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(b) do not permit the trustees at any time to apply any of the
settled property—

(i) by creating a trust, or

(ii) by transferring property to the trustees of any
25settlement other than by an authorised transfer,

(c) do not permit the trustees at any time to make loans to
beneficiaries of the trusts, and

(d) do not permit the trustees or any other person at any time to
amend the trusts in a way such that the amended trusts
30would not comply with one or more of paragraphs (a) to (c).

(2) Section 236K makes provision about the requirement in subsection
(1)(a).

(3) “Eligible employee” means—

(a) if C meets the trading requirement by virtue of section
35236I(1)(a), any individual who is employed by, or is an office-
holder of, C, and

(b) if C meets the trading requirement by virtue of section
236I(1)(b), any individual who is employed by, or is an office-
holder of, a relevant group company,

40but does not include an excluded participator.

(4) But where—

(a) C has ceased to meet the trading requirement or the trustees
have ceased to hold any shares in C (or both), and

(b) a person was an eligible employee at any time during the
45period of two years ending immediately before that event (or,
where both have occurred, the earlier of them),

that person continues to be an “eligible employee”.

(5) “Excluded participator” means—

Finance (No. 2) BillPage 555

(a) a person who is a participator in C, or, where C meets the
trading requirement by virtue of section 236I(1)(b), in any
relevant group company,

(b) any other person who is a participator in any close company
5that has made a disposition whereby property became
comprised in the same settlement, being a disposition which
but for section 13 or 13A of the Inheritance Tax Act 1984
(dispositions by close companies for benefit of employees or
to employee-ownership trusts) would have been a transfer of
10value for the purposes of inheritance tax,

(c) any other person who has been a participator in any
company mentioned in paragraph (a) or (b) at any time on or
after the look-back date, or

(d) any person who is connected with any person within
15paragraph (a), (b) or (c).

(6) The participators in a company who are referred to in subsection (5)
do not include any participator who—

(a) is not beneficially entitled to, or to rights entitling the
participator to acquire, 5% or more of, or of any class of the
20shares comprised in, the company’s share capital, and

(b) on a winding-up of the company would not be entitled to 5%
or more of its assets.

(7) In this section—

(8) In this section references to the settled property include references to
5any income arising from it.

(9) See section 236L for cases where the all-employee benefit
requirement is treated as met.

236K Further provision about the equality requirement

(1) The requirement in section 236J(1)(a) (“the equality requirement”) is
10not infringed by the trusts by reason only that they—

(a) permit the settled property to be applied, where an eligible
employee has died, as if a surviving spouse, civil partner or
dependant of the deceased person were the eligible employee
(and continued to be employed) for a period of 12 months, or
15such shorter period as the trusts may provide, starting with
the time of death,

(b) prevent the settled property being applied for the benefit of
persons who have not been eligible employees for a
continuous period of 12 months or such shorter period as the
20trusts may provide,

(c) permit the trustees to comply with a written request from a
person that the trustees do not apply any of the settled
property for the benefit of that person, or

(d) prevent the settled property being applied for the benefit of
25all persons who are eligible employees by reason only that
they are office-holders.

(2) The equality requirement is not infringed by the trusts by reason
only that, in addition to requiring the settled property to be applied
for the benefit of all the eligible employees on the same terms, they
30also permit the settled property to be applied for charitable
purposes.

(3) Subject to subsections (1) and (2), the equality requirement is
infringed by the trusts if they permit the settled property to be
applied by reference to factors other than those mentioned in
35subsection (4).

(4) The equality requirement is not infringed by the trusts by reason
only that they permit the settled property to be applied for the
benefit of all the eligible employees by reference to—

(a) an eligible employee’s remuneration,

(b) 40an eligible employee’s length of service, or

(c) hours worked by an eligible employee;

but this is subject to subsections (5) and (6).

(5) The equality requirement is infringed by the trusts if they permit any
of the settled property to be applied on terms such that some (but not
45all) eligible employees receive no benefits (other than by virtue of
subsection (1)(b), (c) and (d)).

Finance (No. 2) BillPage 557

(6) If any of the settled property is applied by reference to more than one
of the factors mentioned in subsection (4), the equality requirement
is infringed unless—

(a) each factor gives rise to a separate entitlement related to the
5level of remuneration, length of service or (as the case may
be) hours worked, and

(b) the total entitlement is the sum of those separate
entitlements.

(7) “Eligible employee” has the same meaning as in section 236J.

(8) 10In this section, references to the settled property include references
to any income arising from it.

236L Cases in which all-employee benefit requirement treated as met

(1) A settlement which would not otherwise meet the all-employee
benefit requirement is treated as meeting that requirement if—

(a) 15the settlement was created before 10 December 2013,

(b) on that date—

(i) section 86 of the Inheritance Tax Act 1984 (trusts for
the benefit of employees) applied to the settled
property,

(ii) 20the trustees held a significant interest in C, and

(iii) the settlement did not meet the all-employee benefit
requirement (ignoring this section), and

(c) the trustees of the settlement do not, during the period of 12
months ending with the day of the disposal mentioned in
25section 236H(1), do any of the following—

(i) apply any of the settled property otherwise than for
the benefit of all eligible employees on the same
terms,

(ii) apply any of the settled property by creating a trust,

(iii) 30apply any of the settled property by transferring
property to the trustees of any settlement other than
by an authorised transfer, or

(iv) make loans to beneficiaries of the trusts of the
settlement.

(2) 35The trustees held a significant interest in C on 10 December 2013 if on
that date—

(a) they—

(i) held 10% or more of the ordinary share capital of C,
and

(ii) 40had powers of voting on all questions affecting C as a
whole which, if exercised, would have yielded 10% or
more of the votes capable of being exercised on them,

(b) they were entitled to 10% or more of the profits available for
distribution to the equity holders of C,

(c) 45they would have been entitled, on a winding up of C, to 10%
or more of the assets of C available for distribution to equity
holders, and

(d) there were no provisions in any agreement or instrument
affecting C’s constitution or management or its shares or

Finance (No. 2) BillPage 558

securities whereby the condition in paragraph (a), (b) or (c)
could cease to be satisfied without the consent of the trustees.

See section 236R for further provision relating to the holding of a
significant interest.

(3) Subsections (3) to (8) of section 236J apply for the purposes of this
5section.

(4) The requirement in subsection (1)(c)(i) (“the behaviour
requirement”) is not infringed by reason only that the trustees of the
settlement—

(a) apply any of the settled property, where an eligible employee
10has died, as if a surviving spouse, civil partner or dependant
of the deceased person were the eligible employee (and
continued to be employed) for a period of 12 months, or such
shorter period as the trustees may determine, starting with
the time of death,

(b) 15only apply the settled property for the benefit of persons who
have been eligible employees for a continuous period of 12
months or such shorter period as the trustees may determine,

(c) comply with a written request from a person that the trustees
do not apply any of the settled property for the benefit of that
20person, or

(d) have complied with the terms of the trusts of the settlement
which prevent the settled property being applied for the
benefit of some or all of the persons who are eligible
employees by reason only that they are office-holders.

(5) 25The behaviour requirement is not infringed by reason only that, in
addition to applying any of the settled property for the benefit of all
the eligible employees on the same terms, the trustees also apply any
of it for charitable purposes.

(6) Subject to subsections (4) and (5), the behaviour requirement is
30infringed by the trustees if they apply the settled property by
reference to factors other than those mentioned in subsection (7).

(7) The behaviour requirement is not infringed by the trustees applying
the settled property for the benefit of all the eligible employees by
reference to—

(a) 35an eligible employee’s remuneration,

(b) an eligible employee’s length of service, or

(c) hours worked by an eligible employee;

but this is subject to subsections (8) and (9).

(8) The behaviour requirement is infringed if any of the settled property
40is applied by the trustees on terms such that some (but not all)
eligible employees receive no benefits (other than as mentioned in
subsection (4)(b), (c) and (d)).

(9) If the trustees apply any of the settled property by reference to more
than one of the factors mentioned in subsection (7), the behaviour
45requirement is infringed unless—

(a) each factor gives rise to a separate entitlement related to the
level of remuneration, length of service or (as the case may
be) hours worked, and

Finance (No. 2) BillPage 559

(b) the total entitlement is the sum of those separate
entitlements.

236M Controlling interest requirement

(1) A settlement meets the controlling interest requirement if—

(a) 5the trustees—

(i) hold more than 50% of the ordinary share capital of C,
and

(ii) have powers of voting on all questions affecting C as
a whole which, if exercised, would yield a majority of
10the votes capable of being exercised on them,

(b) the trustees are entitled to more than 50% of the profits
available for distribution to the equity holders of C,

(c) the trustees would be entitled, on a winding up of C, to more
than 50% of the assets of C available for distribution to equity
15holders, and

(d) there are no provisions in any agreement or instrument
affecting C’s constitution or management or its shares or
securities whereby the condition in paragraph (a), (b) or (c)
can cease to be satisfied without the consent of the trustees.

(2) 20See section 236R for further provision relating to the controlling
interest requirement.

236N Limited participation requirement

(1) The limited participation requirement is met if there was no time in
the period of 12 months ending immediately after the disposal
25mentioned in section 236H(1) when—

(a) P was a participator in C, and

(b) the participator fraction exceeded 2/5.

(2) But a time which falls in a period during which the participator
fraction exceeded 2/5 is to be disregarded for the purposes of
30subsection (1)(b) if—

(a) that period lasts no more than 6 months, and

(b) the fraction exceeded 2/5 during that period by reason of
events outside the reasonable control of the trustees.

(3) “The participator fraction” means—


35

where—

(4) 5The participators in C who are referred to in subsections (1) and (3)
do not include any participator who—

(a) is not beneficially entitled to, or to rights entitling the
participator to acquire, 5% or more of, or of any class of the
shares comprised in, C’s share capital, and

(b) 10on a winding-up of C would not be entitled to 5% or more of
its assets.

(5) In this section—

(a) “participator” has the meaning given by section 454 of CTA
2010, and

(b) 15references to a participator in a company are, in the case of a
company which is not a close company (within the meaning
of Chapter 2 of Part 10 of that Act), to be construed as
references to a person who would be a participator in the
company if it were a close company.

236O 20Events which trigger deemed disposal and reacquisition by trustees

(1) Where the trustees of a settlement acquire any ordinary share capital
in a tax year in circumstances where section 236H applies, subsection
(3) applies on the first occasion a disqualifying event occurs in
relation to the acquisition.

(2) 25A “disqualifying event” occurs in relation to the acquisition if and
when—

(a) at any time after that tax year—

(i) C ceases to meet the trading requirement, or

(ii) the settlement ceases to meet the controlling interest
30requirement, or

(b) at any time after the acquisition—

(i) the settlement ceases to meet the all-employee benefit
requirement,

(ii) the participator fraction exceeds 2/5, or

(iii) 35the trustees act in a way which the trusts, as required
by the all-employee benefit requirement, do not
permit.

(3) The trustees are treated as having, immediately after the
disqualifying event—

(a) 40disposed of any ordinary share capital of C held by the
trustees which comprises shares acquired in circumstances
where section 236H applied (and not subsequently disposed
of and reacquired), and

(b) immediately reacquired that ordinary share capital,

45at its market value at that time.

(4) For the purposes of subsection (2)(b)(i)—

(a) unless the settlement met the all-employee benefit
requirement at the time of the acquisition by virtue of section

Finance (No. 2) BillPage 561

236L, that section does not apply for the purposes of
determining whether the settlement continues to meet that
requirement after the acquisition, and

(b) if, at the time of the acquisition, the settlement met that
requirement by virtue of section 236L and later continues to
5meet it otherwise than by virtue of that section, it may not
again meet the requirement by virtue of that section.

(5) Where section 236L applies for the purposes of deciding whether the
settlement has ceased to meet the all-employee benefit requirement
at any time (see subsection (2)(b)(i)), the reference in section
10236L(1)(c) to the day of the disposal mentioned in section 236H(1) is
to be read as a reference to that time.

(6) Section 236N(2) applies for the purposes of subsection (2)(b)(ii) as it
applies in relation to section 236N(1)(b).

236P Relief for deemed disposals under section 71

(1) 15This section applies where—

(a) a deemed disposal arises under section 71(1) by reason of the
trustees of a settlement (“the acquiring settlement”)
becoming absolutely entitled to settled property as against
the trustee of that settled property (“the transferring
20trustee”),

(b) that settled property consists of ordinary share capital of a
company,

(c) the relief requirements in section 236H(4)(a) to (d) are met,
and

(d) 25the transferring trustee makes a claim under this section.

(2)
Section 17(1) (disposals and acquisitions treated as made at market
value) does not apply to the disposal.

(3) The deemed disposal and acquisition by the transferring trustee
under section 71(1) are to be treated for the purposes of this Act as
30being made for such consideration as to secure that neither a gain nor
a loss accrues on the disposal.

(4) For the purposes of section 236O the trustees of the acquiring
settlement are treated as acquiring the ordinary share capital from
the transferring trustee, at the time of the deemed disposal, in
35circumstances where section 236H applies.

(5) In applying sections 236H(4), 236I to 236O and 236R for the purposes
of this section—

(a) references in those provisions to the settlement are to be read
as references to the acquiring settlement, and

(b) 40references in those provisions to C are to be read as references
to the company mentioned in subsection (1)(b).

(6) A claim under this section must include—

(a) information to identify the acquiring settlement,

(b) the name of the company mentioned in subsection (1)(b) and
45the address of its registered office, and

Finance (No. 2) BillPage 562

(c) the date of the deemed disposal and the number of shares
deemed to have been disposed of.

236Q Identification of shares where section 236H or 236P applies

(1) This section applies where the trustees of a settlement hold—

(a) 5shares which were—

(i) acquired in circumstances where section 236H
applied, or

(ii) the subject of a deemed acquisition under section
71(1) in circumstances where section 236P applied,

10and not subsequently disposed of and reacquired (“EOT
exempt shares”), and

(b) other shares which, but for section 104(4A), would be shares
of the same class as those shares.

(2) If the trustees dispose of some, but not all, of the shares so held, they
15may determine what proportion of the shares disposed of are EOT
exempt shares (up to the number of such shares held).

(3) For the purposes of this section shares in a company 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
20dealt with on a recognised stock exchange.

(4) Nothing in subsection (2) applies in relation to a disposal by virtue
of section 236O(3).

236R Further provision about significant and controlling interests

(1) This section applies for the purposes of—

(a) 25section 236L(2) (trustees hold a significant interest in C), and

(b) section 236M (controlling interest requirement).

(2) Chapter 6 of Part 5 of CTA 2010 (group relief: equity holders and
profits or assets available for distribution) applies as it applies for the
purposes of the provisions mentioned in section 157(1) of that Act.

(3) 30The trustees are to be treated, for the purposes of section 236L(2)(b)
or 236M(1)(b), as entitled to dividends on shares even if the trustees
are required, or permitted, by the trusts of the settlement to waive
their entitlement to those dividends.

(4) In determining whether section 236L(2)(d) or 236M(1)(d) applies,
35ignore any provision of—

(a) a mortgage or charge (or, in Scotland, a charge or security)
granted by the trustees to a third party to secure any debt, or

(b) an agreement in respect of a loan made to the trustees by a
third party,

40which confers any entitlement on the third party in the event of a
default by the trustees in performing their obligations in relation to
that debt or loan.

(5) In this section—

236S Interpretation of sections 236H to 236S

(1) In sections 236H to 236R and this section—

(2) In those sections—

(a) 20references to a group, to membership of a group or to the
principal company of a group, are to be construed in
accordance with section 170, and

(b) references to a group are to be construed with any necessary
modifications where applied to a company incorporated
25under the law of a country or territory outside the United
Kingdom.

(3) In determining whether a person is connected with another for the
purposes of those sections, section 286 applies as if subsection (8) of
that section also mentioned uncle, aunt, nephew and niece.

30Commencement and transitional provision

2 The amendment made by paragraph 1 has effect in relation to disposals
made on or after 6 April 2014.

3 (1) For the purposes of determining if the requirement of section 236L(1)(c) of
TCGA 1992 (requirement as to conduct of trustees for 12 months) is met,
35anything done by the trustees before 10 December 2013 is to be disregarded.

(2) But sub-paragraph (1) does not apply in relation to section 236L of TCGA
1992 as applied by section 312E(3) of ITEPA 2003 (rules determining
whether payment is a qualifying bonus payment for the purposes of Chapter
10A of Part 4 of ITEPA 2003).

40Part 2 Employment income exemption

4 In Part 4 of ITEPA 2003 (employment income: exemptions), after Chapter 10

Finance (No. 2) BillPage 564

insert—

CHAPTER 10A Exemptions: bonus payments by certain employers

312A Limited exemption for qualifying bonus payments

(1) This section applies in relation to qualifying bonus payments made,
in a tax year (“the tax year”), by an employer which is a company to
5an employee or former employee of the employer.

(2) No liability to income tax arises in respect of the qualifying bonus
payments if, or to the extent that, the total chargeable amount in
respect of those payments does not exceed £3,600 (“the exempt
amount”).

(3) 10If qualifying bonus payments are made to the same person by two or
more employers in the tax year, subsection (2) applies separately in
relation to the total payments made by each employer, unless
subsection (4) applies.

(4) If two or more employers are members of the same group at the time
15each of them first makes a qualifying bonus payment to the
employee or former employee in the tax year, subsection (2) applies
as if the reference to the qualifying bonus payments were to all the
qualifying bonus payments made by those employers to the
employee or former employee in that tax year.

(5) 20If, in a tax year—

(a) an employer makes a payment when it is a member of a
group, and

(b) later in that tax year the employer ceases to be a member of
that group,

25the employer is treated for the purposes of this section as remaining
a member of that group for the remainder of the tax year (without
prejudice to it also being a member of any other group).

(6) In applying subsection (2)—

(a) the exempt amount is set against payments in the order in
30which they are made, and

(b) if two or more payments are made on the same day, which
together take the total payments made in the tax year over the
exempt amount, subsection (7) applies to determine the
amount of each of those payments which is exempt.

(7) 35In a case within subsection (6)(b), the amount of a payment which is
exempt is given by the formula—


where—

(8) Where subsection (2) applies separately to different payments by
5virtue of subsection (3), subsections (6) and (7) also apply to those
payments separately.

(9) The Treasury may by order increase or reduce the sum of money
specified in subsection (2).

(10) A statutory instrument containing an order under this section which
10reduces the sum of money specified may not be made unless a draft
of it has been laid before and approved by a resolution of the House
of Commons.

(11) In this section “chargeable amount”, in respect of a qualifying bonus
payment, means the amount of employment income which would be
15charged to tax in respect of that qualifying bonus payment, apart
from this section.

312B “Qualifying bonus payments”

(1) A payment made by an employer (“E”) to an employee or former
employee is a qualifying bonus payment if—

(a) 20it does not consist of regular salary or wages,

(b) it is awarded under a scheme which meets the participation
requirement and the equality requirement (see section 312C),

(c) E meets the trading requirement (see section 312D)
throughout the qualifying period,

(d) 25E meets the indirect employee-ownership requirement (see
section 312E) throughout the qualifying period,

(e) E meets the office-holder requirement (see section 312F) at
the time the payment is made and on at least the requisite
number of days in the qualifying period (whether or not
30those days are consecutive),

(f) E is not a service company (see section 312G),

(g) the payment is not excluded (see section 312H), and

(h) where it is a payment to a former employee, it is made in the
period of 12 months beginning with the day the employment
35ceased.

(2) In this section “the qualifying period”, in relation to a payment,
means the period of 12 months ending with the day on which the
payment is made.

(3) But in a case where E meets the indirect employee-ownership
40requirement on the day on which the payment is made—

(a) if the controlling interest requirement was first met during
that 12 month period, the qualifying period does not include
any time before it was met, and

(b) if the all-employee benefit requirement was first met during
45that 12 month period, the qualifying period does not include
any time before that requirement was met.

(4) In this section “the requisite number of days” means—

Finance (No. 2) BillPage 566

(a) if the qualifying period is 12 months, the number of days in
that period reduced by 90, and

(b) if the qualifying period is a shorter period by virtue of
subsection (3), the number of days in that period reduced by
5the corresponding fraction of 90 days.

312C Section 312B: the participation and equality requirements

(1) For the purposes of section 312B—

(a) the participation requirement is that all persons in relevant
employment when the award is determined must be eligible
10to participate in that and any other award under the scheme,
and

(b) the equality requirement is that every employee who
participates in an award under the scheme must do so on the
same terms.

(2) 15A person is in “relevant employment” if—

(a) where E is a member of a group, the person is employed by
any company which is a member of the group, and

(b) in any other case, the person is employed by E.

(3) The participation requirement is not infringed by reason of a person
20in relevant employment being excluded from participating in an
award because, at the time the award is determined, the person has
less than the minimum period of continuous service in relevant
employment required by E.

But the minimum period required by E for this purpose must not
25exceed 12 months.

But the minimum period required by E for this purpose must not
exceed 12 months.

(4) The participation requirement is not infringed—

(a) by reason of a person being excluded from participating in an
30award where—

(i) disciplinary proceedings have been taken against the
person by E which have resulted in a finding of gross
misconduct against the person, and

(ii) that finding was made in the period of 12 months
35immediately before the time the award is determined,

(b) by reason of a person’s eligibility to participate in an award
being conditional, in a case where the person is at the time of
the award subject to disciplinary proceedings taken by E,
upon those proceedings being concluded and no finding of
40gross misconduct being made against that person, or

(c) by a person being treated as never having been eligible to
participate in an award where, after the award was made but
before the payment is made—

(i) a finding of gross misconduct is made against that
45person in disciplinary proceedings taken by E after
the award was made, or

(ii) that person is summarily dismissed from the
employment.

(5) The equality requirement is infringed if the amount of an award to
50an employee under the scheme is determined by reference to factors
other than those mentioned in subsection (6).

Finance (No. 2) BillPage 567

(6) The equality requirement is not infringed by reason of the amount of
an award under the scheme to employees participating in the award
being determined by reference to—

(a) an employee’s remuneration,

(b) 5an employee’s length of service, or

(c) hours worked by an employee;

but this is subject to subsections (7) and (8).

(7) The equality requirement is infringed if an award is made on terms
such that some (but not all) of the employees participating in the
10award receive nothing.

(8) If the amount of an award is determined by reference to more than
one of the factors mentioned in subsection (6), the equality
requirement is infringed unless—

(a) each factor gives rise to a separate entitlement related to the
15level of remuneration, length of service or (as the case may
be) hours worked, and

(b) the total entitlement is the sum of those separate
entitlements.

(9) Subject to subsection (6), the equality requirement is infringed if any
20feature of the scheme has, or is likely to have, the effect of conferring
benefits wholly or mainly on those participating in the award who
are—

(a) directors or former directors, or

(b) employees receiving the higher or highest levels of
25remuneration, or

(c) employees who—

(i) are employed in a particular part of the business
carried on by E or, if E is a member of a group, the
group, or

(ii) 30carry on particular kinds of activities.

(10) In subsections (1)(b), (5), (6), (7) and (9) references to an employee
include a former employee, so, when applying those subsections in
relation to a former employee, any reference to remuneration, length
of service, hours worked, being employed in a particular part of a
35business or carrying on particular activities is to be read as relating
to that former employment.

312D Section 312B: the trading requirement

(1) For the purposes of section 312B, a company meets the trading
requirement if—

(a) 40it is a trading company which is not a member of a group, or

(b) it is a member of a trading group.

(2)
“Trading company” means a company carrying on trading activities
whose activities do not include to a substantial extent activities other
than trading activities.

(3) 45“Trading group” means a group—

(a) one or more of whose members carry on trading group
activities, and

Finance (No. 2) BillPage 568

(b) the activities of whose members, taken together, do not
include to a substantial extent activities other than trading
group activities.

(4) In this section—

(5) For the purposes of determining whether a company is a trading
company or a member of a trading group—

(a) the activities of the members of a group are to be treated as
one business (with the result that activities are disregarded to
15the extent that they are intra-group activities), and

(b) a business carried on by a company in partnership with one
or more other persons is to be treated as not being a trading
activity.

312E Section 312B: the indirect employee-ownership requirement

(1) 20For the purposes of section 312B, a company meets the indirect
employee-ownership requirement if—

(a) a settlement meets the controlling interest requirement in
respect of—

(i) the company, or

(ii) 25if the company is a member of a trading group, but
not the principal company, that principal company,
and

(b) the settlement meets the all-employee benefit requirement.

(2) For this purpose—

(a) 30section 236M of TCGA 1992 applies to determine if a
settlement meets the controlling interest requirement in
respect of the company mentioned in subsection (1)(a)(i) or
(ii) (as the case may be), and

(b) sections 236J and 236K of that Act apply to determine if the
35settlement meets the all-employee benefit requirement (but
see subsection (3)).

(3) If a settlement would not otherwise meet the all-employee benefit
requirement at any time during the qualifying period, section 236L
of TCGA 1992 applies for the purposes of subsection (1)(b), unless
40the all-employee benefit requirement has (ignoring that section)
previously been met at any time in the period—

(a) beginning with 10 December 2013, and

(b) ending immediately before that time.

(4) For the purposes of subsections (2) and (3)—

(a) 45in sections 236I to 236M of TCGA 1992 references to C are to
be read as references to the company in respect of which the
settlement is required to meet the controlling interest
requirement (see subsection (1)(a)), and

Finance (No. 2) BillPage 569

(b) section 236L of that Act applies as if the reference in
subsection (1)(c) of that section to the period of 12 months
ending with the day of the disposal mentioned in section
236H(1) were a reference to the period of 12 months ending
5with the date the payment is made (even if the qualifying
period is a period of less than 12 months by virtue of section
312B(3)).

312F Section 312B: the office-holder requirement

(1) For the purposes of section 312B, a company meets the officer-holder
10requirement if the appropriate fraction does not exceed 2/5.

(2) “The appropriate fraction” means—


where—

312G “Service company”

(1) For the purposes of section 312B, “service company” means—

(a) a managed service company within the meaning of section
61B, or

(b) 25a company (“SC”) in respect of which Conditions A and B are
met.

(2) Condition A is that the business carried on by SC consists
substantially of the provision of the services of persons employed by
it.

(3) 30Condition B is that the majority of those services are provided to
persons—

(a) to whom subsection (4) applies, but

(b) who are not members of the same group as the company
which makes the payment.

(4) 35This subsection applies to—

(a) a person who controls or has controlled, or two or more
persons who together control or have controlled, SC or any
company of which SC is a 51% subsidiary at the time the
payment is made,

(b) 40a person who, or two or more persons who together, at any
time before the time the payment is made—

(i) employed all or a majority of the employees of SC, or

(ii) employed all or a majority of the employees of SC and
other companies which are members of the same
45group as SC at the time the payment is made (taken
together), and

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