(c) immediately after the cessation, a person who was a member of the
partnership immediately before the cessation is carrying on the
business of the partnership, but not in partnership.

(2) Where this paragraph applies, the conduct notice or monitoring notice
5continues (despite paragraphs 1 and 2) to have effect in relation to the person
mentioned in sub-paragraph (1)(c) (but, in relation to times when the
business is not being carried on in partnership, the notice is not regarded for
the purposes of this Part of this Act as a notice that has been given to a
partnership.)

10Persons leaving a partnership: conduct notices

8 (1) Sub-paragraphs (2) and (3) apply where—

(a) a person (“P”) who was a controlling member of a partnership at the
time when a conduct notice (“the original notice”) was given to the
partnership has ceased to be a member of the partnership,

(b) 15the conduct notice had effect in relation to the partnership at the time
of that cessation, and

(c) P is carrying on a business as a promoter.

(2) An authorised officer may give P a conduct notice.

(3) If P is carrying on a business as a promoter in partnership with one or more
20other persons and is a controlling member of that partnership (“the new
partnership”), an authorised officer may give a conduct notice to the new
partnership.

(4) A conduct notice given under sub-paragraph (3) ceases to have effect if P
ceases to be a member of the new partnership.

(5) 25A notice under sub-paragraph (2) or (3) may not be given after the
termination date of the original notice (under section 234(2)(a) or (b)).

Persons leaving a partnership: monitoring notices

9 (1) Sub-paragraphs (2) and (3) apply where—

(a) a person (“P”) who was a controlling member of a partnership at the
30time when a monitoring notice was given to the partnership has
ceased to be a member of the partnership,

(b) the monitoring notice had effect in relation to the partnership at the
time of that cessation, and

(c) P is carrying on a business as a promoter.

(2) 35An authorised officer may give P a monitoring notice.

(3) If P is carrying on a business as a promoter in partnership with one or more
other persons, and is a controlling member of that partnership (“the new
partnership”), an authorised officer may give a monitoring notice to the new
partnership.

(4) 40A monitoring notice given under sub-paragraph (3) ceases to have effect if P
ceases to be a member of the new partnership.

Division of partnership business

10 (1) This paragraph applies if—

(a) a person (“a departing partner”) who has been carrying on a business
in partnership ceases to carry on the business in partnership,

(b) a conduct notice or a monitoring notice had effect in relation to the
partnership immediately before the departing partner ceased to
5carry on the business in partnership, and

(c) the departing partner is continuing to carry on part (but not the
whole) of the business (“the transferred part”).

(2) The notice mentioned in sub-paragraph (1)(b) is referred to in this paragraph
as “the original notice”.

(3) 10An authorised officer may give the departing partner—

(a) a conduct notice (if the original notice is a conduct notice);

(b) a monitoring notice (if the original notice is a monitoring notice).

(4) If the departing partner is itself carrying on the transferred part of the
business in partnership, the authorised officer may give that partnership
15(“the new partnership”)—

(a) a conduct notice (if the original notice is a conduct notice);

(b) a monitoring notice (if the original notice is a monitoring notice).

(5) A notice given under sub-paragraph (4) ceases to have effect if the departing
partner ceases to be a member of the new partnership.

(6) 20A notice under sub-paragraph (3)(a) or (4)(a) may not be given after the
termination date of the original notice (under section 234(2)(a) or (b)).

(7) It does not matter whether one, some or all of the persons who were carrying
on the business in partnership are departing partners by virtue of sub-
paragraph (1).

25Notices under paragraphs 8 to 10: general

11 (1) In this Part of this Act—

• “replacement conduct notice” means a notice under paragraph 8(2) or
  (3) or 10(3)(a) or (4)(a);

• “replacement monitoring notice” means a notice given under
  30paragraph 9(2) or (3) or 10(3)(b) or (4)(b).

(2) In this Part of this Act, “the original monitoring notice” means—

(a) in relation to a replacement monitoring notice given under
paragraph 9(2), the monitoring notice mentioned in paragraph 9(1),
and

(b) 35in relation to a replacement monitoring notice given under
paragraph 10(3)(b) or (4)(b), the monitoring notice mentioned in
paragraph 10(2),

and that original monitoring notice is also the “original monitoring notice”
in relation to any monitoring notice that (under paragraph 9(2) or (3) or
4010(3)(b) or (4)(b)) replaces a replacement monitoring notice.

12 A notice under paragraph 8(2) or (3) or 10(3)(a) or (4)(a)—

(a) has no effect after the termination date of the original notice;

(b) must state that that date is its termination date.

13 An authorised officer may not give a replacement conduct notice or
replacement monitoring notice to a person if a conduct notice or monitoring
notice previously given to the person still has effect in relation to the person.

Publication under section 241

14 5Where the monitored promoter referred to in section 241(2) is a partnership,
paragraphs (a), (b) and (d) of that subsection are to be read as referring to
details of the partnership (for instance, the name under which the business
of the partnership is carried on), not to details of particular partners.

Part 3 10Responsibility of partners

Responsibility of partners

15 (1) A notice given to a partnership under this Part of this Act has effect, at any
time, in relation to the persons who are members of the partnership at that
time (“the responsible partners”).

(2) 15Sub-paragraph (1) does not affect any liability of a person who has ceased to
be a member of a partnership in respect of things that the responsible
partners did or failed to do before that person ceased to be a member of the
partnership.

(3) Anything required to be done by the responsible partners under or by virtue
20of a provision of this Part of this Act is required to be done by all the
responsible partners (but see paragraph 18).

(4) In relation to any right (such as a right of appeal) conferred by this Part of
this Act references to a person have the meaning that is appropriate in
consequence of sub-paragraphs (1) to (3).

25Joint and several liability of responsible partners

16 (1) Where the responsible partners are liable to a penalty under this Part of this
Act, or to interest on such a penalty, their liability is joint and several.

(2) No amount may be recovered under sub-paragraph (1) from a person who
did not become a responsible partner until after the relevant time.

(3) 30“The relevant time” means—

(a) in relation to so much of the penalty as is payable in respect of any
day, or to interest on so much of a penalty as is so payable, the
beginning of that day;

(b) in relation to any other penalty, or interest on such a penalty, the time
35when the act or omission occurred that caused the penalty to become
payable.

Service of notices

17 (1) Any notice given to a partnership by an officer of Revenue and Customs
under this Part of this Act must be served either—

(a) 40on all the persons who are members of the partnership when the
notice is given, or

(b) on a representative partner.

(2) “Representative partner” means—

(a) a nominated partner, or

(b) if no partner has been nominated under paragraph 18(2), a partner
5designated by an authorised officer as a representative partner.

(3) A designation under sub-paragraph (2), or the revocation of such a
designation, has effect only when notice of the designation, or revocation,
has been given to the partnership by an authorised officer.

Nominated partners

18 (1) 10Anything required to be done by the responsible partners under this Part of
this Act may instead be done by any nominated partner.

(2) “Nominated partner” means a partner nominated by a majority of the
partners to act as the representative of the partnership for the purposes of
this Part of this Act.

(3) 15A nomination under sub-paragraph (2), or the revocation of such a
nomination, has effect only after notice of the nomination, or revocation, has
been given to an authorised officer.

Part 4 Interpretation

20Meaning of “controlling member”

19 (1) For the purposes of this Schedule a person (“P”) is a “controlling member”
of a partnership at any time when the person has a right to a share of more
than half the assets, or of more than half the income, of the partnership.

(2) For that purpose there are to be attributed to P any interests or rights of—

(a) 25any individual who is connected with P (if P is an individual), and

(b) any body corporate that P controls.

(3) An individual is “connected” with P if the individual is—

(a) P’s spouse or civil partner;

(b) a relative of P;

(c) 30the spouse or civil partner of a relative of P;

(d) a relative of P’s spouse or civil partner, or

(e) the spouse or civil partner of a relative of P’s spouse or civil partner.

(4) In sub-paragraph (3) “relative” means brother, sister, ancestor or lineal
descendant.

(5) 35P controls a body corporate (“B”) if P has power to secure—

(a) by means of the holding of shares or the possession of voting power
in relation to B or any other body corporate, or

(b) as a result of any powers conferred by the articles of association or
other document regulating that or any other body corporate,

40that the affairs of B are conducted in accordance with P’s wishes.

Meaning of “managing partner”

20 In this Schedule “managing partner”, in relation to a partnership, means a
member of the partnership who directs or is on a day-to-day level in control
of, the management of the business of the partnership.

5Power to amend definitions

21 (1) The Treasury may by regulations amend paragraph 19 or 20.

(2) Regulations under sub-paragraph (1) may include any amendment of this
Schedule that is necessary in consequence of any amendment made by
virtue of sub-paragraph (1).

Section 283

10SCHEDULE 33 Companies owned by employee-ownership trusts

Part 1 Capital gains tax relief

Relief on disposals to employee-ownership trusts

1 15In Part 7 of TCGA 1992 (other property, businesses, investments etc), after
section 236G insert—

“Employee-ownership trusts

236H Disposals to employee-ownership trusts

(1) This section applies where—

(a) 20a person other than a company (“P”) disposes of any ordinary
share capital of a company (“C”) to the trustees of a
settlement,

(b) the relief requirements are met, and

(c) P makes a claim under this section.

(2) 25Section 17(1) (disposals and acquisitions treated as made at market
value) does not apply to the disposal.

(3) The disposal, and the acquisition by the trustees, are to be treated for
the purposes of this Act as being made for such consideration as to
secure that neither a gain nor a loss accrues on the disposal.

(4) 30“The relief requirements” are—

(a) that C meets the trading requirement (see section 236I) at the
time of the disposal and continues to meet that requirement
for the remainder of the tax year in which that time falls,

(b) that the settlement meets the all-employee benefit
35requirement (see sections 236J to 236L),

(c) that the settlement does not meet the controlling interest
requirement (see section 236M) immediately before the

beginning of the tax year in which the disposal occurs, but
does meet it at the end of that year,

(d) that the limited participation requirement is met (see section
236N), and

(e) 5that this section does not apply in relation to any related
disposal by P or a person connected with P which occurs in
an earlier tax year.

(5) A disposal in an earlier tax year is “related” to the disposal in
question if—

(a) 10both disposals are of ordinary share capital of the same
company, or

(b) the disposal in the earlier tax year is of ordinary share capital
of a company which is, or at the time of that disposal was, a
member of the same group as the company whose ordinary
15share capital is the subject of the disposal in question.

(6) A claim under this section must include—

(a) information to identify the settlement,

(b) C’s name and the address of its registered office, and

(c) the date of the disposal and the number of shares disposed of.

236I 20Trading requirement

(1) C meets the trading requirement if C is—

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

(b) the principal company of a trading group.

(2) “Trading company” means a company carrying on trading activities
25whose activities do not include to a substantial extent activities other
than trading activities.

(3) “Trading group” means a group—

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

(b) 30the activities of whose members, taken together, do not
include to a substantial extent activities other than trading
group activities.

(4) In this section—

• “trading activities” means activities carried on by the company
  35in the course of, or for the purposes of, a trade being carried
  on by it;

• “trading group activities” means activities carried on by a
  member of the group in the course of, or for the purposes of,
  a trade being carried on by any member of the group.

(5) 40For the purposes of determining whether C is a trading company or
the principal company 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
the extent that they are intra-group activities), and

(b) 45a business carried on by a company in partnership with one
or more other persons is to be treated as not being a trading
activity or a trading group activity.

236J All-employee benefit requirement

(1) A settlement meets the all-employee benefit requirement if the trusts
of the settlement—

(a) do not permit any of the settled property to be applied, at any
5time, otherwise than for the benefit of all the eligible
employees on the same terms,

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

(i) by creating a trust, or

(ii) 10by transferring property to the trustees of any
settlement 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
15amend the trusts in a way such that the amended trusts
would 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) 20if C meets the trading requirement by virtue of section
236I(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-
25holder of, a relevant group company,

but 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) 30a person was an eligible employee at any time during the
period 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—

(a) 35a 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
that has made a disposition whereby property became
40comprised 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
value for the purposes of inheritance tax,

(c) 45any 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
paragraph (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
5shares 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—

• “authorised transfer” means a transfer of property consisting of
  10or including any ordinary share capital of a company (“the
  transferred company”) where—

  (a)

  the transferred company meets the trading
  requirement, and

  (b)

  the transfer is made to the trustees of a settlement
  15which—

  (i)

  meets the controlling interest requirement
  with respect to the transferred company
  immediately after the transfer, and

  (ii)

  meets the all-employee benefit requirement
  20with respect to the transferred company
  (ignoring section 236L),

  and for this purpose references to “C” in sections 236I, 236K,
  236M and 236R and this section are to be read as references to
  the transferred company,

• 25“close company” and “participator” have the same meaning as
  in Part 4 of the Inheritance Tax Act 1984 (see section 102 of
  that Act), and references to a participator in a company are,
  in the case of a company which is not a close company, to be
  construed as references to a person who would be a
  30participator in the company if it were a close company,

• “the look-back date” means the first day of the period of 10
  years ending with whichever is later of—

  (a)

  10 December 2013, and

  (b)

  the day on which any property first became
  35comprised in the settlement, and

• “relevant group company” means C or any other company
  which is a member of the group of which C is the principal
  company.

(8) In this section references to the settled property include references to
40any 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
45not 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

such 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
5continuous period of 12 months or such shorter period as the
trusts 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) 10prevent the settled property being applied for the benefit of
all 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
15for the benefit of all the eligible employees on the same terms, they
also 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
20applied by reference to factors other than those mentioned in
subsection (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) 25an 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 (5) and (6).

(5) The equality requirement is infringed by the trusts if they permit any
30of the settled property to be applied on terms such that some (but not
all) eligible employees receive no benefits (other than by virtue of
subsection (1)(b), (c) and (d)).

(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
35is 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

(b) the total entitlement is the sum of those separate
40entitlements.

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

(8) In 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) 45A settlement which would not otherwise meet the all-employee
benefit requirement is treated as meeting that requirement if—

(a) the 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) 5the 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
10section 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) 15apply 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) 20The 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) 25had 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) 30they 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
35securities 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
40section.

(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
45has 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,