|
| |
| |
(b) on 5th April in any year. | |
(2) The market value of the employment-related securities is artificially | |
low where it has been reduced by at least 10% as a result of things | |
done otherwise than for genuine commercial purposes within the | |
relevant period. | 5 |
(3) In a case within subsection (1)(a), the reference in subsection (2) of | |
section 428 (amount of charge on restricted securities) to what would | |
be the market value of the employment-related securities is, so far as | |
it relates to subsection (1) of that section, a reference to what would | |
be the market value but for the reduction as a result of the things | 10 |
done as mentioned in subsection (2) (and but for any restrictions). | |
(4) In a case within subsection (1)(b), there shall be treated as occurring | |
on the 5th April concerned a chargeable event within section | |
427(3)(a) (lifting of restrictions) in relation to the employment- | |
related securities. | 15 |
(5) “The relevant period” is the period of 7 years ending with— | |
(a) in a case within subsection (1)(a), the chargeable event | |
concerned, or | |
(b) in a case within subsection (1)(b), the 5th April concerned. | |
(6) But if section 425(2) (no charge on acquisition of certain restricted | 20 |
securities or restricted interests in securities) applied in relation to | |
the employment-related securities, the relevant period is the period | |
beginning 7 years before the acquisition. | |
446F Adjustment of market value: conditional interests | |
(1) This section applies where the market value of an employee’s | 25 |
interest in shares which is only conditional is artificially low | |
immediately after a chargeable event relating to the shares under | |
section 427 as originally enacted. | |
(2) The market value of the shares is artificially low where it has been | |
reduced by at least 10% as a result of things done otherwise than for | 30 |
genuine commercial purposes within the period beginning— | |
(a) 7 years before the chargeable event, or | |
(b) with 16th April 2002, | |
whichever is later. | |
(3) There is a chargeable event in relation to shares if section 427 (as | 35 |
originally enacted) applies in relation to them. | |
(4) The reference in the definition of MV in section 428(1) (as originally | |
enacted) to the market value of the employee’s interest is to what | |
would be the market value but for the reduction as a result of the | |
things done as mentioned in subsection (2). | 40 |
(5) Expressions used in this section and in Chapter 2 of this Part as | |
originally enacted have the same meaning in this section as in that | |
Chapter. | |
| |
| |
|
| |
| |
446G Adjustment of market value: consideration for entitlement to convert | |
(1) This section applies where the market value of employment-related | |
securities which are convertible securities or an interest in | |
convertible securities (determined as if they were not) has been | |
reduced by at least 10% as a result of things done otherwise than for | 5 |
genuine commercial purposes within the period of 7 years ending | |
with the acquisition. | |
(2) The reference to the market value of the employment-related | |
securities in the definition of NCMV in section 442(5) (value of | |
convertible securities at time of acquisition) is to what would be the | 10 |
market value but for the reduction as a result of the things done as | |
mentioned in subsection (1) (and but for the fact that they are | |
convertible securities or an interest in convertible securities). | |
446H Adjustment of market value: charge on conversion | |
(1) This section applies where the market value of securities (“the | 15 |
converted securities”) into which employment-related securities (or | |
securities in which employment-related securities are an interest) are | |
converted is artificially low at the time of an event which is a | |
chargeable event in relation to the employment-related securities by | |
virtue of section 439(3)(a) (conversion). | 20 |
(2) The market value of the converted securities is artificially low where | |
it has been reduced by at least 10% as a result of things done | |
otherwise than for genuine commercial purposes within the period | |
of 7 years ending with the chargeable event. | |
(3) The references to the market value of the converted securities in the | 25 |
definition of CMVCS in section 441(6) (amount of gain realised by | |
conversion) are to what would be the market value but for the | |
reduction as a result of the things done as mentioned in subsection | |
(2). | |
446I Adjustment of consideration or benefit received | 30 |
(1) This section applies where any consideration or benefit mentioned | |
in— | |
(a) section 428(3) (consideration on disposal of restricted | |
securities), | |
(b) section 441(4), (5) or (9) (consideration for disposal of | 35 |
convertible shares or release of entitlement to convert or | |
benefit received in respect of entitlement to convert), | |
(c) section 446C(4) (securities with artificially depressed market | |
value: MV to be amount of consideration), | |
(d) sections 446X and 446Y(3) (consideration for disposal of | 40 |
securities exceeding market value), or | |
(e) section 448 (securities benefit not otherwise subject to tax), | |
consists (in whole or in part) in the provision of securities or an | |
interest in securities the market value of which is artificially low. | |
(2) The market value of any securities or interest in securities is | 45 |
artificially low where it has been reduced by at least 10% as a result | |
of things done otherwise than for genuine commercial purposes | |
| |
| |
|
| |
| |
within the period of 7 years ending with the receipt of the | |
consideration or benefit. | |
(3) The market value of the consideration or benefit consisting in the | |
provision of the securities or interest in securities is for the purposes | |
of the provision or provisions concerned to be taken to be what it | 5 |
would be but for the reduction as a result of the things done as | |
mentioned in subsection (2). | |
Supplementary | |
446J Definitions | |
(1) In this Chapter— | 10 |
“interest”, in relation to securities, and | |
“securities”, | |
have the meaning indicated in section 420. | |
(2) In this Chapter “market value” has the meaning indicated in section | |
421(1). | 15 |
(3) For the purposes of this Chapter sections 421(2) and 421A apply for | |
determining the amount of the consideration given for anything and | |
section 421I applies for determining the amount of the consideration | |
given for the acquisition of employment-related securities. | |
(4) In this Chapter— | 20 |
“the acquisition”, | |
“the employee”, and | |
“employment-related securities”, | |
have the meaning indicated in section 421B(8). | |
(5) In this Chapter— | 25 |
“restricted interest in securities”, and | |
“restricted securities”, | |
have the same meaning as in Chapter 2 of this Part (see sections 423 | |
and 424). | |
(6) In this Chapter “restriction” has the same meaning as in Chapter 2 of | 30 |
this Part (see section 432(8)). | |
(7) In this Chapter “convertible securities” has the same meaning as in | |
Chapter 3 of this Part (see section 436).”. | |
(2) Sub-paragraph (1) has effect on and after 16th April 2003 (so that sections | |
446A, 446F to 446H, 446I(1)(b) to (e), (2) and (3) and 446J apply on and after | 35 |
that date in relation to employment-related securities irrespective of the date | |
of the acquisition). | |
(3) Sections 446E and 446I(1)(a) do not affect any securities, or interests in | |
securities, acquired before 16th April 2003; and, in relation to any securities | |
or interests in securities acquired on or after that date but before the day | 40 |
appointed under paragraph 3(2), those provisions apply only on or after that | |
appointed day. | |
(4) Section 446F— | |
| |
| |
|
| |
| |
(a) applies in relation to conditional interests in shares acquired before | |
16th April 2003, and | |
(b) applies during the period beginning with that date and ending with | |
the day preceding that appointed day in relation to conditional | |
interests in shares acquired during that period. | 5 |
6 (1) After Chapter 3A of Part 7 (inserted by paragraph 5(1)) insert— | |
“Chapter 3B | |
Securities with artificially enhanced market value | |
Introduction | |
446K Application of this Chapter | 10 |
(1) This Chapter applies in certain cases where the market value of | |
employment-related securities is increased by things done otherwise | |
than for genuine commercial purposes. | |
(2) The following are among the things that are, for the purposes of this | |
Chapter, done otherwise than for genuine commercial purposes— | 15 |
(a) anything done as part of a scheme or arrangement the main | |
purpose, or one of the main purposes, of which is the | |
avoidance of tax or national insurance contributions, and | |
(b) any transaction between companies which are members of | |
the same group on terms which are not such as might be | 20 |
expected to be agreed between persons acting at arm’s length | |
(other than a payment for group relief). | |
(3) In subsection (2)(b)— | |
(a) “group” means a company and its 51% subsidiaries, and | |
(b) “group relief” has the same meaning as in section 402(6) of | 25 |
ICTA. | |
(4) In this Chapter, in relation to the market value of the employment- | |
related securities— | |
“non-commercial increase” means an increase in the market | |
value as a result of anything done otherwise than for genuine | 30 |
commercial purposes, and | |
“non-commercial reduction” means a reduction in the market | |
value as a result of anything done otherwise than for genuine | |
commercial purposes. | |
Charge on non-commercial increases | 35 |
446L Charge on non-commercial increases | |
(1) This section applies in relation to employment-related securities | |
where on a date that is the valuation date in relation to a relevant | |
period IMV is at least 10% greater than MV. | |
(2) The taxable amount determined under subsection (4) counts as | 40 |
employment income of the employee for the relevant tax year (but | |
subject to sections 446M and 446N). | |
| |
| |
|
| |
| |
(3) The “relevant tax year” is the tax year in which the valuation date | |
falls. | |
(4) The taxable amount is—
IMV − MV
| |
(5) IMV is the market value of the employment-related securities on the | |
valuation date. | 5 |
(6) MV is the amount that would be the market value of the | |
employment-related securities on the valuation date if any non- | |
commercial increases during the relevant period were disregarded. | |
(7) For the purposes of subsections (5) and (6)— | |
(a) any restrictions having effect in relation to the employment- | 10 |
related securities on the valuation date, and | |
(b) any non-commercial reductions during the relevant period, | |
are to be disregarded. | |
446M Securities subject to restriction on valuation date | |
(1) This section applies where on the valuation date the employment- | 15 |
related securities are relevant restricted securities. | |
(2) The amount determined under section 446L(4) is to be multiplied by | |
CP. | |
(3) CP is—
1 − OP
| |
where OP is the amount that would be determined under section | 20 |
428(6) (amount of charge on chargeable event in relation to restricted | |
securities) on the valuation date if there were on that date a | |
chargeable event (resulting in no tax charge). | |
(4) For the purposes of this section the employment-related securities | |
are relevant restricted securities if they are restricted securities or a | 25 |
restricted interest in securities but are not subject to— | |
(a) an election under section 430 (election to ignore outstanding | |
restrictions) in relation to a chargeable event which occurred | |
before the valuation date, or | |
(b) an election under section 431(1) (election to treat securities as | 30 |
not subject to restrictions). | |
(5) If sections 425 to 430 apply to the employment-related securities in | |
accordance with section 431(2) (election to treat securities as not | |
subject to specified restrictions), the reference in subsection (3) to the | |
amount that would be determined under section 428(6) is to the | 35 |
amount that would be so determined in accordance with section | |
431(2). | |
446N Securities subject to restriction during relevant period | |
(1) This section applies where the employment-related securities have | |
been restricted securities or a restricted interest in securities at any | 40 |
time during the relevant period. | |
| |
| |
|
| |
| |
(2) DA is to be deducted from the amount determined under section | |
446L(4) (or, where section 446M applies, the amount determined | |
under sections 446L(4) and 446M). | |
(3) DA is the aggregate of the amounts arrived at under subsection (4) in | |
relation to each event occurring during the relevant period that is a | 5 |
chargeable event in relation to the employment-related securities. | |
(4) The amount is—
TA − ARTA
| |
(5) TA is the taxable amount actually determined under section 428 in | |
relation to the chargeable event. | |
(6) ARTA is the taxable amount which would have been determined | 10 |
under section 428 in relation to the chargeable event if any non- | |
commercial increases during the period— | |
(a) beginning at the same time as the relevant period, and | |
(b) ending immediately before the chargeable event, | |
had been disregarded. | 15 |
Supplementary | |
446O “Relevant period” and “valuation date” | |
(1) This section explains what is meant by “relevant period” and | |
“valuation date” in this Chapter. | |
(2) The first relevant period in relation to employment-related securities | 20 |
is the period beginning with the date of the acquisition and ending | |
with the following 5th April. | |
(3) After the first relevant period, each period beginning with 6th April | |
and ending with the following 5th April is a relevant period in | |
relation to the employment-related securities. | 25 |
(4) But if this Chapter ceases to apply to the employment-related | |
securities during a relevant period, the relevant period ends with the | |
date on which this Chapter ceases to apply to them. | |
(5) And if this Chapter ceases to apply to an interest in the employment- | |
related securities during a relevant period, the relevant period ends | 30 |
in relation to that interest with the date on which this Chapter ceases | |
to apply to that interest. | |
(6) In a case where subsection (5) applies, this Chapter has effect | |
separately in relation to that interest and the remainder of the | |
employment-related securities. | 35 |
(7) In this Chapter “valuation date”, in relation to a relevant period, | |
means the date with which the relevant period ends. | |
446P Definitions | |
(1) In this Chapter “interest”, in relation to securities has the meaning | |
indicated in section 420. | 40 |
| |
| |
|
| |
| |
(2) In this Chapter “market value” has the meaning indicated in section | |
421(1). | |
(3) In this Chapter— | |
“the acquisition”, | |
“the employee”, and | 5 |
“employment-related securities”, | |
have the meaning indicated in section 421B(8). | |
(4) In this Chapter— | |
“restricted interest in securities”, and | |
“restricted securities”, | 10 |
have the same meaning as in Chapter 2 of this Part (see sections 423 | |
and 424). | |
(5) In this Chapter “chargeable event” means an event which is a | |
chargeable event for the purposes of section 426. | |
(6) In this Chapter “restriction” has the same meaning as in Chapter 2 of | 15 |
this Part (see section 432(8)). | |
(7) In this Chapter— | |
“non-commercial increase”, and | |
“non-commercial reduction”, | |
have the meaning indicated in section 446K(4). | 20 |
(8) In this Chapter | |
“relevant period”, and | |
“valuation date”, | |
have the meaning indicated in section 446O.”. | |
(2) Subject as follows, sub-paragraph (1) has effect on and after 16th April 2003 | 25 |
(so that it applies on and after that date in relation to employment-related | |
securities irrespective of the date of the acquisition). | |
(3) Sections 446M and 446N do not affect any securities, or interests in | |
securities, acquired before 16th April 2003; and, in relation to any securities | |
or interests in securities acquired on or after that date but before the day | 30 |
appointed under paragraph 3(2), those sections apply only on and after that | |
appointed day. | |
(4) For the purposes of section 446O employment-related securities acquired | |
before 16th April 2003 are to be treated as acquired on that date. | |
7 (1) After Chapter 3B of Part 7 (inserted by paragraph 6(1)) insert— | 35 |
“Chapter 3C | |
Securities acquired for less than market value | |
446Q Application of this Chapter | |
(1) This Chapter applies if— | |
(a) no payment is made for employment-related securities at or | 40 |
before the time of the acquisition, or | |
| |
| |
|
