|
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(4) Sub-paragraph (1)(e) does not, however, apply where the difference in | |
treatment arises— | |
(a) from a key feature of the plan, or | |
(b) from any of the participants’ shares being subject to any provision | |
for forfeiture. | 5 |
(5) Nor does it apply as a result only of the fact that shares which have been | |
newly issued receive, in respect of dividends payable with respect to a | |
period beginning before the date on which they were issued, treatment less | |
favourable than that accorded to shares issued before that date. | |
(6) For the purposes of this paragraph a “key feature” of a plan is a provision of | 10 |
the plan that is necessary in order to meet the requirements of this Schedule. | |
Appeal against withdrawal of approval | |
85 (1) This paragraph applies if a SIP has been approved by the Inland Revenue | |
and they decide— | |
(a) to withdraw approval of the plan, or | 15 |
(b) to refuse approval under paragraph 84(1)(b) (approval of alteration | |
of plan or plan trust), or | |
(c) to give a direction under paragraph 11 of Schedule 4AA to ICTA | |
(withdrawal of corporation tax deductions on withdrawal of | |
approval). | 20 |
(2) The company may appeal against the decision to the Special | |
Commissioners. | |
(3) The notice of appeal must be given to the Inland Revenue within 30 days | |
after the date on which notice of their decision is given to the company. | |
Part 11 | 25 |
Supplementary provisions | |
Company reconstructions | |
86 (1) In this Part of this Schedule a “company reconstruction” means a transaction | |
to which this paragraph applies. | |
(2) This paragraph applies to a transaction which occurs in relation to any of a | 30 |
participant’s plan shares (“the original holding”) and— | |
(a) results in a new holding being equated with the original holding for | |
the purposes of capital gains tax, or | |
(b) would have that result but for the fact that what would be the new | |
holding consists of or includes a qualifying corporate bond. | 35 |
(3) But where an excluded issue of shares is made— | |
(a) that issue of shares does not by itself count as a transaction within | |
sub-paragraph (2); and | |
(b) if made as part of a transaction within that sub-paragraph (that is, as | |
part of a company reconstruction), the shares issued are to be | 40 |
regarded as not forming part of the new holding. | |
(4) An “excluded issue of shares” means an issue of shares of any of the | |
following descriptions (in respect of which a charge to income tax arises)— | |
| |
| |
|
| |
| |
(a) redeemable shares or securities issued as mentioned in section | |
209(2)(c) of ICTA (distributions); | |
(b) share capital issued in circumstances such that section 210(1) of ICTA | |
(bonus issues) applies; | |
(c) share capital to which section 249 of ICTA (stock dividends) applies. | 5 |
Consequences of company reconstructions | |
87 (1) In the SIP code references to a participant’s plan shares in relation to a SIP | |
are to be read, after the time of a company reconstruction— | |
(a) as referring to the new shares, or | |
(b) as including those shares, | 10 |
as the case may be. | |
This is subject to the following provisions of this paragraph. | |
(2) For the purposes of the SIP code— | |
(a) a company reconstruction is to be treated as not involving a disposal | |
of the shares comprised in the original holding; | 15 |
(b) new shares are to be treated as having been awarded to the | |
participant on the date on which the corresponding old shares were | |
awarded; | |
(c) the conditions in Part 4 of this Schedule (types of share that may be | |
awarded) are to be treated as fulfilled with respect to any new shares | 20 |
if they were (or were treated as) fulfilled with respect to the | |
corresponding old shares; and | |
(d) the provisions of— | |
(i) sections 489 to 514 (SIPs: income tax advantages and charges | |
under this Act), | 25 |
(ii) sections 68A to 68C and 251A to 251D of ICTA (SIPs: charges | |
to tax under Case V of Schedule D or Schedule F), | |
(iii) sections 686B and 686C of ICTA (SIPs: income tax advantages | |
for trustees), and | |
(iv) Part 1 of Schedule 7D to TCGA 1992 (SIPs: capital gains tax), | 30 |
apply in relation to the new shares as they would have applied in relation to | |
the corresponding old shares. | |
(3) If the corresponding old shares were dividend shares, the reference in sub- | |
paragraph (2)(b) to the corresponding old shares being awarded is a | |
reference to those shares being acquired on behalf of the participant. | 35 |
(4) Sub-paragraphs (1) to (3) are subject to paragraph 88 (treatment of shares | |
acquired under rights issue). | |
(5) For the purposes of the SIP code if, as part of a company reconstruction, | |
trustees become entitled to a capital receipt, their entitlement to the capital | |
receipt is to be taken to arise before the new holding comes into being. | 40 |
(6) In the SIP code, in the context of a new holding, “shares” includes securities | |
and rights of any description which form part of the new holding for the | |
purposes of Chapter 2 of Part 4 of TCGA 1992 (reorganisation of share | |
capital etc.). | |
(7) In this paragraph— | 45 |
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(a) “new shares” means shares comprised in the new holding which | |
were issued in respect of, or otherwise represent, shares comprised | |
in the original holding; | |
(b) “the new holding” and “the original holding” mean respectively the | |
new and original holdings mentioned in paragraph 86(2); | 5 |
(c) “corresponding old shares”, in relation to any new shares, means the | |
shares in respect of which the new shares are issued or which the | |
new shares otherwise represent. | |
Treatment of shares acquired under rights issue | |
88 (1) This paragraph applies for the purposes of the SIP code where the trustees | 10 |
exercise rights arising under a rights issue and conferred in respect of a | |
participant’s plan shares. | |
(2) In such a case, any shares or securities or rights allotted are to be treated as | |
if they were plan shares— | |
(a) identical to the shares in respect of which the rights were conferred, | 15 |
and | |
(b) appropriated to, or acquired on behalf of, the participant under the | |
plan in the same way and at the same time as those shares. | |
(3) If, however, either of the conditions set out in sub-paragraph (4) is met, sub- | |
paragraph (5) applies instead. | 20 |
(4) The conditions are— | |
(a) that the funds used by the trustees to exercise the rights are not | |
provided by the exercise of the trustees’ powers under paragraph 77 | |
(trustees’ powers to raise funds to subscribe for rights issue); | |
(b) that similar rights are not conferred in respect of all ordinary shares | 25 |
in the company. | |
(5) If either of those conditions is met— | |
(a) any shares, securities or rights allotted are not plan shares, and | |
(b) sections 127 to 130 of TCGA 1992 (reorganisation of share capital etc.) | |
do not apply in relation to them. | 30 |
Termination of plan | |
89 (1) The plan may provide for the company to issue a plan termination notice in | |
respect of the plan in circumstances specified in the plan. | |
(2) The plan must provide that, where a plan termination notice is issued, a | |
copy of the notice must be given, without delay, to— | 35 |
(a) the Inland Revenue, | |
(b) the trustees, | |
(c) each individual who has plan shares, and | |
(d) each individual who has entered into a partnership share agreement | |
which was in force immediately before the notice was issued. | 40 |
Effect of plan termination notice | |
90 (1) This paragraph applies if the company has issued a plan termination notice | |
under paragraph 89. | |
(2) No further shares may be awarded to individuals under the plan. | |
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(3) The trustees must remove the plan shares from the plan as soon as | |
practicable after whichever is the later of— | |
(a) the end of the notice period, or | |
(b) the first date on which the shares may be removed from the plan | |
without giving rise to a charge to income tax under sections 501 to | 5 |
507 (SIPs: tax charges) on the participant on whose behalf they are | |
held. | |
(4) In sub-paragraph (3) “the notice period” means the period of 3 months | |
beginning with the date on which the requirements imposed by the plan in | |
accordance with paragraph 89(2) are met in respect of the plan termination | 10 |
notice. | |
(5) The trustees may remove a participant’s shares from the plan at an earlier | |
date with the participant’s consent. | |
(6) Any consent given by the participant before receiving a copy of the plan | |
termination notice is to be disregarded for the purposes of sub-paragraph | 15 |
(5). | |
(7) As soon as practicable after the plan termination notice is issued, the trustees | |
must pay any money held on an individual’s behalf to the individual. | |
(8) In this paragraph references to the trustees removing the plan shares from | |
the plan are to their doing the following in the case of each participant— | 20 |
(a) transferring the shares to the participant on behalf of whom they are | |
held, or to another person, at the participant’s direction, or | |
(b) disposing of the shares and accounting (or holding themselves ready | |
to account) for the proceeds to the participant or to another person at | |
the participant’s direction. | 25 |
(9) Where a participant has died, the references in this paragraph to a | |
participant are to the participant’s personal representatives. | |
Jointly owned companies | |
91 (1) This paragraph applies for the purposes of the provisions of the SIP code | |
relating to group plans. | 30 |
(2) Each joint owner of a jointly owned company is to be treated as controlling | |
every company within sub-paragraph (3). | |
(3) The companies within this sub-paragraph are— | |
(a) the jointly owned company, and | |
(b) any company controlled by that company. | 35 |
(4) However, no company within sub-paragraph (3) may be— | |
(a) a constituent company in more than one group plan, or | |
(b) a constituent company in a particular group plan if another company | |
within that sub-paragraph is a constituent company in a different | |
group plan. | 40 |
(5) In this paragraph a “jointly owned company” means a company— | |
(a) of which 50% of the issued share capital is owned by one person and | |
50% by another, and | |
(b) which is not controlled by any one person. | |
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(6) This paragraph does not apply for the purposes of paragraph 27(1)(b) | |
(requirement that plan shares are in a company not under another | |
company’s control). | |
Determination of market value | |
92 (1) For the purposes of the SIP code the “market value” of shares has the same | 5 |
meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that | |
Act. | |
(2) Sub-paragraph (1) is subject to paragraph 35(3) (determination of value of | |
shares subject to restrictions or risk of forfeiture). | |
(3) Where the market value of shares on any date has to be determined for the | 10 |
purposes of the SIP code, the Inland Revenue and the trustees may agree | |
that it is to be determined by reference— | |
(a) to a date or dates, or | |
(b) to an average of the values on a number of dates, | |
stated in the agreement. | 15 |
Power to require information | |
93 (1) The Inland Revenue may by notice require a person to provide them with | |
information— | |
(a) which they reasonably require for the performance of their functions | |
under the SIP code, and | 20 |
(b) which the person to whom the notice is addressed has or can | |
reasonably obtain. | |
(2) The power conferred by this paragraph extends, in particular, to— | |
(a) information to enable the Inland Revenue— | |
(i) to decide whether to approve a SIP or to withdraw an | 25 |
approval already given, or | |
(ii) to determine the liability to tax, including capital gains tax, of | |
any person who has participated in a plan, and | |
(b) information about the administration of a plan and any proposed | |
alteration of the terms of a plan. | 30 |
(3) The notice must require the information to be provided within a specified | |
period, which must not end earlier than 3 months after the date when the | |
notice is given. | |
Meaning of “associated company” | |
94 (1) For the purposes of the SIP code one company is an “associated company” | 35 |
of another company at a given time if— | |
(a) one has control of the other, or | |
(b) both are under the control of the same person or persons. | |
(2) Sub-paragraph (1) does not, however, apply for the purposes of paragraph | |
29 (prohibited shares). | 40 |
(3) For the purposes of sub-paragraph (1) the question whether a person | |
controls a company is to be determined in accordance with section 416(2) to | |
(6) of ICTA. | |
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Meaning of participant ceasing to be in relevant employment | |
95 (1) This paragraph explains what is meant, for the purposes of the SIP code, by | |
a participant ceasing to be in relevant employment. | |
(2) For the purposes of the SIP code “relevant employment” means employment | |
by the company or any associated company. | 5 |
(3) A participant who remains in the employment of the company or any | |
associated company does not cease to be in relevant employment. | |
Meaning of shares being withdrawn from plan | |
96 (1) For the purposes of the SIP code plan shares are withdrawn from a SIP | |
when— | 10 |
(a) they are transferred by the trustees to the participant, or another | |
person, on the direction of the participant, | |
(b) the participant assigns, charges or otherwise disposes of the | |
beneficial interest in the shares, or | |
(c) they are disposed of by the trustees, on the direction of the | 15 |
participant, in circumstances where the trustees account (or hold | |
themselves ready to account) for the proceeds to the participant or to | |
another person. | |
(2) Where the participant has died, the references in sub-paragraph (1) to the | |
participant are to the participant’s personal representatives. | 20 |
Meaning of shares ceasing to be subject to plan | |
97 (1) For the purposes of the SIP code plan shares cease to be subject to a SIP | |
when— | |
(a) they are withdrawn from the plan, | |
(b) the participant to whom the shares were awarded ceases to be in | 25 |
relevant employment at a time when the shares are subject to the | |
plan, or | |
(c) the trustees dispose of the shares under provision made in | |
accordance with paragraph 79 (meeting by trustees of PAYE | |
obligations). | 30 |
(2) If an individual— | |
(a) participates in an award of partnership shares, and | |
(b) ceases to be in relevant employment at any time during the | |
acquisition period relating to that award, | |
the individual is to be treated for the purposes of this paragraph as ceasing | 35 |
to be in relevant employment immediately after the shares are awarded. | |
(3) In sub-paragraph (2) “the acquisition period” in relation to an award | |
means— | |
(a) where there was no accumulation period, the period beginning with | |
the deduction of the partnership share money and ending with the | 40 |
acquisition date (as defined by paragraph 50(4)), and | |
(b) where there was an accumulation period, the period beginning with | |
the end of that period and ending immediately before the acquisition | |
date (as defined by paragraph 52(5)). | |
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(4) If a participant ceases to be in relevant employment, the participant’s plan | |
shares are to be treated as ceasing to be subject to the plan on the date of | |
leaving. | |
Meaning of “the specified retirement age” | |
98 (1) In the SIP code, in relation to a SIP, “the specified retirement age” means the | 5 |
retirement age specified in the plan. | |
(2) The age so specified— | |
(a) must be the same for men and women, and | |
(b) must not be less than 50. | |
Minor definitions | 10 |
99 (1) In the SIP code— | |
“articles of association”, in relation to a company, includes any other | |
written agreement between the shareholders of the company; | |
“company” means a body corporate; | |
“group of companies” means a company and any other companies of | 15 |
which it has control, and “group company” has a corresponding | |
meaning; | |
“participant’s plan shares”, in relation to a SIP, means plan shares that | |
have been awarded to an individual participant; | |
“PAYE obligations” means (subject to paragraphs 79(2) and 80(2)) | 20 |
obligations of any person under— | |
(a) Part 11 of this Act, or | |
(b) PAYE regulations; | |
“plan shares”, in relation to a SIP, means— | |
(a) free, partnership or matching shares which have been | 25 |
awarded to participants under the plan, | |
(b) dividend shares which have been acquired on behalf of | |
participants under the plan, and | |
(c) shares in relation to which paragraph 87(1) applies | |
(company reconstructions: new shares), | 30 |
and which (in each case) remain subject to the plan; | |
“provision for forfeiture” means a provision to the effect that a | |
participant ceases to be beneficially entitled to shares on the | |
occurrence of certain events, and “forfeiture” is to be read | |
accordingly; | 35 |
“qualifying corporate bond” has the meaning given by section 117 of | |
TCGA 1992; | |
“redundancy” has the same meaning as in ERA 1996 or ER(NI)O 1996; | |
“rights arising under a rights issue” means rights conferred in respect | |
of a participant’s plan shares to be allotted, on payment, other | 40 |
shares or securities or rights of any description in the same | |
company. | |
(2) For the purposes of the SIP code references to “shares” include fractions of | |
shares forming part of the share capital of a company registered in a foreign | |
country the law of which recognises such fractions. | 45 |
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