(3) After that sub-paragraph insert—
“(3A) Arrangements are not repo or stock-lending arrangements if they
are excluded from section 730A of the Taxes Act 1988 by
subsection (8) of that section.”.
19 In paragraph 15(3)(b) of Schedule 9 to the Finance Act 1996 (repo
transactions not related transactions for purposes of loan relationship
provisions), omit “, or a person connected with him,”.
Correction of section 730A(6B) of the Taxes Act 1988
20 In section 730A(6B) of the Taxes Act 1988 (trading loan relationship debits
and credits falling to be brought into account under section 82(2))—
(a) for “section 82(2) above” substitute “section 82(2) of the Finance Act
(b) for “the Finance Act 1996” substitute “that Act”.
21 (1) Paragraph 1 has effect in relation to repurchase prices becoming due on or
after 9th April 2003.
(2) Paragraphs 2 to 19 have effect in relation to agreements to sell securities
made on or after 9th April 2003.
(3) Paragraph 20 has effect in relation to accounting periods beginning on or
after 1st October 2002.
Relevant discounted securities: withdrawal of relief for costs and losses, etc
Withdrawal of relief for incidental costs
1 (1) In Schedule 13 to the Finance Act 1996 (c. 8) (discounted securities: income
tax provisions), paragraph 1 (charge to tax on realised profit comprised in
discount) is amended as follows.
(2) In sub-paragraph (2) (meaning of “realising the profit” from the discount on
a relevant discounted security) at the end of paragraph (b) insert “(no
account being taken of any costs incurred in connection with the transfer or
redemption of the security or its acquisition)”.
(3) In sub-paragraph (3)(a) (calculation of profit) omit “reduced by the amount
of any relevant costs”.
(4) Omit sub-paragraph (4) (meaning of “relevant costs”).
Withdrawal of relief for losses
2 Omit paragraph 2 of that Schedule (income tax relief for losses on
Withdrawal of loss relief: exception for strips of government securities
3 After paragraph 14 of that Schedule (gilt strips) insert—
“Strips of government securities: losses
14A (1) A person who sustains a loss in any year of assessment from the
discount on a strip shall be entitled to relief from income tax on an
amount of his income for that year equal to the amount of the loss.
(2) The relief is due only if the person makes a claim before the end of
twelve months from the 31st January following that year.
(3) For the purposes of this paragraph a person sustains a loss from
the discount on a strip where—
(a) he transfers the strip or becomes entitled, as the person
holding it, to any payment on its redemption, and
(b) the amount paid by him for the strip exceeds the amount
payable on the transfer or redemption (no account being
taken of any costs incurred in connection with the transfer
or redemption of the strip or its acquisition).
The loss shall be taken to be equal to the amount of the excess, and
to be sustained in the year of assessment in which the transfer or
redemption takes place.
(4) In sub-paragraph (3) above the reference to a transfer in paragraph
(a) includes a reference to a deemed transfer under paragraph
14(4) above (and paragraph (b) shall be read accordingly).
(5) This paragraph does not apply in the case of—
(a) any transfer of a strip for the time being held under a
settlement the trustees of which are not resident in the
United Kingdom, or
(b) any redemption of a strip which is so held immediately
before its redemption.”.
Extension of provisions about strips to strips of foreign government securities
4 In the definition of “strip” in paragraph 15(1) of that Schedule, for “is a strip
of a gilt-edged security” substitute “is a strip of a security, or would be if that
section had effect with the substitution in subsection (1B) of “issued by or on
behalf of the government of any territory” for “issued under the National
Loans Act 1968””.
5 (1) In paragraph 6 of that Schedule (trustees and personal representatives)—
(a) in sub-paragraph (3) for “paragraphs 1(1) and 2(1) above do not
apply” substitute “paragraph 1(1) above does not apply”;
(b) omit sub-paragraphs (4) to (6).
(2) Omit the following provisions of that Schedule—
(a) paragraph 7 (treatment of losses where income exempt);
(b) paragraph 9A (securities issued to connected person etc at price in
excess of market value: transfer to connected person);
(c) paragraph 11 (accrued income scheme).
(3) In paragraph 14 of that Schedule (gilt strips)—
(a) for the heading substitute “Strips of government securities”;
(b) in sub-paragraphs (2) and (3), omit the words “gilt-edged”;
(c) in sub-paragraph (4), omit the words after paragraph (c).
(4) In section 710(3) of the Taxes Act 1988 (categories of security not included in
accrued income scheme) after paragraph (e) insert—
“(f) any relevant discounted security within the meaning of
Schedule 13 to the Finance Act 1996 (see paragraphs 3 and
14(1) of that Schedule).”.
Commencement and transitional provisions
6 (1) Subject to sub-paragraph (2)—
(a) the amendments made by paragraphs 1 and 5(3)(c) apply in relation
to costs incurred on or after 27th March 2003;
(b) the amendments made by paragraphs 2, 3 and 5(1), (2) and (4) apply
in relation to any loss sustained from the discount on a relevant
discounted security transferred or redeemed on or after that date;
(c) the amendments made by paragraphs 4 and 5(3)(a) and (b) apply in
relation to any security acquired on or after that date.
(2) The amendments mentioned in sub-paragraph (1)(a) and (b) do not apply in
relation to costs incurred, or losses sustained, on the transfer or redemption
of a relevant discounted security if—
(a) the person transferring or redeeming the security held it
continuously since a time before 27th March 2003, and
(b) the security was listed on a recognised stock exchange at any time
before that date.
(3) No losses may be carried forward under paragraph 6(6) of Schedule 13 to the
Finance Act 1996 (c. 8) to any year of assessment after 2002-03.
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
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).
(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
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
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
(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
shall be chargeable under this subsection with stamp duty of
(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—
“(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
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”)—
(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,
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
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)”.
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
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
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
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
clearance services etc),
Companies in administration
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.
(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
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—
“(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
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
(6) In subsection (7A) for “subsections (1) to (7)” substitute “subsections (1) to
Responsibility of officers of company in administration
2 (1) Section 108 of the Taxes Management Act 1970 (c. 9) (responsibility of
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,
(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
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
Tax on companies in administration
3 After section 342 of the Taxes Act 1988 (tax on company in liquidation)
“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—
(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
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
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
(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
proposed for the penultimate year as is applicable under that
(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
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
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
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
(8) The assumption of the wrong date shall not alter the company’s final
and penultimate year and, if the right date is later—
(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
(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,
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