(4) Sub-paragraph (1)(e) does not, however, apply where the difference in
(a) from a key feature of the plan, or
(b) from any of the participants’ shares being subject to any provision
(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
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
(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
(2) The company may appeal against the decision to the Special
(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.
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
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.
(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
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.
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,
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;
(b) new shares are to be treated as having been awarded to the
participant on the date on which the corresponding old shares were
(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
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),
(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),
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.
(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.
(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
(7) In this paragraph—
(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);
(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
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,
(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.
(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
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.
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—
(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.
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.
(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
507 (SIPs: tax charges) on the participant on whose behalf they are
(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
(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
(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—
(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.
(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.
(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.
(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
(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.
(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
Determination of market value
92 (1) For the purposes of the SIP code the “market value” of shares has the same
meaning as it has for the purposes of TCGA 1992 by virtue of Part 8 of that
(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
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.
Power to require information
93 (1) The Inland Revenue may by notice require a person to provide them with
(a) which they reasonably require for the performance of their functions
under the SIP code, and
(b) which the person to whom the notice is addressed has or can
(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
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.
(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”
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).
(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.
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.
(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
(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
participant, in circumstances where the trustees account (or hold
themselves ready to account) for the proceeds to the participant or to
(2) Where the participant has died, the references in sub-paragraph (1) to the
participant are to the participant’s personal representatives.
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
(a) they are withdrawn from the plan,
(b) the participant to whom the shares were awarded ceases to be in
relevant employment at a time when the shares are subject to the
(c) the trustees dispose of the shares under provision made in
accordance with paragraph 79 (meeting by trustees of PAYE
(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
to be in relevant employment immediately after the shares are awarded.
(3) In sub-paragraph (2) “the acquisition period” in relation to an award
(a) where there was no accumulation period, the period beginning with
the deduction of the partnership share money and ending with the
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)).
(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
Meaning of “the specified retirement age”
98 (1) In the SIP code, in relation to a SIP, “the specified retirement age” means the
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.
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
which it has control, and “group company” has a corresponding
“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))
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
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),
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
“qualifying corporate bond” has the meaning given by section 117 of
“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
shares or securities or rights of any description in the same
(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.