Finance Bill - continued        House of Commons
SCHEDULE 15, THE CORPORATE VENTURING SCHEME - continued
PART VI, WITHDRAWAL OF INVESTMENT RELIEF - continued

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The amount of value received
     50. For the purposes of paragraph 47 the amount of the value received is-
 
 
    (a) in a case within paragraph 49(1)(a), (b) or (c)-
 
      (i) the amount received by the investing company, or
 
      (ii) the market value of the shares, securities or debt in question,
 
      whichever is greater;
 
    (b) in a case within paragraph 49(1)(d), the amount of the liability;
 
    (c) in a case within paragraph 49(1)(e)-
 
      (i) the amount of the loan or advance, less
 
      (ii) the amount of any repayment made before the issue of the relevant shares;
 
    (d) in a case within paragraph 49(1)(f)-
 
      (i) the cost to the issuing company of providing the benefit or facility, less
 
      (ii) any consideration given for it by the recipient or any associate of his;
 
    (e) in a case within paragraph 49(1)(g) or (h), the difference between the market value of the asset and the consideration (if any) received for it; and
 
    (f) in a case within paragraph 49(1)(i), the amount of the payment.
 
Value received where there is more than one issue of shares
     51. - (1) This paragraph applies where-
 
 
    (a) two or more issues of shares in the issuing company have been made to the investing company (being issues in relation to which the investing company is eligible for and claims investment relief), and
 
    (b) the value received falls within the periods of restriction relating to two or more of those issues.
      (2) Where this paragraph applies paragraph 47 has effect in relation to the shares comprised in each of the issues referred to in sub-paragraph (1)(b) as if the amount of the value received were reduced by multiplying it by the fraction-

A / B
 

      Where-
 
 
    A is the amount subscribed by the investing company for the shares comprised in the issue in question to which investment relief is (or, but for paragraph 47 would be) attributable; and
 
    B is the aggregate of that amount and the corresponding amount or amounts for the other issue or issues.
 
Cases where maximum investment relief not obtained
     52. - (1) Where-
 
 
    (a) the amount of the reduction ("C") in the investing company's liability to corporation tax obtained in respect of the relevant shares, is less than
 
    (b) the amount ("D") which is equal to 20% of the amount subscribed by the investing company for those shares,
       paragraph 47 has effect as if the amount of the value received were reduced by multiplying it by the fraction-

C / D
 

      (2) Where the amount of investment relief attributable to any of the relevant shares has been reduced before the investment relief was obtained, the amount of the corporation tax reduction obtained in respect of those shares shall be deemed for the purposes of sub-paragraph (1) to be the amount of the corporation tax reduction that would have been obtained had no such reduction of relief been made before the relief was obtained.
 
      (3) Sub-paragraph (2) does not apply to a reduction of investment relief by virtue of paragraph 45(4) (attribution of investment relief where there is a corresponding issue of bonus shares).
 
 
Receipts of value by and from connected persons
     53. In paragraphs 47, 49 and 50 references to the investing company or the issuing company include references to any person who at any time in the period of restriction relating to the relevant shares is connected with the company concerned, whether or not he is connected at the material time.
 
 
Receipt of replacement value
     54. - (1) Where-
 
 
    (a) any investment relief attributable to the relevant shares would, in the absence of this paragraph, be reduced or withdrawn under paragraph 47 by reason of a receipt of value within paragraph 49(1) ("the original value"),
 
    (b) the original supplier receives value ("the replacement value") from the original recipient by reason of a qualifying receipt, and
 
    (c) the replacement value is not less than the amount of the original value,
       paragraph 47 shall not, by reason of the receipt of the original value, have effect to reduce or withdraw the investment relief.
 
      (2) For the purposes of this paragraph and paragraph 55-
 
 
    "the original recipient" means the person who receives the original value; and
 
    "the original supplier" means the person from whom that value was received.
      (3) A receipt of the replacement value is a qualifying receipt for the purposes of sub-paragraph (1) if it arises-
 
 
    (a) by reason of the original recipient making a payment to the original supplier other than-
 
      (i) a qualifying payment (within the meaning of paragraph 49(5)), or
 
      (ii) a payment for shares in or securities of any company in circumstances that do not fall within paragraph (c) below;
 
    (b) where the receipt of the original value was within paragraph 49(1)(d), by reason of an event the effect of which is to reverse the event which constituted the receipt of the original value; or
 
    (c) where the receipt of the original value was within paragraph 49(1)(g) or (h), by reason of-
 
      (i) the original recipient acquiring any asset from the original supplier for a consideration which is or the value of which is more than the market value of the asset, or
 
      (ii) the original recipient disposing of any asset to the original supplier for no consideration or for a consideration which is, or the value of which is, less than the market value of the asset.
      (4) For the purposes of this paragraph-
 
 
    (a) paragraph 50 shall apply for the purposes of determining the amount of the original value; and
 
    (b) the amount of the replacement value is-
 
      (i) in a case within sub-paragraph (3)(a), the amount of the payment,
 
      (ii) in a case within sub-paragraph (3)(b), the same as the amount of the original value, and
 
      (iii) in a case within sub-paragraph (3)(c), the difference between the market value of the asset and the consideration (if any) received for it.
 
Provision supplementary to paragraph 54
     55. - (1) The receipt of the replacement value shall be disregarded for the purposes of sub-paragraph (1) of paragraph 54 to the extent to which it has previously been set (under that paragraph) against a receipt of value to prevent any reduction or withdrawal of investment relief under paragraph 47.
 
      (2) The receipt of the replacement value by the original supplier ("the event") shall be disregarded for the purposes of paragraph 54(1) if-
 
 
    (a) the event occurs before the start of the period of restriction relating to the relevant shares,
 
    (b) there was an unreasonable delay in the event occurring, or
 
    (c) where an appeal has been brought by the investing company against an assessment to withdraw or reduce any investment relief attributable to the relevant shares by reason of the receipt of the original value, the event occurs more than 60 days after the amount of relief which falls to be withdrawn has been finally determined.
  But nothing in paragraph 54 or this paragraph requires the replacement value to be received after the original value.
 
      (3) Sub-paragraph (4) applies where-
 
 
    (a) the receipt of the replacement value is a qualifying receipt for the purposes of paragraph 54(1) (receipt of replacement value which prevents loss of investment relief), and
 
    (b) the event which gives rise to the receipt is (or includes) a subscription for shares by-
 
      (i) the investing company, or
 
      (ii) any person who at any time in the period of restriction relating to the relevant shares is connected with the investing company, whether or not he is connected at the material time.
      (4) Where this sub-paragraph applies the person who subscribes for the shares shall not-
 
 
    (a) be eligible for-
 
      (i) any investment relief, or
 
      (ii) any relief under Chapter III of Part VII of the Taxes Act 1988 (EIS income tax relief),
 
      in relation to those shares or any other shares in the same issue; or
 
    (b) by virtue of his subscription for those shares or any other shares in the same issue, be treated as making a qualifying investment for the purposes of Schedule 5B to the 1992 Act (EIS: deferral relief).
 
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