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received under a taxable insurance contract by an insurer on or after the day on | |
which this Act is passed. | |
Part 9 | |
Miscellaneous and supplementary provisions | |
Provisions consequential on changes to company law | 5 |
192 Companies acquiring their own shares | |
(1) This section applies for the purposes of the Taxes Acts and the Inheritance Tax | |
Act 1984 (c. 51) where a company acquires any of its own shares (whether by | |
purchase, the issuing of bonus shares or otherwise). | |
(2) The acquisition of any of those shares by the company is not to be treated as the | 10 |
acquisition of an asset. | |
(3) The company is not, by virtue of the acquisition or holding of any of those | |
shares or its being entered in the company’s register of members in respect of | |
any of them, to be treated as a member of itself. | |
(4) Subject to subsection (5)— | 15 |
(a) the company’s issued share capital is to be treated as if it had been | |
reduced by the nominal value of the shares acquired, | |
(b) such of those shares as are not cancelled on acquisition are to be treated | |
as if they had been so cancelled, and | |
(c) any subsequent cancellation by the company of any of those shares is | 20 |
to be disregarded (and, accordingly, is not the disposal of an asset and | |
does not give rise to an allowable loss within the meaning of the | |
Taxation of Chargeable Gains Act 1992 (c. 12)). | |
(5) Where the shares are issued to the company as bonus shares, subsection (4)(a) | |
and (b) does not apply and the shares are to be treated as if they had not been | 25 |
issued. | |
(6) Where, disregarding subsections (2) to (5)— | |
(a) a company holds any of its own shares, and | |
(b) the company issues bonus shares in respect of those shares or any class | |
of those shares (“the existing shares”), | 30 |
nothing in this section prevents the existing shares being the company’s | |
holding of shares for the purposes of the application of section 126 of the | |
Taxation of Chargeable Gains Act 1992 (application of sections 127 to 131 of | |
that Act (company reorganisations etc)). | |
(7) In subsection (6) the reference to the application of section 126 of the Taxation | 35 |
of Chargeable Gains Act 1992 does not include a reference to the application of | |
that section in a modified form by virtue of any enactment relating to | |
chargeable gains. | |
(8) Where a company disposes of any of its own shares to a person in | |
circumstances where, but for subsections (2) to (5), it would be regarded as | 40 |
holding the shares immediately before the disposal— | |
(a) subsections (4)(b) and (c) and (5) cease to apply in relation to the shares | |
disposed of (“the relevant shares”), | |
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(b) the relevant shares are to be treated as having been issued as new | |
shares to that person by the company at the time of the disposal (and | |
not as having been disposed of by the company at that time), | |
(c) that person is to be treated as having subscribed for the relevant shares, | |
(d) an amount equal to the amount or value of the consideration (if any) | 5 |
payable for the disposal of the relevant shares is to be treated as the | |
amount subscribed for those shares, | |
(e) if the amount or value of that consideration does not exceed the | |
nominal value of those shares, the share capital of those shares is to be | |
treated as if it were an amount equal to the amount or value of that | 10 |
consideration, and | |
(f) if the amount or value of that consideration exceeds their nominal | |
value, the relevant shares are to be treated as if they had been issued at | |
a premium representing that excess. | |
(9) Where— | 15 |
(a) a company purchases its own shares, and | |
(b) the price payable by a company for the shares is taken into account in | |
computing the profits of the company which are chargeable to tax in | |
accordance with the provisions of the Taxes Act 1988 applicable to Case | |
I or II of Schedule D, | 20 |
subsections (2) to (7) do not apply and subsection (8) does not apply in relation | |
to any disposal by the company of any of the shares. | |
(10) Schedule 40 to this Act (which makes amendments relating to the acquisition | |
and disposal by a company of its own shares) has effect. | |
(11) For the purposes of this section— | 25 |
(a) a company issues “bonus shares” if it issues share capital as paid up | |
otherwise than by the receipt of new consideration (within the meaning | |
of section 254 of the Taxes Act 1988), and | |
(b) “the Taxes Acts” has the same meaning as in the Taxes Management | |
Act 1970 (c. 9), | 30 |
and in this section references to a “company” are to a company with a share | |
capital. | |
(12) The preceding provisions of this section and the provisions of Schedule 40 to | |
this Act have effect in relation to any acquisition of shares by a company on or | |
after such day as the Treasury may by order made by statutory instrument | 35 |
appoint. | |
193 Companies in administration | |
Schedule 41 to this Act (provisions relating to the treatment, for tax purposes, | |
of companies in administration) has effect. | |
International matters | 40 |
194 Exchange of information between tax authorities of member States | |
(1) No obligation as to secrecy imposed by statute or otherwise precludes the | |
Commissioners or an authorised officer of the Commissioners from disclosing | |
to the competent authorities of another member State any information required | |
to be so disclosed by virtue of the Mutual Assistance Directive. | 45 |
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(2) Neither the Commissioners nor an authorised officer shall disclose any | |
information in pursuance of the Mutual Assistance Directive unless satisfied | |
that the competent authorities of the other State are bound by, or have | |
undertaken to observe, rules of confidentiality with respect to the information | |
that are not less strict than those applying to it in the United Kingdom. | 5 |
(3) Nothing in this section permits the Commissioners or an authorised officer of | |
the Commissioners to authorise the use of information disclosed by virtue of | |
the Mutual Assistance Directive otherwise than for the purposes of taxation or | |
to facilitate legal proceedings for failure to observe the tax laws of the receiving | |
State. | 10 |
(4) In this section— | |
“the Commissioners” means the Commissioners of Inland Revenue or the | |
Commissioners of Customs and Excise; | |
the “Mutual Assistance Directive” means Council Directive 77/799/EEC, | |
as amended by Council Directives 79/1070/EEC and 92/12/EEC. | 15 |
(5) The Treasury may by order make such provision amending any of subsections | |
(1) to (4) above as appears to them appropriate for the purpose of giving effect | |
to any Council Directive adopted after 16th April 2003 amending or replacing | |
the Mutual Assistance Directive. | |
(6) In section 48 of the Value Added Tax Act 1994 (c. 23) (VAT representatives)— | 20 |
(a) in subsection (1B) (meaning of “the mutual assistance provisions”) for | |
paragraphs (a) and (b) substitute— | |
“(a) section 134 of the Finance Act 2002 and Schedule 39 to | |
that Act (recovery of taxes etc due in other member | |
States); | 25 |
(b) section 194 of the Finance Act 2003 (exchange of | |
information between tax authorities of member | |
States);”; | |
(b) after subsection (8) insert— | |
“(9) The Treasury may by order amend the definition of “the mutual | 30 |
assistance provisions” in subsection (1B) above.”. | |
195 Arrangements for mutual exchange of tax information | |
(1) In the following provisions (which confer power to make arrangements for the | |
exchange of information necessary for carrying out the tax laws of the UK and | |
the territory to which the arrangements relate) for “necessary for carrying out” | 35 |
substitute “foreseeably relevant to the administration or enforcement of”. | |
(2) The provisions are— | |
sections 788(2) and 815C(1) of the Taxes Act 1988 (income tax, capital | |
gains tax and corporation tax), and | |
sections 158(1A) and 220A(1) of the Inheritance Tax Act 1984 (c. 51) | 40 |
(inheritance tax). | |
(3) Any reference in arrangements made before the passing of this Act, or in any | |
Order in Council under which such arrangements have effect, to information | |
necessary for the carrying out of the tax laws of the United Kingdom or the | |
territory to which the arrangements relate shall be read as including any | 45 |
information foreseeably relevant to the administration or enforcement of the | |
tax laws of the United Kingdom or, as the case may be, of that territory. | |
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196 Savings income: Community obligations and international arrangements | |
(1) The Treasury may make regulations for implementing and for dealing with | |
matters arising out of or related to— | |
(a) any Community obligation created with a view to ensuring the | |
effective taxation of savings income under the law of the United | 5 |
Kingdom and the laws of the other member States, or | |
(b) any arrangements made with a territory other than a member State | |
with a view to ensuring the effective taxation of savings income under | |
the law of the United Kingdom and the law of the other territory. | |
(2) Regulations under this section may, in particular, require paying agents— | 10 |
(a) to obtain and verify prescribed descriptions of information about the | |
identity and residence of relevant payees to whom they make savings | |
income payments, and | |
(b) to provide to the Inland Revenue (or an officer of the Inland Revenue) | |
prescribed descriptions of information about relevant payees to whom | 15 |
they make savings income payments and about the savings income | |
payments which they make to them. | |
(3) Regulations under this section may include provision for the inspection on | |
behalf of the Inland Revenue of books, documents and other records of persons | |
who are, or appear to an officer of the Inland Revenue to be, paying agents. | 20 |
(4) Regulations under this section may include provision for notices under such | |
regulations to be combined with notices under sections 17 and 18 of the Taxes | |
Management Act 1970 (c. 9) (interest paid or credited by banks and others). | |
(5) Regulations under this section may include provision about the time at or | |
within which, and the manner in which, any requirement imposed by such | 25 |
regulations is to be complied with. | |
(6) Regulations under this section may include provision for penalties for failure | |
to comply with requirements imposed by such regulations (including | |
provision applying any provision of the Taxes Management Act 1970 about the | |
determination of penalties or any other matter relating to penalties); and in the | 30 |
first column of the Table in section 98 of that Act (penalties for failure to furnish | |
information etc), insert at the appropriate place “Regulations under section 196 | |
of the Finance Act 2003.”. | |
(7) In this section “paying agents” means persons of a prescribed description who | |
make savings income payments to other persons; and the descriptions of | 35 |
persons who may be prescribed as paying agents include, in particular, public | |
officers and government departments. | |
(8) For the purposes of this section a person makes savings income payments to | |
another person if the person— | |
(a) makes payments of savings income to the other person, or | 40 |
(b) secures the payment of savings income for the other person. | |
(9) In this section “savings income” means interest (apart from interest of a | |
prescribed description) or other sums of a prescribed description. | |
(10) In this section “relevant payees” means persons of a prescribed description | |
who are resident (within the meaning of the regulations) in a prescribed | 45 |
territory and persons of any such other description as may be prescribed; and | |
the only territories which may be prescribed are the other member States and | |
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territories with which arrangements such as are mentioned in subsection (1)(b) | |
have been made. | |
(11) Regulations under this section— | |
(a) may make different provision for different cases or descriptions of case, | |
and | 5 |
(b) may include supplementary, incidental, consequential or transitional | |
provision. | |
(12) The power to make regulations under this section is exercisable by statutory | |
instrument. | |
(13) A statutory instrument containing regulations under this section is subject to | 10 |
annulment in pursuance of a resolution of the House of Commons. | |
(14) In this section— | |
“the Inland Revenue” means the Commissioners of Inland Revenue, and | |
“prescribed” means prescribed by regulations under this section. | |
197 Controlled foreign companies: exempt activities | 15 |
(1) Schedule 42 to this Act (which amends Part 2 of Schedule 25 to the Taxes Act | |
1988 (exempt activities)) shall have effect. | |
(2) The amendments made by that Schedule have effect in relation to accounting | |
periods of a controlled foreign company beginning on or after 27th November | |
2002. | 20 |
(3) In this section “accounting period” and “controlled foreign company” have the | |
same meaning as in Chapter 4 of Part 17 of the Taxes Act 1988. | |
(4) This section shall be taken to have come into force on 27th November 2002. | |
198 Application of CFC provisions to Hong Kong and Macao companies | |
(1) In Part 2 (exempt activities) of Schedule 25 to the Taxes Act 1988 (cases where | 25 |
section 747(3) does not apply), in paragraph 5 insert after sub-paragraph (2)— | |
“(3) In the case of a controlled foreign company— | |
(a) which is, by virtue of section 749(5), presumed to be resident | |
in a territory in which it is subject to a lower level of taxation, | |
(b) the business affairs of which are, throughout the accounting | 30 |
period in question, effectively managed in a special | |
administrative region, and | |
(c) which is liable to tax for that period in that region, | |
references in the following provisions of this Part of this Schedule to | |
the territory in which that company is resident shall be construed as | 35 |
references to that region. | |
(4) In sub-paragraph (3) above “special administrative region” means | |
the Hong Kong or the Macao Special Administrative Region of the | |
People’s Republic of China. | |
(5) Where sub-paragraph (3) above applies, it applies in place of sub- | 40 |
paragraph (2).”. | |
(2) This section shall be deemed to have had effect— | |
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(a) as from 1st July 1997, so far as relating to the Hong Kong Special | |
Administrative Region; | |
(b) as from 20th December 1999, so far as relating to the Macao Special | |
Administrative Region. | |
Administrative matters | 5 |
199 Deduction of tax from interest: recognised clearing houses etc | |
(1) Section 349 of the Taxes Act 1988 (payment of annual interest etc) is amended | |
as follows. | |
(2) In subsection (3) (cases where obligation to make interest payments net of tax | |
does not apply), at the end insert “or— | 10 |
(j) to interest paid by a recognised clearing house or recognised | |
investment exchange carrying on business as provider of a | |
central counterparty clearing service, in the ordinary course of | |
that business, on margin or other collateral deposited with it by | |
users of the service; or | 15 |
(k) to interest treated by virtue of section 730A(2)(a) or (b) (repos) | |
as paid by a recognised clearing house or recognised | |
investment exchange in respect of contracts made by it as | |
provider of a central counterparty clearing service.”. | |
(3) In subsection (6) (definitions), at the appropriate places insert— | 20 |
““central counterparty clearing service” means the service | |
provided by a clearing house or investment exchange to the | |
parties to a transaction where there are contracts between each | |
of the parties and the clearing house or investment exchange (in | |
place of, or as an alternative to, a contract directly between the | 25 |
parties);”; | |
““recognised clearing house” and “recognised investment | |
exchange” have the same meaning as in the Financial Services | |
and Markets Act 2000 (see section 285 of that Act);”. | |
(4) This section applies in relation to payments of interest on or after 14th April | 30 |
2003. | |
200 Authorised unit trusts: interest distributions paid gross | |
(1) Chapter 3 of Part 12 of the Taxes Act 1988 (unit trust schemes) is amended as | |
follows. | |
(2) In section 468L(4) (obligation to deduct tax from interest distributions to be | 35 |
subject to provision made by sections 468M and 468N), for “sections 468M and | |
468N” substitute “section 468M”. | |
(3) For sections 468M and 468N substitute— | |
“468M Cases where no obligation to deduct tax | |
(1) Where an interest distribution is made for a distribution period to a unit | 40 |
holder, any obligation to deduct under section 349(2) does not apply to | |
the interest distribution if— | |
(a) the unit holder is a company or the trustees of a unit trust | |
scheme, or | |
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(b) either the residence condition or the reputable intermediary | |
condition is on the distribution date fulfilled with respect to the | |
unit holder. | |
(2) Section 468O makes provision about the circumstances in which the | |
residence condition or the reputable intermediary condition is fulfilled | 5 |
with respect to a unit holder.”. | |
(4) Section 468O (residence condition) is amended as follows. | |
(5) In subsection (1), for “sections 468M and 468N” substitute “section 468M”. | |
(6) After that subsection insert— | |
“(1A) For the purposes of section 468M, the reputable intermediary condition | 10 |
is fulfilled with respect to a unit holder if— | |
(a) the interest distribution is paid on behalf of the unit holder to a | |
company, | |
(b) the company either is subject to the EC Money Laundering | |
Directive, or to equivalent non-EC provisions, or is an | 15 |
associated company resident in a regulating country or territory | |
of a company which is so subject, and | |
(c) the trustees of the authorised unit trust have reasonable | |
grounds for believing that the unit holder is not ordinarily | |
resident in the United Kingdom. | 20 |
(1B) For the purposes of subsection (1A)(b) above— | |
(a) a company is subject to the EC Money Laundering Directive if | |
it is a credit institution or financial institution as defined by | |
Article 1 of Directive 91/308/EEC, as amended by Directive | |
2001/97/EC, | 25 |
(b) a company is subject to equivalent non-EC provisions if it is | |
required by the law of any country or territory which is not a | |
member State to comply with requirements similar to those | |
which, under Article 3 of that Directive (as so amended), | |
member States must ensure are complied with by credit | 30 |
institutions and financial institutions, | |
(c) a company is to be treated as another’s associated company if it | |
would be so treated for the purposes of Part 11 (see section 416), | |
and | |
(d) a country or territory is a regulating country or territory if it | 35 |
either is a member State or imposes requirements similar to | |
those which, under Article 3 of that Directive (as so amended), | |
member States must ensure are complied with by credit | |
institutions and financial institutions. | |
(1C) If Directive 91/308/EEC ceases to have effect, or is further amended, | 40 |
the Treasury may by order make consequential amendments in | |
subsections (1A) and (1B) above.”. | |
(7) In the sidenote, insert at the end “and reputable intermediary condition”. | |
(8) In section 468P(1) (residence declarations)— | |
(a) for “468O” substitute “468O(1)”, and | 45 |
(b) for “subsections (2) to (4)” substitute “subsection (2) or (3)”. | |
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