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Schedule 40 | |
Section 192 | |
Acquisition by company of its own shares | |
Venture capital trusts | |
1 In Schedule 15B to the Taxes Act 1988 (venture capital trusts: relief from | |
income tax), in paragraph 1 (entitlement to claim relief on investment), after | 5 |
sub-paragraph (9) insert— | |
“(10) An individual is not eligible for relief under this Part of this | |
Schedule by reference to any shares which are treated as issued to | |
him by virtue of section 192(8) of the Finance Act 2003 (tax | |
treatment of disposal by company of its own shares). | 10 |
(11) Where a company which is a venture capital trust issues to any | |
individual eligible shares to which sub-paragraph (10) above | |
applies, it must— | |
(a) at the time of the issue of those shares, give that individual | |
a notice stating that he is not eligible for relief under this | 15 |
Part of this Schedule by reference to those shares, and | |
(b) no later than three months after the issue of those shares, | |
give a copy of that notice to an officer of the Board.”. | |
Stamp duty and stamp duty reserve tax | |
2 In section 66 of the Finance Act 1986 (c. 41) (stamp duty: company’s | 20 |
purchase of own shares)— | |
(a) in subsection (2)— | |
(i) for “The return which relates to the shares” substitute “Any | |
return which relates to any of the shares”, | |
(ii) after “169” insert “(1) or (1B)”, and | 25 |
(iii) after “transferring the shares” insert “to which it relates”, | |
(b) after that subsection insert— | |
“(2A) Any return which relates to the cancellation of any of the | |
shares purchased and is delivered to the registrar of | |
companies under section 169A of the Companies Act 1985 | 30 |
shall be chargeable under this subsection with stamp duty of | |
£5.”, and | |
(c) in subsection (3), after “169” insert “(1) or (1B)”. | |
3 In section 90 of that Act (exemptions from stamp duty reserve tax), after | |
subsection (7) insert— | 35 |
“(7A) Section 87 above does not apply as regards an agreement to transfer | |
any shares in a company which are held by the company (whether in | |
accordance with section 162A of the Companies Act 1985 (treasury | |
shares) or otherwise).”. | |
4 (1) Section 92 of that Act (stamp duty reserve tax: repayment or cancellation of | 40 |
tax) is amended as follows. | |
(2) After subsection (1B) insert— | |
“(1C) If, as regards an agreement to transfer shares in a company to that | |
company (“the own-shares agreement”)— | |
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(a) tax is charged under section 87 above, and | |
(b) it is proved to the Board’s satisfaction that at a time in the | |
period of six years beginning on the relevant day (as defined | |
in section 87(3)) the conditions mentioned in subsection (1D) | |
have been fulfilled in respect of those shares, | 5 |
subsections (2) to (4A) apply. | |
(1D) The conditions referred to in subsection (1C) are— | |
(a) that, in relation to the transfer made in pursuance of the own- | |
shares agreement, a return has been made in respect of each | |
of those shares in accordance with section 169(1) or (1B) of the | 10 |
Companies Act 1985 (c. 6) (disclosure by company of | |
purchase of own shares), and | |
(b) that any such return has been duly stamped in accordance | |
with section 66.”. | |
(3) In subsection (2), after “subsection (1)” insert “or, as the case may be, (1C)”. | 15 |
5 In Schedule 13 to the Finance Act 1999 (c. 16) (stamp duty: instruments | |
chargeable and rates of duty), in Part 1 (conveyance or transfer on sale), in | |
paragraph 1 (stamp duty charge), after sub-paragraph (2) insert— | |
“(3) Sub-paragraph (1) is subject to sub-paragraphs (4) to (6). | |
(4) Where a company acquires any shares in itself by virtue of section | 20 |
162 of the Companies Act 1985 (power of company to purchase | |
own shares) or otherwise, sub-paragraph (1) does not apply to any | |
instrument by which the shares are transferred to the company. | |
(5) Where a company holds any shares in itself by virtue of section | |
162A of that Act (treasury shares) or otherwise, any instrument to | 25 |
which sub-paragraph (6) applies is to be treated for the purposes | |
of this Schedule as a conveyance otherwise than on sale, and | |
paragraph 16 applies accordingly. | |
(6) This sub-paragraph applies to any instrument for the sale or | |
transfer of any of the shares by the company, other than an | 30 |
instrument which, in the absence of sub-paragraph (5), would be | |
an instrument in relation to which— | |
(a) section 67(2) of the Finance Act 1986 (transfer to person | |
whose business is issuing depositary receipts etc), or | |
(b) section 70(2) of that Act (transfer to person who provides | 35 |
clearance services etc), | |
applied.”. | |
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Schedule 41 | |
Section 193 | |
Companies in administration | 40 |
Accounting period for company in administration | |
1 (1) Section 12 of the Taxes Act 1988 (corporation tax: basis of, and periods for, | |
assessment) is amended as follows. | |
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(2) In subsection (3), after paragraph (d) insert— | |
“(da) the company ceasing to be in administration;”. | |
(3) After subsection (5A) insert— | |
“(5B) For the purposes of subsection (3)(da) a company ceases to be in | |
administration when it ceases to be in administration under | 5 |
Schedule B1 to the Insolvency Act 1986 or any corresponding event | |
occurs otherwise than under that Act.”. | |
(4) In subsection (7) (accounting periods where company is wound up), after | |
the words “subject to” insert “subsection (7ZA) below and”. | |
(5) After subsection (7) insert— | 10 |
“(7ZA) Notwithstanding anything in subsections (1) to (6) above, where a | |
company enters administration— | |
(a) an accounting period of the company shall end immediately | |
before the day the company enters administration, and | |
(b) if immediately before the company enters administration it is | 15 |
in the course of being wound up, subsection (7) ceases to | |
apply at the end of that accounting period. | |
For this purpose a company enters administration when it enters | |
administration under Schedule B1 to the Insolvency Act 1986 or is | |
subject to any corresponding procedure otherwise than under that | 20 |
Act.”. | |
(6) In subsection (7A) for “subsections (1) to (7)” substitute “subsections (1) to | |
(7ZA)”. | |
Responsibility of officers of company in administration | |
2 (1) Section 108 of the Taxes Management Act 1970 (c. 9) (responsibility of | 25 |
company officers) is amended as follows. | |
(2) In subsection (3)(a)— | |
(a) after first “liquidator” insert “or administrator”, and | |
(b) after second “liquidator” insert “or, as the case may be, | |
administrator”. | 30 |
(3) After subsection (3) insert— | |
“(4) For the purposes of subsection (3)(a), where two or more persons are | |
appointed to act jointly or concurrently as the administrator of a | |
company, the proper officer is— | |
(a) such one of them as is specified in a notice given to the Board | 35 |
by those persons for the purposes of this section, or | |
(b) where the Board is not so notified, such one or more of those | |
persons as the Board may designate as the proper officer for | |
those purposes.”. | |
Tax on companies in administration | 40 |
3 After section 342 of the Taxes Act 1988 (tax on company in liquidation) | |
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insert— | |
“342A Tax on companies in administration | |
(1) In this section— | |
(a) references to the relevant event, in relation to a company in | |
administration, are references— | 5 |
(i) to the administrator sending a notice in respect of the | |
company under paragraph 84(1) of Schedule B1 to the | |
Insolvency Act 1986 (company moving from | |
administration to dissolution), or | |
(ii) in the case of a company which enters administration | 10 |
otherwise than under that Act, to the doing of any | |
other act for a like purpose, and | |
(b) references to a company’s final year are references to the | |
financial year in which the relevant event occurs, and | |
references to the company’s penultimate year are references | 15 |
to the last financial year preceding its final year. | |
(2) Subject to subsections (3) and (4)— | |
(a) corporation tax shall be charged on the profits of the | |
company arising in the administration in its final year at the | |
rate of corporation tax fixed or proposed for the penultimate | 20 |
year, but | |
(b) where the corporation tax charged on the company’s income | |
included in those profits falls to be calculated or reduced in | |
accordance with section 13, it shall be so calculated or | |
reduced in accordance with such rate or fraction fixed or | 25 |
proposed for the penultimate year as is applicable under that | |
section. | |
(3) If, before the relevant event, any of the rates or fractions mentioned | |
in subsection (2) has been fixed or proposed for the final year, that | |
subsection shall have effect in relation to that rate or fraction as if for | 30 |
the references to the penultimate year there were substituted | |
references to the final year. | |
(4) If, in the case of the company’s final accounting period, the income | |
(if any) which consists of interest received or receivable by the | |
company under section 826 does not exceed £2,000, that income shall | 35 |
not be subject to corporation tax. | |
(5) In subsection (4) “the company’s final accounting period” means the | |
last accounting period of the company before the relevant event. | |
(6) An assessment on the company’s profits for an accounting period in | |
which the company is in administration shall not be invalid because | 40 |
made before the end of the accounting period. | |
(7) In making an assessment after the company enters administration | |
and before the date of the relevant event, the administrator may act | |
on an assumption as to when that date will fall so far as it governs | |
section 12(3). | 45 |
(8) The assumption of the wrong date shall not alter the company’s final | |
and penultimate year and, if the right date is later— | |
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(a) an accounting period shall end on the date assumed and a | |
new accounting period shall begin, and | |
(b) thereafter, section 12(3) shall apply as if the company had | |
entered administration at the beginning of that new | |
accounting period. | 5 |
(9) Subsections (7) and (9) of section 342 apply in relation to this section | |
as they apply in relation to that section, except that in subsection (7) | |
of that section the reference to the completion of the winding up is to | |
be read as a reference to the relevant event. | |
(10) Where the company entered administration before its final year, | 10 |
paragraphs (a) and (b) of subsection (2) (but not subsection (3)) apply | |
in relation to the company’s profits arising at any time in its | |
penultimate year.”. | |
Debit for bad debt where parties connected and creditor insolvent | |
4 (1) Paragraph 6A of Schedule 9 to the Finance Act 1996 (c. 8) (bad debt etc: | 15 |
parties having connection and creditor in insolvent liquidation etc) is | |
amended as follows. | |
(2) In sub-paragraph (1)— | |
(a) in paragraph (a), for “has gone into” substitute “is in”, | |
(b) for paragraph (b) substitute— | 20 |
“(b) that company is in insolvent administration;”, and | |
(c) in paragraph (d), for “an event has occurred, or circumstances exist,” | |
substitute “circumstances exist”. | |
(3) In sub-paragraph (2)— | |
(a) in paragraph (a) for “after the commencement” substitute “in the | 25 |
course”, and | |
(b) in paragraph (b) for “when the administration order is in force” | |
substitute “in the course of the administration”. | |
(4) For sub-paragraph (3) substitute— | |
“(3) For the purposes of this paragraph a company is in insolvent | 30 |
liquidation during the period which— | |
(a) begins when it goes into liquidation, as defined in section | |
247(2) of the Insolvency Act 1986 or Article 6(2) of the | |
Insolvency (Northern Ireland) Order 1989, at a time when | |
its assets are insufficient for the payment of its debts and | 35 |
other liabilities and the expenses of the winding up, and | |
(b) ends when the winding up is completed or otherwise | |
brought to an end (whether under paragraph 37 or 38 of | |
Schedule B1 to the Insolvency Act 1986 or otherwise). | |
(4) For the purposes of this paragraph a company in administration is | 40 |
in insolvent administration if— | |
(a) in the case of an administration under Schedule B1 to the | |
Insolvency Act 1986, it entered administration at a time | |
when its assets were insufficient for the payment of its | |
debts and other liabilities and the expenses of the | 45 |
administration, or | |
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(b) in a case where an administration order has effect under | |
Part 3 of the Insolvency (Northern Ireland) Order 1989, the | |
order was made at such a time.”. | |
Commencement | |
5 (1) Subject to sub-paragraph (2), this Schedule has effect in relation to | 5 |
companies which enter administration (whether under the Insolvency Act | |
1986 (c. 45) or otherwise) on or after the commencement of section 248 of the | |
Enterprise Act 2002 (c. 40) (which substitutes Part 2 of the Insolvency Act | |
1986 (administration)). | |
(2) Paragraph 4 has effect in relation to companies which— | 10 |
(a) are in insolvent liquidation or insolvent administration immediately | |
before 9th April 2003, or | |
(b) go into insolvent liquidation or insolvent administration on or after | |
that date. | |
For this purpose “insolvent liquidation” and “insolvent administration” are | 15 |
to be construed in accordance with paragraph 6A of Schedule 9 to the | |
Finance Act 1996 (c. 8) (as amended by paragraph 4 above). | |
Schedule 42 | |
Section 197 | |
Controlled foreign companies: exempt activities | |
Introductory | 20 |
1 Part 2 of Schedule 25 to the Taxes Act 1988 (controlled foreign companies: | |
exempt activities) is amended as follows. | |
Companies engaged in wholesale, distributive, financial or service business | |
2 (1) Paragraph 6 (meaning of “engaged in exempt activities”) is amended as | |
follows. | 25 |
(2) In sub-paragraph (1)(c) (requirement that any of sub-paragraphs (2) to (4A) | |
applies to the company) for “(2) to (4A)” substitute “(2), (3), (4) or (4A)”. | |
(3) In sub-paragraph (2A) (persons from whom less than 50% of the gross | |
trading receipts of a wholesale etc business of the controlled foreign | |
company must be derived) omit the word “and” immediately preceding | 30 |
paragraph (c) and at the end of that paragraph add— “; | |
(d) persons not falling within paragraphs (a) to (c) above which | |
are companies resident in the United Kingdom; | |
(e) persons not falling within paragraphs (a) to (c) above which | |
are companies not resident in the United Kingdom which | 35 |
carry on business through a branch or agency in the United | |
Kingdom; | |
(f) persons not falling within paragraphs (a) to (c) above who are | |
individuals habitually resident in the United Kingdom; | |
but where the company is a controlled foreign company falling | 40 |
within sub-paragraph (2B) below, paragraphs (d) to (f) above shall be | |
disregarded”. | |
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(4) After sub-paragraph (2A) insert— | |
“(2B) A controlled foreign company falls within this sub-paragraph if | |
either— | |
(a) its main business is the effecting or carrying out of | |
contracts of long-term insurance, other than protection | 5 |
business; or | |
(b) it is a member of an insurance group and its main business | |
is insuring or reinsuring large risks. | |
Paragraph 11A below has effect for the interpretation of this sub- | |
paragraph. | 10 |
(2C) For the purposes of sub-paragraph (2)(b) above, a company’s | |
gross trading receipts from a business shall be regarded as directly | |
or indirectly derived from a person falling within sub-paragraph | |
(2A)(e) above only to the extent that they are derived directly or | |
indirectly from contracts or other arrangements relating to that | 15 |
person’s branch or agency in the United Kingdom.”. | |
(5) In sub-paragraph (4C) (which defines for the purposes of sub-paragraph | |
(2)(b) a “25 per cent assessable interest”, an expression not used in sub- | |
paragraph (2)(b) but used in sub-paragraph (2A)(b)) for “(2)(b)” substitute | |
“(2A)(b)”. | 20 |
Companies engaged in business of banking etc | |
3 (1) Paragraph 11 (provisions relating to wholesale, distributive, financial or | |
service business) is amended as follows. | |
(2) In sub-paragraph (3) (controlled foreign company engaged in business of | |
banking etc) for paragraph (a) (interest from UK company not to be regarded | 25 |
as receipt derived from connected or associated persons) substitute— | |
“(a) no payment of interest received from a company resident in | |
the United Kingdom which is connected or associated with | |
the controlled foreign company shall be regarded for the | |
purposes of paragraph 6(2)(b) above as a receipt derived | 30 |
directly or indirectly from a person falling within paragraph | |
6(2A) above, but”. | |
(3) At the end of paragraph (b) of that sub-paragraph (the capitalisation test) | |
add “, and | |
(c) it shall also be conclusively presumed that the condition in | 35 |
paragraph 6(2)(b) is not fulfilled if 10% or more of the | |
company’s gross trading receipts from all businesses carried | |
on by it in the accounting period in question, taken together, | |
are receipts other than interest and are directly or indirectly | |
derived from persons— | 40 |
(i) which are companies resident in the United | |
Kingdom, | |
(ii) which are companies not resident in the United | |
Kingdom but which carry on business through a | |
branch or agency in the United Kingdom, or | 45 |
(iii) who are individuals habitually resident in the United | |
Kingdom, | |
but for this purpose a company’s gross trading receipts shall | |
be regarded as directly or indirectly derived from a person | |
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