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Excluded activities: leasing of ships |
| | 21. - (1) This paragraph supplements paragraph 19(1)(d) so far as it relates to the leasing of ships other than oil rigs or pleasure craft.
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(2) A trade shall not be treated as not being a qualifying trade by reason only of its consisting in letting such ships on charter if the following requirements are met-
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(a) every ship let on charter by the company carrying on the trade is beneficially owned by the company; |
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(b) every ship beneficially owned by the company is registered in the United Kingdom; |
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(c) the company is solely responsible for arranging the marketing of the services of its ships; and |
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(d) the conditions mentioned in sub-paragraph (3) are satisfied in relation to every letting of a ship on charter by the company. |
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(3) The conditions are that-
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(a) the letting is for a period not exceeding 12 months and no provision is made at any time (whether in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer; |
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(b) during the period of the letting there is no provision in force (whether by virtue of being contained in the charterparty or otherwise) for the grant of a new letting to end, otherwise than at the option of the charterer, more than 12 months after that provision is made; |
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(c) the letting is by way of a bargain made at arm's length between the company and a person who is not connected with it; |
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(d) under the terms of the charter the company is responsible as principal- |
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(i) for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry; and
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(ii) for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period;
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(e) no arrangements exist by virtue of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) on behalf of the company. |
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(4) In relation to any letting between one company and another where-
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(a) one of those companies is the company carrying on the trade and the other is a qualifying subsidiary of that company, or |
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(b) both companies are qualifying subsidiaries of the company carrying on the trade, |
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sub-paragraph (3) has effect with the omission of paragraph (c).
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(5) Where any of the requirements in sub-paragraph (2) are not met in relation to any lettings, the trade shall not thereby be treated as not a qualifying trade if those lettings and any other excluded activities do not, taken together, amount to a substantial part of the trade.
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(6) In this paragraph-
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"oil rig" means any ship which is an offshore installation for the purposes of the Mineral Workings (Offshore Installations) Act 1971; and |
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"pleasure craft" means any ship of a kind primarily used for sport or recreation. |
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Excluded activities: receipt of royalties and licence fees |
| | 22. - (1) This paragraph supplements paragraph 19(1)(d) so far as it relates to the receipt of royalties and licence fees.
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(2) A trade shall not be regarded as not being a qualifying trade by reason only that at some time in the qualification period relating to the relevant shares it consists to a substantial extent in the receiving of royalties or licence fees if the royalties and licence fees (or all but for a part that is not a substantial part in terms of value) are attributable to the exploitation of relevant intangible assets.
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(3) For this purpose an intangible asset is a "relevant intangible asset" if the whole or greater part (in terms of value) of it has been created-
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(a) by the company carrying on the trade, or |
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(b) by a company which at all times during which it created the asset was- |
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(i) the parent company of the company carrying on the trade, or
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(ii) a qualifying subsidiary of that parent company.
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(4) In this paragraph "intangible asset" means any asset which falls to be treated as an intangible asset in accordance with normal accounting practice.
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For this purpose "normal accounting practice" means normal accounting practice in relation to the accounts of companies incorporated in any part of the United Kingdom.
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(5) In the case of a relevant asset that is intellectual property, references in this paragraph to the creation of the asset by a company are to its creation in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others).
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(6) In sub-paragraph (5) "intellectual property" means-
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(a) any patent, trade mark, registered design, copyright, design right, performer's right or plant breeder's right; and |
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(b) any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a). |
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Excluded activities: property development |
| | 23. - (1) This paragraph supplements paragraph 19(1)(f).
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(2) "Property development" means the development of land-
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(a) by a company which has, or at any time has had, an interest in the land, and |
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(b) with the sole or main object of realising a gain from the disposal of an interest in the land when it is developed. |
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(3) For this purpose "interest in land" means, subject to sub-paragraph (4)-
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(a) any estate, interest or right in or over land, including any right affecting the use or disposition of land, or |
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(b) any right to obtain such an estate, interest or right from another which is conditional on the other's ability to grant it. |
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(4) References in this paragraph to an interest in land do not include-
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(a) the interest of a creditor (other than a creditor in respect of a rentcharge) whose debt is secured by way of mortgage, an agreement for a mortgage or a charge of any kind over land, or |
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(b) in the case of land in Scotland, the interest of a creditor in a charge or security of any kind over land. |
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Excluded activities: hotels and comparable establishments |
| | 24. - (1) This paragraph supplements paragraph 19(1)(i).
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(2) The reference to a comparable establishment is to a guest house, hostel or other establishment the main purpose of maintaining which is the provision of facilities for overnight accommodation (with or without catering services).
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(3) The activities of a person shall not be taken to fall within paragraph 19(1)(i) unless that person has an estate or interest in, or is in occupation of, the hotel or comparable establishment in question.
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Excluded activities: nursing homes and residential care homes |
| | 25. - (1) This paragraph supplements paragraph 19(1)(j).
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(2) "Nursing home" means an establishment that exists wholly or mainly for the provision of nursing care-
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(a) for persons suffering from sickness, injury or infirmity, or |
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(b) for women who are pregnant or have given birth to children. |
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(3) "Residential care home" means an establishment that exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care by reason of-
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(b) mental or physical disability, |
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(c) past or present dependence on alcohol or drugs, |
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(e) past or present mental disorder. |
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(4) The activities of a person shall not be taken to fall within paragraph 19(1)(j) unless that person has an estate or interest in, or is in occupation of, the nursing home or residential care home in question.
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Excluded activities: provision of facilities for another business |
| | 26. - (1) Providing services or facilities for a business carried on by another person is an excluded activity if-
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(a) the business consists to a substantial extent in excluded activities within paragraph 19(1), and |
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(b) a controlling interest in the business is held by a person (other than a company of which the company providing the services or facilities is a subsidiary) who also has a controlling interest in the business carried on by the company providing the services or facilities. |
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(2) Sub-paragraphs (3) to (5) define what is meant by a controlling interest in a business for the purposes of sub-paragraph (1)(b).
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(3) In the case of a business carried on by a company, a person has a controlling interest if-
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(a) he controls the company, |
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(b) the company is a close company and he or an associate of his, being a director of the company, either- |
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(i) is the beneficial owner of more than 30% of the ordinary share capital of the company, or
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(ii) is able, directly or through the medium of other companies or by any other indirect means, to control more than 30% of that share capital,
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(c) not less than half of the business could, in accordance with section 344(2) of the Taxes Act 1988, be regarded as belonging to him for the purposes of section 343 of that Act. |
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(4) In any other case, a person has a controlling interest in a business if he is entitled to not less than half of the assets used for, or of the income arising from, the business.
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(5) For the purposes of sub-paragraph (3)(a) the question whether a person controls a company shall be determined in accordance with section 416(2) to (6) of the Taxes Act 1988.
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(6) For the purposes of this paragraph there shall be attributed to any person any rights or powers of any other person who is an associate of his.
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(7) In this paragraph-
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"associate" has the meaning given in section 417(3) and (4) of the Taxes Act 1988, except that in those subsections as they apply for the purposes of this paragraph "relative" does not include a brother or sister; |
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"business" includes any trade, profession or vocation; and |
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"director" shall be construed in accordance with section 417(5) of the Taxes Act 1988. |
