the registers kept by the Registrar of Government Stock.
- (3) In this section “dividends” means any interest, public annuities, dividends or shares of annuities.
- (4) In this section “*Registrar of Government Stock*” means the person or persons appointed in accordance with regulations under section 47(1)(b) of the Finance Act 1942 (see regulation 3 of the Government Stock Regulations 2004).
### Government securities: interest payable without deduction of tax
#### United Kingdom securities: Treasury directions for payment without deduction of tax
##### 50
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treasury directions as respects Northern Ireland securities
##### 51
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of interest on converted government securities and interest which becomes subject to deduction
##### 52
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART IV — PROVISIONS RELATING TO THE SCHEDULE D CHARGE
### CHAPTER I — SUPPLEMENTARY CHARGING PROVISIONS
#### Farming and other commercial occupation of land (except woodlands)
##### 53
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Woodlands managed on a commercial basis
##### 54
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Mines, quarries and other concerns
##### 55
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transactions in deposits with and without certificates or in debts
##### 56
- (1) Subsection (2) below applies to the following rights—
- (a) the right to receive the amount, with or without interest, stated in a certificate of deposit;
- (b) the right to receive an amount payable with interest—
- (i) in a transaction in which no certificate of deposit or security is issued, and
- (ii) which is payable by a bank or similar institution or a person regularly engaging in similar transactions;
and the right to receive that interest.
- (2) Profits or gains arising to a company from the disposal of a right to which this subsection applies or, except so far as it is a right to receive interest, from the exercise of any such right (whether by the person to whom the certificate was issued or by some other person, or, as the case may be, by the person who acquired the right in the transaction referred to in subsection (1) above or by some person acquiring it directly or indirectly from that person), shall, if not falling to be taken into account as a trading receipt, be treated as an amount to which the charge to corporation tax on income applies.
- (3) Subsection (2) above and section 551 of ITTOIA 2005 (charge to income tax on profits from disposal of deposit rights) do not apply in the case of the disposal or exercise of a right to receive an amount stated in a certificate of deposit or interest on such an amount—
- (a) if the company disposing of the right acquired it before 7th March 1973;
- (b) to any profits or gains arising to a fund or scheme in the case of which provision is made by section 613(4) or 614(2) or (3) or section 186 of the Finance Act 2004 for exempting the whole or part of its income from income tax;
- (c) in so far as they are applied to charitable purposes only, to any profits or gains arising to a charitable company within the meaning of section 506.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) This section and section 56A shall not apply for the purposes of corporation tax except in relation to rights in existence before 1st April 1996.
- (4B) For the purposes of corporation tax, where any profits or gains arising from the disposal or exercise of a right in existence before 1st April 1996 are, or (if there were any) would be, chargeable under this section, nothing in Part 5 of CTA 2009 (loan relationships) shall require any amount relating to that disposal, or to the exercise of that right, to be brought into account for the purposes of that Part.
- (5) In this section—
- “*certificate of deposit*” means a document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable; and
- “*security*” has the same meaning as in section 132 of the 1992 Act.
#### Deep discount securities
##### 57
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign pensions
##### 58
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons chargeable
##### 59
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Where, in accordance with section 12 of ITTOIA 2005, income tax is charged . . . on the profits of markets or fairs, or on tolls, fisheries or any other annual or casual profits not distrainable, the owner or occupier or receiver of the profits thereof shall be answerable for the tax so charged, and may retain and deduct the same out of any such profits.
- (4) Subsection (3) above shall not apply for the purposes of corporation tax.
### CHAPTER II — INCOME TAX: BASIS OF ASSESSMENT ETC.
### Cases I and II
#### Assessment on preceding year basis
##### 60
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special basis at commencement of trade, profession or vocation
##### 61
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special basis for early years following commencement
##### 62
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special basis on discontinuance
##### 63
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Cases III, IV and V
#### Case III assessments: general
##### 64
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cases IV and V assessments: general
##### 65
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special rules for fresh income
##### 66
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special rules where source of income disposed of or yield ceases
##### 67
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special rules where property etc. situated in Republic of Ireland
##### 68
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Case VI
#### Assessment on current year basis unless otherwise directed
##### 69
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — CORPORATION TAX: BASIS OF ASSESSMENT ETC
#### Basis of assessment etc
##### 70
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — PROVISIONS SUPPLEMENTARY TO CHAPTERS II AND III
#### Computation of income tax where no profits in year of assessment
##### 71
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Apportionments etc. for purposes of Cases I, II and VI
##### 72
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Single assessments for purposes of Cases III, IV and V
##### 73
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — COMPUTATIONAL PROVISIONS
### Deductions
#### General rules as to deductions not allowable
##### 74
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of management: investment companies
##### 75
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of management: insurance companies
##### 76
- (1) In computing for the purposes of corporation tax the profits for any accounting period of a company—
- (a) which carries on life assurance business, and
- (b) which is charged to tax in respect of that business under the I minus E basis,
sections 1219 to 1223 of CTA 2009 (expenses of management of a company's investment business) do not apply in computing the profits of that business, but a deduction for expenses payable (the “expenses deduction”) is to be allowed in accordance with the following provisions of this section.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) The expenses deduction is to be made from so much of the income and gains of the accounting period referable to basic life assurance and general annuity business as remains after any deduction falling to be made by virtue of section 388 of CTA 2009 (basic rule: deficit set off against income and gains of deficit period).
- (3) For the purposes of this section “*expenses payable*” means expenses brought into account in line 12, 22 or 25 of Form 40 (the revenue account) in the periodical return of the company for a period of account, but does not include any of the amounts falling within subsection (4), (5) or (6) below.
- (4) The amounts falling within this subsection are the following—
- (a) reinsurance premiums,
- (b) refunds of premiums,
- (c) profit commissions and profit participations (however described),
- (d) expenses or other amounts payable, to the extent that the company’s purpose in incurring the liability to make the payment is not a business or other commercial purpose of the company.
For the purposes of paragraph (d) above, it is not one of the business or commercial purposes of a company to incur a liability to pay an amount of commission or other expenses which exceeds the amount which it could reasonably be expected to pay if the company were charged to tax under section 35 of CTA 2009 (charge on trade profits) in respect of its life assurance business.
- (5) The amounts falling within this subsection are any amounts payable in connection with a policy or contract to—
- (a) a policy holder or annuitant under the policy or contract (except where the policy holder is an insurance company),
- (b) any other person who is entitled to receive benefits under the policy or contract,
- (c) any person acting on behalf of a person falling within paragraph (a) or (b) above,
- (d) the personal representatives of a deceased person who fell within paragraphs (a) to (c) above.
- (6) The amounts falling within this subsection are expenses of a capital nature.
But this subsection does not apply in the case of an amount which, by virtue of any provision of the Tax Acts other than this section, falls to be treated for the purposes of this section as expenses payable which fall to be brought into account at Step 1 in subsection (7) below (the reference to Step 1 being express in the provision).
- (7) The amount of the expenses deduction for an accounting period is found by taking the following steps—
- *Step 1*
- Find so much of the expenses payable as are—attributable to basic life assurance and general annuity business (see subsection (8) below), andreferable to the accounting period (see subsection (9) below).
- *Step 2*
- Reduce each of the amounts found at Step 1 by excluding so much of the amount as is—deductible in computing, for corporation tax purposes, the profits of a UK property business,deductible by virtue of section 85(2B) of the Finance Act 1989, . . . deductible by virtue of section 272 of CTA 2009 in computing income from the letting of rights to work minerals in the United Kingdom, orrequired to be deducted by subsection (9A) below.
- *Step 3*
- Find the amounts (so far as not included at Step 1) which fall to be treated for the purposes of this section as expenses payable for the accounting period by virtue of any of the following provisions—
- section 432AB(3) (Schedule A loss or an overseas property business loss referable to basic life assurance and general annuity business);
- section 437(1A) (relief for income element of new annuities);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- paragraph 16(1) of Schedule 7 to the Finance Act 1991 (transitional relief for old annuities);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- section 256(2)(a) of the Capital Allowances Act (capital allowances on plant and machinery used in the management of life assurance business);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- section 391(3)(b) of CTA 2009 (carried forward non-trading deficit on loan relationships);
- section 1080(2) of CTA 2009 (30% additional deduction for qualifying R&D expenditure of company carrying on life assurance business);
- section 1162 of CTA 2009 (50% additional relief for remediation expenditure on contaminated or derelict land owned by company carrying on life assurance business).
- *Step 4*
- Give effect to the provisions specified in Step 3 by adding together—so much of the amounts found at Step 1 as remains after making any reductions at Step 2, andthe amounts found at Step 3,
- and then deduct the amount of any reversal (wherever brought into account) of an expense included at Step 1 in a previous period,
- to give Subtotal 1.
- *Step 5*
- If the whole or any part of a loss arising to the company in respect of its life assurance business in the accounting period is set off under section 393A or 403(1)—find the amount (“amount L”) that is equal to so much of the loss as, in the aggregate, is so set off,find the amount (“amount S”) by which any losses for that period under section 436A fall to be reduced under section 434A(2)(b),from amount L deduct amount S, to give the adjusted loss deduction,
- then reduce Subtotal 1 by deducting from it the adjusted loss deduction,
- to give Subtotal 2.
- *Step 6*
- Give effect to subsection (6) of section 86 of the Finance Act 1989 (spreading of acquisition expenses) by—finding the amount that is equal to six-sevenths of the adjusted amount of the acquisition expenses (within the meaning of that section) for the accounting period, anddeducting that amount from Subtotal 2,
- to give Subtotal 3.
- *Step 7*
- Add together the following amounts—Subtotal 3, andany amounts carried forward to the accounting period under subsection (12) or (13) below (unrelieved excesses from earlier accounting periods),
- to give Subtotal 4.
- *Step 8*
- Give effect to subsections (8) and (9) of section 86 of the Finance Act 1989 (fraction of adjusted amount of acquisition expenses for earlier accounting periods) by adding together—Subtotal 4, andany amounts which are to be relieved under this section by virtue of those subsections,
- to give the expenses deduction.
- *Step 9*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- *Step 10: the amount of the expenses deduction*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) For the purposes of Step 1, the expenses that are attributable to basic life assurance and general annuity business are the expenses which are attributable to that business in accordance with proper internal accounting practice.
In this subsection “*proper internal accounting practice*” means the practice of insurance companies in allocating all the expenses of the company to particular categories of business in accordance with any applicable requirements of—
- (a) generally accepted accounting practice, . . .
- (b) the Prudential Sourcebook (Insurers), or
- (c) the Insurance Prudential Sourcebook.
- (9) The following rules have effect for determining for the purposes of Step 1 the expenses that are referable to an accounting period.
*Rule A*
Where a period of account coincides with an accounting period, the expenses brought into account for the period of account are the expenses referable to the accounting period.
*Rule B*
Where—
- (a) two or more accounting periods fall within the same period of account, and
- (b) that period of account is longer than 12 months,
section 834(4) (apportionment on time basis) is to apply.
*Rule C*
In any other case where two or more accounting periods fall within the same period of account, the expenses referable to any of those accounting periods are the expenses that would have been referable to that accounting period if—
- (a) the accounting period had coincided with a period of account, and
- (b) a separate periodical return had been made for that period of account,
and section 834(4) (apportionment on time basis) is not to apply.
*Rule D*
Rules A to C are subject to any provision of the Corporation Tax Acts which provides for an amount to be treated as expenses payable for, or referable to, a particular period.
- (9A) The amount required to be deducted at paragraph (d) of Step 2 is the total of the amounts (if any) arrived at under subsection (9C) below in relation to the fronting reinsurance contracts (if any) made by the company.
- (9B) A fronting reinsurance contract is a contract of reinsurance forming part of a fronting reinsurance arrangement; and a fronting reinsurance arrangement is an arrangement under which the company—
- (a) enters into a contract constituting term assurance with a person, and
- (b) reinsures all, or substantially all, of the liabilities under that contract with a reinsurer which—
- (i) does not meet the BLAGAB group reinsurance conditions in paragraph 1(3) of Schedule 19ABA to this Act, and
- (ii) is connected with that person or with a person entitled to commission from the company in respect of the contract.
- (9C) The amount referred to in subsection (9A) above in relation to any fronting reinsurance contract made by the company is the relevant reinsurance fraction of so much of the amount found at Step 1 as relates to policies and contracts which are relevant reinsured policies and contracts in relation to the fronting reinsurance contract.
- (9D) For the purposes of subsection (9C) above “the relevant reinsurance fraction” is—
$$RLTL$where—RL is so much of TL as is reinsured under the fronting reinsurance contract, andTL is the amount of the total liabilities under the relevant reinsured policies and contracts at the end of the accounting period.$
- (9E) For the purposes of subsections (9B) and (9C) above policies and contracts are relevant reinsured policies and contracts in relation to a fronting reinsurance contract if—
- (a) they are attributable to the company's basic life assurance and general annuity business, and
- (b) any or all of the risks under them are reinsured under the fronting reinsurance contract.
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) Where for any accounting period—
- (a) the amount of the expenses deduction (see Step 8), exceeds
- (b) the amount from which that deduction is to be made (see subsection (2) above),
the excess is to be carried forward to the next accounting period for which the company is charged to tax in respect of its life assurance business under the I minus E basis and brought into account for that period in accordance with Step 7.
- (13) Where for any accounting period excess adjusted Case I profits are charged to tax under section 85A of the Finance Act 1989, an amount equal to the profits is to be carried forward to the next accounting period for which the company is charged to tax in respect of its life assurance business under the I minus E basis and brought into account for that period in accordance with Step 7.
- (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (15) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*expenses payable*” has the meaning given by subsection (3) above;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Incidental costs of obtaining loan finance
##### 77
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Discounted bills of exchange
##### 78
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Contributions to local enterprise agencies
##### 79
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses connected with foreign trades etc
##### 80
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Travel between trades etc
##### 81
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest paid to non-residents
##### 82
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Patent fees etc. and expenses
##### 83
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments for technical education
##### 84
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to trustees of approved profit sharing schemes
##### 85
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employees seconded to charities and educational establishments
##### 86
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxable premiums etc
##### 87
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to Export Credit Guarantee Department
##### 88
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Debts proving irrecoverable after event treated as discontinuance
##### 89
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional payments to redundant employees
##### 90
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cemeteries
##### 91
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Treatment of regional development and other grants and debts released etc.
#### Regional development grants
##### 92
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other grants under Industrial Development Act 1982 etc
##### 93
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Debts deducted and subsequently released
##### 94
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of dealer’s receipts on purchase by company of own shares
##### 95
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Special provisions
#### Farming and market gardening: relief for fluctuating profits
##### 96
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of farm animals etc
##### 97
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tied premises
##### 98
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dealers in land
##### 99
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VI — DISCONTINUANCE . . .
### Valuation of trading stock etc.
#### Valuation of trading stock at discontinuance of trade
##### 100
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of work in progress at discontinuance of profession or vocation
##### 101
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 100 and 101
##### 102
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Case VI charges on receipts
#### Receipts after discontinuance: earnings basis charge and related charge affecting conventional basis
##### 103
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conventional basis: general charge on receipts after discontinuance or change of basis
##### 104
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowable deductions
##### 105
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of charges where rights to payments transferred
##### 106
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Reliefs
#### Treatment of receipts as earned income
##### 107
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Election for carry-back
##### 108
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge under section 104: relief for individuals born before 6th April 1917
##### 109
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplemental
#### Interpretation etc
##### 110
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VII — PARTNERSHIPS AND SUCCESSIONS
### General
#### Partnership assessments to income tax
##### 111
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Partnerships controlled abroad
##### 112
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect, for income tax, of change in ownership of trade, profession or vocation
##### 113
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Partnerships involving companies
#### Special rules for computing profits and losses
##### 114
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 114
##### 115
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Arrangements for transferring relief
##### 116
- (1) The provisions of subsection (2) below shall apply in relation to a company (“the partner company”) which is a member of a partnership carrying on a trade if arrangements are in existence (whether as part of the terms of the partnership or otherwise) whereby—
- (a) in respect of the whole or any part of the value of, or of any portion of, the partner company’s share in the profits or loss of any accounting period of the partnership, another member of the partnership or any person connected with another member of the partnership receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money’s worth; or
- (b) in respect of the whole or any part of the cost of, or of any portion of, the partner company’s share in the loss of any accounting period of the partnership, the partner company or any person connected with that company receives any payment or acquires or enjoys, directly or indirectly, any other benefit in money’s worth, other than a payment in respect of group relief to the partner company by a company which is a member of the same group as the partner company for the purposes of group relief.
- (2) In any case where the provisions of this subsection apply in relation to the partner company—
- (a) the company’s share in the loss of the relevant accounting period of the partnership and its share in any charges on income, within the meaning of section 338, paid by the partnership in that accounting period shall not be available for set-off for the purposes of corporation tax except against its share in the profits of the trade carried on by the partnership; and
- (b) except in accordance with paragraph (a) above, no trading losses shall be available for set-off for the purposes of corporation tax against the company’s share in the profits of the relevant accounting period of the partnership; and
- (c) except in accordance with paragraphs (a) and (b) above, no amount which, apart from this subsection, would be available for relief against profits shall be available for set-off for the purposes of corporation tax against so much of the company’s total profits as consists of its share in the profits of the relevant accounting period of the partnership; and
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) In subsection (2) above “*relevant accounting period of the partnership*” means any accounting period of the partnership in which any such arrangements as are specified in subsection (1) above are in existence or to which any such arrangements apply.
- (4) If a company is a member of a partnership and corporation tax in respect of any profits of the partnership is chargeable under or by virtue of any provision to which section 834A (miscellaneous charges) applies, this section shall apply in relation to the company’s share in the profits or loss of the partnership as if—
- (a) the profits or loss to which the company’s share is attributable were the profits of, or the loss incurred in, a trade carried on by the partnership; and
- (b) any allowance to be given effect under Part 2 of the Capital Allowances Act in respect of a special leasing of plant or machinery were an allowance to be given effect in calculating the profits of that trade.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) In this section “*arrangements*” means arrangements of any kind whether in writing or not.
- (7) Section 839 shall apply for the purposes of this section.
### Limited partners
#### Restriction on relief: individuals
##### 117
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction on relief: companies
##### 118
- (1) An amount which may be given . . . under section 338, 393A(1) or 403 below . . . —
- (a) in respect of a loss incurred by a company in a trade, or of charges paid by a company in connection with the carrying on of a trade, in a relevant accounting period; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
may be given . . . to that company (“the partner company”) otherwise than against profits arising from the trade, or to another company, only to the extent that the amount given . . . or (as the case may be) the aggregate amount does not exceed the relevant sum.
- (2) In this section—
- “*limited partner*” means—a company which is carrying on a trade as a limited partner in a limited partnership registered under the Limited Partnerships Act 1907;a company which—is carrying on a trade as a general partner in a partnership;is not entitled to take part in the management of the trade; andis entitled to have its liabilities, or its liabilities beyond a certain limit, for debts or obligations incurred for the purposes of the trade discharged or reimbursed by some other person; ora company which carries on a trade jointly with others and which, under the law of any territory outside the United Kingdom—is not entitled to take part in the management of the trade; andis not liable beyond a certain limit for debts or obligations incurred for the purposes of the trade;
- “*relevant accounting period*” means an accounting period of the partner company at any time during which it carried on the trade as a limited partner . . . ;
- “*the aggregate amount*” means the aggregate of any amounts given . . . to the partner company or another company at any time under section 338, 393A(1) or 403 below . . . —in respect of a loss incurred by the partner company in the trade, or of charges paid by it in connection with carrying it on, in any relevant accounting period; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*the relevant sum*” means the amount of the partner company’s contribution . . . to the trade as at the appropriate time; and
- “*the appropriate time*” is the end of the relevant accounting period in which the loss is incurred or the charges paid or for which the allowance falls to be made (except that where the partner company ceased to carry on the trade during that accounting period it is the time when it so ceased).
- (3) A partner company's contribution to a trade at any time is the aggregate of—
- (a) the amount which the partner company has contributed to the trade as capital and has not, directly or indirectly, drawn out or received back (other than anything which it is or may be entitled so to draw out or receive back at any time when it carries on the trade as a limited partner or which it is or may be entitled to require another person to reimburse to it), and
- (b) the amount of any profits of the trade to which the partner company is entitled but which it has not received in money or money's worth.
### CHAPTER VIII — MISCELLANEOUS AND SUPPLEMENTAL
#### Rent etc. payable in connection with mines, quarries and similar concerns
##### 119
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Rent etc. payable in respect of electric line wayleaves
##### 120
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Management expenses of owner of mineral rights
##### 121
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief in respect of mineral royalties
##### 122
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign dividends
##### 123
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on quoted Eurobonds
##### 124
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annual payments for non-taxable consideration
##### 125
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treasury securities issued at a discount
##### 126
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Enterprise allowance
##### 127
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commodity and financial futures etc.: losses and gains
##### 128
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Stock lending
##### 129
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “investment company” for purposes of Part IV
##### 130
In this Part of this Act —
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*investment company*”, means any company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings except any which, for the purposes of the Trustee Savings Bank Act 1985, is a successor or a further successor to a trustee savings bank.
## PART V — PROVISIONS RELATING TO THE SCHEDULE E CHARGE
### CHAPTER I — SUPPLEMENTARY CHARGING PROVISIONS OF GENERAL APPLICATION
### Miscellaneous provisions
#### Chargeable emoluments
##### 131
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Place of performance, and meaning of emoluments received in the U.K
##### 132
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Voluntary pensions
##### 133
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Workers supplied by agencies
##### 134
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Shareholdings, loans etc.
#### Gains by directors and employees from share options
##### 135
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 135
##### 136
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payment of tax under section 135 by instalments
##### 137
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Share acquisitions by directors and employees
##### 138
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 138
##### 139
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further interpretation of sections 135 to 139
##### 140
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Vouchers etc.
#### Non-cash vouchers
##### 141
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Credit-tokens
##### 142
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cash vouchers taxable under P.A.Y.E
##### 143
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions
##### 144
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Living accommodation
#### Living accommodation provided for employee
##### 145
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional charge in respect of certain living accommodation
##### 146
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Occupation of Chevening House
##### 147
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Payments on retirement, sick pay etc.
#### Payments on retirement or removal from office or employment
##### 148
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sick pay
##### 149
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Job release scheme allowances, maternity pay and statutory sick pay
##### 150
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Income support etc
##### 151
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Notification of amount taxable under section 151
##### 152
- (1) A benefit officer may by notice notify a person who is taxable in respect of any unemployment benefit , Jobseeker’s allowance or income support of the amount on which he is taxable and any such notification shall state the date on which it is issued and shall inform the person to whom it is given that he may object to the notification by notice given within 60 days after the date of issue of the notification.
- (2) Where—
- (a) no objection is made to a notification of an amount under subsection (1) above within the period specified in that subsection (or such further period as may be allowed by virtue of subsection (5) below); or
- (b) an objection is made but is withdrawn by the objector by notice,
that amount shall not be questioned in any appeal against any assessment in respect of income including that amount.
- (3) Where—
- (a) an objection is made to a notification of an amount under subsection (1) above within the period specified in that subsection (or such further period as may be allowed by virtue of subsection (5) below), and
- (b) the benefit officer and the objector come to an agreement that the amount notified should be varied in a particular manner, and
- (c) the officer confirms the agreement to vary in writing,
then, subject to subsection (4) below, that amount as so varied shall not be questioned in any appeal against any assessment in respect of income including that amount.
- (4) Subsection (3) above shall not apply if, within 60 days from the date when the agreement was come to, the objector gives notice to the benefit officer that he wishes to repudiate or resile from the agreement.
- (5) An objection to a notification may be made later than 60 days after the date of the issue of the notification if, on an application for the purpose—
- (a) a benefit officer is satisfied that there was a reasonable excuse for not objecting within that time, and
- (b) the objection was made thereafter without unreasonable delay, and
- (c) the officer gives consent in writing;
and if the officer is not so satisfied he shall refer the application for determination by the tribunal.
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Where a benefit officer has notified an amount to a person under subsection (1) above, he may by another notice notify the person of an alteration in the amount previously notified and, if he does so, the original notification shall be cancelled and this section shall apply to such a subsequent notification as it applies to the original notification.
- (7) In this section “*benefit officer*” means the appropriate officer, in Great Britain, of the Department for Work and Pensions, or, in Northern Ireland, of the Department of Health and Social Services.
### CHAPTER II — EMPLOYEES EARNING £8,500 OR MORE AND DIRECTORS
### Expenses
#### Payments in respect of expenses
##### 153
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Benefits in kind
#### General charging provision
##### 154
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from the general charge
##### 155
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cash equivalents of benefits charged under section 154
##### 156
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#### Cars available for private use
##### 157
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Car fuel
##### 158
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Pooled cars
##### 159
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#### Beneficial loan arrangements
##### 160
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from section 160
##### 161
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employee shareholdings
##### 162
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses connected with living accommodation
##### 163
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Director’s tax paid by employer
##### 164
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scholarships
##### 165
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### General supplementary provisions
#### Notice of nil liability under this Chapter
##### 166
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “director’s or higher-paid employment”
##### 167
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other interpretative provisions
##### 168
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — PROFIT-RELATED PAY
### Preliminary
#### Interpretation
##### 169
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of profit-related pay
##### 170
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The relief
#### Relief from tax
##### 171
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from tax
##### 172
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Registration
#### Persons who may apply for registration
##### 173
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#### Excluded employments
##### 174
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Applications for registration
##### 175
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Registration
##### 176
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change of scheme employer
##### 177
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cancellation of registration
##### 178
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Administration
#### Recovery of tax from scheme employer
##### 179
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annual returns etc
##### 180
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other information
##### 181
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals
##### 182
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary
#### Partnerships
##### 183
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#### Independent accountants
##### 184
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — OTHER EXEMPTIONS AND RELIEFS
### Share option and profit sharing schemes
#### Approved share option schemes
##### 185
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Approved profit sharing schemes
##### 186
- (1) The provisions of this section apply where, after 5th April 1979 and before 1st January 2003, the trustees of an approved profit sharing scheme appropriate shares—
- (a) which have previously been acquired by the trustees, and
- (b) as to which the conditions in Part II of Schedule 9 are fulfilled,
to an individual who participates in the scheme (“the participant”).
- (2) Notwithstanding that, by virtue of such an appropriation of shares as is mentioned in subsection (1) above, the beneficial interest in the shares passes to the participant to whom they are appropriated—
- (a) the value of the shares at the time of the appropriation shall be treated as not being income of his chargeable to tax under Schedule E; and
- (b) he shall not be chargeable to income tax under that Schedule by virtue of section 78 or 79 of the Finance Act 1988 in respect of the shares or by virtue of section 162 in any case where the shares are appropriated to him at an undervalue within the meaning of that section.
- (3) Subject to the provisions of this section and paragraph 4 of Schedule 10, if, in respect of or by reference to any of a participant’s shares, the trustees become or the participant becomes entitled, before the release date, to receive any money or money’s worth (“a capital receipt”), . . . the appropriate percentage (determined as at the time the trustees become or the participant becomes so entitled) of so much of the amount or value of the receipt as exceeds the appropriate allowance for that year, as determined under subsection (12) below counts as employment income of the participant for the year of assessment in which the entitlement arises.
- (4) If the trustees dispose of any of a participant’s shares at any time before the release date or, if it is earlier, the date of the participant’s death, then, subject to subsections (6) and (7) below, . . . the appropriate percentage of the locked-in value of the shares at the time of the disposal counts as employment income of the participant for the year of assessment in which the disposal takes place.
- (5) Subject to paragraphs 5 and 6(6) of Schedule 10, the locked-in value of a participant’s shares at any time is—
- (a) if prior to that time he has become entitled to a capital receipt (within the meaning of subsection (3) above) which is referable to those shares and—
- (i) an amount calculated by reference to that capital receipt counts as his employment income by virtue of subsection (3) above, or
- (ii) if the entitlement to the capital receipt arose before 6th April 2003, he was chargeable to income tax by virtue of that subsection (as it had effect before that date) in respect of that capital receipt,
the amount by which their initial market value exceeds the amount or value of that capital receipt or, if there has been more than one such receipt, the aggregate of them; and
- (b) in any other case, their initial market value.
- (6) Subject to subsection (7) below, if, on a disposal of shares falling within subsection (4) above, the proceeds of the disposal are less than the locked-in value of the shares at the time of the disposal, subsection (4) above shall have effect as if that locked-in value were reduced to an amount equal to the proceeds of the disposal.
- (7) If, at any time prior to the disposal of any of a participant’s shares, a payment was made to the trustees to enable them to exercise rights arising under a rights issue, then, subject to subsection (8) below, subsections (4) and (6) above shall have effect as if the proceeds of the disposal were reduced by an amount equal to that proportion of that payment or, if there was more than one, of the aggregate of those payments which, immediately before the disposal, the market value of the shares disposed of bore to the market value of all the participant’s shares held by the trustees at that time.
- (8) For the purposes of subsection (7) above—
- (a) no account shall be taken of any payment to the trustees if or to the extent that it consists of the proceeds of a disposal of rights arising under a rights issue; and
- (b) in relation to a particular disposal the amount of the payment or, as the case may be, of the aggregate of the payments referred to in that subsection shall be taken to be reduced by an amount equal to the total of the reduction (if any) previously made under that subsection in relation to earlier disposals;
and any reference in subsection (7) or paragraph (a) above to the rights arising under a rights issue is a reference to rights conferred in respect of a participant’s shares, being rights to be allotted, on payment, other shares or securities or rights of any description in the same company.
- (9) If at any time the participant’s beneficial interest in any of his shares is disposed of, the shares in question shall be treated for the purposes of the relevant provisions as having been disposed of at that time by the trustees for (subject to subsection (10) below) the like consideration as was obtained for the disposal of the beneficial interest; and for the purposes of this subsection there is no disposal of the participant’s beneficial interest if and at the time when—
- (a) in England and Wales or Northern Ireland, that interest becomes vested in any person on the insolvency of the participant or otherwise by operation of law, or
- (b) in Scotland, that interest becomes vested in a judicial factor, in a trustee on the participant’s sequestrated estate or in a trustee for the benefit of the participant’s creditors.
- (10) If—
- (a) a disposal of shares falling within subsection (4) above is a transfer to which paragraph 2(2)(c) of Schedule 9 applies, or
- (b) any other disposal falling within that subsection is not at arm’s length,
- (c) a disposal of shares falling within that subsection is one which is treated as taking place by virtue of subsection (9) above and takes place within the period of retention,
then for the purposes of the relevant provisions the proceeds of the disposal shall be taken to be equal to the market value of the shares at the time of the disposal.
- (11) Where the trustees of an approved scheme acquire any shares as to which the requirements of Part II of Schedule 9 are fulfilled and, within the period of 18 months beginning with the date of their acquisition, those shares are appropriated in accordance with the scheme, section 686 shall not apply to income consisting of dividends on those shares received by the trustees; and, for the purpose of determining whether any shares are appropriated within that period, shares which were acquired at an earlier time shall be taken to be appropriated before shares of the same class which were acquired at a later time.
- (12) For the purposes of subsection (3) above, “*the appropriate allowance*”, in relation to any year of assessment, means a sum which, subject to a maximum of £60, is the product of multiplying £20 by 1 plus the number of years which fall within the period of three years immediately preceding the year in question and in which shares were appropriated to the participant under the scheme; and if in any year (and before the release date) the trustees become or the participant becomes entitled, in respect of or by reference to any of his shares, to more than one capital receipt, the receipts shall be set against the appropriate allowance for that year in the order in which they are received.
- (13) Schedule 10 shall have effect with respect to profit sharing schemes.
#### Interpretation of sections 185 and 186 and Schedules 9 and 10
##### 187
- (1) In sections 185 and 186, this section and Schedules 9 and 10 “*the relevant provisions*” means those sections (including this section) and Schedules.
- (2) For the purposes of the relevant provisions, except where the context otherwise requires—
- “*appropriate percentage*” shall be construed in accordance with paragraph 3 of Schedule 10;
- “*approved*”, in relation to a scheme, means approved under Schedule 9;
- “*associated company*” has the same meaning as in section 416, except that, for the purposes of paragraph 23 of Schedule 9, subsection (1) of that section shall have effect with the omission of the words “ or at any time within one year previously ”;
- “*bonus date*” has the meaning given by paragraph 17 of Schedule 9;
- “*capital receipt*” means money or money’s worth to which the trustees of or a participant in a profit sharing scheme become or becomes entitled as mentioned in section 186(3), but subject to paragraph 4 of Schedule 10;
- “*certified contractual savings scheme*” has the meaning given by section 326;
- “*control*” has the same meaning as in section 840;
- “*grantor*”, in relation to any scheme, means the company which has established the scheme;
- “*group scheme*” and, in relation to such a scheme, “*participating company*” have the meanings given by paragraph 1(3) and (4) of Schedule 9;
- “*initial market value*”, in relation to shares in a profit sharing scheme, has the meaning given by paragraph 30(4) of Schedule 9;
- “*locked-in value*”, in relation to any shares, shall be construed in accordance with section 186(5);
- “*market value*” has the same meaning as in Part VIII of the 1992 Act;
- “*new holding*” has the meaning given by section 126(1)(b) of the 1992 Act;
- “*participant*”, in relation to a profit sharing scheme, means an individual to whom the trustees of the scheme have appropriated shares;
- “*participant’s shares*”, in relation to a participant in a profit sharing scheme, means, subject to paragraph 5(4) of Schedule 10, shares which have been appropriated to the participant by the trustees;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*period of retention*” has the meaning given by paragraph 2 of Schedule 10;
- “*release date*”, in relation to any of the shares of a participant in a profit sharing scheme, means the third anniversary of the date on which they were appropriated to him;
- “*relevant amount*”, in relation to a participant in a profit sharing scheme, means an amount which is not less than £3,000 and not more than £8,000 but which, subject to that, is 10 per cent. of his salary (determined under subsection (5) below) for the year of assessment in question or the preceding year of assessment, whichever is the greater;
- “*relevant requirements*” has the meaning given by paragraph 1 of Schedule 9;
- “*savings-related share option scheme*” has the meaning given by paragraph 1 of Schedule 9;
- “*scheme*” means a savings-related share option scheme, a share option scheme which is not a savings-related share option scheme or a profit sharing scheme, as the context may require;
- “*shares*” includes stock;
- “*specified age*”, in relation to a scheme, means the age specified in pursuance of paragraph 8A of Schedule 9 as the specified age for the purposes of the scheme;
- “*the trustees*”, in relation to an approved profit sharing scheme or the shares of a participant in such a scheme, means the body of persons for the establishment of which the scheme must provide as mentioned in paragraph 30 of Schedule 9; and
- “*just instrument*”, in relation to an approved profit sharing scheme, means the instrument referred to in paragraph 30(1)(c) of Schedule 9.
- (3) For the purposes of the application of the relevant provisions in relation to any share option scheme or profit sharing scheme, a person has a material interest in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,—
- (a) 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 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the ordinary share capital of the company, or
- (b) where the company is a close company, 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, give an entitlement to receive more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the assets which would then be available for distribution among the participators.
- In this subsection “*associate*” has the meaning given by section 417(3) and (4) and “*participator*” has the meaning given by section 417(1).
- (4) Subsection (3) above shall have effect subject to the provisions of Part VI of Schedule 9.
- (5) For the purposes of subsection (2) above, a participant’s salary for a year of assessment means such of the emoluments of the office or employment by virtue of which he is entitled to participate in a profit sharing scheme as are liable to be paid in that year under deduction of tax pursuant to section 203 after deducting therefrom amounts included by virtue of Chapter II of this Part.
- (6) Section 839 shall apply for the purposes of the relevant provisions.
- (7) For the purposes of the relevant provisions a company is a member of a consortium owning another company if it is one of a number of companies which between them beneficially own not less than three-quarters of the other company’s ordinary share capital and each of which beneficially owns not less than one-twentieth of that capital.
- (8) Where the disposal referred to in section 186(4) is made from a holding of shares which were appropriated to the participant at different times, then, in determining for the purposes of the relevant provisions—
- (a) the initial market value and the locked-in value of each of those shares, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) Any of the relevant provisions with respect to—
- (a) the order in which any of a participant’s shares are to be treated as disposed of for the purposes of those provisions, or
- (b) the shares in relation to which an event is to be treated as occurring for any such purpose,
shall have effect in relation to a profit sharing scheme notwithstanding any direction given to the trustees with respect to shares of a particular description or to shares appropriated to the participant at a particular time.
- (10) In the relevant provisions “*workers’ cooperative*” means a registered industrial and provident society , as defined in section 834(1), which is a cooperative society and the rules of which include provisions which secure—
- (a) that the only persons who may be members of it are those who are employed by, or by a subsidiary of, the society and those who are the trustees of its profit sharing scheme; and
- (b) that, subject to any provision about qualifications for membership which is from time to time made by the members of the society by reference to age, length of service or other factors of any description, all such persons may be members of the society;
and in this subsection “*cooperative society*” has the same meaning as in section 1 of the Industrial and Provident Societies Act 1965 or, as the case may be, the Industrial and Provident Societies Act (Northern Ireland) 1969.
### Retirement benefits etc.
#### Exemptions from section 148
##### 188
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lump sum benefits on retirement
##### 189
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to Members of Parliament, Representatives to the European Parliament and others
##### 190
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Job release scheme allowances not to be treated as income
##### 191
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Foreign emoluments and earnings, pensions and certain travel facilities
#### Relief from tax for foreign emoluments
##### 192
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign earnings and travel expenses
##### 193
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other foreign travel expenses
##### 194
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Travel expenses of employees not domiciled in the United Kingdom
##### 195
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign pensions
##### 196
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leave travel facilities for the armed forces
##### 197
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Other expenses, subscriptions etc.
#### Relief for necessary expenses
##### 198
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses necessarily incurred and defrayed from official emoluments
##### 199
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of Members of Parliament
##### 200
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Fees and subscriptions to professional bodies, learned societies etc
##### 201
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Donations to charity: payroll deduction scheme
##### 202
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — ASSESSMENT, COLLECTION, RECOVERY AND APPEALS
#### Pay as you earn
##### 203
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### P.A.Y.E repayments
##### 204
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessments unnecessary in certain circumstances
##### 205
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional provision for certain assessments
##### 206
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disputes as to domicile or ordinary residence
##### 207
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART VI — COMPANY DISTRIBUTIONS, TAX CREDITS ETC
### CHAPTER I — TAXATION OF COMPANY DISTRIBUTIONS
#### U.K. company distributions not generally chargeable to corporation tax
##### 208
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — MATTERS WHICH ARE DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
#### Meaning of “distribution”
##### 209
- (1) The following provisions of this Chapter, together with section 418, shall, subject to any express exceptions, have effect with respect to the meaning of “distribution” and for determining the persons to whom certain distributions are to be treated as made, but references in the Corporation Tax Acts to distributions of a company shall not apply to distributions made in respect of share capital in a winding up.
- (1A) If a company making a distribution as part of a merger to which section 140E or section 140F of the 1992 Act (cross-border mergers) applies ceases to exist in the course of the merger (without being wound up), the distribution shall be treated for the purposes of subsection (1) as a distribution in respect of share capital in a winding up.
- (2) In the Corporation Tax Acts “*distribution*”, in relation to any company, means—
- (a) any dividend paid by the company, including a capital dividend;
- (b) subject to subsections (5) and (6) below, any other distribution out of assets of the company (whether in cash or otherwise) in respect of shares in the company, except so much of the distribution, if any, as represents repayment of capital on the shares or is, when it is made, equal in amount or value to any new consideration received by the company for the distribution;
- (c) subject to section 230, any redeemable share capital or any security issued by the company in respect of shares in or securities of the company otherwise than wholly for new consideration, or such part of any redeemable share capital or any security so issued as is not properly referable to new consideration;
- (d) any interest or other distribution out of assets of the company in respect of securities of the company, where they are securities under which the consideration given by the company for the use of the principal thereby secured represents more than a reasonable commercial return for the use of that principal, except so much, if any, of any such distribution as represents that principal and so much as represents a reasonable commercial return for the use of that principal;
- (da) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) subject to subsection (6A), any interest or other distribution out of assets of the company in respect of securities of the company (except so much, if any, of any such distribution as represents the principal thereby secured and except so much of any distribution as falls within paragraph (d) . . . above), where the securities are—
- (i) securities issued as mentioned in paragraph (c) above, but excluding securities issued before 6th April 1965 in respect of shares and securities issued before 6th April 1972 in respect of securities; or
- (ii) securities convertible directly or indirectly into shares in the company or securities issued after 5th April 1972 and carrying any right to receive shares in or securities of the company, not being (in either case) securities listed on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities so listed; or
- (iii) securities under which the consideration given by the company for the use of the principal secured is to any extent dependent on the results of the company’s business or any part of it; or
- (iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (v) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (vi) securities which are connected with shares in the company, and for this purpose securities are so connected if, in consequence of the nature of the rights attaching to the securities or shares and in particular of any terms or conditions attaching to the right to transfer the shares or securities, it is necessary or advantageous for a person who has, or disposes of or acquires, any of the securities also to have, or to dispose of or to acquire, a proportionate holding of the shares or;
- (vii) equity notes issued by the company (“*the issuing company*”) and held by a company which is associated with the issuing company or is a funded company;
- (f) any such amount as is required to be treated as a distribution by subsection (4) below or section 210.
- (3) Without prejudice to section 254(11), no amount shall be regarded for the purposes of subsection (2)(d) . . . and (e) above as representing the principal secured by a security issued after 5th April 1972 in so far as it exceeds any new consideration which has been received by the company for the issue of the security.
- (3A) Where any security of a company is issued at a premium representing new consideration—
- (a) the references in subsection (2)(d) . . . and (e) above to so much of any distribution as represents, or is an amount representing, the principal secured by a security shall be construed, in relation to a distribution in respect of the security issued at a premium, as references to the aggregate of—
- (i) so much of the distribution as represents, or is an amount representing, that principal, and
- (ii) so much of it as represents, or is an amount representing, the premium;
- (b) the reference in subsection (2)(d) above to so much of any distribution as represents a reasonable commercial return for the use of the principal secured by a security shall be construed, in relation to a distribution in respect of the security issued at a premium, as a reference to the aggregate of—
- (i) so much of the distribution as represents a reasonable commercial return for the use of that principal, and
- (ii) so much of it as (when regard is had to the extent to which distributions represent the premium) represents a reasonable commercial return for the use of the premium.
- (3AA) If, in the case of any security issued by a company, the amount of new consideration received by the company for the issue of the security exceeds the amount of the principal secured by the security—
- (a) the amount of the principal so secured shall be treated for the purposes of paragraph (d) of subsection (2) above as increased to the amount of the new consideration so received; and
- (b) subsection (3A) above, so far as relating to that paragraph, shall not have effect in relation to the security;
but this subsection is subject to sections 209A and 209B.
- (3B) For the purposes of subsection (2)(e)(iii) above the consideration given by the company for the use of the principal secured shall not be treated as being to any extent dependent on the results of the company’s business or any part of it by reason only of the fact that the terms of the security provide—
- (a) for the consideration to be reduced in the event of the results improving, or
- (b) for the consideration to be increased in the event of the results deteriorating.
- (4) Where on a transfer of assets or liabilities by a company to its members or to a company by its members, the amount or value of the benefit received by a member (taken according to its market value) exceeds the amount or value (so taken) of any new consideration given by him, the company shall, subject to subsections (5) and (6) below, be treated as making a distribution to him of an amount equal to the difference.
- (5) Subsection (4) above shall not apply where the company and the member receiving the benefit are both resident in the United Kingdom and either the former is a subsidiary of the latter or both are subsidiaries of a third company also so resident; and any amount which would apart from this subsection be a distribution shall not constitute a distribution by virtue of subsection (2)(b) above.
- (6) No transfer of assets (other than cash) or of liabilities between one company and another shall constitute, or be treated as giving rise to, a distribution by virtue of subsection (2)(b) or (4) above if they are companies—
- (a) both of which are resident in the United Kingdom and neither of which is a 51 per cent. subsidiary of a company not so resident; and
- (b) which, neither at the time of the transfer nor as a result of it, are under common control.
- (6A) Relevant alternative finance return shall not be treated as a distribution for the purposes of the Corporation Tax Acts by virtue of subsection (2)(e)(iii).
In this subsection “*relevant alternative finance return*”—
- (a) for corporation tax purposes means anything that is alternative finance return for the purposes of Part 6 of CTA 2009 as a result of section 513 of that Act or any part of the redemption payment under arrangements to which section 507 of that Act applies (investment bond arrangements), and
- (b) for income tax purposes means anything that is alternative finance return for the purposes of Chapter 5 of Part 2 of the Finance Act 2005 as a result of section 48B(1), 49(2) or 49A(2) of that Act or any part of the redemption payment under arrangements to which section 48A of that Act applies (alternative finance investment bonds).
- (7) The question whether one body corporate is a subsidiary of another for the purpose of subsection (5) above shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—
- (a) of any share capital which it owns directly in a body corporate, if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt; or
- (c) of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom.
- (8) For the purposes of subsection (2)(c) above—
- (a) the value of any redeemable share capital shall be taken to be the amount of the share capital together with any premium payable on redemption, or in a winding up, or in any other circumstances; and
- (b) the value of any security shall be taken to be the amount of the principal thereby secured (including any premium payable at maturity or in a winding up, or in any other circumstances);
and in determining the amount of the distribution constituted by the issue of any redeemable share capital or any security, the capital or security shall be taken at that value.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) For the purposes of subsection (2)(e)(vii) above a security is an equity note if as regards the whole of the principal or as regards any part of it—
- (a) the security’s terms contain no particular date by which it is to be redeemed,
- (b) under the security’s terms the date for redemption, or the latest date for redemption, falls after the expiry of the permitted period,
- (c) under the security’s terms redemption is to occur after the expiry of the permitted period if a particular event occurs and the event is one which (judged at the time of the security’s issue) is certain or likely to occur, or
- (d) the issuing company can secure that there is no particular date by which the security is to be redeemed or that the date for redemption falls after the expiry of the permitted period;
and the permitted period is the period of 50 years beginning with the date of the security’s issue.
- (10) For the purposes of subsection (2)(e)(vii) above and subsection (11) below a company is associated with the issuing company if—
- (a) the issuing company is a 75 per cent. subsidiary of the other company,
- (b) the other company is a 75 per cent. subsidiary of the issuing company, or
- (c) both are 75 per cent. subsidiaries of a third company.
- (11) For the purposes of subsection (2)(e)(vii) above a company is a funded company if there are arrangements involving the company being put in funds (directly or indirectly) by the issuing company or a company associated with the issuing company.
#### Bonus issue following repayment of share capital
##### 210
- (1) Where a company—
- (a) repays any share capital or has done so at any time after 6th April 1965, and
- (b) at or after the time of that repayment issues any share capital as paid up otherwise than by the receipt of new consideration,
the amount so paid up shall, except as provided by any provision of the Corporation Tax Acts, be treated as a distribution made in respect of the shares on which it is paid up, except in so far as that amount exceeds the amount or aggregate amount of share capital so repaid less any amounts previously so paid up and treated by virtue of this subsection as distributions.
- (2) Subsection (1) above shall not apply where the repaid share capital consists of fully paid preference shares—
- (a) if those shares existed as issued and fully paid preference shares on 6th April 1965 and throughout the period from that date until the repayment those shares continued to be fully paid preference shares, or
- (b) if those shares were issued after 6th April 1965 as fully paid preference shares wholly for new consideration not derived from ordinary shares and throughout the period from their issue until the repayment those shares continued to be fully paid preference shares.
- (3) Except in relation to a company within paragraph D of section 704, subsection (1) above shall not apply if the issue of share capital mentioned in paragraph (b) of that subsection—
- (a) is of share capital other than redeemable share capital; and
- (b) takes place after 5th April 1973 and more than ten years after the repayment of share capital mentioned in paragraph (a) of that subsection.
- (4) In this section—
- “*ordinary shares*” means shares other than preference shares;
- “*preference shares*” means shares—which do not carry any right to dividends other than dividends at a rate per cent. of the nominal value of the shares which is fixed, andwhich carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares included in the official UK list; and
- “*new consideration not derived from ordinary shares*” means new consideration other than consideration—consisting of the surrender, transfer or cancellation of ordinary shares of the company or any other company or consisting of the variation of rights in ordinary shares of the company or any other company, orderived from a repayment of share capital paid in respect of ordinary shares of the company or of any other company.
#### Matters to be treated or not to be treated as repayments of share capital
##### 211
- (1) Where—
- (a) a company issues any share capital as paid up otherwise than by the receipt of new consideration, or has done so after 6th April 1965; and
- (b) any amount so paid up does not fall to be treated as a qualifying distribution or, where the issue took place before 6th April 1973, did not fall to be treated as a distribution;
then, except as otherwise provided by any provision of the Corporation Tax Acts, for the purposes of sections 209 and 210, distributions afterwards made by the company in respect of shares representing that share capital shall not be treated as repayments of share capital, except to the extent to which those distributions, together with any relevant distributions previously so made, exceed the amounts so paid up (then or previously) on such shares after 6th April 1965 and not falling to be treated as qualifying distributions or, where the share capital was issued before 6th April 1973, as distributions.
- (2) Except in relation to a company within paragraph D of section 704, subsection (1) above shall not prevent a distribution being treated as a repayment of share capital if it is made—
- (a) more than ten years after the issue of share capital mentioned in paragraph (a) of that subsection; and
- (b) in respect of share capital other than redeemable share capital.
- (3) In subsection (1) above “*relevant distribution*” means so much of any distribution made in respect of shares representing the relevant share capital as apart from that subsection would be treated as a repayment of share capital, but by virtue of that subsection cannot be so treated.
- (4) For the purposes of subsection (1) above all shares of the same class shall be treated as representing the same share capital, and where shares are issued in respect of other shares, or are directly or indirectly converted into or exchanged for other shares, all such shares shall be treated as representing the same share capital.
- (5) Where share capital is issued at a premium representing new consideration, the amount of the premium is to be treated as forming part of that share capital for the purpose of determining under this Chapter whether any distribution made in respect of shares representing the share capital is to be treated as a repayment of share capital.
- (6) Subsection (5) above shall not have effect in relation to any part of the premium after that part has been applied in paying up share capital.
- (7) Subject to subsection (5) above, premiums paid on redemption of share capital are not to be treated as repayments of capital.
### CHAPTER III — MATTERS WHICH ARE NOT DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
### Payments of interest
#### Interest etc. paid in respect of certain securities
##### 212
- (1) Any interest or other distribution—
- (a) which is paid out of the assets of a company (“the borrower”) to another company which is within the charge to corporation tax; and
- (b) which is so paid in respect of securities of the borrower which fall within . . . any of sub-paragraphs (i) to (iii) and (vi) and (vii) of paragraph (e) of section 209(2); and
- (c) which does not fall within paragraph (d) of section 209(2),
shall not be a distribution for the purposes of the Corporation Tax Acts unless the application of this subsection is excluded by subsection (2) or (3) below.
- (2) Subsection (1) above does not apply in the case of any interest or other distribution which is paid in respect of a security of the borrower falling within section 209(2)(e)(iii) if—
- (a) the principal secured does not exceed £100,000; and
- (b) the borrower is under an obligation to repay the principal and interest before the expiry of the period of five years beginning on the date on which the principal was paid to the borrower; and
- (c) that obligation either was entered into before 9th March 1982 or was entered into before 1st July 1982 pursuant to negotiations which were in progress on 9th March 1982; and
- (d) where the period for repayment of either principal or interest is extended after 8th March 1982 (but paragraph (b) above still applies), the interest or other distribution is paid within the period which was applicable immediately before that date;
and for the purposes of paragraph (c) above negotiations shall not be regarded as having been in progress on 9th March 1982 unless, before that date, the borrower had applied to the lender for a loan and had supplied the lender with any documents required by him to support the application.
- (3) . . . Subsection (1) above does not apply in a case where the company to which the interest or other distribution is paid is entitled under any enactment, other than section 1285 of CTA 2009 (exemption for UK company distributions), to an exemption from tax in respect of that interest or distribution . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Demergers
#### Exempt distributions
##### 213
- (1) The provisions of this section and sections 214 to 218 have effect for facilitating certain transactions whereby trading activities carried on by a single company or group are divided so as to be carried on by two or more companies not belonging to the same group or by two or more independent groups.
- (2) References in the Corporation Tax Acts to distributions of a company shall not apply to any distribution—
- (a) which falls within subsection (3) below, and
- (b) in respect of which the conditions specified in subsections (4) to (12) below are satisfied;
and any such distribution is referred to in this section as an “exempt distribution”.
- (3) The following distributions fall within this subsection—
- (a) a distribution consisting of the transfer to all or any of its members by a company (“the distributing company”) of shares in one or more companies which are its 75 per cent. subsidiaries;
- (b) a distribution consisting of the transfer by a company (“the distributing company”) to one or more other companies (“the transferee company or companies”) of—
- (i) a trade or trades; or
- (ii) shares in one or more companies which are 75 per cent. subsidiaries of the distributing company,
and the issue of shares by the transferee company or companies to all or any of the members of the distributing company;
and in this section and sections 214 to 217 references to a relevant company are to the distributing company, to each subsidiary whose shares are transferred as mentioned in paragraph (a) or (b) (ii) above and to each transferee company mentioned in paragraph (b) above.
- (4) Each relevant company must be resident in a member State at the time of the distribution.
- (5) The distributing company must at the time of the distribution be either a trading company or a member of a trading group and each subsidiary whose shares are transferred as mentioned in subsection (3)(a) or (b)(ii) above must at that time be either a trading company or the holding company of a trading group.
- (6) In a case within subsection (3)(a) above—
- (a) the shares must not be redeemable, must constitute the whole or substantially the whole of the distributing company’s holding of the ordinary share capital of the subsidiary and must confer the whole or substantially the whole of the distributing company’s voting rights in the subsidiary; and
- (b) subject to subsections (7) and (12)(b) below, the distributing company must after the distribution be either a trading company or the holding company of a trading group.
- (7) Subsection (6)(b) above does not apply if the transfer relates to two or more 75 per cent. subsidiaries of the distributing company and that company is dissolved without there having been after the distribution any net assets of the company available for distribution in a winding up or otherwise.
- (8) In a case within subsection (3)(b) above—
- (a) if a trade is transferred the distributing company must either not retain any interest or retain only a minor interest in that trade;
- (b) if shares in a subsidiary are transferred those shares must constitute the whole or substantially the whole of the distributing company’s holding of the ordinary share capital of the subsidiary and must confer the whole or substantially the whole of the distributing company’s voting rights in the subsidiary;
- (c) the only or main activity of the transferee company or each transferee company after the distribution must be the carrying on of the trade or the holding of the shares transferred to it;
- (d) the shares issued by the transferee company or each transferee company must not be redeemable, must constitute the whole or substantially the whole of its issued ordinary share capital and must confer the whole or substantially the whole of the voting rights in that company; and
- (e) subject to subsections (9) and (12)(b) below, the distributing company must after the distribution be either a trading company or the holding company of a trading group.
- (9) Subsection (8)(e) above does not apply if there are two or more transferee companies each of which has a trade or shares in a separate 75 per cent. subsidiary of the distributing company transferred to it and the distributing company is dissolved without there having been after the distribution any net assets of the company available for distribution in a winding up or otherwise.
- (10) The distribution must be made wholly or mainly for the purpose of benefiting some or all of the trading activities which before the distribution are carried on by a single company or group and after the distribution will be carried on by two or more companies or groups.
- (11) The distribution must not form part of a scheme or arrangements the main purpose or one of the main purposes of which is—
- (a) the avoidance of tax (including stamp duty or stamp duty land tax); or
- (b) without prejudice to paragraph (a) above, the making of a chargeable payment, as defined by section 214, or what would be such a payment if any of the companies mentioned in that section were an unquoted company; or
- (c) the acquisition by any person or persons other than members of the distributing company of control of that company, of any other relevant company or of any company which belongs to the same group as any such company; or
- (d) the cessation of a trade or its sale after the distribution.
- In paragraph (c) above “*group*” means a company which has one or more 51 per cent. subsidiaries together with that or those subsidiaries.
- (12) Where the distributing company is a 75 per cent. subsidiary of another company—
- (a) the group (or, if more than one, the largest group) to which the distributing company belongs at the time of the distribution must be a trading group;
- (b) subsections (6)(b) and (8)(e) above shall not apply; and
- (c) the distribution must be followed by one or more other distributions falling within subsection (3)(a) or (b)(ii) above which satisfy the conditions of this section and result in members of the holding company of the group (or, if more than one, the largest group) to which the distributing company belonged at the time of the distribution becoming members of—
- (i) the transferee company or each transferee company to which a trade was transferred by the distributing company; or
- (ii) the subsidiary or each subsidiary whose shares were transferred by the distributing company; or
- (iii) a company (other than that holding company) of which the company or companies mentioned in sub-paragraph (i) or (ii) above are 75 per cent. subsidiaries.
#### Chargeable payments connected with exempt distributions
##### 214
- (1) If within five years after the making of an exempt distribution there is a chargeable payment—
- (a) the amount or value of the payment shall be treated as income . . . ;
- (ab) that income shall be chargeable to tax;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) the payment shall be regarded as a distribution for the purposes of section 1305(1) of CTA 2009 (denial of deduction for distributions); and
- (d) the payment shall not (if it otherwise would) be treated as a repayment of capital for the purposes of section 210 or 211.
- (1A) Income tax chargeable by virtue of subsection (1) shall be charged on the full amount or value of the payment made in the year of assessment; and the person liable for any tax so charged is the person receiving or entitled to the payment.
- (1B) So far as relating to corporation tax, the charge to tax under subsection (1) has effect as an application of the charge to corporation tax on income.
- (2) In this section “*a chargeable payment*” means any payment made otherwise than for bona fide commercial reasons or forming part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax (including stamp duty or stamp duty land tax), being a payment which—
- (a) a company concerned in an exempt distribution makes directly or indirectly to a member of that company or of any other company concerned in that distribution; and
- (b) is made in connection with, or with any transaction affecting, the shares in that or any such company; and
- (c) is not a distribution or exempt distribution or made to another company which belongs to the same group as the company making the payment.
- (3) Where a company concerned in an exempt distribution is an unquoted company subsection (2)(a) above shall have effect as if any reference to the making of a payment by, or to a member of, a company concerned in the exempt distribution included a reference to the making of a payment by or to any other person in pursuance of a scheme or arrangements made with the unquoted company or, if the unquoted company is—
- (a) under the control of five or fewer persons; and
- (b) not under the control of (and only of) a company which is not itself under the control of five or fewer persons,
with any of the persons mentioned in paragraph (a) above.
- (4) References in this section to a company concerned in an exempt distribution are to any relevant company and to any other company which was connected with any such company for the whole or any part of the period beginning with the exempt distribution and ending with the making of the payment which is in question under this section.
- (5) For the purposes of subsection (4) above and this subsection a company shall be deemed to have been connected in the period referred to in that subsection with each company to which a company connected with it was connected in that period.
- (6) References in this section to a payment include references to a transfer of money’s worth including the assumption of a liability.
#### Advance clearance by Board of distributions and payments
##### 215
- (1) A distribution shall be treated as an exempt distribution in any case in which, before the distribution is made, the Board have, on the application of the distributing company, notified that company that the Board are satisfied that it will be such a distribution.
- (2) A payment shall not be treated as a chargeable payment in any case in which, before the payment is made, the Board have, on the application of the person intending to make it, notified him that they are satisfied that it will be made for bona fide commercial reasons and will not form part of any scheme or arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax (including stamp duty or stamp duty land tax).
- (3) A company which becomes or ceases to be connected with another company may make an application under subsection (2) above as respects any payments that may be made by it at any time after becoming or ceasing to be so connected (whether or not there is any present intention to make any payments); and where a notification is given by the Board on such an application no payment to which the notification relates shall be treated as a chargeable payment by reason only of the company being or having been connected with the other company.
- (4) References in subsections (2) and (3) above to a payment shall be construed as in section 214.
- (5) Any application under this section shall be in writing and shall contain particulars of the relevant transactions and the Board may, within 30 days of the receipt of the application or of any further particulars previously required under this subsection, by notice require the applicant to furnish further particulars for the purposes of enabling the Board to make their decision; and if any such notice is not complied with within 30 days or such longer period as the Board may allow, the Board need not proceed further on the application.
- (6) The Board shall notify their decision to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of the notice being complied with.
- (7) If the Board notify the applicant that they are not satisfied as mentioned in subsection (1) or (2) above or do not notify their decision to the applicant within the time required by subsection (6) above, the applicant may within 30 days of the notification or of that time require the Board to transmit the application, together with any notice given and further particulars furnished under subsection (5) above, to the tribunal; and in that event any notification by the tribunal shall have effect for the purposes of this section as if it were a notification by the Board.
- (8) If any particulars furnished under this section do not fully and accurately disclose all facts and circumstances material for the decision of the Board or the tribunal, any resulting notification that the Board or the tribunal are satisfied as mentioned in subsection (1) or (2) above shall be void.
#### Returns
##### 216
- (1) Where a company makes an exempt distribution it shall within 30 days after the distribution make a return to the inspector giving particulars of the distribution and of the circumstances by reason of which it is exempt.
- (2) Where within five years after the making of an exempt distribution a person makes a chargeable payment which consists of a transfer of money’s worth, he shall within 30 days after the transfer make a return to the inspector giving particulars—
- (a) of the transaction effecting the transfer;
- (b) of the name and address of the recipient or each recipient and the value of what is transferred to him or each of them; and
- (c) if the transfer is accompanied by a chargeable payment consisting of a payment of money, of that payment.
- (3) Subject to subsection (4) below, where within five years after the making of an exempt distribution a person makes a payment or a transfer of money’s worth which would be a chargeable payment but for the fact that it is made for bona fide commercial reasons and does not form part of any such scheme or arrangements as are mentioned in section 214(2), that person shall within 30 days after making the payment or transfer make a return to the inspector giving particulars—
- (a) in the case of a transfer, of the transaction by which it is effected;
- (b) of the name and address of the recipient or each recipient and the amount of the payment made, or the value of what is transferred, to him or each of them; and
- (c) of the circumstances by reason of which the payment or transfer is not a chargeable payment.
- (4) Subsection (3) above does not apply where the payment or transfer is one in relation to which a notification under section 215(3) has effect.
#### Information
##### 217
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Any recipient of a chargeable payment and any person on whose behalf such a payment is received shall, if so required by the inspector, state whether the payment received by him or on his behalf is received on behalf of any person other than himself and, if so, the name and address of that person.
#### Interpretation of sections 213 to 217
##### 218
- (1) In sections 213 to 217—
- “*chargeable payment*” has the meaning given by section 214(2);
- “*control*” shall be construed in accordance with section 416(2) to (6);
- “*distributing company*” means a company to which section 213(3)(b) or 213A(1)(a) applies;
- “*exempt distribution*” means a distribution falling within section 213(2) or 213A;
- “*group*”, except in section 213(11)(c), means a company which has one or more 75 per cent. subsidiaries together with that or those subsidiaries;
- “*holding company*” means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 75 per cent. subsidiaries;
- “member”, where the reference is to a member of a company, does not, except in section 214(2)(a), include a person who is a member otherwise than by virtue of holding shares forming part of the company’s ordinary share capital;
- “*relevant company*” means a company falling within section 213(3) or 213A(3);
- “*shares*” includes stock;
- “*trade*”, except in subsection (3) below, does not include dealing in shares, securities, land, trades or commodity futures 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 in the carrying on of a trade or trades; and
- “*unquoted company*” means a company which does not satisfy the condition that its shares or some class thereof (disregarding debenture or loan stock, preferred shares or preferred stock) are listed in the Official List of the Stock Exchange and are dealt in on the Stock Exchange regularly or from time to time, so however that this definition does not apply to a company under the control of (and only of) one or more companies to which this definition does not apply.
- (2) In determining for the purposes of section 213(3) to (9) whether a company whose shares are transferred by the distributing company is a 75 per cent. subsidiary of the distributing company there shall be disregarded any share capital of the first-mentioned company which is owned indirectly by the distributing company.
- (3) In determining for the purposes of sections 213 to 217 whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner of—
- (a) any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) any share capital which it owns indirectly and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.
- (4) Section 839 applies for the purposes of sections 213 to 217.
### Purchase of own shares
#### Purchase by unquoted trading company of own shares
##### 219
- (1) References in the Corporation Tax Acts to distributions of a company shall not 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) the redemption, repayment or purchase is made wholly or mainly for the purpose of benefiting a trade carried on by the company or by any of its 75 per cent. subsidiaries, and does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is—
- (i) to enable the owner of the shares to participate in the profits of the company without receiving a dividend, or
- (ii) the avoidance of tax; and
the conditions specified in sections 220 to 224, so far as applicable, are satisfied in relation to the owner of the shares; or
- (b) the whole or substantially the whole of the payment (apart from any sum applied in paying capital gains tax charged on the redemption, repayment or purchase) is applied by the person to whom it is made in discharging a liability of his for inheritance tax charged on a death and is so applied within the period of two years after the death;
and in sections 220 to 224—
- “*the purchase*” means the redemption, repayment or purchase referred to in subsection (1)(a) above; and
- “*the vendor*” means the owner of the shares at the time it is made.
- (2) Where, apart from this subsection, a payment falls within subsection (1)(b) above, subsection (1) above shall not apply to the extent that the liability in question could without undue hardship have been discharged otherwise than through the redemption, repayment or purchase of shares in the company or another unquoted company which is a trading company or the holding company of a trading group.
#### Conditions as to residence and period of ownership
##### 220
- (1) The vendor must be resident and ordinarily resident in the United Kingdom in the year of assessment in which the purchase is made and if the shares are held through a nominee the nominee must also be so resident and ordinarily resident.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) 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 death.
- (4) The references in this section to a person’s ordinary residence shall be disregarded in the case of a company.
- (5) The shares must have been owned by the vendor throughout the period of five years ending with the date of the purchase.
- (6) If at any time during that period the shares were transferred to the vendor by a person who was then his spouse or civil partner living with him then, unless that person is alive at the date of the purchase but is no longer the vendor’s spouse or civil partner living with him, any period during which the shares were owned by that person shall be treated for the purposes of subsection (5) above as a period of ownership by the vendor.
- (7) 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 his personal representatives shall be treated for the purposes of subsection (5) above as a period of ownership by the vendor, and
- (b) that subsection shall have effect as if it referred to three years instead of five.
- (8) In determining whether the condition in subsection (5) above 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 him of shares of that class shall be assumed to be a disposal of shares acquired later rather than of shares acquired earlier.
- (9) If for the purposes of capital gains tax the time when shares were acquired would be determined under any provision of Chapter II of Part IV of the 1992 Act (reorganisation of share capital, conversion of securities, etc.) then, unless the shares were allotted for payment or were comprised in share capital to which section 249 applies, it shall be determined in the same way for the purposes of this section.
#### Reduction of vendor’s interest as shareholder
##### 221
- (1) If immediately after the purchase the vendor owns shares in the company, then, subject to section 224, the vendor’s interest as a shareholder must be substantially reduced.
- (2) If immediately after the purchase any associate of the vendor owns shares in the company then, subject to section 224, the combined interests as shareholders of the vendor and his associates must be substantially reduced.
- (3) The question whether the combined interests as shareholders of the vendor and his associates are substantially reduced shall be determined in the same way as is (under the following subsections) 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 his associates as well as his own.
- (4) Subject to subsection (5) below, the vendor’s interest as a shareholder shall be taken to be substantially reduced if and only if the total nominal value of the shares owned by him immediately after the purchase, expressed as a fraction of the issued share capital of the company at that time, does not exceed 75 per cent. of the corresponding fraction immediately before the purchase.
- (5) The vendor’s interest as a shareholder shall not be taken to be substantially reduced where—
- (a) he would, if the company distributed all its profits available for distribution immediately after the purchase, be entitled to a share of those profits, and
- (b) that share, expressed as a fraction of the total of those profits, exceeds 75 per cent. of the corresponding fraction immediately before the purchase.
- (6) In determining for the purposes of subsection (5) above 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 he would be entitled for a year.
- (7) In subsection (5) above “*profits available for distribution*” has the same meaning as it has for the purposes of Part 23 of the Companies Act 2006, 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) above, by a further amount equal to that required to make the distribution to which he 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.
#### Conditions applicable where purchasing company is member of group
##### 222
- (1) Subject to section 224, where the company making the purchase is immediately before the purchase a member of a group and—
- (a) immediately after the purchase the vendor owns shares in one or more other members of the group (whether or not he then owns shares in the company making the purchase), or
- (b) immediately after the purchase the vendor owns shares in the company making the purchase and immediately before the purchase he owned shares in one or more other members of the group,
the vendor’s interest as a shareholder in the group must be substantially reduced.
- (2) In subsections (5) to (7) below “*relevant company*” means the company making the purchase and any other member of the group in which the vendor owns shares immediately before or immediately after the purchase, but subject to subsection (4) below.
- (3) Subject to section 224, 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 his associates must be substantially reduced.
- (4) The question whether the combined interests as shareholders in the group of the vendor and his associates are substantially reduced shall be determined in the same way as is (under the following subsections) 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 his associates as well as his own (and references in subsections (5) to (7) below to a relevant company shall be construed accordingly).
- (5) 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 him in each relevant company as a fraction of the issued share capital of the company,
- (b) adding together the fractions so obtained, and
- (c) dividing the result by the number of relevant companies (including any in which he owns no shares).
- (6) Subject to subsection (7) below, the vendor’s interest as a shareholder in the group shall be taken to be substantially reduced if and only if it does not exceed 75 per cent. of the corresponding interest immediately before the purchase.
- (7) The vendor’s interest as a shareholder in the group shall not be taken to be substantially reduced if—
- (a) he 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 of them, and
- (b) that share, or the aggregate of those shares, expressed as a fraction 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 fraction immediately before the purchase.
- (8) Subsections (6) and (7) of section 221 shall apply for the purposes of subsection (7) above as they apply for the purposes of subsection (5) of that section.
- (9) Subject to the following subsections, 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.
- (10) Where the whole or a significant part of the business carried on by an unquoted company (“the successor company”) was previously carried on by—
- (a) the company making the purchase, or
- (b) a company which is (apart from this subsection) 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).
- (11) Subsection (10) above shall not apply if the successor company first carried on the business there referred to more than three years before the time of the purchase.
- (12) 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.
#### Other conditions
##### 223
- (1) Subject to section 224, the vendor must 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.
- In this subsection “*group*” has the same meaning as it has for the purposes of section 222.
- (2) Subject to section 224, the purchase must not be part of a scheme or arrangement which is designed or likely to result in the vendor or any associate of his having interests in any company such that, if he had those interests immediately after the purchase, any of the conditions in sections 221 and 222 and subsection (1) above could not be satisfied.
- (3) A transaction occurring within one year after the purchase shall be deemed for the purposes of subsection (2) above to be part of a scheme or arrangement of which the purchase is also part.
#### Relaxation of conditions in certain cases
##### 224
Where—
- (a) any of the conditions in sections 221 to 223 which are applicable are not satisfied in relation to the vendor, but
- (b) he proposed or agreed to the purchase in order that the condition in section 221(2) or 222(3) could be satisfied in respect of the redemption, repayment or purchase of shares owned by a person of whom he is an associate,
then, to the extent that that result is produced by virtue of the purchase, section 219(1)(a) shall have effect as if the conditions in sections 221 to 223 were satisfied in relation to the vendor.
#### Advance clearance of payments by Board
##### 225
- (1) A payment made by a company on the redemption, repayment or purchase of its own shares shall be deemed—
- (a) to be one to which section 219 applies if, before it is made, the Board have on the application of the company notified the company that they are satisfied that the section will apply; and
- (b) to be one to which section 219 does not apply if, before it is made, the Board have on the application of the company notified the company that they are satisfied that the section will not apply.
- (2) An application under this section shall be in writing and shall contain particulars of the relevant transactions; and the Board may, within 30 days of the receipt of the application or of any further particulars previously required under this subsection, by notice require the applicant to furnish further particulars for the purpose of enabling the Board to make their decision.
- (3) If a notice under subsection (2) above is not complied with within 30 days or such longer period as the Board may allow, the Board need not proceed further on the application.
- (4) The Board shall notify their decision to the applicant within 30 days of receiving the application or, if they give a notice under subsection (2) above, within 30 days of the notice being complied with.
- (5) If particulars furnished under this section do not fully and accurately disclose all facts and circumstances material for the decision of the Board, any resulting notification by the Board shall be void.
#### Returns and information
##### 226
- (1) A company which treats a payment made by it as one to which section 219 applies shall within 60 days after making the payment make a return to the inspector giving particulars of the payment and of the circumstances by reason of which that section is regarded as applying to it.
- (2) Where a company treats a payment made by it as one to which section 219(1)(a) applies, any person connected with the company who knows of any such scheme or arrangement affecting the payment as is mentioned in section 223(2) shall, within 60 days after he first knows of both the payment and the scheme or arrangement, give a notice to the inspector containing particulars of the scheme or arrangement.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The recipient of a payment treated by the company making it as one to which section 219 applies, and any person on whose behalf such a payment is received, shall if so required by the inspector state whether the payment received by him or on his behalf is received on behalf of any person other than himself and, if so, the name and address of that person.
#### Associated persons
##### 227
- (1) Any question whether a person is an associate of another in relation to a company shall be determined for the purposes of sections 219 to 226 and 228 in accordance with the following provisions of this section.
- (2) A husband and wife living together , or civil partners of each other living together, are associates of one another, a person under the age of 18 is an associate of his parents, and his parents are his associates.
- (3) A person connected with a company is an associate of the company and of any company controlled by it, and the company and any company controlled by it are his associates.
- (4) Where a person connected with one company has control of another company, the second company is an associate of the first.
- (5) Where shares in a company are held by the trustees of a settlement then in relation to that company, but subject to subsection (8) below, the trustees are associates of—
- (a) any person who directly or indirectly provided property to the trustees or has made a reciprocal arrangement for another to do so,
- (b) any person who is, by virtue of subsection (2) above, an associate of a person within paragraph (a) above, and
- (c) any person who is or may become beneficially entitled to a significant interest in the shares;
and any such person is an associate of the trustees.
- (6) 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 are associates of any person who is or may become beneficially entitled to a significant interest in the shares, and any such person is an associate of the personal representatives.
- (7) Where one person is accustomed to act on the directions of another in relation to the affairs of a company, then in relation to that company the two persons are associates of one another.
- (8) Subsection (5) above shall not apply to shares held on trusts which—
- (a) relate exclusively to a registered pension scheme, or
- (b) are exclusively for the benefit of the employees, or the employees and directors, of the company referred to in that subsection 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.
- (9) For the purposes of subsections (5) and (6) above a person’s interest is significant if its value exceeds 5 per cent. of the value of all the the settled property or, as the case may be, comprised in the estate concerned, excluding any property in which he is not and cannot become beneficially entitled to an interest.
#### Connected persons
##### 228
- (1) Any question whether a person is connected with a company shall be determined for the purposes of sections 219 to 227 in accordance with the following provisions of this section.
- (2) A person is connected with a company if he directly or indirectly possesses or is entitled to acquire more than 30 per cent. of—
- (a) the issued ordinary share capital of the company, or
- (b) the loan capital and issued share capital of the company, or
- (c) the voting power in the company.
- (3) 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 him, being a business which includes the lending of money, and
- (b) takes no part in the management or conduct of the company,
his interest in that loan capital shall be disregarded for the purposes of subsection (2) above.
- (4) A person is connected with a company if he 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 him 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 subsection—
- (a) the persons who are equity holders of the company, and
- (b) the percentage of the assets of the company to which a person would be entitled,
shall be determined in accordance with paragraphs 1 and 3 of Schedule 18, taking references in paragraph 3 to the first company as references to an equity holder and references to a winding up as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.
- (5) A person is connected with a company if he has control of it.
- (6) 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, or
- (b) for any right to receive income created in favour of the company, or
- (c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon).
- (7) For the purposes of this section a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date or will at a future date be entitled to acquire.
- (8) For the purposes of this section a person shall be assumed to have the rights or powers of his associates as well as his own.
#### Other interpretative provisions
##### 229
- (1) In sections 219 to 228—
- “*control*” has the meaning given by section 840;
- “*holding company*” means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 75 per cent. subsidiaries;
- “*personal representatives*” means persons responsible for administering the estate of a deceased person;
- “*quoted company*” means a company whose shares (or any class of whose shares) are listed in the official list of a stock exchange;
- “*shares*” includes stock;
- “*trade*” does not include dealing in shares, securities, land or futures 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, and for this purpose “*group*” means a company which has one or more 75 per cent. subsidiaries together with those subsidiaries; and
- “*unquoted company*” means a company which is neither a quoted company nor a 51 per cent. subsidiary of a quoted company.
- (2) References in sections 219 to 228 to the owner of shares are references to the beneficial owner except where the shares are settled property or are comprised in the estate of a deceased person, and in such a case are references to the trustees of the settlement or, as the case may be, to the deceased’s personal representatives.
- (3) References in sections 219 to 228 to a payment made by a company include references to anything else that is, or would but for section 219 be, a distribution.
### Stock dividends
#### Stock dividends: distributions
##### 230
Any share capital to which section 249 applies and which is issued by a company . . . in a case where section 410(2), (3) or (4) of ITTOIA 2005 applies—
- (a) shall, notwithstanding section 209(2)(c), not constitute a distribution within the meaning of section 209(2); and
- (b) for purposes of sections 210 and 211 shall not be treated as issued “as paid up otherwise than by the receipt of new consideration”.
### CHAPTER IV — TAX CREDITS
#### Tax credits for certain recipients of qualifying distributions
##### 231
- (1) Subject to sections 231AA and 231AB of this Act. . . , for corporation tax purposes where a company (whether resident in the United Kingdom or outside the United Kingdom) makes an exempt qualifying distribution and the person receiving the distribution is a company resident in the United Kingdom. . . , the recipient of the distribution shall be entitled to a tax credit equal to such proportion of the amount or value of the distribution as corresponds to the tax credit fraction in force when the distribution is made.
- (1A) The tax credit fraction is one-ninth.
- (1B) For the purposes of subsection (1) a qualifying distribution is “exempt” if it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3AA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where a distribution mentioned in subsection (1) above is, or falls to be treated as, or under any provision of the Tax Acts is deemed to be, the income of a person other than the recipient, that person shall be treated for the purposes of this section as receiving the distribution (and accordingly the question whether that person is entitled to a tax credit in respect of it shall be determined by reference to where that person, and not the actual recipient, is resident);*and where any such distribution is income of a United Kingdom trust the trustees shall be entitled to a tax credit in respect of it if no other person falls to be treated for the purposes of this section as receiving the distribution*.
- (5) *In subsection* (4)*above “*United Kingdom trust*” means a trust administered under the law of any part of the United Kingdom, not being a trust the general administration of which is ordinarily carried on outside the United Kingdom and the trustees, or a majority of the trustees, of which are resident or ordinarily resident outside the United Kingdom*.
#### Tax credits for non-U.K. residents
##### 232
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of certain recipients of distributions and in respect of non-qualifying distributions
##### 233
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information relating to distributions
##### 234
- (1) Without prejudice to section 234A. . . , a company which makes a qualifying distribution shall, if the recipient so requests in writing, furnish to him a statement in writing showing the amount or value of the distribution and (whether or not the recipient is a person entitled to a tax credit in respect of the distribution) the amount of the tax credit to which a recipient who is such a person is entitled in respect of that distribution.
- (2) The duty imposed by subsection (1) above shall be enforceable at the suit or instance of the person requesting the information.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Where a company makes a distribution which is not a qualifying distribution it shall make a return to the inspector—
- (a) within 14 days from the end of the accounting period in which the distribution is made; or
- (b) if the distribution is made on a date not falling in an accounting period, within 14 days from that date.
- (6) A return under subsection (5) above shall contain—
- (a) particulars of the transaction giving rise to the distribution; and
- (b) the name and address of the person, or each of the persons, receiving the distribution, and the amount or value of the distribution received by him or by each of them.
- (7) Where it is not in the circumstances apparent whether a transaction gives rise to a distribution in respect of which a return is required to be made under subsection (5) above, the company shall—
- (a) within the time within which such a return would be required to be made if the transaction did give rise to such a distribution, make a return to the inspector containing particulars of the transaction in question; and
- (b) if required by a notice served on the company by the inspector, furnish him within the time specified in the notice with such further information in relation to the transaction as he may reasonably require.
- (8) If it appears to the inspector that particulars of any transaction ought to have been and have not been included in a return under subsection (5) or (7) above, he may by a notice served on the company require the company to furnish him within the time specified in the notice with such information relating thereto as he may reasonably require.
- (9) Any power which the inspector may exercise under paragraphs 3 and 4 of Schedule 12 to the Finance Act 1989 for the purposes of the relevant provisions (as defined in paragraph 1 of that Schedule) may be exercised by him for the purposes of subsections (5) to (8) above.
#### Distributions of exempt funds etc
##### 235
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 235
##### 236
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of reliefs in respect of bonus issues
##### 237
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — ADVANCE CORPORATION TAX AND FRANKED INVESTMENT INCOME
#### Interpretation of terms and collection of ACT
##### 238
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of ACT against liability to corporation tax
##### 239
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of company’s surplus ACT against subsidiary’s liability to corporation tax
##### 240
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Calculation of ACT where company receives franked investment income
##### 241
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of losses etc. against surplus of franked investment income
##### 242
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of loss brought forward, or terminal loss
##### 243
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further provisions relating to claims under section 242 or 243
##### 244
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Calculation etc. of ACT on change of ownership of company
##### 245
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge of ACT at previous rate until new rate fixed, and changes of rate
##### 246
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VI — MISCELLANEOUS AND SUPPLEMENTAL
### Group income
#### Dividends etc. paid by one member of a group to another
##### 247
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 247
##### 248
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Stock dividends
#### Stock dividends treated as income
##### 249
- (1) Subject to subsections (8) and (9) below, this section applies (and accordingly section 230 above and section 410 of ITTOIA 2005 apply) to any of the following share capital, that is to say—
- (a) any share capital issued by a company resident in the United Kingdom in consequence of the exercise by any person of an option conferred on him to receive in respect of shares in the company (whether the last-mentioned shares were issued before or after the coming into force of this section) either a dividend in cash or additional share capital; and
- (b) any bonus share capital issued by a company so resident in respect of any shares in the company of a relevant class (whether the last-mentioned shares were issued before or after the coming into force of this section).
- (2) For the purposes of subsection (1)(b) above a class of shares is a relevant class if—
- (a) shares of that class carry the right to receive bonus share capital in the company of the same or a different class; and
- (b) that right is conferred by the terms on which shares of that class were originally issued or by those terms as subsequently extended or otherwise varied.
- (3) Where a company issues any share capital in a case in which two or more persons are entitled thereto, the following provisions of this section*and paragraph* 12(1)*to* (3)*of Schedule* 19 shall have effect as if the company had issued to each of those persons separately a part of that share capital proportionate to his interest therein on the due date of issue.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) Where, in a case within section 410(2), (3) or (4) of ITTOIA 2005, the share capital in question is issued in respect of shares in the company issued before 6th April 1975 which confer on the holder a right to convert or exchange them into or for shares of a different class, this section shall not apply to so much (if any) of any bonus share capital issued by the company after 5th April 1976 in connection with an exercise of that right as would have been issued if that right had been exercised so as to effect the conversion or exchange of the shares on the earliest possible date after 5th April 1975; . . . .
- (9) Where any bonus share capital falling within subsection (1)(b) above is after 5th April 1975 converted into or exchanged for shares in the company in question of a different class, then—
- (a) this section shall not apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of that bonus share capital; but
- (b) section 230(a) and (b) shall apply to any shares in the company issued, in connection with the conversion or exchange, in consideration of the cancellation, extinguishment or acquisition by the company of so much of that bonus share capital as caused income to be treated as arising to an individual as a result of section 410(2) of ITTOIA 2005 on the due date of issue (or would have done so if the case had been one in which an individual was beneficially entitled to that share capital).
#### Returns
##### 250
- (1) A company shall for each of its accounting periods make, in accordance with this section, returns to the inspector of all share capital to which section 249 applies (“relevant share capital”) and which was issued by it in that period.
- (2) A return shall be made for—
- (a) each complete quarter falling within the accounting period, that is to say, each of the periods of three months ending with 31st March, 30th June, 30th September or 31st December which falls within that period;
- (b) each part of the accounting period which is not a complete quarter and ends on the first (or only), or begins immediately after the last (or only), of those dates which falls within the accounting period;
- (c) if none of those dates falls within the accounting period, the whole accounting period.
- (3) A return for any period for which a return is required to be made under this section (a “return period”) shall be made within 30 days from the end of that period.
- (4) No return need be made under this section by a company for any period in which it has issued no relevant share capital.
- (5) The return made by a company for any return period shall state—
- (a) the date on which any relevant share capital issued by it in the period was issued and, if different, the date on which the company was first required to issue it;
- (b) particulars of the terms on which any such share capital so issued by it was issued; and
- (c) what is, in relation to any such share capital so issued, the cash equivalent of the share capital in accordance with section 412 of ITTOIA 2005.
- (6) If it appears to the inspector that a company ought to have, but has not, made a return for any return period, he may (notwithstanding subsection (4) above) by notice require the company to make a return for that period within such time (not being less than 30 days) as may be specified in the notice; and a return required to be made under this subsection shall, if such be the case, state that no relevant share capital was issued in the period in question.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 249 and 250
##### 251
- (1) For the purposes of sections 249 and 250 —
- (a) “*bonus share capital*”, in relation to a company, means share capital issued by the company otherwise than wholly for new consideration or such part of any share capital so issued as is not properly referable to new consideration;
- (b) “*due date of issue*”, in relation to any share capital issued by a company, means the earliest date on which the company was required to issue that share capital;
- (c) an option to receive either a dividend in cash or additional share capital is conferred on a person not only where he is required to choose one or the other, but also where he is offered the one subject to a right, however expressed, to choose the other instead, and a person’s abandonment of, or failure to exercise, such a right is to be treated as an exercise of the option;
and in section 254 the definition of “*security*” (in subsection (1)) and subsections (5) and (11) shall not apply.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplemental
#### Rectification of excessive set-off etc. of ACT or tax credit
##### 252
- (1) If an inspector discovers that—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) any set-off or payment of tax credit,
ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax (including interest on unpaid tax) of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.
- (2) In any case where—
- (a) interest has been paid under section 826 on a payment of tax credit; and
- (b) interest ought not to have been paid on that payment, either at all or to any extent,
an assessment under this section may be made for recovering any interest that ought not to have been paid.
- (3) Where—
- (a) an assessment is made under this section to recover tax credit paid to a company in respect of franked investment income received by the company in an accounting period; and
- (b) more than one payment of tax credit has been made in respect of that period,
any sum recovered shall as far as possible be treated as relating to a payment of tax credit made later rather than to a payment made earlier.
- (4) Subsections (2) and (3) above shall have effect in relation to payments of tax credit claimed in respect of accounting periods ending after such day as may be appointed for the purpose of those subsections by order made by the Treasury, not being earlier than 31st March 1992.
- (5) The Management Act shall apply to any assessment under this section for recovering a payment of tax credit or interest on such a payment as if it were an assessment to income tax for the year of assessment, or in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed, and as if that payment represented a loss of tax to the Crown; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within 14 days after the issue of the notice of assessment.
#### Power to modify or replace section 234(5) to (9) and Schedule 13
##### 253
- (1) The Board may by regulations—
- (a) modify, supplement or replace any of the provisions of subsections (5) to (9) of section 234 for the purpose of requiring companies resident in the United Kingdom to make returns and give information to the inspector in respect of distributions made by them, whether before or after the passing of this Act, which are not qualifying distributions;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and references in this Act and in any other enactment to section 234(5) to (9) . . . shall be construed as including references to any such regulations.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Regulations under this section may—
- (a) make different provision for different descriptions of companies and for different circumstances and may authorise the Board, where in their opinion there are special circumstances justifying it, to make special arrangements as respects . . . the repayment of income tax borne by a company or the payment to a company of amounts in respect of any tax credit to which it is entitled;
- (b) include such transitional and other supplemental provisions as appear to the Board to be expedient or necessary.
- (4) The Board shall not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.
#### Interpretation of Part VI
##### 254
- (1) In this Part, except where the context otherwise requires—
- “*new consideration*” means, subject to subsections (5) and (6) below, consideration not provided directly or indirectly out of the assets of the company, and in particular does not include amounts retained by the company by way of capitalising a distribution;
- “*security*” includes securities not creating or evidencing a charge on assets, and interest paid by a company on money advanced without the issue of a security for the advance, or other consideration given by a company for the use of money so advanced, shall be treated as if paid or given in respect of a security issued for the advance by the company;
- “*share*” includes stock, and any other interest of a member in a company;
and in this section “*a 90 per cent. group*” means a company and all of its 90 per cent. subsidiaries.
- (2) In this Part, the expressions “*in respect of shares in the company*” and “*in respect of securities of the company*”, in relation to a company which is a member of a 90 per cent. group, mean respectively in respect of shares in that company or any other company in the group and in respect of securities of that company or any other company in the group.
- (3) Without prejudice to section 209(2)(b) as extended by subsection (2) above, in relation to a company which is a member of a 90 per cent. group, “*distribution*” includes anything distributed out of assets of the company (whether in cash or otherwise) in respect of shares in or securities of another company in the group.
- (4) Nothing in subsections (2) and (3) above shall require a company to be treated as making a distribution to any other company which is in the same group and is resident in the United Kingdom.
- (5) Where share capital has been issued at a premium representing new consideration, any part of that premium afterwards applied in paying up share capital shall be treated as new consideration also for that share capital, except in so far as the premium has been taken into account under section 211(5) so as to enable a distribution to be treated as a repayment of share capital.
- (6) Subject to subsection (7) below, no consideration derived from the value of any share capital or security of a company, or from voting or other rights in a company, shall be regarded for the purposes of this Part as new consideration received by the company unless the consideration consists of—
- (a) money or value received from the company as a qualifying distribution;
- (b) money received from the company as a payment which for those purposes constitutes a repayment of that share capital or of the principal secured by the security; or
- (c) the giving up of the right to the share capital or security on its cancellation, extinguishment or acquisition by the company.
- (7) No amount shall be regarded as new consideration by virtue of subsection (6)(b) or (c) above in so far as it exceeds any new consideration received by the company for the issue of the share capital or security in question or, in the case of share capital which constituted a qualifying distribution on issue, the nominal value of that share capital.
- (8) Where two or more companies enter into arrangements to make distributions to each other’s members, all parties concerned (however many) may for the purposes of this Part be treated as if anything done by any one of those companies had been done by any of the others.
- (9) A distribution shall be treated under this Part as made, or consideration as provided, out of assets of a company if the cost falls on the company.
- (10) References in this Part to issuing share capital as paid up apply also to the paying up of any issued share capital.
- (11) Where securities are issued at a price less than the amount repayable on them, and are not listed on a recognised stock exchange, the principal secured shall not be taken for the purposes of this Part to exceed the issue price, unless the securities are issued on terms reasonably comparable with the terms of issue of securities so listed.
- (12) For the purposes of this Part a thing is to be regarded as done in respect of a share if it is done to a person as being the holder of the share, or as having at a particular time been the holder, or is done in pursuance of a right granted or offer made in respect of a share; and anything done in respect of shares by reference to share holdings at a particular time is to be regarded as done to the then holders of the shares or the personal representatives of any share holder then dead.
#### “Gross rate” and “gross amount” of distributions to include ACT
##### 255
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART VII — GENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS
### CHAPTER I — PERSONAL RELIEFS
### The reliefs
#### General
##### 256
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Personal relief
##### 257
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Widower’s or widow’s housekeeper
##### 258
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Additional relief in respect of children
##### 259
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Apportionment of relief under section 259
##### 260
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Claims under sections 258 and 259 for year of marriage
##### 261
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Widows' bereavement allowance
##### 262
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dependent relatives
##### 263
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Claimant depending on services of a son or daughter
##### 264
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for blind persons
##### 265
- (1) If the claimant . . . is a registered blind person for the whole or any part of the year of assessment, he shall be entitled to a blind person's allowance of £1,280. . . .
- (1A) Section 257C (indexation) shall have effect (using the rounding up rule in subsection (1)(b) of that section) for the application of this section for the year 1998-99 and any subsequent year of assessment as it has effect for the application of sections 257 and 257A.
- (2) Where—
- (a) a person entitled to an allowance under subsection (1) above is a person whose spouse or civil partner is living with him for the whole of any part of the year of assessment, but
- (b) the amount to which the person is entitled exceeds the person's remaining relievable income,
his spouse or civil partner shall be entitled to an allowance of an amount equal to the excess.
- (2A) The person's remaining relievable income is the amount found by—
- (a) taking the amount of the individual's net income, and
- (b) subtracting any personal allowance to which the person is entitled.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Subsection (2) above shall not apply for a year of assessment unless the person entitled to an allowance under subsection (1) has given to the inspector written notice that it is to apply; and any such notice—
- (a) shall be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
- (6) A notice given under subsection (5) above in relation to a year of assessment by a spouse or civil partner shall have effect also as a notice under section 257BB(2).
- (7) In this section “*registered blind person*” means a person registered as a blind person in a register compiled under section 29 of the National Assistance Act 1948 or, in the case of a person ordinarily resident in Scotland or Northern Ireland, a person who is a blind person within the meaning of section 64(1) of that Act.
- (8) An allowance under this section is given effect at Step 3 of the calculation in section 23 of ITA 2007.
#### Life assurance premiums
##### 266
- (1) Subject to the provisions of this section, section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004, an eligible individual who pays any such premium as is specified in subsection (2) below . . . shall (without making any claim) be entitled to relief under this section.
- (1A) For the purposes of subsection (1) above an individual is an eligible individual if the individual—
- (a) is resident in the United Kingdom, or
- (b) meets the conditions in section 56(3) of ITA 2007.
- (2) The premiums referred to in subsection (1) above are any premiums paid by an individual under a policy of insurance or contract for a deferred annuity, where—
- (a) the payments are made to —
- (i) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 or under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of long-term insurance; or
- (ii) a member of the Society who effects or carries out contracts of long-term insurance in accordance with Part 19 of the Financial Services and Markets Act 2000;
- (iv) in the case of a deferred annuity, the National Debt Commissioners; and
- (b) the insurance or, as the case may be, the deferred annuity is on the life of the individual or on the life of his spouse or civil partner; and
- (c) the insurance or contract was made by him or his spouse or civil partner.
- (3) Subject to subsections . . . (10) and (11) below, no relief under this section shall be given—
- (a) except in respect of premiums payable under policies for securing a capital sum on death, whether in conjunction with any other benefit or not;
- (b) in respect of premiums payable under any policy issued in respect of an insurance made after 19th March 1968 unless the policy is a qualifying policy;
- (c) in respect of premiums payable under any policy issued in respect of an insurance made after 13th March 1984 . . . ;
- (d) in respect of premiums payable during the period of deferment in respect of a policy of deferred assurance.
- (4) Subject to subsection (8) below, relief under this section in respect of any premiums paid by an individual in a year of assessment shall be given by making good to the person to whom they are paid any deficiency arising from the deductions authorised under subsection (5) below; and this section and Schedule 14 shall have effect in relation to any premium or part of a premium which is paid otherwise than in the year of assessment in which it becomes due and payable as if it were paid in that year.
- (5) Subject to the provisions of Schedule 14—
- (a) an individual resident in the United Kingdom who is entitled to relief under this section in respect of any premium may deduct from any payment in respect of the premium and retain an amount equal to 12.5 per cent of the payment; and
- (b) the person to whom the payment is made shall accept the amount paid after the deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made and may recover the deficiency from the Board.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) Where the individual is not resident in the United Kingdom (but is entitled to relief by virtue of subsection (1A)(b)), subsection (4) above shall not apply but . . . the like relief shall be given to him under paragraph 6 of Schedule 14.
- (9) Subsections (5) and (8) above shall apply in relation to an individual who is not resident in the United Kingdom but is a member of the armed forces of the Crown or the spouseor civil partner of such a member as if the individual were so resident.
- (10) Subsection (3)(b) above shall not apply—
- (a) to any policy of life insurance having as its sole object the provision on an individual’s death or disability of a sum substantially the same as any amount then outstanding under a mortgage of his residence, or of any premises occupied by him for the purposes of a business, being a mortgage the principal amount secured by which is repayable by instalments payable annually or at shorter regular intervals; or
- (b) to any policy of life insurance issued in connection with an approved scheme as defined in Chapter I of Part XIV.
- (11) Subsection (3)(a) and (d) above shall not affect premiums payable—
- (a) under policies or contracts made in connection with any superannuation or bona fide pension scheme for the benefit of the employees of any employer, or of persons engaged in any particular trade, profession, vocation or business, or for the benefit of the spouse, civil partner, widow, widower , surviving civil partner or children or other dependants of any such employee or person, or
- (b) under policies taken out by teachers in the schools known in the year 1918 as secondary schools, pending the establishment of a superannuation or pension scheme for those teachers.
- (12) Schedule 14 shall have effect for the purpose of modifying, for certain cases, and supplementing the provisions of this section.
- (13) In . . . Schedule 14, “*friendly society*” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act).
- (14) In subsection (2)(a)—
- “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and
- “member of the society” has the same meaning as in Lloyd’s Act 1982 .
#### Qualifying policies
##### 267
Schedule 15, Part I of which contains the basic rules for determining whether or not a policy is a qualifying policy, Part II of which makes provision for the certification etc. of policies as qualifying policies and Part III of which modifies Parts I and II in their application to certain policies issued by non-resident companies, shall have effect for the purpose of determining whether or not a policy is a qualifying policy; and, accordingly, any reference in this Act to a qualifying policy shall be construed in accordance with that Schedule.
#### Early conversion or surrender of life policies
##### 268
- (1) Where a policy of life insurance to which this section applies has been issued and, within four years from the making of the insurance in respect of which it was issued, any of the following events happens, that is to say—
- (a) the surrender of the whole or part of the rights conferred by the policy;
- (b) the falling due (otherwise than on death) of a sum payable in pursuance of a right conferred by the policy to participate in profits; and
- (c) the conversion of the policy into a paid-up or partly paid-up policy;
the body by whom the policy was issued shall pay to the Board, out of the sums payable by reason of the surrender or, as the case may be, out of the sum falling due or out of the fund available to pay the sums which will be due on death or on the maturity of the policy, a sum determined in accordance with the following provisions of this section, unless the body is wound up and the event is a surrender or conversion effected in connection with the winding-up.
- (2) The sum payable under subsection (1) above shall, subject to the following provisions of this section, be equal to the lower of the following, that is to say—
- (a) the appropriate percentage of the premiums payable under the policy up to the happening of the event; and
- (b) the surrender value of the policy at the time of the happening of the event less the complementary percentage of the premiums mentioned in paragraph (a) above.
- (3) If the event is one of those mentioned below, the sum payable to the Board shall not exceed the following limit, that is to say—
- (a) if it is the surrender of part of the rights conferred by the policy, the value of the rights surrendered at the time of the surrender;
- (b) if it is the conversion of the policy into a partly paid-up policy, the surrender value at the time of the conversion, of so much of the policy as is paid up; and
- (c) if it is the falling due of a sum, that sum.
- (4) If the event was preceded by the happening of such an event as is mentioned in subsection (1) above, subsection (2) above shall apply—
- (a) as if the lower of the amounts mentioned therein were reduced by the sum paid under this section in respect of the earlier event; and
- (b) if the earlier event was such an event as is mentioned in paragraph (a) or (c) of subsection (3) above, as if the surrender value of the policy were increased by the amount which, under that paragraph, limited or might have limited the sum payable under this section in respect of the earlier event.
- (5) For the purposes of this section the appropriate percentage, in relation to any event, is the percentage equal to the following fraction of the percentage found by doubling that mentioned in section 266(5)(a) as in force for the year of assessment in which the event happened, that is to say—
- (a) if the event happens in the first two of the four years mentioned in subsection (1) above, three-sixths;
- (b) if it happens in the third of those years, two-sixths; and
- (c) if it happens in the last of those years, one-sixth;
and the complementary percentage, in relation to any event, is 100 per cent. less the appropriate percentage.
- (6) Where the annual amount of the premiums payable under a policy of life insurance is at any time increased (whether under the policy or by any contract made after its issue) so as to exceed by more than 25 per cent.—
- (a) if the insurance was made on or before 26th March 1974, the annual amount as at that date, or
- (b) in the case of any other insurance, the first annual amount so payable,
the additional rights attributable to the excess shall be treated for the purposes of this section as conferred by a new policy issued in respect of an insurance made at that time, and the excess shall be treated as premiums payable under the new policy.
- (7) This section applies to any policy of life insurance which is a qualifying policy unless—
- (a) it is a policy in respect of the premiums on which relief under section 266 is not available by virtue of subsection (3)(c) of that section; or
- (b) it is a policy of life insurance issued in connection with a registered pension scheme;
and in relation to a policy of life insurance issued in respect of an insurance made before 27th March 1974 applies only in accordance with subsection (6) above.
#### Surrender etc. of policies after four years
##### 269
- (1) Where a policy of life insurance to which this section applies has been issued and, in the fifth or any later year from the making of the insurance in respect of which it was issued, either of the following events happens, that is to say—
- (a) the surrender of the whole or part of the rights conferred by the policy; and
- (b) the falling due (otherwise than on death or maturity) of a sum payable in pursuance of a right conferred by the policy to participate in profits;
then, if either of those events has happened before, the body by whom the policy was issued shall pay to the Board, out of the sums payable by reason of the surrender, or, as the case may be, out of the sum falling due, a sum determined in accordance with the following provisions of this section.
- (2) The sum payable under subsection (1) above shall, subject to the following provisions of this section, be equal to the applicable percentage of the lower of the following—
- (a) the total of the premiums which are payable in that year under the policy; and
- (b) the sums payable by reason of the surrender or, as the case may be, the sum falling due;
and the percentage to be applied for this purpose shall be a percentage equal to that mentioned in section 266(5)(a) as in force for the year of assessment in which the event happens.
- (3) Where, after a sum has become payable under subsection (1) above, and within the same year from the making of the insurance, another such event happens as is mentioned therein, the sums payable under that subsection in respect of both or all of the events shall not exceed the applicable percentage of the total mentioned in subsection (2)(a) above.
- (4) Where, on the happening of an event in the fifth or any later year from the making of the insurance, any sum is payable under subsection (1) of section 268 as applied by subsection (6) of that section as well as under subsection (1) above, subsection (2) above shall apply as if the sums or sum mentioned in paragraph (b) thereof were reduced by the sum payable under that section.
- (5) This section applies to any policy of life insurance which is a qualifying policy unless—
- (a) it is a policy in respect of the premiums on which relief under section 266 is not available by virtue of subsection (3)(c) of that section; or
- (b) it is a policy issued in the course of an industrial insurance business; or
- (c) it was issued in respect of an insurance made before 27th March 1974.
#### Provisions supplementary to sections 268 and 269
##### 270
- (1) Where on the happening of an event in relation to a policy of life insurance a sum is payable under section 268 or 269, relief under section 266 in respect of the relevant premiums paid under the policy shall be reduced by the sum so payable or, as the case may be, by so much of the sum as does not exceed the amount of that relief (or as does not exceed so much of that amount as remains after any previous reduction under this section).
- (2) For the purposes of this section the relevant premiums are—
- (a) in relation to a sum payable under section 268, the premiums payable under the policy up to the happening of the event by reason of which the sum is payable; and
- (b) in relation to a sum payable under section 269, the premiums payable in the year (from the making of the insurance) in which the event happens by reason of which the sum is payable.
- (3) Where the relevant premiums are payable in more than one year of assessment the reduction in relief under this section shall, so far as possible, reduce relief for an earlier year of assessment before reducing relief for a later one.
- (4) Any sum paid under section 268 or 269 by reason of any event shall be treated—
- (a) as between the parties, as received by the person by whom the premiums under the policy were paid; and
- (b) for the purposes of section 266, as a sum paid by that person in satisfaction of his liability resulting from the reduction of relief under this section;
and where that sum exceeds that liability he shall be entitled, on a claim made by him not later than six years after the end of the year of assessment in which the event happens, to repayment of the excess.
#### Deemed surrender in cases of certain loans
##### 271
- (1) Where—
- (a) by virtue of section 465 of ITTOIA 2005 a gain arising in connection with a policy . . . would be treated as forming part of an individual’s total income; and
- (b) the policy was issued in respect of an insurance made after 26th March 1974 . . .; and
- (c) any sum is at any time after the making of the insurance . . . lent to or at the direction of that individual by or by arrangement with the body issuing the policy . . .;
then, subject to subsection (2) below, the same results shall follow under sections 268 to 270 as if at the time the sum was lent there had been a surrender of part of the rights conferred by the policy . . . and the sum had been paid as consideration for the surrender (and if the policy is a qualifying policy, whether or not the premiums under it are eligible for relief under section 266, those results shall follow under section 269, whether or not a gain would be treated as arising on the surrender).
- (2) Subsection (1) above does not apply—
- (a) in relation to a policy if—
- (i) it is a qualifying policy; and
- (ii) either interest at a commercial rate is payable on the sum lent or the sum is lent to a full-time employee of the body issuing the policy for the purpose of assisting him in the purchase or improvement of a dwelling used or to be used as his only or main residence; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Collection of sums payable under sections 268 and 269
##### 272
- (1) Any body by whom a policy to which section 268 or 269 applies has been issued shall, within 30 days of the end of each period of 12 months ending with 31st March in every year, make a return to the collector of the sums which, in that period, have become payable by it under either of those sections.
- (2) Any sum which is to be included in a return made under subsection (1) above shall be due at the time by which the return is to be made and shall be paid without being demanded.
- (3) Where any sum which was or ought to have been included in such a return is not paid by the end of the period for which the return was to be made, it may be recovered by an assessment as if it were income tax for the year of assessment in which that period ends; and where it appears to the inspector that a sum which ought to have been so included had not been included or that a return is not correct he may make such an assessment to the best of his judgment.
- (4) All the provisions of the Income Tax Acts relating to the assessment and collection of tax, interest on unpaid tax, appeals and penalties shall, with the necessary modifications, apply in relation to sums due under this section; and for the purposes of those provisions so far as they relate to interest on unpaid tax, a sum assessed in pursuance of this section shall be treated as having been payable when it would have been payable had it been included in a return under subsection (1) above.
- (5) Where, on an appeal against an assessment made in pursuance of this section, it is determined that a greater sum has been assessed than was payable, the excess, if paid, shall be repaid.
- (6) Where a body has paid a sum which is payable under section 268 or 269 it shall give within 30 days to the person by whom the sum is, under section 270(4), treated as received a statement specifying that sum and showing how it has been arrived at.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments securing widows' and children’s annuities
##### 273
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Limits on relief under sections 266 and 273
##### 274
- (1) The aggregate of the premiums . . . in respect of which relief is given to any person under section 266 shall not exceed £1,500 in any year of assessment or one-sixth of that person’s total income, whichever is the greater.
- (2) The aggregate of the relief given under section 266 in respect of premiums . . . payable for securing any benefits other than capital sums on death shall not exceed the amount of the income tax calculated at 12.5% on £100.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) War insurance premiums shall not be taken into account in calculating the limits of one-sixth of total income or of £100 mentioned in this section.
### Supplemental
#### Meaning of “relative”
##### 275
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect on relief of charges on income
##### 276
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Partners
##### 277
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Non-residents
##### 278
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — TAXATION OF INCOME OF SPOUSES AND CIVIL PARTNERS
### General rules
#### Aggregation of wife’s income with husband's
##### 279
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of reliefs
##### 280
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax repayments to wives
##### 281
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Construction of references to married women living with their husbands
##### 282
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Separate assessments
#### Option for separate assessment
##### 283
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of separate assessment on personal reliefs
##### 284
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Collection from wife of tax assessed on husband but attributable to her income
##### 285
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Right of husband to disclaim liability for tax on deceased wife’s income
##### 286
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Separate taxation
#### Separate taxation of wife’s earnings
##### 287
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Elections under section 287
##### 288
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — ENTERPRISE INVESTMENT SCHEME
#### The relief
##### 289
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Minimum and maximum subscriptions
##### 290
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Individuals qualifying for relief
##### 291
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Parallel trades
##### 292
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
##### 293
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Companies with interests in land
##### 294
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Valuation of interests in land for purposes of section 294(1)(b)
##### 295
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 294 disapplied where amounts raised total £50,000 or less
##### 296
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trades
##### 297
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 293 and 297
##### 298
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disposal of shares
##### 299
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Value received from company
##### 300
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 300
##### 301
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Replacement capital
##### 302
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Value received by persons other than claimants
##### 303
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#### Husband and wife
##### 304
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reorganisation of share capital
##### 305
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Claims
##### 306
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of relief
##### 307
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application to subsidiaries
##### 308
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further provisions as to subsidiaries
##### 309
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information
##### 310
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Nominees, bare trustees and approved investment funds
##### 311
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter III
##### 312
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — SPECIAL PROVISIONS
#### Taxation of consideration for certain restrictive undertakings
##### 313
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Divers and diving supervisors
##### 314
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Wounds and disability pensions
##### 315
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances, bounties and gratuities
##### 316
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#### Victoria Cross and other awards
##### 317
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other pensions in respect of death due to war service etc
##### 318
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Crown servants: foreign service allowance
##### 319
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commonwealth Agents-General and official agents etc
##### 320
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Consuls and other official agents
##### 321
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Consular officers and employees
##### 322
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Visiting forces
##### 323
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Designated international organisations
##### 324
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on deposits with National Savings Bank
##### 325
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest etc. under contractual savings schemes
##### 326
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disabled person’s vehicle maintenance grant
##### 327
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Funds in court
##### 328
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on damages for personal injuries
##### 329
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Compensation for National-Socialist persecution
##### 330
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scholarship income
##### 331
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenditure and houses of ministers of religion
##### 332
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Personal equity plans
##### 333
Regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) may include provision generally for the purpose of the administration of corporation tax in relation to plans.
### CHAPTER V — RESIDENCE OF INDIVIDUALS
#### Commonwealth citizens and others temporarily abroad
##### 334
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Residence of persons working abroad
##### 335
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Temporary residents in the United Kingdom
##### 336
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART VIII — TAXATION OF INCOME AND CHARGEABLE GAINS OF COMPANIES
### Taxation of income
#### Companies beginning or ceasing to carry on a trade
##### 337
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowance of charges on income and capital
##### 338
- (1) Charges on income are allowed as deductions from a company’s total profits in computing the corporation tax chargeable for an accounting period.
- (2) They are deducted from the company’s total profits for the period as reduced by any other relief from tax other than group relief.
- (3) The amount of the deduction is limited to the amount that reduces the company’s total profits for the period to nil.
- (4) Except as otherwise provided, a deduction is allowed only in respect of payments made by the company in the accounting period concerned.
- (5) The above provisions are subject to any express exceptions in the Corporation Tax Acts.
#### Charges on income: donations to charity
##### 339
- (1) A qualifying donation is a payment made by a company to a charity, other than—
- (a) a payment which, by reason of any provision of the Taxes Acts (within the meaning of the Management Act) except section 209(4), is to be regarded as a distribution (but see subsections (1A) and (1B) below); and
- (b) a payment which is deductible in computing profits or any description of profits for purposes of corporation tax.
- (1A) In determining whether a payment is to be regarded as a distribution for the purposes of subsection (1)(a) above, the words in section 209(5) from “; and any amount” to the end are to be disregarded.
- (1B) A payment (other than a dividend) made by a company which is wholly owned by a charity is not to be regarded as a distribution for the purposes of subsection (1)(a) above.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) A payment made by a company is not a qualifying donation if—
- (a) it is made subject to a condition as to repayment, or
- (b) the company or a connected person receives a benefit in consequence of making it and either the relevant value in relation to the payment exceeds the limit imposed by subsection (3DA) below or the amount to be taken into account for the purposes of this paragraph in relation to the payment exceeds £500.
- (3C) For the purposes of subsections (3B) above and (3D) below, the relevant value in relation to a payment to a charity is—
- (a) where there is one benefit received in consequence of making it which is received by the company or a connected person, the value of that benefit;
- (b) where there is more than one benefit received in consequence of making it which is received by the company or a connected person, the aggregate value of all the benefits received in consequence of making it which are received by the company or a connected person.
- (3D) The amount to be taken into account for the purposes of subsection (3B)(b) above in relation to a payment to a charity is an amount equal to the aggregate of—
- (a) the relevant value in relation to the payment, and
- (b) the relevant value in relation to each payment already made to the charity by the company in the accounting period in which the payment is made which is a qualifying donation within the meaning of this section.
- (3DA) The limit imposed by this subsection is—
- (a) where the amount of the payment does not exceed £100, 25 per cent of the amount of the payment;
- (b) where the amount of the payment exceeds £100 but does not exceed £1,000, £25;
- (c) where the amount of the payment exceeds £1,000, 5 per cent of the amount of the payment.
- (3DB) Where a benefit received in consequence of making a payment—
- (a) consists of the right to receive benefits at intervals over a period of less than twelve months;
- (b) relates to a period of less than twelve months; or
- (c) is one of a series of benefits received at intervals in consequence of making a series of payments at intervals of less than twelve months,
the value of the benefit shall be adjusted for the purposes of subsection (3C) above and the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.
- (3DC) Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a payment which is one of a series of payments made at intervals of less than twelve months, the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.
- (3DD) Where the value of a benefit, or the amount of a payment, falls to be adjusted under subsection (3DB) or (3DC) above, the value or amount shall be multiplied by 365 and the result shall be divided by—
- (a) in a case falling within subsection (3DB)(a) or (b) above, the number of days in the period of less than twelve months;
- (b) in a case falling within subsection (3DB)(c) or (3DC) above, the average number of days in the intervals of less than twelve months;
and the reference in subsection (3DB) to subsection (3C) above is a reference to that subsection as it applies for the purposes of subsection (3B) above.
- (3E) A payment made by a company is not a qualifying donation if it is conditional on, or associated with, or part of an arrangement involving, the acquisition of property by the charity, otherwise than by way of gift, from the company or a connected person.
- (3F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3G) A payment made by a company is not a qualifying donation if the company is itself a charity.
- (4) Where a company gives a sum of money to a charity—
- (a) if the charity is a charitable company, a body mentioned in section 507 or an Association of a description specified in section 508, the gift shall in the hands of the charitable company be treated for the purposes of this Act as if it were an annual payment, and
- (b) if the charity is a trust established for charitable purposes only, see section 522 of ITA 2007 (gifts of money from companies).
- (5) *In any accounting period of a company, the maximum amount allowable under section* 338*by virtue of subsection* (2)(b)*of that section in respect of qualifying donations made by the company shall be a sum equal to* 3*per cent. of the dividends paid on the company’s ordinary share capital in that accounting period* .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7AA) Where—
- (a) a qualifying donation to a charity is made by a company which is wholly owned by a charity, and
- (b) the company makes a claim for the donation, or any part of it, to be deemed for the purposes of section 338 to be a charge on income paid in an accounting period falling wholly or partly within the period of nine months ending with the date of the making of the donation,
the donation or part shall be deemed for those purposes to be a charge on income paid in that accounting period, and not in any later period.
A claim under this subsection must be made within the period of two years immediately following the accounting period in which the donation is made, or such longer period as the Board may allow.
- (7AB) For the purposes of this section a company is wholly owned by a charity if it is either—
- (a) a company with an ordinary share capital every part of which is owned by a charity (whether or not the same charity); or
- (b) a company limited by guarantee in whose case every person who—
- (i) is beneficially entitled to participate in the divisible profits of the company, or
- (ii) will be beneficially entitled to share in any net assets of the company available for distribution on its winding up,
is or must be a charity or a company wholly owned by a charity.
- (7AC) For the purposes of subsection (7AB) above ordinary share capital of a company shall be taken to be owned by a charity if there is a charity which—
- (a) within the meaning of section 838 directly or indirectly owns that share capital; or
- (b) would be taken so to own that share capital if references in that section to a body corporate included references to a charity which is not a body corporate.
- (7A) In subsections (3B) to (3E) above references to a connected person are to a person connected with—
- (a) the company, or
- (b) a person connected with the company;
and section 839 applies for the purposes of this subsection.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) For the purposes of this section “charity” includes each of the bodies mentioned in section 507, and . . . any Association of a description specified in section 508, but, subject to that, in this section “charity” has the same meaning as in section 506.
- (10) In this section “*charitable company*” has the same meaning as in section 506.
#### Charges on income: interest payable to non-residents
##### 340
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments of interest etc. between related companies
##### 341
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax on company in liquidation
##### 342
- (1) In this section references to a company’s final year are references to the financial year in which the affairs of the company are completely wound up, and references to a company’s penultimate year are references to the last financial year preceding its final year.
- (2) Subject to subsection (3) or (3A) below—
- (a) corporation tax shall be charged on the profits of the company arising in the winding-up in its final year at the rate of corporation tax fixed or proposed for the penultimate year; but
- (b) where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.
- (3) If, before the affairs of the company are completely wound up, any of the rates or fractions mentioned in subsection (2) above has been fixed or proposed for the final year, that subsection shall have effect in relation to that rate or fraction as if for the references to the penultimate year there were substituted references to the final year.
- (3A) If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.
In this subsection “*the company’s final accounting period*” means the accounting period of the company which, in accordance with section 12(4) of CTA 2009, ends by reason of the completion of the winding up.
- (4) An assessment on the company’s profits for an accounting period which falls after the commencement of the winding-up shall not be invalid because made before the end of the accounting period.
- (5) In making an assessment after the commencement of the winding-up of the company but before the date when its affairs are completely wound up, the liquidator may act on an assumption as to when that date will fall, so far as it governs section 12(4) of CTA 2009.
- (6) The assumption of the wrong date shall not alter the company’s final and penultimate year, and, if the right date is later, an accounting period shall end on the date assumed, and a new accounting period shall begin and section 12(4) of CTA 2009 shall thereafter apply as if the winding-up had commenced with the beginning of that new accounting period.
- (7) References in this section to a rate or fraction fixed or proposed are references to a rate or fraction fixed by an Act passed before the completion of the winding-up or, if not so fixed, proposed by a Budget resolution (and without regard to any subsequent Act); except that if a rate or fraction so fixed is proposed to be altered by a Budget resolution any such reference to it is a reference to it as proposed to be so altered.
- In this subsection “*Budget resolution*” means a resolution of the House of Commons for fixing any such rate or fraction as is mentioned in this section.
- (8) Where the winding-up commenced before the company’s final year, paragraphs (a) and (b) of subsection (2) (but not subsection (3)) above shall apply in relation to the company’s profits arising at any time in its penultimate year.
- (9) Any assessment made by virtue of section 8(4) shall be subject to any such adjustment by discharge or repayment of tax or by a further assessment as may be required to give effect to this section.
#### Company reconstructions without a change of ownership
##### 343
- (1) Where, on a company (“*the predecessor*”) ceasing to carry on a trade, another company (“*the successor*”) begins to carry it on, and—
- (a) on or at any time within two years after that event the trade or an interest amounting to not less than a three-fourths share in it belongs to the same persons as the trade or such an interest belonged to at some time within a year before that event; and
- (b) the trade is not, within the period taken for the comparison under paragraph (a) above, carried on otherwise than by a company which is within the charge to tax in respect of it;
then the Corporation Tax Acts shall have effect subject to subsections (2) to (6) below.
- (2) In the circumstances mentioned in subsection (1)—
- (a) there shall be made to or on the successor in accordance with the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act) all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on it; and
- (b) the amount of any such allowance or charge shall be computed as if—
- (i) the successor had been carrying on the trade since the predecessor began to do so, and
- (ii) everything done to or by the predecessor had been done to or by the successor (but so that no sale or transfer which on the transfer of the trade is made to the successor by the predecessor of any assets in use for the purpose of the trade shall be treated as giving rise to any such allowance or charge).
- (3) . . . Subject to subsection (4) below and to any claim made by the predecessor under section 393A(1)(including a case where section 393B applies), the successor shall be entitled to relief under section 393(1), as for a loss sustained by the successor in carrying on the trade, for any amount for which the predecessor would have been entitled to . . . relief if it had continued to carry on the trade.
- (4) Where the amount of relevant liabilities exceeds the value of relevant assets, the successor shall be entitled to relief by virtue of subsection (3) above only if, and only to the extent that, the amount of that excess is less than the amount mentioned in that subsection.
- (4A) Subsection (2A) of section 393A shall not apply to any loss which (but for this subsection) would fall within subsection (2B) of that section by virtue of the predecessor’s ceasing to carry on the trade, and subsection (7) of that section shall not apply for the computation of any such loss.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Where the successor ceases to carry on the trade within the period taken for the comparison under subsection (1)(a) above and on its doing so a third company begins to carry on the trade, . . ., subsections (2) to (5) above shall apply both in relation to that event (together with the new predecessor and successor) and to the earlier event (together with the original predecessor and successor), but so that—
- (a) in relation to the earlier event “successor” shall include the successor at either event; and
- (b) in relation to the later event “predecessor” shall include the predecessor at either event;
and if the conditions of this subsection are thereafter again satisfied, it shall apply again in like manner.
- (8) Where, on a company ceasing to carry on a trade, another company begins to carry on the activities of the trade as part of its trade, then that part of the trade carried on by the successor shall be treated for the purposes of this section as a separate trade, if the effect of so treating it is that subsection (1) or (7) above has effect on that event in relation to that separate trade; and where, on a company ceasing to carry on part of a trade, another company begins to carry on the activities of that part as its trade or part of its trade, the predecessor shall for purposes of this section be treated as having carried on that part of its trade as a separate trade if the effect of so treating it is that subsection (1) or (7) above has effect on that event in relation to that separate trade.
- (9) Where under subsection (8) above any activities of a company’s trade fall, on the company ceasing or beginning to carry them on, to be treated as a separate trade, such apportionments of receipts, expenses, assets or liabilities shall be made as may be just.
- (10) Where, by virtue of subsection (9) above, any item falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to tax (for whatever period) of two or more companies, any question which arises as to the manner in which the item is to be apportioned shall be determined, for the purposes of the tax of all those companies in like manner as an appeal, and all those companies shall be entitled to be a party to those proceedings.
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) Any relief obtainable under this section by way of discharge or repayment of tax shall be given on the making of a claim.
- (12) In the application of this section to any case in relation to which subsection (4) above does not apply—
- (a) subsection (9) above shall have effect with the substitution for the words following “separate trade” of the words “ any necessary apportionment shall be made of receipts or expenses ”; and
- (b) subsection (10) above shall have effect with the substitution for “item” of “ sum ”.
#### Company reconstructions: supplemental
##### 344
- (1) For the purposes of section 343—
- (a) a trade carried on by two or more persons shall be treated as belonging to them in the shares in which they are entitled to the profits of the trade;
- (b) a trade or interest in a trade belonging to any person as trustee (otherwise than for charitable or public purposes) shall be treated as belonging to the persons for the time being entitled to the income under the trust; and
- (c) a trade or interest in a trade belonging to a company shall, where the result of so doing is that subsection (1) or (7) of section 343 has effect in relation to an event, be treated in any of the ways permitted by subsection (2) below.
- (2) For the purposes of section 343, a trade or interest in a trade which belongs to a company engaged in carrying it on may be regarded—
- (a) as belonging to the persons owning the ordinary share capital of the company and as belonging to them in proportion to the amount of their holdings of that capital, or
- (b) in the case of a company which is a subsidiary company, as belonging to a company which is its parent company, or as belonging to the persons owning the ordinary share capital of that parent company, and as belonging to them in proportion to the amount of their holdings of that capital,
and any ordinary share capital owned by a company may, if any person or body of persons has the power to secure by means of the holding of shares or the possession of voting power in or in relation to any company, or by virtue of any power conferred by the articles of association or other document regulating any company, that the affairs of the company owning the share capital are conducted in accordance with his or their wishes, be regarded as owned by the person or body of persons having that power.
- (3) For the purposes of subsection (2) above—
- (a) references to ownership shall be construed as references to beneficial ownership;
- (b) a company shall be deemed to be a subsidiary of another company if and so long as not less than three-quarters of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies;
- (c) the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with section 838(5) to (10); and
- (d) where any company is a subsidiary of another company, that other company shall be considered as its parent company unless both are subsidiaries of a third company.
- (4) In determining, for the purposes of section 343, whether or to what extent a trade belongs at different times to the same persons, persons who are relatives of one another and the persons from time to time entitled to the income under any trust shall respectively be treated as a single person, and for this purpose “*relative*” means husband, wife, civil partner, ancestor, lineal descendant, brother or sister.
- (5) For the purposes of section 343(4), relevant assets are—
- (a) assets which were vested in the predecessor immediately before it ceased to carry on the trade, which were not transferred to the successor and which, in a case where the predecessor was the predecessor on a previous application of section 343, were not by virtue of subsection (9) of that section apportioned to a trade carried on by the company which was the successor on that application; and
- (b) consideration given to the predecessor by the successor in respect of the change of company carrying on the trade;
and for the purposes of paragraph (b) above the assumption by the successor of any liabilities of the predecessor shall not be treated as the giving of consideration to the predecessor by the successor.
- (6) For the purposes of section 343(4), relevant liabilities are liabilities which were outstanding and vested in the predecessor immediately before it ceased to carry on the trade, which were not transferred to the successor and which, in a case where the predecessor was the predecessor on a previous application of section 343, were not by virtue of subsection (9) of that section apportioned to a trade carried on by the company which was the successor on that application; but a liability representing the predecessor’s share capital, share premium account, reserves or relevant loan stock is not a relevant liability.
- (7) For the purposes of section 343(4)—
- (a) the value of assets (other than money) shall be taken to be the price which they might reasonably be expected to have fetched on a sale in the open market immediately before the predecessor ceased to carry on the trade; and
- (b) the amount of liabilities shall be taken to be their amount at that time.
- (8) Where the predecessor transferred a liability to the successor but the creditor concerned agreed to accept settlement of part of the liability as settlement of the whole, the liability shall be treated for the purposes of subsection (6) above as not having been transferred to the successor except as to that part.
- (9) A liability representing the predecessor’s share capital, share premium account, reserves or relevant loan stock shall, for the purposes of subsection (6) above, be treated as not doing so if, in the period of one year ending with the day on which the predecessor ceased to carry on the trade, the liability arose on a conversion of a liability not representing its share capital, share premium account, reserves or relevant loan stock.
- (10) Where a liability of the predecessor representing its relevant loan stock is not a relevant liability for the purposes of section 343(4) but is secured on an asset of the predecessor not transferred to the successor, the value of the asset shall, for the purposes of section 343(4), be reduced by an amount equal to the amount of the liability.
- (11) In this section “*relevant loan stock*” means any loan stock or similar security (whether secured or unsecured) except any in the case of which subsection (12) below applies.
- (12) This subsection applies where, at the time the liability giving rise to the loan stock or other security was incurred, the person who was the creditor was carrying on a trade of lending money.
### Chargeable gains
#### Computation of chargeable gains
##### 345
#### Capital distribution of chargeable gains: recovery of tax from shareholder
##### 346
#### Tax on one member of group recoverable from another member
##### 347
## PART IX — ANNUAL PAYMENTS AND INTEREST
### Annual payments
#### Payments out of profits or gains brought into charge to income tax: deduction of tax
##### 348
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments not out of profits or gains brought into charge to income tax, and annual interest
##### 349
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax where payments made under section 349
##### 350
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Small maintenance payments
##### 351
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certificates of deduction of tax
##### 352
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Relief for payments of interest (excluding MIRAS)
#### General provision
##### 353
- (1) Where a person pays interest in any year of assessment, that person, if he makes a claim to the relief, shall for that year of assessment be entitled (subject to . . . section 52 of ITTOIA 2005) to relief in accordance with this section in respect of so much (if any) of the amount of that interest as is eligible for relief under this section by virtue of section 365.
- (1A) Where a person is entitled for a year of assessment to relief under this section in respect of an amount of interest which is eligible for relief by virtue of section 365, the relief is given as a tax reduction for that tax year.
- (1AA) The amount of the tax reduction is 23% of the amount of the interest.
- (1AB) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1E) Where any person is entitled for any year of assessment to relief . . . in respect of any amount of interest as is eligible for that relief partly as mentioned in subsection (1A) above and partly as mentioned in section 383 of ITA 2007 (relief for interest payments), that amount of interest shall be apportioned between the cases to which each of those provisions applies without regard to what parts of the total amount borrowed remain outstanding but according to . . . —
- (a) the proportions of the total amount borrowed which were applied for different purposes; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and subsection (1A) above or section 383 of ITA 2007 shall apply accordingly to the case in which that subsection or section applies.
- (1F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1H) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) This section does not apply to a payment of relevant loan interest to which section 369 applies.
- (3) Relief under this section shall not be given in respect of—
- (a) interest on a debt incurred by overdrawing an account or by debiting the account of any person as the holder of a credit card or under similar arrangements; or
- (b) where interest is paid at a rate in excess of a reasonable commercial rate, so much of the interest as represents the excess.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loans to buy land etc
##### 354
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Matters excluded from section 354
##### 355
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Job-related accommodation
##### 356
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Limit on amount of loan eligible for relief by virtue of section 354
##### 357
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief where borrower deceased
##### 358
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy machinery or plant
##### 359
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy interest in close company
##### 360
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy interest in co-operative or employee-controlled company
##### 361
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy into partnership
##### 362
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 360 to 362
##### 363
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to pay inheritance tax
##### 364
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loan to buy life annuity
##### 365
- (1) Subject to the following provisions of this section, interest is eligible for relief under section 353 if it is interest on a loan in respect of which the following conditions are satisfied—
- (aa) that the loan was made before 9th March 1999;
- (a) that the loan was made as part of a scheme under which not less than nine-tenths of the proceeds of the loan were applied to the purchase by the person to whom it was made of an annuity ending with his life or with the life of the survivor of two or more persons (“*the annuitants*”) who include the person to whom the loan was made;
- (b) that at the time the loan was made the person to whom it was made or each of the annuitants had attained the age of 65 years;
- (c) that the loan was secured on land in the United Kingdom or the Republic of Ireland and the person to whom it was made or one of the annuitants owns an estate or interest in that land; and
- (d) that, if the loan was made after 26th March 1974, the person to whom it was made or each of the annuitants used the land on which it was secured as his only or main residence immediately before 9th March 1999 .
- (1AA) Where—
- (a) a loan made on or after 9th March 1999 was made in pursuance of an offer made by the lender before that date, and
- (b) the offer was either in writing or evidenced by a note or memorandum made by the lender before that date,
the loan shall be deemed for the purposes of subsection (1)(aa) above to have been made before that date.
- (1AB) Subject to subsection (1AC) below, the conditions in paragraphs (aa) and (a) of subsection (1) above shall be treated as satisfied in relation to a loan (“*the new loan*”) if—
- (a) the new loan was made on or after the day on which the Finance Act 1999 was passed;
- (b) the new loan was made as part of a scheme (“*the scheme*”) under which the whole or any part of the proceeds of the loan was used to defray money applied in paying off another loan (“*the old loan*”); and
- (c) the conditions in subsection (1) above were, or were treated by virtue of this subsection as, satisfied with respect to the old loan.
- (1AC) If only part of the proceeds of the new loan was used to defray money applied in paying off the old loan, subsection (1AB) above applies only if, under the scheme, not less than nine-tenths of the remaining part of the proceeds of the new loan was applied to the purchase by the person to whom it was made of an annuity ending with his life or with the life of the survivor of two or more persons who include him.
- (1AD) In subsection (1AC) above “*the remaining part*” means the part of the proceeds of the new loan that was not used to defray money applied in paying off the old loan.
- (1A) The condition in subsection (1)(d) above shall be treated as satisfied in relation to a loan if—
- (a) the person to whom the loan was made, or any of the annuitants, ceased to use the land as his only or main residence at a time falling within the period of twelve months ending with 8th March 1999, and
- (b) the intention at that time of the person to whom the loan was made, or each of the annuitants owning an estate or interest in the land, was to take steps, before the end of the period of twelve months after the day on which the land ceased to be so used, with a view to the disposal of his estate or interest.
- (1B) If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case.
- (2) Interest is not eligible for relief by virtue of this section unless it is payable by the person to whom the loan was made or by one of the annuitants.
- (3) If the loan was made after 26th March 1974 interest on it is eligible for relief by virtue of this section only to the extent that the amount on which it is payable does not exceed the sum of £30,000; and if the interest is payable by two or more persons the interest payable by each of them is so eligible only to the extent that the amount on which it is payable does not exceed such amount as bears to that sum the same proportion as the interest payable by him bears to the interest payable by both or all of them.
#### Information
##### 366
- (1) A person who claims relief under section 353 in respect of any payment of interest shall furnish to the inspector a statement in writing by the person to whom the payment is made, showing—
- (a) the date when the debt was incurred;
- (b) the amount of the debt when incurred;
- (c) the interest paid in the year of assessment for which the claim is made . . . ; and
- (d) the name and address of the debtor.
- (2) Where any such interest as is mentioned in section 353 is paid, the person to whom it is paid shall, if the person who pays it so requests in writing, furnish him with such statement as regards that interest as is mentioned in subsection (1) above; and the duty imposed by this subsection shall be enforceable at the suit or instance of the person making the request.
- (3) Subsections (1) and (2) above do not apply to interest paid to a building society, or to a local authority.
#### Provisions supplementary to sections 354 to 366
##### 367
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In section 365(3) references to the qualifying maximum for the year of assessment are references to such sum as Parliament may determine for the purpose for that year.
#### Exclusion of double relief etc
##### 368
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mortgage interest relief at source
#### Mortgage interest payable under deduction of tax
##### 369
- (1) If a person who is a qualifying borrower makes a payment of relevant loan interest to which this section applies, he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to the applicable percentage thereof.
- (1A) In subsection (1) above “*the applicable percentage*” means 23 per cent..
- (2) Where a sum is deducted under subsection (1) above from a payment of relevant loan interest—
- (a) the person to whom the payment is made shall allow the deduction on receipt of the residue;
- (b) the borrower shall be acquitted and discharged of so much money as is represented by the deduction as if the sum had been actually paid; and
- (c) the sum deducted shall be treated as income tax paid by the person to whom the payment is made.
- (3) The following payments, that is to say—
- (a) payments of relevant loan interest to which this section applies, and
- (b) payments which would be such payments but for section 373(5),
shall not be allowable as deductions for any purpose of the Income Tax Acts except in so far as they fall to be treated as such payments by virtue only of section 375(2) and would be allowable apart from this subsection.
- (6) Any person by whom a payment of relevant loan interest to which this section applies is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (2)(c) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the payment of relevant loan interest to which it relates.
- (7) The following provisions of the Management Act, namely—
- (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act;
- (b) section 30 (tax repaid in error etc.) apart from subsection (1B) ,
- (c) section 86 (interest), and
- (d) section 95 (incorrect return or accounts),
shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.
- (8) In the application of section 86 of the Management Act by virtue of subsection (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment (“the relevant year of assessment”) under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—
- (a) is 1st January in the relevant year of assessment in a case where the person falling within subsection (6) above has made a relevant interim claim; and
- (b) in any other case, is the later of the following dates, that is to say—
- (i) 1st January in the relevant year of assessment; or
- (ii) the date of the making of the payment by the Board which gives rise to the assessment.
- (9) In this section—
- “*financial year*”, in relation to any person, means a financial year of that person for the purposes of the relevant regulations;
- “*interim claim*” means an interim claim within the meaning of the relevant regulations;
- “*relevant interim claim*” means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person’s financial year, an interim claim made for a period falling wholly or partly within that financial year; and
- “*the relevant regulations*” means regulations made under section 378(3) for the purposes of subsection (6) above.
#### Relevant loan interest
##### 370
- (1) Subject to this section and sections 373 to 376, in this Part “*relevant loan interest*” means interest which is paid and payable in the United Kingdom to a qualifying lender and to which subsection (2) . . . below applies.
- (2) Subject to subsection (4) below, this subsection applies to interest if, disregarding section 353(2) and any other provision applying to interest falling to be treated as relevant loan interest—
- (a) it is interest falling within section . . . 365; and
- (b) apart (where applicable) from section . . . 365(3), the whole of the interest would be eligible for relief under section 353;. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In determining whether subsection (2) above applies to any interest, section 365 shall have effect as if the words “or the Republic of Ireland” were omitted.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Second loans
##### 371
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Home improvement loans
##### 372
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Loans in excess of the qualifying maximum, and joint borrowers
##### 373
- (1) The provisions of this section have effect in relation to a loan where, by virtue of . . . section 365(3), only part of the interest on the loan would (apart from section 353(2)) be eligible for relief under section 353; and in this section any such loan is referred to as a “*limited loan*”.
- (2) None of the interest on a limited loan is relevant loan interest unless—
- (a) the loan is made on or after 6th April 1987; or
- (b) the qualifying lender to whom the interest is payable has given notice to the Board in accordance with regulations that he is prepared to have limited loans of a description which includes that limited loan brought within the tax deduction scheme.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Where the condition in paragraph (a) or (b) of subsection (2) above is fulfilled . . . only so much of the interest as (apart from section 353(2)) would be eligible for relief under section 353 is relevant loan interest.
- (6) Where a loan on which interest is payable by the borrower was made jointly to the borrower and another person who is not the borrower’s husband or wife, the interest on the loan is not relevant loan interest unless—
- (a) each of the persons to whom the loan was made is a qualifying borrower; and
- (b) in relation to each of them considered separately, the whole of that interest is relevant loan interest, in accordance with section 370 and this section.
- (7) In subsection (6) above references to the borrower’s husband or wife do not include references to a separated husband or wife . . . .
#### Conditions for application of section 369
##### 374
- (1) Section 369 does not apply to any relevant loan interest unless—
- (a) in the case of a loan of a description specified by regulations for the purposes of this paragraph, the borrower or, in the case of joint borrowers, each of them has given notice to the lender in the prescribed form certifying—
- (i) that he is a qualifying borrower; and
- (ii) that the interest is relevant loan interest; and
- (iii) such other matters as may be prescribed; or
- (b) the Board have given notice to the lender and the borrower that the interest may be paid under deduction of tax; or
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) the loan to which the interest relates is of a description specified by regulations for the purposes of this paragraph and was made—
- (i) if sub-paragraph (2) of paragraph 2 of Schedule 7 to the Finance Act 1982 applied to interest on the loan which became due on or after a date earlier than 6th April 1983, being a date specified by the Board in pursuance of sub-paragraph (5) of that paragraph, before that earlier date; or
- (ii) if the qualifying lender is a building society or a local authority, before 1st April 1983; or
- (iii) if sub-paragraphs (i) and (ii) above do not apply and the interest falls within section 370(2), before 6th April 1983.
- (2) Where notice has been given as mentioned in paragraph (a) or (b) of subsection (1) above, section 369 applies to any relevant loan interest to which the notice relates and which becomes due on or after the relevant date, as defined by subsection (3) below; and in a case falling within paragraph . . . (d) of subsection (1) above, section 369 applies to the relevant loan interest referred to in that paragraph.
- (3) In subsection (2) above “*the relevant date*” means—
- (a) in the case of a notice under subsection (1)(a) above, the date the notice is given, and
- (b) in the case of a notice under subsection (1)(b) above, a date specified in the notice as being the relevant date (which may be earlier than the date so specified as the date from which the interest may be paid under deduction of tax).
#### Interest ceasing to be relevant loan interest, etc
##### 375
- (1) If at any time—
- (a) the interest on a loan ceases to be relevant loan interest; or
- (b) a person making payments of relevant loan interest ceases to be a qualifying borrower;
the borrower shall give notice of the fact to the lender.
- (2) Without prejudice to subsection (3) below, in relation to a payment of interest—
- (a) which is due after the time referred to in subsection (1) above and before the date on which notice is given under that subsection, and
- (aa) as respects which any of the conditions mentioned in section 374(1) is fulfilled, and
- (b) from which a deduction was made as mentioned in section 369(1),
section 369 shall have effect as if the payment were a payment of relevant loan interest made by a qualifying borrower.
- (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to any deduction or to retain any amount deducted and, accordingly, where any amount that has been deducted exceeds the amount which ought to have been deducted, he shall be liable to make good the excess and an inspector may make such assessments as may in his judgment be required for recovering the excess.
- (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made.
- (4A) If there is any unreasonable delay in the giving of a notice under subsection (1) above, the borrower shall be liable to a penalty not exceeding so much of the aggregate amount that he is liable to make good under subsection (3) above as is attributable to that delay.
- (5) If, as a result of receiving a notice under subsection (1) above or otherwise, a qualifying lender has reason to believe that any interest is no longer relevant loan interest or that a borrower is no longer a qualifying borrower, the lender shall furnish the Board with such information as is in his possession with respect to those matters.
- (6) Where it appears to the Board that any of the provisions of sections 370 to 373 is not or may not be fulfilled with respect to any interest, or that a qualifying borrower has or may have ceased to be a qualifying borrower, they shall give notice of that fact to the lender and the borrower specifying the description of relevant loan interest concerned or, as the case may be, that the borrower has or may have ceased to be a qualifying borrower.
- (7) Section 369 shall not apply to any payment of relevant loan interest of a description to which a notice under subsection (6) above relates and which becomes due or is made after such date as may be specified in the notice and before such date as may be specified in a further notice given by the Board to the lender and the borrower.
- (8) In any case where—
- (a) section 369 applies to any relevant loan interest by virtue of a notice under section 374(1)(b), and
- (b) the relevant date specified in the notice is earlier than the date from which the interest begins to be paid under deduction of tax, and
- (c) a payment of that interest was made on or after the relevant date but not under deduction of tax,
regulations may provide for a sum to be paid by the Board of an amount equal to that which the borrower would have been able to deduct from that payment by virtue of section 369 if it had been made after the relevant date.
- (8A) In any case where an amount to which a person is not entitled is paid to him by the Board in pursuance of regulations made by virtue of subsection (8) above, regulations may—
- (a) provide for an officer of the Board to make such assessments as may in his judgment be required for recovering that amount from that person; and
- (b) make provision corresponding to that made by subsection (4A) above and subsections (4) and (5) of section 374A.
- (8B) Subsections (1), (5) and (6) above shall not apply where interest ceases to be relevant loan interest by virtue of section 38 of the Finance Act 1999.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying borrowers and qualifying lenders
##### 376
- (1) Subject to subsection (2) below, an individual is a qualifying borrower with respect to the interest on any loan.
- (2) In relation to interest paid at a time when the borrower or the borrower’s husband or wife holds an office or employment which would, but for some special exemption or immunity from tax, be a taxable employment under Part 2 of ITEPA 2003 (as defined by section 66(3) of that Act), the borrower is not a qualifying borrower.
- (3) In subsection (2) above references to the borrower’s husband or wife do not include references to a separated husband or wife . . . .
- (4) The following bodies are qualifying lenders:—
- (a) a building society;
- (b) a local authority;
- (c) the Bank of England;
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance;
- (f) any company to which property and rights belonging to a trustee savings bank were transferred by section 3 of the Trustee Savings Bank Act 1985;
- (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (h) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968;
- (j) the Homes and Communities Agency;
- (k) the Housing Corporation;
- (ka) the Secretary of State if the loan is made by him under section 79 of the Housing Associations Act 1985;
- (l) the Northern Ireland Housing Executive;
- (m) the Scottish Special Housing Association;
- (n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (o) the Church of England Pensions Board;
- (p) any body which is for the time being registered under section 376A.
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Variation of terms of repayment of certain loans
##### 377
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary regulations
##### 378
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) The Board may by regulations make provision—
- (a) for the purposes of any provision of sections 369 to 376A which relates to any matter or thing to be specified by or done in accordance with regulations;
- (b) for the application of those sections in relation to loan interest paid by personal representatives and trustees;
- (c) with respect to the furnishing of information by borrowers or lenders, including, in the case of lenders, the inspection of books, documents and other records on behalf of the Board;
- (d) for, and with respect to, appeals to the tribunal against the refusal of the Board to issue a notice under section 374(1)(b) or the issue of a notice under section 375(6) or (7); and
- (e) generally for giving effect to sections 369 to 376A.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 369 to 378
##### 379
In sections 369 to 378—
- “contracts of general insurance” means contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contracts of long-term insurance” means contracts which fall within Part II of that Schedule;
- “*prescribed*” . . . means prescribed by the Board;
- “*qualifying borrower*” has the meaning given by section 376(1) to (3);
- “*qualifying lender*” has the meaning given by section 376(4) . . . ;
- “*regulations*” . . . means regulations made by the Board under section 378;
- “*relevant loan interest*” has the meaning given by section 370(1);
- “*separated*” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent.
## PART X — LOSS RELIEF AND GROUP RELIEF
### CHAPTER I — LOSS RELIEF: INCOME TAX
### Trade etc. losses
#### Set-off against general income
##### 380
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further relief for individuals for losses in early years of trade
##### 381
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 380 and 381
##### 382
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Extension of right of set-off to capital allowances
##### 383
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restrictions on right of set-off
##### 384
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward against subsequent profits
##### 385
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward where business transferred to a company
##### 386
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward as losses of amounts taxed under section 350
##### 387
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-back of terminal losses
##### 388
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions relating to carry-back of terminal losses
##### 389
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of interest as a loss for purposes of carry-forward and carry-back
##### 390
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Losses from trade etc. carried on abroad
##### 391
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Case VI losses
#### Case VI losses
##### 392
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — LOSS RELIEF: CORPORATION TAX
### Trade etc. losses
#### Losses other than terminal losses
##### 393
- (1) Where in any accounting period a company carrying on a trade incurs a loss in the trade, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against any trading income from the trade in succeeding accounting periods; and (so long as the company continues to carry on the trade) its trading income from the trade in any succeeding accounting period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection, or (if a claim is made under section 393A(1)) under section 393A(1) or 393B(3), against income or profits of an earlier accounting period.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) The amount of a loss incurred in a trade in an accounting period shall be computed for the purposes of this section in the same way as trading income from the trade in that period would have been computed.
- (8) For the purposes of this section “*trading income*” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; but where—
- (a) in an accounting period a company incurs a loss in a trade in respect of which it is within the charge to corporation tax under Chapter 2 of Part 3 of CTA 2009, and
- (b) in any later accounting period to which the loss or any part of it is carried forward under subsection (1) above relief in respect thereof cannot be given, or cannot wholly be given, because the amount of the trading income of the trade is insufficient,
any interest or dividends on investments which would fall to be taken into account as trading receipts in computing that trading income but for the fact that they have been subjected to tax under other provisions shall be treated for the purposes of subsection (1) above as if they were trading income of the trade.
- (9) Where in an accounting period the charges on income paid by a company—
- (a) exceed the amount of the profits against which they are deductible, and
- (b) include payments made wholly and exclusively for the purposes of a trade carried on by the company,
then, up to the amount of that excess or of those payments, whichever is the less, the charges on income so paid shall in computing a loss for the purposes of subsection (1) above be deductible as if they were trading expenses of the trade.
- (10) In this section references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
- (11) A claim under subsection (1) above must be made within six years after the end of the accounting period in which the loss is incurred, and must be so made notwithstanding that relief cannot be given in respect of the loss until after the end of that period of six years; . . ..
#### Terminal losses
##### 394
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leasing contracts and company reconstructions
##### 395
- (1) Subject to the provisions of this section, if—
- (a) under a contract entered into on or after 6th March 1973 a company (“*the first company*”) incurs capital expenditure on the provision of plant or machinery which the first company lets to another person by another contract (a “*leasing contract*”); and
- (b) apart from this subsection, the first company would be entitled under section 393(1) or in pursuance of a claim under section 393A(1) to relief in respect of losses incurred on the leasing contract; and
- (c) in the accounting period for which an annual investment allowance or a first-year allowance, within the meaning of Part 2 of the Capital Allowances Act, in respect of the expenditure referred to in paragraph (a) above is made to the first company, arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period, a successor company will be able to carry on any part of the first company’s trade which consists of or includes the performance of all or any of the obligations which, apart from the arrangements, would be the first company’s obligations under the leasing contract,
then, in the accounting period specified in paragraph (c) above and in any subsequent accounting period, the first company shall not be entitled . . . as mentioned in paragraph (b) above except in computing its profits (if any) arising under the leasing contract.
- (2) For the purposes of this section a company is a successor of the first company if the circumstances are such that—
- (a) section 343 applies in relation to the first company and the other company as the predecessor and the successor within the meaning of that section; or
- (b) the two companies are connected with each other within the terms of section 839.
- (3) For the purposes of this section losses incurred on a leasing contract and profits arising under such a contract shall be computed as if the performance of the leasing contract were a trade begun to be carried on by the first company, separately from any other trade which it may carry on, at the commencement of the letting under the leasing contract.
- (4) In determining whether the first company would be entitled . . . as mentioned in subsection (1)(b) above, any losses incurred on the leasing contract shall be treated as incurred in a trade carried on by that company separately from any other trade which it may carry on.
- (5) In this section “*arrangements*” means arrangements of any kind whether in writing or not.
### Case VI losses
#### Case VI losses
##### 396
- (1) Subject to subsection (2) below, where in any accounting period a company incurs a loss in a transaction in respect of which the company is within the charge to corporation tax under or by virtue of a relevant provision, the company may make a claim requiring that the loss be set off against the amount of any income arising from transactions in respect of which the company is assessed to corporation tax charged under or by virtue of a provision to which section 834A (miscellaneous charges) applies for the same or any subsequent accounting period; and the company’s income in any accounting period from such transactions shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against income of an earlier accounting period.
- (2) In this section “*relevant provision*” means any provision to which section 834A applies, except section 761(1)(b)(ii) (offshore income gains).
- (2A) Subsection (2B) applies to any loss made by a company in a transaction if—
- (a) the transaction was of such a nature that, if any profits had arisen from it, the company would have been liable to corporation tax in respect of the profits under Case VI of Schedule D for an accounting period ending before 1 April 2009, and
- (b) the transaction—
- (i) did not fall within section 34, 35 or 36 (lease premiums etc), and
- (ii) was not a disposal made after 31 March 2007 to which Chapter 5 of Part 17 (offshore funds) applied.
- (2B) So far as relief for the loss has not previously been given, the loss is to be treated as a loss to be set off against income in accordance with subsection (1).
- (3) A claim under this section must be made within six years after the end of the accounting period in which the loss is incurred and must be so made notwithstanding that relief cannot be given in respect of the loss until after the end of that period of six years .
### CHAPTER III — LOSS RELIEF: MISCELLANEOUS PROVISIONS
#### Restriction of relief in case of farming and market gardening
##### 397
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Any loss incurred in any accounting period by a company in carrying on a trade of farming or market gardening shall be excluded from section 393(2) if a loss, computed without regard to capital allowances, was incurred in carrying on that trade in that accounting period, and in each of the chargeable periods wholly or partly comprised in the prior five years.
- (3) This section shall not restrict relief for any loss or for any capital allowance in any case—
- (a) where the whole of the farming or market gardening activities in the year next following the prior five years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if they had been undertaken by a competent farmer or market gardener, but
- (b) where, if that farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, that farmer or market gardener could not reasonably have expected the activities to become profitable until after the end of the year next following the prior period of loss.
- (4) This section shall not restrict relief where the carrying on of the trade forms part of, and is ancillary to, a larger trading undertaking.
- (5) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*prior five years*” means, in relation to a loss incurred in a company's accounting period, the last five years before the beginning of that period;
- “*prior period of loss*” means the prior five years, except that, if losses were incurred in the trade in successive . . . chargeable periods amounting in all to a period longer than five years (and ending when the prior five years end), it means that longer period, and for this purpose“*losses*” means losses computed without regard to capital allowances; and
- “*farming*” and “*market gardening*” shall be construed in accordance with the definitions in section 832, but as if those definitions were not restricted to activities in the United Kingdom.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) In ascertaining for the purposes of this section whether a loss was incurred in any part of the prior five years or earlier, the rules applicable to the calculation of the profits of a trade in Part 3 of CTA 2009 (or in Part 2 of ITTOIA 2005) shall be applied; and in this section “*loss computed without regard to capital allowances*” means . . . a loss so ascertained, but disregarding—
- (a) any allowance or charge under the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act); and
- (b) any provision of that Act requiring allowances and charges to be treated as expenses and receipts of the trade.
- (8) This section shall not restrict relief for any loss or capital allowance if the trade was set up and commenced within the prior five years, and, for the purposes of this subsection a trade shall be treated as discontinued, and a new trade set up in the event of any of the following—
- (a) a company starting or ceasing to be within the charge to corporation tax in respect of a trade;
- (b) a change in the persons carrying on a trade which involves all of the persons carrying it on before the change permanently ceasing to carry it on; or
- (c) a change in the persons carrying on a trade not falling within paragraph (b) if—
- (i) immediately before the change, the trade is carried on by persons who include a company and after the change, no company that carried on the trade in partnership immediately before the change continues to carry it on in partnership, or
- (ii) immediately before the change, no company carries on the trade in partnership, and immediately after the change, the trade is carried on in partnership by persons who include a company.
- (9) For the purposes of subsection (8) above a trade shall not be treated as discontinued if the change in the persons carrying on the trade is a cessation to which section 343(1) applies.
- (10) Where at any time there has been a change in the persons carrying on a trade, this section shall, notwithstanding subsection (8) above, apply as if—
- (a) a husband and his wife were the same person, . . .
- (ab) two civil partners of each other were the same person,
- (b) a husband or his wife were the same person as any company of which either the husband or the wife has control, or of which the two of them have control; and
- (c) a civil partner of another were the same person as any company of which either of the civil partners has control, or of which the two of them have control;
and accordingly relief . . . may be restricted under this section by reference to losses (computed without regard to capital allowances) some of which are incurred in an accounting period wholly or partly comprised in the prior five years and some of which are incurred in a year of assessment wholly or partly comprised in the prior five years.
#### Transactions in deposits with and without certificates or in debts
##### 398
Where a company sustains a loss on the exercise or disposal of a right to receive any amount, being a right to which section 56(2) . . . applies, in a case where—
- (a) if a profit had arisen from that exercise or disposal, that profit would have been chargeable to corporation tax by virtue of section 56(2) . . . , and
- (b) the company is chargeable to corporation tax under Part 5 of CTA 2009 (loan relationships) in respect of interest payable on that amount,
then the amount of that interest shall be included in the amounts against which the amount of its loss may be set off under section 396..
#### Dealings in commodity futures etc: withdrawal of loss relief
##### 399
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Relief shall not be given to any company under section393A(1) in respect of a loss sustained in a trade of dealing in commodity futures if—
- (a) the loss was sustained in a trade carried on in partnership . . . ; and
- (b) a scheme has been effected or arrangements have been made (whether by the partnership agreement or otherwise) such that the sole or main benefit that might be expected to accrue to that company from its interest in the partnership was the obtaining of a reduction in corporation tax liability by means of any such relief.
- (3) Where relief has been given in a case to which subsection (2) above applies it shall be withdrawn by the making of an assessment to corporation tax . . . .
- (4) Subsection (2) above does not apply where the scheme was effected or the arrangements were made wholly before 6th April 1976.
- (5) In this section “*commodity futures*”, “*financial futures*” and “*qualifying options*” have the same meanings as in section 143 of the 1992 Act. . . .
#### Write-off of government investment
##### 400
- (1) Where any amount of government investment in a body corporate is written-off on or after 6th April 1988, an amount equal to the amount written-off shall be set off against the body’s tax losses as at the end of the accounting period ending last before the write-off date and, to the extent to which that amount exceeds those losses, against the body’s tax losses as at the end of the next accounting period and so on.
- (2) For the purposes of subsection (1) above a body’s tax losses as at the end of an accounting period are—
- (a) any losses which under section 393(1) are . . . available for relief against its trading income for the next accounting period;
- (b) in the case of a company with investment business, within the meaning of Part 16 of CTA 2009, any excess that falls to be deducted under section 1223(3) of that Act;
- (bb) any losses which—
- (i) under section 392A(2) or 392B are carried forward to the next accounting period, or
- (ii) under section 392A(3) are to be carried forward to the next accounting period and treated for the purposes of Chapter 2 of Part 16 of CTA 2009 as if they were expenses of management deductible for that period;
- (c) any allowances which under section 260(2) of the Capital Allowances Act are available for carry forward to the next accounting period;
- (d) any amount paid by way of charges on income so far as it exceeds the company’s profit for the period and is not taken into account under section 393(9) of this Act or section 1223 of CTA 2009; and
- (e) any allowable losses available under 8 of the 1992 Act so far as not allowed in that or a previous accounting period.
- (3) The set off to be made under subsection (1) above for any accounting period shall be made first against the amounts in paragraphs (a) to (d) of subsection (2) above and, so far as it cannot be so made, against the amount in paragraph (e) of that subsection.
- (4) For the purposes of subsection (1) above there shall be excluded from a body’s tax losses as at the end of the accounting period ending last before the write-off date any amounts in respect of which a claim has been made before the write-off date under section 393A(1) or 402 of this Act or section 260(3) of the Capital Allowances Act but the body’s tax losses as at the end of any subsequent accounting period shall be determined as if no such claim had been made on or after that date.
- (5) Any amount that could be set off under subsection (1) above against a body’s tax losses as at the end of an accounting period (or could be so set off if that body then had any such losses) may be set off against the tax losses of any other body corporate which at the end of that period is a member of the same group as the first-mentioned body, or partly against the tax losses of one member of that group and partly against those of the other or any of the others, as may be just and reasonable.
- (6) Expenditure shall not be treated for the purposes of section 532 or 536 of the Capital Allowances Act or section 50 of the 1992 Act as met by the Crown by reason only of the writing-off of any government investment in the body in question and a sum shall not by reason only of any such writing-off be treated as not having been deductible in computing the profits of that body for the purposes of Part 3 of CTA 2009.
- (7) For the purposes of this section an amount of government investment in a body corporate is written-off—
- (a) if its liability to repay any money lent to it out of public funds by a Minister of the Crown or the Scottish Ministers is extinguished;
- (b) if any of its shares for which a Minister of the Crown has , or the Scottish Ministers have, subscribed out of public funds are cancelled; or
- (c) if its commencing capital debt is reduced otherwise than by being paid off or its public dividend capital is reduced otherwise than by being repaid (including, in either case, a reduction to nil);
and the amount written-off and the write-off date are the amount in respect of which the liability is extinguished and the date on which it is extinguished, the amount subscribed for the shares that are cancelled and the date of cancellation or the amount of reduction in the commencing capital debt or public dividend capital and the date of the reduction, as the case may be.
- (8) In subsection (7) above “*commencing capital debt*” means any debt to a Minister of the Crown or the Scottish Ministers assumed as such under an enactment and “*public dividend capital*” means any amount paid by a Minister of the Crown or the Scottish Ministers under an enactment in which that amount is so described or under an enactment corresponding to an enactment in which a payment made on similar terms to another body is so described.
- (9) This section shall not have effect in relation to any amount written-off if and to the extent to which it is replaced by money lent, or a payment made, out of public funds or by shares subscribed for, whether for money or money’s worth, by a Minister of the Crown or the Scottish Ministers.
- (9A) Nothing in section 464(1) of CTA 2009 (matters to be brought into account in the case of loan relationships only under Part 5 of that Act) shall be construed as preventing this section from applying where a government investment in a body corporate is written off by the extinguishment, in whole or in part, of any liability under a loan relationship.
- (10) In this section—
- “*body corporate*” means any body corporate which is a company for the purposes of corporation tax;
- “*group*” means a company having one or more 51 per cent. subsidiaries and that or those subsidiaries; and
- “*Minister of the Crown*” includes a Northern Ireland department.
#### Relief for pre-trading expenditure
##### 401
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — GROUP RELIEF
#### Surrender of relief between members of groups and consortia
##### 402
- (1) Subject to and in accordance with this Chapter and section 492(8)—
- (a) relief for trading losses and other amounts eligible for relief from corporation tax, or
- (b) losses and other amounts not eligible for relief from corporation tax,
may, in the cases set out in subsections (2) and (3) below, be surrendered by a company (“*the surrendering company*”) and, on the making of a claim by another company (“*the claimant company*”) may be allowed to the claimant company by way of a relief from corporation tax called “*group relief*”.
- (2) In respect of amounts falling within subsection (1)(a) above, group relief shall be available in a case where—
- (a) the surrendering company and the claimant company are both members of the same group,
- (b) the surrendering company is resident in the United Kingdom or is not so resident but carries on a trade there through a permanent establishment, and
- (c) the claimant company is resident in the United Kingdom or is not so resident but carries on a trade there through a permanent establishment,
and, in respect of amounts falling within subsection (1)(b) above, group relief shall be available in a case where the condition in subsection (2A) below is satisfied.
A claim made by virtue of this subsection is referred to as a “*group claim*”.
- (2A) The condition in this subsection is satisfied if the surrendering company is within the charge to tax under the law of any EEA territory and—
- (a) the surrendering company is a 75 per cent. subsidiary of the claimant company and the claimant company is resident in the United Kingdom, or
- (b) both the surrendering company and the claimant company are 75 per cent. subsidiaries of a third company that is resident in the United Kingdom.
- (2B) For the purposes of subsection (2A) above, the surrendering company is within the charge to tax under the law of any EEA territory if—
- (a) it is a non-resident company which is resident in any EEA territory, or
- (b) it is a non-resident company which is not resident in any EEA territory but which carries on a trade in any EEA territory through a permanent establishment.
- (3A) A consortium claim shall not be made unless the following condition is satisfied in the case of both the surrendering company and the claimant company.
- (3B) The condition is that the company is resident in the United Kingdom or is a non-resident company carrying on a trade in the United Kingdom through a permanent establishment.
- (4) A consortium claim shall not be made . . . if a profit on a sale of the share capital of the other company or its holding company which the member owns would be treated as a trading receipt of that member.
- (5) Subject to the provisions of this Chapter, two or more claimant companies may make claims relating to the same surrendering company, and to the same accounting period of that surrendering company.
- (6) A payment for group relief—
- (a) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and
- (b) shall not for any of the purposes of the Corporation Tax Acts be regarded as a distribution . . . ;
and in this subsection “*a payment for group relief*” means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered by way of group relief, being a payment not exceeding that amount.
#### Losses etc. which may be surrendered by way of group relief
##### 403
- (1) If in an accounting period (the “surrender period") the surrendering company has—
- (a) trading losses, excess capital allowances or a non-trading deficit on its loan relationships, or
- (b) charges on income, UK property business losses, management expenses or a non-trading loss on intangible fixed assets available for group relief,
the amount may, subject to the provisions of this Chapter, be set off for the purposes of corporation tax against the total profits of the claimant company for its corresponding accounting period.
- (2) Trading losses, excess capital allowances and a non-trading deficit on the company’s loan relationships are eligible for surrender as group relief even if the surrendering company has other profits of the surrender period against which they could be set.
Further provision about relief in respect of amounts eligible for surrender under this subsection is contained in sections 403ZA to 403ZC.
- (3) Charges on income, UK property business losses, management expenses and a non-trading loss on intangible fixed assets are available for surrender as group relief only to the extent that in aggregate they exceed the surrendering company’s gross profits for the surrender period.
Any excess surrendered shall be taken to consist first of charges on income, then UK property business losses, management expenses and finally a non-trading loss on intangible fixed assets.
Further provision about relief in respect of amounts available for surrender under this subsection is contained in section 403ZD.
- (4) This section has effect subject to—
- section 404 (limitation of group relief in relation to certain dual resident companies), and
- sections 492(8) and 494A (oil extraction activities: availability of group relief against ring fence profits), and
- section 785ZA (restrictions on use of losses: leasing partnerships), and
- paragraph 38 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc: anti-avoidance).
#### Limitation of group relief in relation to certain dual resident companies
##### 404
- (1) Notwithstanding any other provision of this Chapter, no loss or other amount shall be available for set off by way of group relief in accordance with section 403 if, in the material accounting period of the company which would otherwise be the surrendering company, that company is for the purposes of this section a dual resident investing company.
- (2) In this section “*the material accounting period*” means, according to the kind of group relief which would be appropriate, the accounting period—
- (a) in which the trading loss or UK property business loss is incurred; or
- (aa) in which the non-trading deficit on the company’s loan relationships arises; or
- (b) for which the capital allowances fall to be made; or
- (c) for which the expenses of management are deductible; or
- (d) for which the amount is paid by way of charges on income;
but subsection (1) above does not have effect unless the material accounting period begins on or after 1st April 1987.
- (3) In Schedule 17—
- (a) Part I has effect where an accounting period of a company in which it is a dual resident investing company begins before and ends on or after 1st April 1987 and references in subsections (1) and (2) above to the material accounting period shall be construed accordingly; and
- (b) Part II has effect with respect to the time at which certain interest and other payments are to be treated as paid.
- (4) A company is for the purposes of this section a dual resident company in any accounting period in which—
- (a) it is resident in the United Kingdom; and
- (b) it is also within a charge to tax under the laws of a territory outside the United Kingdom—
- (i) because it derives its status as a company from those laws; or
- (ii) because its place of management is in that territory; or
- (iii) because under those laws it is for any other reason regarded as resident in that territory for the purposes of that charge.
- (5) In any accounting period throughout which it is not a trading company, a dual resident company is for the purposes of this section an investing company.
- (6) In any accounting period of a dual resident company in which it is a trading company, the company is nevertheless for the purposes of this section an investing company if—
- (a) in that period it carries on a trade of such a description that its main function or one of its main functions consists of all or any of the following, namely—
- (i) acquiring and holding, directly or indirectly, shares, securities or investments of any other description, including interests in companies (resident outside, as well as in, the United Kingdom) with which the dual resident company is connected, within the terms of section 839;
- (ia) making payments in relation to which, being payments under loan relationships, any debits fall to be brought into account for the purposes of Part 5 of CTA 2009;
- (ii) making payments which, by virtue of any enactment, are charges on income for the purposes of corporation tax;
- (iii) making payments (of interest or other sums) which are similar to those referred to in sub-paragraph (ii) above but which are deductible in computing the profits of the company for the purposes of corporation tax;
- (iv) obtaining funds (by borrowing or in any other manner whatsoever) for the purpose of, or otherwise in connection with, any of the activities referred to in sub-paragraphs (i) to (iii) above; or
- (b) it does not fall within paragraph (a) above, but in that accounting period it carries on all or any of the activities referred to in sub-paragraphs (i) to (iv) of that paragraph and does so—
- (i) to an extent which does not appear to be justified by any trade which it does carry on; or
- (ii) for a purpose which does not appear to be appropriate to any such trade; or
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) In this section “*debtor relationship*” has the same meaning as in Part 5 of CTA 2009 (see section 302(6) of that Act).
#### Claims relating to losses etc. of members of both group and consortium
##### 405
- (1) For the purposes of a consortium claim in respect of the loss or other amount of any relevant accounting period of a group/consortium company, that loss or other amount shall be treated as reduced (or, as the case may be, extinguished) by first deducting therefrom the potential relief attributable to group claims.
- (2) Subject to subsection (3) below, in relation to the loss or other amount of a relevant accounting period of a group/consortium company, the potential relief attributable to group claims is the aggregate amount of group relief that would be claimed if every company which, as a member of the same group of companies as the group/consortium company, could make a group claim in respect of that loss or other amount made such a claim for an amount which, when set against the claimant company’s total profits for its corresponding accounting period, would equal those profits.
- (3) Where for any accounting period another member of the group of companies of which the group/consortium company is a member has a loss or other amount available for relief and one or more group claims is or are in fact made in respect of that loss or other amount, account shall be taken of the relief so claimed before determining (in relation to the loss or other amount of the group/consortium company) the potential relief attributable to group claims under subsection (2) above.
- (4) In any case where—
- (a) a consortium claim is made by a group/consortium company in respect of a loss or other amount of an accounting period of a member of the consortium, and
- (b) the corresponding accounting period of the group/consortium company is a relevant accounting period,
the total profits of the corresponding accounting period of the group/consortium company against which an amount may by virtue of that claim be set off by way of group relief shall be treated as reduced (or as the case may be extinguished) by deducting therefrom the potential relief available to the group/consortium company by way of group claims.
- (5) Subject to subsection (6) below, in relation to a relevant accounting period of a group/consortium company, the potential relief available to the company by way of group claims is the maximum amount of group relief that could be claimed by the company for that accounting period on group claims relating to the losses or other amounts available for relief of other members of the group of companies of which the group/consortium company is a member.
- (6) Where another member of the group of companies of which the group/consortium company is a member in fact makes one or more group claims in respect of losses or other amounts of other members of the group, account shall be taken of the relief already claimed by that company in determining the potential relief available to the group/consortium company by way of group claims under subsection (5) above.
#### Claims relating to losses etc. of consortium company or group member
##### 406
- (1) In this section—
- (a) “*link company*” means a company which is a member of a consortium and is also a member of a group of companies; and
- (b) “*consortium company*”, in relation to a link company, means a company owned by the consortium of which the link company is a member; and
- (c) “*group member*”, in relation to a link company, means a company which is a member of the group of which the link company is also a member but is not itself a member of the consortium of which the link company is a member.
- (2) Subject to subsections (3) and (4) below, where the link company could (disregarding any deficiency of profits) make a consortium claim in respect of the loss or other amount eligible for relief of a relevant accounting period of a consortium company, a group member may make any consortium claim which could be made by the link company; and the fraction which is the relevant fraction for the purposes of section 403C where a group member is the claimant company shall be the same as it would be if the link company were the claimant company.
- (3) Sections 403A to 403C shall have effect in relation to a consortium claim made by a group member by virtue of subsection (2) above as if any time when the claimant company was not a member of the group—
- (a) were not comprised in the period which is the overlapping period in the case of that claim; and
- (b) were to be treated instead as if it constituted a part of the claim period which did not coincide with any part of the accounting period of the surrendering company to which the claim relates.
- (4) The maximum amount of relief which, in the aggregate, may be claimed by group members and the link company by consortium claims relating to the loss or other amount of a relevant accounting period of a consortium company shall not exceed the relief which could have been claimed by the link company (disregarding any deficiency of profits) if subsections (2) and (3) above had not been enacted.
- (5) Subject to subsections (6) to (8) below, where a group member has for a relevant accounting period a loss or other amount available for relief, a consortium company may make any claim in respect of that loss or other amount which it could make if the group member were a member of the consortium at all times when the link company was such a member, but not at any other time.
- (6) The fraction which is the relevant fraction for the purposes of section 403C in relation to a consortium claim made by virtue of subsection (5) above shall be the same as it would be if the link company were the surrendering company, except that the overlapping period in respect of which the relevant fraction is to be ascertained shall be that of the group member which is in fact the surrendering company.
- (7) Sections 403A to 403C shall have effect in relation to a consortium claim made by a consortium company by virtue of subsection (5) above as if any time when the surrendering company was not a member of the group—
- (a) were not comprised in the period which is the overlapping period in the case of that claim; and
- (b) were to be treated instead as if it constituted a part of the claim period that did not coincide with any part of the accounting period of the surrendering company to which the claim relates.
- (8) For any accounting period of a consortium company (“*the claimant company’s accounting period*”) the maximum amount of relief which, in the aggregate, may be claimed by that company by consortium claims relating to the losses or other amounts of accounting periods of the link company and group members shall not exceed the maximum amount of relief available to the claimant company on a consortium claim in respect of which—
- (a) the link company was the surrendering company; and
- (b) the link company’s accounting period was the same as the claimant company’s accounting period.
#### Relationship between group relief and other relief
##### 407
- (1) Group relief for an accounting period shall be allowed as a deduction against the claimant company’s total profits for the period—
- (a) before reduction by any relief derived from a subsequent accounting period, but
- (b) as reduced by any other relief from tax (including relief in respect of charges on income under section 338(1) of this Act or by virtue of section 388, 389 or 391 or Chapter 16 of Part 5 of CTA 2009 (non-trading deficits)) determined on the assumption that the company makes all relevant claims under section 393A(1) of this Act and section 260(3) of the Capital Allowances Act(set-off of capital allowances against total profits).
- (2) For the purposes of this section “*relief derived from a subsequent accounting period*” means—
- (a) relief under section 393A(1)(b) in respect of a loss incurred in an accounting period after the accounting period the profits of which are being computed; and
- (b) relief under section 260(3) of the Capital Allowances Act in respect of capital allowances falling to be made for an accounting period after the accounting period the profits of which are being computed; and
- (c) relief in pursuance of a claim under section 389 or 459 of CTA 2009 (non-trading deficits) in respect of any deficit for a deficit period after the accounting period the profits of which are being computed.
- (3) The reductions to be made in total profits of an accounting period against which any relief derived from a subsequent accounting period is to be set off shall include any group relief for that first-mentioned accounting period.
#### Corresponding accounting periods
##### 408
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Companies joining or leaving group or consortium
##### 409
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Arrangements for transfer of company to another group or consortium
##### 410
- (1) If, apart from this section, two companies (“*the first company*” and “*the second company*”) would be treated as members of the same group of companies and—
- (a) in an accounting period one of the two companies has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender by way of group relief; and
- (b) arrangements are in existence by virtue of which, at some time during or after the expiry of that accounting period—
- (i) the first company or any successor of it could cease to be a member of the same group of companies as the second company and could become a member of the same group of companies as a third company; or
- (ii) any person has or could obtain, or any persons together have or could obtain, control of the first company but not of the second; or
- (iii) a third company could begin to carry on the whole or any part of a trade which, at any time in that accounting period, is carried on by the first company and could do so either as a successor of the first company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade;
then, for the purposes of this Chapter, the first company shall be treated as not being a member of the same group of companies as the second company.
- (2) If a trading company is owned by a consortium or is a 90 per cent. subsidiary of a holding company which is owned by a consortium and—
- (a) in any accounting period the trading company or a member of the consortium has trading losses or other amounts eligible for relief from corporation tax which it would, apart from this section, be entitled to surrender by way of group relief; and
- (b) arrangements are in existence by virtue of which—
- (i) the trading company or any successor of it could, at some time during or after the expiry of that accounting period, become a 75 per cent. subsidiary of a third company; or
- (ii) any person who owns, or any persons who together own, less than 50 per cent. of the ordinary share capital of the trading company has or together have, or could at some time during or after the expiry of that accounting period obtain, control of the trading company; or
- (iii) any person, other than a holding company of which the trading company is a 90 per cent. subsidiary, either alone or together with connected persons, holds or could obtain, or controls or could control the exercise of not less than 75 per cent. of the votes which may be cast on a poll taken at a general meeting of that trading company in that accounting period or in any subsequent accounting period; or
- (iv) a third company could begin to carry on, at some time during or after the expiry of that accounting period, the whole or any part of a trade which, at any time in that accounting period, is carried on by the trading company and could do so either as a successor of the trading company or as a successor of another company which is not a third company but which, at some time during or after the expiry of that accounting period, has begun to carry on the whole or any part of that trade;
then, for the purposes of this Chapter, the trading company shall be treated as though it did not (as the surrendering company or the claimant company) fall within section 402(3).
- (3) In any case where a trading company is a 90 per cent. subsidiary of a holding company which is owned by a consortium, any reference in subsection (2) above to the trading company, other than a reference in paragraph (b)(iv), shall be construed as including a reference to the holding company.
- (4) In this section “*third company*” means a company which, apart from any provision made by or under any such arrangements as are specified in paragraph (b) of either subsection (1) or subsection (2) above, is not a member of the same group of companies as the first company or, as the case may be, the trading company or the holding company to which subsection (2) above applies.
- (5) In subsections (1) and (2) above—
- “*arrangements*” means arrangements of any kind whether in writing or not;
- “*connected persons*” shall be construed in accordance with section 839 but as if subsection (7) of that section (persons acting together to control a company are connected) were omitted; and
- “*control*” has the meaning assigned by section 840.
- (6) For the purposes of subsections (1) and (2) above a company is the successor of another if it carries on a trade which, in whole or in part, the other company has ceased to carry on and the circumstances are such that—
- (a) section 343 applies in relation to the two companies as the predecessor and the successor within the meaning of that section; or
- (b) the two companies are connected with each other within the meaning of section 839.
- (7) Where by virtue of any enactment a Minister of the Crown or Northern Ireland department has power to give directions to a statutory body as to the disposal of assets belonging to, or to a subsidiary of, that body, the existence of that power shall not be regarded as constituting or as having at any time constituted an arrangement within the meaning of this section.
#### Exclusion of double allowances
##### 411
- (1) Relief shall not be given more than once in respect of the same amount, whether by giving group relief and by giving some other relief (in any accounting period) to the surrendering company, or by giving group relief more than once.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . Any reference in the Capital Allowances Act, except Parts 6 and 10, to an allowance made includes a reference to an allowance which would be made but for the granting of group relief, or but for that and but for an insufficiency of profits or other income against which to make it.
#### Claims and adjustments
##### 412
- (1) Claims for group relief are dealt with in Part VIII of Schedule 18 to the Finance Act 1998.
- (2) Paragraph 76 of that Schedule provides for assessments or other adjustments where group relief has been given which is or has become excessive.
#### Interpretation of Chapter IV
##### 413
- (1) The following provisions of this section have effect for the interpretation of this Chapter.
- (2) In this Chapter—
- “*claimant company*” has the meaning given by section 402(1);
- “*company*” means any body corporate;
- “*consortium claim*” means a claim for group relief made by virtue of section 402(3);
- “*EEA territory*”, in relation to any time, means a territory outside the United Kingdom which is within the European Economic Area at that time;
- “*group claim*” means a claim for group relief made by virtue of section 402(2);
- “*group/consortium company*” means a company which is both a member of a group of companies and a company owned by a consortium;
- “*group relief*” has the meaning given by section 402(1);
- “*non-resident company*” means a company that is not resident in the United Kingdom;
- “*relevant accounting period*” means an accounting period beginning after 31st July 1985; and
- “*surrendering company*” has the meaning given by section 402(1).
- (2A) For the purposes of group relief an accounting period of the claimant company which falls wholly or partly within an accounting period of the surrendering company shall be taken to correspond to that accounting period of the surrendering company.
- (3) For the purposes of this Chapter—
- (a) two companies shall be deemed to be members of a group of companies if one is the 75 per cent. subsidiary of the other or both are 75 per cent. subsidiaries of a third company;
- (b) “*holding company*” means a company the business of which 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; and
- (c) “*trading company*” means a company the business of which consists wholly or mainly in the carrying on of a trade or trades.
- (4) In applying for the purposes of this Chapter the definition of “*75 per cent. subsidiary*” in section 838, any share capital of a registered industrial and provident society shall be treated as ordinary share capital.
- (5) . . . In determining for the purposes of this Chapter whether one company is a 75 per cent. subsidiary of another, the other company shall be treated as not being the owner—
- (a) of any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on a sale of the shares would be a trading receipt;. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) References to a company being owned by a consortium shall be construed in accordance with paragraph (a) below except for the purposes of the definition of “*group consortium company*” in subsection (2) above and of sections 403ZA(3), 406(1)(b) and 409(5), (6) and (7), and for those purposes shall be construed in accordance with paragraph (b) below—
- (a) a company is owned by a consortium if three-quarters or more of the ordinary share capital of the company is beneficially owned between them by companies of which none beneficially owns less than one-twentieth of that capital;
- (b) a company is owned by a consortium if—
- (i) it is either such a trading company as is referred to in paragraph (a) or (b) of subsection (3) of section 402 or such a holding company as is referred to in paragraph (c) of that subsection, and
- (ii) three-quarters or more of the ordinary share capital of the company or, in the case of a company within section 402(3)(b), of its holding company is beneficially owned between them by companies of which none beneficially owns less than one-twentieth of that capital;
and the companies which so own three-quarters or more of that ordinary share capital are in this Chapter called the members of the consortium.
- (7) Notwithstanding that at any time a company (“*the subsidiary company*”) is a 75 per cent. subsidiary or a 90 per cent. subsidiary of another company (“*the parent company*”) it shall not be treated at that time as such a subsidiary for the purposes of this Chapter unless, additionally at that time—
- (a) the parent company is beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any profits available for distribution to equity holders of the subsidiary company; and
- (b) the parent company would be beneficially entitled to not less than 75 per cent. or, as the case may be, 90 per cent. of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) Schedule 18 shall have effect for supplementing this section.
## PART XI — CLOSE COMPANIES
### CHAPTER I — INTERPRETATIVE PROVISIONS
#### Close companies
##### 414
- (1) For the purposes of the Corporation Tax Acts, a “*close company*” is one which is under the control of five or fewer participators, or of participators who are directors, except that the expression does not apply—
- (a) to a company not resident in the United Kingdom;
- (b) to a registered industrial and provident society . . . or to a building society;
- (c) to a company controlled by or on behalf of the Crown, and not otherwise a close company; or
- (d) to a company falling within section 415 or subsection (5) below.
- (2) Subject to section 415 and subsection (5) below, a company resident in the United Kingdom (but not falling within subsection (1)(b) above) is also a close company if five or fewer participators, or participators who are directors, together possess or are entitled to acquire—
- (a) such rights as would, in the event of the winding-up of the company (“*the relevant company*”) on the basis set out in subsection (2A) below, entitle them to receive the greater part of the assets of the relevant company which would then be available for distribution among the participators, or
- (b) such rights as would in that event so entitle them if any rights which any of them or any other person has as a loan creditor (in relation to the relevant company or any other company) were disregarded.
- (2A) In the notional winding-up of the relevant company, the part of the assets available for distribution among the participators which any person is entitled to receive is the aggregate of—
- (a) any part of those assets which he would be entitled to receive in the event of the winding-up of the company, and
- (b) any part of those assets which he would be entitled to receive if—
- (i) any other company which is a participator in the relevant company and is entitled to receive any assets in the notional winding-up were also wound up on the basis set out in this subsection, and
- (ii) the part of the assets of the relevant company to which the other company is entitled were distributed among the participators in the other company in proportion to their respective entitlement to the assets of the other company available for distribution among the participators.
- (2B) In the application of subsection (2A) above to the notional winding-up of the other company and to any further notional winding-up required by paragraph (b) of that subsection (or by any further application of that paragraph), references to “*the relevant company*” shall have effect as references to the company concerned.
- (2C) In ascertaining under subsection (2) above whether five or fewer participators, or participators who are directors, together possess or are entitled to acquire rights such as are mentioned in paragraph (a) or (b) of that subsection—
- (a) a person shall be treated as a participator in or director of the relevant company if he is a participator in or director of any other company which would be entitled to receive assets in the notional winding-up of the relevant company on the basis set out in subsection (2A) above, and
- (b) except in the application of subsection (2A) above, no account shall be taken of a participator which is a company unless the company possesses or is entitled to acquire the rights in a fiduciary or representative capacity.
- (2D) Subsections (4) to (6) of section 416 apply for the purposes of subsections (2) and (2A) above as they apply for the purposes of subsection (2) of that sections.
- (3) *In ascertaining under subsection* (2)*above whether any amount could be apportioned among five or fewer participators or among participators who are directors, account shall, in cases where an original apportionment and any sub-apportionment are involved, be taken only of persons among whom that amount could finally be apportioned as the result of the whole process of original apportionment and sub-apportionment and those persons shall be treated as participators or directors if they are participators or directors of any company in the case of which either an original apportionment or any sub-apportionment could be made*.
- (4) For the purposes of this section—
- (a) a company is to be treated as controlled by or on behalf of the Crown if, but only if, it is under the control of the Crown or of persons acting on behalf of the Crown, independently of any other person, and
- (b) where a company is so controlled, it shall not be treated as being otherwise a close company unless it can be treated as a close company as being under the control of persons acting independently of the Crown.
- (5) A company is not to be treated as a close company—
- (a) if—
- (i) it is controlled by a company which is not a close company, or by two or more companies none of which is a close company; and
- (ii) it cannot be treated as a close company except by taking as one of the five or fewer participators requisite for its being so treated a company which is not a close company;
- (b) if it cannot be treated as a close company except by virtue of paragraph (a) of subsection (2) above or paragraph (c) of section 416(2) and it would not be a close company if the references in those paragraphs to participators did not include loan creditors who are companies other than close companies.
- (6) References in subsection (5) above to a close company shall be treated as applying to any company which, if resident in the United Kingdom, would be a close company.
- (7) If shares in any company (“*the first company*”) are held on trust for a registered pension scheme, then, unless the scheme is established wholly or mainly for the benefit of persons who are, or are dependants of, directors or employees or past directors or employees of—
- (a) the first company; or
- (b) an associated company of the first company; or
- (c) a company which is under the control of any director or associate of a director of the first company or of two or more persons each of whom is such a director or associate; or
- (d) a close company;
the persons holding the shares shall, for the purposes of subsection (5) above, be deemed to be the beneficial owners of the shares and, in that capacity, to be a company which is not a close company.
#### Certain quoted companies not to be close companies
##### 415
- (1) Subject to the following provisions of this section, a company is not to be treated as being at any time a close company if—
- (a) shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, and are at that time beneficially held by, the public, and
- (b) any such shares have within the preceding 12 months been the subject of dealings on a recognised stock exchange, and the shares have within those 12 months been listedon a recognised stock exchange.
- (2) Subsection (1) above shall not apply to a company at any time when the total percentage of the voting power in the company possessed by all of the company’s principal members exceeds 85 per cent.
- (3) For the purposes of subsection (1) above shares in a company shall be deemed to be beneficially held by the public if, and only if, they—
- (a) fall within subsection (4) below, and
- (b) are not within the exceptions in subsection (5) below,
and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.
- (4) Shares shall fall within this subsection (as being beneficially held by the public)—
- (a) if beneficially held by a company resident in the United Kingdom which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or
- (b) if held on trust for a registered pension scheme, or
- (c) If they are not comprised in a principal member’s holding.
- (5) Shares shall not be deemed to be held by the public if they are held—
- (a) by any director or associate of a director of the company, or
- (b) by any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate, or
- (c) by any associated company of the company, or
- (d) as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c) above.
- (6) For the purposes of this section—
- (a) a person is a principal member of a company if he possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages, and
- (b) a principal member’s holding consists of the shares which carry the voting power possessed by him.
- (7) In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 416, would be attributed to him under subsection (5) or (6) of that section.
- (8) In this section “*shares*” include stock.
#### Meaning of “associated company” and “control”
##### 416
- (1) For the purposes of this Part,*except paragraphs* 2*and* 9(1)(a), (2)(a)*and* (3)(a)*of Schedule* 19 , a company is to be treated as another’s “*associated company*” at a given time if, at that time or at any other time within one year previously, one of the two has control of the other, or both are under the control of the same person or persons.
- (2) For the purposes of this Part, a person shall be taken to have control of a company if he exercises, or is able to exercise or is entitled to acquire, direct or indirect control over the company’s affairs, and in particular, but without prejudice to the generality of the preceding words, if he possesses or is entitled to acquire—
- (a) the greater part of the share capital or issued share capital of the company or of the voting power in the company; or
- (b) such part of the issued share capital of the company as would, if the whole of the income of the company were in fact distributed among the participators (without regard to any rights which he or any other person has as a loan creditor), entitle him to receive the greater part of the amount so distributed; or
- (c) such rights as would, in the event of the winding-up of the company or in any other circumstances, entitle him to receive the greater part of the assets of the company which would then be available for distribution among the participators.
- (3) Where two or more persons together satisfy any of the conditions of subsection (2) above, they shall be taken to have control of the company.
- (4) For the purposes of subsection (2) above a person shall be treated as entitled to acquire anything which he is entitled to acquire at a future date, or will at a future date be entitled to acquire.
- (5) For the purposes of subsections (2) and (3) above, there shall be attributed to any person any rights or powers of a nominee for him, that is to say, any rights or powers which another person possesses on his behalf or may be required to exercise on his direction or behalf.
- (6) For the purposes of subsections (2) and (3) above, there may also be attributed to any person all the rights and powers of any company of which he has, or he and associates of his have, control or any two or more such companies, or of any associate of his or of any two or more associates of his, including those attributed to a company or associate under subsection (5) above, but not those attributed to an associate under this subsection; and such attributions shall be made under this subsection as will result in the company being treated as under the control of five or fewer participators if it can be so treated.
#### Meaning of “participator”, “associate”, “director” and “loan creditor”
##### 417
- (1) For the purposes of this Part, a “*participator*” is, in relation to any company, a person having a share or interest in the capital or income of the company, and, without prejudice to the generality of the preceding words, includes—
- (a) any person who possesses, or is entitled to acquire, share capital or voting rights in the company;
- (b) any loan creditor of the company;
- (c) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company (construing “distributions” without regard to section 418) or any amounts payable by the company (in cash or in kind) to loan creditors by way of premium on redemption; and
- (d) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit.
- (2) The provisions of subsection (1) above are without prejudice to any particular provision of this Part requiring a participator in one company to be treated as being also a participator in another company.
- (3) “*associate*” means, in relation to a participator—
- (a) any relative or partner of the participator;
- (b) the . . . trustees of any settlement in relation to which the participator is, or any relative of his (living or dead) is or was, a settlor . . . ; and
- (c) where the participator is interested in any shares or obligations of the company which are subject to any trust, or are part of the estate of a deceased person—
- (i) the . . . trustees of the settlement concerned or, as the case may be, the personal representatives of the deceased; and
- (ii) if the participator is a company, any other company interested in those shares or obligations;
and has a corresponding meaning in relation to a person other than a participator.
- (4) In subsection (3) above “*relative*” means spouse or civil partner, parent or remoter forebear, child or remoter issue, or brother or sister.
- (5) For the purposes of this Part “*director*” includes any person occupying the position of director by whatever name called, any person in accordance with whose directions or instructions the directors are accustomed to act, and any person who—
- (a) is a manager of the company or otherwise concerned in the management of the company’s trade or business, and
- (b) is, either on his own or with one or more associates, the beneficial owner of, or able, directly or through the medium of other companies or by any other indirect means, to control 20 per cent. or over of the ordinary share capital of the company.
- (6) In subsection (5)(b) above the expression “*either on his own or with one or more associates*” requires a person to be treated as owning or, as the case may be, controlling what any associate owns or controls, even if he does not own or control share capital on his own.
- (7) Subject to subsection (9) below, for the purposes of this Part “*loan creditor*”, in relation to a company, means a creditor in respect of any debt incurred by the company—
- (a) for any money borrowed or capital assets acquired by the company; or
- (b) for any right to receive income created in favour of the company; or
- (c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium thereon);
or in respect of any redeemable loan capital issued by the company.
- (8) Subject to subsection (9) below, a person who is not the creditor in respect of any debt or loan capital to which subsection (7) above applies but nevertheless has a beneficial interest therein shall, to the extent of that interest, be treated for the purposes of this Part as a loan creditor in respect of that debt or loan capital.
- (9) A person carrying on a business of banking shall not be deemed to be a loan creditor in respect of any loan capital or debt issued or incurred by the company for money lent by him to the company in the ordinary course of that business.
### Additional matters to be treated as distributions
#### “Distribution” to include certain expenses of close companies
##### 418
- (1) Subject to such exceptions as are mentioned in section 209(1), in the Corporation Tax Acts “*distribution*”, in relation to a close company, includes, unless otherwise stated, any such amount as is required to be treated as a distribution by subsection (2) below.
- (2) Subject to subsection (3) below, where a close company incurs expense in or in connection with the provision for any participator of living or other accommodation, of entertainment, of domestic or other services, or of other benefits or facilities of whatever nature, the company shall be treated as making a distribution to him of an amount equal to so much of that expense as is not made good to the company by the participator.
- (3) Subsection (2) above shall not apply to expense incurred in or in connection with the provision—
- (a) for a person employed in employment to which Part 3 of ITEPA 2003 applies (earnings and benefits etc. treated as employment income) without the exclusion in section 216 of that Act (provisions not applicable to lower-paid employment) of such benefits as are mentioned in any of Chapters 6 to 10 of Part 3 and section 223 of that Act (cars and vans, loans, shares, other benefits, and payments on account of director’s tax); or
- (b) of living accommodation for any person if the accommodation is (within the meaning of Chapter 5 of Part 3 of ITEPA 2003) provided by reason of his employment; or
- (c) for the spouse or civil partner, children or dependants of a person employed by the company of any pension, annuity, lump sum, gratuity or other like benefit to be given on that person’s death or retirement.
- (4) The amount of the expense to be taken into account under subsection (2) above as a distribution shall be the same as would under Chapters 6 to 10 of Part 3 of ITEPA 2003 be the cash equivalent of the resultant benefit to the participator.
- (5) Subsection (2) above shall not apply if the company and the participator are both resident in the United Kingdom and—
- (a) one is a subsidiary of the other or both are subsidiaries of a third company also so resident, and
- (b) the benefit to the participator arises on or in connection with a transfer of assets or liabilities by the company to him, or to the company by him.
- (6) The question whether one body corporate is a subsidiary of another for the purposes of subsection (5) above shall be determined as a question whether it is a 51 per cent. subsidiary of that other, except that that other shall be treated as not being the owner—
- (a) of any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or
- (b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on a sale of the shares would be a trading receipt; or
- (c) of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom.
- (7) Where each of two or more close companies makes a payment to a person who is not a participator in that company, but is a participator in another of those companies, and the companies are acting in concert or under arrangements made by any person, then each of those companies and any participator in it shall be treated as if the payment made to him had been made by that company.
- (8) For the purposes of this section any reference to a participator includes an associate of a participator, and any participator in a company which controls another company shall be treated as being also a participator in that other company.
### CHAPTER II — CHARGES TO TAX IN CONNECTION WITH LOANS
#### Loans to participators etc
##### 419
- (1) Subject to the following provisions of this section and section 420, where a close company, otherwise than in the ordinary course of a business carried on by it which includes the lending of money, makes any loan or advances any money to an individual who is a participator in the company or an associate of a participator, there shall be assessed on and recoverable from the company, as if it were an amount of corporation tax chargeable on the company for the accounting period in which the loan or advance is made, an amount equal to 25 per cent. of the amount of the loan or advance.
- (2) For the purposes of this section the cases in which a close company is to be regarded as making a loan to any person include a case where—
- (a) that person incurs a debt to the close company; or
- (b) a debt due from that person to a third party is assigned to the close company;
and then the close company shall be regarded as making a loan of an amount equal to the debt.
- (3) Tax due by virtue of this section in relation to any loan or advance shall be due and payable in accordance with section 59D of the Management Act on the day following the expiry of nine months from the end of the accounting period in which the loan or advance was made.
- (4) Where a close company has made a loan or advance which gave rise to a charge to tax on the company under subsection (1) above and
- (a) the loan or advance or any part of it is repaid to the company,or
- (b) the whole or part of the debt in respect of the loan or advance is released or written off,
relief shall be given from that tax, or a proportionate part of it . . . .
- (4A) Where
- (a) the repayment of the whole or any part of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance, or
- (b) the release or writing off of the whole or any part of the debt in respect of a loan or advance occurs on or after the day on which tax by virtue of this section becomes due in relation to that loan or advance,
relief in respect of the repayment , release or writing off shall not be given under subsection (4) above at any time before the expiry of nine months from the end of the accounting period in which the repayment , release or writing off occurred.
- (4B) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in return) applies to a claim for relief under subsection (4) above unless—
- (a) the claim is included (by amendment or otherwise) in the return for the period in which the loan or advance was made, and
- (b) the relief may be given at the time the claim is made.
- (5) Where, under arrangements made by any person otherwise than in the ordinary course of a business carried on by him—
- (a) a close company makes a loan or advance which, apart from this subsection, does not give rise to any charge on the company under subsection (1) above, and
- (b) some person other than the close company makes a payment or transfers property to, or releases or satisfies (in whole or in part) a liability of, an individual who is a participator in the company or an associate of a participator,
then, unless in respect of the matter referred to in paragraph (b) above there falls to be included in the total income of the participator or associate an amount not less than the loan or advance, this section shall apply as if the loan or advance had been made to him.
- (6) In subsections (1) and (5)(b) above the references to an individual shall apply also to a company receiving the loan or advance in a fiduciary or representative capacity . . . .
- (7) For the purposes of this section any participator in a company which controls another company shall be treated as being also a participator in that other company.
#### Exceptions from section 419
##### 420
- (1) Section 419(2)(a) shall not apply to a debt incurred for the supply by the close company of goods or services in the ordinary course of its trade or business unless the credit given exceeds six months or is longer than that normally given to the company’s customers.
- (2) Section 419(1) shall not apply to a loan made to a director or employee of a close company, or of an associated company of the close company, if—
- (a) neither the amount of the loan, nor that amount when taken together with any other outstanding loans which—
- (i) were made by the close company or any of its associated companies to the borrower*or the wife or husband of the borrower* ; and
- (ii) if made before 31st March 1971, were made for the purpose of purchasing a dwelling which was or was to be the borrower’s only or main residence;
exceeds £15,000 and the outstanding loans falling within sub-paragraph (ii) above do not together exceed £10,000; and
- (b) the borrower works full-time for the close company or any of its associated companies; and
- (c) the borrower does not have a material interest in the close company or in any associated company of the close company;
but if the borrower acquires such a material interest at a time when the whole or part of any such loan made after 30th March 1971 remains outstanding the close company shall be regarded as making to him at that time a loan of an amount equal to the sum outstanding.
#### Taxation of borrower when loan under section 419 released etc
##### 421
- (1) Subject to the following provisions of this section, where a company is assessed or liable to be assessed under section 419 in respect of a loan or advance made to the trustees of a settlement and after the settlement has ended releases or writes off the whole or part of the debt in respect of it, then—
- (a) for the purpose of computing the income of the person from whom the debt was due (“*the debtor*”) for corporation tax purposes, a sum equal to the amount so released or written off shall be treated as income received by the debtor after deduction of income tax at the dividend ordinary rate from a corresponding gross amount;
- (b) no repayment of income tax shall be made in respect of that income and the debtor shall not be liable to pay corporation tax at the dividend ordinary rate on that income;
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) This section shall be construed as one with section 419.
#### Extension of section 419 to loans by companies controlled by close companies
##### 422
- (1) Subject to subsection (4) below, where a company which is controlled by a close company makes a loan which, apart from this section, does not give rise to a charge under subsection (1) of section 419, that section and section 420 shall apply as if the loan had been made by the close company.
- (2) Subject to subsection (4) below, where a company which is not controlled by a close company makes a loan which, apart from this section, does not give rise to a charge under subsection (1) of section 419 and a close company subsequently acquires control of it, that section and section 420 shall apply as if the loan had been made by the close company immediately after the time when it acquired control.
- (3) Where two or more close companies together control the company that makes or has made the loan, subsections (1) and (2) above shall have effect—
- (a) as if each of them controlled that company; and
- (b) as if the loan had been made by each of those close companies,
but the loan shall be apportioned between those close companies in such proportion as may be appropriate having regard to the nature and amount of their respective interests in the company that makes or has made the loan.
- (4) Subsections (1) and (2) above do not apply if it is shown that no person has made any arrangements (otherwise than in the ordinary course of a business carried on by him) as a result of which there is a connection—
- (a) between the making of the loan and the acquisition of control; or
- (b) between the making of the loan and the provision by the close company of funds for the company making the loan;
and the close company shall be regarded as providing funds for the company making the loan if it directly or indirectly makes any payment or transfers any property to, or releases or satisfies (in whole or in part) a liability of, the company making the loan.
- (5) Where, by virtue of this section, sections 419 and 420 have effect as if a loan made by one company had been made by another, any question under those sections or section 421 whether—
- (a) the company making the loan did so otherwise than in the ordinary course of a business carried on by it which includes the lending of money;
- (b) the loan or any part of it has been repaid to the company;
- (c) the company has released or written off the whole or part of the debt in respect of the loan,
shall be determined by reference to the company that makes the loan.
- (6) This section shall be construed as one with section 419 and section 420 and in this section—
- (a) “*loan*” includes advance; and
- (b) references to a company making a loan include references to cases in which the company is, or if it were a close company would be, regarded as making a loan by virtue of section 419(2).
### CHAPTER III — APPORTIONMENT OF UNDISTRIBUTED INCOME ETC.
#### Apportionment of certain income, deductions and interest
##### 423
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exclusions from section 423
##### 424
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manner of apportionment
##### 425
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to income tax where apportionment is to an individual
##### 426
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction of charge under section 426 in certain cases
##### 427
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Increase of apportioned sum etc. by reference to ACT
##### 428
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payment and collection of income tax
##### 429
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Consequences of apportionment: ACT
##### 430
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XII — SPECIAL CLASSES OF COMPANIES AND BUSINESSES
### CHAPTER I — INSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS
### Insurance companies: general
#### Interpretative provisions relating to insurance companies
##### 431
- (1) This section has effect for the interpretation of the life assurance provisions of the Corporation Tax Acts.
- (2) Unless the context otherwise requires—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*basic life assurance and general annuity business*” has the meaning given by section 431F;
- “*brought into account*” has the meaning given by section 83A of the Finance Act 1989;
- “*child trust fund business*” has the meaning given by section 431BA;
- “*closing*” and “*opening*”, in relation to a period of account, refer respectively to the position at the end and at the beginning of the period and, in relation to an accounting period, refer respectively to the position at the end and at the beginning of the period of account in which the accounting period falls;
- “*closing liabilities*” includes liabilities assumed at the end of the period of account concerned in consequence of the declaration of reversionary bonuses or a reduction in premiums;
- “contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contract of long-term insurance” means any contract which falls within Part II of Schedule 1 to that Order;
- “*deposit back arrangements*” means arrangements by which an amount is deposited by the reinsurer under a contract of reinsurance with the cedant;
- “*fair value*”, in relation to assets, means the amount which would be obtained from an independent person purchasing them or, if the assets are money, its amount;
- “*foreign business assets*”, in relation to an insurance company, means assets, other than linked assets, which either—are shown in the records of the company as being primarily attributable to liabilities of the company's foreign business, orare attributable, under the law of a country or territory outside the United Kingdom, to a permanent establishment of the company in that country or territory through which it carries on foreign business;and for this purpose “*foreign business*” means overseas life assurance business or life reinsurance business to the extent that it consists of the reinsurance of overseas life assurance business;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*free assets amount*”, in relation to an insurance company, means the excess of the value of the assets of the company's long-term business , other than any structural assets (within the meaning of section 83XA of the Finance Act 1989), over the aggregate of —the value of the liabilities of that business,any money debts (within the meaning of Part 5 of CTA 2009 (see section 303 of that Act)) of the company not within paragraph (a) above which are owed in respect of that business, andthe amount of the shareholders' excess assets within the meaning given by section 432A(8)(b));
- “*General Prudential Sourcebook*” means the General Prudential Sourcebook made by the Financial Services Authority under the Financial Services and Markets Act 2000 ;
- “*gross roll-up business*” has the meaning given by section 431EA;
- “*the I minus E basis*” means the basis under which a company carrying on life assurance business is charged to tax on the relevant profits (within the meaning of section 88(3) of the Finance Act 1989) of that business otherwise than under section 35 of CTA 2009 (charge on trade profits);
- “*immediate needs annuities business*” means business which consists of the effecting or carrying out of immediate needs annuities (within the meaning of section 725 of ITTOIA 2005);
- “*individual savings account business*” has the meaning given by section 431BB;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*insurance business transfer scheme*” means—a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 , 4 or 5 of subsection (3) of that section, ora scheme which would fall within that section but for subsection (1)(b) of that section;
- “insurance company” means—a person (other than a friendly society) who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance, oran EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act or a firm qualifying for authorisation under Schedule 4 to that Act which—carries on business which consists of the effecting or carrying out of contracts of insurance, andcarries on that business through a branch or agency in the United Kingdom,but does not include an insurance special purpose vehicle;
- “*the Insurance Prudential Sourcebook*” means the Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000;
- “*insurance special purpose vehicle*” means any undertaking which assumes risks from insurance or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issue or some other financing mechanism where the repayment rights of the providers of such debt or other financing mechanism are subordinated to the reinsurance obligations of the undertaking;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*internal linked fund*”, in relation to an insurance company, means an account—to which linked assets are appropriated by the company, andwhich may be divided into units the value of which is determined by the company by reference to the value of those assets;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*liabilities*”, in relation to an insurance company, means—the mathematical reserves of the company as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook, andliabilities of the company (whose value falls to be determined in accordance with section 1.3 of the General Prudential Sourcebook) which arise from deposit back arrangements;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*life assurance business*” means business which—consists of the effecting or carrying out of contracts of insurance which fall within paragraph I, II, III or VII(b) of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, oris capital redemption business,other than immediate needs annuities business;
- “*the life assurance provisions of the Corporation Tax Acts*” means—the provisions of this Chapter so far as relating to life assurance business, companies carrying on such business and friendly societies, andany other provisions of the Corporation Tax Acts making separate provision by reference to whether or not the business of a company is or includes life assurance business or any category of business that includes life assurance business;
- “*life assurance trade profits provisions*” means the provisions applicable for the purposes of the taxation under section 35 of CTA 2009 (charge on trade profits) of the profits of life assurance business carried on by an insurance company;
- “*life reinsurance business*” has the meaning given by section 431C;
- “*linked assets*”, and related expressions, shall be construed in accordance with section 432ZA;
- “long-term business” means business which consists of the effecting or carrying out of contracts of long-term insurance;
- “*long-term insurance fund*” means the fund maintained by an insurance company in respect of its long-term business . . . ;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*net value*”, in relation to any assets, means the excess of the value of the assets over the value of money debts (within the meaning of Part 5 of CTA 2009: see section 303 of that Act) attributable to an internal linked fund which are not owed in respect of liabilities;
- “*non-profit company*”, in relation to a period of account, means a company carrying on long-term business where, at the end of the period—none of the liabilities of that business, ornone but an insignificant proportion of those liabilities,are with-profits liabilities;
- “*non-profit fund*” means a fund that is not a with-profits fund;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*overseas life assurance business*” has the meaning given by section 431D;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*overseas life insurance company*” means an insurance company not resident in the United Kingdom but carrying on life assurance business through a branch or agency in the United Kingdom; . . .
- “*pension business*” has the meaning given by section 431B;
- “*periodical return*”, in relation to an insurance company, means a return deposited with the Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers)(and does not include the Forms mentioned in Rule 9.3(5)).
- “*period of account*” means the period covered by a periodical return;
- “*PHI business*” means long-term business other than life assurance business (including the reinsurance of such long-term business);
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000;
- “*reinsurance*” includes retrocession;
- “*shareholders' excess assets*” has the meaning given by section 432A(8)(b));
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*value*”, in relation to an asset of an insurance company, means the value of the asset as determined in accordance with section 1.3 of the General Prudential Sourcebook, as read with section 2.1 of the Insurance Prudential Sourcebook;
- “*with-profits fund*” has the meaning given by the Prudential Sourcebook (Insurers);
- “*with-profits liabilities*” means liabilities in respect of policies or contracts under which the policy holders or annuitants are eligible to participate in surplus;
- (2YA) Where an insurance company becomes an insurance special purpose vehicle otherwise than on the last day of a period of account, it shall be treated as an insurance special purpose vehicle from the beginning of that period.
- (2YB) “*BLAGAB profits*”, in relation to an accounting period of an insurance company, means the company's BLAGAB income and gains for the period reduced (but not below nil) by the company's BLAGAB deductions for the period.
- (2YC) “*BLAGAB income and gains*”, in relation to an accounting period of an insurance company, means the aggregate of—
- (a) income chargeable for the period . . . so far as referable (in accordance with section 432A) to the company's basic life assurance and general annuity business, and
- (b) chargeable gains so far as so referable accruing to the company in the period, but (subject to section 210A of the 1992 Act) after deducting—
- (i) any allowable losses so referable and so accruing, and
- (ii) so far as they have not been allowed as a deduction from chargeable gains in any previous accounting period, any allowable losses so referable previously accruing to the company.
- (2YD) “*BLAGAB deductions*”, in relation to an accounting period of an insurance company, means the aggregate of—
- (a) amounts falling in respect of any non-trading deficits on the company's loan relationships to be brought into account in the period in accordance with sections 387 to 391 of CTA 2009, and
- (b) the expenses deduction given by Step 8 in section 76(7) for the period.
- (2ZA) Subsections (2ZB) and (2ZC) below apply where an insurance business transfer scheme has effect to transfer long-term business from one person (“*the transferor*”) to another (“*the transferee*”).
- (2ZB) If the transfer takes place otherwise than on the last day of a period of account of the transferor, references to—
- (a) opening liabilities of the transferor,
- (b) opening values or net values of assets of the transferor, . . . or
- (c) the opening amount of the free assets amount of the transferor, . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
for the period of account, so far as relating to the business transferred, are to the part of those liabilities, values or amounts which bears to the whole the proportion A/C.
- (2ZC) If the transfer takes place otherwise than on the first day of a period of account of the transferee, references to—
- (a) closing liabilities of the transferee,
- (b) closing values or net values of assets of the transferee, . . . or
- (c) the closing amount of the free assets amount of the transferee, . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
for the period of account, so far as relating to the business transferred, are to the part of those liabilities, values or amounts which bears to the whole the proportion B/C.
- (2ZD) For the purposes of subsection (2ZC) above—
- (a) closing liabilities of the transferee are to be taken not to relate to the business transferred to the extent that they are liabilities which, immediately before the transfer, were reinsured by the transferor with the transferee, but
- (b) closing liabilities of the transferee are to be taken to relate to the business transferred to the extent that they are liabilities which, immediately before the transfer, were reinsured by the transferee with the transferor if the business transferred consists of or includes that reinsurance business.
- (2ZE) In subsections (2ZB) and (2ZC) above—
- A is the number of days in the period beginning with the period of account and ending with the day of the transfer,
- B is the number of days in the period beginning with the day of the transfer and ending with the period of account, and
- C is one-half of the number of days in the period of account.
- (2ZF) In this Chapter “*capital redemption business*” means any business of a company carrying on insurance business in so far as it consists of the effecting on the basis of actuarial calculations, and the carrying out, of contracts under which, in return for one or more fixed payments, a sum or series of sums of a specified amount become payable at a future time or over a period.
- (2ZG) The Treasury may by order amend the definition of “insurance business transfer scheme” given by subsection (2) above where it is expedient to do so in consequence of any amendment of section 105 of the Financial Services and Markets Act 2000.
- (2ZH) The power conferred by subsection (2ZG) above includes power to make incidental, supplementary, consequential or transitional provisions and savings (including provision amending any provision of the Corporation Tax Acts relating to insurance companies).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Separation of different classes of business
##### 432
- (1) Where an insurance company carries on life assurance business in conjunction with insurance business of any other category, the life assurance business shall, for the purposes of the Corporation Tax Acts, be treated as a separate business from any other category of business carried on by the company.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Profits reserved for policy holders and annuitants
##### 433
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Franked investment income etc
##### 434
- (1) Where an insurance company makes a payment representative of a distribution made by a company resident in the United Kingdom in respect of an asset of its long-term insurance fund, the payment is to be taken into account in computing its profits in accordance with the life assurance trade profits provisions unless the amount taken into account in accordance with section 83(2)(a) of the Finance Act 1989 includes the amount of the payment.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) So much of the policy holders' share of the franked investment income from investments of a company’s long-term insurance fund as is referable to its life assurance business shall be left out of account in determining, under subsection (7) of section 13, the franked investment income forming part of the company’s profits for the purposes of that section.
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) *Subject to subsection* (5)*below, the specified part shall be, in the case of any unrelieved income, the same fraction of it as the fraction which, on a computation of the profits of the company in respect of its life assurance business in accordance with the provisions applicable to Case* I*of Schedule D* (*whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods*),*would be connoted by the words in section* 433 “*such part of those profits as belongs or is allocated to, or is reserved for, or expended on behalf of, policy holders or annuitants*”.
- (5) *If the income exceeds the profits as computed in accordance with the provisions applicable to Case* I*of Schedule D other than section 433, the specified part shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess*.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) For the purposes of this section—
- (a) “*the policy holders’ share*” of any franked investment income is so much of that income as is not the shareholders’ share within the meaning of section 89 of the Finance Act 1989, . . .
- (aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ab) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ac) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of gains reserved for policy holders and annuitants
##### 435
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity business and pension business: separate charge on profits
##### 436
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### General annuity business
##### 437
- (1A) In the computation under the I minus E basis of the relevant profits (within the meaning of section 88(1) of the Finance Act 1989) of an insurance company for any accounting period, new annuities paid by the company in that period shall be brought into account by treating an amount equal to the income limit for that period as expenses payable which fall to be brought into account for that period at Step 3 in section 76(7).
- (1C) For the purposes of this section (but subject to subsections (1CA) to (1CD) below)—
- (a) “*new annuity*” means any annuity, so far as paid under a contract made by an insurance company in an accounting period beginning on or after 1st January 1992 and so far as referable to the company’s basic life assurance and general annuity business;
- (b) “*the income limit*” for an accounting period of an insurance company is the difference between—
- (i) the total amount of the new annuities paid by the company in that accounting period; and
- (ii) the total of the . . . amounts exempt under section 717 of ITTOIA 2005 contained in the new annuities so paid; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .and
- (d) the amounts exempt under section 717 of ITTOIA 2005 are so much of the payments under the new annuities as would be within the exemption in subsection (1) of that section if—
- (i) section 718 of that Act were omitted, and
- (ii) that exemption were an exemption applying in relation to companies as well as individuals.
- (1CA) Where a new annuity (“*the actual annuity*”) is a steep-reduction annuity, the income limit for an accounting period of the company paying the annuity shall be computed for the purposes of this section as if—
- (a) the contract providing for the actual annuity provided instead for the annuities identified by subsections (1CB) and (1CC) below; and
- (b) the consideration for each of those annuities were to be determined by the making of a just and reasonable apportionment of the consideration for the actual annuity.
- (1CB) The annuities mentioned in subsection (1CA)(a) above are—
- (a) an annuity the payments in respect of which are confined to the payments in respect of the actual annuity that fall to be made before the earliest time for the making in respect of the actual annuity of a reduced payment such as is mentioned in section 437A(1)(c); and
- (b) subject to subsection (1CC) below, an annuity the payments in respect of which are all the payments in respect of the actual annuity other than those mentioned in paragraph (a) above.
- (1CC) Where an annuity identified by paragraph (b) of subsection (1CB) above (“*the later annuity*”) would itself be a steep-reduction annuity, the annuities mentioned in subsection (1CA)(a) above—
- (a) shall not include the later annuity; but
- (b) shall include, instead, the annuities which would be identified by subsection (1CB) above (with as many further applications of this subsection as may be necessary for securing that none of the annuities mentioned in subsection (1CA)(a) above is a steep-reduction annuity) if references in that subsection to the actual annuity were references to the later annuity.
- (1CD) Subsections (1CA) to (1CC) above shall be construed in accordance with section 437A.
- (1D) In any case where—
- (a) a payment in respect of an annuity is made by an insurance company under a group annuity contract made in an accounting period beginning before 1st January 1992,
- (b) the company’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
- (c) the company’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall be treated for the purposes of this section, other than this subsection, as if the group annuity contract had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
- (1E) In any case where—
- (a) a payment in respect of an annuity is made by a reinsurer under a reinsurance treaty made in an accounting period beginning before 1st January 1992,
- (b) the reinsurer’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
- (c) the reinsurer’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall, as respects the reinsurer, be treated for the purposes of this section, other than this subsection, as if the reinsurance treaty had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
- (1F) In this section—
- “*group annuity contract*” means a contract between an insurance company and some other person under which the company undertakes to become liable to pay annuities to or in respect of such persons as may subsequently be specified or otherwise ascertained under or in accordance with the contract (whether or not annuities under the contract are also payable to or in respect of persons who are specified or ascertained at the time the contract is made);
- “*reinsurance treaty*” means a contract under which one insurance company is obliged to cede, and another (in this section referred to as a “*reinsurer*”) to accept, the whole or part of a risk of a class or description to which the contract relates.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Pension business: exemption from tax
##### 438
- (1) Exemption from corporation tax shall be allowed in respect of income from assets solely linked to pension business.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3AA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restricted government securities
##### 439
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Identification or exchange of long term assets
##### 440
- (1) If at any time an asset (or a part of an asset) held by an insurance company ceases to be within one of the categories set out in subsection (4) below and comes within another of those categories, the company shall for the purposes of corporation tax be deemed to have disposed of and immediately re-acquired the asset (or part) for a consideration equal to its fair value at that time.
- (2) Where—
- (a) an asset is acquired by a company as a result of an insurance business transfer scheme which has effect to transfer long-term business from any person (“the transferor”) to the company, and
- (b) the asset (or part of it) is within one of the categories set out in subsection (4) below immediately before the acquisition and is within another of those categories immediately afterwards,
the transferor shall for the purposes of corporation tax be deemed to have disposed of and immediately re-acquired the asset (or part) immediately before the acquisition for a consideration equal to its fair value at that time.
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Where, apart from this subsection, section 171 or 173 the 1992 Act (transfers within a group) would apply to a disposal or acquisition by an insurance company of an asset (or part of an asset) which, immediately before the disposal or (as the case may be) immediately after the acquisition, is within one of the categories set out in paragraphs (a), (d) and (e) of subsection (4) below, that section shall not apply to the disposal or acquisition.
- (4) The categories referred to in subsections (1) to (3) above are—
- (a) assets which are linked solely to gross roll-up business or are foreign business assets;
- (d) assets linked solely to basic life assurance and general annuity business;
- (e) assets of the long-term insurance fund not within either of the preceding paragraphs;
- (f) other assets.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) In a case where the profits of a company’s life assurance business are charged to tax under section 35 of CTA 2009 (charge on trade profits) this section has effect with the modification specified in section 440B(3).
#### Foreign life assurance funds
##### 441
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Overseas business of U.K. companies
##### 442
- (1) Subsections (2) and (3) below apply where a company resident in the United Kingdom carries on insurance business outside the United Kingdom through a permanent establishment and—
- (a) that business, or part of it, together with the whole assets of the company used for the purposes of that business or part (or together with the whole of those assets other than cash), is transferred to a company not resident in the United Kingdom;
- (b) the business or part is so transferred wholly or partly in exchange for shares, or for shares and loan stock, issued by the transferee company to the transferor company; and
- (c) the shares so issued, either alone or taken together with any other shares in the transferee company already held by the transferor company, amount in all to not less than one quarter of the ordinary share capital of the transferee company.
- (2) In making any computation in accordance with the provisions applicable for the purposes of section 35 of CTA 2009 (charge on trade profits) of the profits or losses of the transferor company for the accounting period in which the transfer occurs, there shall be disregarded any profit or loss in respect of any asset transferred which, apart from this subsection, would fall to be taken into account in making that computation.
- (3) Where by virtue of subsection (2) above any profit or loss is disregarded in making any computation . . . the profit or loss shall be treated for the purposes of the 1992 Act as a chargeable gain or allowable loss accruing to the transferor company on the transfer.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies carrying rights not in money
##### 443
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies issued before 5th August 1965
##### 444
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Provisions applying only to overseas life insurance companies
#### Charge to tax on investment income
##### 445
#### Annuity business
##### 446
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Set-off of income tax and tax credits against corporation tax
##### 447
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying distributions and tax credits
##### 448
#### Double taxation agreements
##### 449
### Underwriters
#### Assessment, set-off of losses and reinsurance
##### 450
#### Regulations
##### 451
#### Special reserve funds
##### 452
#### Payments into premiums trust fund on account of losses
##### 453
#### Income tax consequences on payments into and out of special reserve fund
##### 454
#### Income tax consequences on death of underwriter
##### 455
#### Unearned income, variation of arrangements and cancellation of approval etc
##### 456
#### Interpretation of sections 450 to 456
##### 457
### Capital redemption business
#### Capital redemption business
##### 458
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — FRIENDLY SOCIETIES, TRADE UNIONS AND EMPLOYERS’ ASSOCIATIONS
### Unregistered friendly societies
#### Exemption from tax
##### 459
An unregistered friendly society (that is, a friendly society which is neither an incorporated friendly society nor a registered friendly society) whose income does not exceed £160 a year shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains).
### Registered friendly societies
#### Exemption from tax in respect of life or endowment business
##### 460
- (1) Subject to subsection (2) below, a friendly society shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits arising from life or endowment business.
- (2) Subsection (1) above—
- (a) shall not, subject to section 462, exempt a registered friendly society registered after 31st December 1957 which at any time in the period of three months ending 3rd May 1966 entered into any transaction in return for a single premium, being a transaction forming part of its life or endowment business;
- (aa) shall not, subject to section 462, exempt an incorporated friendly society which, before its incorporation, was a registered friendly society such as is mentioned in paragraph (a) above;
- (b) shall not apply to profits arising from gross roll-up business;
- (c) shall not apply to profits arising from life or endowment business consisting—
- (zai) where the profits relate to contracts made on or after the day on which the Finance Act 1995 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £270 or of the granting of annuities of annual amounts exceeding £156;
- (ai) where the profits relate to contracts made on or after the day on which the Finance Act 1991 was passed but before the day on which the Finance Act 1995 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £200 or of the granting of annuities of annual amounts exceeding £156;
- (i) where the profits relate to contracts made after 31st August 1990 but before the day on which the Finance Act 1991 was passed, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £150 or of the granting of annuities of annual amounts exceeding £156;
- (ia) where the profits relate to contracts made after 31st August 1987 but before 1st September 1990, of the assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £100 or of the granting of annuities of annual amounts exceeding £156.
- (ii) where the profits relate to contracts made after 13th March 1984 but before 1st September 1987, of the assurance of gross sums exceeding £750 or of the granting of annuities of annual amounts exceeding £156;
- (iii) where the profits relate to contracts made before 14th March 1984, of the assurance of gross sums exceeding £500 or of the granting of annuities of annual amounts exceeding £104;
- (ca) shall not apply to so much of the profits arising from life or endowment business as is attributable to contracts for the assurance of gross sums made on or after 20th March 1991 and expressed at the outset not to be made in the course of tax exempt life or endowment business;and
- (cb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) as respects other life or endowment business (“tax exempt life or endowment business”), has effect subject to the following provisions of this Chapter.
- (3) In determining for the purposes of subsection (2)(c)(zai), (ai), (i) or (ia) above the total premiums payable in any period of 12 months—
- (a) where those premiums are payable more frequently than annually, there shall be disregarded an amount equal to 10 per cent. of those premiums; and
- (b) so much of any premium as is charged on the ground that an exceptional risk of death or disability is involved shall be disregarded;
and in applying the limit of £156 in subsection (2)(c)(zai), (ai), (i) or (ia) above, any bonus or addition declared upon an annuity shall be disregarded.
- (4) In applying the limits referred to in subsection (2)(c)(ii) and (iii) above, any bonus or addition which either is declared upon an assurance of a gross sum or annuity or accrues upon such an assurance by reference to an increase in the value of any investments shall be disregarded.
- (4A) Subsection (4B) below applies to contracts for the assurance of gross sums under tax exempt life or endowment business made after 31st August 1987 and before the day on which the the Finance Act 1995 was passed.
- (4B) Where the amount payable by way of premium under a contract to which this subsection applies is increased by virtue of a variation made—
- (a) in the period beginning with 25th July 1991 and ending with 31st July 1992, or
- (b) in the period beginning with the day on which the Finance Act 1995 was passed and ending with 31st March 1996,
the contract shall, for the purposes of subsection (2)(c) above, be treated, in relation to any profits relating to it as varied, as made at the time of the variation.
- (5) A friendly society is within this subsection if its rules make no provision for it to carry on life or endowment business consisting of the assurance of gross sums exceeding £2,000 or of the granting of annuities of annual amounts exceeding £416.
- (6) In the case of a friendly society within subsection (5) above—
- (a) subsection (2)(c)(iii) above shall have effect with the substitution of references to £2,000 and £416 respectively for the references to £500 and £104; and
- (b) references in this Chapter to tax exempt life or endowment business shall be construed accordingly.
- (7) Where at any time a friendly society within subsection (5) above amends its rules so as to cease to be within that subsection, any part of its life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
shall thereafter continue to be tax exempt life or endowment business for the purposes of this Chapter.
- (8) Where at any time a friendly society not within subsection (5) above amends its rules so as to bring itself within that subsection, any part of its life or endowment business consisting of business which—
- (a) related to contracts made before that time; and
- (b) immediately before that time was not tax exempt life or endowment business,
shall thereafter continue not to be tax exempt life or endowment business for the purposes of this Chapter.
- (9) Where at any time a friendly society not within subsection (5) above acquires by way of transfer of engagements or amalgamation from another friendly society any life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
that business shall thereafter continue to be tax exempt life or endowment business for the purposes of this Chapter.
- (10) Where at any time a friendly society within subsection (5) above acquires by way of transfer of engagements or amalgamation from another friendly society any life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was not tax exempt life or endowment business,
that business shall thereafter continue not to be tax exempt life or endowment business for the purposes of this Chapter.
- (10A) Where at any time an insurance business transfer scheme has effect to transfer to a friendly society long-term business, any life or endowment business which relates to contracts included in the transfer , other than any to which subsection (11) or (12) below applied immediately before the transfer had effect, shall not thereafter be tax exempt life or endowment business for the purposes of this Chapter.
- (10B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) Where at any time a friendly society ceases . . . by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, any part of its life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
shall continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
- (12) Where at any time an insurance company acquires by way of transfer of engagements from a friendly society any life or endowment business consisting of business which—
- (a) relates to contracts made before that time; and
- (b) immediately before that time was tax exempt life or endowment business,
that business shall continue to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
- (13) But if any contracts constituting or forming part of the business of a company covered by subsection (11) or (12) above are varied during an accounting period of the company so as to increase the premiums payable under them, the business relating to those contracts is not exempt from corporation tax for that or any subsequent accounting period.
- (14) For the purposes of the Corporation Tax Acts any part of a company's business which is exempt from corporation tax by virtue of subsection (11) or (12) above shall be treated as a separate business from any other business carried on by the company.
- (15) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (11) or (12) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (16) Regulations under subsection (15) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
#### Taxation in respect of other business
##### 461
- (1) Subject to the following provisions of this section, a registered friendly society other than a society to which subsection (2) below applies shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.
- (2) This subsection applies to any society registered after 31st May 1973 unless—
- (a) its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Board; or
- (b) it was registered before 27th March 1974 and its rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as the Board may authorise for the purposes of this section;
and also applies to any society registered before 1st June 1973 with respect to which a direction under subsection (7) below is in force.
- (3) If a society to which subsection (2) above applies, after 26th March 1974 or such later date as may be specified in a direction under this section, makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—
- (a) any previous payment so made to him by the society after that date, and
- (b) any earlier repayment of such sums paid by him,
the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where a registered friendly society—
- (a) at any time ceases . . . by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act; and
- (b) immediately before that time was exempt from . . . corporation tax on profits arising from any business carried on by it other than life or endowment business,
the company into which the society is converted shall be so exempt on its profits arising from any part of that business which relates to contracts made before that time so long as there is no increase in the scale of benefits which it undertakes to provide in the course of carrying on that part of its business.
- (4A) Where—
- (a) at any time an insurance company acquires by way of transfer of engagements from a registered friendly society any business other than life or endowment business, and
- (b) immediately before that time the society was exempt from corporation tax on profits arising from that business,
the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.
- (4B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (4A) above for that or any subsequent accounting period.
- (5) For the purposes of the Corporation Tax Acts any part of a company’s business in respect of the profits from which the company is exempt by virtue of subsection (4) or (4A) above shall be treated as a separate business from any other business carried on by the company.
- (6) If—
- (a) a friendly society registered before 1st June 1973 begins after 26th March 1974 to carry on business other than life or endowment business or, in the opinion of the Board, begins to carry on business other than life or endowment business on an enlarged scale or of a new character; and
- (b) it appears to the Board, having regard to the restrictions imposed by this section on friendly societies registered later, that for the protection of the revenue it is expedient to do so;
the Board may give a direction to the society under subsection (7) below.
- (7) A direction under this subsection is that (and has the effect that) the society to which it is given is to be treated for the purposes of this Act as a society registered after 31st May 1973 with respect to business carried on after the date of the direction.
- (8) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction . . . on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (6)(a) above; or
- (b) the direction is not necessary for the protection of the revenue.
- (9) If a registered friendly society in respect of which a direction is in force under subsection (7) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a society registered after 31st May 1973.
- (10) For the purposes of this section a registered friendly society formed on the amalgamation of two or more friendly societies shall be treated as registered before 1st June 1973 if at the time of the amalgamation subsection (2) above did not apply to any of the societies amalgamated, but otherwise shall be treated as registered at that time.
- (11) For the purposes of this section and section 461C—
- (a) any group of persons which was approved for the purposes of this section (as mentioned in subsection (2)(a) above) immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date;
- (b) any greater amount which was authorised for the purposes of this section (as mentioned in subsection (2)(b) above) immediately before 1st December 2001 shall be treated as having been authorised for the purposes of this section by the Board on that date; and
- (c) where a direction that subsection (2) above applies to a society was in force immediately before 1st December 2001, a direction in relation to that society shall be treated as having been made under subsection (7) above by the Board on that date.
- (12) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (4) or (4A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (13) Regulations under subsection (12) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
#### Conditions for tax exempt business
##### 462
- (1) Subject to subsection (2) below, section 460 does not afford any exemption from corporation tax in relation to so much of the profits arising to a friendly society or insurance company from any business as is attributable to a policy which—
- (a) is not a qualifying policy (by virtue of sub-paragraph (2) of paragraph 6 of Schedule 15) and is not an excluded policy, and
- (b) would not be a qualifying policy (by virtue of that sub-paragraph) if all excluded policies were left out of account.
- (1A) For the purposes of subsection (1) above a policy is an excluded policy if—
- (a) it is a policy held otherwise than with the friendly society or insurance company, or
- (b) the person who has the contract effecting the policy acquired the rights under it on an assignment (or, in Scotland, assignation) otherwise than for money or money's worth.
- (2) Section 460(2)(a) or (aa) and subsection (1) above shall not withdraw exemption in relation to profits arising from any part of a business relating to contracts made not later than 3rd May 1966.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life or endowment business: application of the Corporation Tax Acts
##### 463
- (1) Subject to section 460(1), the Corporation Tax Acts shall apply to long-term business carried on by friendly societies in the same way as they apply to mutual life assurance business (or other long-term business) carried on by insurance companies, so however that the Treasury may by regulations provide that those Acts as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations, and those regulations may in particular require any part of any business to be treated as a separate business.
- (2) The provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the long-term business of an insurance company shall apply in the same way—
- (a) on the transfer of the whole or part of the business of a friendly society to another friendly society (and on the amalgamation of friendly societies), and
- (b) on the transfer of the whole or part of the business of a friendly society to a company which is not a friendly society (and on the conversion of a friendly society into such a company),
so however that the Treasury may by regulations provide that those provisions as so applied shall have effect subject to such modifications and exceptions as may be prescribed by the regulations.
- (3) The Treasury may by regulations provide that the provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the long-term business of an insurance company to another company shall have effect where the transferee is a friendly society subject to such modifications and exceptions as may be prescribed by the regulations.
- (4) Regulations under this section may make different provision for different cases and may include provision having retrospective effect.
#### Maximum benefits payable to members
##### 464
- (1) Subject to subsections (2) and (3) below, a person is not entitled to have at any time outstanding contracts with any one or more friendly societies, registered branches or insurance companies which (taking them all together) are for the assurance of—
- (a) more than £750 by way of gross sum under business which is afforded exemption from corporation tax by section 460, or
- (b) more than £156 by way of annuity under such business.
In any case where the member’s outstanding contracts were all made before 14th March 1984 this subsection shall have effect with the substitution for “£750” and “£156” of “ £2,000 ” and “ £416 ” respectively.
- (2) Subsection (1)(a) above shall not apply as respects sums assured under contracts made after 31st August 1987.
- (3) With respect to contracts for the assurance of gross sums under business which is afforded exemption from corporation tax by section 460, a person is not entitled to have outstanding at any time with any one or more friendly societies, registered branches or insurance companies—
- (zza) contracts under which the total premiums payable in any period of 12 months exceed £270; or
- (za) contracts made before the day on which the Finance Act 1995 was passed and under which the total premiums payable in any period of 12 months exceed £200; or
- (a) contracts made before the day on which the Finance Act 1991 was passed and under which the total premiums payable in any period of 12 months exceed £150; or
- (b) contracts made before 1st September 1990 under which the total premiums payable in any period of 12 months exceed £100,
unless all those contracts were made before 1st September 1987.
- (4) In applying the limits in subsection (3) above, the premiums under any contract for an annuity which was made before 1st June 1984 by a new society shall be brought into account as if the contract were for the assurance of a gross sum.
- (4A) Subsection (4B) below applies to contracts for the assurance of gross sums under business which is afforded exemption from corporation tax by section 460 if they are made after 31st August 1987 and before the day on which the Finance Act 1995 was passed.
- (4B) Where the amount payable by way of premium under a contract to which this subsection applies is increased by virtue of a variation made—
- (a) in the period beginning with 25th July 1991 and ending with 31st July 1992, or
- (b) in the period beginning with the day on which the Finance Act 1995 was passed and ending with 31st March 1996,
the contract shall, for the purposes of subsection (3) above, be treated, in relation to times when the contract has effect as varied, as made at the time of the variation.
- (5) In applying the limits in this section there shall be disregarded—
- (a) any bonus or addition which either is declared upon assurance of a gross sum or annuity or accrues upon such an assurance by reference to an increase in the value of any investments;
- (b) any policy of insurance or annuity contract by means of which the benefits to be provided under an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) are secured or any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than such an occupational pension scheme;
- (c) any increase in a benefit under a friendly society contract, as defined in section 6 of the Decimal Currency Act 1969, resulting from the adoption of a scheme prescribed or approved in pursuance of subsection (3) of that section; and
- (d) so far as concerns the total premiums payable in any period of 12 months—
- (i) 10 per cent. of the premiums payable under any contract under which the premiums are payable more frequently than annually; and
- (ii) £10 of the premiums payable under any contract made before 1st September 1987 by a friendly society other than a new society; and
- (iii) so much of any premium as is charged on the ground that an exceptional risk of death is involved.
- (6) In applying the limits in this section in any case where a person has outstanding with one or more societies, branches or companies one or more contracts made after 13th March 1984 and one or more contracts made on or before that date, any contract for an annuity which was made before 1st June 1984 by a new society shall be regarded not only as a contract for the annual amount concerned but also as a contract for the assurance of a gross sum equal to 75 per cent. of the total premiums which would be payable under the contract if it were to run for its full term or, as the case may be, if the member concerned were to die at the age of 75 years.
- (7) A friendly society , registered branch or insurance company may require a person to make and sign a statutory declaration that the total amount assured under outstanding contracts entered into by that person with any one or more friendly societies, registered branches or insurance companies (taken together) does not exceed the limits applicable by virtue of this section and that the total premiums under those contracts do not exceed those limits.
#### Old societies
##### 465
- (1) In this section “*old society*” means a friendly society which is not a new society.
- (2) This section applies if, on or after 19th March 1985, an old society—
- (a) begins to carry on tax exempt life or endowment business; or
- (b) in the opinion of the Board begins to carry on such business on an enlarged scale or of a new character.
- (3) If it appears to the Board, having regard to the restrictions placed on qualifying policies issued by new societies by paragraphs 3(1)(b) . . . and 4(3)(b) of Schedule 15, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the old society under subsection (4) below.
- (4) A direction under this subsection is that (and has the effect that) the old society to which it is given is to be treated for the purposes of this Act as a new society with respect to business carried on after the date of the direction.
- (5) An old society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction . . . on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (2) above; or
- (b) that the direction is not necessary for the protection of the revenue.
- (6) If a registered friendly society in respect of which a direction is in force under subsection (4) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a new society.
#### Interpretation of Chapter II
##### 466
- (1) In this Chapter “*life or endowment business*” means, subject to subsections (1A) and (1B) below—
- (a) any life assurance business, and
- (b) any PHI business (as defined in section 431) if—
- (i) the contract is one made before 1 September 1996, or
- (ii) the contract is one made on or after that date and the effecting and carrying out of the business also constitutes business within paragraphs I, II or III of Part II of Schedule 1 to the Financial Services and Markets Act (Regulated Activities) Order 2001.
- (1A) Life or endowment business does not include the issue, in respect of a contract made before 1st September 1996, of a policy affording provision for sickness or other infirmity (whether bodily or mental), unless—
- (a) the policy also affords assurance for a gross sum independent of sickness or other infirmity;
- (b) not less than 60 per cent. of the amount of the premiums is attributable to the provision afforded during sickness or other infirmity; and
- (c) there is no bonus or addition which may be declared or accrue upon the assurance of the gross sum.
- (1B) Life or endowment business does not include the assurance of any annuity the consideration for which consists of sums obtainable on the maturity, or on the surrender, of any other policy of assurance issued by the friendly society, being a policy of assurance forming part of the tax exempt life or endowment business of the friendly society.
- (2) In this Chapter—
- “*friendly society*”, without qualification, means (except in section 459) an incorporated friendly society or a registered friendly society;
- “*gross roll-up business*” shall be construed in accordance with section 431;
- “*incorporated friendly society*” means a society incorporated under the Friendly Societies Act 1992;
- “*insurance company*” shall be construed in accordance with section 431;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*long-term business*” shall be construed in accordance with section 431;
- “*new society*” means—a registered friendly society which was registered after 3rd May 1966 or which was registered in the period of three months ending on that date but which at no time earlier than that date carried on any life or endowment business, oran incorporated friendly society other than one which, before its incorporation, was a registered friendly society not within paragraph (a) above;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*policy*”, in relation to life or endowment business, includes an instrument evidencing a contract to pay an annuity upon human life;
- “*registered branch*” means the same as in the Friendly Societies Act 1992 (and includes any branch that by virtue of section 96(3) of that Act is to be treated as a registered branch);
- “*registered friendly society*” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society);
- . . .
- “*tax exempt life or endowment business*” has, subject to subsections (7) to (10A) of section 460, the meaning given by subsection (2)(d) of that section, that is to say, it means (subject to those subsections) life or endowment business other than business profits arising from which are excluded from subsection (1) of that section by subsection (2)(b) or (c) of that section (read, where appropriate, with subsection (6) of that section);
and references in sections 460 to 465 and this subsection to a friendly society include, in the case of a registered friendly society, references to any branch of that society.
- (2ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) It is hereby declared that for the purposes of this Chapter (except where provision to the contrary is made) a friendly society formed on the amalgamation of two or more friendly societies is to be treated as different from the amalgamated societies.
- (4) A registered friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as registered not later than 3rd May 1966 if at the time of the amalgamation—
- (a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and
- (b) at least one of them was not a new society;
or, if the amalgamation took place before 19th March 1985, the society was treated as registered not later than 3rd May 1966 by virtue of the proviso to section 337(4) of the 1970 Act.
- (5) An incorporated friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as a society which, before its incorporation, was a registered friendly society registered not later than 3rd May 1966 if at the time of the amalgamation—
- (a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and
- (b) at least one of them was not a new society.
### Trade unions and employers’ associations
#### Exemption for trade unions and employers' associations
##### 467
- (1) A trade union which is precluded by Act of Parliament or by its rules from assuring to any person a sum exceeding £4,000 by way of gross sum or £825 by way of annuity shall on making a claim be entitled to exemption from corporation tax—
- (a) . . . in respect of its income which is not trading income and which is applicable and applied for the purpose of provident benefits;
- (b) . . . in respect of chargeable gains which are applicable and applied for the purpose of provident benefits.
- (2) In this section “*provident benefits*” includes any payment, expressly authorised by the rules of the trade union, which is made to a member during sickness or incapacity from personal injury or while out of work, or to an aged member by way of superannuation, or to a member who has met with an accident, or has lost his tools by fire or theft, and includes a payment in discharge or aid of funeral expenses on the death of a member or the spouseor civil partner of a member or as provision for the children of a deceased member.
- (3) In determining for the purposes of this section whether a trade union is by Act of Parliament or its rules precluded from assuring to any person a sum exceeding £825 by way of annuity, there shall be disregarded any annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004).
- (3A) The Treasury may by order substitute for any figure for the time being specified in this section such greater figure as may be specified in the order; and any amendment made in exercise of the power conferred by this subsection shall have effect in relation to such income or gains as may be specified in the order.
- (4) In this section “*trade union*” means—
- (a) any trade union the name of which is entered in the list of trade unions maintained by the Certification Officer under section 2 of the Trade Union and Labour Relations (Consolidation) Act 1992;
- (b) any employers’ association the name of which is entered in the list of employers’ associations maintained by the Certification Officer under section 123 of the Trade Union and Labour Relations (Consolidation) Act 1992 and which on 30th September 1971 was a registered trade union for the purposes of section 338 of the 1970 Act;
- (ba) any trade union the name of which is entered in the list of trade unions maintained by the Certification Officer for Northern Ireland under Article 5 of the Industrial Relations (Northern Ireland) Order 1992;
- (bb) any employers’ association the name of which is entered in the list of employers’ associations maintained by the Certification Officer for Northern Ireland under Article 5 of the Industrial Relations (Northern Ireland) Order 1992 and which immediately before the coming into operation of that Article was a trade union for the purposes of this section; and
- (c) the Police Federation for England and Wales, the Police Federation for Scotland, the Police Federation for Northern Ireland and any other organisation of persons in police service which has similar functions.
### CHAPTER III — UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.
### Unit trust schemes
#### Authorised unit trusts
##### 468
- (1) In respect of income arising to the trustees of an authorised unit trust, and for the purposes of the provisions relating to relief for capital expenditure, the Tax Acts shall have effect as if—
- (a) the trustees were a company resident in the United Kingdom; and
- (b) the rights of the unit holders were shares in the company;
but paragraph (b) above is without prejudice to the making of distributions which are interest distributions (within the meaning of regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 18(3) of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964))) to unit holders.
- (1A) In relation to any authorised unit trust the rate of corporation tax for the financial year 1996 and subsequent financial years shall be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned and section 13 shall not apply.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) References in the Corporation Tax Acts to a body corporate shall be construed in accordance with subsection (1) above, and section 234A shall apply with any necessary modifications.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Subject to subsections (7) to (9) below in this section—
- “*authorised unit trust*” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that accounting period;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*unit holder*” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme; . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Each of the parts of an umbrella scheme shall be regarded for the purposes of this Chapter as an authorised unit trust and the scheme as a whole shall not be so regarded.
- (8) In this section, “*umbrella scheme*” means a unit trust scheme—
- (a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them;
- (b) under which the participants are entitled to exchange rights in one pool for rights in another; and
- (c) in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force;
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
- (9) In relation to a part of an umbrella scheme, any reference—
- (a) to investments subject to the trusts of an authorised unit trust, shall have effect as a reference to such of the investments as under the arrangements form part of the separate pool to which the part of the umbrella scheme relates; and
- (b) to a unit holder, shall have effect as a reference to a person for the time being having rights in that separate pool.
#### Other unit trusts
##### 469
- (1) This section applies to—
- (a) any unit trust scheme that is an unauthorised unit trust within the meaning of section 989 of ITA 2007; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
except where the trustees of the scheme are not resident in the United Kingdom.
- (2) Income arising to the trustees of the scheme shall be regarded for the purposes of the Corporation Tax Acts as income of the trustees (and not as income of the unit holders) ; and the trustees (and not the unit holders) shall be regarded as the persons to or on whom allowances or charges are to be made under the provisions of those Acts relating to relief for capital expenditure. . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) This section shall have effect in relation to distribution periods beginning on or after 6th April 1987.
#### Transitional provisions relating to unit trusts
##### 470
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Dealers in securities, banks and insurance businesses
#### Exchange of securities in connection with conversion operations, nationalisation etc
##### 471
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Distribution of securities issued in connection with nationalisation etc
##### 472
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conversion etc. of securities held as circulating capital
##### 473
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of tax-free income
##### 474
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax-free Treasury securities: exclusion of interest on borrowed money
##### 475
- (1) This section has effect where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities—
- (a) is carried on in the United Kingdom by a person not ordinarily resident there; and
- (b) in computing for any of the purposes of the Income Tax Acts the profits arising from, or loss sustained, in the business, any amount which would otherwise be brought into account is disregarded by virtue of a condition subject to which any 3½% War Loan 1952 or after was issued;
and for this purpose insurance business includes insurance business of any category.
- (2) Up to the amount determined under this section (“*the amount ineligible for relief*”), interest on money borrowed for the purposes of the business—
- (a) shall be excluded in any computation under the Income Tax Acts of the profits (or losses) arising from the business . . . , . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Subject to subsection (4) below, in determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which is outstanding in the accounting or basis period, up to the total cost of the 3½% War Loan 1952 or after held for the purpose of the business in that period.
- (4) Where the person carrying on the business is a company, account shall not be taken of any borrowed money carrying interest which, apart from subsection (2) above, does not fall to be included in the computations under paragraph (a) of that subsection . . . .
- (5) . . . The amount ineligible for relief shall be equal to a year’s interest on the amount of money borrowed which is to be taken into account under subsection (3) above at a rate equal to the average rate of interest in the accounting or basis period on money borrowed for the purposes of the business, except that in the case of a period of less than 12 months interest shall be taken for that shorter period instead of for a year.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) For the purposes of this section the cost of a holding of 3½% War Loan 1952 or after which has fluctuated in the accounting or basis period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting or basis period, applied to the average amount of the holding in the accounting or basis period, . . . .
- (9) In this section “*accounting or basis period*” means the company’s accounting period or the period by reference to which the profits or gains arising in the year of assessment are to be computed.
### CHAPTER IV — BUILDING SOCIETIES, BANKS, SAVINGS BANKS, INDUSTRIAL AND PROVIDENT SOCIETIES AND OTHERS
#### Building societies: regulations for payment of tax
##### 476
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Investments becoming or ceasing to be relevant building society investments
##### 477
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Building societies: time for payment of tax
##### 478
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest paid on deposits with banks etc
##### 479
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deposits becoming or ceasing to be composite rate deposits
##### 480
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### “Deposit-taker”, “deposit” and “relevant deposit”
##### 481
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions
##### 482
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Determination of reduced rate for building societies and composite rate for banks etc
##### 483
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) If the order made under section 26 of the Finance Act 1984 in the year 1987-88 is made in pursuance of subsection (4) of that section, that order shall, notwithstanding that that subsection is not re-enacted by this Act, apply for the purposes of sections 476 and 479 for the year 1988-89.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Savings banks: exemption from tax
##### 484
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Savings banks: supplemental
##### 485
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Industrial and provident societies and co-operative associations
##### 486
- (1) Notwithstanding anything in the Tax Acts, share interest or loan interest paid by a registered industrial and provident society shall not be treated as a distribution for the purposes of corporation tax. . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) If in the course of, or as part of, a union or amalgamation of two or more registered industrial and provident societies, or a transfer of engagements from one registered industrial and provident society to another, there is a disposal of an asset by one society to another, both shall be treated for the purposes of corporation tax in respect of chargeable gains as if the asset were acquired from the society making the disposal for a consideration of such amount as would secure that neither a gain nor a loss would accrue to that society on the disposal.
- (9) Subsections (1) and (8) above shall have effect as if references to a registered industrial and provident society included any co-operative association established and resident in the United Kingdom, and having as its object or primary object to assist its members in the carrying on of agricultural or horticultural businesses on land occupied by them in the United Kingdom or in the carrying on of businesses consisting in the catching or taking of fish or shellfish.
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) In this section—
- “*co-operative association*” means a body of persons having a written constitution from which the Minister is satisfied, having regard to the provision made as to the manner in which the income of the body is to be applied for the benefit of its members and all other relevant provisions, that the body is in substance a co-operative association;
- “*the Minister*” means—
- the Secretary of State, as regards England and Wales;
- the Secretary of State, as regards Scotland; and
- the Department of Agriculture for Northern Ireland, as regards Northern Ireland;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*share interest*” means any interest, dividend, bonus or other sum payable to a shareholder of the society by reference to the amount of his holding in the share capital of the society;
- “*loan interest*” means any interest payable by the society in respect of any mortgage, loan, loan stock or deposit;
and references to the payment of share interest or loan interest include references to the crediting of such interest.
#### Credit unions
##### 487
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Co-operative housing associations
##### 488
- (1) Where a housing association makes a claim in that behalf for any year or part of a year of assessment during which the association was approved for the purposes of this section—
- (a) rent to which the association was entitled from its members for the year or part shall be disregarded for tax purposes; and
- (b) any yearly interest payable by the association for the year or part shall be treated for tax purposes in relation to the association as if there were no interest so payable.
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where the property, or any of the properties, to which any such interest as is mentioned in paragraph (b) of subsection (1) above relates is for any period not subject to a tenancy—
- (a) that paragraph shall not apply in relation to so much of the interest as is attributable to the property not subject to a tenancy;. . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where a claim under subsection (1) above has effect, any adjustment of the liability to tax of . . . the association which is required in consequence of the claim may be made by an assessment or by repayment or otherwise, as the case may require.
- (5) Where a housing association makes a claim in that behalf for an accounting period or part of an accounting period during which it was approved for the purposes of this section, the housing association shall be exempt from corporation tax on chargeable gains accruing to it in the accounting period or part on the disposal by way of sale of any property which has been or is being occupied by a tenant of the housing association.
- (6) References in this section to the approval of an association shall be construed as references to approval—
- (a) by the Secretary of State in the case of a housing association in Great Britain;
- (b) by the Head of the Department of the Environment for Northern Ireland in the case of a housing association in Northern Ireland;
and an association shall not be approved unless the approving authority is satisfied—
- (i) that the association is, or is deemed to be, duly registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969, and is a housing association within the meaning of the Housing Associations Act 1985 or Article 3 of the Housing (Northern Ireland) Order 1992;
- (ii) that the rules of the association restrict membership to persons who are tenants or prospective tenants of the association, and preclude the granting or assignment (or, in Scotland, the granting or assignation) of tenancies to persons other than members; and
- (iii) that the association satisfies such other requirements as may be prescribed by the Secretary of State as respects Great Britain, or the Head of the Department for Social Development for Northern Ireland as respects Northern Ireland, and will comply with such conditions as may for the time being be so prescribed.
- (7) An approval given for the purposes of this section shall have effect as from such date (whether before or after the giving of the approval) as may be specified by the approving authority and shall cease to have effect if revoked.
- (7A) The Secretary of State may delegate any of his functions under subsections (6) and (7)—
- (a) to the Housing Corporation, in the case of a body registered as a social landlord in the register maintained by the Housing Corporation under Part I of the Housing Act 1996, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
to such extent and subject to such conditions as he may specify.
- (8) The Secretary of State as respects Great Britain, or the Head of the Department of the Environment for Northern Ireland as respects Northern Ireland, may make regulations for the purpose of carrying out the provisions of this section; and, from the coming into operation of regulations under this subsection prescribing requirements or conditions for the purposes of subsection (6)(iii) above, “prescribed” in subsection (6)(iii) above shall mean prescribed by or under such regulations.
- (9) A claim under this section may be made at any time not later than two years after the end of the year of assessment or accounting period to which, or to a part of which, it relates.
- (10) Subject to subsection (11) below, no claim shall be made under this section unless during the year or accounting period, or part thereof, to which the claim relates—
- (a) no property belonging to the association making the claim was let otherwise than to a member of the association;
- (b) no property let by the association, and no part of such property, was occupied, whether solely or as joint occupier, by a person not being a member of the association;
- (c) the association making the claim satisfies the conditions specified in subsection (6)(i) and (ii) above and has complied with the conditions prescribed under subsection (6)(iii) for the time being in force; and
- (d) any covenants required to be included in grants of tenancies by those conditions have been observed.
- (11) A housing association may make a claim under this section notwithstanding anything in subsection (10) above, if the association reasonably considers that the requirements of that subsection are substantially complied with.
- (11A) If as a result of an enquiry—
- (a) into a company tax return, in which a claim under this section by a housing association is included, or
- (b) under paragraph 5 of Schedule 1A to that Act into a claim under this section by a housing association, or an amendment of such a claim,
an amendment is made to the association’s return or, as the case may be, to the claim, the liability of the association to tax for all relevant years or accounting periods may also be adjusted by the making of assessments or otherwise.
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Self-build societies
##### 489
- (1) Where a self-build society makes a claim in that behalf for any year or part of a year of assessment during which the society was approved for the purposes of this section, rent to which the society was entitled from its members for the year or part shall be disregarded for tax purposes.
- (2) Where a claim under subsection (1) above has effect, any adjustment of the society’s liability to tax which is required in consequence of the claim may be made by an assessment or by repayment or otherwise, as the case may require.
- (3) Where a self-build society makes a claim in that behalf for an accounting period or part during which it was approved for the purposes of this section, the society shall be exempt from corporation tax on chargeable gains accruing to it in the accounting period or part thereof on the disposal of any land to a member of the society.
- (4) References in this section to the approval of a self-build society are references to its approval by the Secretary of State, and the Secretary of State shall not approve a self-build society for the purposes of this section unless he is satisfied—
- (a) that the society is, or is deemed to be, duly registered under the Industrial and Provident Societies Act 1965; and
- (b) that the society satisfies such other requirements as may be prescribed by or under regulations under subsection (6) below and will comply with such conditions as may for the time being be so prescribed.
- (5) An approval given for the purposes of this section shall have effect as from such date (whether before or after the giving of the approval) as may be specified by the Secretary of State and shall cease to have effect if revoked by him.
- (5A) The Secretary of State may delegate any of his functions under subsections (4) and (5) to—
- (a) the Housing Corporation, where the society has its registered office in England for the purposes of the Industrial and Provident Societies Act 1965,. . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
to such extent and subject to such conditions as he may specify.
- (6) The Secretary of State may by statutory instrument make regulations for the purpose of carrying out the provisions of this section; and a statutory instrument containing any such regulations shall be subject to annulment in pursuance of a resolution of the House of Commons.
- (7) A claim under this section may be made at any time not later than two years after the end of the year of assessment or accounting period to which, or to a part of which, it relates.
- (8) Subject to subsection (9) below, no claim shall be made under this section unless during the year or accounting period, or part thereof, to which the claim relates—
- (a) no land owned by the society was occupied, in whole or in part and whether solely or as joint occupier, by a person who was not, at the time of his occupation, a member of the society; and
- (b) the society making the claim satisfies the condition specified in paragraph (a) of subsection (4) above and has complied with the conditions prescribed under paragraph (b) of that subsection and for the time being in force;
and for the purposes of paragraph (a) above, occupation by any other person in accordance with the will, or the provisions applicable on the intestacy, of a deceased member, shall be treated during the first six months after the death as if it were occupation by a member.
- (9) A self-build society may make a claim under this section notwithstanding anything in subsection (8) above, if the society reasonably considers that the requirements of that subsection are substantially complied with.
- (9A) If as a result of an enquiry—
- (a) into a company tax return, in which a claim under this section by a self-build society is included, or
- (b) under paragraph 5 of Schedule 1A to that Act into a claim under this section by a self-build society or an amendment of such a claim,
an amendment is made to the society’s return or, as the case may be, to the claim, the society’s liability to tax for all relevant years or accounting periods may also be adjusted by the making of assessments or otherwise.
- (10) A claim under this section shall be in such form and contain such particulars as may be prescribed by the Board.
- (11) In this section—
- “*self-build society*” has the same meaning as in the Housing Associations Act 1985 or, in Northern Ireland, Part VII of the Housing (Northern Ireland) Order 1981; and
- “*rent*” includes any sums to which a self-build society is entitled in respect of the occupation of any of its land under a licence or otherwise.
- (12) In the application of this section to Northern Ireland—
- (a) any reference in subsections (4) and (5) above to the Secretary of State shall be construed as a reference to the Department of the Environment for Northern Ireland;
- (b) the reference in subsection (4)(a) to the Industrial and Provident Societies Act 1965 shall be construed as a reference to the Industrial and Provident Societies Act (Northern Ireland) 1969; and
- (c) for subsection (6) there shall be substituted the following subsection—
> (6) the Department of the Environment for Northern Ireland may by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 make regulations for the purpose of carrying out the provisions of this section; and a statutory rule containing any such regulations shall be subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954.
#### Companies carrying on a mutual business or not carrying on a business
##### 490
- (1) Subject to subsection (2) below, where a company carries on any business of mutual trading or mutual insurance or other mutual business the provisions of the Tax Acts relating to distributions shall apply to distributions made by the company notwithstanding that they are made to persons participating in the mutual activities of that business and derive from those activities, but shall so apply only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income . . . . . . .
- (2) In the case of a company carrying on any mutual life assurance business, the provisions of the Tax Acts relating to distributions shall not apply to distributions made to persons participating in the mutual activities of that business and derived from those activities . . . .
- (3) Subject to subsections (1) and (2) above, the fact that a distribution made by a company carrying on any such business is derived from the mutual activities of that business and the recipient is a person participating in those activities shall not affect the character which the payment or other receipt has for purposes of corporation tax or income tax in the hands of the recipient.
- (4) Where a company does not carry on, and never has carried on, a trade or a business of holding investments, and is not established for purposes which include the carrying on of a trade or of such a business, the provisions of the Tax Acts relating to distributions shall apply to distributions made by the company only to the extent to which the distributions are made out of profits of the company which are brought into charge to corporation tax or out of franked investment income . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Distribution of assets of body corporate carrying on mutual business
##### 491
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V
#### Treatment of oil extraction activities etc. for tax purposes
##### 492
those activities shall be treated for the purposes of the charge of corporation tax on income as a separate trade, distinct from all other activities carried on by him as part of the trade.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Relief in respect of a loss incurred by a person shall not be given under section 393A(1) against his ring fence profits except to the extent that the loss arises from oil extraction activities or from oil rights.
- (3A) No deduction under section 1219 of CTA 2009 (expenses of management of investment business) shall be allowed from a company's ring fence profits.
- (4) In any case where—
- (a) in any accounting period a company incurs a loss in activities (“separate activities”) which, for that or any subsequent accounting period, are treated by virtue of subsection (1) above as a separate trade for the purposes specified in that subsection, and
- (b) in any subsequent accounting period any of its trading income is derived from activities (“related activities”) which are not part of the separate activities but which, apart from subsection (1) above, would together with those activities constitute a single trade,
then, notwithstanding anything in subsection (1) above, the amount of the loss may be set off, in accordance with section 393(1), against so much of its trading income in any subsequent accounting period as is derived from the related activities.
- (5) Subject to subsection (7) below, a capital allowance which is to be given to any person by discharge or repayment of tax shall not to any extent be given effect under section 258 of the Capital Allowances Act by deduction from or set off against his ring fence income.
- (6) Subject to subsection (7) below, a capital allowance which is to be given to any person by discharge or repayment of tax shall not to any extent be given effect under section 259 or 260 of the Capital Allowances Act by deduction from or set off against his ring fence profits.
- (7) Subsection (5) or (6) above shall not apply to a capital allowance which falls to be made to a company for any accounting period in respect of an asset used in the relevant accounting period by a company associated with it and so used in carrying on oil extraction activities. For the purposes of this subsection, the relevant accounting period is that in which the allowance in question first falls to be made to the company (whether or not it can to any extent be given effect in that period under section 259 of the Capital Allowances Act.
- (8) On a claim for group relief made by a claimant company in relation to a surrendering company, group relief shall not be allowed against the claimant company’s ring fence profits except to the extent that the claim relates to losses incurred by the surrendering company that arose from oil extraction activities or from oil rights.
#### Valuation of oil disposed of or appropriated in certain circumstances
##### 493
- (A1) Where the conditions in subsection (A2) below are met in the case of a disposal of oil by a person, section 2(5A) of the Oil Taxation Act 1975 (“*the 1975 Act*”) (transportation etc) is to apply in determining the amount which the person is to bring into account for the purposes of the charge to corporation tax on income in respect of the disposal as it applies (or would apply) for the purposes of petroleum revenue tax.
- (A2) The conditions are that—
- (a) the oil is oil won from an oil field in the United Kingdom,
- (b) the disposal is a disposal of the oil by the person crude in a sale at arm's length, as defined in paragraph 1 of Schedule 3 to the 1975 Act,
- (c) the circumstances are such that the price received or receivable—
- (i) falls to be taken into account under section 2(5)(a) of that Act in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to the person in any chargeable period from the oil field, or
- (ii) would fall to be so taken into account, had the oil field been a taxable field, as defined in section 185 of the Finance Act 1993,
- (d) the terms of the contract are such as are described in the opening words of section 2(5A) of the 1975 Act,
- (e) apart from subsection (A1) above, the person is not entitled to a transportation allowance in respect of the oil (see subsection (A3)) in computing his ring fence profits,
- (f) the person does not claim a transportation allowance in respect of the oil in computing for the purposes of corporation tax any profits of his that are not ring fence profits.
- (A3) In subsection (A2) above “*transportation allowance*”, in relation to any oil, means any of the following—
- (a) a deduction in respect of the expense of transporting the oil as mentioned in the opening words of section 2(5A) of the 1975 Act,
- (b) a deduction in respect of any costs of or incidental to the transportation of the oil as there mentioned,
- (c) any such reduction in the price to be regarded as received or receivable for the oil as would result from the application of section 2(5A) of the 1975 Act, if that provision applied for the purposes of corporation tax.
- (1) Where a person disposes of any oil in circumstances such that the market value of that oil . . . falls to be taken into account under section 2 of the 1975 Act, otherwise than by virtue of paragraph 6 of Schedule 3 to that Act, in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to him in any chargeable period from an oil field (or as would so fall but for section 10 of that Act), then—
- (a) for all purposes of income tax, and
- (b) for the purposes of the charge of corporation tax on income,
the disposal of the oil and its acquisition by the person to whom it was disposed of shall be treated as having been for a consideration equal to the market value of the oil as so taken into account under section 2 of that Act (or as would have been so taken into account under that section but for section 10 of that Act).
- (1A) Where an excess of nominated proceeds in a chargeable period (within the meaning given by section 61 of the Finance Act 1987) is taken into account in computing a person's profits under section 2(5)(e) of the 1975 Act (or would be taken into account if the person were chargeable to tax under that Act in respect of a field)—
- (a) for the purposes of subsection (1) the amount of the excess shall be added to the consideration which the person is deemed to have received in respect of oil disposed of by him in the period, and
- (b) for the purposes of corporation tax, that amount shall be available to the person as a deduction in computing the profits of any trade to which section 492(1) does not apply.
- (2) Where a person makes a relevant appropriation of any oil without disposing of it and does so in circumstances such that the market value of that oil . . . falls to be taken into account under section 2 of the 1975 Act in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to him in any chargeable period from an oil field (or would so fall but for section 10 of that Act), then for all the purposes of income tax and for the purposes of the charge of corporation tax on income, he shall be treated—
- (a) as having, at the time of the appropriation—
- (i) sold the oil in the course of the separate trade consisting of activities falling within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1)(a) or (b) above; and
- (ii) bought it in the course of the separate trade consisting of activities not so falling; and
- (b) as having so sold and bought it at a price equal to its market value as so taken into account under section 2 of the 1975 Act (or as would have been so taken into account under that section but for section 10 of that Act).
In this subsection “*relevant appropriation*” has the meaning given by section 12(1) of the 1975 Act.
- (3) Where—
- (a) a person disposes otherwise than in a sale at arm’s length (as defined in paragraph 1 of Schedule 3 to the 1975 Act) of oil acquired by him in the course of oil extraction activities carried on by him or by virtue of oil rights held by him, and
- (b) subsection (1) above does not apply in relation to the disposal,
then, for all purposes of income tax and for the purposes of the charge of corporation tax on income, the disposal of the oil and its acquisition by the person to whom it was disposed of shall be treated as having been for a consideration equal to the market value of the oil . . . .
- (4) If a person appropriates oil acquired by him in the course of oil extraction activities carried on by him or by virtue of oil rights held by him and the appropriation is to refining or to any use except for production purposes of an oil field, within the meaning of Part I of the 1975 Act, then, unless subsection (2) above applies, for all purposes of income tax and for the purposes of the charge of corporation tax on income—
- (a) he shall be treated as having, at the time of the appropriation, sold and bought the oil as mentioned in subsection (2)(a)(i) and (ii) above; and
- (b) that sale and purchase shall be deemed to have been at a price equal to the market value of the oil . . . .
- (5) For the purposes of subsections (3) and (4) above, paragraph 2 of Schedule 3 to the 1975 Act shall apply as it applies for the purposes of Part 1 of that Act, but with the following modifications—
- (a) sub-paragraph (4) shall be treated as omitted;
- (b) any reference in paragraphs 2 and 2A to oil being relevantly appropriated shall be construed as a reference to its being appropriated as mentioned in section 493(4) of the Taxes Act; and
- (c) any reference in paragraph 2 to the notional delivery day for the actual oil shall be construed as a reference to the day on which the oil is disposed of or appropriated as mentioned in subsection (3) or (4) above.
- (6) In subsections (3) and (4) above the references to the market value of any oil in the calendar month in which a disposal of the oil was made or, as the case may be, in which it was appropriated shall each have effect in relation to light gases (within the meaning of the 1975 Act) as a reference to the amount which, if paragraph 3A of Schedule 3 to the 1975 Act applied, would be the market value of that oil in relation to the disposal or appropriation in question.
#### Charges on income
##### 494
- (1) . . . Part 5 of CTA 2009 (loan relationships) shall have effect subject to the following provisions of this section.
- (2) Debits shall not be brought into account for the purposes of Part 5 of CTA 2009 in respect of any loan relationship of a company in any manner that results in a reduction of what would otherwise be the company’s ring fence profits except—
- (a) to the extent that the loan relationship is in respect of money borrowed by the company which has been—
- (i) used to meet expenditure incurred by the company in carrying on oil extraction activities or in acquiring oil rights otherwise than from a connected person; or
- (ii) appropriated to meeting expenditure to be so incurred by the company;
- (b) in the case of debits falling to be brought into account by virtue of section 329 of that Act in respect of a loan relationship that has not been entered into, to the extent that the relationship would have been one entered into for the purpose of borrowing money to be used or appropriated as mentioned in paragraph (a) above; and
- (c) in the case of debits in respect of a relationship to which Chapter 2 of Part 6 (relevant non-lending relationships) of that Act applies, to the extent that—
- (i) the payment of interest under that relationship is expenditure incurred as mentioned in sub-paragraph (i) of paragraph (a) above; or
- (ii) the exchange loss arising from that relationship is in respect of a money debt on which the interest payable (if any) is, or would be, such expenditure;
as the case may be;. . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- In this subsection “*debtor relationship*” and “*creditor relationship*” have the same meanings as in Part 5 of CTA 2009, and references to a loan relationship, in relation to the borrowing of money, do not include references to any relationship to which Chapter 2 of Part 6 (relevant non-lending relationships) of that Act applies.
- Section 839 shall apply for the purposes of this subsection.
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2ZA) Credits in respect of exchange gains from a company’s loan relationships shall not be brought into account for the purposes of Part 5 of CTA 2009 in respect of any loan relationship of a company in any manner that results in an increase of what would otherwise be the company’s ring fence profits, except to the extent that, if the credit had been a debit in respect of an exchange loss from the relationship, it would have been brought into account by virtue of any of paragraphs (a) to (c) of subsection (2) above.
- (2A) Where any debit or credit—
- (a) falls to be brought into account for the purposes of Part 5 of CTA 2009 in respect of any loan relationship of a company, but
- (b) in accordance with subsection (2) or (2ZA) above cannot be brought into account in a manner that results in any reduction or, as the case may be, increase of what would otherwise be the company’s ring fence profits,
then (notwithstanding anything in section 297 of that Act) that debit or credit shall be brought into account for those purposes as a non-trading debit or, as the case may be, non-trading credit.
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Regional development grants
##### 495
- (1) Subsection (2) below applies in any case where—
- (a) a person has incurred expenditure (by way of purchase, rent or otherwise) on the acquisition of an asset in a transaction to which paragraph 2 of Schedule 4 to the 1975 Act applies (transactions between connected persons and otherwise than at arm’s length), and
- (b) the expenditure incurred by the other person referred to in that paragraph in acquiring, bringing into existence or enhancing the value of the asset as mentioned in that paragraph has been or is to be met by a regional development grant and, in whole or in part, falls to be taken into account Part 2 . . . or 6 of the Capital Allowances Act (capital allowances relating to plant and machinery . . . or research and development).
- (2) Where this subsection applies, for the purposes of the charge of income tax or corporation tax on the income arising from those activities of the person referred to in paragraph (a) of subsection (1) above which are treated by virtue of section 16(1) of ITTOIA 2005 or section 492(1) above as a separate trade for those purposes, the expenditure referred to in that paragraph shall be treated as reduced by the amount of the regional development grant referred to in paragraph (b) of that subsection.
- (3) Subsections (4) to (6) below apply where—
- (a) expenditure incurred by any person in relation to an asset in any relevant period (“*the initial period*”) has been or is to be met by a regional development grant; and
- (b) notwithstanding the provisions of section 137 of the Finance Act 1982 and subsections (1) and (2) above, in determining that person’s liability to income tax or corporation tax for the initial period the whole or some part of that expenditure falls to be taken into account Part 2 . . . or 6 of the Capital Allowances Act; and
- (c) in a relevant period subsequent to the initial period either expenditure on the asset becomes allowable under section 3 or 4 of the 1975 Act or the proportion of any such expenditure which is allowable is different as compared with the initial period;
and in subsections (4) to (6) below the subsequent relevant period referred to in paragraph (c) above is referred to as “*the adjustment period*”.
- (4) Where this subsection applies—
- (a) there shall be redetermined for the purposes of subsections (5) and (6) below the amount of the expenditure referred to in subsection (3)(a) above which would have been taken into account as mentioned in subsection (3)(b) if the circumstances referred to in subsection (3)(c) had existed in the initial period; and
- (b) according to whether the amount as so redetermined is greater or less than the amount actually taken into account as mentioned in subsection (3)(b), the difference is in subsections (5) and (6) below referred to as the increase or the reduction in the allowance.
- (5) If there is an increase in the allowance, then, for the purposes of the provisions referred to in subsection (3)(b) above, an amount of capital expenditure equal to the increase shall be deemed to have been incurred by the person concerned in the adjustment period on an extension of or addition to the asset referred to in subsection (3)(a) above.
- (6) If there is a reduction in the allowance, then, for the purpose of determining the liability to income tax or corporation tax of the person concerned, he shall be treated as having received in the adjustment period, as income of the trade in connection with which the expenditure referred to in subsection (3)(a) above was incurred, a sum equal to the amount of the reduction in the allowance.
- (7) In this section—
- “*regional development grant*” means a grant falling within section 534(1) of the Capital Allowances Act; and
- “*relevant period*” means an accounting period of a company or a year of assessment.
#### Tariff receipts
##### 496
- (1) Any sum which—
- (a) constitutes a tariff receipt or tax-exempt tariffing receipt of a person who is a participator in an oil field, and
- (b) constitutes consideration in the nature of income rather than capital, and
- (c) would not, apart from this subsection, be treated for the purposes of this Chapter as a receipt of the separate trade referred to in section 16(1) of ITTOIA 2005 or section 492(1) above,
shall be so treated for those purposes.
- (2) To the extent that they would not otherwise be so treated, the activities of a participator in an oil field or a person connected with him in making available an asset in a way which gives rise to tariff receipts or tax-exempt tariffing receipts of the participator shall be treated for the purposes of this Chapter as oil extraction activities.
- (3) In determining for the purposes of subsection (1) above whether any sum constitutes a tariff receipt or tax-exempt tariffing receipt of a person who is a participator, no account shall be taken of any sum which—
- (a) is in fact received or receivable by a person connected with the participator, and
- (b) constitutes a tariff receipt or tax-exempt tariffing receipt of the participator,
but in relation to the person by whom such a sum is actually received, subsection (1) above shall have effect as if he were a participator and as if the condition in paragraph (a) of that subsection were fulfilled.
- (4) References in this section to a person connected with a participator include references to a person with whom the person is associated within the meaning of paragraph 11 of Schedule 2 to the Oil Taxation Act 1983.
#### Restriction on setting ACT against income from oil extraction activities etc
##### 497
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Limited right to carry back surrendered ACT
##### 498
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Surrender of ACT where oil extraction company etc. owned by a consortium
##### 499
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deduction of PRT in computing income for corporation tax purposes
##### 500
- (1) Where a participator in an oil field has paid any petroleum revenue tax with which he was chargeable for a chargeable period, then, in computing for corporation tax the amount of his income arising in the relevant accounting period from oil extraction activities or oil rights, there shall be deducted an amount equal to that petroleum revenue tax.
- (2) There shall be made all such adjustments of assessments to corporation tax as are required in order to give effect to subsection (1) above.
- (3) For the purposes of subsection (1) above, the relevant accounting period, in relation to any petroleum revenue tax paid by a company, is—
- (a) the accounting period of the company in or at the end of which the chargeable period for which that tax was charged ends; or
- (b) if that chargeable period ends after the accounting period of the company in or at the end of which the company—
- (i) ceases to carry on the trade giving rise to the income referred to above, or
- (ii) ceases to be within the charge to corporation tax in respect of that trade,
that accounting period.
- (4) Subject to the following provisions of this section if some or all of the petroleum revenue tax in respect of which a deduction has been made under subsection (1) above is subsequently repaid, that deduction shall be reduced or extinguished accordingly; and any additional assessment to corporation tax required in order to give effect to this subsection may be made at any time not later than six years after the end of the calendar year in which the first-mentioned tax was repaid.
- (5) If, in a case where paragraph 17 of Schedule 2 to the 1975 Act applies, an amount of petroleum revenue tax in respect of which a deduction has been made under subsection (1) above is repaid by virtue of an assessment under that Schedule or an amendment of such an assessment, then, so far as concerns so much of that repayment as constitutes the appropriate repayment,—
- (a) subsection (4) above shall not apply; and
- (b) the following provisions of this section shall apply in relation to the company which is entitled to the repayment.
- (6) In subsection (5) above and the following provisions of this section—
- (a) “*the appropriate repayment*” has the meaning assigned by sub-paragraph (2) of paragraph 17 of Schedule 2 to the 1975 Act;
- (b) in relation to the appropriate repayment, a “*carried back loss*” means an allowable loss which falls within sub-paragraph (1)(a) of that paragraph and which (alone or together with one or more other carried back losses) gives rise to the appropriate repayment;
- (c) in relation to a carried back loss, “*the operative chargeable period*” means the chargeable period in which the loss accrued; and
- (d) in relation to the company which is entitled to the appropriate repayment, “*the relevant accounting period*”means—
- (i) the accounting period in or at the end of which ends the operative chargeable period, or
- (ii) if the company ceases to carry on its ring fence trade (or to be within the charge to corporation tax in respect of that trade) before the end of the operative chargeable period, the last accounting period of that trade (or, as the case requires, the accounting period during or at the end of which the company ceased to be within the charge to corporation tax in respect of that trade).
- (7) In computing for corporation tax the amount of the company’s income arising in the relevant accounting period from oil extraction activities or oil rights there shall be added an amount equal to the appropriate repayment; but this subsection has effect subject to subsection (8) below in any case where—
- (a) two or more carried back losses give rise to the appropriate repayment; and
- (b) the operative chargeable period in relation to each of the carried back losses is not the same; and
- (c) if subsection (6)(d) above were applied separately in relation to each of the carried back losses there would be more than one relevant accounting period.
- (8) Where paragraphs (a) to (c) of subsection (7) above apply, the appropriate repayment shall be treated as apportioned between each of the relevant accounting periods referred to in paragraph (c) of that subsection in such manner as to secure that the amount added by virtue of that subsection in relation to each of those relevant accounting periods is what it would have been if—
- (a) relief for each of the carried back losses for which there is a different operative chargeable period had been given by a separate assessment or amendment of an assessment under Schedule 2 to the 1975 Act; and
- (b) relief for a carried back loss accruing in an earlier chargeable period had been so given before relief for a carried back loss accruing in a later chargeable period.
- (9) Any additional assessment to corporation tax required in order to give effect to the addition of an amount by virtue of subsection (7) above may be made at any time not later than six years after the end of the calendar year in which is made the repayment of petroleum revenue tax comprising the appropriate repayment.
- (10) In this section “*allowable loss*” and “*chargeable period*” have the same meaning as in Part I of the 1975 Act and “*calendar year*” means a period of twelve months beginning on 1st January.
#### Interest on repayment of PRT
##### 501
Where any amount of petroleum revenue tax paid by a participator in an oil field is, under any provision of Part I of the 1975 Act, repaid to him with interest, the amount of the interest paid to him shall be disregarded in computing the amount of his income for the purposes of corporation tax.
#### Interpretation of Chapter V
##### 502
- (1) In this Chapter—
- “*the 1975 Act*” means the Oil Taxation Act 1975 ;
- “*oil*” means any substance won or capable of being won under the authority of a licence granted under either Part I of the Petroleum Act 1998 or the Petroleum (Production) Act (Northern Ireland) 1964, other than methane gas won in the course of operations for making and keeping mines safe;
- “*oil extraction activities*” means any activities of a person—in searching for oil in the United Kingdom or a designated area or causing such searching to be carried out for him; orin extracting or causing to be extracted for him oil at any place in the United Kingdom or a designated area under rights authorising the extraction and held by him or, if the person in question is a company, by the company or a company associated with it; orin transporting or causing to be transported for him . . . oil extracted at any such place not on dry land under rights authorising the extraction and so held where the transportation is—to the place where the oil is first landed in the United Kingdom, orto the place in the United Kingdom or, in the case of oil first landed in another country, the place in that or any other country (other than the United Kingdom) at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one such place, the one nearest to the place of extraction; orin effecting or causing to be effected for him the initial treatment or initial storage of oil won from any oil field under rights authorising its extraction and so held;
- “*oil field*” has the same meaning as in Part I of the 1975 Act;
- “*oil rights*” means rights to oil to be extracted at any place in the United Kingdom or a designated area, or to interests in or to the benefit of such oil;
- “*participator*” has the same meaning as in Part I of the 1975 Act; and
- “*ring fence income*” means income arising from oil extraction activities or oil rights; and
- “*ring fence profits*” has the meaning given by subsection (1A) below or, in any case where that subsection does not apply, means ring fence income; and
- “*ring fence trade*” means activities which—fall within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1) above; andconstitute a separate trade (whether by virtue of section 16(1) of ITTOIA 2005 or section 492(1) above or otherwise).
- (1A) Where in accordance with section 197(3) of the 1992 Act a person has an aggregate gain for any chargeable period, that gain and his ring fence income (if any) for that period together constitute his ring fence profits for the purposes of this Chapter.
- (2) For the purposes of subsection (1) above—
- (a) “*designated area*” means an area designated by Order in Council under section 1(7) of the Continental Shelf Act 1964;
- (b) “*initial treatment*” has the same meaning as in Part I of the 1975 Act; and
- (c) the definition of “*initial storage*” in section 12(1) of the 1975 Act shall apply but, in its application for those purposes in relation to the person mentioned in subsection (1)(d) above and to oil won from any one oil field shall have effect as if the reference to the maximum daily production rate of oil for the field as there mentioned were a reference to that person’s share of that maximum daily production rate, that is to say, a share thereof proportionate to his share of the oil won from that field.
- (3) For the purposes of this Chapter two companies are associated with one another if—
- (a) one is a 51 per cent. subsidiary of the other;
- (b) each is a 51 per cent. subsidiary of a third company; or
- (c) one is owned by a consortium of which the other is a member.
- (3A) Section 413(6) applies for the purposes of subsection (3)(c) above . . . .
- (4) Without prejudice to subsection (3) above, for the purposes of this Chapter, two companies are also associated with one another if one has control of the other or both are under the control of the same person or persons; and in this subsection “control” shall be construed in accordance with section 416.
### CHAPTER VI — MISCELLANEOUS BUSINESSES AND BODIES
#### Letting of furnished holiday accommodation treated as a trade
##### 503
- (1) For the purposes of Chapter 2 of Part 10 (loss relief for corporation tax)—
- (a) a UK property business which consists in, or so far as it consists in, the commercial letting of furnished holiday accommodation . . . shall be treated as if it were a trade carried on wholly or partly in the United Kingdom the profits of which are chargeable to corporation tax under Part 3 of CTA 2009, and
- (b) all such lettings made by a particular company or partnership shall be treated as one trade.
The “*commercial letting of furnished holiday accommodation*” is defined below in section 504.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Where there is a letting of accommodation only part of which is holiday accommodation, such apportionments shall be made for the purposes of this section as are just and reasonable.
- (5) Relief shall not be given for the same loss, or the same portion of a loss, both under a provision of Chapter 2 of Part 10 as applied by this section and under any other provision of the Corporation Tax Acts.
#### Supplementary provisions
##### 504
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charities: general
##### 505
- (1) Subject to subsections (2) and (3) below, the following exemptions shall be granted on a claim in that behalf to the Board—
- (a) exemption from tax under Parts 3 and 4 of CTA 2009. . . in respect of any profits or gains arising in respect of rents or other receipts from an estate, interest or right in or over any land (whether situated in the United Kingdom or elsewhere) to the extent that the profits or gains—
- (i) arise in respect of rents or receipts from an estate, interest or right vested in any person for charitable purposes; and
- (ii) are applied to charitable purposes only;
- (aa) exemption from tax under Parts 3 and 4 of CTA 2009, or under Parts 2 and 3 of ITTOIA 2005, in respect of distributions to which section 121 of the Finance Act 2006 (Real Estate Investment Trusts: distributions) applies to the extent that the distributions—
- (i) arise in respect of shares vested in a person for charitable purposes; and
- (ii) are applied to charitable purposes only;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) exemption—
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) from tax under section 299 of CTA 2009 (non-trading profits in respect of loan relationships),
- (iizza) from tax under Part 9A of CTA 2009 (company distributions),
- (iiza) from tax under Chapter 5 of Part 10 of that Act (distributions from unauthorised unit trusts),
- (iizb) from tax under Chapter 7 of that Part (annual payments not otherwise charged),
- (iia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (iiaa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (iib) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (iic) from tax under Part 8 of CTA 2009 in respect of non-trading gains on intangible fixed assets,
- (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
where the income in question forms part of the income of a charitable company, or is, according to rules or regulations established by Act of Parliament, charter, decree, deed of trust or will, applicable to charitable purposes only, and so far as it is applied to charitable purposes only;
- (d) exemption from tax . . . . . . in respect of public revenue dividends on securities which are in the name of trustees, to the extent that the dividends are applicable and applied only for the repair of—
- (i) any cathedral, college, church or chapel, or
- (ii) any building used only for the purposes of divine worship;
- (e) exemption from tax under Part 3 of CTA 2009. . . in respect of the profits of any trade carried on by a charitable company(whether in the United Kingdom or elsewhere), if the profits are applied solely to the purposes of the charitable company and either—
- (i) the trade is exercised in the course of the actual carrying out of a primary purpose of the charitable company; or
- (ii) the work in connection with the trade is mainly carried out by beneficiaries of the charitable company;
- (f) exemption from tax under Schedule D . . . in respect of profits accruing to a charitable company from a lottery if the profits are applied solely to the charitable company's purposes and—
- (i) the lottery is an exempt lottery within the meaning of the Gambling Act 2005 by virtue of Part 1 or 4 of Schedule 11 to that Act;
- (ii) the lottery is promoted in accordance with a lottery operating licence within the meaning of Part 5 of that Act; or
- (iii) the lottery is promoted and conducted in accordance with Article 133 or 135 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985.
- (1AA) In subsection (1)(c)(iib)“*relevant foreign distribution*” means any distribution of a company not resident in the United Kingdom which is not chargeable under Chapter 2 of Part 10 of CTA 2009.
- (1A) In subsection (1)(d) above “*public revenue dividends*” means—
- (a) income from securities which is payable out of the public revenue of the United Kingdom or Northern Ireland;
- (b) income from securities issued by or on behalf of a government or a public or local authority in a country outside the United Kingdom.
- (1B) For the purpose of subsection (1)(e)—
- (a) where a trade is exercised partly in the course of the actual carrying out of a primary purpose of the charitable company and partly otherwise, each part shall be treated as a separate trade (for which purpose reasonable apportionment of expenses and receipts shall be made), and
- (b) where the work in connection with the trade is carried out partly but not mainly by beneficiaries, the part in connection with which work is carried on by beneficiaries and the other part shall be treated as separate trades (for which purpose reasonable apportionment of expenses and receipts shall be made).
- (2) Any payment which—
- (a) is received by a charitable company from another charity; and
- (b) is not made for full consideration in money or money’s worth; and
- (c) is not chargeable to corporation tax apart from this subsection; and
- (d) is not, apart from this subsection, of a description which (on a claim) would be eligible for relief from tax by virtue of any provision of subsection (1) above;
shall be . . . chargeable to corporation tax under the charge to corporation tax on income but shall be eligible for relief from tax under subsection (1)(c) above as if it were an annual payment.
- (3) In subsections (4) to (7)—
- (a) “*charitable expenditure*” has the meaning given by section 506,
- (b) “*relief*” means relief or exemption under—
- (i) subsection (1) above,
- (ii) section 56(3)(c) above,
- (iii) section 761(6) below,
- (iv) section 256 of the 1992 Act (charities), or
- (v) section 46 of the Finance Act 2000 (small trades),
- (c) “*relievable income and gains*” means income and gains which would be eligible for relief or exemption under any of those provisions (disregarding subsections (4) to (6)), and
- (d) “*total income and gains*” means the aggregate of—
- (i) relievable income and gains,
- (ii) income and gains, other than relievable income and gains, chargeable to tax, and
- (iii) donations, legacies and other similar receipts that are not chargeable to tax.
- (4) If a charitable company incurs (or is treated as incurring) non-charitable expenditure in an accounting period, relief shall be disallowed in respect of such amount of relievable income and gains as equals the amount of the non-charitable expenditure.
- (5) If in an accounting period a charitable company's non-charitable expenditure exceeds its total income and gains the excess shall be treated as non-charitable expenditure of the previous period for the purposes of subsection (4); and any necessary adjustments shall be made, whether by making assessments or otherwise.
- (6) Subsection (5) may apply to an accounting period wholly or partly as a result of the application of that subsection in respect of a later period; but no excess of non-charitable expenditure shall be treated as non-charitable expenditure of an accounting period which ended more than six years before the end of the period in which the expenditure was actually incurred.
- (7) Where an amount of a charitable company's relievable income and gains is disallowed for relief by subsection (4) (whether or not as a result of the application of subsection (5))—
- (a) the charitable company may by notice to the Board specify which items of income or gains are to be disallowed, but
- (b) if the Board requires the charitable company to give a notice under paragraph (a) and the charitable company fails to comply within the period of 30 days beginning with the date on which the requirement is imposed, the Board shall determine which items to disallow.
#### Qualifying expenditure and non-qualifying expenditure
##### 506
- (1) In this section, section 505 and Schedule 20—
- “*charity*” means any body of persons or trust established for charitable purposes only;
- “*charitable company*” means any body of persons established for charitable purposes only;
- “*charitable expenditure*” means (subject to subsections (3) to (5) below) expenditure which is exclusively for charitable purposes.
- (2) For the purposes of section 505 . . . , where expenditure which is not actually incurred in a particular accounting period properly falls to be charged against the income of that accounting period as being referable to commitments (whether or not of a contractual nature) which the charitable company has entered into before or during that period, it shall be treated as incurred in that period.
- (3) A payment made (or to be made) to a body situated outside the United Kingdom shall not be charitable expenditure by virtue of this section unless the charitable company concerned has taken such steps as may be reasonable in the circumstances to ensure that the payment will be applied for charitable purposes.
- (4) If in any accounting period a charitable company—
- (a) invests any of its funds in an investment which is not a qualifying investment, as defined in Part I of Schedule 20; or
- (b) makes a loan (not being an investment) which is not a qualifying loan, as defined in Part II of that Schedule;
then, subject to subsection (5) below, the amount so invested or lent in that period shall be treated for the purposes of this section as being an amount of expenditure incurred by the charitable company, and, accordingly, as being non-charitable expenditure.
- (5) If, in any accounting period, a charitable company which has in that period made an investment or loan falling within subsection (4) above—
- (a) realises the whole or part of that investment; or
- (b) is repaid the whole or part of that loan;
any further investment or lending in that period of the sum realised or repaid shall, to the extent that it does not exceed the sum originally invested or lent, be left out of account in determining the amount which, by virtue of subsection (4) above, is treated as non-charitable expenditure incurred in that period.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The National Heritage Memorial Fund, the Historic Buildings and Monuments Commission for England and the British Museum
##### 507
- (1) There shall on a claim in that behalf to the Board be allowed in the case of—
- (a) the Trustees of the National Heritage Memorial Fund;
- (b) the Historic Buildings and Monuments Commission for England;
- (c) the Trustees of the British Museum;
- (d) the Trustees of the Natural History Museum;
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) the National Endowment for Science, Technology and the Arts;
such exemption from tax as falls to be allowed under section 505 in the case of a charitable company the whole income of which is applied to charitable purposes.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scientific research organisations
##### 508
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reserves of marketing boards and certain other statutory bodies
##### 509
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Agricultural societies
##### 510
- (1) Profits or gains arising to an agricultural society from any exhibition or show held for the purposes of the society shall be exempt from tax if applied solely to the purposes of the society.
- (2) In this section “*agricultural society*” means any society or institution established for the purpose of promoting the interests of agriculture, horticulture, livestock breeding or forestry.
#### The Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council
##### 511
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) The Corporation Tax Acts shall apply in relation to the trade of the Gas Council as if before the beginning of April 1962 it had consisted of the trades of the Area Boards (within the meaning of the Gas Act 1948), and (without prejudice to the generality of the foregoing) allowances and balancing charges shall be made to or on the Gas Council accordingly by reference to the capital expenditure of Area Boards and to the allowances made to Area Boards in respect of that expenditure.
#### Atomic Energy Authority and National Radiological Protection Board
##### 512
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### British Airways Board and National Freight Corporation
##### 513
- (1) Subject to subsection (2) below, the successor company in which the property, rights, liabilities and obligations of the British Airways Board are vested by the Civil Aviation Act 1980 shall be treated for all purposes of corporation tax as if it were the same person as the British Airways Board; and the successor company to which the undertaking of the National Freight Corporation is transferred by the Transport Act 1980 shall be treated for those purposes as if it were the same person as the National Freight Corporation.
- (2) The transfer by the Civil Aviation Act 1980 from the British Airways Board to the successor company of liability for any loan made to the Board shall not affect any direction in respect of the loan which has been given by the Treasury under section 581.
- (3) A successor company shall not by virtue of subsection (1) above be regarded as a body falling within section 170(12) of the 1992 Act.
#### Funds for reducing the National Debt
##### 514
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Signatories to Operating Agreement for INMARSAT
##### 515
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Government securities held by non-resident central banks
##### 516
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Issue departments of the Reserve Bank of India and the State Bank of Pakistan
##### 517
There shall be exempt from corporation tax any profits or income arising or accruing to the issue department of the Reserve Bank of India constituted under an Act of the Indian legislature called the Reserve Bank of India Act 1934, or to the issue department of the State Bank of Pakistan constituted under certain orders made under section 9 of the Indian Independence Act 1947.
#### Harbour reorganisation schemes
##### 518
- (1) This section has effect where the trade of any body corporate other than a limited liability company is transferred to a harbour authority by or under a certified harbour reorganisation scheme which provides also for the dissolution of the transferor.
- (2) For the purposes of provisions of the Corporation Tax Acts that apply—
- (a) only if a person starts to carry on a trade, or
- (b) only if a person ceases to carry on a trade,
the transferor is not treated as ceasing to carry on the trade, and the transferee is not treated as starting to carry it on.
- (3) The transferee shall be entitled to relief from corporation tax under section 393(1), as for a loss sustained by it in carrying on the transferred trade or any trade of which it comes to form part, for any amount which, if the transferor had continued to carry it on, would have been available to the transferor for carry-forward against chargeable profits of succeeding accounting periods, but subject to any claim made by the transferor under section 393A(1).
- (4) There shall be made to or on the transferee in accordance with the Capital Allowances Act (including enactments which under this Act are to be treated as contained in that Act) all such allowances and charges as would, if the transferor had continued to carry on the trade, have fallen to be made to or on it under those Acts and the amount of any such allowance or charge shall be computed as if the transferee had been carrying on the trade since the transferor had begun to do so and as if everything done to or by the transferor had been done to or by the transferee.
- (5) No sale or transfer which on the transfer of the trade is made by the transferor to the transferee of any assets in use for the purposes of the trade shall be treated as giving rise to any such allowance or charge as is mentioned in subsection (4) above.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) The transferee shall be entitled to relief from corporation tax in respect of chargeable gains for any amount for which the transferor would have been entitled to claim relief in respect of allowable losses if it had continued to carry on the trade.
- (8) Where part only of such trade is transferred to a harbour authority by or under a certified harbour organisation scheme, and the transferor continues to carry on the remainder of the trade, or any such trade is, by or under a certified harbour reorganisation scheme which provides also for the dissolution of the transferor, transferred in parts to two or more harbour authorities, this section shall apply as if the transferred part, or each of the transferred parts, had at all times been a separate trade.
- (9) Where a part of any trade is to be treated by virtue of subsection (8) above as having been a separate trade over any period there shall be made any necessary adjustments of accounting periods, and such apportionments as may be just of receipts, expenses, allowances or charges.
- (10) In this section—
- “*harbour authority*” has the same meaning as in the Harbours Act 1964;
- “*harbour reorganisation scheme*” means any statutory provision providing for the management by a harbour authority of any harbour or group of harbours in the United Kingdom, and “*certified*”, in relation to any harbour reorganisation scheme, means certified by a Minister of the Crown or government department as so providing with a view to securing, in the public interest, the efficient and economical development of the harbour or harbours in question;
- “*limited liability company*” means a company having a limit on the liability of its members;
- “*statutory provision*” means any enactment, or any scheme, order or other instrument having effect under an enactment, and includes an enactment confirming a provisional order; and
- “*transferor*”, in relation to a trade, means the body from whom the trade is transferred, whether or not the transfer is effected by that body.
#### Local authorities
##### 519
- (1) A local authority in the United Kingdom shall be exempt from corporation tax.
- (2) Subsection (1) above shall apply to a local authority association as it applies to a local authority.
- (3) In this Act “*local authority association*” means any incorporated or unincorporated association—
- (a) of which all the constituent members are local authorities, groups of local authorities or local authority associations, and
- (b) which has for its object or primary object the protection and furtherance of the interests in general of local authorities or any description of local authorities;
and for this purpose, if a member of an association is a representative of or appointed by any authority, group of authorities or association, that authority, group or association (and not he) shall be treated as a constituent member of the association.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XIII — MISCELLANEOUS SPECIAL PROVISIONS
### CHAPTER I — INTELLECTUAL PROPERTY
### Patents and know-how
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure
##### 520
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 520
##### 521
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances for expenditure on purchase of patent rights: pre-1st April 1986 expenditure
##### 522
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lapses of patent rights, sales etc
##### 523
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of receipts from sale of patent rights
##### 524
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital sums: death, winding up or partnership change
##### 525
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for expenses
##### 526
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Spreading of royalties over several years
##### 527
- (1) Where—
- (a) a royalty or other sum is paid to a company in respect of the user of a patent,
- (b) the user extended over a period of six complete years or more, and
- (c) the payment is one from which a sum representing income tax must be deducted under section 903 of ITA 2007,
the company may on the making of a claim require that the corporation tax payable by it by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of corporation tax which would have been payable by it if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.
- (2) Subsection (1) above shall apply in relation to a royalty or other sum where the period of the user is two complete years or more but less than six complete years as it applies to the royalties and sums mentioned in that subsection, but with the substitution for the reference to six equal instalments of a reference to so many equal instalments as there are complete years comprised in that period.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manner of making allowances and charges
##### 528
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Patent income to be earned income in certain cases
##### 529
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disposal of know-how
##### 530
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 530
##### 531
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of the 1968 Act
##### 532
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 520 to 532
##### 533
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Copyright and public lending right
#### Relief for copyright payments etc
##### 534
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief where copyright sold after ten years or more
##### 535
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Taxation of royalties where owner abroad
##### 536
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Public lending right
##### 537
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Artists’ receipts
#### Relief for painters, sculptors and other artists
##### 538
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — LIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES
#### Introductory
##### 539
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies: chargeable events
##### 540
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life policies: computation of gain
##### 541
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life annuity contracts: chargeable events
##### 542
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life annuity contracts: computation of gain
##### 543
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Second and subsequent assignment of life policies and contracts
##### 544
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital redemption policies
##### 545
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Calculation of certain amounts for purposes of sections 540, 542 and 545
##### 546
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Method of charging gain to tax
##### 547
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deemed surrender of certain loans
##### 548
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certain deficiencies allowable as deductions
##### 549
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief where gain charged at a higher rate
##### 550
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Right of individual to recover tax from trustees
##### 551
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information: duty of insurers
##### 552
- (1) Where a chargeable event . . . has happened in relation to any policy or contract, the body by or with whom the policy or contract was issued, entered into or effected shall—
- (a) unless satisfied that no gain is to be treated as arising by reason of the event, deliver to the appropriate policy holder before the end of the relevant three month period a certificate specifying the information described in subsection (5) below; and
- (b) if the condition in paragraph (a) or (b) of subsection (2) below is satisfied, deliver to the inspector before the end of the relevant three month period a certificate specifying the information described in subsection (5) below together with the name and address of the appropriate policy holder.
- (2) For the purposes of this section—
- (a) the condition in this paragraph is that the event is an assignment for money or money’s worth of the whole of the rights conferred by the policy or contract; or
- (b) the condition in this paragraph is that the amount of the gain, or the aggregate amount of the gain and any gains connected with it, exceeds one half of the basic rate limit for the relevant year of assessment.
- (3) If, in the case of every certificate which a body delivers under subsection (1)(a) above which relates to a gain attributable to a year of assessment . . . , the body also delivers to the inspector—
- (a) before the end of the relevant three month period for the purposes of subsection (1)(b) above,
- (b) by a means prescribed by the Board for the purposes of this subsection under section 552ZA(5), and
- (c) in a form so prescribed in the case of that means,
a certificate specifying the same information as the certificate under subsection (1)(a) together with the name and address of the appropriate policy holder, the body shall be taken to have complied with the requirements of subsection (1)(b) above in relation to that year of assessment . . . so far as relating to the chargeable events to which the certificates relate.
- (4) Where a certificate is not required to be delivered under subsection (1)(b) above in the case of any chargeable event—
- (a) the inspector may by notice require the body to deliver to him a copy of any certificate that the body was required to deliver under subsection (1)(a) above which relates to the chargeable event; and
- (b) it shall be the duty of the body to deliver such a copy within 30 days of receipt of the notice.
- (5) The information to be given to the appropriate policy holder pursuant to subsection (1)(a) above or the inspector pursuant to subsection (1)(b) above is—
- (a) any unique identifying designation given to the policy or contract;
- (b) the nature of the chargeable event and—
- (i) the date on which it happened; and
- (ii) if it is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 (chargeable events where transaction-related calculations show gains), the date on which the insurance year ends;
- (c) if the event is the assignment of all the rights conferred by the policy or contract, such of the following as may be required for computing the amount of the gain to be treated as arising by virtue of . . . Chapter 9 of Part 4 of ITTOIA 2005—
- (i) . . . the amount or value of any capital sums of a kind referred to in section 492(1)(b) to (e) of ITTOIA 2005;
- (ii) the amounts previously paid under the policy or contract by way of premiums or otherwise by way of consideration for an annuity;
- (iii) . . . the amount of so much of any payment previously made on account of an annuity as is exempt under section 717 of ITTOIA 2005;
- (iv) the value of any previously assigned parts of or shares in the rights conferred by the policy or contract;
- (v) . . . the total of the amounts of gains treated as arising on previous chargeable events within section 509(1) or 514(1) of ITTOIA 2005;
- (d) except where paragraph (c) above applies, the amount of the gain treated as arising by reason of the event;
- (e) the number of years relevant for computing the annual equivalent of the amount of the gain for the purposes of subsection (1) of section 536 of ITTOIA 2005 (top slicing relieved liability: one chargeable event), apart from subsections (6) and (8) of that section;
- (f) on the assumption that section 465 of ITTOIA 2005 (person liable: individuals) has effect in relation to the gain —
- (i) whether an individual would fall to be treated as having paid income tax at the basic rate on the amount of the gain in accordance with section 530 of that Act; and
- (ii) if so, except in a case where paragraph (c) above applies, the amount of such tax that would fall to be so treated as paid.
- (6) For the purposes of subsection (1)(a) above, the relevant three month period is whichever of the following periods ends the latest—
- (a) the period of three months following the happening of the chargeable event;
- (b) if the event is a surrender or assignment which is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 . . . , the period of three months following the end of the insurance year in which the event happens;
- (c) if the event is a death or an assignment of the whole of the rights or a surrender or assignment which is a chargeable event by virtue of . . . section 514(1) of ITTOIA 2005 . . . , the period of three months beginning with receipt of written notification of the event.
- (7) For the purposes of subsection (1)(b) above, the relevant three month period is whichever of the following periods ends the latest—
- (a) the period of three months following the end of the year of assessment . . . in which the event happened;
- (b) if the event is a surrender or assignment which is a chargeable event by virtue of section 514(1) of ITTOIA 2005, the period of three months following the end of the insurance year in which the event happens;
- (c) if the event is a death or an assignment, the period of three months beginning with receipt of written notification of the event;
- (d) if a certificate under subsection (1)(b) above would not be required in respect of the event apart from the happening of another event, and that other event is one of those mentioned in paragraph (c) above, the period of three months beginning with receipt of written notification of that other event.
- (8) For the purposes of this section the cases where a gain is connected with another gain are those cases where—
- (a) both gains arise in connection with policies or contracts containing obligations which, immediately before the chargeable event, were obligations of the same body;
- (b) the policy holder of those policies or contracts is the same;
- (c) both gains are attributable to the same year of assessment . . . ;
- (d) the terms of the policies or contracts are the same, apart from any difference in their maturity dates; and
- (e) the policies or contracts were issued in respect of insurances made, or were entered into or effected, on the same date.
- (9) For the purposes of this section, the year of assessment . . . to which a gain is attributable is—
- (a) in the case of a gain treated as arising by virtue of subsection (1) of section 514 of ITTOIA 2005, the year of assessment which includes the end of the insurance year mentioned in subsection (3) and (4) of that section; or
- (b) in any other case, the year of assessment . . . in which happens the chargeable event by reason of which the gain is treated as arising.
- (10) In this section—
- “*amount*”, in relation to any gain, means the amount of the gain apart from . . . section 528 of ITTOIA 2005;
- “*appropriate policy holder*” means—in relation to an assignment of part of or a share in the rights conferred by a policy or contract, any person who is both—the policy holder, or one of the policy holders, immediately before the assignment; andthe assignor or one of the assignors; andin relation to any other chargeable event, the person who is the policy holder immediately before the happening of the event;
- “*chargeable event*” means an event which is a chargeable event within the meaning of . . . Chapter 9 of Part 4 of ITTOIA 2005;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*insurance year*” has the same meaning as in Chapter 9 of Part 4 of ITTOIA 2005 (see section 499 of that Act);
- “*the relevant year of assessment*”, in the case of any gain, means—the year of assessment to which the gain is attributable, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) This section is supplemented by section 552ZA.
- (13) For the purposes of this section, no account is to be taken of the effect of . . . section 541A of ITTOIA 2005.
#### Non-resident policies and off-shore capital redemption policies
##### 553
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Borrowings on life policies to be treated as income in certain cases
##### 554
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — ENTERTAINERS AND SPORTSMEN
#### Payment of tax
##### 555
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Activity treated as trade etc. and attribution of income
##### 556
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge on profits or gains
##### 557
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions
##### 558
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY
#### Deductions on account of tax etc. from payments to certain sub-contractors
##### 559
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons who are sub-contractors or contractors for purposes of Chapter IV
##### 560
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from section 559
##### 561
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by individuals
##### 562
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by partners who are individuals
##### 563
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by firms
##### 564
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Conditions to be satisfied by companies
##### 565
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### General powers to make regulations under Chapter IV
##### 566
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “construction operations”
##### 567
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — SCHEMES FOR RATIONALIZING INDUSTRY
#### Deductions from profits of contributions paid under certified schemes
##### 568
- (1) Notwithstanding anything contained in . . . section 33 of ITTOIA 2005or section 53 of CTA 2009 (no deduction for capital expenditure) but subject to the following provisions of this Chapter, where a person pays, wholly and exclusively for the purposes of a trade in respect of which he is chargeable under Part 2 of ITTOIA 2005 or Part 3 of CTA 2009, a contribution in furtherance of a scheme which is for the time being certified by the Secretary of State under this section, the contribution shall, in so far as it is paid in furtherance of the primary object of the scheme, be allowed to be deducted as an expense in computing the profits of that trade.
- (2) The Secretary of State shall certify a scheme under this section if he is satisfied—
- (a) that the primary object of the scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom; and
- (b) that the scheme is in the national interest and in the interests of that industry as a whole; and
- (c) that such number of persons engaged in that industry as are substantially representative of the industry are liable to pay contributions in furtherance of the primary object of the scheme by agreement between them and the body of persons carrying out the scheme.
- (3) The Secretary of State shall cancel any certificate granted under this section if he ceases to be satisfied as to any of the matters referred to in subsection (2) above.
- (4) The Secretary of State may at any time require the body of persons carrying out a scheme certified under this section to produce any books or documents of whatever nature relating to the scheme and, if the requirement is not complied with, he may cancel the certificate.
- (5) In this section and in section 569 “*contribution*”, in relation to a scheme, does not include a sum paid by a person by way of loan or subscription of share capital, or in consideration of the transfer of assets to him, or by way of a penalty for contravening or failing to comply with the scheme.
#### Repayment of contributions
##### 569
- (1) In the event of the repayment, whether directly or by way of distribution of assets on a winding up or otherwise, of a contribution or any part of a contribution which has been allowed to be deducted under section 568, the deduction of the contribution, or so much of it as has been repaid, shall be deemed to be an unauthorised deduction in respect of which an assessment shall be made, and, notwithstanding the provisions of the Tax Acts requiring assessments to be made within six years after the end of the chargeable period to which they relate, any such assessment and any consequential assessment may be made at any time within three years after the end of the chargeable period in which the repayment was made.
- (2) For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.
#### Payments under certified schemes which are not repayments of contributions
##### 570
- (1) Subject to the provisions of this section, where, under any scheme which is for the time being certified or has at any time been certified by the Secretary of State under section 568, any payment (not being a payment made by way of repayment of contributions) is made to a person carrying on a trade to which the scheme relates, that payment shall be treated for the purposes of the Tax Acts as a trading receipt of the trade, and shall accordingly be taken into account in computing the profits of the trade for those purposes.
- (2) Where . . . the payments which have been made under such a scheme in respect of a trade (not being payments made by way of repayment of contributions) have been made wholly or partly in respect of damage in respect of which no relief may be given under the Tax Acts, and a claim is made to that effect, then, subject to and in accordance with the provisions of Schedule 21—
- (a) relief shall be given in respect of those payments by reducing the amounts which are to be treated as trading receipts of the trade under subsection (1) above; but
- (b) where such relief is given, section 568 shall, in relation to contributions subsequently paid under the scheme in respect of the trade, have effect subject to the modifications specified in Part III of that Schedule,
and paragraph 6 of that Schedule applies for the purposes of this subsection as it applies for the purposes of that Schedule.
- (3) The provisions of this section and Schedule 21 shall apply in relation to any payment made to a person who has ceased to carry on a trade to which any such scheme as is mentioned in subsection (1) above relates as they apply in relation to payments made to a person carrying on such a trade, subject to the modification that so much of that payment as falls to be treated as a trading receipt by virtue of those provisions shall be deemed for the purposes of those provisions to have been made to him on the last day on which he was engaged in carrying on the trade.
- (4) In determining for the purposes of this section and of Schedule 21—
- (a) whether any trade has ceased to be carried on; or
- (b) whether any contribution is paid in respect of a trade in respect of which a payment has been made; or
- (c) whether any payment is made in respect of a trade in respect of which a contribution has been paid,
no regard shall be had to any event which, by virtue of section 18 of ITTOIA 2005 or section 41 of CTA 2009 (company starting or ceasing to be within charge to corporation tax) is to be treated as effecting a cessation of trading.
#### Cancellation of certificates
##### 571
- (1) Where any certificate granted with respect to a scheme under section 568 is cancelled by the Secretary of State, and any deductible contributions paid in furtherance of the scheme have not been repaid at the expiration of one year from the cancellation, the body of persons carrying out the scheme shall, for the chargeable period in which that year expires, be charged to tax . . . upon the aggregate amount of the deductible contributions which have not been repaid at that time.
- (1A) An amount charged to income tax under subsection (1) above is treated for income tax purposes as an amount of income.
- (1B) So far as relating to corporation tax, the charge to tax under subsection (1) has effect as an application of the charge to corporation tax on income.
- (2) The charge to tax under subsection (1) above shall not be made if the total amount of any contributions, other than deductible contributions, which have been paid under the scheme and have not been repaid before that time is greater than the available resources of the scheme, and shall not in any case be made upon an amount greater than the excess, if any, of those resources over that total amount.
- (3) In subsection (2) above “*the available resources*”, in relation to any scheme, means a sum representing the total funds held for the purposes of the scheme at the expiration of one year from the cancellation of the certificate plus a sum representing any funds held for the purposes of the scheme which, during that year, have been applied otherwise than in accordance with the provisions of the scheme as in force when the certificate was granted.
- (4) Where the body of persons carrying out a scheme are charged to tax by virtue of subsection (1) above, and, after the expiration of one year from the cancellation of the certificate, any deductible contribution paid in furtherance of the scheme is repaid, the amount upon which the charge is made shall on the making of a claim be reduced by the amount repaid, and all such repayments of tax shall be made as are necessary to give effect to the provisions of this subsection.
- (5) In this section “*contribution*” includes a part of a contribution, and “*deductible contribution*” means a contribution allowed to be deducted under section 568, any reduction under Part III of Schedule 21 being left out of account.
- (6) For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.
#### Application to statutory redundancy schemes
##### 572
- (1) Sections 569 to 571 and Schedule 21 shall, subject to the adaptations specified in subsection (2) below, apply in relation to a statutory redundancy scheme as they apply in relation to a scheme certified under section 568.
- (2) The adaptations referred to above are as follows, that is to say—
- (a) for any reference to a contribution allowed to be deducted under section 568 there shall be substituted a reference to a contribution allowed to be deducted under any provision of the Tax Acts other than that section;
- (b) any provision that section 568 shall, in relation to contributions, have effect subject to modifications, shall be construed as a provision that so much of any provision of the Tax Acts other than that section as authorises the deduction of contributions shall, in relation to the contributions in question, have effect subject to the modifications in question;
- (c) for any reference to the cancellation of a certificate with respect to a scheme there shall be substituted a reference to the scheme ceasing to have effect; and
- (d) for any reference to the provisions of the scheme as in force when the certificate was granted there shall be substituted a reference to the provisions of the scheme as in force when the contributions were first paid thereunder.
- (3) In this section “*statutory redundancy scheme*” means a scheme for the elimination or reduction of redundant works, machinery or plant, or for other similar purposes, to which effect is given by or under any Act, whether passed before or after this Act.
### CHAPTER VI — OTHER PROVISIONS
### Relief for losses on unquoted shares in trading companies
#### Relief for companies
##### 573
- (1) Subsection (2) below has effect where a company which has subscribed for shares in a qualifying trading company incurs an allowable loss (for the purpose of corporation tax on chargeable gains) on the disposal of the shares in any accounting period and the company disposing of the shares—
- (a) is an investment company on the date of the disposal and either—
- (i) has been an investment company for a continuous period of six years ending on that date; or
- (ii) has been an investment company for a shorter continuous period ending on that date and has not before the beginning of that period been a trading company or an excluded company; and
- (b) was not associated with, or a member of the same group as, the qualifying trading company at any time in the period beginning with the date when it subscribed for the shares and ending with the date of the disposal.
- (2) The company disposing of the shares may, within two years after the end of the accounting period in which the loss was incurred, make a claim requiring that the loss be set off for the purposes of corporation tax against income—
- (a) of that accounting period; and
- (b) if the company was then an investment company and the claim so requires, of preceding accounting periods ending within the time specified in subsection (3) below;
and, subject to any relief for an earlier loss, the income of any of those periods shall then be treated as reduced by the amount of the loss or by so much of it as cannot be relieved under this subsection against income of a later accounting period.
- (3) The time referred to in subsection (2) above is the period of 12 months ending immediately before the accounting period in which the loss is incurred; but the amount of the reduction which may be made under that subsection in the income of an accounting period falling partly before that time shall not exceed a part of that income proportionate to the part of the accounting period falling within that time.
- (4) Where relief is claimed under subsection (2) above, it must be claimed before any deduction is made for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of any description; . . . .
This subsection is subject to subsection (4A) below.
- (4A) Paragraph 70 of Schedule 15 to the Finance Act 2000 (priority of loss relief) provides that where relief under Part VII of that Schedule (relief for losses on disposals of shares to which investment relief is attributable) is claimed it must be claimed in priority to relief under subsection (2) above.
- (5) For the purposes of subsection (1)(b) above companies are associated with each other if one controls the other or both are under the control of the same person or persons; and section 416(2) to (6) shall apply for the purposes of this subsection.
- (6) For the purposes of this section a company subscribes for shares in another company if they are issued to it by that other company in consideration of money or money’s worth.
#### Relief for individuals
##### 574
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exclusion of relief under section 573 or 574 in certain cases
##### 575
- (1) Section 573 does not apply unless the disposal is—
- (a) by way of a bargain made at arm’s length for full consideration; or
- (b) by way of a distribution in the course of dissolving or winding up the company; or
- (ba) a disposal within section 24(1) of the 1992 Act (entire loss, destruction, dissipation or extinction of asset); or
- (c) a deemed disposal under section 24(2) of the 1992 Act (claim that value of asset has become negligible).
- (2) Where a company disposes of shares (“*the new shares*”) which by virtue of section 127 of the 1992 Act (reorganisation etc. treated as not involving disposal) are identified with other shares (“*the old shares*”) previously held by it, relief shall not be given under section 573 . . . on the disposal of the new shares unless—
- (a) relief under section 573 . . . could (or if this section had been in force could) have been given on a disposal of the old shares if it had incurred an allowable loss in disposing of them as mentioned in subsection (1)(a) above on the occasion of the disposal that would have occurred but for section 127 of the 1992 Act; or
- (b) it gave new consideration for the new shares;
but in a case within paragraph (b) above the amount of relief under section 573 . . . on the disposal of the new shares shall not exceed the amount or value of the new consideration taken into account as a deduction in computing the loss incurred on their disposal.
- (3) Where the shares are the subject of an exchange or arrangement of the kind mentioned in section 135 or 136 of the 1992 Act (company reconstructions etc.) which by reason of section 137 of that Act involves a disposal of the shares, section 573 . . . shall not apply to any allowable loss incurred on the disposal.
- (4) In this section “*new consideration*” means consideration in money or money's worth other than consideration of the kind excluded by paragraph (a) or (b) of section 128(2) of the 1992 Act.
#### Provisions supplementary to sections 573 to 575
##### 576
- (1) Subject to subsection (1C) below, where a company holds shares in another company which constitute a holding and comprise—
- (a) shares for which it has subscribed (“*qualifying shares*”); and
- (b) shares which it has acquired otherwise than by subscription,
any question whether a disposal by it of shares forming part of the holding is of qualifying shares shall be determined by treating that and any previous disposal by it out of the holding as relating to shares acquired later rather than earlier; and if a disposal by it is of qualifying shares forming part of a holding and it makes a claim under section 573 . . . in respect of a loss incurred on their disposal, the amount of relief under that section on the disposal shall not exceed the sums that would be allowed as deductions in computing the loss if the shares had not been part of the holding.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1C) Where the holding mentioned in subsection (1) above comprises any shares—
- (a) to which investment relief is attributable under Schedule 15 to the Finance Act 2000 (corporate venturing scheme), and
- (b) which have been held continuously (within the meaning of paragraph 97 of that Schedule) from the time they were issued until the disposal,
any such question as is mentioned in that subsection shall not be determined as provided by that subsection, but shall be determined instead as provided by paragraph 93 of that Schedule (identification of shares on a disposal of part of a holding where investment relief is attributable to any shares in the holding held continuously by the disposing company).
For this purpose paragraph 93 of that Schedule shall have effect as if the references in it to a disposal had the same meaning as in subsection (1) above.
- (1D) In this section “*holding*” means any number of shares of the same class held by one company in one capacity, growing or diminishing as shares of that class are acquired or disposed of.
For this purpose—
- (a) shares are not to be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt in on such an exchange, and
- (b) subsection (4) of section 104 of the 1992 Act applies as it applies for the purposes of subsection (1) of that section.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Miscellaneous
#### Business entertaining expenses
##### 577
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Housing grants
##### 578
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Statutory redundancy payments
##### 579
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 579
##### 580
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Borrowing in foreign currency by local authorities and statutory corporations
##### 581
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Funding bonds issued in respect of interest on certain debts
##### 582
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Inter-American Development Bank
##### 583
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for unremittable overseas income
##### 584
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief from tax on delayed remittances
##### 585
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of deductions for war risk premiums
##### 586
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of certain payments in respect of war injuries to employees
##### 587
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Training courses for employees
##### 588
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying courses of training etc
##### 589
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XIV — PENSION SCHEMES, SOCIAL SECURITY BENEFITS, LIFE ANNUITIES ETC.
### CHAPTER I — RETIREMENT BENEFIT SCHEMES
### Approval of schemes
#### Conditions for approval of retirement benefit schemes
##### 590
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Discretionary approval
##### 591
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Tax reliefs
#### Exempt approved schemes
##### 592
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief by way of deductions from contributions
##### 593
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exempt statutory schemes
##### 594
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Charge to tax in certain cases
#### Charge to tax in respect of certain sums paid by employer etc
##### 595
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from section 595
##### 596
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: pensions
##### 597
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: repayment of employee’s contributions
##### 598
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: commutation of entire pension in special circumstances
##### 599
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: unauthorised payments to or for employees
##### 600
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charge to tax: payments to employers
##### 601
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Regulations relating to pension fund surpluses
##### 602
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction of surpluses
##### 603
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary provisions
#### Application for approval of a scheme
##### 604
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information
##### 605
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Responsibilities of administrator of scheme, and employer
##### 606
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Pilots' benefit fund
##### 607
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Superannuation funds approved before 6th April 1980
##### 608
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schemes approved before 23rd July 1987
##### 609
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amendments of schemes
##### 610
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definition of “retirement benefits scheme”
##### 611
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other interpretative provisions, and regulations for purposes of this Chapter
##### 612
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — OTHER PENSION FUNDS AND SOCIAL SECURITY BENEFITS AND CONTRIBUTIONS
#### Parliamentary pension funds
##### 613
- (1) The salary of a Member of the House of Commons shall, for all the purposes of the Income Tax Acts, be treated as reduced by the amounts deducted in pursuance of section 1 of the House of Commons Members’ Fund Act 1939; but a Member shall not by reason of any such deduction be entitled to relief under any other provision of the Income Tax Acts.
- (2) In subsection (1) above the reference to salary shall be construed as mentioned in subsection (3) of section 1 of the House of Commons Members’ Fund Act 1939, the reference to amounts deducted includes a reference to amounts required to be set aside under that subsection, and “deduction” shall be construed accordingly.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The . . . trustees of—
- (a) the House of Commons Members’ Fund established under section 1 of that Act of 1939;
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (bb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall be entitled to exemption from income tax in respect of all income derived from that Fund or any investment of that Fund.
#### Exemptions and reliefs in respect of income from investments etc. of certain pension schemes
##### 614
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Any interest or dividends received by the person in whom is vested any of the Family Pension Funds mentioned in section 273 of the Government of India Act 1935, and having effect as a scheme made under section 2 of the Overseas Pensions Act 1973, on sums forming part of that fund shall be exempt from income tax.
- (2A) The reference in subsection (2) above to interest on sums forming part of a fund include references to any amount which is treated as income by virtue of Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) and derives from any investment forming part of that fund.
- (3) Income derived from investments or deposits of any fund referred to in section 648, 649, 650 or 651 of ITEPA 2003 shall not be charged to income tax, and any income tax deducted from any such income shall be repaid by the Board to the persons entitled to receive the income.
- (4) In respect of income derived from investments or deposits of the Overseas Service Pensions Fund established pursuant to section 7(1) of the Overseas Aid Act 1966, the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled, ordinarily resident or resident in the United Kingdom.
- (5) In respect of dividends and other income derived from investments, deposits or other property of a superannuation fund to which section 615(3) applies the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled, ordinarily resident or resident in the United Kingdom.
- (6) A claim under this section shall be made to the Board.
#### Exemption from tax in respect of certain pensions
##### 615
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Where an annuity is paid from a superannuation fund to which this subsection applies to a person who is not resident in the United Kingdom, income tax shall not be deducted from any payment of the annuity or accounted for under Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and patent royalties) by the trustees or other persons having the control of the fund.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Subsection (3) above applies to any superannuation fund which—
- (a) is bona fide established under irrevocable trusts in connection with some trade or undertaking carried on wholly or partly outside the United Kingdom;
- (b) has for its sole purpose (subject to any enactment or Northern Ireland legislation requiring or allowing provision for the value of any rights to be transferred between schemes or between members of the same scheme) the provision of superannuation benefits in respect of persons’ employment in the trade or undertaking wholly outside the United Kingdom; and
- (c) is recognised by the employer and employed persons in the trade or undertaking;
and for the purposes of this subsection duties performed in the United Kingdom the performance of which is merely incidental to the performance of other duties outside the United Kingdom shall be treated as performed outside the United Kingdom.
- (7) In this section—
- “*pension*” includes a gratuity or any sum payable on or in respect of death or, in the case of a pension falling within subsection (2)(g) above, ill-health, and a return of contributions with or without interest thereon or any other addition thereto;
- “*overseas territory*” means any territory or country outside the United Kingdom;
- “*the Pensions (Increase) Acts*” means the Pensions (Increase) Act 1971 and any Act passed after that Act for purposes corresponding to the purposes of that Act;
- “*United Kingdom trust territory*” means a territory administered by the government of the United Kingdom under the trusteeship system of the United Nations.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) For the purposes of this section, a person shall be taken to be employed in the public service of an overseas territory at any time when—
- (a) he is employed in any capacity under the government of that territory, or under any municipal or other local authority in it,
- (b) he is employed, in circumstances not falling within paragraph (a) above, by a body corporate established for any public purpose in that territory by an enactment of a legislature empowered to make laws for that territory, or
- (c) he is the holder of a public office in that territory in circumstances not falling within either paragraph (a) or (b).
- (10) For the purposes of subsection (9), references to the government of an overseas territory include references to a government constituted for two or more overseas territories, and to any authority established for the purpose of providing or administering services which are common to, or relate to matters of common interest to, two or more such territories.
#### Other overseas pensions
##### 616
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Social security benefits and contributions
##### 617
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — RETIREMENT ANNUITIES
#### Termination of relief under this Chapter, and transitional provisions
##### 618
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from tax in respect of qualifying premiums
##### 619
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying premiums
##### 620
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other approved contracts
##### 621
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Substituted retirement annuity contracts
##### 622
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relevant earnings
##### 623
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sponsored superannuation schemes and controlling directors
##### 624
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward of unused relief under section 619
##### 625
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modification of section 619 in relation to persons over 50
##### 626
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lloyd’s underwriters
##### 627
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Partnership retirement annuities
##### 628
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity premiums of Ministers and other officers
##### 629
- (1) For the purposes of this Chapter so much of any salary which—
- (a) is payable to the holder of a qualifying office who is also a Member of the House of Commons, and
- (b) is payable for a period in respect of which the holder is not a participant in relation to that office in arrangements contained in the Parliamentary pension scheme but is a participant in relation to his membership of the House of Commons in any such arrangements, or for any part of such a period,
as is equal to the difference between a Member’s pensionable salary and the salary which (in accordance with any such resolution as is mentioned in subsection (3)(a) below) is payable to him as a Member holding that qualifying office shall be treated as remuneration from the office of Member and not from the qualifying office.
- (2) In this section—
- “*Member’s pensionable salary*” means a Member’s ordinary salary under any resolution of the House of Commons which, being framed otherwise than as an expression of opinion, is for the time being in force relating to the remuneration of Members or, if the resolution provides for a Member’s ordinary salary thereunder to be treated for pension purposes as being at a higher rate, a notional yearly salary at that higher rate;
- “*qualifying office*” means an office mentioned in section 2(2)(b), (c) or (d) of the Parliamentary and other Pensions Act 1987;
- “*the Parliamentary pension scheme*” has the same meaning as in that Act;
and without prejudice to the power conferred by virtue of paragraph 13 of Schedule 1 to that Act, regulations under section 2 of that Act may make provision specifying the circumstances in which a person is to be regarded for the purposes of this section as being or not being a participant in relation to his Membership of the House of Commons, or in relation to any office, in arrangements contained in the Parliamentary pension scheme.
- (3) In subsection (2) above “*a Member’s ordinary salary*”, in relation to any resolution of the House of Commons, means—
- (a) if the resolution provides for salary to be paid to Members at different rates according to whether or not they are holders of particular offices, or are in receipt of salaries or pensions as the holders or former holders of particular offices, a Member’s yearly salary at the higher or highest rate; and
- (b) in any other case, a Member’s yearly salary at the rate specified in or determined under the resolution.
### CHAPTER IV — PERSONAL PENSION SCHEMES
### Preliminary
#### Interpretation
##### 630
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Approval of schemes
##### 631
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Restrictions on approval
#### Establishment of schemes
##### 632
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Scope of benefits
##### 633
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity to member
##### 634
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lump sum to member
##### 635
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Annuity after death of member
##### 636
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lump sum on death of member
##### 637
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Other restrictions on approval
##### 638
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Tax reliefs
#### Member’s contributions
##### 639
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Maximum amount of deductions
##### 640
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-back of contributions
##### 641
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Carry-forward of relief
##### 642
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employer’s contributions and personal pension income etc
##### 643
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “relevant earnings”
##### 644
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Earnings from pensionable employment
##### 645
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “net relevant earnings”
##### 646
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Charge to tax
#### Unauthorised payments
##### 647
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Contributions under unapproved arrangements
##### 648
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Miscellaneous
#### Minimum contributions under Social Security Act 1986
##### 649
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of approval
##### 650
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals
##### 651
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information about payments
##### 652
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information: penalties
##### 653
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Remuneration of Ministers and other officers
##### 654
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transitional provisions
##### 655
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — PURCHASED LIFE ANNUITIES
#### Purchased life annuities other than retirement annuities
##### 656
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Purchased life annuities to which section 656 applies
##### 657
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary
##### 658
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER VI — MISCELLANEOUS
#### Financial futures and traded options
##### 659
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XV — SETTLEMENTS
### CHAPTER I — DISPOSITIONS FOR SHORT PERIODS
#### Dispositions for period which cannot exceed six years
##### 660
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustments between disponor and trustees
##### 661
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Chapter I to dispositions by two or more disponors
##### 662
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER II — SETTLEMENTS ON CHILDREN
#### The general rule
##### 663
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accumulation settlements
##### 664
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “irrevocable”
##### 665
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest paid by trustees
##### 666
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustments between disponor and trustees
##### 667
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Chapter II to settlements by two or more settlors
##### 668
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to obtain information under Chapter II
##### 669
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter II
##### 670
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — REVOCABLE SETTLEMENTS ETC.
#### Revocable settlements allowing release of obligation
##### 671
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing reversion of property
##### 672
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements where settlor retains an interest
##### 673
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements: discretionary power for benefit of settlor etc
##### 674
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 671 to 674
##### 675
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Disallowance of deduction from total income of certain sums paid by settlor
##### 676
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sums paid to settlor otherwise than as income
##### 677
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Capital sums paid by body connected with settlement
##### 678
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application of Chapter III to settlements by two or more settlors
##### 679
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to obtain information for purposes of Chapter III
##### 680
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter III
##### 681
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Ascertainment of undistributed income
##### 682
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — LIABILITY TO HIGHER RATE AND ADDITIONAL RATE TAX
### Liability of settlors
#### Settlements made after 6th April 1965
##### 683
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements made before 7th April 1965 but after 9th April 1946
##### 684
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to sections 683 and 684
##### 685
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Liability of trustees
#### Liability to additional rate tax of certain income of discretionary trusts
##### 686
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments under discretionary trusts
##### 687
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schemes for employees and directors to acquire shares
##### 688
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Recovery from trustees of discretionary trusts of higher rate tax due from beneficiaries
##### 689
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER V — MAINTENANCE FUNDS FOR HISTORIC BUILDINGS
#### Schedule 4 directions
##### 690
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certain income not to be income of settlor etc
##### 691
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reimbursement of settlor
##### 692
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Severance of settled property for certain purposes
##### 693
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Trustees chargeable to income tax at 30 per cent. in certain cases
##### 694
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XVI — ESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION
#### Limited interests in residue
##### 695
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Absolute interests in residue
##### 696
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplementary provisions as to absolute interests in residue
##### 697
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Special provisions as to certain interests in residue
##### 698
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief from higher rate tax for inheritance tax on accrued income
##### 699
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustments and information
##### 700
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) It shall be the duty of a personal representative of a deceased person, if a request to do so is made in writing by a person who has, or has had, an absolute or limited interest in the residue of the estate of the deceased or by a person to whom any of the income of the residue of that estate has been paid in the exercise of any discretion, to furnish the person making the request with a statement in writing setting out—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (aa) the amount treated as estate income under Chapter 6 of Part 5 of ITTOIA 2005 in respect of that interest or the exercise of that discretion for which he is liable to income tax for a year of assessment, and
- (b) the amount of any tax at the applicable rate which any amount falling within paragraph . . . (aa) above is deemed to have borne;
and, where an amount . . . treated as estate income under that Chapter is deemed for any of the purposes of . . . that Chapter to have borne tax on different parts of it at different applicable rates, the matters to be set out in pursuance of paragraphs (aa) and (b) above shall be set out separately as respects each part of that amount.
- (6) The duty imposed by subsection (5) above shall be enforceable at the suit or instance of the person making the request.
- (7) This section is to be read as if it were in Chapter 6 of Part 5 of ITTOIA 2005.
#### Interpretation
##### 701
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Application to Scotland
##### 702
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
## PART XVII — TAX AVOIDANCE
### CHAPTER I — CANCELLATION OF CORPORATION TAX ADVANTAGES FROM CERTAIN TRANSACTIONS IN SECURITIES
#### Cancellation of tax advantage
##### 703
- (1) Where—
- (a) in any such circumstances as are mentioned in section 704, and
- (b) in consequence of a transaction in securities or of the combined effect of two or more such transactions,
a company is in a position to obtain, or has obtained, a corporation tax advantage, then unless it shows that the transaction or transactions were carried out either for bona fide commercial reasons or in the ordinary course of making or managing investments, and that none of them had as their main object, or one of their main objects, to enable corporation tax advantages to be obtained, this section shall apply to it in respect of that transaction or those transactions.
- (2) For the purposes of this Chapter a corporation tax advantage obtained or obtainable by a company shall be deemed to be obtained or obtainable by it in consequence of a transaction in securities or of the combined effect of two or more such transactions, if it is obtained or obtainable in consequence of the combined effect of the transaction or transactions and the liquidation of a company.
- (3) Where this section applies to a company in respect of any transaction or transactions, the corporation tax advantage obtained or obtainable by it in consequence thereof shall be counteracted by such of the following adjustments, that is to say an assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made . . . , or the computation or recomputation of profits or gains, or liability to corporation tax, on such basis as the Board may specify by notice served on it as being requisite for counteracting the corporation tax advantage so obtained or obtainable.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) *In the case of a man and his wife living with him (whether or not she is separately assessed to tax), this Chapter shall, subject to subsection* (8)*below, be treated as applying to him in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the wife were his property, rights or liabilities in relation to which she had acted only as nominee for him, and shall be treated as applying to the wife in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the man were her property, rights or liabilities in relation to which he had acted only as nominee for her*.
- (8) *No adjustment made under subsection* (3)*above by reference to any transaction or transactions to counteract any tax advantage shall by virtue of subsection* (7)*above be so made that a person bears more tax than if the transaction or transactions had not had as a consequence that any relief or increased relief from, or repayment or increased repayment of, income tax, or any deduction in computing profits or gains, was obtained or obtainable, or that the way in which receipts accrued was such that the recipient did not pay or bear tax on them*.
- (9) The Board shall not give a notice under subsection (3) above until they have notified the company in question that they have reason to believe that this section may apply to it in respect of a transaction or transactions specified in the notification; and if within 30 days of the issue of the notification that company, being of opinion that this section does not so apply to it, makes a statutory declaration to that effect stating the facts and circumstances upon which its opinion is based, and sends it to the Board, then subject to subsection (10) below, this section shall not apply to it in respect of the transaction or transactions.
- (10) If, when a statutory declaration has been sent to the Board under subsection (9) above, they see reason to take further action in the matter—
- (a) the Board shall send to the tribunal a certificate to that effect, together with the statutory declaration, and may also send therewith a counter-statement with reference to the matter;
- (b) the tribunal shall take into consideration the declaration and the certificate, and the counter-statement, if any, and shall determine whether there is or is not a prima facie case for proceeding in the matter, and if it determines that there is no such case this section shall not apply to the company in question in respect of the transaction or transactions;
but any such determination shall not affect the operation of this section in respect of transactions which include that transaction or some or all of those transactions and also include another transaction or other transactions.
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) This section applies whether the corporation tax advantage in question relates to a chargeable period ending before or after the commencement of this Act, but nothing in this section shall authorise the making of an assessment later than six years after the accounting period to which the corporation tax advantage relates; and no other provision contained in the Corporation Tax Acts shall be construed as limiting the powers conferred by this section.
#### The prescribed circumstances
##### 704
The circumstances mentioned in section 703(1) are as follows (and in this section references to “*the section 703(1) company*” are references to the company referred to in that section)
- (A) That in connection with the distribution of profits of a company, or in connection with the sale or purchase of securities being a sale or purchase followed by the purchase or sale of the same or other securities, the section 703(1) company receives an abnormal amount by way of dividend, and the amount so received is taken into account for any of the following purposes—
- (a) any exemption from corporation tax, or
- (b) the setting-off of losses against profits or income, or
- (c) the giving of group relief, or
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against Board’s notices under section 703
##### 705
- (1) Any company to which notice has been given under section 703(3) may within 30 days by notice to the Board appeal . . . on the grounds that section 703 does not apply to it in respect of the transaction or transactions in question, or that the adjustments directed to be made are inappropriate.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) On an appeal under subsection (1) above the tribunal shall have power to cancel or vary a notice under subsection (3) of section 703 or to vary or quash an assessment made in accordance with such a notice, but the bringing of an appeal . . . shall not affect the validity of a notice given or of any other thing done in pursuance of that subsection pending the determination of the proceedings.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The tribunal
##### 706
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Procedure for clearance in advance
##### 707
- (1) The following provisions shall have effect where in pursuance of this section a company furnishes to the Board particulars of a transaction or transactions effected or to be effected by it , that is to say—
- (a) if the Board are of opinion that the particulars, or any further information furnished in pursuance of this paragraph, are not sufficient for the purposes of this section, they shall within 30 days of the receipt thereof notify to that company what further information they require for those purposes, and unless that further information is furnished to the Board within 30 days from the notification, or such further time as the Board may allow, they shall not be required to proceed further under this section;
- (b) subject to paragraph (a) above, the Board shall within 30 days of the receipt of the particulars, or, where that paragraph has effect, of all further information required, notify that company whether or not they are satisfied that the transaction or transactions as described in the particulars were or will be such that no notice under section 703(3) ought to be given in respect of it or them;
and, subject to the following provisions of this section, if the Board notify it that they are so satisfied, section 703 shall not apply to it in respect of that transaction or those transactions.
- (2) If the particulars, and any further information given under this section with respect to any transaction or transactions, are not such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Board, any notification given by the Board under this section shall be void.
- (3) In no event shall the giving of a notification under this section with respect to any transaction or transactions prevent section 703 applying to a company in respect of transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.
#### Power to obtain information
##### 708
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “tax advantage” and other expressions
##### 709
- (1) In this Chapter “*corporation tax advantage*” means a relief or increased relief from, or repayment or increased repayment of, corporation tax, or the avoidance or reduction of a charge to corporation tax or an assessment to corporation tax or the avoidance of a possible assessment thereto, whether the avoidance or reduction is effected by receipts accruing in such a way that the recipient does not pay or bear corporation tax on them, or by a deduction in computing profits or gains.
- (2) In this Chapter—
- “*company*” includes any body corporate,
- “*securities*”—includes shares and stock, andin relation to a company not limited by shares (whether or not it has a share capital) includes also a reference to the interest of a member of the company as such, whatever the form of that interest;
- “*trading stock*” has the meaning given by section 163 of CTA 2009;
- “*transaction in securities*” includes transactions, of whatever description, relating to securities, and in particular—the purchase, sale or exchange of securities;the issuing or securing the issue of, or applying or subscribing for, new securities;the altering, or securing the alteration of, the rights attached to securities;and references to dividends include references to other qualifying distributions and to interest.
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) In section 704—
- (a) references to profits include references to income, reserves or other assets;
- (b) references to distribution include references to transfer or realisation (including application in discharge of liabilities); and
- (c) references to the receipt of consideration include references to the receipt of any money or money’s worth.
- (4) For the purposes of section 704 an amount received by way of dividend shall be treated as abnormal if the Board . . . or the tribunal, as the case may be, are satisfied—
- (a) in the case of a dividend at a fixed rate, that it substantially exceeds the amount which the recipient would have received if the dividend had accrued from day to day and the recipient had been entitled only to so much of the dividend as accrued while the recipient held the securities, so however that an amount shall not be treated as abnormal by virtue only of this paragraph if during the six months beginning with the purchase of the securities the recipient does not sell or otherwise dispose of, or acquire an option to sell, any of those securities or any securities similar to those securities; or
- (b) in any case, that it substantially exceeds a normal return on the consideration provided by the recipient for the relevant securities, that is to say, the securities in respect of which the dividend was received and, if those securities are derived from securities previously acquired by the recipient, the securities which were previously acquired.
- (5) For the purposes of subsection (4)(a) above securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred, and for those purposes rights guaranteed by the Treasury shall be treated as rights against the Treasury.
- (6) For the purposes of subsection (4)(b) above—
- (a) if the consideration provided by the recipient for any of the relevant securities was in excess of their market value at the time the recipient acquired them, or if no consideration was provided by the recipient for any of the relevant securities, the recipient shall be taken to have provided for those securities consideration equal to their market value at the time the recipient acquired them; and
- (b) in determining whether an amount received by way of dividend exceeds a normal return, regard shall be had to the length of time previous to the receipt of that amount that the recipient first acquired any of the relevant securities and to any dividends and other distributions made in respect of them during that time.
### CHAPTER II — TRANSFERS OF SECURITIES
### Transfers with or without accrued interest: introductory
#### Meaning of “securities”, “transfer” etc. for purposes of sections 711 to 728
##### 710
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “interest”, “transfers with or without accrued interest” etc
##### 711
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “settlement day” for purposes of sections 711 to 728
##### 712
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Transfers with or without accrued interest: charge to tax and reliefs
#### Deemed sums and reliefs
##### 713
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of deemed sums and reliefs
##### 714
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from sections 713 and 714
##### 715
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of unrealised interest
##### 716
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Variable interest rate
##### 717
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest in default
##### 718
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Unrealised interest in default
##### 719
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Transfers with or without accrued interest: supplemental
#### Nominees, trustees etc
##### 720
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Death
##### 721
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Trading stock
##### 722
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign securities: delayed remittances
##### 723
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies
##### 724
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Lloyd’s underwriters
##### 725
#### Building societies
##### 726
#### Stock lending
##### 727
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Information
##### 728
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Other transfers of securities
#### Sale and repurchase of securities
##### 729
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of income arising from securities
##### 730
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Purchase and sale of securities
#### Application and interpretation of sections 732 to 734
##### 731
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dealers in securities
##### 732
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons entitled to exemptions
##### 733
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons other than dealers in securities
##### 734
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “appropriate amount in respect of” interest
##### 735
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Miscellaneous provisions relating to securities
#### Company dealing in securities: distribution materially reducing value of holding
##### 736
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manufactured dividends: treatment of tax deducted
##### 737
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplemental
#### Power to amend sections 732, 735 and 737
##### 738
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER III — TRANSFER OF ASSETS ABROAD
#### Prevention of avoidance of income tax
##### 739
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Liability of non-transferors
##### 740
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from sections 739 and 740
##### 741
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of sections 739 to 741
##### 742
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplemental provisions
##### 743
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### No duplication of charge
##### 744
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to obtain information
##### 745
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Persons resident in the Republic of Ireland
##### 746
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### CHAPTER IV — CONTROLLED FOREIGN COMPANIES
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
##### 747
- (1) If . . . in any accounting period a company—
- (a) is resident outside the United Kingdom, and
- (b) is controlled by persons resident in the United Kingdom, and
- (c) is subject to a lower level of taxation in the territory in which it is resident,
. . . the provisions of this Chapter shall apply in relation to that accounting period.
- (1A) A company which would not, apart from this subsection, fall to be regarded as controlled by persons resident in the United Kingdom shall be taken for the purposes of this Chapter to be so controlled if—
- (a) there are two persons who, taken together, control the company;
- (b) one of those persons is resident in the United Kingdom and is a person in whose case the 40 per cent test in section 755D(3) is satisfied; and
- (c) the other is a person in whose case the 40 per cent test in section 755D(4) is satisfied.
- (1B) In determining, for the purposes of any provision of this Chapter except subsection (1)(a) above, whether a company is a person resident in the United Kingdom, section 18 of CTA 2009 (under which a company is treated as non-resident if it is so treated for double taxation relief purposes) shall be disregarded.
- (2) A company which falls within paragraphs (a) to (c) of subsection (1) above is in this Chapter referred to as a “*controlled foreign company*”.
- (3) Subject to section 748, where the provisions of this Chapter apply in relation to an accounting period of a controlled foreign company, the chargeable profits of that company for that period and its creditable tax (if any) for that period shall each be apportioned in accordance with section 752 among the persons (whether resident in the United Kingdom or not) who had an interest in that company at any time during that accounting period.
- (3A) In the case of an apportionment to a company resident in the United Kingdom which has made an application under section 751A or 751AA which has been granted, subsection (3) above has effect subject to that section.
- (4) Where, on such an apportionment of a controlled foreign company’s chargeable profits for an accounting period as is referred to in subsection (3) above, an amount of those profits is apportioned to a company resident in the United Kingdom then, subject to subsection (5) below—
- (a) a sum equal to corporation tax at the appropriate rate on that apportioned amount of profits, less the portion of the controlled foreign company’s creditable tax for that period (if any) which is apportioned to the resident company, shall be chargeable on the resident company as if it were an amount of corporation tax chargeable on that company; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
and for the purposes of paragraph (a) above “*the appropriate rate*” means the rate of corporation tax applicable to profits of that accounting period of the resident company in which ends the accounting period of the controlled foreign company which is mentioned in subsection (1) above or, if there is more than one such rate, the average rate over the whole of that accounting period of the resident company.
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Tax shall not, by virtue of subsection (4) above, be chargeable on a company resident in the United Kingdom unless, on the apportionment in question, the aggregate of—
- (a) the amount of the controlled foreign company’s chargeable profits for the accounting period in question which is apportioned to the resident company, and
- (b) any amounts of those chargeable profits which are apportioned to persons who are connected or associated with the resident company,
is at least 25 per cent. of the total of those chargeable profits.
- (5A) Where the resident company has made an application under section 751A or 751AA which has been granted, it shall be assumed for the purposes of subsection (5) above that—
- (a) each of the persons who are connected or associated with the resident company has made an application under that section to the same effect, and
- (b) all the applications have been granted.
- (6) In relation to a company resident outside the United Kingdom—
- (a) any reference in this Chapter to its chargeable profits for an accounting period is a reference to the amount which, on the assumptions in Schedule 24, would be the amount of the total profits of the company for that period on which, after allowing for any deductions available against those profits, corporation tax would be chargeable;
- (aa) any reference in this Chapter to its chargeable profits for an accounting period includes (subject to subsections (7) to (9)) income which accrues during that accounting period to the trustees of a settlement in relation to which the company is a settlor or a beneficiary; and
- (b) any reference in this Chapter to profits does not include a reference to chargeable gains but otherwise (except as provided by paragraph (a) above) has the same meaning as it has for the purposes of corporation tax.
- (7) Where there is more than one settlor or beneficiary in relation to the settlement mentioned in subsection (6)(aa), the income is to be apportioned between the company and the other settlors or beneficiaries on a just and reasonable basis.
- (8) Where income within subsection (6)(aa) is included in the chargeable profits of a company, any dividend or other distribution received by the company which derives from that income is not included in the chargeable profits of the company to the extent that it is so derived.
- (9) Any income within subsection (6)(aa) which would (apart from this subsection)—
- (a) be included in the chargeable profits of a company which is a beneficiary in relation to a settlement and apportioned under subsection (3), and
- (b) be included in the chargeable profits of a company which is a settlor in relation to the settlement and apportioned under that subsection,
is not to be included in the chargeable profits of the company which is a settlor.
#### Limitations on direction-making power
##### 748
- (1) No apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company if—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) throughout that period the company is, within the meaning of Part II of that Schedule, engaged in exempt activities; or
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) the chargeable profits of the accounting period do not exceed £50,000 or, if the accounting period is less than 12 months, a proportionately reduced amount; or
- (e) as respects the accounting period, the company is, within the meaning of regulations made by the Board for the purposes of this paragraph, resident in a territory specified in the regulations and satisfies—
- (i) such conditions with respect to its income or gains as may be so specified; and
- (ii) such other conditions (if any) as may be so specified.
- (1A) Regulations under paragraph (e) of subsection (1) above may—
- (a) make different provision for different cases or with respect to different territories;
- (b) make provision having effect in relation to accounting periods of controlled foreign companies ending not more than one year before the date on which the regulations are made; and
- (c) contain such supplementary, incidental, consequential and transitional provision as the Board may think fit.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Notwithstanding that none of paragraphs (a) to (e) of subsection (1) above applies to an accounting period of a controlled foreign company, no apportionment under section 747(3) falls to be made as regards that accounting period if it is the case that—
- (a) in so far as any of the transactions the results of which are reflected in the profits arising in that accounting period, or any two or more transactions taken together, the results of at least one of which are so reflected, achieved a reduction in United Kingdom tax, either the reduction so achieved was minimal or it was not the main purpose or one of the main purposes of that transaction or, as the case may be, of those transactions taken together to achieve that reduction, and
- (b) it was not the main reason or, as the case may be, one of the main reasons for the company’s existence in that accounting period to achieve a reduction in United Kingdom tax by a diversion of profits from the United Kingdom,
and Part IV of Schedule 25 shall have effect with respect to the preceding provisions of this subsection.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) This section is subject to section 748A.
#### Residence and interest
##### 749
- (1) Subject to subsections (2) to (4) and (6) below, in any accounting period in which a company is resident outside the United Kingdom, it shall be regarded for the purposes of this Chapter as resident in that territory in which, throughout that period, it is liable to tax by reason of domicile, residence or place of management.
- (2) If, in the case of any company,—
- (a) there are in any accounting period two or more territories falling within subsection (1) above, and
- (b) no election or designation made under paragraph (d) or (e) of subsection (3) below in relation to an earlier accounting period of the company has effect by virtue of section 749A(1) in relation to that accounting period,
subsection (3) below shall apply with respect to that company and that accounting period.
- (3) Where this subsection applies, the company shall in that accounting period be regarded for the purposes of this Chapter as resident in only one of those territories, namely—
- (a) if, throughout the accounting period, the company’s place of effective management is situated in one of those territories only, in that territory;
- (b) if, throughout the accounting period, the company’s place of effective management is situated in two or more of those territories, in that one of them in which, at the end of the accounting period, the greater amount of the company’s assets is situated;
- (c) if neither paragraph (a) nor paragraph (b) above applies, in that one of the territories falling within subsection (1) above in which, at the end of the accounting period, the greater amount of the company’s assets is situated;
- (d) if—
- (i) paragraph (a) above does not apply, and
- (ii) neither paragraph (b) nor paragraph (c) above produces one, and only one, of those territories,
in that one of them (if any) which is specified in an election made in relation to that accounting period by any one or more persons who together have a majority assessable interest in the company in that accounting period; and
- (e) if, in a case falling within paragraph (d) above, the time by which any election under that paragraph in relation to that accounting period must be made in accordance with section 749A(3)(b) expires without such an election having been made, in that one of those territories which the Board justly and reasonably designates in relation to that accounting period.
- (4) If, in the case of any company,—
- (a) there are in any accounting period two or more territories falling within subsection (1) above, and
- (b) an election or designation made under paragraph (d) or (e) of subsection (3) above in relation to an earlier accounting period of the company has effect by virtue of section 749A(1) in relation to the accounting period mentioned in paragraph (a) above,
the company shall in that accounting period be regarded for the purposes of this Chapter as resident in that one of those territories which is the subject of the election or designation.
- (5) If, in the case of any company, there is in any accounting period no territory falling within subsection (1) above, then, for the purposes of this Chapter, it shall be conclusively presumed that the company is in that accounting period resident in a territory in which it is subject to a lower level of taxation.
- (6) In any case where it becomes necessary for the purposes of subsection (3) above to determine in which of two or more territories the greater amount of a company’s assets is situated at the end of an accounting period—
- (a) account shall be taken only of those assets which, immediately before the end of that period, are situated in those territories; and
- (b) the amount of them shall be determined by reference to their market value at that time.
- (7) This section is without prejudice to the provision that may be made in regulations under section 748(1)(e).
- (8) For the purposes of this section, one or more persons together have a “majority assessable interest" in a controlled foreign company in an accounting period of the company if—
- (a) each of them has an assessable interest in the company in that accounting period; and
- (b) it is likely that, were an apportionment of the chargeable profits of the company for that accounting period made under section 747(3), the aggregate of the amounts which would be apportioned to them is greater than 50 per cent. of the aggregate of the amounts which would be apportioned to all the persons who have an assessable interest in the company in that accounting period.
- (9) For the purposes of subsection (8) above, a person has an “assessable interest" in a controlled foreign company in an accounting period of the company if he is one of the persons who it is likely would be chargeable to tax under section 747(4)(a) on an apportionment of the chargeable profits and creditable tax (if any) of the company for that accounting period under section 747(3).
- (10) For the purposes of subsection (8) and (9) above, the effect of any application under section 751A or 751AA shall be disregarded.
#### Territories with a lower level of taxation
##### 750
- (1) Without prejudice to subsection (5) of section 749, a company which, by virtue of any of subsections (1) to (4) of that section, is to be regarded as resident in a particular territory outside the United Kingdom shall be considered to be subject to a lower level of taxation in that territory if , after giving effect to subsections (1A) and (1B) below, the amount of tax (“the local tax”) which is paid under the law of that territory in respect of the profits of the company which arise in any accounting period is less than three-quarters of the corresponding United Kingdom tax on those profits.
- (1A) If in the case of that accounting period there is any income, or any income and any expenditure, of the company—
- (a) which is brought into account in determining the profits of the company in respect of which tax is paid under the law of that territory, but
- (b) which does not also fall to be brought into account in determining the chargeable profits of the company,
the local tax shall be treated for the purposes of this Chapter as reduced to what it would have been had that income and any such expenditure not been so brought into account.
- (1B) If—
- (a) under the law of that territory any tax (“the company's tax”) falls to be paid by the company in respect of profits of the company arising in that accounting period,
- (b) under that law, any repayment of tax, or any payment in respect of a credit for tax, is made to a person other than the company, and
- (c) that payment or repayment is directly or indirectly in respect of the company's tax,
the local tax shall be treated for the purposes of this Chapter as reduced (or further reduced) by the amount of that payment or repayment.
- (2) For the purposes of this Chapter, the amount of the corresponding United Kingdom tax on the profits arising in an accounting period of a company resident outside the United Kingdom is the amount of corporation tax which, on the assumptions set out in Schedule 24 and subject to subsection (3) below, would be chargeable in respect of the chargeable profits of the company for that accounting period.
- (3) In determining the amount of corporation tax which, in accordance with subsection (2) above, would be chargeable in respect of the chargeable profits of an accounting period of a company resident outside the United Kingdom—
- (a) it shall be assumed for the purposes of Schedule 24 that an apportionment under section 747(3) falls to be made as regards that period; and
- (ab) there shall be disregarded the effect of any application under section 751A or 751AA; and
- (b) there shall be disregarded so much of any relief from corporation tax in respect of income as would be attributable to the local tax and would fall to be given by virtue of any provision of Part XVIII . . . ; and
- (c) there shall be deducted from what would otherwise be the amount of that corporation tax—
- (i) any amount which (on the assumptions set out in Schedule 24) would fall to be set off against corporation tax by virtue of section 7(2); and
- (ii) any amount of income tax or corporation tax actually charged in respect of any of those chargeable profits.
- (4) The references in subsection (3)(c) above to an amount falling to be set off or an amount actually charged do not include so much of any such amount as has been or falls to be repaid to the company whether on the making of a claim or otherwise.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods and creditable tax
##### 751
- (1) For the purposes of this Chapter, an accounting period of a company resident outside the United Kingdom shall begin—
- (a) whenever the company comes under the control of persons resident in the United Kingdom;
- (b) whenever the company . . . commences to carry on business unless an accounting period of the company has previously begun as respects which an apportionment under section 747(3) falls or has fallen to be made; and
- (c) whenever an accounting period of the company ends without the company then ceasing either to carry on business or to have any source of income whatsoever.
- (2) For the purposes of this Chapter, an accounting period of a company resident outside the United Kingdom shall end if and at the time when—
- (a) the company ceases to be under the control of persons resident in the United Kingdom; or
- (b) the company becomes, or ceases to be, liable to tax in a territory; or
- (bb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) the company ceases to have any source of income whatsoever;
and for the purposes of paragraph (b) above “*liable to tax*” means liable to tax by reason of domicile, residence or place of management.
- (3) Without prejudice to subsections (1) and (2) above, sections 10(1) and (5), 11(1) and (2) and 12 of CTA 2009 shall apply for the purposes of this Chapter as they apply for the purposes of corporation tax, but with the omission of so much of those provisions as relates to a company coming or ceasing to be within the charge to corporation tax.
- (4) Where it appears to the Board that the beginning or end of any accounting period of a company resident outside the United Kingdom is uncertain, the Board may by notice specify as an accounting period of the company such period, not exceeding 12 months, as appears to the Board to be appropriate, and that period shall be treated for the purposes of this Chapter as an accounting period of the company unless the notice is subsequently amended under subsection (5) below.
- (5) If, on further facts coming to the knowledge of the Board after the giving of a notice under subsection (4) above, it appears to the Board that any accounting period specified in the notice is not the true accounting period, the Board shall amend the notice so as to specify the true period.
- (5A) Any notice under subsection (4) above, and notice of any amendment of such a notice under subsection (5) above, shall be given to every person who has an assessable interest (as defined in section 749(9)) in the company in the accounting period in question.
- (6) In this Chapter, in relation to an accounting period of a controlled foreign company as regards which an apportionment under section 747(3) falls to be made, the creditable tax means the aggregate of—
- (a) the amount of any relief from corporation tax in respect of income which (on the assumptions set out in Schedule 24 and assuming the company to be liable for corporation tax on the chargeable profits of that accounting period) would fall to be given to the company by virtue of any provision of Part XVIII in respect of foreign tax attributable to any income which is brought into account in determining those chargeable profits; and
- (b) any amount which (on those assumptions) would fall to be set off against corporation tax on those chargeable profits by virtue of section 7(2); and
- (c) the amount of any income tax or corporation tax actually charged in respect of the chargeable profits of that accounting period, less any of that tax which has been or falls to be repaid to the company, whether on the making of a claim or otherwise.
#### Apportionment of chargeable profits and creditable tax
##### 752
- (1) This section applies in any case where an apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company.
- (2) Where—
- (a) the persons who have relevant interests in the controlled foreign company at any time in the relevant accounting period have those interests by virtue only of directly or indirectly holding ordinary shares of the company,
- (b) each of those persons satisfies the condition that he is either—
- (i) resident in the United Kingdom throughout that accounting period, or
- (ii) resident in the United Kingdom at no time in that accounting period, and
- (c) no company which has an intermediate interest in the controlled foreign company at any time in the relevant accounting period has that interest otherwise than by virtue of directly or indirectly holding ordinary shares of the controlled foreign company,
subsection (3) below shall apply.
- (3) Where this subsection applies, the apportionment of the controlled foreign company’s chargeable profits and creditable tax (if any) for the relevant accounting period shall be made among the persons who have relevant interests in the company at any time in that period in direct proportion to the percentage of the issued ordinary shares of the controlled foreign company which, in accordance with section 752B, each of those relevant interests represents.
- (4) Where subsection (3) above does not apply, the apportionment of the controlled foreign company’s chargeable profits and creditable tax (if any) for the relevant accounting period shall be made on a just and reasonable basis among the persons who have relevant interests in the company at any time in that period.
#### Notices and appeals
##### 753
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessment, recovery and postponement of tax
##### 754
- (1) Subject to the following provisions of this section, the provisions of section 747(4)(a) relating to the charging of a sum as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Acts, and to any necessary modifications, all enactments applying generally to corporation tax, including those relating to company tax returns, those relating to the assessing, collecting and receiving of corporation tax, those conferring or regulating a right of appeal and those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
- (1A) Accordingly (but without prejudice to subsection (1) above) the Management Act shall have effect as if—
- (a) any reference to corporation tax included a reference to a sum chargeable under section 747(4)(a) as if it were an amount of corporation tax; and
- (b) any reference to profits of a company included a reference to an amount of chargeable profits of a controlled foreign company which falls to be apportioned to a company under section 747(3).
- (2) For the purposes of the Taxes Acts, any sum chargeable on a company under section 747(4)(a) is chargeable for the accounting period of the company in which ends that one of the controlled foreign company’s accounting periods the chargeable profits of which give rise to that sum.
- (2A) Where—
- (a) an apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company, and
- (b) the apportionment falls to be made in accordance with section 752(4) on a just and reasonable basis, and
- (c) a company tax return is made or amended using for the apportionment a particular basis adopted by the company making the return,
the Board may determine that another basis is to be used for the apportionment.
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2D) Once the Board have determined under subsection (2A) above the basis to be used for the apportionment, matters shall proceed as if that were the only basis allowed by the Tax Acts.
- (2E) A determination under subsection (2A) above may be questioned on an appeal against an amendment, made under paragraph 30 or 34(2) of Schedule 18 to the Finance Act 1998, of the company’s company tax return, but only on the ground that the basis of apportionment determined by the Board is not just and reasonable.
- (3) Subsection (3B) shall apply where any appeal—
- (a) under paragraph 34(3) of Schedule 18 to the Finance Act 1998 against an amendment of a company tax return, or
- (b) under paragraph 48 of that Schedule against a discovery assessment or discovery determination under paragraph 41 of that Schedule (including an assessment by virtue of paragraph 52 of that Schedule),
involves any question concerning the application of this Chapter in relation to any particular person, and the question is one whose resolution is likely to affect the liability of more than one person under this Chapter in respect of the controlled foreign company concerned.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) Where this subsection applies—
- (a) each of the persons whose liability under this Chapter in respect of the controlled foreign company concerned is likely to be affected by the resolution of the question shall be entitled to be a party to any proceedings;
- (b) the tribunal shall determine that question separately from any other questions in those proceedings; and
- (c) the tribunal's determination on that question shall have effect as if made in an appeal to which each of those persons was a party.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Schedule 26 shall have effect with respect to the reliefs which may be claimed by a company resident in the United Kingdom which has a liability for tax in respect of an amount of chargeable profits; and no reliefs other than those provided for by that Schedule shall be allowed against any such liability.
- (6) In any case where—
- (a) the whole or any part of the tax chargeable on a company (“the chargeable company”) by virtue of section 747(4)(a) is not paid before the date on which it is due and payable in accordance with this Act or, as the case may be, the Management Act; and
- (b) the Board serve a notice of liability to tax under this subsection on another company (“the responsible company”) which is resident in the United Kingdom and holds or has held (whether directly or indirectly) the whole or any part of the same interest in the controlled foreign company as is or was held by the chargeable company,
the whole or, as the case may be, the corresponding part of the tax chargeable on the chargeable company or, as the case may be, so much of it as remains unpaid shall be payable by the responsible company upon service of the notice.
- (7) Where a notice of liability is served under subsection (6) above—
- (a) the whole, or (as the case may be) the corresponding part, of any interest due on the tax chargeable on the chargeable company and not paid; and
- (b) any interest accruing due on that tax after the date of service,
shall be payable by the responsible company (so far as referable to tax payable by the responsible company by virtue of the notice).
- (8) In any case where—
- (a) a notice of liability is served on the responsible company under subsection (6) above, and
- (b) the relevant tax and any interest payable by the responsible company under subsection (7) above is not paid by that company before the expiry of the period of three months beginning on the date of service of the notice,
that tax and interest may, without prejudice to the right of recovery from the responsible company, be recovered from the chargeable company.
- (9) In this section “*the Taxes Acts*” has the same meaning as in the Management Act.
#### Information relating to controlled foreign companies
##### 755
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation and construction of Chapter IV
##### 756
- (1) In this Chapter—
- “*company tax return*” means a return required to be made under Schedule 18 to the Finance Act 1998;
- “*trading company*” means a company whose business consists wholly or mainly of the carrying on of a trade or trades.
- (1A) In this Chapter “*EEA territory*”, in relation to any time, means a territory which is an EEA state at that time other than the United Kingdom.
- (1B) But a territory is not to be regarded for the purposes of subsection (1A) above as an EEA state at any time if—
- (a) it is not a member State at that time, and
- (b) there are no arrangements made in relation to the territory having effect by virtue of section 173 of the Finance Act 2006 (international tax enforcement arrangements) at that time.
- (2) For the purposes of this Chapter—
- (a) section 839 applies; and
- (b) subsection (10) of section 783 applies as it applies for the purposes of that section.
- (3) The following provisions of Part XI apply for the purposes of this Chapter as they apply for the purposes of that Part—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) section 417(7) to (9);
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
@@ -10618,203 +10618,25 @@
##### 757
- (1) This Chapter applies to a disposal by any person of an asset if—
- (a) at the time of the disposal, the asset constitutes a material interest in an offshore fund which is or has at any material time been a non-qualifying offshore fund; or
- (b) at the time of the disposal, the asset constitutes an interest in a company resident in the United Kingdom or in a unit trust scheme, the trustees of which are at that time resident in the United Kingdom and at a material time after 31st December 1984 the interest was a material interest in a non-qualifying offshore fund;
and for the purpose of determining whether the asset disposed of falls within paragraph (b) above, section 127 of the 1992 Act (equation of original shares and new holding) shall have effect as it has effect for the purposes of that Act.
- (1A) But this Chapter does not apply to disposals of assets of an insurance company's long-term insurance fund.
- (2) Subject to the following provisions of this section and section 758, there is a disposal of an asset for the purposes of this Chapter if there would be such a disposal for the purposes of the 1992 Act.
- (3) Notwithstanding anything in paragraph (b) of subsection (1) of section 62 of the 1992 Act (general provisions applicable on death: no deemed disposal by the deceased) where a person dies and the assets of which he was competent to dispose include an asset which is or has at any time been a material interest in a non-qualifying offshore fund, then, for the purposes of this Chapter, other than section 758—
- (a) immediately before the acquisition referred to in paragraph (a) of that subsection, that interest shall be deemed to be disposed of by the deceased for such a consideration as is mentioned in that subsection; but
- (b) nothing in this subsection affects the determination, in accordance with subsection (1) above, of the question whether that deemed disposal is one to which this Chapter applies.
- (4) Subject to subsection (3) above, section 62 of the 1992 Act applies for the purposes of this Chapter as it applies for the purposes of that Act, and the reference in that subsection to the assets of which a deceased person was competent to dispose shall be construed in accordance with subsection (10) of that section.
- (5) Section 135 of the 1992 Act (exchange of securities for those in another company treated as not involving a disposal) does not apply for the purposes of this Chapter to the extent that—
- (a) the interest in the entity that is company A for the purposes of that section that is exchanged is or was at a material time an interest in a non-qualifying offshore fund, and
- (b) the interest in the entity that is company B for those purposes that is exchanged is not an interest in such a fund.
In a case where that section would apply apart from this subsection, the exchange in question (of interests in or of an entity that are or were at a material time interests in a non-qualifying offshore fund) shall for the purposes of this Chapter constitute a disposal of interests in the offshore fund for a consideration equal to their market value at the time of the exchange.
- (6) Section 136 of the 1992 Act (scheme of reconstruction involving issue of securities treated as exchange not involving disposal) does not apply for the purposes of this Chapter to the extent that—
- (a) the interest in the entity that is company A for the purposes of that section that is exchanged is or was at a material time an interest in a non-qualifying offshore fund, and
- (b) the interest in the entity that is company B for those purposes that is exchanged is not an interest in such a fund.
In a case where that section would apply apart from this subsection, the deemed exchange in question (of interests in or of an entity that are or were at a material time interests in a non-qualifying offshore fund) shall for the purposes of this Chapter constitute a disposal of interests in the offshore fund for a consideration equal to their market value at the time of the deemed exchange.
- (7) For the purposes of this section—
- (a) a material time, in relation to the disposal of an asset, is any time on or after the earliest date on which any relevant consideration was given for the acquisition of the asset or, if that date is earlier than 1st January 1984, any time on or after 1st January 1984; and
- (b) “*relevant consideration*” means consideration which, assuming the application to the disposal of Chapter III of Part II of the 1992 Act, would fall to be taken into account in determining the amount of the gain or loss accruing on the disposal, whether that consideration was given by or on behalf of the person making the disposal or by or on behalf of a predecessor in title of his whose acquisition cost represents, directly or indirectly, the whole or any part of the acquisition cost of the person making the disposal.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Offshore funds operating equalisation arrangements
##### 758
- (1) For the purposes of this Chapter, an offshore fund operates equalisation arrangements if, and at a time when, arrangements are in existence which have the result that where—
- (a) a person acquires by way of initial purchase a material interest in the fund at some time during a period relevant to the arrangements; and
- (b) the fund makes a distribution for a period which begins before the date of his acquisition of that interest;
the amount of that distribution which is paid to him (assuming him still to retain that interest) will include a payment of capital which is debited to an account maintained under the arrangements (“the equalisation account”) and which is determined by reference to the income which had accrued to the fund at the date of his acquisition.
- (2) For the purposes of this section, a person acquires an interest in an offshore fund by way of initial purchase if—
- (a) his acquisition is by way of subscription for or allotment of new shares, units or other interests issued or created by the fund; or
- (b) his acquisition is by way of direct purchase from the persons concerned with the management of the fund and their sale to him is made in their capacity as managers of the fund.
- (3) Without prejudice to section 757(1), this Chapter applies, subject to the following provisions of this section, to a disposal by any person of an asset if—
- (a) at the time of the disposal, the asset constitutes a material interest in an offshore fund which at that time is operating equalisation arrangements; and
- (b) the fund is not and has not at any material time (within the meaning of section 757(7)) been a non-qualifying offshore fund; and
- (c) the proceeds of the disposal do not fall to be taken into account as a trading receipt.
- (4) This Chapter does not, by virtue of subsection (3) above, apply to a disposal if—
- (a) it takes place during such a period as is mentioned in subsection (1)(a) above; and
- (b) throughout so much of that period as precedes the disposal, the income of the offshore fund concerned has been of such a nature as is referred to in paragraph 3(1) of Schedule 27.
- (5) An event which, apart from section 127 of the 1992 Act (reorganisations etc.), would constitute a disposal of an asset shall constitute such a disposal for the purpose of determining whether, by virtue of subsection (3) above, there is a disposal to which this Chapter applies.
- (6) The reference in subsection (5) above to section 127 of the 1992 Act includes a reference to that section as applied by any provision of Chapter 2 of Part 4 of that Act.
- (7) The Treasury may make provision by regulations as to the application of the provisions of this section in relation to—
- (a) a part of an umbrella fund which is treated as an offshore fund under section 756B, or
- (b) a class of interest in an offshore fund which is treated as an offshore fund under section 756C.
- (8) Regulations under subsection (7) may—
- (a) make different provision for different cases, and
- (b) include such supplementary, incidental, consequential or transitional provisions (including provisions modifying the effect of other enactments) as appear to the Treasury to be necessary or expedient.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Material interests in offshore funds
##### 759
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Subject to the following provisions of this section, a person’s interest in an offshore fund is a material interest if, at the time when he acquired the interest, it could reasonably be expected that, at some time during the period of seven years beginning at the time of his acquisition, he would be able to realise the value of the interest (whether by transfer, surrender or in any other manner).
- (3) For the purposes of subsection (2) above, a person is at any time able to realise the value of an interest if at that time he can realise an amount which is reasonably approximate to that portion which the interest represents (directly or indirectly) of the market value at that time of the assets of the fund.
- (4) For the purposes of subsections (2) and (3) above—
- (a) a person is able to realise a particular amount if he is able to obtain that amount either in money or in the form of assets to the value of that amount; and
- (b) if at any time an interest in an offshore fund has a market value which is substantially greater than the portion which the interest represents, as mentioned in subsection (3) above, of the market value at that time of the assets concerned, the ability to realise such a market value of the interest shall not be regarded as an ability to realise such an amount as is referred to in that subsection.
- (5) An interest in an offshore fund is not a material interest if—
- (a) it is an interest in respect of any loan capital or debt issued or incurred for money which, in the ordinary course of a business of banking, is lent by a person carrying on that business; or
- (b) it is a right arising under a policy of insurance.
- (6) Shares in a company that is not resident in the United Kingdom(an “overseas company”) do not constitute a material interest in an offshore fund if—
- (a) the shares are held by a company and the holding of them is necessary or desirable for the maintenance and development of a trade carried on by the company or a company associated with it; and
- (b) the shares confer at least 10 per cent. of the total voting rights in the overseas company and a right, in the event of a winding-up, to at least 10 per cent. of the assets of that company remaining after the discharge of all liabilities having priority over the shares; and
- (c) not more than ten persons hold shares in the overseas company and all the shares in that company confer both voting rights and a right to participate in the assets on a winding-up; and
- (d) at the time of its acquisition of the shares, the company had such a reasonable expectation as is referred to in subsection (2) above by reason only of the existence of—
- (i) an arrangement under which, at some time within the period of seven years beginning at the time of acquisition, that company may require the other participators to purchase its shares; or
- (ii) provisions of either an agreement between the participators or the constitution of the overseas company under which the company will be wound up within a period which is, or is reasonably expected to be, shorter than the period referred to in subsection (2) above; or
- (iii) both such an arrangement and such provisions;
and in this paragraph “*participators*” means the persons holding shares falling within paragraph (c) above.
- (7) For the purposes of subsection (6)(a) above, a company is associated with another company if one of them has control of the other within the meaning of section 416 or both of them are under the control, within the meaning of that section, of the same person or persons.
- (8) An interest in a company that is not resident in the United Kingdom is not a material interest in an offshore fund at any time when the following conditions are satisfied, namely—
- (a) that the holder of the interest has the right to have the company wound up; and
- (b) that, in the event of a winding up, the holder is, by virtue of the interest and any other interest which he then holds in the same capacity, entitled to more than 50 per cent. of the assets remaining after the discharge of all liabilities having priority over the interest or interests concerned.
- (9) The market value of any asset for the purposes of this Chapter shall be determined in like manner as it would be determined for the purposes of the 1992 Act except that, in the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(5) of that Act (meaning of “*market value*” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this Chapter.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Non-qualifying offshore funds
##### 760
- (1) For the purposes of this Chapter, an offshore fund is a non-qualifying fund except during an account period of the fund in respect of which the fund is certified by the Board as a distributing fund.
- (2) An offshore fund shall not be certified as a distributing fund in respect of any account period unless, with respect to that period, the fund pursues a full distribution policy, within the meaning of Part I of Schedule 27.
- (3) Subject to Part II of that Schedule, an offshore fund shall not be certified as a distributing fund in respect of any account period if, at any time in that period—
- (a) more than 5 per cent. by value of the assets of the fund consists of interests in other offshore funds; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) For the purposes of this Chapter, an account period of an offshore fund shall begin—
- (a) whenever the fund begins to carry on its activities; and
- (b) whenever an account period of the fund ends without the fund then ceasing to carry on its activities.
- (9) For the purposes of this Chapter, an account period of an offshore fund shall end on the first occurrence of any of the following—
- (a) the expiration of 12 months from the beginning of the period;
- (b) an accounting date of the fund or, if there is a period for which the fund does not make up accounts, the end of that period; and
- (c) the fund ceasing to carry on its activities.
- (10) For the purposes of this Chapter—
- (a) an account period of an offshore fund which is a company that is not resident in the United Kingdom shall end if, and at the time when, the company ceases to be resident outside the United Kingdom; and
- (b) an account period of an offshore fund which is a unit trust scheme of which the trustees are not resident in the United Kingdom shall end if, and at the time when, the trustees of the scheme become resident in the United Kingdom.
- (10A) For the purposes of this Chapter, in relation to—
- (a) a part of an umbrella fund which is treated as an offshore fund under section 756B, or
- (b) a class of interest in an offshore fund which is treated as an offshore fund under section 756C,
references to an account period of the offshore fund are to an account period of the umbrella fund or the main fund (as the case may be).
- (11) The provisions of Part III of Schedule 27 shall have effect with respect to the procedure for and in connection with the certification of an offshore fund as a distributing fund, and the supplementary provisions in Part IV of that Schedule shall have effect.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Charge to tax of offshore income gains
@@ -10822,111 +10644,19 @@
##### 761
- (1) If a disposal to which this Chapter applies gives rise in accordance with section 758 or Schedule 28 to an offshore income gain, then, subject to the provisions of this section, the amount of that gain—
- (a) shall be treated for all the purposes of the Tax Acts as income arising at the time of the disposal to the person making the disposal, and
- (b) shall be charged—
- (i) to income tax for the year of assessment in which the disposal is made, or
- (ii) to corporation tax , under the charge to corporation tax on income, for the accounting period in which the disposal is made.
- (1A) The income tax charged by virtue of subsection (1)(b)(i) above shall be charged on the full amount of the income treated as arising in the year of assessment.
- (2) Subject to subsection (3) below, sections 2(1), 10 and 10Bof the 1992 Act (persons chargeable to tax in respect of chargeable gains) and section 19(3)(c) of CTA 2009 shall have effect in relation to income tax or corporation tax in respect of offshore income gains as they have effect in relation to capital gains tax or corporation tax in respect of chargeable gains.
- (3) In the application of sections 10 and 10Bof the 1992 Act in accordance with subsection (2) above, paragraphs (a) and (b) of subsection (1) of section 10 (which define the assets on the disposal of which chargeable gains are taxable) shall have effect with the omission of the words “situated in the United Kingdom and” and paragraphs (a) and (b) of subsection (1) of section 10B (which make similar provision in relation to corporation tax) shall have effect with the omission of the words “situated in the United Kingdom and”.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) Subsections (1)(b) and (1A) are subject to section 762ZB (income treated as arising: non-UK domiciled individuals to whom remittance basis applies).
- (6) A charitable company shall be exempt from corporation tax in respect of an offshore income gain if the gain is applicable and applied for charitable purposes . . . .
- (6A) See section 535 of ITA 2007 for an exemption for income tax purposes for offshore income gains accruing to a charitable trust.
- (6B) If property held on charitable trusts ceases to be subject to charitable trusts and that property represents directly or indirectly an offshore income gain, the trustees shall be treated as if they had disposed of and immediately reacquired that property for a consideration equal to its market value, any gain (calculated in accordance with Schedule 28) accruing being treated as an offshore income gain not accruing to a charity.
- (6C) In this section “*charity*” and “*charitable company*” have the same meaning as in section 506 and “*market value*” has the same meaning as in the 1992 Act.
- (7) In any case where—
- (a) a disposal to which this Chapter applies is a disposal of settled property, within the meaning of the 1992 Act, and
- (b) at the time of the disposal referred to in paragraph (a) above the trustees of the settlement are neither resident nor ordinarily resident in the United Kingdom for the purposes of the 1992 Act,
subsection (1) above shall not apply in relation to any offshore income gain to which the disposal gives rise.
- (8) Nothing in subsection (7) affects the application of this section in relation to an offshore income gain treated as arising by virtue of section 762(3).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Offshore income gains accruing to persons resident or domiciled abroad
##### 762
- (1) Section 13 of the 1992 Act (chargeable gains accruing to certain non-resident companies) shall have effect in relation to offshore income gains subject to the following modifications—
- (a) for any reference to a chargeable gain there shall be substituted a reference to an offshore income gain;
- (aa) any reference to anything accruing is to be read as a reference to it arising (and similar references are to be read accordingly);
- (b) for the reference in subsection (7) to capital gains tax there shall be substituted a reference to income tax or corporation tax; and
- (c) paragraphs (b) and (c) of subsection (5) and subsection (8) shall be omitted.
- (2) If—
- (a) offshore income gains arise to the trustees of a settlement in a tax year, and
- (b) section 87 of the 1992 Act (gains of non-resident settlements) applies to the settlement for that year,
the OIG amount for the settlement for that year is the amount of the offshore income gains.
- (3) Sections 87, 87A, 87C to 90 and 96 to 98 of, and Schedule 4C to, the 1992 Act apply in relation to OIG amounts as if—
- (a) references to section 2(2) amounts (except those in paragraph 7B(2)(b) and (4) of Schedule 4C) were to OIG amounts,
- (b) references to chargeable gains (except the one in paragraph 1(5) of Schedule 4C) were to offshore income gains,
- (c) references to anything accruing were to it arising (and similar references, except the one in paragraph 1(5) of Schedule 4C, were read accordingly), and
- (d) sections 87(4), 88(2) to (5), 89(4) and 97(6) and paragraphs 1(3A), 3 to 7, 8AA, 12 and 13 of Schedule 4C were omitted.
- (4) Section 87A of the 1992 Act applies for a tax year by virtue of subsection (3) before it applies for that year otherwise than by virtue of that subsection.
- (5) If, by virtue of subsection (1) or (3), offshore income gains are treated as arising to a person, for the purposes of section 761 as it applies in relation to the offshore income gains treat the person as having made the disposal in question.
- (6) To the extent that an offshore income gain is treated, by virtue of subsection (1) or (3), as having arisen to any person resident or ordinarily resident in the United Kingdom, that gain shall not be deemed to be the income of any individual for the purposes of . . . any provision of Chapter 5 of Part 5 of ITTOIA 2005.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deduction of offshore income gain in determining capital gain
##### 763
- (1) The provisions of this section apply where a disposal to which this Chapter applies gives rise to an offshore income gain; and, if that disposal also constitutes the disposal of the interest concerned for the purposes of the 1992 Act, then that disposal is in the following provisions of this section referred to as the 1992 Act disposal.
- (2) So far as relates to an offshore income gain which arises on a material disposal (within the meaning of Part I of Schedule 28), subsections (3) and (4) below shall have effect in relation to the 1992 Act disposal in substitution for section 37(1) of that Act (deduction of consideration chargeable to tax on income).
- (3) Subject to the following provisions of this section, in the computation of the gain accruing on the 1992 Act disposal, a sum equal to the offshore income gain shall be deducted from the sum which would otherwise constitute the amount or value of the consideration for the disposal.
- (4) Where the 1992 Act disposal is of such a nature that, by virtue of section 42 of that Act (part disposals) an apportionment falls to be made of certain expenditure, no deduction shall be made by virtue of subsection (3) above in determining, for the purposes of the fraction in subsection (2) of that section, the amount or value of the consideration for the disposal.
- (5) If the 1992 Act disposal forms part of a transfer to which section 162 of that Act applies (roll-over relief on transfer of business in exchange wholly or partly for shares) then, for the purposes of subsection (4) of that section (determination of the amount of the deduction from the gain on the old assets) “B” in the fraction in that subsection (the value of the whole of the consideration received by the transferor in exchange for the business) shall be taken to be what it would be if the value of the consideration other than shares so received by the transferor were reduced by a sum equal to the offshore income gain.
- (6) Where the disposal to which this Chapter applies constitutes such a disposal by virtue of section 757(5) or (6) or 758(5), the 1992 Act shall have effect as if an amount equal to the offshore income gain to which the disposal gives rise were given (by the person making the exchange concerned) as consideration for the new holding, within the meaning of section 128 of that Act (consideration given or received for new holding on a reorganisation).
- (6A) Where the disposal to which this Chapter applies constitutes such a disposal by virtue of section 762A (exchange of interests of different classes), the 1992 Act shall have effect as if an amount equal to the offshore income gain to which that disposal gives rise were given (by the person making the exchange) as consideration for the new holding (within the meaning of section 128 of that Act (consideration given or received for new holding on a reorganisation)).
- (7) In any case where—
- (a) a disposal to which this Chapter applies by virtue of subsection (3) of section 758 is made otherwise than to the offshore fund concerned or the persons referred to in subsection (2)(b) of that section; and
- (b) subsequently, a distribution which is referable to the asset disposed of is paid either to the person who made the disposal or to a person connected with him; and
- (c) the disposal gives rise (in accordance with Part II of Schedule 28) to an offshore income gain;
then, for the purposes of the Tax Acts, the amount of the first distribution falling within paragraph (b) above shall be taken to be reduced or, as the case may be, extinguished by deducting therefrom an amount equal to the offshore income gain referred to in paragraph (c) above and, if that amount exceeds the amount of that first distribution, the balance shall be set against the second and, where necessary, any later distribution falling within paragraph (b) above, until the balance is exhausted.
- (8) For the purposes of subsection (7)(b) above, whether the person who made the disposal is connected with another person is determined in accordance with section 839.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Offshore income gains of trustees
@@ -13601,7 +13331,7 @@
- (c) where in connection with a scheme of reconstruction . . . , a company issues shares or securities to persons holding shares or securities in a second company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings in the second company, without those persons becoming liable to give any consideration, a holding of the shares or securities in the second company and a corresponding holding of the shares or securities so issued shall be regarded as the same holding.
- (3A) References in this section to income do not include income treated as arising under section 761(1)(a).
- (3A) References in this section to income do not include income treated as arising under regulation 18(1) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001).
- (4) In this section “*company*” and “*shares*” shall be construed in accordance with sections 99 and 288 of the 1992 Actand “*scheme of reconstruction*” has the same meaning as in section 136 of that Act.
@@ -20176,7 +19906,7 @@
## SCHEDULE 31
#### Application of lower rate to income from savings and distributions.
#### The charge to income tax.
##### 1A
@@ -20186,10900 +19916,10778 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Advance corporation tax and qualifying distributions.
##### 8A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 11AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13ZA
- (1) In determining for the purposes of section 13(7) whether one body corporate is a 51 per cent subsidiary of another, that other shall be treated as not being the owner of any share capital—
- (a) which it owns indirectly, and
- (b) which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.
- (2) Notwithstanding that at any time a company (“*the subsidiary company*”) is a 51 per cent subsidiary of another company (“*the parent company*”) it shall not be treated at that time as such a subsidiary for the purposes of section 13(7) unless, additionally, at that time—
- (a) the parent company would be beneficially entitled to more than 50 per cent of any profits available for distribution to equity holders of the subsidiary company, and
- (b) the parent company would be beneficially entitled to more than 50 per cent of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.
- (3) For the purposes of section 13(7) and this section—
- (a) “*trading or holding company*” means a trading company or a company the business of which consists wholly or mainly in the holding of shares or securities of trading companies that are its 90 per cent subsidiaries;
- (b) “*trading company*” means a company whose business consists wholly or mainly of the carrying on of a trade or trades;
- (c) a company is owned by a consortium if 75 per cent or more of the ordinary share capital of the company is beneficially owned between them by companies of which none—
- (i) beneficially owns less than 5 per cent of that capital,
- (ii) would be beneficially entitled to less than 5 per cent of any profits available for distribution to equity holders of the company, or
- (iii) would be beneficially entitled to less than 5 per cent of any assets of the company available for distribution to its equity holders on a winding up,
and those companies are called the members of the consortium.
- (4) Schedule 18 (equity holders and assets etc. available for distribution) applies for the purposes of subsections (2) and (3)(c) above as it applies for the purposes of section 413(7).
##### 13AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13A
- (1) A close company is for the purposes of section 13(1) . . . a “*close investment-holding company*” unless it complies with subsection (2) below.
- (2) A company (“*the relevant company*”) complies with this subsection in any accounting period if throughout that period it exists wholly or mainly for any one or more of the following purposes—
- (a) the purpose of carrying on a trade or trades on a commercial basis,
- (b) the purpose of making investments in land or estates or interests in land in cases where the land is, or is intended to be, let to persons other than—
- (i) any person connected with the relevant company, or
- (ii) any person who is the spouse or civil partner of an individual connected with the relevant company, or is a relative, or the spouse or civil partner of a relative, of such an individual or of the spouse or civil partner of such an individual,
- (c) the purpose of holding shares in and securities of, or making loans to, one or more companies each of which is a qualifying company or a company which—
- (i) is under the control of the relevant company or of a company which has control of the relevant company, and
- (ii) itself exists wholly or mainly for the purpose of holding shares in or securities of, or making loans to, one or more qualifying companies,
- (d) the purpose of co-ordinating the administration of two or more qualifying companies,
- (e) the purpose of a trade or trades carried on on a commercial basis by one or more qualifying companies or by a company which has control of the relevant company, and
- (f) the purpose of the making, by one or more qualifying companies or by a company which has control of the relevant company, of investments as mentioned in paragraph (b) above.
- (3) For the purposes of subsection (2) above, a company is a “*qualifying company*”, in relation to the relevant company, if it—
- (a) is under the control of the relevant company or of a company which has control of the relevant company, and
- (b) exists wholly or mainly for either or both of the purposes mentioned in subsection (2)(a) or (b) above.
- (4) Where a company is wound up, it shall not be treated as failing to comply with subsection (2) above in the accounting period that (by virtue of subsection (7) of section 12) begins with the time which is for the purposes of that subsection the commencement of the winding up, if it complied with subsection (2) above in the accounting period that ends with that time.
- (5) In this section—
- “*control*” shall be construed in accordance with section 416, and
- “*relative*” has the meaning given by section 839(8).
- (6) Section 839 shall apply for the purposes of this section.
#### Tax treatment of receipts and outgoings on sale of land.
##### 21A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 21B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 21C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule E.
##### 31ZB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31ZC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule A.
##### 8A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 11AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13ZA
- (1) In determining for the purposes of section 13(7) whether one body corporate is a 51 per cent subsidiary of another, that other shall be treated as not being the owner of any share capital—
- (a) which it owns indirectly, and
- (b) which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.
- (2) Notwithstanding that at any time a company (“*the subsidiary company*”) is a 51 per cent subsidiary of another company (“*the parent company*”) it shall not be treated at that time as such a subsidiary for the purposes of section 13(7) unless, additionally, at that time—
- (a) the parent company would be beneficially entitled to more than 50 per cent of any profits available for distribution to equity holders of the subsidiary company, and
- (b) the parent company would be beneficially entitled to more than 50 per cent of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.
- (3) For the purposes of section 13(7) and this section—
- (a) “*trading or holding company*” means a trading company or a company the business of which consists wholly or mainly in the holding of shares or securities of trading companies that are its 90 per cent subsidiaries;
- (b) “*trading company*” means a company whose business consists wholly or mainly of the carrying on of a trade or trades;
- (c) a company is owned by a consortium if 75 per cent or more of the ordinary share capital of the company is beneficially owned between them by companies of which none—
- (i) beneficially owns less than 5 per cent of that capital,
- (ii) would be beneficially entitled to less than 5 per cent of any profits available for distribution to equity holders of the company, or
- (iii) would be beneficially entitled to less than 5 per cent of any assets of the company available for distribution to its equity holders on a winding up,
and those companies are called the members of the consortium.
- (4) Schedule 18 (equity holders and assets etc. available for distribution) applies for the purposes of subsections (2) and (3)(c) above as it applies for the purposes of section 413(7).
##### 13AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 13A
- (1) A close company is for the purposes of section 13(1) . . . a “*close investment-holding company*” unless it complies with subsection (2) below.
- (2) A company (“*the relevant company*”) complies with this subsection in any accounting period if throughout that period it exists wholly or mainly for any one or more of the following purposes—
- (a) the purpose of carrying on a trade or trades on a commercial basis,
- (b) the purpose of making investments in land or estates or interests in land in cases where the land is, or is intended to be, let to persons other than—
- (i) any person connected with the relevant company, or
- (ii) any person who is the spouse or civil partner of an individual connected with the relevant company, or is a relative, or the spouse or civil partner of a relative, of such an individual or of the spouse or civil partner of such an individual,
- (c) the purpose of holding shares in and securities of, or making loans to, one or more companies each of which is a qualifying company or a company which—
- (i) is under the control of the relevant company or of a company which has control of the relevant company, and
- (ii) itself exists wholly or mainly for the purpose of holding shares in or securities of, or making loans to, one or more qualifying companies,
- (d) the purpose of co-ordinating the administration of two or more qualifying companies,
- (e) the purpose of a trade or trades carried on on a commercial basis by one or more qualifying companies or by a company which has control of the relevant company, and
- (f) the purpose of the making, by one or more qualifying companies or by a company which has control of the relevant company, of investments as mentioned in paragraph (b) above.
- (3) For the purposes of subsection (2) above, a company is a “*qualifying company*”, in relation to the relevant company, if it—
- (a) is under the control of the relevant company or of a company which has control of the relevant company, and
- (b) exists wholly or mainly for either or both of the purposes mentioned in subsection (2)(a) or (b) above.
- (4) Where a company is wound up, it shall not be treated as failing to comply with subsection (2) above in the accounting period that (by virtue of subsection (7) of section 12) begins with the time which is for the purposes of that subsection the commencement of the winding up, if it complied with subsection (2) above in the accounting period that ends with that time.
### Connected persons
##### 33A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 33B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 37A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 37(4) and reductions in receipts under ITTOIA 2005
##### 42A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Rent factoring
##### 43A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 51AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 51A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 51B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments for restrictive undertakings
##### 56A
- (1) This section applies where there is an arrangement under which—
- (a) there is a right to receive an amount (with or without interest)
in pursuance of a deposit of money,
- (b) when the right comes into existence there is no certificate of deposit in respect of the right, and
- (c) the person for the time being entitled to the right is entitled to call for the issue of a certificate of deposit in respect of the right.
- (2) In such a case—
- (a) the right shall be treated as not falling within section 56(1)(b), and
- (b) if there is a disposal or exercise of the right before such time (if any) as a certificate of deposit is issued in respect of it, section 56(2) shall apply to it by virtue of this paragraph.
- (3) In the application of section 56 by virtue of this section—
- (a) subsection (2) shall have effect as if the words from “(whether” to “person)” read “(whether by the person originally entitled to the right or by some other person)”, and
- (b) subsection (3) shall have effect as if the words “stated in a certificate of deposit” read “under an arrangement”.
- (4) In this section “*certificate of deposit*” has the meaning given by section 56(5).
##### 62A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 63A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 65A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 68A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 68B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 68C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 70A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 75A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Costs of establishing share option or profit sharing schemes: relief.
##### 75B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against determinations under sections 34 to 36 or Chapter 4 of Part 3 of ITTOIA 2005.
##### 76A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 76B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deep discount securities.
##### 79A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 79B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 82A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 82B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 83A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 84A
- (1) Subsection (2) below applies where—
- (a) a company incurs expenditure on establishing a share option scheme which the Board approve and under which no employee or director obtains rights before such approval is given, or
- (b) a company incurs expenditure on establishing a profit sharing scheme which the Board approve and under which the trustees acquire no shares before such approval is given.
- (2) In such a case the expenditure—
- (a) shall be deducted in computing for the purposes of . . . Part 2 of ITTOIA 2005 the profits of a trade carried on by the company, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) In a case where—
- (a) subsection (2) above applies, and
- (b) the approval is given after the end of the period of nine months beginning with the day following the end of the period of account in which the expenditure is incurred,
for the purpose of applying subsection (2) above the expenditure shall be treated in accordance with subsection (3ZA) below.
- (3ZA) Where this subsection applies—
- (a) in applying subsection (2)(a) above, the expenditure shall be treated as incurred in the period of account in which the approval is given (and not the period of account mentioned in subsection (3)(b) above),
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) In this section, “*share option scheme*” means—
- (a) an SAYE option scheme within the meaning of the SAYE code (see section 516(4) of ITEPA 2003 (approved SAYE option schemes)), or
- (b) a CSOP scheme within the meaning of the CSOP code (see section 521(4) of that Act (approved CSOP schemes)).
- (4) References in this section to approving are to approving under Schedule 9 to this Act or under Schedule 3 or 4 to ITEPA 2003 (approved SAYE option schemes and approved CSOP schemes).
- (5) This section applies where the expenditure is incurred on or after 1st April 1991.
##### 85A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 85B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 86A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Computation of income tax where no profits in year of assessment.
##### 87A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definitions.
##### 88A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 88B
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##### 88C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 88D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 91A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 91B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 91BA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 91C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Payments for restrictive undertakings
##### 76ZA
- (1) This section applies if a payment—
- (a) is treated as earnings of an employee by virtue of section 225 of ITEPA 2003 (payments for restrictive undertakings), and
- (b) is made, or treated as made for the purposes of section 226 of that Act (valuable consideration given for restrictive undertakings), by a company in relation to which section 76 applies.
- (2) The payment is treated as expenses payable which fall to be brought into account at Step 1 in section 76(7), so far as it otherwise would not be.
### Seconded employees
##### 76ZB
- (1) This section applies if a company to which section 76 applies makes the services of a person employed for the purposes of the company's life assurance business available to—
- (a) a charity, or
- (b) an educational establishment,
on a basis that is stated and intended to be temporary.
- (2) Expenses of the employer that are attributable to the employee's employment during the period of the secondment are treated as expenses payable which fall to be brought into account at Step 1 in section 76(7).
- (3) In this section—
- “*educational establishment*” has the same meaning as in section 70 of CTA 2009, and
- “*the period of the secondment*” means the period for which the employee's services are made available to the charity or educational establishment.
### Counselling and retraining expenses
##### 76ZC
- (1) This section applies if—
- (a) a company carrying on life assurance business (“*the employer*”) incurs counselling expenses,
- (b) the expenses are incurred in relation to a person (“*the employee*”) who holds or has held an office or employment under the employer, and
- (c) the relevant conditions are met.
- (2) The expenses are brought into account under section 76 as expenses payable (so far as they otherwise would not be).
- (3) In this section “*counselling expenses*” means expenses incurred—
- (a) in the provision of services to the employee in connection with the cessation of the office or employment,
- (b) in the payment or reimbursement of fees for such provision, or
- (c) in the payment or reimbursement of travelling expenses in connection with such provision.
- (4) In this section “*the relevant conditions*” means—
- (a) conditions A to D for the purposes of section 310 of ITEPA 2003 (employment income exemptions: counselling and other outplacement services), and
- (b) in the case of travel expenses, condition E for those purposes.
##### 76ZD
- (1) This section applies if—
- (a) a company carrying on life assurance business (“*the employer*”) incurs training course expenses,
- (b) they are incurred in relation to a person (“*the employee*”) who holds or has held an office or employment under the employer, and
- (c) the relevant conditions are met.
- (2) The expenses are brought into account under section 76 as expenses payable (so far as they otherwise would not be).
- (3) In this section—
- “*retraining course expenses*” means expenses incurred in the payment or reimbursement of retraining course expenses within the meaning given by section 311(2) of ITEPA 2003, and
- “*the relevant conditions*” means—the conditions in subsections (3) and (4) of section 311 of ITEPA 2003 (employment income exemptions: retraining courses), andin the case of travel expenses, the conditions in subsection (5) of that section.
##### 76ZE
- (1) This section applies if—
- (a) an employer's liability to corporation tax for an accounting period is determined on the assumption that it is entitled by virtue of section 76ZD to bring an amount into account in determining the amount of a deduction to be made under section 76, and
- (b) without section 76ZD the employer would not have been so entitled.
- (2) If, subsequently—
- (a) the condition in section 311(4)(a) of ITEPA 2003 is not met because of the employee's failure to begin the course within the period of one year after ceasing to be employed, or
- (b) the condition in section 311(4)(b) of ITEPA 2003 is not met because of the employee's continued employment or re-employment,
an assessment of an amount or further amount of corporation tax due as a result of the condition not being met may be made under paragraph 41 of Schedule 18 to FA 1998.
- (3) Such an assessment must be made before the end of the period of 6 years immediately following the end of the accounting period in which the failure to meet the condition occurred.
- (4) If subsection (2) applies, the employer must give an officer of Revenue and Customs a notice containing particulars of—
- (a) the employee's failure to begin the course,
- (b) the employee's continued employment, or
- (c) the employee's re-employment,
within 60 days of coming to know of it.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Redundancy payments etc
##### 76ZF
- (1) Sections 76ZG to 76ZI apply if—
- (a) a company to which section 76 applies (“*the employer*”) makes a redundancy payment or an approved contractual payment to another person (“*the employee*”), and
- (b) the payment is in respect of the employee's employment wholly in the employer's life assurance business or partly in the employer's life assurance business and partly in one or more other capacities.
- (2) For the purposes of this section and sections 76ZG to 76ZH “*redundancy payment*” means a redundancy payment payable under—
- (a) Part 11 of the Employment Rights Act 1996, or
- (b) Part 12 of the Employment Rights (Northern Ireland) Order 1996.
- (3) For the purposes of this section and those sections—
- “*contractual payment*” means a payment which, under an agreement, an employer is liable to make to an employee on the termination of the employee's contract of employment, and
- a contractual payment is “*approved*” if, in respect of that agreement, an order is in force under—section 157 of the Employment Rights Act 1996, orArticle 192 of the Employment Rights (Northern Ireland) Order 1996.
##### 76ZG
- (1) This section applies if the payment is in respect of the employee's employment wholly in the employer's life assurance business.
- (2) The payment is treated as expenses payable which fall to be brought into account at Step 1 in section 76(7), so far as it otherwise would not be.
- (3) The amount brought into account by virtue of this section for an approved contractual payment must not exceed the amount which would have been due to the employee if a redundancy payment had been payable.
- (4) If the payment is referable to an accounting period beginning after the business has permanently ceased to be carried on, it is treated as referable to the last accounting period in which the business was carried on.
##### 76ZH
- (1) This section applies if the payment is in respect of the employee's employment with the employer—
- (a) partly in the employer's life assurance business, and
- (b) partly in one or more other capacities.
- (2) The amount of the redundancy payment, or the amount which would have been due if a redundancy payment had been payable, is to be apportioned on a just and reasonable basis between—
- (a) the employment in the life assurance business, and
- (b) the employment in the other capacities.
- (3) The part of the payment apportioned to the employment in the life assurance business is treated as a payment in respect of the employee's employment wholly in the life assurance business for the purposes of section 76ZG.
##### 76ZI
- (1) This section applies if the employer's business, or part of it, ceases (permanently) to be carried on and the employer makes a payment to the employee in addition to—
- (a) the redundancy payment, or
- (b) if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.
- (2) If—
- (a) the additional payment would not otherwise be regarded as expenses payable for the purposes of section 76, but
- (b) that is only because the business, or the part of the business, has ceased to be carried on,
the additional payment is regarded as expenses payable for the purposes of section 76.
- (3) So far as the additional payment would, apart from this subsection, be regarded as expenses payable for the purposes of Step 5 in subsection (7) of section 76, it is not to be so regarded for the purposes of that subsection (or of subsection (2) above so far as relating to section 76).
- (4) The amount treated under this section as expenses payable for the purposes of section 76 is limited to 3 times the amount of—
- (a) the redundancy payment, or
- (b) if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.
- (5) If the payment is referable to an accounting period beginning after the business or the part of the business has ceased to be carried on, it is treated as referable to the last accounting period in which the business, or the part concerned, was carried on.
##### 76ZJ
- (1) This section applies if—
- (a) a redundancy payment or an approved contractual payment is payable by a company to which section 76 applies (“*the employer*”), and
- (b) a payment to which subsection (2) applies is made in respect of the payment.
- (2) This subsection applies to—
- (a) payments made by the Secretary of State under section 167 of the Employment Rights Act 1996, and
- (b) payments made by the Department for Employment and Learning under Article 202 of the Employment Rights (Northern Ireland) Order 1996.
- (3) So far as the employer reimburses the Secretary of State or Department for the payment, sections 76ZG to 76ZI apply as if the payment were—
- (a) a redundancy payment, or
- (b) an approved contractual payment,
made by the employer.
### Contributions to local enterprise organisations or urban regeneration companies
##### 76ZK
- (1) This section applies if a company to which section 76 applies (“*the contributor*”) incurs expenses in making a contribution (whether in cash or in kind)—
- (a) to a local enterprise organisation, or
- (b) to an urban regeneration company.
- (2) The expenses are treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 1 in section 76(7).
- (3) But if, in connection with the making of the contribution, the contributor or a connected person—
- (a) receives a disqualifying benefit of any kind, or
- (b) is entitled to receive such a benefit,
the amount treated in accordance with subsection (2) is restricted to the amount of the expenses less the value of the benefit.
- (4) For this purpose it does not matter whether a person receives, or is entitled to receive, the benefit—
- (a) from the local enterprise organisation or urban regeneration company concerned, or
- (b) from anyone else.
- (5) Subsection (6) applies if—
- (a) an amount has been brought into account in accordance with subsection (2), and
- (b) the contributor or a connected person receives a disqualifying benefit that is in any way attributable to the contribution.
- (6) The contributor is to be treated as receiving, when the benefit is received, an amount—
- (a) which is equal to the value of the benefit (so far as not brought into account in determining the amount of the deduction), and
- (b) to which the charge to corporation tax on income applies.
- (7) In this section—
- “*disqualifying benefit*” means a benefit the expenses of obtaining which, if incurred by the contributor directly in a transaction at arm's length, would not be expenses payable for the purposes of section 76,
- “*local enterprise organisation*” has the meaning given by section 83 of CTA 2009,
- “*urban regeneration company*” has the meaning given by section 86 of CTA 2009.
- (8) Section 839 (“connected person”) applies for the purposes of subsections (3) and (5).
### Unpaid remuneration
##### 76ZL
- (1) This section applies if—
- (a) an amount is charged in respect of employees' remuneration in the accounts for a period of a company to which section 76 applies,
- (b) the amount would apart from this section be brought into account under section 76 as expenses payable, and
- (c) the remuneration is not paid before the end of the period of 9 months immediately following the end of the period of account.
- (2) If the remuneration is paid after the end of that period of 9 months, the amount is brought into account for the period of account in which it is paid.
- (3) But—
- (a) subsection (2) is subject to section 86 of FA 1989 (spreading of relief for acquisition expenses), and
- (b) in interpreting that section the remuneration is treated as expenses payable which fall to be included at Step 1 in section 76(7) for the period of account in which the remuneration is paid.
- (4) The amount is not brought into account under section 76 as expenses payable if it is not paid.
##### 76ZM
- (1) For the purposes of section 76ZL an amount charged in the accounts in respect of employees' remuneration includes an amount for which provision is made in the accounts with a view to its becoming employees' remuneration.
- (2) For the purposes of section 76ZL it does not matter whether an amount is charged for—
- (a) particular employments, or
- (b) employments generally.
- (3) If the profits of the company are calculated before the end of the 9 month period mentioned in section 76ZL(1)(c)—
- (a) it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but
- (b) if the remuneration is subsequently paid before the end of that period, nothing in this subsection prevents the calculation being revised and any tax return being amended accordingly.
- (4) For the purposes of this section and section 76ZL remuneration is paid when it—
- (a) is treated as received by an employee for the purposes of ITEPA 2003 by section 18 or 19 of that Act (receipt of money and non-money earnings), or
- (b) would be so treated if it were not exempt income.
- (5) In this section and section 76ZL—
- “*employee*” includes an office-holder and “*employment*” therefore includes an office, and
- “*remuneration*” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of ITEPA 2003.
### Car or motor cycle hire
##### 76ZN
- (1) Subsection (2) applies if—
- (a) in calculating the corporation tax to which a company is liable for an accounting period, an amount representing expenses incurred on the hiring of a car . . . can be brought into account under section 76 as expenses payable, and
- (b) the car is not—
- (i) a car that is first registered before 1 March 2001,
- (ii) a car that has low CO₂ emissions (as defined in section 104AA of the Capital Allowances Act),
- (iii) a car that is electrically propelled (as defined in section 268B of that Act), or
- (iv) a qualifying hire car.
- (1A) Subsection (2) does not apply if condition A or condition B in section 58A of CTA 2009 (short-term hiring in and long-term hiring out) is met.
- (2) The amount that would otherwise be capable of being brought into account as expenses payable is reduced by 15%.
- (3) Subsection (4) applies if an amount is reduced as a result of subsection (2), or a corresponding provision, and—
- (a) subsequently—
- (i) there is a rebate (however described) of the hire charges, or
- (ii) a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency agreement, and
- (b) an amount is brought into account in respect of the rebate or release.
- (4) For the purposes of subsection (3)(b) an amount is brought into account in respect of a rebate of hire charges or the release of a debt if—
- (a) the amount of a reversal representing the rebate or release falls to be deducted under Step 4 in section 76(7), or
- (b) (in the case of a rebate of hire charges) an amount representing the rebate is chargeable under section 85(1) of the Finance Act 1989 (c. 26).
- (5) The amount that would otherwise be deductible as mentioned in subsection (4)(a) or chargeable as mentioned in subsection (4)(b) is reduced by 15%.
- (6) In this section “*corresponding provision*” means—
- (a) section 56(2) of CTA 2009 (car . . . hire: trade profits and property income),
- (b) section 1251(2) of CTA 2009 (car . . . hire: companies with investment business), and
- (c) section 48(2) of ITTOIA 2005 (car . . . hire: trade profits and property income).
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In this section “*car . . .*” and “*qualifying hire car . . .*” have the meanings given by section 57 of CTA 2009.
- (9) For the purposes of section 50B of ITTOIA 2005 and section 58B of CTA 2009 (connected persons: application of restrictions), this section is to be treated as if it were part of section 56 of CTA 2009.
##### 76ZO
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 95ZA
- (1) If the total amount of relevant distributions received by a company in an accounting period exceeds £50,000, those distributions are to be taken into account in calculating for corporation tax purposes the profits of the company in that period (and accordingly section 130(2) of CTA 2009 does not apply in relation to those distributions).
- (2) A company (“company A”) receives a “relevant distribution” if—
- (a) it receives a distribution made by a company . . . (“company B”),
- (b) the value of the shares or stock in respect of which the distribution is made (“the holding”) is materially reduced by reason of the distribution,
- (c) a profit on the sale of the holding (to anyone other than company B) would be taken into account in calculating company A's profits in respect of relevant insurance business, and
- (d) either—
- (i) the holding amounts to, or is an ingredient in a holding amounting to, 10% of all holdings of the same class in company B, or
- (ii) the period between the acquisition by company A of the holding and that company first taking steps to dispose of the holding does not exceed 30 days.
- (3) In this section “*relevant insurance business*” means any kind of insurance business other than life assurance business.
- (4) Section 177(7) of TCGA 1992 (provision supplementing provision corresponding to subsection (2)(d)(i) above) applies for the purposes of subsection (2)(d)(i).
- (5) Section 731(4) below (interpretation of “taking steps to dispose of securities”) applies for the purposes of subsection (2)(d)(ii) as if the reference to the securities were to the holding.
##### 95A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Relief for post-cessation expenditure
##### 109A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Change of residence
##### 110A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of insurance companies
### Limited liability partnerships
##### 118ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZB
Section 118 has effect in relation to a member of a limited liability partnership as in relation to a limited partner, but subject to sections 118ZC and 118ZD.
##### 118ZC
- (1) Subsection (3) of section 118 does not have effect in relation to a member of a limited liability partnership.
- (2) But, for the purposes of . . . section 118, such a member’s contribution to a trade at any time (“*the relevant time*”) is the greater of—
- (a) the amount subscribed by it, and
- (b) the amount of its liability on a winding up.
- (3) The amount subscribed by a member of a limited liability partnership is the amount which it has contributed to the limited liability partnership as capital, less so much of that amount (if any) as—
- (a) it has previously, directly or indirectly, drawn out or received back,
- (b) it so draws out or receives back during the period of five years beginning with the relevant time,
- (c) it is or may be entitled so to draw out or receive back at any time when it is a member of the limited liability partnership, or
- (d) it is or may be entitled to require another person to reimburse to it.
- (4) The amount of the liability of a member of a limited liability partnership on a winding up is the amount which—
- (a) it is liable to contribute to the assets of the limited liability partnership in the event of the partnership's being wound up, and
- (b) it remains liable so to contribute for the period of at least five years beginning with the relevant time (or until the partnership is wound up, if that happens before the end of that period).
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZD
- (1) Where amounts relating to a trade carried on by a member of a limited liability partnership are, in any one or more accounting periods, prevented from being given or allowed by section . . . 118 as it applies otherwise than by virtue of this section (the member's“total unrelieved loss”), subsection (2) applies in each subsequent accounting period in which—
- (a) the member carries on the trade as a member of the limited liability partnership, and
- (b) any of the member's total unrelieved loss remains outstanding.
- (2) Sections 393A(1) and 403 (and section 118 as it applies in relation to those sections) shall have effect in the subsequent accounting period as if—
- (a) any loss sustained or incurred by the member in the trade in that accounting period were increased by an amount equal to so much of the member's total unrelieved loss as remains outstanding in that period, or
- (b) (if no loss is so sustained or incurred) a loss of that amount were so sustained or incurred.
- (3) To ascertain whether any (and, if so, how much) of a member’s total unrelieved loss remains outstanding in the subsequent accounting period, deduct from the amount of the member's total unrelieved loss the aggregate of—
- (a) any relief given under any provision of the Corporation Tax Acts (otherwise than as a result of subsection (2)) in respect of the member's total unrelieved loss in that or any previous accounting period, and
- (b) any amount given or allowed in respect of the member's total unrelieved loss as a result of subsection (2) in any previous accounting period (or which would have been so given or allowed had a claim been made).
### Non-active general partners and non-active members of limited liability partnerships
##### 118ZE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZF
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amounts reversing expenses of management deducted: charge to tax
##### 118ZG
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZH
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZI
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 18ZJ
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZK
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Partnerships exploiting films
##### 118ZL
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZM
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Partners: meaning of “contribution to the trade”
#### Levies and repayments under the Financial Services and Markets Act 2000.
##### 118ZN
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZO
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Chapter VIIA — Paying and collecting agents
##### 118A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Levies and repayments under the Financial Services and Markets Act 2000.
##### 126A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 127A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 129A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 129B
- (1) The income which, as income deriving from investments of a description specified in any of the relevant provisions, is eligible for relief from tax by virtue of that provision shall be taken to include any relevant stock lending fee.
- (2) For the purposes of this section the relevant provisions are sections 613(4) and 614(3) and section 186 of the Finance Act 2004.
- (3) In this section “*relevant stock lending fee*”, in relation to investments of any description, means any amount, in the nature of a fee, which is payable in connection with any stock lending arrangement relating to investments which, but for any transfer under the arrangement, would be investments of that description.
- (4) In this section “*stock lending arrangement*” has the same meaning as in section 263B of the 1992 Act.
#### Payments to trustees of approved profit sharing schemes.
#### Procedure for making election.
#### Company reconstructions without a change of ownership.
##### 140A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Aggregation of wife’s income with husband’s.
##### 144A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 146A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 151A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155ZB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cars available for private use.
##### 156A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 157A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159AC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 161A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 161B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from tax.
#### Company reconstructions involving business of leasing plant or machinery
##### 177A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 177B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Contributions in respect of share option gains
#### Substitution of security: supplemental.
##### 187A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Removal expenses and benefits
##### 191A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 191B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 192A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Home improvement loans.
##### 197A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mileage allowances
##### 197AD
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##### 197AE
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#### Interest ceasing to be relevant loan interest, etc.
##### 197AF
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##### 197AG
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##### 197AH
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mileage allowances
##### 197B
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##### 197C
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##### 197D
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##### 197E
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##### 197F
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### Sporting and recreational facilities
##### 197G
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##### 198A
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##### 200ZA
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##### 200AA
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##### 200A
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##### 200B
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##### 200C
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##### 200D
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##### 200E
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##### 200F
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##### 200G
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##### 200H
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##### 200J
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##### 201AA
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##### 201A
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##### 202A
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##### 202B
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##### 203A
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##### 203B
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##### 203C
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##### 203D
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##### 203E
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##### 203F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203FA
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##### 203FB
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##### 203G
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##### 203H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 203I
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##### 203J
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##### 203K
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##### 203L
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##### 206A
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##### 207A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of trade to obtain balancing allowances
##### 209A
- (1) Subsection (3AA) of section 209 does not apply in relation to a security issued by a company (the “*issuing company*”) if the security is one which to a significant extent reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in one or more companies each of which is—
- (a) the issuing company; or
- (b) an associated company of the issuing company;
but this subsection is subject to the following provisions of this section.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 above from applying in relation to a security if—
- (a) the issuing company is a bank or securities house;
- (b) the security is issued by the issuing company in the ordinary course of its business; and
- (c) the security reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in companies falling within paragraph (a) or (b) of subsection (1) above by reason only that the security reflects fluctuations in a qualifying index.
- (3) In subsection (2)(c) above “*qualifying index*” means an index whose underlying subject matter includes both—
- (a) shares in one or more companies falling within paragraph (a) or (b) of subsection (1) above, and
- (b) shares in one or more companies falling within neither of those paragraphs,
and which is an index such that the shares falling within paragraph (b) above represent a significant proportion of the market value of the underlying subject matter of the index.
- (4) In this section—
- “*bank*” has the meaning given by section 840A;
- “*securities house*” means any person—who is authorised for the purposes of the Financial Services and Markets Act 2000; andwhose business consists wholly or mainly of dealing in financial instruments as principal;and in paragraph (b) above “*financial instrument*” has the meaning given by section 984 of ITA 2007.
- (5) For the purposes of this section a company is an “*associated company*” of another at any time if at that time one has control of the other or both are under the control of the same person or persons.
- (6) For the purposes of subsection (5) above, “*control*”, in relation to a company, means the power of a person to secure—
- (a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
- (b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
- (7) There shall be left out of account for the purposes of subsection (6) above—
- (a) any shares held by a company, and
- (b) any voting power or other powers arising from shares held by a company,
if a profit on a sale of the shares would be treated as a trading receipt of a trade carried on by the company and the shares are not, within the meaning of Chapter 1 of Part 12, assets of an insurance company’s long-term insurance fund (see section 431(2)).
##### 209B
- (1) Subsection (3AA) of section 209 does not at any time apply in relation to a security issued by a company (the “*issuing company*”) if at that time, or any earlier time on or after 17th April 2002, there are or have been any hedging arrangements that relate to some or all of the company’s liabilities under the security.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 from applying in relation to a security at any time if—
- (a) conditions 1 to 4 below are satisfied in relation to any such hedging arrangements at that time; and
- (b) at all earlier times on or after 17th April 2002 when there have been hedging arrangements that relate to some or all of the company’s liabilities under the security, conditions 1 to 4 below were satisfied in relation to those hedging arrangements.
- (3) Where subsection (3AA) of section 209 at any time ceases to apply in relation to a security by virtue of this section, subsection (2)(d) of that section shall have effect in relation to the security as from that time as it would have had effect if subsection (3AA) had never applied in relation to the security.
- (4) Condition 1 is that the hedging arrangements do not constitute, include, or form part of, any scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax (including stamp duty or stamp duty land tax).
- (5) Condition 2 is that the hedging arrangements are such that, where for the purposes of corporation tax a deduction in respect of the security falls to be made at any time by the issuing company, then at that time, or within a reasonable time before or after it, any amounts intended under the hedging arrangements to offset some or all of that deduction arise—
- (a) to the issuing company; or
- (b) to a company which is a member of the same group of companies as the issuing company.
- (6) Condition 3 is that the whole of every amount arising as mentioned in subsection (5) above is brought into charge to corporation tax—
- (a) by a company falling within paragraph (a) or (b) of that subsection, or
- (b) by two or more companies, taken together, each of which falls within paragraph (a) or (b) of that subsection.
- (7) Condition 4 is that for the purposes of corporation tax any deductions in respect of expenses of establishing or administering the hedging arrangements are reasonable, in proportion to the amounts required to be brought into charge to corporation tax by subsection (6) above.
- (8) For the purposes of this section “*hedging arrangements*”, in relation to a security, means any scheme or arrangement for the purpose, or for purposes which include the purpose, of securing that an amount of income or gain accrues, or is received or receivable, whether directly or indirectly, which is intended to offset some or all of the amounts which fall to be brought into account, in accordance with generally accepted accounting practice, in respect of amounts accruing or falling to be paid in accordance with the terms of the security.
- (9) Any reference in this section to two companies being members of the same group of companies is a reference to their being members of the same group of companies for the purposes of Chapter 4 of Part 10 of this Act (group relief).
##### 213A
- (1) A reference in the Corporation Tax Acts to distributions of a company shall not apply to a distribution if—
- (a) it is a distribution consisting of—
- (i) the transfer of part of a business by a company (“the distributing company”) to one or more other companies (“the transferee company or companies”), and
- (ii) the issue of shares by the transferee company or companies to the members of the distributing company, and
- (b) the requirements of either section 140A(1A) of the 1992 Act (division of UK business) or section 140C(1A) of that Act (division of non-UK business) are satisfied in relation to the distribution.
- (2) A distribution to which this section applies is an “*exempt distribution*” for the purposes of sections 214 to 217.
- (3) The expression “*relevant company*” in sections 214 to 217 includes the distributing company and the transferee company or companies.
### Industrial and provident society dividends etc
##### 230A
- (1) This section applies if—
- (a) a dividend or bonus is granted by a registered industrial and provident society, and
- (b) section 132 (deduction for dividends etc granted by industrial and provident societies) of CTA 2009 allows the sum representing the dividend or bonus to be deducted in calculating the profits of a trade.
- (2) The dividend, or the bonus, is not treated as a distribution for the purposes of the Corporation Tax Acts.
##### 231A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 231AA
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) he is the borrower under a stock lending arrangement or the lender under a creditor repo or creditor quasi-repo;
- (b) the qualifying distribution is, or is a payment representative of, a distribution in respect of securities to which the arrangement or repo in question relates; and
- (c) a manufactured dividend representative of that distribution is paid by that person in respect of securities to which the arrangement or repo in question relates.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*stock lending arrangement*” has the same meaning as in section 263B of the 1992 Act and, in relation to any such arrangement, any reference to the borrower, or the securities to which the arrangement relates, shall be construed accordingly.
- (3) In this section “*creditor repo*” and “*creditor quasi-repo*” have the meaning given by Chapter 10 of Part 6 of CTA 2009 (repos).
- (4) For the purposes of this section “*manufactured dividend*” has the same meaning as in paragraph 2 of Schedule 23A (and any reference to a manufactured dividend being paid accordingly includes a reference to a payment falling by virtue of section 736B(2) . . . to be treated for the purposes of Schedule 23A as if it were made).
- (5) For the purposes of this section a person is taken to have paid a manufactured dividend representative of a distribution in respect of securities to which a creditor repo relates if (as a result of paragraph 13(1) of Schedule 13 to the Finance Act 2007) the person is treated for the purposes of Chapter 9 of Part 15 of ITA 2007 as making a payment which is representative of the income payable on the securities.
##### 231AB
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) the person is the borrower under a debtor repo or debtor quasi-repo;
- (b) the qualifying distribution is a manufactured dividend paid to the borrower in consequence of that repo; and
- (c) the arrangement or arrangements in relation to that repo are not such that the actual dividend which the manufactured dividend represents is receivable otherwise than by the borrower under that repo.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*debtor repo*” and “*debtor quasi-repo*” have the meaning given by Chapter 10 of Part 6 of CTA 2009 (repos).
- (3) Subsection (4) of section 231AA applies for the purposes of this section as it applies for the purposes of that section.
##### 231B
- (1) This section applies in any case where—
- (a) a person (“A”) is entitled to a tax credit in respect of a qualifying distribution;
- (b) arrangements subsist such that another person (“B”) obtains, whether directly or indirectly, a payment representing any of the value of the tax credit;
- (c) the arrangements (whether or not made directly between A and B) were entered into for an unallowable purpose; and
- (d) the condition in subsection (2) below is satisfied.
- (2) The condition is that if B had been the person entitled to the tax credit and the qualifying distribution to which it relates, and had received the distribution when it was made, then—
- (a) B would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if B is a company, B could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (3) This section does not apply if and to the extent that any other provision of the Tax Acts has the effect of cancelling or reducing the tax advantage which would otherwise be obtained by virtue of the arrangements.
- (4) Where this section applies—
- (a) no claim shall be made under section 231(2) for payment of the amount of the tax credit;
- (b) no claim shall be made under section 397(2) of ITTOIA 2005. . . in respect of the tax credit;
- (c) the income consisting of the distribution in respect of which A is entitled to the tax credit shall not be regarded for the purposes of section 241 as franked investment income; and
- (d) no claim shall be made under section 35 of the Finance (No. 2) Act 1997 (transitional relief) for payment of an amount determined by reference to that distribution.
- (5) For the purposes of this section, the question whether any arrangements were entered into for an “unallowable purpose” shall be determined in accordance with subsections (6) and (7) below.
- (6) Arrangements are entered into for an unallowable purpose if the purposes for which at least one person is a party to the arrangements include a purpose which is not amongst the business or other commercial purposes of that person.
- (7) Where one of the purposes for which a person enters into any arrangements is the purpose of securing that that person or another obtains a tax advantage, that purpose shall be regarded as a business or other commercial purpose of the person only if it is neither the main purpose, nor one of the main purposes, for which the person enters into the arrangements.
- (8) Any reference in this section to a person obtaining a tax advantage includes a reference to a person obtaining a payment representing any of the value of a tax credit in circumstances where, had the person obtaining the payment been entitled to the tax credit and the qualifying distribution to which it relates, that person—
- (a) would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if that person is a company, could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (9) If an amount representing any of the value of a tax credit to which a person is entitled is applied at the direction of, or otherwise in favour of, some other person (whether by way of set off or otherwise), the case shall be treated for the purposes of this section as one where that other person obtains a payment representing any of the value of the tax credit.
- (10) In determining for the purposes of subsections (2)(b) and (8)(b) b above whether a company could have used the income consisting of the distribution in question to frank a distribution of the company, the company shall be taken to use its actual franked investment income to frank distributions before using the income consisting of the distribution in question.
- (11) References in this section to using franked investment income to frank a distribution of a company have the same meaning as in Chapter V of Part VI.
- (12) In this section—
- “*arrangements*” means arrangements of any kind, whether in writing or not (and includes a series of arrangements, whether or not between the same parties);
- “*business or other commercial purposes*” includes the efficient management of investments;
- “*franked investment income*” has the same meaning as in Chapter V of Part VI and references to income consisting of a distribution shall be construed accordingly;
- “*tax advantage*” has the meaning given by section 840ZA
#### Company reconstructions: supplemental.
##### 234A
- (1) This section applies where dividend or interest is distributed by a company which is—
- (a) a company as defined in section 1(1) of the Companies Act 2006 (c. 46), or
- (b) a company created by letters patent or by or in pursuance of an Act.
- (2) If the company makes a payment of dividend or interest to any person, and subsection (3) below does not apply, within a reasonable period the company shall send an appropriate statement to that person.
- (3) If the company makes a payment of dividend or interest into a bank or building society account held by any person, within a reasonable period the company shall send an appropriate statement to either—
- (a) the bank or building society concerned, or
- (b) the person holding the account.
- (4) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part to the other person and subsection (5) below does not apply,
within a reasonable period the nominee shall send an appropriate statement to that person.
- (5) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part into a bank or building society account held by the other person,
within a reasonable period the nominee shall send an appropriate statement to either the bank or building society concerned or the other person.
- (6) In the case of a payment of interest which is not a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the gross amount which, after deduction of the income tax appropriate to the interest, corresponds to the net amount actually paid,
- (b) the rate and the amount of income tax appropriate to such gross amount,
- (c) the net amount actually paid, and
- (d) the date of the payment.
- (7) In the case of a payment of dividend or interest which is a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the amount of the dividend or interest paid,
- (b) the date of the payment, and
- (c) the amount of the tax credit to which a person is entitled in respect of the dividend or interest, or to which a person would be so entitled if he had a right to a tax credit in respect of the dividend or interest.
- (8) In this section “*send*” means send by post.
- (8A) In this section “*bank*” has the meaning given by section 840A.
- (9) If a person fails to comply with subsection (2), (3), (4) or (5) above, the person shall incur a penalty of £60 in respect of each offence, except that the aggregate amount of any penalties imposed under this subsection on a person in respect of offences connected with any one distribution of dividends or interest shall not exceed £600.
- (10) The Board may by regulations provide that where a person is under a duty to comply with subsection (2), (3), (4) or (5) above, the person shall be taken to comply with the subsection if the person either—
- (a) acts in accordance with the subsection concerned, or
- (b) acts in accordance with rules contained in the regulations;
and subsection (9) above shall be construed accordingly.
- (11) Regulations under subsection (10) above may make different provision for different circumstances.
##### 245A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 245B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Chapter VA — Foreign Income Dividends
### Election by company paying dividend
#### Substitution of security: supplemental.
##### 246A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Recipient of foreign income dividend
##### 246C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Companies: payments and receipts
##### 246E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Foreign source profit and distributable foreign profit
##### 246I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Matching of dividend with distributable foreign profit
##### 246J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Repayment or set-off of advance corporation tax
##### 246N
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246P
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246Q
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### International headquarters companies
##### 246S
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246T
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246U
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246V
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 246W
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Adjustments
##### 246X
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Application of this Chapter
##### 246Y
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Elections as to transfer of relief under section 257A or 257AB.
### Approved share incentive plans
##### 251A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 251B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 251C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### UK property business losses
##### 251D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 256A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 256B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257AB
- (1) This section applies if —
- (a) the claimant is, for the whole or any part of the year of assessment, living with his spouse or civil partner,
- (b) either the claimant or his spouse or civil partner was born before 6th April 1935,
- (c) the marriage or civil partnership was entered into on or after 5th December 2005 or, if the marriage was entered into before that date, an election for this section to apply has effect for that year, and
- (d) the claimant's net income for that year exceeds that of his spouse or civil partner or, if they have the same amount of net income for that year, the claimant is specified in an election as the person to be entitled to relief under this section for that year.
- (2) The claimant shall be entitled for that year to a tax reduction—
- (a) calculated by reference to £5,975 (if either the claimant or his spouse or civil partner is at any time within that year of the age of 75 or upwards), or
- (b) calculated by reference to £5,905 (in any other case).
- (3) For the purposes of subsection (2)(a) above an individual who would have been of or over the age of 75 within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.
- (4) In relation to a claimant whose adjusted net income for the year of assessment exceeds £19,500, subsection (2) above applies as if the amounts specified in it were reduced by—
- (a) one half of the excess, less
- (b) any reduction made in his allowance under section 257 by virtue of subsection (5) of that section.
- (5) The amounts specified in subsection (2) above shall not by virtue of subsection (4) above be treated as reduced below the minimum amount.
- (6) An individual shall not be entitled by virtue of this section to more than one tax reduction for any year of assessment.
- (7) In relation to a claim by an individual who —
- (a) becomes a spouse or civil partner in the year of assessment, and
- (b) has not previously in the year been entitled to relief under this section,
this section shall have effect as if the amounts specified in subsection (2) above were reduced by one twelfth for each month of the year ending before the date of the marriage or civil partnership.
- In this subsection “*month*” means a month beginning with the 6th day of a month of the calendar year.
- (8) An election under subsection (1)(c) —
- (a) shall be made jointly by the parties to the marriage,
- (b) shall be made before the first year of assessment for which it is to have effect,
- (c) shall have effect for that and each succeeding year of assessment for which any party to the marriage is entitled to relief under this section, and
- (d) shall be irrevocable.
- (9) An election under subsection (1)(d) —
- (a) shall be made jointly by the parties to the marriage or civil partnership, and
- (b) shall be made on or before the 5th anniversary of the 31st January next following the end of the year of assessment to which the election relates.
- (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
#### Qualifying policies.
##### 257BA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257BB
- (1) Where—
- (a) an individual is entitled to a tax reduction under section 257A or 257AB, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of an election under section 257BA) to a tax reduction equal to the unused part of the individual's MCA tax reductions.
- (1A) The individual's MCA tax reductions are the sum of—
- (a) the tax reduction to which the individual is entitled under section 257A or 257AB, and
- (b) any tax reduction to which the individual is entitled by virtue of an election under section 257BA(3).
- (1B) The unused part of the individual's MCA tax reductions is equal to—
- (a) the individual's MCA tax reductions, less
- (b) the individual's comparable tax liability.
- (2) Subsection (1) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (3) Where—
- (a) an individual is entitled to a tax reduction by virtue of an election under section 257BA, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of section 257A or 257AB) to a tax reduction equal to the unused part of the individual's tax reduction.
- (3AA) The unused part of the individual's tax reduction is equal to—
- (a) the tax reduction to which the individual is entitled by virtue of the election under section 257BA, less
- (b) the individual's comparable tax liability.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subsection (3) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (5) Any notice under subsection (2) or (4) above—
- (a) shall be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
- (5A) For the purposes of this section, the comparable tax liability of an individual is the amount of the individual's tax left after Step 6 of the calculation in section 23 of ITA 2007, making that calculation with the modifications set out in subsections (5B) and (5C).
- (5B) In making that calculation, do not deduct any tax reduction under—
- (a) section 788 (double taxation arrangements: relief by agreement), or
- (b) section 790(1) (relief for foreign tax where there are no double taxation arrangements).
- (5C) If the individual's entitlement to a tax reduction under section 257A, 257AB, 257BA or this section is extinguished under section 423(4) of ITA 2007 (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (5A) and (5B) the amount by which the tax reduction is reduced.
- (5D) For the purposes of this section a person is treated as being entitled to a tax reduction under section 788 if the person is entitled to credit against income tax under arrangements which have effect under that section.
- (5E) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257B
- (1) Where—
- (a) a man is entitled to relief under section 257A, but
- (b) the amount which he is entitled to deduct from his total income by virtue of that section exceeds what is left of his total income after all other deductions have been made from it,
his wife shall be entitled to a deduction from her total income of an amount equal to the excess.
- (2) In determining for the purposes of subsection (1)(b) above the amount that is left of a person’s total income for a year of assessment after other deductions have been made from it, there shall be disregarded any deduction made—
- (a) on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or
- (b) under section 289 or
- (c) on account of any payments to which section 593(2) or 639(3) applies,or
- (d) on account of any payments to which section 54(5) of the Finance Act 1989 applies.
, or
- (e) on account of any payments to which section 32(4) of the Finance Act 1991 applies.
- (3) This section shall not apply for a year of assessment unless the claimant’s husband has given to the inspector written notice that it is to apply; and any such notice—
- (a) shall be given not later than six years after the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
##### 257C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 261A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 266A
- (1) This section applies if—
- (a) pursuant to an employer-financed retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for or in respect of any employee of that employer, and
- (b) the payment is made under such an insurance or contract as is mentioned in section 266.
This section applies whether or not the accrual of the relevant benefits is dependent on any contingency.
- (2) Relief, if not otherwise allowable, shall be given to that employee under section 266 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if—
- (a) the payment had been made by him, and
- (b) the insurance or contract under which the payment is made had been made with him.
- (3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse, widow or widower, children, dependants or personal representatives.
- (4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them.
- (5) The amount treated as paid for or in respect of each employee is—
$$A×BC$where—A is the sum paid,B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, andC is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.$
- (6) This section does not apply if—
- (a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or
- (b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met.
- (7) Those conditions are—
- (a) that the employment is with a foreign employer, and
- (b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme.
- (8) In subsection (6)(a) “*earnings charged on remittance*” means earnings which are taxable earnings under—
- (a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or
- (b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK).
- (9) In this section—
- “*employer-financed retirement benefits scheme*”, and
- “*relevant benefits*”,
- have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).
#### Supplementary provisions.
##### 282A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 282B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further interpretation of sections 135 to 139.
##### 289A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 289B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 290A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Credit-tokens.
##### 291A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 291B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 300A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 301A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 303AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Losses of ring fence trade: set off against profits of an earlier accounting period
##### 303A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Leasing contracts and company reconstructions.
##### 304A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 305A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Companies joining or leaving group or consortium.
#### Terminal losses.
##### 326A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326BB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 327A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “participator”, “associate”, “director” and “loan creditor”.
##### 329AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 331A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 332A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 338B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 337A
- (1) For the purposes of corporation tax, subject to any provision of the Corporation Tax Acts expressly authorising a deduction—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) a company’s income from any source shall be computed without any deduction in respect of charges on income.
- (2) In computing a company’s income from any source for the purposes of corporation tax—
- (a) no deduction shall be made in respect of interest except in accordance with Part 5 of CTA 2009 (loan relationships); . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 338A
- (1) This section defines what payments or other amounts are “*charges on income*” for the purposes of corporation tax.
This section has effect subject to any express exceptions in the Corporation Tax Acts.
- (2) Subject to the following provisions of this section, the following (and only the following) are charges on income—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) qualifying donations within the meaning of section 339 (qualifying donations to charity);
- (c) amounts allowed as charges on income under section 587B(2)(a)(ii) (gifts of shares etc to charity).
- (3) No payment that is deductible in computing profits or any description of profits for the purposes of corporation tax shall be treated as a charge on income.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 339A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 342A
- (1) In this section—
- (a) references to the relevant event, in relation to a company in administration, are references—
- (i) to the administrator sending a notice in respect of the company under paragraph 84(1) of Schedule B1 to the Insolvency Act 1986 (company moving from administration to dissolution), or
- (ii) in the case of a company which enters administration otherwise than under that Act, to the doing of any other act for a like purpose, and
- (b) references to a company’s final year are references to the financial year in which the relevant event occurs, and references to the company’s penultimate year are references to the last financial year preceding its final year.
- (2) Subject to subsections (3) and (4)—
- (a) corporation tax shall be charged on the profits of the company arising in the administration in its final year at the rate of corporation tax fixed or proposed for the penultimate year, but
- (b) where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.
- (3) If, before the relevant event, any of the rates or fractions mentioned in subsection (2) has been fixed or proposed for the final year, that subsection shall have effect in relation to that rate or fraction as if for the references to the penultimate year there were substituted references to the final year.
- (4) If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.
- (5) In subsection (4) “*the company’s final accounting period*” means the last accounting period of the company before the relevant event.
- (6) An assessment on the company’s profits for an accounting period in which the company is in administration shall not be invalid because made before the end of the accounting period.
- (7) In making an assessment after the company enters administration and before the date of the relevant event, the administrator may act on an assumption as to when that date will fall so far as it governs section 10(1) of CTA 2009.
- (8) The assumption of the wrong date shall not alter the company’s final and penultimate year and, if the right date is later—
- (a) an accounting period shall end on the date assumed and a new accounting period shall begin, and
- (b) thereafter, section 10(1) of CTA 2009 shall apply as if the company had entered administration at the beginning of that new accounting period.
- (9) Section 342(7) applies in relation to this section as it applies in relation to that section, except that the reference to the completion of the winding up is to be read as a reference to the relevant event.
- (10) Where the company entered administration before its final year, paragraphs (a) and (b) of subsection (2) (but not subsection (3)) apply in relation to the company’s profits arising at any time in its penultimate year.
#### Transfers of trade to obtain balancing allowances
#### Interpretative provisions relating to insurance companies.
##### 343ZA
- (1) This section applies where—
- (a) a company (“the predecessor”) ceases to carry on a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that trade as its trade or as part of its trade,
- (c) in the accounting period in which the predecessor ceases to carry on the trade the predecessor would (apart from this section) be entitled under Part 2 of the Capital Allowances Act to a balancing allowance in respect of the trade, and
- (d) the predecessor's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor to that balancing allowance.
- (2) This section also applies where—
- (a) a company (“the predecessor”) ceases to carry on part of a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that part of the trade as its trade or as part of its trade, and
- (c) the predecessor's ceasing to carry on the part of the trade mentioned in paragraph (a) is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor, on cessation of the trade, to a balancing allowance in respect of the trade under Part 2 of the Capital Allowances Act.
- (3) This section does not apply where section 343 applies.
- (4) Where this section applies, the Corporation Tax Acts have effect subject to section 343(2), but as if the words “and are subject to section 343A (company reconstructions involving business of leasing plant or machinery)” were omitted.
- (5) Where this section applies because of subsection (1), and the successor carries on the activities of the trade the predecessor ceased to carry on as part of the successor's trade, for the purposes of section 343(2) that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (6) Where this section applies because of subsection (2), for the purposes of section 343(2)—
- (a) that part of the trade which the predecessor ceased to carry on is to be treated as a separate trade carried on by the predecessor, and
- (b) where the successor carries on the activities of that part of the trade as part of its trade, that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (7) Where subsection (5) or (6) applies, such apportionment of receipts, expenses, assets and liabilities is to be made as may be just.
- (8) Section 343(10) applies to an apportionment under subsection (7) as it applies to an apportionment under section 343(9).
##### 343A
- (1) This section applies if the trade is or forms part of a business of leasing plant or machinery which the predecessor or the successor carries on on the day of cessation.
- (2) If, on the day of cessation, both the predecessor and the successor carry on the trade otherwise than in partnership, section 343(2) does not apply unless—
- (a) the principal company or companies of the predecessor immediately before the cessation are the same as the principal company or companies of the successor immediately afterwards, and
- (b) if any such principal company is a consortium principal company, the relevant fraction in relation to the predecessor immediately before the cessation is the same as the relevant fraction in relation to the successor immediately afterwards (irrespective of whether the members of each consortium are the same).
- (3) If, on the day of cessation, the predecessor or the successor carries on the trade in partnership, section 343(2) does not apply unless—
- (a) the predecessor ceases to carry on the whole of its trade, and
- (b) that trade is a business of leasing plant or machinery which the predecessor carries on in partnership on the day of cessation.
- (4) In any case where section 343(2) does not apply as a result of this section, the plant or machinery belonging to the trade shall be treated for the purposes of the Corporation Tax Acts as sold by the predecessor to the successor on the day of the cessation for an amount equal to its market value as at that day.
- (5) In this section—
- “*control*” shall be construed in accordance with section 416, and
- “*relative*” has the meaning given by section 839(8).
- (6) Section 839 shall apply for the purposes of this section.
#### Tax treatment of receipts and outgoings on sale of land.
##### 21A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 21B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 21C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule E.
##### 31ZB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31ZC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 31B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule A.
### Connected persons
##### 33A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 33B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 37A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 37(4) and reductions in receipts under ITTOIA 2005
##### 42A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Rent factoring
##### 43A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 43G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 51AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 51A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 51B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employees seconded to charities and educational establishments
##### 56A
- (1) This section applies where there is an arrangement under which—
- (a) there is a right to receive an amount (with or without interest)
in pursuance of a deposit of money,
- (b) when the right comes into existence there is no certificate of deposit in respect of the right, and
- (c) the person for the time being entitled to the right is entitled to call for the issue of a certificate of deposit in respect of the right.
- (2) In such a case—
- (a) the right shall be treated as not falling within section 56(1)(b), and
- (b) if there is a disposal or exercise of the right before such time (if any) as a certificate of deposit is issued in respect of it, section 56(2) shall apply to it by virtue of this paragraph.
- (3) In the application of section 56 by virtue of this section—
- (a) subsection (2) shall have effect as if the words from “(whether” to “person)” read “(whether by the person originally entitled to the right or by some other person)”, and
- (b) subsection (3) shall have effect as if the words “stated in a certificate of deposit” read “under an arrangement”.
- (4) In this section “*certificate of deposit*” has the meaning given by section 56(5).
##### 62A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 63A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 65A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 68A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 68B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 68C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 70A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 75A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Costs of establishing share option or profit sharing schemes: relief.
##### 75B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against determinations under sections 34 to 36 or Chapter 4 of Part 3 of ITTOIA 2005.
##### 76A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 76B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deep discount securities.
##### 79A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 79B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 82A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 82B
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##### 83A
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##### 84A
- “business of leasing plant or machinery”—has the same meaning as in Part 2 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc) (if the business is carried on otherwise than in partnership), andhas the same meaning as in Part 3 of that Schedule (if the business is carried on in partnership),
- “*consortium principal company*” means a company which is a principal company as a result of paragraph 12 of that Schedule,
- “*market value*”, in relation to plant or machinery, is to be construed in accordance with paragraph 41(8) of that Schedule,
- “*plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act,
- “*principal company*” is to be construed in accordance with paragraph 11 or (as the case may be) 12 of Schedule 10 to the Finance Act 2006, and
- “*relevant fraction*” has the same meaning as in paragraph 12 of that Schedule.
#### Amendment of Chapter etc
#### Meaning of “participator”, “associate”, “director” and “loan creditor”.
#### Loans to participators etc.
##### 347A
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##### 347B
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#### No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
##### 349ZA
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##### 349A
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#### Election that assets not be foreign business assets
##### 349B
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##### 349C
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##### 349D
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##### 349E
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##### 350A
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##### 356A
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##### 356B
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##### 356C
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##### 356D
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#### Section 432B apportionment: supplementary provisions.
##### 357A
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##### 357B
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##### 357C
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##### 360A
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#### Profits reserved for policy holders and annuitants.
#### Returns.
##### 367A
- (1) Sections 353 and 365 have effect as if—
- (a) purchase and resale arrangements involved the making of a loan, and
- (b) alternative finance return were interest.
- (2) Section 366 has effect accordingly.
- (3) In this section—
- “*alternative finance return*” has the meaning given in sections 564I to 564L of ITA 2007, and
- “*purchase and resale arrangements*” means arrangements to which section 564C of ITA 2007 applies.
#### Securities.
##### 374A
- (1) This section applies where, in the case of any loan, interest on the loan never has been relevant loan interest or the borrower never has been a qualifying borrower.
- (2) Without prejudice to subsection (3) below, in relation to a payment of interest—
- (a) as respects which either of the conditions mentioned in paragraphs (a) and (b) of section 374(1) is fulfilled, and
- (b) from which a deduction was made as mentioned in section 369(1),
section 369 shall have effect as if the payment of interest were a payment of relevant loan interest made by a qualifying borrower.
- (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to make any deduction or to retain any amount deducted and, accordingly, where any amount has been deducted, he shall be liable to make good that amount and an officer of the Board may make such assessments as may in his judgment be required for recovering that amount.
- (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made . . . .
- (5) If the borrower fraudulently or negligently makes any false statement or representation in connection with the making of any deduction, he shall be liable to a penalty not exceeding the amount deducted.
##### 375A
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##### 376A
- (1) The Board shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of section 376(4).
- (1A) The following are entitled to be registered—
- (a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000—
- (i) to accept deposits; or
- (ii) to effect or carry out contracts of general insurance;
- (b) a 90 per cent subsidiary of a person mentioned in—
- (i) section 376(4)(e); or
- (ii) paragraph (a) above;
- (c) any other body whose activities and objects appear to the Board to qualify it for registration.
- (2) If the Board are satisfied that an applicant for registration is entitled to be registered, they may register the applicant generally or in relation to any description of loan specified in the register, with effect from such date as may be so specified; and a body which is so registered shall become a qualifying lender in accordance with the terms of its registration.
- (3) The registration of any body may be varied by the Board—
- (a) where it is general, by providing for it to be in relation to a specified description of loan, or
- (b) where it is in relation to a specified description of loan, by removing or varying the reference to that description of loan,
and where they do so, they shall give the body written notice of the variation and of the date from which it is to have effect.
- (4) If it appears to the Board at any time that a body which is registered under this section would not be entitled to be registered if it applied for registration at that time, the Board may by written notice given to the body cancel its registration with effect from such date as may be specified in the notice.
- (5) The date specified in a notice under subsection (3) or (4) above shall not be earlier than the end of the period of 30 days beginning with the date on which the notice is served.
- (6) Any body which is aggrieved by the failure of the Board to register it under this section, or by the variation or cancellation of its registration, may appeal, by notice given to the Board before the end of the period of 30 days beginning with the date on which the body is notified of the Board’s decision. . . .
### Losses from UK property business or overseas property business
##### 379A
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##### 379B
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#### Modifications for change of tax basis
##### 384A
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### Losses from UK property business or overseas property business
##### 392A
- (1) Where a company incurs a UK property business loss in an accounting period, the loss shall be set off for the purposes of corporation tax against the company’s total profits for that period.
- (2) To the extent that a company’s UK property business loss cannot be set off under subsection (1), it shall, if the company continues to carry on the UK property business in the succeeding accounting period, be carried forward to that period and be treated for the purposes of this section as a UK property business loss of that period.
- (3) Where a company with investment business—
- (a) ceases to carry on a UK property business, or to be within the charge to corporation tax in respect of such a business, but
- (b) continues to be a company with investment business,
any UK property business loss that cannot be used under the preceding provisions shall be carried forward to the succeeding accounting period and be treated for the purposes of Chapter 2 of Part 16 of CTA 2009 as if it were expenses of management deductible for that period.
- (4) In this section—
- (a) a “*UK property business loss*” means a loss incurred by a company in a UK property business carried on by it; and
- (b) “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
- (5) The preceding provisions of this section apply to a UK property business only to the extent that it is carried on—
- (a) on a commercial basis, or
- (b) in the exercise of statutory functions.
- (6) For the purposes of subsection (5)(a)—
- (a) a business or part is not carried on on a commercial basis unless it is carried on with a view to making a profit, but if it is carried on so as to afford a reasonable expectation of profit it is treated as carried on with a view to making a profit; and
- (b) if there is a change in the manner in which a business or part is carried on, it is treated as having been carried on throughout an accounting period in the way in which it was being carried on by the end of the period.
- (7) In subsection (5)(b) “*statutory functions*” means functions conferred by or under any enactment (including an enactment contained in a local or private Act).
##### 392B
- (1) Where in any accounting period a company incurs a loss in an overseas property business (whether carried on by it solely or in partnership)—
- (a) the loss shall be carried forward to the succeeding accounting period and set against any profits of the business for that period,
- (b) if there are no profits of the business for that period, or if the profits for that period are exceeded by the amount of the loss, the loss or the remainder of it shall be carried forward again and set against any profits of the business for the next succeeding accounting period,
and so on.
- (2) Subsections (5) to (7) of section 392A apply in relation to relief under subsection (1) above and an overseas property business as they apply in relation to relief under section 392A(1) to (3) and a UK property business.
##### 393A
- (1) Subject to section 492(3), where in any accounting period ending on or after 1st April 1991 a company carrying on a trade incurs a loss in the trade, then, subject to subsection (3) below, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against profits (of whatever description)—
- (a) of that accounting period, and
- (b) if the company was then carrying on the trade and the claim so requires, of preceding accounting periods falling wholly or partly within the period specified in subsection (2) below;
and, subject to that subsection and to any relief for an earlier loss, the profits of any of those accounting periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.
- (2) The period referred to in paragraph (b) of subsection (1) is (subject to subsection (2A) below) the period of twelve months immediately preceding the accounting period in which the loss is incurred; but the amount of the reduction that may be made under that subsection in the profits of an accounting period falling partly before the beginning of that period shall not exceed a part of those profits proportionate to the part of the accounting period falling within that period.
- (2A) This section shall have effect in relation to any loss to which this subsection applies as if, in subsection (2) above, the words “three years” were substituted for the words “twelve months”.
- (2B) Where a company ceases to carry on a trade at any time, subsection (2A) above applies to the following—
- (a) the whole of any loss incurred in that trade by that company in an accounting period beginning twelve months or less before that time; and
- (b) the part of any loss incurred in that trade by that company in an accounting period ending, but not beginning, in that twelve months which is proportionate to the part of that accounting period falling within those twelve months.
- (2C) Where—
- (a) a loss is incurred by a company in a ring fence trade carried on by that company, and
- (b) the accounting period in which the loss is incurred is an accounting period for which an allowance under section 164 of the Capital Allowances Act (general decommissioning expenditure incurred before cessation of ring fence trade) is made to that company,
subsection (2A) above applies to so much of the amount of that loss not falling within subsection (2B) above as does not exceed the amount of that allowance.
- (2D) Section 393B makes further provision about setting off losses in cases where subsection (2C) applies.
- (2E) But subsection (2A) above does not apply by reason of a company ceasing to carry on a trade if—
- (a) on the company ceasing to carry on the trade, any of the activities of the trade begin to be carried on by a person who is not (or by persons any or all of whom are not) within the charge to corporation tax, and
- (b) the company's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to secure that subsection (2A) above applies to a loss by reason of the cessation.
- (3) Subsection (1) above shall not apply to trades carried on wholly outside the United Kingdom; and a loss incurred in a trade in any accounting period shall not be relieved under that subsection unless—
- (a) the trade is one carried on in the exercise of functions conferred by or under any enactment (including an enactment contained in a local or private Act), or
- (b) for that accounting period the trade was being carried on on a commercial basis and with a view to the realisation of gain in the trade or in any larger undertaking of which the trade formed part;
but this subsection is without prejudice to section 397.
- (4) For the purposes of subsection (3) above—
- (a) where at any time a trade is carried on so as to afford a reasonable expectation of gain, it shall be treated as being carried on at that time with a view to the realisation of gain; and
- (b) where in an accounting period there is a change in the manner in which a trade is being carried on, it shall be treated as having throughout the accounting period been carried on in the way in which it was being carried on by the end of that period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Subject to subsection (7A) below, where a company ceases to carry on a trade, subsection (9) of section 393 shall apply in computing for the purposes of this section a loss in the trade in an accounting period ending with the cessation, or ending at any time in the twelve months immediately preceding the cessation, as it applies in computing a loss in an accounting period for the purposes of subsection (1) of that section.
- (7A) For the purposes of this section where—
- (a) subsection (7) above has effect for computing the loss for any accounting period, and
- (b) that accounting period is one beginning before the beginning of the twelve months mentioned in that subsection,
the part of that loss that is not the part falling within subsection (2B)(b) above shall be treated as reduced (without any corresponding increase in the part of the loss that does fall within subsection (2B)(b) above) by an amount equal to so much of the aggregate of the charges on income treated as expenses by virtue of subsection (7) above as is proportionate to the part of the accounting period that does not fall within those twelve months.
- (8) Relief shall not be given by virtue of subsection (1)(b) above in respect of a loss incurred in a trade so as to interfere with any relief under section 338 in respect of payments made wholly and exclusively for the purposes of that trade.
- (9) For the purposes of this section—
- (a) the amount of a loss incurred in a trade in an accounting period shall be computed in the same way as trading income from the trade in that period would have been computed;
- (b) “*trading income*” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; and
- (c) references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
- (10) A claim under subsection (1) above may only be made within the period of two years immediately following the accounting period in which the loss is incurred or within such further period as the Board may allow.
- (11) Subsection (11A) applies in any case where—
- (a) by virtue of section 165 of the Capital Allowances Act (general decommissioning expenditureafter ceasing ring fence trade) the qualifying expenditure of the company for the chargeable period related to the cessation of its ring fence trade is treated as increased by any amount, or
- (b) by virtue of section 416 of that Act (expenditure on restoration within 3 years of ceasing to trade) any expenditure is treated as qualifying expenditure incurred by the company on the last day of trading.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11A) In relation to any claim under subsection (1)—
- (a) to the extent that the claim relates to an increase falling within subsection (11)(a), this section shall have effect as if—
- (i) in subsection (10), “the relevant period” were substituted for “ the period of two years ”, and
- (ii) after subsection (10) there were inserted—
> (10ZA) In subsection (10) “*relevant period*” means the period calculated by adding two years to the post-cessation period (within the meaning of section 165 of the Capital Allowances Act).
;
- (b) to the extent that the claim relates to expenditure falling within subsection (11)(b), subsection (10) shall have effect with the substitution of “ five years ” for “two years”.
- (12) In this section “*ring fence trade*” has the same meaning as in section 162 of the Capital Allowances Act.
##### 393B
- (1) This section applies if these conditions are met—
- (a) a company makes a claim under section 393A(1) requiring that a loss incurred in a ring fence trade be set off against profits;
- (b) section 393A(2A) applies in relation to that claim (three year set off period) by virtue of—
- (i) section 393A(2B) (loss precedes cessation of trade), or
- (ii) section 393A(2C) (loss arises in year when general decommissioning expenditure incurred); and
- (c) the loss incurred in the ring fence trade that may be set off under section 393A (“L”) exceeds the profits against which L may be set off under section 393A (“P”).
- (2) The profits of the ring fence trade of an accounting period are to be relieved under subsection (3) if that period—
- (a) falls wholly or partly before the three year set off period, and
- (b) ends on or after 17 April 2002.
- (3) Subject to any relief for an earlier loss, those profits of that accounting period shall be treated as reduced by—
- (a) the amount by which L exceeds P, or
- (b) so much of that amount as cannot be relieved under this subsection against profits of the ring fence trade of a later accounting period.
- (4) Subsection (3) is subject to subsection (5) in the case of an accounting period that falls partly (but not wholly) before the three year set off period.
- (5) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls before the three year set off period.
- (6) Subsection (3) is subject to subsection (7) in the case of an accounting period that begins before 17 April 2002 and ends on or after that date.
- (7) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls after 16 April 2002.
- (8) In this section—
- “*ring fence*” has the same meaning as in section 162 of the Capital Allowances Act;
- “*three year set off period*” means the period of three years that applies to the claim under section 393A(1) by virtue of section 393A(2A) and section 393A(2B) or (2C).
#### Transfers of business: deemed periodical returns
##### 403ZA
- (1) For the purposes of section 403 a trading loss means a loss incurred by the surrendering company in the surrender period in carrying on a trade, computed as for the purposes of section 393A(1).
- (2) That section does not apply to a trading loss which would be excluded from section 393A(1) by—
- (a) section 393A(3) (foreign trades and certain trades not carried on with a view to gain), or
- (b) section 397 (farming and market gardening: restriction on loss relief).
- (3) Where a company owned by a consortium—
- (a) has in any relevant accounting period incurred a trading loss, and
- (b) has profits (of whatever description) of that accounting period against which that loss could be set off under section 393A(1),
the amount of the loss available to a member of the consortium on a consortium claim shall be determined on the assumption that the company has made a claim under section 393A(1) requiring the loss to be so set off.
- (4) Where the company mentioned in subsection (3) is a group/consortium company, the amount of the loss available under that subsection shall be determined before any reduction is made under section 405(1) to (3).
##### 403ZB
- (1) For the purposes of section 403 excess capital allowances means capital allowances falling to be made to the surrendering company for the surrender period to the extent that they are to be given effect under section 260 of the Capital Allowances Act (special leasing: excess allowance).
- (2) In determining the amount of the allowances falling to be made for the surrender period, no account shall be taken of any allowances carried forward from an earlier period.
- (3) The amount of the company’s income of the relevant class means its amount before deduction of—
- (a) losses of any other period, or
- (b) capital allowances.
##### 403ZC
- (1) For the purposes of section 403 a non-trading deficit on its loan relationships means a deficit of the surrendering company to which Chapter 16 of Part 5 of CTA 2009 (non-trading deficits) applies.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403ZD
- (1) References in section 403 to charges on income, UK property business losses and management expenses shall be construed as follows.
- (2) Charges on income means the aggregate of the amounts paid by the surrendering company in the surrender period by way of charges on income.
- (3) A UK property business loss means a loss incurred by the surrendering company in the surrender period in a UK property business carried on by the company.
It does not include—
- (a) an amount treated as such a loss by section 392A(2) (losses carried forward from earlier period), or
- (b) a loss which would be excluded from section 392A by subsection (5) of that section (certain businesses not carried on with a view to gain).
- (4) Management expenses means the aggregate of the amounts deductible under section 1219 of CTA 2009 (expenses of management of a company's investment business) by the surrendering company for this period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) A non-trading loss on intangible fixed assets means a non-trading loss on intangible fixed assets, within the meaning of Part 8 of CTA 2009 (intangible fixed assets), for the surrender period.
It does not include so much of any such loss as is attributable to an amount being carried forward under section 753(3) of that Act (amounts carried forward from earlier periods).
##### 403ZE
- (1) For the purposes of section 403 the surrendering company’s gross profits of the surrender period means its profits for that period—
- (a) without any deduction in respect of such losses, allowances and other amounts as are mentioned in paragraph (a) or (b) of subsection (1) of that section, and
- (b) without any deduction falling to be made—
- (i) in respect of losses, allowances or other amounts of any other period (whether or not of a description within subsection (1) of that section), or
- (ii) by virtue of section 392A(3) above or section 1223(3) of CTA 2009 (other amounts carried forward).
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403A
- (1) The amount which, on a claim for group relief, may be set off against the total profits of the claimant company for an accounting period (“*the claim period*”), and accordingly the amount to which any consent required in respect of that claim may relate, shall not exceed whichever is the smaller of the following amounts—
- (a) the unused part of the surrenderable amount for the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period.
- (2) For the purposes of any claim for group relief—
- (a) the unused part of the surrenderable amount for the overlapping period is the surrenderable amount for that period reduced by the amount of any prior surrenders attributable to the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period is the amount of its total profits for that period reduced by the amount of any previously claimed group relief attributable to the overlapping period.
- (3) For the purposes of any claim for group relief—
- (a) the surrenderable amount for the overlapping period is so much of the surrenderable amount for the accounting period of the surrendering company to which the claim relates as is attributable, on an apportionment in accordance with section 403B, to the overlapping period;
- (b) the surrenderable amount for an accounting period of the surrendering company is the total amount for that accounting period of the losses and other amounts which (disregarding this section and section 403C) are available in that company’s case for set off by way of group relief; and
- (c) the amount of the claimant company’s total profits for the overlapping period is so much of its total profits for the claim period as is attributable, on an apportionment in accordance with section 403B, to the overlapping period.
- (4) In relation to any claim for group relief (“*the relevant claim*”) the amount of the prior surrenders attributable to the period which is the overlapping period in the case of the relevant claim is equal to the aggregate amount (if any) produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was made in respect of the whole or any part of the amount which, in relation to the relevant claim, is the surrenderable amount for the accounting period of the surrendering company to which the claim relates, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (5) In relation to any claim for group relief (“*the relevant claim*”), the amount of previously claimed group relief attributable to the period which is the overlapping period in the case of that claim is the aggregate amount produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was a claim to set off an amount by way of group relief against the claimant company’s total profits for the period which, in relation to the relevant claim, is the claim period, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (6) For the purposes of this section the amount of group relief allowable on any claim (“*the finalised claim*”) shall fall to be determined as at the time when that claim ceases to be capable of being withdrawn as if—
- (a) every claim that became incapable of being withdrawn before that time were a claim made before the finalised claim; and
- (b) every claim that remains capable of being withdrawn at that time were a claim made after the finalised claim.
- (7) Subject to subsection (6) above and without prejudice to any power to withdraw and resubmit claims, where (but for this subsection) more than one claim for group relief would be taken for the purposes of subsections (4) and (5) above to have been made at the same time, those claims shall be deemed, instead, to have been made—
- (a) in such order as the company or companies making them may, by notice to any officer of the Board, elect or, as the case may be, jointly elect; and
- (b) if there is no such election, in such order as an officer of the Board may direct.
- (8) In this section “*the overlapping period*”, in relation to a claim for group relief, means (subject to subsection (9) below and section 406(3) and (7)) the period which is common to both—
- (a) the claim period; and
- (b) the accounting period of the surrendering company to which the claim relates.
- (9) For the purposes of this section any time in the period which, in relation to any claim for group relief, is common to both the accounting periods mentioned in subsection (8) above but which is a time when the qualifying conditions were not satisfied—
- (a) shall be treated as not comprised in the period which is the overlapping period in the case of that claim; and
- (b) shall be treated instead, in relation to each of those accounting periods, as if it constituted a part of that accounting period which was not common to both periods.
- (10) For the purposes of subsection (9) above the qualifying conditions are satisfied in relation to any claim for group relief at the following times, that is to say—
- (a) if (or so far as) the claim is a group claim for the surrender of any loss or other amount other than a qualifying overseas loss, whenever the conditions in paragraphs (a) to (c) of section 402(2) are satisfied;
- (ab) if (or so far as) the claim is a group claim for the surrender of a qualifying overseas loss, whenever the condition specified in section 402(2A) is satisfied; and
- (b) if the claim is a consortium claim, whenever the conditions specified in section 402(3) for the making of that claim and the condition specified in section 402(3B) are satisfied in the case of the claimant company and the surrendering company.
- (11) For the purposes of subsection (10) above a “*qualifying overseas loss*” means a loss or other amount that is available for surrender by way of group relief in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403B
- (1) Subject to subsection (2) below, where an apportionment falls to be made under section 403A for the purpose of determining how much of an amount for any period (“*the first period*”) is attributable to any other period (“*the second period*”) which comprises the whole or a part of the first period—
- (a) the whole of that amount shall be attributed to the second period if the first and second periods begin and end at the same times; and
- (b) in any other case, the apportionment shall be made on a time basis according to how much of the first period coincides with the second period.
- (2) Where the circumstances of a particular case are such that the making on the time basis mentioned in subsection (1)(b) above of some or all of the apportionments to be made in that case would work in a manner that would be unjust or unreasonable in relation to any person, those apportionments shall be made instead (to the extent only that is necessary in order to avoid injustice and unreasonableness) in such other manner as may be just and reasonable.
##### 403C
- (1) In the case of a consortium claim the amount that may be set off against the total profits of the claimant company is limited by this section.
- (2) Where the claimant company is a member of the consortium, the amount that may be set off against the total profits of that company for the overlapping period is limited to the relevant fraction of the surrenderable amount.
That fraction is whichever is the lowest in that period of the following percentages—
- (a) the percentage of the ordinary share capital of the surrendering company that is beneficially owned by the claimant company;
- (b) the percentage to which the claimant company is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and
- (c) the percentage to which the claimant company would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding-up.
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
- (3) Where the surrendering company is a member of the consortium, the amount that may be set off against the total profits of the claimant company for the overlapping period is limited to the relevant fraction of the claimant company’s total profits for the overlapping period.
That fraction is whichever is the lowest in that period of the following percentages—
- (a) the percentage of the ordinary share capital of the claimant company that is beneficially owned by the surrendering company;
- (b) the percentage to which the surrendering company is beneficially entitled of any profits available for distribution to equity holders of the claimant company; and
- (c) the percentage to which the surrendering company would be beneficially entitled of any assets of the claimant company available for distribution to its equity holders on a winding-up.
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
- (4) In any case where the claimant or surrendering company is a subsidiary of a holding company which is owned by a consortium, for the references in subsection (2) or (3) above to the claimant or surrendering company there shall be substituted references to the holding company.
- (5) Expressions used in this section and in section 403A have the same meanings in this section as in that section.
- (6) Schedule 18 has effect for supplementing this section.
##### 403D
- (1) In determining for the purposes of this Chapter the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by a non-resident company carrying on a trade in the United Kingdom through a permanent establishment, no loss or other amount shall be treated as so available (but see also subsection (11) below) except in so far as—
- (a) it is attributable to activities of that company the income and gains from which for that period are, or (were there any) would be, brought into account in computing the company’s chargeable profits for that period for corporation tax purposes;
- (b) it is not attributable to activities of the company which are made exempt from corporation tax for that period by any double taxation arrangements; and
- (c) no part of—
- (i) the loss or other amount, or
- (ii) any amount brought into account in computing it,
corresponds to, or is represented in, any amount which, for the purposes of any foreign tax, is (in any period) deductible from or otherwise allowable against non-UK profits of the company or any other person.
- (2) In determining for the purposes of sections 403A and 403C the total profits for an accounting period of a non-resident company, there shall be disregarded—
- (a) amounts not falling to be comprised for corporation tax purposes in the chargeable profits of the company for that accounting period, and
- (b) so far as not falling within paragraph (a) above, any amounts arising from activities which are made exempt from corporation tax for that period by any double taxation arrangements.
- (3) In this section “*non-UK profits*”, in relation to any person, means amounts which—
- (a) are taken for the purposes of any foreign tax to be the amount of the profits, income or gains on which (after allowing for deductions) that person is charged with that tax, and
- (b) are not amounts corresponding to, and are not represented in, the total profits (of that or any other person) for any accounting period,
or amounts taken into account in computing such amounts.
- (4) Subsection (2) above applies for the purposes of subsection (3)(b) above as it applies for the purposes of sections 403A and 403C.
- (5) For the purposes of this section an amount shall not be taken to be an amount which for the purposes of any foreign tax is deductible from or otherwise allowable against any non-UK profits of any person by reason only that it is—
- (a) an amount of profits brought into account for the purpose of being excluded from the profits that are non-UK profits of that person by reference to that foreign tax; or
- (b) an amount brought into account in computing the amount of any profits falling to be so excluded.
- (6) So much of the law of any territory outside the United Kingdom as for the purposes of any foreign tax makes the deductibility of any amount dependent on whether or not it is deductible for tax purposes in the United Kingdom shall be disregarded for the purposes of this section.
- (7) For the purposes of this section activities of a company are made exempt from corporation tax for any period by double taxation arrangements if the effect of any such arrangements is that the income and gains (if any) arising for that period from those activities is to be disregarded in computing the company’s chargeable profits.
- (8) In this section “*double taxation arrangements*” means any arrangements having effect by virtue of section 788.
- (9) In this section “*foreign tax*” means any tax chargeable under the law of any territory outside the United Kingdom which—
- (a) is charged on income and corresponds to United Kingdom income tax; or
- (b) is charged on income or chargeable gains or both and corresponds to United Kingdom corporation tax;
but for the purposes of this section a tax shall not be treated as failing to correspond to income tax or corporation tax by reason only that it is chargeable under the law of a province, state or other part of a country, or is levied by or on behalf of a municipality or other local body.
- (10) In determining for the purposes of this section whether any activities are made exempt from corporation tax for any period by any double taxation arrangements any requirement that a claim is made before effect is given to any provision of the arrangements shall be disregarded.
- (11) Any loss or other amount that is available for surrender by way of group relief in accordance with this section is in addition to any loss or other amount that is so available in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403E
- (1) In determining, for the purposes of this Chapter, the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by any company resident in the United Kingdom (“*the resident company*”), a loss or other amount shall be treated as not so available in so far as it—
- (a) is attributable to an overseas permanent establishment of that company, and
- (b) is a loss or other amount falling within subsection (2) below.
- (2) Subject to subsection (3) below, a loss or other amount attributable to an overseas permanent establishment falls within this subsection if the whole or any part of it is, or represents, an amount which, for the purposes of foreign tax under the law of the territory where that permanent establishment is situated, is (in any period) deductible from or otherwise allowable against non-UK profits of a person other than the resident company.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The reference in subsections (1) and (2) above to a loss or other amount attributable to an overseas permanent establishment of a company is a reference to the loss or other amount (if any) that would be surrenderable by that company by way of group relief if the amount surrenderable by that company were computed—
- (a) by reference only to that permanent establishment, and
- (b) by the application in relation to that permanent establishment of principles corresponding in all material respects to those applicable for the purposes of corporation tax to the computation of the equivalent losses or other amounts in the case of the UK permanent establishment of a non-resident company.
- (5) In subsection (4)(b) above the reference to the UK permanent establishment of a non-resident company is a reference to any permanent establishment through which a company which is not resident in the United Kingdom carries on a trade in the United Kingdom.
- (6) References in this section to an overseas permanent establishment of a company are references to any permanent establishment through which that company carries on a trade in a territory outside the United Kingdom.
- (7) In this section “*foreign tax*” and “*non-UK profits*” have the same meaning as in section 403D.
- (8) Where the deductibility of any amount for the purposes of any foreign tax is dependent on whether or not that amount, or a corresponding amount, is deductible for tax purposes in the United Kingdom, this section shall have effect as if that amount were deductible for the purposes of that foreign tax if, and only if, the resident company is treated for the purposes of that tax as resident in the territory where that tax is charged.
##### 403F
- (1) This section has effect for determining for the purposes of this Chapter the extent to which a loss or other amount is available for surrender by way of group relief by a non-resident company—
- (a) which is resident in an EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
in a case where a group claim may be made as a result of the condition in section 402(2A) being satisfied.
- (2) A loss or other amount is not available for surrender by way of group relief by the non-resident company except in so far as, in relation to the EEA territory, the amount meets—
- (a) the equivalence condition,
- (b) the EEA tax loss condition,
- (c) the qualifying loss condition, and
- (d) the precedence condition.
- (3) Part 1 of Schedule 18A determines, in the case of any amount and any EEA territory, the extent to which those conditions are met.
- (4) In so far as a loss or other amount meets those conditions, Part 2 of Schedule 18A applies—
- (a) for calculating the amount of the loss or other amount (if any) that is available for surrender by way of group relief, and
- (b) otherwise for making provision in relation to the application of this Chapter to the non-resident company.
- (5) This section is subject to section 403G (unallowable overseas losses of non-resident companies).
##### 403G
- (1) This section applies in the case of a loss or other amount arising to a non-resident company—
- (a) which is resident in any EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
where the amount is not attributable for corporation tax purposes to any UK permanent establishment of the non-resident company.
- (2) The amount is not available for surrender by way of group relief by the non-resident company in so far as conditions A and B are met.
- (3) Condition A is that—
- (a) the amount would not qualify for group relief but for any relevant arrangements, or
- (b) the amount would not have arisen to the non-resident company but for any relevant arrangements.
- (4) Condition B is that the main purpose, or one of the main purposes, of the relevant arrangements was to secure that the amount would qualify for group relief.
- (5) In this section references to relevant arrangements, in relation to any amount, are to—
- (a) arrangements made on or after 20th February 2006, or
- (b) arrangements made before that date where the amount would (but for this section) first qualify for group relief on or after that date or (as the case may be) the amount arises on or after that date.
- (6) In this section—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),
- “*UK permanent establishment*”, in relation to the non-resident company, means any permanent establishment through which it carries on a trade in the United Kingdom.
##### 411ZA
- (1) This section applies if the surrendering company is prevented from obtaining a deduction in respect of an amount by section 520 of CTA 2009 (provision not at arm's length: non-deductibility of relevant return).
- (2) The amount may not be surrendered by way of group relief.
##### 411A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of business: election for transferee to pay tax of transferor
#### Further interpretation of sections 135 to 139.
#### Parts of transfer scheme arrangements: anti-avoidance rule
#### Modification of s. 444BA for mutual or overseas business and for non-resident companies.
#### Taxation in respect of other business: incorporated friendly societies qualifying for exemption.
##### 431ZA
- (1) An insurance company may, in its company tax return for the first accounting period of the company beginning on or after 1 January 2008 in which any of the assets of the company's long-term insurance fund would (apart from this section) be foreign business assets, elect that none of the assets of the company's long-term insurance fund are to be regarded for the purposes of this Act as being foreign business assets.
- (2) The election has effect for that accounting period and all subsequent accounting periods of the company.
- (3) An election under subsection (1) is irrevocable.
##### 431A
- (1) The Treasury may by order amend any of the life assurance provisions of the Corporation Tax Acts where it is expedient to do so in consequence of the exercise of any power under the Financial Services and Markets Act 2000, in so far as that Act relates to insurance companies.
- (2) Where any exercise of a power under that Act has effect for a period ending on or before, or beginning before and ending after, the day on which an order containing an amendment in consequence of that exercise is made under subsection (1) above, the power conferred by that subsection includes power to provide for the amendment to have effect in relation to that period.
- (2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
- (2B) An order under subsection (2A) above may in particular contain provision—
- (a) making amendments of any provision of the Corporation Tax Acts, or
- (b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
- (2C) An order under subsection (2A) above—
- (a) may make provision having effect in relation to accounting periods current when it is made, and
- (b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument.
- (3) The Treasury may by order amend any of the following provisions—
- (a) sections 432ZA, 432A, 432B to 432G and 755A . . . ;
- (b) sections 83A, 85, 88 and 89 of the Finance Act 1989;
- (c) section 210A of the Taxation of Chargeable Gains Act 1992.
- (4) An order under subsection (3) above may only be made so as to have effect in relation to periods of account—
- (a) beginning on or after 1st January 2005, and
- (b) ending before 1st October 2006.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Any power conferred by this section to make an order includes power to make—
- (a) different provision for different cases or different purposes, and
- (b) incidental, supplemental, consequential or transitional provision and savings.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 431AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432A
- (1) Subject to section 432B, this section has effect for determining for the purposes of any provision of the Corporation Tax Acts in relation to any period for which an insurance company carries on business what parts of—
- (a) income or losses arising from the assets of the company’s long-term insurance fund, or
- (b) gains or losses accruing on the disposal of such assets in accordance with the provisions of the 1992 Act,
are referable to any category of business.
- (1ZA) In subsection (1)(a) above “*income*” means—
- (a) income chargeable under Chapter 3 of Part 4 of CTA 2009 (profits of a property business) in respect of any separate UK property businesses treated as carried on by the company under section 432AA,
- (b) income chargeable under Chapter 3 of Part 4 of CTA 2009 in respect of distributions treated by section 121(1)(a) of the Finance Act 2006 as profits of a UK property business carried on by the company,
- (c) income chargeable under Chapter 3 of Part 4 of CTA 2009 in respect of any overseas property business treated as carried on by the company under section 432AA,
- (d) income chargeable under Chapter 2 of Part 10 of CTA 2009 (dividends of non-UK resident companies) or Chapter 6 of that Part (sale of foreign dividend coupons),
- (da) income chargeable under Chapter 7 of Part 10 of CTA 2009 (annual payments not otherwise charged) or Chapter 8 of that Part (income not otherwise charged) which arises from a source outside the United Kingdom,
- (e) distributions received by the company from companies resident in the United Kingdom,
- (f) credits in respect of any creditor relationships (within the meaning of Part 5 of CTA 2009) of the company,
- (g) credits in respect of any derivative contracts (within the meaning of Part 7 of CTA 2009) of the company,
- (h) any income of the company chargeable under Chapter 5 of Part 10 of CTA 2009 (distributions from unauthorised unit trusts) or Chapter 7 of that Part (annual payments not otherwise charged),
- (i) any credits brought into account by the company under Chapter 2 of Part 8 of CTA 2009 (intangible fixed assets), and
- (j) any income of the company chargeable under any provision to which section 834A (miscellaneous charges) applies, other than profits of the company chargeable under section 436A (gross roll-up business).
- (1ZB) In subsection (1)(a) above “*losses*” means—
- (a) losses in respect of any separate UK property businesses treated as carried on by the company under section 432AA,
- (b) losses in respect of any overseas property businesses treated as carried on by the company under that section,
- (c) debits in respect of any creditor relationships (within the meaning of Part 5 of CTA 2009) of the company,
- (d) debits in respect of any derivative contracts (within the meaning of Part 7 of CTA 2009) of the company,
- (e) any debits brought into account by the company under Chapter 3 of Part 8 of CTA 2009 (intangible fixed assets), and
- (f) any losses of the company computed in the same way as profits chargeable under any provision to which section 834A applies, other than any losses of gross roll-up business.
- (1ZC) For determining as mentioned in subsection (1) above what parts of income or gains arising from the assets of the company's long-term insurance fund are referable to PHI business (to the extent that it would not be the case by virtue of subsections (1ZA) and (1ZB))—
- (a) “income” also includes profits shown in the technical account, and
- (b) “losses” also includes losses so shown.
- (1A) If the company carries on only one category of business in the period—
- (a) all of the income and losses referred to in paragraph (a) of subsection (1) above, and
- (b) all of the gains and losses referred to in paragraph (b) of that subsection,
are referable to that category of business; but if the company carries on more than one category of business in the period, the following provisions shall apply.
- (2) The categories of business referred to in subsections (1) and (1A) above are—
- (a) basic life assurance and general annuity business,
- (b) gross roll-up business, and
- (c) PHI business.
- (3) Income or losses arising from, and gains or losses accruing on the disposal of, assets linked to any category of business is referable to that category of business.
- (3A) Amounts falling within—
- (a) section 442A,
- (b) section 85(2C) of the Finance Act 1989, or
- (c) section 85A of that Act,
are directly referable to basic life assurance and general annuity business.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) Income or losses arising from, and gains or losses accruing on the disposal of, foreign business assets is referable to gross roll-up business.
- (5) There is referable to any category of business . . . the relevant fraction of any income and losses referred to in paragraph (a) of subsection (1) above, and any gains and losses referred to in paragraph (b) of that subsection, not directly referable to any category of business.
- (6) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to basic life assurance and general annuity business, is—
$$AA+B+C$where—A is the aggregate of—(a) the mean of the opening and closing liabilities of the basic life assurance and general annuity business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business,(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and(c) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts;B is the aggregate of—(a) the mean of the opening and closing liabilities of the gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts; andC is the aggregate of—(a) the mean of the opening and closing liabilities of the PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts.$
- (6A) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to gross roll-up business, is—
$$BA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6B) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to PHI business, is—
$$CA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6C) But if the denominator found in accordance with subsection (6), (6A) or (6B) above is nil, the relevant fraction for the purposes of subsection (5) above in relation to the category of business in question is such fraction as is just and reasonable.
- (7) For the purposes of subsections (5), (6) , (6A) and (6B) above—
- (a) income and losses referred to in paragraph (a) of subsection (1) above, and gains and losses referred to in paragraph (b) of that subsection, are directly referable to a category of business if referable to that category by virtue of subsection (3) or (4A) above, . . . and
- (b) assets are directly referable to a category of business if income and losses arising from the assets, and gains and losses accruing on the disposal of the assets, are so referable by virtue of subsection (3) or (4A) above,. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In subsection (6) above—
- (a) “*appropriate part*”, in relation to the free assets amount, means—
- (i) where none (or none but an insignificant proportion) of the liabilities of the long-term business are with-profits liabilities, the part of that amount which bears to the whole the proportion A/B where—
A is the amount of the liabilities of the category of business in question (but taking that amount to be nil if it would otherwise be below nil);
B is the whole amount of the liabilities of the long-term business; and
- (ii) in any other case the part of the free assets amount which bears to the whole the proportion C/D where—
C is the amount of the with-profits liabilities of the category of business in question;
D is the whole amount of the with-profits liabilities of the long-term business; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This is subject to subsection (8ZA) below.
- (8ZA) If for the purposes of subsection (8)(a) above either B or D is nil then, in paragraph (c) of the definition of A and paragraph (b) of the definitions of B and C in subsection (6) above, “*appropriate part*”, in relation to the free assets amount, means the part of that amount which bears to the whole such proportion as is just and reasonable.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432B
- (1) This section and sections 432C to 432G have effect where it is necessary in accordance with section 83 of the Finance Act 1989 to determine what parts of any items brought into account, within the meaning of that section, are referable to life assurance business or gross roll-up business.
- (2) Where for that purpose reference falls to be made to more than one account recognised for the purposes of that section, the provisions of sections 432C to 432G apply separately in relation to each account.
- (3) Section 432C applies where the business with which an account is concerned (“*the relevant business*”) relates exclusively to policies or contracts under which the policy holders or annuitants are not eligible to participate in surplus; and sections 432E and 432F apply where the relevant business relates wholly or partly to other policies or contracts (and section 432G applies in either case).
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432C
- (1) This section specifies the extent to which the net amount is referable to life assurance business or to gross roll-up business.
- (2) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (3) To the extent that the net amount is attributable to—
- (a) assets linked to life assurance business, or
- (b) foreign business assets,
it is referable to life assurance business.
- (4) There is also referable to life assurance business the appropriate fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (5) For the purposes of subsection (4) above “the appropriate fraction” is—
$$AA+B$where—A is the mean of the opening and closing liabilities of the relevant business so far as referable to life assurance business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of assets linked to the relevant business so far as so referable and foreign business assets; andB is the mean of the opening and closing liabilities of the relevant business so far as referable to PHI business, reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to PHI business.$
- (6) But if the denominator found in accordance with subsection (5) above is nil, the appropriate fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
- (7) To the extent that the net amount is attributable to—
- (a) assets linked to gross roll-up business, or
- (b) foreign business assets,
it is referable to gross roll-up business.
- (8) There is also referable to gross roll-up business the relevant fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (9) For the purposes of subsection (8) above “the relevant fraction” is—
$$CC+D$where—C is the mean of the opening and closing liabilities of the relevant business so far as referable to gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of any assets linked to gross roll-up business and foreign business assets; andD is the mean of the opening and closing liabilities of the relevant business so far as referable to basic life assurance and general annuity business or PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to either of those categories of business.$
- (10) But if the denominator found in accordance with subsection (9) above is nil, the relevant fraction for the purposes of subsection (8) above is such fraction as is just and reasonable.
- (11) For the purposes of this section, so much of the net amount—
- (a) as is brought into account as other income in an internal linked fund of the company, and
- (b) as is not attributable to assets of that fund,
is to be treated as linked to a category of business to the same extent as income attributable to an asset of the fund would, by virtue of section 432ZA, be referable to that category of business.
##### 432D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432E
- (1) The part of the net amount which is referable to life assurance business or to gross roll-up business is—
- (a) the amount determined in accordance with subsections (2) and (2A) below, or
- (b) if greater, the amount determined in accordance with subsection (3) below.
- (1A) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (2) For the purposes of subsection (1) above there shall be determined the amount which is such as to secure—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . that
$$CS-CAS=(S-AS)×CASAS$where—S is the surplus of the relevant business;AS is so much of that surplus as is allocated to persons entitled to the benefits provided for by the policies or contracts to which the relevant business relates;CAS is so much of the surplus so allocated as is attributable to policies or contracts of life assurance business or of gross roll-up business; andCS is so much of the surplus of the relevant business as would remain if the relevant business were confined to life assurance business or to gross roll-up business.$
- (2A) In a case where an amount or amounts are taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of subsection (2B) of that section or by virtue of section . . . 444AB, . . . 444AEA,444AECA, 444AF(2) or 444AK(2) of this Act, the amount determined under subsection (2) above is increased by—
$$CASAS×RP$where—CAS and AS have the same meanings as in subsection (2) above; andRP is the amount or the aggregate of the amounts taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of any of the following provisions—subsection (2B) of that section;section 444AB . . . of this Act;section 444AEA or 444AECA of this Act;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .subsection (2) of section 444AF of this Act (and see subsections (5) and (6) of that section);subsection (2) of section 444AK of this Act (but only for the purposes mentioned in subsection (3) of that section).$
- (3) For the purposes of subsection (1) above there shall also be determined the aggregate of—
- (a) the applicable percentage of what is left of the mean of the opening and closing liabilities of the relevant business so far as referable to the category of business concerned (but taking that mean to be nil if it would otherwise be below nil) after deducting from it the mean of the opening and closing values of any assets of the relevant business linked to that category of business . . . , and
- (b) the part of the net amount . . . that is attributable to assets linked to that category of business . . . .
- (4) Subject to subsection (4A) below, for the purposes of subsection (3) above “*the applicable percentage*”, in any case, is—
$$AB×100$where—A is so much of the net amount as is brought into account in respect of the relevant business less such part of it as is attributable to linked assets . . . ; andB is the mean of the opening and closing liabilities of the relevant business reduced by the mean of the opening and closing values of any assets of the relevant business which are linked assets . . . .$
- (4A) If the mean of the opening and closing liabilities of the relevant business reduced by the opening and closing values of any assets of the relevant business which are linked assets . . . is nil then, for the purposes of subsection (3) above, “*the applicable percentage*” is such percentage as is just and reasonable.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of other business
#### Transfers of other business
##### 434A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the life assurance trade profits provisions—
- (a) the loss resulting from the computation shall be reduced (but not below nil) by . . . —
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) any relevant non-trading deficit for that period on the company’s debtor relationships; and
- (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) if the whole or any part of that loss as so reduced is set off—
- (i) under section 393A, or
- (ii) under section 403(1),
any loss for that period under section 436A shall be reduced (but not below nil) by the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above.
- (2A) The reference in subsection (2)(a)(ii) above to a relevant non-trading deficit for any period on a company’s debtor relationships is a reference to the non-trading deficit on the company’s loan relationships . . . for the company’s basic life assurance and general annuity business if credits and debits given in respect of the company’s creditor relationships (within the meaning of Part 5 of CTA 2009) were disregarded.
- (3) In the case of a company carrying on life assurance business, no relief shall be allowable —
- (a) under Chapter II (loss relief) or Chapter IV (group relief) of Part X,
- (aa) (where the company's life assurance business is not mutual business) in respect of any amount which is a charge on income for the purposes of corporation tax, or
- (b) in respect of any amount representing a non-trading deficit on the company’s loan relationships that has been computed otherwise than by reference to debits and credits referable to that business,
against the policy holders’ share of the relevant profits for any accounting period.
- For the purposes of this subsection “*the policy holders’ share of the relevant profits*” has the same meaning as in section 89 of the Finance Act 1989.
- (4) For the purposes of section 403, where the surrendering company is an insurance company which is charged to tax under the I minus E basis in respect of its life assurance business for the surrender period, the company's gross profits of that period do not include its relevant profits (within the meaning of section 88 of the Finance Act 1989) for that period; and expressions used in this subsection and section 403 have the same meaning here as there.
#### Old societies.
##### 438A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certified unit trusts: distributions.
##### 440A
- (1) Subsection (2) below applies where the assets of an insurance company include securities of a class all of which would apart from this section be regarded for the purposes of corporation tax on chargeable gains as one holding.
- (2) Where this subsection applies—
- (a) so many of the securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of—
- (i) basic life assurance and general annuity business, or
- (ii) gross roll-up business,
shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) so many of the securities as are included in the company’s long-term insurance fund but do not fall within paragraph (a) shall be treated for those purposes as a separate holding which is an asset of that fund (but not of the description mentioned in that paragraph), and
- (e) any remaining securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.
- (3) Subsection (2) above also applies where the assets of an insurance company include securities of a class and apart from this section some of them would be regarded as a 1982 holding, and the rest as a section 104 holding, for the purposes of corporation tax on chargeable gains.
- (4) In a case within subsection (3) above—
- (a) the reference in any paragraph of subsection (2) above to a separate holding shall be construed, where necessary, as a reference to a separate 1982 holding and a separate section 104 holding, and
- (b) the questions whether such a construction is necessary in the case of any paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings shall be determined in accordance with paragraph 12 of Schedule 6 to the Finance Act 1990 and the identification rules applying on any subsequent acquisitions and disposals.
- (5) Section 105 of the 1992 Act shall have effect where subsection (2) above applies as if securities regarded as included in different holdings by virtue of that subsection were securities of different kinds.
- (6) In this section—
- “*1982 holding*” has the same meaning as in section 109 of the 1992 Act;
- “*section 104 holding*” has the same meaning as in section 104(3) of that Act; and
- “*securities*” means shares, or securities of a company, and any other assets where they are of a nature to be dealt in without identifying the particular assets disposed or acquired.
- (7) In a case where the profits of a company’s life assurance business are charged to tax under section 35 of CTA 2009 (charge on trade profits) this section has effect with the modification specified in section 440B(4).
##### 441A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444A
- (1) . . . This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).
- (2) Any expenses payable which (making the assumptions in subsection (3B) below) would have fallen to be brought into account by the transferor in determining the deduction for expenses payable to be allowed under section 76 in computing profits for an accounting period following the period which ends with the day on which the transfer takes place shall, instead, be brought into account under and in accordance with that section by the transferee as expenses payable by him (and giving effect in the case of acquisition expenses, to section 86(6) to (9) of the Finance Act 1989).
- (3) Any loss which (making the assumptions in subsection (3B) below)—
- (a) would have been available under section 436A(4) to be set off against profits of the transferor for the accounting period following that which ends with the day on which transfer takes place, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall, instead, be treated as a loss of the transferee (and available to be set off against profits of gross roll-up business)if the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to the transfer).
- (3ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) Any subsection (2) excess (within the meaning of section 432F(2)) which (making the assumptions in subsection (3B) below) would have been available under section 432F(3) or (4) to reduce a subsection (3) figure (within the meaning of section 432F(1)) of the transferor in an accounting period following that which ends with the day on which transfer takes place—
- (a) shall, instead, be treated as a subsection (2) excess of the transferee, and
- (b) shall be taken into account in the first accounting period of the transferee ending after the date of the transfer (to reduce the subsection (3) figure or, as the case may be, to produce or increase a subsection (2) excess for that period),
in relation to the revenue account of the transferee dealing with or including the business transferred.
- (3B) The assumptions referred to in subsections (2), (3) and (3A) above are—
- (a) that the transferor had continued to carry on the business transferred after the transfer, and
- (b) where there is no accounting period of the transferor ending with the transfer date, that there was such an accounting period.
- (4) Where acquisition expenses are treated as expenses payable by the transferee by virtue of subsection (2) above, the amount deductible for the first accounting period of the transferee ending after the transfer takes place shall be calculated as if that accounting period began with the day after the transfer.
- (5) Where the transfer is of part only of the transferor’s long-term business, subsection (2), (3) or (3A) above shall apply only to such part of any amount to which it would otherwise apply as is appropriate.
- (6) Any question arising as to the operation of subsection (5) above shall be determined in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Classes of life assurance business
##### 431B
- (1) In this Chapter “*pension business*” means so much of a company’s life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme or is the reinsurance of such business.
- (2) Where a pension scheme ceases to be a registered pension scheme by virtue of the withdrawal of registration of the pension scheme under section 157 of the Finance Act 2004, any of the company’s life assurance business that was pension business when the pension scheme was a registered pension scheme is to be treated as ceasing to be pension business at the beginning of the period of account of the company in which the pension scheme so ceases to be a registered pension scheme.
- (3) Where—
- (a) immediately before 6th April 2006 an annuity contract falls within any of the descriptions of contracts specified in subsection (2) of this section as it had effect immediately before that date, but
- (b) on or after that date the contract does not fall to be regarded for the purposes of this section as having been entered into for the purposes of a registered pension scheme,
the contract is to be treated for the purposes of this section as having been entered into for such purposes.
##### 431BA
- (1) In this Chapter “*child trust fund business*” means so much of a company's life assurance business as is referable to child trust fund policies (but not including the reinsurance of such business).
- (2) In this section “*child trust fund policy*” means a policy of life insurance which is an investment under a child trust fund (within the meaning of the Child Trust Funds Act 2004).
##### 431BB
- (1) In this Chapter “*individual savings account business*” means so much of a company's life assurance business as is referable to individual savings account policies (but not including the reinsurance of such business).
- (2) In this section “*individual savings account policy*” means a policy of life insurance which is an investment of a kind specified in regulations made by virtue of section 695(1) of ITTOIA 2005.
##### 431C
- (1) In this Chapter “*life reinsurance business*” means reinsurance of life assurance business other than pension business or business of any description excluded from this section by regulations made by the Board.
- (2) Regulations under subsection (1) above may describe the excluded business by reference to any circumstances appearing to the Board to be relevant.
##### 431D
- (1) In this Chapter “*overseas life assurance business*” means so much of a company's relevant life assurance business as is with a policy holder or annuitant not residing in the United Kingdom (but not including the reinsurance of such business).
- (1A) In subsection (1) above “*relevant life assurance business*” means life assurance business other than—
- (a) pension business
- (b) individual savings account business,
- (c) child trust fund business, and
- (d) business of any description prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.
- (2) Regulations under subsection (1A) above may describe the excluded business by reference to any circumstances appearing to the Commissioners to be relevant.
- (3) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
- (a) make provision as to the circumstances in which a trustee who is a policy holder or annuitant residing in the United Kingdom is to be treated for the purposes of this section as not so residing; and
- (b) provide that nothing in Chapter II of Part XIII or Chapter 9 of Part 4 of ITTOIA 2005 shall apply to a policy or contract which constitutes overseas life assurance business by virtue of any such provision as is mentioned in paragraph (a) above.
- (4) Regulations under subsection (1A) or (3) above may contain such supplementary, incidental, consequential or transitional provision as appears to the Commissioners to be appropriate (including provision amending any enactment or any instrument made under an enactment).
##### 431E
- (1) The Board may by regulations make provision for giving effect to section 431D.
- (2) Such regulations may, in particular—
- (a) provide that, in such circumstances as may be prescribed, any prescribed issue as to whether business is or is not overseas life assurance business (or overseas life assurance business of a particular kind) shall be determined by reference to such matters (including the giving of certificates or undertakings, the giving or possession of information or the making of declarations) as may be prescribed,
- (b) require companies to obtain certificates, undertakings, information or declarations from policy holders or annuitants, or from trustees or other companies, for the purposes of the regulations,
- (c) make provision for dealing with cases where any issue such as is mentioned in paragraph (a) above is (for any reason) wrongly determined, including provision allowing for the imposition of charges to tax (with or without limits on time) on the insurance company concerned or on the policy holders or annuitants concerned,
- (d) require companies to supply information and make available books, documents and other records for inspection on behalf of the Board, and
- (e) make provision (including provision imposing penalties) for contravention of, or non-compliance with, the regulations.
- (3) The regulations may—
- (a) make different provision for different cases, and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 431EA
In this Chapter “*gross roll-up business*” means business of any of the following kinds—
- (a) pension business;
- (b) child trust fund business;
- (c) individual savings account business;
- (d) life reinsurance business; and
- (e) overseas life assurance business.
##### 431F
In this Chapter “*basic life assurance and general annuity business*” means life assurance business other than gross roll-up business.
### Basis of taxation etc
##### 431G
- (1) This section applies in relation to an insurance company which carries on life assurance business (whether or not it also carries on insurance business of any other kind).
- (2) Subject as follows, the profits of the life assurance business for any accounting period shall be charged to tax under the I minus E basis.
- (3) Where in the case of an insurance company for an accounting period either—
- (a) all of its life assurance business is reinsurance business and none of that business is of a type excluded from this subsection by regulations made by the Board, or
- (b) all, or substantially all, of its life assurance business is gross roll-up business,
the profits of that business for the accounting period shall be charged to tax under section 35 of CTA 2009 (charge on trade profits) and not otherwise.
- (4) Where—
- (a) the profits of the life assurance business of an insurance company for any accounting period are charged to tax under the I minus E basis, and
- (b) had those profits been charged to tax under section 35 of CTA 2009, a loss would have arisen to the company from that business for the period,
the loss (after being reduced in accordance with section 434A(2)(a)) may be set-off under section 393A or section 403(1).
- (5) The application, in relation to the life assurance business of an insurance company, of any of the life assurance trade profits provisions is not to be taken—
- (a) to prevent the application of the I minus E basis in relation to that business of the company for any accounting period, or
- (b) to affect the operation of the I minus E basis in relation to the that business of the company for any accounting period except as specifically provided by the Corporation Tax Acts.
##### 431H
- (1) This section applies in relation to an insurance company which carries on life assurance business and insurance business of any other kind.
- (2) For the purposes of the Corporation Tax Acts—
- (a) the life assurance business, and
- (b) the other insurance business,
are to be treated as separate businesses.
- (3) The profits of the other insurance business shall be charged to tax under section 35 of CTA 2009 (charge on trade profits) as the profits of a separate trade.
- (4) But subsection (3) above does not apply where that business is mutual business.
- (5) As to the profits of the life assurance business, see section 431G.
##### 432YA
- (1) This section applies in the case of—
- (a) a company which is a non-profit company, or
- (b) the non-profit fund of a company which is not a non-profit company,
if an amount (“*the relevant amount*”) is shown in paragraph 4(12) of Appendix 9.4 to the periodical return for the company for a period of account which ends on or after 31st December 2006 but before 1st January 2009 (a “relevant period of account”).
- (2) In computing profits of PHI business in accordance with the provisions applicable for the purposes of section 35 of CTA 2009 (charge on trade profits)—
- (a) X shall be added to the closing long term business provision of the company for the relevant period of account; and
- (b) XA shall be brought into account as a trading receipt of the company for each subsequent period of account until the total sum of the amounts so bought into account is equal to X (and if that total sum would otherwise exceed X, the excess shall be ignored).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) X is—
- (a) where the relevant period of account ends before 1st April 2007, the whole of the relevant amount;
- (b) where the relevant period of account ends on or after 1st April 2007 but before 1st January 2008, two-thirds of the relevant amount;
- (c) where the relevant period of account ends on or after 1st January 2008, one-third of the relevant amount.
- (2C) XA is the amount found by applying the following formula—
$$Y12×Z$Here—Y is the number of months of the period of account in question (part of a month being counted as a month); andZ is—(a) where X is the whole of the relevant amount, one-third of X;(b) where X is two thirds of the relevant amount, one-half of X;(c) where X is one third of the relevant amount, the whole of X.$
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In this section—
- “*long term business provision*” has the same meaning as in Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) This section is subject to sections 82E and 82F of the Finance Act 1989 (treatment of transferors and transferees under insurance business transfer schemes) and those sections shall apply in relation to this section as if—
- (a) any reference in them to a provision of section 82D of that Act (treatment of profits: life assurance – adjustment consequent on change in Insurance Prudential Sourcebook) were a reference to the corresponding provision of this section,
- (b) the reference in section 82E(4) to life assurance business were a reference to PHI business, and
- (c) the reference in section 82E(7) to the life assurance trade profits provisions were a reference to the provisions applicable for the purposes of section 35 of CTA 2009.
##### 432ZA
- (1) In this Chapter “*linked assets*” means assets of an insurance company which are identified in its records as assets by reference to the value of which benefits provided for under a policy or contract are to be determined and in a case where only part of an asset is so identified, references to a linked asset are references to that part.
- (2) Linked assets shall be taken—
- (a) to be linked to long-term business of a particular category if the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category; and
- (b) to be linked solely to long-term business of a particular category if all (or all but an insignificant proportion) of the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category.
- (3) Where an asset is linked to more than one category of long-term business, a part of the asset shall be taken to be linked to each category; and references in this Chapter to assets linked (but not solely linked) to any category of business shall be construed accordingly.
- (4) Where subsection (3) above applies, the part of the asset linked to any category of business shall be a proportion determined as follows—
- (a) where in the records of the company values are shown for the asset in funds referable to particular categories of business, the proportion shall be determined by reference to those values;
- (b) in any other case the proportion shall be equal to the proportion A/B where—
A is the total of the linked liabilities of the company which are liabilities of the internal linked fund in which the asset is held and are referable to that category of business;
B is the total of the linked liabilities of the company which are liabilities of that fund.
- (5) For the purposes of sections 432A to 432E—
- (a) income arising in any period from assets linked but not solely linked to a category of business,
- (b) gains arising in any period from the disposal of such assets, and
- (c) increases and decreases in the value of such assets,
shall be treated as arising to that category of business in the proportion which is the mean of the proportions determined under subsection (4) above at the beginning and end of the period.
- (6) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*linked liabilities*” means liabilities in respect of benefits to be determined by reference to the value of linked assets.
- (7) In the case of a policy or contract the effecting of which constitutes a class of life assurance business the fact that it also constitutes PHI business shall be disregarded for the purposes of this section unless the benefits to be provided which constitute PHI business are to be determined by reference to the value of assets.
##### 432AA
- (1) An insurance company is treated (despite sections 205 and 206 of CTA 2009) as carrying on separate UK property businesses or overseas property businesses, in accordance with the following rules.
- (2) The exploitation of land held as an asset of the company’s long-term insurance fund is treated as a separate business from the exploitation of land not so held.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The exploitation of land held as an asset linked to any of the following categories of business is regarded as a separate business—
- (a) basic life assurance and general annuity business;
- (b) gross roll-up business; and
- (c) PHI business.
- (5) Accordingly, the exploitation of land held as an asset of the company’s long-term insurance fund otherwise than as mentioned in subsection . . . (4) is treated as a separate business from any other.
- (6) In this section “*land*” means any estate, interest or rights in or over land.
##### 432AB
- (1) This section applies to any loss arising in a UK property business or overseas property business.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) So far as a loss is referable to basic life assurance and general annuity business, it shall be treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 3 in subsection (7) of that section.
- (4) Where a company is treated under section 432AA as carrying on—
- (a) more than one UK property business, or
- (b) more than one overseas property business,
then, in relation to either kind of business, the reference in subsection (3) above to a loss referable to basic life assurance and general annuity business shall be construed as a reference to any aggregate net loss after setting the losses from those businesses which are so referable against any profits from those businesses that are so referable.
- (5) The provisions of sections 392A and 503, or section 392B, (loss relief) do not apply to a loss referable to life assurance business or any category of life assurance business.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432CA
- (1) This section applies where—
- (a) an insurance company is not a non-profit company in relation to a period of account (“the current period of account”),
- (b) in the case of any business with which an account of the company for the current period of account is concerned (“the relevant business”), an amount is a relevant brought into account amount for that period of account (see subsection (2)),
- (c) section 432C applies for determining the extent to which the relevant brought into account amount is referable to life assurance business or to gross roll-up business, and
- (d) the line 51 reduction condition is met (see subsection (3)).
- (2) An amount is a relevant brought into account amount for a period of account if—
- (a) it is brought into account as mentioned in subsection (2)(b) of section 83 of the Finance Act 1989 (increases in value of non-linked assets) for that period,
- (b) it is deemed to be brought into account for that period by subsection (2B) of that section in consequence of the transfer of non-linked assets, or
- (c) it is taken into account under subsection (2) of that section for that period by virtue of section 444AB as being the relevant amount in relation to non-linked assets.
- (3) The line 51 reduction condition is met if—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for the current period of account, is less than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant reduction”.
- (4) Section 432C applies in relation to so much of the relevant brought into account amount as does not exceed the relevant reduction (“the affected amount”) as if it were brought into account as an increase in the value of assets in the case of the relevant business for the applicable appropriate period of account of the company.
- (5) A period of account is an “appropriate period of account” if it ended before the current period of account and—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for it, was more than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant increase.”
- (6) The “applicable” appropriate period of account is the one which ended most recently (“the most recent appropriate period of account”).
- (7) But if the relevant increase in the case of the most recent appropriate period of account is less than the affected amount, the most recent appropriate period of account is the applicable appropriate period of account in relation to only so much of the affected amount as does not exceed that relevant increase.
- (8) In that case, the appropriate period of account which ended most recently before the most recent appropriate period of account is the applicable appropriate period of account in relation to so much of the remainder as does not exceed the relevant increase in the case of that appropriate period of account (and, where necessary, so on until the applicable appropriate period of account is established in relation to all of the affected amount or there are no more appropriate periods of account).
- (9) If the current period of account is not the first in relation to which this section has applied in the case of the business concerned, the amount of the relevant increase in the case of any appropriate period of account (“*the period in question*”) is to be treated as reduced by the relevant aggregate.
- (10) The “relevant aggregate” is the aggregate of so much of the affected amount for any period or periods of account earlier than the current period of account as was an amount to which section 432C applied as if it were brought into account as mentioned in subsection (4) for the period in question.
- (11) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
##### 432CB
- (1) This section applies where, under an insurance business transfer scheme, there is a transfer of long-term business—
- (a) from a non-profit fund of an insurance company (“*the transferor*”) which is not a non-profit company in relation to the relevant period of account,
- (b) to another insurance company (“*the transferee*”) to constitute or form part of a non-profit fund of the transferee (“*the transferee's non-profit fund*”),
(“*the transfer*”) and conditions A and B are met.
- (2) Condition A is that the fair value of the assets transferred by the transfer exceeds by an amount (“the chargeable excess”) the amount of the relevant liabilities transferred by the transfer.
For this purpose “relevant” liabilities are liabilities of a type shown (or treated as shown) in any of lines 14, 17, 21 to 23 and 31 to 38 of Form 14 of a periodical return of an insurance company.
- (3) Condition B is that the main purpose, or one of the main purposes, of the transferor or the transferee (or both) in entering into any part of the transfer scheme arrangements is to secure a reduction in tax as a result of section 432C having effect in the case of the transferee, rather than the transferor, in relation to the business transferred by the transfer.
- (4) The chargeable excess is to be brought into account by the transferor as mentioned in section 83(2)(b) of the Finance Act 1989 for the relevant period of account.
- (5) Where there is no amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first period of account of the transferee ending on or after the transfer date (“the first post-transfer period of account”), the chargeable excess is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the first post-transfer period of account.
- (6) Where—
- (a) there is an amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first post-transfer period of account, and
- (b) the amount so shown in column 1 of line 51 of Form 14 of the periodical return of the transferee for that period of account, or for any other period of account of the transferee ending after the transfer date, (an “affected period of account”) is less than the total chargeable excess amount,
the relevant amount is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the affected period of account.
- (7) For this purpose “the relevant amount” is the amount by which—
- (a) the amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the affected period of account, is less than
- (b) the total chargeable excess amount less any amount brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for any earlier period of account by virtue of the operation of this section in relation to the transferee's non-profit fund.
- (8) In subsections (6) and (7) “*the total chargeable excess amount*” means the aggregate of—
- (a) the chargeable excess, and
- (b) any amount which is the chargeable excess in relation to any other transfer of business to the transferee's non-profit fund.
- (9) In this section “*the relevant period of account*” means—
- (a) the period of account of the transferor ending immediately before the transfer date, or
- (b) if no period of account of the transferor so ends, the period of account of the transferor covering the transfer date.
- (10) In this section “*the transfer scheme arrangements*” means the insurance business transfer scheme and any relevant associated operations; and for this purpose “*relevant associated operations*” means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance, or
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee,
which is effected in connection with the insurance business transfer scheme.
- (11) In subsection (10)—
- “dependant”, and
- “insurance undertaking”,
have the same meaning as in the Insurance Prudential Sourcebook.
- (12) In this section “*the transfer date*” means the date on which the insurance business transfer scheme takes effect.
- (13) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
#### Dividends paid to investment trusts.
##### 432F
- (1) The provisions of this section provide for the reduction of the amount determined in accordance with section 432E(3) (“the subsection (3) figure”) for an accounting period in which that amount exceeds, or would otherwise exceed, the amount determined in accordance with section 432E(2) (“the subsection (2) figure”).
- (2) . . . There shall be determined for each accounting period the amount (if any) by which the subsection (2) figure . . . exceeds the subsection (3) figure (“the subsection (2) excess”).
- (3) Where there is a subsection (2) excess, the amount shall be carried forward and if in any subsequent accounting period the subsection (3) figure exceeds, or would otherwise exceed, the subsection (2) figure, it shall be reduced by the amount or cumulative amount of subsection (2) excesses so far as not previously used under this subsection.
- (4) Where in an accounting period that amount is greater than is required to bring the subsection (3) figure down to the subsection (2) figure, the balance shall be carried forward and aggregated with any subsequent subsection (2) excess for use in subsequent accounting periods.
##### 432G
- (1) There is referable to the life assurance business of the transferee the appropriate fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (2) For the purposes of subsection (1) above “the appropriate fraction” is—
$$LABLTL$where—LABL is the amount of the liabilities transferred that are referable to the life assurance business (but is nil if it would otherwise be below nil); andTL is the whole of the liabilities transferred.$
- (3) But if the amount of the liabilities transferred is nil, the appropriate fraction for the purposes of subsection (1) above is such fraction as is just and reasonable.
- (4) There is referable to the gross roll-up business of the transferee the relevant fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (5) For the purposes of subsection (4) above “the relevant fraction” is—
$$GRBLTL$where—GRBL is the amount of the liabilities transferred that are referable to the gross roll-up business (but is nil if it would otherwise be below nil); andTL has the same meaning as in subsection (2) above.$
- (6) But if the amount of the liabilities transferred is nil, the relevant fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
### Miscellaneous provisions relating to life assurance business
##### 434AZA
- (1) Where this section applies in the case of a company carrying on life assurance business, relief allowable under section 393A or Chapter 4 of Part 10 in respect of losses incurred by the company in the life assurance business in an accounting period is reduced in accordance with section 434AZB.
- (2) This section applies in the case of a company where—
- (a) there has been a relevant addition to one or more non-profit funds in a period of account ending no later than the accounting period (“the relevant period of account”) (see subsection (3)),
- (b) the company is not a non-profit company in relation to the relevant period of account and has not elected under subsection (9) of section 83YA of the Finance Act 1989 to be treated for the purposes of that section as if it were, and
- (c) condition A or B is met,
and, if the relevant period of account is not the period of account ending with the accounting period (“the current period of account”), condition C is also met.
- (3) For the purposes of subsection (2), there is a relevant addition to a non-profit fund in the relevant period of account if an amount is shown as a transfer from non-technical account in line 32 of the Form 58 of the non-profit fund in the periodical return for that period of account.
- (4) Condition A is that there is a relevant book value election in relation to assets of a non-profit fund of the company.
- (5) For the purposes of subsection (4), there is a relevant book value election in relation to assets of a non-profit fund if an amount is shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account.
- (6) Condition B is that the company is party to arrangements the main purpose, or one of the main purposes, of which is to reduce the relevant admissible value of assets of a non-profit fund of the company, other than any structural assets.
- (7) For the purposes of subsection (6) (and section 434AZB), the “*relevant admissible value*” means the value reflected in line 89 of Form 13 of the periodical return for the current period of account.
- (8) Condition C is that the surplus arising since the last valuation shown in line 34 of the Form 58 of the non-profit fund, or any of the non-profit funds, in relation to which condition A or B is met in the periodical return for the current period of account is a negative amount.
#### Determination of reduced rate for building societies and composite rate for banks etc.
##### 434AZB
- (1) The amount of the relief allowable as mentioned in section 434AZA(1) is reduced by whichever of the following is the least—
- (a) the amount of the loss,
- (b) the amount specified in subsection (2), and
- (c) the amount specified in subsection (4).
- (2) The amount mentioned in subsection (1)(b) is—
- (a) where only condition A in section 434AZA is met, the relevant amount relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant amounts relating to them,
- (b) where only condition B is met, the amount of the relevant reduction relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant reductions relating to them, and
- (c) where both condition A and condition B are met, the aggregate of the amounts in paragraphs (a) and (b).
- (3) In subsection (2)—
- (a) “*relevant amount*”, in relation to a non-profit fund, means the amount shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account (as reduced by any amount which has had effect to reduce relief for losses for a previous accounting period), and
- (b) “*relevant reduction*”, in relation to a non-profit fund, means the reduction of the relevant admissible value of assets of the non-profit fund (other than structural assets) which is attributable to the arrangements (as so reduced).
- (4) The amount mentioned in subsection (1)(c) is—
- (a) if the relevant period of account is the current period of account, the amount referred to in section 434AZA(3) in the case of the non-profit fund, or of each of the non-profit funds, to which there has been a relevant addition in the relevant period of account, and
- (b) otherwise, so much of the amount shown in line 31 of the Form 58 of the non-profit fund or non-profit funds in the periodical return for the current period of account as is attributable to the amount so referred to.
##### 434AZC
- (1) For the purposes of sections 434AZA and 434AZB, a non-profit fund required to support a with-profits fund is to be treated as not being a non-profit fund.
- (2) Sections 434AZA and 434AZB apply to a non-profit part of a with-profits fund as if references to something shown in the Form 14 or Form 58 of the non-profit fund in a periodical return were to what would be so shown if there were a Form 14 or Form 58 of the non-profit part of the with-profits fund in the periodical return.
- (3) In sections 434AZA and 434AZB—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
- “*structural assets*” has the same meaning as in section 83XA of the Finance Act 1989 (see subsection (3) of that section and any regulations made under it).
##### 434B
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 436A
- (1) The charge to corporation tax on income applies to profits arising to an insurance company from gross roll-up business.
- (2) For that purpose—
- (a) the gross roll-up business is to be treated separately, and
- (b) the profits from it are to be computed in accordance with the life assurance trade profits provisions.
- (3) In making that computation, sections 82 and 82B to 83AB 83ZA of the Finance Act 1989 apply with the necessary modifications.
- (4) If in any accounting period an insurance company incurs a loss, to be computed on the same basis as the profits, arising from its gross roll-up business—
- (a) the loss must be set off against the amount of any profits chargeable under this section for any subsequent accounting period, and
- (b) accordingly, the amount of the company's profits so charged in any such accounting period is to be treated as reduced by the amount of the loss or so much of that amount as cannot be relieved under this section against profits of an earlier accounting period.
- (5) Section 396 does not apply to a loss incurred by an insurance company on its gross roll-up business.
- (6) No loss to which section 396 applies may be set off . . . against the amount of any profits chargeable under this section.
- (7) This section does not apply in relation to an insurance company for an accounting period if the profits of its long-term business for the accounting period are charged to tax under section 35 of CTA 2009 (charge on trade profits).
##### 436B
- (1) Gains referable to gross roll-up business are not chargeable gains.
- (2) For the purposes of this section “*gains referable to gross roll-up business*” means gains which—
- (a) accrue to an insurance company on the disposal by it of assets of its long-term insurance fund, and
- (b) are referable (in accordance with section 432A) to gross roll-up business.
##### 437A
- (1) For the purposes of section 437 an annuity is a steep-reduction annuity if—
- (a) the amount of any payment in respect of the annuity (but not the term of the annuity) depends on any contingency other than the duration of a human life or lives;
- (b) the annuitant is entitled in respect of the annuity to payments of different amounts at different times; and
- (c) those payments include a payment (“*a reduced payment*”) of an amount which is substantially smaller than the amount of at least one of the earlier payments in respect of that annuity to which the annuitant is entitled.
- (2) Where there are different intervals between payments to which an annuitant is entitled in respect of any annuity, the question whether or not the conditions in subsection (1)(b) and (c) above are satisfied in the case of that annuity shall be determined by assuming—
- (a) that the annuitant’s entitlement, after the first payment, to payments in respect of that annuity is an entitlement to payments at yearly intervals on the anniversary of the first payment; and
- (b) that the amount to which the annuitant is assumed to be entitled on each such anniversary is equal to the annuitant’s assumed entitlement for the year ending with that anniversary.
- (3) For the purposes of subsection (2) above an annuitant’s assumed entitlement for any year shall be determined as follows—
- (a) the annuitant’s entitlement to each payment in respect of the annuity shall be taken to accrue at a constant rate during the interval between the previous payment and that payment; and
- (b) his assumed entitlement for any year shall be taken to be equal to the aggregate of the amounts which, in accordance with paragraph (a) above, are treated as accruing in that year.
- (4) In the case of an annuity to which subsection (2) above applies, the reference in section 437(1CB)(a) to the making of a reduced payment shall be construed as if it were a reference to the making of a payment in respect of that annuity which (applying subsection (3)(a) above) is taken to accrue at a rate that is substantially less than the rate at which at least one of the earlier payments in respect of that annuity is taken to accrue.
- (5) Where—
- (a) any question arises for the purposes of this section whether the amount of any payment in respect of any annuity—
- (i) is substantially smaller than the amount of, or
- (ii) accrues at a rate substantially less than,
an earlier payment in respect of that annuity, and
- (b) the annuitant or, as the case may be, every annuitant is an individual who is beneficially entitled to all the rights conferred on him as such an annuitant,
that question shall be determined without regard to so much of the difference between the amounts or rates as is referable to a reduction falling to be made as a result of the occurrence of a death.
- (6) Where the amount of any one or more of the payments to which an annuitant is entitled in respect of an annuity depends on any contingency, his entitlement to payments in respect of that annuity shall be determined for the purposes of section 437(1CA) to (1CC) and this section according to whatever (applying any relevant actuarial principles) is the most likely outcome in relation to that contingency.
- (7) Where any agreement or arrangement has effect for varying the rights of an annuitant in relation to a payment in respect of any annuity, that payment shall be taken, for the purposes of section 437(1CA) to (1CC) and this section, to be a payment of the amount to which the annuitant is entitled in accordance with that agreement or arrangement.
- (8) References in this section to a contingency include references to a contingency that consists wholly or partly in the exercise by any person of any option.
##### 438B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 438C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440B
- (1) The following provisions apply where the profits of a company’s life assurance business are charged to tax under section 35 of CTA 2009 (charge on trade profits)in accordance with section 431G(3).
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Subsection (1) of section 440 applies as if the only categories set out in subsection (4) of that section were—
- (a) assets of the long-term insurance fund, and
- (b) other assets.
- (4) Section 440A applies as if for paragraphs (a), (d) and (e) of subsection (2) there were substituted—
- (“) so many of the securities as are included in the company's long-term insurance fund shall be treated for the purposes of corporation tax as a separate holding which is an asset of that fund, and
- (b) any remaining securities shall be treated for those purposes as a separate holding which is not of the description mentioned in the preceding paragraph.”.
- (4A) Section 440(2) does not apply if either the transferor or the company by which the asset is acquired is a company whose profits are charged to tax under section 35 of CTA 2009 (or if they both are).
- (4B) Section 211 of the 1992 Act does not apply in relation to assets which are referable to the life assurance business of the transferor if the transferor is a company whose profits are charged to tax under section 35 of CTA 2009.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440C
- (1) Subsection (2) makes provision for a case where—
- (a) subsection (4) of section 431G applies in relation to the profits of the life assurance business of an insurance company for any accounting period, but
- (b) the profits of that business for a succeeding accounting period fall to be charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of subsection (3) of that section.
- (2) The loss referred to in section 431G(4)(b) (less any loss for the same accounting period set off under section 436A for any intervening accounting period and any amount deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989) may be set off under section 393 against profits of that succeeding accounting period (without being reduced in accordance with section 434A(2)(a)).
- (3) In determining whether any loss has been set off under section 436A for any intervening accounting period, or whether any amount has been deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989, losses of earlier accounting periods are to be assumed to be set off before those of later accounting periods.
- (4) Subsection (5) makes provision for a case where—
- (a) a loss arises to an insurance company for an accounting period for which the profits of its life assurance business fall to be charged to tax under section 35 of CTA 2009 by virtue of section 431G(3)(b),
- (b) the profits of that business for a subsequent accounting period are charged to tax under the I minus E basis, and
- (c) had those profits (instead) been charged to tax under section 35 of CTA 2009, any of that loss would have been available to be set off against them under section 393.
- (5) The loss is to be treated for the purposes of the operation of section 436A in relation to the subsequent accounting period as if it were a loss arising from its gross roll-up business in the accounting period in which it arose.
- (6) Subsections (7) and (8) make provision for a case where—
- (a) the profits of the life assurance business of an insurance company for an accounting period are charged to tax under the I minus E basis,
- (b) the profits of that business for its next accounting period fall to be charged to tax under section 35 of CTA 2009 by virtue of section 431G(3), and
- (c) that prevents the giving of relief in accordance with section 86(8) of the Finance Act 1989 (acquisition expenses relieved in fractions under section 76).
- (7) Any relief which would have been so given in—
- (a) the next accounting period, or
- (b) any subsequent accounting period for which the profits of the company's life assurance business continue to be charged to tax under section 35 of CTA 2009,
may be given by set-off against any gains treated as accruing under section 213(1) of the 1992 Act at the end of the accounting period.
- (8) But if the profits of the company's life assurance business for a subsequent accounting period are charged to tax under the I minus E basis, any relief not previously given under subsection (7) is to be treated for the purposes of the operation of section 76 in relation to the first subsequent accounting period for which profits are so charged as if it were an amount which is to be relieved under that section by virtue of section 86(8) and (9) of the Finance Act 1989.
#### Treatment of oil extraction activities etc. for tax purposes.
##### 440D
Schedule 19ABA (which makes modifications of this Act in relation to BLAGAB group reinsurers) shall have effect.
##### 441B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 442A
- (1) Where an insurance company reinsures any risk in respect of a policy or contract attributable to its basic life assurance and general annuity business, the investment return on the policy or contract shall be treated as accruing to the company while the risk remains reinsured by the company under the reinsurance arrangement and shall be charged to tax under the charge to corporation tax on income.
- (2) The Board may make provision by regulations as to the amount of investment return to be treated as accruing in each accounting period during which the reinsurance arrangement is in force.
- (3) The regulations may, in particular, provide that the investment return to be treated as accruing to the company in respect of a policy or contract in any accounting period shall be calculated by reference to—
- (a) the aggregate of the sums paid by the company to the reinsurer during that accounting period and any earlier accounting periods by way of premium or otherwise;
- (b) the aggregate of the sums paid by the reinsurer to the company during that accounting period and any earlier accounting periods by way of commission or otherwise;
- (c) the aggregate amount of the net investment return treated as accruing to the company in any earlier accounting periods, that is to say, net of tax at such rate as may be prescribed; and
- (d) such percentage rate of return as may be prescribed.
- (3A) Where a transfer of the reinsurance arrangement from one insurance company (“*the transferor*”) to another (“*the transferee*”) is effected by novation or an insurance business transfer scheme, for the purpose of calculating the investment return to be treated as accruing to the transferee in respect of the policy or contract after the transfer, the references to the company in subsection (3)(a), (b) and (c) above include (as well as the transferee)—
- (a) the transferor, and
- (b) any insurance company from which the reinsurance arrangement was transferred on an earlier transfer effected by novation or an insurance business transfer scheme.
- (4) The regulations shall provide that the amount of investment return to be treated as accruing . . . in respect of a policy or contract in the final accounting period during which the policy or contract is in force is the amount, ascertained in accordance with regulations, by which the profit over the whole period during which the policy or contract, and the reinsurance arrangement, were in force exceeds the aggregate of the amounts treated as accruing in earlier accounting periods.
- (5) Regulations under this section—
- (a) may exclude from the operation of this section such descriptions of insurance company, such descriptions of policies or contracts and such descriptions of reinsurance arrangements as may be prescribed;
- (b) may make such supplementary provision as to the ascertainment of the investment return to be treated as accruing to the company as appears to the Board to be appropriate, including provision requiring payments made during an accounting period to be treated as made on such date or dates as may be prescribed; and
- (c) may make different provision for different cases or descriptions of case.
- (6) In this section “*prescribed*” means prescribed by regulations under this section.
##### 444AZA
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in respect of that business under the I minus E basis,
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3), and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) Any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits chargeable under section 436A (a “qualifying loss of the transferor”) shall instead be treated as a loss of the transferee . . . available to be set off against GRBP in relation to a period of account.
- (3) For the purposes of subsection (2) above “*GRBP*”, in relation to a period of account, is—
$P×GRBTLTL$
where—
- *P* is the amount of such profits of the transferee's life assurance business for the period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable),
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of any qualifying loss of the transferor to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
#### Valuation of oil disposed of or appropriated in certain circumstances.
##### 444AZB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3),
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under the I minus E basis, and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) The relevant fraction of any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits of that business (a “qualifying loss of the transferor”) shall instead be treated as a loss of the transferee . . . available to be set off against the amount of such profits chargeable under section 436A for a period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable).
- (3) For the purposes of subsection (2) above “*the relevant fraction*”, in relation to a period of account, is—
$GRBTLTL$
where—
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of the amount of any qualifying loss of the transferor to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
##### 444AA
- (1) This section applies where the whole of the long-term business of a person (“*the transferor*”) is transferred from that person–
- (a) by one insurance business transfer scheme, or
- (b) by two or more insurance business transfer schemes which take effect on the same date.
- (2) Where (apart from this subsection) there would not be a periodical return of the transferor covering a period ending immediately before the transfer date, there is to be deemed for the purposes of corporation tax to be a periodical return of the transferor covering the period—
- (a) beginning immediately after the last period ending before the transfer date which is covered by a periodical return of the transferor, and
- (b) ending immediately before the transfer date.
- (3) The periodical return deemed to exist by subsection (2) above is to be deemed to contain—
- (a) such entries as would be included in an actual periodical return of the transferor covering the period mentioned in subsection (2) above, and
- (b) such entries as would be included in an actual periodical return of the transferor covering the period—
- (i) beginning immediately after the end of the period mentioned in subsection (2) above, and
- (ii) ending immediately before the transfer had effect,
and the period mentioned in subsection (2) above is to be deemed to be a period of account (but not an accounting period) of the transferor.
- (4) There is to be deemed for the purposes of corporation tax to be a periodical return of the transferor—
- (a) covering the transfer date, and
- (b) containing the appropriate entries.
- (5) In subsection (4) above “*appropriate entries*” means such entries as would be included in an actual periodical return covering the transfer date—
- (a) in line 32 of Form 40, and
- (b) in line 11 of Form 14, in both columns (treating references in that form to “current year” as references to the time immediately after the transfer date and to “previous year” as references to the time immediately before the transfer date).
- (6) A transfer date covered by a periodical return deemed to exist by subsection (4) above is to be deemed to be a period of account of the transferor only for the purpose of taking into account profits under section 444ABD.
- (7) Where—
- (a) a periodical return deemed to exist by subsection (4) above is preceded by an actual periodical return of the transferor covering the period immediately before the transfer date, and
- (b) profits are to be taken into account under section 444ABD in the period of account deemed to exist by subsection (6) above,
those profits are to be deemed for the purposes of corporation tax to be profits arising on the last day of the period of account covered by the actual periodical return.
- (8) Any actual periodical return of the transferor covering a period which includes the transfer date is to be ignored for the purposes of corporation tax.
- (9) In this section and sections 444AB to 444AECC “*the transfer date*”, in relation to an insurance business transfer scheme, means the date on which it takes effect.
##### 444AB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer long-term business of a person (“*the transferor*”) to another person (“*the transferee*”), and
- (b) condition A or condition B is met.
- (2) Condition A is met if any of the assets of the transferor's long-term insurance fund which are transferred . . . by the insurance business transfer scheme are not, immediately after their transfer—
- (a) if the transferee is an insurance company or an insurance special purpose vehicle, assets of the transferee's long-term insurance fund, or
- (b) if the transferee is not an insurance company , an insurance special purpose vehicleor a friendly society, assets of a fund of the transferee which would be a with-profits fund if the transferee were an insurance company,
(“relevant non-transferred assets”).
- (3) Condition B is met if, immediately after the transfer date, the transferor—
- (a) does not carry on long-term business, but
- (b) holds any assets which, immediately before the transfer date, were assets of its long-term insurance fund (“retained assets”).
- (4) If there are relevant non-transferred assets or retained assets (or both) the relevant amount in relation to them (see subsection (5) below) is to be taken into account under section 83(2) of the Finance Act 1989 as an increase in value of the assets of the long-term insurance fund of the transferor for the relevant period of account (see subsection (6) below).
- (5) Section 444ABA makes provision for the calculation of the relevant amount in relation to relevant non-transferred assets; and section 444ABB makes provision for its calculation in relation to retained assets.
- (5A) In this section references to assets held by the transferor after the transfer do not include—
- (a) assets held on trust for the transferee, or
- (b) assets held to meet liabilities which have been wholly reinsured and which are intended to be transferred under an insurance business transfer scheme to the reinsurer.
- (6) In this section and sections 444ABA to 444AC “*the relevant period of account*” means the period of account of the transferor ending, or treated by section 444AA(2) as ending, immediately before the transfer date.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
- (8) For the purpose of paragraph (2)(a), in relation to an insurance special purpose vehicle which is not an insurance company, “*long-term insurance fund*” has the meaning it has in paragraph 4(5) of Schedule 19ABA.
##### 444ABA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are relevant non-transferred assets is—
$$FVA-BTO$where—FVA is the fair value of the assets on the transfer date, andBTO is the lesser of ABTO and AL13, where—ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andAL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.$
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) See section 444AA for the meaning of “the transfer date”. . . in this section.
##### 444ABAA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are non-profit fund transferred assets is—
$$FVA-(ABTO+TL)$where—FVA is the fair value of the assets on the transfer date,ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andTL is the amount of any non-profit fund transferred liabilities which are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38, but not in line 61, in Form 14 in the periodical return for the period of account of the transferor ending (or treated as ending by section 444AA) immediately before the transfer date or, if there is no period of account of the transferor so ending (or treated as so ending), the amount of any liabilities which would be so shown if one did.$
- (2) In subsection (1) “*non-profit fund transferred liabilities*” means such of the liabilities of the transferor's long-term insurance fund as are transferred from the transferor to the transferee by the insurance business transfer scheme and were, immediately before their transfer, liabilities of a non-profit fund of the transferor.
- (3) See section 444AA for the meaning of “the transfer date” in this section.
#### Loan relationships etc.
##### 444ABB
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are retained assets is—
$FVA-ABDP-RL13-RRL$
where—
- FVA is the fair value of the assets on the transfer date,
- ABDP is the amount of the profits to be taken into account as profits under section 444ABD,
- RL13 is the amount by which AL13 exceeds VE, and
- RRL is the value of any relevant retained liabilities immediately after the transfer date.
But the relevant amount is nil if it would otherwise be below nil.
- (1A) For the purposes of subsection (1) above—
- (a) AL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date;
- (b) VE is the amount (if any) by which VL32 exceeds VTL where—
- (i) VL32 is the value of the assets shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor covering (or treated as covering) the transfer date, and
- (ii) VTL means the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by the insurance business transfer scheme; and
- (c) relevant retained liabilities are any liabilities of the company's long-term business which are owed by the company immediately after the transfer date and are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38 in Form 14 in a periodical return for the period of account ending (or treated as ending by section 444AA) immediately before the transfer date.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABBA
- (1) This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“*the transferor*”) to another (“*the transferee*”).
- (2) If the transferor and the transferee jointly elect, the transferee (and not the transferor) is chargeable to any amount of additional corporation tax to which the transferor would otherwise be chargeable by virtue of section 444AB(4) in relation to relevant non-transferred assets.
- (3) An election under subsection (2) above—
- (a) is to be irrevocable, and
- (b) is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 90 days beginning with the day following the transfer date,
and a copy of the notice containing the election must accompany the tax return of the transferee for the first accounting period ending after the transfer. Paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.
- (4) Where an election under subsection (2) above has been made, the transferor must inform the transferee of—
- (a) the amount of any additional corporation tax to which the transferor considers the election to apply, and
- (b) the day on which that tax is due and payable,
no later than the end of the period of 8 months beginning with the day following the transfer date.
- (5) Tax chargeable on the transferee by virtue of an election under subsection (2) above—
- (a) is due in accordance with section 59D of the Management Act on the day on which it would have been due if no election had been made, and
- (b) for the purposes of that section, is to be treated as tax payable by the transferor (and not as tax payable by the transferee).
- (6) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ABD
- (1) Any profits representing the amount by which—
- (a) the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by an insurance business transfer scheme, exceeds
- (b) the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in line 32 of Form 40 of the periodical return of the transferor for the period of account of the transferor including the transfer date,
are to be taken into account as profits of that period of account in accordance with subsections (1A) and (1C) below.
- (1A) Where the profits of the life assurance business of the transferor for a period of account are charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3), the appropriate fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 35 of that Act (and not otherwise).
- (1B) For the purposes of subsection (1A) above “the appropriate fraction” is the appropriate fraction for the purposes of section 432G(1).
- (1C) Where the profits of the life assurance business of the transferor for a period of account are charged to tax under the I minus E basis, the relevant fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 436A (and not otherwise).
- (1D) For the purposes of subsection (1C) above “the relevant fraction” is the relevant fraction for the purposes of section 432G(4).
- (1E) Where the value mentioned in paragraph (b) of subsection (1) above exceeds the amount mentioned in paragraph (a) of that subsection, the amount of the excess is not to be taken into account as a loss of the transferor.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AC
- (1) This section applies where an insurance business transfer scheme has effect to transfer . . . long-term business of a person (“*the transferor*”) to another person (“*the transferee*”) and the condition in subsection (2) below is met.
- (2) The condition is that the transferor did not carry on life assurance business that is mutual business during the relevant period of account.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amount which (apart from this section) would be regarded as other income of the transferee for the purposes of section 83(2)(e) of the Finance Act 1989 for the period of account of the transferee which includes the transfer date is to be reduced by an amount equal to the lesser of the transferred surplus and any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.
- (5) In subsection (4) above “*the transferred surplus*”is VE – RBTO where—
- (a) VE has the same meaning as in section 444ABB, and
- (b) RBTO means so much of BTO as relates to relevant non-transferred assets transferred to the transferee where—
- (i) BTO has the same meaning as in section 444ABA, and
- (ii) “*relevant non-transferred assets*” has the same meaning as in section 444AB.
- (5A) Where the transfer is to more than one transferee, the amount of any reduction to be made in accordance with subsection (4) above is to be apportioned to each transferee on a just and reasonable basis.
- (6) See section 444AA for the meaning of “the transfer date”, and section 444AB for the meaning of “the relevant period of account”, in this section.
##### 444ACZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ACA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AE
- (1) Where an insurance business transfer scheme has effect to transfer the relevant financing arrangements entered into in relation to a non-profit fund of an insurance company (“*the transferor*”) to another person (“*the transferee*”), after the transfer—
- (a) they are to be treated for the purposes of sections 83YC and 83YD of the Finance Act 1989 as having been entered into by the transferee, but
- (b) the references in those sections to earlier periods of account of the transferee include earlier periods of account of the transferor.
- (2) But if the insurance business transfer scheme has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the transferor, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the transferor, or of the transferee or any of the transferees, ending after the transfer is to be made on a just and reasonable basis.
- (3) Subsection (4) below applies where—
- (a) relevant financing arrangements have been entered into in relation to a non-profit fund of an insurance company (“the old company”), and
- (b) as a result of any transaction other than an insurance business transfer scheme, another insurance company (“the new company”) becomes the debtor in respect of the money debt, or the cedant, under the financial reinsurance arrangements.
- (4) Where this subsection applies, after the transaction—
- (a) the relevant financing arrangements are to be treated for the purposes of sections 83YC and 83YD as having been entered into by the new company, but
- (b) the references in those sections to earlier periods of account of the new company include earlier periods of account of the old company, and
- (c) the transaction is not to be regarded as causing the condition in section 83YD(3) to be met in relation to the old company.
- (5) But if the transaction has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the old company, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the old company, or of the new company or any of the new companies, ending after the transaction is to be made on a just and reasonable basis.
- (6) Expressions used in this section and section 83YC or 83YD have the same meanings here as there.
##### 444AEA
- (1) This section applies where—
- (a) as a result of the whole . . . of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a life assurance trade profits advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of the whole . . . of the transfer scheme arrangements is the obtaining of that . . . advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” means an insurance business transfer scheme (“*the relevant transfer scheme*”) together with any relevant associated operations.
- (3) If a life assurance trade profits advantage is obtained by the transferor (see subsection (1) of section 444AEB), the amount of the . . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a life assurance trade profits advantage is obtained by the transferee (see subsection (1) of section 444AEC), the amount of the . . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) In this section and sections 444AEB to 444AECC“*relevant associated operations*”, in relation to the relevant transfer scheme, means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance,
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee, or
- (d) any surplus-increasing transfer of assets,
which is effected in connection with the relevant transfer scheme.
- (6) In subsection (5) above—
- “*dependant*” and “*insurance undertaking*” have the same meaning as in the Insurance Prudential Sourcebook, and
- “*surplus-increasing transfer of assets*” means a transfer of assets of the transferor's long-term insurance fund to the transferee which is not brought into account for any period of account of the transferee but increases the amount of total surplus shown in line 39 of Form 58 in any periodical return of the transferee.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AEB
- (1) A life assurance trade profits advantage is obtained by the transferor if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a life assurance trade profits advantage is obtained by the transferor, the amount of the advantage is the aggregate of—
- (a) the amounts (if any) by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, and
- (b) the amounts (if any) by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (4) In this section and sections 444AEC, 444AECB and 444AECC—
- “*section 35 profits*” and “*section 35 losses*” means profits and losses computed in accordance with the life assurance trade profits provisions, and
- “the relevant time” is the time at which any application under section 444AED is made, or, if no such application is made, the transfer date.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AEC
- (1) A life assurance trade profits advantage is obtained by the transferee if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a life assurance trade profits advantage is obtained by the transferee, the amount of the advantage is—
- (a) the amount by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) the amount by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (4) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “ section 35 profits” and “ section 35 losses” and “the relevant time”, in this section.
##### 444AECA
- (1) This section applies where—
- (a) as a result of any part of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a life assurance trade profits advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of that part of the transfer scheme arrangements is the obtaining of that . . . advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” has the same meaning as in section 444AEA.
- (3) If a life assurance trade profits advantage is obtained by the transferor (see subsection (1) of section 444AECB), the amount of the . . . advantage (see subsection (3) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a life assurance trade profits advantage is obtained by the transferee (see subsection (1) of section 444AECC), the amount of the . . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AECB
- (1) A life assurance trade profits advantage is obtained by the transferor if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the section 35 profits to be greater or the section 35 losses to be less than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a life assurance trade profits advantage is obtained by the transferor.
- (3) If a life assurance trade profits advantage is obtained by the transferor, the amount of the advantage is the aggregate of—
- (a) the amounts (if any) by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, and
- (b) the amounts (if any) by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (5) In this section and section 444AECC “*the relevant part of the arrangements*” means, in relation to a life assurance trade profits advantage, the part of the transfer scheme arrangements as a result of which the advantage is obtained.
- (6) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “ section 35 profits” and “ section 35 losses” and “the relevant time”, in this section.
##### 444AECC
- (1) A life assurance trade profits advantage is obtained by the transferee if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the section 35 profits to be greater, or the section 35 losses to be less, than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a life assurance trade profits advantage is obtained by the transferor.
- (3) If a life assurance trade profits advantage is obtained by the transferee, the amount of the advantage is—
- (a) the amount by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, or
- (b) the amount by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (5) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations”, section 444AEB for the meaning of “ section 35 profits” and “ section 35 losses” and “the relevant time” and section 444AECB for the meaning of “the relevant part of the arrangements”, in this section.
##### 444AED
- (1) Sections 444AEA and 444AECA do not apply in relation to the transferor or the transferee if, on an application under this section, the Commissioners for Her Majesty's Revenue and Customs (“the HMRC Commissioners”) have given a notice under subsection (2) below.
- (2) A notice under this subsection is a notice stating that the HMRC Commissioners are satisfied—
- (a) that the obtaining of a life assurance trade profits advantage by the applicant is not the sole or main purpose of the whole or any part of the transfer scheme arrangements, or
- (b) that the transferor and the transferee are members of the same group of companies and that there is no advantage to the group arising from any life assurance trade profits advantage obtained by the transferor or by the transferee.
- (3) For the purposes of this section there is no advantage to a group arising from any life assurance trade profits advantage obtained by the transferor or by the transferee if—
- (a) as a result of transfer scheme arrangements, there is an increase in the liability to corporation tax of one or more companies which are members of the group of companies, and
- (b) the amount (or aggregate amount) of that increase is not less than the reduction in the liability to corporation tax of the transferor or the transferee (or both) arising from the obtaining of the life assurance trade profits advantage.
- (4) An application under this section must be in writing and contain particulars of the transfer scheme arrangements.
- (5) The HMRC Commissioners may by notice require the applicant to provide further particulars in order to enable them to determine the application.
- (6) A requirement may be imposed under subsection (5) above within 30 days of the receipt of the application or of any further particulars required under that subsection.
- (7) If a notice under subsection (5) above is not complied with within 30 days or such longer period as the HMRC Commissioners may allow, they need not proceed further on the application.
- (8) The HMRC Commissioners must give notice of their decision on an application under this section to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of that notice being complied with.
- (9) If the HMRC Commissioners—
- (a) give notice to the applicant under subsection (8) above that they are not satisfied as mentioned in subsection (2) above, or
- (b) do not comply with subsection (8) above,
the applicant may require them to transmit the application to the tribunal.
- (10) A requirement under subsection (9) above must be imposed within 30 days of the giving of the notice or the failure to comply and must be accompanied by any notice given under subsection (5) above and further particulars provided pursuant to any such notice.
- (11) Any notice given by the tribunal has effect for the purposes of subsection (1) above as if it were given by the HMRC Commissioners.
- (12) If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for the decision of the HMRC Commissioners or the tribunal, any resulting notice that they are satisfied as mentioned in subsection (2) above is void.
- (13) For the purposes of this section two companies are members of the same group of companies if they are for the purposes of Chapter 4 of Part 10.
### Surpluses of mutual and former mutual businesses
##### 444AF
- (1) This section applies in relation to a period of account of an insurance company (“*the relevant period*”) if—
- (a) at any time in the relevant period the company carries on life assurance business that is not mutual business,
- (b) the company has an amount of undistributed demutualisation surplus for the relevant period (see subsection (7)), and
- (c) there is a reduction in the amount of the company's unappropriated surplus over the relevant period (see section 444AI).
- (2) Where this section applies in relation to the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund whichever of the following amounts is the smallest—
- (a) the amount of the reduction mentioned in subsection (1)(c) above;
- (b) the amount of the company's undistributed demutualisation surplus for the relevant period;
- (c) the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (4) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if for “smallest” there were substituted smaller and as if paragraph (c) were omitted.
- (5) This section shall have effect—
- (a) for the purposes of computing in accordance with the life assurance trade profits provisions the profits of the company's life assurance business, and
- (b) for the purposes of so computing profits of the company chargeable . . . under section 436A (gross roll-up business).
- (6) But for the purposes mentioned in subsection (5)(b) above, this section and section 444AG have effect subject to the modification in section 444AH; and the Corporation Tax Acts have effect accordingly (so that there may, in particular, be a difference between—
- (a) the amount deemed to be brought into account by virtue of subsection (2) above for a period of account for those purposes, and
- (b) the amount so deemed to be brought into account for that period of account for the purposes mentioned in subsection (5)(a) above).
- (7) For the purposes of this section, the undistributed demutualisation surplus of an insurance company for the relevant period is—
- (a) an amount equal to (UDSP – AD + DTSI – DTSO); or
- (b) if that amount is a negative amount, nil.
For this purpose—
- UDSP is the undistributed demutualisation surplus of the company for the period of account immediately preceding the relevant period,
- AD is any amount deemed under this section to be brought into account for the period of account immediately preceding the relevant period as an increase in the value of the assets of the company's long-term insurance fund,
- DTSI is the total amount of any demutualisation transfer surpluses accruing to the company during the relevant period (see section 444AG),
- DTSO is the total amount of any demutualisation transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
##### 444AG
- (1) For the purposes of section 444AF and this section, a demutualisation transfer surplus accrues to an insurance company where—
- (a) life assurance business is transferred to the company by a person (“*the transferor*”),
- (b) after the transfer, the company carries on the transferred business otherwise than as mutual business, and
- (c) the condition in subsection (2) below is satisfied in relation to the transfer.
- (2) The condition is that—
- (a) immediately before the transfer, the transferor carried on the transferred business as mutual business, or
- (b) where paragraph (a) above does not apply, some or all of the transferred business was carried on by an insurance company as mutual business at a time on or after 1st January 1990 and before the transfer (“former mutual business”).
- (3) The demutualisation transfer surplus accrues to the company on the date of the transfer.
- (4) The amount of the demutualisation transfer surplus is given by subsection (5) or (6) below.
- (5) Where subsection (2)(a) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer, the aggregate of—
- (i) the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer, and
- (ii) the amount of any added surplus accruing to the company in connection with the transfer (see subsection (10));
- (b) otherwise, a just and reasonable portion of that aggregate amount, having regard to how much of the transferor's life assurance business was transferred to the company under the transfer.
- (6) Where subsection (2)(b) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer and all of the transferred business is former mutual business, the former mutual surplus of the transferor on the transfer date (see subsection (7));
- (b) otherwise, so much of that former mutual surplus as it is just and reasonable to attribute to the company, having regard in particular to—
- (i) how much of the transferor's life assurance business was transferred to the company under the transfer, and
- (ii) how much of the transferred business is former mutual business.
- (7) For the purposes of subsection (6) above, the former mutual surplus of the transferor on the transfer date is—
- (a) the amount given by subsection (8) below, or
- (b) if less, the amount given by subsection (9) below.
- (8) The amount given by this subsection is the total amount of any demutualisation transfer surpluses accruing to the transferor—
- (a) on or after 1st January 1990, and
- (b) on or before the date of the transfer.
- (9) The amount given by this subsection is the lowest amount of unappropriated surplus of the transferor at the end of any period of account ending—
- (a) on or after the date of the last occasion on which a demutualisation transfer surplus accrued to it as mentioned in subsection (8) above, and
- (b) on or before the date of the transfer.
- (10) For the purposes of this section, added surplus accrues to the company in connection with the transfer if—
- (a) an amount of assets is received by the company in connection with the transfer, no later than six months after the date of the transfer,
- (b) the amount is not brought into account by the company,
- (c) the amount is added to the unappropriated surplus of the company, and
- (d) the amount does not derive from any unappropriated surplus of the transferor;
and the amount of the added surplus is the amount referred to in paragraphs (a) to (d) above.
##### 444AH
- (1) The modification in this section has effect for the purposes mentioned in section 444AF(5)(b) only.
- (2) In relation to any demutualisation transfer surplus accruing to a company in a post-2002 period of account—
- (a) the references in section 444AG(5) to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer shall be taken to be references to—
- (i) the amount of that unappropriated surplus, or
- (ii) if less, the unappropriated surplus of the transferor at the end of the period of account immediately preceding the first post-2002 period of account of the transferor; and
- (b) the references in sections 444AF and 444AG to the amount of any demutualisation transfer surplus are to have effect accordingly.
- (3) In this section “*post-2002 period of account*”, in relation to an insurance company, means a period of account of the company beginning on or after 1st January 2003 and ending on or after 9th April 2003.
##### 444AI
- (1) For the purposes of section 444AF—
- (a) there is a reduction in the amount of the company's unappropriated surplus over the relevant period if CUS is less than (OUS + TSI – TSO);
- (b) the amount of that reduction is the amount by which CUS is less than (OUS + TSI – TSO).
- (2) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- TSI is the total amount of any transfer surpluses accruing to the company during the relevant period (see subsections (3) to (7)),
- TSO is the total amount of any transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
- (3) For the purposes of this section, a transfer surplus accrues to an insurance company where life assurance business is transferred to the company by a person (“*the transferor*”).
- (4) The transfer surplus accrues to the company on the date of the transfer.
- (5) The amount of the transfer surplus is equal to so much of the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer as is transferred to the company under the transfer.
- (6) But if, immediately before the transfer, the transferor carried on the transferred business as mutual business, the amount of the transfer surplus is the aggregate of—
- (a) the amount given by subsection (5) above, and
- (b) the amount of any added surplus accruing to the company in connection with the transfer.
- (7) Subsection (10) of section 444AG applies for the purposes of subsection (6) above as it applies for the purposes of that section.
##### 444AJ
- (1) For the purposes of sections 444AF and 444AK, the amount of the company's relevant receipts reduction for the relevant period is to be calculated by—
- (a) determining, in the case of each with-profits fund of the company, the amount given by subsection (2) or (6) below for the relevant period, and
- (b) aggregating each of those amounts.
- (2) The amount, in the case of a fund other than a policy holder participation fund, is—
- (a) where the gross transfer to non-technical account for the fund for the relevant period (see subsections (3) and (4)) is greater than the post-policy holder surplus for the fund for the relevant period (see subsection (5)), the amount of the difference;
- (b) otherwise, nil.
- (3) In this section “*the gross transfer to non-technical account*” means the amount shown in line 13 of Form 58 for the fund.
- (4) But if—
- (a) there is a transfer from a with-profits fund of the company to another fund of the company (“the initial transfer”) which is shown in (or included in an amount shown in) line 14 of Form 58 for the with-profits fund,
- (b) there is a transfer from a fund of the company (whether or not the other fund mentioned in paragraph (a) above) to the non-technical account which is shown in (or included in an amount shown in) line 13 of Form 58 for that fund, and
- (c) the transfer to the non-technical account can reasonably be regarded as connected with the initial transfer,
the amount of the gross transfer to non-technical account for the relevant period given by subsection (3) above in the case of the with-profits fund is to be increased by the amount transferred to the non-technical account.
- (5) In this section “*post-policy holder surplus*” means an amount equal to—
$$SA-TAP$where—SA is—(a) the amount shown in line 34 of Form 58 for the fund (surplus arising since last valuation), or(b) if that amount is a negative amount, nil;TAP is the amount shown in line 46 of Form 58 for the fund (total allocated to policy holders).$
- (6) The amount, in the case of a policy holder participation fund, is—
- (a) where TAP is greater than SA, the amount of the difference;
- (b) otherwise, nil;
and for this purpose “*SA*” and “*TAP*” have the same meaning as in subsection (5) above.
- (7) References in this section to Form 58 are references to that Form in the periodical return of the company for the relevant period.
- (8) In this section “*policy holder participation fund*” means a fund in the case of which an amount equal to the amount shown in line 34 of Form 58 for the fund is allocated to policy holders for the relevant period.
##### 444AK
- (1) This section applies if at any time in a period of account of an insurance company (“*the relevant period*”)—
- (a) the company carries on life assurance business as mutual business, and
- (b) the company carries on gross roll-up business.
- (2) If there is a reduction in the amount of the company's unappropriated surplus over the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund—
- (a) the amount of that reduction, or
- (b) if less, the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) But subsection (2) above shall have effect only for the purposes of computing in accordance with the life assurance trade profits provisions the profits for the relevant period of the company's gross roll-up business.
- (4) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (5) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if paragraph (b) and the word “or” before it were omitted.
- (6) For the purposes of this section, there is a reduction in the amount of the company's unappropriated surplus over the relevant period if—
- (a) CUS is less than OUS, and
- (b) CUS is less than UUS.
- (7) The amount of that reduction is—
- (a) the amount by which CUS is less than OUS, or
- (b) if OUS is greater than UUS, the amount by which CUS is less than UUS.
- (8) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- UUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the first period of account of the company to begin on or after 1st January 2003 and to end on or after 9th April 2003.
##### 444AL
- (1) This section applies for the purposes of sections 444AF to 444AK.
- (2) References to mutual business, in relation to any time, include business which at that time is treated for the purposes of section 432E as mutual business.
- (3) “*Unappropriated surplus*”, in relation to a period of account of an insurance company, means an unappropriated surplus on valuation as shown in the periodical return of the company for the period of account.
- (4) References to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer are, where a period of account of the transferor does not end at that time, references to the unappropriated surplus on valuation that would have been shown in a periodical return of the transferor for that period had such a return been drawn up.
### Provisions applying in relation to overseas life insurance companies
##### 444B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certified unit trusts: distributions.
##### 444C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Equalisation reserves
##### 444BA
- (1) Subject to the following provisions of this section and to sections 444BB to 444BD, the rules in subsection (2) below shall apply in making any computation, for the purposes of section 35 of CTA 2009 (charge on trade profits), of the profits or losses for any accounting period of an insurance company whose business has at any time been or included business in respect of which it was required, by virtue of equalisation reserve rules, to maintain an equalisation reserve.
- (2) Those rules are—
- (a) that amounts which, in accordance with equalisation reserve rules, are transferred into the equalisation reserve in respect of the company’s business for the accounting period in question are to be deductible;
- (b) that amounts which, in accordance with any such regulations, are transferred out of the reserve in respect of the company’s business for that period are to be treated as receipts of that business; and
- (c) that it must be assumed that all such transfers as are required by equalisation reserve rules to be made into or out of the reserve in respect of the company’s business for any period are made as required.
- (3) Where an insurance company having any business in respect of which it is required, by virtue of equalisation reserve rules, to maintain an equalisation reserve ceases to trade—
- (a) any balance which exists in the reserve at that time for the purposes of the Tax Acts shall be deemed to have been transferred out of the reserve immediately before the company ceases to trade; and
- (b) that transfer out shall be deemed to be a transfer in respect of the company’s business for the accounting period in which the company so ceases and to have been required by equalisation reserve rules.
- (4) Where—
- (a) an amount is transferred into an equalisation reserve in respect of the business of an insurance company for any accounting period,
- (b) the rule in subsection (2)(a) above would apply to the transfer of that amount but for this subsection,
- (c) that company by notice in writing to an officer of the Board makes an election in relation to that amount for the purposes of this subsection, and
- (d) the notice of the election is given not more than two years after the end of that period,
the rule mentioned in subsection (2)(a) above shall not apply to that transfer of that amount and, instead, the amount transferred (the “unrelieved transfer”) shall be carried forward for the purposes of subsection (5) below to the next accounting period and (subject to subsection (6) below) from accounting period to accounting period.
- (5) Where—
- (a) in accordance with equalisation reserve rules, a transfer is made out of an equalisation reserve in respect of an insurance company’s business for any accounting period,
- (b) the rule in subsection (2)(b) above would apply to the transfer but for this subsection, and
- (c) the accounting period is one to which any amount representing one or more unrelieved transfers has been carried forward under subsection (4) above,
that rule mentioned in subsection (2)(b) above shall not apply to that transfer except to the extent (if any) that the amount of the transfer exceeds the aggregate of the amounts representing unrelieved transfers carried forward to that period.
- (6) Where in the case of any company—
- (a) any amount representing one or more unrelieved transfers is carried forward to an accounting period in accordance with subsection (4) above, and
- (b) by virtue of subsection (5) above the rule in subsection (2)(b) above does not apply to an amount representing the whole or any part of any transfer out of an equalisation reserve in respect of the company’s business for that period,
the amount mentioned in paragraph (a) above shall not be carried forward under subsection (4) above to the next accounting period except to the extent (if any) that it exceeds the amount mentioned in paragraph (b) above.
- (7) To the extent that any actual or assumed transfer in accordance with equalisation reserve rules of any amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes—
- (a) the rule in subsection (2)(a) above shall not apply to that transfer; and
- (b) the making of that transfer shall be disregarded in determining, for the purposes of the Tax Acts, whether and to what extent there is subsequently any requirement to make a transfer into or out of the reserve in accordance with equalisation reserve rules;
and this subsection applies irrespective of whether the insurance company in question is a party to the arrangements.
- (8) For the purposes of this section the transfer of an amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes to the extent that the arrangements to which it is attributable are arrangements—
- (a) the sole or main purpose of which is, or
- (b) the sole or main benefit accruing from which might (but for subsection (7) above) be expected to be,
the reduction by virtue of this section of any liability to tax.
- (9) Where—
- (a) any transfer made into or out of an equalisation reserve maintained by an insurance company is made in accordance with equalisation reserve rules in respect of business carried on by that company over a period (“the equalisation period”), and
- (b) parts of the equalisation period are in different accounting periods,
the amount transferred shall be apportioned for the purposes of this section between the different accounting periods in the proportions that correspond to the number of days in the equalisation period that are included in each of those accounting periods.
- (10) The Treasury may by regulations provide in relation to any accounting periods ending on or after 1st April 1996 for specified transitional provisions contained in equalisation reserve rules to be disregarded for the purposes of the Tax Acts in determining how much is required, on any occasion, to be transferred into or out of any equalisation reserve in accordance with the rules.
- (11) In this section, and in sections 444BB to 444BD, “equalisation reserves rules” means the rules in chapter 1.4 of the Insurance Prudential Sourcebook.
##### 444BB
- (1) The Treasury may by regulations make provision modifying section 444BA so as, in cases mentioned in subsection (2) below—
- (a) to require—
- (i) sums by reference to which the amount of any transfer into or out of an equalisation reserve falls to be computed, or
- (ii) the amount of any such transfer,
to be apportioned between different parts of the business carried on for any period by an insurance company; and
- (b) to provide for the purposes of corporation tax for the amounts taken to be transferred into or out of an equalisation reserve to be computed disregarding any such sum or, as the case may be, any such part of a transfer as is attributed, in accordance with the regulations, to a part of the business described for the purpose in the regulations.
- (2) Those cases are cases where an insurance company which, in accordance with equalisation reserve rules, is required to make transfers into or out of an equalisation reserve in respect of any business carried on by that company for any period is carrying on, for the whole or any part of that period—
- (a) any business the income and gains of which fall to be disregarded in making a computation of the company’s profits in accordance with the rules applicable for the purposes of section 35 of CTA 2009 (charge on trade profits), or
- (b) any business by reference to which double taxation relief is afforded in respect of any income or gains.
- (3) Section 444BA shall have effect (subject to any regulations under subsection (1) above) in the case of an equalisation reserve maintained by an insurance company which—
- (a) is not resident in the United Kingdom, and
- (b) carries on business in the United Kingdom through a permanent establishment,
only if such conditions as may be prescribed by regulations made by the Treasury are satisfied in relation to that company and in relation to transfers into or out of that reserve.
- (4) Regulations under this section prescribing conditions subject to which section 444BA is to apply in the case of any equalisation reserve maintained by an insurance company may—
- (a) contain conditions imposing requirements on the company to furnish the Board with information with respect to any matters to which the regulations relate, or to produce to the Board documents or records relating to any such matters; and
- (b) provide that, where any prescribed condition is not, or ceases to be, satisfied in relation to the company or in relation to transfers into or out of that reserve, there is to be deemed for the purposes of the Tax Acts to have been a transfer out of that reserve of an amount determined under the regulations.
- (5) Regulations under this section may—
- (a) provide for apportionments under the regulations to be made in such manner, and by reference to such factors, as may be specified or described in the regulations;
- (b) make different provision for different cases;
- (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit;
- (d) make provision having retrospective effect in relation to accounting periods beginning not more than one year before the time when the regulations are made;
and the powers conferred by this section in relation to transfers into or out of any reserve shall be exercisable in relation to both actual and assumed transfers.
- (6) In this section “*double taxation relief*” means—
- (a) relief under double taxation arrangements which takes the form of a credit allowed against corporation tax, or
- (b) unilateral relief under section 790(1) which takes that form;
and “*double taxation arrangements*” here means arrangements having effect by virtue of section 788.
##### 444BC
- (1) The Treasury may by regulations make provision modifying the operation of section 444BA in relation to cases where an insurance company has, for the purpose of preparing the documents it is required to prepare for the purposes of section 9.3 of the Prudential Sourcebook (Insurers), applied for any period an accounting method described in paragraphs 57 to 59 in Section E of Part 2 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (accounting on a non-annual basis).
- (2) Subsection (5) of section 444BB applies for the purposes of this section as it applies for the purposes of that section.
##### 444BD
- (1) The Treasury may by regulations provide for section 444BA to have effect, in such cases and subject to such modifications as may be specified in the regulations, in relation to any equivalent reserves as it has effect in relation to equalisation reserves maintained by virtue of equalisation reserve rules.
- (2) For the purposes of this section a reserve is an equivalent reserve if—
- (a) it is maintained, otherwise than by virtue of equalisation reserve rules, either—
- (i) by an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (ii) by a firm which has permission under paragraph 4 of Schedule 4 to that Act (as a result of qualifying for authorisation under paragraph 2 of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (iii) in respect of any business which consists of the effecting or carrying out of contracts of insurance and which is carried on outside the United Kingdom by a company resident in the United Kingdom;
- (b) the purpose for which, or the manner in which, it is maintained is such as to make it equivalent to an equalisation reserve maintained by virtue of equalisation reserve rules.
- (3) For the purposes of this section a reserve is also an equivalent reserve if it is maintained in respect of any credit insurance business in accordance with requirements imposed either—
- (a) by or under any enactment, or
- (b) under so much of the law of any territory as secures compliance with the requirements of Article 1 of the credit insurance directive (equalisation reserves for credit insurance).
- (4) Without prejudice to the generality of subsection (1) above, the modifications made by virtue of that subsection may—
- (a) provide for section 444BA to apply in the case of an equivalent reserve only where such conditions as may be specified in the regulations are satisfied in relation to the company maintaining the reserve or in relation to transfers made into or out of it; and
- (b) contain any other provision corresponding to any provision which, in the case of a reserve maintained by virtue of equalisation reserve rules, may be made under sections 444BA to 444BC.
- (5) Subsections (4) and (5) of section 444BB shall apply for the purposes of this section as they apply for the purposes of that section.
- (6) Without prejudice to the generality of section 444BB(5), the transitional provision which by virtue of subsection (5) above may be contained in regulations under this section shall include—
- (a) provision for treating the amount of any transfers made into or out of an equivalent reserve in respect of business carried on for any specified period as increased by the amount by which they would have been increased if no transfers into the reserve had been made in respect of business carried on for an earlier period; and
- (b) provision for excluding from the rule in section 444BA(2)(b) so much of any amount transferred out of an equivalent reserve as represents, in pursuance of an apportionment made under the regulations, the transfer out of that reserve of amounts in respect of which there has been no entitlement to relief by virtue of section 444BA(2)(a).
- (7) In this section—
- “credit insurance business” means business which consists of the effecting or carrying out of contracts of insurance against risks of loss to the persons insured arising from—the insolvency of debtors of theirs, orfrom the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due;
- “*the credit insurance directive*” means Council Directive [87/343/EEC](https://www.legislation.gov.uk/european/directive/1987/0343) of 22nd June 1987 amending, as regards credit insurance and suretyship insurance, First Directive 73/239 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance; . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 458A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 461A
- (1) For the purposes of sections 461B and 461C, a “*qualifying society*” is an incorporated friendly society which—
- (a) immediately before its incorporation, was a registered friendly society to which section 461(2) did not apply,
- (b) was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies and satisfies subsection (2) below, or
- (c) was formed by the amalgamation of two or more friendly societies and satisfies subsection (3) below,
and in respect of which no direction under section 461C(5) is in force.
- (2) A society satisfies this subsection if its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Board.
- (3) If at the time of the amalgamation referred to in subsection (1)(c) above—
- (a) section 461(2) applied to none of the registered friendly societies being amalgamated (if any), and
- (b) all of the incorporated friendly societies being amalgamated (if any) were qualifying societies,
the society formed by the amalgamation satisfies this subsection.
- (4) For the purposes of this section and section 461C, any group of persons which was approved for the purposes of this section (as mentioned in subsection (2) above) by the Friendly Societies Commission immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date.
##### 461B
- (1) Subject to the following provisions of this section, a qualifying society shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.
- (2) Subsection (1) above shall not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate which is a subsidiary (within the meaning of the Friendly Societies Act 1992) of the society or of which the society has joint control (within the meaning of that Act).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) If an incorporated friendly society which is not a qualifying society makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—
- (a) any previous payment so made to him by the society, and
- (b) any earlier repayment of such sums paid by him,
the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.
- (4) In relation to an incorporated friendly society which, immediately before its incorporation, was a registered friendly society to which section 461(2) applied—
- (a) the references in subsection (3) above to sums paid to the society shall include sums paid to the registered friendly society,
- (b) the reference in subsection (3)(a) above to any payment made by the society shall include any payment made by the registered friendly society after 26 March 1974 or such later date as was specified in any direction under section 461 (7) relating to it, and
- (c) the reference in subsection (3)(b) above to any repayment shall include any repayment made by the registered friendly society.
- (5) Where a qualifying society at any time ceases by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, the company into which the society is converted shall be exempt from . . . corporation tax on its profits arising from any part of its business, other than life or endowment business, which relates to contracts made before that time.
- (6) But if during an accounting period of the company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of its business, the company shall not be exempt from corporation tax by virtue of subsection (5) above for that or any subsequent accounting period.
- (6A) Where—
- (a) at any time an insurance company acquires by way of transfer of engagements from a qualifying society any business other than life or endowment business, and
- (b) immediately before that time the society was exempt from corporation tax on profits arising from that business,
the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.
- (6B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (6A) above for that or any subsequent accounting period.
- (7) Any part of a company’s business to which an exemption under subsection (5) or (6A) above relates shall be treated for the purposes of the Corporation Tax Acts as a separate business from any other business carried on by the company.
- (8) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (5) or (6A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (9) Regulations under subsection (8) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 461C
- (1) Subject to subsection (2) below, subsections (3) and (4) below apply where a qualifying society—
- (a) begins to carry on business other than life or endowment business, or
- (b) in the opinion of the Board, begins to carry on business other than life or endowment business on an enlarged scale or of a new character.
- (2) Subsections (3) and (4) below do not apply if—
- (a) the society’s business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of section 461 or 461A by the Board, or
- (b) the society’s rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as is authorised for the purposes of section 461.
- (3) If it appears to the Board, having regard to the restrictions imposed by section 461 on registered friendly societies registered after 31st May 1973, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the society under subsection (4) below.
- (4) A direction under this subsection is that (and has the effect that) the society to which it is given shall cease to be a qualifying society as from the date of the direction.
- (5) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction . . . on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (1) above;
- (b) subsections (3) and (4) above do not apply to it by reason of subsection (2) above; or
- (c) the direction is not necessary for the protection of the revenue.
##### 461D
- (1) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was exempt from corporation tax on profits arising from that business,
the transferee is so exempt after that time.
- (2) But if during an accounting period of the transferee there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on that business, the transferee shall not be exempt from corporation tax by virtue of subsection (1) above for that or any subsequent accounting period.
- (3) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was not exempt from corporation tax on profits arising from that business,
the transferee is not so exempt after that time.
- (4) The Treasury may by regulations provide that, where any business of a friendly society is exempt from corporation tax by virtue of subsection (1) above, or not so exempt by virtue of subsection (3) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (5) Regulations under subsection (4) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 462A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessment, recovery and postponement of supplementary charge
##### 465A
- (1) This section applies where any assets of a branch of a registered friendly society have been identified in a scheme under section 6(5) of the Friendly Societies Act 1992 (property, rights etc. excluded from transfer to the society on its incorporation).
- (2) In relation to any time after the incorporation of the society, the assets shall be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any tax liability arising in respect of them shall be a liability of the society rather than of the branch).
- (3) Where, by virtue of this section, tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.
##### 468AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessment, recovery and postponement of supplementary charge
##### 468C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
##### 468EE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions of authorised unit trusts: general
##### 468H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Dividend and foreign income distributions
##### 468J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Interest distributions
##### 468L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Charitable and non-charitable expenditure
##### 468M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468N
- (1) Subsection (2) below applies where—
- (a) a company incurs expenditure on establishing a share option scheme which the Board approve and under which no employee or director obtains rights before such approval is given, or
- (b) a company incurs expenditure on establishing a profit sharing scheme which the Board approve and under which the trustees acquire no shares before such approval is given.
- (2) In such a case the expenditure—
- (a) shall be deducted in computing for the purposes of . . . Part 2 of ITTOIA 2005 the profits of a trade carried on by the company, . . .
- (a) an interest distribution is made for a distribution period to a unit holder; and
- (b) the gross income entered in the distribution accounts for the purposes of computing the total amount available for distribution to unit holders does not derive from eligible income entirely.
- (2) Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the relevant amount of the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
- (3) Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
- (4) This is how to calculate the relevant amount of the interest distribution—
$$R=AxBC$Where—R = the relevant amount;A = the amount of the interest distribution before deduction of tax to the unit holder in question;B = such amount of the gross income as derives from eligible income;C = the amount of the gross income.$
- (5) In subsection (4) above the references to the gross income are references to the gross income entered as mentioned in subsection (1)(b) above.
##### 468O
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468P
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468PA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468PB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions to corporate unit holder
##### 468Q
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 469A
- (1) The Tax Acts shall have effect in relation to any common investment fund established under section 42 of the Administration of Justice Act 1982 (common investment funds for money paid into court) as if—
- (a) the fund were an authorised unit trust;
- (b) the person who is for the time being the investment manager of the fund were the trustee of that authorised unit trust; and
- (c) the persons with qualifying interests were the unit holders in that authorised unit trust.
- (1A) For the purposes of subsection (1)(c) above, the persons with qualifying interests are—
- (a) in relation to shares in the fund held by the Accountant General, the persons whose interests entitle them, as against him, to share in the fund’s investments;
- (b) in relation to shares in the fund held by any other person authorised by the Lord Chancellor to hold such shares on behalf of others (an “authorised person”)—
- (i) if there are persons whose interests entitle them, as against the authorised person, to share in the fund’s investments, those persons;
- (ii) if not, the authorised person;
- (c) in relation to shares in the fund held by persons authorised by the Lord Chancellor to hold such shares on their own behalf, those persons.
- (2) In this section “*the Accountant General*” means . . . the Accountant General of the Senior Courts of England and Wales or the Accountant General of the Court of Judicature of Northern Ireland.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 472A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 477A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . Dividends or interest payable in respect of shares in, or deposits with or loans to, a building society shall be dealt with for the purposes of corporation tax as follows—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) no part of any such dividends or interest . . . shall be treated as a distribution of the society or as franked investment income of any company resident in the United Kingdom.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) In this section “*dividend*” includes any distribution (whether or not described as a dividend).
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 477B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 480A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 480B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council.
##### 480C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
##### 482A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### PETROLEUM EXTRACTION ACTIVITIES
##### 494AA
- (1) This section applies where—
- (a) a company (“*the seller*”) carrying on a trade has disposed of an asset which was used for the purposes of that trade, or an interest in such an asset;
- (b) the asset is used, under a lease, by the seller or a company associated with the seller (“*the lessee*”) for the purposes of a ring fence trade carried on by the lessee; and
- (c) the lessee uses the asset before the end of the period of two years beginning with the disposal.
- (2) Subject to subsection (4) below, subsection (3) below applies to so much (if any) of the expenditure incurred by the lessee under the lease as—
- (a) falls, in accordance with generally accepted accounting practice, to be treated in the accounts of the lessee as a finance charge;. . . or
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) falls, if the case is one where the lease is a long funding operating lease, to be deductible in computing the profits of the lessee for the purposes of corporation tax (after first making against any such expenditure any reductions falling to be made by virtue of section 502K).
- (3) The expenditure shall not be allowable in computing for the purposes of Part 3 of CTA 2009 the profits of the ring fence trade.
- (4) Expenditure shall not be disallowed by virtue of subsection (3) above to the extent that the disposal referred to in subsection (1) above is made for a consideration which—
- (a) is used to meet expenditure incurred by the seller in carrying on oil extraction activities or in acquiring oil rights otherwise than from a company associated with the seller; or
- (b) is appropriated to meeting expenditure to be so incurred by the seller.
- (5) Where any expenditure—
- (a) would apart from subsection (3) above be allowable in computing for the purposes of Part 3 of CTA 2009 the profits of the ring fence trade for an accounting period, but
- (b) by virtue of that subsection is not so allowable,
that expenditure shall be brought into account for the purposes of Part 5 of CTA 2009 as if it were a non-trading debit in respect of a loan relationship of the lessee for that accounting period.
- (6) In this section —
- “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act);
- “*lease*”, in relation to an asset, has the same meaning as in sections 781 to 784.
##### 494A
- (1) In section 403(3) (availability of charges, UK property business losses and management expenses for surrender as group relief) the reference to the gross profits of the surrendering company for an accounting period does not include the company’s relevant ring fence profits for that period.
- (2) If for that period—
- (a) there are no charges on income paid by the company that are allowable under section 338, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
all the company’s ring fence profits are relevant ring fence profits.
- (3) In any other case the company’s relevant ring fence profits are so much of its ring fence profits as exceeds the amount of the charges on income paid by the company as—
- (a) are allowable under section 338 for that period, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 496A
Schedule 19B to this Act (exploration expenditure supplement) shall have effect.
##### 496B
Schedule 19C to this Act (ring fence expenditure supplement) shall have effect.
#### Sale and lease-back.
##### 501A
- (1) Where in any accounting period beginning on or after 17th April 2002 a company carries on a ring fence trade, a sum equal to 20 per cent of its adjusted ring fence profits for that period shall be charged on the company as if it were an amount of corporation tax chargeable on the company.
- (2) A company’s adjusted ring fence profits for an accounting period are the amount which, on the assumption mentioned in subsection (3) below, would be determined for that period (in accordance with this Chapter) as the profits of the company’s ring fence trade chargeable to corporation tax.
- (3) The assumption is that financing costs are left out of account in computing—
- (a) the amount of the profits or loss of any ring fence trade of the company’s for each accounting period beginning on or after 17th April 2002; and
- (b) where for any such period the whole or part of any loss relief is surrendered to the company in accordance with section 492(8), the amount of that relief or, as the case may be, that part.
- (4) For the purposes of this section, “*financing costs*” means the costs of debt finance.
- (5) In calculating the costs of debt finance for an accounting period the matters to be taken into account include—
- (a) any costs giving rise to debits in respect of debtor relationships of the company under Part 5 of CTA 2009 (loan relationships) , other than debits in respect of exchange losses from such relationships (see section 475 of that Act);
- (b) any exchange gain or loss from a debtor relationship, within the meaning of that Part (see section 475 of that Act), in relation to debt finance;
- (c) any credit or debit falling to be brought into account in accordance with Part 7 of CTA 2009 (derivative contracts) in relation to debt finance;
- (d) the financing cost implicit in a payment under a finance lease;
- (dd) where the company is the lessee under a long funding operating lease, the amount deductible in respect of payments under the lease in computing the profits of the lessee for the purposes of corporation tax (after first making against any such amount any reductions falling to be made by virtue of section 502K); and
- (e) any other costs arising from what would be considered in accordance with generally accepted accounting practice to be a financing transaction.
- (6) Where an amount representing the whole or part of a payment falling to be made by a company—
- (a) falls (or would fall) to be treated as a finance charge under a finance lease for the purposes of accounts relating to that company and one or more other companies and prepared in accordance with generally accepted accounting practice, but
- (b) is not so treated in the accounts of the company,
the amount shall be treated for the purposes of this section as financing costs falling within subsection (5)(d) above.
- (7) If—
- (a) in computing the adjusted ring fence profits of a company for an accounting period, an amount falls to be left out of account by virtue of subsection (5)(d) above, but
- (b) the whole or any part of that amount is repaid,
the repayment shall also be left out of account in computing the adjusted ring fence profits of the company for any accounting period.
- (8) In this section “*finance lease*” means any arrangements—
- (a) which provide for an asset to be leased or otherwise made available by a person to another person (“*the lessee*”), and
- (b) which, under generally accepted accounting practice,—
- (i) fall (or would fall) to be treated, in the accounts of the lessee or a person connected with the lessee, as a finance lease or a loan, or
- (ii) are comprised in arrangements which fall (or would fall) to be so treated.
- (9) For the purposes of applying subsection (8)(b) above, the lessee and any person connected with the lessee are to be treated as being companies which are incorporated in a part of the United Kingdom.
- (10) In this section “*accounts*”, in relation to a company, includes any accounts which—
- (a) relate to two or more companies of which that company is one, and
- (b) are drawn up in accordance with generally accepted accounting practice.
- (11) In this section “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act).
- (12) This section is subject to Schedule 44 to the Finance Act 2009.
##### 501B
- (1) Subject to subsection (3) below, the provisions of section 501A(1) relating to the charging of a sum as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Acts, and to any necessary modifications, all enactments applying generally to corporation tax, including—
- (a) those relating to returns of information and the supply of accounts, statements and reports;
- (b) those relating to the assessing, collecting and receiving of corporation tax;
- (c) those conferring or regulating a right of appeal; and
- (d) those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
- (2) Accordingly (but without prejudice to subsection (1) above) the Management Act shall have effect as if any reference to corporation tax included a reference to a sum chargeable under section 501A(1) as if it were an amount of corporation tax.
- (3) In any regulations made under section 32 of the Finance Act 1998 (as at 17th April 2002, the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations 1999)—
- (a) references to corporation tax do not include a reference to a sum chargeable on a company under section 501A(1) as if it were corporation tax; and
- (b) references to profits charged to corporation tax do not include a reference to adjusted ring fence profits, within the meaning of section 501A(1).
- (4) In this section “*the Taxes Acts*” has the same meaning as in the Management Act.
### Chapter 5A — Special rules for long funding leases of plant or machinery: corporation tax
### Introductory
##### 502A
This Chapter has effect for the purposes of corporation tax only.
### Lessors under long funding finance leases
##### 502B
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessor of any plant or machinery under a long funding finance lease.
- (2) The amount to be brought into account as the lessor's taxable income from the lease for the period of account is the amount of the rental earnings in respect of the lease for the period of account.
- (3) The “rental earnings” for any period is the amount which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment for that period in respect of the lease where it meets the finance lease test.
- (4) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan in the accounts in question, so much of the rentals under the lease as fall (or would fall) to be treated as interest are to be treated for the purposes of this section as rental earnings.
##### 502C
- (1) This section applies for determining for the purposes of corporation tax the profits of a company which is or has been the lessor under a long funding finance lease.
- (2) This section has effect where a profit or loss (whether of an income or capital nature)—
- (a) arises to the company in connection with the lease, and
- (b) in accordance with generally accepted accounting practice falls to be recognised for accounting purposes in a period of account, but
- (c) would not, apart from this section, be brought into account in computing the profits of the company for the purposes of corporation tax.
- (3) The profit or loss is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (4) Any reference in this section to an amount falling to be recognised for accounting purposes in a period of account is a reference to an amount falling to be recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in computing the company's profits or losses for that period.
##### 502D
- (1) This section applies for determining the liability to corporation tax of a company which is or has been the lessor under a long funding finance lease.
- (2) Where—
- (a) the lease terminates, and
- (b) a sum calculated by reference to the termination value is paid to the lessee,
no deduction in respect of the sum paid to the lessee is allowed in computing the profits of the company.
- (3) This section does not prevent a deduction in respect of a sum to the extent that the sum is brought into account in determining the company's rental earnings.
### Lessors under long funding operating leases
##### 502E
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account—
- (a) for the whole of which, or
- (b) for any part of which,
the company is the lessor of any plant or machinery under a long funding operating lease.
- (2) A deduction is allowed in computing the profits of the company for the period of account.
- (3) The amount of the deduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) if the only use of the plant or machinery by the lessor has been the leasing of it under the long funding operating lease as a qualifying activity, cost;
- (b) if the last previous use of the plant or machinery by the lessor was the leasing of it under another long funding operating lease as a qualifying activity, market value;
- (c) if the last previous use of the plant or machinery by the lessor was the leasing of it under a long funding finance lease as a qualifying activity, the recognised value;
- (d) if the last previous use of the plant or machinery by the lessor was for the purposes of a qualifying activity other than leasing under a long funding lease, the lower of cost and market value;
- (e) if the lessor owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but—
- (i) the plant or machinery is brought into use by the lessor for the purposes of a qualifying activity on or after 1st April 2006, and
- (ii) that qualifying activity is the leasing of the plant or machinery under the long funding operating lease,
the relevant value is the lower of first use market value and first use amortised value.
- (5) In subsection (4) above—
- “*cost*” means the amount of the expenditure incurred by the lessor on the provision of the plant or machinery;
- “*first use amortised value*” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity, on the assumption that—the cost of acquiring the plant or machinery had been written off on a straight line basis over the remaining useful economic life of the plant or machinery, andany further capital expenditure incurred had been written off on a straight line basis over so much of the remaining economic life of the plant or machinery as remains at the time when the expenditure is incurred;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity;
- “*market value*” means the market value of the plant or machinery at the commencement of the term of the long funding operating lease;
- “*recognised value*” means the value at which the plant or machinery is recognised in the books or other financial records of the lessor at the commencement of the long funding operating lease.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(e) above, would have been) expected to be the residual value of the plant or machinery,
to find the expected gross reduction in value over the term of the lease.
- (7) Apportion the amount of that expected gross reduction in value to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the deduction for any period of account is the amount so apportioned to that period.
##### 502F
- (1) This section applies if in any period of account—
- (a) a company is the lessor of any plant or machinery under a long funding operating lease,
- (b) the company incurs capital expenditure in relation to the plant or machinery, and
- (c) that capital expenditure (the “additional expenditure”) is not reflected in the market value of the plant or machinery at the commencement of the term of the lease.
- (2) In a case falling within section 502E(4)(e) above, subsection (1)(c) above has effect as if the reference to the commencement of the term of the lease were a reference to the time when the plant or machinery is first brought into use by the lessor for the purposes of the qualifying activity.
- (3) Where this section applies, an additional deduction is allowed in computing the profits of the company for each post-expenditure period of account in which the company is the lessor of the plant or machinery under the lease.
- (4) The amount of the deduction for any such period of account is to be determined as follows.
- (5) Find ARV, CRV, PRV, and TRV where—
- “ARV” is the amount which, at the time when the additional expenditure is incurred, is expected to be the residual value of the plant or machinery;
- “CRV” is the amount which, at the commencement of the term of the lease, is expected to be the residual value of the plant or machinery;
- “PRV” is the sum of any amounts that fell to be taken into account as RRV (see subsection (6)) in the application of this section in relation to any previous additional expenditure incurred by the company in relation to the leased plant or machinery;
- “TRV” is the total of CRV and PRV.
- (6) Find RRV, where—
- (a) if ARV exceeds TRV, RRV is the portion of the excess that is a result of the additional expenditure, but
- (b) if ARV does not exceed TRV, RRV is nil.
- (7) From—
- (a) the amount of the additional expenditure,
subtract
- (b) RRV,
to find the expected partial reduction in value over the remainder of the term of the lease.
- (8) Apportion the amount of that expected partial reduction in value to each post-expenditure period of account in which any part of the term of the lease falls.
- (9) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each post-expenditure period of account.
- (10) The amount of the additional deduction for any period of account is the amount so apportioned to that period.
- (11) In this section “*post-expenditure period of account*” means any period of account ending after the incurring of the additional expenditure.
##### 502G
- (1) This section applies for determining the liability to corporation tax of a company which is the lessor immediately before the termination of a long funding operating lease.
- (2) Step 1 is to find—
- (a) the termination amount (TA);
- (b) the total of any sums paid to the lessee that are calculated by reference to the termination value (LP).
- (3) Step 2 is to find—
- (a) the relevant value for the purposes of section 502E(6)(a) (RV);
- (b) the total of the deductions allowable under section 502E for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD1);
- (c) the amount, if any, (ERV) by which RV exceeds TD1.
- (4) Step 3 is to find—
- (a) the total of any amounts of capital expenditure incurred by the company which constitute additional expenditure for the purposes of section 502F in the case of the lease (TAE);
- (b) the total of any deductions allowable under section 502F for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD2);
- (c) the amount, if any, (EAE) by which TAE exceeds TD2.
- (5) Step 4 is to find the total of ERV and EAE (T).
- (6) If (TA – LP) exceeds T, treat a profit of an amount equal to the excess as arising to the company in the period of account in which the lease terminates.
- (7) If T exceeds (TA – LP), treat a loss of an amount equal to the excess as arising to the company in that period of account.
- (8) A profit or loss treated as arising to the company under subsection (6) or (7) above is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (9) In computing the profits of the company, no deduction is allowed in respect of any sums paid to the lessee that are calculated by reference to the termination value.
### Lessors under long funding finance or operating leases: avoidance etc
#### Tariff receipts and tax-exempt tariffing receipts
##### 502GA
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if the following condition is met.
- (2) The condition is that any part of the expenditure incurred by the company on the acquisition of the plant or machinery for leasing under the lease—
- (a) is (apart from those sections) allowable as a deduction in calculating its profits or losses for the purposes of corporation tax, and
- (b) is so allowable as a result of the plant or machinery forming part of its trading stock.
- (3) For the purposes of this section the cases in which expenditure incurred by a company on the acquisition of any plant or machinery for leasing under a lease is allowable as such a deduction include any case where—
- (a) the company becomes entitled to the deduction at any time after the expenditure is incurred, and
- (b) the deduction arises as a result of the plant or machinery forming part of its trading stock at that time.
- (4) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) the condition in subsection (2) is met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (5) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (4).
##### 502GB
- (1) This section applies if—
- (a) a company is the lessee of any plant or machinery under a lease (“lease A”) that is not a long funding lease,
- (b) it enters into a lease (“lease B”) of any of that plant or machinery (as lessor), and
- (c) lease B is a long funding lease.
- (2) Sections 502B to 502G do not apply in relation to lease B.
- (3) If by virtue of section 70H of the Capital Allowances Act (tax return by lessee treating lease as long funding lease) lease A becomes a long funding lease (and does not cease to be such a lease), treat this section as never having applied in relation to lease B.
##### 502GC
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if conditions A to C are met.
- (2) Condition A is that the long funding lease forms part of any arrangement entered into by the company which includes one or more other transactions (whether the arrangement is entered into before or after or at the inception of the lease).
- (3) Condition B is that the main purpose, or one of the main purposes, of the arrangement is to secure that, over the relevant period, there would be a substantial difference between—
- (a) the total amount of the amounts under the arrangement which are, in accordance with generally accepted accounting practice, recognised in determining the company's profit or loss for any period or taken into account in calculating the amounts which are so recognised, and
- (b) the total amount of the amounts under the arrangement which are taken into account in calculating the profits or losses of the company for the purposes of corporation tax.
- (4) For the purposes of condition B “*the relevant period*” means the period which begins with the inception of the lease and ends with the end of the term of the lease.
- (5) Condition C is that the difference would be attributable (wholly or partly) to the application of any of sections 502B to 502G in relation to the company by reference to the plant or machinery under the lease.
- (6) The reference in this section to an amount being recognised in determining a company's profit or loss for a period is to an amount being recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in calculating the company's profits and losses for that period.
- (7) For the purposes of this section it does not matter whether the parties to any transaction which forms part of the arrangement differ from the parties to any of the other transactions.
- (8) For the purposes of this section the cases in which two or more transactions are to be taken as forming part of an arrangement include any case in which it would be reasonable to assume that one or more of them—
- (a) would not have been entered into independently of the other or others, or
- (b) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
- (9) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) conditions A to C are met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (10) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (9).
##### 502GD
- (1) If a company is or has been a lessor under a long funding lease of a film, sections 502B to 502G do not apply in respect of the lease.
- (2) “*Film*” has the same meaning as in Part 15 of CTA 2009 (see section 1181 of that Act).
### Insurance company as lessor
##### 502H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Lessees under long funding finance leases
#### Introductory.
##### 502I
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding finance lease.
- (2) In calculating the company's profits for the period of account,—
- (a) the amount deducted in respect of amounts payable under the lease,
must not exceed
- (b) the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company's accounts as finance charges in respect of the lease.
- (3) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, subsection (2) above applies as if the lease were one which, under generally accepted accounting practice, fell to be treated as a finance lease.
##### 502J
- (1) This section applies where—
- (a) a company is or has been the lessee under a long funding finance lease, and
- (b) in connection with the termination of the lease, a payment calculated by reference to the termination value falls to be made to the company.
- (2) The payment is not to be brought into account in determining for the purposes of corporation tax the profits of the company for any period of account.
- (3) Subsection (2) above does not affect the amount of any disposal value that falls to be brought into account by the company under the Capital Allowances Act.
### Lessees under long funding operating leases
##### 502K
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding operating lease.
- (2) The deductions that may be allowed in computing the profits of the company for the period of account are to be reduced in accordance with the following provisions of this section.
- (3) The amount of the reduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) the market value of the plant or machinery at the commencement of the term of the lease, unless paragraph (b) below applies;
- (b) if the lessee—
- (i) has the use of the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but
- (ii) brings the plant or machinery into use for the purposes of a qualifying activity on or after 1st April 2006,
the lower of first use market value and first use amortised market value.
- (5) In subsection (4) above—
- “*first use amortised market value*” means the value that the plant or machinery would have—at the time when it is first brought into use for the purposes of the qualifying activity, buton the assumption that the market value of the plant or machinery at the commencement of the term of the lease had been written off on a straight line basis over the remaining useful economic life of the plant or machinery;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(b) above, would have been) expected to be the market value of the plant or machinery at the end of the term of the lease,
to find the expected gross reduction over the term of the lease.
- (7) Apportion the amount of that expected gross reduction to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the reduction for any period of account is the amount so apportioned to that period.
### Interpretation of Chapter
##### 502L
- (1) This section has effect for the interpretation of this Chapter.
- (2) In this Chapter—
- “*qualifying activity*” has the same meaning as in Part 2 of the Capital Allowances Act;
- “*residual value*”, in relation to any plant or machinery leased under a long funding operating lease, means—the estimated market value of the plant or machinery on a disposal at the end of the term of the lease,lessthe estimated costs of that disposal.
- (3) Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to—
- (a) the sum being apportioned between each of the periods of account in which any part of the writing-off period falls,
- (b) that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and
- (c) the sum being written off accordingly.
- (4) Chapter 6A of Part 2 of the Capital Allowances Act (interpretation of provisions about long funding leases) applies in relation to this Chapter as it applies in relation to that Part.
##### 504A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
#### Old societies.
##### 506A
- (1) This section applies to the following transactions—
- (a) the sale or letting of property by a charitable company to a substantial donor,
- (b) the sale or letting of property to a charitable company by a substantial donor,
- (c) the provision of services by a charitable company to a substantial donor,
- (d) the provision of services to a charitable company by a substantial donor,
- (e) an exchange of property between a charitable company and a substantial donor,
- (f) the provision of financial assistance by a charitable company to a substantial donor,
- (g) the provision of financial assistance to a charitable company by a substantial donor, and
- (h) investment by a charitable company in the business of a substantial donor.
- (2) For the purposes of this section a person is a substantial donor to a charitable company in respect of an accounting period if—
- (a) the charitable company receives relievable gifts of at least £25,000 from him in a period of 12 months in which the accounting period wholly or partly falls, or
- (b) the charitable company receives relievable gifts of at least £150,000 from him in a period of six years in which the accounting period wholly or partly falls;
and if a person is a substantial donor to a charitable company in respect of an accounting period by virtue of paragraph (a) or (b), he is a substantial donor to the charitable company in respect of the following five accounting periods.
- (3) A payment made by a charitable company to a substantial donor in the course of or for the purposes of a transaction to which this section applies shall be treated for the purposes of section 505 as non-charitable expenditure.
- (4) If the terms of a transaction to which this section applies are less beneficial to the charitable company than terms which might be expected in a transaction at arm's length, the charitable company shall be treated for the purposes of section 505 as incurring non-charitable expenditure equal to that amount which the Commissioners for Her Majesty's Revenue and Customs determine as the cost to the charitable company of the difference in terms.
- (5) A payment by a charitable company of remuneration to a substantial donor shall be treated for the purposes of section 505 as non-charitable expenditure unless it is remuneration, for services as a trustee, which is approved by—
- (a) the Charity Commission,
- (b) another body with responsibility for regulating charities by virtue of legislation having effect in respect of any Part of the United Kingdom, or
- (c) a court.
##### 506B
- (1) Section 506A shall not apply to a transaction within section 506A(1)(b) or (d) if the Commissioners for Her Majesty's Revenue and Customs determine that the transaction—
- (a) takes place in the course of a business carried on by the substantial donor,
- (b) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (c) is not part of an arrangement for the avoidance of any tax.
- (2) Section 506A shall not apply to the provision of services to a substantial donor if the Commissioners determine that the services are provided—
- (a) in the course of the actual carrying out of a primary purpose of the charitable company, and
- (b) on terms which are no more beneficial to the substantial donor than those on which services are provided to others.
- (3) Section 506A shall not apply to the provision of financial assistance to a charitable company by a substantial donor if the Commissioners determine that the assistance—
- (a) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (b) is not part of an arrangement for the avoidance of any tax.
- (4) Section 506A shall not apply to investment by a charitable company in the business of a substantial donor where the investment takes the form of the purchase of shares or securities listed on a recognised stock exchange.
- (5) A disposal at an undervalue in respect of which relief is available under section 587B of this Act or section 431 of ITA 2007 (gifts of shares, securities and real property to charities etc) shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (6) A disposal at an undervalue to which section 257(2) of the 1992 Act (gifts of chargeable assets) applies shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (7) In the application of section 506A payments by a charitable company, or benefits arising to a substantial donor from a transaction, shall be disregarded in so far as they relate to a donation by the donor, and—
- (a) if the donation is made by a company, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 339 because of subsection (3B)(b) of that section (restrictions on associated benefits), or
- (b) if the donation is made by an individual, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 416 of ITA 2007 because of subsection (7)(b) of that section (restrictions on associated benefits).
- (8) A company which is wholly owned by a charity within the meaning of section 339(7AB) shall not be treated as a substantial donor in relation to a charitable company which owns it (or any part of it).
- (9) A registered social landlord or housing association shall not be treated as a substantial donor in relation to a charitable company with which it is connected; and for that purpose—
- (a) “*registered social landlord or housing association*” means a body entered on a register maintained under—
- (i) section 1 of the Housing Act 1996,
- (ii) section 57 of the Housing (Scotland) Act 2001, or
- (iii) Article 14 of the Housing (Northern Ireland) Order 1992, and
- (b) a body and a charitable company are connected if (and only if)—
- (i) the one is wholly owned, or subject to control, by the other, or
- (ii) both are wholly owned, or subject to control, by the same person.
##### 506C
- (1) A gift is “*relievable*” for the purposes of section 506A(2) if relief is available in respect of it under—
- (a) section 105 of CTA 2009,
- (b) section 339,
- (c) sections 587B and 587C,
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) section 257 of the 1992 Act (gifts of chargeable assets),
- (f) section 63 of the Capital Allowances Act (gifts of plant and machinery),
- (g) sections 713 to 715 of ITEPA 2003 (payroll giving),
- (h) section 108 of ITTOIA 2005 (gifts of trading stock), . . .
- (i) sections 628 and 630 of ITTOIA 2005 (gifts from settlor-interested trusts), or
- (j) Chapters 2 and 3 of Part 8 of ITA 2007 (gift aid and gifts of shares, securities and real property).
- (2) A charitable company is treated as incurring expenditure in accordance with section 506A(4) at such time (or times) as the Commissioners determine.
- (3) Section 506A applies to a transaction entered into in an accounting period with a person who is a substantial donor in respect of that period, even if it was not until after the transaction was entered into that he first satisfied the definition of “substantial donor” in respect of that period.
- (4) Either or both of subsections (3) and (4) of section 506A may be applied to a single transaction; but any amount of non-charitable expenditure which a charitable company is treated as incurring under section 506A(3) in respect of a transaction shall be deducted from any amount which it would otherwise be treated as incurring under section 506A(4) in respect of the transaction.
- (5) A charitable company and any other charities with which it is connected are to be treated as a single charitable company for the purposes of section 506A and 506B and this section; and for this purpose “*connected*” means connected in a matter relating to the structure, administration or control of a charity.
- (6) Where remuneration is paid otherwise than in money, section 506A(5) shall apply as to a payment in money of the amount that would, under Part 3 of ITEPA 2003, be the cash equivalent of the remuneration as a benefit.
- (7) In sections 506A and 506B and this section—
- (a) a reference to a substantial donor or other person includes a reference to a person connected with him within the meaning of section 839,
- (b) “*financial assistance*” includes, in particular—
- (i) the provision of a loan, guarantee or indemnity, and
- (ii) entering into alternative finance arrangements within the meaning of section 46 of the Finance Act 2005 or section 501(2) of CTA 2009, and
- (c) a reference to a gift of a specified amount includes a reference to a non-monetary gift of that value.
- (8) On an appeal against an assessment the tribunal may review a decision of the Commissioners in connection with section 506A.
- (9) The Treasury may by regulations vary a sum, or a period of time, specified in section 506A(2).
#### Eligibility for relief.
##### 508A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 508B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 510A
- (1) In this section “*grouping*” means a European Economic Interest Grouping formed in pursuance of Council Regulation [(EEC) No. 2137/85](https://www.legislation.gov.uk/european/regulation/1985/2137) of 25th July 1985, whether registered in Great Britain, in Northern Ireland, or elsewhere.
- (2) Subject to the following provisions of this section, for the purposes of charging corporation tax a grouping shall be regarded as acting as the agent of its members.
- (3) In accordance with subsection (2) above—
- (a) for the purposes mentioned in that subsection the activities of the grouping shall be regarded as those of its members acting jointly and each member shall be regarded as having a share of its property, rights and liabilities; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but paragraph (a) above is subject to subsection (6A) below.
- (4) Subject to subsection (5) below, for the purposes of this section a member’s share of any property, rights or liabilities of a grouping shall be determined in accordance with the contract under which the grouping is established.
- (5) Where the contract does not make provision as to the shares of members in the property, rights or liabilities in question a member’s share shall be determined by reference to the share of the profits of the grouping to which he is entitled under the contract (and if the contract makes no provision as to that, the members shall be regarded as having equal shares).
- (6) . . . Where any trade or profession is carried on by a grouping it shall be regarded for the purposes of charging corporation tax as carried on in partnership by the members of the grouping.
- (6A) Part 5 of CTA 2009 (loan relationships) shall have effect in relation to a grouping as it has effect in relation to a partnership (see in particular Chapter 9 of that Part and sections 467 and 472 to 474 of that Act).
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 519A
- (1) A health service body shall be exempt from corporation tax.
- (2) In this section “*health service body*” means—
- (a) a Strategic Health Authority established under section 13 of the National Health Service Act 2006. . . . . . ;
- (aa) a Special Health Authority established under section 28 of that Act or section 22 of the National Health Service (Wales) Act 2006;
- (ab) a Primary Care Trust;
- (aba) a Local Health Board;
- (b) a National Health Service trust established under section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006;
- (bb) an NHS foundation trust
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) In a case where—
- (a) subsection (2) above applies, and
- (b) the approval is given after the end of the period of nine months beginning with the day following the end of the period of account in which the expenditure is incurred,
for the purpose of applying subsection (2) above the expenditure shall be treated in accordance with subsection (3ZA) below.
- (3ZA) Where this subsection applies—
- (a) in applying subsection (2)(a) above, the expenditure shall be treated as incurred in the period of account in which the approval is given (and not the period of account mentioned in subsection (3)(b) above),
- (d) a Health Board or Special Health Board, the Common Services Agency for the Scottish Health Service and a National Health Service trust respectively constituted under sections 2, 10 and 12A of the National Health Service (Scotland) Act 1978;
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (g) the Scottish Dental Practice Board; . . .
- (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (i) a Health and Social Services Board and the Northern Ireland Central Services Agency for the Health and Social Services established under Articles 16 and 26 respectively of the Health and Personal Social Services (Northern Ireland) Order 1972;
- (j) a special health and social services agency established under the Health and Personal Social Services (Special Agencies) (Northern Ireland) Order 1990; and
- (k) a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991.
- (3) The Treasury may by order disapply subsection (1) in relation to a specified activity, or class of activity, of an NHS foundation trust.
- (4) An order under subsection (3) shall make provision for determining the amount of the profits relating to an activity that are to be charged to corporation tax as a result of the disapplication of subsection (1).
- (5) An order under subsection (3) may, in particular—
- (a) make provision for disregarding profits of less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (b) make provision for disregarding a specified part of profits in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (c) make provision for disregarding all or part of profits relating to activity in respect of which receipts or turnover (as defined by the order) are less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period.
- (6) An order under subsection (3)—
- (a) may apply, with or without modification, a provision of the Tax Acts,
- (b) may disapply a provision of the Tax Acts,
- (c) may make provision similar to a provision of the Tax Acts, and
- (d) may make provision generally or in relation to a specified body or class of bodies.
- (7) The Treasury may make an order under subsection (3) only—
- (a) in relation to an activity or class of activity that appears to the Treasury to be of a commercial nature,
- (b) where it appears to the Treasury to be expedient for the purpose of avoiding, removing or reducing differences between—
- (i) the fiscal treatment of the body undertaking the activity, and
- (ii) the fiscal treatment of another body or class of body which is of a commercial nature and which undertakes or might undertake the same or a similar activity, and
- (c) if a draft has been laid before, and approved by resolution of, the House of Commons.
- (8) An activity authorised under section 43(1) of the National Health Service Act 2006 shall not be treated as an activity of a commercial nature for the purposes of subsection (7)(a).
#### Information: supplementary provisions
#### Information: supplementary provisions
#### Non-resident policies and off-shore capital redemption policies.
#### Provisions supplementary to sections 573 and 575.
#### The qualifying subsidiaries requirement
### Designs
##### 537A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 537B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The qualifying subsidiaries requirement
##### 539ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 539A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for individuals.
##### 546A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 547A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 548A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Gifts of shares, securities and real property to charities etc
##### 548B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 551A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 552ZA
- (1) This section supplements section 552 and shall be construed as one with it.
- (2) Where the obligations under any policy or contract of the body that issued, entered into or effected it (“*the original insurer*”) are at any time the obligations of another body (“*the transferee*”) to whom there has been a transfer of the whole or any part of a business previously carried on by the original insurer, section 552 shall have effect in relation to that time, except where the chargeable event—
- (a) happened before the transfer, and
- (b) in the case of a death or an assignment, is an event of which the notification mentioned in subsection (6) or (7) of that section was given before the transfer,
as if the policy or contract had been issued, entered into or effected by the transferee.
- (3) Where, in consequence of . . . section 514(1) of ITTOIA 2005, paragraph (a) or (b) of section 552(1) requires certificates to be delivered in respect of two or more surrenders, happening in the same year, of part of or a share in the rights conferred by the policy or contract, a single certificate may be delivered under the paragraph in question in respect of all those surrenders (and may treat them as if they together constituted a single surrender) unless between the happening of the first and the happening of the last of them there has been—
- (a) an assignment of part of or a share in the rights conferred by the policy or contract; or
- (b) an assignment, otherwise than for money or money’s worth, of the whole of the rights conferred by the policy or contract.
- (4) Where the appropriate policy holder is two or more persons—
- (a) section 552(1)(a) requires a certificate to be delivered to each of them; but
- (b) nothing in section 552 or this section requires a body to deliver a certificate under subsection (1)(a) of that section to any person whose address has not been provided to the body (or to another body, at a time when the obligations under the policy or contract were obligations of that other body).
- (5) A certificate under section 552(1)(b) or (3)—
- (a) shall be in a form prescribed for the purpose by the Board; and
- (b) shall be delivered by any means prescribed for the purpose by the Board;
and different forms, or different means of delivery, may be prescribed for different cases or different purposes.
- (6) The Board may by regulations make such provision as they think fit for securing that they are able—
- (a) to ascertain whether there has been or is likely to be any contravention of the requirements of section 552 or this section; and
- (b) to verify any certificate under that section.
- (7) Regulations under subsection (6) above may include, in particular, provisions requiring persons to whom premiums under any policy are or have at any time been payable—
- (a) to supply information to the Board; and
- (b) to make available books, documents and other records for inspection on behalf of the Board.
- (8) Regulations under subsection (6) above may—
- (a) make different provision for different cases; and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 552ZB
- (1) The Commissioners for Her Majesty's Revenue and Customs may make regulations—
- (a) requiring relevant persons—
- (i) to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;
- (ii) to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;
- (b) making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—
- (i) to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;
- (ii) to verify any information provided to an officer of Revenue and Customs as required by the regulations.
- (2) The provision that may be made by virtue of subsection (1)(b) includes, in particular, provision requiring relevant persons to make available books, documents and other records for inspection by or on behalf of an officer of Revenue and Customs.
- (3) The regulations may—
- (a) make different provision for different cases or circumstances, and
- (b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
- (4) In this section—
- “*prescribed*” means prescribed by the regulations,
- “*qualifying policy*” includes a policy which would be a qualifying policy apart from—paragraph A1(2), B1(2), B2(2) or B3(3) of Schedule 15, orparagraph 17(2)(za) of that Schedule (including as applied by paragraph 18), and
- “*relevant person*” means a person—who issues, or has issued, qualifying policies, orwho is, or has been, a relevant transferee in relation to qualifying policies.
- (5) For the purposes of this section a person (“X”) is at any time a “*relevant transferee*” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.
##### 552A
- (1) This section has effect for the purpose of securing that, where it applies to an overseas insurer, another person is the overseas insurer’s tax representative.
- (2) In this section “*overseas insurer*” means a person who is not resident in the United Kingdom who carries on a business which consists of or includes the effecting and carrying out of—
- (a) policies of life insurance;
- (b) contracts for life annuities; or
- (c) capital redemption policies.
- (3) This section applies to an overseas insurer—
- (a) if the condition in subsection (4) below is satisfied on the designated day; or
- (b) where that condition is not satisfied on that day, if it has subsequently become satisfied.
- (4) The condition mentioned in subsection (3) above is that—
- (a) there are in force relevant insurances the obligations under which are obligations of the overseas insurer in question or of an overseas insurer connected with him; and
- (b) the total amount or value of the gross premiums paid under those relevant insurances is £1 million or more.
- (5) In this section “*relevant insurance*” means any policy of life insurance, contract for a life annuity or capital redemption policy . . . in the case of which—
- (a) the holder is resident in the United Kingdom;
- (b) the obligations of the insurer are obligations of a person not resident in the United Kingdom; and
- (c) those obligations are not attributable to a branch or agency of that person’s in the United Kingdom.
- (6) Before the expiration of the period of three months following the day on which this section first applies to an overseas insurer, the overseas insurer must nominate to the Board a person to be his tax representative.
- (7) A person shall not be a tax representative unless—
- (a) if he is an individual, he is resident in the United Kingdom and has a fixed place of residence there, or
- (b) if he is not an individual, he has a business establishment in the United Kingdom,
and, in either case, he satisfies such other requirements (if any) as are prescribed in regulations made for the purpose by the Board.
- (8) A person shall not be an overseas insurer’s tax representative unless—
- (a) his nomination by the overseas insurer has been approved by the Board; or
- (b) he has been appointed by the Board.
- (9) The Board may by regulations make provision supplementing this section; and the provision that may be made by any such regulations includes provision with respect to—
- (a) the making of a nomination by an overseas insurer of a person to be his tax representative;
- (b) the information which is to be provided in connection with such a nomination;
- (c) the form in which such a nomination is to be made;
- (d) the powers and duties of the Board in relation to such a nomination;
- (e) the procedure for approving, or refusing to approve, such a nomination, and any time limits applicable to doing so;
- (f) the termination, by the overseas insurer or the Board, of a person’s appointment as a tax representative;
- (g) the appointment by the Board of a person as the tax representative of an overseas insurer (including the circumstances in which such an appointment may be made);
- (h) the nomination by the overseas insurer, or the appointment by the Board, of a person to be the tax representative of an overseas insurer in place of a person ceasing to be his tax representative;
- (j) circumstances in which an overseas insurer to whom this section applies may, with the Board’s agreement, be released (subject to any conditions imposed by the Board) from the requirement that there must be a tax representative;
- (k) appeals to the tribunal against decisions of the Board under this section or regulations under it.
- (10) The provision that may be made by regulations under subsection (9) above also includes provision for or in connection with the making of other arrangements between the Board and an overseas insurer for the purpose of securing the discharge by or on behalf of the overseas insurer of the relevant duties, within the meaning of section 552B.
- (11) Section 839 (connected persons) applies for the purposes of this section.
- (12) In this section—
- “*capital redemption policy*” means a capital redemption policy in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*contract for a life annuity*” means a contract for a life annuity in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*the designated day*” means such day as the Board may specify for the purpose in regulations;
- “*policy of life insurance*” means a policy of life insurance in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*tax representative*” means a tax representative under this section.
##### 552B
- (1) It shall be the duty of an overseas insurer’s tax representative to secure (where appropriate by acting on the overseas insurer’s behalf) that the relevant duties are discharged by or on behalf of the overseas insurer.
- (2) For the purposes of this section “*the relevant duties*” are—
- (a) the duties imposed by section 552,
- (b) the duties imposed by section 552ZA(2), (4) or (5), and
- (c) any duties imposed by regulations made under subsection (6) of section 552ZA by virtue of subsection (7) of that section,
so far as relating to relevant insurances under which the overseas insurer in question has any obligations.
- (3) An overseas insurer’s tax representative shall be personally liable—
- (a) in respect of any failure to secure the discharge of the relevant duties, and
- (b) in respect of anything done for purposes connected with acting on the overseas insurer’s behalf,
as if the relevant duties were imposed jointly and severally on the tax representative and the overseas insurer.
- (4) In the application of this section in relation to any particular tax representative, it is immaterial whether any particular relevant duty arose before or after his appointment.
- (5) This section has effect in relation to relevant duties relating to chargeable events happening on or after the day by which section 552A(6) requires the nomination of the overseas insurer’s first tax representative to be made.
- (5A) In subsection (5) “*chargeable event*” has the same meaning as in section 552 (see subsection (10) of that section).
- (6) Expressions used in this section and in section 552A have the same meaning in this section as they have in that section.
##### 553A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 559A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cessation of approval: general provisions.
### Chapter 5A — Share loss relief
### Relief for losses on unquoted shares in trading companies
##### 576A
- (1) For the purposes of this Chapter a qualifying trading company is a company which meets each of conditions A to D.
- (2) Condition A is that the company either—
- (a) meets each of the following requirements on the date of the disposal—
- (i) the trading requirement (see section 576B),
- (ii) the control and independence requirement (see section 576D),
- (iii) the qualifying subsidiaries requirement (see section 576E), and
- (iv) the property managing subsidiaries requirement (see section 576F), or
- (b) has ceased to meet any of those requirements at a time which is not more than 3 years before that date and has not since that time been an excluded company, an investment company or a trading company.
- (3) Condition B is that the company either—
- (a) has met each of the requirements mentioned in condition A for a continuous period of 6 years ending on that date or at that time, or
- (b) has met each of those requirements for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company, an investment company or a trading company.
- (4) Condition C is that the company—
- (a) met the gross assets requirement (see section 576G) both immediately before and immediately after the issue of the shares in respect of which the relief is claimed under this Chapter, and
- (b) met the unquoted status requirement (see section 576H) at the relevant time within the meaning of that section.
- (5) Condition D is that the company has carried on its business wholly or mainly in the United Kingdom throughout the period—
- (a) beginning with the incorporation of the company or, if later, 12 months before the shares in question were issued, and
- (b) ending with the date of the disposal.
### Qualifying trading companies: the requirements
##### 576B
- (1) The trading requirement is that—
- (a) the company, disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, or
- (b) the company is a parent company and the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities.
- (2) If the company intends that one or more other companies should become its qualifying subsidiaries with a view to their carrying on one or more qualifying trades—
- (a) the company is treated as a parent company for the purposes of subsection (1)(b), and
- (b) the reference in subsection (1)(b) to the group includes the company and any existing or future company that will be its qualifying subsidiary after the intention in question is carried into effect.
This subsection does not apply at any time after the abandonment of that intention.
- (3) For the purpose of subsection (1)(b) the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
- (4) For the purpose of determining the business of a group, activities are disregarded to the extent that they are activities carried on by a mainly trading subsidiary otherwise than for its main purpose.
- (5) For the purposes of determining the business of a group, activities of a group company are disregarded to the extent that they consist in—
- (a) the holding of shares in or securities of a qualifying subsidiary of the parent company,
- (b) the making of loans to another group company,
- (c) the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by a group company, or
- (d) the holding and managing of property used by a group company for the purpose of research and development from which it is intended—
- (i) that a qualifying trade to be carried on by a group company will be derived, or
- (ii) that a qualifying trade carried on or to be carried on by a group company will benefit.
- (6) Any reference in subsection (5)(d)(i) or (ii) to a group company includes a reference to any existing or future company which will be a group company at any future time.
- (7) In this section—
- “*excluded activities*” has the meaning given by section 192 of ITA 2007 read with sections 193 to 199 of that Act,
- “*group*” means a parent company and all its qualifying subsidiaries,
- “*group company*”, in relation to a group, means the parent company or any of its qualifying subsidiaries,
- “*incidental purposes*” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question,
- “*mainly trading subsidiary*” means a subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,
- “*non-qualifying activities*” means—excluded activities, andactivities (other than research and development) carried on otherwise than in the course of a trade,
- “*parent company*” means a company that has one or more qualifying subsidiaries,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007,
- “*qualifying trade*” has the meaning given by section 189 of that Act,
- “*research and development*” has the meaning given by section 837A.
- (8) In sections 189(1)(b) and 194(4)(c) of ITA 2007 (as applied by subsection (7) for the purposes of the definitions of “excluded activities” and “qualifying trade”) “*period B*” means the continuous period that is relevant for the purposes of section 576A(3).
- (9) In section 195 of ITA 2007 as applied by subsection (7) for the purposes mentioned in subsection (8), references to the issuing company are to be read as references to the company mentioned in subsection (1).
#### Cessation of approval: tax on certain schemes.
##### 576C
- (1) A company is not regarded as ceasing to meet the trading requirement by reason only of anything done in consequence of the company or any of its subsidiaries being in administration or receivership.
This has effect subject to subsections (2) and (3).
- (2) Subsection (1) applies only if—
- (a) the entry into administration or receivership, and
- (b) everything done as a result of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
- (3) A company ceases to meet the trading requirement if before the time that is relevant for the purposes of section 576A(2)—
- (a) a resolution is passed, or an order is made, for the winding up of the company or any of its subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose), or
- (b) the company or any of its subsidiaries is dissolved without winding up.
This is subject to subsection (4).
- (4) Subsection (3) does not apply if —
- (a) the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
- (b) the company continues, during the winding up, to be a trading company.
- (5) References in this section to a company being “in administration” or “in receivership” are to be read in accordance with section 252 of ITA 2007.
##### 576D
- (1) The control element of the requirement is that—
- (a) the company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (2) The independence element of the requirement is that—
- (a) the company must not—
- (i) be a 51% subsidiary of another company, or
- (ii) be under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (3) This section is subject to section 576J(3).
- (3A) Section 839 (connected persons) applies for the purposes of this section.
- (4) In this section—
- “*arrangements*” includes any scheme, agreement or understanding, whether or not legally enforceable,
- “control” is to be read as follows—in subsection (1)(a), in accordance with section 416(2) to (6),in subsection (2)(a), in accordance with section 840,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007.
#### Termination of relief under this Chapter, and transitional provisions.
##### 576E
- (1) The qualifying subsidiaries requirement is that any subsidiary that the company has must be a qualifying subsidiary of the company.
- (2) In this section “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007.
##### 576F
- (1) The property managing subsidiaries requirement is that any property managing subsidiary that the company has must be a qualifying 90% subsidiary of the company.
- (2) In this section—
- “*property managing subsidiary*” has the meaning given by section 188(2) of ITA 2007,
- “*qualifying 90% subsidiary*” has the meaning given by section 190 of that Act.
##### 576G
- (1) The gross assets requirement in the case of a single company is that the value of the company's gross assets—
- (a) must not exceed £7 million immediately before the shares in respect of which the relief is claimed under this Chapter are issued, and
- (b) must not exceed £8 million immediately afterwards.
- (2) The gross assets requirement in the case of a parent company is that the value of the group assets—
- (a) must not exceed £7 million immediately before the shares in respect of which the relief is claimed under this Chapter are issued, and
- (b) must not exceed £8 million immediately afterwards.
- (3) The value of the group assets means the aggregate of the values of the gross assets of each of the members of the group, disregarding any that consist in rights against, or shares in or securities of, another member of the group.
- (4) In this section—
- “*group*” means a parent company and its qualifying subsidiaries,
- “*parent company*” means a company that has one or more qualifying subsidiaries,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007, and
- “*single company*” means a company that does not have one or more qualifying subsidiaries.
##### 576H
- (1) The unquoted status requirement is that, at the time (“*the relevant time*”) at which the shares in respect of which the relief is claimed under this Chapter are issued—
- (a) the company must be an unquoted company,
- (b) there must be no arrangements in existence for the company to cease to be an unquoted company, and
- (c) there must be no arrangements in existence for the company to become a subsidiary of another company (“the new company”) by virtue of an exchange of shares, or shares and securities, if—
- (i) section 576J applies in relation to the exchange, and
- (ii) arrangements have been made with a view to the new company ceasing to be an unquoted company.
- (2) The arrangements referred to in subsection (1)(b) and (c)(ii) do not include arrangements in consequence of which any shares, stocks, debentures or other securities of the company or the new company are at any subsequent time—
- (a) listed on a stock exchange that is a recognised stock exchange by virtue of an order made under section 1005(1)(b) of ITA 2007, or
- (b) listed on an exchange, or dealt in by any means, designated by an order made for the purposes of section 184(3)(b) or (c) of that Act,
if the order was made after the relevant time.
- (3) In this section—
- “*arrangements*” includes any scheme, agreement or understanding, whether or not legally enforceable,
- “*debenture*” has the meaning given by section 738 of the Companies Act 2006,
- “*unquoted company*” has the meaning given by section 184(2) of ITA 2007.
##### 576I
The Treasury may by order make such amendments of sections 576B to 576H as they consider appropriate.
### Qualifying trading companies: supplementary provisions
##### 576J
- (1) This section and section 576K apply in relation to shares if—
- (a) a company (“the new company”) in which the only issued shares are subscriber shares acquires all the shares (“old shares”) in another company (“the old company”),
- (b) the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company,
- (c) the consideration for the new shares of each description consists wholly of old shares of the corresponding description,
- (d) new shares of each description are issued to the holders of old shares of the corresponding description in respect of and in proportion to their holdings, and
- (e) by virtue of section 127 of the 1992 Act as applied by section 135(3) of that Act (company reconstructions etc), the exchange of shares is not to be treated as involving a disposal of the old shares or an acquisition of the new shares.
In this subsection references to shares, except the first and that in the expression “subscriber shares”, include securities.
- (2) For the purposes of this Chapter the exchange of shares is not regarded as involving any disposal of the old shares or any acquisition of the new shares.
- (3) Nothing in section 576D (the control and independence requirement) applies in relation to such an exchange of shares, or shares and securities, as is mentioned in subsection (1), or arrangements with a view to such an exchange.
- (4) For the purposes of this section old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
- (5) References in section 576K to “old shares”, “new shares”, “the old company” and “the new company” are to be read in accordance with this section.
##### 576K
- (1) Subsection (2) applies if, in the case of any new shares held by a company or by a nominee for a company, the old shares for which they were exchanged were shares that had been subscribed for by the company (“the investor”).
- (2) This Chapter has effect as if—
- (a) the new shares had been subscribed for by the investor at the time when, and for the amount for which, the old shares were subscribed for by the investor,
- (b) the new shares had been issued by the new company at the time when the old shares were issued to the investor by the old company, and
- (c) any requirements of this Chapter which were met at any time before the exchange by the old company had been met at that time by the new company.
- (3) Section 573(6) applies for the purposes of this section.
- (4) Nothing in subsection (2) applies in relation to section 195(7) of ITA 2007 as applied by section 576B(7) above for the purposes mentioned in section 576B(8).
### Supplemental
##### 576L
- (1) In this Chapter (subject to subsections (2) to (5))—
- “*excluded company*” means a company which—has a trade which consists wholly or mainly of dealing in land, in commodities or futures or in shares, securities or other financial instruments,has a trade which is not carried on on a commercial basis and in such a way that profits in the trade can reasonably be expected to be realised,is a holding company of a group other than a trading group, oris a building society or a registered industrial and provident society,
- “group” (except in sections 576B and 576G) means a company which has one or more 51% subsidiaries together with that or those subsidiaries,
- “*holding company*” means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 51% subsidiaries,
- “*investment company*” has the meaning given by section 130 except that it does not include the holding company of a trading group,
- “*registered industrial and provident society*” means a society registered or treated as registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) Act 1969,
- “shares”—includes stock, butdoes not include shares or stock not forming part of a company's ordinary share capital,
- “*trading company*” means a company other than an excluded company which is—a company whose business consists wholly or mainly of the carrying on of a trade or trades, orthe holding company of a trading group, and
- “*trading group*” means a group the business of whose members, when taken together, consists wholly or mainly in the carrying on of a trade or trades.
- (2) Except as provided by subsection (3), paragraph (b) of the definition of “shares” in subsection (1) does not apply in the definition of “excluded company” in subsection (1) or in section 576J(1) to (4).
- (3) Paragraph (b) of that definition applies in relation to the first reference to “shares” in section 576J(1).
- (4) The definition of “shares” in subsection (1) does not apply in sections 576B(5)(a), 576G(3) and 576H(1)(c) and (2).
- (5) For the purposes of the definition of “trading group” in subsection (1), any trade carried on by a subsidiary which is an excluded company is treated as not constituting a trade.
#### Definition of insurance company.
##### 577A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 578A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 578B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 580A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 580B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 580C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definition of insurance company.
##### 581A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 582A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from tax in respect of qualifying premiums.
##### 587A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 587B
- (1) Subsection (2) below applies where, otherwise than by way of a bargain made at arm’s length, a company which is not itself a charity disposes of the whole of the beneficial interest in a qualifying investment to a charity.
- (2) On a claim made in that behalf to an officer of the Board—
- (a) the relevant amount shall be allowed—
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) . . . as a charge on income for the purposes of corporation tax for the accounting period in which the disposal is made; and
- (b) no relief in respect of the disposal shall be given under section 105 of CTA 2009 (gifts of trading stock to charities etc),. . . ;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subject to subsections (5) to (7) below, the relevant amount is an amount equal to—
- (a) where the disposal is a gift, the value of the net benefit to the charity at, or immediately after, the time when the disposal is made (whichever time gives the lower value);
- (b) where the disposal is at an undervalue, the amount by which—
- (i) the value described in paragraph (a) above, exceeds
- (ii) the amount or value of the consideration for the disposal,
or, if there is no such excess, nil.
- (5) Where there are one or more benefits received in consequence of making the disposal which are received by the company making the disposal or a person connected with it, the relevant amount shall be reduced by the value of that benefit or, as the case may be, the aggregate value of those benefits; and section 839 applies for the purposes of this subsection.
- (6) Where the disposal is a gift, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the company making it.
- (7) Where the disposal is at an undervalue—
- (a) to the extent that the consideration for the disposal is less than that for which the disposal is treated as made by virtue of section 257(2)(a) of the 1992 Act, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the company making it; and
- (b) section 48 of that Act (consideration due after time of disposal) shall apply in relation to the computation of the relevant amount as it applies in relation to the computation of a gain.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8A) The value of the net benefit to the charity is—
- (a) the market value of the qualifying investment, unless subsection (8B) below applies;
- (b) where that subsection applies, that market value reduced by the aggregate amount of the related liabilities of the charity (see subsections (8E) to (8G)).
- (8B) This subsection applies in any case where—
- (a) the charity is, or becomes, subject to an obligation to any person (whether or not the company making the disposal or a person connected with it), and
- (b) one or more of the conditions in subsection (8C) below is satisfied.
- (8C) For the purposes of subsection (8B) above—
- (a) condition 1 is that, taking into account all the circumstances (including, in particular, the difference in the value of the net benefit to the charity if subsection (8B) applies and if it does not), it is reasonable to suppose that the disposal of the qualifying investment to the charity would not have been made in the absence of the obligation;
- (b) condition 2 is that the obligation (whether in whole or in part) relates to, is framed by reference to, or is conditional on the charity receiving, the qualifying investment or a related investment (see subsection (8D)).
- (8D) In subsection (8C) above “*related investment*” means any of the following—
- (a) any asset of the same class or description as the qualifying investment (irrespective of size, quantity or amount);
- (b) any asset derived from, or representing, the qualifying investment whether in whole or in part and whether directly or indirectly;
- (c) any asset from which the qualifying investment is derived, or which the qualifying investment represents, whether in whole or in part and whether directly or indirectly.
- (8E) For the purposes of this section, the liabilities which are related liabilities in the case of any qualifying investment are the liabilities of the charity under each of the obligations that fall within subsection (8B) above (as read with subsection (8C) above) in relation to that investment.
- (8F) Where an obligation is contingent and the contingency occurs, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, under the obligation is the amount or value of the liability actually incurred in consequence of the occurrence of the contingency.
- (8G) Where an obligation is contingent and the contingency does not occur, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, is nil.
- (9) In this section—
- “*authorised unit trust*” has the meaning given by section 468;
- “*charity*” has the same meaning as in section 506 and includes the Trustees of the National Heritage Memorial Fund;the Historic Buildings and Monuments Commission for England; andthe National Endowment for Science, Technology and the Arts;
- “*the incidental costs of making the disposal to the company making it*” shall be construed in accordance with section 38(2) of the 1992 Act;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*obligation*” includes a reference to each of the following—any scheme, arrangement or understanding of any kind, whether or not legally enforceable;a series of obligations (whether or not between the same parties);
- “*offshore fund*” has the same meaning as in section 40A of the Finance Act 2008;
- “*open-ended investment company*” is to be read in accordance with section 468A(2) to (4);
- “*qualifying investment*” means any of the following—shares or securities which are listed on a recognised stock exchange or dealt in on any designated market in the United Kingdom;units in an authorised unit trust;shares in an open-ended investment company;. . . an interest in an offshore fund; anda qualifying interest in land;
- “*related liabilities*” shall be construed in accordance with subsection (8E) above;
- “*value of the net benefit to the charity*” shall be construed in accordance with subsection (8A) above.
- (9ZA) In paragraph (a) of the definition of “qualifying investment” in subsection (9) above, “*designated*” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that paragraph.
- (9ZB) An order under subsection (9ZA) above may—
- (a) designate a market by name or by reference to any class or description of market, and
- (b) vary or revoke a previous order under that subsection.
- (9A) In this section a “*qualifying interest in land*” means—
- (a) a freehold interest in land, or
- (b) a leasehold interest in land which is a term of years absolute,
where the land in question is in the United Kingdom.
This subsection is subject to subsections (9B) to (9D) below.
- (9B) Where a company makes a disposal to a charity of—
- (a) the whole of its beneficial interest in such freehold or leasehold interest in land as is described in subsection (9A)(a) or (b) above, and
- (b) any easement, servitude, right or privilege so far as benefiting that land,
the disposal falling within paragraph (b) above is to be regarded for the purposes of this section as a disposal by the company of the whole of its beneficial interest in a qualifying interest in land.
- (9C) Where a company which has a freehold or leasehold interest in land in the United Kingdom grants a lease for a term of years absolute (or, in the case of land in Scotland, grants a lease) to a charity of the whole or part of that land, the grant of that lease is to be regarded for the purposes of this section as a disposal by the company of the whole of the beneficial interest in the leasehold interest so granted.
- (9D) For the purposes of subsection (9A) above, an agreement to acquire a freehold interest and an agreement for a lease are not qualifying interests in land.
- (9E) In the application of this section to Scotland—
- (a) references to a freehold interest in land are references to the interest of the owner,
- (b) references to a leasehold interest in land which is a term of years absolute are references to a tenant’s right over or interest in a property subject to a lease, and
- (c) references to an agreement for a lease do not include references to missives of let that constitute an actual lease.
- (10) Subject to subsection (11) below, the market value of any qualifying investment shall be determined for the purposes of this section as for the purposes of the 1992 Act.
- (10A) Section 839 (connected persons) applies for the purposes of this section.
- (11) In the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(5) of the 1992 Act (meaning of “*market value*” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this section.
- (12) This section is supplemented by sections 587BA and 587C below.
##### 587BA
- (1) This section applies for the purposes of section 587B where a qualifying investment is a qualifying interest in land.
- (2) Where two or more persons (“the owners”)—
- (a) are jointly beneficially entitled to the qualifying interest in land, or
- (b) are, taken together, beneficially entitled in common to the qualifying interest in land,
relief under section 587B is available if at least one of the owners is a qualifying company and all the owners dispose of the whole of their beneficial interests in the qualifying interest in land to the charity.
- (3) Subsection (4) applies if one or more of the owners is not a company.
- (4) For the purpose of determining whether the owners' beneficial interests are disposed of as mentioned in subsection (2), section 587B(9B) and (9C) applies as if references to a company included a reference to a person who is not a company.
- (5) Relief under section 587B is available to each of the owners which is a qualifying company.
- (6) If one or more of the owners is an individual—
- (a) the relevant amount is taken to be the relievable amount calculated for the purposes of Chapter 3 of Part 8 of ITA 2007, and
- (b) the amount of relief under section 587B to be given to a qualifying company is such share of the relievable amount as is allocated to the company by the agreement mentioned in section 442(5) of ITA 2007.
- (7) Subsections (8) to (12) apply if none of the owners is an individual.
- (8) The amount of relief under section 587B to be given to a qualifying company is such share of the relevant amount as is allocated to the company by an agreement made between those owners which are qualifying companies.
- (9) Calculate the relevant amount as if—
- (a) the owners were a single qualifying company, and
- (b) the disposals of the owners' beneficial interests were a single disposal by that single company of the whole of the beneficial interest in the qualifying interest in land.
- (10) In particular, for the purposes of section 587B(7) calculate the consideration for which the disposal is made by virtue of section 257(2)(a) of the 1992 Act by—
- (a) calculating, for each owner, the consideration for which the disposal of the owner's beneficial interest is so made, and
- (b) adding together all the consideration calculated under paragraph (a).
- (11) If one or more of the owners is not a qualifying company, in calculating the relevant amount make just and reasonable adjustments to reduce the relevant amount to reflect the fact that relief under section 587B is not available to that owner or to those owners.
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (13) A company is a qualifying company if—
- (a) it is not itself a charity, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) In this section, “*share option scheme*” means—
- (a) an SAYE option scheme within the meaning of the SAYE code (see section 516(4) of ITEPA 2003 (approved SAYE option schemes)), or
- (b) a CSOP scheme within the meaning of the CSOP code (see section 521(4) of that Act (approved CSOP schemes)).
- (4) References in this section to approving are to approving under Schedule 9 to this Act or under Schedule 3 or 4 to ITEPA 2003 (approved SAYE option schemes and approved CSOP schemes).
- (5) This section applies where the expenditure is incurred on or after 1st April 1991.
##### 85A
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##### 85B
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##### 86A
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#### Computation of income tax where no profits in year of assessment.
##### 87A
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#### Paying agents.
##### 88A
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##### 88B
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##### 88C
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##### 88D
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##### 91A
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##### 91B
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##### 91BA
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##### 91C
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### Payments for restrictive undertakings
##### 76ZA
- (1) This section applies if a payment—
- (a) is treated as earnings of an employee by virtue of section 225 of ITEPA 2003 (payments for restrictive undertakings), and
- (b) is made, or treated as made for the purposes of section 226 of that Act (valuable consideration given for restrictive undertakings), by a company in relation to which section 76 applies.
- (2) The payment is treated as expenses payable which fall to be brought into account at Step 1 in section 76(7), so far as it otherwise would not be.
### Seconded employees
##### 76ZB
- (1) This section applies if a company to which section 76 applies makes the services of a person employed for the purposes of the company's life assurance business available to—
- (a) a charity, or
- (b) an educational establishment,
on a basis that is stated and intended to be temporary.
- (2) Expenses of the employer that are attributable to the employee's employment during the period of the secondment are treated as expenses payable which fall to be brought into account at Step 1 in section 76(7).
##### 587C
- (1) This section applies for the purposes of section 587B where a qualifying investment is a qualifying interest in land.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) No company may make a claim for a relief under subsection (2) of section 587B unless it has received a certificate given by or on behalf of the charity.
- (5) The certificate must—
- (a) specify the description of the qualifying interest in land which is the subject of the disposal,
- (b) specify the date of the disposal, and
- (c) contain a statement that the charity has acquired the qualifying interest in land.
- (6) If, in the case of a disposal of a qualifying interest in land, a disqualifying event occurs at any time in the relevant period, the following shall be treated as never having been entitled to relief under section 587B in respect of the disposal—
- (a) in a case to which section 587BA does not apply, the company which made the disposal, and
- (b) in a case to which section 587BA applies, each qualifying company which is an owner.
- (7) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (6) above.
- (8) For the purposes of subsection (6) above a disqualifying event occurs if a person mentioned in subsection (8A)—
- (a) becomes entitled to an interest or right in relation to all or part of the land to which the disposal relates, or
- (b) becomes party to an arrangement under which he enjoys some right in relation to all or part of that land,
otherwise than for full consideration in money or money’s worth.
- (8A) The persons are—
- (a) in a case to which section 587BA does not apply—
- (i) the company which made the disposal, or
- (ii) a person connected with that company, and
- (b) in a case to which section 587BA applies—
- (i) a person who is an owner, or
- (ii) a person connected with such a person.
- (9) A disqualifying event does not occur, for the purposes of subsection (6) above, if a person becomes entitled to an interest or right as mentioned in subsection (8)(a) above as a result of a disposition of property on death, whether the disposition is effected by will, under the law relating to intestacy or otherwise.
- (10) For the purposes of subsection (6) above the relevant period is the period beginning with the date of the disposal of the qualifying interest in land and ending with—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . the sixth anniversary of the end of the accounting period in which the disposal was made.
- (11) Section 839 (connected persons) applies for the purposes of this section.
- (12) This section shall be construed as one with section 587B.
#### Interpretation.
##### 589A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 589B
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Income arising under settlement where settlor retains an interest.
##### 590A
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##### 590B
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##### 590C
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##### 591A
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##### 591B
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##### 591C
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##### 591D
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#### Income arising under settlement where settlor retains an interest.
##### 596A
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##### 596B
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##### 596C
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##### 599A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 605A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 606A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 611A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 611AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 611A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 617A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing release of obligation.
#### Settlements made after 6th April 1965.
##### 631A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 632A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 632B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 634A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 636A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 637A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 638ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 638A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements made after 6th April 1965.
##### 640A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 641A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Schedule 4 directions.
#### Interpretation.
##### 646A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 646B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 646C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 646D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Annuities: charge to tax
##### 648A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 648B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 650A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 651A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 653A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 658A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659A
- (1) For the purposes of sections . . . 613(4), 614(3) and (4) . . . —
- (a) “*investments*” (or “*investment*”) includes futures contracts and options contracts, and
- (b) income derived from transactions relating to such contracts shall be regarded as income derived from (or income from) such contracts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) For the purposes of subsection (1) above a contract is not prevented from being a futures contract or an options contract by the fact that any party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets other than money) in full settlement of all obligations.
##### 659B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659E
- (1) The exemptions specified below do not apply to income derived from investments, deposits or other property held as a member of a property investment LLP (see section 1004 of ITA 2007).
- (2) The exemptions are those provided by—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- section 613(4) (Parliamentary pension funds),
- section 614(3) (certain colonial, &c. pension funds),
- section 614(4) (the Overseas Service Pension Fund),
- section 614(5) (other pension funds for overseas employees),
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) The income to which subsection (1) above applies includes relevant stock lending fees, in relation to any investments, to which any of the provisions listed in subsection (2) above would apply by virtue of section 129B.
- (4) Section 659A (treatment of futures and options) applies for the purposes of subsection (1) above.
### Chapter IA — Liability of settlor
### Main provisions
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
##### 660A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660C
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary provisions
##### 660E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 674A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against Board’s notices under section 703.
#### Reduction in chargeable profits for certain financing income
##### 682A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### . . .
### . . .
##### 685A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits for certain financing income
##### 685F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits: failure to qualify for exemptions
##### 686A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 686B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 686C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 686D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits following an exempt period
##### 686E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 687A
- (1) This section applies where—
- (a) the trustees of a settlement make a payment to a company;
- (b) sections 494 and 495 of ITA 2007 apply in relation to the payment; and
- (c) the company is chargeable to corporation tax and does not fall within subsection (2) below.
- (2) A company falls within this subsection if it is—
- (a) a charitable company, as defined in section 506(1);
- (b) a body mentioned in section 507 (heritage bodies); or
- (c) an Association of a description specified in section 508 (scientific research organisations).
- (3) Where this section applies—
- (a) none of the following provisions, namely—
- (i) section 7(2),
- (ii) section 11(3),
- (iii) section 952 of ITA 2007 (set off of income tax suffered against income tax payable),
shall apply in the case of the payment;
- (b) the payment shall be left out of account in calculating the profits of the company for the purposes of corporation tax; and
- (c) no repayment shall be made of the amount treated under section 494 of ITA 2007 as income tax paid by the company in the case of the payment.
- (4) If the company is not resident in the United Kingdom, this section applies only in relation to so much (if any) of the payment as is comprised in the company’s chargeable profits for the purposes of corporation tax.
### Chapter ID — Trust management expenses
##### 689A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 689B
- (1) The expenses of the trustees of a settlement in any year of assessment, so far as they are properly chargeable to income (or would be so chargeable but for any express provisions of the trust), shall be treated—
- (a) as set against so much (if any) of any income as is income falling within subsection (2) , (2A) or (3) below before being set against other income; and
- (b) as set against so much (if any) of any income as is income falling within subsection (2) or (2A) below before being set against income falling within subsection (3) below; and
- (c) as set against so much (if any) of any income as is income falling within subsection (2) below before being set against income falling within subsection (2A) below.
- (2) Income falls within this subsection if it is—
- (a) so much of the income of the trustees as is income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.);
- (b) income treated as arising to the trustees under Chapter 5 of that Part (stock dividends from UK resident companies); or
- (c) income chargeable under Chapter 6 of that Part (release of loan to participator in close company).
- (2A) Income falls within this subsection if it is —
- (a) income chargeable under Chapter 4 of Part 4 of ITTOIA 2005 (dividends from non-UK resident companies); or
- (b) a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged).
- (2B) In subsection (2A) “*relevant foreign distribution*” means any distribution of a company not resident in the United Kingdom which—
- (a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but
- (b) would be chargeable under Chapter 3 of that Part if the company were resident in the United Kingdom.
- (3) Income falls within this subsection if it is income of the trustees which is savings income (within the meaning of section 18 of ITA 2007).
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) This section applies for corporation tax purposes only.
##### 698A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 699A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sections 751A and 751AA: supplementary
#### Apportionment of chargeable profits and creditable tax
##### 705A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 705B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Apportionment of chargeable profits and creditable tax
#### General definition of offshore fund
#### Deductions: asset transferred within group.
##### 722A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in ownership of company carrying on property business.
##### 726A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 727A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provision not at arm’s length.
##### 730A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 730B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 730BB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 730C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sections 774B and 774D: exceptions
##### 736A
Schedule 23A to this Act shall have effect in relation to certain cases where under a contract or other arrangements for the transfer of shares or other securities a person is required to pay to the other party an amount representative of a dividend or payment of interest on the securities.
#### Sections 774B and 774D: exceptions
##### 736B
- (1) This section applies where—
- (a) any interest on securities transferred by the lender under a stock lending arrangement is paid, as a consequence of the arrangement, to a person other than the lender; and
- (b) no provision is made for securing that the lender receives payments representative of that interest.
- (2) Where this section applies, Schedule 23A and the provisions for the time being contained in any regulations under that Schedule , and Chapter 9 of Part 6 of CTA 2009 (loan relationships: manufactured interest), shall apply for corporation tax purposes, subject to subsections (2A) and (2B) below, as if—
- (a) the borrower were required under the stock lending arrangement to pay the lender an amount representative of the interest mentioned in subsection (1)(a) above;
- (b) a payment were made by the borrower in discharge of that requirement; and
- (c) that payment were made on the same date as the payment of the interest of which it is representative.
- (2A) The borrower is not entitled, by virtue of anything in Schedule 23A or any provision of regulations under that Schedule, or otherwise—
- (a) to any deduction in computing profits or gains for the purposes of . . . corporation tax, or
- (b) to any deduction against . . . total profits,
in respect of any such deemed requirement or payment as is provided for by subsection (2) above.
Where the borrower is a company, an amount may not be surrendered by way of group relief if a deduction in respect of it is prohibited by this subsection.
- (2B) In its application by virtue of subsection (2), paragraph 4(4) of Schedule 23A has effect as if—
- (a) in paragraph (a), the words from “but paid after” to the end were omitted, and
- (b) paragraph (b) were omitted.
- (3) In this section—
- “*educational establishment*” has the same meaning as in section 70 of CTA 2009, and
- “*the period of the secondment*” means the period for which the employee's services are made available to the charity or educational establishment.
### Counselling and retraining expenses
##### 76ZC
- “*interest*” includes dividends; and
- “*stock lending arrangement*” and “*securities*” have the same meanings as in section 263B of the 1992 Act.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 736C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 736D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sections 774A to 774D: minor definitions etc
##### 737A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of rights to receive annual payments
##### 747A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 748ZA
- (1) Nothing in section 748(1)(da) prevents an apportionment falling to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company (“X”) if condition A, B or C is met.
- (2) Condition A is that at any time before the end of the relevant accounting period a scheme is entered into and—
- (a) in the absence of this subsection, in consequence of the scheme, section 748(1)(da) would apply to prevent an apportionment falling to be made as regards the relevant accounting period of X, and
- (b) the main purpose, or one of the main purposes, of any party to the scheme in entering into the scheme is to secure that section 748(1)(da) prevents an apportionment falling to be made as regards that period, or that period and one or more other accounting periods of X.
- (3) Condition B is that at any time before the end of the relevant accounting period a scheme is entered into and—
- (a) in consequence of the scheme profits are shifted to X from another company (“Y”),
- (b) the main purpose or one of the main purposes of any party to the scheme in entering into the scheme is to ensure that section 748(1)(da) prevents an apportionment falling to be made as regards the chargeable profits of one or more controlled foreign companies for one or more accounting periods, and
- (c) the relevant accounting period of X falls wholly or partly within that accounting period or those accounting periods.
- (4) For the purposes of subsection (3), profits are shifted to X from Y if it is reasonable to suppose that in the absence of the scheme, and any similar scheme, the whole or a part of the income which is reflected in X's profits would have been reflected in Y's profits.
- (5) Condition C is that, in determining X's chargeable profits for the relevant accounting period—
- (a) section 418(5) of CTA 2009 (loan relationships involving connected debtor and creditor where debits exceed credits) has effect so as to treat X, for the purposes of Part 5 of that Act, as bringing into account for that period credits in respect of a loan relationship, or
- (b) Part 21B of CTA 2010 (group mismatch schemes) has effect so as to exclude an amount from being brought into account as a debit or credit for the purposes of Part 5 of CTA 2009 (loan relationships) or Part 7 of that Act (derivative contracts).
- (6) For the purposes of this section—
- “*apportionment*” means an apportionment under section 747(3);
- “*scheme*” means any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving one or more transactions.
##### 748A
- (1) Nothing in section 748 prevents an apportionment under section 747(3) falling to be made as regards an accounting period of a controlled foreign company if the company—
- (a) is a company incorporated in a territory to which this section applies as respects that accounting period; or
- (b) is at any time in that accounting period liable to tax in such a territory by reason of domicile, residence or place of management; or
- (c) at any time in that accounting period carries on business through a permanent establishment in such a territory.
- (2) The condition in subsection (1)(c) above is not satisfied as regards an accounting period of a controlled foreign company if the business carried on by the company in that period through permanent establishments in territories to which this section applies, taken as a whole, is only a minimal part of the whole of the business carried on by the company in that period.
- (3) The territories to which this section applies as respects an accounting period of a controlled foreign company are those specified as such in regulations made by the Treasury.
- (4) Regulations under subsection (3) above—
- (a) may make different provision for different cases or with respect to different territories; and
- (b) may contain such incidental, supplemental, consequential or transitional provision as the Treasury may think fit.
- (5) A statutory instrument containing regulations under subsection (3) above shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
##### 749A
- (1) An election under paragraph (d) or a designation under paragraph (e) of section 749(3) shall have effect in relation to—
- (a) the accounting period in relation to which it is made (“the original accounting period"), and
- (b) each successive accounting period of the controlled foreign company in question which precedes the next one in which the eligible territories are different,
and shall so have effect notwithstanding any change in the persons who have interests in the company or any change in the interests which those persons have in the company.
- (2) For the purposes of subsection (1)(b) above, an accounting period of the controlled foreign company is one in which the eligible territories are different if in the case of that accounting period—
- (a) at least one of the two or more territories which fell within subsection (1) of section 749 in the original accounting period does not fall within that subsection; or
- (b) some other territory also falls within that subsection.
- (3) Any election under section 749(3)(d)—
- (a) must be made by notice given to an officer of the Board;
- (b) must be made no later than twelve months after the end of the controlled foreign company’s accounting period in relation to which it is made;
- (c) must state, as respects each of the persons making it, the percentage of the chargeable profits and creditable tax (if any) of the controlled foreign company for that accounting period which it is likely would be apportioned to him on an apportionment under section 747(3) if one were made;
- (d) must be signed by the persons making it; and
- (e) is irrevocable.
- (4) Nothing in—
- (a) paragraph 10 of Schedule 18 to the Finance Act 1998 (claims or elections in company tax returns), or
- (b) Schedule 1A to the Management Act (claims or elections not included in returns),
shall apply, whether by virtue of section 754 or otherwise, to an election under section 749(3)(d).
- (5) A designation under section 749(3)(e) is irrevocable.
- (6) Where the Board make a designation under section 749(3)(e), notice of the making of the designation shall be given to every company resident in the United Kingdom which appears to the Board to have had an assessable interest in the controlled foreign company at any time during the accounting period of the controlled foreign company in relation to which the designation is made.
- (7) A notice under subsection (6) above shall specify—
- (a) the date on which the designation was made;
- (b) the controlled foreign company to which the designation relates;
- (c) the accounting period of the controlled foreign company in relation to which the designation is made; and
- (d) the territory designated.
- (8) Subsection (9) of section 749 has effect for the purposes of subsection (6) above as it has effect for the purposes of subsection (8) of that section.
- (9) For the purposes of this section the effect of any application under section 751A or 751AA shall be disregarded.
##### 749B
- (1) For the purposes of this Chapter, the following persons have an interest in a company—
- (a) any person who possesses, or is entitled to acquire, share capital or voting rights in the company;
- (b) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company;
- (c) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit; and
- (d) any other person who, either alone or together with other persons, has control of the company.
- (2) Rights which a person has as a loan creditor of a company do not constitute an interest in the company for the purposes of this Chapter.
- (3) For the purposes of subsection (1)(b) above, the definition of “distribution" in Part VI shall be construed without any limitation to companies resident in the United Kingdom.
- (4) References in subsection (1) above to being entitled to do anything apply where a person—
- (a) is presently entitled to do it at a future date, or
- (b) will at a future date be entitled to do it;
but a person whose entitlement to secure that any income or assets of the company will be applied as mentioned in paragraph (c) of that subsection is contingent upon a default of the company or any other person under any agreement shall not be treated as falling within that paragraph unless the default has occurred.
- (5) Where a company has an interest in another company and a third person has, or two or more persons together have, an interest in the first company (as in a case where one company has a shareholding in a controlled foreign company and the first company is controlled by a third company or by two or more persons together) subsections (6) and (7) below apply.
- (6) Where this subsection applies, the person who has, or each of the persons who together have, the interest in the first company shall be regarded for the purposes of this Chapter as thereby having an interest in the second company.
- (7) In any case where this subsection applies, in construing references in this Chapter to one person having the same interest as another, the person or, as the case may be, each of the persons who together have, the interest in the first company shall be treated as having, to the extent of that person’s interest in that company, the same interest as the first company has in the second company.
- (8) Where two or more persons jointly have an interest in a company otherwise than in a fiduciary or representative capacity, they shall be treated for the purposes of this Chapter as having the interest in equal shares.
##### 750A
- (1) Where—
- (a) in any accounting period a company is to be regarded by virtue of any of subsections (1) to (4) of section 749 as resident in a particular territory outside the United Kingdom, and
- (b) within the meaning of section 750(1), the local tax in respect of the profits arising to the company in that accounting period is equal to or greater than three-quarters of the corresponding United Kingdom tax on those profits, but
- (c) that local tax is determined under designer rate tax provisions,
the company shall be taken for the purposes of this Chapter to be subject to a lower level of taxation in that territory in that accounting period.
- (2) In subsection (1) above “*designer rate tax provisions*” means provisions—
- (a) which appear to the Board to be designed to enable companies to exercise significant control over the amount of tax which they pay; and
- (b) which are specified in regulations made by the Board.
- (3) Regulations under subsection (2) above—
- (a) may make different provision for different cases or with respect to different territories; and
- (b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.
- (4) The first regulations under subsection (2) above may make provision having effect in relation to accounting periods beginning not more than fifteen months before the date on which the regulations are made.
##### 751A
- (1) This section applies if—
- (a) a company carrying on life assurance business (“*the employer*”) incurs counselling expenses,
- (b) the expenses are incurred in relation to a person (“*the employee*”) who holds or has held an office or employment under the employer, and
- (c) the relevant conditions are met.
- (2) The expenses are brought into account under section 76 as expenses payable (so far as they otherwise would not be).
- (3) In this section “*counselling expenses*” means expenses incurred—
- (a) in the provision of services to the employee in connection with the cessation of the office or employment,
- (b) in the payment or reimbursement of fees for such provision, or
- (c) in the payment or reimbursement of travelling expenses in connection with such provision.
- (4) In this section “*the relevant conditions*” means—
- (a) conditions A to D for the purposes of section 310 of ITEPA 2003 (employment income exemptions: counselling and other outplacement services), and
- (b) in the case of travel expenses, condition E for those purposes.
##### 76ZD
- (a) an apportionment under section 747(3) falls to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company,
- (b) throughout that period the controlled foreign company has a business establishment in an EEA territory,
- (c) throughout that period there are individuals who work for the controlled foreign company in that territory, and
- (d) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in that period.
- (2) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for the relevant accounting period to be reduced by an amount (“*the specified amount*”) specified in the application (including to nil).
- (3) If the Commissioners grant the application—
- (a) those chargeable profits are treated as reduced by the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in those chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (4) The Commissioners may grant the application only if they are satisfied that the specified amount does not exceed the amount (if any) equal to so much of those chargeable profits as can reasonably be regarded as representing the net economic value which—
- (a) arises to the appropriate body of persons (taken as a whole), and
- (b) is created directly by qualifying work.
- (5) For the purposes of subsection (4) “*net economic value*” does not include any value which derives directly or indirectly from the reduction or elimination of any liability of any person to any tax or duty imposed under the law of any territory.
- (6) For the purposes of subsection (4) “*the appropriate body of persons*” means—
- (a) if the controlled foreign company is not a member of a group of companies, the controlled foreign company and the persons who have an interest in it at any time in the relevant accounting period, and
- (b) if the controlled foreign company is a member of a group of companies, all the persons falling within paragraph (a) and any other person who is a member of that group of companies,
and for the purposes of this subsection “*group of companies*” means a company and any other companies of which it has control.
- (7) For the purposes of subsection (4) “*qualifying work*” means work which—
- (a) is done in any EEA territory in which the controlled foreign company has a business establishment throughout the relevant accounting period, and
- (b) is done in that territory by individuals working for the controlled foreign company there.
- (8) Any reference in this section to a business establishment of a controlled foreign company in an EEA territory is to be construed in accordance with paragraph 7 of Schedule 25 (but as if the reference in that paragraph to the territory in which the company is resident were to the EEA territory).
- (9) For the purposes of this section individuals are not to be regarded as working for a company in any territory unless—
- (a) they are employed by the company in the territory, or
- (b) they are otherwise directed by the company to perform duties on its behalf in the territory.
#### Leased assets subject to hire-purchase agreements.
##### 751AA
- (1) This section applies if—
- (a) a company carrying on life assurance business (“*the employer*”) incurs training course expenses,
- (b) they are incurred in relation to a person (“*the employee*”) who holds or has held an office or employment under the employer, and
- (c) the relevant conditions are met.
- (2) The expenses are brought into account under section 76 as expenses payable (so far as they otherwise would not be).
- (a) an apportionment under section 747(3) falls to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company,
- (b) the chargeable profits of the controlled foreign company for the relevant accounting period would, apart from this section, include an amount of income in respect of a payment made by another company (“the payer”),
- (c) the amount that the payer brings into account for the purposes of corporation tax in respect of the payment is reduced (in part or in full) by virtue of Part 3 of Schedule 15 to FA 2009 (tax treatment of financing costs and income), and
- (d) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in the relevant accounting period.
- (2) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for the relevant accounting period (“the chargeable profits”) to be reduced by an amount (“*the specified amount*”) specified in the application (including to nil).
- (3) If the Commissioners grant the application—
- (a) the chargeable profits are treated as reduced by the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in the chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (4) The Commissioners may grant the application only if they are satisfied that the specified amount does not exceed the relevant amount.
- (5) In subsection (4) “*the relevant amount*” means the amount (if any) by which it is just and reasonable that the chargeable profits should be treated as reduced, having regard to the effect of Parts 3 and 4 of Schedule 15 to FA 2009 on amounts brought into account for the purposes of corporation tax by the payer, or any other company.
#### Section 785B: expectation that relevant capital payment will not be paid
##### 751AB
- (1) This section applies if—
- (a) an apportionment under section 747(3) would fall to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company,
- (b) but for a relevant failure, section 748(1)(ba) or (bb) would have prevented such an apportionment, and
- (c) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in that period.
- (2) “*Relevant failure*” means—
- (a) in the case of section 748(1)(ba), one or both of the following—
- (i) a failure to satisfy the requirement of paragraph 12E of Schedule 25 (requirement as to company's UK connection) in circumstances where the requirement would be satisfied if the reference in sub-paragraph (3)(a) of that paragraph to 10% were a reference to 50%, and
- (ii) a failure to satisfy the requirement of paragraph 12F of that Schedule (finance income and relevant IP income) in circumstances where the relevant IP income of the controlled foreign company for the accounting period does not exceed 5% of the company's gross income for that period, and
- (b) in the case of section 748(1)(bb), a failure to satisfy the requirement of paragraph 12M of that Schedule (finance income).
- (3) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for the relevant accounting period (“the chargeable profits”) to be reduced to an amount specified in the application (“*the specified amount*”).
The specified amount may be nil.
- (4) If the Commissioners grant the application—
- (a) the chargeable profits are treated as reduced to the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in the chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (5) The Commissioners may grant the application only if—
- (a) they are satisfied that the specified amount is not less than the relevant amount, and
- (b) they have not previously granted an application made by the UK resident company in respect of the relevant accounting period under section 751A or 751AC.
- (6) “*The relevant amount*” means—
- (a) if the relevant failure is within subsection (2)(a), the sum of—
- (i) the excess finance and IP income (if any) for the relevant accounting period, and
- (ii) in a case where there is a failure specified in subsection (2)(a)(i), so much (if any) of the net chargeable profits for that period as are not excluded by subsection (8), and
- (b) if the relevant failure is within subsection (2)(b)—
- (i) the amount (if any) by which the controlled foreign company's finance income for the relevant accounting period exceeds 5% of its gross income for that period, or
- (ii) if that amount is a negligible amount, nil.
- (7) “The excess finance and IP income” for the relevant accounting period means—
- (a) the amount (if any) by which the total of the controlled foreign company's finance income and relevant IP income for that period exceeds 5% of its gross income for that period, or
- (b) if that amount is a negligible amount, nil.
- (8) Net chargeable profits are excluded by this subsection if, and to the extent that, they can reasonably be regarded—
- (a) as representing the net economic value which—
- (i) arises to the appropriate body of persons (taken as a whole), and
- (ii) is created directly by qualifying work, or
- (b) as not being wholly or partly attributable, directly or indirectly, to transactions with persons within the charge to United Kingdom tax.
- (9) In subsection (8)(a) “*qualifying work*” means work which—
- (a) is done in the territory in which the controlled foreign company is resident, and
- (b) is done in that territory by individuals working for the controlled foreign company there.
- (10) A transaction with a company which is within the charge to United Kingdom tax only because it carries on a trade in the United Kingdom through a permanent establishment there is within subsection (8)(b) only if the transaction is attributable to activities carried on through that establishment.
- (11) For the purposes of subsections (8) and (9)—
- (a) section 751A(5), (6) and (9) applies as it applies for the purposes of the equivalent provisions of section 751A, and
- (b) paragraph 5(2) to (5) of Schedule 25 (residence of controlled foreign company) applies as it applies in relation to Part 2 of that Schedule.
- (12) In this section—
- “*finance income*” has the meaning given by paragraph 12F(3) of Schedule 25 (with references to C read as references to the controlled foreign company);
- “*relevant IP income*” has the meaning given by paragraph 12F(4) of that Schedule;
- “*net chargeable profits*” means chargeable profits excluding so much of those profits as is directly attributable to the finance income or relevant IP income of the controlled foreign company;
- “*UK-connected gross income*” has the same meaning as in paragraph 12E of Schedule 25;
- “*United Kingdom tax*” means corporation tax or income tax;
and paragraph 12G of that Schedule (gross income) applies for the purposes of this section as it applies for the purposes of Part 2A of that Schedule (with references to C read as references to the controlled foreign company).
#### Transactions associated with loans or credit.
##### 751AC
- (1) This section applies if—
- (a) an exempt period in relation to a controlled foreign company ends in accordance with paragraph 15F(2) of Schedule 25 (time exempt period ends if there is an early termination event), other than by reason of an early termination event within paragraph 15F(3)(b),
- (b) an accounting period (“*the relevant accounting period*”) of the company ends after that exempt period but before the time the exempt period would have ended had paragraph 15F(2) of that Schedule not applied,
- (c) an apportionment under section 747(3) would fall to be made as regards the relevant accounting period, and
- (d) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in that period.
- (2) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for that accounting period (“the chargeable profits”) to be reduced to an amount (“*the specified amount*”) specified in the application (which may be nil).
- (3) If the Commissioners grant the application—
- (a) the chargeable profits are treated as reduced to the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in the chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (4) The Commissioners may grant the application only if—
- (a) they are satisfied that the specified amount is not less than the relevant amount, and
- (b) they have not previously granted an application made by the UK resident company in respect of the relevant accounting period under section 751A or 751AB.
- (5) “*The relevant amount*” means the amount (if any) equal to so much of the chargeable profits as it is just and reasonable to regard as referable to—
- (a) the relevant transaction which triggered the end of the exempt period, or
- (b) any later relevant transaction occurring before the time the exempt period would have ended had paragraph 15F(2) of Schedule 25 not applied.
- (6) “*Relevant transaction*” has the meaning given by paragraph 15E of Schedule 25 (and it does not matter if the transaction occurs pursuant to an agreement entered into by the controlled foreign company before the relevant time (within the meaning of paragraph 15G of that Schedule)).
#### Restriction of relief for payments of interest.
##### 751B
- (1) An application by a company under section 751A or 751AA—
- (a) must be made in such form as the HMRC Commissioners may determine,
- (b) must be accompanied by such documents (or copies of documents) in the company's possession or power as those Commissioners may reasonably require for the purpose of determining whether to grant the application, and
- (c) must contain such information as those Commissioners may reasonably require for that purpose.
- (2) An application by a company under section 751A or 751AA—
- (a) may be made at any time on or before the filing date (within the meaning of Schedule 18 to the Finance Act 1998) for the relevant company tax return of the company, and
- (b) may be amended or withdrawn at any time before the application is determined by those Commissioners.
- (3) If an application by a company under section 751A or 751AA is granted after the company has delivered its relevant company tax return, it has 30 days beginning with the day on which the application is granted in which to amend that return to give effect to section 751A or 751AA.
- (4) The time limits otherwise applicable to an amendment of a company tax return do not prevent an amendment being made under subsection (3).
- (5) If the HMRC Commissioners refuse an application by a company under section 751A or 751AA, the company may appeal . . . against the refusal.
- (6) Notice of an appeal must be given in writing to the HMRC Commissioners within 30 days after the application is refused.
- (7) On an appeal—
- (a) if the tribunal is satisfied that the relevant amount is a different amount from the amount specified in the application, it must direct the HMRC Commissioners to grant the application as if the amount specified in it were that different amount,
- (b) if the tribunal is satisfied that the relevant amount is the amount specified in the application, it must direct the HMRC Commissioners to grant the application, and
- (c) in any other case, the tribunal must confirm the refusal.
- (8) For the purposes of subsection (7) “*the relevant amount*”—
- (a) in the case of an appeal in respect of the refusal of an application under section 751A, means the amount (if any) equal to so much of the chargeable profits mentioned in subsection (4) of section 751A as can reasonably be regarded as representing the value mentioned in that subsection , and
- (b) in the case of an appeal in respect of the refusal of an application under section 751AA, has the meaning given by subsection (5) of that section.
- (9) Part 5 of the Management Act (appeals), apart from section 50, applies in relation to an appeal under this section as it applies in relation to an appeal against an assessment to tax.
- (10) In this section “*relevant company tax return*”, in relation to a company, means the return for the accounting period for which—
- (a) any sum is chargeable on the company under section 747(4)(a), or
- (b) any sum would be so chargeable but for section 751A or 751AA,
in respect of the chargeable profits of the controlled foreign company for the accounting period mentioned in section 751A(1) or 751AA(1).
- (11) In this section “*the HMRC Commissioners*” means the Commissioners for Her Majesty's Revenue and Customs.
#### Sections 774B and 774D: exceptions
##### 752A
- (1) This section has effect for the purpose of determining for the purposes of this Chapter who has a relevant interest in a controlled foreign company at any time; and references in this Chapter to relevant interests shall be construed accordingly.
- (2) A UK resident company which has a direct or indirect interest in a controlled foreign company has a relevant interest in the company by virtue of that interest unless subsection (3) below otherwise provides.
- (3) A UK resident company which has an indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest if it has the interest by virtue of having a direct or indirect interest in another UK resident company.
- (4) A related person who has a direct or indirect interest in a controlled foreign company has a relevant interest in the company by virtue of that interest unless subsection (5) or (6) below otherwise provides.
- (5) A related person who has an indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest if he has the interest by virtue of having a direct or indirect interest in—
- (a) a UK resident company; or
- (b) another related person.
- (6) A related person who has a direct or indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest to the extent that a UK resident company—
- (a) has the whole or any part of the same interest indirectly, by virtue of having a direct or indirect interest in the related person, and
- (b) by virtue of that indirect interest in the controlled foreign company, has a relevant interest in the company by virtue of subsection (2) above.
- (7) A person who—
- (a) has a direct interest in a controlled foreign company, but
- (b) does not by virtue of subsections (2) to (6) above have a relevant interest in the company by virtue of that interest,
has a relevant interest in the company by virtue of that interest unless subsection (8) below otherwise provides.
- (8) A person does not by virtue of subsection (7) above have a relevant interest in a controlled foreign company by virtue of having a direct interest in the company to the extent that another person—
- (a) has the whole or any part of the same interest indirectly, and
- (b) by virtue of that indirect interest, has a relevant interest in the company by virtue of subsections (2) to (6) above.
- (9) No person has a relevant interest in a controlled foreign company otherwise than as provided by subsections (2) to (8) above.
- (10) In this section—
- “*related person*” means a person who—is not a UK resident company, butis connected or associated with a UK resident company which has by virtue of subsection (2) above a relevant interest in the controlled foreign company in question;
- “*UK resident company*” means a company resident in the United Kingdom.
##### 752B
- (1) For the purposes of section 752(3) above, where a person has a relevant interest in a controlled foreign company by virtue of indirectly holding issued ordinary shares of the company, the percentage of the issued ordinary shares of the company which the relevant interest represents is equal to—
$$P×S$where—P is the product of the appropriate fractions of that person and each of the share-linked companies through which he indirectly holds the shares in question, other than the lowest share-linked company; andS is the percentage of issued ordinary shares of the controlled foreign company which is held directly by the lowest share-linked company.$
- (2) In subsection (1) above and this subsection—
- “the appropriate fraction", in the case of a person who directly holds ordinary shares of a share-linked company, means that fraction of the issued ordinary shares of that company which his holding represents;
- “*the lowest share-linked company*”, in relation to a person who indirectly holds ordinary shares of a controlled foreign company, means the share-linked company which directly holds the shares in question;
- “*share-linked company*” means a company which is share-linked to the controlled foreign company in question.
- (3) Where a person has different indirect holdings of shares of the controlled foreign company (as in a case where different shares are held through different companies which are share-linked to the controlled foreign company)—
- (a) subsection (1) above shall apply separately in relation to the different holdings with any necessary modifications; and
- (b) for the purposes of section 752(3) above the percentage of the issued ordinary shares of the company which the relevant interest represents is the aggregate of the percentages resulting from those separate applications.
- (4) Where, for the purposes of subsection (3) of section 752, the percentage of the issued ordinary shares of the controlled foreign company which a person directly or indirectly holds varies during the relevant accounting period, he shall be treated for the purposes of that subsection as holding throughout that period that percentage of the issued ordinary shares of the company which is equal to the sum of the relevant percentages for each holding period in the relevant accounting period.
- (5) For the purposes of subsection (4) above—
- “holding period", in the case of any person, means a part of the relevant accounting period during which the percentage of the issued ordinary shares of the controlled foreign company which the person holds (whether directly or indirectly) remains the same;
- “the relevant percentage", in the case of a holding period, means the percentage equal to—$P×HA$where—P is the percentage of the issued ordinary shares of the controlled foreign company which the person in question directly or indirectly holds in the holding period, as calculated in accordance with subsections (1) to (3) above so far as applicable;H is the number of days in the holding period; andA is the number of days in the relevant accounting period.
##### 752C
- (1) In this section “*the relevant provisions*” means sections 752 to 752B and this section.
- (2) For the purposes of the relevant provisions—
- (a) a person has a direct interest in a company if (and only if) he has an interest in the company otherwise than by virtue of having an interest in another company;
- (b) a person has an indirect interest in a company if (and only if) he has an interest in the company by virtue of having an interest in another company;
- (c) a person indirectly holds shares of a controlled foreign company if (and only if) he directly holds ordinary shares of a company which is share-linked to the controlled foreign company.
- (3) For the purposes of the relevant provisions, a company is “share-linked" to a controlled foreign company if it has an interest in the controlled foreign company only by virtue of directly holding ordinary shares—
- (a) of the controlled foreign company, or
- (b) of the controlled foreign company or of one or more companies which are share-linked to the controlled foreign company by virtue of paragraph (a) above, or
- (c) of the controlled foreign company or of one or more companies which are share-linked to the controlled foreign company by virtue of paragraph (a) or (b) above,
and so on.
- (4) For the purposes of the relevant provisions, a company (“company A") has an intermediate interest in a controlled foreign company if (and only if)—
- (a) it has a direct or indirect interest in the controlled foreign company; and
- (b) one or more other persons have relevant interests in the controlled foreign company by virtue of having a direct or indirect interest in company A.
- (5) Any interest or shares held by a nominee or bare trustee shall be treated for the purposes of the relevant provisions as held by the person or persons for whom the nominee or bare trustee holds the interest or shares.
- (6) Where—
- (a) an interest in a controlled foreign company is held in a fiduciary or representative capacity, and
- (b) subsection (5) above does not apply, but
- (c) there are one or more identifiable beneficiaries,
the interest shall be treated for the purposes of the relevant provisions as held by that beneficiary or, as the case may be, as apportioned on a just and reasonable basis among those beneficiaries.
- (7) In the relevant provisions—
- “*bare trustee*” means a person acting as trustee—for a person absolutely entitled as against the trustee; orfor any person who would be so entitled but for being a minor or otherwise under a disability; orfor two or more persons who are or would, but for all or any of them being a minor or otherwise under a disability, be jointly so entitled;
- “ordinary shares", in the case of any company, means shares of a single class, however described, which is the only class of shares issued by the company;
- “*the relevant accounting period*” means the accounting period mentioned in section 752(1);
- “*share*” includes a reference to a fraction of a share.
##### 754A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 754B
- (1) This section has effect where a determination requiring the Board’s sanction is made for any of the following purposes, that is to say—
- (a) the giving of a closure notice; or
- (b) the making of a discovery assessment.
- (2) If the closure notice or, as the case may be, notice of the discovery assessment is given to any person without—
- (a) the determination, so far as it is taken into account in the closure notice or the discovery assessment, having been approved by the Board, or
- (b) notification of the Board’s approval having been served on that person at or before the time of the giving of the notice,
the closure notice or, as the case may be, the discovery assessment shall be deemed to have been given or made (and in the case of an assessment notified) in the terms (if any) in which it would have been given or made had that determination not been taken into account.
- (3) A notification under subsection (2)(b) above—
- (a) must be in writing;
- (b) must state that the Board have given their approval on the basis that—
- (i) an amount of chargeable profits, and
- (ii) an amount of creditable tax (which may be nil),
for the accounting period of the controlled foreign company in question fall to be apportioned under section 747(3) to the person in question;
- (c) must state the amounts mentioned in sub-paragraphs (i) and (ii) of paragraph (b) above; and
- (d) subject to paragraphs (a) to (c) above, may be in such form as the Board may determine.
- (4) For the purposes of this section, the Board’s approval of a determination requiring their sanction—
- (a) must be given specifically in relation to the case in question and must apply to the amount determined; but
- (b) subject to that, may be given by the Board (either before or after the making of the determination) in any such form or manner as they may determine.
- (5) In this section references to a determination requiring the Board’s sanction are references (subject to subsection (6) below) to any determination of the amount of chargeable profits or creditable tax for an accounting period of a controlled foreign company which falls to be apportioned to a particular person under section 747(3).
- (6) For the purposes of this section, a determination shall be taken, in relation to a closure notice or a discovery assessment, not to be a determination requiring the Board’s sanction if—
- (a) an agreement about the relevant amounts has been made between an officer of the Board and the person in whose case it is made;
- (b) that agreement is in force at the time of the giving of the closure notice or, as the case may be, notice of the assessment; and
- (c) the matters to which the agreement relates include the amount determined.
- (7) In paragraph (a) of subsection (6) above, “*the relevant amounts*” means—
- (a) the amount of chargeable profits, and
- (b) the amount of creditable tax (which may be nil),
for the accounting period of the controlled foreign company in question which fall to be apportioned under section 747(3) to the person mentioned in that paragraph.
- (8) For the purposes of subsection (6) above an agreement made between an officer of the Board and any person (“the taxpayer") in relation to any matter shall be taken to be in force at any time if, and only if—
- (a) the agreement is one which has been made or confirmed in writing;
- (b) that time is after the end of the period of thirty days beginning—
- (i) in the case of an agreement made in writing, with the day of the making of the agreement, and
- (ii) in any other case, with the day of the agreement’s confirmation in writing; and
- (c) the taxpayer has not, before the end of that period of thirty days, served a notice on an officer of the Board stating that he is repudiating or resiling from the agreement.
- (9) The references in subsection (8) above to the confirmation in writing of an agreement are references to the service on the taxpayer by an officer of the Board of a notice—
- (a) stating that the agreement has been made; and
- (b) setting out the terms of the agreement.
- (10) The matters that may be questioned on so much of any appeal by virtue of any provision of the Management Act or Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters) as relates to a determination the making of which has been approved by the Board for the purposes of this section shall not include the Board’s approval, except to the extent that the grounds for questioning the approval are the same as the grounds for questioning the determination itself.
- (11) In this section—
- “*closure notice*” means a notice under paragraph 32 of Schedule 18 to the Finance Act 1998 (completion of enquiry and statement of conclusions);
- “*discovery assessment*” means a discovery assessment or discovery determination under paragraph 41 of that Schedule (including an assessment by virtue of paragraph 52 of that Schedule).
##### 755A
- (1) This section applies in any case where—
- (a) an amount (“the apportioned profit") of a controlled foreign company’s chargeable profits for an accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom (“the UK company");
- (b) the UK company carries on life assurance business in that one of its accounting periods (“the relevant accounting period") in which ends the accounting period of the controlled foreign company; and
- (c) the property or rights which represent the UK company’s relevant interest in the controlled foreign company constitute to any extent assets of the UK company’s long-term insurance fund.
- (2) Subsections (3) and (4) below apply if, in the case of the relevant accounting period, the UK company is charged to tax under the I minus E basis in respect of life assurance business.
- (3) Where this subsection applies, the “*appropriate rate*” for the purposes of section 747(4)(a) and paragraph 1 of Schedule 26 in relation to the policy holders’ part of any BLAGAB apportioned profit shall be—
- (a) if a single rate of tax under section 88(1) of the Finance Act 1989 (lower corporation tax rate on certain insurance company profits) is applicable in relation to the relevant accounting period, that rate; or
- (b) if more than one such rate of tax is applicable in relation to the relevant accounting period, the average of those rates over the whole of that period.
- (4) Where this subsection applies, the “*appropriate rate*” for the purposes of section 747(4)(a) and paragraph 1 of Schedule 26 shall be nil in relation to so much of the apportioned profit as is referable to gross roll-up business carried on by the UK company.
- (4A) In any case where—
- (a) paragraph 4 of Schedule 26 to this Act applies to a dividend received by the UK company, and
- (b) but for this subsection, subsection (4) of section 804B of this Act would apply to that dividend,
the amount of credit for foreign tax in respect of that dividend shall be treated, for the purposes of that section, as wholly attributable to basic life assurance and general annuity business.
- (5) If, in the case of the relevant accounting period, the UK company is charged to tax under section 35 of CTA 2009 (charge on trade profits) in respect of its profits from life assurance business, the “*appropriate rate*” for the purposes of—
- (a) section 747(4)(a), and
- (b) paragraph 1 of Schedule 26,
shall be nil in relation to so much of the apportioned profit as is referable to the UK company’s relevant interest so far as represented by assets of its long-term insurance fund.
- (6) If, in the case of the relevant accounting period,—
- (a) the UK company is charged to tax under the I minus E basis in respect of life assurance business,
- (b) any creditable tax of the controlled foreign company falls to be apportioned to the UK company, and
- (c) the apportioned profit is to any extent referable to gross roll-up business,
so much of the creditable tax so apportioned as is attributable to the apportioned profit so far as so referable shall be left out of account for the purposes of this Chapter, other than section 747(3) and this section, and shall be treated as extinguished.
- (7) If, in the case of the relevant accounting period,—
- (a) the UK company is charged to tax under section 35 of CTA 2009 in respect of its profits from life assurance business, and
- (b) any creditable tax of the controlled foreign company falls to be apportioned to the UK company,
so much of the creditable tax so apportioned as is attributable to so much of the apportioned profit as is referable to the UK company’s relevant interest so far as represented by assets of the UK company’s long-term insurance fund shall be left out of account for the purposes of this Chapter, other than section 747(3) and this section, and shall be treated as extinguished.
- (8) Any set off under paragraph 1 . . . of Schedule 26 against the UK company’s liability to tax under section 747(4)(a) in respect of the apportioned profit shall be made against only so much of that liability as is attributable to the eligible part of the apportioned profit.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) For the purposes of this section, the “eligible part" of the apportioned profit is any BLAGAB apportioned profit, other than the policy holders’ part.
- (11) For the purposes of this section the policy holders' part of any BLAGAB apportioned profit is—
- (a) where subsection (11A) below applies, the whole of that profit, and
- (b) in any other case, the relevant fraction (within the meaning of subsection (11B) below) of that profit.
- (11A) This subsection applies if—
- (a) the UK company’s life assurance business is mutual business,
- (b) the policy holders' share of the UK company’s relevant profits for the relevant accounting period is equal to all those profits, or
- (c) the policy holders' share of the UK company’s relevant profits for the relevant accounting period is more than its BLAGAB profits for that period.
- (11B) The relevant fraction for the purposes of subsection (11)(b) above is the fraction arrived at by dividing—
- (a) the policy holders' share of the UK company’s relevant profits for the relevant accounting period, by
- (b) the UK company’s BLAGAB profits for that period.
- (11BA) But where the BLAGAB profits for the relevant accounting period are nil, the relevant fraction—
- (a) if there are section 35 profits of the accounting period in respect of its life assurance business, is nil, and
- (b) otherwise, is such fraction as is just and reasonable;
and for this purpose there are section 35 profits if there are profits computed in accordance with the life assurance trade profits provisions after making adjustments in respect of losses in accordance with section 85A(4) of the Finance Act 1989.
- (11C) In subsections (11A) and (11B) above—
- (a) references to the policy holders' share of the UK company’s share of the relevant profits are to be construed in accordance with sections 88(3) and 89 of the Finance Act 1989, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) In this section—
- “*BLAGAB apportioned profit*” means so much of the apportioned profit as is referable to basic life assurance and general annuity business carried on by the UK company;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (13) For the purposes of this section, the part of the apportioned profit which is referable to—
- (a) basic life assurance and general annuity business, or
- (ba) gross roll-up business,
carried on by the UK company is the part which would have been so referable under section 432A had the apportioned profit been a dividend paid to the UK company at the end of the accounting period mentioned in subsection (1)(a) above in respect of the property or rights which represent the UK company’s relevant interest in the controlled foreign company.
- (14) For the purposes of this section, any attribution of creditable tax to a particular part of the apportioned profit shall be made in the proportion which that part of the apportioned profit bears to the whole of the apportioned profit.
##### 755B
- (1) This section applies where—
- (a) a controlled foreign company carries on general insurance business in an accounting period;
- (b) an amount of the company’s chargeable profits, and an amount of its creditable tax (if any), for that accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom (“the UK company");
- (c) the UK company delivers a company tax return for that one of its accounting periods in which the controlled foreign company’s accounting period ends; and
- (d) in making or amending the return, the UK company has regard to accounts of the controlled foreign company drawn up using a method falling within subsection (2) below.
- (2) The methods which fall within this subsection are—
- (a) the method described in paragraph 58 in Section E of Part 2 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (which provides for a technical provision to be made in the accounts which is later replaced by a provision for estimated claims outstanding); and
- (b) any method which would have fallen within paragraph (a) above, had final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 58 of that Schedule, taken place, and been required to take place, no later than the end of the year referred to in that sub-paragraph as the third year following the underwriting year.
- (3) Where this section applies—
- (a) the UK company may make any amendments of its company tax return arising from the replacement of the technical provision in the controlled foreign company’s accounts at any time within twelve months from the date on which the provision was replaced; and
- (b) notice of intention to enquire into the return under paragraph 24 of Schedule 18 to the Finance Act 1998 may be given at any time up to two years from that date (or at any later time in accordance with the general rule in sub-paragraph (3) of that paragraph).
- (4) If, in a case where this section applies, the accounts of the controlled foreign company are drawn up using a method falling within paragraph (b) of subsection (2) above—
- (a) the controlled foreign company, and
- (b) any person with an interest in the controlled foreign company,
shall be treated for the purposes of this section as if final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 58 of Schedule 3 to those Regulations, had taken place at, and been required to take place no later than, the end of the year referred to in that sub-paragraph as the third year following the underwriting year.
- (5) Regulations under section 755C may make provision with respect to the determination of the amount of the provision by which the technical provision is to be treated as replaced in cases falling within subsection (4) above.
- (6) In this section “general insurance business” means business which consists of the effecting or carrying out of contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
##### 755C
- (1) The Treasury may by regulations provide for the provisions of this Chapter to have effect with prescribed modifications in any case where a non-resident company—
- (a) carries on general insurance business; and
- (b) draws up accounts relating to that business using a method falling within subsection (2) of section 755B.
- (2) Regulations under subsection (1) above may—
- (a) make different provision for different cases;
- (b) make provision having effect in relation to accounting periods of non-resident companies ending not more than one year before the date on which the regulations are made; and
- (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit.
- (3) In this section—
- “*retraining course expenses*” means expenses incurred in the payment or reimbursement of retraining course expenses within the meaning given by section 311(2) of ITEPA 2003, and
- “*the relevant conditions*” means—the conditions in subsections (3) and (4) of section 311 of ITEPA 2003 (employment income exemptions: retraining courses), andin the case of travel expenses, the conditions in subsection (5) of that section.
##### 76ZE
- “*general insurance business*” has the same meaning as in section 755B;
- “*non-resident company*” means a company resident outside the United Kingdom;
- “*prescribed*” means prescribed in regulations under this section.
##### 755D
- (1) For the purposes of this Chapter “control", in relation to a company, means the power of a person to secure—
- (a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
- (b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
- (1A) For the purposes of this Chapter a person also controls a company if the person possesses, or is entitled to acquire, such rights as would—
- (a) if the whole of the income of the company were distributed, entitle the person to receive the greater part of the amount so distributed,
- (b) if the whole of the company's share capital were disposed of, entitle the person to receive the greater part of the proceeds of the disposal, or
- (c) in the event of the winding-up of the company or in any other circumstances, entitle the person to receive the greater part of the assets of the company which would then be available for distribution.
- (2) Where two or more persons, taken together, have the power mentioned in subsection (1) above or satisfy subsection (1A) above, they shall be taken for the purposes of this Chapter to control the company.
- (3) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing at least 40 per cent of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.
- (4) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing—
- (a) at least 40 per cent, but
- (b) not more than 55 per cent,
of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.
- (5) For the purposes of this Chapter any question—
- (a) whether a company is controlled by a person, or by two or more persons taken together, or
- (b) whether, in the case of any company, the applicable 40 per cent test is satisfied in the case of each of two persons who, taken together, control the company,
shall be determined after attributing to each of the persons all the rights and powers mentioned in subsection (6) below that are not already attributed to that person for the purposes of subsections (1) to (4) above.
- (6) The rights and powers referred to in subsection (5) above are—
- (a) rights and powers which the person is entitled to acquire at a future date or which he will, at a future date, become entitled to acquire;
- (b) rights and powers of other persons, to the extent that they are rights or powers falling within subsection (7) below;
- (c) if the person is resident in the United Kingdom, rights and powers of any person who is resident in the United Kingdom and connected with the person; and
- (d) if the person is resident in the United Kingdom, rights and powers which for the purposes of subsection (5) above would be attributed to a person who is resident in the United Kingdom and connected with the person (a “*UK connected person*”) if the UK connected person were himself the person.
- (7) Rights and powers fall within this subsection to the extent that they—
- (a) are required, or may be required, to be exercised in any one or more of the following ways, that is to say—
- (i) on behalf of the person;
- (ii) under the direction of the person; or
- (iii) for the benefit of the person; and
- (b) are not confined, in a case where a loan has been made by one person to another, to rights and powers conferred in relation to property of the borrower by the terms of any security relating to the loan.
- (8) In subsections (6)(b) to (d) and (7) above, the references to a person’s rights and powers include references to any rights or powers which he either—
- (a) is entitled to acquire at a future date, or
- (b) will, at a future date, become entitled to acquire.
- (9) In paragraph (d) of subsection (6) above, the reference to rights and powers which would be attributed to a UK connected person if he were the person includes a reference to rights and powers which, by applying that paragraph wherever one person resident in the United Kingdom is connected with another person, would be so attributed to him through a number of persons each of whom is resident in the United Kingdom and connected with at least one of the others.
- (10) In determining for the purposes of this section whether one person is connected with another in relation to a company, subsection (7) of section 839 shall be disregarded.
- (11) References in this section—
- (a) to rights and powers of a person, or
- (b) to rights and powers which a person is or will become entitled to acquire,
include references to rights or powers which are exercisable by that person, or (when acquired by that person) will be exercisable, only jointly with one or more other persons.
### Meaning of offshore fund
#### Sale by individual of income derived from his personal activities.
##### 756A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Treatment of umbrella funds
##### 756B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Treatment of funds comprising more than one class of interest
##### 756C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sale by individual of income derived from his personal activities.
##### 762ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 762ZB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 762A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 765A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assets leased to traders and others.
##### 767A
- (1) Where it appears to the Board that—
- (a) there has been a change in the ownership of a company (“*the tax-payer company*”),
- (b) any corporation tax assessed on the tax-payer company for an accounting period beginning before the change remains unpaid at any time after the relevant date, and
- (c) any of the three conditions mentioned below is fulfilled,
any person mentioned in subsection (2) below may be assessed by the Board and charged (in the name of the tax-payer company) to an amount of corporation tax in accordance with this section.
- (2) The persons are—
- (a) any person who at any time during the relevant period before the change in the ownership of the tax-payer company had control of it;
- (b) any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before that change.
- (3) In subsection (2) above, “*the relevant period*” means—
- (a) the period of three years before the change in the ownership of the tax-payer company; or
- (b) if during the period of three years before that change (“*the later change*”) there was a change in the ownership of the tax-payer company (“*the earlier change*”), the period elapsing between the earlier change and the later change.
- (4) The first condition is that—
- (a) at any time during the period of three years before the change in the ownership of the tax-payer company the activities of a trade or business of that company cease or the scale of those activities become small or negligible; and
- (b) there is no significant revival of those activities before that change occurs.
- (5) The second condition is that at any time after the change in the ownership of the tax-payer company, but under arrangements made before that change, the activities of a trade or business of that company cease or the scale of those activities become small or negligible.
- (6) The third condition is that—
- (a) at any time during the period of six years beginning three years before the change in the ownership of the tax-payer company there is a major change in the nature or conduct of a trade or business of that company;
- (b) there is a transfer or there are transfers of assets of the tax-payer company to a person mentioned in subsection (7) below or to any person under arrangements which enable any of those assets or any assets representing those assets to be transferred to a person mentioned in subsection (7) below;
- (c) that transfer occurs or those transfers occur during the period of three years before the change in the ownership of the tax-payer company or after that change but under arrangements made before that change; and
- (d) the major change mentioned in paragraph (a) above is attributable to that transfer or those transfers.
- (7) The persons are—
- (a) any person mentioned in subsection (2)(a) above; and
- (b) any person connected with him.
- (8) The amount of tax charged in an assessment made under this section must not exceed the amount of the tax which, at the time of that assessment, remains unpaid by the tax-payer company.
- (9) For the purposes of this section the relevant date is the date six months from the date on which the corporation tax is assessed as mentioned in subsection (1)(b) above.
- (10) Any assessment made under this section shall not be out of time if made within three years from the date on which the liability of the tax-payer company to corporation tax for the accounting period mentioned in subsection (1)(b) above is finally determined.
##### 767AA
- (1) Where it appears to the Board that—
- (a) there has been a change in the ownership of a company (“the transferred company"),
- (b) any corporation tax relating to an accounting period ending on or after the change has been assessed on the transferred company or an associated company,
- (c) that tax remains unpaid at any time more than six months after it was assessed, and
- (d) the condition set out in subsection (2) below is fulfilled,
any person mentioned in subsection (4) below may be assessed by the Board and charged to an amount of corporation tax not exceeding the amount remaining unpaid.
- (2) The condition is that it would be reasonable (apart from this section) to infer, from either or both of—
- (a) the terms of any transactions entered into in connection with the change, and
- (b) the other circumstances of the change and of any such transactions,
that at least one of those transactions was entered into by one or more of its parties on the assumption, as regards a potential tax liability, that that liability would be unlikely to be met, or met in full, if it were to arise.
- (3) In subsection (2) above the reference to a potential tax liability is a reference to a liability to pay corporation tax which—
- (a) in circumstances which were reasonably foreseeable at the time of the change in ownership, or
- (b) in circumstances the occurrence of which is something of which there was at that time a reasonably foreseeable risk,
would or might arise from an assessment made, after the change in ownership, on the transferred company or an associated company (whether or not a particular associated company).
- (4) The persons mentioned in subsection (1) above are—
- (a) any person who at any time during the relevant period had control of the transferred company;
- (b) any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before the change in the ownership of the transferred company.
- (5) In subsection (4) above, “*the relevant period*” means—
- (a) the period of three years before the change in the ownership of the transferred company; or
- (b) if during the period of three years before that change (“the later change") there was a change in the ownership of the transferred company (“the earlier change"), the period elapsing between the earlier change and the later change.
- (6) For the purposes of this section a transaction is entered into in connection with a change in the ownership of a company if—
- (a) it is the transaction, or one of the transactions, by which that change is effected; or
- (b) it is entered into as part of a series of transactions, or scheme, of which transactions effecting the change in ownership have formed or will form a part.
- (7) For the purposes of this section—
- (a) references to a scheme are references to any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving a single transaction or two or more transactions;
- (b) it shall be immaterial in determining whether any transactions have formed or will form part of a series of transactions or scheme that the parties to any of the transactions are different from the parties to another of the transactions; and
- (c) the cases in which any two or more transactions are to be taken as forming part of a series of transactions or scheme shall include any case in which it would be reasonable to assume that one or more of them—
- (i) would not have been entered into independently of the other or others; or
- (ii) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
- (8) In this section references, in relation to the transferred company and an assessment to tax, to an associated company are references to any compnay (whenever formed) which, at the time of the assessment or at an earlier time after the change in ownership—
- (a) has control of the transferred company;
- (b) is a company of which the transferred company has control; or
- (c) is a company under the control of the same person or persons as the transferred company.
- (9) A person assessed and charged to tax under this section shall be assessed and charged in the name of the company by whom the tax to which the assessment relates remains unpaid.
- (10) Any assessment made under this section shall not be out of time if made within three years from the date of the final determination of the liability of the company by whom the tax remains unpaid to corporation tax for the accounting period for which that tax was assessed.
##### 767B
- (1) In relation to corporation tax assessed under section 767A—
- (a) section 86 of the Management Act (interest on overdue tax), in so far as it has effect in relation to accounting periods ending on or before 30th September 1993, and
- (b) section 87A of that Act (corresponding provision for corporation tax due for accounting periods ending after that date),
shall have effect as if the references in section 86 to the reckonable date and in section 87A to the date when the tax becomes due and payable were, respectively, references to the date which is the reckonable date in relation to the tax-payer company and the date when the tax became due and payable by the tax-payer company.
- (1A) In relation to corporation tax assessed under section 767AA, section 87A of the Management Act shall have effect as if the references to the date when the tax becomes due and payable were references to the date when the tax became due and payable by the transferred company or the associated company (as the case may be).
- (2) A payment in pursuance of an assessment under section 767A or 767AA shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes; but any person making such a payment shall be entitled to recover an amount equal to the payment from the tax-payer company or the transferred company or associated company (as the case may be).
- (3) In subsection (2) above the reference to a payment in pursuance of an assessment includes a reference to a payment of interest under section 86 or 87A of the Management Act (as they have effect by virtue of subsection (1) above).
- (4) For the purposes of sections 767A and 767AA, “*control*”, in relation to a company, shall be construed in accordance with section 416 as modified by subsections (5) and (6) below.
- (5) In subsection (2)(a) for “the greater part of” there shall be substituted “50 per cent. of”.
- (6) For subsection (3) there shall be substituted—
- (”) Where two or more persons together satisfy any of the conditions in subsection (2) above and do so by reason of having acted together to put themselves in a position where they will in fact satisfy the condition in question, each of those persons shall be treated as having control of the company.”
- (7) In section 767A(6) “*a major change in the nature or conduct of a trade or business*” includes any change mentioned in any of paragraphs (a) to (d) of section 245(4); and also includes a change falling within any of those paragraphs which is achieved gradually as the result of a series of transfers.
- (8) In section 767A(6) “*transfer*”, in relation to an asset, includes any disposal, letting or hiring of it, and any grant or transfer of any right, interest or licence in or over it, or the giving of any business facilities with respect to it.
- (9) Section 839 shall apply for the purposes of section 767A(7).
- (10) Subsection (9) of section 768 shall apply for the purposes of sections 767A and 767AA as it applies for the purposes of section 768.
##### 767C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 768A
- (1) In any case where—
- (a) within any period of three 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 carried on by the company, or
- (b) at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, there is a change in the ownership of the company,
no relief shall be given under section 393A(1) or 393B(3) by setting a loss incurred by the company in an accounting period ending after the change in ownership against any profits of an accounting period beginning before the change in ownership.
- (2) Subsections (2) to (4), (8) and (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.
- (3) This section applies in relation to changes in ownership occurring on or after 14th June 1991.
##### 768B
- (1) This section applies where there is a change in the ownership of a company with investment business and—
- (a) after the change there is a significant increase in the amount of the company’s capital; or
- (b) within the period of six years beginning three years before the change there is a major change in the nature or conduct of the business carried on by the company; or
- (c) the change in the ownership occurs at any time after the scale of the activities in the business carried on by the company has become small or negligible and before any considerable revival of the business.
- (2) For the purposes of subsection (1)(a) above, whether there is a significant increase in the amount of a company’s capital after a change in the ownership of the company shall be determined in accordance with the provisions of Part I of Schedule 28A.
- (3) In paragraph (b) of subsection (1) above “*major change in the nature or conduct of a business*” includes a major change in the nature of the investments held by the company, even if the change is the result of a gradual process which began before the period of six years mentioned in that paragraph.
- (4) For the purposes of this section—
- (a) the accounting period of the company in which the change in the ownership occurs shall be divided into two parts, the first the part ending with the change, the second the part after;
- (b) those parts shall be treated as two separate accounting periods; and
- (c) the amounts in issue for the accounting period being divided shall be apportioned to those parts.
- (5) In Schedule 28A—
- (a) Part II shall have effect for identifying the amounts in issue for the accounting period being divided; and
- (b) Part III shall have effect for the purpose of apportioning those amounts to the parts of that accounting period.
- (6) Any sums which—
- (a) are, or are treated as, expenses of management referable to the accounting period being divided, and
- (b) under Part III of Schedule 28A are apportioned to either part of that period,
shall be treated for the purposes of Chapter 2 of Part 16 of CTA 2009 (companies with investment business) asexpenses of management referable to that part.
- (7) Any charges which under Part III of Schedule 28A are apportioned to either part of the accounting period being divided shall be treated for the purposes of section 338 above (charges on income deducted from total profits) and Chapter 2 of Part 16 of CTA 2009 as paid in that part.
- (8) Any allowances which under Part III of Schedule 28A are apportioned to either part of the accounting period being divided shall be treated for the purposes of section 253 of the Capital Allowances Act and section 1233 of CTA 2009 (companies with investment business: excess capital allowances) as falling to be made in that part.
- (9) In computing the total profits of the company for an accounting period ending after the change in the ownership, no deduction shall be made under section 1219 of CTA 2009 (expenses of management of a company's investment business) by reference to—
- (a) expenses of management deductible or allowances falling to be made for an accounting period beginning before the change; or
- (b) charges paid in such an accounting period.
- (10) Part IV of Schedule 28A shall have effect for the purpose of restricting, in a case where this section applies, the debits . . . to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the company’s loan relationships (including debits so brought into account by virtue of section 574 of that Act)and the non-trading deficits in respect of those relationships that may be carried forward.
- (12) Subject to the modification in subsection (13) below, subsections (6) to (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.
- (13) The modification is that in subsection (6) of section 768 for the words “relief in respect of a company’s losses has been restricted” there shall be substituted “deductions from a company’s total profits , or the debits to be brought into account for the purposes of Part 5 of CTA 2009 in the case of a company in respect of its loan relationships (or its derivative contracts by virtue of section 574 of that Act), have been restricted.”
- (14) In this section “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
##### 768C
- (1) This section applies where—
- (a) there is a change in the ownership of a company with investment business (“the relevant company”);
- (b) none of paragraphs (a) to (c) of section 768B(1) applies;
- (c) after the change in the ownership the relevant company acquires an asset from another company in circumstances such that section 171(1) of the 1992 Act applies to the acquisition; and
- (d) a chargeable gain (“a relevant gain”) accrues to the relevant company on a disposal of the asset within the period of three years beginning with the change in the ownership.
- (2) For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold and the first asset was a leasehold and the lessee has acquired the reversion.
- (3) For the purposes of this section—
- (a) the accounting period of the relevant company in which the change in the ownership occurs shall be divided into two parts, the first the part ending with the change, the second the part after;
- (b) those parts shall be treated as two separate accounting periods; and
- (c) the amounts in issue for the accounting period being divided shall be apportioned to those parts.
- (4) In Schedule 28A—
- (a) Part V shall have effect for identifying the amounts in issue for the accounting period being divided; and
- (b) Part VI shall have effect for the purpose of apportioning those amounts to the parts of that accounting period.
- (5) Subsections (6) to (8) of section 768B shall apply in relation to the relevant company as they apply in relation to the company mentioned in subsection (1) of that section except that any reference in those subsections to Part III of Schedule 28A shall be read as a reference to Part VI of that Schedule.
- (6) Subsections (7) and (9) below apply only where, in accordance with the relevant provisions of the 1992 Act and Part VI of Schedule 28A, an amount is included in respect of chargeable gains in the total profits for the accounting period of the relevant company in which the relevant gain accrues.
- (7) In computing the total profits of the relevant company for the accounting period in which the relevant gain accrues, no deduction shall be made under section 1219 of CTA 2009 (expenses of management of a company's investment business) by reference to—
- (a) expenses of management deductible or allowances falling to be made for an accounting period of the relevant company beginning before the change in ownership, or
- (b) charges paid in such an accounting period,
from an amount of the total profits equal to the amount which represents the relevant gain.
- (8) For the purposes of this section, the amount of the total profits for an accounting period which represents the relevant gain is—
- (a) where the amount of the relevant gain does not exceed the amount which is included in respect of chargeable gains for that period, an amount equal to the amount of the relevant gain;
- (b) where the amount of the relevant gain exceeds the amount which is included in respect of chargeable gains for that period, the amount so included.
- (9) Part IV of Schedule 28A shall have effect for the purpose of restricting, in a case where this section applies, the debits . . . to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the relevant company’s loan relationships (including debits so brought into account by virtue of section 574 of that Act)and the non-trading deficits in respect of those relationships that may be carried forward.
- (11) Subsections (8) and (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.
- (12) In this section—
- “*the relevant provisions of the 1992 Act*” means section 8(1) of and Schedule 7A to that Act; and
- “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
- (13) This section applies in relation to an asset to which Part 8 of CTA 2009 applies (intangible fixed assets), with the following adaptations—
- (a) for the reference to section 171(1) of the 1992 Act substitute a reference to section 775 of CTA 2009;
- (b) for any reference to a chargeable gain under the 1992 Act substitute a reference to a chargeable realisation gain within the meaning of that Part that is a non-trading credit for the purposes of that Part (see section 746 of that Act);
- (c) for any reference to a disposal of the asset substitute a reference to its realisation within the meaning of that Part (see section 734(1) of that Act);
- (d) for the reference to the relevant provisions of the 1992 Act substitute a reference to Chapter 6 of that Part.
##### 768D
- (1) This section applies where there is a change in the ownership of a company carrying on a UK property business and—
- (a) in the case of a company with investment business, either—
- (i) paragraph (a), (b) or (c) of section 768B(1) applies, or
- (ii) section 768C applies;
- (b) in the case of a company which is not a company with investment business, paragraph (a) or (b) of section 768(1) applies.
- (2) Where this section applies the following provisions have effect to prevent relief being given under section 392A by setting a UK property business loss incurred by the company before the change of ownership against profits arising after the change.
- (3) The accounting period in which the change of ownership occurs is treated for that purpose as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period.
- (4) The profits or losses of the period in which the change occurs are apportioned to those two periods—
- (a) in the case of a company with investment business—
- (i) where paragraph (a), (b) or (c) of section 768B(1) applies, in accordance with Parts II and III of Schedule 28A, or
- (ii) where section 768C applies, in accordance with Parts V and VI of that Schedule, and
- (b) in the case of a company which is not a company with investment business, according to the length of the periods,
unless in any case the specified method of apportionment would work unjustly or unreasonably in which case such other method shall be used as appears just and reasonable.
- (5) Relief under section 392A(1) against total profits of the same accounting period is available only in relation to each of those periods considered separately.
- (6) A loss made in any accounting period beginning before the change of ownership may not be set off under section 392A(2) against, or deducted by virtue of section 392A(3) from—
- (a) in the case of—
- (i) a company with investment business where paragraph (a), (b) or (c) of section 768B(1) applies, or
- (ii) a company which is not a company with investment business,
profits of an accounting period ending after the change of ownership;
- (b) in the case of a company with investment business where section 768C applies, from so much of those profits as represents the relevant gain within the meaning of that section.
- (7) Subsections (8) and (9) of section 768 (time limits for assessment; information powers) apply for the purposes of this section as they apply for the purposes of that section.
- (8) In this section—
- (a) any reference to a case where paragraph (a) or (b) of section 768(1) applies includes the case where that paragraph would apply if the reference there to a trade carried on by the company were to a UK property business carried on by it;
- (b) “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
- (9) The provisions of this section apply in relation to an overseas property business as they apply in relation to a UK property business.
##### 768E
- (1) Where there is a change in the ownership of a company with investment business and either—
- (a) paragraph (a), (b) or (c) of section 768B(1) applies, or
- (b) section 768C applies,
the following provisions have effect to prevent relief being given under section 753 of CTA 2009 (treatment of non-trading losses) by setting a non-trading loss on intangible fixed assets incurred by the company before the change of ownership against profits arising after the change.
- (2) The accounting period in which the change of ownership occurs is treated for that purpose as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period.
- (3) The profits or losses of the period in which the change occurs are apportioned to those two periods—
- (a) where paragraph (a), (b) or (c) of section 768B(1) applies, in accordance with Parts 2 and 3 of Schedule 28A, or
- (b) where section 768C applies, in accordance with Parts 5 and 6 of that Schedule,
unless in any case the specified method of apportionment would work unjustly or unreasonably in which case such other method shall be used as appears just and reasonable.
- (4) Relief under section 753 of CTA 2009 (treatment of non-trading losses) against total profits of the same accounting period is available only in relation to each of those periods considered separately.
- (5) A loss made in any accounting period beginning before the change of ownership may not be set off under section 753(3) of CTA 2009 (carry forward of non-trading losses) against—
- (a) in a case where paragraph (a), (b) or (c) of section 768B(1) applies, profits of an accounting period ending after the change of ownership;
- (b) in a case where section 768C applies, so much of those profits as represents the relevant gain within the meaning of that section.
- (6) Subsections (8) and (9) of section 768 (time limits for assessment; information powers) apply for the purposes of this section as they apply for the purposes of that section.
- (7) In this section “company with investment business” has the meaning given by section 1218 of CTA 2009.
##### 770A
Schedule 28AA (which deals with provision made or imposed otherwise than at arm’s length) shall have effect.
#### Assets leased to traders and others.
### Factoring of income receipts etc
##### 774A
- (1) For the purposes of section 774B an arrangement is a structured finance arrangement in relation to a person (“*the borrower*”) if the following condition is met in relation to the borrower.
- (2) The condition is that—
- (a) under the arrangement the borrower receives from another person (“*the lender*”) any money or other asset (“the advance”) in any period,
- (b) in accordance with generally accepted accounting practice the accounts of the borrower for that period record a financial liability in respect of the advance,
- (c) the borrower, or a person connected with the borrower, makes a disposal of an asset (“the security”) under the arrangement to or for the benefit of the lender or a person connected with the lender,
- (d) the lender, or a person connected with the lender, is entitled under the arrangement to payments in respect of the security, and
- (e) in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower.
- (3) For the purposes of this section, in any case where the borrower is a partnership, references to the accounts of the borrower include the accounts of any member of the partnership.
- (4) For the purposes of this section and section 774B—
- (a) references to a person connected with the borrower do not include the lender, and
- (b) references to a person connected with the lender do not include the borrower.
##### 774B
- (1) This section applies if an arrangement is a structured finance arrangement in relation to a person (“*the borrower*”).
- (1A) If the arrangement would (disregarding this section) have had the relevant effect (see subsections (2) and (3)), the arrangement is not to have that effect.
- (1B) If the arrangement would (disregarding this section) not have had that effect, the payments mentioned in section 774A(2)(d) are to be treated for tax purposes as income of the borrower payable in respect of the security (whether or not those payments are also the income of anyone else for tax purposes).
- (2) If the borrower is a person other than a partnership, the relevant effect is that—
- (a) an amount of income on which the borrower, or a person connected with the borrower, would otherwise have been charged to tax is not so charged,
- (b) an amount which would otherwise have been brought into account in calculating for tax purposes any income of the borrower, or of a person connected with the borrower, is not so brought into account, or
- (c) the borrower, or a person connected with the borrower, becomes entitled to an income deduction.
- (3) If the borrower is a partnership, the relevant effect is that—
- (a) an amount of income on which a member of the partnership would otherwise have been charged to tax is not so charged,
- (b) an amount which would otherwise have been brought into account in calculating for tax purposes any income of a member of the partnership is not so brought into account, or
- (c) a member of the partnership becomes entitled to an income deduction.
- (4) If—
- (a) a person in relation to whom this section applies is within the charge to income tax, and
- (b) in accordance with generally accepted accounting practice the accounts of the person record an amount as a finance charge in respect of the advance,
that person may treat the amount for income tax purposes as interest payable on a loan.
- (5) If a person in relation to whom this section applies is within the charge to corporation tax—
- (a) the advance is to be treated, in relation to the company, for the purposes of Part 5 of CTA 2009 as a money debt owed by the company,
- (b) the arrangement is to be treated, in relation to the company, for the purposes of that Part as a loan relationship of the company (as a debtor relationship), and
- (c) any amount which, in accordance with generally accepted accounting practice, is recorded in the accounts of the company as a finance charge in respect of the advance is to be treated as interest payable under that relationship.
- (6) For the purposes of this section, in any case where the borrower is a partnership,—
- (a) references to accounts include the accounts of the partnership, and
- (b) any deemed interest is treated as payable by the partnership (whether or not the finance charge is recorded in the accounts of the partnership).
- (7) For the purpose of determining when any deemed interest in respect of the advance is paid—
- (a) the payments mentioned in section 774A(2)(d) are treated as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance, and
- (b) the interest elements of those payments are treated as paid when those payments are paid,
and the deemed interest in respect of the advance is treated as paid at the times when the interest elements are treated as paid.
- (8) In this section “*deemed interest*” means any amount which is treated as interest as a result of subsection (4) or (5).
- (9) This section is subject to the exceptions contained in section 774E.
##### 774C
- (1) For the purposes of section 774D an arrangement is a structured finance arrangement in relation to a partnership (“the borrower partnership”) if condition A or B is met in relation to the borrower partnership.
- (2) Condition A is that—
- (a) a person (“the transferor partner”) disposes of an asset (“the security”) under the arrangement to the borrower partnership,
- (b) the transferor partner is a member of the borrower partnership immediately after the disposal (whether or not a member immediately before the disposal),
- (c) under the arrangement the borrower partnership receives from another person (“*the lender*”) any money or other asset (“the advance”) in any period,
- (d) in accordance with generally accepted accounting practice the accounts of the borrower partnership for that period record a financial liability in respect of the advance,
- (e) there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender (see subsection (6)),
- (f) under the arrangement the share of the lender or person connected with the lender in the profits of the borrower partnership is determined by reference (wholly or partly) to payments in respect of the security, and
- (g) in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower partnership.
- (3) For the purposes of condition A, references to the accounts of the borrower partnership include the accounts of the transferor partner.
- (4) Condition B is that—
- (a) the borrower partnership holds an asset (“the security”) as a partnership asset at any time before the arrangement is made,
- (b) under the arrangement the borrower partnership receives from another person (“*the lender*”) any money or other asset (“the advance”) in any period,
- (c) in accordance with generally accepted accounting practice the accounts of the borrower partnership for that period record a financial liability in respect of the advance,
- (d) there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender,
- (e) under the arrangement the share of the lender or person connected with the lender in the profits of the borrower partnership is determined by reference (wholly or partly) to payments in respect of the security, and
- (f) in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower partnership.
- (5) For the purposes of condition B, references to the accounts of the borrower partnership include the accounts of any person who is a member of the partnership immediately before the arrangement is made.
- (6) For the purposes of this section and section 774D there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender if directly or indirectly in consequence of, or otherwise in connection with, the arrangement—
- (a) the lender, or a person connected with the lender, becomes a member of the borrower partnership at any time, or
- (b) there is at any time a change in the share of a member of the borrower partnership in the profits of the borrower partnership in a case where that member is the lender or a person connected with the lender.
- (7) For the purposes of subsection (6)(b) the reference to a person connected with the lender includes a person who at any time becomes connected with the lender directly or indirectly in consequence of, or otherwise in connection with, the arrangement.
##### 774D
- (1) This section applies if—
- (a) an employer's liability to corporation tax for an accounting period is determined on the assumption that it is entitled by virtue of section 76ZD to bring an amount into account in determining the amount of a deduction to be made under section 76, and
- (b) without section 76ZD the employer would not have been so entitled.
- (2) If, subsequently—
- (a) the condition in section 311(4)(a) of ITEPA 2003 is not met because of the employee's failure to begin the course within the period of one year after ceasing to be employed, or
- (b) the condition in section 311(4)(b) of ITEPA 2003 is not met because of the employee's continued employment or re-employment,
an assessment of an amount or further amount of corporation tax due as a result of the condition not being met may be made under paragraph 41 of Schedule 18 to FA 1998.
- (3) Such an assessment must be made before the end of the period of 6 years immediately following the end of the accounting period in which the failure to meet the condition occurred.
- (4) If subsection (2) applies, the employer must give an officer of Revenue and Customs a notice containing particulars of—
- (a) the employee's failure to begin the course,
- (b) the employee's continued employment, or
- (c) the employee's re-employment,
within 60 days of coming to know of it.
- (a) an arrangement is a structured finance arrangement in relation to a partnership (“the borrower partnership”), and
- (b) any relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender would (disregarding this section) have had the following effect.
- (2) The effect is that—
- (a) an amount of income on which a relevant member of the borrower partnership would otherwise have been charged to tax is not so charged,
- (b) an amount which would otherwise have been brought into account in calculating for tax purposes any income of a relevant member of the borrower partnership is not so brought into account, or
- (c) a relevant member of the borrower partnership becomes entitled to an income deduction.
- (2A) In determining whether the condition in subsection (1)(b) is met it is to be assumed that amounts of income equal to the payments mentioned in section 774C(2)(f) or (4)(e) were payable to the borrower partnership before the time at which the relevant change in relation to its membership involving the lender or a person connected with the lender occurs.
- (3) In this section “*relevant member of the borrower partnership*” means—
- (a) in any case where condition A in section 774C is met in relation to the arrangement, the transferor partner, and
- (b) in any case where condition B in that section is met in relation to the arrangement, any person other than the lender who is a member of the borrower partnership immediately before the time at which the relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender occurs.
- (4) Part 9 of ITTOIA 2005 and sections 1259 to 1265 of CTA 2009 are to have effect in relation to any relevant member of the borrower partnership as if the relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender had not occurred.
Accordingly, the structured finance arrangement is not to have the effect mentioned in subsection (2).
- (5) The following provisions of this section confer relief from tax the availability of which depends on which of the conditions in section 774C is met in relation to the arrangement.
- (6) In any case where condition A in section 774C is met, if—
- (a) the transferor partner is a person within the charge to income tax, and
- (b) in accordance with generally accepted accounting practice the accounts of the borrower partnership record an amount as a finance charge in respect of the advance,
the transferor partner may treat the amount for income tax purposes as interest payable by the transferor partner on a loan.
- (7) In any case where condition A in that section is met, if the transferor partner is a company within the charge to corporation tax—
- (a) the advance is to be treated, in relation to the company, for the purposes of Chapter 9 of Part 5 of CTA 2009 (partnerships involving companies) (and the other provisions of that Part) as a money debt owed by the borrower partnership,
- (b) the arrangement is to be treated, in relation to the company, as a transaction for the lending of money from which that debt is treated as arising for those purposes, and
- (c) any amount which, in accordance with generally accepted accounting practice, is recorded in the accounts of the borrower partnership as a finance charge in respect of the advance is to be treated as interest payable by the company under that transaction.
- (8) For the purposes of subsections (6) and (7), references to the accounts of the borrower partnership include the accounts of the transferor partner.
- (9) In any case where condition B in section 774C is met, if—
- (a) a relevant member of the borrower partnership is a person within the charge to income tax, and
- (b) in accordance with generally accepted accounting practice the accounts of the borrower partnership record an amount as a finance charge in respect of the advance,
the relevant partner may treat the amount for income tax purposes as interest payable by the borrower partnership on a loan.
- (10) In any case where condition B in that section is met, if a relevant member of the borrower partnership is a company within the charge to corporation tax—
- (a) the advance is to be treated, in relation to the company, for the purposes of Chapter 9 of Part 5 of CTA 2009 (partnerships involving companies) (and the other provisions of that Part) as a money debt owed by that partnership,
- (b) the arrangement is to be treated, in relation to the company, as a transaction for the lending of money from which that debt is treated as arising for those purposes, and
- (c) any amount which, in accordance with generally accepted accounting practice, is recorded in the accounts of the borrower partnership as a finance charge in respect of the advance is to be treated as interest payable by the borrower partnership under that transaction.
- (11) For the purposes of subsections (9) and (10), references to the accounts of the borrower partnership include the accounts of any relevant member of the borrower partnership.
- (12) For the purpose of determining when any deemed interest in respect of the advance is paid—
- (a) the payments mentioned in section 774C(2)(f) or (4)(e) are treated as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance, and
- (b) the interest elements of those payments are treated as paid when those payments are paid,
and the deemed interest in respect of the advance is treated as paid at the times when the interest elements are treated as paid.
- (13) In this section “*deemed interest*” means any amount which is treated as interest as a result of any of subsections (6) to (10).
- (14) This section is subject to the exceptions contained in section 774E.
##### 774E
- (1) Section 774B or 774D does not apply if the whole of the advance under the structured finance arrangement—
- (a) is charged to tax on a relevant person (see subsection (7)) as an amount of income,
- (b) is brought into account in calculating for tax purposes any income of a relevant person, or
- (c) is brought into account for the purposes of any provision of the Capital Allowances Act as a disposal receipt, or proceeds from a balancing event or disposal event, of a relevant person.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Subsection (1)(c) is not to be taken as met in any case where—
- (a) the receipt or proceeds gives rise to a balancing charge, and
- (b) the amount of the balancing charge is limited by any provision of the Capital Allowances Act.
- (3) Section 774B or 774D does not apply if, at all times, the whole of the advance under the structured finance arrangement—
- (a) is a debtor relationship of a relevant person for the purposes of Part 5 of CTA 2009 (loan relationships), or
- (b) would be a debtor relationship of a relevant person for those purposes if that person were a company within the charge to corporation tax.
For the purposes of this subsection references to a debtor relationship do not include a relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies.
- (4) Section 774B or 774D does not apply in so far as the structured finance arrangement is an arrangement in relation to which—
- (a) section 263A of the 1992 Act (agreements for sale and repurchase of securities) applies,
- (b) Schedule 13 to the Finance Act 2007 (sale and repurchase of securities) or Chapter 10 of Part 6 of CTA 2009 (repos) applies, or
- (c) Chapter 5 of Part 2 of the Finance Act 2005 or Chapter 6 of Part 6 of CTA 2009 (alternative finance arrangements) has effect.
- (5) Section 774B or 774D does not apply in so far as—
- (a) the security under the structured finance arrangement is plant or machinery which is the subject of a sale and finance leaseback, or
- (b) the structured finance arrangement is an arrangement in relation to which sections 228B and 228C of the Capital Allowances Act apply with the modifications contained in section 228F of that Act (lease and finance leaseback).
- (6) For the purposes of subsection (5)(a), whether plant or machinery is the subject of a sale and finance leaseback is determined in accordance with section 221 of the Capital Allowances Act.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) For the purposes of this section a “*relevant person*” means—
- (a) if section 774B applies, the borrower under the structured finance arrangement, a person connected with that borrower or (if that borrower is a partnership) a member of the partnership, and
- (b) if section 774D applies, a relevant member of the borrower partnership (within the meaning of that section).
##### 774F
- (1) The Treasury may make regulations prescribing other circumstances in which section 774B or 774D is not to apply in relation to a structured finance arrangement.
- (2) Any regulations under subsection (1) may make provision amending section 774E.
- (3) The power to make regulations under subsection (1) includes—
- (a) power to make provision having effect in relation to times before the making of the regulations (but not times earlier than 6th June 2006),
- (b) power to make different provision for different cases or different purposes, and
- (c) power to make incidental, supplemental, consequential or transitional provision and savings.
##### 774G
- (1) For the purposes of sections 774A to 774D “*arrangement*” includes any agreement or understanding (whether or not legally enforceable).
- (2) For the purposes of sections 774A to 774D “*income deduction*” means—
- (a) a deduction in calculating any income for tax purposes, or
- (b) a deduction against total income or total profits.
- (3) For the purposes of sections 774A to 774D—
- (a) references to a person's receiving any asset include—
- (i) the person's obtaining directly or indirectly the value of any asset or otherwise deriving directly or indirectly any benefit from it, and
- (ii) the discharge (in whole or in part) of any liability of the person,
- (b) references to a disposal of an asset include anything which constitutes a disposal of the asset for the purposes of the 1992 Act,
- (c) references to payments in respect of any asset include—
- (i) payments in respect of any other asset substituted for it under the arrangement, and
- (ii) obtaining directly or indirectly the value of any asset or otherwise deriving directly or indirectly any benefit from it.
- (4) For the purposes of sections 774A to 774D, section 839 (connected persons) applies.
- (5) For the purposes of sections 774A to 774D references to the accounts of any person who is a company include the consolidated group accounts of a group of companies of which it is a member.
- (5A) In determining for the purposes of sections 774A to 774D whether an amount is recorded as a financial liability in respect of the advance it is to be assumed that the period of account in which the advance is received ended immediately after the receipt of the advance.
- (6) If any person does not draw up accounts in accordance with generally accepted accounting practice, sections 774A to 774D apply as if the accounts had been drawn up by the person in accordance with that practice.
- (7) Sections 277 to 281 of ITTOIA 2005 and sections 217 to 221 of CTA 2009 (lease premiums) are not to apply in relation to a premium paid in respect of a grant of a lease where the grant constitutes a disposal of an asset for the purposes of section 774A(2)(c) or 774C(2)(a).
##### 775A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction of relief for payments of interest.
##### 785ZA
- (1) This section applies for corporation tax purposes if—
- (a) a company carries on a business in respect of which the company is within the charge to corporation tax,
- (b) the company carries on the business in partnership with other persons in an accounting period of the partnership,
- (c) the business (“the leasing business”) is, on any day in that period, a business of leasing plant or machinery,
- (d) the company incurs a loss in its notional business in any accounting period comprised (wholly or partly) in the accounting period of the partnership, and
- (e) the interest of the company in the leasing business during the accounting period of the partnership is not determined on an allowable basis (see subsections (2) to (4)).
- (2) The interest of the company in the leasing business during the accounting period of the partnership is determined on an allowable basis if (and only if) the following condition is met.
- (3) The condition is met if, for the purposes of sections 1262 to 1264 of CTA 2009,—
- (a) the company's share in the profits or loss of the leasing business for that period is determined wholly by reference to a single percentage, and
- (b) the company's share in any relevant capital allowances for that period is determined wholly by reference to the same percentage.
- (4) For the purposes of this condition “*profits*” does not include chargeable gains.
- (5) The following restrictions apply in respect of so much of the loss incurred by the company in its notional business as derives from any relevant capital allowances (“the restricted part of the loss”).
- (6) Apart from by way of set off against any relevant leasing income, relief is not to be given to the company under any relevant loss relief provision in respect of the restricted part of the loss.
- (7) If the leasing business is a trade, relief is not to be given to the company under section 393A(1) in respect of the restricted part of the loss.
- (8) The restricted part of the loss is not available for set off by way of group relief in accordance with section 403.
- (9) For the purpose of determining how much of a loss derives from any relevant capital allowances, the loss is to be calculated on the basis that any relevant capital allowances are the final amounts to be deducted.
##### 785ZB
- (1) This section applies for the purposes of section 785ZA.
- (2) “*Business of leasing plant or machinery*” has the same meaning as in Part 3 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc).
- (3) “*Lease*” includes an underlease, sublease, tenancy or licence and an agreement for any of those things.
- (4) “*Notional business*”, in relation to a company, means the business the profits or losses of which are determined, in relation to the company, under section 1259 of CTA 2009 (calculation of firm's profits and losses).
- (5) “*Plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act.
- (6) “*Relevant capital allowance*” means an allowance under Part 2 of the Capital Allowances Act in respect of expenditure incurred on the provision of plant or machinery wholly or partly for the purposes of the leasing business.
- (7) “*Relevant leasing income*” means any income of the company's notional business deriving from any lease—
- (a) which is a lease of plant or machinery, and
- (b) which was entered into before the end of the accounting period of the company in which the loss in its notional business was incurred.
- (8) “*Relevant loss relief provision*” means any of the following provisions—
- (a) section 392A (UK property business losses),
- (b) section 392B (losses from overseas property businesses),
- (c) section 393 (trade losses),
- (d) section 396 (losses from miscellaneous transactions).
##### 785A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 785B
- (1) This section applies if—
- (a) there is an unconditional obligation, under a lease of plant or machinery or a relevant arrangement, to make a relevant capital payment (at any time), or
- (b) a relevant capital payment is made under such a lease or arrangement otherwise than in pursuance of such an obligation.
- (2) The lessor is treated for corporation tax purposes as receiving income attributable to the lease of an amount equal to the amount of the capital payment.
- (3) The income is treated—
- (a) if subsection (1)(a) applies, as income for the period of account in which there is first an obligation of the kind mentioned there, and
- (b) if subsection (1)(b) applies, as income for the period of account in which the payment is made.
##### 785C
- (1) The expressions used in section 785B and this section are to be interpreted as follows.
- (2) “*Capital payment*” means any payment except one which, if made to the lessor—
- (a) would fall to be included in a calculation of the lessor's income for corporation tax purposes, or
- (b) would fall to be included in such a calculation but for section 502B (rental earnings under long funding finance lease).
- (3) “*Lease*” includes—
- (a) a licence, and
- (b) the letting of a ship or aircraft on charter or the letting of any other asset on hire,
and “*lessor*” and “*lessee*” are to be read accordingly.
- (4) “*Lease of plant or machinery*” includes a lease of plant or machinery and other property but does not include—
- (a) a lease where the income attributable to the lease received by the lessor (if any) would be chargeable to tax under Chapter 3 of Part 4 of CTA 2009 as profits of a UK property business, or
- (b) a lease of plant or machinery where the lessor has incurred what would (but for section 34A of the Capital Allowances Act) be qualifying expenditure (within the meaning of Part 2 of that Act) on the plant or machinery.
- (5) “*Relevant arrangement*” means any agreement or arrangement relating to a lease of plant or machinery, including one made before the lease is entered into or after it has ended (and, accordingly, “lessor” and lessee” include prospective and former lessors and lessees).
- (6) A capital payment, in relation to a lease or relevant arrangement, is “relevant” if condition A or B is met (but this is subject to subsections (9) and (9A)).
- (7) Condition A is that the capital payment is payable (or paid), directly or indirectly, by (or on behalf of) the lessee to (or on behalf of) the lessor in connection with—
- (a) the grant, assignment, novation or termination of the lease, or
- (b) any provision of the lease or relevant arrangement (including the variation or waiver of any such provision).
- (8) Condition B is that rentals payable under the lease are less than (or payable later than) they might reasonably be expected to be if there were no obligation to make the capital payment (and the capital payment were not made).
- (9) A capital payment is not “relevant” if or to the extent that—
- (a) the capital payment reduces (or would but for section 536 of the Capital Allowances Act reduce) the amount of expenditure incurred by the lessor for the purposes of the Capital Allowances Act in respect of the plant or machinery in question, or
- (b) the capital payment is compensation for loss resulting from damage to, or damage caused by, the plant or machinery in question, . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9A) Where—
- (a) a capital payment is an initial payment under a long-funding lease, and
- (b) under section 61 of the Capital Allowances Act (disposal events and disposal values), the commencement of the term of the lease is an event that requires the lessor to bring a disposal value into account,
the capital payment is only “relevant” to the extent that it exceeds the disposal value.”
- (9B) “*Commencement*”, “*disposal value*”, “*initial payment*”, “*long funding lease*” and “*the term*” have the same meaning as in Part 2 of the Capital Allowances Act.
- (10) References to payment include the provision of value by any means other than the making of a payment, and accordingly—
- (a) references to the making of a payment include the passing of value (by any other means), and
- (b) references to the amount of the payment include the value passed.
##### 785D
- (1) This section applies if section 785B applies in relation to a lease of plant or machinery and other property (see section 785C(4)).
- (2) The relevant capital payment is to be apportioned, on a just and reasonable basis, between—
- (a) the plant and machinery, and
- (b) the other property.
- (3) If the income (if any) received by the lessor that is attributable to any of the plant or machinery is chargeable to tax under Chapter 3 of Part 4 of CTA 2009 as profits of a UK property business, treat that plant or machinery as falling within subsection (2)(b) (and not subsection (2)(a)).
- (4) Section 785B(2) has effect as if the reference to the amount of the capital payment were to such amount as is apportioned under subsection (2) in respect of the plant or machinery within subsection (2)(a).
#### Relief by agreement with other territories.
##### 785E
- (1) This section applies for corporation tax purposes if—
- (a) section 785B applies by virtue of subsection (1)(a) of that section, and
- (b) at any time, the lessor reasonably expects that the relevant capital payment will not be paid (or will not be paid in full).
- (2) For the purposes of calculating the profits of the lessor, a deduction is allowed for the period of account which includes that time.
- (3) The amount of the deduction is equal to the amount reasonably expected not to be paid.
- (4) No other deduction is allowed in respect of the matters mentioned in subsection (1).
#### Introduction to section 807E
#### Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets
##### 793A
- (1) Where relief in respect of an amount of tax that would otherwise be payable under the law of a territory outside the United Kingdom may be allowed—
- (a) under arrangements made in relation to that territory, or
- (b) under the law of that territory in consequence of any such arrangements,
credit may not be allowed in respect of that tax, whether the relief has been used or not.
- (2) Where, under arrangements having effect by virtue of section 788, credit may be allowed in respect of an amount of tax, credit by way of unilateral relief may not be allowed in respect of that tax.
- (3) Where arrangements made in relation to a territory outside the United Kingdom contain express provision to the effect that relief by way of credit shall not be given under the arrangements in cases or circumstances specified or described in the arrangements, then neither shall credit by way of unilateral relief be allowed in those cases or circumstances.
##### 795A
- (1) The amount of credit for foreign tax which, under any arrangements, is to be allowed against tax in respect of any income or chargeable gain shall not exceed the credit which would be allowed had all reasonable steps been taken—
- (a) under the law of the territory concerned, and
- (b) under any arrangements made in relation to that territory,
to minimise the amount of tax payable in that territory.
- (2) The steps mentioned in subsection (1) above include—
- (a) claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances; and
- (b) making elections for tax purposes.
- (3) For the purposes of subsection (1) above, any question as to the steps which it would have been reasonable for a person to take shall be determined on the basis of what the person might reasonably be expected to have done in the absence of relief under this Part against tax in the United Kingdom.
##### 797A
- (1) This section applies for the purposes of any arrangements where, in the case of any company—
- (a) any non-trading credit relating to an item is brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) for any accounting period (“the applicable accounting period”); and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that interest.
- (2) It shall be assumed that tax chargeable under section 299 of CTA 2009 on the profits . . . arising for the applicable accounting period from the company’s loan relationships falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect (subject to subsection (7) below) as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description; and
- (b) different parts of that amount might be set against different profits.
- (4) For the purposes of this section, the adjusted amount of a company’s non-trading debits for any accounting period is the amount equal, in the case of that company, to the aggregate of the non-trading debits given for that period for the purposes of Part 5 of CTA 2009 (loan relationships) less the aggregate of the amounts specified in subsection (5) below.
- (5) Those amounts are—
- (a) so much of any non-trading deficit for the applicable accounting period as is an amount to which a claim under section 389(1) or 459(1)(b) of CTA 2009(deficit carried back and set against profits) relates; and
- (aa) so much of any non-trading deficit for that period as is surrendered as group relief by virtue of section 403 of the Taxes Act 1988; and
- (b) so much of any non-trading deficit for that period as falls to be carried forward to a subsequent period in accordance with section 391 or 457(1) of CTA 2009; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Section 797(3) shall have effect as if any amount carried forward to the applicable accounting period under section 457(1) of CTA 2009 were an amount capable of being allocated only to any non-trading profits of the company.
- (7) Where—
- (a) the company has a non-trading deficit for the applicable accounting period,
- (b) the amount of that deficit exceeds the aggregate of the amounts specified in subsection (5) above, and
- (c) as the result of—
- (i) the application of section 388(1) of CTA 2009 (insurance companies: basic rule: deficit set off against income and gains of deficit period), or
- (ii) a claim under section 459(1)(a) of that Act (claim to set off deficit against profits of deficit period),
the excess falls to be set off against profits of any description,
section 797(3) shall have effect as if non-trading debits of the company which in aggregate are equal to the amount of the excess were required to be allocated to the profits against which they are set off in pursuance of the claim.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In this section “*non-trading profits*” has the same meaning as in Chapter 16 of Part 5 of CTA 2009 (see section 457(5) of that Act).
##### 797B
- (1) This section applies for the purposes of any arrangements where, in the case of a company—
- (a) a non-trading credit relating to an item is brought into account for the purposes of Part 8 of CTA 2009 (intangible fixed assets) for an accounting period (“*the applicable accounting period*”), and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that item.
- (2) It shall be assumed that tax chargeable under that Part of that Act on the profits and gains arising for the applicable accounting period from the company’s intangible fixed assets falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description, and
- (b) different parts of that amount might be set against different profits.
- (4) For this purpose the adjusted amount of a company’s non-trading debits for an accounting period is given by:
$$TotalDebits-AmountCarriedForward$where—Total Debits is the aggregate amount of the company’s non-trading debits for that accounting period under Part 8 of CTA 2009 (intangible fixed assets), andAmount Carried Forward is the amount (if any) carried forward to the next accounting period of the company under section 753(3) of that Act (carry-forward of non-trading loss in respect of which no claim is made for it to be set against total profits of current period).$
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
##### 798A
- (1) This section has effect in relation to the application of section 797(1) to the allowance of credit for foreign tax against corporation tax in respect of trade income.
- (2) The reference in section 797(1) to the relevant income or gain shall be treated as referring only to income arising or gains accruing out of the transaction, arrangement or asset in connection with which the credit for foreign tax arises.
- (3) In determining for the purposes of section 797(1) the amount of corporation tax attributable to any income or gain, there shall be taken into account—
- (a) deductions or expenses which would be allowable in the computation of the taxpayer's liability,
- (b) a reasonable apportionment of allowable deductions or expenses which relate partly to the transaction, arrangement or asset from which the income or gain arises and partly to other matters, and
- (c) expenses of a company connected (within the meaning given by section 839) with the taxpayer, in so far as reasonably attributable to the income or gain.
- (3A) Subsection (3) is subject to subsection (3B) if—
- (a) the taxpayer is a bank or a company connected with a bank, and
- (b) the amount of the included funding costs is significantly less than the amount of the notional funding costs.
- (3B) The amount of the notional funding costs is to be included in the subsection (3) total, but only to the extent that it exceeds the amount of the included funding costs.
- (3C) In subsections (3A) and (3B) and this subsection—
- “*bank*” has the meaning given by section 840A;
- “*connected*” has the meaning given by section 839;
- “*included funding costs*” means the total of the funding costs that are—incurred by the taxpayer, or any company connected with the taxpayer, in respect of capital used to fund the relevant transaction, andincluded in the subsection (3) total (before the application of subsection (3B));
- “*notional funding costs*” means the funding costs that the relevant bank would incur (on the basis of its average funding costs) in respect of the capital that would be needed to wholly fund the relevant transaction if that transaction were funded in that way (and for this purpose “*relevant bank*” means the bank that is the taxpayer, or with which the taxpayer is connected);
- “*relevant transaction*” means the transaction, arrangement or asset from which the income or gain arises;
- “*subsection (3) total*” means the amount to be taken into account under subsection (3) for the purposes of section 797(1).
- (4) In this section and section 798B “*trade income*” means—
- (a) income chargeable to tax under Chapter 2 or 15 of Part 3 of CTA 2009 (trade profits and post-cessation receipts),
- (b) income chargeable to tax under Chapter 3 or 9 of Part 4 of CTA 2009 (profits of property businesses and post-cessation receipts),
- (c) income which arises from a source outside the United Kingdom and is chargeable to tax under section 979 of CTA 2009 (charge to tax on income not otherwise charged), and
- (d) any other income or profits which by a provision of this Act is or are—
- (i) chargeable to tax under Chapter 2 of Part 3 of CTA 2009, or
- (ii) calculated in the same way as the profits of a trade;
but this section shall not apply in relation to income to which section 804C below applies.
- (5) In subsection (4) the references—
- (a) to income chargeable under Chapter 15 of Part 3 of CTA 2009, and
- (b) to income chargeable under Chapter 9 of Part 4 of CTA 2009,
do not include income that would, but for the repeal by CTA 2009 of section 103 above, have been chargeable to corporation tax under that section.
##### 798B
- (1) Where—
- (a) a credit for foreign tax arises in connection with an asset, and
- (b) the asset is in a hedging relationship with a derivative contract,
in the application of section 798A(2) the reference to the income arising out of the asset shall be taken as a reference to the income arising out of the asset and the derivative contract taken together (but taking account of the income or loss from the derivative contract only in so far as reasonably attributable to the hedging relationship).
- (2) For the purposes of subsection (1)(b) an asset is in a hedging relationship with a derivative contract if—
- (a) the asset is acquired as a hedge of risk in connection with the contract, or
- (b) the contract is entered into as a hedge of risk in connection with the asset;
and if an asset or a contract is wholly or partly designated as a hedge for the purposes of a person's accounts, that shall be conclusive for the purpose of this subsection.
- (3) Where royalties (as defined in arrangements having effect by virtue of section 788) are paid in respect of an asset in more than one jurisdiction outside the United Kingdom, for the purposes of section 798A(2)—
- (a) royalty income arising in more than one jurisdiction (other than the United Kingdom) in a year of assessment in respect of that asset shall be treated as income arising from a single transaction, arrangement or asset, and
- (b) credits available for foreign tax in respect of the royalty income shall be aggregated accordingly.
- (4) If a person (“A”) carrying on a trade giving rise to trade income enters into a scheme or arrangement with another person (“B”) a main purpose of which is to alter the effect of section 798A in relation to A, income received in pursuance of the scheme or arrangement shall be treated for the purposes of section 798A as trade income of B (and not as income of A).
- (4A) Income of a person (“D”) is to be treated for the purposes of section 798A as trade income (if it is not otherwise trade income) of D in a case where—
- (a) the income is received by D as part of a scheme or arrangement entered into by D and a connected person (“C”),
- (b) if C had received the income, it would be reasonable to assume that it would be trade income of C, and
- (c) a main purpose of the scheme or arrangement is to produce the result that section 798A will not have effect in relation to the income because it is received by D.
- (4B) For the purposes of subsection (4A)(b) it is to be assumed that, in the case of any relevant transaction to which a relevant person is a party, C were that party to that transaction.
- (4C) In subsections (4A) and (4B) and this subsection—
- “*connected person*” means a person with whom D is connected (within the meaning of section 839);
- “*relevant person*” means—D, orany other connected person who is a party to the scheme or arrangement;
- “*relevant transaction*” means any of the transactions giving rise to the income.
- (5) Where—
- (a) transactions, arrangements or assets are treated by a taxpayer as a series or group (the “portfolio”),
- (b) a number of credits for foreign tax arise in respect of the portfolio, and
- (c) either—
- (i) it is not reasonably practicable to prepare a separate computation of income or gain for the purposes of section 798A(2) in respect of each transaction, arrangement or asset, or
- (ii) a separate computation of income or gain in respect of each transaction, arrangement or asset for the purposes of section 798A(2) would not, compared with an aggregated computation, make a material difference to the amount of credit for foreign tax which is allowable,
the income or gains arising from the portfolio, or part of the portfolio, may be aggregated and apportioned for the purposes of section 798A(2) in a fair and reasonable manner.
##### 798C
- (1) This section applies where the application of section 796(1) or 797(1) prevents an amount of credit for foreign tax from being allowable against income tax or corporation tax.
- (2) The taxpayer's income shall be treated as reduced by the amount of disallowed credit.
- (3) Subsection (2) applies only in so far as the amount of disallowed credit does not exceed the amount of any loss attributable to the income or gain in respect of which the foreign tax was paid.
- (4) For the purpose of subsection (3), payment of the foreign tax is to be taken into account despite section 795(2).
##### 801A
- (1) This section applies where—
- (a) a company (“*the claimant company*”) makes a claim for an allowance by way of credit in accordance with this Part;
- (b) the claim relates to underlying tax on a dividend paid to that company by a company resident outside the United Kingdom (“*the overseas company*”);
- (c) that underlying tax is or includes an amount in respect of tax (“*the high rate tax*”) payable by—
- (i) the overseas company, or
- (ii) such a third, fourth or successive company as is mentioned in section 801,
at a rate in excess of the relievable rate; and
- (d) the whole or any part of the amount in respect of the high rate tax which is or is included in the underlying tax would not be, or be included in, that underlying tax but for the existence of, or for there having been, an avoidance scheme.
- (2) Where this section applies, the amount of the credit to which the claimant company is entitled on the claim shall be determined as if the high rate tax had been tax at the relievable rate, instead of at a rate in excess of that rate.
- (3) For the purposes of this section tax shall be taken to be payable at a rate in excess of the relievable rate if, and to the extent that, the amount of that tax exceeds the amount that would represent tax on the relevant profits at the relievable rate.
- (4) In subsection (3) above “*the relevant profits*”, in relation to any tax, means the profits of the overseas company or, as the case may be, of the third, fourth or successive company which, for the purposes of this Part, are taken to bear that tax.
- (5) In this section “*the relievable rate*” means the rate of corporation tax in force when the dividend mentioned in subsection (1)(b) above was paid.
- (6) In this section “*an avoidance scheme*” means any scheme or arrangement which—
- (a) falls within subsection (7) below; and
- (b) is a scheme or arrangement the purpose, or one of the main purposes, of which is to have an amount of underlying tax taken into account on a claim for an allowance by way of credit in accordance with this Part.
- (7) A scheme or arrangement falls within this subsection if the parties to it include both—
- (a) the claimant company, a company related to that company or a person connected with the claimant company; and
- (b) a person who was not under the control of the claimant company at any time before the doing of anything as part of, or in pursuance of, the scheme or arrangement.
- (8) In this section “*arrangement*” means an arrangement of any kind, whether in writing or not.
- (9) For the purposes of this section, whether a person is connected with another is determined in accordance with section 839.
- (10) Subsection (5) of section 801 (meaning of “*related company*”) shall apply for the purposes of this section as it applies for the purposes of that section.
- (11) For the purposes of this section a person who is a party to a scheme or arrangement shall be taken to have been under the control of the claimant company at all the following times, namely—
- (a) any time when that company would have been taken (in accordance with section 416) to have had control of that person for the purposes of Part XI;
- (b) any time when that company would have been so taken if that section applied (with the necessary modifications) in the case of partnerships and unincorporated associations as it applies in the case of companies; and
- (c) any time when that person acted in relation to that scheme or arrangement, or any proposal for it, either directly or indirectly under the direction of that company.
##### 801B
- (1) This section applies where—
- (a) a company (“*company A*”) resident outside the United Kingdom has paid tax under the law of a territory outside the United Kingdom in respect of any of its profits;
- (b) some or all of those profits become profits of another company resident outside the United Kingdom (“*company B*”) otherwise than by virtue of the payment of a dividend to company B; and
- (c) company B pays a dividend out of those profits to another company (“*company C*”), wherever resident.
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid—
- (a) by any company resident outside the United Kingdom (whether or not company B),
- (b) to a company resident in the United Kingdom,
as if company B had paid the tax paid by company A in respect of those profits of company A which have become profits of company B as mentioned in subsection (1)(b) above.
- (3) But the amount of relief under this Part which is allowable to a company resident in the United Kingdom shall not exceed the amount which would have been allowable to that company had those profits become profits of company B by virtue of the payment of a dividend by company A to company B.
##### 801C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 803A
- (1) This section applies in any case where, under the law of a territory outside the United Kingdom, tax is payable by any one company resident in that territory (“*the responsible company*”) in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies so resident, taken together as a single taxable entity.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid by any of the companies mentioned in subsection (1) above (the “*non-resident companies*”) to another company (“*the recipient company*”), as if—
- (a) the non-resident companies, taken together, were a single company,
- (b) anything done by or in relation to any of the non-resident companies (including the payment of the dividend) were done by or in relation to that single company, and
- (c) that single company were related to the recipient company, if that one of the non-resident companies which actually pays the dividend is related to the recipient company,
(so that, in particular, the relevant profits for the purposes of section 799(1) is a single aggregate figure in respect of that single company and the foreign tax paid by the responsible company is foreign tax paid by that single company).
- (3) For the purposes of this section a company is related to another company if that other company—
- (a) controls directly or indirectly, or
- (b) is a subsidiary of a company which controls directly or indirectly,
not less than 10 per cent. of the voting power in the first-mentioned company.
##### 804ZA
- (1) If the Board consider, on reasonable grounds, that conditions A to D are or may be satisfied in relation to any income or chargeable gain taken or to be taken into account for the purposes of determining a person's liability to tax in a chargeable period, they may give the person a notice under this section.
- (2) Condition A is that, in the case of the person, there is in respect of the income or gain an amount of foreign tax for which, under any arrangements, credit is allowable against United Kingdom tax for that chargeable period.
- (3) Condition B is that there is a scheme or arrangement the main purpose, or one of the main purposes, of which is to cause an amount of foreign tax to be taken into account in the case of the person for that chargeable period.
- (4) Condition C is that the scheme or arrangement is a prescribed scheme or arrangement.
- (5) Condition D is that the amount referred to in subsection (6) is more than a minimal amount.
- (6) The amount is the aggregate of—
- (a) the aggregate amount of the claims for credit that the person has made, or is in a position to make, for the chargeable period; and
- (b) for all the persons connected to that person, the aggregate amount of the claims for credit that the connected person has made, or is in a position to make, for a corresponding chargeable period.
- (7) A chargeable period of a person (“A”) corresponds to a chargeable period of another person (“B”) if at least one day of A's chargeable period falls within B's chargeable period.
- (8) A notice under this section is a notice—
- (a) informing the person of the Board's view under subsection (1),
- (b) specifying the chargeable period in relation to which the Board formed that view,
- (c) if the amount of foreign tax considered by the Board to satisfy condition B is an amount of underlying tax, specifying the body corporate . . . whose payment of foreign tax is relevant to that underlying tax, and
- (d) informing the person that as a consequence section 804ZB has effect in relation to him.
- (9) A notice under this section may specify the adjustments of a person's tax return that, in the view of the Board, fall to be made by him under section 804ZB(2).
- (10) The adjustments specified may, in a case where the notice given to a person specifies a body corporate resident outside the United Kingdom, include treating the body corporate as having paid or being liable to pay only so much foreign tax as would have been allowed to it as a credit if it were resident in the United Kingdom and a notice under this section had been given to it as regards an amount of foreign tax.
- (11) Schedule 28AB makes provision about what constitutes a prescribed scheme or arrangement.
- (11A) In this section “*foreign tax*” includes any tax which for the purpose of allowing credit under any arrangements against corporation tax is treated by section 801 as if it were tax payable under the law of any territory outside the United Kingdom.
- (12) In this section and sections 804ZB and 804ZC “*tax return*” means—
- (a) a return under section 8, 8A or 12AA of the Management Act, or
- (b) a company tax return;
and “*company tax return*” means the return required to be delivered pursuant to a notice under paragraph 3 of Schedule 18 to the Finance Act 1998, as read with paragraph 4 of that Schedule.
##### 804ZB
- (1) This section applies in relation to a person if—
- (a) a notice under section 804ZA has been given to the person in respect of a chargeable period specified in the notice, and
- (b) the chargeable period specified is a chargeable period in relation to which conditions A to D of section 804ZA are satisfied.
- (2) The person must in his tax return for the period make (or must amend his return for the period so as to make) such adjustments as are necessary for counteracting the effects of the scheme or arrangement in that period that are referable to the purpose referred to in condition B of section 804ZA.
##### 804ZC
- (1) Subsection (2) applies if the Board give a notice to a person under section 804ZA before the person has made his tax return for the chargeable period specified in the notice.
- (2) If the person makes a tax return for that period before the end of the period of 90 days beginning with the day on which the notice is given, he may—
- (a) make a tax return that disregards the notice, and
- (b) at any time after making the return and before the end of the period of 90 days, amend the return for the purpose of complying with the notice.
- (3) If a person has made a tax return for a chargeable period, the Board may only give him a notice under section 804ZA in relation to that period if a notice of enquiry has been given to him in respect of his tax return for that period.
- (4) After any enquiries into the person's tax return for that period have been completed, the Board may only give him a notice under section 804ZA in relation to that period if the requirements in subsections (5) and (7) are satisfied.
- (5) The first requirement is that at the time the enquiries were completed, the Board could not have been reasonably expected, on the basis of the information made available to them or to an officer of theirs before that time, to have been aware that the circumstances were such that a notice under section 804ZA could have been given to the person in relation to that period.
- (6) For the purposes of subsection (5)—
- (a) section 29(6) and (7) of the Management Act (information made available) applies as it applies for the purposes of section 29(5), and
- (b) paragraph 44(2) and (3) of Schedule 18 to the Finance Act 1998 applies as it applies for the purposes of paragraph 44(1).
- (7) The second requirement is that—
- (a) the person was requested to produce, provide or furnish information during an enquiry into the return for that period, and
- (b) if the person had duly complied with the request, the Board could have been reasonably expected to give the person a notice under section 804ZA in relation to that period.
- (8) If a person is given a notice under section 804ZA in relation to a chargeable period after having made a tax return for that period, the person may amend the return for the purpose of complying with the notice at any time before the end of the period of 90 days beginning with the day on which the notice is given.
- (9) If the notice under section 804ZA is given to the person after he has been given a notice of enquiry in respect of his tax return for the period, no closure notice may be given in relation to his tax return until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (10) If the notice under section 804ZA is given to the person after any enquiries into the return for the period are completed, no discovery assessment may be made as regards the income or chargeable gain to which the notice relates until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (11) Subsections (2)(b) and (8) do not prevent a person's tax return for a chargeable period becoming incorrect if—
- (a) a notice under section 804ZA is given to the person in relation to that period,
- (b) the return is not amended in accordance with subsection (2)(b) or (8) for the purpose of complying with the notice, and
- (c) the return ought to have been so amended.
- (12) In this section—
- “*closure notice*” means a notice under—section 28A or 28B of the Management Act, orparagraph 32 of Schedule 18 to the Finance Act 1998;
- “*discovery assessment*” means an assessment under—section 29 of the Management Act, orparagraph 41 of Schedule 18 to the Finance Act 1998;
- “*notice of enquiry*” means a notice under—section 9A or 12AC of the Management Act, orparagraph 24 of Schedule 18 to the Finance Act 1998.
##### 804A
- (1) Subsection (2) below applies where credit for tax—
- (a) which is payable under the laws of a territory outside the United Kingdom in respect of insurance business carried on by a company through a permanent establishment in that territory, and
- (b) which is computed otherwise than wholly by reference to profits arising in that territory,
is to be allowed (in accordance with this Part) against corporation tax charged under section 35 of CTA 2009 (charge on trade profits) or section 436A in respect of the profits, computed in accordance with the provisions applicable for the purposes of section 35 of CTA 2009, of life assurance business or gross roll-up business carried on by the company in an accounting period (in this section referred to as “*the relevant profits*”).
- (1A) For the purposes of paragraph (b) of subsection (1) above, the cases where tax payable under the laws of a territory outside the United Kingdom is “*computed otherwise than wholly by reference to profits arising in that territory*” are those cases where the charge to tax in that territory falls within subsection (1B) below.
- (1B) A charge to tax falls within this subsection if it is such a charge made otherwise than by reference to profits as (by disallowing their deduction in computing the amount chargeable) to require sums payable and other liabilities arising under policies to be treated as sums or liabilities falling to be met out of amounts subject to tax in the hands of the company.
- (2) Where this subsection applies, the amount of the credit shall not exceed the greater of—
- (a) any such part of the tax payable under the laws of the territory outside the United Kingdom as is charged by reference to profits arising in that territory, and
- (b) the shareholders’ share of the tax so payable.
- (3) For the purposes of subsection (2) above the shareholders’ share of tax payable under the laws of a territory outside the United Kingdom is so much of that tax as is represented by the fraction
$$AB$where— A is an amount equal to the amount of the relevant profits before making any deduction authorised by subsection (5) below; andB is an amount equal to the excess of—$
- (a) the amount taken into account as receipts of the company in computing those profits, apart from premiums and sums received by virtue of a claim under a reinsurance contract, over
- (b) the amounts taken into account as expenses . . . in computing those profits.
- (4) Where there is no such excess as is mentioned in subsection (3) above, or where the profits are greater than any excess, the whole of the tax payable under the laws of the territory outside the United Kingdom shall be the shareholders’ share; and (subject to that) where there are no profits, none of it shall be the shareholders’ share.
- (5) Where, by virtue of this section, the credit for any tax payable under the laws of a territory outside the United Kingdom is less than it otherwise would be, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the relevant profits.
##### 804B
- (1) Where—
- (a) an insurance company carries on more than one category of long-term business in an accounting period, and
- (b) there arises to the company in that period any income or gain (“*the relevant income*”) in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is allowable against corporation tax in respect of so much of the relevant income as is referable (in accordance with the provisions of sections 432ZA to 432E . . . ) to a particular category of business must not exceed the fraction of the foreign tax which, in accordance with the following provisions of this section, is attributable to that category of business.
- (3) Where the relevant income arises from an asset which is linked solely to a category of business, the whole of the foreign tax is attributable to that category of business, unless the case is one where subsection (7) below applies.
- (3A) Where the relevant income arises from foreign business assets, the whole of the foreign tax is attributable to gross roll-up business, unless the case is one where subsection (7) below applies.
- (4) Where subsection (3) above does not apply and the category of business in question is—
- (a) basic life assurance and general annuity business, or
- (b) PHI business,
the fraction of the foreign tax that is attributable to that category of business is the fraction whose numerator is the part of the relevant income which is referable to that category by virtue of any provision of section 432A . . . and whose denominator is the whole of the relevant income.
- (5) Subsections (6) and (7) below apply where the category of business in question is gross roll-up business.
- (6) Where—
- (a) subsection (3) above does not apply, and
- (b) some or all of the relevant income is taken into account in accordance with section 83 of the Finance Act 1989 in an account in relation to which the provisions of section 432C . . . apply,
the fraction of the foreign tax that is attributable to gross roll-up business is the fraction whose numerator is the part of the relevant income which is referable to gross roll-up business by virtue of any provision of section 432C . . . and whose denominator is the whole of the relevant income.
- (7) Where some or all of the relevant income falls to be taken into account in determining in accordance with section 83(2) of the Finance Act 1989 the amount referred to in section 432E(1) as the net amount, the fraction of the foreign tax that is attributable to gross roll-up business is the fraction—
- (a) whose numerator is the part of the investment income taken into account in that determination which would be referable to gross roll-up business by virtue of section 432E if the investment income were the only amount included in the net amount; and
- (b) whose denominator is the whole of that investment income.
- (7A) The Treasury may by regulations amend subsection (7) above; and the regulations may include amendments having effect in relation to accounting periods during which they are made.
- (8) No part of the foreign tax is attributable to any category of business except as provided by subsections (3) to (7) above.
- (9) Where for the purposes of this section an amount of foreign tax is attributable to gross roll-up business, credit in respect of the foreign tax so attributable shall be allowed only against corporation tax in respect of profits chargeable under section 436A.
##### 804C
- (1) Where—
- (a) an insurance company carries on any category of insurance business in a period of account,
- (b) a computation in accordance with the provisions applicable for the purposes of section 35 of CTA 2009 (charge on trade profits) falls to be made in relation to that category of business for that period, and
- (c) there arises to the company in that period any income or gain in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is to be allowed against corporation tax in respect of so much of that income or gain as is referable to the category of business concerned (“*the relevant income*”) shall be limited by treating the amount of the relevant income as reduced in accordance with subsections (3) and (4) below.
- (3) The first limitation is to treat the amount of the relevant income as reduced (but not below nil) for the purposes of this Chapter by the amount of expenses (if any) attributable to the relevant income.
- (4) If—
- (a) the amount of the relevant income after any reduction under subsection (3) above,
exceeds
- (b) the relevant fraction of the profits of the category of business concerned for the period of account in question which are chargeable to corporation tax,
the second limitation is to treat the relevant income as further reduced (but not below nil) for the purposes of this Chapter to an amount equal to that fraction of those profits.
In this subsection any reference to the profits of a category of business is a reference to those profits after the set off of any losses of that category of business which have arisen in any previous accounting period.
- (5) In determining the amount of the credit for foreign tax which is to be allowed as mentioned in subsection (2) above, the relevant income shall not be reduced except in accordance with that subsection.
- (6) For the purposes of subsection (3) above, the amount of expenses attributable to the relevant income is the appropriate fraction of the total relevant expenses of the category of business concerned for the period of account in question.
- (7) In subsection (6) above, the “*appropriate fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above, and
- (b) whose denominator is the total income of the category of business concerned for the period of account in question,
unless the denominator so determined is nil, in which case the denominator shall instead be the amount described in subsection (8) below.
- (8) That amount is so much in total of the income and gains—
- (a) which arise to the company in the period of account in question, and
- (b) in respect of which credit for foreign tax falls to be allowed under any arrangements,
as are referable to the category of business concerned (before any reduction in accordance with subsection (2) above).
- (9) In subsection (4) above, the “*relevant fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above; and
- (b) whose denominator is the amount described in subsection (8) above.
- (10) Where a 75 per cent subsidiary of an insurance company is acting in accordance with a scheme or arrangement and—
- (a) the purpose, or one of the main purposes, of that scheme or arrangement is to prevent or restrict the application of subsection (2) above to the insurance company, and
- (b) the subsidiary does not carry on insurance business of any description,
the amount of corporation tax attributable (apart from this subsection) to any item of income or gain arising to the subsidiary shall be found by setting off against that item the amount of expenses that would be attributable to it under subsection (3) above if that item had arisen directly to the insurance company.
- (11) Where the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is, by virtue of subsection (2) above, less than it would be if the relevant income were not treated as reduced in accordance with that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the profits of the category of business concerned.
- (12) Where, by virtue of subsection (10) above, the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is less than it would be apart from that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the income of the 75 per cent subsidiary.
- (13) For the purposes of the operation of this section in relation to any income or gain in respect of which credit falls to be allowed under any arrangements, the amount of the income or gain that is referable to a category of insurance business is the same fraction of the income and gain as the fraction of the foreign tax that is attributable to that category of business in accordance with section 804B.
- (14) This section shall be construed—
- (a) in accordance with section 804D, where the category of business concerned is life assurance business or gross roll-up business; and
- (b) in accordance with section 804E, where the category of business concerned is not life assurance business or gross roll-up business.
##### 804D
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for the period of account in question is the amount (if any) by which—
- (a) so much of the total income shown in the revenue account in the periodical return of the company concerned for that period as is referable to that category of business,
exceeds
- (b) so much of any commissions payable and any expenses of management incurred in connection with the acquisition of the business, as shown in that return, so far as referable to that category of business.
- (3) Where any amounts fall to be brought into account in accordance with section 83 of the Finance Act 1989, the amounts that are referable to the category of business concerned shall be determined for the purposes of subsection (2) above in accordance with sections 432B to 432G.
- (4) The “total relevant expenses" of the category of business concerned for any period of account is the amount of the claims incurred—
- (a) increased by any increase in the liabilities of the company, or
- (b) reduced (but not below nil) by any decrease in the liabilities of the company.
- (5) For the purposes of subsection (4) above, the amounts to be taken into account in the case of any period of account are the amounts as shown in the company’s periodical return for the period so far as referable to the category of business concerned.
##### 804E
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is not life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for any period of account is the amount (if any) by which—
- (a) the sum of the amounts specified in subsection (3) below,
exceeds
- (b) the sum of the amounts specified in subsection (4) below.
- (3) The amounts mentioned in subsection (2)(a) above are—
- (a) earned premiums, net of reinsurance;
- (b) investment income and gains;
- (c) other technical income, net of reinsurance;
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amounts mentioned in subsection (2)(b) above are—
- (a) acquisition costs;
- (b) the change in deferred acquisition costs;
- (c) losses on investments.
- (5) The “total relevant expenses" of the category of business concerned for any period of account is the sum of—
- (a) the claims incurred, net of reinsurance,
- (b) the changes in other technical provisions, net of reinsurance,
- (c) the change in the equalisation provision, and
- (d) investment management expenses,
unless that sum is a negative amount, in which case the total relevant expenses shall be taken to be nil.
- (6) The amounts to be taken into account for the purposes of the paragraphs of subsections (3) to (5) above are the amounts taken into account for the purposes of corporation tax.
- (7) Expressions used—
- (a) in the paragraphs of subsections (3) to (5) above, and
- (b) in the provisions of section B of Part 1 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the required formats) which relate to the profit and loss account format (within the meaning of sub-paragraphs (1) and (2) of paragraph 1 of that Schedule),
have the same meaning in those paragraphs as they have in those provisions.
##### 804F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 804G
- (1) This section applies if—
- (a) credit for foreign tax falls to be allowed to a person (“P”) under any arrangements, and
- (b) a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax.
- (2) The amount of that credit is to be reduced by an amount equal to that payment.
- (3) Section 839 applies for the purposes of determining whether or not a person is connected with P.
### Foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax
##### 806A
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##### 806B
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##### 806C
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##### 806D
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##### 806E
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##### 806F
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##### 806G
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##### 806H
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##### 806J
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### Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
##### 806K
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### Unrelieved foreign tax: profits of overseas branch or agency
##### 806L
- (1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of unrelieved foreign tax arises in respect of any of the company’s qualifying income from an overseas permanent establishment of the company.
- (2) The amount of the unrelieved foreign tax so arising shall be treated for the purposes of allowing credit relief under this Part as if it were foreign tax paid in respect of, and computed by reference to, the company’s qualifying income from the same overseas permanent establishment—
- (a) in the next accounting period (whether or not the company in fact has any such income from that source in that accounting period), or
- (b) in such one or more preceding accounting periods, beginning not more than three years before the accounting period in which the unrelieved foreign tax arises, as result from applying the rules in subsection (3) below,
or partly in the one way and partly in the other.
- (3) Where any unrelieved foreign tax is to be treated as mentioned in paragraph (b) of subsection (2) above, the rules for determining the accounting periods in question (and the amount of the unrelieved foreign tax to be so treated in relation to each of them) are that the unrelieved foreign tax must be so treated under that paragraph—
- (1) that—
- (a) credit for, or for any remaining balance of, the unrelieved foreign tax is allowed against corporation tax in respect of income of a later one of the accounting periods beginning as mentioned in that paragraph,
before
- (b) credit for any of the unrelieved foreign tax is allowed against corporation tax in respect of income of any earlier such period;
- (2) that, before allowing credit for any of the unrelieved foreign tax against corporation tax in respect of income of any accounting period, credit for foreign tax is allowed—
- (a) first for foreign tax in respect of the income of that accounting period, other than unrelieved foreign tax arising in another accounting period; and
- (b) then for unrelieved foreign tax arising in any accounting period before that in which the unrelieved foreign tax in question arises.
- (4) For the purposes of this section, the cases where an amount of unrelieved foreign tax arises in respect of any of a company’s qualifying income from an overseas permanent establishment in an accounting period are those cases where—
- (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of that income,
exceeds
- (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of that income;
and in any such case that excess is the amount of the unrelieved foreign tax in respect of that income.
- (5) For the purposes of this section, a company’s qualifying income from an overseas permanent establishment is the profits of the overseas permanent establishment which are—
- (a) profits, chargeable under Chapter 2 of Part 3 of CTA 2009, of a trade carried on partly, but not wholly, outside the United Kingdom; or
- (b) included in the profits of gross roll-up business chargeable under . . . section 436A.
- (6) Where (whether by virtue of this subsection or otherwise) an amount of unrelieved foreign tax arising in an accounting period falls to be treated under subsection (2) above for the purposes of allowing credit relief under this Part as foreign tax paid in respect of, and computed by reference to, qualifying income of an earlier accounting period, it shall not be so treated for the purpose of any further application of this section.
- (7) In this section—
- “*overseas permanent establishment*” means a permanent establishment through which a company carries on a trade in a territory outside the United Kingdom; and
- “*permanent establishment*”—if there are arrangements having effect under section 788 in relation to the territory concerned that define the expression, has the meaning given by those arrangements, andif there are no such arrangements, or if they do not define the expression, has the meaning given by section 148 of the Finance Act 2003.
##### 806M
- (1) This section has effect for the purposes of section 806L and shall be construed as one with that section.
- (2) If, in any accounting period, a company ceases to have a particular overseas permanent establishment, the amount of any unrelieved foreign tax which arises in that accounting period in respect of the company’s income from that overseas permanent establishment shall, to the extent that it is not treated as mentioned in section 806L(2)(b), be reduced to nil (so that no amount arises which falls to be treated as mentioned in section 806L(2)(a)).
- (3) If a company—
- (a) at any time ceases to have a particular overseas permanent establishment in a particular territory (“*the old permanent establishment*”), but
- (b) subsequently again has an overseas permanent establishment in that territory (“*the new permanent establishment*”),
the old permanent establishment and the new permanent establishment shall be regarded as different overseas permanent establishments.
- (4) If, under the law of a territory outside the United Kingdom, tax is charged in the case of a company resident in the United Kingdom in respect of the profits of two or more of its overseas permanent establishments in that territory, taken together, then, for the purposes of—
- (a) section 806L, and
- (b) subsection (3) above,
those overseas permanent establishments shall be treated as if they together constituted a single overseas permanent establishment of the company.
- (5) Unrelieved foreign tax arising in respect of qualifying income from a particular overseas permanent establishment in any accounting period shall only be treated as mentioned in subsection (2) of section 806L on a claim.
- (6) Any such claim must specify the amount (if any) of the unrelieved foreign tax—
- (a) which is to be treated as mentioned in paragraph (a) of that subsection; and
- (b) which is to be treated as mentioned in paragraph (b) of that subsection.
- (7) A claim under subsection (5) above may only be made before the expiration of the period of—
- (a) six years after the end of the accounting period mentioned in that subsection, or
- (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.
##### 807A
- (1) This Part shall have effect for the purposes of corporation tax in relation to any company as if tax falling within subsection (2) below were to be disregarded.
- (2) Subject to subsection (2A) below, tax falls within this subsection in relation to a company to the extent that it is—
- (a) tax under the law of a territory outside the United Kingdom; and
- (b) is attributable, on a just and reasonable apportionment,
- (i) to interest accruing under a loan relationship at a time when the company is not a party to the relationship ; or
- (ii) to so much of a relevant payment as, on such an apportionment, is attributable to a time when the company is not a party to the derivative contract concerned.
- (2A) Tax attributable to interest accruing to a company under a loan relationship does not fall within subsection (2) above if—
- (a) at the time when the interest accrues, that company has ceased to be a party to that relationship by reason of having made the initial transfer under or in accordance with any repo or stock-lending arrangements relating to that relationship; and
- (b) that time falls during the period for which those arrangements have effect.
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Redundancy payments etc
##### 76ZF
- (1) Sections 76ZG to 76ZI apply if—
- (a) a company to which section 76 applies (“*the employer*”) makes a redundancy payment or an approved contractual payment to another person (“*the employee*”), and
- (b) the payment is in respect of the employee's employment wholly in the employer's life assurance business or partly in the employer's life assurance business and partly in one or more other capacities.
- (2) For the purposes of this section and sections 76ZG to 76ZH “*redundancy payment*” means a redundancy payment payable under—
- (a) Part 11 of the Employment Rights Act 1996, or
- (b) Part 12 of the Employment Rights (Northern Ireland) Order 1996.
- (3) For the purposes of this section and those sections—
- “*contractual payment*” means a payment which, under an agreement, an employer is liable to make to an employee on the termination of the employee's contract of employment, and
- a contractual payment is “*approved*” if, in respect of that agreement, an order is in force under—section 157 of the Employment Rights Act 1996, orArticle 192 of the Employment Rights (Northern Ireland) Order 1996.
##### 76ZG
- (1) This section applies if the payment is in respect of the employee's employment wholly in the employer's life assurance business.
- (2) The payment is treated as expenses payable which fall to be brought into account at Step 1 in section 76(7), so far as it otherwise would not be.
- (3) The amount brought into account by virtue of this section for an approved contractual payment must not exceed the amount which would have been due to the employee if a redundancy payment had been payable.
- (4) If the payment is referable to an accounting period beginning after the business has permanently ceased to be carried on, it is treated as referable to the last accounting period in which the business was carried on.
##### 76ZH
- (1) This section applies if the payment is in respect of the employee's employment with the employer—
- (a) partly in the employer's life assurance business, and
- (b) partly in one or more other capacities.
- (2) The amount of the redundancy payment, or the amount which would have been due if a redundancy payment had been payable, is to be apportioned on a just and reasonable basis between—
- (a) the employment in the life assurance business, and
- (b) the employment in the other capacities.
- (3) The part of the payment apportioned to the employment in the life assurance business is treated as a payment in respect of the employee's employment wholly in the life assurance business for the purposes of section 76ZG.
##### 76ZI
- (1) This section applies if the employer's business, or part of it, ceases (permanently) to be carried on and the employer makes a payment to the employee in addition to—
- (a) the redundancy payment, or
- (b) if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.
- (2) If—
- (a) the additional payment would not otherwise be regarded as expenses payable for the purposes of section 76, but
- (b) that is only because the business, or the part of the business, has ceased to be carried on,
the additional payment is regarded as expenses payable for the purposes of section 76.
- (3) So far as the additional payment would, apart from this subsection, be regarded as expenses payable for the purposes of Step 5 in subsection (7) of section 76, it is not to be so regarded for the purposes of that subsection (or of subsection (2) above so far as relating to section 76).
- (4) The amount treated under this section as expenses payable for the purposes of section 76 is limited to 3 times the amount of—
- (a) the redundancy payment, or
- (b) if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.
- (5) If the payment is referable to an accounting period beginning after the business or the part of the business has ceased to be carried on, it is treated as referable to the last accounting period in which the business, or the part concerned, was carried on.
##### 76ZJ
- (1) This section applies if—
- (a) a redundancy payment or an approved contractual payment is payable by a company to which section 76 applies (“*the employer*”), and
- (b) a payment to which subsection (2) applies is made in respect of the payment.
- (2) This subsection applies to—
- (a) payments made by the Secretary of State under section 167 of the Employment Rights Act 1996, and
- (b) payments made by the Department for Employment and Learning under Article 202 of the Employment Rights (Northern Ireland) Order 1996.
- (3) So far as the employer reimburses the Secretary of State or Department for the payment, sections 76ZG to 76ZI apply as if the payment were—
- (a) a redundancy payment, or
- (b) an approved contractual payment,
made by the employer.
### Contributions to local enterprise organisations or urban regeneration companies
##### 76ZK
- (1) This section applies if a company to which section 76 applies (“*the contributor*”) incurs expenses in making a contribution (whether in cash or in kind)—
- (a) to a local enterprise organisation, or
- (b) to an urban regeneration company.
- (2) The expenses are treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 1 in section 76(7).
- (3) But if, in connection with the making of the contribution, the contributor or a connected person—
- (a) receives a disqualifying benefit of any kind, or
- (b) is entitled to receive such a benefit,
the amount treated in accordance with subsection (2) is restricted to the amount of the expenses less the value of the benefit.
- (4) For this purpose it does not matter whether a person receives, or is entitled to receive, the benefit—
- (a) from the local enterprise organisation or urban regeneration company concerned, or
- (b) from anyone else.
- (5) Subsection (6) applies if—
- (a) an amount has been brought into account in accordance with subsection (2), and
- (b) the contributor or a connected person receives a disqualifying benefit that is in any way attributable to the contribution.
- (6) The contributor is to be treated as receiving, when the benefit is received, an amount—
- (a) which is equal to the value of the benefit (so far as not brought into account in determining the amount of the deduction), and
- (b) to which the charge to corporation tax on income applies.
- (6A) In this section “*repo or stock-lending arrangements*” means—
- (a) a debtor repo within the meaning of Chapter 10 of Part 6 of CTA 2009 (see section 548 of that Act), or
- (b) a stock lending arrangement within the meaning of section 263B of the 1992 Act.
- (6B) In any case where a debtor repo within the meaning of that paragraph constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the sale mentioned in condition C of that paragraph; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the subsequent purchase mentioned in condition D of that paragraph takes place and the time when it becomes apparent that that subsequent purchase will not take place.
- (6C) In any case where a stock lending arrangement within the meaning of section 263B of the 1992 Act constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the transfer mentioned in subsection (1)(a) of that section; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the transfer mentioned in subsection (1)(b) of that section takes place and the time when it becomes apparent that that transfer will not take place.
- (7) In this section—
- “*disqualifying benefit*” means a benefit the expenses of obtaining which, if incurred by the contributor directly in a transaction at arm's length, would not be expenses payable for the purposes of section 76,
- “*local enterprise organisation*” has the meaning given by section 83 of CTA 2009,
- “*urban regeneration company*” has the meaning given by section 86 of CTA 2009.
- (8) Section 839 (“connected person”) applies for the purposes of subsections (3) and (5).
### Unpaid remuneration
##### 76ZL
- (1) This section applies if—
- (a) an amount is charged in respect of employees' remuneration in the accounts for a period of a company to which section 76 applies,
- (b) the amount would apart from this section be brought into account under section 76 as expenses payable, and
- (c) the remuneration is not paid before the end of the period of 9 months immediately following the end of the period of account.
- (2) If the remuneration is paid after the end of that period of 9 months, the amount is brought into account for the period of account in which it is paid.
- (3) But—
- (a) subsection (2) is subject to section 86 of FA 1989 (spreading of relief for acquisition expenses), and
- (b) in interpreting that section the remuneration is treated as expenses payable which fall to be included at Step 1 in section 76(7) for the period of account in which the remuneration is paid.
- (4) The amount is not brought into account under section 76 as expenses payable if it is not paid.
##### 76ZM
- (1) For the purposes of section 76ZL an amount charged in the accounts in respect of employees' remuneration includes an amount for which provision is made in the accounts with a view to its becoming employees' remuneration.
- (2) For the purposes of section 76ZL it does not matter whether an amount is charged for—
- (a) particular employments, or
- (b) employments generally.
- (3) If the profits of the company are calculated before the end of the 9 month period mentioned in section 76ZL(1)(c)—
- (a) it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but
- (b) if the remuneration is subsequently paid before the end of that period, nothing in this subsection prevents the calculation being revised and any tax return being amended accordingly.
- (4) For the purposes of this section and section 76ZL remuneration is paid when it—
- (a) is treated as received by an employee for the purposes of ITEPA 2003 by section 18 or 19 of that Act (receipt of money and non-money earnings), or
- (b) would be so treated if it were not exempt income.
- (5) In this section and section 76ZL—
- “*employee*” includes an office-holder and “*employment*” therefore includes an office, and
- “*remuneration*” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of ITEPA 2003.
### Car or motor cycle hire
##### 76ZN
- (1) Subsection (2) applies if—
- (a) in calculating the corporation tax to which a company is liable for an accounting period, an amount representing expenses incurred on the hiring of a car . . . can be brought into account under section 76 as expenses payable, and
- (b) the car is not—
- (i) a car that is first registered before 1 March 2001,
- (ii) a car that has low CO₂ emissions (as defined in section 104AA of the Capital Allowances Act),
- (iii) a car that is electrically propelled (as defined in section 268B of that Act), or
- (iv) a qualifying hire car.
- (1A) Subsection (2) does not apply if condition A or condition B in section 58A of CTA 2009 (short-term hiring in and long-term hiring out) is met.
- (2) The amount that would otherwise be capable of being brought into account as expenses payable is reduced by 15%.
- (3) Subsection (4) applies if an amount is reduced as a result of subsection (2), or a corresponding provision, and—
- (a) subsequently—
- (i) there is a rebate (however described) of the hire charges, or
- (ii) a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency agreement, and
- (b) an amount is brought into account in respect of the rebate or release.
- (4) For the purposes of subsection (3)(b) an amount is brought into account in respect of a rebate of hire charges or the release of a debt if—
- (a) the amount of a reversal representing the rebate or release falls to be deducted under Step 4 in section 76(7), or
- (b) (in the case of a rebate of hire charges) an amount representing the rebate is chargeable under section 85(1) of the Finance Act 1989 (c. 26).
- (5) The amount that would otherwise be deductible as mentioned in subsection (4)(a) or chargeable as mentioned in subsection (4)(b) is reduced by 15%.
- (6) In this section “*corresponding provision*” means—
- (a) section 56(2) of CTA 2009 (car . . . hire: trade profits and property income),
- (b) section 1251(2) of CTA 2009 (car . . . hire: companies with investment business), and
- (c) section 48(2) of ITTOIA 2005 (car . . . hire: trade profits and property income).
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In this section “*car . . .*” and “*qualifying hire car . . .*” have the meanings given by section 57 of CTA 2009.
- (9) For the purposes of section 50B of ITTOIA 2005 and section 58B of CTA 2009 (connected persons: application of restrictions), this section is to be treated as if it were part of section 56 of CTA 2009.
##### 76ZO
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 95ZA
- (1) If the total amount of relevant distributions received by a company in an accounting period exceeds £50,000, those distributions are to be taken into account in calculating for corporation tax purposes the profits of the company in that period (and accordingly section 130(2) of CTA 2009 does not apply in relation to those distributions).
- (2) A company (“company A”) receives a “relevant distribution” if—
- (a) it receives a distribution made by a company . . . (“company B”),
- (b) the value of the shares or stock in respect of which the distribution is made (“the holding”) is materially reduced by reason of the distribution,
- (c) a profit on the sale of the holding (to anyone other than company B) would be taken into account in calculating company A's profits in respect of relevant insurance business, and
- (d) either—
- (i) the holding amounts to, or is an ingredient in a holding amounting to, 10% of all holdings of the same class in company B, or
- (ii) the period between the acquisition by company A of the holding and that company first taking steps to dispose of the holding does not exceed 30 days.
- (3) In this section “*relevant insurance business*” means any kind of insurance business other than life assurance business.
- (4) Section 177(7) of TCGA 1992 (provision supplementing provision corresponding to subsection (2)(d)(i) above) applies for the purposes of subsection (2)(d)(i).
- (5) Section 731(4) below (interpretation of “taking steps to dispose of securities”) applies for the purposes of subsection (2)(d)(ii) as if the reference to the securities were to the holding.
##### 95A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Relief for post-cessation expenditure
##### 109A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Change of residence
##### 110A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Expenses of insurance companies
### Limited liability partnerships
##### 118ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZB
Section 118 has effect in relation to a member of a limited liability partnership as in relation to a limited partner, but subject to sections 118ZC and 118ZD.
##### 118ZC
- (1) Subsection (3) of section 118 does not have effect in relation to a member of a limited liability partnership.
- (2) But, for the purposes of . . . section 118, such a member’s contribution to a trade at any time (“*the relevant time*”) is the greater of—
- (a) the amount subscribed by it, and
- (b) the amount of its liability on a winding up.
- (3) The amount subscribed by a member of a limited liability partnership is the amount which it has contributed to the limited liability partnership as capital, less so much of that amount (if any) as—
- (a) it has previously, directly or indirectly, drawn out or received back,
- (b) it so draws out or receives back during the period of five years beginning with the relevant time,
- (c) it is or may be entitled so to draw out or receive back at any time when it is a member of the limited liability partnership, or
- (d) it is or may be entitled to require another person to reimburse to it.
- (4) The amount of the liability of a member of a limited liability partnership on a winding up is the amount which—
- (a) it is liable to contribute to the assets of the limited liability partnership in the event of the partnership's being wound up, and
- (b) it remains liable so to contribute for the period of at least five years beginning with the relevant time (or until the partnership is wound up, if that happens before the end of that period).
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZD
- (1) Where amounts relating to a trade carried on by a member of a limited liability partnership are, in any one or more accounting periods, prevented from being given or allowed by section . . . 118 as it applies otherwise than by virtue of this section (the member's“total unrelieved loss”), subsection (2) applies in each subsequent accounting period in which—
- (a) the member carries on the trade as a member of the limited liability partnership, and
- (b) any of the member's total unrelieved loss remains outstanding.
- (2) Sections 393A(1) and 403 (and section 118 as it applies in relation to those sections) shall have effect in the subsequent accounting period as if—
- (a) any loss sustained or incurred by the member in the trade in that accounting period were increased by an amount equal to so much of the member's total unrelieved loss as remains outstanding in that period, or
- (b) (if no loss is so sustained or incurred) a loss of that amount were so sustained or incurred.
- (3) To ascertain whether any (and, if so, how much) of a member’s total unrelieved loss remains outstanding in the subsequent accounting period, deduct from the amount of the member's total unrelieved loss the aggregate of—
- (a) any relief given under any provision of the Corporation Tax Acts (otherwise than as a result of subsection (2)) in respect of the member's total unrelieved loss in that or any previous accounting period, and
- (b) any amount given or allowed in respect of the member's total unrelieved loss as a result of subsection (2) in any previous accounting period (or which would have been so given or allowed had a claim been made).
### Non-active general partners and non-active members of limited liability partnerships
##### 118ZE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZF
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amounts reversing expenses of management deducted: charge to tax
##### 118ZG
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZH
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZI
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 18ZJ
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZK
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Partnerships exploiting films
##### 118ZL
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZM
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Partners: meaning of “contribution to the trade”
#### Levies and repayments under the Financial Services and Markets Act 2000.
##### 118ZN
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118ZO
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Chapter VIIA — Paying and collecting agents
##### 118A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 118K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Levies and repayments under the Financial Services and Markets Act 2000.
##### 126A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 127A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 129A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 129B
- (1) The income which, as income deriving from investments of a description specified in any of the relevant provisions, is eligible for relief from tax by virtue of that provision shall be taken to include any relevant stock lending fee.
- (2) For the purposes of this section the relevant provisions are sections 613(4) and 614(3) and section 186 of the Finance Act 2004.
- (3) In this section “*relevant stock lending fee*”, in relation to investments of any description, means any amount, in the nature of a fee, which is payable in connection with any stock lending arrangement relating to investments which, but for any transfer under the arrangement, would be investments of that description.
- (4) In this section “*stock lending arrangement*” has the same meaning as in section 263B of the 1992 Act.
#### Payments to trustees of approved profit sharing schemes.
#### Election by company paying dividend.
#### Company reconstructions without a change of ownership.
##### 140A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 140H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Aggregation of wife’s income with husband’s.
##### 144A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 146A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 151A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155ZB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 155A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cars available for private use.
##### 156A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 157A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159AC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 159A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 161A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 161B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 168G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exceptions from tax.
#### Transfers of trade to obtain balancing allowances
##### 177A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 177B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Contributions in respect of share option gains
#### Substitution of security: supplemental.
##### 187A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Removal expenses and benefits
##### 191A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 191B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 192A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Second loans.
##### 197A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mileage allowances
##### 197AD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest which never has been relevant loan interest etc.
##### 197AF
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AG
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197AH
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Mileage allowances
##### 197B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 197F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Sporting and recreational facilities
##### 197G
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##### 198A
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##### 200ZA
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##### 200AA
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##### 200A
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##### 200B
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##### 200C
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##### 200D
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##### 200E
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##### 200F
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##### 200G
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##### 200H
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##### 200J
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##### 201AA
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##### 201A
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##### 202A
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##### 202B
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##### 203A
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##### 203B
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##### 203C
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##### 203D
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##### 203E
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##### 203F
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##### 203FA
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##### 203FB
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##### 203G
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##### 203H
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##### 203I
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##### 203J
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##### 203K
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##### 203L
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##### 206A
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##### 207A
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#### Transfers of trade to obtain balancing allowances
##### 209A
- (1) Subsection (3AA) of section 209 does not apply in relation to a security issued by a company (the “*issuing company*”) if the security is one which to a significant extent reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in one or more companies each of which is—
- (a) the issuing company; or
- (b) an associated company of the issuing company;
but this subsection is subject to the following provisions of this section.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 above from applying in relation to a security if—
- (a) the issuing company is a bank or securities house;
- (b) the security is issued by the issuing company in the ordinary course of its business; and
- (c) the security reflects dividends or other distributions in respect of, or fluctuations in the value of, shares in companies falling within paragraph (a) or (b) of subsection (1) above by reason only that the security reflects fluctuations in a qualifying index.
- (3) In subsection (2)(c) above “*qualifying index*” means an index whose underlying subject matter includes both—
- (a) shares in one or more companies falling within paragraph (a) or (b) of subsection (1) above, and
- (b) shares in one or more companies falling within neither of those paragraphs,
and which is an index such that the shares falling within paragraph (b) above represent a significant proportion of the market value of the underlying subject matter of the index.
- (4) In this section—
- “*bank*” has the meaning given by section 840A;
- “*securities house*” means any person—who is authorised for the purposes of the Financial Services and Markets Act 2000; andwhose business consists wholly or mainly of dealing in financial instruments as principal;and in paragraph (b) above “*financial instrument*” has the meaning given by section 984 of ITA 2007.
- (5) For the purposes of this section a company is an “*associated company*” of another at any time if at that time one has control of the other or both are under the control of the same person or persons.
- (6) For the purposes of subsection (5) above, “*control*”, in relation to a company, means the power of a person to secure—
- (a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
- (b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
- (7) There shall be left out of account for the purposes of subsection (6) above—
- (a) any shares held by a company, and
- (b) any voting power or other powers arising from shares held by a company,
if a profit on a sale of the shares would be treated as a trading receipt of a trade carried on by the company and the shares are not, within the meaning of Chapter 1 of Part 12, assets of an insurance company’s long-term insurance fund (see section 431(2)).
##### 209B
- (1) Subsection (3AA) of section 209 does not at any time apply in relation to a security issued by a company (the “*issuing company*”) if at that time, or any earlier time on or after 17th April 2002, there are or have been any hedging arrangements that relate to some or all of the company’s liabilities under the security.
- (2) Subsection (1) above does not prevent subsection (3AA) of section 209 from applying in relation to a security at any time if—
- (a) conditions 1 to 4 below are satisfied in relation to any such hedging arrangements at that time; and
- (b) at all earlier times on or after 17th April 2002 when there have been hedging arrangements that relate to some or all of the company’s liabilities under the security, conditions 1 to 4 below were satisfied in relation to those hedging arrangements.
- (3) Where subsection (3AA) of section 209 at any time ceases to apply in relation to a security by virtue of this section, subsection (2)(d) of that section shall have effect in relation to the security as from that time as it would have had effect if subsection (3AA) had never applied in relation to the security.
- (4) Condition 1 is that the hedging arrangements do not constitute, include, or form part of, any scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax (including stamp duty or stamp duty land tax).
- (5) Condition 2 is that the hedging arrangements are such that, where for the purposes of corporation tax a deduction in respect of the security falls to be made at any time by the issuing company, then at that time, or within a reasonable time before or after it, any amounts intended under the hedging arrangements to offset some or all of that deduction arise—
- (a) to the issuing company; or
- (b) to a company which is a member of the same group of companies as the issuing company.
- (6) Condition 3 is that the whole of every amount arising as mentioned in subsection (5) above is brought into charge to corporation tax—
- (a) by a company falling within paragraph (a) or (b) of that subsection, or
- (b) by two or more companies, taken together, each of which falls within paragraph (a) or (b) of that subsection.
- (7) Condition 4 is that for the purposes of corporation tax any deductions in respect of expenses of establishing or administering the hedging arrangements are reasonable, in proportion to the amounts required to be brought into charge to corporation tax by subsection (6) above.
- (8) For the purposes of this section “*hedging arrangements*”, in relation to a security, means any scheme or arrangement for the purpose, or for purposes which include the purpose, of securing that an amount of income or gain accrues, or is received or receivable, whether directly or indirectly, which is intended to offset some or all of the amounts which fall to be brought into account, in accordance with generally accepted accounting practice, in respect of amounts accruing or falling to be paid in accordance with the terms of the security.
- (9) Any reference in this section to two companies being members of the same group of companies is a reference to their being members of the same group of companies for the purposes of Chapter 4 of Part 10 of this Act (group relief).
##### 213A
- (1) A reference in the Corporation Tax Acts to distributions of a company shall not apply to a distribution if—
- (a) it is a distribution consisting of—
- (i) the transfer of part of a business by a company (“the distributing company”) to one or more other companies (“the transferee company or companies”), and
- (ii) the issue of shares by the transferee company or companies to the members of the distributing company, and
- (b) the requirements of either section 140A(1A) of the 1992 Act (division of UK business) or section 140C(1A) of that Act (division of non-UK business) are satisfied in relation to the distribution.
- (2) A distribution to which this section applies is an “*exempt distribution*” for the purposes of sections 214 to 217.
- (3) The expression “*relevant company*” in sections 214 to 217 includes the distributing company and the transferee company or companies.
### Industrial and provident society dividends etc
##### 230A
- (1) This section applies if—
- (a) a dividend or bonus is granted by a registered industrial and provident society, and
- (b) section 132 (deduction for dividends etc granted by industrial and provident societies) of CTA 2009 allows the sum representing the dividend or bonus to be deducted in calculating the profits of a trade.
- (2) The dividend, or the bonus, is not treated as a distribution for the purposes of the Corporation Tax Acts.
##### 231A
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##### 231AA
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) he is the borrower under a stock lending arrangement or the lender under a creditor repo or creditor quasi-repo;
- (b) the qualifying distribution is, or is a payment representative of, a distribution in respect of securities to which the arrangement or repo in question relates; and
- (c) a manufactured dividend representative of that distribution is paid by that person in respect of securities to which the arrangement or repo in question relates.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*stock lending arrangement*” has the same meaning as in section 263B of the 1992 Act and, in relation to any such arrangement, any reference to the borrower, or the securities to which the arrangement relates, shall be construed accordingly.
- (3) In this section “*creditor repo*” and “*creditor quasi-repo*” have the meaning given by Chapter 10 of Part 6 of CTA 2009 (repos).
- (4) For the purposes of this section “*manufactured dividend*” has the same meaning as in paragraph 2 of Schedule 23A (and any reference to a manufactured dividend being paid accordingly includes a reference to a payment falling by virtue of section 736B(2) . . . to be treated for the purposes of Schedule 23A as if it were made).
- (5) For the purposes of this section a person is taken to have paid a manufactured dividend representative of a distribution in respect of securities to which a creditor repo relates if (as a result of paragraph 13(1) of Schedule 13 to the Finance Act 2007) the person is treated for the purposes of Chapter 9 of Part 15 of ITA 2007 as making a payment which is representative of the income payable on the securities.
##### 231AB
- (1) A person shall not be entitled to a tax credit under section 231 . . . in respect of a qualifying distribution if—
- (a) the person is the borrower under a debtor repo or debtor quasi-repo;
- (b) the qualifying distribution is a manufactured dividend paid to the borrower in consequence of that repo; and
- (c) the arrangement or arrangements in relation to that repo are not such that the actual dividend which the manufactured dividend represents is receivable otherwise than by the borrower under that repo.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) In this section “*debtor repo*” and “*debtor quasi-repo*” have the meaning given by Chapter 10 of Part 6 of CTA 2009 (repos).
- (3) Subsection (4) of section 231AA applies for the purposes of this section as it applies for the purposes of that section.
##### 231B
- (1) This section applies in any case where—
- (a) a person (“A”) is entitled to a tax credit in respect of a qualifying distribution;
- (b) arrangements subsist such that another person (“B”) obtains, whether directly or indirectly, a payment representing any of the value of the tax credit;
- (c) the arrangements (whether or not made directly between A and B) were entered into for an unallowable purpose; and
- (d) the condition in subsection (2) below is satisfied.
- (2) The condition is that if B had been the person entitled to the tax credit and the qualifying distribution to which it relates, and had received the distribution when it was made, then—
- (a) B would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if B is a company, B could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (3) This section does not apply if and to the extent that any other provision of the Tax Acts has the effect of cancelling or reducing the tax advantage which would otherwise be obtained by virtue of the arrangements.
- (4) Where this section applies—
- (a) no claim shall be made under section 231(2) for payment of the amount of the tax credit;
- (b) no claim shall be made under section 397(2) of ITTOIA 2005. . . in respect of the tax credit;
- (c) the income consisting of the distribution in respect of which A is entitled to the tax credit shall not be regarded for the purposes of section 241 as franked investment income; and
- (d) no claim shall be made under section 35 of the Finance (No. 2) Act 1997 (transitional relief) for payment of an amount determined by reference to that distribution.
- (5) For the purposes of this section, the question whether any arrangements were entered into for an “unallowable purpose” shall be determined in accordance with subsections (6) and (7) below.
- (6) Arrangements are entered into for an unallowable purpose if the purposes for which at least one person is a party to the arrangements include a purpose which is not amongst the business or other commercial purposes of that person.
- (7) Where one of the purposes for which a person enters into any arrangements is the purpose of securing that that person or another obtains a tax advantage, that purpose shall be regarded as a business or other commercial purpose of the person only if it is neither the main purpose, nor one of the main purposes, for which the person enters into the arrangements.
- (8) Any reference in this section to a person obtaining a tax advantage includes a reference to a person obtaining a payment representing any of the value of a tax credit in circumstances where, had the person obtaining the payment been entitled to the tax credit and the qualifying distribution to which it relates, that person—
- (a) would not have been entitled to obtain any payment under section 231(2) or (3) in respect of the tax credit; and
- (b) if that person is a company, could not have used the income consisting of the distribution to frank a distribution actually made in the accounting period in which it would have received the distribution to which the tax credit relates.
- (9) If an amount representing any of the value of a tax credit to which a person is entitled is applied at the direction of, or otherwise in favour of, some other person (whether by way of set off or otherwise), the case shall be treated for the purposes of this section as one where that other person obtains a payment representing any of the value of the tax credit.
- (10) In determining for the purposes of subsections (2)(b) and (8)(b) b above whether a company could have used the income consisting of the distribution in question to frank a distribution of the company, the company shall be taken to use its actual franked investment income to frank distributions before using the income consisting of the distribution in question.
- (11) References in this section to using franked investment income to frank a distribution of a company have the same meaning as in Chapter V of Part VI.
- (12) In this section—
- “*arrangements*” means arrangements of any kind, whether in writing or not (and includes a series of arrangements, whether or not between the same parties);
- “*business or other commercial purposes*” includes the efficient management of investments;
- “*franked investment income*” has the same meaning as in Chapter V of Part VI and references to income consisting of a distribution shall be construed accordingly;
- “*tax advantage*” has the meaning given by section 840ZA
#### Company reconstructions: supplemental.
##### 234A
- (1) This section applies where dividend or interest is distributed by a company which is—
- (a) a company as defined in section 1(1) of the Companies Act 2006 (c. 46), or
- (b) a company created by letters patent or by or in pursuance of an Act.
- (2) If the company makes a payment of dividend or interest to any person, and subsection (3) below does not apply, within a reasonable period the company shall send an appropriate statement to that person.
- (3) If the company makes a payment of dividend or interest into a bank or building society account held by any person, within a reasonable period the company shall send an appropriate statement to either—
- (a) the bank or building society concerned, or
- (b) the person holding the account.
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*relevant payment*” means a payment the amount of which falls to be determined (wholly or mainly) by applying to a notional principal amount specified in a derivative contract, for a period so specified, a rate the value of which at all times is the same as that of a rate of interest so specified;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 808A
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the interest paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the loan would have been made at all in the absence of the relationship,
- (b) the amount which the loan would have been in the absence of the relationship, and
- (c) the rate of interest and other terms which would have been agreed in the absence of the relationship.
- (3) The special relationship provision shall be construed as requiring the taxpayer to show that there is no special relationship or (as the case may be) to show the amount of interest which would have been paid in the absence of the special relationship.
- (4) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part to the other person and subsection (5) below does not apply,
within a reasonable period the nominee shall send an appropriate statement to that person.
- (5) In a case where—
- (a) a statement is received by a person under subsection (2) or (3)(b) above,
- (b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and
- (c) the nominee makes a payment of the sum or part into a bank or building society account held by the other person,
within a reasonable period the nominee shall send an appropriate statement to either the bank or building society concerned or the other person.
- (6) In the case of a payment of interest which is not a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the gross amount which, after deduction of the income tax appropriate to the interest, corresponds to the net amount actually paid,
- (b) the rate and the amount of income tax appropriate to such gross amount,
- (c) the net amount actually paid, and
- (d) the date of the payment.
- (7) In the case of a payment of dividend or interest which is a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—
- (a) the amount of the dividend or interest paid,
- (b) the date of the payment, and
- (c) the amount of the tax credit to which a person is entitled in respect of the dividend or interest, or to which a person would be so entitled if he had a right to a tax credit in respect of the dividend or interest.
- (8) In this section “*send*” means send by post.
- (8A) In this section “*bank*” has the meaning given by section 840A.
- (9) If a person fails to comply with subsection (2), (3), (4) or (5) above, the person shall incur a penalty of £60 in respect of each offence, except that the aggregate amount of any penalties imposed under this subsection on a person in respect of offences connected with any one distribution of dividends or interest shall not exceed £600.
- (10) The Board may by regulations provide that where a person is under a duty to comply with subsection (2), (3), (4) or (5) above, the person shall be taken to comply with the subsection if the person either—
- (a) acts in accordance with the subsection concerned, or
- (b) acts in accordance with rules contained in the regulations;
and subsection (9) above shall be construed accordingly.
- (11) Regulations under subsection (10) above may make different provision for different circumstances.
##### 245A
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##### 245B
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### Chapter VA — Foreign Income Dividends
### Election by company paying dividend
#### Substitution of security: supplemental.
##### 246A
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##### 246B
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### Recipient of foreign income dividend
##### 246C
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##### 246D
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### Companies: payments and receipts
##### 246E
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##### 246F
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##### 246G
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##### 246H
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### Foreign source profit and distributable foreign profit
##### 246I
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### Matching of dividend with distributable foreign profit
##### 246J
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##### 246K
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##### 246L
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##### 246M
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### Repayment or set-off of advance corporation tax
##### 246N
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##### 246P
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##### 246Q
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##### 246R
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### International headquarters companies
##### 246S
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##### 246T
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##### 246U
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##### 246V
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##### 246W
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### Adjustments
##### 246X
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Application of this Chapter
##### 246Y
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#### Elections as to transfer of relief under section 257A or 257AB.
### Approved share incentive plans
##### 251A
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##### 251B
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##### 251C
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#### UK property business losses
##### 251D
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##### 256A
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##### 256B
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##### 257AA
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##### 257A
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##### 257AB
- (1) This section applies if —
- (a) the claimant is, for the whole or any part of the year of assessment, living with his spouse or civil partner,
- (b) either the claimant or his spouse or civil partner was born before 6th April 1935,
- (c) the marriage or civil partnership was entered into on or after 5th December 2005 or, if the marriage was entered into before that date, an election for this section to apply has effect for that year, and
- (d) the claimant's net income for that year exceeds that of his spouse or civil partner or, if they have the same amount of net income for that year, the claimant is specified in an election as the person to be entitled to relief under this section for that year.
- (2) The claimant shall be entitled for that year to a tax reduction—
- (a) calculated by reference to £5,975 (if either the claimant or his spouse or civil partner is at any time within that year of the age of 75 or upwards), or
- (b) calculated by reference to £5,905 (in any other case).
- (3) For the purposes of subsection (2)(a) above an individual who would have been of or over the age of 75 within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.
- (4) In relation to a claimant whose adjusted net income for the year of assessment exceeds £19,500, subsection (2) above applies as if the amounts specified in it were reduced by—
- (a) one half of the excess, less
- (b) any reduction made in his allowance under section 257 by virtue of subsection (5) of that section.
- (5) The amounts specified in subsection (2) above shall not by virtue of subsection (4) above be treated as reduced below the minimum amount.
- (6) An individual shall not be entitled by virtue of this section to more than one tax reduction for any year of assessment.
- (7) In relation to a claim by an individual who —
- (a) becomes a spouse or civil partner in the year of assessment, and
- (b) has not previously in the year been entitled to relief under this section,
this section shall have effect as if the amounts specified in subsection (2) above were reduced by one twelfth for each month of the year ending before the date of the marriage or civil partnership.
- In this subsection “*month*” means a month beginning with the 6th day of a month of the calendar year.
- (8) An election under subsection (1)(c) —
- (a) shall be made jointly by the parties to the marriage,
- (b) shall be made before the first year of assessment for which it is to have effect,
- (c) shall have effect for that and each succeeding year of assessment for which any party to the marriage is entitled to relief under this section, and
- (d) shall be irrevocable.
- (9) An election under subsection (1)(d) —
- (a) shall be made jointly by the parties to the marriage or civil partnership, and
- (b) shall be made on or before the 5th anniversary of the 31st January next following the end of the year of assessment to which the election relates.
- (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
#### Qualifying policies.
##### 257BA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257BB
- (1) Where—
- (a) an individual is entitled to a tax reduction under section 257A or 257AB, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of an election under section 257BA) to a tax reduction equal to the unused part of the individual's MCA tax reductions.
- (1A) The individual's MCA tax reductions are the sum of—
- (a) the tax reduction to which the individual is entitled under section 257A or 257AB, and
- (b) any tax reduction to which the individual is entitled by virtue of an election under section 257BA(3).
- (1B) The unused part of the individual's MCA tax reductions is equal to—
- (a) the individual's MCA tax reductions, less
- (b) the individual's comparable tax liability.
- (2) Subsection (1) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (3) Where—
- (a) an individual is entitled to a tax reduction by virtue of an election under section 257BA, but
- (b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,
the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of section 257A or 257AB) to a tax reduction equal to the unused part of the individual's tax reduction.
- (3AA) The unused part of the individual's tax reduction is equal to—
- (a) the tax reduction to which the individual is entitled by virtue of the election under section 257BA, less
- (b) the individual's comparable tax liability.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subsection (3) above shall not apply for a year of assessment unless the claimant’s spouse or civil partner gives notice to the inspector that it is to apply.
- (5) Any notice under subsection (2) or (4) above—
- (a) shall be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
- (5A) For the purposes of this section, the comparable tax liability of an individual is the amount of the individual's tax left after Step 6 of the calculation in section 23 of ITA 2007, making that calculation with the modifications set out in subsections (5B) and (5C).
- (5B) In making that calculation, do not deduct any tax reduction under—
- (a) section 788 (double taxation arrangements: relief by agreement), or
- (b) section 790(1) (relief for foreign tax where there are no double taxation arrangements).
- (5C) If the individual's entitlement to a tax reduction under section 257A, 257AB, 257BA or this section is extinguished under section 423(4) of ITA 2007 (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (5A) and (5B) the amount by which the tax reduction is reduced.
- (5D) For the purposes of this section a person is treated as being entitled to a tax reduction under section 788 if the person is entitled to credit against income tax under arrangements which have effect under that section.
- (5E) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257B
- (1) Where—
- (a) a man is entitled to relief under section 257A, but
- (b) the amount which he is entitled to deduct from his total income by virtue of that section exceeds what is left of his total income after all other deductions have been made from it,
his wife shall be entitled to a deduction from her total income of an amount equal to the excess.
- (2) In determining for the purposes of subsection (1)(b) above the amount that is left of a person’s total income for a year of assessment after other deductions have been made from it, there shall be disregarded any deduction made—
- (a) on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or
- (b) under section 289 or
- (c) on account of any payments to which section 593(2) or 639(3) applies,or
- (d) on account of any payments to which section 54(5) of the Finance Act 1989 applies.
, or
- (e) on account of any payments to which section 32(4) of the Finance Act 1991 applies.
- (3) This section shall not apply for a year of assessment unless the claimant’s husband has given to the inspector written notice that it is to apply; and any such notice—
- (a) shall be given not later than six years after the end of the year of assessment to which it relates,
- (b) shall be in such form as the Board may determine, and
- (c) shall be irrevocable.
##### 257C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 257F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 261A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 266A
- (1) This section applies if—
- (a) pursuant to an employer-financed retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for or in respect of any employee of that employer, and
- (b) the payment is made under such an insurance or contract as is mentioned in section 266.
This section applies whether or not the accrual of the relevant benefits is dependent on any contingency.
- (2) Relief, if not otherwise allowable, shall be given to that employee under section 266 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if—
- (a) the payment had been made by him, and
- (b) the insurance or contract under which the payment is made had been made with him.
- (3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse, widow or widower, children, dependants or personal representatives.
- (4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them.
- (5) The amount treated as paid for or in respect of each employee is—
$$A×BC$where—A is the sum paid,B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, andC is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.$
- (6) This section does not apply if—
- (a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or
- (b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met.
- (7) Those conditions are—
- (a) that the employment is with a foreign employer, and
- (b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme.
- (8) In subsection (6)(a) “*earnings charged on remittance*” means earnings which are taxable earnings under—
- (a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or
- (b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK).
- (9) In this section—
- “*employer-financed retirement benefits scheme*”, and
- “*relevant benefits*”,
- have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).
#### Supplementary provisions.
##### 282A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 282B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Further interpretation of sections 135 to 139.
##### 289A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 289B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 290A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Credit-tokens.
##### 291A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 291B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 299B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 300A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 301A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 303AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Losses of ring fence trade: set off against profits of an earlier accounting period
##### 303A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Terminal losses.
##### 304A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 305A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Corresponding accounting periods.
#### Terminal losses.
##### 326A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326BB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 326D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 327A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “participator”, “associate”, “director” and “loan creditor”.
##### 329AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329AB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 329C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 331A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 332A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 333B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 338B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 337A
- (1) For the purposes of corporation tax, subject to any provision of the Corporation Tax Acts expressly authorising a deduction—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) a company’s income from any source shall be computed without any deduction in respect of charges on income.
- (2) In computing a company’s income from any source for the purposes of corporation tax—
- (a) no deduction shall be made in respect of interest except in accordance with Part 5 of CTA 2009 (loan relationships); . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 338A
- (1) This section defines what payments or other amounts are “*charges on income*” for the purposes of corporation tax.
This section has effect subject to any express exceptions in the Corporation Tax Acts.
- (2) Subject to the following provisions of this section, the following (and only the following) are charges on income—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) qualifying donations within the meaning of section 339 (qualifying donations to charity);
- (c) amounts allowed as charges on income under section 587B(2)(a)(ii) (gifts of shares etc to charity).
- (3) No payment that is deductible in computing profits or any description of profits for the purposes of corporation tax shall be treated as a charge on income.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 339A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 342A
- (1) In this section—
- (a) references to the relevant event, in relation to a company in administration, are references—
- (i) to the administrator sending a notice in respect of the company under paragraph 84(1) of Schedule B1 to the Insolvency Act 1986 (company moving from administration to dissolution), or
- (ii) in the case of a company which enters administration otherwise than under that Act, to the doing of any other act for a like purpose, and
- (b) references to a company’s final year are references to the financial year in which the relevant event occurs, and references to the company’s penultimate year are references to the last financial year preceding its final year.
- (2) Subject to subsections (3) and (4)—
- (a) corporation tax shall be charged on the profits of the company arising in the administration in its final year at the rate of corporation tax fixed or proposed for the penultimate year, but
- (b) where the corporation tax charged on the company’s income included in those profits falls to be calculated or reduced in accordance with section 13, it shall be so calculated or reduced in accordance with such rate or fraction fixed or proposed for the penultimate year as is applicable under that section.
- (3) If, before the relevant event, any of the rates or fractions mentioned in subsection (2) has been fixed or proposed for the final year, that subsection shall have effect in relation to that rate or fraction as if for the references to the penultimate year there were substituted references to the final year.
- (4) If, in the case of the company’s final accounting period, the income (if any) which consists of interest received or receivable by the company under section 826 does not exceed £2,000, that income shall not be subject to corporation tax.
- (5) In subsection (4) “*the company’s final accounting period*” means the last accounting period of the company before the relevant event.
- (6) An assessment on the company’s profits for an accounting period in which the company is in administration shall not be invalid because made before the end of the accounting period.
- (7) In making an assessment after the company enters administration and before the date of the relevant event, the administrator may act on an assumption as to when that date will fall so far as it governs section 10(1) of CTA 2009.
- (8) The assumption of the wrong date shall not alter the company’s final and penultimate year and, if the right date is later—
- (a) an accounting period shall end on the date assumed and a new accounting period shall begin, and
- (b) thereafter, section 10(1) of CTA 2009 shall apply as if the company had entered administration at the beginning of that new accounting period.
- (9) Section 342(7) applies in relation to this section as it applies in relation to that section, except that the reference to the completion of the winding up is to be read as a reference to the relevant event.
- (10) Where the company entered administration before its final year, paragraphs (a) and (b) of subsection (2) (but not subsection (3)) apply in relation to the company’s profits arising at any time in its penultimate year.
#### Transfers of trade to obtain balancing allowances
#### Interpretative provisions relating to insurance companies.
##### 343ZA
- (1) This section applies where—
- (a) a company (“the predecessor”) ceases to carry on a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that trade as its trade or as part of its trade,
- (c) in the accounting period in which the predecessor ceases to carry on the trade the predecessor would (apart from this section) be entitled under Part 2 of the Capital Allowances Act to a balancing allowance in respect of the trade, and
- (d) the predecessor's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor to that balancing allowance.
- (2) This section also applies where—
- (a) a company (“the predecessor”) ceases to carry on part of a trade,
- (b) another company (“*the successor*”) begins to carry on the activities of that part of the trade as its trade or as part of its trade, and
- (c) the predecessor's ceasing to carry on the part of the trade mentioned in paragraph (a) is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to entitle the predecessor, on cessation of the trade, to a balancing allowance in respect of the trade under Part 2 of the Capital Allowances Act.
- (3) This section does not apply where section 343 applies.
- (4) Where this section applies, the Corporation Tax Acts have effect subject to section 343(2), but as if the words “and are subject to section 343A (company reconstructions involving business of leasing plant or machinery)” were omitted.
- (5) Where this section applies because of subsection (1), and the successor carries on the activities of the trade the predecessor ceased to carry on as part of the successor's trade, for the purposes of section 343(2) that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (6) Where this section applies because of subsection (2), for the purposes of section 343(2)—
- (a) that part of the trade which the predecessor ceased to carry on is to be treated as a separate trade carried on by the predecessor, and
- (b) where the successor carries on the activities of that part of the trade as part of its trade, that part of the successor's trade is to be treated as a separate trade carried on by the successor.
- (7) Where subsection (5) or (6) applies, such apportionment of receipts, expenses, assets and liabilities is to be made as may be just.
- (8) Section 343(10) applies to an apportionment under subsection (7) as it applies to an apportionment under section 343(9).
##### 343A
- (1) This section applies if the trade is or forms part of a business of leasing plant or machinery which the predecessor or the successor carries on on the day of cessation.
- (2) If, on the day of cessation, both the predecessor and the successor carry on the trade otherwise than in partnership, section 343(2) does not apply unless—
- (a) the principal company or companies of the predecessor immediately before the cessation are the same as the principal company or companies of the successor immediately afterwards, and
- (b) if any such principal company is a consortium principal company, the relevant fraction in relation to the predecessor immediately before the cessation is the same as the relevant fraction in relation to the successor immediately afterwards (irrespective of whether the members of each consortium are the same).
- (3) If, on the day of cessation, the predecessor or the successor carries on the trade in partnership, section 343(2) does not apply unless—
- (a) the predecessor ceases to carry on the whole of its trade, and
- (b) that trade is a business of leasing plant or machinery which the predecessor carries on in partnership on the day of cessation.
- (4) In any case where section 343(2) does not apply as a result of this section, the plant or machinery belonging to the trade shall be treated for the purposes of the Corporation Tax Acts as sold by the predecessor to the successor on the day of the cessation for an amount equal to its market value as at that day.
- (5) In this section—
- “business of leasing plant or machinery”—has the same meaning as in Part 2 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc) (if the business is carried on otherwise than in partnership), andhas the same meaning as in Part 3 of that Schedule (if the business is carried on in partnership),
- “*consortium principal company*” means a company which is a principal company as a result of paragraph 12 of that Schedule,
- “*market value*”, in relation to plant or machinery, is to be construed in accordance with paragraph 41(8) of that Schedule,
- “*plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act,
- “*principal company*” is to be construed in accordance with paragraph 11 or (as the case may be) 12 of Schedule 10 to the Finance Act 2006, and
- “*relevant fraction*” has the same meaning as in paragraph 12 of that Schedule.
#### Election that assets not be foreign business assets
#### Meaning of “participator”, “associate”, “director” and “loan creditor”.
#### Loans to participators etc.
##### 347A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 347B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
##### 349ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Election that assets not be foreign business assets
##### 349B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 349E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 350A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 356D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 432B apportionment: supplementary provisions.
##### 357A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 357B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 357C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 360A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 432B apportionment: business transfers-in
#### Returns.
##### 367A
- (1) Sections 353 and 365 have effect as if—
- (a) purchase and resale arrangements involved the making of a loan, and
- (b) alternative finance return were interest.
- (2) Section 366 has effect accordingly.
- (3) In this section—
- “*alternative finance return*” has the meaning given in sections 564I to 564L of ITA 2007, and
- “*purchase and resale arrangements*” means arrangements to which section 564C of ITA 2007 applies.
#### Securities.
##### 374A
- (1) This section applies where, in the case of any loan, interest on the loan never has been relevant loan interest or the borrower never has been a qualifying borrower.
- (2) Without prejudice to subsection (3) below, in relation to a payment of interest—
- (a) as respects which either of the conditions mentioned in paragraphs (a) and (b) of section 374(1) is fulfilled, and
- (b) from which a deduction was made as mentioned in section 369(1),
section 369 shall have effect as if the payment of interest were a payment of relevant loan interest made by a qualifying borrower.
- (3) Nothing in subsection (2) above shall be taken as regards the borrower as entitling him to make any deduction or to retain any amount deducted and, accordingly, where any amount has been deducted, he shall be liable to make good that amount and an officer of the Board may make such assessments as may in his judgment be required for recovering that amount.
- (4) The Management Act shall apply to an assessment under subsection (3) above as if it were an assessment to income tax for the year of assessment in which the deduction was made . . . .
- (5) If the borrower fraudulently or negligently makes any false statement or representation in connection with the making of any deduction, he shall be liable to a penalty not exceeding the amount deducted.
##### 375A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 376A
- (1) The Board shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of section 376(4).
- (1A) The following are entitled to be registered—
- (a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000—
- (i) to accept deposits; or
- (ii) to effect or carry out contracts of general insurance;
- (b) a 90 per cent subsidiary of a person mentioned in—
- (i) section 376(4)(e); or
- (ii) paragraph (a) above;
- (c) any other body whose activities and objects appear to the Board to qualify it for registration.
- (2) If the Board are satisfied that an applicant for registration is entitled to be registered, they may register the applicant generally or in relation to any description of loan specified in the register, with effect from such date as may be so specified; and a body which is so registered shall become a qualifying lender in accordance with the terms of its registration.
- (3) The registration of any body may be varied by the Board—
- (a) where it is general, by providing for it to be in relation to a specified description of loan, or
- (b) where it is in relation to a specified description of loan, by removing or varying the reference to that description of loan,
and where they do so, they shall give the body written notice of the variation and of the date from which it is to have effect.
- (4) If it appears to the Board at any time that a body which is registered under this section would not be entitled to be registered if it applied for registration at that time, the Board may by written notice given to the body cancel its registration with effect from such date as may be specified in the notice.
- (5) The date specified in a notice under subsection (3) or (4) above shall not be earlier than the end of the period of 30 days beginning with the date on which the notice is served.
- (6) Any body which is aggrieved by the failure of the Board to register it under this section, or by the variation or cancellation of its registration, may appeal, by notice given to the Board before the end of the period of 30 days beginning with the date on which the body is notified of the Board’s decision. . . .
### Losses from UK property business or overseas property business
##### 379A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 379B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Modifications for change of tax basis
##### 384A
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### Losses from UK property business or overseas property business
##### 392A
- (1) Where a company incurs a UK property business loss in an accounting period, the loss shall be set off for the purposes of corporation tax against the company’s total profits for that period.
- (2) To the extent that a company’s UK property business loss cannot be set off under subsection (1), it shall, if the company continues to carry on the UK property business in the succeeding accounting period, be carried forward to that period and be treated for the purposes of this section as a UK property business loss of that period.
- (3) Where a company with investment business—
- (a) ceases to carry on a UK property business, or to be within the charge to corporation tax in respect of such a business, but
- (b) continues to be a company with investment business,
any UK property business loss that cannot be used under the preceding provisions shall be carried forward to the succeeding accounting period and be treated for the purposes of Chapter 2 of Part 16 of CTA 2009 as if it were expenses of management deductible for that period.
- (4) In this section—
- (a) a “*UK property business loss*” means a loss incurred by a company in a UK property business carried on by it; and
- (b) “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
- (5) The preceding provisions of this section apply to a UK property business only to the extent that it is carried on—
- (a) on a commercial basis, or
- (b) in the exercise of statutory functions.
- (6) For the purposes of subsection (5)(a)—
- (a) a business or part is not carried on on a commercial basis unless it is carried on with a view to making a profit, but if it is carried on so as to afford a reasonable expectation of profit it is treated as carried on with a view to making a profit; and
- (b) if there is a change in the manner in which a business or part is carried on, it is treated as having been carried on throughout an accounting period in the way in which it was being carried on by the end of the period.
- (7) In subsection (5)(b) “*statutory functions*” means functions conferred by or under any enactment (including an enactment contained in a local or private Act).
##### 392B
- (1) Where in any accounting period a company incurs a loss in an overseas property business (whether carried on by it solely or in partnership)—
- (a) the loss shall be carried forward to the succeeding accounting period and set against any profits of the business for that period,
- (b) if there are no profits of the business for that period, or if the profits for that period are exceeded by the amount of the loss, the loss or the remainder of it shall be carried forward again and set against any profits of the business for the next succeeding accounting period,
and so on.
- (2) Subsections (5) to (7) of section 392A apply in relation to relief under subsection (1) above and an overseas property business as they apply in relation to relief under section 392A(1) to (3) and a UK property business.
##### 393A
- (1) Subject to section 492(3), where in any accounting period ending on or after 1st April 1991 a company carrying on a trade incurs a loss in the trade, then, subject to subsection (3) below, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against profits (of whatever description)—
- (a) of that accounting period, and
- (b) if the company was then carrying on the trade and the claim so requires, of preceding accounting periods falling wholly or partly within the period specified in subsection (2) below;
and, subject to that subsection and to any relief for an earlier loss, the profits of any of those accounting periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.
- (2) The period referred to in paragraph (b) of subsection (1) is (subject to subsection (2A) below) the period of twelve months immediately preceding the accounting period in which the loss is incurred; but the amount of the reduction that may be made under that subsection in the profits of an accounting period falling partly before the beginning of that period shall not exceed a part of those profits proportionate to the part of the accounting period falling within that period.
- (2A) This section shall have effect in relation to any loss to which this subsection applies as if, in subsection (2) above, the words “three years” were substituted for the words “twelve months”.
- (2B) Where a company ceases to carry on a trade at any time, subsection (2A) above applies to the following—
- (a) the whole of any loss incurred in that trade by that company in an accounting period beginning twelve months or less before that time; and
- (b) the part of any loss incurred in that trade by that company in an accounting period ending, but not beginning, in that twelve months which is proportionate to the part of that accounting period falling within those twelve months.
- (2C) Where—
- (a) a loss is incurred by a company in a ring fence trade carried on by that company, and
- (b) the accounting period in which the loss is incurred is an accounting period for which an allowance under section 164 of the Capital Allowances Act (general decommissioning expenditure incurred before cessation of ring fence trade) is made to that company,
subsection (2A) above applies to so much of the amount of that loss not falling within subsection (2B) above as does not exceed the amount of that allowance.
- (2D) Section 393B makes further provision about setting off losses in cases where subsection (2C) applies.
- (2E) But subsection (2A) above does not apply by reason of a company ceasing to carry on a trade if—
- (a) on the company ceasing to carry on the trade, any of the activities of the trade begin to be carried on by a person who is not (or by persons any or all of whom are not) within the charge to corporation tax, and
- (b) the company's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to secure that subsection (2A) above applies to a loss by reason of the cessation.
- (3) Subsection (1) above shall not apply to trades carried on wholly outside the United Kingdom; and a loss incurred in a trade in any accounting period shall not be relieved under that subsection unless—
- (a) the trade is one carried on in the exercise of functions conferred by or under any enactment (including an enactment contained in a local or private Act), or
- (b) for that accounting period the trade was being carried on on a commercial basis and with a view to the realisation of gain in the trade or in any larger undertaking of which the trade formed part;
but this subsection is without prejudice to section 397.
- (4) For the purposes of subsection (3) above—
- (a) where at any time a trade is carried on so as to afford a reasonable expectation of gain, it shall be treated as being carried on at that time with a view to the realisation of gain; and
- (b) where in an accounting period there is a change in the manner in which a trade is being carried on, it shall be treated as having throughout the accounting period been carried on in the way in which it was being carried on by the end of that period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) Subject to subsection (7A) below, where a company ceases to carry on a trade, subsection (9) of section 393 shall apply in computing for the purposes of this section a loss in the trade in an accounting period ending with the cessation, or ending at any time in the twelve months immediately preceding the cessation, as it applies in computing a loss in an accounting period for the purposes of subsection (1) of that section.
- (7A) For the purposes of this section where—
- (a) subsection (7) above has effect for computing the loss for any accounting period, and
- (b) that accounting period is one beginning before the beginning of the twelve months mentioned in that subsection,
the part of that loss that is not the part falling within subsection (2B)(b) above shall be treated as reduced (without any corresponding increase in the part of the loss that does fall within subsection (2B)(b) above) by an amount equal to so much of the aggregate of the charges on income treated as expenses by virtue of subsection (7) above as is proportionate to the part of the accounting period that does not fall within those twelve months.
- (8) Relief shall not be given by virtue of subsection (1)(b) above in respect of a loss incurred in a trade so as to interfere with any relief under section 338 in respect of payments made wholly and exclusively for the purposes of that trade.
- (9) For the purposes of this section—
- (a) the amount of a loss incurred in a trade in an accounting period shall be computed in the same way as trading income from the trade in that period would have been computed;
- (b) “*trading income*” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; and
- (c) references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
- (10) A claim under subsection (1) above may only be made within the period of two years immediately following the accounting period in which the loss is incurred or within such further period as the Board may allow.
- (11) Subsection (11A) applies in any case where—
- (a) by virtue of section 165 of the Capital Allowances Act (general decommissioning expenditureafter ceasing ring fence trade) the qualifying expenditure of the company for the chargeable period related to the cessation of its ring fence trade is treated as increased by any amount, or
- (b) by virtue of section 416 of that Act (expenditure on restoration within 3 years of ceasing to trade) any expenditure is treated as qualifying expenditure incurred by the company on the last day of trading.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11A) In relation to any claim under subsection (1)—
- (a) to the extent that the claim relates to an increase falling within subsection (11)(a), this section shall have effect as if—
- (i) in subsection (10), “the relevant period” were substituted for “ the period of two years ”, and
- (ii) after subsection (10) there were inserted—
> (10ZA) In subsection (10) “*relevant period*” means the period calculated by adding two years to the post-cessation period (within the meaning of section 165 of the Capital Allowances Act).
;
- (b) to the extent that the claim relates to expenditure falling within subsection (11)(b), subsection (10) shall have effect with the substitution of “ five years ” for “two years”.
- (12) In this section “*ring fence trade*” has the same meaning as in section 162 of the Capital Allowances Act.
##### 393B
- (1) This section applies if these conditions are met—
- (a) a company makes a claim under section 393A(1) requiring that a loss incurred in a ring fence trade be set off against profits;
- (b) section 393A(2A) applies in relation to that claim (three year set off period) by virtue of—
- (i) section 393A(2B) (loss precedes cessation of trade), or
- (ii) section 393A(2C) (loss arises in year when general decommissioning expenditure incurred); and
- (c) the loss incurred in the ring fence trade that may be set off under section 393A (“L”) exceeds the profits against which L may be set off under section 393A (“P”).
- (2) The profits of the ring fence trade of an accounting period are to be relieved under subsection (3) if that period—
- (a) falls wholly or partly before the three year set off period, and
- (b) ends on or after 17 April 2002.
- (3) Subject to any relief for an earlier loss, those profits of that accounting period shall be treated as reduced by—
- (a) the amount by which L exceeds P, or
- (b) so much of that amount as cannot be relieved under this subsection against profits of the ring fence trade of a later accounting period.
- (4) Subsection (3) is subject to subsection (5) in the case of an accounting period that falls partly (but not wholly) before the three year set off period.
- (5) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls before the three year set off period.
- (6) Subsection (3) is subject to subsection (7) in the case of an accounting period that begins before 17 April 2002 and ends on or after that date.
- (7) The amount of the reduction of the profits of the ring fence trade that may be made under subsection (3) shall not exceed a part of those profits proportionate to the part of the accounting period that falls after 16 April 2002.
- (8) In this section—
- “*ring fence*” has the same meaning as in section 162 of the Capital Allowances Act;
- “*three year set off period*” means the period of three years that applies to the claim under section 393A(1) by virtue of section 393A(2A) and section 393A(2B) or (2C).
#### Transfers of life assurance business: trade losses of the transferor
##### 403ZA
- (1) For the purposes of section 403 a trading loss means a loss incurred by the surrendering company in the surrender period in carrying on a trade, computed as for the purposes of section 393A(1).
- (2) That section does not apply to a trading loss which would be excluded from section 393A(1) by—
- (a) section 393A(3) (foreign trades and certain trades not carried on with a view to gain), or
- (b) section 397 (farming and market gardening: restriction on loss relief).
- (3) Where a company owned by a consortium—
- (a) has in any relevant accounting period incurred a trading loss, and
- (b) has profits (of whatever description) of that accounting period against which that loss could be set off under section 393A(1),
the amount of the loss available to a member of the consortium on a consortium claim shall be determined on the assumption that the company has made a claim under section 393A(1) requiring the loss to be so set off.
- (4) Where the company mentioned in subsection (3) is a group/consortium company, the amount of the loss available under that subsection shall be determined before any reduction is made under section 405(1) to (3).
##### 403ZB
- (1) For the purposes of section 403 excess capital allowances means capital allowances falling to be made to the surrendering company for the surrender period to the extent that they are to be given effect under section 260 of the Capital Allowances Act (special leasing: excess allowance).
- (2) In determining the amount of the allowances falling to be made for the surrender period, no account shall be taken of any allowances carried forward from an earlier period.
- (3) The amount of the company’s income of the relevant class means its amount before deduction of—
- (a) losses of any other period, or
- (b) capital allowances.
##### 403ZC
- (1) For the purposes of section 403 a non-trading deficit on its loan relationships means a deficit of the surrendering company to which Chapter 16 of Part 5 of CTA 2009 (non-trading deficits) applies.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403ZD
- (1) References in section 403 to charges on income, UK property business losses and management expenses shall be construed as follows.
- (2) Charges on income means the aggregate of the amounts paid by the surrendering company in the surrender period by way of charges on income.
- (3) A UK property business loss means a loss incurred by the surrendering company in the surrender period in a UK property business carried on by the company.
It does not include—
- (a) an amount treated as such a loss by section 392A(2) (losses carried forward from earlier period), or
- (b) a loss which would be excluded from section 392A by subsection (5) of that section (certain businesses not carried on with a view to gain).
- (4) Management expenses means the aggregate of the amounts deductible under section 1219 of CTA 2009 (expenses of management of a company's investment business) by the surrendering company for this period.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) A non-trading loss on intangible fixed assets means a non-trading loss on intangible fixed assets, within the meaning of Part 8 of CTA 2009 (intangible fixed assets), for the surrender period.
It does not include so much of any such loss as is attributable to an amount being carried forward under section 753(3) of that Act (amounts carried forward from earlier periods).
##### 403ZE
- (1) For the purposes of section 403 the surrendering company’s gross profits of the surrender period means its profits for that period—
- (a) without any deduction in respect of such losses, allowances and other amounts as are mentioned in paragraph (a) or (b) of subsection (1) of that section, and
- (b) without any deduction falling to be made—
- (i) in respect of losses, allowances or other amounts of any other period (whether or not of a description within subsection (1) of that section), or
- (ii) by virtue of section 392A(3) above or section 1223(3) of CTA 2009 (other amounts carried forward).
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 403A
- (1) The amount which, on a claim for group relief, may be set off against the total profits of the claimant company for an accounting period (“*the claim period*”), and accordingly the amount to which any consent required in respect of that claim may relate, shall not exceed whichever is the smaller of the following amounts—
- (a) the unused part of the surrenderable amount for the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period.
- (2) For the purposes of any claim for group relief—
- (a) the unused part of the surrenderable amount for the overlapping period is the surrenderable amount for that period reduced by the amount of any prior surrenders attributable to the overlapping period; and
- (b) the unrelieved part of the claimant company’s total profits for the overlapping period is the amount of its total profits for that period reduced by the amount of any previously claimed group relief attributable to the overlapping period.
- (3) For the purposes of any claim for group relief—
- (a) the surrenderable amount for the overlapping period is so much of the surrenderable amount for the accounting period of the surrendering company to which the claim relates as is attributable, on an apportionment in accordance with section 403B, to the overlapping period;
- (b) the surrenderable amount for an accounting period of the surrendering company is the total amount for that accounting period of the losses and other amounts which (disregarding this section and section 403C) are available in that company’s case for set off by way of group relief; and
- (c) the amount of the claimant company’s total profits for the overlapping period is so much of its total profits for the claim period as is attributable, on an apportionment in accordance with section 403B, to the overlapping period.
- (4) In relation to any claim for group relief (“*the relevant claim*”) the amount of the prior surrenders attributable to the period which is the overlapping period in the case of the relevant claim is equal to the aggregate amount (if any) produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was made in respect of the whole or any part of the amount which, in relation to the relevant claim, is the surrenderable amount for the accounting period of the surrendering company to which the claim relates, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (5) In relation to any claim for group relief (“*the relevant claim*”), the amount of previously claimed group relief attributable to the period which is the overlapping period in the case of that claim is the aggregate amount produced by—
- (a) taking the amount of every claim for group relief (whether a group claim or a consortium claim) which—
- (i) has been made before the relevant claim,
- (ii) was a claim to set off an amount by way of group relief against the claimant company’s total profits for the period which, in relation to the relevant claim, is the claim period, and
- (iii) has not been withdrawn;
- (b) treating the amount of group relief which (having regard to the provisions of this section) is allowable under each such claim as an amount of relief for the period which is the overlapping period in the case of that claim;
- (c) determining how much of each amount treated in accordance with paragraph (b) above as an amount of relief for a particular period is attributable, on an apportionment in accordance with section 403B, to the period (if any) which is common to both—
- (i) that period; and
- (ii) the period which is the overlapping period in the case of the relevant claim;
and
- (d) aggregating all the amounts determined under paragraph (c) above in respect of the previously made claims.
- (6) For the purposes of this section the amount of group relief allowable on any claim (“*the finalised claim*”) shall fall to be determined as at the time when that claim ceases to be capable of being withdrawn as if—
- (a) every claim that became incapable of being withdrawn before that time were a claim made before the finalised claim; and
- (b) every claim that remains capable of being withdrawn at that time were a claim made after the finalised claim.
- (7) Subject to subsection (6) above and without prejudice to any power to withdraw and resubmit claims, where (but for this subsection) more than one claim for group relief would be taken for the purposes of subsections (4) and (5) above to have been made at the same time, those claims shall be deemed, instead, to have been made—
- (a) in such order as the company or companies making them may, by notice to any officer of the Board, elect or, as the case may be, jointly elect; and
- (b) if there is no such election, in such order as an officer of the Board may direct.
- (8) In this section “*the overlapping period*”, in relation to a claim for group relief, means (subject to subsection (9) below and section 406(3) and (7)) the period which is common to both—
- (a) the claim period; and
- (b) the accounting period of the surrendering company to which the claim relates.
- (9) For the purposes of this section any time in the period which, in relation to any claim for group relief, is common to both the accounting periods mentioned in subsection (8) above but which is a time when the qualifying conditions were not satisfied—
- (a) shall be treated as not comprised in the period which is the overlapping period in the case of that claim; and
- (b) shall be treated instead, in relation to each of those accounting periods, as if it constituted a part of that accounting period which was not common to both periods.
- (10) For the purposes of subsection (9) above the qualifying conditions are satisfied in relation to any claim for group relief at the following times, that is to say—
- (a) if (or so far as) the claim is a group claim for the surrender of any loss or other amount other than a qualifying overseas loss, whenever the conditions in paragraphs (a) to (c) of section 402(2) are satisfied;
- (ab) if (or so far as) the claim is a group claim for the surrender of a qualifying overseas loss, whenever the condition specified in section 402(2A) is satisfied; and
- (b) if the claim is a consortium claim, whenever the conditions specified in section 402(3) for the making of that claim and the condition specified in section 402(3B) are satisfied in the case of the claimant company and the surrendering company.
- (11) For the purposes of subsection (10) above a “*qualifying overseas loss*” means a loss or other amount that is available for surrender by way of group relief in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403B
- (1) Subject to subsection (2) below, where an apportionment falls to be made under section 403A for the purpose of determining how much of an amount for any period (“*the first period*”) is attributable to any other period (“*the second period*”) which comprises the whole or a part of the first period—
- (a) the whole of that amount shall be attributed to the second period if the first and second periods begin and end at the same times; and
- (b) in any other case, the apportionment shall be made on a time basis according to how much of the first period coincides with the second period.
- (2) Where the circumstances of a particular case are such that the making on the time basis mentioned in subsection (1)(b) above of some or all of the apportionments to be made in that case would work in a manner that would be unjust or unreasonable in relation to any person, those apportionments shall be made instead (to the extent only that is necessary in order to avoid injustice and unreasonableness) in such other manner as may be just and reasonable.
##### 403C
- (1) In the case of a consortium claim the amount that may be set off against the total profits of the claimant company is limited by this section.
- (2) Where the claimant company is a member of the consortium, the amount that may be set off against the total profits of that company for the overlapping period is limited to the relevant fraction of the surrenderable amount.
That fraction is whichever is the lowest in that period of the following percentages—
- (a) the percentage of the ordinary share capital of the surrendering company that is beneficially owned by the claimant company;
- (b) the percentage to which the claimant company is beneficially entitled of any profits available for distribution to equity holders of the surrendering company; and
- (c) the percentage to which the claimant company would be beneficially entitled of any assets of the surrendering company available for distribution to its equity holders on a winding-up.
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
- (3) Where the surrendering company is a member of the consortium, the amount that may be set off against the total profits of the claimant company for the overlapping period is limited to the relevant fraction of the claimant company’s total profits for the overlapping period.
That fraction is whichever is the lowest in that period of the following percentages—
- (a) the percentage of the ordinary share capital of the claimant company that is beneficially owned by the surrendering company;
- (b) the percentage to which the surrendering company is beneficially entitled of any profits available for distribution to equity holders of the claimant company; and
- (c) the percentage to which the surrendering company would be beneficially entitled of any assets of the claimant company available for distribution to its equity holders on a winding-up.
If any of those percentages have fluctuated in that period, the average percentage over the period shall be taken.
- (4) In any case where the claimant or surrendering company is a subsidiary of a holding company which is owned by a consortium, for the references in subsection (2) or (3) above to the claimant or surrendering company there shall be substituted references to the holding company.
- (5) Expressions used in this section and in section 403A have the same meanings in this section as in that section.
- (6) Schedule 18 has effect for supplementing this section.
##### 403D
- (1) In determining for the purposes of this Chapter the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by a non-resident company carrying on a trade in the United Kingdom through a permanent establishment, no loss or other amount shall be treated as so available (but see also subsection (11) below) except in so far as—
- (a) it is attributable to activities of that company the income and gains from which for that period are, or (were there any) would be, brought into account in computing the company’s chargeable profits for that period for corporation tax purposes;
- (b) it is not attributable to activities of the company which are made exempt from corporation tax for that period by any double taxation arrangements; and
- (c) no part of—
- (i) the loss or other amount, or
- (ii) any amount brought into account in computing it,
corresponds to, or is represented in, any amount which, for the purposes of any foreign tax, is (in any period) deductible from or otherwise allowable against non-UK profits of the company or any other person.
- (2) In determining for the purposes of sections 403A and 403C the total profits for an accounting period of a non-resident company, there shall be disregarded—
- (a) amounts not falling to be comprised for corporation tax purposes in the chargeable profits of the company for that accounting period, and
- (b) so far as not falling within paragraph (a) above, any amounts arising from activities which are made exempt from corporation tax for that period by any double taxation arrangements.
- (3) In this section “*non-UK profits*”, in relation to any person, means amounts which—
- (a) are taken for the purposes of any foreign tax to be the amount of the profits, income or gains on which (after allowing for deductions) that person is charged with that tax, and
- (b) are not amounts corresponding to, and are not represented in, the total profits (of that or any other person) for any accounting period,
or amounts taken into account in computing such amounts.
- (4) Subsection (2) above applies for the purposes of subsection (3)(b) above as it applies for the purposes of sections 403A and 403C.
- (5) For the purposes of this section an amount shall not be taken to be an amount which for the purposes of any foreign tax is deductible from or otherwise allowable against any non-UK profits of any person by reason only that it is—
- (a) an amount of profits brought into account for the purpose of being excluded from the profits that are non-UK profits of that person by reference to that foreign tax; or
- (b) an amount brought into account in computing the amount of any profits falling to be so excluded.
- (6) So much of the law of any territory outside the United Kingdom as for the purposes of any foreign tax makes the deductibility of any amount dependent on whether or not it is deductible for tax purposes in the United Kingdom shall be disregarded for the purposes of this section.
- (7) For the purposes of this section activities of a company are made exempt from corporation tax for any period by double taxation arrangements if the effect of any such arrangements is that the income and gains (if any) arising for that period from those activities is to be disregarded in computing the company’s chargeable profits.
- (8) In this section “*double taxation arrangements*” means any arrangements having effect by virtue of section 788.
- (9) In this section “*foreign tax*” means any tax chargeable under the law of any territory outside the United Kingdom which—
- (a) is charged on income and corresponds to United Kingdom income tax; or
- (b) is charged on income or chargeable gains or both and corresponds to United Kingdom corporation tax;
but for the purposes of this section a tax shall not be treated as failing to correspond to income tax or corporation tax by reason only that it is chargeable under the law of a province, state or other part of a country, or is levied by or on behalf of a municipality or other local body.
- (10) In determining for the purposes of this section whether any activities are made exempt from corporation tax for any period by any double taxation arrangements any requirement that a claim is made before effect is given to any provision of the arrangements shall be disregarded.
- (11) Any loss or other amount that is available for surrender by way of group relief in accordance with this section is in addition to any loss or other amount that is so available in accordance with sections 403F and 403G and Schedule 18A (relief in respect of overseas losses of non-resident companies).
##### 403E
- (1) In determining, for the purposes of this Chapter, the amounts for any accounting period of the losses and other amounts available for surrender by way of group relief by any company resident in the United Kingdom (“*the resident company*”), a loss or other amount shall be treated as not so available in so far as it—
- (a) is attributable to an overseas permanent establishment of that company, and
- (b) is a loss or other amount falling within subsection (2) below.
- (2) Subject to subsection (3) below, a loss or other amount attributable to an overseas permanent establishment falls within this subsection if the whole or any part of it is, or represents, an amount which, for the purposes of foreign tax under the law of the territory where that permanent establishment is situated, is (in any period) deductible from or otherwise allowable against non-UK profits of a person other than the resident company.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The reference in subsections (1) and (2) above to a loss or other amount attributable to an overseas permanent establishment of a company is a reference to the loss or other amount (if any) that would be surrenderable by that company by way of group relief if the amount surrenderable by that company were computed—
- (a) by reference only to that permanent establishment, and
- (b) by the application in relation to that permanent establishment of principles corresponding in all material respects to those applicable for the purposes of corporation tax to the computation of the equivalent losses or other amounts in the case of the UK permanent establishment of a non-resident company.
- (5) In subsection (4)(b) above the reference to the UK permanent establishment of a non-resident company is a reference to any permanent establishment through which a company which is not resident in the United Kingdom carries on a trade in the United Kingdom.
- (6) References in this section to an overseas permanent establishment of a company are references to any permanent establishment through which that company carries on a trade in a territory outside the United Kingdom.
- (7) In this section “*foreign tax*” and “*non-UK profits*” have the same meaning as in section 403D.
- (8) Where the deductibility of any amount for the purposes of any foreign tax is dependent on whether or not that amount, or a corresponding amount, is deductible for tax purposes in the United Kingdom, this section shall have effect as if that amount were deductible for the purposes of that foreign tax if, and only if, the resident company is treated for the purposes of that tax as resident in the territory where that tax is charged.
##### 403F
- (1) This section has effect for determining for the purposes of this Chapter the extent to which a loss or other amount is available for surrender by way of group relief by a non-resident company—
- (a) which is resident in an EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
in a case where a group claim may be made as a result of the condition in section 402(2A) being satisfied.
- (2) A loss or other amount is not available for surrender by way of group relief by the non-resident company except in so far as, in relation to the EEA territory, the amount meets—
- (a) the equivalence condition,
- (b) the EEA tax loss condition,
- (c) the qualifying loss condition, and
- (d) the precedence condition.
- (3) Part 1 of Schedule 18A determines, in the case of any amount and any EEA territory, the extent to which those conditions are met.
- (4) In so far as a loss or other amount meets those conditions, Part 2 of Schedule 18A applies—
- (a) for calculating the amount of the loss or other amount (if any) that is available for surrender by way of group relief, and
- (b) otherwise for making provision in relation to the application of this Chapter to the non-resident company.
- (5) This section is subject to section 403G (unallowable overseas losses of non-resident companies).
##### 403G
- (1) This section applies in the case of a loss or other amount arising to a non-resident company—
- (a) which is resident in any EEA territory, or
- (b) which is not so resident but which carries on a trade in an EEA territory through a permanent establishment,
where the amount is not attributable for corporation tax purposes to any UK permanent establishment of the non-resident company.
- (2) The amount is not available for surrender by way of group relief by the non-resident company in so far as conditions A and B are met.
- (3) Condition A is that—
- (a) the amount would not qualify for group relief but for any relevant arrangements, or
- (b) the amount would not have arisen to the non-resident company but for any relevant arrangements.
- (4) Condition B is that the main purpose, or one of the main purposes, of the relevant arrangements was to secure that the amount would qualify for group relief.
- (5) In this section references to relevant arrangements, in relation to any amount, are to—
- (a) arrangements made on or after 20th February 2006, or
- (b) arrangements made before that date where the amount would (but for this section) first qualify for group relief on or after that date or (as the case may be) the amount arises on or after that date.
- (a) a company makes a loan to another company with which it has a special relationship, and
- (b) it is not part of the first company’s business to make loans generally,
the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing subsection (2) above.
- (5) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the debt on which the interest is paid in determining the excess interest (and accordingly expressly limits the factors to be taken into account).
##### 808B
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to royalties (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the royalties paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the agreement under which the royalties are paid would have been made at all in the absence of the relationship,
- (b) the rate or amounts of royalties and other terms which would have been agreed in the absence of the relationship, and
- (c) where subsection (3) below applies, the factors specified in subsection (4) below.
- (3) This subsection applies if the asset in respect of which the royalties are paid, or any asset which that asset represents or from which it is derived, has previously been in the beneficial ownership of—
- (a) the person who is liable to pay the royalties,
- (b) a person who is, or has at any time been, an associate of the person who is liable to pay the royalties,
- (c) a person who has at any time carried on a business which, at the time when the liability to pay the royalties arises, is being carried on in whole or in part by the person liable to pay those royalties, or
- (d) a person who is, or has at any time been, an associate of a person who has at any time carried on such a business as is mentioned in paragraph (c) above.
- (4) The factors mentioned in subsection (2)(c) above are—
- (a) the amounts which were paid under the transaction, or under each of the transactions in the series of transactions, as a result of which the asset has come to be an asset of the beneficial owner for the time being,
- (b) the amounts which would have been so paid in the absence of a special relationship, and
- (c) the question whether the transaction or series of transactions would have taken place in the absence of such a relationship.
- (5) The special relationship provision shall be construed as requiring the taxpayer to show—
- (a) the absence of any special relationship, or
- (b) the rate or amount of royalties that would have been payable in the absence of the relationship,
as the case may be.
- (6) The requirement on the taxpayer to show in accordance with subsection (5)(a) above the absence of any special relationship includes a requirement—
- (a) to show that no person of any of the descriptions in paragraphs (a) to (d) of subsection (3) above has previously been the beneficial owner of the asset in respect of which the royalties are paid, or of any asset which that asset represents or from which it is derived, or
- (b) to show the matters specified in subsection (7) below,
as the case may be.
- (7) Those matters are—
- (a) that the transaction or series of transactions mentioned in subsection (4)(a) above would have taken place in the absence of a special relationship, and
- (b) the amounts which would have been paid under the transaction, or under each of the transactions in the series of transactions, in the absence of such a relationship.
- (8) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the use, right or information for which royalties are paid in determining the excess royalties (and accordingly expressly limits the factors to be taken into account).
- (9) For the purposes of this section one person (“*person A*”) is an associate of another person (“*person B*”) at a given time if—
- (a) person A was, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person B at that time, or
- (b) the same person was or same persons were, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person A and person B at that time.
#### Recovery of tax credits incorrectly paid.
#### Mutual agreement procedure and presentation of cases under arrangements.
##### 815A
- (1) This section applies where section 269C of the 1970 Act or section 140C or 140F of the Taxation of Chargeable Gains Act 1992 applies; and references in this section to company A, the transfer and the trade shall be construed accordingly.
- (2) Where gains accruing to company A on the transfer would have been chargeable to tax under the law of the relevant member State but for the Mergers Directive, this Part, including any arrangements having effect by virtue of section 788, shall apply as if the amount of tax, calculated on the required basis, which would have been payable under that law in respect of the gains so accruing but for that Directive, were tax payable under that law.
- (5) For the purposes of this section, the required basis is that—
- (a) so far as permitted under the law of the relevant member State, any losses arising on the transfer are set against any gains so arising, and
- (b) any relief available to company A under that law has been duly claimed.
- (6) In this section—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),
- “*UK permanent establishment*”, in relation to the non-resident company, means any permanent establishment through which it carries on a trade in the United Kingdom.
##### 411ZA
- (1) This section applies if the surrendering company is prevented from obtaining a deduction in respect of an amount by section 520 of CTA 2009 (provision not at arm's length: non-deductibility of relevant return).
- (2) The amount may not be surrendered by way of group relief.
##### 411A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Retained assets
#### Further interpretation of sections 135 to 139.
#### Life assurance trade profits advantage: transferee
#### Equalisation reserves for general business.
#### Taxation in respect of other business: incorporated friendly societies etc.
##### 431ZA
- (1) An insurance company may, in its company tax return for the first accounting period of the company beginning on or after 1 January 2008 in which any of the assets of the company's long-term insurance fund would (apart from this section) be foreign business assets, elect that none of the assets of the company's long-term insurance fund are to be regarded for the purposes of this Act as being foreign business assets.
- (2) The election has effect for that accounting period and all subsequent accounting periods of the company.
- (3) An election under subsection (1) is irrevocable.
##### 431A
- (1) The Treasury may by order amend any of the life assurance provisions of the Corporation Tax Acts where it is expedient to do so in consequence of the exercise of any power under the Financial Services and Markets Act 2000, in so far as that Act relates to insurance companies.
- (2) Where any exercise of a power under that Act has effect for a period ending on or before, or beginning before and ending after, the day on which an order containing an amendment in consequence of that exercise is made under subsection (1) above, the power conferred by that subsection includes power to provide for the amendment to have effect in relation to that period.
- (2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
- (2B) An order under subsection (2A) above may in particular contain provision—
- (a) making amendments of any provision of the Corporation Tax Acts, or
- (b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
- (2C) An order under subsection (2A) above—
- (a) may make provision having effect in relation to accounting periods current when it is made, and
- (b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument.
- (3) The Treasury may by order amend any of the following provisions—
- (a) sections 432ZA, 432A, 432B to 432G and 755A . . . ;
- (b) sections 83A, 85, 88 and 89 of the Finance Act 1989;
- (c) section 210A of the Taxation of Chargeable Gains Act 1992.
- (4) An order under subsection (3) above may only be made so as to have effect in relation to periods of account—
- (a) beginning on or after 1st January 2005, and
- (b) ending before 1st October 2006.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Any power conferred by this section to make an order includes power to make—
- (a) different provision for different cases or different purposes, and
- (b) incidental, supplemental, consequential or transitional provision and savings.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 431AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432A
- (1) Subject to section 432B, this section has effect for determining for the purposes of any provision of the Corporation Tax Acts in relation to any period for which an insurance company carries on business what parts of—
- (a) income or losses arising from the assets of the company’s long-term insurance fund, or
- (b) gains or losses accruing on the disposal of such assets in accordance with the provisions of the 1992 Act,
are referable to any category of business.
- (1ZA) In subsection (1)(a) above “*income*” means—
- (a) income chargeable under Chapter 3 of Part 4 of CTA 2009 (profits of a property business) in respect of any separate UK property businesses treated as carried on by the company under section 432AA,
- (b) income chargeable under Chapter 3 of Part 4 of CTA 2009 in respect of distributions treated by section 121(1)(a) of the Finance Act 2006 as profits of a UK property business carried on by the company,
- (c) income chargeable under Chapter 3 of Part 4 of CTA 2009 in respect of any overseas property business treated as carried on by the company under section 432AA,
- (d) income chargeable under Chapter 2 of Part 10 of CTA 2009 (dividends of non-UK resident companies) or Chapter 6 of that Part (sale of foreign dividend coupons),
- (da) income chargeable under Chapter 7 of Part 10 of CTA 2009 (annual payments not otherwise charged) or Chapter 8 of that Part (income not otherwise charged) which arises from a source outside the United Kingdom,
- (e) distributions received by the company from companies resident in the United Kingdom,
- (f) credits in respect of any creditor relationships (within the meaning of Part 5 of CTA 2009) of the company,
- (g) credits in respect of any derivative contracts (within the meaning of Part 7 of CTA 2009) of the company,
- (h) any income of the company chargeable under Chapter 5 of Part 10 of CTA 2009 (distributions from unauthorised unit trusts) or Chapter 7 of that Part (annual payments not otherwise charged),
- (i) any credits brought into account by the company under Chapter 2 of Part 8 of CTA 2009 (intangible fixed assets), and
- (j) any income of the company chargeable under any provision to which section 834A (miscellaneous charges) applies, other than profits of the company chargeable under section 436A (gross roll-up business).
- (1ZB) In subsection (1)(a) above “*losses*” means—
- (a) losses in respect of any separate UK property businesses treated as carried on by the company under section 432AA,
- (b) losses in respect of any overseas property businesses treated as carried on by the company under that section,
- (c) debits in respect of any creditor relationships (within the meaning of Part 5 of CTA 2009) of the company,
- (d) debits in respect of any derivative contracts (within the meaning of Part 7 of CTA 2009) of the company,
- (e) any debits brought into account by the company under Chapter 3 of Part 8 of CTA 2009 (intangible fixed assets), and
- (f) any losses of the company computed in the same way as profits chargeable under any provision to which section 834A applies, other than any losses of gross roll-up business.
- (1ZC) For determining as mentioned in subsection (1) above what parts of income or gains arising from the assets of the company's long-term insurance fund are referable to PHI business (to the extent that it would not be the case by virtue of subsections (1ZA) and (1ZB))—
- (a) “income” also includes profits shown in the technical account, and
- (b) “losses” also includes losses so shown.
- (1A) If the company carries on only one category of business in the period—
- (a) all of the income and losses referred to in paragraph (a) of subsection (1) above, and
- (b) all of the gains and losses referred to in paragraph (b) of that subsection,
are referable to that category of business; but if the company carries on more than one category of business in the period, the following provisions shall apply.
- (2) The categories of business referred to in subsections (1) and (1A) above are—
- (a) basic life assurance and general annuity business,
- (b) gross roll-up business, and
- (c) PHI business.
- (3) Income or losses arising from, and gains or losses accruing on the disposal of, assets linked to any category of business is referable to that category of business.
- (3A) Amounts falling within—
- (a) section 442A,
- (b) section 85(2C) of the Finance Act 1989, or
- (c) section 85A of that Act,
are directly referable to basic life assurance and general annuity business.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) Income or losses arising from, and gains or losses accruing on the disposal of, foreign business assets is referable to gross roll-up business.
- (5) There is referable to any category of business . . . the relevant fraction of any income and losses referred to in paragraph (a) of subsection (1) above, and any gains and losses referred to in paragraph (b) of that subsection, not directly referable to any category of business.
- (6) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to basic life assurance and general annuity business, is—
$$AA+B+C$where—A is the aggregate of—(a) the mean of the opening and closing liabilities of the basic life assurance and general annuity business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business,(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and(c) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts;B is the aggregate of—(a) the mean of the opening and closing liabilities of the gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts; andC is the aggregate of—(a) the mean of the opening and closing liabilities of the PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category of business, and(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts.$
- (6A) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to gross roll-up business, is—
$$BA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6B) For the purposes of subsection (5) above “*the relevant fraction*”, in relation to PHI business, is—
$$CA+B+C$where A, B and C have the same meaning as in subsection (6) above.$
- (6C) But if the denominator found in accordance with subsection (6), (6A) or (6B) above is nil, the relevant fraction for the purposes of subsection (5) above in relation to the category of business in question is such fraction as is just and reasonable.
- (7) For the purposes of subsections (5), (6) , (6A) and (6B) above—
- (a) income and losses referred to in paragraph (a) of subsection (1) above, and gains and losses referred to in paragraph (b) of that subsection, are directly referable to a category of business if referable to that category by virtue of subsection (3) or (4A) above, . . . and
- (b) assets are directly referable to a category of business if income and losses arising from the assets, and gains and losses accruing on the disposal of the assets, are so referable by virtue of subsection (3) or (4A) above,. . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In subsection (6) above—
- (a) “*appropriate part*”, in relation to the free assets amount, means—
- (i) where none (or none but an insignificant proportion) of the liabilities of the long-term business are with-profits liabilities, the part of that amount which bears to the whole the proportion A/B where—
A is the amount of the liabilities of the category of business in question (but taking that amount to be nil if it would otherwise be below nil);
B is the whole amount of the liabilities of the long-term business; and
- (ii) in any other case the part of the free assets amount which bears to the whole the proportion C/D where—
C is the amount of the with-profits liabilities of the category of business in question;
D is the whole amount of the with-profits liabilities of the long-term business; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This is subject to subsection (8ZA) below.
- (8ZA) If for the purposes of subsection (8)(a) above either B or D is nil then, in paragraph (c) of the definition of A and paragraph (b) of the definitions of B and C in subsection (6) above, “*appropriate part*”, in relation to the free assets amount, means the part of that amount which bears to the whole such proportion as is just and reasonable.
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432B
- (1) This section and sections 432C to 432G have effect where it is necessary in accordance with section 83 of the Finance Act 1989 to determine what parts of any items brought into account, within the meaning of that section, are referable to life assurance business or gross roll-up business.
- (2) Where for that purpose reference falls to be made to more than one account recognised for the purposes of that section, the provisions of sections 432C to 432G apply separately in relation to each account.
- (3) Section 432C applies where the business with which an account is concerned (“*the relevant business*”) relates exclusively to policies or contracts under which the policy holders or annuitants are not eligible to participate in surplus; and sections 432E and 432F apply where the relevant business relates wholly or partly to other policies or contracts (and section 432G applies in either case).
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8G) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432C
- (1) This section specifies the extent to which the net amount is referable to life assurance business or to gross roll-up business.
- (2) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (3) To the extent that the net amount is attributable to—
- (a) assets linked to life assurance business, or
- (b) foreign business assets,
it is referable to life assurance business.
- (4) There is also referable to life assurance business the appropriate fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (5) For the purposes of subsection (4) above “the appropriate fraction” is—
$$AA+B$where—A is the mean of the opening and closing liabilities of the relevant business so far as referable to life assurance business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of assets linked to the relevant business so far as so referable and foreign business assets; andB is the mean of the opening and closing liabilities of the relevant business so far as referable to PHI business, reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to PHI business.$
- (6) But if the denominator found in accordance with subsection (5) above is nil, the appropriate fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
- (7) To the extent that the net amount is attributable to—
- (a) assets linked to gross roll-up business, or
- (b) foreign business assets,
it is referable to gross roll-up business.
- (8) There is also referable to gross roll-up business the relevant fraction of so much of the net amount as is not attributable to linked assets or foreign business assets.
- (9) For the purposes of subsection (8) above “the relevant fraction” is—
$$CC+D$where—C is the mean of the opening and closing liabilities of the relevant business so far as referable to gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of any assets linked to gross roll-up business and foreign business assets; andD is the mean of the opening and closing liabilities of the relevant business so far as referable to basic life assurance and general annuity business or PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to either of those categories of business.$
- (10) But if the denominator found in accordance with subsection (9) above is nil, the relevant fraction for the purposes of subsection (8) above is such fraction as is just and reasonable.
- (11) For the purposes of this section, so much of the net amount—
- (a) as is brought into account as other income in an internal linked fund of the company, and
- (b) as is not attributable to assets of that fund,
is to be treated as linked to a category of business to the same extent as income attributable to an asset of the fund would, by virtue of section 432ZA, be referable to that category of business.
##### 432D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432E
- (1) The part of the net amount which is referable to life assurance business or to gross roll-up business is—
- (a) the amount determined in accordance with subsections (2) and (2A) below, or
- (b) if greater, the amount determined in accordance with subsection (3) below.
- (1A) In this section “*the net amount*” means the aggregate of the amounts brought into account—
- (a) as investment income,
- (b) as an increase in the value of assets, or
- (c) as other income,
less the aggregate of the amounts brought into account as a decrease in the value of assets.
- (2) For the purposes of subsection (1) above there shall be determined the amount which is such as to secure—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . that
$$CS-CAS=(S-AS)×CASAS$where—S is the surplus of the relevant business;AS is so much of that surplus as is allocated to persons entitled to the benefits provided for by the policies or contracts to which the relevant business relates;CAS is so much of the surplus so allocated as is attributable to policies or contracts of life assurance business or of gross roll-up business; andCS is so much of the surplus of the relevant business as would remain if the relevant business were confined to life assurance business or to gross roll-up business.$
- (2A) In a case where an amount or amounts are taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of subsection (2B) of that section or by virtue of section . . . 444AB, . . . 444AEA,444AECA, 444AF(2) or 444AK(2) of this Act, the amount determined under subsection (2) above is increased by—
$$CASAS×RP$where—CAS and AS have the same meanings as in subsection (2) above; andRP is the amount or the aggregate of the amounts taken into account under subsection (2) of section 83 of the Finance Act 1989 by virtue of any of the following provisions—subsection (2B) of that section;section 444AB . . . of this Act;section 444AEA or 444AECA of this Act;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .subsection (2) of section 444AF of this Act (and see subsections (5) and (6) of that section);subsection (2) of section 444AK of this Act (but only for the purposes mentioned in subsection (3) of that section).$
- (3) For the purposes of subsection (1) above there shall also be determined the aggregate of—
- (a) the applicable percentage of what is left of the mean of the opening and closing liabilities of the relevant business so far as referable to the category of business concerned (but taking that mean to be nil if it would otherwise be below nil) after deducting from it the mean of the opening and closing values of any assets of the relevant business linked to that category of business . . . , and
- (b) the part of the net amount . . . that is attributable to assets linked to that category of business . . . .
- (4) Subject to subsection (4A) below, for the purposes of subsection (3) above “*the applicable percentage*”, in any case, is—
$$AB×100$where—A is so much of the net amount as is brought into account in respect of the relevant business less such part of it as is attributable to linked assets . . . ; andB is the mean of the opening and closing liabilities of the relevant business reduced by the mean of the opening and closing values of any assets of the relevant business which are linked assets . . . .$
- (4A) If the mean of the opening and closing liabilities of the relevant business reduced by the opening and closing values of any assets of the relevant business which are linked assets . . . is nil then, for the purposes of subsection (3) above, “*the applicable percentage*” is such percentage as is just and reasonable.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of other business
#### Conditions for tax exempt business.
##### 434A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the life assurance trade profits provisions—
- (a) the loss resulting from the computation shall be reduced (but not below nil) by . . . —
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) any relevant non-trading deficit for that period on the company’s debtor relationships; and
- (iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) if the whole or any part of that loss as so reduced is set off—
- (i) under section 393A, or
- (ii) under section 403(1),
any loss for that period under section 436A shall be reduced (but not below nil) by the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above.
- (2A) The reference in subsection (2)(a)(ii) above to a relevant non-trading deficit for any period on a company’s debtor relationships is a reference to the non-trading deficit on the company’s loan relationships . . . for the company’s basic life assurance and general annuity business if credits and debits given in respect of the company’s creditor relationships (within the meaning of Part 5 of CTA 2009) were disregarded.
- (3) In the case of a company carrying on life assurance business, no relief shall be allowable —
- (a) under Chapter II (loss relief) or Chapter IV (group relief) of Part X,
- (aa) (where the company's life assurance business is not mutual business) in respect of any amount which is a charge on income for the purposes of corporation tax, or
- (b) in respect of any amount representing a non-trading deficit on the company’s loan relationships that has been computed otherwise than by reference to debits and credits referable to that business,
against the policy holders’ share of the relevant profits for any accounting period.
- For the purposes of this subsection “*the policy holders’ share of the relevant profits*” has the same meaning as in section 89 of the Finance Act 1989.
- (4) For the purposes of section 403, where the surrendering company is an insurance company which is charged to tax under the I minus E basis in respect of its life assurance business for the surrender period, the company's gross profits of that period do not include its relevant profits (within the meaning of section 88 of the Finance Act 1989) for that period; and expressions used in this subsection and section 403 have the same meaning here as there.
#### Old societies.
##### 438A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Funds of funds: distributions.
##### 440A
- (1) Subsection (2) below applies where the assets of an insurance company include securities of a class all of which would apart from this section be regarded for the purposes of corporation tax on chargeable gains as one holding.
- (2) Where this subsection applies—
- (a) so many of the securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of—
- (i) basic life assurance and general annuity business, or
- (ii) gross roll-up business,
shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) so many of the securities as are included in the company’s long-term insurance fund but do not fall within paragraph (a) shall be treated for those purposes as a separate holding which is an asset of that fund (but not of the description mentioned in that paragraph), and
- (e) any remaining securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.
- (3) Subsection (2) above also applies where the assets of an insurance company include securities of a class and apart from this section some of them would be regarded as a 1982 holding, and the rest as a section 104 holding, for the purposes of corporation tax on chargeable gains.
- (4) In a case within subsection (3) above—
- (a) the reference in any paragraph of subsection (2) above to a separate holding shall be construed, where necessary, as a reference to a separate 1982 holding and a separate section 104 holding, and
- (b) the questions whether such a construction is necessary in the case of any paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings shall be determined in accordance with paragraph 12 of Schedule 6 to the Finance Act 1990 and the identification rules applying on any subsequent acquisitions and disposals.
- (5) Section 105 of the 1992 Act shall have effect where subsection (2) above applies as if securities regarded as included in different holdings by virtue of that subsection were securities of different kinds.
- (6) In this section—
- “*1982 holding*” has the same meaning as in section 109 of the 1992 Act;
- “*section 104 holding*” has the same meaning as in section 104(3) of that Act; and
- “*securities*” means shares, or securities of a company, and any other assets where they are of a nature to be dealt in without identifying the particular assets disposed or acquired.
- (7) In a case where the profits of a company’s life assurance business are charged to tax under section 35 of CTA 2009 (charge on trade profits) this section has effect with the modification specified in section 440B(4).
##### 441A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444A
- (1) . . . This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).
- (2) Any expenses payable which (making the assumptions in subsection (3B) below) would have fallen to be brought into account by the transferor in determining the deduction for expenses payable to be allowed under section 76 in computing profits for an accounting period following the period which ends with the day on which the transfer takes place shall, instead, be brought into account under and in accordance with that section by the transferee as expenses payable by him (and giving effect in the case of acquisition expenses, to section 86(6) to (9) of the Finance Act 1989).
- (3) Any loss which (making the assumptions in subsection (3B) below)—
- (a) would have been available under section 436A(4) to be set off against profits of the transferor for the accounting period following that which ends with the day on which transfer takes place, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall, instead, be treated as a loss of the transferee (and available to be set off against profits of gross roll-up business)if the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to the transfer).
- (3ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3A) Any subsection (2) excess (within the meaning of section 432F(2)) which (making the assumptions in subsection (3B) below) would have been available under section 432F(3) or (4) to reduce a subsection (3) figure (within the meaning of section 432F(1)) of the transferor in an accounting period following that which ends with the day on which transfer takes place—
- (a) shall, instead, be treated as a subsection (2) excess of the transferee, and
- (b) shall be taken into account in the first accounting period of the transferee ending after the date of the transfer (to reduce the subsection (3) figure or, as the case may be, to produce or increase a subsection (2) excess for that period),
in relation to the revenue account of the transferee dealing with or including the business transferred.
- (3B) The assumptions referred to in subsections (2), (3) and (3A) above are—
- (a) that the transferor had continued to carry on the business transferred after the transfer, and
- (b) where there is no accounting period of the transferor ending with the transfer date, that there was such an accounting period.
- (4) Where acquisition expenses are treated as expenses payable by the transferee by virtue of subsection (2) above, the amount deductible for the first accounting period of the transferee ending after the transfer takes place shall be calculated as if that accounting period began with the day after the transfer.
- (5) Where the transfer is of part only of the transferor’s long-term business, subsection (2), (3) or (3A) above shall apply only to such part of any amount to which it would otherwise apply as is appropriate.
- (6) Any question arising as to the operation of subsection (5) above shall be determined in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Classes of life assurance business
##### 431B
- (1) In this Chapter “*pension business*” means so much of a company’s life assurance business as is referable to contracts entered into for the purposes of a registered pension scheme or is the reinsurance of such business.
- (2) Where a pension scheme ceases to be a registered pension scheme by virtue of the withdrawal of registration of the pension scheme under section 157 of the Finance Act 2004, any of the company’s life assurance business that was pension business when the pension scheme was a registered pension scheme is to be treated as ceasing to be pension business at the beginning of the period of account of the company in which the pension scheme so ceases to be a registered pension scheme.
- (3) Where—
- (a) immediately before 6th April 2006 an annuity contract falls within any of the descriptions of contracts specified in subsection (2) of this section as it had effect immediately before that date, but
- (b) on or after that date the contract does not fall to be regarded for the purposes of this section as having been entered into for the purposes of a registered pension scheme,
the contract is to be treated for the purposes of this section as having been entered into for such purposes.
##### 431BA
- (1) In this Chapter “*child trust fund business*” means so much of a company's life assurance business as is referable to child trust fund policies (but not including the reinsurance of such business).
- (2) In this section “*child trust fund policy*” means a policy of life insurance which is an investment under a child trust fund (within the meaning of the Child Trust Funds Act 2004).
##### 431BB
- (1) In this Chapter “*individual savings account business*” means so much of a company's life assurance business as is referable to individual savings account policies (but not including the reinsurance of such business).
- (2) In this section “*individual savings account policy*” means a policy of life insurance which is an investment of a kind specified in regulations made by virtue of section 695(1) of ITTOIA 2005.
##### 431C
- (1) In this Chapter “*life reinsurance business*” means reinsurance of life assurance business other than pension business or business of any description excluded from this section by regulations made by the Board.
- (2) Regulations under subsection (1) above may describe the excluded business by reference to any circumstances appearing to the Board to be relevant.
##### 431D
- (1) In this Chapter “*overseas life assurance business*” means so much of a company's relevant life assurance business as is with a policy holder or annuitant not residing in the United Kingdom (but not including the reinsurance of such business).
- (1A) In subsection (1) above “*relevant life assurance business*” means life assurance business other than—
- (a) pension business
- (b) individual savings account business,
- (c) child trust fund business, and
- (d) business of any description prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.
- (2) Regulations under subsection (1A) above may describe the excluded business by reference to any circumstances appearing to the Commissioners to be relevant.
- (3) The Commissioners for Her Majesty's Revenue and Customs may by regulations—
- (a) make provision as to the circumstances in which a trustee who is a policy holder or annuitant residing in the United Kingdom is to be treated for the purposes of this section as not so residing; and
- (b) provide that nothing in Chapter II of Part XIII or Chapter 9 of Part 4 of ITTOIA 2005 shall apply to a policy or contract which constitutes overseas life assurance business by virtue of any such provision as is mentioned in paragraph (a) above.
- (4) Regulations under subsection (1A) or (3) above may contain such supplementary, incidental, consequential or transitional provision as appears to the Commissioners to be appropriate (including provision amending any enactment or any instrument made under an enactment).
##### 431E
- (1) The Board may by regulations make provision for giving effect to section 431D.
- (2) Such regulations may, in particular—
- (a) provide that, in such circumstances as may be prescribed, any prescribed issue as to whether business is or is not overseas life assurance business (or overseas life assurance business of a particular kind) shall be determined by reference to such matters (including the giving of certificates or undertakings, the giving or possession of information or the making of declarations) as may be prescribed,
- (b) require companies to obtain certificates, undertakings, information or declarations from policy holders or annuitants, or from trustees or other companies, for the purposes of the regulations,
- (c) make provision for dealing with cases where any issue such as is mentioned in paragraph (a) above is (for any reason) wrongly determined, including provision allowing for the imposition of charges to tax (with or without limits on time) on the insurance company concerned or on the policy holders or annuitants concerned,
- (d) require companies to supply information and make available books, documents and other records for inspection on behalf of the Board, and
- (e) make provision (including provision imposing penalties) for contravention of, or non-compliance with, the regulations.
- (3) The regulations may—
- (a) make different provision for different cases, and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 431EA
In this Chapter “*gross roll-up business*” means business of any of the following kinds—
- (a) pension business;
- (b) child trust fund business;
- (c) individual savings account business;
- (d) life reinsurance business; and
- (e) overseas life assurance business.
##### 431F
In this Chapter “*basic life assurance and general annuity business*” means life assurance business other than gross roll-up business.
### Basis of taxation etc
##### 431G
- (1) This section applies in relation to an insurance company which carries on life assurance business (whether or not it also carries on insurance business of any other kind).
- (2) Subject as follows, the profits of the life assurance business for any accounting period shall be charged to tax under the I minus E basis.
- (3) Where in the case of an insurance company for an accounting period either—
- (a) all of its life assurance business is reinsurance business and none of that business is of a type excluded from this subsection by regulations made by the Board, or
- (b) all, or substantially all, of its life assurance business is gross roll-up business,
the profits of that business for the accounting period shall be charged to tax under section 35 of CTA 2009 (charge on trade profits) and not otherwise.
- (4) Where—
- (a) the profits of the life assurance business of an insurance company for any accounting period are charged to tax under the I minus E basis, and
- (b) had those profits been charged to tax under section 35 of CTA 2009, a loss would have arisen to the company from that business for the period,
the loss (after being reduced in accordance with section 434A(2)(a)) may be set-off under section 393A or section 403(1).
- (5) The application, in relation to the life assurance business of an insurance company, of any of the life assurance trade profits provisions is not to be taken—
- (a) to prevent the application of the I minus E basis in relation to that business of the company for any accounting period, or
- (b) to affect the operation of the I minus E basis in relation to the that business of the company for any accounting period except as specifically provided by the Corporation Tax Acts.
##### 431H
- (1) This section applies in relation to an insurance company which carries on life assurance business and insurance business of any other kind.
- (2) For the purposes of the Corporation Tax Acts—
- (a) the life assurance business, and
- (b) the other insurance business,
are to be treated as separate businesses.
- (3) The profits of the other insurance business shall be charged to tax under section 35 of CTA 2009 (charge on trade profits) as the profits of a separate trade.
- (4) But subsection (3) above does not apply where that business is mutual business.
- (5) As to the profits of the life assurance business, see section 431G.
##### 432YA
- (1) This section applies in the case of—
- (a) a company which is a non-profit company, or
- (b) the non-profit fund of a company which is not a non-profit company,
if an amount (“*the relevant amount*”) is shown in paragraph 4(12) of Appendix 9.4 to the periodical return for the company for a period of account which ends on or after 31st December 2006 but before 1st January 2009 (a “relevant period of account”).
- (2) In computing profits of PHI business in accordance with the provisions applicable for the purposes of section 35 of CTA 2009 (charge on trade profits)—
- (a) X shall be added to the closing long term business provision of the company for the relevant period of account; and
- (b) XA shall be brought into account as a trading receipt of the company for each subsequent period of account until the total sum of the amounts so bought into account is equal to X (and if that total sum would otherwise exceed X, the excess shall be ignored).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2B) X is—
- (a) where the relevant period of account ends before 1st April 2007, the whole of the relevant amount;
- (b) where the relevant period of account ends on or after 1st April 2007 but before 1st January 2008, two-thirds of the relevant amount;
- (c) where the relevant period of account ends on or after 1st January 2008, one-third of the relevant amount.
- (2C) XA is the amount found by applying the following formula—
$$Y12×Z$Here—Y is the number of months of the period of account in question (part of a month being counted as a month); andZ is—(a) where X is the whole of the relevant amount, one-third of X;(b) where X is two thirds of the relevant amount, one-half of X;(c) where X is one third of the relevant amount, the whole of X.$
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) In this section—
- “*long term business provision*” has the same meaning as in Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) This section is subject to sections 82E and 82F of the Finance Act 1989 (treatment of transferors and transferees under insurance business transfer schemes) and those sections shall apply in relation to this section as if—
- (a) any reference in them to a provision of section 82D of that Act (treatment of profits: life assurance – adjustment consequent on change in Insurance Prudential Sourcebook) were a reference to the corresponding provision of this section,
- (b) the reference in section 82E(4) to life assurance business were a reference to PHI business, and
- (c) the reference in section 82E(7) to the life assurance trade profits provisions were a reference to the provisions applicable for the purposes of section 35 of CTA 2009.
##### 432ZA
- (1) In this Chapter “*linked assets*” means assets of an insurance company which are identified in its records as assets by reference to the value of which benefits provided for under a policy or contract are to be determined and in a case where only part of an asset is so identified, references to a linked asset are references to that part.
- (2) Linked assets shall be taken—
- (a) to be linked to long-term business of a particular category if the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category; and
- (b) to be linked solely to long-term business of a particular category if all (or all but an insignificant proportion) of the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category.
- (3) Where an asset is linked to more than one category of long-term business, a part of the asset shall be taken to be linked to each category; and references in this Chapter to assets linked (but not solely linked) to any category of business shall be construed accordingly.
- (4) Where subsection (3) above applies, the part of the asset linked to any category of business shall be a proportion determined as follows—
- (a) where in the records of the company values are shown for the asset in funds referable to particular categories of business, the proportion shall be determined by reference to those values;
- (b) in any other case the proportion shall be equal to the proportion A/B where—
A is the total of the linked liabilities of the company which are liabilities of the internal linked fund in which the asset is held and are referable to that category of business;
B is the total of the linked liabilities of the company which are liabilities of that fund.
- (5) For the purposes of sections 432A to 432E—
- (a) income arising in any period from assets linked but not solely linked to a category of business,
- (b) gains arising in any period from the disposal of such assets, and
- (c) increases and decreases in the value of such assets,
shall be treated as arising to that category of business in the proportion which is the mean of the proportions determined under subsection (4) above at the beginning and end of the period.
- (6) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*linked liabilities*” means liabilities in respect of benefits to be determined by reference to the value of linked assets.
- (7) In the case of a policy or contract the effecting of which constitutes a class of life assurance business the fact that it also constitutes PHI business shall be disregarded for the purposes of this section unless the benefits to be provided which constitute PHI business are to be determined by reference to the value of assets.
##### 432AA
- (1) An insurance company is treated (despite sections 205 and 206 of CTA 2009) as carrying on separate UK property businesses or overseas property businesses, in accordance with the following rules.
- (2) The exploitation of land held as an asset of the company’s long-term insurance fund is treated as a separate business from the exploitation of land not so held.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The exploitation of land held as an asset linked to any of the following categories of business is regarded as a separate business—
- (a) basic life assurance and general annuity business;
- (b) gross roll-up business; and
- (c) PHI business.
- (5) Accordingly, the exploitation of land held as an asset of the company’s long-term insurance fund otherwise than as mentioned in subsection . . . (4) is treated as a separate business from any other.
- (6) In this section “*land*” means any estate, interest or rights in or over land.
##### 432AB
- (1) This section applies to any loss arising in a UK property business or overseas property business.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) So far as a loss is referable to basic life assurance and general annuity business, it shall be treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 3 in subsection (7) of that section.
- (4) Where a company is treated under section 432AA as carrying on—
- (a) more than one UK property business, or
- (b) more than one overseas property business,
then, in relation to either kind of business, the reference in subsection (3) above to a loss referable to basic life assurance and general annuity business shall be construed as a reference to any aggregate net loss after setting the losses from those businesses which are so referable against any profits from those businesses that are so referable.
- (5) The provisions of sections 392A and 503, or section 392B, (loss relief) do not apply to a loss referable to life assurance business or any category of life assurance business.
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 432CA
- (1) This section applies where—
- (a) an insurance company is not a non-profit company in relation to a period of account (“the current period of account”),
- (b) in the case of any business with which an account of the company for the current period of account is concerned (“the relevant business”), an amount is a relevant brought into account amount for that period of account (see subsection (2)),
- (c) section 432C applies for determining the extent to which the relevant brought into account amount is referable to life assurance business or to gross roll-up business, and
- (d) the line 51 reduction condition is met (see subsection (3)).
- (2) An amount is a relevant brought into account amount for a period of account if—
- (a) it is brought into account as mentioned in subsection (2)(b) of section 83 of the Finance Act 1989 (increases in value of non-linked assets) for that period,
- (b) it is deemed to be brought into account for that period by subsection (2B) of that section in consequence of the transfer of non-linked assets, or
- (c) it is taken into account under subsection (2) of that section for that period by virtue of section 444AB as being the relevant amount in relation to non-linked assets.
- (3) The line 51 reduction condition is met if—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for the current period of account, is less than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant reduction”.
- (4) Section 432C applies in relation to so much of the relevant brought into account amount as does not exceed the relevant reduction (“the affected amount”) as if it were brought into account as an increase in the value of assets in the case of the relevant business for the applicable appropriate period of account of the company.
- (5) A period of account is an “appropriate period of account” if it ended before the current period of account and—
- (a) the amount shown in column 1 of line 51 of Form 14 of the company's periodical return in respect of the relevant business for it, was more than
- (b) the amount so shown for the period of account immediately before it;
and the amount of the difference is “the relevant increase.”
- (6) The “applicable” appropriate period of account is the one which ended most recently (“the most recent appropriate period of account”).
- (7) But if the relevant increase in the case of the most recent appropriate period of account is less than the affected amount, the most recent appropriate period of account is the applicable appropriate period of account in relation to only so much of the affected amount as does not exceed that relevant increase.
- (8) In that case, the appropriate period of account which ended most recently before the most recent appropriate period of account is the applicable appropriate period of account in relation to so much of the remainder as does not exceed the relevant increase in the case of that appropriate period of account (and, where necessary, so on until the applicable appropriate period of account is established in relation to all of the affected amount or there are no more appropriate periods of account).
- (9) If the current period of account is not the first in relation to which this section has applied in the case of the business concerned, the amount of the relevant increase in the case of any appropriate period of account (“*the period in question*”) is to be treated as reduced by the relevant aggregate.
- (10) The “relevant aggregate” is the aggregate of so much of the affected amount for any period or periods of account earlier than the current period of account as was an amount to which section 432C applied as if it were brought into account as mentioned in subsection (4) for the period in question.
- (11) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
##### 432CB
- (1) This section applies where, under an insurance business transfer scheme, there is a transfer of long-term business—
- (a) from a non-profit fund of an insurance company (“*the transferor*”) which is not a non-profit company in relation to the relevant period of account,
- (b) to another insurance company (“*the transferee*”) to constitute or form part of a non-profit fund of the transferee (“*the transferee's non-profit fund*”),
(“*the transfer*”) and conditions A and B are met.
- (2) Condition A is that the fair value of the assets transferred by the transfer exceeds by an amount (“the chargeable excess”) the amount of the relevant liabilities transferred by the transfer.
For this purpose “relevant” liabilities are liabilities of a type shown (or treated as shown) in any of lines 14, 17, 21 to 23 and 31 to 38 of Form 14 of a periodical return of an insurance company.
- (3) Condition B is that the main purpose, or one of the main purposes, of the transferor or the transferee (or both) in entering into any part of the transfer scheme arrangements is to secure a reduction in tax as a result of section 432C having effect in the case of the transferee, rather than the transferor, in relation to the business transferred by the transfer.
- (4) The chargeable excess is to be brought into account by the transferor as mentioned in section 83(2)(b) of the Finance Act 1989 for the relevant period of account.
- (5) Where there is no amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first period of account of the transferee ending on or after the transfer date (“the first post-transfer period of account”), the chargeable excess is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the first post-transfer period of account.
- (6) Where—
- (a) there is an amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the first post-transfer period of account, and
- (b) the amount so shown in column 1 of line 51 of Form 14 of the periodical return of the transferee for that period of account, or for any other period of account of the transferee ending after the transfer date, (an “affected period of account”) is less than the total chargeable excess amount,
the relevant amount is to be brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for the affected period of account.
- (7) For this purpose “the relevant amount” is the amount by which—
- (a) the amount shown in relation to the transferee's non-profit fund in column 1 of line 51 of Form 14 of the periodical return of the transferee for the affected period of account, is less than
- (b) the total chargeable excess amount less any amount brought into account by the transferee as mentioned in section 83(2) of the Finance Act 1989 as a decrease in the value of non-linked assets for any earlier period of account by virtue of the operation of this section in relation to the transferee's non-profit fund.
- (8) In subsections (6) and (7) “*the total chargeable excess amount*” means the aggregate of—
- (a) the chargeable excess, and
- (b) any amount which is the chargeable excess in relation to any other transfer of business to the transferee's non-profit fund.
- (9) In this section “*the relevant period of account*” means—
- (a) the period of account of the transferor ending immediately before the transfer date, or
- (b) if no period of account of the transferor so ends, the period of account of the transferor covering the transfer date.
- (10) In this section “*the transfer scheme arrangements*” means the insurance business transfer scheme and any relevant associated operations; and for this purpose “*relevant associated operations*” means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance, or
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee,
which is effected in connection with the insurance business transfer scheme.
- (11) In subsection (10)—
- “dependant”, and
- “insurance undertaking”,
have the same meaning as in the Insurance Prudential Sourcebook.
- (12) In this section “*the transfer date*” means the date on which the insurance business transfer scheme takes effect.
- (13) For the purposes of this section an insurance company which has elected under section 83YA(9) of the Finance Act 1989 (changes in value of assets brought into account: non-profit companies) to be treated as a non-profit company in relation to a period of account is to be regarded as a non-profit company in relation to the period of account.
#### Dividends paid to investment trusts.
##### 432F
- (1) The provisions of this section provide for the reduction of the amount determined in accordance with section 432E(3) (“the subsection (3) figure”) for an accounting period in which that amount exceeds, or would otherwise exceed, the amount determined in accordance with section 432E(2) (“the subsection (2) figure”).
- (2) . . . There shall be determined for each accounting period the amount (if any) by which the subsection (2) figure . . . exceeds the subsection (3) figure (“the subsection (2) excess”).
- (3) Where there is a subsection (2) excess, the amount shall be carried forward and if in any subsequent accounting period the subsection (3) figure exceeds, or would otherwise exceed, the subsection (2) figure, it shall be reduced by the amount or cumulative amount of subsection (2) excesses so far as not previously used under this subsection.
- (4) Where in an accounting period that amount is greater than is required to bring the subsection (3) figure down to the subsection (2) figure, the balance shall be carried forward and aggregated with any subsequent subsection (2) excess for use in subsequent accounting periods.
##### 432G
- (1) There is referable to the life assurance business of the transferee the appropriate fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (2) For the purposes of subsection (1) above “the appropriate fraction” is—
$$LABLTL$where—LABL is the amount of the liabilities transferred that are referable to the life assurance business (but is nil if it would otherwise be below nil); andTL is the whole of the liabilities transferred.$
- (3) But if the amount of the liabilities transferred is nil, the appropriate fraction for the purposes of subsection (1) above is such fraction as is just and reasonable.
- (4) There is referable to the gross roll-up business of the transferee the relevant fraction of the amount brought into account as a business transfer-in and of any amount taken into account as profits under section 444ABD(1).
- (5) For the purposes of subsection (4) above “the relevant fraction” is—
$$GRBLTL$where—GRBL is the amount of the liabilities transferred that are referable to the gross roll-up business (but is nil if it would otherwise be below nil); andTL has the same meaning as in subsection (2) above.$
- (6) But if the amount of the liabilities transferred is nil, the relevant fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.
### Miscellaneous provisions relating to life assurance business
##### 434AZA
- (1) Where this section applies in the case of a company carrying on life assurance business, relief allowable under section 393A or Chapter 4 of Part 10 in respect of losses incurred by the company in the life assurance business in an accounting period is reduced in accordance with section 434AZB.
- (2) This section applies in the case of a company where—
- (a) there has been a relevant addition to one or more non-profit funds in a period of account ending no later than the accounting period (“the relevant period of account”) (see subsection (3)),
- (b) the company is not a non-profit company in relation to the relevant period of account and has not elected under subsection (9) of section 83YA of the Finance Act 1989 to be treated for the purposes of that section as if it were, and
- (c) condition A or B is met,
and, if the relevant period of account is not the period of account ending with the accounting period (“the current period of account”), condition C is also met.
- (3) For the purposes of subsection (2), there is a relevant addition to a non-profit fund in the relevant period of account if an amount is shown as a transfer from non-technical account in line 32 of the Form 58 of the non-profit fund in the periodical return for that period of account.
- (4) Condition A is that there is a relevant book value election in relation to assets of a non-profit fund of the company.
- (5) For the purposes of subsection (4), there is a relevant book value election in relation to assets of a non-profit fund if an amount is shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account.
- (6) Condition B is that the company is party to arrangements the main purpose, or one of the main purposes, of which is to reduce the relevant admissible value of assets of a non-profit fund of the company, other than any structural assets.
- (7) For the purposes of subsection (6) (and section 434AZB), the “*relevant admissible value*” means the value reflected in line 89 of Form 13 of the periodical return for the current period of account.
- (8) Condition C is that the surplus arising since the last valuation shown in line 34 of the Form 58 of the non-profit fund, or any of the non-profit funds, in relation to which condition A or B is met in the periodical return for the current period of account is a negative amount.
#### Savings banks: exemption from tax.
##### 434AZB
- (1) The amount of the relief allowable as mentioned in section 434AZA(1) is reduced by whichever of the following is the least—
- (a) the amount of the loss,
- (b) the amount specified in subsection (2), and
- (c) the amount specified in subsection (4).
- (2) The amount mentioned in subsection (1)(b) is—
- (a) where only condition A in section 434AZA is met, the relevant amount relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant amounts relating to them,
- (b) where only condition B is met, the amount of the relevant reduction relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant reductions relating to them, and
- (c) where both condition A and condition B are met, the aggregate of the amounts in paragraphs (a) and (b).
- (3) In subsection (2)—
- (a) “*relevant amount*”, in relation to a non-profit fund, means the amount shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account (as reduced by any amount which has had effect to reduce relief for losses for a previous accounting period), and
- (b) “*relevant reduction*”, in relation to a non-profit fund, means the reduction of the relevant admissible value of assets of the non-profit fund (other than structural assets) which is attributable to the arrangements (as so reduced).
- (4) The amount mentioned in subsection (1)(c) is—
- (a) if the relevant period of account is the current period of account, the amount referred to in section 434AZA(3) in the case of the non-profit fund, or of each of the non-profit funds, to which there has been a relevant addition in the relevant period of account, and
- (b) otherwise, so much of the amount shown in line 31 of the Form 58 of the non-profit fund or non-profit funds in the periodical return for the current period of account as is attributable to the amount so referred to.
##### 434AZC
- (1) For the purposes of sections 434AZA and 434AZB, a non-profit fund required to support a with-profits fund is to be treated as not being a non-profit fund.
- (2) Sections 434AZA and 434AZB apply to a non-profit part of a with-profits fund as if references to something shown in the Form 14 or Form 58 of the non-profit fund in a periodical return were to what would be so shown if there were a Form 14 or Form 58 of the non-profit part of the with-profits fund in the periodical return.
- (3) In sections 434AZA and 434AZB—
- “*arrangements*” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
- “*structural assets*” has the same meaning as in section 83XA of the Finance Act 1989 (see subsection (3) of that section and any regulations made under it).
##### 434B
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 434E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 436A
- (1) The charge to corporation tax on income applies to profits arising to an insurance company from gross roll-up business.
- (2) For that purpose—
- (a) the gross roll-up business is to be treated separately, and
- (b) the profits from it are to be computed in accordance with the life assurance trade profits provisions.
- (3) In making that computation, sections 82 and 82B to 83AB 83ZA of the Finance Act 1989 apply with the necessary modifications.
- (4) If in any accounting period an insurance company incurs a loss, to be computed on the same basis as the profits, arising from its gross roll-up business—
- (a) the loss must be set off against the amount of any profits chargeable under this section for any subsequent accounting period, and
- (b) accordingly, the amount of the company's profits so charged in any such accounting period is to be treated as reduced by the amount of the loss or so much of that amount as cannot be relieved under this section against profits of an earlier accounting period.
- (5) Section 396 does not apply to a loss incurred by an insurance company on its gross roll-up business.
- (6) No loss to which section 396 applies may be set off . . . against the amount of any profits chargeable under this section.
- (7) This section does not apply in relation to an insurance company for an accounting period if the profits of its long-term business for the accounting period are charged to tax under section 35 of CTA 2009 (charge on trade profits).
##### 436B
- (1) Gains referable to gross roll-up business are not chargeable gains.
- (2) For the purposes of this section “*gains referable to gross roll-up business*” means gains which—
- (a) accrue to an insurance company on the disposal by it of assets of its long-term insurance fund, and
- (b) are referable (in accordance with section 432A) to gross roll-up business.
##### 437A
- (1) For the purposes of section 437 an annuity is a steep-reduction annuity if—
- (a) the amount of any payment in respect of the annuity (but not the term of the annuity) depends on any contingency other than the duration of a human life or lives;
- (b) the annuitant is entitled in respect of the annuity to payments of different amounts at different times; and
- (c) those payments include a payment (“*a reduced payment*”) of an amount which is substantially smaller than the amount of at least one of the earlier payments in respect of that annuity to which the annuitant is entitled.
- (2) Where there are different intervals between payments to which an annuitant is entitled in respect of any annuity, the question whether or not the conditions in subsection (1)(b) and (c) above are satisfied in the case of that annuity shall be determined by assuming—
- (a) that the annuitant’s entitlement, after the first payment, to payments in respect of that annuity is an entitlement to payments at yearly intervals on the anniversary of the first payment; and
- (b) that the amount to which the annuitant is assumed to be entitled on each such anniversary is equal to the annuitant’s assumed entitlement for the year ending with that anniversary.
- (3) For the purposes of subsection (2) above an annuitant’s assumed entitlement for any year shall be determined as follows—
- (a) the annuitant’s entitlement to each payment in respect of the annuity shall be taken to accrue at a constant rate during the interval between the previous payment and that payment; and
- (b) his assumed entitlement for any year shall be taken to be equal to the aggregate of the amounts which, in accordance with paragraph (a) above, are treated as accruing in that year.
- (4) In the case of an annuity to which subsection (2) above applies, the reference in section 437(1CB)(a) to the making of a reduced payment shall be construed as if it were a reference to the making of a payment in respect of that annuity which (applying subsection (3)(a) above) is taken to accrue at a rate that is substantially less than the rate at which at least one of the earlier payments in respect of that annuity is taken to accrue.
- (5) Where—
- (a) any question arises for the purposes of this section whether the amount of any payment in respect of any annuity—
- (i) is substantially smaller than the amount of, or
- (ii) accrues at a rate substantially less than,
an earlier payment in respect of that annuity, and
- (b) the annuitant or, as the case may be, every annuitant is an individual who is beneficially entitled to all the rights conferred on him as such an annuitant,
that question shall be determined without regard to so much of the difference between the amounts or rates as is referable to a reduction falling to be made as a result of the occurrence of a death.
- (6) Where the amount of any one or more of the payments to which an annuitant is entitled in respect of an annuity depends on any contingency, his entitlement to payments in respect of that annuity shall be determined for the purposes of section 437(1CA) to (1CC) and this section according to whatever (applying any relevant actuarial principles) is the most likely outcome in relation to that contingency.
- (7) Where any agreement or arrangement has effect for varying the rights of an annuitant in relation to a payment in respect of any annuity, that payment shall be taken, for the purposes of section 437(1CA) to (1CC) and this section, to be a payment of the amount to which the annuitant is entitled in accordance with that agreement or arrangement.
- (8) References in this section to a contingency include references to a contingency that consists wholly or partly in the exercise by any person of any option.
##### 438B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 438C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 439B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440B
- (1) The following provisions apply where the profits of a company’s life assurance business are charged to tax under section 35 of CTA 2009 (charge on trade profits)in accordance with section 431G(3).
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) Subsection (1) of section 440 applies as if the only categories set out in subsection (4) of that section were—
- (a) assets of the long-term insurance fund, and
- (b) other assets.
- (4) Section 440A applies as if for paragraphs (a), (d) and (e) of subsection (2) there were substituted—
- (“) so many of the securities as are included in the company's long-term insurance fund shall be treated for the purposes of corporation tax as a separate holding which is an asset of that fund, and
- (b) any remaining securities shall be treated for those purposes as a separate holding which is not of the description mentioned in the preceding paragraph.”.
- (4A) Section 440(2) does not apply if either the transferor or the company by which the asset is acquired is a company whose profits are charged to tax under section 35 of CTA 2009 (or if they both are).
- (4B) Section 211 of the 1992 Act does not apply in relation to assets which are referable to the life assurance business of the transferor if the transferor is a company whose profits are charged to tax under section 35 of CTA 2009.
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 440C
- (1) Subsection (2) makes provision for a case where—
- (a) subsection (4) of section 431G applies in relation to the profits of the life assurance business of an insurance company for any accounting period, but
- (b) the profits of that business for a succeeding accounting period fall to be charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of subsection (3) of that section.
- (2) The loss referred to in section 431G(4)(b) (less any loss for the same accounting period set off under section 436A for any intervening accounting period and any amount deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989) may be set off under section 393 against profits of that succeeding accounting period (without being reduced in accordance with section 434A(2)(a)).
- (3) In determining whether any loss has been set off under section 436A for any intervening accounting period, or whether any amount has been deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989, losses of earlier accounting periods are to be assumed to be set off before those of later accounting periods.
- (4) Subsection (5) makes provision for a case where—
- (a) a loss arises to an insurance company for an accounting period for which the profits of its life assurance business fall to be charged to tax under section 35 of CTA 2009 by virtue of section 431G(3)(b),
- (b) the profits of that business for a subsequent accounting period are charged to tax under the I minus E basis, and
- (c) had those profits (instead) been charged to tax under section 35 of CTA 2009, any of that loss would have been available to be set off against them under section 393.
- (5) The loss is to be treated for the purposes of the operation of section 436A in relation to the subsequent accounting period as if it were a loss arising from its gross roll-up business in the accounting period in which it arose.
- (6) Subsections (7) and (8) make provision for a case where—
- (a) the profits of the life assurance business of an insurance company for an accounting period are charged to tax under the I minus E basis,
- (b) the profits of that business for its next accounting period fall to be charged to tax under section 35 of CTA 2009 by virtue of section 431G(3), and
- (c) that prevents the giving of relief in accordance with section 86(8) of the Finance Act 1989 (acquisition expenses relieved in fractions under section 76).
- (7) Any relief which would have been so given in—
- (a) the next accounting period, or
- (b) any subsequent accounting period for which the profits of the company's life assurance business continue to be charged to tax under section 35 of CTA 2009,
may be given by set-off against any gains treated as accruing under section 213(1) of the 1992 Act at the end of the accounting period.
- (8) But if the profits of the company's life assurance business for a subsequent accounting period are charged to tax under the I minus E basis, any relief not previously given under subsection (7) is to be treated for the purposes of the operation of section 76 in relation to the first subsequent accounting period for which profits are so charged as if it were an amount which is to be relieved under that section by virtue of section 86(8) and (9) of the Finance Act 1989.
#### Treatment of oil extraction activities etc. for tax purposes.
##### 440D
Schedule 19ABA (which makes modifications of this Act in relation to BLAGAB group reinsurers) shall have effect.
##### 441B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 442A
- (1) Where an insurance company reinsures any risk in respect of a policy or contract attributable to its basic life assurance and general annuity business, the investment return on the policy or contract shall be treated as accruing to the company while the risk remains reinsured by the company under the reinsurance arrangement and shall be charged to tax under the charge to corporation tax on income.
- (2) The Board may make provision by regulations as to the amount of investment return to be treated as accruing in each accounting period during which the reinsurance arrangement is in force.
- (3) The regulations may, in particular, provide that the investment return to be treated as accruing to the company in respect of a policy or contract in any accounting period shall be calculated by reference to—
- (a) the aggregate of the sums paid by the company to the reinsurer during that accounting period and any earlier accounting periods by way of premium or otherwise;
- (b) the aggregate of the sums paid by the reinsurer to the company during that accounting period and any earlier accounting periods by way of commission or otherwise;
- (c) the aggregate amount of the net investment return treated as accruing to the company in any earlier accounting periods, that is to say, net of tax at such rate as may be prescribed; and
- (d) such percentage rate of return as may be prescribed.
- (3A) Where a transfer of the reinsurance arrangement from one insurance company (“*the transferor*”) to another (“*the transferee*”) is effected by novation or an insurance business transfer scheme, for the purpose of calculating the investment return to be treated as accruing to the transferee in respect of the policy or contract after the transfer, the references to the company in subsection (3)(a), (b) and (c) above include (as well as the transferee)—
- (a) the transferor, and
- (b) any insurance company from which the reinsurance arrangement was transferred on an earlier transfer effected by novation or an insurance business transfer scheme.
- (4) The regulations shall provide that the amount of investment return to be treated as accruing . . . in respect of a policy or contract in the final accounting period during which the policy or contract is in force is the amount, ascertained in accordance with regulations, by which the profit over the whole period during which the policy or contract, and the reinsurance arrangement, were in force exceeds the aggregate of the amounts treated as accruing in earlier accounting periods.
- (5) Regulations under this section—
- (a) may exclude from the operation of this section such descriptions of insurance company, such descriptions of policies or contracts and such descriptions of reinsurance arrangements as may be prescribed;
- (b) may make such supplementary provision as to the ascertainment of the investment return to be treated as accruing to the company as appears to the Board to be appropriate, including provision requiring payments made during an accounting period to be treated as made on such date or dates as may be prescribed; and
- (c) may make different provision for different cases or descriptions of case.
- (6) In this section “*prescribed*” means prescribed by regulations under this section.
##### 444AZA
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in respect of that business under the I minus E basis,
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3), and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) Any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits chargeable under section 436A (a “qualifying loss of the transferor”) shall instead be treated as a loss of the transferee . . . available to be set off against GRBP in relation to a period of account.
- (3) For the purposes of subsection (2) above “*GRBP*”, in relation to a period of account, is—
$P×GRBTLTL$
where—
- *P* is the amount of such profits of the transferee's life assurance business for the period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable),
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of any qualifying loss of the transferor to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
#### Valuation of oil disposed of or appropriated in certain circumstances.
##### 444AZB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer life assurance business from one person (“*the transferor*”) to another (“*the transferee*”),
- (b) assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3),
- (c) the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under the I minus E basis, and
- (d) the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
- (2) The relevant fraction of any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits of that business (a “qualifying loss of the transferor”) shall instead be treated as a loss of the transferee . . . available to be set off against the amount of such profits chargeable under section 436A for a period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable).
- (3) For the purposes of subsection (2) above “*the relevant fraction*”, in relation to a period of account, is—
$GRBTLTL$
where—
- *GRBTL* is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
- *TL* is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
- (4) Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of the amount of any qualifying loss of the transferor to which it would otherwise apply as is appropriate.
- (5) Any question arising as to the operation of subsection (4) above shall be determined in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
##### 444AA
- (1) This section applies where the whole of the long-term business of a person (“*the transferor*”) is transferred from that person–
- (a) by one insurance business transfer scheme, or
- (b) by two or more insurance business transfer schemes which take effect on the same date.
- (2) Where (apart from this subsection) there would not be a periodical return of the transferor covering a period ending immediately before the transfer date, there is to be deemed for the purposes of corporation tax to be a periodical return of the transferor covering the period—
- (a) beginning immediately after the last period ending before the transfer date which is covered by a periodical return of the transferor, and
- (b) ending immediately before the transfer date.
- (3) The periodical return deemed to exist by subsection (2) above is to be deemed to contain—
- (a) such entries as would be included in an actual periodical return of the transferor covering the period mentioned in subsection (2) above, and
- (b) such entries as would be included in an actual periodical return of the transferor covering the period—
- (i) beginning immediately after the end of the period mentioned in subsection (2) above, and
- (ii) ending immediately before the transfer had effect,
and the period mentioned in subsection (2) above is to be deemed to be a period of account (but not an accounting period) of the transferor.
- (4) There is to be deemed for the purposes of corporation tax to be a periodical return of the transferor—
- (a) covering the transfer date, and
- (b) containing the appropriate entries.
- (5) In subsection (4) above “*appropriate entries*” means such entries as would be included in an actual periodical return covering the transfer date—
- (a) in line 32 of Form 40, and
- (b) in line 11 of Form 14, in both columns (treating references in that form to “current year” as references to the time immediately after the transfer date and to “previous year” as references to the time immediately before the transfer date).
- (6) A transfer date covered by a periodical return deemed to exist by subsection (4) above is to be deemed to be a period of account of the transferor only for the purpose of taking into account profits under section 444ABD.
- (7) Where—
- (a) a periodical return deemed to exist by subsection (4) above is preceded by an actual periodical return of the transferor covering the period immediately before the transfer date, and
- (b) profits are to be taken into account under section 444ABD in the period of account deemed to exist by subsection (6) above,
those profits are to be deemed for the purposes of corporation tax to be profits arising on the last day of the period of account covered by the actual periodical return.
- (8) Any actual periodical return of the transferor covering a period which includes the transfer date is to be ignored for the purposes of corporation tax.
- (9) In this section and sections 444AB to 444AECC “*the transfer date*”, in relation to an insurance business transfer scheme, means the date on which it takes effect.
##### 444AB
- (1) This section applies where—
- (a) an insurance business transfer scheme has effect to transfer long-term business of a person (“*the transferor*”) to another person (“*the transferee*”), and
- (b) condition A or condition B is met.
- (2) Condition A is met if any of the assets of the transferor's long-term insurance fund which are transferred . . . by the insurance business transfer scheme are not, immediately after their transfer—
- (a) if the transferee is an insurance company or an insurance special purpose vehicle, assets of the transferee's long-term insurance fund, or
- (b) if the transferee is not an insurance company , an insurance special purpose vehicleor a friendly society, assets of a fund of the transferee which would be a with-profits fund if the transferee were an insurance company,
(“relevant non-transferred assets”).
- (3) Condition B is met if, immediately after the transfer date, the transferor—
- (a) does not carry on long-term business, but
- (b) holds any assets which, immediately before the transfer date, were assets of its long-term insurance fund (“retained assets”).
- (4) If there are relevant non-transferred assets or retained assets (or both) the relevant amount in relation to them (see subsection (5) below) is to be taken into account under section 83(2) of the Finance Act 1989 as an increase in value of the assets of the long-term insurance fund of the transferor for the relevant period of account (see subsection (6) below).
- (5) Section 444ABA makes provision for the calculation of the relevant amount in relation to relevant non-transferred assets; and section 444ABB makes provision for its calculation in relation to retained assets.
- (5A) In this section references to assets held by the transferor after the transfer do not include—
- (a) assets held on trust for the transferee, or
- (b) assets held to meet liabilities which have been wholly reinsured and which are intended to be transferred under an insurance business transfer scheme to the reinsurer.
- (6) In this section and sections 444ABA to 444AC “*the relevant period of account*” means the period of account of the transferor ending, or treated by section 444AA(2) as ending, immediately before the transfer date.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
- (8) For the purpose of paragraph (2)(a), in relation to an insurance special purpose vehicle which is not an insurance company, “*long-term insurance fund*” has the meaning it has in paragraph 4(5) of Schedule 19ABA.
##### 444ABA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are relevant non-transferred assets is—
$$FVA-BTO$where—FVA is the fair value of the assets on the transfer date, andBTO is the lesser of ABTO and AL13, where—ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andAL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.$
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) See section 444AA for the meaning of “the transfer date”. . . in this section.
##### 444ABAA
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are non-profit fund transferred assets is—
$$FVA-(ABTO+TL)$where—FVA is the fair value of the assets on the transfer date,ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, andTL is the amount of any non-profit fund transferred liabilities which are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38, but not in line 61, in Form 14 in the periodical return for the period of account of the transferor ending (or treated as ending by section 444AA) immediately before the transfer date or, if there is no period of account of the transferor so ending (or treated as so ending), the amount of any liabilities which would be so shown if one did.$
- (2) In subsection (1) “*non-profit fund transferred liabilities*” means such of the liabilities of the transferor's long-term insurance fund as are transferred from the transferor to the transferee by the insurance business transfer scheme and were, immediately before their transfer, liabilities of a non-profit fund of the transferor.
- (3) See section 444AA for the meaning of “the transfer date” in this section.
#### Loan relationships etc.
##### 444ABB
- (1) For the purposes of section 444AB the relevant amount in relation to assets that are retained assets is—
$FVA-ABDP-RL13-RRL$
where—
- FVA is the fair value of the assets on the transfer date,
- ABDP is the amount of the profits to be taken into account as profits under section 444ABD,
- RL13 is the amount by which AL13 exceeds VE, and
- RRL is the value of any relevant retained liabilities immediately after the transfer date.
But the relevant amount is nil if it would otherwise be below nil.
- (1A) For the purposes of subsection (1) above—
- (a) AL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date;
- (b) VE is the amount (if any) by which VL32 exceeds VTL where—
- (i) VL32 is the value of the assets shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor covering (or treated as covering) the transfer date, and
- (ii) VTL means the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by the insurance business transfer scheme; and
- (c) relevant retained liabilities are any liabilities of the company's long-term business which are owed by the company immediately after the transfer date and are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38 in Form 14 in a periodical return for the period of account ending (or treated as ending by section 444AA) immediately before the transfer date.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABBA
- (1) This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“*the transferor*”) to another (“*the transferee*”).
- (2) If the transferor and the transferee jointly elect, the transferee (and not the transferor) is chargeable to any amount of additional corporation tax to which the transferor would otherwise be chargeable by virtue of section 444AB(4) in relation to relevant non-transferred assets.
- (3) An election under subsection (2) above—
- (a) is to be irrevocable, and
- (b) is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 90 days beginning with the day following the transfer date,
and a copy of the notice containing the election must accompany the tax return of the transferee for the first accounting period ending after the transfer. Paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.
- (4) Where an election under subsection (2) above has been made, the transferor must inform the transferee of—
- (a) the amount of any additional corporation tax to which the transferor considers the election to apply, and
- (b) the day on which that tax is due and payable,
no later than the end of the period of 8 months beginning with the day following the transfer date.
- (5) Tax chargeable on the transferee by virtue of an election under subsection (2) above—
- (a) is due in accordance with section 59D of the Management Act on the day on which it would have been due if no election had been made, and
- (b) for the purposes of that section, is to be treated as tax payable by the transferor (and not as tax payable by the transferee).
- (6) See section 444AA for the meaning of “the transfer date” in this section.
##### 444ABC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ABD
- (1) Any profits representing the amount by which—
- (a) the amount of the mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by an insurance business transfer scheme, exceeds
- (b) the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in line 32 of Form 40 of the periodical return of the transferor for the period of account of the transferor including the transfer date,
are to be taken into account as profits of that period of account in accordance with subsections (1A) and (1C) below.
- (1A) Where the profits of the life assurance business of the transferor for a period of account are charged to tax under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3), the appropriate fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 35 of that Act (and not otherwise).
- (1B) For the purposes of subsection (1A) above “the appropriate fraction” is the appropriate fraction for the purposes of section 432G(1).
- (1C) Where the profits of the life assurance business of the transferor for a period of account are charged to tax under the I minus E basis, the relevant fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 436A (and not otherwise).
- (1D) For the purposes of subsection (1C) above “the relevant fraction” is the relevant fraction for the purposes of section 432G(4).
- (1E) Where the value mentioned in paragraph (b) of subsection (1) above exceeds the amount mentioned in paragraph (a) of that subsection, the amount of the excess is not to be taken into account as a loss of the transferor.
- (2) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AC
- (1) This section applies where an insurance business transfer scheme has effect to transfer . . . long-term business of a person (“*the transferor*”) to another person (“*the transferee*”) and the condition in subsection (2) below is met.
- (2) The condition is that the transferor did not carry on life assurance business that is mutual business during the relevant period of account.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amount which (apart from this section) would be regarded as other income of the transferee for the purposes of section 83(2)(e) of the Finance Act 1989 for the period of account of the transferee which includes the transfer date is to be reduced by an amount equal to the lesser of the transferred surplus and any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.
- (5) In subsection (4) above “*the transferred surplus*”is VE – RBTO where—
- (a) VE has the same meaning as in section 444ABB, and
- (b) RBTO means so much of BTO as relates to relevant non-transferred assets transferred to the transferee where—
- (i) BTO has the same meaning as in section 444ABA, and
- (ii) “*relevant non-transferred assets*” has the same meaning as in section 444AB.
- (5A) Where the transfer is to more than one transferee, the amount of any reduction to be made in accordance with subsection (4) above is to be apportioned to each transferee on a just and reasonable basis.
- (6) See section 444AA for the meaning of “the transfer date”, and section 444AB for the meaning of “the relevant period of account”, in this section.
##### 444ACZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444ACA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AD
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444AE
- (1) Where an insurance business transfer scheme has effect to transfer the relevant financing arrangements entered into in relation to a non-profit fund of an insurance company (“*the transferor*”) to another person (“*the transferee*”), after the transfer—
- (a) they are to be treated for the purposes of sections 83YC and 83YD of the Finance Act 1989 as having been entered into by the transferee, but
- (b) the references in those sections to earlier periods of account of the transferee include earlier periods of account of the transferor.
- (2) But if the insurance business transfer scheme has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the transferor, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the transferor, or of the transferee or any of the transferees, ending after the transfer is to be made on a just and reasonable basis.
- (3) Subsection (4) below applies where—
- (a) relevant financing arrangements have been entered into in relation to a non-profit fund of an insurance company (“the old company”), and
- (b) as a result of any transaction other than an insurance business transfer scheme, another insurance company (“the new company”) becomes the debtor in respect of the money debt, or the cedant, under the financial reinsurance arrangements.
- (4) Where this subsection applies, after the transaction—
- (a) the relevant financing arrangements are to be treated for the purposes of sections 83YC and 83YD as having been entered into by the new company, but
- (b) the references in those sections to earlier periods of account of the new company include earlier periods of account of the old company, and
- (c) the transaction is not to be regarded as causing the condition in section 83YD(3) to be met in relation to the old company.
- (5) But if the transaction has effect—
- (a) to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the old company, or
- (b) to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the old company, or of the new company or any of the new companies, ending after the transaction is to be made on a just and reasonable basis.
- (6) Expressions used in this section and section 83YC or 83YD have the same meanings here as there.
##### 444AEA
- (1) This section applies where—
- (a) as a result of the whole . . . of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a life assurance trade profits advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of the whole . . . of the transfer scheme arrangements is the obtaining of that . . . advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” means an insurance business transfer scheme (“*the relevant transfer scheme*”) together with any relevant associated operations.
- (3) If a life assurance trade profits advantage is obtained by the transferor (see subsection (1) of section 444AEB), the amount of the . . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a life assurance trade profits advantage is obtained by the transferee (see subsection (1) of section 444AEC), the amount of the . . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) In this section and sections 444AEB to 444AECC“*relevant associated operations*”, in relation to the relevant transfer scheme, means—
- (a) any other insurance business transfer scheme,
- (b) any contract of reinsurance,
- (c) any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee, or
- (d) any surplus-increasing transfer of assets,
which is effected in connection with the relevant transfer scheme.
- (6) In subsection (5) above—
- “*dependant*” and “*insurance undertaking*” have the same meaning as in the Insurance Prudential Sourcebook, and
- “*surplus-increasing transfer of assets*” means a transfer of assets of the transferor's long-term insurance fund to the transferee which is not brought into account for any period of account of the transferee but increases the amount of total surplus shown in line 39 of Form 58 in any periodical return of the transferee.
- (7) See section 444AA for the meaning of “the transfer date” in this section.
##### 444AEB
- (1) A life assurance trade profits advantage is obtained by the transferor if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a life assurance trade profits advantage is obtained by the transferor, the amount of the advantage is the aggregate of—
- (a) the amounts (if any) by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, and
- (b) the amounts (if any) by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (4) In this section and sections 444AEC, 444AECB and 444AECC—
- “*section 35 profits*” and “*section 35 losses*” means profits and losses computed in accordance with the life assurance trade profits provisions, and
- “the relevant time” is the time at which any application under section 444AED is made, or, if no such application is made, the transfer date.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AEC
- (1) A life assurance trade profits advantage is obtained by the transferee if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (2) If a life assurance trade profits advantage is obtained by the transferee, the amount of the advantage is—
- (a) the amount by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the whole of the transfer scheme arrangements, or
- (b) the amount by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the whole of the transfer scheme arrangements.
- (3) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (4) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “ section 35 profits” and “ section 35 losses” and “the relevant time”, in this section.
##### 444AECA
- (1) This section applies where—
- (a) as a result of any part of transfer scheme arrangements involving the transfer of long-term business from one person (“*the transferor*”) to another (“*the transferee*”) a life assurance trade profits advantage is obtained by the transferor or the transferee (or by both), and
- (b) the sole or main purpose, or one of the main purposes, of that part of the transfer scheme arrangements is the obtaining of that . . . advantage.
- (2) In subsection (1) above “*transfer scheme arrangements*” has the same meaning as in section 444AEA.
- (3) If a life assurance trade profits advantage is obtained by the transferor (see subsection (1) of section 444AECB), the amount of the . . . advantage (see subsection (3) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
- (a) to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
- (i) for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
- (ii) where there is no such period, for the period of account of the transferor including the transfer date, and
- (b) to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
- (4) If a life assurance trade profits advantage is obtained by the transferee (see subsection (1) of section 444AECC), the amount of the . . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
- (5) See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
##### 444AECB
- (1) A life assurance trade profits advantage is obtained by the transferor if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the section 35 profits to be greater or the section 35 losses to be less than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a life assurance trade profits advantage is obtained by the transferor.
- (3) If a life assurance trade profits advantage is obtained by the transferor, the amount of the advantage is the aggregate of—
- (a) the amounts (if any) by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, and
- (b) the amounts (if any) by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the period of account of the transferor covering the transfer date,
- (b) any earlier period of account of the transferor, or
- (c) where any relevant associated operations are effected in any later period of account, that period of account.
- (5) In this section and section 444AECC “*the relevant part of the arrangements*” means, in relation to a life assurance trade profits advantage, the part of the transfer scheme arrangements as a result of which the advantage is obtained.
- (6) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations” and section 444AEB for the meaning of “ section 35 profits” and “ section 35 losses” and “the relevant time”, in this section.
##### 444AECC
- (1) A life assurance trade profits advantage is obtained by the transferee if—
- (a) section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
- (b) section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the any part of the transfer scheme arrangements.
- (2) But if any of the relevant associated operations would, by itself, cause the section 35 profits to be greater, or the section 35 losses to be less, than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a life assurance trade profits advantage is obtained by the transferor.
- (3) If a life assurance trade profits advantage is obtained by the transferee, the amount of the advantage is—
- (a) the amount by which section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, or
- (b) the amount by which section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
- (4) This section applies to a period of account if it is—
- (a) the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
- (b) the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
- (c) any intervening period of account.
- (5) See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations”, section 444AEB for the meaning of “ section 35 profits” and “ section 35 losses” and “the relevant time” and section 444AECB for the meaning of “the relevant part of the arrangements”, in this section.
##### 444AED
- (1) Sections 444AEA and 444AECA do not apply in relation to the transferor or the transferee if, on an application under this section, the Commissioners for Her Majesty's Revenue and Customs (“the HMRC Commissioners”) have given a notice under subsection (2) below.
- (2) A notice under this subsection is a notice stating that the HMRC Commissioners are satisfied—
- (a) that the obtaining of a life assurance trade profits advantage by the applicant is not the sole or main purpose of the whole or any part of the transfer scheme arrangements, or
- (b) that the transferor and the transferee are members of the same group of companies and that there is no advantage to the group arising from any life assurance trade profits advantage obtained by the transferor or by the transferee.
- (3) For the purposes of this section there is no advantage to a group arising from any life assurance trade profits advantage obtained by the transferor or by the transferee if—
- (a) as a result of transfer scheme arrangements, there is an increase in the liability to corporation tax of one or more companies which are members of the group of companies, and
- (b) the amount (or aggregate amount) of that increase is not less than the reduction in the liability to corporation tax of the transferor or the transferee (or both) arising from the obtaining of the life assurance trade profits advantage.
- (4) An application under this section must be in writing and contain particulars of the transfer scheme arrangements.
- (5) The HMRC Commissioners may by notice require the applicant to provide further particulars in order to enable them to determine the application.
- (6) A requirement may be imposed under subsection (5) above within 30 days of the receipt of the application or of any further particulars required under that subsection.
- (7) If a notice under subsection (5) above is not complied with within 30 days or such longer period as the HMRC Commissioners may allow, they need not proceed further on the application.
- (8) The HMRC Commissioners must give notice of their decision on an application under this section to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of that notice being complied with.
- (9) If the HMRC Commissioners—
- (a) give notice to the applicant under subsection (8) above that they are not satisfied as mentioned in subsection (2) above, or
- (b) do not comply with subsection (8) above,
the applicant may require them to transmit the application to the tribunal.
- (10) A requirement under subsection (9) above must be imposed within 30 days of the giving of the notice or the failure to comply and must be accompanied by any notice given under subsection (5) above and further particulars provided pursuant to any such notice.
- (11) Any notice given by the tribunal has effect for the purposes of subsection (1) above as if it were given by the HMRC Commissioners.
- (12) If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for the decision of the HMRC Commissioners or the tribunal, any resulting notice that they are satisfied as mentioned in subsection (2) above is void.
- (13) For the purposes of this section two companies are members of the same group of companies if they are for the purposes of Chapter 4 of Part 10.
### Surpluses of mutual and former mutual businesses
##### 444AF
- (1) This section applies in relation to a period of account of an insurance company (“*the relevant period*”) if—
- (a) at any time in the relevant period the company carries on life assurance business that is not mutual business,
- (b) the company has an amount of undistributed demutualisation surplus for the relevant period (see subsection (7)), and
- (c) there is a reduction in the amount of the company's unappropriated surplus over the relevant period (see section 444AI).
- (2) Where this section applies in relation to the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund whichever of the following amounts is the smallest—
- (a) the amount of the reduction mentioned in subsection (1)(c) above;
- (b) the amount of the company's undistributed demutualisation surplus for the relevant period;
- (c) the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (4) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if for “smallest” there were substituted smaller and as if paragraph (c) were omitted.
- (5) This section shall have effect—
- (a) for the purposes of computing in accordance with the life assurance trade profits provisions the profits of the company's life assurance business, and
- (b) for the purposes of so computing profits of the company chargeable . . . under section 436A (gross roll-up business).
- (6) But for the purposes mentioned in subsection (5)(b) above, this section and section 444AG have effect subject to the modification in section 444AH; and the Corporation Tax Acts have effect accordingly (so that there may, in particular, be a difference between—
- (a) the amount deemed to be brought into account by virtue of subsection (2) above for a period of account for those purposes, and
- (b) the amount so deemed to be brought into account for that period of account for the purposes mentioned in subsection (5)(a) above).
- (7) For the purposes of this section, the undistributed demutualisation surplus of an insurance company for the relevant period is—
- (a) an amount equal to (UDSP – AD + DTSI – DTSO); or
- (b) if that amount is a negative amount, nil.
For this purpose—
- UDSP is the undistributed demutualisation surplus of the company for the period of account immediately preceding the relevant period,
- AD is any amount deemed under this section to be brought into account for the period of account immediately preceding the relevant period as an increase in the value of the assets of the company's long-term insurance fund,
- DTSI is the total amount of any demutualisation transfer surpluses accruing to the company during the relevant period (see section 444AG),
- DTSO is the total amount of any demutualisation transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
##### 444AG
- (1) For the purposes of section 444AF and this section, a demutualisation transfer surplus accrues to an insurance company where—
- (a) life assurance business is transferred to the company by a person (“*the transferor*”),
- (b) after the transfer, the company carries on the transferred business otherwise than as mutual business, and
- (c) the condition in subsection (2) below is satisfied in relation to the transfer.
- (2) The condition is that—
- (a) immediately before the transfer, the transferor carried on the transferred business as mutual business, or
- (b) where paragraph (a) above does not apply, some or all of the transferred business was carried on by an insurance company as mutual business at a time on or after 1st January 1990 and before the transfer (“former mutual business”).
- (3) The demutualisation transfer surplus accrues to the company on the date of the transfer.
- (4) The amount of the demutualisation transfer surplus is given by subsection (5) or (6) below.
- (5) Where subsection (2)(a) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer, the aggregate of—
- (i) the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer, and
- (ii) the amount of any added surplus accruing to the company in connection with the transfer (see subsection (10));
- (b) otherwise, a just and reasonable portion of that aggregate amount, having regard to how much of the transferor's life assurance business was transferred to the company under the transfer.
- (6) Where subsection (2)(b) above applies, the amount of the demutualisation transfer surplus is—
- (a) where the whole of the transferor's life assurance business was transferred to the company under the transfer and all of the transferred business is former mutual business, the former mutual surplus of the transferor on the transfer date (see subsection (7));
- (b) otherwise, so much of that former mutual surplus as it is just and reasonable to attribute to the company, having regard in particular to—
- (i) how much of the transferor's life assurance business was transferred to the company under the transfer, and
- (ii) how much of the transferred business is former mutual business.
- (7) For the purposes of subsection (6) above, the former mutual surplus of the transferor on the transfer date is—
- (a) the amount given by subsection (8) below, or
- (b) if less, the amount given by subsection (9) below.
- (8) The amount given by this subsection is the total amount of any demutualisation transfer surpluses accruing to the transferor—
- (a) on or after 1st January 1990, and
- (b) on or before the date of the transfer.
- (9) The amount given by this subsection is the lowest amount of unappropriated surplus of the transferor at the end of any period of account ending—
- (a) on or after the date of the last occasion on which a demutualisation transfer surplus accrued to it as mentioned in subsection (8) above, and
- (b) on or before the date of the transfer.
- (10) For the purposes of this section, added surplus accrues to the company in connection with the transfer if—
- (a) an amount of assets is received by the company in connection with the transfer, no later than six months after the date of the transfer,
- (b) the amount is not brought into account by the company,
- (c) the amount is added to the unappropriated surplus of the company, and
- (d) the amount does not derive from any unappropriated surplus of the transferor;
and the amount of the added surplus is the amount referred to in paragraphs (a) to (d) above.
##### 444AH
- (1) The modification in this section has effect for the purposes mentioned in section 444AF(5)(b) only.
- (2) In relation to any demutualisation transfer surplus accruing to a company in a post-2002 period of account—
- (a) the references in section 444AG(5) to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer shall be taken to be references to—
- (i) the amount of that unappropriated surplus, or
- (ii) if less, the unappropriated surplus of the transferor at the end of the period of account immediately preceding the first post-2002 period of account of the transferor; and
- (b) the references in sections 444AF and 444AG to the amount of any demutualisation transfer surplus are to have effect accordingly.
- (3) In this section “*post-2002 period of account*”, in relation to an insurance company, means a period of account of the company beginning on or after 1st January 2003 and ending on or after 9th April 2003.
##### 444AI
- (1) For the purposes of section 444AF—
- (a) there is a reduction in the amount of the company's unappropriated surplus over the relevant period if CUS is less than (OUS + TSI – TSO);
- (b) the amount of that reduction is the amount by which CUS is less than (OUS + TSI – TSO).
- (2) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- TSI is the total amount of any transfer surpluses accruing to the company during the relevant period (see subsections (3) to (7)),
- TSO is the total amount of any transfer surpluses accruing to any other company (or companies) during the relevant period on a transfer (or transfers) of life assurance business by the company to that other company (or companies).
- (3) For the purposes of this section, a transfer surplus accrues to an insurance company where life assurance business is transferred to the company by a person (“*the transferor*”).
- (4) The transfer surplus accrues to the company on the date of the transfer.
- (5) The amount of the transfer surplus is equal to so much of the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer as is transferred to the company under the transfer.
- (6) But if, immediately before the transfer, the transferor carried on the transferred business as mutual business, the amount of the transfer surplus is the aggregate of—
- (a) the amount given by subsection (5) above, and
- (b) the amount of any added surplus accruing to the company in connection with the transfer.
- (7) Subsection (10) of section 444AG applies for the purposes of subsection (6) above as it applies for the purposes of that section.
##### 444AJ
- (1) For the purposes of sections 444AF and 444AK, the amount of the company's relevant receipts reduction for the relevant period is to be calculated by—
- (a) determining, in the case of each with-profits fund of the company, the amount given by subsection (2) or (6) below for the relevant period, and
- (b) aggregating each of those amounts.
- (2) The amount, in the case of a fund other than a policy holder participation fund, is—
- (a) where the gross transfer to non-technical account for the fund for the relevant period (see subsections (3) and (4)) is greater than the post-policy holder surplus for the fund for the relevant period (see subsection (5)), the amount of the difference;
- (b) otherwise, nil.
- (3) In this section “*the gross transfer to non-technical account*” means the amount shown in line 13 of Form 58 for the fund.
- (4) But if—
- (a) there is a transfer from a with-profits fund of the company to another fund of the company (“the initial transfer”) which is shown in (or included in an amount shown in) line 14 of Form 58 for the with-profits fund,
- (b) there is a transfer from a fund of the company (whether or not the other fund mentioned in paragraph (a) above) to the non-technical account which is shown in (or included in an amount shown in) line 13 of Form 58 for that fund, and
- (c) the transfer to the non-technical account can reasonably be regarded as connected with the initial transfer,
the amount of the gross transfer to non-technical account for the relevant period given by subsection (3) above in the case of the with-profits fund is to be increased by the amount transferred to the non-technical account.
- (5) In this section “*post-policy holder surplus*” means an amount equal to—
$$SA-TAP$where—SA is—(a) the amount shown in line 34 of Form 58 for the fund (surplus arising since last valuation), or(b) if that amount is a negative amount, nil;TAP is the amount shown in line 46 of Form 58 for the fund (total allocated to policy holders).$
- (6) The amount, in the case of a policy holder participation fund, is—
- (a) where TAP is greater than SA, the amount of the difference;
- (b) otherwise, nil;
and for this purpose “*SA*” and “*TAP*” have the same meaning as in subsection (5) above.
- (7) References in this section to Form 58 are references to that Form in the periodical return of the company for the relevant period.
- (8) In this section “*policy holder participation fund*” means a fund in the case of which an amount equal to the amount shown in line 34 of Form 58 for the fund is allocated to policy holders for the relevant period.
##### 444AK
- (1) This section applies if at any time in a period of account of an insurance company (“*the relevant period*”)—
- (a) the company carries on life assurance business as mutual business, and
- (b) the company carries on gross roll-up business.
- (2) If there is a reduction in the amount of the company's unappropriated surplus over the relevant period, there shall be deemed for the purposes of section 83(2) of the Finance Act 1989 to be brought into account for the relevant period as an increase in the value of the assets of the company's long-term insurance fund—
- (a) the amount of that reduction, or
- (b) if less, the amount of the company's relevant receipts reduction for the relevant period (see section 444AJ).
- (3) But subsection (2) above shall have effect only for the purposes of computing in accordance with the life assurance trade profits provisions the profits for the relevant period of the company's gross roll-up business.
- (4) If the company prepares for the relevant period one or more such separate revenue accounts as are mentioned in section 83A(2)(b) of the Finance Act 1989—
- (a) subsection (2) above shall apply separately in relation to each separate revenue account which is recognised for the purposes of section 83 of that Act; and
- (b) for that purpose, any amount that falls to be determined in order to determine—
- (i) whether that subsection applies in relation to any such separate revenue account, and
- (ii) if so, the amount to be brought into account under that subsection in relation to that account,
shall be determined using only amounts or items which relate to the separate revenue account concerned.
- (5) In applying subsection (2) above in relation to a revenue account or separate revenue account which—
- (a) is recognised for the purposes of section 83 of that Act, and
- (b) is one in relation to which section 432C applies,
that subsection shall have effect as if paragraph (b) and the word “or” before it were omitted.
- (6) For the purposes of this section, there is a reduction in the amount of the company's unappropriated surplus over the relevant period if—
- (a) CUS is less than OUS, and
- (b) CUS is less than UUS.
- (7) The amount of that reduction is—
- (a) the amount by which CUS is less than OUS, or
- (b) if OUS is greater than UUS, the amount by which CUS is less than UUS.
- (8) In this section—
- CUS is the amount of the company's unappropriated surplus at the end of the relevant period,
- OUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the relevant period,
- UUS is the amount of the company's unappropriated surplus at the end of the period of account immediately preceding the first period of account of the company to begin on or after 1st January 2003 and to end on or after 9th April 2003.
##### 444AL
- (1) This section applies for the purposes of sections 444AF to 444AK.
- (2) References to mutual business, in relation to any time, include business which at that time is treated for the purposes of section 432E as mutual business.
- (3) “*Unappropriated surplus*”, in relation to a period of account of an insurance company, means an unappropriated surplus on valuation as shown in the periodical return of the company for the period of account.
- (4) References to the unappropriated surplus of the transferor at the end of the period of account of the transferor ending immediately before the transfer are, where a period of account of the transferor does not end at that time, references to the unappropriated surplus on valuation that would have been shown in a periodical return of the transferor for that period had such a return been drawn up.
### Provisions applying in relation to overseas life insurance companies
##### 444B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certified unit trusts: distributions.
##### 444C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 444E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Equalisation reserves
##### 444BA
- (1) Subject to the following provisions of this section and to sections 444BB to 444BD, the rules in subsection (2) below shall apply in making any computation, for the purposes of section 35 of CTA 2009 (charge on trade profits), of the profits or losses for any accounting period of an insurance company whose business has at any time been or included business in respect of which it was required, by virtue of equalisation reserve rules, to maintain an equalisation reserve.
- (2) Those rules are—
- (a) that amounts which, in accordance with equalisation reserve rules, are transferred into the equalisation reserve in respect of the company’s business for the accounting period in question are to be deductible;
- (b) that amounts which, in accordance with any such regulations, are transferred out of the reserve in respect of the company’s business for that period are to be treated as receipts of that business; and
- (c) that it must be assumed that all such transfers as are required by equalisation reserve rules to be made into or out of the reserve in respect of the company’s business for any period are made as required.
- (3) Where an insurance company having any business in respect of which it is required, by virtue of equalisation reserve rules, to maintain an equalisation reserve ceases to trade—
- (a) any balance which exists in the reserve at that time for the purposes of the Tax Acts shall be deemed to have been transferred out of the reserve immediately before the company ceases to trade; and
- (b) that transfer out shall be deemed to be a transfer in respect of the company’s business for the accounting period in which the company so ceases and to have been required by equalisation reserve rules.
- (4) Where—
- (a) an amount is transferred into an equalisation reserve in respect of the business of an insurance company for any accounting period,
- (b) the rule in subsection (2)(a) above would apply to the transfer of that amount but for this subsection,
- (c) that company by notice in writing to an officer of the Board makes an election in relation to that amount for the purposes of this subsection, and
- (d) the notice of the election is given not more than two years after the end of that period,
the rule mentioned in subsection (2)(a) above shall not apply to that transfer of that amount and, instead, the amount transferred (the “unrelieved transfer”) shall be carried forward for the purposes of subsection (5) below to the next accounting period and (subject to subsection (6) below) from accounting period to accounting period.
- (5) Where—
- (a) in accordance with equalisation reserve rules, a transfer is made out of an equalisation reserve in respect of an insurance company’s business for any accounting period,
- (b) the rule in subsection (2)(b) above would apply to the transfer but for this subsection, and
- (c) the accounting period is one to which any amount representing one or more unrelieved transfers has been carried forward under subsection (4) above,
that rule mentioned in subsection (2)(b) above shall not apply to that transfer except to the extent (if any) that the amount of the transfer exceeds the aggregate of the amounts representing unrelieved transfers carried forward to that period.
- (6) Where in the case of any company—
- (a) any amount representing one or more unrelieved transfers is carried forward to an accounting period in accordance with subsection (4) above, and
- (b) by virtue of subsection (5) above the rule in subsection (2)(b) above does not apply to an amount representing the whole or any part of any transfer out of an equalisation reserve in respect of the company’s business for that period,
the amount mentioned in paragraph (a) above shall not be carried forward under subsection (4) above to the next accounting period except to the extent (if any) that it exceeds the amount mentioned in paragraph (b) above.
- (7) To the extent that any actual or assumed transfer in accordance with equalisation reserve rules of any amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes—
- (a) the rule in subsection (2)(a) above shall not apply to that transfer; and
- (b) the making of that transfer shall be disregarded in determining, for the purposes of the Tax Acts, whether and to what extent there is subsequently any requirement to make a transfer into or out of the reserve in accordance with equalisation reserve rules;
and this subsection applies irrespective of whether the insurance company in question is a party to the arrangements.
- (8) For the purposes of this section the transfer of an amount into an equalisation reserve is attributable to arrangements entered into wholly or mainly for tax purposes to the extent that the arrangements to which it is attributable are arrangements—
- (a) the sole or main purpose of which is, or
- (b) the sole or main benefit accruing from which might (but for subsection (7) above) be expected to be,
the reduction by virtue of this section of any liability to tax.
- (9) Where—
- (a) any transfer made into or out of an equalisation reserve maintained by an insurance company is made in accordance with equalisation reserve rules in respect of business carried on by that company over a period (“the equalisation period”), and
- (b) parts of the equalisation period are in different accounting periods,
the amount transferred shall be apportioned for the purposes of this section between the different accounting periods in the proportions that correspond to the number of days in the equalisation period that are included in each of those accounting periods.
- (10) The Treasury may by regulations provide in relation to any accounting periods ending on or after 1st April 1996 for specified transitional provisions contained in equalisation reserve rules to be disregarded for the purposes of the Tax Acts in determining how much is required, on any occasion, to be transferred into or out of any equalisation reserve in accordance with the rules.
- (11) In this section, and in sections 444BB to 444BD, “equalisation reserves rules” means the rules in chapter 1.4 of the Insurance Prudential Sourcebook.
##### 444BB
- (1) The Treasury may by regulations make provision modifying section 444BA so as, in cases mentioned in subsection (2) below—
- (a) to require—
- (i) sums by reference to which the amount of any transfer into or out of an equalisation reserve falls to be computed, or
- (ii) the amount of any such transfer,
to be apportioned between different parts of the business carried on for any period by an insurance company; and
- (b) to provide for the purposes of corporation tax for the amounts taken to be transferred into or out of an equalisation reserve to be computed disregarding any such sum or, as the case may be, any such part of a transfer as is attributed, in accordance with the regulations, to a part of the business described for the purpose in the regulations.
- (2) Those cases are cases where an insurance company which, in accordance with equalisation reserve rules, is required to make transfers into or out of an equalisation reserve in respect of any business carried on by that company for any period is carrying on, for the whole or any part of that period—
- (a) any business the income and gains of which fall to be disregarded in making a computation of the company’s profits in accordance with the rules applicable for the purposes of section 35 of CTA 2009 (charge on trade profits), or
- (b) any business by reference to which double taxation relief is afforded in respect of any income or gains.
- (3) Section 444BA shall have effect (subject to any regulations under subsection (1) above) in the case of an equalisation reserve maintained by an insurance company which—
- (a) is not resident in the United Kingdom, and
- (b) carries on business in the United Kingdom through a permanent establishment,
only if such conditions as may be prescribed by regulations made by the Treasury are satisfied in relation to that company and in relation to transfers into or out of that reserve.
- (4) Regulations under this section prescribing conditions subject to which section 444BA is to apply in the case of any equalisation reserve maintained by an insurance company may—
- (a) contain conditions imposing requirements on the company to furnish the Board with information with respect to any matters to which the regulations relate, or to produce to the Board documents or records relating to any such matters; and
- (b) provide that, where any prescribed condition is not, or ceases to be, satisfied in relation to the company or in relation to transfers into or out of that reserve, there is to be deemed for the purposes of the Tax Acts to have been a transfer out of that reserve of an amount determined under the regulations.
- (5) Regulations under this section may—
- (a) provide for apportionments under the regulations to be made in such manner, and by reference to such factors, as may be specified or described in the regulations;
- (b) make different provision for different cases;
- (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit;
- (d) make provision having retrospective effect in relation to accounting periods beginning not more than one year before the time when the regulations are made;
and the powers conferred by this section in relation to transfers into or out of any reserve shall be exercisable in relation to both actual and assumed transfers.
- (6) In this section “*double taxation relief*” means—
- (a) relief under double taxation arrangements which takes the form of a credit allowed against corporation tax, or
- (b) unilateral relief under section 790(1) which takes that form;
and “*double taxation arrangements*” here means arrangements having effect by virtue of section 788.
##### 444BC
- (1) The Treasury may by regulations make provision modifying the operation of section 444BA in relation to cases where an insurance company has, for the purpose of preparing the documents it is required to prepare for the purposes of section 9.3 of the Prudential Sourcebook (Insurers), applied for any period an accounting method described in paragraphs 57 to 59 in Section E of Part 2 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (accounting on a non-annual basis).
- (2) Subsection (5) of section 444BB applies for the purposes of this section as it applies for the purposes of that section.
##### 444BD
- (1) The Treasury may by regulations provide for section 444BA to have effect, in such cases and subject to such modifications as may be specified in the regulations, in relation to any equivalent reserves as it has effect in relation to equalisation reserves maintained by virtue of equalisation reserve rules.
- (2) For the purposes of this section a reserve is an equivalent reserve if—
- (a) it is maintained, otherwise than by virtue of equalisation reserve rules, either—
- (i) by an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (ii) by a firm which has permission under paragraph 4 of Schedule 4 to that Act (as a result of qualifying for authorisation under paragraph 2 of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or
- (iii) in respect of any business which consists of the effecting or carrying out of contracts of insurance and which is carried on outside the United Kingdom by a company resident in the United Kingdom;
- (b) the purpose for which, or the manner in which, it is maintained is such as to make it equivalent to an equalisation reserve maintained by virtue of equalisation reserve rules.
- (3) For the purposes of this section a reserve is also an equivalent reserve if it is maintained in respect of any credit insurance business in accordance with requirements imposed either—
- (a) by or under any enactment, or
- (b) under so much of the law of any territory as secures compliance with the requirements of Article 1 of the credit insurance directive (equalisation reserves for credit insurance).
- (4) Without prejudice to the generality of subsection (1) above, the modifications made by virtue of that subsection may—
- (a) provide for section 444BA to apply in the case of an equivalent reserve only where such conditions as may be specified in the regulations are satisfied in relation to the company maintaining the reserve or in relation to transfers made into or out of it; and
- (b) contain any other provision corresponding to any provision which, in the case of a reserve maintained by virtue of equalisation reserve rules, may be made under sections 444BA to 444BC.
- (5) Subsections (4) and (5) of section 444BB shall apply for the purposes of this section as they apply for the purposes of that section.
- (6) Without prejudice to the generality of section 444BB(5), the transitional provision which by virtue of subsection (5) above may be contained in regulations under this section shall include—
- (a) provision for treating the amount of any transfers made into or out of an equivalent reserve in respect of business carried on for any specified period as increased by the amount by which they would have been increased if no transfers into the reserve had been made in respect of business carried on for an earlier period; and
- (b) provision for excluding from the rule in section 444BA(2)(b) so much of any amount transferred out of an equivalent reserve as represents, in pursuance of an apportionment made under the regulations, the transfer out of that reserve of amounts in respect of which there has been no entitlement to relief by virtue of section 444BA(2)(a).
- (7) In this section—
- “credit insurance business” means business which consists of the effecting or carrying out of contracts of insurance against risks of loss to the persons insured arising from—the insolvency of debtors of theirs, orfrom the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due;
- “*the credit insurance directive*” means Council Directive [87/343/EEC](https://www.legislation.gov.uk/european/directive/1987/0343) of 22nd June 1987 amending, as regards credit insurance and suretyship insurance, First Directive 73/239 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance; . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 458A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 461A
- (1) For the purposes of sections 461B and 461C, a “*qualifying society*” is an incorporated friendly society which—
- (a) immediately before its incorporation, was a registered friendly society to which section 461(2) did not apply,
- (b) was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies and satisfies subsection (2) below, or
- (c) was formed by the amalgamation of two or more friendly societies and satisfies subsection (3) below,
and in respect of which no direction under section 461C(5) is in force.
- (2) A society satisfies this subsection if its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Board.
- (3) If at the time of the amalgamation referred to in subsection (1)(c) above—
- (a) section 461(2) applied to none of the registered friendly societies being amalgamated (if any), and
- (b) all of the incorporated friendly societies being amalgamated (if any) were qualifying societies,
the society formed by the amalgamation satisfies this subsection.
- (4) For the purposes of this section and section 461C, any group of persons which was approved for the purposes of this section (as mentioned in subsection (2) above) by the Friendly Societies Commission immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date.
##### 461B
- (1) Subject to the following provisions of this section, a qualifying society shall, on making a claim, be entitled to exemption from . . . corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business.
- (2) Subsection (1) above shall not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate which is a subsidiary (within the meaning of the Friendly Societies Act 1992) of the society or of which the society has joint control (within the meaning of that Act).
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) If an incorporated friendly society which is not a qualifying society makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of—
- (a) any previous payment so made to him by the society, and
- (b) any earlier repayment of such sums paid by him,
the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution.
- (4) In relation to an incorporated friendly society which, immediately before its incorporation, was a registered friendly society to which section 461(2) applied—
- (a) the references in subsection (3) above to sums paid to the society shall include sums paid to the registered friendly society,
- (b) the reference in subsection (3)(a) above to any payment made by the society shall include any payment made by the registered friendly society after 26 March 1974 or such later date as was specified in any direction under section 461 (7) relating to it, and
- (c) the reference in subsection (3)(b) above to any repayment shall include any repayment made by the registered friendly society.
- (5) Where a qualifying society at any time ceases by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, the company into which the society is converted shall be exempt from . . . corporation tax on its profits arising from any part of its business, other than life or endowment business, which relates to contracts made before that time.
- (6) But if during an accounting period of the company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of its business, the company shall not be exempt from corporation tax by virtue of subsection (5) above for that or any subsequent accounting period.
- (6A) Where—
- (a) at any time an insurance company acquires by way of transfer of engagements from a qualifying society any business other than life or endowment business, and
- (b) immediately before that time the society was exempt from corporation tax on profits arising from that business,
the insurance company shall be exempt from corporation tax on its profits arising from any part of that business which relates to contracts made before that time.
- (6B) But if during an accounting period of the insurance company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on any such part of that business, the company shall not be exempt from corporation tax by virtue of subsection (6A) above for that or any subsequent accounting period.
- (7) Any part of a company’s business to which an exemption under subsection (5) or (6A) above relates shall be treated for the purposes of the Corporation Tax Acts as a separate business from any other business carried on by the company.
- (8) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax by virtue of subsection (5) or (6A) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (9) Regulations under subsection (8) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 461C
- (1) Subject to subsection (2) below, subsections (3) and (4) below apply where a qualifying society—
- (a) begins to carry on business other than life or endowment business, or
- (b) in the opinion of the Board, begins to carry on business other than life or endowment business on an enlarged scale or of a new character.
- (2) Subsections (3) and (4) below do not apply if—
- (a) the society’s business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of section 461 or 461A by the Board, or
- (b) the society’s rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as is authorised for the purposes of section 461.
- (3) If it appears to the Board, having regard to the restrictions imposed by section 461 on registered friendly societies registered after 31st May 1973, that for the protection of the revenue it is expedient to do so, the Board may give a direction to the society under subsection (4) below.
- (4) A direction under this subsection is that (and has the effect that) the society to which it is given shall cease to be a qualifying society as from the date of the direction.
- (5) A society to which a direction is given may, within 30 days of the date on which it is given, appeal against the direction . . . on the ground that—
- (a) it has not begun to carry on business as mentioned in subsection (1) above;
- (b) subsections (3) and (4) above do not apply to it by reason of subsection (2) above; or
- (c) the direction is not necessary for the protection of the revenue.
##### 461D
- (1) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was exempt from corporation tax on profits arising from that business,
the transferee is so exempt after that time.
- (2) But if during an accounting period of the transferee there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on that business, the transferee shall not be exempt from corporation tax by virtue of subsection (1) above for that or any subsequent accounting period.
- (3) Where—
- (a) at any time a friendly society (“*the transferee*”) acquires by way of transfer of engagements or amalgamation from another friendly society (“*the transferor*”) any business, other than life or endowment business, consisting of business which relates to contracts made before that time, and
- (b) immediately before that time the transferor was not exempt from corporation tax on profits arising from that business,
the transferee is not so exempt after that time.
- (4) The Treasury may by regulations provide that, where any business of a friendly society is exempt from corporation tax by virtue of subsection (1) above, or not so exempt by virtue of subsection (3) above, the Corporation Tax Acts have effect subject to such modifications (or exceptions) as the Treasury consider appropriate.
- (5) Regulations under subsection (4) above—
- (a) may make different provision for different cases,
- (b) may include any incidental, supplementary, consequential or transitional provisions which the Treasury consider appropriate, and
- (c) may include retrospective provision.
##### 462A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assessment, recovery and postponement of supplementary charge
##### 465A
- (1) This section applies where any assets of a branch of a registered friendly society have been identified in a scheme under section 6(5) of the Friendly Societies Act 1992 (property, rights etc. excluded from transfer to the society on its incorporation).
- (2) In relation to any time after the incorporation of the society, the assets shall be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any tax liability arising in respect of them shall be a liability of the society rather than of the branch).
- (3) Where, by virtue of this section, tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.
##### 468AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Chapter V.
##### 468C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Cases where ss. 502B to 502G do not apply: lessor also lessee under non-long funding lease
##### 468EE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions of authorised unit trusts: general
##### 468H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Dividend and foreign income distributions
##### 468J
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468K
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Interest distributions
##### 468L
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transactions with substantial donors
##### 468M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468N
- (1) Subsection (2) below applies where—
- (a) an interest distribution is made for a distribution period to a unit holder; and
- (b) the gross income entered in the distribution accounts for the purposes of computing the total amount available for distribution to unit holders does not derive from eligible income entirely.
- (2) Where this subsection applies, the obligation to deduct under section 349(2) shall not apply to the relevant amount of the interest distribution to the unit holder if the residence condition is on the distribution date fulfilled with respect to him.
- (3) Section 468O makes provision with respect to the circumstances in which the residence condition is fulfilled with respect to a unit holder.
- (4) This is how to calculate the relevant amount of the interest distribution—
$$R=AxBC$Where—R = the relevant amount;A = the amount of the interest distribution before deduction of tax to the unit holder in question;B = such amount of the gross income as derives from eligible income;C = the amount of the gross income.$
- (5) In subsection (4) above the references to the gross income are references to the gross income entered as mentioned in subsection (1)(b) above.
##### 468O
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468P
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468PA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468PB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Distributions to corporate unit holder
##### 468Q
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 469A
- (1) The Tax Acts shall have effect in relation to any common investment fund established under section 42 of the Administration of Justice Act 1982 (common investment funds for money paid into court) as if—
- (a) the fund were an authorised unit trust;
- (b) the person who is for the time being the investment manager of the fund were the trustee of that authorised unit trust; and
- (c) the persons with qualifying interests were the unit holders in that authorised unit trust.
- (1A) For the purposes of subsection (1)(c) above, the persons with qualifying interests are—
- (a) in relation to shares in the fund held by the Accountant General, the persons whose interests entitle them, as against him, to share in the fund’s investments;
- (b) in relation to shares in the fund held by any other person authorised by the Lord Chancellor to hold such shares on behalf of others (an “authorised person”)—
- (i) if there are persons whose interests entitle them, as against the authorised person, to share in the fund’s investments, those persons;
- (ii) if not, the authorised person;
- (c) in relation to shares in the fund held by persons authorised by the Lord Chancellor to hold such shares on their own behalf, those persons.
- (2) In this section “*the Accountant General*” means . . . the Accountant General of the Senior Courts of England and Wales or the Accountant General of the Court of Judicature of Northern Ireland.
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 472A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 477A
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . Dividends or interest payable in respect of shares in, or deposits with or loans to, a building society shall be dealt with for the purposes of corporation tax as follows—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) no part of any such dividends or interest . . . shall be treated as a distribution of the society or as franked investment income of any company resident in the United Kingdom.
- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9) In this section “*dividend*” includes any distribution (whether or not described as a dividend).
- (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 477B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 480A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 480B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Atomic Energy Authority and National Radiological Protection Board.
##### 480C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provisions supplementary to section 520.
##### 482A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### PETROLEUM EXTRACTION ACTIVITIES
##### 494AA
- (1) This section applies where—
- (a) a company (“*the seller*”) carrying on a trade has disposed of an asset which was used for the purposes of that trade, or an interest in such an asset;
- (b) the asset is used, under a lease, by the seller or a company associated with the seller (“*the lessee*”) for the purposes of a ring fence trade carried on by the lessee; and
- (c) the lessee uses the asset before the end of the period of two years beginning with the disposal.
- (2) Subject to subsection (4) below, subsection (3) below applies to so much (if any) of the expenditure incurred by the lessee under the lease as—
- (a) falls, in accordance with generally accepted accounting practice, to be treated in the accounts of the lessee as a finance charge;. . . or
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (c) falls, if the case is one where the lease is a long funding operating lease, to be deductible in computing the profits of the lessee for the purposes of corporation tax (after first making against any such expenditure any reductions falling to be made by virtue of section 502K).
- (3) The expenditure shall not be allowable in computing for the purposes of Part 3 of CTA 2009 the profits of the ring fence trade.
- (4) Expenditure shall not be disallowed by virtue of subsection (3) above to the extent that the disposal referred to in subsection (1) above is made for a consideration which—
- (a) is used to meet expenditure incurred by the seller in carrying on oil extraction activities or in acquiring oil rights otherwise than from a company associated with the seller; or
- (b) is appropriated to meeting expenditure to be so incurred by the seller.
- (5) Where any expenditure—
- (a) would apart from subsection (3) above be allowable in computing for the purposes of Part 3 of CTA 2009 the profits of the ring fence trade for an accounting period, but
- (b) by virtue of that subsection is not so allowable,
that expenditure shall be brought into account for the purposes of Part 5 of CTA 2009 as if it were a non-trading debit in respect of a loan relationship of the lessee for that accounting period.
- (6) In this section —
- “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act);
- “*lease*”, in relation to an asset, has the same meaning as in sections 781 to 784.
##### 494A
- (1) In section 403(3) (availability of charges, UK property business losses and management expenses for surrender as group relief) the reference to the gross profits of the surrendering company for an accounting period does not include the company’s relevant ring fence profits for that period.
- (2) If for that period—
- (a) there are no charges on income paid by the company that are allowable under section 338, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
all the company’s ring fence profits are relevant ring fence profits.
- (3) In any other case the company’s relevant ring fence profits are so much of its ring fence profits as exceeds the amount of the charges on income paid by the company as—
- (a) are allowable under section 338 for that period, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 496A
Schedule 19B to this Act (exploration expenditure supplement) shall have effect.
##### 496B
Schedule 19C to this Act (ring fence expenditure supplement) shall have effect.
#### Sale and lease-back.
##### 501A
- (1) Where in any accounting period beginning on or after 17th April 2002 a company carries on a ring fence trade, a sum equal to 20 per cent of its adjusted ring fence profits for that period shall be charged on the company as if it were an amount of corporation tax chargeable on the company.
- (2) A company’s adjusted ring fence profits for an accounting period are the amount which, on the assumption mentioned in subsection (3) below, would be determined for that period (in accordance with this Chapter) as the profits of the company’s ring fence trade chargeable to corporation tax.
- (3) The assumption is that financing costs are left out of account in computing—
- (a) the amount of the profits or loss of any ring fence trade of the company’s for each accounting period beginning on or after 17th April 2002; and
- (b) where for any such period the whole or part of any loss relief is surrendered to the company in accordance with section 492(8), the amount of that relief or, as the case may be, that part.
- (4) For the purposes of this section, “*financing costs*” means the costs of debt finance.
- (5) In calculating the costs of debt finance for an accounting period the matters to be taken into account include—
- (a) any costs giving rise to debits in respect of debtor relationships of the company under Part 5 of CTA 2009 (loan relationships) , other than debits in respect of exchange losses from such relationships (see section 475 of that Act);
- (b) any exchange gain or loss from a debtor relationship, within the meaning of that Part (see section 475 of that Act), in relation to debt finance;
- (c) any credit or debit falling to be brought into account in accordance with Part 7 of CTA 2009 (derivative contracts) in relation to debt finance;
- (d) the financing cost implicit in a payment under a finance lease;
- (dd) where the company is the lessee under a long funding operating lease, the amount deductible in respect of payments under the lease in computing the profits of the lessee for the purposes of corporation tax (after first making against any such amount any reductions falling to be made by virtue of section 502K); and
- (e) any other costs arising from what would be considered in accordance with generally accepted accounting practice to be a financing transaction.
- (6) Where an amount representing the whole or part of a payment falling to be made by a company—
- (a) falls (or would fall) to be treated as a finance charge under a finance lease for the purposes of accounts relating to that company and one or more other companies and prepared in accordance with generally accepted accounting practice, but
- (b) is not so treated in the accounts of the company,
the amount shall be treated for the purposes of this section as financing costs falling within subsection (5)(d) above.
- (7) If—
- (a) in computing the adjusted ring fence profits of a company for an accounting period, an amount falls to be left out of account by virtue of subsection (5)(d) above, but
- (b) the whole or any part of that amount is repaid,
the repayment shall also be left out of account in computing the adjusted ring fence profits of the company for any accounting period.
- (8) In this section “*finance lease*” means any arrangements—
- (a) which provide for an asset to be leased or otherwise made available by a person to another person (“*the lessee*”), and
- (b) which, under generally accepted accounting practice,—
- (i) fall (or would fall) to be treated, in the accounts of the lessee or a person connected with the lessee, as a finance lease or a loan, or
- (ii) are comprised in arrangements which fall (or would fall) to be so treated.
- (9) For the purposes of applying subsection (8)(b) above, the lessee and any person connected with the lessee are to be treated as being companies which are incorporated in a part of the United Kingdom.
- (10) In this section “*accounts*”, in relation to a company, includes any accounts which—
- (a) relate to two or more companies of which that company is one, and
- (b) are drawn up in accordance with generally accepted accounting practice.
- (11) In this section “*long funding operating lease*” means a long funding operating lease for the purposes of Part 2 of the Capital Allowances Act (see section 70YI(1) of that Act).
- (12) This section is subject to Schedule 44 to the Finance Act 2009.
##### 501B
- (1) Subject to subsection (3) below, the provisions of section 501A(1) relating to the charging of a sum as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Acts, and to any necessary modifications, all enactments applying generally to corporation tax, including—
- (a) those relating to returns of information and the supply of accounts, statements and reports;
- (b) those relating to the assessing, collecting and receiving of corporation tax;
- (c) those conferring or regulating a right of appeal; and
- (d) those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
- (2) Accordingly (but without prejudice to subsection (1) above) the Management Act shall have effect as if any reference to corporation tax included a reference to a sum chargeable under section 501A(1) as if it were an amount of corporation tax.
- (3) In any regulations made under section 32 of the Finance Act 1998 (as at 17th April 2002, the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations 1999)—
- (a) references to corporation tax do not include a reference to a sum chargeable on a company under section 501A(1) as if it were corporation tax; and
- (b) references to profits charged to corporation tax do not include a reference to adjusted ring fence profits, within the meaning of section 501A(1).
- (4) In this section “*the Taxes Acts*” has the same meaning as in the Management Act.
### Chapter 5A — Special rules for long funding leases of plant or machinery: corporation tax
### Introductory
##### 502A
This Chapter has effect for the purposes of corporation tax only.
### Lessors under long funding finance leases
##### 502B
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessor of any plant or machinery under a long funding finance lease.
- (2) The amount to be brought into account as the lessor's taxable income from the lease for the period of account is the amount of the rental earnings in respect of the lease for the period of account.
- (3) The “rental earnings” for any period is the amount which, in accordance with generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment for that period in respect of the lease where it meets the finance lease test.
- (4) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan in the accounts in question, so much of the rentals under the lease as fall (or would fall) to be treated as interest are to be treated for the purposes of this section as rental earnings.
##### 502C
- (1) This section applies for determining for the purposes of corporation tax the profits of a company which is or has been the lessor under a long funding finance lease.
- (2) This section has effect where a profit or loss (whether of an income or capital nature)—
- (a) arises to the company in connection with the lease, and
- (b) in accordance with generally accepted accounting practice falls to be recognised for accounting purposes in a period of account, but
- (c) would not, apart from this section, be brought into account in computing the profits of the company for the purposes of corporation tax.
- (3) The profit or loss is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (4) Any reference in this section to an amount falling to be recognised for accounting purposes in a period of account is a reference to an amount falling to be recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in computing the company's profits or losses for that period.
##### 502D
- (1) This section applies for determining the liability to corporation tax of a company which is or has been the lessor under a long funding finance lease.
- (2) Where—
- (a) the lease terminates, and
- (b) a sum calculated by reference to the termination value is paid to the lessee,
no deduction in respect of the sum paid to the lessee is allowed in computing the profits of the company.
- (3) This section does not prevent a deduction in respect of a sum to the extent that the sum is brought into account in determining the company's rental earnings.
### Lessors under long funding operating leases
##### 502E
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account—
- (a) for the whole of which, or
- (b) for any part of which,
the company is the lessor of any plant or machinery under a long funding operating lease.
- (2) A deduction is allowed in computing the profits of the company for the period of account.
- (3) The amount of the deduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) if the only use of the plant or machinery by the lessor has been the leasing of it under the long funding operating lease as a qualifying activity, cost;
- (b) if the last previous use of the plant or machinery by the lessor was the leasing of it under another long funding operating lease as a qualifying activity, market value;
- (c) if the last previous use of the plant or machinery by the lessor was the leasing of it under a long funding finance lease as a qualifying activity, the recognised value;
- (d) if the last previous use of the plant or machinery by the lessor was for the purposes of a qualifying activity other than leasing under a long funding lease, the lower of cost and market value;
- (e) if the lessor owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but—
- (i) the plant or machinery is brought into use by the lessor for the purposes of a qualifying activity on or after 1st April 2006, and
- (ii) that qualifying activity is the leasing of the plant or machinery under the long funding operating lease,
the relevant value is the lower of first use market value and first use amortised value.
- (5) In subsection (4) above—
- “*cost*” means the amount of the expenditure incurred by the lessor on the provision of the plant or machinery;
- “*first use amortised value*” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity, on the assumption that—the cost of acquiring the plant or machinery had been written off on a straight line basis over the remaining useful economic life of the plant or machinery, andany further capital expenditure incurred had been written off on a straight line basis over so much of the remaining economic life of the plant or machinery as remains at the time when the expenditure is incurred;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity;
- “*market value*” means the market value of the plant or machinery at the commencement of the term of the long funding operating lease;
- “*recognised value*” means the value at which the plant or machinery is recognised in the books or other financial records of the lessor at the commencement of the long funding operating lease.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(e) above, would have been) expected to be the residual value of the plant or machinery,
to find the expected gross reduction in value over the term of the lease.
- (7) Apportion the amount of that expected gross reduction in value to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the deduction for any period of account is the amount so apportioned to that period.
##### 502F
- (1) This section applies if in any period of account—
- (a) a company is the lessor of any plant or machinery under a long funding operating lease,
- (b) the company incurs capital expenditure in relation to the plant or machinery, and
- (c) that capital expenditure (the “additional expenditure”) is not reflected in the market value of the plant or machinery at the commencement of the term of the lease.
- (2) In a case falling within section 502E(4)(e) above, subsection (1)(c) above has effect as if the reference to the commencement of the term of the lease were a reference to the time when the plant or machinery is first brought into use by the lessor for the purposes of the qualifying activity.
- (3) Where this section applies, an additional deduction is allowed in computing the profits of the company for each post-expenditure period of account in which the company is the lessor of the plant or machinery under the lease.
- (4) The amount of the deduction for any such period of account is to be determined as follows.
- (5) Find ARV, CRV, PRV, and TRV where—
- “ARV” is the amount which, at the time when the additional expenditure is incurred, is expected to be the residual value of the plant or machinery;
- “CRV” is the amount which, at the commencement of the term of the lease, is expected to be the residual value of the plant or machinery;
- “PRV” is the sum of any amounts that fell to be taken into account as RRV (see subsection (6)) in the application of this section in relation to any previous additional expenditure incurred by the company in relation to the leased plant or machinery;
- “TRV” is the total of CRV and PRV.
- (6) Find RRV, where—
- (a) if ARV exceeds TRV, RRV is the portion of the excess that is a result of the additional expenditure, but
- (b) if ARV does not exceed TRV, RRV is nil.
- (7) From—
- (a) the amount of the additional expenditure,
subtract
- (b) RRV,
to find the expected partial reduction in value over the remainder of the term of the lease.
- (8) Apportion the amount of that expected partial reduction in value to each post-expenditure period of account in which any part of the term of the lease falls.
- (9) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each post-expenditure period of account.
- (10) The amount of the additional deduction for any period of account is the amount so apportioned to that period.
- (11) In this section “*post-expenditure period of account*” means any period of account ending after the incurring of the additional expenditure.
##### 502G
- (1) This section applies for determining the liability to corporation tax of a company which is the lessor immediately before the termination of a long funding operating lease.
- (2) Step 1 is to find—
- (a) the termination amount (TA);
- (b) the total of any sums paid to the lessee that are calculated by reference to the termination value (LP).
- (3) Step 2 is to find—
- (a) the relevant value for the purposes of section 502E(6)(a) (RV);
- (b) the total of the deductions allowable under section 502E for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD1);
- (c) the amount, if any, (ERV) by which RV exceeds TD1.
- (4) Step 3 is to find—
- (a) the total of any amounts of capital expenditure incurred by the company which constitute additional expenditure for the purposes of section 502F in the case of the lease (TAE);
- (b) the total of any deductions allowable under section 502F for periods of account for the whole or part of which the company was the lessor before the termination of the lease (TD2);
- (c) the amount, if any, (EAE) by which TAE exceeds TD2.
- (5) Step 4 is to find the total of ERV and EAE (T).
- (6) If (TA – LP) exceeds T, treat a profit of an amount equal to the excess as arising to the company in the period of account in which the lease terminates.
- (7) If T exceeds (TA – LP), treat a loss of an amount equal to the excess as arising to the company in that period of account.
- (8) A profit or loss treated as arising to the company under subsection (6) or (7) above is to be treated—
- (a) in the case of a profit, as income of the company attributable to the lease,
- (b) in the case of a loss, as a revenue expense incurred by the company in connection with the lease.
- (9) In computing the profits of the company, no deduction is allowed in respect of any sums paid to the lessee that are calculated by reference to the termination value.
### Lessors under long funding finance or operating leases: avoidance etc
#### Tariff receipts and tax-exempt tariffing receipts
##### 502GA
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if the following condition is met.
- (2) The condition is that any part of the expenditure incurred by the company on the acquisition of the plant or machinery for leasing under the lease—
- (a) is (apart from those sections) allowable as a deduction in calculating its profits or losses for the purposes of corporation tax, and
- (b) is so allowable as a result of the plant or machinery forming part of its trading stock.
- (3) For the purposes of this section the cases in which expenditure incurred by a company on the acquisition of any plant or machinery for leasing under a lease is allowable as such a deduction include any case where—
- (a) the company becomes entitled to the deduction at any time after the expenditure is incurred, and
- (b) the deduction arises as a result of the plant or machinery forming part of its trading stock at that time.
- (4) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) the condition in subsection (2) is met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (5) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (4).
##### 502GB
- (1) This section applies if—
- (a) a company is the lessee of any plant or machinery under a lease (“lease A”) that is not a long funding lease,
- (b) it enters into a lease (“lease B”) of any of that plant or machinery (as lessor), and
- (c) lease B is a long funding lease.
- (2) Sections 502B to 502G do not apply in relation to lease B.
- (3) If by virtue of section 70H of the Capital Allowances Act (tax return by lessee treating lease as long funding lease) lease A becomes a long funding lease (and does not cease to be such a lease), treat this section as never having applied in relation to lease B.
##### 502GC
- (1) Sections 502B to 502G do not apply in the case of a company which is or has been the lessor of any plant or machinery under a long funding lease if conditions A to C are met.
- (2) Condition A is that the long funding lease forms part of any arrangement entered into by the company which includes one or more other transactions (whether the arrangement is entered into before or after or at the inception of the lease).
- (3) Condition B is that the main purpose, or one of the main purposes, of the arrangement is to secure that, over the relevant period, there would be a substantial difference between—
- (a) the total amount of the amounts under the arrangement which are, in accordance with generally accepted accounting practice, recognised in determining the company's profit or loss for any period or taken into account in calculating the amounts which are so recognised, and
- (b) the total amount of the amounts under the arrangement which are taken into account in calculating the profits or losses of the company for the purposes of corporation tax.
- (4) For the purposes of condition B “*the relevant period*” means the period which begins with the inception of the lease and ends with the end of the term of the lease.
- (5) Condition C is that the difference would be attributable (wholly or partly) to the application of any of sections 502B to 502G in relation to the company by reference to the plant or machinery under the lease.
- (6) The reference in this section to an amount being recognised in determining a company's profit or loss for a period is to an amount being recognised for accounting purposes—
- (a) in the company's profit and loss account or income statement,
- (b) in the company's statement of recognised gains and losses or statement of changes in equity, or
- (c) in any other statement of items brought into account in calculating the company's profits and losses for that period.
- (7) For the purposes of this section it does not matter whether the parties to any transaction which forms part of the arrangement differ from the parties to any of the other transactions.
- (8) For the purposes of this section the cases in which two or more transactions are to be taken as forming part of an arrangement include any case in which it would be reasonable to assume that one or more of them—
- (a) would not have been entered into independently of the other or others, or
- (b) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
- (9) If—
- (a) at any time any of sections 502B to 502G has applied for determining the amounts to be taken into account in calculating the profits or losses of the company for the purposes of corporation tax, and
- (b) conditions A to C are met at any subsequent time,
those amounts, and any other amounts which (as a result of this section) are to be so taken into account, are subject to such adjustments as are just and reasonable.
- (10) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (9).
##### 502GD
- (1) If a company is or has been a lessor under a long funding lease of a film, sections 502B to 502G do not apply in respect of the lease.
- (2) “*Film*” has the same meaning as in Part 15 of CTA 2009 (see section 1181 of that Act).
### Insurance company as lessor
##### 502H
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Lessees under long funding finance leases
#### Introductory.
##### 502I
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding finance lease.
- (2) In calculating the company's profits for the period of account,—
- (a) the amount deducted in respect of amounts payable under the lease,
must not exceed
- (b) the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company's accounts as finance charges in respect of the lease.
- (3) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, subsection (2) above applies as if the lease were one which, under generally accepted accounting practice, fell to be treated as a finance lease.
##### 502J
- (1) This section applies where—
- (a) a company is or has been the lessee under a long funding finance lease, and
- (b) in connection with the termination of the lease, a payment calculated by reference to the termination value falls to be made to the company.
- (2) The payment is not to be brought into account in determining for the purposes of corporation tax the profits of the company for any period of account.
- (3) Subsection (2) above does not affect the amount of any disposal value that falls to be brought into account by the company under the Capital Allowances Act.
### Lessees under long funding operating leases
##### 502K
- (1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding operating lease.
- (2) The deductions that may be allowed in computing the profits of the company for the period of account are to be reduced in accordance with the following provisions of this section.
- (3) The amount of the reduction for any period of account is to be determined as follows.
- (4) First, find the “*relevant value*” for the purposes of subsection (6)(a) below, which is—
- (a) the market value of the plant or machinery at the commencement of the term of the lease, unless paragraph (b) below applies;
- (b) if the lessee—
- (i) has the use of the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but
- (ii) brings the plant or machinery into use for the purposes of a qualifying activity on or after 1st April 2006,
the lower of first use market value and first use amortised market value.
- (5) In subsection (4) above—
- “*first use amortised market value*” means the value that the plant or machinery would have—at the time when it is first brought into use for the purposes of the qualifying activity, buton the assumption that the market value of the plant or machinery at the commencement of the term of the lease had been written off on a straight line basis over the remaining useful economic life of the plant or machinery;
- “*first use market value*” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity.
- (6) From—
- (a) the relevant value determined in accordance with subsection (4) above,
subtract
- (b) the amount which, at the commencement of the term of the lease, is (or, in a case falling within subsection (4)(b) above, would have been) expected to be the market value of the plant or machinery at the end of the term of the lease,
to find the expected gross reduction over the term of the lease.
- (7) Apportion the amount of that expected gross reduction to each period of account in which any part of the term of the lease falls.
- (8) The apportionment must be on a time basis according to the proportion of the term of the lease that falls in each period of account.
- (9) The amount of the reduction for any period of account is the amount so apportioned to that period.
### Interpretation of Chapter
##### 502L
- (1) This section has effect for the interpretation of this Chapter.
- (2) In this Chapter—
- “*qualifying activity*” has the same meaning as in Part 2 of the Capital Allowances Act;
- “*residual value*”, in relation to any plant or machinery leased under a long funding operating lease, means—the estimated market value of the plant or machinery on a disposal at the end of the term of the lease,lessthe estimated costs of that disposal.
- (3) Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to—
- (a) the sum being apportioned between each of the periods of account in which any part of the writing-off period falls,
- (b) that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and
- (c) the sum being written off accordingly.
- (4) Chapter 6A of Part 2 of the Capital Allowances Act (interpretation of provisions about long funding leases) applies in relation to this Chapter as it applies in relation to that Part.
##### 504A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
#### Old societies.
##### 506A
- (1) This section applies to the following transactions—
- (a) the sale or letting of property by a charitable company to a substantial donor,
- (b) the sale or letting of property to a charitable company by a substantial donor,
- (c) the provision of services by a charitable company to a substantial donor,
- (d) the provision of services to a charitable company by a substantial donor,
- (e) an exchange of property between a charitable company and a substantial donor,
- (f) the provision of financial assistance by a charitable company to a substantial donor,
- (g) the provision of financial assistance to a charitable company by a substantial donor, and
- (h) investment by a charitable company in the business of a substantial donor.
- (2) For the purposes of this section a person is a substantial donor to a charitable company in respect of an accounting period if—
- (a) the charitable company receives relievable gifts of at least £25,000 from him in a period of 12 months in which the accounting period wholly or partly falls, or
- (b) the charitable company receives relievable gifts of at least £150,000 from him in a period of six years in which the accounting period wholly or partly falls;
and if a person is a substantial donor to a charitable company in respect of an accounting period by virtue of paragraph (a) or (b), he is a substantial donor to the charitable company in respect of the following five accounting periods.
- (3) A payment made by a charitable company to a substantial donor in the course of or for the purposes of a transaction to which this section applies shall be treated for the purposes of section 505 as non-charitable expenditure.
- (4) If the terms of a transaction to which this section applies are less beneficial to the charitable company than terms which might be expected in a transaction at arm's length, the charitable company shall be treated for the purposes of section 505 as incurring non-charitable expenditure equal to that amount which the Commissioners for Her Majesty's Revenue and Customs determine as the cost to the charitable company of the difference in terms.
- (5) A payment by a charitable company of remuneration to a substantial donor shall be treated for the purposes of section 505 as non-charitable expenditure unless it is remuneration, for services as a trustee, which is approved by—
- (a) the Charity Commission,
- (b) another body with responsibility for regulating charities by virtue of legislation having effect in respect of any Part of the United Kingdom, or
- (c) a court.
##### 506B
- (1) Section 506A shall not apply to a transaction within section 506A(1)(b) or (d) if the Commissioners for Her Majesty's Revenue and Customs determine that the transaction—
- (a) takes place in the course of a business carried on by the substantial donor,
- (b) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (c) is not part of an arrangement for the avoidance of any tax.
- (2) Section 506A shall not apply to the provision of services to a substantial donor if the Commissioners determine that the services are provided—
- (a) in the course of the actual carrying out of a primary purpose of the charitable company, and
- (b) on terms which are no more beneficial to the substantial donor than those on which services are provided to others.
- (3) Section 506A shall not apply to the provision of financial assistance to a charitable company by a substantial donor if the Commissioners determine that the assistance—
- (a) is on terms which are no less beneficial to the charitable company than those which might be expected in a transaction at arm's length, and
- (b) is not part of an arrangement for the avoidance of any tax.
- (4) Section 506A shall not apply to investment by a charitable company in the business of a substantial donor where the investment takes the form of the purchase of shares or securities listed on a recognised stock exchange.
- (5) A disposal at an undervalue in respect of which relief is available under section 587B of this Act or section 431 of ITA 2007 (gifts of shares, securities and real property to charities etc) shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (6) A disposal at an undervalue to which section 257(2) of the 1992 Act (gifts of chargeable assets) applies shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
- (7) In the application of section 506A payments by a charitable company, or benefits arising to a substantial donor from a transaction, shall be disregarded in so far as they relate to a donation by the donor, and—
- (a) if the donation is made by a company, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 339 because of subsection (3B)(b) of that section (restrictions on associated benefits), or
- (b) if the donation is made by an individual, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 416 of ITA 2007 because of subsection (7)(b) of that section (restrictions on associated benefits).
- (8) A company which is wholly owned by a charity within the meaning of section 339(7AB) shall not be treated as a substantial donor in relation to a charitable company which owns it (or any part of it).
- (9) A registered social landlord or housing association shall not be treated as a substantial donor in relation to a charitable company with which it is connected; and for that purpose—
- (a) “*registered social landlord or housing association*” means a body entered on a register maintained under—
- (i) section 1 of the Housing Act 1996,
- (ii) section 57 of the Housing (Scotland) Act 2001, or
- (iii) Article 14 of the Housing (Northern Ireland) Order 1992, and
- (b) a body and a charitable company are connected if (and only if)—
- (i) the one is wholly owned, or subject to control, by the other, or
- (ii) both are wholly owned, or subject to control, by the same person.
##### 506C
- (1) A gift is “*relievable*” for the purposes of section 506A(2) if relief is available in respect of it under—
- (a) section 105 of CTA 2009,
- (b) section 339,
- (c) sections 587B and 587C,
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (e) section 257 of the 1992 Act (gifts of chargeable assets),
- (f) section 63 of the Capital Allowances Act (gifts of plant and machinery),
- (g) sections 713 to 715 of ITEPA 2003 (payroll giving),
- (h) section 108 of ITTOIA 2005 (gifts of trading stock), . . .
- (i) sections 628 and 630 of ITTOIA 2005 (gifts from settlor-interested trusts), or
- (j) Chapters 2 and 3 of Part 8 of ITA 2007 (gift aid and gifts of shares, securities and real property).
- (2) A charitable company is treated as incurring expenditure in accordance with section 506A(4) at such time (or times) as the Commissioners determine.
- (3) Section 506A applies to a transaction entered into in an accounting period with a person who is a substantial donor in respect of that period, even if it was not until after the transaction was entered into that he first satisfied the definition of “substantial donor” in respect of that period.
- (4) Either or both of subsections (3) and (4) of section 506A may be applied to a single transaction; but any amount of non-charitable expenditure which a charitable company is treated as incurring under section 506A(3) in respect of a transaction shall be deducted from any amount which it would otherwise be treated as incurring under section 506A(4) in respect of the transaction.
- (5) A charitable company and any other charities with which it is connected are to be treated as a single charitable company for the purposes of section 506A and 506B and this section; and for this purpose “*connected*” means connected in a matter relating to the structure, administration or control of a charity.
- (6) Where remuneration is paid otherwise than in money, section 506A(5) shall apply as to a payment in money of the amount that would, under Part 3 of ITEPA 2003, be the cash equivalent of the remuneration as a benefit.
- (7) In sections 506A and 506B and this section—
- (a) a reference to a substantial donor or other person includes a reference to a person connected with him within the meaning of section 839,
- (b) “*financial assistance*” includes, in particular—
- (i) the provision of a loan, guarantee or indemnity, and
- (ii) entering into alternative finance arrangements within the meaning of section 46 of the Finance Act 2005 or section 501(2) of CTA 2009, and
- (c) a reference to a gift of a specified amount includes a reference to a non-monetary gift of that value.
- (8) On an appeal against an assessment the tribunal may review a decision of the Commissioners in connection with section 506A.
- (9) The Treasury may by regulations vary a sum, or a period of time, specified in section 506A(2).
#### Eligibility for relief.
##### 508A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 508B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 510A
- (1) In this section “*grouping*” means a European Economic Interest Grouping formed in pursuance of Council Regulation [(EEC) No. 2137/85](https://www.legislation.gov.uk/european/regulation/1985/2137) of 25th July 1985, whether registered in Great Britain, in Northern Ireland, or elsewhere.
- (2) Subject to the following provisions of this section, for the purposes of charging corporation tax a grouping shall be regarded as acting as the agent of its members.
- (3) In accordance with subsection (2) above—
- (a) for the purposes mentioned in that subsection the activities of the grouping shall be regarded as those of its members acting jointly and each member shall be regarded as having a share of its property, rights and liabilities; . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but paragraph (a) above is subject to subsection (6A) below.
- (4) Subject to subsection (5) below, for the purposes of this section a member’s share of any property, rights or liabilities of a grouping shall be determined in accordance with the contract under which the grouping is established.
- (5) Where the contract does not make provision as to the shares of members in the property, rights or liabilities in question a member’s share shall be determined by reference to the share of the profits of the grouping to which he is entitled under the contract (and if the contract makes no provision as to that, the members shall be regarded as having equal shares).
- (6) . . . Where any trade or profession is carried on by a grouping it shall be regarded for the purposes of charging corporation tax as carried on in partnership by the members of the grouping.
- (6A) Part 5 of CTA 2009 (loan relationships) shall have effect in relation to a grouping as it has effect in relation to a partnership (see in particular Chapter 9 of that Part and sections 467 and 472 to 474 of that Act).
- (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 519A
- (1) A health service body shall be exempt from corporation tax.
- (2) In this section “*health service body*” means—
- (a) a Strategic Health Authority established under section 13 of the National Health Service Act 2006. . . . . . ;
- (aa) a Special Health Authority established under section 28 of that Act or section 22 of the National Health Service (Wales) Act 2006;
- (ab) a Primary Care Trust;
- (aba) a Local Health Board;
- (b) a National Health Service trust established under section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006;
- (bb) an NHS foundation trust
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (d) a Health Board or Special Health Board, the Common Services Agency for the Scottish Health Service and a National Health Service trust respectively constituted under sections 2, 10 and 12A of the National Health Service (Scotland) Act 1978;
- (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (g) the Scottish Dental Practice Board; . . .
- (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (i) a Health and Social Services Board and the Northern Ireland Central Services Agency for the Health and Social Services established under Articles 16 and 26 respectively of the Health and Personal Social Services (Northern Ireland) Order 1972;
- (j) a special health and social services agency established under the Health and Personal Social Services (Special Agencies) (Northern Ireland) Order 1990; and
- (k) a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991.
- (3) The Treasury may by order disapply subsection (1) in relation to a specified activity, or class of activity, of an NHS foundation trust.
- (4) An order under subsection (3) shall make provision for determining the amount of the profits relating to an activity that are to be charged to corporation tax as a result of the disapplication of subsection (1).
- (5) An order under subsection (3) may, in particular—
- (a) make provision for disregarding profits of less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (b) make provision for disregarding a specified part of profits in respect of a financial year or accounting period or a specified part of a financial year or accounting period;
- (c) make provision for disregarding all or part of profits relating to activity in respect of which receipts or turnover (as defined by the order) are less than a specified amount in respect of a financial year or accounting period or a specified part of a financial year or accounting period.
- (6) An order under subsection (3)—
- (a) may apply, with or without modification, a provision of the Tax Acts,
- (b) may disapply a provision of the Tax Acts,
- (c) may make provision similar to a provision of the Tax Acts, and
- (d) may make provision generally or in relation to a specified body or class of bodies.
- (7) The Treasury may make an order under subsection (3) only—
- (a) in relation to an activity or class of activity that appears to the Treasury to be of a commercial nature,
- (b) where it appears to the Treasury to be expedient for the purpose of avoiding, removing or reducing differences between—
- (i) the fiscal treatment of the body undertaking the activity, and
- (ii) the fiscal treatment of another body or class of body which is of a commercial nature and which undertakes or might undertake the same or a similar activity, and
- (c) if a draft has been laid before, and approved by resolution of, the House of Commons.
- (8) An activity authorised under section 43(1) of the National Health Service Act 2006 shall not be treated as an activity of a commercial nature for the purposes of subsection (7)(a).
#### Information: supplementary provisions
#### Regulations in relation to qualifying policies
#### Overseas life assurance business: life policies.
#### Provisions supplementary to sections 573 and 575.
#### The qualifying subsidiaries requirement
### Designs
##### 537A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 537B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The property managing subsidiaries requirement
##### 539ZA
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##### 539A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for individuals.
##### 546A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 546D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 547A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 548A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Gifts of shares, securities and real property to charities etc
##### 548B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 551A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 552ZA
- (1) This section supplements section 552 and shall be construed as one with it.
- (2) Where the obligations under any policy or contract of the body that issued, entered into or effected it (“*the original insurer*”) are at any time the obligations of another body (“*the transferee*”) to whom there has been a transfer of the whole or any part of a business previously carried on by the original insurer, section 552 shall have effect in relation to that time, except where the chargeable event—
- (a) happened before the transfer, and
- (b) in the case of a death or an assignment, is an event of which the notification mentioned in subsection (6) or (7) of that section was given before the transfer,
as if the policy or contract had been issued, entered into or effected by the transferee.
- (3) Where, in consequence of . . . section 514(1) of ITTOIA 2005, paragraph (a) or (b) of section 552(1) requires certificates to be delivered in respect of two or more surrenders, happening in the same year, of part of or a share in the rights conferred by the policy or contract, a single certificate may be delivered under the paragraph in question in respect of all those surrenders (and may treat them as if they together constituted a single surrender) unless between the happening of the first and the happening of the last of them there has been—
- (a) an assignment of part of or a share in the rights conferred by the policy or contract; or
- (b) an assignment, otherwise than for money or money’s worth, of the whole of the rights conferred by the policy or contract.
- (4) Where the appropriate policy holder is two or more persons—
- (a) section 552(1)(a) requires a certificate to be delivered to each of them; but
- (b) nothing in section 552 or this section requires a body to deliver a certificate under subsection (1)(a) of that section to any person whose address has not been provided to the body (or to another body, at a time when the obligations under the policy or contract were obligations of that other body).
- (5) A certificate under section 552(1)(b) or (3)—
- (a) shall be in a form prescribed for the purpose by the Board; and
- (b) shall be delivered by any means prescribed for the purpose by the Board;
and different forms, or different means of delivery, may be prescribed for different cases or different purposes.
- (6) The Board may by regulations make such provision as they think fit for securing that they are able—
- (a) to ascertain whether there has been or is likely to be any contravention of the requirements of section 552 or this section; and
- (b) to verify any certificate under that section.
- (7) Regulations under subsection (6) above may include, in particular, provisions requiring persons to whom premiums under any policy are or have at any time been payable—
- (a) to supply information to the Board; and
- (b) to make available books, documents and other records for inspection on behalf of the Board.
- (8) Regulations under subsection (6) above may—
- (a) make different provision for different cases; and
- (b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
##### 552ZB
- (1) The Commissioners for Her Majesty's Revenue and Customs may make regulations—
- (a) requiring relevant persons—
- (i) to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;
- (ii) to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;
- (b) making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—
- (i) to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;
- (ii) to verify any information provided to an officer of Revenue and Customs as required by the regulations.
- (2) The provision that may be made by virtue of subsection (1)(b) includes, in particular, provision requiring relevant persons to make available books, documents and other records for inspection by or on behalf of an officer of Revenue and Customs.
- (3) The regulations may—
- (a) make different provision for different cases or circumstances, and
- (b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
- (4) In this section—
- “*prescribed*” means prescribed by the regulations,
- “*qualifying policy*” includes a policy which would be a qualifying policy apart from—paragraph A1(2), B1(2), B2(2) or B3(3) of Schedule 15, orparagraph 17(2)(za) of that Schedule (including as applied by paragraph 18), and
- “*relevant person*” means a person—who issues, or has issued, qualifying policies, orwho is, or has been, a relevant transferee in relation to qualifying policies.
- (5) For the purposes of this section a person (“X”) is at any time a “*relevant transferee*” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.
##### 552A
- (1) This section has effect for the purpose of securing that, where it applies to an overseas insurer, another person is the overseas insurer’s tax representative.
- (2) In this section “*overseas insurer*” means a person who is not resident in the United Kingdom who carries on a business which consists of or includes the effecting and carrying out of—
- (a) policies of life insurance;
- (b) contracts for life annuities; or
- (c) capital redemption policies.
- (3) This section applies to an overseas insurer—
- (a) if the condition in subsection (4) below is satisfied on the designated day; or
- (b) where that condition is not satisfied on that day, if it has subsequently become satisfied.
- (4) The condition mentioned in subsection (3) above is that—
- (a) there are in force relevant insurances the obligations under which are obligations of the overseas insurer in question or of an overseas insurer connected with him; and
- (b) the total amount or value of the gross premiums paid under those relevant insurances is £1 million or more.
- (5) In this section “*relevant insurance*” means any policy of life insurance, contract for a life annuity or capital redemption policy . . . in the case of which—
- (a) the holder is resident in the United Kingdom;
- (b) the obligations of the insurer are obligations of a person not resident in the United Kingdom; and
- (c) those obligations are not attributable to a branch or agency of that person’s in the United Kingdom.
- (6) Before the expiration of the period of three months following the day on which this section first applies to an overseas insurer, the overseas insurer must nominate to the Board a person to be his tax representative.
- (7) A person shall not be a tax representative unless—
- (a) if he is an individual, he is resident in the United Kingdom and has a fixed place of residence there, or
- (b) if he is not an individual, he has a business establishment in the United Kingdom,
and, in either case, he satisfies such other requirements (if any) as are prescribed in regulations made for the purpose by the Board.
- (8) A person shall not be an overseas insurer’s tax representative unless—
- (a) his nomination by the overseas insurer has been approved by the Board; or
- (b) he has been appointed by the Board.
- (9) The Board may by regulations make provision supplementing this section; and the provision that may be made by any such regulations includes provision with respect to—
- (a) the making of a nomination by an overseas insurer of a person to be his tax representative;
- (b) the information which is to be provided in connection with such a nomination;
- (c) the form in which such a nomination is to be made;
- (d) the powers and duties of the Board in relation to such a nomination;
- (e) the procedure for approving, or refusing to approve, such a nomination, and any time limits applicable to doing so;
- (f) the termination, by the overseas insurer or the Board, of a person’s appointment as a tax representative;
- (g) the appointment by the Board of a person as the tax representative of an overseas insurer (including the circumstances in which such an appointment may be made);
- (h) the nomination by the overseas insurer, or the appointment by the Board, of a person to be the tax representative of an overseas insurer in place of a person ceasing to be his tax representative;
- (j) circumstances in which an overseas insurer to whom this section applies may, with the Board’s agreement, be released (subject to any conditions imposed by the Board) from the requirement that there must be a tax representative;
- (k) appeals to the tribunal against decisions of the Board under this section or regulations under it.
- (10) The provision that may be made by regulations under subsection (9) above also includes provision for or in connection with the making of other arrangements between the Board and an overseas insurer for the purpose of securing the discharge by or on behalf of the overseas insurer of the relevant duties, within the meaning of section 552B.
- (11) Section 839 (connected persons) applies for the purposes of this section.
- (12) In this section—
- “*capital redemption policy*” means a capital redemption policy in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*contract for a life annuity*” means a contract for a life annuity in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*the designated day*” means such day as the Board may specify for the purpose in regulations;
- “*policy of life insurance*” means a policy of life insurance in relation to which . . . Chapter 9 of Part 4 of ITTOIA 2005 has effect;
- “*tax representative*” means a tax representative under this section.
##### 552B
- (1) It shall be the duty of an overseas insurer’s tax representative to secure (where appropriate by acting on the overseas insurer’s behalf) that the relevant duties are discharged by or on behalf of the overseas insurer.
- (2) For the purposes of this section “*the relevant duties*” are—
- (a) the duties imposed by section 552,
- (b) the duties imposed by section 552ZA(2), (4) or (5), and
- (c) any duties imposed by regulations made under subsection (6) of section 552ZA by virtue of subsection (7) of that section,
so far as relating to relevant insurances under which the overseas insurer in question has any obligations.
- (3) An overseas insurer’s tax representative shall be personally liable—
- (a) in respect of any failure to secure the discharge of the relevant duties, and
- (b) in respect of anything done for purposes connected with acting on the overseas insurer’s behalf,
as if the relevant duties were imposed jointly and severally on the tax representative and the overseas insurer.
- (4) In the application of this section in relation to any particular tax representative, it is immaterial whether any particular relevant duty arose before or after his appointment.
- (5) This section has effect in relation to relevant duties relating to chargeable events happening on or after the day by which section 552A(6) requires the nomination of the overseas insurer’s first tax representative to be made.
- (5A) In subsection (5) “*chargeable event*” has the same meaning as in section 552 (see subsection (10) of that section).
- (6) Expressions used in this section and in section 552A have the same meaning in this section as they have in that section.
##### 553A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 553C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 559A
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#### Cessation of approval: general provisions.
### Chapter 5A — Share loss relief
### Relief for losses on unquoted shares in trading companies
##### 576A
- (1) For the purposes of this Chapter a qualifying trading company is a company which meets each of conditions A to D.
- (2) Condition A is that the company either—
- (a) meets each of the following requirements on the date of the disposal—
- (i) the trading requirement (see section 576B),
- (ii) the control and independence requirement (see section 576D),
- (iii) the qualifying subsidiaries requirement (see section 576E), and
- (iv) the property managing subsidiaries requirement (see section 576F), or
- (b) has ceased to meet any of those requirements at a time which is not more than 3 years before that date and has not since that time been an excluded company, an investment company or a trading company.
- (3) Condition B is that the company either—
- (a) has met each of the requirements mentioned in condition A for a continuous period of 6 years ending on that date or at that time, or
- (b) has met each of those requirements for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company, an investment company or a trading company.
- (4) Condition C is that the company—
- (a) met the gross assets requirement (see section 576G) both immediately before and immediately after the issue of the shares in respect of which the relief is claimed under this Chapter, and
- (b) met the unquoted status requirement (see section 576H) at the relevant time within the meaning of that section.
- (5) Condition D is that the company has carried on its business wholly or mainly in the United Kingdom throughout the period—
- (a) beginning with the incorporation of the company or, if later, 12 months before the shares in question were issued, and
- (b) ending with the date of the disposal.
### Qualifying trading companies: the requirements
##### 576B
- (1) The trading requirement is that—
- (a) the company, disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, or
- (b) the company is a parent company and the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities.
- (2) If the company intends that one or more other companies should become its qualifying subsidiaries with a view to their carrying on one or more qualifying trades—
- (a) the company is treated as a parent company for the purposes of subsection (1)(b), and
- (b) the reference in subsection (1)(b) to the group includes the company and any existing or future company that will be its qualifying subsidiary after the intention in question is carried into effect.
This subsection does not apply at any time after the abandonment of that intention.
- (3) For the purpose of subsection (1)(b) the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
- (4) For the purpose of determining the business of a group, activities are disregarded to the extent that they are activities carried on by a mainly trading subsidiary otherwise than for its main purpose.
- (5) For the purposes of determining the business of a group, activities of a group company are disregarded to the extent that they consist in—
- (a) the holding of shares in or securities of a qualifying subsidiary of the parent company,
- (b) the making of loans to another group company,
- (c) the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by a group company, or
- (d) the holding and managing of property used by a group company for the purpose of research and development from which it is intended—
- (i) that a qualifying trade to be carried on by a group company will be derived, or
- (ii) that a qualifying trade carried on or to be carried on by a group company will benefit.
- (6) Any reference in subsection (5)(d)(i) or (ii) to a group company includes a reference to any existing or future company which will be a group company at any future time.
- (7) In this section—
- “*excluded activities*” has the meaning given by section 192 of ITA 2007 read with sections 193 to 199 of that Act,
- “*group*” means a parent company and all its qualifying subsidiaries,
- “*group company*”, in relation to a group, means the parent company or any of its qualifying subsidiaries,
- “*incidental purposes*” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question,
- “*mainly trading subsidiary*” means a subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,
- “*non-qualifying activities*” means—excluded activities, andactivities (other than research and development) carried on otherwise than in the course of a trade,
- “*parent company*” means a company that has one or more qualifying subsidiaries,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007,
- “*qualifying trade*” has the meaning given by section 189 of that Act,
- “*research and development*” has the meaning given by section 837A.
- (8) In sections 189(1)(b) and 194(4)(c) of ITA 2007 (as applied by subsection (7) for the purposes of the definitions of “excluded activities” and “qualifying trade”) “*period B*” means the continuous period that is relevant for the purposes of section 576A(3).
- (9) In section 195 of ITA 2007 as applied by subsection (7) for the purposes mentioned in subsection (8), references to the issuing company are to be read as references to the company mentioned in subsection (1).
#### Section 591C: supplementary.
##### 576C
- (1) A company is not regarded as ceasing to meet the trading requirement by reason only of anything done in consequence of the company or any of its subsidiaries being in administration or receivership.
This has effect subject to subsections (2) and (3).
- (2) Subsection (1) applies only if—
- (a) the entry into administration or receivership, and
- (b) everything done as a result of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
- (3) A company ceases to meet the trading requirement if before the time that is relevant for the purposes of section 576A(2)—
- (a) a resolution is passed, or an order is made, for the winding up of the company or any of its subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose), or
- (b) the company or any of its subsidiaries is dissolved without winding up.
This is subject to subsection (4).
- (4) Subsection (3) does not apply if —
- (a) the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
- (b) the company continues, during the winding up, to be a trading company.
- (5) References in this section to a company being “in administration” or “in receivership” are to be read in accordance with section 252 of ITA 2007.
##### 576D
- (1) The control element of the requirement is that—
- (a) the company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (2) The independence element of the requirement is that—
- (a) the company must not—
- (i) be a 51% subsidiary of another company, or
- (ii) be under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
- (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
- (3) This section is subject to section 576J(3).
- (3A) Section 839 (connected persons) applies for the purposes of this section.
- (4) In this section—
- “*arrangements*” includes any scheme, agreement or understanding, whether or not legally enforceable,
- “control” is to be read as follows—in subsection (1)(a), in accordance with section 416(2) to (6),in subsection (2)(a), in accordance with section 840,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007.
#### Exemption from tax in respect of qualifying premiums.
##### 576E
- (1) The qualifying subsidiaries requirement is that any subsidiary that the company has must be a qualifying subsidiary of the company.
- (2) In this section “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007.
##### 576F
- (1) The property managing subsidiaries requirement is that any property managing subsidiary that the company has must be a qualifying 90% subsidiary of the company.
- (2) In this section—
- “*property managing subsidiary*” has the meaning given by section 188(2) of ITA 2007,
- “*qualifying 90% subsidiary*” has the meaning given by section 190 of that Act.
##### 576G
- (1) The gross assets requirement in the case of a single company is that the value of the company's gross assets—
- (a) must not exceed £7 million immediately before the shares in respect of which the relief is claimed under this Chapter are issued, and
- (b) must not exceed £8 million immediately afterwards.
- (2) The gross assets requirement in the case of a parent company is that the value of the group assets—
- (a) must not exceed £7 million immediately before the shares in respect of which the relief is claimed under this Chapter are issued, and
- (b) must not exceed £8 million immediately afterwards.
- (3) The value of the group assets means the aggregate of the values of the gross assets of each of the members of the group, disregarding any that consist in rights against, or shares in or securities of, another member of the group.
- (4) In this section—
- “*group*” means a parent company and its qualifying subsidiaries,
- “*parent company*” means a company that has one or more qualifying subsidiaries,
- “*qualifying subsidiary*” is to be read in accordance with section 191 of ITA 2007, and
- “*single company*” means a company that does not have one or more qualifying subsidiaries.
##### 576H
- (1) The unquoted status requirement is that, at the time (“*the relevant time*”) at which the shares in respect of which the relief is claimed under this Chapter are issued—
- (a) the company must be an unquoted company,
- (b) there must be no arrangements in existence for the company to cease to be an unquoted company, and
- (c) there must be no arrangements in existence for the company to become a subsidiary of another company (“the new company”) by virtue of an exchange of shares, or shares and securities, if—
- (i) section 576J applies in relation to the exchange, and
- (ii) arrangements have been made with a view to the new company ceasing to be an unquoted company.
- (2) The arrangements referred to in subsection (1)(b) and (c)(ii) do not include arrangements in consequence of which any shares, stocks, debentures or other securities of the company or the new company are at any subsequent time—
- (a) listed on a stock exchange that is a recognised stock exchange by virtue of an order made under section 1005(1)(b) of ITA 2007, or
- (b) listed on an exchange, or dealt in by any means, designated by an order made for the purposes of section 184(3)(b) or (c) of that Act,
if the order was made after the relevant time.
- (3) In this section—
- “*arrangements*” includes any scheme, agreement or understanding, whether or not legally enforceable,
- “*debenture*” has the meaning given by section 738 of the Companies Act 2006,
- “*unquoted company*” has the meaning given by section 184(2) of ITA 2007.
##### 576I
The Treasury may by order make such amendments of sections 576B to 576H as they consider appropriate.
### Qualifying trading companies: supplementary provisions
##### 576J
- (1) This section and section 576K apply in relation to shares if—
- (a) a company (“the new company”) in which the only issued shares are subscriber shares acquires all the shares (“old shares”) in another company (“the old company”),
- (b) the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company,
- (c) the consideration for the new shares of each description consists wholly of old shares of the corresponding description,
- (d) new shares of each description are issued to the holders of old shares of the corresponding description in respect of and in proportion to their holdings, and
- (e) by virtue of section 127 of the 1992 Act as applied by section 135(3) of that Act (company reconstructions etc), the exchange of shares is not to be treated as involving a disposal of the old shares or an acquisition of the new shares.
In this subsection references to shares, except the first and that in the expression “subscriber shares”, include securities.
- (2) For the purposes of this Chapter the exchange of shares is not regarded as involving any disposal of the old shares or any acquisition of the new shares.
- (3) Nothing in section 576D (the control and independence requirement) applies in relation to such an exchange of shares, or shares and securities, as is mentioned in subsection (1), or arrangements with a view to such an exchange.
- (4) For the purposes of this section old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
- (5) References in section 576K to “old shares”, “new shares”, “the old company” and “the new company” are to be read in accordance with this section.
##### 576K
- (1) Subsection (2) applies if, in the case of any new shares held by a company or by a nominee for a company, the old shares for which they were exchanged were shares that had been subscribed for by the company (“the investor”).
- (2) This Chapter has effect as if—
- (a) the new shares had been subscribed for by the investor at the time when, and for the amount for which, the old shares were subscribed for by the investor,
- (b) the new shares had been issued by the new company at the time when the old shares were issued to the investor by the old company, and
- (c) any requirements of this Chapter which were met at any time before the exchange by the old company had been met at that time by the new company.
- (3) Section 573(6) applies for the purposes of this section.
- (4) Nothing in subsection (2) applies in relation to section 195(7) of ITA 2007 as applied by section 576B(7) above for the purposes mentioned in section 576B(8).
### Supplemental
##### 576L
- (1) In this Chapter (subject to subsections (2) to (5))—
- “*excluded company*” means a company which—has a trade which consists wholly or mainly of dealing in land, in commodities or futures or in shares, securities or other financial instruments,has a trade which is not carried on on a commercial basis and in such a way that profits in the trade can reasonably be expected to be realised,is a holding company of a group other than a trading group, oris a building society or a registered industrial and provident society,
- “group” (except in sections 576B and 576G) means a company which has one or more 51% subsidiaries together with that or those subsidiaries,
- “*holding company*” means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 51% subsidiaries,
- “*investment company*” has the meaning given by section 130 except that it does not include the holding company of a trading group,
- “*registered industrial and provident society*” means a society registered or treated as registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) Act 1969,
- “shares”—includes stock, butdoes not include shares or stock not forming part of a company's ordinary share capital,
- “*trading company*” means a company other than an excluded company which is—a company whose business consists wholly or mainly of the carrying on of a trade or trades, orthe holding company of a trading group, and
- “*trading group*” means a group the business of whose members, when taken together, consists wholly or mainly in the carrying on of a trade or trades.
- (2) Except as provided by subsection (3), paragraph (b) of the definition of “shares” in subsection (1) does not apply in the definition of “excluded company” in subsection (1) or in section 576J(1) to (4).
- (3) Paragraph (b) of that definition applies in relation to the first reference to “shares” in section 576J(1).
- (4) The definition of “shares” in subsection (1) does not apply in sections 576B(5)(a), 576G(3) and 576H(1)(c) and (2).
- (5) For the purposes of the definition of “trading group” in subsection (1), any trade carried on by a subsidiary which is an excluded company is treated as not constituting a trade.
#### Definition of insurance company.
##### 577A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 578A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 578B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 580A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 580B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 580C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of appointment or arrangements under section 659B.
##### 581A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 582A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from tax in respect of qualifying premiums.
##### 587A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 587B
- (1) Subsection (2) below applies where, otherwise than by way of a bargain made at arm’s length, a company which is not itself a charity disposes of the whole of the beneficial interest in a qualifying investment to a charity.
- (2) On a claim made in that behalf to an officer of the Board—
- (a) the relevant amount shall be allowed—
- (i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (ii) . . . as a charge on income for the purposes of corporation tax for the accounting period in which the disposal is made; and
- (b) no relief in respect of the disposal shall be given under section 105 of CTA 2009 (gifts of trading stock to charities etc),. . . ;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) Subject to subsections (5) to (7) below, the relevant amount is an amount equal to—
- (a) where the disposal is a gift, the value of the net benefit to the charity at, or immediately after, the time when the disposal is made (whichever time gives the lower value);
- (b) where the disposal is at an undervalue, the amount by which—
- (i) the value described in paragraph (a) above, exceeds
- (ii) the amount or value of the consideration for the disposal,
or, if there is no such excess, nil.
- (5) Where there are one or more benefits received in consequence of making the disposal which are received by the company making the disposal or a person connected with it, the relevant amount shall be reduced by the value of that benefit or, as the case may be, the aggregate value of those benefits; and section 839 applies for the purposes of this subsection.
- (6) Where the disposal is a gift, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the company making it.
- (7) Where the disposal is at an undervalue—
- (a) to the extent that the consideration for the disposal is less than that for which the disposal is treated as made by virtue of section 257(2)(a) of the 1992 Act, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the company making it; and
- (b) section 48 of that Act (consideration due after time of disposal) shall apply in relation to the computation of the relevant amount as it applies in relation to the computation of a gain.
- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8A) The value of the net benefit to the charity is—
- (a) the market value of the qualifying investment, unless subsection (8B) below applies;
- (b) where that subsection applies, that market value reduced by the aggregate amount of the related liabilities of the charity (see subsections (8E) to (8G)).
- (8B) This subsection applies in any case where—
- (a) the charity is, or becomes, subject to an obligation to any person (whether or not the company making the disposal or a person connected with it), and
- (b) one or more of the conditions in subsection (8C) below is satisfied.
- (8C) For the purposes of subsection (8B) above—
- (a) condition 1 is that, taking into account all the circumstances (including, in particular, the difference in the value of the net benefit to the charity if subsection (8B) applies and if it does not), it is reasonable to suppose that the disposal of the qualifying investment to the charity would not have been made in the absence of the obligation;
- (b) condition 2 is that the obligation (whether in whole or in part) relates to, is framed by reference to, or is conditional on the charity receiving, the qualifying investment or a related investment (see subsection (8D)).
- (8D) In subsection (8C) above “*related investment*” means any of the following—
- (a) any asset of the same class or description as the qualifying investment (irrespective of size, quantity or amount);
- (b) any asset derived from, or representing, the qualifying investment whether in whole or in part and whether directly or indirectly;
- (c) any asset from which the qualifying investment is derived, or which the qualifying investment represents, whether in whole or in part and whether directly or indirectly.
- (8E) For the purposes of this section, the liabilities which are related liabilities in the case of any qualifying investment are the liabilities of the charity under each of the obligations that fall within subsection (8B) above (as read with subsection (8C) above) in relation to that investment.
- (8F) Where an obligation is contingent and the contingency occurs, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, under the obligation is the amount or value of the liability actually incurred in consequence of the occurrence of the contingency.
- (8G) Where an obligation is contingent and the contingency does not occur, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, is nil.
- (9) In this section—
- “*authorised unit trust*” has the meaning given by section 468;
- “*charity*” has the same meaning as in section 506 and includes the Trustees of the National Heritage Memorial Fund;the Historic Buildings and Monuments Commission for England; andthe National Endowment for Science, Technology and the Arts;
- “*the incidental costs of making the disposal to the company making it*” shall be construed in accordance with section 38(2) of the 1992 Act;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*obligation*” includes a reference to each of the following—any scheme, arrangement or understanding of any kind, whether or not legally enforceable;a series of obligations (whether or not between the same parties);
- “*offshore fund*” has the same meaning as in Chapter 5 of Part 17;
- “*open-ended investment company*” is to be read in accordance with section 468A(2) to (4);
- “*qualifying investment*” means any of the following—shares or securities which are listed on a recognised stock exchange or dealt in on any designated market in the United Kingdom;units in an authorised unit trust;shares in an open-ended investment company;. . . an interest in an offshore fund; anda qualifying interest in land;
- “*related liabilities*” shall be construed in accordance with subsection (8E) above;
- “*value of the net benefit to the charity*” shall be construed in accordance with subsection (8A) above.
- (9ZA) In paragraph (a) of the definition of “qualifying investment” in subsection (9) above, “*designated*” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that paragraph.
- (9ZB) An order under subsection (9ZA) above may—
- (a) designate a market by name or by reference to any class or description of market, and
- (b) vary or revoke a previous order under that subsection.
- (9A) In this section a “*qualifying interest in land*” means—
- (a) a freehold interest in land, or
- (b) a leasehold interest in land which is a term of years absolute,
where the land in question is in the United Kingdom.
This subsection is subject to subsections (9B) to (9D) below.
- (9B) Where a company makes a disposal to a charity of—
- (a) the whole of its beneficial interest in such freehold or leasehold interest in land as is described in subsection (9A)(a) or (b) above, and
- (b) any easement, servitude, right or privilege so far as benefiting that land,
the disposal falling within paragraph (b) above is to be regarded for the purposes of this section as a disposal by the company of the whole of its beneficial interest in a qualifying interest in land.
- (9C) Where a company which has a freehold or leasehold interest in land in the United Kingdom grants a lease for a term of years absolute (or, in the case of land in Scotland, grants a lease) to a charity of the whole or part of that land, the grant of that lease is to be regarded for the purposes of this section as a disposal by the company of the whole of the beneficial interest in the leasehold interest so granted.
- (9D) For the purposes of subsection (9A) above, an agreement to acquire a freehold interest and an agreement for a lease are not qualifying interests in land.
- (9E) In the application of this section to Scotland—
- (a) references to a freehold interest in land are references to the interest of the owner,
- (b) references to a leasehold interest in land which is a term of years absolute are references to a tenant’s right over or interest in a property subject to a lease, and
- (c) references to an agreement for a lease do not include references to missives of let that constitute an actual lease.
- (10) Subject to subsection (11) below, the market value of any qualifying investment shall be determined for the purposes of this section as for the purposes of the 1992 Act.
- (10A) Section 839 (connected persons) applies for the purposes of this section.
- (11) In the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(5) of the 1992 Act (meaning of “*market value*” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this section.
- (12) This section is supplemented by sections 587BA and 587C below.
##### 587BA
- (1) This section applies for the purposes of section 587B where a qualifying investment is a qualifying interest in land.
- (2) Where two or more persons (“the owners”)—
- (a) are jointly beneficially entitled to the qualifying interest in land, or
- (b) are, taken together, beneficially entitled in common to the qualifying interest in land,
relief under section 587B is available if at least one of the owners is a qualifying company and all the owners dispose of the whole of their beneficial interests in the qualifying interest in land to the charity.
- (3) Subsection (4) applies if one or more of the owners is not a company.
- (4) For the purpose of determining whether the owners' beneficial interests are disposed of as mentioned in subsection (2), section 587B(9B) and (9C) applies as if references to a company included a reference to a person who is not a company.
- (5) Relief under section 587B is available to each of the owners which is a qualifying company.
- (6) If one or more of the owners is an individual—
- (a) the relevant amount is taken to be the relievable amount calculated for the purposes of Chapter 3 of Part 8 of ITA 2007, and
- (b) the amount of relief under section 587B to be given to a qualifying company is such share of the relievable amount as is allocated to the company by the agreement mentioned in section 442(5) of ITA 2007.
- (7) Subsections (8) to (12) apply if none of the owners is an individual.
- (8) The amount of relief under section 587B to be given to a qualifying company is such share of the relevant amount as is allocated to the company by an agreement made between those owners which are qualifying companies.
- (9) Calculate the relevant amount as if—
- (a) the owners were a single qualifying company, and
- (b) the disposals of the owners' beneficial interests were a single disposal by that single company of the whole of the beneficial interest in the qualifying interest in land.
- (10) In particular, for the purposes of section 587B(7) calculate the consideration for which the disposal is made by virtue of section 257(2)(a) of the 1992 Act by—
- (a) calculating, for each owner, the consideration for which the disposal of the owner's beneficial interest is so made, and
- (b) adding together all the consideration calculated under paragraph (a).
- (11) If one or more of the owners is not a qualifying company, in calculating the relevant amount make just and reasonable adjustments to reduce the relevant amount to reflect the fact that relief under section 587B is not available to that owner or to those owners.
- (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (13) A company is a qualifying company if—
- (a) it is not itself a charity, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 587C
- (1) This section applies for the purposes of section 587B where a qualifying investment is a qualifying interest in land.
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) No company may make a claim for a relief under subsection (2) of section 587B unless it has received a certificate given by or on behalf of the charity.
- (5) The certificate must—
- (a) specify the description of the qualifying interest in land which is the subject of the disposal,
- (b) specify the date of the disposal, and
- (c) contain a statement that the charity has acquired the qualifying interest in land.
- (6) If, in the case of a disposal of a qualifying interest in land, a disqualifying event occurs at any time in the relevant period, the following shall be treated as never having been entitled to relief under section 587B in respect of the disposal—
- (a) in a case to which section 587BA does not apply, the company which made the disposal, and
- (b) in a case to which section 587BA applies, each qualifying company which is an owner.
- (7) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (6) above.
- (8) For the purposes of subsection (6) above a disqualifying event occurs if a person mentioned in subsection (8A)—
- (a) becomes entitled to an interest or right in relation to all or part of the land to which the disposal relates, or
- (b) becomes party to an arrangement under which he enjoys some right in relation to all or part of that land,
otherwise than for full consideration in money or money’s worth.
- (8A) The persons are—
- (a) in a case to which section 587BA does not apply—
- (i) the company which made the disposal, or
- (ii) a person connected with that company, and
- (b) in a case to which section 587BA applies—
- (i) a person who is an owner, or
- (ii) a person connected with such a person.
- (9) A disqualifying event does not occur, for the purposes of subsection (6) above, if a person becomes entitled to an interest or right as mentioned in subsection (8)(a) above as a result of a disposition of property on death, whether the disposition is effected by will, under the law relating to intestacy or otherwise.
- (10) For the purposes of subsection (6) above the relevant period is the period beginning with the date of the disposal of the qualifying interest in land and ending with—
- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (b) . . . the sixth anniversary of the end of the accounting period in which the disposal was made.
- (11) Section 839 (connected persons) applies for the purposes of this section.
- (12) This section shall be construed as one with section 587B.
#### Interpretation.
##### 589A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 589B
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Income arising under settlement where settlor retains an interest.
##### 590A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 590B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 590C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 591A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 591B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 591C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 591D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Payments to unmarried minor children of settlor.
##### 596A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 596B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 596C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 599A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 605A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 606A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 611A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 611AA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 611A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 617A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing release of obligation.
#### Settlements made after 6th April 1965.
##### 631A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 632A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 632B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 634A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 636A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 637A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 638ZA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 638A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Settlements made before 7th April 1965 but after 9th April 1946.
##### 640A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 641A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Certain income not to be income of settlor etc.
#### Application to Scotland.
##### 646A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 646B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 646C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 646D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Annuities: charge to tax
##### 648A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 648B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 650A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 651A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 653A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 658A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659A
- (1) For the purposes of sections . . . 613(4), 614(3) and (4) . . . —
- (a) “*investments*” (or “*investment*”) includes futures contracts and options contracts, and
- (b) income derived from transactions relating to such contracts shall be regarded as income derived from (or income from) such contracts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) For the purposes of subsection (1) above a contract is not prevented from being a futures contract or an options contract by the fact that any party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets other than money) in full settlement of all obligations.
##### 659B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 659E
- (1) The exemptions specified below do not apply to income derived from investments, deposits or other property held as a member of a property investment LLP (see section 1004 of ITA 2007).
- (2) The exemptions are those provided by—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- section 613(4) (Parliamentary pension funds),
- section 614(3) (certain colonial, &c. pension funds),
- section 614(4) (the Overseas Service Pension Fund),
- section 614(5) (other pension funds for overseas employees),
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) The income to which subsection (1) above applies includes relevant stock lending fees, in relation to any investments, to which any of the provisions listed in subsection (2) above would apply by virtue of section 129B.
- (4) Section 659A (treatment of futures and options) applies for the purposes of subsection (1) above.
### Chapter IA — Liability of settlor
### Main provisions
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
##### 660A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660C
- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Supplementary provisions
##### 660E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 660G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 674A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Appeals against Board’s notices under section 703.
#### Reduction in chargeable profits for certain financing income
##### 682A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### . . .
### . . .
##### 685A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits for certain financing income
##### 685F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 685G
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits: failure to qualify for exemptions
##### 686A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 686B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 686C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 686D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits following an exempt period
##### 686E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 687A
- (1) This section applies where—
- (a) the trustees of a settlement make a payment to a company;
- (b) sections 494 and 495 of ITA 2007 apply in relation to the payment; and
- (c) the company is chargeable to corporation tax and does not fall within subsection (2) below.
- (2) A company falls within this subsection if it is—
- (a) a charitable company, as defined in section 506(1);
- (b) a body mentioned in section 507 (heritage bodies); or
- (c) an Association of a description specified in section 508 (scientific research organisations).
- (3) Where this section applies—
- (a) none of the following provisions, namely—
- (i) section 7(2),
- (ii) section 11(3),
- (iii) section 952 of ITA 2007 (set off of income tax suffered against income tax payable),
shall apply in the case of the payment;
- (b) the payment shall be left out of account in calculating the profits of the company for the purposes of corporation tax; and
- (c) no repayment shall be made of the amount treated under section 494 of ITA 2007 as income tax paid by the company in the case of the payment.
- (4) If the company is not resident in the United Kingdom, this section applies only in relation to so much (if any) of the payment as is comprised in the company’s chargeable profits for the purposes of corporation tax.
### Chapter ID — Trust management expenses
##### 689A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 689B
- (1) The expenses of the trustees of a settlement in any year of assessment, so far as they are properly chargeable to income (or would be so chargeable but for any express provisions of the trust), shall be treated—
- (a) as set against so much (if any) of any income as is income falling within subsection (2) , (2A) or (3) below before being set against other income; and
- (b) as set against so much (if any) of any income as is income falling within subsection (2) or (2A) below before being set against income falling within subsection (3) below; and
- (c) as set against so much (if any) of any income as is income falling within subsection (2) below before being set against income falling within subsection (2A) below.
- (2) Income falls within this subsection if it is—
- (a) so much of the income of the trustees as is income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.);
- (b) income treated as arising to the trustees under Chapter 5 of that Part (stock dividends from UK resident companies); or
- (c) income chargeable under Chapter 6 of that Part (release of loan to participator in close company).
- (2A) Income falls within this subsection if it is —
- (a) income chargeable under Chapter 4 of Part 4 of ITTOIA 2005 (dividends from non-UK resident companies); or
- (b) a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged).
- (2B) In subsection (2A) “*relevant foreign distribution*” means any distribution of a company not resident in the United Kingdom which—
- (a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but
- (b) would be chargeable under Chapter 3 of that Part if the company were resident in the United Kingdom.
- (3) Income falls within this subsection if it is income of the trustees which is savings income (within the meaning of section 18 of ITA 2007).
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) This section applies for corporation tax purposes only.
##### 698A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 699A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sections 751A and 751AA: supplementary
#### Apportionment of chargeable profits and creditable tax
##### 705A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 705B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relevant interests.
#### Offshore income gains accruing to persons resident or domiciled abroad.
#### Income treated as arising under section 761(1): remittance basis
##### 722A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deductions: asset transferred within group.
##### 726A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 727A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
##### 730A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 730B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 730BB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 730C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sales etc. at an undervalue or overvalue.
##### 736A
Schedule 23A to this Act shall have effect in relation to certain cases where under a contract or other arrangements for the transfer of shares or other securities a person is required to pay to the other party an amount representative of a dividend or payment of interest on the securities.
#### Sections 774B and 774D: exceptions
##### 736B
- (1) This section applies where—
- (a) any interest on securities transferred by the lender under a stock lending arrangement is paid, as a consequence of the arrangement, to a person other than the lender; and
- (b) no provision is made for securing that the lender receives payments representative of that interest.
- (2) Where this section applies, Schedule 23A and the provisions for the time being contained in any regulations under that Schedule , and Chapter 9 of Part 6 of CTA 2009 (loan relationships: manufactured interest), shall apply for corporation tax purposes, subject to subsections (2A) and (2B) below, as if—
- (a) the borrower were required under the stock lending arrangement to pay the lender an amount representative of the interest mentioned in subsection (1)(a) above;
- (b) a payment were made by the borrower in discharge of that requirement; and
- (c) that payment were made on the same date as the payment of the interest of which it is representative.
- (2A) The borrower is not entitled, by virtue of anything in Schedule 23A or any provision of regulations under that Schedule, or otherwise—
- (a) to any deduction in computing profits or gains for the purposes of . . . corporation tax, or
- (b) to any deduction against . . . total profits,
in respect of any such deemed requirement or payment as is provided for by subsection (2) above.
Where the borrower is a company, an amount may not be surrendered by way of group relief if a deduction in respect of it is prohibited by this subsection.
- (2B) In its application by virtue of subsection (2), paragraph 4(4) of Schedule 23A has effect as if—
- (a) in paragraph (a), the words from “but paid after” to the end were omitted, and
- (b) paragraph (b) were omitted.
- (3) In this section—
- “*interest*” includes dividends; and
- “*stock lending arrangement*” and “*securities*” have the same meanings as in section 263B of the 1992 Act.
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 736C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 736D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sections 774A to 774D: minor definitions etc
##### 737A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 737E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 741D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfers of rights to receive annual payments
##### 747A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 748ZA
- (1) Nothing in section 748(1)(da) prevents an apportionment falling to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company (“X”) if condition A, B or C is met.
- (2) Condition A is that at any time before the end of the relevant accounting period a scheme is entered into and—
- (a) in the absence of this subsection, in consequence of the scheme, section 748(1)(da) would apply to prevent an apportionment falling to be made as regards the relevant accounting period of X, and
- (b) the main purpose, or one of the main purposes, of any party to the scheme in entering into the scheme is to secure that section 748(1)(da) prevents an apportionment falling to be made as regards that period, or that period and one or more other accounting periods of X.
- (3) Condition B is that at any time before the end of the relevant accounting period a scheme is entered into and—
- (a) in consequence of the scheme profits are shifted to X from another company (“Y”),
- (b) the main purpose or one of the main purposes of any party to the scheme in entering into the scheme is to ensure that section 748(1)(da) prevents an apportionment falling to be made as regards the chargeable profits of one or more controlled foreign companies for one or more accounting periods, and
- (c) the relevant accounting period of X falls wholly or partly within that accounting period or those accounting periods.
- (4) For the purposes of subsection (3), profits are shifted to X from Y if it is reasonable to suppose that in the absence of the scheme, and any similar scheme, the whole or a part of the income which is reflected in X's profits would have been reflected in Y's profits.
- (5) Condition C is that, in determining X's chargeable profits for the relevant accounting period—
- (a) section 418(5) of CTA 2009 (loan relationships involving connected debtor and creditor where debits exceed credits) has effect so as to treat X, for the purposes of Part 5 of that Act, as bringing into account for that period credits in respect of a loan relationship, or
- (b) Part 21B of CTA 2010 (group mismatch schemes) has effect so as to exclude an amount from being brought into account as a debit or credit for the purposes of Part 5 of CTA 2009 (loan relationships) or Part 7 of that Act (derivative contracts).
- (6) For the purposes of this section—
- “*apportionment*” means an apportionment under section 747(3);
- “*scheme*” means any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving one or more transactions.
##### 748A
- (1) Nothing in section 748 prevents an apportionment under section 747(3) falling to be made as regards an accounting period of a controlled foreign company if the company—
- (a) is a company incorporated in a territory to which this section applies as respects that accounting period; or
- (b) is at any time in that accounting period liable to tax in such a territory by reason of domicile, residence or place of management; or
- (c) at any time in that accounting period carries on business through a permanent establishment in such a territory.
- (2) The condition in subsection (1)(c) above is not satisfied as regards an accounting period of a controlled foreign company if the business carried on by the company in that period through permanent establishments in territories to which this section applies, taken as a whole, is only a minimal part of the whole of the business carried on by the company in that period.
- (3) The territories to which this section applies as respects an accounting period of a controlled foreign company are those specified as such in regulations made by the Treasury.
- (4) Regulations under subsection (3) above—
- (a) may make different provision for different cases or with respect to different territories; and
- (b) may contain such incidental, supplemental, consequential or transitional provision as the Treasury may think fit.
- (5) A statutory instrument containing regulations under subsection (3) above shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
##### 749A
- (1) An election under paragraph (d) or a designation under paragraph (e) of section 749(3) shall have effect in relation to—
- (a) the accounting period in relation to which it is made (“the original accounting period"), and
- (b) each successive accounting period of the controlled foreign company in question which precedes the next one in which the eligible territories are different,
and shall so have effect notwithstanding any change in the persons who have interests in the company or any change in the interests which those persons have in the company.
- (2) For the purposes of subsection (1)(b) above, an accounting period of the controlled foreign company is one in which the eligible territories are different if in the case of that accounting period—
- (a) at least one of the two or more territories which fell within subsection (1) of section 749 in the original accounting period does not fall within that subsection; or
- (b) some other territory also falls within that subsection.
- (3) Any election under section 749(3)(d)—
- (a) must be made by notice given to an officer of the Board;
- (b) must be made no later than twelve months after the end of the controlled foreign company’s accounting period in relation to which it is made;
- (c) must state, as respects each of the persons making it, the percentage of the chargeable profits and creditable tax (if any) of the controlled foreign company for that accounting period which it is likely would be apportioned to him on an apportionment under section 747(3) if one were made;
- (d) must be signed by the persons making it; and
- (e) is irrevocable.
- (4) Nothing in—
- (a) paragraph 10 of Schedule 18 to the Finance Act 1998 (claims or elections in company tax returns), or
- (b) Schedule 1A to the Management Act (claims or elections not included in returns),
shall apply, whether by virtue of section 754 or otherwise, to an election under section 749(3)(d).
- (5) A designation under section 749(3)(e) is irrevocable.
- (6) Where the Board make a designation under section 749(3)(e), notice of the making of the designation shall be given to every company resident in the United Kingdom which appears to the Board to have had an assessable interest in the controlled foreign company at any time during the accounting period of the controlled foreign company in relation to which the designation is made.
- (7) A notice under subsection (6) above shall specify—
- (a) the date on which the designation was made;
- (b) the controlled foreign company to which the designation relates;
- (c) the accounting period of the controlled foreign company in relation to which the designation is made; and
- (d) the territory designated.
- (8) Subsection (9) of section 749 has effect for the purposes of subsection (6) above as it has effect for the purposes of subsection (8) of that section.
- (9) For the purposes of this section the effect of any application under section 751A or 751AA shall be disregarded.
##### 749B
- (1) For the purposes of this Chapter, the following persons have an interest in a company—
- (a) any person who possesses, or is entitled to acquire, share capital or voting rights in the company;
- (b) any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company;
- (c) any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for his benefit; and
- (d) any other person who, either alone or together with other persons, has control of the company.
- (2) Rights which a person has as a loan creditor of a company do not constitute an interest in the company for the purposes of this Chapter.
- (3) For the purposes of subsection (1)(b) above, the definition of “distribution" in Part VI shall be construed without any limitation to companies resident in the United Kingdom.
- (4) References in subsection (1) above to being entitled to do anything apply where a person—
- (a) is presently entitled to do it at a future date, or
- (b) will at a future date be entitled to do it;
but a person whose entitlement to secure that any income or assets of the company will be applied as mentioned in paragraph (c) of that subsection is contingent upon a default of the company or any other person under any agreement shall not be treated as falling within that paragraph unless the default has occurred.
- (5) Where a company has an interest in another company and a third person has, or two or more persons together have, an interest in the first company (as in a case where one company has a shareholding in a controlled foreign company and the first company is controlled by a third company or by two or more persons together) subsections (6) and (7) below apply.
- (6) Where this subsection applies, the person who has, or each of the persons who together have, the interest in the first company shall be regarded for the purposes of this Chapter as thereby having an interest in the second company.
- (7) In any case where this subsection applies, in construing references in this Chapter to one person having the same interest as another, the person or, as the case may be, each of the persons who together have, the interest in the first company shall be treated as having, to the extent of that person’s interest in that company, the same interest as the first company has in the second company.
- (8) Where two or more persons jointly have an interest in a company otherwise than in a fiduciary or representative capacity, they shall be treated for the purposes of this Chapter as having the interest in equal shares.
##### 750A
- (1) Where—
- (a) in any accounting period a company is to be regarded by virtue of any of subsections (1) to (4) of section 749 as resident in a particular territory outside the United Kingdom, and
- (b) within the meaning of section 750(1), the local tax in respect of the profits arising to the company in that accounting period is equal to or greater than three-quarters of the corresponding United Kingdom tax on those profits, but
- (c) that local tax is determined under designer rate tax provisions,
the company shall be taken for the purposes of this Chapter to be subject to a lower level of taxation in that territory in that accounting period.
- (2) In subsection (1) above “*designer rate tax provisions*” means provisions—
- (a) which appear to the Board to be designed to enable companies to exercise significant control over the amount of tax which they pay; and
- (b) which are specified in regulations made by the Board.
- (3) Regulations under subsection (2) above—
- (a) may make different provision for different cases or with respect to different territories; and
- (b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.
- (4) The first regulations under subsection (2) above may make provision having effect in relation to accounting periods beginning not more than fifteen months before the date on which the regulations are made.
##### 751A
- (1) This section applies if—
- (a) an apportionment under section 747(3) falls to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company,
- (b) throughout that period the controlled foreign company has a business establishment in an EEA territory,
- (c) throughout that period there are individuals who work for the controlled foreign company in that territory, and
- (d) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in that period.
- (2) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for the relevant accounting period to be reduced by an amount (“*the specified amount*”) specified in the application (including to nil).
- (3) If the Commissioners grant the application—
- (a) those chargeable profits are treated as reduced by the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in those chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (4) The Commissioners may grant the application only if they are satisfied that the specified amount does not exceed the amount (if any) equal to so much of those chargeable profits as can reasonably be regarded as representing the net economic value which—
- (a) arises to the appropriate body of persons (taken as a whole), and
- (b) is created directly by qualifying work.
- (5) For the purposes of subsection (4) “*net economic value*” does not include any value which derives directly or indirectly from the reduction or elimination of any liability of any person to any tax or duty imposed under the law of any territory.
- (6) For the purposes of subsection (4) “*the appropriate body of persons*” means—
- (a) if the controlled foreign company is not a member of a group of companies, the controlled foreign company and the persons who have an interest in it at any time in the relevant accounting period, and
- (b) if the controlled foreign company is a member of a group of companies, all the persons falling within paragraph (a) and any other person who is a member of that group of companies,
and for the purposes of this subsection “*group of companies*” means a company and any other companies of which it has control.
- (7) For the purposes of subsection (4) “*qualifying work*” means work which—
- (a) is done in any EEA territory in which the controlled foreign company has a business establishment throughout the relevant accounting period, and
- (b) is done in that territory by individuals working for the controlled foreign company there.
- (8) Any reference in this section to a business establishment of a controlled foreign company in an EEA territory is to be construed in accordance with paragraph 7 of Schedule 25 (but as if the reference in that paragraph to the territory in which the company is resident were to the EEA territory).
- (9) For the purposes of this section individuals are not to be regarded as working for a company in any territory unless—
- (a) they are employed by the company in the territory, or
- (b) they are otherwise directed by the company to perform duties on its behalf in the territory.
#### Leased assets: special cases.
##### 751AA
- (1) This section applies if—
- (a) an apportionment under section 747(3) falls to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company,
- (b) the chargeable profits of the controlled foreign company for the relevant accounting period would, apart from this section, include an amount of income in respect of a payment made by another company (“the payer”),
- (c) the amount that the payer brings into account for the purposes of corporation tax in respect of the payment is reduced (in part or in full) by virtue of Part 3 of Schedule 15 to FA 2009 (tax treatment of financing costs and income), and
- (d) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in the relevant accounting period.
- (2) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for the relevant accounting period (“the chargeable profits”) to be reduced by an amount (“*the specified amount*”) specified in the application (including to nil).
- (3) If the Commissioners grant the application—
- (a) the chargeable profits are treated as reduced by the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in the chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (4) The Commissioners may grant the application only if they are satisfied that the specified amount does not exceed the relevant amount.
- (5) In subsection (4) “*the relevant amount*” means the amount (if any) by which it is just and reasonable that the chargeable profits should be treated as reduced, having regard to the effect of Parts 3 and 4 of Schedule 15 to FA 2009 on amounts brought into account for the purposes of corporation tax by the payer, or any other company.
#### Meaning of “asset”, “capital sum” and “lease” for purposes of sections 781 to 784.
##### 751AB
- (1) This section applies if—
- (a) an apportionment under section 747(3) would fall to be made as regards an accounting period (“*the relevant accounting period*”) of a controlled foreign company,
- (b) but for a relevant failure, section 748(1)(ba) or (bb) would have prevented such an apportionment, and
- (c) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in that period.
- (2) “*Relevant failure*” means—
- (a) in the case of section 748(1)(ba), one or both of the following—
- (i) a failure to satisfy the requirement of paragraph 12E of Schedule 25 (requirement as to company's UK connection) in circumstances where the requirement would be satisfied if the reference in sub-paragraph (3)(a) of that paragraph to 10% were a reference to 50%, and
- (ii) a failure to satisfy the requirement of paragraph 12F of that Schedule (finance income and relevant IP income) in circumstances where the relevant IP income of the controlled foreign company for the accounting period does not exceed 5% of the company's gross income for that period, and
- (b) in the case of section 748(1)(bb), a failure to satisfy the requirement of paragraph 12M of that Schedule (finance income).
- (3) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for the relevant accounting period (“the chargeable profits”) to be reduced to an amount specified in the application (“*the specified amount*”).
The specified amount may be nil.
- (4) If the Commissioners grant the application—
- (a) the chargeable profits are treated as reduced to the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in the chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (5) The Commissioners may grant the application only if—
- (a) they are satisfied that the specified amount is not less than the relevant amount, and
- (b) they have not previously granted an application made by the UK resident company in respect of the relevant accounting period under section 751A or 751AC.
- (6) “*The relevant amount*” means—
- (a) if the relevant failure is within subsection (2)(a), the sum of—
- (i) the excess finance and IP income (if any) for the relevant accounting period, and
- (ii) in a case where there is a failure specified in subsection (2)(a)(i), so much (if any) of the net chargeable profits for that period as are not excluded by subsection (8), and
- (b) if the relevant failure is within subsection (2)(b)—
- (i) the amount (if any) by which the controlled foreign company's finance income for the relevant accounting period exceeds 5% of its gross income for that period, or
- (ii) if that amount is a negligible amount, nil.
- (7) “The excess finance and IP income” for the relevant accounting period means—
- (a) the amount (if any) by which the total of the controlled foreign company's finance income and relevant IP income for that period exceeds 5% of its gross income for that period, or
- (b) if that amount is a negligible amount, nil.
- (8) Net chargeable profits are excluded by this subsection if, and to the extent that, they can reasonably be regarded—
- (a) as representing the net economic value which—
- (i) arises to the appropriate body of persons (taken as a whole), and
- (ii) is created directly by qualifying work, or
- (b) as not being wholly or partly attributable, directly or indirectly, to transactions with persons within the charge to United Kingdom tax.
- (9) In subsection (8)(a) “*qualifying work*” means work which—
- (a) is done in the territory in which the controlled foreign company is resident, and
- (b) is done in that territory by individuals working for the controlled foreign company there.
- (10) A transaction with a company which is within the charge to United Kingdom tax only because it carries on a trade in the United Kingdom through a permanent establishment there is within subsection (8)(b) only if the transaction is attributable to activities carried on through that establishment.
- (11) For the purposes of subsections (8) and (9)—
- (a) section 751A(5), (6) and (9) applies as it applies for the purposes of the equivalent provisions of section 751A, and
- (b) paragraph 5(2) to (5) of Schedule 25 (residence of controlled foreign company) applies as it applies in relation to Part 2 of that Schedule.
- (12) In this section—
- “*finance income*” has the meaning given by paragraph 12F(3) of Schedule 25 (with references to C read as references to the controlled foreign company);
- “*relevant IP income*” has the meaning given by paragraph 12F(4) of that Schedule;
- “*net chargeable profits*” means chargeable profits excluding so much of those profits as is directly attributable to the finance income or relevant IP income of the controlled foreign company;
- “*UK-connected gross income*” has the same meaning as in paragraph 12E of Schedule 25;
- “*United Kingdom tax*” means corporation tax or income tax;
and paragraph 12G of that Schedule (gross income) applies for the purposes of this section as it applies for the purposes of Part 2A of that Schedule (with references to C read as references to the controlled foreign company).
#### Transactions associated with loans or credit.
##### 751AC
- (1) This section applies if—
- (a) an exempt period in relation to a controlled foreign company ends in accordance with paragraph 15F(2) of Schedule 25 (time exempt period ends if there is an early termination event), other than by reason of an early termination event within paragraph 15F(3)(b),
- (b) an accounting period (“*the relevant accounting period*”) of the company ends after that exempt period but before the time the exempt period would have ended had paragraph 15F(2) of that Schedule not applied,
- (c) an apportionment under section 747(3) would fall to be made as regards the relevant accounting period, and
- (d) a company resident in the United Kingdom (“the UK resident company”) has a relevant interest in the controlled foreign company in that period.
- (2) The UK resident company may make an application to the Commissioners for Her Majesty's Revenue and Customs for the chargeable profits of the controlled foreign company for that accounting period (“the chargeable profits”) to be reduced to an amount (“*the specified amount*”) specified in the application (which may be nil).
- (3) If the Commissioners grant the application—
- (a) the chargeable profits are treated as reduced to the specified amount, and
- (b) the controlled foreign company's creditable tax (if any) for that period is treated as reduced by so much of that tax as, on a just and reasonable basis, relates to the reduction in the chargeable profits,
for the purpose of applying section 747(3) to (5) for determining the sum (if any) chargeable on the UK resident company under section 747(4)(a) (but for no other purpose).
- (4) The Commissioners may grant the application only if—
- (a) they are satisfied that the specified amount is not less than the relevant amount, and
- (b) they have not previously granted an application made by the UK resident company in respect of the relevant accounting period under section 751A or 751AB.
- (5) “*The relevant amount*” means the amount (if any) equal to so much of the chargeable profits as it is just and reasonable to regard as referable to—
- (a) the relevant transaction which triggered the end of the exempt period, or
- (b) any later relevant transaction occurring before the time the exempt period would have ended had paragraph 15F(2) of Schedule 25 not applied.
- (6) “*Relevant transaction*” has the meaning given by paragraph 15E of Schedule 25 (and it does not matter if the transaction occurs pursuant to an agreement entered into by the controlled foreign company before the relevant time (within the meaning of paragraph 15G of that Schedule)).
#### Restriction of relief for payments of interest.
##### 751B
- (1) An application by a company under section 751A or 751AA—
- (a) must be made in such form as the HMRC Commissioners may determine,
- (b) must be accompanied by such documents (or copies of documents) in the company's possession or power as those Commissioners may reasonably require for the purpose of determining whether to grant the application, and
- (c) must contain such information as those Commissioners may reasonably require for that purpose.
- (2) An application by a company under section 751A or 751AA—
- (a) may be made at any time on or before the filing date (within the meaning of Schedule 18 to the Finance Act 1998) for the relevant company tax return of the company, and
- (b) may be amended or withdrawn at any time before the application is determined by those Commissioners.
- (3) If an application by a company under section 751A or 751AA is granted after the company has delivered its relevant company tax return, it has 30 days beginning with the day on which the application is granted in which to amend that return to give effect to section 751A or 751AA.
- (4) The time limits otherwise applicable to an amendment of a company tax return do not prevent an amendment being made under subsection (3).
- (5) If the HMRC Commissioners refuse an application by a company under section 751A or 751AA, the company may appeal . . . against the refusal.
- (6) Notice of an appeal must be given in writing to the HMRC Commissioners within 30 days after the application is refused.
- (7) On an appeal—
- (a) if the tribunal is satisfied that the relevant amount is a different amount from the amount specified in the application, it must direct the HMRC Commissioners to grant the application as if the amount specified in it were that different amount,
- (b) if the tribunal is satisfied that the relevant amount is the amount specified in the application, it must direct the HMRC Commissioners to grant the application, and
- (c) in any other case, the tribunal must confirm the refusal.
- (8) For the purposes of subsection (7) “*the relevant amount*”—
- (a) in the case of an appeal in respect of the refusal of an application under section 751A, means the amount (if any) equal to so much of the chargeable profits mentioned in subsection (4) of section 751A as can reasonably be regarded as representing the value mentioned in that subsection , and
- (b) in the case of an appeal in respect of the refusal of an application under section 751AA, has the meaning given by subsection (5) of that section.
- (9) Part 5 of the Management Act (appeals), apart from section 50, applies in relation to an appeal under this section as it applies in relation to an appeal against an assessment to tax.
- (10) In this section “*relevant company tax return*”, in relation to a company, means the return for the accounting period for which—
- (a) any sum is chargeable on the company under section 747(4)(a), or
- (b) any sum would be so chargeable but for section 751A or 751AA,
in respect of the chargeable profits of the controlled foreign company for the accounting period mentioned in section 751A(1) or 751AA(1).
- (11) In this section “*the HMRC Commissioners*” means the Commissioners for Her Majesty's Revenue and Customs.
#### Sections 774B and 774D: exceptions
##### 752A
- (1) This section has effect for the purpose of determining for the purposes of this Chapter who has a relevant interest in a controlled foreign company at any time; and references in this Chapter to relevant interests shall be construed accordingly.
- (2) A UK resident company which has a direct or indirect interest in a controlled foreign company has a relevant interest in the company by virtue of that interest unless subsection (3) below otherwise provides.
- (3) A UK resident company which has an indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest if it has the interest by virtue of having a direct or indirect interest in another UK resident company.
- (4) A related person who has a direct or indirect interest in a controlled foreign company has a relevant interest in the company by virtue of that interest unless subsection (5) or (6) below otherwise provides.
- (5) A related person who has an indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest if he has the interest by virtue of having a direct or indirect interest in—
- (a) a UK resident company; or
- (b) another related person.
- (6) A related person who has a direct or indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest to the extent that a UK resident company—
- (a) has the whole or any part of the same interest indirectly, by virtue of having a direct or indirect interest in the related person, and
- (b) by virtue of that indirect interest in the controlled foreign company, has a relevant interest in the company by virtue of subsection (2) above.
- (7) A person who—
- (a) has a direct interest in a controlled foreign company, but
- (b) does not by virtue of subsections (2) to (6) above have a relevant interest in the company by virtue of that interest,
has a relevant interest in the company by virtue of that interest unless subsection (8) below otherwise provides.
- (8) A person does not by virtue of subsection (7) above have a relevant interest in a controlled foreign company by virtue of having a direct interest in the company to the extent that another person—
- (a) has the whole or any part of the same interest indirectly, and
- (b) by virtue of that indirect interest, has a relevant interest in the company by virtue of subsections (2) to (6) above.
- (9) No person has a relevant interest in a controlled foreign company otherwise than as provided by subsections (2) to (8) above.
- (10) In this section—
- “*related person*” means a person who—is not a UK resident company, butis connected or associated with a UK resident company which has by virtue of subsection (2) above a relevant interest in the controlled foreign company in question;
- “*UK resident company*” means a company resident in the United Kingdom.
##### 752B
- (1) For the purposes of section 752(3) above, where a person has a relevant interest in a controlled foreign company by virtue of indirectly holding issued ordinary shares of the company, the percentage of the issued ordinary shares of the company which the relevant interest represents is equal to—
$$P×S$where—P is the product of the appropriate fractions of that person and each of the share-linked companies through which he indirectly holds the shares in question, other than the lowest share-linked company; andS is the percentage of issued ordinary shares of the controlled foreign company which is held directly by the lowest share-linked company.$
- (2) In subsection (1) above and this subsection—
- “the appropriate fraction", in the case of a person who directly holds ordinary shares of a share-linked company, means that fraction of the issued ordinary shares of that company which his holding represents;
- “*the lowest share-linked company*”, in relation to a person who indirectly holds ordinary shares of a controlled foreign company, means the share-linked company which directly holds the shares in question;
- “*share-linked company*” means a company which is share-linked to the controlled foreign company in question.
- (3) Where a person has different indirect holdings of shares of the controlled foreign company (as in a case where different shares are held through different companies which are share-linked to the controlled foreign company)—
- (a) subsection (1) above shall apply separately in relation to the different holdings with any necessary modifications; and
- (b) for the purposes of section 752(3) above the percentage of the issued ordinary shares of the company which the relevant interest represents is the aggregate of the percentages resulting from those separate applications.
- (4) Where, for the purposes of subsection (3) of section 752, the percentage of the issued ordinary shares of the controlled foreign company which a person directly or indirectly holds varies during the relevant accounting period, he shall be treated for the purposes of that subsection as holding throughout that period that percentage of the issued ordinary shares of the company which is equal to the sum of the relevant percentages for each holding period in the relevant accounting period.
- (5) For the purposes of subsection (4) above—
- “holding period", in the case of any person, means a part of the relevant accounting period during which the percentage of the issued ordinary shares of the controlled foreign company which the person holds (whether directly or indirectly) remains the same;
- “the relevant percentage", in the case of a holding period, means the percentage equal to—$P×HA$where—P is the percentage of the issued ordinary shares of the controlled foreign company which the person in question directly or indirectly holds in the holding period, as calculated in accordance with subsections (1) to (3) above so far as applicable;H is the number of days in the holding period; andA is the number of days in the relevant accounting period.
##### 752C
- (1) In this section “*the relevant provisions*” means sections 752 to 752B and this section.
- (2) For the purposes of the relevant provisions—
- (a) a person has a direct interest in a company if (and only if) he has an interest in the company otherwise than by virtue of having an interest in another company;
- (b) a person has an indirect interest in a company if (and only if) he has an interest in the company by virtue of having an interest in another company;
- (c) a person indirectly holds shares of a controlled foreign company if (and only if) he directly holds ordinary shares of a company which is share-linked to the controlled foreign company.
- (3) For the purposes of the relevant provisions, a company is “share-linked" to a controlled foreign company if it has an interest in the controlled foreign company only by virtue of directly holding ordinary shares—
- (a) of the controlled foreign company, or
- (b) of the controlled foreign company or of one or more companies which are share-linked to the controlled foreign company by virtue of paragraph (a) above, or
- (c) of the controlled foreign company or of one or more companies which are share-linked to the controlled foreign company by virtue of paragraph (a) or (b) above,
and so on.
- (4) For the purposes of the relevant provisions, a company (“company A") has an intermediate interest in a controlled foreign company if (and only if)—
- (a) it has a direct or indirect interest in the controlled foreign company; and
- (b) one or more other persons have relevant interests in the controlled foreign company by virtue of having a direct or indirect interest in company A.
- (5) Any interest or shares held by a nominee or bare trustee shall be treated for the purposes of the relevant provisions as held by the person or persons for whom the nominee or bare trustee holds the interest or shares.
- (6) Where—
- (a) an interest in a controlled foreign company is held in a fiduciary or representative capacity, and
- (b) subsection (5) above does not apply, but
- (c) there are one or more identifiable beneficiaries,
the interest shall be treated for the purposes of the relevant provisions as held by that beneficiary or, as the case may be, as apportioned on a just and reasonable basis among those beneficiaries.
- (7) In the relevant provisions—
- “*bare trustee*” means a person acting as trustee—for a person absolutely entitled as against the trustee; orfor any person who would be so entitled but for being a minor or otherwise under a disability; orfor two or more persons who are or would, but for all or any of them being a minor or otherwise under a disability, be jointly so entitled;
- “ordinary shares", in the case of any company, means shares of a single class, however described, which is the only class of shares issued by the company;
- “*the relevant accounting period*” means the accounting period mentioned in section 752(1);
- “*share*” includes a reference to a fraction of a share.
##### 754A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 754B
- (1) This section has effect where a determination requiring the Board’s sanction is made for any of the following purposes, that is to say—
- (a) the giving of a closure notice; or
- (b) the making of a discovery assessment.
- (2) If the closure notice or, as the case may be, notice of the discovery assessment is given to any person without—
- (a) the determination, so far as it is taken into account in the closure notice or the discovery assessment, having been approved by the Board, or
- (b) notification of the Board’s approval having been served on that person at or before the time of the giving of the notice,
the closure notice or, as the case may be, the discovery assessment shall be deemed to have been given or made (and in the case of an assessment notified) in the terms (if any) in which it would have been given or made had that determination not been taken into account.
- (3) A notification under subsection (2)(b) above—
- (a) must be in writing;
- (b) must state that the Board have given their approval on the basis that—
- (i) an amount of chargeable profits, and
- (ii) an amount of creditable tax (which may be nil),
for the accounting period of the controlled foreign company in question fall to be apportioned under section 747(3) to the person in question;
- (c) must state the amounts mentioned in sub-paragraphs (i) and (ii) of paragraph (b) above; and
- (d) subject to paragraphs (a) to (c) above, may be in such form as the Board may determine.
- (4) For the purposes of this section, the Board’s approval of a determination requiring their sanction—
- (a) must be given specifically in relation to the case in question and must apply to the amount determined; but
- (b) subject to that, may be given by the Board (either before or after the making of the determination) in any such form or manner as they may determine.
- (5) In this section references to a determination requiring the Board’s sanction are references (subject to subsection (6) below) to any determination of the amount of chargeable profits or creditable tax for an accounting period of a controlled foreign company which falls to be apportioned to a particular person under section 747(3).
- (6) For the purposes of this section, a determination shall be taken, in relation to a closure notice or a discovery assessment, not to be a determination requiring the Board’s sanction if—
- (a) an agreement about the relevant amounts has been made between an officer of the Board and the person in whose case it is made;
- (b) that agreement is in force at the time of the giving of the closure notice or, as the case may be, notice of the assessment; and
- (c) the matters to which the agreement relates include the amount determined.
- (7) In paragraph (a) of subsection (6) above, “*the relevant amounts*” means—
- (a) the amount of chargeable profits, and
- (b) the amount of creditable tax (which may be nil),
for the accounting period of the controlled foreign company in question which fall to be apportioned under section 747(3) to the person mentioned in that paragraph.
- (8) For the purposes of subsection (6) above an agreement made between an officer of the Board and any person (“the taxpayer") in relation to any matter shall be taken to be in force at any time if, and only if—
- (a) the agreement is one which has been made or confirmed in writing;
- (b) that time is after the end of the period of thirty days beginning—
- (i) in the case of an agreement made in writing, with the day of the making of the agreement, and
- (ii) in any other case, with the day of the agreement’s confirmation in writing; and
- (c) the taxpayer has not, before the end of that period of thirty days, served a notice on an officer of the Board stating that he is repudiating or resiling from the agreement.
- (9) The references in subsection (8) above to the confirmation in writing of an agreement are references to the service on the taxpayer by an officer of the Board of a notice—
- (a) stating that the agreement has been made; and
- (b) setting out the terms of the agreement.
- (10) The matters that may be questioned on so much of any appeal by virtue of any provision of the Management Act or Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters) as relates to a determination the making of which has been approved by the Board for the purposes of this section shall not include the Board’s approval, except to the extent that the grounds for questioning the approval are the same as the grounds for questioning the determination itself.
- (11) In this section—
- “*closure notice*” means a notice under paragraph 32 of Schedule 18 to the Finance Act 1998 (completion of enquiry and statement of conclusions);
- “*discovery assessment*” means a discovery assessment or discovery determination under paragraph 41 of that Schedule (including an assessment by virtue of paragraph 52 of that Schedule).
##### 755A
- (1) This section applies in any case where—
- (a) an amount (“the apportioned profit") of a controlled foreign company’s chargeable profits for an accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom (“the UK company");
- (b) the UK company carries on life assurance business in that one of its accounting periods (“the relevant accounting period") in which ends the accounting period of the controlled foreign company; and
- (c) the property or rights which represent the UK company’s relevant interest in the controlled foreign company constitute to any extent assets of the UK company’s long-term insurance fund.
- (2) Subsections (3) and (4) below apply if, in the case of the relevant accounting period, the UK company is charged to tax under the I minus E basis in respect of life assurance business.
- (3) Where this subsection applies, the “*appropriate rate*” for the purposes of section 747(4)(a) and paragraph 1 of Schedule 26 in relation to the policy holders’ part of any BLAGAB apportioned profit shall be—
- (a) if a single rate of tax under section 88(1) of the Finance Act 1989 (lower corporation tax rate on certain insurance company profits) is applicable in relation to the relevant accounting period, that rate; or
- (b) if more than one such rate of tax is applicable in relation to the relevant accounting period, the average of those rates over the whole of that period.
- (4) Where this subsection applies, the “*appropriate rate*” for the purposes of section 747(4)(a) and paragraph 1 of Schedule 26 shall be nil in relation to so much of the apportioned profit as is referable to gross roll-up business carried on by the UK company.
- (4A) In any case where—
- (a) paragraph 4 of Schedule 26 to this Act applies to a dividend received by the UK company, and
- (b) but for this subsection, subsection (4) of section 804B of this Act would apply to that dividend,
the amount of credit for foreign tax in respect of that dividend shall be treated, for the purposes of that section, as wholly attributable to basic life assurance and general annuity business.
- (5) If, in the case of the relevant accounting period, the UK company is charged to tax under section 35 of CTA 2009 (charge on trade profits) in respect of its profits from life assurance business, the “*appropriate rate*” for the purposes of—
- (a) section 747(4)(a), and
- (b) paragraph 1 of Schedule 26,
shall be nil in relation to so much of the apportioned profit as is referable to the UK company’s relevant interest so far as represented by assets of its long-term insurance fund.
- (6) If, in the case of the relevant accounting period,—
- (a) the UK company is charged to tax under the I minus E basis in respect of life assurance business,
- (b) any creditable tax of the controlled foreign company falls to be apportioned to the UK company, and
- (c) the apportioned profit is to any extent referable to gross roll-up business,
so much of the creditable tax so apportioned as is attributable to the apportioned profit so far as so referable shall be left out of account for the purposes of this Chapter, other than section 747(3) and this section, and shall be treated as extinguished.
- (7) If, in the case of the relevant accounting period,—
- (a) the UK company is charged to tax under section 35 of CTA 2009 in respect of its profits from life assurance business, and
- (b) any creditable tax of the controlled foreign company falls to be apportioned to the UK company,
so much of the creditable tax so apportioned as is attributable to so much of the apportioned profit as is referable to the UK company’s relevant interest so far as represented by assets of the UK company’s long-term insurance fund shall be left out of account for the purposes of this Chapter, other than section 747(3) and this section, and shall be treated as extinguished.
- (8) Any set off under paragraph 1 . . . of Schedule 26 against the UK company’s liability to tax under section 747(4)(a) in respect of the apportioned profit shall be made against only so much of that liability as is attributable to the eligible part of the apportioned profit.
- (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (10) For the purposes of this section, the “eligible part" of the apportioned profit is any BLAGAB apportioned profit, other than the policy holders’ part.
- (11) For the purposes of this section the policy holders' part of any BLAGAB apportioned profit is—
- (a) where subsection (11A) below applies, the whole of that profit, and
- (b) in any other case, the relevant fraction (within the meaning of subsection (11B) below) of that profit.
- (11A) This subsection applies if—
- (a) the UK company’s life assurance business is mutual business,
- (b) the policy holders' share of the UK company’s relevant profits for the relevant accounting period is equal to all those profits, or
- (c) the policy holders' share of the UK company’s relevant profits for the relevant accounting period is more than its BLAGAB profits for that period.
- (11B) The relevant fraction for the purposes of subsection (11)(b) above is the fraction arrived at by dividing—
- (a) the policy holders' share of the UK company’s relevant profits for the relevant accounting period, by
- (b) the UK company’s BLAGAB profits for that period.
- (11BA) But where the BLAGAB profits for the relevant accounting period are nil, the relevant fraction—
- (a) if there are section 35 profits of the accounting period in respect of its life assurance business, is nil, and
- (b) otherwise, is such fraction as is just and reasonable;
and for this purpose there are section 35 profits if there are profits computed in accordance with the life assurance trade profits provisions after making adjustments in respect of losses in accordance with section 85A(4) of the Finance Act 1989.
- (11C) In subsections (11A) and (11B) above—
- (a) references to the policy holders' share of the UK company’s share of the relevant profits are to be construed in accordance with sections 88(3) and 89 of the Finance Act 1989, . . .
- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (12) In this section—
- “*BLAGAB apportioned profit*” means so much of the apportioned profit as is referable to basic life assurance and general annuity business carried on by the UK company;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (13) For the purposes of this section, the part of the apportioned profit which is referable to—
- (a) basic life assurance and general annuity business, or
- (ba) gross roll-up business,
carried on by the UK company is the part which would have been so referable under section 432A had the apportioned profit been a dividend paid to the UK company at the end of the accounting period mentioned in subsection (1)(a) above in respect of the property or rights which represent the UK company’s relevant interest in the controlled foreign company.
- (14) For the purposes of this section, any attribution of creditable tax to a particular part of the apportioned profit shall be made in the proportion which that part of the apportioned profit bears to the whole of the apportioned profit.
##### 755B
- (1) This section applies where—
- (a) a controlled foreign company carries on general insurance business in an accounting period;
- (b) an amount of the company’s chargeable profits, and an amount of its creditable tax (if any), for that accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom (“the UK company");
- (c) the UK company delivers a company tax return for that one of its accounting periods in which the controlled foreign company’s accounting period ends; and
- (d) in making or amending the return, the UK company has regard to accounts of the controlled foreign company drawn up using a method falling within subsection (2) below.
- (2) The methods which fall within this subsection are—
- (a) the method described in paragraph 58 in Section E of Part 2 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (which provides for a technical provision to be made in the accounts which is later replaced by a provision for estimated claims outstanding); and
- (b) any method which would have fallen within paragraph (a) above, had final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 58 of that Schedule, taken place, and been required to take place, no later than the end of the year referred to in that sub-paragraph as the third year following the underwriting year.
- (3) Where this section applies—
- (a) the UK company may make any amendments of its company tax return arising from the replacement of the technical provision in the controlled foreign company’s accounts at any time within twelve months from the date on which the provision was replaced; and
- (b) notice of intention to enquire into the return under paragraph 24 of Schedule 18 to the Finance Act 1998 may be given at any time up to two years from that date (or at any later time in accordance with the general rule in sub-paragraph (3) of that paragraph).
- (4) If, in a case where this section applies, the accounts of the controlled foreign company are drawn up using a method falling within paragraph (b) of subsection (2) above—
- (a) the controlled foreign company, and
- (b) any person with an interest in the controlled foreign company,
shall be treated for the purposes of this section as if final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 58 of Schedule 3 to those Regulations, had taken place at, and been required to take place no later than, the end of the year referred to in that sub-paragraph as the third year following the underwriting year.
- (5) Regulations under section 755C may make provision with respect to the determination of the amount of the provision by which the technical provision is to be treated as replaced in cases falling within subsection (4) above.
- (6) In this section “general insurance business” means business which consists of the effecting or carrying out of contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
##### 755C
- (1) The Treasury may by regulations provide for the provisions of this Chapter to have effect with prescribed modifications in any case where a non-resident company—
- (a) carries on general insurance business; and
- (b) draws up accounts relating to that business using a method falling within subsection (2) of section 755B.
- (2) Regulations under subsection (1) above may—
- (a) make different provision for different cases;
- (b) make provision having effect in relation to accounting periods of non-resident companies ending not more than one year before the date on which the regulations are made; and
- (c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit.
- (3) In this section—
- “*general insurance business*” has the same meaning as in section 755B;
- “*non-resident company*” means a company resident outside the United Kingdom;
- “*prescribed*” means prescribed in regulations under this section.
##### 755D
- (1) For the purposes of this Chapter “control", in relation to a company, means the power of a person to secure—
- (a) by means of the holding of shares or the possession of voting power in or in relation to the company or any other company, or
- (b) by virtue of any powers conferred by the articles of association or other document regulating the company or any other company,
that the affairs of the company are conducted in accordance with his wishes.
- (1A) For the purposes of this Chapter a person also controls a company if the person possesses, or is entitled to acquire, such rights as would—
- (a) if the whole of the income of the company were distributed, entitle the person to receive the greater part of the amount so distributed,
- (b) if the whole of the company's share capital were disposed of, entitle the person to receive the greater part of the proceeds of the disposal, or
- (c) in the event of the winding-up of the company or in any other circumstances, entitle the person to receive the greater part of the assets of the company which would then be available for distribution.
- (2) Where two or more persons, taken together, have the power mentioned in subsection (1) above or satisfy subsection (1A) above, they shall be taken for the purposes of this Chapter to control the company.
- (3) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing at least 40 per cent of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.
- (4) The 40 per cent test in this subsection is satisfied in the case of one of two persons who, taken together, control a company if that one of them has interests, rights and powers representing—
- (a) at least 40 per cent, but
- (b) not more than 55 per cent,
of the holdings, rights and powers in respect of which the pair of them fall to be taken as controlling the company.
- (5) For the purposes of this Chapter any question—
- (a) whether a company is controlled by a person, or by two or more persons taken together, or
- (b) whether, in the case of any company, the applicable 40 per cent test is satisfied in the case of each of two persons who, taken together, control the company,
shall be determined after attributing to each of the persons all the rights and powers mentioned in subsection (6) below that are not already attributed to that person for the purposes of subsections (1) to (4) above.
- (6) The rights and powers referred to in subsection (5) above are—
- (a) rights and powers which the person is entitled to acquire at a future date or which he will, at a future date, become entitled to acquire;
- (b) rights and powers of other persons, to the extent that they are rights or powers falling within subsection (7) below;
- (c) if the person is resident in the United Kingdom, rights and powers of any person who is resident in the United Kingdom and connected with the person; and
- (d) if the person is resident in the United Kingdom, rights and powers which for the purposes of subsection (5) above would be attributed to a person who is resident in the United Kingdom and connected with the person (a “*UK connected person*”) if the UK connected person were himself the person.
- (7) Rights and powers fall within this subsection to the extent that they—
- (a) are required, or may be required, to be exercised in any one or more of the following ways, that is to say—
- (i) on behalf of the person;
- (ii) under the direction of the person; or
- (iii) for the benefit of the person; and
- (b) are not confined, in a case where a loan has been made by one person to another, to rights and powers conferred in relation to property of the borrower by the terms of any security relating to the loan.
- (8) In subsections (6)(b) to (d) and (7) above, the references to a person’s rights and powers include references to any rights or powers which he either—
- (a) is entitled to acquire at a future date, or
- (b) will, at a future date, become entitled to acquire.
- (9) In paragraph (d) of subsection (6) above, the reference to rights and powers which would be attributed to a UK connected person if he were the person includes a reference to rights and powers which, by applying that paragraph wherever one person resident in the United Kingdom is connected with another person, would be so attributed to him through a number of persons each of whom is resident in the United Kingdom and connected with at least one of the others.
- (10) In determining for the purposes of this section whether one person is connected with another in relation to a company, subsection (7) of section 839 shall be disregarded.
- (11) References in this section—
- (a) to rights and powers of a person, or
- (b) to rights and powers which a person is or will become entitled to acquire,
include references to rights or powers which are exercisable by that person, or (when acquired by that person) will be exercisable, only jointly with one or more other persons.
### Meaning of offshore fund
#### Sale by individual of income derived from his personal activities.
##### 756A
- (1) In this Chapter references to an offshore fund are to a collective investment scheme constituted by—
- (a) a company that is resident outside the United Kingdom, or
- (b) a unit trust scheme the trustees of which are not resident in the United Kingdom, or
- (c) arrangements not falling within paragraph (a) or (b) taking effect by virtue of the law of a territory outside the United Kingdom and which under that law create rights in the nature of co-ownership (without restricting that expression to its meaning in the law of any part of the United Kingdom).
- (2) Subsection (1) has effect subject to—
- section 756B (treatment of umbrella funds), and
- section 756C (treatment of funds comprising more than one class of interest).
- (3) In this section “*collective investment scheme*” means any arrangements which are a collective investment scheme for the purposes of Part 17 of the Financial Services and Markets Act 2000 (see section 235 of that Act and orders made under subsection (5) of that section) or would be if the words “, within a period appearing to him to be reasonable,” were omitted from section 236(3)(a) of that Act.
- (4) But the reference to offshore funds in section 760(3)(a) does not include any arrangements which are not a collective investment scheme for the purposes of that Part of that Act.
### Treatment of umbrella funds
##### 756B
- (1) In this Chapter, an “*umbrella fund*” means an offshore fund—
- (a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are made to them; and
- (b) under which the participants are entitled to exchange rights in one pool for rights in another;
and references in this Chapter to a part of an umbrella fund are to such of the arrangements as relate to a separate pool.
- (2) For the purposes of this Chapter (except subsection (1))—
- (a) each part of an umbrella fund shall be regarded as a separate offshore fund, and
- (b) the umbrella fund as a whole shall not be regarded as an offshore fund.
- (3) In this Chapter, in relation to a part of an umbrella fund—
- (a) a reference to the assets of an offshore fund is to such of the assets of the umbrella fund as under the arrangements form part of the separate pool to which that part of the umbrella fund relates;
- (b) a reference to the income of an offshore fund is to the income arising from those assets;
- (c) a reference to a person having an interest in an offshore fund is to a person for the time being having an interest in that separate pool; and
- (d) a reference to an offshore fund being a non-qualifying fund shall be read in relation to times before the coming into force of this section as a reference to the umbrella fund being a non-qualifying fund.
### Treatment of funds comprising more than one class of interest
##### 756C
- (1) For the purposes of this Chapter where there is more than one class of interest in an offshore fund (the “*main fund*”)—
- (a) each class of interest shall be regarded as a separate offshore fund, and
- (b) the main fund shall not be regarded as an offshore fund.
- (2) In this section, references to a class of interest in an offshore fund do not include—
- (a) a part of an umbrella fund which is regarded as an offshore fund by virtue of section 756B, or
- (b) a class of interest in an offshore fund which by virtue of section 759(5), (6) or (8) is not a material interest in the fund.
- (3) In this Chapter, in relation to a class of interest in an offshore fund—
- (a) a reference to the assets of an offshore fund is to the assets of the main fund;
- (b) a reference to the income of an offshore fund is to such of the income of the main fund as is attributable to interests of that class under the arrangements constituting the main fund;
- (c) a reference to a person having an interest in an offshore fund is to a person for the time being having an interest of that class; and
- (d) a reference to an offshore fund being a non-qualifying fund shall be read in relation to times before the coming into force of this section as a reference to the main fund being a non-qualifying fund.
#### Sale by individual of income derived from his personal activities.
##### 762ZA
- (1) Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) applies in relation to an offshore income gain arising to a person resident or domiciled outside the United Kingdom as if the offshore income gain were income becoming payable to the person.
- (2) Income treated as arising under that Chapter by virtue of subsection (1) is regarded as “*foreign*” for the purposes of section 726, 730 or 735 of that Act.
- (3) Subsection (1) does not apply in relation to an offshore income gain if (and to the extent that) it is treated, by virtue of section 762(1), as arising to a person resident or ordinarily resident in the United Kingdom.
- (4) The following provisions apply if section 762(2) applies in relation to an offshore income gain (“the relevant offshore income gain”).
- (5) If—
- (a) by virtue of section 762(3) an offshore income gain is treated as arising in a tax year to a person resident or ordinarily resident in the United Kingdom, and
- (b) it is so treated by reason of the relevant offshore income gain (or part of it),
for that and subsequent tax years subsection (1) does not apply in relation to the relevant offshore income gain (or that part).
- (6) If, by virtue of subsection (1) as it applies in relation to the relevant offshore income gain, income is treated under Chapter 2 of Part 13 of ITA 2007 as arising in a tax year, reduce (with effect from the following tax year) the OIG amount in question by the amount of the income.
##### 762ZB
- (1) This section applies to income treated as arising under section 761(1) to an individual in a tax year if—
- (a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for that year, and
- (b) the individual is not domiciled in the United Kingdom in that year.
- (2) Treat the income as relevant foreign income of the individual.
- (3) For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis)—
- (a) treat any consideration obtained on the disposal of the asset as deriving from the income, and
- (b) unless the consideration so obtained is of an amount equal to the market value of the asset, treat the asset as deriving from the income.
- (4) In subsection (3)—
- (a) “*the asset*” means the asset the disposal of which causes the income to be treated as arising, and
- (b) “*the disposal*” means the disposal mentioned in paragraph (a).
##### 762A
- (1) This section applies where—
- (a) classes of interest in an offshore fund (the “*main fund*”) are treated as separate offshore funds under section 756C; and
- (b) as the result of—
- (i) a reorganisation within the meaning of section 126 of the 1992 Act, or
- (ii) a conversion of securities within the meaning of section 132 of that Act,
a person exchanges an interest of one class (A) in the main fund for an interest of another class (B) in that fund.
- (2) Where—
- (a) the interest of class A—
- (i) is at the time of the exchange an interest in a non-qualifying offshore fund, or
- (ii) has been an interest in such a fund at any material time, and
- (b) the interest of class B is at the time of the exchange an interest in a fund which is certified by the Board as a distributing offshore fund,
section 127 of the 1992 Act (equation of original shares and new holding) shall not prevent the exchange constituting a disposal for the purposes of this Chapter.
- (3) Any such disposal shall be treated as a disposal for a consideration equal to the market value of the rights at the time of the exchange.
- (4) In this section—
- “*class of interest*” has the same meaning as in section 756C(1);
- “*material time*” has the same meaning as in section 757.
##### 765A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Assets leased to traders and others.
##### 767A
- (1) Where it appears to the Board that—
- (a) there has been a change in the ownership of a company (“*the tax-payer company*”),
- (b) any corporation tax assessed on the tax-payer company for an accounting period beginning before the change remains unpaid at any time after the relevant date, and
- (c) any of the three conditions mentioned below is fulfilled,
any person mentioned in subsection (2) below may be assessed by the Board and charged (in the name of the tax-payer company) to an amount of corporation tax in accordance with this section.
- (2) The persons are—
- (a) any person who at any time during the relevant period before the change in the ownership of the tax-payer company had control of it;
- (b) any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before that change.
- (3) In subsection (2) above, “*the relevant period*” means—
- (a) the period of three years before the change in the ownership of the tax-payer company; or
- (b) if during the period of three years before that change (“*the later change*”) there was a change in the ownership of the tax-payer company (“*the earlier change*”), the period elapsing between the earlier change and the later change.
- (4) The first condition is that—
- (a) at any time during the period of three years before the change in the ownership of the tax-payer company the activities of a trade or business of that company cease or the scale of those activities become small or negligible; and
- (b) there is no significant revival of those activities before that change occurs.
- (5) The second condition is that at any time after the change in the ownership of the tax-payer company, but under arrangements made before that change, the activities of a trade or business of that company cease or the scale of those activities become small or negligible.
- (6) The third condition is that—
- (a) at any time during the period of six years beginning three years before the change in the ownership of the tax-payer company there is a major change in the nature or conduct of a trade or business of that company;
- (b) there is a transfer or there are transfers of assets of the tax-payer company to a person mentioned in subsection (7) below or to any person under arrangements which enable any of those assets or any assets representing those assets to be transferred to a person mentioned in subsection (7) below;
- (c) that transfer occurs or those transfers occur during the period of three years before the change in the ownership of the tax-payer company or after that change but under arrangements made before that change; and
- (d) the major change mentioned in paragraph (a) above is attributable to that transfer or those transfers.
- (7) The persons are—
- (a) any person mentioned in subsection (2)(a) above; and
- (b) any person connected with him.
- (8) The amount of tax charged in an assessment made under this section must not exceed the amount of the tax which, at the time of that assessment, remains unpaid by the tax-payer company.
- (9) For the purposes of this section the relevant date is the date six months from the date on which the corporation tax is assessed as mentioned in subsection (1)(b) above.
- (10) Any assessment made under this section shall not be out of time if made within three years from the date on which the liability of the tax-payer company to corporation tax for the accounting period mentioned in subsection (1)(b) above is finally determined.
##### 767AA
- (1) Where it appears to the Board that—
- (a) there has been a change in the ownership of a company (“the transferred company"),
- (b) any corporation tax relating to an accounting period ending on or after the change has been assessed on the transferred company or an associated company,
- (c) that tax remains unpaid at any time more than six months after it was assessed, and
- (d) the condition set out in subsection (2) below is fulfilled,
any person mentioned in subsection (4) below may be assessed by the Board and charged to an amount of corporation tax not exceeding the amount remaining unpaid.
- (2) The condition is that it would be reasonable (apart from this section) to infer, from either or both of—
- (a) the terms of any transactions entered into in connection with the change, and
- (b) the other circumstances of the change and of any such transactions,
that at least one of those transactions was entered into by one or more of its parties on the assumption, as regards a potential tax liability, that that liability would be unlikely to be met, or met in full, if it were to arise.
- (3) In subsection (2) above the reference to a potential tax liability is a reference to a liability to pay corporation tax which—
- (a) in circumstances which were reasonably foreseeable at the time of the change in ownership, or
- (b) in circumstances the occurrence of which is something of which there was at that time a reasonably foreseeable risk,
would or might arise from an assessment made, after the change in ownership, on the transferred company or an associated company (whether or not a particular associated company).
- (4) The persons mentioned in subsection (1) above are—
- (a) any person who at any time during the relevant period had control of the transferred company;
- (b) any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before the change in the ownership of the transferred company.
- (5) In subsection (4) above, “*the relevant period*” means—
- (a) the period of three years before the change in the ownership of the transferred company; or
- (b) if during the period of three years before that change (“the later change") there was a change in the ownership of the transferred company (“the earlier change"), the period elapsing between the earlier change and the later change.
- (6) For the purposes of this section a transaction is entered into in connection with a change in the ownership of a company if—
- (a) it is the transaction, or one of the transactions, by which that change is effected; or
- (b) it is entered into as part of a series of transactions, or scheme, of which transactions effecting the change in ownership have formed or will form a part.
- (7) For the purposes of this section—
- (a) references to a scheme are references to any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable, involving a single transaction or two or more transactions;
- (b) it shall be immaterial in determining whether any transactions have formed or will form part of a series of transactions or scheme that the parties to any of the transactions are different from the parties to another of the transactions; and
- (c) the cases in which any two or more transactions are to be taken as forming part of a series of transactions or scheme shall include any case in which it would be reasonable to assume that one or more of them—
- (i) would not have been entered into independently of the other or others; or
- (ii) if entered into independently of the other or others, would not have taken the same form or been on the same terms.
- (8) In this section references, in relation to the transferred company and an assessment to tax, to an associated company are references to any compnay (whenever formed) which, at the time of the assessment or at an earlier time after the change in ownership—
- (a) has control of the transferred company;
- (b) is a company of which the transferred company has control; or
- (c) is a company under the control of the same person or persons as the transferred company.
- (9) A person assessed and charged to tax under this section shall be assessed and charged in the name of the company by whom the tax to which the assessment relates remains unpaid.
- (10) Any assessment made under this section shall not be out of time if made within three years from the date of the final determination of the liability of the company by whom the tax remains unpaid to corporation tax for the accounting period for which that tax was assessed.
##### 767B
- (1) In relation to corporation tax assessed under section 767A—
- (a) section 86 of the Management Act (interest on overdue tax), in so far as it has effect in relation to accounting periods ending on or before 30th September 1993, and
- (b) section 87A of that Act (corresponding provision for corporation tax due for accounting periods ending after that date),
shall have effect as if the references in section 86 to the reckonable date and in section 87A to the date when the tax becomes due and payable were, respectively, references to the date which is the reckonable date in relation to the tax-payer company and the date when the tax became due and payable by the tax-payer company.
- (1A) In relation to corporation tax assessed under section 767AA, section 87A of the Management Act shall have effect as if the references to the date when the tax becomes due and payable were references to the date when the tax became due and payable by the transferred company or the associated company (as the case may be).
- (2) A payment in pursuance of an assessment under section 767A or 767AA shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes; but any person making such a payment shall be entitled to recover an amount equal to the payment from the tax-payer company or the transferred company or associated company (as the case may be).
- (3) In subsection (2) above the reference to a payment in pursuance of an assessment includes a reference to a payment of interest under section 86 or 87A of the Management Act (as they have effect by virtue of subsection (1) above).
- (4) For the purposes of sections 767A and 767AA, “*control*”, in relation to a company, shall be construed in accordance with section 416 as modified by subsections (5) and (6) below.
- (5) In subsection (2)(a) for “the greater part of” there shall be substituted “50 per cent. of”.
- (6) For subsection (3) there shall be substituted—
- (”) Where two or more persons together satisfy any of the conditions in subsection (2) above and do so by reason of having acted together to put themselves in a position where they will in fact satisfy the condition in question, each of those persons shall be treated as having control of the company.”
- (7) In section 767A(6) “*a major change in the nature or conduct of a trade or business*” includes any change mentioned in any of paragraphs (a) to (d) of section 245(4); and also includes a change falling within any of those paragraphs which is achieved gradually as the result of a series of transfers.
- (8) In section 767A(6) “*transfer*”, in relation to an asset, includes any disposal, letting or hiring of it, and any grant or transfer of any right, interest or licence in or over it, or the giving of any business facilities with respect to it.
- (9) Section 839 shall apply for the purposes of section 767A(7).
- (10) Subsection (9) of section 768 shall apply for the purposes of sections 767A and 767AA as it applies for the purposes of section 768.
##### 767C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 768A
- (1) In any case where—
- (a) within any period of three 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 carried on by the company, or
- (b) at any time after the scale of the activities in a trade carried on by a company has become small or negligible, and before any considerable revival of the trade, there is a change in the ownership of the company,
no relief shall be given under section 393A(1) or 393B(3) by setting a loss incurred by the company in an accounting period ending after the change in ownership against any profits of an accounting period beginning before the change in ownership.
- (2) Subsections (2) to (4), (8) and (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.
- (3) This section applies in relation to changes in ownership occurring on or after 14th June 1991.
##### 768B
- (1) This section applies where there is a change in the ownership of a company with investment business and—
- (a) after the change there is a significant increase in the amount of the company’s capital; or
- (b) within the period of six years beginning three years before the change there is a major change in the nature or conduct of the business carried on by the company; or
- (c) the change in the ownership occurs at any time after the scale of the activities in the business carried on by the company has become small or negligible and before any considerable revival of the business.
- (2) For the purposes of subsection (1)(a) above, whether there is a significant increase in the amount of a company’s capital after a change in the ownership of the company shall be determined in accordance with the provisions of Part I of Schedule 28A.
- (3) In paragraph (b) of subsection (1) above “*major change in the nature or conduct of a business*” includes a major change in the nature of the investments held by the company, even if the change is the result of a gradual process which began before the period of six years mentioned in that paragraph.
- (4) For the purposes of this section—
- (a) the accounting period of the company in which the change in the ownership occurs shall be divided into two parts, the first the part ending with the change, the second the part after;
- (b) those parts shall be treated as two separate accounting periods; and
- (c) the amounts in issue for the accounting period being divided shall be apportioned to those parts.
- (5) In Schedule 28A—
- (a) Part II shall have effect for identifying the amounts in issue for the accounting period being divided; and
- (b) Part III shall have effect for the purpose of apportioning those amounts to the parts of that accounting period.
- (6) Any sums which—
- (a) are, or are treated as, expenses of management referable to the accounting period being divided, and
- (b) under Part III of Schedule 28A are apportioned to either part of that period,
shall be treated for the purposes of Chapter 2 of Part 16 of CTA 2009 (companies with investment business) asexpenses of management referable to that part.
- (7) Any charges which under Part III of Schedule 28A are apportioned to either part of the accounting period being divided shall be treated for the purposes of section 338 above (charges on income deducted from total profits) and Chapter 2 of Part 16 of CTA 2009 as paid in that part.
- (8) Any allowances which under Part III of Schedule 28A are apportioned to either part of the accounting period being divided shall be treated for the purposes of section 253 of the Capital Allowances Act and section 1233 of CTA 2009 (companies with investment business: excess capital allowances) as falling to be made in that part.
- (9) In computing the total profits of the company for an accounting period ending after the change in the ownership, no deduction shall be made under section 1219 of CTA 2009 (expenses of management of a company's investment business) by reference to—
- (a) expenses of management deductible or allowances falling to be made for an accounting period beginning before the change; or
- (b) charges paid in such an accounting period.
- (10) Part IV of Schedule 28A shall have effect for the purpose of restricting, in a case where this section applies, the debits . . . to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the company’s loan relationships (including debits so brought into account by virtue of section 574 of that Act)and the non-trading deficits in respect of those relationships that may be carried forward.
- (12) Subject to the modification in subsection (13) below, subsections (6) to (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.
- (13) The modification is that in subsection (6) of section 768 for the words “relief in respect of a company’s losses has been restricted” there shall be substituted “deductions from a company’s total profits , or the debits to be brought into account for the purposes of Part 5 of CTA 2009 in the case of a company in respect of its loan relationships (or its derivative contracts by virtue of section 574 of that Act), have been restricted.”
- (14) In this section “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
##### 768C
- (1) This section applies where—
- (a) there is a change in the ownership of a company with investment business (“the relevant company”);
- (b) none of paragraphs (a) to (c) of section 768B(1) applies;
- (c) after the change in the ownership the relevant company acquires an asset from another company in circumstances such that section 171(1) of the 1992 Act applies to the acquisition; and
- (d) a chargeable gain (“a relevant gain”) accrues to the relevant company on a disposal of the asset within the period of three years beginning with the change in the ownership.
- (2) For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold and the first asset was a leasehold and the lessee has acquired the reversion.
- (3) For the purposes of this section—
- (a) the accounting period of the relevant company in which the change in the ownership occurs shall be divided into two parts, the first the part ending with the change, the second the part after;
- (b) those parts shall be treated as two separate accounting periods; and
- (c) the amounts in issue for the accounting period being divided shall be apportioned to those parts.
- (4) In Schedule 28A—
- (a) Part V shall have effect for identifying the amounts in issue for the accounting period being divided; and
- (b) Part VI shall have effect for the purpose of apportioning those amounts to the parts of that accounting period.
- (5) Subsections (6) to (8) of section 768B shall apply in relation to the relevant company as they apply in relation to the company mentioned in subsection (1) of that section except that any reference in those subsections to Part III of Schedule 28A shall be read as a reference to Part VI of that Schedule.
- (6) Subsections (7) and (9) below apply only where, in accordance with the relevant provisions of the 1992 Act and Part VI of Schedule 28A, an amount is included in respect of chargeable gains in the total profits for the accounting period of the relevant company in which the relevant gain accrues.
- (7) In computing the total profits of the relevant company for the accounting period in which the relevant gain accrues, no deduction shall be made under section 1219 of CTA 2009 (expenses of management of a company's investment business) by reference to—
- (a) expenses of management deductible or allowances falling to be made for an accounting period of the relevant company beginning before the change in ownership, or
- (b) charges paid in such an accounting period,
from an amount of the total profits equal to the amount which represents the relevant gain.
- (8) For the purposes of this section, the amount of the total profits for an accounting period which represents the relevant gain is—
- (a) where the amount of the relevant gain does not exceed the amount which is included in respect of chargeable gains for that period, an amount equal to the amount of the relevant gain;
- (b) where the amount of the relevant gain exceeds the amount which is included in respect of chargeable gains for that period, the amount so included.
- (9) Part IV of Schedule 28A shall have effect for the purpose of restricting, in a case where this section applies, the debits . . . to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the relevant company’s loan relationships (including debits so brought into account by virtue of section 574 of that Act)and the non-trading deficits in respect of those relationships that may be carried forward.
- (11) Subsections (8) and (9) of section 768 shall apply for the purposes of this section as they apply for the purposes of that section.
- (12) In this section—
- “*the relevant provisions of the 1992 Act*” means section 8(1) of and Schedule 7A to that Act; and
- “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
- (13) This section applies in relation to an asset to which Part 8 of CTA 2009 applies (intangible fixed assets), with the following adaptations—
- (a) for the reference to section 171(1) of the 1992 Act substitute a reference to section 775 of CTA 2009;
- (b) for any reference to a chargeable gain under the 1992 Act substitute a reference to a chargeable realisation gain within the meaning of that Part that is a non-trading credit for the purposes of that Part (see section 746 of that Act);
- (c) for any reference to a disposal of the asset substitute a reference to its realisation within the meaning of that Part (see section 734(1) of that Act);
- (d) for the reference to the relevant provisions of the 1992 Act substitute a reference to Chapter 6 of that Part.
##### 768D
- (1) This section applies where there is a change in the ownership of a company carrying on a UK property business and—
- (a) in the case of a company with investment business, either—
- (i) paragraph (a), (b) or (c) of section 768B(1) applies, or
- (ii) section 768C applies;
- (b) in the case of a company which is not a company with investment business, paragraph (a) or (b) of section 768(1) applies.
- (2) Where this section applies the following provisions have effect to prevent relief being given under section 392A by setting a UK property business loss incurred by the company before the change of ownership against profits arising after the change.
- (3) The accounting period in which the change of ownership occurs is treated for that purpose as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period.
- (4) The profits or losses of the period in which the change occurs are apportioned to those two periods—
- (a) in the case of a company with investment business—
- (i) where paragraph (a), (b) or (c) of section 768B(1) applies, in accordance with Parts II and III of Schedule 28A, or
- (ii) where section 768C applies, in accordance with Parts V and VI of that Schedule, and
- (b) in the case of a company which is not a company with investment business, according to the length of the periods,
unless in any case the specified method of apportionment would work unjustly or unreasonably in which case such other method shall be used as appears just and reasonable.
- (5) Relief under section 392A(1) against total profits of the same accounting period is available only in relation to each of those periods considered separately.
- (6) A loss made in any accounting period beginning before the change of ownership may not be set off under section 392A(2) against, or deducted by virtue of section 392A(3) from—
- (a) in the case of—
- (i) a company with investment business where paragraph (a), (b) or (c) of section 768B(1) applies, or
- (ii) a company which is not a company with investment business,
profits of an accounting period ending after the change of ownership;
- (b) in the case of a company with investment business where section 768C applies, from so much of those profits as represents the relevant gain within the meaning of that section.
- (7) Subsections (8) and (9) of section 768 (time limits for assessment; information powers) apply for the purposes of this section as they apply for the purposes of that section.
- (8) In this section—
- (a) any reference to a case where paragraph (a) or (b) of section 768(1) applies includes the case where that paragraph would apply if the reference there to a trade carried on by the company were to a UK property business carried on by it;
- (b) “*company with investment business*” has the meaning given by section 1218 of CTA 2009.
- (9) The provisions of this section apply in relation to an overseas property business as they apply in relation to a UK property business.
##### 768E
- (1) Where there is a change in the ownership of a company with investment business and either—
- (a) paragraph (a), (b) or (c) of section 768B(1) applies, or
- (b) section 768C applies,
the following provisions have effect to prevent relief being given under section 753 of CTA 2009 (treatment of non-trading losses) by setting a non-trading loss on intangible fixed assets incurred by the company before the change of ownership against profits arising after the change.
- (2) The accounting period in which the change of ownership occurs is treated for that purpose as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period.
- (3) The profits or losses of the period in which the change occurs are apportioned to those two periods—
- (a) where paragraph (a), (b) or (c) of section 768B(1) applies, in accordance with Parts 2 and 3 of Schedule 28A, or
- (b) where section 768C applies, in accordance with Parts 5 and 6 of that Schedule,
unless in any case the specified method of apportionment would work unjustly or unreasonably in which case such other method shall be used as appears just and reasonable.
- (4) Relief under section 753 of CTA 2009 (treatment of non-trading losses) against total profits of the same accounting period is available only in relation to each of those periods considered separately.
- (5) A loss made in any accounting period beginning before the change of ownership may not be set off under section 753(3) of CTA 2009 (carry forward of non-trading losses) against—
- (a) in a case where paragraph (a), (b) or (c) of section 768B(1) applies, profits of an accounting period ending after the change of ownership;
- (b) in a case where section 768C applies, so much of those profits as represents the relevant gain within the meaning of that section.
- (6) Subsections (8) and (9) of section 768 (time limits for assessment; information powers) apply for the purposes of this section as they apply for the purposes of that section.
- (7) In this section “company with investment business” has the meaning given by section 1218 of CTA 2009.
##### 770A
Schedule 28AA (which deals with provision made or imposed otherwise than at arm’s length) shall have effect.
#### Assets leased to traders and others.
### Factoring of income receipts etc
##### 774A
- (1) For the purposes of section 774B an arrangement is a structured finance arrangement in relation to a person (“*the borrower*”) if the following condition is met in relation to the borrower.
- (2) The condition is that—
- (a) under the arrangement the borrower receives from another person (“*the lender*”) any money or other asset (“the advance”) in any period,
- (b) in accordance with generally accepted accounting practice the accounts of the borrower for that period record a financial liability in respect of the advance,
- (c) the borrower, or a person connected with the borrower, makes a disposal of an asset (“the security”) under the arrangement to or for the benefit of the lender or a person connected with the lender,
- (d) the lender, or a person connected with the lender, is entitled under the arrangement to payments in respect of the security, and
- (e) in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower.
- (3) For the purposes of this section, in any case where the borrower is a partnership, references to the accounts of the borrower include the accounts of any member of the partnership.
- (4) For the purposes of this section and section 774B—
- (a) references to a person connected with the borrower do not include the lender, and
- (b) references to a person connected with the lender do not include the borrower.
##### 774B
- (1) This section applies if an arrangement is a structured finance arrangement in relation to a person (“*the borrower*”).
- (1A) If the arrangement would (disregarding this section) have had the relevant effect (see subsections (2) and (3)), the arrangement is not to have that effect.
- (1B) If the arrangement would (disregarding this section) not have had that effect, the payments mentioned in section 774A(2)(d) are to be treated for tax purposes as income of the borrower payable in respect of the security (whether or not those payments are also the income of anyone else for tax purposes).
- (2) If the borrower is a person other than a partnership, the relevant effect is that—
- (a) an amount of income on which the borrower, or a person connected with the borrower, would otherwise have been charged to tax is not so charged,
- (b) an amount which would otherwise have been brought into account in calculating for tax purposes any income of the borrower, or of a person connected with the borrower, is not so brought into account, or
- (c) the borrower, or a person connected with the borrower, becomes entitled to an income deduction.
- (3) If the borrower is a partnership, the relevant effect is that—
- (a) an amount of income on which a member of the partnership would otherwise have been charged to tax is not so charged,
- (b) an amount which would otherwise have been brought into account in calculating for tax purposes any income of a member of the partnership is not so brought into account, or
- (c) a member of the partnership becomes entitled to an income deduction.
- (4) If—
- (a) a person in relation to whom this section applies is within the charge to income tax, and
- (b) in accordance with generally accepted accounting practice the accounts of the person record an amount as a finance charge in respect of the advance,
that person may treat the amount for income tax purposes as interest payable on a loan.
- (5) If a person in relation to whom this section applies is within the charge to corporation tax—
- (a) the advance is to be treated, in relation to the company, for the purposes of Part 5 of CTA 2009 as a money debt owed by the company,
- (b) the arrangement is to be treated, in relation to the company, for the purposes of that Part as a loan relationship of the company (as a debtor relationship), and
- (c) any amount which, in accordance with generally accepted accounting practice, is recorded in the accounts of the company as a finance charge in respect of the advance is to be treated as interest payable under that relationship.
- (6) For the purposes of this section, in any case where the borrower is a partnership,—
- (a) references to accounts include the accounts of the partnership, and
- (b) any deemed interest is treated as payable by the partnership (whether or not the finance charge is recorded in the accounts of the partnership).
- (7) For the purpose of determining when any deemed interest in respect of the advance is paid—
- (a) the payments mentioned in section 774A(2)(d) are treated as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance, and
- (b) the interest elements of those payments are treated as paid when those payments are paid,
and the deemed interest in respect of the advance is treated as paid at the times when the interest elements are treated as paid.
- (8) In this section “*deemed interest*” means any amount which is treated as interest as a result of subsection (4) or (5).
- (9) This section is subject to the exceptions contained in section 774E.
##### 774C
- (1) For the purposes of section 774D an arrangement is a structured finance arrangement in relation to a partnership (“the borrower partnership”) if condition A or B is met in relation to the borrower partnership.
- (2) Condition A is that—
- (a) a person (“the transferor partner”) disposes of an asset (“the security”) under the arrangement to the borrower partnership,
- (b) the transferor partner is a member of the borrower partnership immediately after the disposal (whether or not a member immediately before the disposal),
- (c) under the arrangement the borrower partnership receives from another person (“*the lender*”) any money or other asset (“the advance”) in any period,
- (d) in accordance with generally accepted accounting practice the accounts of the borrower partnership for that period record a financial liability in respect of the advance,
- (e) there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender (see subsection (6)),
- (f) under the arrangement the share of the lender or person connected with the lender in the profits of the borrower partnership is determined by reference (wholly or partly) to payments in respect of the security, and
- (g) in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower partnership.
- (3) For the purposes of condition A, references to the accounts of the borrower partnership include the accounts of the transferor partner.
- (4) Condition B is that—
- (a) the borrower partnership holds an asset (“the security”) as a partnership asset at any time before the arrangement is made,
- (b) under the arrangement the borrower partnership receives from another person (“*the lender*”) any money or other asset (“the advance”) in any period,
- (c) in accordance with generally accepted accounting practice the accounts of the borrower partnership for that period record a financial liability in respect of the advance,
- (d) there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender,
- (e) under the arrangement the share of the lender or person connected with the lender in the profits of the borrower partnership is determined by reference (wholly or partly) to payments in respect of the security, and
- (f) in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower partnership.
- (5) For the purposes of condition B, references to the accounts of the borrower partnership include the accounts of any person who is a member of the partnership immediately before the arrangement is made.
- (6) For the purposes of this section and section 774D there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender if directly or indirectly in consequence of, or otherwise in connection with, the arrangement—
- (a) the lender, or a person connected with the lender, becomes a member of the borrower partnership at any time, or
- (b) there is at any time a change in the share of a member of the borrower partnership in the profits of the borrower partnership in a case where that member is the lender or a person connected with the lender.
- (7) For the purposes of subsection (6)(b) the reference to a person connected with the lender includes a person who at any time becomes connected with the lender directly or indirectly in consequence of, or otherwise in connection with, the arrangement.
##### 774D
- (1) This section applies if—
- (a) an arrangement is a structured finance arrangement in relation to a partnership (“the borrower partnership”), and
- (b) any relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender would (disregarding this section) have had the following effect.
- (2) The effect is that—
- (a) an amount of income on which a relevant member of the borrower partnership would otherwise have been charged to tax is not so charged,
- (b) an amount which would otherwise have been brought into account in calculating for tax purposes any income of a relevant member of the borrower partnership is not so brought into account, or
- (c) a relevant member of the borrower partnership becomes entitled to an income deduction.
- (2A) In determining whether the condition in subsection (1)(b) is met it is to be assumed that amounts of income equal to the payments mentioned in section 774C(2)(f) or (4)(e) were payable to the borrower partnership before the time at which the relevant change in relation to its membership involving the lender or a person connected with the lender occurs.
- (3) In this section “*relevant member of the borrower partnership*” means—
- (a) in any case where condition A in section 774C is met in relation to the arrangement, the transferor partner, and
- (b) in any case where condition B in that section is met in relation to the arrangement, any person other than the lender who is a member of the borrower partnership immediately before the time at which the relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender occurs.
- (4) Part 9 of ITTOIA 2005 and sections 1259 to 1265 of CTA 2009 are to have effect in relation to any relevant member of the borrower partnership as if the relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender had not occurred.
Accordingly, the structured finance arrangement is not to have the effect mentioned in subsection (2).
- (5) The following provisions of this section confer relief from tax the availability of which depends on which of the conditions in section 774C is met in relation to the arrangement.
- (6) In any case where condition A in section 774C is met, if—
- (a) the transferor partner is a person within the charge to income tax, and
- (b) in accordance with generally accepted accounting practice the accounts of the borrower partnership record an amount as a finance charge in respect of the advance,
the transferor partner may treat the amount for income tax purposes as interest payable by the transferor partner on a loan.
- (7) In any case where condition A in that section is met, if the transferor partner is a company within the charge to corporation tax—
- (a) the advance is to be treated, in relation to the company, for the purposes of Chapter 9 of Part 5 of CTA 2009 (partnerships involving companies) (and the other provisions of that Part) as a money debt owed by the borrower partnership,
- (b) the arrangement is to be treated, in relation to the company, as a transaction for the lending of money from which that debt is treated as arising for those purposes, and
- (c) any amount which, in accordance with generally accepted accounting practice, is recorded in the accounts of the borrower partnership as a finance charge in respect of the advance is to be treated as interest payable by the company under that transaction.
- (8) For the purposes of subsections (6) and (7), references to the accounts of the borrower partnership include the accounts of the transferor partner.
- (9) In any case where condition B in section 774C is met, if—
- (a) a relevant member of the borrower partnership is a person within the charge to income tax, and
- (b) in accordance with generally accepted accounting practice the accounts of the borrower partnership record an amount as a finance charge in respect of the advance,
the relevant partner may treat the amount for income tax purposes as interest payable by the borrower partnership on a loan.
- (10) In any case where condition B in that section is met, if a relevant member of the borrower partnership is a company within the charge to corporation tax—
- (a) the advance is to be treated, in relation to the company, for the purposes of Chapter 9 of Part 5 of CTA 2009 (partnerships involving companies) (and the other provisions of that Part) as a money debt owed by that partnership,
- (b) the arrangement is to be treated, in relation to the company, as a transaction for the lending of money from which that debt is treated as arising for those purposes, and
- (c) any amount which, in accordance with generally accepted accounting practice, is recorded in the accounts of the borrower partnership as a finance charge in respect of the advance is to be treated as interest payable by the borrower partnership under that transaction.
- (11) For the purposes of subsections (9) and (10), references to the accounts of the borrower partnership include the accounts of any relevant member of the borrower partnership.
- (12) For the purpose of determining when any deemed interest in respect of the advance is paid—
- (a) the payments mentioned in section 774C(2)(f) or (4)(e) are treated as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance, and
- (b) the interest elements of those payments are treated as paid when those payments are paid,
and the deemed interest in respect of the advance is treated as paid at the times when the interest elements are treated as paid.
- (13) In this section “*deemed interest*” means any amount which is treated as interest as a result of any of subsections (6) to (10).
- (14) This section is subject to the exceptions contained in section 774E.
##### 774E
- (1) Section 774B or 774D does not apply if the whole of the advance under the structured finance arrangement—
- (a) is charged to tax on a relevant person (see subsection (7)) as an amount of income,
- (b) is brought into account in calculating for tax purposes any income of a relevant person, or
- (c) is brought into account for the purposes of any provision of the Capital Allowances Act as a disposal receipt, or proceeds from a balancing event or disposal event, of a relevant person.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Subsection (1)(c) is not to be taken as met in any case where—
- (a) the receipt or proceeds gives rise to a balancing charge, and
- (b) the amount of the balancing charge is limited by any provision of the Capital Allowances Act.
- (3) Section 774B or 774D does not apply if, at all times, the whole of the advance under the structured finance arrangement—
- (a) is a debtor relationship of a relevant person for the purposes of Part 5 of CTA 2009 (loan relationships), or
- (b) would be a debtor relationship of a relevant person for those purposes if that person were a company within the charge to corporation tax.
For the purposes of this subsection references to a debtor relationship do not include a relationship to which Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships) applies.
- (4) Section 774B or 774D does not apply in so far as the structured finance arrangement is an arrangement in relation to which—
- (a) section 263A of the 1992 Act (agreements for sale and repurchase of securities) applies,
- (b) Schedule 13 to the Finance Act 2007 (sale and repurchase of securities) or Chapter 10 of Part 6 of CTA 2009 (repos) applies, or
- (c) Chapter 5 of Part 2 of the Finance Act 2005 or Chapter 6 of Part 6 of CTA 2009 (alternative finance arrangements) has effect.
- (5) Section 774B or 774D does not apply in so far as—
- (a) the security under the structured finance arrangement is plant or machinery which is the subject of a sale and finance leaseback, or
- (b) the structured finance arrangement is an arrangement in relation to which sections 228B and 228C of the Capital Allowances Act apply with the modifications contained in section 228F of that Act (lease and finance leaseback).
- (6) For the purposes of subsection (5)(a), whether plant or machinery is the subject of a sale and finance leaseback is determined in accordance with section 221 of the Capital Allowances Act.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (7) For the purposes of this section a “*relevant person*” means—
- (a) if section 774B applies, the borrower under the structured finance arrangement, a person connected with that borrower or (if that borrower is a partnership) a member of the partnership, and
- (b) if section 774D applies, a relevant member of the borrower partnership (within the meaning of that section).
##### 774F
- (1) The Treasury may make regulations prescribing other circumstances in which section 774B or 774D is not to apply in relation to a structured finance arrangement.
- (2) Any regulations under subsection (1) may make provision amending section 774E.
- (3) The power to make regulations under subsection (1) includes—
- (a) power to make provision having effect in relation to times before the making of the regulations (but not times earlier than 6th June 2006),
- (b) power to make different provision for different cases or different purposes, and
- (c) power to make incidental, supplemental, consequential or transitional provision and savings.
##### 774G
- (1) For the purposes of sections 774A to 774D “*arrangement*” includes any agreement or understanding (whether or not legally enforceable).
- (2) For the purposes of sections 774A to 774D “*income deduction*” means—
- (a) a deduction in calculating any income for tax purposes, or
- (b) a deduction against total income or total profits.
- (3) For the purposes of sections 774A to 774D—
- (a) references to a person's receiving any asset include—
- (i) the person's obtaining directly or indirectly the value of any asset or otherwise deriving directly or indirectly any benefit from it, and
- (ii) the discharge (in whole or in part) of any liability of the person,
- (b) references to a disposal of an asset include anything which constitutes a disposal of the asset for the purposes of the 1992 Act,
- (c) references to payments in respect of any asset include—
- (i) payments in respect of any other asset substituted for it under the arrangement, and
- (ii) obtaining directly or indirectly the value of any asset or otherwise deriving directly or indirectly any benefit from it.
- (4) For the purposes of sections 774A to 774D, section 839 (connected persons) applies.
- (5) For the purposes of sections 774A to 774D references to the accounts of any person who is a company include the consolidated group accounts of a group of companies of which it is a member.
- (5A) In determining for the purposes of sections 774A to 774D whether an amount is recorded as a financial liability in respect of the advance it is to be assumed that the period of account in which the advance is received ended immediately after the receipt of the advance.
- (6) If any person does not draw up accounts in accordance with generally accepted accounting practice, sections 774A to 774D apply as if the accounts had been drawn up by the person in accordance with that practice.
- (7) Sections 277 to 281 of ITTOIA 2005 and sections 217 to 221 of CTA 2009 (lease premiums) are not to apply in relation to a premium paid in respect of a grant of a lease where the grant constitutes a disposal of an asset for the purposes of section 774A(2)(c) or 774C(2)(a).
##### 775A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restriction of relief for payments of interest.
##### 785ZA
- (1) This section applies for corporation tax purposes if—
- (a) a company carries on a business in respect of which the company is within the charge to corporation tax,
- (b) the company carries on the business in partnership with other persons in an accounting period of the partnership,
- (c) the business (“the leasing business”) is, on any day in that period, a business of leasing plant or machinery,
- (d) the company incurs a loss in its notional business in any accounting period comprised (wholly or partly) in the accounting period of the partnership, and
- (e) the interest of the company in the leasing business during the accounting period of the partnership is not determined on an allowable basis (see subsections (2) to (4)).
- (2) The interest of the company in the leasing business during the accounting period of the partnership is determined on an allowable basis if (and only if) the following condition is met.
- (3) The condition is met if, for the purposes of sections 1262 to 1264 of CTA 2009,—
- (a) the company's share in the profits or loss of the leasing business for that period is determined wholly by reference to a single percentage, and
- (b) the company's share in any relevant capital allowances for that period is determined wholly by reference to the same percentage.
- (4) For the purposes of this condition “*profits*” does not include chargeable gains.
- (5) The following restrictions apply in respect of so much of the loss incurred by the company in its notional business as derives from any relevant capital allowances (“the restricted part of the loss”).
- (6) Apart from by way of set off against any relevant leasing income, relief is not to be given to the company under any relevant loss relief provision in respect of the restricted part of the loss.
- (7) If the leasing business is a trade, relief is not to be given to the company under section 393A(1) in respect of the restricted part of the loss.
- (8) The restricted part of the loss is not available for set off by way of group relief in accordance with section 403.
- (9) For the purpose of determining how much of a loss derives from any relevant capital allowances, the loss is to be calculated on the basis that any relevant capital allowances are the final amounts to be deducted.
##### 785ZB
- (1) This section applies for the purposes of section 785ZA.
- (2) “*Business of leasing plant or machinery*” has the same meaning as in Part 3 of Schedule 10 to the Finance Act 2006 (sale etc of lessor companies etc).
- (3) “*Lease*” includes an underlease, sublease, tenancy or licence and an agreement for any of those things.
- (4) “*Notional business*”, in relation to a company, means the business the profits or losses of which are determined, in relation to the company, under section 1259 of CTA 2009 (calculation of firm's profits and losses).
- (5) “*Plant or machinery*” has the same meaning as in Part 2 of the Capital Allowances Act.
- (6) “*Relevant capital allowance*” means an allowance under Part 2 of the Capital Allowances Act in respect of expenditure incurred on the provision of plant or machinery wholly or partly for the purposes of the leasing business.
- (7) “*Relevant leasing income*” means any income of the company's notional business deriving from any lease—
- (a) which is a lease of plant or machinery, and
- (b) which was entered into before the end of the accounting period of the company in which the loss in its notional business was incurred.
- (8) “*Relevant loss relief provision*” means any of the following provisions—
- (a) section 392A (UK property business losses),
- (b) section 392B (losses from overseas property businesses),
- (c) section 393 (trade losses),
- (d) section 396 (losses from miscellaneous transactions).
##### 785A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 785B
- (1) This section applies if—
- (a) there is an unconditional obligation, under a lease of plant or machinery or a relevant arrangement, to make a relevant capital payment (at any time), or
- (b) a relevant capital payment is made under such a lease or arrangement otherwise than in pursuance of such an obligation.
- (2) The lessor is treated for corporation tax purposes as receiving income attributable to the lease of an amount equal to the amount of the capital payment.
- (3) The income is treated—
- (a) if subsection (1)(a) applies, as income for the period of account in which there is first an obligation of the kind mentioned there, and
- (b) if subsection (1)(b) applies, as income for the period of account in which the payment is made.
##### 785C
- (1) The expressions used in section 785B and this section are to be interpreted as follows.
- (2) “*Capital payment*” means any payment except one which, if made to the lessor—
- (a) would fall to be included in a calculation of the lessor's income for corporation tax purposes, or
- (b) would fall to be included in such a calculation but for section 502B (rental earnings under long funding finance lease).
- (3) “*Lease*” includes—
- (a) a licence, and
- (b) the letting of a ship or aircraft on charter or the letting of any other asset on hire,
and “*lessor*” and “*lessee*” are to be read accordingly.
- (4) “*Lease of plant or machinery*” includes a lease of plant or machinery and other property but does not include—
- (a) a lease where the income attributable to the lease received by the lessor (if any) would be chargeable to tax under Chapter 3 of Part 4 of CTA 2009 as profits of a UK property business, or
- (b) a lease of plant or machinery where the lessor has incurred what would (but for section 34A of the Capital Allowances Act) be qualifying expenditure (within the meaning of Part 2 of that Act) on the plant or machinery.
- (5) “*Relevant arrangement*” means any agreement or arrangement relating to a lease of plant or machinery, including one made before the lease is entered into or after it has ended (and, accordingly, “lessor” and lessee” include prospective and former lessors and lessees).
- (6) A capital payment, in relation to a lease or relevant arrangement, is “relevant” if condition A or B is met (but this is subject to subsections (9) and (9A)).
- (7) Condition A is that the capital payment is payable (or paid), directly or indirectly, by (or on behalf of) the lessee to (or on behalf of) the lessor in connection with—
- (a) the grant, assignment, novation or termination of the lease, or
- (b) any provision of the lease or relevant arrangement (including the variation or waiver of any such provision).
- (8) Condition B is that rentals payable under the lease are less than (or payable later than) they might reasonably be expected to be if there were no obligation to make the capital payment (and the capital payment were not made).
- (9) A capital payment is not “relevant” if or to the extent that—
- (a) the capital payment reduces (or would but for section 536 of the Capital Allowances Act reduce) the amount of expenditure incurred by the lessor for the purposes of the Capital Allowances Act in respect of the plant or machinery in question, or
- (b) the capital payment is compensation for loss resulting from damage to, or damage caused by, the plant or machinery in question, . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (9A) Where—
- (a) a capital payment is an initial payment under a long-funding lease, and
- (b) under section 61 of the Capital Allowances Act (disposal events and disposal values), the commencement of the term of the lease is an event that requires the lessor to bring a disposal value into account,
the capital payment is only “relevant” to the extent that it exceeds the disposal value.”
- (9B) “*Commencement*”, “*disposal value*”, “*initial payment*”, “*long funding lease*” and “*the term*” have the same meaning as in Part 2 of the Capital Allowances Act.
- (10) References to payment include the provision of value by any means other than the making of a payment, and accordingly—
- (a) references to the making of a payment include the passing of value (by any other means), and
- (b) references to the amount of the payment include the value passed.
##### 785D
- (1) This section applies if section 785B applies in relation to a lease of plant or machinery and other property (see section 785C(4)).
- (2) The relevant capital payment is to be apportioned, on a just and reasonable basis, between—
- (a) the plant and machinery, and
- (b) the other property.
- (3) If the income (if any) received by the lessor that is attributable to any of the plant or machinery is chargeable to tax under Chapter 3 of Part 4 of CTA 2009 as profits of a UK property business, treat that plant or machinery as falling within subsection (2)(b) (and not subsection (2)(a)).
- (4) Section 785B(2) has effect as if the reference to the amount of the capital payment were to such amount as is apportioned under subsection (2) in respect of the plant or machinery within subsection (2)(a).
#### Restriction of relief for payments of interest.
##### 785E
- (1) This section applies for corporation tax purposes if—
- (a) section 785B applies by virtue of subsection (1)(a) of that section, and
- (b) at any time, the lessor reasonably expects that the relevant capital payment will not be paid (or will not be paid in full).
- (2) For the purposes of calculating the profits of the lessor, a deduction is allowed for the period of account which includes that time.
- (3) The amount of the deduction is equal to the amount reasonably expected not to be paid.
- (4) No other deduction is allowed in respect of the matters mentioned in subsection (1).
#### Disposals and acquisitions of company loan relationships with or without interest.
#### Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets
##### 793A
- (1) Where relief in respect of an amount of tax that would otherwise be payable under the law of a territory outside the United Kingdom may be allowed—
- (a) under arrangements made in relation to that territory, or
- (b) under the law of that territory in consequence of any such arrangements,
credit may not be allowed in respect of that tax, whether the relief has been used or not.
- (2) Where, under arrangements having effect by virtue of section 788, credit may be allowed in respect of an amount of tax, credit by way of unilateral relief may not be allowed in respect of that tax.
- (3) Where arrangements made in relation to a territory outside the United Kingdom contain express provision to the effect that relief by way of credit shall not be given under the arrangements in cases or circumstances specified or described in the arrangements, then neither shall credit by way of unilateral relief be allowed in those cases or circumstances.
##### 795A
- (1) The amount of credit for foreign tax which, under any arrangements, is to be allowed against tax in respect of any income or chargeable gain shall not exceed the credit which would be allowed had all reasonable steps been taken—
- (a) under the law of the territory concerned, and
- (b) under any arrangements made in relation to that territory,
to minimise the amount of tax payable in that territory.
- (2) The steps mentioned in subsection (1) above include—
- (a) claiming, or otherwise securing the benefit of, reliefs, deductions, reductions or allowances; and
- (b) making elections for tax purposes.
- (3) For the purposes of subsection (1) above, any question as to the steps which it would have been reasonable for a person to take shall be determined on the basis of what the person might reasonably be expected to have done in the absence of relief under this Part against tax in the United Kingdom.
##### 797A
- (1) This section applies for the purposes of any arrangements where, in the case of any company—
- (a) any non-trading credit relating to an item is brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) for any accounting period (“the applicable accounting period”); and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that interest.
- (2) It shall be assumed that tax chargeable under section 299 of CTA 2009 on the profits . . . arising for the applicable accounting period from the company’s loan relationships falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect (subject to subsection (7) below) as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description; and
- (b) different parts of that amount might be set against different profits.
- (4) For the purposes of this section, the adjusted amount of a company’s non-trading debits for any accounting period is the amount equal, in the case of that company, to the aggregate of the non-trading debits given for that period for the purposes of Part 5 of CTA 2009 (loan relationships) less the aggregate of the amounts specified in subsection (5) below.
- (5) Those amounts are—
- (a) so much of any non-trading deficit for the applicable accounting period as is an amount to which a claim under section 389(1) or 459(1)(b) of CTA 2009(deficit carried back and set against profits) relates; and
- (aa) so much of any non-trading deficit for that period as is surrendered as group relief by virtue of section 403 of the Taxes Act 1988; and
- (b) so much of any non-trading deficit for that period as falls to be carried forward to a subsequent period in accordance with section 391 or 457(1) of CTA 2009; . . .
- (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) Section 797(3) shall have effect as if any amount carried forward to the applicable accounting period under section 457(1) of CTA 2009 were an amount capable of being allocated only to any non-trading profits of the company.
- (7) Where—
- (a) the company has a non-trading deficit for the applicable accounting period,
- (b) the amount of that deficit exceeds the aggregate of the amounts specified in subsection (5) above, and
- (c) as the result of—
- (i) the application of section 388(1) of CTA 2009 (insurance companies: basic rule: deficit set off against income and gains of deficit period), or
- (ii) a claim under section 459(1)(a) of that Act (claim to set off deficit against profits of deficit period),
the excess falls to be set off against profits of any description,
section 797(3) shall have effect as if non-trading debits of the company which in aggregate are equal to the amount of the excess were required to be allocated to the profits against which they are set off in pursuance of the claim.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (8) In this section “*non-trading profits*” has the same meaning as in Chapter 16 of Part 5 of CTA 2009 (see section 457(5) of that Act).
##### 797B
- (1) This section applies for the purposes of any arrangements where, in the case of a company—
- (a) a non-trading credit relating to an item is brought into account for the purposes of Part 8 of CTA 2009 (intangible fixed assets) for an accounting period (“*the applicable accounting period*”), and
- (b) there is in respect of that item an amount of foreign tax for which, under the arrangements, credit is allowable against United Kingdom tax computed by reference to that item.
- (2) It shall be assumed that tax chargeable under that Part of that Act on the profits and gains arising for the applicable accounting period from the company’s intangible fixed assets falls to be computed on the actual amount of its non-trading credits for that period, and without any deduction in respect of non-trading debits.
- (3) Section 797(3) shall have effect as if—
- (a) there were for the applicable accounting period an amount equal to the adjusted amount of the non-trading debits falling to be brought into account by being set against profits of the company for that period of any description, and
- (b) different parts of that amount might be set against different profits.
- (4) For this purpose the adjusted amount of a company’s non-trading debits for an accounting period is given by:
$$TotalDebits-AmountCarriedForward$where—Total Debits is the aggregate amount of the company’s non-trading debits for that accounting period under Part 8 of CTA 2009 (intangible fixed assets), andAmount Carried Forward is the amount (if any) carried forward to the next accounting period of the company under section 753(3) of that Act (carry-forward of non-trading loss in respect of which no claim is made for it to be set against total profits of current period).$
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
##### 798A
- (1) This section has effect in relation to the application of section 797(1) to the allowance of credit for foreign tax against corporation tax in respect of trade income.
- (2) The reference in section 797(1) to the relevant income or gain shall be treated as referring only to income arising or gains accruing out of the transaction, arrangement or asset in connection with which the credit for foreign tax arises.
- (3) In determining for the purposes of section 797(1) the amount of corporation tax attributable to any income or gain, there shall be taken into account—
- (a) deductions or expenses which would be allowable in the computation of the taxpayer's liability,
- (b) a reasonable apportionment of allowable deductions or expenses which relate partly to the transaction, arrangement or asset from which the income or gain arises and partly to other matters, and
- (c) expenses of a company connected (within the meaning given by section 839) with the taxpayer, in so far as reasonably attributable to the income or gain.
- (3A) Subsection (3) is subject to subsection (3B) if—
- (a) the taxpayer is a bank or a company connected with a bank, and
- (b) the amount of the included funding costs is significantly less than the amount of the notional funding costs.
- (3B) The amount of the notional funding costs is to be included in the subsection (3) total, but only to the extent that it exceeds the amount of the included funding costs.
- (3C) In subsections (3A) and (3B) and this subsection—
- “*bank*” has the meaning given by section 840A;
- “*connected*” has the meaning given by section 839;
- “*included funding costs*” means the total of the funding costs that are—incurred by the taxpayer, or any company connected with the taxpayer, in respect of capital used to fund the relevant transaction, andincluded in the subsection (3) total (before the application of subsection (3B));
- “*notional funding costs*” means the funding costs that the relevant bank would incur (on the basis of its average funding costs) in respect of the capital that would be needed to wholly fund the relevant transaction if that transaction were funded in that way (and for this purpose “*relevant bank*” means the bank that is the taxpayer, or with which the taxpayer is connected);
- “*relevant transaction*” means the transaction, arrangement or asset from which the income or gain arises;
- “*subsection (3) total*” means the amount to be taken into account under subsection (3) for the purposes of section 797(1).
- (4) In this section and section 798B “*trade income*” means—
- (a) income chargeable to tax under Chapter 2 or 15 of Part 3 of CTA 2009 (trade profits and post-cessation receipts),
- (b) income chargeable to tax under Chapter 3 or 9 of Part 4 of CTA 2009 (profits of property businesses and post-cessation receipts),
- (c) income which arises from a source outside the United Kingdom and is chargeable to tax under section 979 of CTA 2009 (charge to tax on income not otherwise charged), and
- (d) any other income or profits which by a provision of this Act is or are—
- (i) chargeable to tax under Chapter 2 of Part 3 of CTA 2009, or
- (ii) calculated in the same way as the profits of a trade;
but this section shall not apply in relation to income to which section 804C below applies.
- (5) In subsection (4) the references—
- (a) to income chargeable under Chapter 15 of Part 3 of CTA 2009, and
- (b) to income chargeable under Chapter 9 of Part 4 of CTA 2009,
do not include income that would, but for the repeal by CTA 2009 of section 103 above, have been chargeable to corporation tax under that section.
##### 798B
- (1) Where—
- (a) a credit for foreign tax arises in connection with an asset, and
- (b) the asset is in a hedging relationship with a derivative contract,
in the application of section 798A(2) the reference to the income arising out of the asset shall be taken as a reference to the income arising out of the asset and the derivative contract taken together (but taking account of the income or loss from the derivative contract only in so far as reasonably attributable to the hedging relationship).
- (2) For the purposes of subsection (1)(b) an asset is in a hedging relationship with a derivative contract if—
- (a) the asset is acquired as a hedge of risk in connection with the contract, or
- (b) the contract is entered into as a hedge of risk in connection with the asset;
and if an asset or a contract is wholly or partly designated as a hedge for the purposes of a person's accounts, that shall be conclusive for the purpose of this subsection.
- (3) Where royalties (as defined in arrangements having effect by virtue of section 788) are paid in respect of an asset in more than one jurisdiction outside the United Kingdom, for the purposes of section 798A(2)—
- (a) royalty income arising in more than one jurisdiction (other than the United Kingdom) in a year of assessment in respect of that asset shall be treated as income arising from a single transaction, arrangement or asset, and
- (b) credits available for foreign tax in respect of the royalty income shall be aggregated accordingly.
- (4) If a person (“A”) carrying on a trade giving rise to trade income enters into a scheme or arrangement with another person (“B”) a main purpose of which is to alter the effect of section 798A in relation to A, income received in pursuance of the scheme or arrangement shall be treated for the purposes of section 798A as trade income of B (and not as income of A).
- (4A) Income of a person (“D”) is to be treated for the purposes of section 798A as trade income (if it is not otherwise trade income) of D in a case where—
- (a) the income is received by D as part of a scheme or arrangement entered into by D and a connected person (“C”),
- (b) if C had received the income, it would be reasonable to assume that it would be trade income of C, and
- (c) a main purpose of the scheme or arrangement is to produce the result that section 798A will not have effect in relation to the income because it is received by D.
- (4B) For the purposes of subsection (4A)(b) it is to be assumed that, in the case of any relevant transaction to which a relevant person is a party, C were that party to that transaction.
- (4C) In subsections (4A) and (4B) and this subsection—
- “*connected person*” means a person with whom D is connected (within the meaning of section 839);
- “*relevant person*” means—D, orany other connected person who is a party to the scheme or arrangement;
- “*relevant transaction*” means any of the transactions giving rise to the income.
- (5) Where—
- (a) transactions, arrangements or assets are treated by a taxpayer as a series or group (the “portfolio”),
- (b) a number of credits for foreign tax arise in respect of the portfolio, and
- (c) either—
- (i) it is not reasonably practicable to prepare a separate computation of income or gain for the purposes of section 798A(2) in respect of each transaction, arrangement or asset, or
- (ii) a separate computation of income or gain in respect of each transaction, arrangement or asset for the purposes of section 798A(2) would not, compared with an aggregated computation, make a material difference to the amount of credit for foreign tax which is allowable,
the income or gains arising from the portfolio, or part of the portfolio, may be aggregated and apportioned for the purposes of section 798A(2) in a fair and reasonable manner.
##### 798C
- (1) This section applies where the application of section 796(1) or 797(1) prevents an amount of credit for foreign tax from being allowable against income tax or corporation tax.
- (2) The taxpayer's income shall be treated as reduced by the amount of disallowed credit.
- (3) Subsection (2) applies only in so far as the amount of disallowed credit does not exceed the amount of any loss attributable to the income or gain in respect of which the foreign tax was paid.
- (4) For the purpose of subsection (3), payment of the foreign tax is to be taken into account despite section 795(2).
##### 801A
- (1) This section applies where—
- (a) a company (“*the claimant company*”) makes a claim for an allowance by way of credit in accordance with this Part;
- (b) the claim relates to underlying tax on a dividend paid to that company by a company resident outside the United Kingdom (“*the overseas company*”);
- (c) that underlying tax is or includes an amount in respect of tax (“*the high rate tax*”) payable by—
- (i) the overseas company, or
- (ii) such a third, fourth or successive company as is mentioned in section 801,
at a rate in excess of the relievable rate; and
- (d) the whole or any part of the amount in respect of the high rate tax which is or is included in the underlying tax would not be, or be included in, that underlying tax but for the existence of, or for there having been, an avoidance scheme.
- (2) Where this section applies, the amount of the credit to which the claimant company is entitled on the claim shall be determined as if the high rate tax had been tax at the relievable rate, instead of at a rate in excess of that rate.
- (3) For the purposes of this section tax shall be taken to be payable at a rate in excess of the relievable rate if, and to the extent that, the amount of that tax exceeds the amount that would represent tax on the relevant profits at the relievable rate.
- (4) In subsection (3) above “*the relevant profits*”, in relation to any tax, means the profits of the overseas company or, as the case may be, of the third, fourth or successive company which, for the purposes of this Part, are taken to bear that tax.
- (5) In this section “*the relievable rate*” means the rate of corporation tax in force when the dividend mentioned in subsection (1)(b) above was paid.
- (6) In this section “*an avoidance scheme*” means any scheme or arrangement which—
- (a) falls within subsection (7) below; and
- (b) is a scheme or arrangement the purpose, or one of the main purposes, of which is to have an amount of underlying tax taken into account on a claim for an allowance by way of credit in accordance with this Part.
- (7) A scheme or arrangement falls within this subsection if the parties to it include both—
- (a) the claimant company, a company related to that company or a person connected with the claimant company; and
- (b) a person who was not under the control of the claimant company at any time before the doing of anything as part of, or in pursuance of, the scheme or arrangement.
- (8) In this section “*arrangement*” means an arrangement of any kind, whether in writing or not.
- (9) For the purposes of this section, whether a person is connected with another is determined in accordance with section 839.
- (10) Subsection (5) of section 801 (meaning of “*related company*”) shall apply for the purposes of this section as it applies for the purposes of that section.
- (11) For the purposes of this section a person who is a party to a scheme or arrangement shall be taken to have been under the control of the claimant company at all the following times, namely—
- (a) any time when that company would have been taken (in accordance with section 416) to have had control of that person for the purposes of Part XI;
- (b) any time when that company would have been so taken if that section applied (with the necessary modifications) in the case of partnerships and unincorporated associations as it applies in the case of companies; and
- (c) any time when that person acted in relation to that scheme or arrangement, or any proposal for it, either directly or indirectly under the direction of that company.
##### 801B
- (1) This section applies where—
- (a) a company (“*company A*”) resident outside the United Kingdom has paid tax under the law of a territory outside the United Kingdom in respect of any of its profits;
- (b) some or all of those profits become profits of another company resident outside the United Kingdom (“*company B*”) otherwise than by virtue of the payment of a dividend to company B; and
- (c) company B pays a dividend out of those profits to another company (“*company C*”), wherever resident.
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid—
- (a) by any company resident outside the United Kingdom (whether or not company B),
- (b) to a company resident in the United Kingdom,
as if company B had paid the tax paid by company A in respect of those profits of company A which have become profits of company B as mentioned in subsection (1)(b) above.
- (3) But the amount of relief under this Part which is allowable to a company resident in the United Kingdom shall not exceed the amount which would have been allowable to that company had those profits become profits of company B by virtue of the payment of a dividend by company A to company B.
##### 801C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 803A
- (1) This section applies in any case where, under the law of a territory outside the United Kingdom, tax is payable by any one company resident in that territory (“*the responsible company*”) in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies so resident, taken together as a single taxable entity.
- (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (2) Where this section applies, this Part shall have effect, so far as relating to the determination of underlying tax in relation to any dividend paid by any of the companies mentioned in subsection (1) above (the “*non-resident companies*”) to another company (“*the recipient company*”), as if—
- (a) the non-resident companies, taken together, were a single company,
- (b) anything done by or in relation to any of the non-resident companies (including the payment of the dividend) were done by or in relation to that single company, and
- (c) that single company were related to the recipient company, if that one of the non-resident companies which actually pays the dividend is related to the recipient company,
(so that, in particular, the relevant profits for the purposes of section 799(1) is a single aggregate figure in respect of that single company and the foreign tax paid by the responsible company is foreign tax paid by that single company).
- (3) For the purposes of this section a company is related to another company if that other company—
- (a) controls directly or indirectly, or
- (b) is a subsidiary of a company which controls directly or indirectly,
not less than 10 per cent. of the voting power in the first-mentioned company.
##### 804ZA
- (1) If the Board consider, on reasonable grounds, that conditions A to D are or may be satisfied in relation to any income or chargeable gain taken or to be taken into account for the purposes of determining a person's liability to tax in a chargeable period, they may give the person a notice under this section.
- (2) Condition A is that, in the case of the person, there is in respect of the income or gain an amount of foreign tax for which, under any arrangements, credit is allowable against United Kingdom tax for that chargeable period.
- (3) Condition B is that there is a scheme or arrangement the main purpose, or one of the main purposes, of which is to cause an amount of foreign tax to be taken into account in the case of the person for that chargeable period.
- (4) Condition C is that the scheme or arrangement is a prescribed scheme or arrangement.
- (5) Condition D is that the amount referred to in subsection (6) is more than a minimal amount.
- (6) The amount is the aggregate of—
- (a) the aggregate amount of the claims for credit that the person has made, or is in a position to make, for the chargeable period; and
- (b) for all the persons connected to that person, the aggregate amount of the claims for credit that the connected person has made, or is in a position to make, for a corresponding chargeable period.
- (7) A chargeable period of a person (“A”) corresponds to a chargeable period of another person (“B”) if at least one day of A's chargeable period falls within B's chargeable period.
- (8) A notice under this section is a notice—
- (a) informing the person of the Board's view under subsection (1),
- (b) specifying the chargeable period in relation to which the Board formed that view,
- (c) if the amount of foreign tax considered by the Board to satisfy condition B is an amount of underlying tax, specifying the body corporate . . . whose payment of foreign tax is relevant to that underlying tax, and
- (d) informing the person that as a consequence section 804ZB has effect in relation to him.
- (9) A notice under this section may specify the adjustments of a person's tax return that, in the view of the Board, fall to be made by him under section 804ZB(2).
- (10) The adjustments specified may, in a case where the notice given to a person specifies a body corporate resident outside the United Kingdom, include treating the body corporate as having paid or being liable to pay only so much foreign tax as would have been allowed to it as a credit if it were resident in the United Kingdom and a notice under this section had been given to it as regards an amount of foreign tax.
- (11) Schedule 28AB makes provision about what constitutes a prescribed scheme or arrangement.
- (11A) In this section “*foreign tax*” includes any tax which for the purpose of allowing credit under any arrangements against corporation tax is treated by section 801 as if it were tax payable under the law of any territory outside the United Kingdom.
- (12) In this section and sections 804ZB and 804ZC “*tax return*” means—
- (a) a return under section 8, 8A or 12AA of the Management Act, or
- (b) a company tax return;
and “*company tax return*” means the return required to be delivered pursuant to a notice under paragraph 3 of Schedule 18 to the Finance Act 1998, as read with paragraph 4 of that Schedule.
##### 804ZB
- (1) This section applies in relation to a person if—
- (a) a notice under section 804ZA has been given to the person in respect of a chargeable period specified in the notice, and
- (b) the chargeable period specified is a chargeable period in relation to which conditions A to D of section 804ZA are satisfied.
- (2) The person must in his tax return for the period make (or must amend his return for the period so as to make) such adjustments as are necessary for counteracting the effects of the scheme or arrangement in that period that are referable to the purpose referred to in condition B of section 804ZA.
##### 804ZC
- (1) Subsection (2) applies if the Board give a notice to a person under section 804ZA before the person has made his tax return for the chargeable period specified in the notice.
- (2) If the person makes a tax return for that period before the end of the period of 90 days beginning with the day on which the notice is given, he may—
- (a) make a tax return that disregards the notice, and
- (b) at any time after making the return and before the end of the period of 90 days, amend the return for the purpose of complying with the notice.
- (3) If a person has made a tax return for a chargeable period, the Board may only give him a notice under section 804ZA in relation to that period if a notice of enquiry has been given to him in respect of his tax return for that period.
- (4) After any enquiries into the person's tax return for that period have been completed, the Board may only give him a notice under section 804ZA in relation to that period if the requirements in subsections (5) and (7) are satisfied.
- (5) The first requirement is that at the time the enquiries were completed, the Board could not have been reasonably expected, on the basis of the information made available to them or to an officer of theirs before that time, to have been aware that the circumstances were such that a notice under section 804ZA could have been given to the person in relation to that period.
- (6) For the purposes of subsection (5)—
- (a) section 29(6) and (7) of the Management Act (information made available) applies as it applies for the purposes of section 29(5), and
- (b) paragraph 44(2) and (3) of Schedule 18 to the Finance Act 1998 applies as it applies for the purposes of paragraph 44(1).
- (7) The second requirement is that—
- (a) the person was requested to produce, provide or furnish information during an enquiry into the return for that period, and
- (b) if the person had duly complied with the request, the Board could have been reasonably expected to give the person a notice under section 804ZA in relation to that period.
- (8) If a person is given a notice under section 804ZA in relation to a chargeable period after having made a tax return for that period, the person may amend the return for the purpose of complying with the notice at any time before the end of the period of 90 days beginning with the day on which the notice is given.
- (9) If the notice under section 804ZA is given to the person after he has been given a notice of enquiry in respect of his tax return for the period, no closure notice may be given in relation to his tax return until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (10) If the notice under section 804ZA is given to the person after any enquiries into the return for the period are completed, no discovery assessment may be made as regards the income or chargeable gain to which the notice relates until—
- (a) the end of the period of 90 days beginning with the day on which the notice under section 804ZA is given, or
- (b) the earlier amendment of the return for the purpose of complying with the notice.
- (11) Subsections (2)(b) and (8) do not prevent a person's tax return for a chargeable period becoming incorrect if—
- (a) a notice under section 804ZA is given to the person in relation to that period,
- (b) the return is not amended in accordance with subsection (2)(b) or (8) for the purpose of complying with the notice, and
- (c) the return ought to have been so amended.
- (12) In this section—
- “*closure notice*” means a notice under—section 28A or 28B of the Management Act, orparagraph 32 of Schedule 18 to the Finance Act 1998;
- “*discovery assessment*” means an assessment under—section 29 of the Management Act, orparagraph 41 of Schedule 18 to the Finance Act 1998;
- “*notice of enquiry*” means a notice under—section 9A or 12AC of the Management Act, orparagraph 24 of Schedule 18 to the Finance Act 1998.
##### 804A
- (1) Subsection (2) below applies where credit for tax—
- (a) which is payable under the laws of a territory outside the United Kingdom in respect of insurance business carried on by a company through a permanent establishment in that territory, and
- (b) which is computed otherwise than wholly by reference to profits arising in that territory,
is to be allowed (in accordance with this Part) against corporation tax charged under section 35 of CTA 2009 (charge on trade profits) or section 436A in respect of the profits, computed in accordance with the provisions applicable for the purposes of section 35 of CTA 2009, of life assurance business or gross roll-up business carried on by the company in an accounting period (in this section referred to as “*the relevant profits*”).
- (1A) For the purposes of paragraph (b) of subsection (1) above, the cases where tax payable under the laws of a territory outside the United Kingdom is “*computed otherwise than wholly by reference to profits arising in that territory*” are those cases where the charge to tax in that territory falls within subsection (1B) below.
- (1B) A charge to tax falls within this subsection if it is such a charge made otherwise than by reference to profits as (by disallowing their deduction in computing the amount chargeable) to require sums payable and other liabilities arising under policies to be treated as sums or liabilities falling to be met out of amounts subject to tax in the hands of the company.
- (2) Where this subsection applies, the amount of the credit shall not exceed the greater of—
- (a) any such part of the tax payable under the laws of the territory outside the United Kingdom as is charged by reference to profits arising in that territory, and
- (b) the shareholders’ share of the tax so payable.
- (3) For the purposes of subsection (2) above the shareholders’ share of tax payable under the laws of a territory outside the United Kingdom is so much of that tax as is represented by the fraction
$$AB$where— A is an amount equal to the amount of the relevant profits before making any deduction authorised by subsection (5) below; andB is an amount equal to the excess of—$
- (a) the amount taken into account as receipts of the company in computing those profits, apart from premiums and sums received by virtue of a claim under a reinsurance contract, over
- (b) the amounts taken into account as expenses . . . in computing those profits.
- (4) Where there is no such excess as is mentioned in subsection (3) above, or where the profits are greater than any excess, the whole of the tax payable under the laws of the territory outside the United Kingdom shall be the shareholders’ share; and (subject to that) where there are no profits, none of it shall be the shareholders’ share.
- (5) Where, by virtue of this section, the credit for any tax payable under the laws of a territory outside the United Kingdom is less than it otherwise would be, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the relevant profits.
##### 804B
- (1) Where—
- (a) an insurance company carries on more than one category of long-term business in an accounting period, and
- (b) there arises to the company in that period any income or gain (“*the relevant income*”) in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is allowable against corporation tax in respect of so much of the relevant income as is referable (in accordance with the provisions of sections 432ZA to 432E . . . ) to a particular category of business must not exceed the fraction of the foreign tax which, in accordance with the following provisions of this section, is attributable to that category of business.
- (3) Where the relevant income arises from an asset which is linked solely to a category of business, the whole of the foreign tax is attributable to that category of business, unless the case is one where subsection (7) below applies.
- (3A) Where the relevant income arises from foreign business assets, the whole of the foreign tax is attributable to gross roll-up business, unless the case is one where subsection (7) below applies.
- (4) Where subsection (3) above does not apply and the category of business in question is—
- (a) basic life assurance and general annuity business, or
- (b) PHI business,
the fraction of the foreign tax that is attributable to that category of business is the fraction whose numerator is the part of the relevant income which is referable to that category by virtue of any provision of section 432A . . . and whose denominator is the whole of the relevant income.
- (5) Subsections (6) and (7) below apply where the category of business in question is gross roll-up business.
- (6) Where—
- (a) subsection (3) above does not apply, and
- (b) some or all of the relevant income is taken into account in accordance with section 83 of the Finance Act 1989 in an account in relation to which the provisions of section 432C . . . apply,
the fraction of the foreign tax that is attributable to gross roll-up business is the fraction whose numerator is the part of the relevant income which is referable to gross roll-up business by virtue of any provision of section 432C . . . and whose denominator is the whole of the relevant income.
- (7) Where some or all of the relevant income falls to be taken into account in determining in accordance with section 83(2) of the Finance Act 1989 the amount referred to in section 432E(1) as the net amount, the fraction of the foreign tax that is attributable to gross roll-up business is the fraction—
- (a) whose numerator is the part of the investment income taken into account in that determination which would be referable to gross roll-up business by virtue of section 432E if the investment income were the only amount included in the net amount; and
- (b) whose denominator is the whole of that investment income.
- (7A) The Treasury may by regulations amend subsection (7) above; and the regulations may include amendments having effect in relation to accounting periods during which they are made.
- (8) No part of the foreign tax is attributable to any category of business except as provided by subsections (3) to (7) above.
- (9) Where for the purposes of this section an amount of foreign tax is attributable to gross roll-up business, credit in respect of the foreign tax so attributable shall be allowed only against corporation tax in respect of profits chargeable under section 436A.
##### 804C
- (1) Where—
- (a) an insurance company carries on any category of insurance business in a period of account,
- (b) a computation in accordance with the provisions applicable for the purposes of section 35 of CTA 2009 (charge on trade profits) falls to be made in relation to that category of business for that period, and
- (c) there arises to the company in that period any income or gain in respect of which credit for foreign tax falls to be allowed under any arrangements,
subsection (2) below shall have effect.
- (2) In any such case, the amount of the credit for foreign tax which, under the arrangements, is to be allowed against corporation tax in respect of so much of that income or gain as is referable to the category of business concerned (“*the relevant income*”) shall be limited by treating the amount of the relevant income as reduced in accordance with subsections (3) and (4) below.
- (3) The first limitation is to treat the amount of the relevant income as reduced (but not below nil) for the purposes of this Chapter by the amount of expenses (if any) attributable to the relevant income.
- (4) If—
- (a) the amount of the relevant income after any reduction under subsection (3) above,
exceeds
- (b) the relevant fraction of the profits of the category of business concerned for the period of account in question which are chargeable to corporation tax,
the second limitation is to treat the relevant income as further reduced (but not below nil) for the purposes of this Chapter to an amount equal to that fraction of those profits.
In this subsection any reference to the profits of a category of business is a reference to those profits after the set off of any losses of that category of business which have arisen in any previous accounting period.
- (5) In determining the amount of the credit for foreign tax which is to be allowed as mentioned in subsection (2) above, the relevant income shall not be reduced except in accordance with that subsection.
- (6) For the purposes of subsection (3) above, the amount of expenses attributable to the relevant income is the appropriate fraction of the total relevant expenses of the category of business concerned for the period of account in question.
- (7) In subsection (6) above, the “*appropriate fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above, and
- (b) whose denominator is the total income of the category of business concerned for the period of account in question,
unless the denominator so determined is nil, in which case the denominator shall instead be the amount described in subsection (8) below.
- (8) That amount is so much in total of the income and gains—
- (a) which arise to the company in the period of account in question, and
- (b) in respect of which credit for foreign tax falls to be allowed under any arrangements,
as are referable to the category of business concerned (before any reduction in accordance with subsection (2) above).
- (9) In subsection (4) above, the “*relevant fraction*” means the fraction—
- (a) whose numerator is the amount of the relevant income before any reduction in accordance with subsection (2) above; and
- (b) whose denominator is the amount described in subsection (8) above.
- (10) Where a 75 per cent subsidiary of an insurance company is acting in accordance with a scheme or arrangement and—
- (a) the purpose, or one of the main purposes, of that scheme or arrangement is to prevent or restrict the application of subsection (2) above to the insurance company, and
- (b) the subsidiary does not carry on insurance business of any description,
the amount of corporation tax attributable (apart from this subsection) to any item of income or gain arising to the subsidiary shall be found by setting off against that item the amount of expenses that would be attributable to it under subsection (3) above if that item had arisen directly to the insurance company.
- (11) Where the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is, by virtue of subsection (2) above, less than it would be if the relevant income were not treated as reduced in accordance with that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the profits of the category of business concerned.
- (12) Where, by virtue of subsection (10) above, the credit allowed for any tax payable under the laws of a territory outside the United Kingdom is less than it would be apart from that subsection, section 795(2)(a) shall not prevent a deduction being made for the difference in computing the income of the 75 per cent subsidiary.
- (13) For the purposes of the operation of this section in relation to any income or gain in respect of which credit falls to be allowed under any arrangements, the amount of the income or gain that is referable to a category of insurance business is the same fraction of the income and gain as the fraction of the foreign tax that is attributable to that category of business in accordance with section 804B.
- (14) This section shall be construed—
- (a) in accordance with section 804D, where the category of business concerned is life assurance business or gross roll-up business; and
- (b) in accordance with section 804E, where the category of business concerned is not life assurance business or gross roll-up business.
##### 804D
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for the period of account in question is the amount (if any) by which—
- (a) so much of the total income shown in the revenue account in the periodical return of the company concerned for that period as is referable to that category of business,
exceeds
- (b) so much of any commissions payable and any expenses of management incurred in connection with the acquisition of the business, as shown in that return, so far as referable to that category of business.
- (3) Where any amounts fall to be brought into account in accordance with section 83 of the Finance Act 1989, the amounts that are referable to the category of business concerned shall be determined for the purposes of subsection (2) above in accordance with sections 432B to 432G.
- (4) The “total relevant expenses" of the category of business concerned for any period of account is the amount of the claims incurred—
- (a) increased by any increase in the liabilities of the company, or
- (b) reduced (but not below nil) by any decrease in the liabilities of the company.
- (5) For the purposes of subsection (4) above, the amounts to be taken into account in the case of any period of account are the amounts as shown in the company’s periodical return for the period so far as referable to the category of business concerned.
##### 804E
- (1) This section has effect for the interpretation of section 804C where the category of business concerned is not life assurance business or gross roll-up business.
- (2) The “total income" of the category of business concerned for any period of account is the amount (if any) by which—
- (a) the sum of the amounts specified in subsection (3) below,
exceeds
- (b) the sum of the amounts specified in subsection (4) below.
- (3) The amounts mentioned in subsection (2)(a) above are—
- (a) earned premiums, net of reinsurance;
- (b) investment income and gains;
- (c) other technical income, net of reinsurance;
- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) The amounts mentioned in subsection (2)(b) above are—
- (a) acquisition costs;
- (b) the change in deferred acquisition costs;
- (c) losses on investments.
- (5) The “total relevant expenses" of the category of business concerned for any period of account is the sum of—
- (a) the claims incurred, net of reinsurance,
- (b) the changes in other technical provisions, net of reinsurance,
- (c) the change in the equalisation provision, and
- (d) investment management expenses,
unless that sum is a negative amount, in which case the total relevant expenses shall be taken to be nil.
- (6) The amounts to be taken into account for the purposes of the paragraphs of subsections (3) to (5) above are the amounts taken into account for the purposes of corporation tax.
- (7) Expressions used—
- (a) in the paragraphs of subsections (3) to (5) above, and
- (b) in the provisions of section B of Part 1 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (the required formats) which relate to the profit and loss account format (within the meaning of sub-paragraphs (1) and (2) of paragraph 1 of that Schedule),
have the same meaning in those paragraphs as they have in those provisions.
##### 804F
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 804G
- (1) This section applies if—
- (a) credit for foreign tax falls to be allowed to a person (“P”) under any arrangements, and
- (b) a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax.
- (2) The amount of that credit is to be reduced by an amount equal to that payment.
- (3) Section 839 applies for the purposes of determining whether or not a person is connected with P.
### Foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax
##### 806A
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##### 806B
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##### 806C
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##### 806D
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##### 806E
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##### 806F
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##### 806G
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##### 806H
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##### 806J
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### Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
##### 806K
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### Unrelieved foreign tax: profits of overseas branch or agency
##### 806L
- (1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of unrelieved foreign tax arises in respect of any of the company’s qualifying income from an overseas permanent establishment of the company.
- (2) The amount of the unrelieved foreign tax so arising shall be treated for the purposes of allowing credit relief under this Part as if it were foreign tax paid in respect of, and computed by reference to, the company’s qualifying income from the same overseas permanent establishment—
- (a) in the next accounting period (whether or not the company in fact has any such income from that source in that accounting period), or
- (b) in such one or more preceding accounting periods, beginning not more than three years before the accounting period in which the unrelieved foreign tax arises, as result from applying the rules in subsection (3) below,
or partly in the one way and partly in the other.
- (3) Where any unrelieved foreign tax is to be treated as mentioned in paragraph (b) of subsection (2) above, the rules for determining the accounting periods in question (and the amount of the unrelieved foreign tax to be so treated in relation to each of them) are that the unrelieved foreign tax must be so treated under that paragraph—
- (1) that—
- (a) credit for, or for any remaining balance of, the unrelieved foreign tax is allowed against corporation tax in respect of income of a later one of the accounting periods beginning as mentioned in that paragraph,
before
- (b) credit for any of the unrelieved foreign tax is allowed against corporation tax in respect of income of any earlier such period;
- (2) that, before allowing credit for any of the unrelieved foreign tax against corporation tax in respect of income of any accounting period, credit for foreign tax is allowed—
- (a) first for foreign tax in respect of the income of that accounting period, other than unrelieved foreign tax arising in another accounting period; and
- (b) then for unrelieved foreign tax arising in any accounting period before that in which the unrelieved foreign tax in question arises.
- (4) For the purposes of this section, the cases where an amount of unrelieved foreign tax arises in respect of any of a company’s qualifying income from an overseas permanent establishment in an accounting period are those cases where—
- (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of that income,
exceeds
- (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of that income;
and in any such case that excess is the amount of the unrelieved foreign tax in respect of that income.
- (5) For the purposes of this section, a company’s qualifying income from an overseas permanent establishment is the profits of the overseas permanent establishment which are—
- (a) profits, chargeable under Chapter 2 of Part 3 of CTA 2009, of a trade carried on partly, but not wholly, outside the United Kingdom; or
- (b) included in the profits of gross roll-up business chargeable under . . . section 436A.
- (6) Where (whether by virtue of this subsection or otherwise) an amount of unrelieved foreign tax arising in an accounting period falls to be treated under subsection (2) above for the purposes of allowing credit relief under this Part as foreign tax paid in respect of, and computed by reference to, qualifying income of an earlier accounting period, it shall not be so treated for the purpose of any further application of this section.
- (7) In this section—
- “*overseas permanent establishment*” means a permanent establishment through which a company carries on a trade in a territory outside the United Kingdom; and
- “*permanent establishment*”—if there are arrangements having effect under section 788 in relation to the territory concerned that define the expression, has the meaning given by those arrangements, andif there are no such arrangements, or if they do not define the expression, has the meaning given by section 148 of the Finance Act 2003.
##### 806M
- (1) This section has effect for the purposes of section 806L and shall be construed as one with that section.
- (2) If, in any accounting period, a company ceases to have a particular overseas permanent establishment, the amount of any unrelieved foreign tax which arises in that accounting period in respect of the company’s income from that overseas permanent establishment shall, to the extent that it is not treated as mentioned in section 806L(2)(b), be reduced to nil (so that no amount arises which falls to be treated as mentioned in section 806L(2)(a)).
- (3) If a company—
- (a) at any time ceases to have a particular overseas permanent establishment in a particular territory (“*the old permanent establishment*”), but
- (b) subsequently again has an overseas permanent establishment in that territory (“*the new permanent establishment*”),
the old permanent establishment and the new permanent establishment shall be regarded as different overseas permanent establishments.
- (4) If, under the law of a territory outside the United Kingdom, tax is charged in the case of a company resident in the United Kingdom in respect of the profits of two or more of its overseas permanent establishments in that territory, taken together, then, for the purposes of—
- (a) section 806L, and
- (b) subsection (3) above,
those overseas permanent establishments shall be treated as if they together constituted a single overseas permanent establishment of the company.
- (5) Unrelieved foreign tax arising in respect of qualifying income from a particular overseas permanent establishment in any accounting period shall only be treated as mentioned in subsection (2) of section 806L on a claim.
- (6) Any such claim must specify the amount (if any) of the unrelieved foreign tax—
- (a) which is to be treated as mentioned in paragraph (a) of that subsection; and
- (b) which is to be treated as mentioned in paragraph (b) of that subsection.
- (7) A claim under subsection (5) above may only be made before the expiration of the period of—
- (a) six years after the end of the accounting period mentioned in that subsection, or
- (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.
##### 807A
- (1) This Part shall have effect for the purposes of corporation tax in relation to any company as if tax falling within subsection (2) below were to be disregarded.
- (2) Subject to subsection (2A) below, tax falls within this subsection in relation to a company to the extent that it is—
- (a) tax under the law of a territory outside the United Kingdom; and
- (b) is attributable, on a just and reasonable apportionment,
- (i) to interest accruing under a loan relationship at a time when the company is not a party to the relationship ; or
- (ii) to so much of a relevant payment as, on such an apportionment, is attributable to a time when the company is not a party to the derivative contract concerned.
- (2A) Tax attributable to interest accruing to a company under a loan relationship does not fall within subsection (2) above if—
- (a) at the time when the interest accrues, that company has ceased to be a party to that relationship by reason of having made the initial transfer under or in accordance with any repo or stock-lending arrangements relating to that relationship; and
- (b) that time falls during the period for which those arrangements have effect.
- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- (6A) In this section “*repo or stock-lending arrangements*” means—
- (a) a debtor repo within the meaning of Chapter 10 of Part 6 of CTA 2009 (see section 548 of that Act), or
- (b) a stock lending arrangement within the meaning of section 263B of the 1992 Act.
- (6B) In any case where a debtor repo within the meaning of that paragraph constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the sale mentioned in condition C of that paragraph; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the subsequent purchase mentioned in condition D of that paragraph takes place and the time when it becomes apparent that that subsequent purchase will not take place.
- (6C) In any case where a stock lending arrangement within the meaning of section 263B of the 1992 Act constitutes the repo or stock-lending arrangements—
- (a) a reference in this section, in relation to those arrangements, to the initial transfer is to the transfer mentioned in subsection (1)(a) of that section; and
- (b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the transfer mentioned in subsection (1)(b) of that section takes place and the time when it becomes apparent that that transfer will not take place.
- (7) In this section—
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- “*relevant payment*” means a payment the amount of which falls to be determined (wholly or mainly) by applying to a notional principal amount specified in a derivative contract, for a period so specified, a rate the value of which at all times is the same as that of a rate of interest so specified;
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 808A
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the interest paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the loan would have been made at all in the absence of the relationship,
- (b) the amount which the loan would have been in the absence of the relationship, and
- (c) the rate of interest and other terms which would have been agreed in the absence of the relationship.
- (3) The special relationship provision shall be construed as requiring the taxpayer to show that there is no special relationship or (as the case may be) to show the amount of interest which would have been paid in the absence of the special relationship.
- (4) In a case where—
- (a) a company makes a loan to another company with which it has a special relationship, and
- (b) it is not part of the first company’s business to make loans generally,
the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing subsection (2) above.
- (5) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the debt on which the interest is paid in determining the excess interest (and accordingly expressly limits the factors to be taken into account).
##### 808B
- (1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
- (a) make provision, whether for relief or otherwise, in relation to royalties (as defined in the arrangements), and
- (b) make provision (the special relationship provision) that where owing to a special relationship the amount of the royalties paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
- (2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
- (a) the question whether the agreement under which the royalties are paid would have been made at all in the absence of the relationship,
- (b) the rate or amounts of royalties and other terms which would have been agreed in the absence of the relationship, and
- (c) where subsection (3) below applies, the factors specified in subsection (4) below.
- (3) This subsection applies if the asset in respect of which the royalties are paid, or any asset which that asset represents or from which it is derived, has previously been in the beneficial ownership of—
- (a) the person who is liable to pay the royalties,
- (b) a person who is, or has at any time been, an associate of the person who is liable to pay the royalties,
- (c) a person who has at any time carried on a business which, at the time when the liability to pay the royalties arises, is being carried on in whole or in part by the person liable to pay those royalties, or
- (d) a person who is, or has at any time been, an associate of a person who has at any time carried on such a business as is mentioned in paragraph (c) above.
- (4) The factors mentioned in subsection (2)(c) above are—
- (a) the amounts which were paid under the transaction, or under each of the transactions in the series of transactions, as a result of which the asset has come to be an asset of the beneficial owner for the time being,
- (b) the amounts which would have been so paid in the absence of a special relationship, and
- (c) the question whether the transaction or series of transactions would have taken place in the absence of such a relationship.
- (5) The special relationship provision shall be construed as requiring the taxpayer to show—
- (a) the absence of any special relationship, or
- (b) the rate or amount of royalties that would have been payable in the absence of the relationship,
as the case may be.
- (6) The requirement on the taxpayer to show in accordance with subsection (5)(a) above the absence of any special relationship includes a requirement—
- (a) to show that no person of any of the descriptions in paragraphs (a) to (d) of subsection (3) above has previously been the beneficial owner of the asset in respect of which the royalties are paid, or of any asset which that asset represents or from which it is derived, or
- (b) to show the matters specified in subsection (7) below,
as the case may be.
- (7) Those matters are—
- (a) that the transaction or series of transactions mentioned in subsection (4)(a) above would have taken place in the absence of a special relationship, and
- (b) the amounts which would have been paid under the transaction, or under each of the transactions in the series of transactions, in the absence of such a relationship.
- (8) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the use, right or information for which royalties are paid in determining the excess royalties (and accordingly expressly limits the factors to be taken into account).
- (9) For the purposes of this section one person (“*person A*”) is an associate of another person (“*person B*”) at a given time if—
- (a) person A was, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person B at that time, or
- (b) the same person was or same persons were, within the meaning of Schedule 28AA, directly or indirectly participating in the management, control or capital of person A and person B at that time.
#### Recovery of tax credits incorrectly paid.
#### Arrangements to avoid section 812.
##### 815A
- (1) This section applies where section 269C of the 1970 Act or section 140C or 140F of the Taxation of Chargeable Gains Act 1992 applies; and references in this section to company A, the transfer and the trade shall be construed accordingly.
- (2) Where gains accruing to company A on the transfer would have been chargeable to tax under the law of the relevant member State but for the Mergers Directive, this Part, including any arrangements having effect by virtue of section 788, shall apply as if the amount of tax, calculated on the required basis, which would have been payable under that law in respect of the gains so accruing but for that Directive, were tax payable under that law.
- (5) For the purposes of this section, the required basis is that—
- (a) so far as permitted under the law of the relevant member State, any losses arising on the transfer are set against any gains so arising, and
- (b) any relief available to company A under that law has been duly claimed.
- (6) In this section—
- “*the Mergers Directive*” means the Directive of the Council of the European Communities dated 23rd July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different member States (no. [90/434/EEC](https://www.legislation.gov.uk/european/directive/1990/0434));
- “*relevant member State*” means the member State in which, immediately before the time of the transfer, company A carried on the trade through a permanent establishment.
@@ -31146,7 +30754,7 @@
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Repayment supplements: companies.
#### Repayment supplements: companies.
@@ -31198,7 +30806,7 @@
| Section 442A(1) | Taxation of investment return where risk reinsured |
| Section 571(1) | Cancellation of tax certificates |
| Section 730(6) | Transfers of income arising from securities |
| Section 761(1)(b)(ii) | Offshore income gains |
| . . . | . . . |
| Section 774(1) | Transactions between dealing company and associated company |
| Section 776(3A) | Transactions in land |
| Section 780(3A)(b) | Sale and leaseback: taxation of consideration received |
@@ -31233,6 +30841,7 @@
| Section 131(4) of the Finance Act 2004 | Companies in partnership |
| Section 27(2) of the Finance (No 2) Act 2005 | Avoidance involving tax arbitrage: qualifying payments |
| Section 112(1) of the Finance Act 2006 | Real estate investment trusts: entry charge |
| Regulation 18(4) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) | Offshore income gains |
- (3) The reference in Part 2 of the above table to Chapter 8 of Part 10 of CTA 2009 does not include that Chapter so far as relating to income which arises from a source outside the United Kingdom.
@@ -34220,7 +33829,7 @@
## SCHEDULE 12AA
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
##### 1
@@ -34234,7 +33843,7 @@
“*Business travel*” means travelling the expenses of which, if incurred and defrayed by the employee in question out of the emoluments of his employment, would (in the absence of sections 197AD to 197AF) be deductible under section 198(1) (general relief for necessary expenses).
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying vehicles
##### 3
@@ -34285,7 +33894,7 @@
One employment is associated with another if—
#### Introduction
#### The approved amount: passenger payments
##### 5
@@ -34313,7 +33922,7 @@
- (2) Section 168(6) (when cars and vans are made available for private use and are made available by reason of employment) applies for the purposes of sub-paragraph (1).
#### Company vehicles
#### Employment
##### 7
@@ -46889,12 +46498,40 @@
[^c23311081]: [S. 755D](https://www.legislation.gov.uk/ukpga/1988/1/section/755D) inserted (with effect in accordance with [Sch. 31 para. 9(3)](https://www.legislation.gov.uk/ukpga/2000/17/schedule/31/paragraph/9/3) of the amending Act) by [Finance Act 2000 (c. 17)](https://www.legislation.gov.uk/ukpga/2000/17), [Sch. 31 para. 4(1)](https://www.legislation.gov.uk/ukpga/2000/17/schedule/31/paragraph/4/1)
[^c23790491]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790511]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790521]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790531]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790541]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790551]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790561]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790571]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790581]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790591]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790601]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790611]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790621]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23790471]: [S. 764](https://www.legislation.gov.uk/ukpga/1988/1/section/764) repealed (6.4.2006) by [Finance Act 2006 (c. 25)](https://www.legislation.gov.uk/ukpga/2006/25), [Sch. 13 paras. 23](https://www.legislation.gov.uk/ukpga/2006/25/schedule/13/paragraph/23), [27(1)](https://www.legislation.gov.uk/ukpga/2006/25/schedule/13/paragraph/27/1), [Sch. 26 Pt. 3(15)](https://www.legislation.gov.uk/ukpga/2006/25/schedule/26/part/3/15), Note
[^c23788241]: [Ss. 762ZA](https://www.legislation.gov.uk/ukpga/1988/1/section/762ZA), [762ZB](https://www.legislation.gov.uk/ukpga/1988/1/section/762ZB) inserted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 94](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/94)
[^c23788221]: [S. 762A](https://www.legislation.gov.uk/ukpga/1988/1/section/762A) inserted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 15(1)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/15/1) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23790631]: [Pt. 17 Ch. 5](https://www.legislation.gov.uk/ukpga/1988/1/part/17/chapter/5) (ss. 756A-763) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23788201]: [Ss. 756A-756C](https://www.legislation.gov.uk/ukpga/1988/1/section/756A) and preceding cross-headings inserted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 3](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/3) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23790791]: [S. 765](https://www.legislation.gov.uk/ukpga/1988/1/section/765) omitted (with effect in accordance with Sch. 17 para. 13 of the repealing Act) by virtue of [Finance Act 2009 (c. 10)](https://www.legislation.gov.uk/ukpga/2009/10), [Sch. 17 para. 1(a)](https://www.legislation.gov.uk/ukpga/2009/10/schedule/17/paragraph/1/a)
@@ -48377,6 +48014,10 @@
[^c23319541]: Words in [Sch. 26 para. 4(2)(5)(a)](https://www.legislation.gov.uk/ukpga/1988/1/schedule/26/paragraph/4/2/5/a) substituted (with effect in accordance with [Sch. 17 para. 37](https://www.legislation.gov.uk/ukpga/1998/36/schedule/17/paragraph/37) of the amending Act) by [Finance Act 1998 (c. 36)](https://www.legislation.gov.uk/ukpga/1998/36), [Sch. 17 para. 36(4)(5)](https://www.legislation.gov.uk/ukpga/1998/36/schedule/17/paragraph/36/4/5); [S.I. 1998/3173](https://www.legislation.gov.uk/uksi/1998/3173), [art. 2](https://www.legislation.gov.uk/uksi/1998/3173/article/2)
[^c23829271]: [Sch. 27](https://www.legislation.gov.uk/ukpga/1988/1/schedule/27) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with saving in [Sch. 1 para. 3(4)](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1/paragraph/3/4)) (subject, as saved, to modification by [Taxation (International and Other Provisions) Act 2010 (c. 8)](https://www.legislation.gov.uk/ukpga/2010/8), [s. 381(1)](https://www.legislation.gov.uk/ukpga/2010/8/section/381/1), [Sch. 9 para. 24](https://www.legislation.gov.uk/ukpga/2010/8/schedule/9/paragraph/24))
[^c23830681]: [Sch. 28](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28) repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [13(2)(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/13/2/3), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with saving in [Sch. 1 para. 3(4)](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1/paragraph/3/4))
[^c23831011]: [Sch. 28A](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28A) heading substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by virtue of The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 ([S.I. 2004/2310](https://www.legislation.gov.uk/uksi/2004/2310)), art. 2, Sch. para. 39(11)
[^c23835841]: [Sch. 28B](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28B) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 240](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/240), [Sch. 3 Pt. 1](https://www.legislation.gov.uk/ukpga/2007/3/schedule/3/part/1) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
@@ -49685,6 +49326,8 @@
[^c23449991]: [S. 396(2A)(2B)](https://www.legislation.gov.uk/ukpga/1988/1/section/396/2A/2B) inserted (1.4.2009 with effect in accordance with [s. 1329(1)](https://www.legislation.gov.uk/ukpga/2009/4/section/1329/1) of the amending Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [Sch. 1 para. 112(4)](https://www.legislation.gov.uk/ukpga/2009/4/schedule/1/paragraph/112/4) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c23451141]: Words in [s. 396(2)](https://www.legislation.gov.uk/ukpga/1988/1/section/396/2) substituted (1.12.2009 with effect in acordance with art. 1(2)(3), Sch. 1 of the amending S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [126(2)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/126/2)
[^c22748951]: [Pt. 10 Chs. 1](https://www.legislation.gov.uk/ukpga/1988/1/part/10/chapter/1), [2](https://www.legislation.gov.uk/ukpga/1988/1/part/10/chapter/2) extended (with effect in accordance with s. 44 of the extending Act) by [Finance Act 1998 (c. 36)](https://www.legislation.gov.uk/ukpga/1998/36), [Sch. 6 para. 2](https://www.legislation.gov.uk/ukpga/1998/36/schedule/6/paragraph/2), (with Sch. 6 para. 6)
[^c22752321]: [Pt. 10 Chs. 1](https://www.legislation.gov.uk/ukpga/1988/1/part/10/chapter/1), [2](https://www.legislation.gov.uk/ukpga/1988/1/part/10/chapter/2) extended (with effect in accordance with s. 64, Sch. 22 paras. 16-18 of the extending Act) by [Finance Act 2002 (c. 23)](https://www.legislation.gov.uk/ukpga/2002/23), [Sch. 22 para. 4(2)(d)](https://www.legislation.gov.uk/ukpga/2002/23/schedule/22/paragraph/4/2/d)
@@ -52551,6 +52194,8 @@
[^c23731291]: [S. 505(1)(c)(iib)](https://www.legislation.gov.uk/ukpga/1988/1/section/505/1/c/iib) omitted (with effect in accordance with Sch. 14 para. 31 of the repealing Act) by virtue of [Finance Act 2009 (c. 10)](https://www.legislation.gov.uk/ukpga/2009/10), [Sch. 14 para. 4(3)](https://www.legislation.gov.uk/ukpga/2009/10/schedule/14/paragraph/4/3)
[^c23731311]: Words in [s. 505(3)(b)(iii)](https://www.legislation.gov.uk/ukpga/1988/1/section/505/3/b/iii) substituted (1.12.2009 with effect in accordance with reg. 1(2) of the amending S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1), [126(3)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/126/3) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c21610281]: *Definition employed for purposes of*:1990 s.25—*donation to charity by individuals.*1990 s.56*and* Sch.10 para.21—*exemption for convertible securities held by charities.*1990 s.94(1)—*inspection powers* (*definition extended to cover bodies mentioned in* sections 507*and* 508).
[^c21610291]: Source—1970 s.360(3); 1986 s.31(1)(a), (c), Sch.7 1(1)
@@ -52841,6 +52486,8 @@
[^c23757331]: Words in [s. 587B(2)(b)](https://www.legislation.gov.uk/ukpga/1988/1/section/587B/2/b) substituted (1.4.2009 with effect in accordance with [s. 1329(1)](https://www.legislation.gov.uk/ukpga/2009/4/section/1329/1) of the amending Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [Sch. 1 para. 199](https://www.legislation.gov.uk/ukpga/2009/4/schedule/1/paragraph/199) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c23757351]: [S. 587B(9)](https://www.legislation.gov.uk/ukpga/1988/1/section/587B/9): words in definition of "offshore fund" substituted (1.12.2009 with effect in accordance with reg. 1(2)(3) of the amending S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [126(4)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/126/4)
[^c23761461]: [S. 587C(2)(3)](https://www.legislation.gov.uk/ukpga/1988/1/section/587C/2/3) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 139(2)](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/139/2), [Sch. 3 Pt. 1](https://www.legislation.gov.uk/ukpga/2007/3/schedule/3/part/1) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
[^c23761341]: Word in [s. 587C(4)](https://www.legislation.gov.uk/ukpga/1988/1/section/587C/4) substituted (6.4.2007 with effect in accordance with [s. 1034(1)](https://www.legislation.gov.uk/ukpga/2007/3/section/1034/1) of the amending Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 139(3)(a)](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/139/3/a) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
@@ -53457,144 +53104,6 @@
[^c23783591]: [S. 748ZA(5)(a)](https://www.legislation.gov.uk/ukpga/1988/1/section/748ZA/5/a) omitted (with effect in accordance with Sch. 5 paras. 6(3), 7(3)(4) of the repealing Act) by [Finance Act 2011 (c. 11)](https://www.legislation.gov.uk/ukpga/2011/11), [Sch. 5 para. 7(2)(a)](https://www.legislation.gov.uk/ukpga/2011/11/schedule/5/paragraph/7/2/a)
[^c21626341]: Source—1984 s.92(1), (7)
[^c21626351]: Words in [s. 757(1)-(7)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/1) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(43)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/43) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c21626361]: Source—1984 s.92(2)-(6), (8)
[^c21626441]: 1990 s.89*and* Sch.14 para.10 (*correction of errors*)—*deemed always to have had effect.*
[^c23788311]: [S. 757](https://www.legislation.gov.uk/ukpga/1988/1/section/757) modified (24.2.2003) by [Proceeds of Crime Act 2002 (c. 29)](https://www.legislation.gov.uk/ukpga/2002/29), [s. 458(1)](https://www.legislation.gov.uk/ukpga/2002/29/section/458/1), [Sch. 10 para. 7](https://www.legislation.gov.uk/ukpga/2002/29/schedule/10/paragraph/7) (with [Sch. 10 para. 10](https://www.legislation.gov.uk/ukpga/2002/29/schedule/10/paragraph/10)); [S.I. 2003/120](https://www.legislation.gov.uk/uksi/2003/120), [art. 2](https://www.legislation.gov.uk/uksi/2003/120/article/2), [Sch.](https://www.legislation.gov.uk/uksi/2003/120/schedule) (with [arts. 3](https://www.legislation.gov.uk/uksi/2003/120/article/3), [4](https://www.legislation.gov.uk/uksi/2003/120/article/4) (as amended by [S.I. 2003/333](https://www.legislation.gov.uk/uksi/2003/333), [art. 14](https://www.legislation.gov.uk/uksi/2003/333/article/14)))
[^c23312931]: [S. 757(5)(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/5/6) substituted (with effect in accordance with Sch. 9 paras. 7, 8(1) of the amending Act) by [Finance Act 2002 (c. 23)](https://www.legislation.gov.uk/ukpga/2002/23), [Sch. 9 para. 4(5)](https://www.legislation.gov.uk/ukpga/2002/23/schedule/9/paragraph/4/5)
[^c23789391]: Words in [s. 757(1)(b)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/1/b) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 4(2)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/4/2)
[^c23789431]: Words in [s. 757(5)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/5) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 4(3)(a)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/4/3/a)
[^c23789451]: Words in [s. 757(5)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/5) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 4(3)(b)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/4/3/b)
[^c23789471]: Words in [s. 757(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/6) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 4(4)(a)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/4/4/a)
[^c23789491]: Words in [s. 757(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/6) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 4(4)(b)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/4/4/b)
[^c23789511]: [S. 757(1A)](https://www.legislation.gov.uk/ukpga/1988/1/section/757/1A) inserted (with effect in accordance with [Sch. 17 para. 30(2)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/17/paragraph/30/2) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 17 para. 30(1)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/17/paragraph/30/1)
[^c21626481]: Source—1984 s.93
[^c21626491]: Words in [s. 758(5)(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/758/5/6) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(44)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/44) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c23312951]: Words in [s. 758(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/758/6) substituted (with effect in accordance with Sch. 9 paras. 7, 8(3) of the amending Act) by [Finance Act 2002 (c. 23)](https://www.legislation.gov.uk/ukpga/2002/23), [Sch. 9 para. 4(6)](https://www.legislation.gov.uk/ukpga/2002/23/schedule/9/paragraph/4/6)
[^c23789551]: [S. 758](https://www.legislation.gov.uk/ukpga/1988/1/section/758) applied (with modifications) (22.10.2004 with effect in accordance with reg. 1(2) of the affecting S.I.) by [The Offshore Funds Regulations 2004 (S.I. 2004/2572)](https://www.legislation.gov.uk/uksi/2004/2572), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2004/2572/regulation/1/1), [3](https://www.legislation.gov.uk/uksi/2004/2572/regulation/3)
[^c23789531]: [S. 758(7)(8)](https://www.legislation.gov.uk/ukpga/1988/1/section/758/7/8) inserted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 5](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/5)
[^c21626561]: Source—1984 s.94
[^c21626571]: Words in [s. 759(9)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/9) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(45)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/45) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c22903881]: [S. 759(1A)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/1A) inserted (with application in accordance with [s. 134(8)](https://www.legislation.gov.uk/ukpga/1995/4/section/134/8) of the amending Act) by [Finance Act 1995 (c. 4)](https://www.legislation.gov.uk/ukpga/1995/4), [s. 134(3)](https://www.legislation.gov.uk/ukpga/1995/4/section/134/3)
[^c23789561]: [S. 759(1)(1A)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/1/1A) repealed (with effect in accordance with s. 145(2) of the repealing Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 6(2)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/6/2), [Sch. 42 Pt. 2(18)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/42/part/2/18), Note 1 (with Sch. 26 para. 17)
[^c23789591]: Words in [s. 759(2)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/2) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 6(3)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/6/3) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23789611]: Words in [s. 759(3)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/3) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 6(4)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/6/4) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23789631]: Words in [s. 759(5)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/5) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 6(5)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/6/5) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23789651]: Words in [s. 759(6)(8)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/6/8) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 6(6)(a)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/6/6/a) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23789681]: Words in [s. 759(6)(8)](https://www.legislation.gov.uk/ukpga/1988/1/section/759/6/8) inserted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 6(6)(b)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/6/6/b) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c21626601]: Source—1984 s.95
[^c23789871]: [S. 760](https://www.legislation.gov.uk/ukpga/1988/1/section/760) modified (22.7.2004) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17)
[^c23789771]: [S. 760(3)(b)-(d)](https://www.legislation.gov.uk/ukpga/1988/1/section/760/3/b) and preceding word repealed (with effect in accordance with s. 145(2) of the repealing Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 13(2)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/13/2), [Sch. 42 Pt. 2(18)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/42/part/2/18), Note 1 (with Sch. 26 para. 17)
[^c23789821]: [S. 760(4)-(7)](https://www.legislation.gov.uk/ukpga/1988/1/section/760/4) repealed (with effect in accordance with s. 145(2) of the repealing Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 13(3)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/13/3), [Sch. 42 Pt. 2(18)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/42/part/2/18), Note 1 (with Sch. 26 para. 17)
[^c23789711]: Words in [s. 760(10)(a)](https://www.legislation.gov.uk/ukpga/1988/1/section/760/10/a) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 7(2)(a)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/7/2/a) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23789731]: Words in [s. 760(10)(b)](https://www.legislation.gov.uk/ukpga/1988/1/section/760/10/b) substituted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 7(2)(b)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/7/2/b) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23789751]: [S. 760(10A)](https://www.legislation.gov.uk/ukpga/1988/1/section/760/10A) inserted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 7(3)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/7/3) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c21626641]: Source—1984 s.96; 1987 Sch.15 16(1)
[^c21626651]: 1990 s.89*and* Sch.14 para.11 (*correction of errors)*—*deemed always to have had effect. Previously* “and Schedule.”
[^c21626661]: Words in [s. 761(2)(3)(5)(6)(7)(a)(b)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/2/3/5/6/7/a/b) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(47)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/47) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c21626691]: [S. 761(4)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/4) repealed (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch.12](https://www.legislation.gov.uk/ukpga/1992/12/schedule/12) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3), [Sch. 11 paras. 22](https://www.legislation.gov.uk/ukpga/1992/12/schedule/11/paragraph/22), [26(2)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/11/paragraph/26/2), [27](https://www.legislation.gov.uk/ukpga/1992/12/schedule/11/paragraph/27))
[^c23789881]: Words in [s. 761(1)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/1) substituted (6.4.2005 with effect in accordance with [s. 883(1)](https://www.legislation.gov.uk/ukpga/2005/5/section/883/1) of the amending Act) by [Income Tax (Trading and Other Income) Act 2005 (c. 5)](https://www.legislation.gov.uk/ukpga/2005/5), [Sch. 1 para. 308(2)](https://www.legislation.gov.uk/ukpga/2005/5/schedule/1/paragraph/308/2) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2005/5/schedule/2))
[^c23789901]: [S. 761(1A)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/1A) inserted (6.4.2005 with effect in accordance with [s. 883(1)](https://www.legislation.gov.uk/ukpga/2005/5/section/883/1) of the amending Act) by [Income Tax (Trading and Other Income) Act 2005 (c. 5)](https://www.legislation.gov.uk/ukpga/2005/5), [Sch. 1 para. 308(3)](https://www.legislation.gov.uk/ukpga/2005/5/schedule/1/paragraph/308/3) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2005/5/schedule/2))
[^c23789921]: Words in [s. 761(2)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/2) substituted (20.7.2005) by [Finance (No. 2) Act 2005 (c. 22)](https://www.legislation.gov.uk/ukpga/2005/22), [s. 23(1)(a)(i)](https://www.legislation.gov.uk/ukpga/2005/22/section/23/1/a/i)
[^c23789961]: Words in [s. 761(3)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/3) substituted (20.7.2005) by [Finance (No. 2) Act 2005 (c. 22)](https://www.legislation.gov.uk/ukpga/2005/22), [s. 23(1)(b)(i)](https://www.legislation.gov.uk/ukpga/2005/22/section/23/1/b/i)
[^c23789981]: Words in [s. 761(3)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/3) substituted (20.7.2005) by [Finance (No. 2) Act 2005 (c. 22)](https://www.legislation.gov.uk/ukpga/2005/22), [s. 23(1)(b)(ii)](https://www.legislation.gov.uk/ukpga/2005/22/section/23/1/b/ii)
[^c23790001]: Words in [s. 761(3)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/3) substituted (20.7.2005) by [Finance (No. 2) Act 2005 (c. 22)](https://www.legislation.gov.uk/ukpga/2005/22), [s. 23(1)(b)(iii)](https://www.legislation.gov.uk/ukpga/2005/22/section/23/1/b/iii)
[^c23790021]: [S. 761(7)(b)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/7/b) substituted (with effect in accordance with [Sch. 12 para. 47(2)](https://www.legislation.gov.uk/ukpga/2006/25/schedule/12/paragraph/47/2) of the amending Act) by [Finance Act 2006 (c. 25)](https://www.legislation.gov.uk/ukpga/2006/25), [Sch. 12 para. 47(1)](https://www.legislation.gov.uk/ukpga/2006/25/schedule/12/paragraph/47/1)
[^c23790041]: Words in [s. 761(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/6) substituted (6.4.2007 with effect in accordance with [s. 1034(1)](https://www.legislation.gov.uk/ukpga/2007/3/section/1034/1) of the amending Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 179(2)(a)](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/179/2/a) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
[^c23790061]: Words in [s. 761(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/6) substituted (6.4.2007 with effect in accordance with [s. 1034(1)](https://www.legislation.gov.uk/ukpga/2007/3/section/1034/1) of the amending Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 179(2)(b)](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/179/2/b) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
[^c23790101]: Words in [s. 761(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/6) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 179(2)(c)](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/179/2/c), [Sch. 3 Pt. 1](https://www.legislation.gov.uk/ukpga/2007/3/schedule/3/part/1) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
[^c23790081]: [S. 761(6A)-(6C)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/6A) inserted (6.4.2007 with effect in accordance with [s. 1034(1)](https://www.legislation.gov.uk/ukpga/2007/3/section/1034/1) of the amending Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 179(3)](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/179/3) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
[^c23790121]: [S. 761(5)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/5) substituted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 92(2)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/92/2)
[^c23790141]: [S. 761(8)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/8) inserted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 92(3)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/92/3)
[^c23790161]: Words in [s. 761(1)(b)(ii)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/1/b/ii) substituted (1.4.2009 with effect in accordance with [s. 1329(1)](https://www.legislation.gov.uk/ukpga/2009/4/section/1329/1) of the amending Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [Sch. 1 para. 220(2)](https://www.legislation.gov.uk/ukpga/2009/4/schedule/1/paragraph/220/2) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c23790181]: Words in [s. 761(2)](https://www.legislation.gov.uk/ukpga/1988/1/section/761/2) substituted (1.4.2009 with effect in accordance with [s. 1329(1)](https://www.legislation.gov.uk/ukpga/2009/4/section/1329/1) of the amending Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [Sch. 1 para. 220(3)](https://www.legislation.gov.uk/ukpga/2009/4/schedule/1/paragraph/220/3) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c21626751]: Source—1984 s.97
[^c21626761]: Words in [s. 762(1)-(4)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/1) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(48)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/48) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c23790231]: Words in [s. 762(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/6) substituted (6.4.2005 with effect in accordance with [s. 883(1)](https://www.legislation.gov.uk/ukpga/2005/5/section/883/1) of the amending Act) by [Income Tax (Trading and Other Income) Act 2005 (c. 5)](https://www.legislation.gov.uk/ukpga/2005/5), [Sch. 1 para. 309(b)](https://www.legislation.gov.uk/ukpga/2005/5/schedule/1/paragraph/309/b) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2005/5/schedule/2))
[^c23790311]: [S. 762(1)(aa)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/1/aa) inserted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 93(2)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/93/2)
[^c23790331]: [S. 762(2)-(5)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/2) substituted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 93(3)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/93/3)
[^c23790351]: Word in [s. 762(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/6) substituted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 93(4)(a)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/93/4/a)
[^c23790371]: Word in [s. 762(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/6) substituted (with effect in accordance with [Sch. 7 para. 98](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/98) of the amending Act) by [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 93(4)(b)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/93/4/b)
[^c23790391]: Words in [s. 762(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/762/6) omitted (with effect in accordance with Sch. 7 para. 98 of the repealing Act) by virtue of [Finance Act 2008 (c. 9)](https://www.legislation.gov.uk/ukpga/2008/9), [Sch. 7 para. 93(4)(c)](https://www.legislation.gov.uk/ukpga/2008/9/schedule/7/paragraph/93/4/c)
[^c21626851]: Source—1984 s.98
[^c21626861]: Words in [s. 763(1)-(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/763/1) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(49)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/49) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c23790431]: Words in [s. 763(6)](https://www.legislation.gov.uk/ukpga/1988/1/section/763/6) substituted (with retrospective effect in accordance with [Sch. 26 para. 16(2)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/16/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 16(1)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/16/1) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23790411]: [S. 763(6A)](https://www.legislation.gov.uk/ukpga/1988/1/section/763/6A) inserted (with effect in accordance with [s. 145(2)](https://www.legislation.gov.uk/ukpga/2004/12/section/145/2) of the amending Act) by [Finance Act 2004 (c. 12)](https://www.legislation.gov.uk/ukpga/2004/12), [Sch. 26 para. 15(2)](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/15/2) (with [Sch. 26 para. 17](https://www.legislation.gov.uk/ukpga/2004/12/schedule/26/paragraph/17))
[^c23790451]: [S. 763(8)](https://www.legislation.gov.uk/ukpga/1988/1/section/763/8) substituted (6.4.2007 with effect in accordance with [s. 1034(1)](https://www.legislation.gov.uk/ukpga/2007/3/section/1034/1) of the amending Act) by [Income Tax Act 2007 (c. 3)](https://www.legislation.gov.uk/ukpga/2007/3), [Sch. 1 para. 181](https://www.legislation.gov.uk/ukpga/2007/3/schedule/1/paragraph/181) (with [Sch. 2](https://www.legislation.gov.uk/ukpga/2007/3/schedule/2))
[^c23788281]: [Ss. 756A-756C](https://www.legislation.gov.uk/ukpga/1988/1/section/756A) applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [s. 489](https://www.legislation.gov.uk/ukpga/2009/4/section/489) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c23788261]: [S. 756A(3)(4)](https://www.legislation.gov.uk/ukpga/1988/1/section/756A/3/4) substituted for s. 756A(3) (19.7.2007) by [Finance Act 2007 (c. 11)](https://www.legislation.gov.uk/ukpga/2007/11), [s. 57(2)](https://www.legislation.gov.uk/ukpga/2007/11/section/57/2)
[^c23788291]: [Ss. 756A-756C](https://www.legislation.gov.uk/ukpga/1988/1/section/756A) applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [s. 489](https://www.legislation.gov.uk/ukpga/2009/4/section/489) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c23788301]: [Ss. 756A-756C](https://www.legislation.gov.uk/ukpga/1988/1/section/756A) applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [s. 489](https://www.legislation.gov.uk/ukpga/2009/4/section/489) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c21627171]: Source—1970 s.483(1)-(7)
[^c21627191]: *See* s.245—*calculation etc. of* ACT*on change of ownership.*
@@ -55377,6 +54886,8 @@
[^c23819641]: [S. 842(2D)(2E)](https://www.legislation.gov.uk/ukpga/1988/1/section/842/2D/2E) inserted (1.4.2009 with effect in accordance with [s. 1329(1)](https://www.legislation.gov.uk/ukpga/2009/4/section/1329/1) of the amending Act) by [Corporation Tax Act 2009 (c. 4)](https://www.legislation.gov.uk/ukpga/2009/4), [Sch. 1 para. 277(4)](https://www.legislation.gov.uk/ukpga/2009/4/schedule/1/paragraph/277/4) (with [Sch. 2 Pts. 1](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/1), [2](https://www.legislation.gov.uk/ukpga/2009/4/schedule/2/part/2))
[^c23819661]: Words in [s. 842(3A)](https://www.legislation.gov.uk/ukpga/1988/1/section/842/3A) substituted (1.12.2009 with effect in accordance with reg. 1(2) of the amending S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [126(6)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/126/6) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c21631491]: [S. 842A(2)(a)-(c)](https://www.legislation.gov.uk/ukpga/1988/1/section/842A/2/a) substituted (1.4.1993) by [Local Government Finance Act 1992 (c. 14)](https://www.legislation.gov.uk/ukpga/1992/14), [s. 117(1)](https://www.legislation.gov.uk/ukpga/1992/14/section/117/1), [Sch. 13 para. 57](https://www.legislation.gov.uk/ukpga/1992/14/schedule/13/paragraph/57) (with [s. 118(1)(2)(4)](https://www.legislation.gov.uk/ukpga/1992/14/section/118/1/2/4)); [S.I. 1992/2454](https://www.legislation.gov.uk/uksi/1992/2454), [art. 3(1)(a)](https://www.legislation.gov.uk/uksi/1992/2454/article/3/1/a)
[^c21631501]: [1988 c. 41](https://www.legislation.gov.uk/ukpga/1988/41).
@@ -55451,6 +54962,10 @@
[^c23819381]: Words in [s. 840ZA(3)(b)](https://www.legislation.gov.uk/ukpga/1988/1/section/840ZA/3/b) inserted (with effect in accordance with [Sch. 19 para. 14](https://www.legislation.gov.uk/ukpga/2009/10/schedule/19/paragraph/14) of the amending Act) by [Finance Act 2009 (c. 10)](https://www.legislation.gov.uk/ukpga/2009/10), [Sch. 19 para. 10(b)](https://www.legislation.gov.uk/ukpga/2009/10/schedule/19/paragraph/10/b)
[^c23818181]: [S. 834A](https://www.legislation.gov.uk/ukpga/1988/1/section/834A) Table Pt. 1: entry repealed (1.12.2009 with effect in accordance with reg. 1(2) of the repealing S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [126(5)(a)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/126/5/a), [Sch. 2](https://www.legislation.gov.uk/uksi/2009/3001/schedule/2) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c23818161]: [S. 834A](https://www.legislation.gov.uk/ukpga/1988/1/section/834A) Table Pt. 3: entry inserted (1.12.2009 with effect in accordance with reg. 1(2) of the amending S.I.) by [The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)](https://www.legislation.gov.uk/uksi/2009/3001), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/1/1), [126(5)(b)](https://www.legislation.gov.uk/uksi/2009/3001/regulation/126/5/b) (with [Sch. 1](https://www.legislation.gov.uk/uksi/2009/3001/schedule/1))
[^c21631581]: Source—1970 Sch.2
[^c21631591]: [1952 c.10](https://www.legislation.gov.uk/ukpga/1952/10).
@@ -56565,10 +56080,6 @@
[^c23319321]: Words in [Sch. 26 para. 1(3)(a)](https://www.legislation.gov.uk/ukpga/1988/1/schedule/26/paragraph/1/3/a) substituted (with effect in accordance with [s. 38(2)(3)](https://www.legislation.gov.uk/ukpga/1998/36/section/38/2/3) of the amending Act) by [Finance Act 1998 (c. 36)](https://www.legislation.gov.uk/ukpga/1998/36), [Sch. 5 para. 46](https://www.legislation.gov.uk/ukpga/1998/36/schedule/5/paragraph/46) (with [Sch. 5 para. 73](https://www.legislation.gov.uk/ukpga/1998/36/schedule/5/paragraph/73))
[^c23828701]: [Sch. 27](https://www.legislation.gov.uk/ukpga/1988/1/schedule/27) applied (with modifications) (22.10.2004 with effect in accordance with reg. 1(2) of the affecting S.I.) by [The Offshore Funds Regulations 2004 (S.I. 2004/2572)](https://www.legislation.gov.uk/uksi/2004/2572), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2004/2572/regulation/1/1), [4](https://www.legislation.gov.uk/uksi/2004/2572/regulation/4)
[^c21639631]: Source—[1984 Sch.19; 1986 s.50; 1987 (No.2) s.66]
[^c23319121]: [Sch. 27 para. 1(2)(a)(b)](https://www.legislation.gov.uk/ukpga/1988/1/schedule/27/paragraph/1/2/a/b) substituted (with effect in accordance with [s. 134(9)](https://www.legislation.gov.uk/ukpga/1995/4/section/134/9) of the amending Act) by [Finance Act 1995 (c. 4)](https://www.legislation.gov.uk/ukpga/1995/4), [s. 134(4)](https://www.legislation.gov.uk/ukpga/1995/4/section/134/4)
[^c23828791]: [Sch. 27 para. 1(1)(d)](https://www.legislation.gov.uk/ukpga/1988/1/schedule/27/paragraph/1/1/d) substituted (20.7.2005) by [Finance (No. 2) Act 2005 (c. 22)](https://www.legislation.gov.uk/ukpga/2005/22), [s. 23(2)](https://www.legislation.gov.uk/ukpga/2005/22/section/23/2)
@@ -56669,8 +56180,6 @@
[^c23829211]: Word in [Sch. 27 para. 20(a)](https://www.legislation.gov.uk/ukpga/1988/1/schedule/27/paragraph/20/a) substituted (1.4.2009) by [The Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (S.I. 2009/56)](https://www.legislation.gov.uk/uksi/2009/56), [art. 1(2)](https://www.legislation.gov.uk/uksi/2009/56/article/1/2), [Sch. 1 para. 161(5)](https://www.legislation.gov.uk/uksi/2009/56/schedule/1/paragraph/161/5)
[^c21639671]: Source—[1984 Sch.20.]
[^c21639681]: Words in [Sch. 28 para. 2](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28/paragraph/2) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(63)(a)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/63/a) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
[^c21639751]: Words in [Sch. 28 para. 3](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28/paragraph/3) substituted (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 10 para. 14(63)(b)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/10/paragraph/14/63/b) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3))
@@ -56683,8 +56192,6 @@
[^c21639841]: [Sch. 28 para. 8(4)(5)](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28/paragraph/8/4/5) repealed (6.3.1992 with effect as mentioned in [s. 289(1)(2)](https://www.legislation.gov.uk/ukpga/1992/12/section/289/1/2) of the amending Act) by [Taxation of Chargeable Gains Act 1992 (c. 12)](https://www.legislation.gov.uk/ukpga/1992/12), [ss. 289](https://www.legislation.gov.uk/ukpga/1992/12/section/289), [290](https://www.legislation.gov.uk/ukpga/1992/12/section/290), [Sch. 12](https://www.legislation.gov.uk/ukpga/1992/12/schedule/12) (with [ss. 60](https://www.legislation.gov.uk/ukpga/1992/12/section/60), [101(1)](https://www.legislation.gov.uk/ukpga/1992/12/section/101/1), [171](https://www.legislation.gov.uk/ukpga/1992/12/section/171), [201(3)](https://www.legislation.gov.uk/ukpga/1992/12/section/201/3), [Sch. 11 paras. 22](https://www.legislation.gov.uk/ukpga/1992/12/schedule/11/paragraph/22), [26(2)](https://www.legislation.gov.uk/ukpga/1992/12/schedule/11/paragraph/26/2), [27](https://www.legislation.gov.uk/ukpga/1992/12/schedule/11/paragraph/27))
[^c23830671]: [Sch. 28](https://www.legislation.gov.uk/ukpga/1988/1/schedule/28) applied (with modifications) (22.10.2004 with effect in accordance with reg. 1(2) of the affecting S.I.) by [The Offshore Funds Regulations 2004 (S.I. 2004/2572)](https://www.legislation.gov.uk/uksi/2004/2572), [regs. 1(1)](https://www.legislation.gov.uk/uksi/2004/2572/regulation/1/1), [5](https://www.legislation.gov.uk/uksi/2004/2572/regulation/5)
[^c21642521]: *See* 1990 s.132*and* Sch.19 Part V*for repeal in relation to allowances and charges falling to be made for chargeable periods ending after the day to be appointed* (*see* 1988 s.10).
[^c21642531]: *See* 1990 s.132*and* Sch.19 Part V*for repeal in relation to allowances and charges falling to be made for chargeable periods ending after the day to be appointed* (*see* 1988 s.10).
@@ -58109,465 +57616,465 @@
#### Application of sections 251B and 251C
#### Losses from overseas property business.
#### Relevant loan interest.
#### Losses other than terminal losses.
#### Losses from UK property business.
#### Relevant loan interest.
#### Further interpretation of sections 135 to 139.
#### Transactions in deposits with and without certificates or in debts.
#### Write-off of government investment.
#### Meaning of “associated company” and “control”.
#### Taxation of borrower when loan under section 419 released etc
#### Corresponding accounting periods.
#### Apportionment of income and gains.
#### Losses from UK property business or overseas property business.
#### Section 432B apportionment: participating funds.
#### Reduced loss relief for additions to non-profit funds
#### UK property business or overseas property business
#### Overseas life assurance business.
#### Relevant non-transferred assets
#### Modifications for change of tax basis
#### Modifications in relation to BLAGAB group reinsurers
#### Election as to tax exempt business.
#### Long-term business: application of the Corporation Tax Acts.
#### Company carrying on life assurance business
#### Exemption for trade unions and employers’ associations.
#### Relevant deposits: computation of tax on interest.
#### Sale and lease-back.
#### Sale and lease-back.
#### Tariff receipts and tax-exempt tariffing receipts
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
#### Transfers of other business
#### Assessment, recovery and postponement of supplementary charge
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
#### Certified unit trusts: distributions.
#### Provisions supplementary to sections 573 and 575.
#### Relief for individuals.
#### Qualifying interests in land held jointly
#### Conditions for approval of retirement benefit schemes.
#### Interpretation.
#### Section 590: supplementary provisions.
#### Cessation of approval: general provisions.
#### Revocable settlements allowing release of obligation.
#### Charge on profits.
#### The property managing subsidiaries requirement
#### Payments to unmarried minor children of settlor.
#### The prescribed circumstances.
#### Reduction in chargeable profits: failure to qualify for exemptions
#### Reduction in chargeable profits following an exempt period
#### Returns where it is not established whether acceptable distribution policy applies.
#### Change in ownership of company with investment business: deductions generally
#### Change in ownership of company with investment business: deductions generally
#### Change in ownership of company carrying on property business.
#### Provision not at arm’s length.
#### Sections 774B and 774D: power to provide further exceptions
#### Sale by individual of income derived from his personal activities.
#### Assets leased to traders and others.
#### Assets leased to traders and others.
#### Restriction of relief for payments of interest.
#### Sale by individual of income derived from his personal activities.
#### Reduction in chargeable profits following an exempt period
#### Section 785B: expectation that relevant capital payment will not be paid
#### Restriction of relief for payments of interest.
#### Limits on credit: minimisation of the foreign tax.
#### Reduction of United Kingdom taxes by amount of credit due.
#### Recovery of tax credits incorrectly paid.
#### Recovery of tax credits incorrectly paid.
#### Arrangements to avoid section 812.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Interest on tax overpaid.
#### Interest on payments in respect of corporation tax and meaning of “the material date".
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Savings, transitional provisions, consequential amendments and repeals.
#### The approved amount: mileage allowance payments
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provision not at arm’s length.
#### Ceasing to meet the trading requirement because of administration or receivership
#### Conditions for approval of retirement benefit schemes.
#### Qualifying interests in land held jointly
#### The prescribed circumstances.
#### Sections 774B and 774D: exceptions
#### Leased assets subject to hire-purchase agreements.
#### Limits on credit: income tax.
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Introduction to section 807C
#### Interest on tax overpaid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: postponed corporation tax.
#### Supplementary provisions.
#### Loans to participators etc.
#### Exclusions from section 423.
#### Company carrying on life assurance business and other insurance business
#### Exceptions from section 419.
#### Losses from overseas property business.
#### Losses from UK property business.
#### Further interpretation of sections 135 to 139.
#### Restriction of relief in case of farming and market gardening.
#### Dealings in commodity futures etc: withdrawal of loss relief.
#### Certain quoted companies not to be close companies.
#### Exceptions from section 419.
#### Corresponding accounting periods.
#### Apportionment of income and gains.
#### UK property business or overseas property business
#### Returns.
#### Transfer schemes transferring part of business: reduction in income of transferee
#### Application of s. 444BA rules to other equalisation reserves.
#### Section 432B apportionment: value of non-participating funds.
#### Computation of losses and limitation on relief.
#### UK property business or overseas property business
#### Modifications in relation to BLAGAB group reinsurers
#### Transfer schemes: transferor
#### Modifications for change of tax basis
#### Modifications in relation to BLAGAB group reinsurers
#### Election as to tax exempt business.
#### Maximum benefits payable to members.
#### Company carrying on life assurance business
#### Interpretation.
## [SCHEDULE 19A
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Surrender of relief between members of groups and consortia.
#### Interpretative provisions relating to insurance companies.
#### Sections 434AZA and 434AZB: supplementary
#### Determination of policy holders’ share for purposes of s.438B
#### Taxation in respect of other business.
#### Old societies.
#### Charitable and non-charitable expenditure
#### Approval of schemes.
#### Stock lending.
#### Deemed manufactured payments in the case of stock lending arrangements.
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
#### Special rule for computing chargeable profits.
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Rent factoring of leases of plant or machinery
#### Provision not at arm’s length.
#### Tariff receipts and tax-exempt tariffing receipts
#### The Arbitration Convention.
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Interpretation of the Corporation Tax Acts etc.
#### Territorial sea . . . .
#### Interpretation of Income Tax Acts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustment of profits on averaging claim
#### Qualifying trade, profession or vocation
#### Change in company ownership: postponed corporation tax.
#### Change in company ownership: corporation tax.
#### Change in ownership of company carrying on property business.
#### Provision not at arm’s length.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying vehicles
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Deemed interest: cash collateral under stock lending arrangements
#### Certain income not to be income of settlor etc.
#### Change in ownership of company carrying on property business.
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Dividends paid out of transferred profits.
#### Introduction to section 807E
#### Interpretation of Income Tax Acts.
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of price differential on sale and repurchase of securities.
#### Sales etc. at an undervalue or overvalue.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Company reconstructions without a change of ownership.
#### Interpretation of Part VI.
#### Amounts eligible for group relief: trading losses.
#### Taxation in respect of other business.
#### Exemption for trade unions and employers’ associations.
#### “Deposit-taker”, “deposit” and “relevant deposit”.
#### Sale and lease-back.
#### Computation of amount available for surrender by way of group relief.
#### Exploration expenditure supplement
#### Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
#### Transfers of other business
#### Assessment, recovery and postponement of supplementary charge
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
#### Certified unit trusts: distributions.
#### Qualifying trading companies
#### Business entertaining expenses.
#### Supplementary provision for gifts of real property
#### Section 590: supplementary provisions.
#### Approval of schemes.
#### Section 590: supplementary provisions.
#### Cessation of approval: general provisions.
#### Revocable settlements allowing reversion of property.
#### Charge on profits.
#### The property managing subsidiaries requirement
#### Payments to unmarried minor children of settlor.
#### The prescribed circumstances.
#### Reduction in chargeable profits: failure to qualify for exemptions
#### Reduction in chargeable profits following an exempt period
#### Determinations requiring the sanction of the Board.
#### Offshore income gains accruing to persons resident or domiciled abroad.
#### Certified unit trusts: corporation tax.
#### Introductory.
#### Cessation of approval: tax on certain schemes.
#### Change in ownership of company with investment business: deductions generally
#### Change in ownership of company carrying on property business.
#### Provision not at arm’s length.
#### Offshore income gains: application of transfer of assets abroad provisions
#### Sections 774B and 774D: power to provide further exceptions
#### Deductions: asset transferred within group.
#### Interpretation of credit code.
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### Introduction to section 807E
#### Venture capital trusts.
#### Commencement.
#### Local authorities.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Assets leased to traders and others.
#### Plant and machinery leases: capital receipts to be treated as income
#### Sale by individual of income derived from his personal activities.
#### Reduction in chargeable profits following an exempt period
#### Section 785B: expectation that relevant capital payment will not be paid
#### Restriction of relief for payments of interest.
#### Arrangements made under old law.
#### Reduction of United Kingdom taxes by amount of credit due.
#### Qualifying vehicles
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Close companies.
#### Termination of relief under this Chapter, and transitional provisions.
#### Sales etc. at an undervalue or overvalue.
#### Schemes and arrangements designed to increase relief
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Interpretation of the Corporation Tax Acts etc.
#### Interpretation of Income Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing release of obligation.
#### Introduction
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
#### Schemes and arrangements designed to increase relief
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Onshore pooling.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### Relief for rent etc. not paid.
#### Disposal or exercise of rights in pursuance of deposits.
#### Restrictions on relief
#### Payments to trustees of approved profit sharing schemes.
#### Restriction on relief for non-active partners
#### Amounts reversing expenses of management deducted: charge to tax
#### Interpretation.
#### Relief for contributions in respect of share option gains.
#### Discounted bills of exchange.
#### Application of lower rate to company distributions.
#### Costs of establishing share option or profit sharing schemes: relief.
#### Interpretation of sections 249 and 250.
#### Tax on companies in administration
#### Exemptions from section 148.
#### Introduction to section 807C
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Recovery of tax credits incorrectly paid.
#### Dividends paid out of transferred profits.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### Insurance companies: allocation of expenses etc in computations under Case I of Schedule D.
#### Arrangements to avoid section 812.
#### Interest on tax overpaid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Savings, transitional provisions, consequential amendments and repeals.
#### The approved amount: mileage allowance payments
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Provision not at arm’s length.
#### The control and independence requirement
#### Conditions for approval of retirement benefit schemes.
#### Qualifying interests in land held jointly
#### Appeals against Board’s notices under section 703.
#### Sections 774B and 774D: exceptions
#### Leased assets subject to hire-purchase agreements.
#### Limits on credit: income tax.
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Introduction to section 807C
#### Interest on tax overpaid.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### Tax year
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: postponed corporation tax.
#### Supplementary provisions.
#### Loans to participators etc.
#### Apportionment of certain income, deductions and interest.
#### Company carrying on life assurance business
#### Exceptions from section 419.
#### Losses from overseas property business.
#### Returns.
#### Transfer schemes: reduction of income of transferee
#### Modification of section 440.
#### Section 432B apportionment: value of non-participating funds.
#### Distribution accounts.
## [SCHEDULE 19A
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Relief for pre-trading expenditure.
#### Interpretative provisions relating to insurance companies.
#### Additions to non-profit funds: amount of loss reduction
#### Income or gains arising from property investment LLP
#### Taxation in respect of other business.
#### Assets of branch of registered friendly society to be treated as assets of society after incorporation.
#### Charitable and non-charitable expenditure
#### Approval of schemes.
#### Exception for sale and repurchase of securities.
#### Deemed manufactured payments in the case of stock lending arrangements.
#### Imputation of chargeable profits and creditable tax of controlled foreign companies
#### Cases where section 747(3) does not apply.
#### Tax credits under Part 1 of Tax Credits Act 2002
#### Leased assets subject to hire-purchase agreements.
#### Provision not at arm’s length.
#### Tariff receipts and tax-exempt tariffing receipts
#### The Arbitration Convention.
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### VAT penalties etc.
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Territorial sea . . . .
#### Interpretation of the Corporation Tax Acts etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Qualifying trade, profession or vocation
#### Change in company ownership: postponed corporation tax.
#### Change in company ownership: corporation tax.
#### Change in ownership of company carrying on property business.
#### Provision not at arm’s length.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying vehicles
#### Introduction
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Quasi-stock lending arrangements and quasi-cash collateral
#### Certain income not to be income of settlor etc.
#### Change in ownership of company carrying on property business.
#### Cases where ss. 502B to 502G do not apply: plant or machinery held as trading stock
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Introduction to section 807E
#### Interpretation of Income Tax Acts.
#### Interpretation of the Corporation Tax Acts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Treatment of price differential on sale and repurchase of securities.
#### Sales etc. at an undervalue or overvalue.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Company reconstructions without a change of ownership.
#### Interpretation of Part VI.
#### Losses etc. which may be surrendered by way of group relief.
#### Taxation in respect of other business.
#### Authorised unit trusts.
#### Certified unit trusts: corporation tax.
#### Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
#### Cessation of approval: tax on certain schemes.
#### Change in ownership of company with investment business: deductions generally
#### Relief by agreement with other territories.
#### Separate streaming of dividend so far as representing an ADP dividend of a CFC.
#### Effect of notice under section 804ZA
#### Introduction to section 807E
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Meaning of “UK property business” and “overseas property business”
#### Local authorities.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Assets leased to traders and others.
#### Qualifying vehicles
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Section 796: trade income
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Close companies.
#### Termination of relief under this Chapter, and transitional provisions.
#### Sales etc. at an undervalue or overvalue.
#### Section 796: trade income
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Interpretation of the Corporation Tax Acts etc.
#### Interpretation of Income Tax Acts.
#### Commencement.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Revocable settlements allowing release of obligation.
#### Settlements made after 6th April 1965.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
#### Schemes and arrangements designed to increase relief
#### Insurance companies carrying on more than one category of business: restriction of credit.
#### Disposals and acquisitions of company loan relationships with or without interest.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Onshore pooling.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### Appeals against determinations under . . . Chapter 4 of Part 3 of ITTOIA 2005.
#### Deep discount securities.
#### Restrictions on relief
#### Costs of establishing employee share ownership trusts: relief.
#### Meaning of “the aggregate amount”
#### Amounts reversing expenses of management deducted: charge to tax
#### Taxation of profit-related pay.
#### Exemptions from section 148.
#### Discounted bills of exchange.
#### U.K. company distributions not generally chargeable to corporation tax.
#### Costs of establishing share option or profit sharing schemes: relief.
#### Returns.
#### Tax on companies in administration
#### Exemptions from section 148.
#### Insurance companies: allocation of expenses etc in computations under section 35 of CTA 2009.
#### Tax treated as chargeable in respect of transfer of loan relationship, derivative contract or intangible fixed assets
#### Interpretation of Income Tax Acts.
@@ -58901,11 +58408,11 @@
#### Schedule E.
#### Employees seconded to charities and educational establishments.
#### Approved share incentive plans
#### Meaning of “distribution”.
#### Application of sections 251B and 251C
#### Treatment of cash dividend retained and then later paid out
#### Apportionment of income and gains.
@@ -59071,7 +58578,7 @@
#### Taxable premiums etc.
#### Section 209(3AA): hedging arrangements
#### Section 209(3AA): link to shares of company or associated company
#### Elections as to transfer of relief under section 257A or 257AB.
@@ -59125,848 +58632,848 @@
#### Charitable donations: contributions to agent’s expenses.
#### Exempt distributions.
#### Chargeable payments connected with exempt distributions.
#### Interest etc. paid in respect of certain securities.
#### Exempt distributions: division of business
#### Early conversion or surrender of life policies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manufactured dividends and interest.
#### Section 751A: supplementary
#### The approved amount: mileage allowance payments
#### Employment
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Arrangements to avoid section 812.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Unrealised interest in default
#### Interest on tax overpaid.
#### Transfers of rights to receive distributions in respect of shares
#### Offshore income gains: application of transfer of assets abroad provisions
#### Qualifying trade, profession or vocation
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: mileage allowance payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Indexation of amounts in sections 256B, 257, 257A and 257AB.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Interest on tax overpaid.
#### Section 751A: supplementary
#### Introduction
#### Adjustment of profits on averaging claim
#### Tax year
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Manufactured interest on UK securities: general
### Manufactured interest on gilt-edged securities etc.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Stock dividends: distributions.
#### Life assurance premiums paid by employer
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of credit code.
#### Section 796: trade income
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Effect of notice under section 804ZA
#### Utilisation of eligible unrelieved foreign tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### Interpretation of the Corporation Tax Acts etc.
#### Meaning of “UK property business” and “overseas property business”
#### Income treated as arising under section 761(1): remittance basis
#### Change in company ownership: postponed corporation tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sales etc. at an undervalue or overvalue.
#### Section 785B: expectation that relevant capital payment will not be paid
#### Company vehicles
#### Introduction
#### The approved amount: mileage allowance payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of appointment or arrangements under section 659B.
#### Repayment supplements: companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Sales etc. at an undervalue or overvalue.
#### Restriction of relief for payments of interest.
#### Tax year
#### Company vehicles
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Dividend or bonus granted by industrial and provident society
#### Restrictions on the use of tax credits by pension funds.
#### Form of relief.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Territorial sea and designated areas.
#### Interpretation of the Corporation Tax Acts.
#### Interpretation of Income Tax Acts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Introduction
### Introductory
### Payments and other benefits to which section 148 applies
### Payments and other benefits excluded from charge under section 148
### Application of £30,000 threshold
### Exclusion or reduction of charge in case of foreign service
### Valuation of benefits
### Notional interest treated as paid if amount charged in respect of beneficial loan
### Giving effect to the charge to tax
### Reporting requirements
### Interpretation
#### Qualifying vehicles
#### The approved amount: passenger payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a post-commencement period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Liability of non-transferors.
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Company vehicles
#### Introduction
#### Supplement in respect of a pre-commencement accounting period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to modify sections 727A, 730A, 730BB and 737A to 737C
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax year
#### Accounting periods
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Trading stock.
#### VAT penalties etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The appropriate percentage
### Car with CO2 emissions figure
### The lower threshold
### Bi-fuel cars
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### The non-qualifying pool
#### Supplement in respect of a pre-commencement accounting period
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of the Corporation Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest: special relationship.
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amount of post-commencement supplement for a post-commencement period
#### Qualifying companies
#### The non-qualifying pool
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### Amount of post-commencement supplement for a post-commencement period
#### Supplement in respect of a pre-commencement accounting period
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying policies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Manufactured dividends and interest.
#### Section 751A: supplementary
#### The approved amount: mileage allowance payments
#### Employment
#### Withdrawal of right to tax credit of certain non-resident companies connected with unitary states.
#### Arrangements to avoid section 812.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Application of Income Tax Acts to public departments and avoidance of exempting provisions.
#### Unrealised interest in default
#### Interest on tax overpaid.
#### Transfers of rights to receive distributions in respect of shares
#### Offshore income gains: application of transfer of assets abroad provisions
#### Supplement in respect of a pre-commencement accounting period
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: corporation tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### No tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits following an exempt period
#### Reduction in chargeable profits following an exempt period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to inspect documents.
#### The Arbitration Convention.
#### About this Schedule
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The non-qualifying pool
#### About this Schedule
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Qualifying companies
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### The non-qualifying pool
#### About this Schedule
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### “Gross rate” and “gross amount” of distributions to include ACT.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### Children’s tax credit.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of the Corporation Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Qualifying companies
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### Transfer of relief under section 257A where relief exceeds income or 257AB.
#### Relief for contributions in respect of share option gains.
#### Partners: meaning of “contribution to the trade”
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Life assurance premiums paid by employer
#### Charges on income: interest payable to non-residents.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Definitions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
##### 468A
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##### 468A
- (1) In relation to an open-ended investment company the rate of corporation tax for the financial year 2005 and subsequent financial years shall be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned (and section 13 shall not apply).
- (2) In this section “*open-ended investment company*” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.
- (3) Each of the parts of an umbrella company shall be regarded for the purposes of this section as an open-ended investment company and the umbrella company as a whole shall not be so regarded (and shall not, unless an enactment expressly provides otherwise, be regarded as a company for any other purpose of the Tax Acts).
- (4) In subsection (3) “*umbrella company*” means an open-ended investment company—
- (a) in respect of which the instrument of incorporation provides arrangements for separate pooling of the contributions of the shareholders and the profits or income out of which payments are to be made to them, and
- (b) the shareholders of which are entitled to exchange rights in one pool for rights in another,
and a reference to part of an umbrella company is a reference to a separate pool.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “research and development”.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### How averaging claim is given effect
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: mileage allowance payments
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Transfer of relief under section 257A.
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a pre-commencement accounting period
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Adjustment of profits on averaging claim
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Dividends paid out of transferred profits.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Meaning of “UK property business” and “overseas property business”
#### Miscellaneous charges (list for the purposes of certain provisions that formerly referred to Case VI of Schedule D)
#### Interest on tax overpaid.
#### Section 751A: supplementary
#### Introduction
#### Adjustment of profits on averaging claim
#### Tax year
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Manufactured interest on UK securities: general
### Manufactured interest on gilt-edged securities etc.
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Stock dividends: distributions.
#### Life assurance premiums paid by employer
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of credit code.
#### Section 796: trade income
#### Mutual agreement procedure and presentation of cases under arrangements.
#### Effect of notice under section 804ZA
#### Utilisation of eligible unrelieved foreign tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Commencement.
#### Interpretation of the Corporation Tax Acts etc.
#### Meaning of “UK property business” and “overseas property business”
#### Income treated as arising under section 761(1): remittance basis
#### Change in company ownership: postponed corporation tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Sales etc. at an undervalue or overvalue.
#### Section 785B: expectation that relevant capital payment will not be paid
#### Company vehicles
#### Introduction
#### The approved amount: mileage allowance payments
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Effect of appointment or arrangements under section 659B.
#### Repayment supplements: companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in ownership of company with unused non-trading loss on intangible fixed assets
#### Sales etc. at an undervalue or overvalue.
#### Restriction of relief for payments of interest.
#### Tax year
#### Company vehicles
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Tax credits for certain recipients of qualifying distributions.
#### Restrictions on the use of tax credits by pension funds.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### Meaning of “industrial assurance business”
##### 20A
In this Part of this Schedule “*industrial assurance business*” means any industrial assurance business within the meaning given by—
- (a) section 1(2) of the Industrial Assurance Act 1923, or
- (b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979,
which was carried on before 1 December 2001.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Eligibility for relief.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Employment
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Territorial sea and designated areas.
#### Interpretation of the Corporation Tax Acts.
#### Interpretation of Income Tax Acts.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Introduction
### Introductory
### Payments and other benefits to which section 148 applies
### Payments and other benefits excluded from charge under section 148
### Application of £30,000 threshold
### Exclusion or reduction of charge in case of foreign service
### Valuation of benefits
### Notional interest treated as paid if amount charged in respect of beneficial loan
### Giving effect to the charge to tax
### Reporting requirements
### Interpretation
#### Qualifying vehicles
#### The approved amount: passenger payments
#### Loan to buy machinery or plant.
#### Relevant loan interest.
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a post-commencement period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Liability of non-transferors.
#### Exemption from sections 739 and 740 (transactions before 5th December 2005)
#### Company vehicles
#### Introduction
#### Supplement in respect of a pre-commencement accounting period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to modify sections 727A, 730A, 730BB and 737A to 737C
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Tax year
#### Accounting periods
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#### Foreign tax on items giving rise to a non-trading credit: intangible fixed assets
#### Interest on payments in respect of corporation tax and meaning of “the material date".
#### Trading stock.
#### VAT penalties etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
### The appropriate percentage
### Car with CO2 emissions figure
### The lower threshold
### Bi-fuel cars
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### The non-qualifying pool
#### Supplement in respect of a pre-commencement accounting period
#### Qualifying companies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of the Corporation Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interest: special relationship.
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Amount of post-commencement supplement for a post-commencement period
#### Qualifying companies
#### The non-qualifying pool
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Accounting periods
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a post-commencement period
#### Amount of post-commencement supplement for a post-commencement period
#### Supplement in respect of a pre-commencement accounting period
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying policies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying companies
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Supplement in respect of a pre-commencement accounting period
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Change in company ownership: corporation tax.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Restrictions on the use of tax credits by pension funds.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Reduction in chargeable profits following an exempt period
#### Reduction in chargeable profits following an exempt period
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Power to inspect documents.
#### The Arbitration Convention.
#### About this Schedule
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The non-qualifying pool
#### About this Schedule
#### About this Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### Qualifying companies
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### The non-qualifying pool
#### About this Schedule
#### Accounting periods
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of Part VI.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Adjustment of profits on averaging claim
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### About this Schedule
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The approved amount: passenger payments
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Qualifying trade, profession or vocation
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Supplement in respect of a pre-commencement accounting period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### Children’s tax credit.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Interpretation of the Corporation Tax Acts.
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Introduction
#### Qualifying companies
#### Amount of post-commencement supplement for a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### Accounting periods
#### Supplement in respect of a post-commencement period
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### Elections as to transfer of relief under section 257A or 257AB.
#### Relief for contributions in respect of share option gains.
#### Partners: meaning of “contribution to the trade”
#### Supplement in respect of a pre-commencement accounting period
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#### Qualifying trade, profession or vocation
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
#### Amount of post-commencement supplement for a post-commencement period
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#### Supplement in respect of a post-commencement period
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#### Life assurance premiums paid by employer
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#### Definitions.
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#### Qualifying companies
#### Meaning of “investment LLP” and “property investment LLP”
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#### Introduction
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#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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##### 468A
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##### 468A
- (1) In relation to an open-ended investment company the rate of corporation tax for the financial year 2005 and subsequent financial years shall be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned (and section 13 shall not apply).
- (2) In this section “*open-ended investment company*” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.
- (3) Each of the parts of an umbrella company shall be regarded for the purposes of this section as an open-ended investment company and the umbrella company as a whole shall not be so regarded (and shall not, unless an enactment expressly provides otherwise, be regarded as a company for any other purpose of the Tax Acts).
- (4) In subsection (3) “*umbrella company*” means an open-ended investment company—
- (a) in respect of which the instrument of incorporation provides arrangements for separate pooling of the contributions of the shareholders and the profits or income out of which payments are to be made to them, and
- (b) the shareholders of which are entitled to exchange rights in one pool for rights in another,
and a reference to part of an umbrella company is a reference to a separate pool.
#### Supplement in respect of a post-commencement period
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#### Qualifying trade, profession or vocation
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#### About this Schedule
#### About this Schedule
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#### Meaning of “research and development”.
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#### How averaging claim is given effect
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#### About this Schedule
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#### The pool of qualifying E&A losses and the pool of non-qualifying losses
#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### Qualifying trade, profession or vocation
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#### Supplement in respect of a pre-commencement accounting period
#### Amount of post-commencement supplement for a post-commencement period
#### The non-qualifying pool
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#### Introduction
#### Adjustment of profits on averaging claim
#### About this Schedule
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### Meaning of “industrial assurance business”
##### 20A
In this Part of this Schedule “*industrial assurance business*” means any industrial assurance business within the meaning given by—
- (a) section 1(2) of the Industrial Assurance Act 1923, or
- (b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979,
which was carried on before 1 December 2001.
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#### The mixed pool of qualifying E&A expenditure and supplement previously allowed
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#### Eligibility for relief.
#### Company reconstructions: supplemental.
#### Relief where borrower deceased.
#### Relevant loan interest.
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2009-11-11
Income and Corporation Taxes Act 1988
2009-10-01
Income and Corporation Taxes Act 1988
2009-09-01
Income and Corporation Taxes Act 1988
2009-08-13
Income and Corporation Taxes Act 1988
2009-07-21
Income and Corporation Taxes Act 1988
2009-06-01
Income and Corporation Taxes Act 1988
2009-04-23
Income and Corporation Taxes Act 1988
2009-04-22
Income and Corporation Taxes Act 1988
2009-04-06
Income and Corporation Taxes Act 1988
2009-04-01
Income and Corporation Taxes Act 1988
2009-02-21
Income and Corporation Taxes Act 1988
2009-02-03
Income and Corporation Taxes Act 1988
2009-01-01
Income and Corporation Taxes Act 1988
2008-12-27
Income and Corporation Taxes Act 1988
2008-12-01
Income and Corporation Taxes Act 1988
2008-10-29
Income and Corporation Taxes Act 1988
2008-10-28
Income and Corporation Taxes Act 1988
2008-09-08
Income and Corporation Taxes Act 1988
2008-08-12
Income and Corporation Taxes Act 1988
2008-07-22
Income and Corporation Taxes Act 1988
2008-07-21
Income and Corporation Taxes Act 1988
2008-07-08
Income and Corporation Taxes Act 1988
2008-07-01
Income and Corporation Taxes Act 1988
2008-04-06
Income and Corporation Taxes Act 1988
2008-04-01
Income and Corporation Taxes Act 1988
2008-02-19
Income and Corporation Taxes Act 1988
2008-01-03
Income and Corporation Taxes Act 1988
2008-01-01
Income and Corporation Taxes Act 1988
2007-12-28
Income and Corporation Taxes Act 1988
2007-12-27
Income and Corporation Taxes Act 1988
2007-12-06
Income and Corporation Taxes Act 1988
2007-11-29
Income and Corporation Taxes Act 1988
2007-10-01
Income and Corporation Taxes Act 1988
2007-09-01
Income and Corporation Taxes Act 1988
2007-08-14
Income and Corporation Taxes Act 1988
2007-08-13
Income and Corporation Taxes Act 1988
2007-07-19
Income and Corporation Taxes Act 1988
2007-07-17
Income and Corporation Taxes Act 1988
2007-04-17
Income and Corporation Taxes Act 1988
2007-04-06
Income and Corporation Taxes Act 1988
2007-04-01
Income and Corporation Taxes Act 1988
2007-03-29
Income and Corporation Taxes Act 1988
2007-03-21
Income and Corporation Taxes Act 1988
2007-03-01
Income and Corporation Taxes Act 1988
2007-01-08
Income and Corporation Taxes Act 1988
2007-01-01
Income and Corporation Taxes Act 1988
2006-12-31
Income and Corporation Taxes Act 1988
2006-12-26
Income and Corporation Taxes Act 1988
2006-12-12
Income and Corporation Taxes Act 1988
2006-12-06
Income and Corporation Taxes Act 1988
2006-08-11
Income and Corporation Taxes Act 1988
2006-07-19
Income and Corporation Taxes Act 1988
2006-06-09
Income and Corporation Taxes Act 1988
2006-04-06
Income and Corporation Taxes Act 1988
2006-04-01
Income and Corporation Taxes Act 1988
2006-03-22
Income and Corporation Taxes Act 1988
2006-01-06
Income and Corporation Taxes Act 1988
2005-12-27
Income and Corporation Taxes Act 1988
2005-12-05
Income and Corporation Taxes Act 1988
2005-11-01
Income and Corporation Taxes Act 1988
2005-10-05
Income and Corporation Taxes Act 1988
2005-09-27
Income and Corporation Taxes Act 1988
2005-08-12
Income and Corporation Taxes Act 1988
2005-08-11
Income and Corporation Taxes Act 1988
2005-08-03
Income and Corporation Taxes Act 1988
2005-07-24
Income and Corporation Taxes Act 1988
2005-07-20
Income and Corporation Taxes Act 1988
2005-06-08
Income and Corporation Taxes Act 1988
2005-04-07
Income and Corporation Taxes Act 1988
2005-04-06
Income and Corporation Taxes Act 1988
original version
Text at this date