House of Commons portcullis
House of Commons
Session 2003 - 04
Internet Publications
Other Bills before Parliament

Finance Bill


Finance Bill
Schedule 19 — Venture capital trusts
Part 3 — Miscellaneous

372

 

(a)   

by the partners in a partnership of which the

relevant company, or a relevant qualifying

subsidiary of that company, is a member, or

(b)   

by the parties to a joint venture to which the

relevant company, or a relevant qualifying

5

subsidiary of that company, is a party.

    (2AF)  

The requirements of this paragraph are not to be regarded,

by virtue of sub-paragraph (2AB) above, as failing to be

satisfied if—

(a)   

by reason only of anything done as a consequence

10

of the relevant company or any other company

being in administration or receivership, or

(b)   

by reason only of the relevant company or any

other company being wound up or dissolved

without winding up,

15

           

the trade mentioned in sub-paragraph (2AB)(a) above

ceases to be carried on by the relevant company or a

relevant qualifying subsidiary of that company and is

subsequently carried on by a person who has not been

connected, at any time after the date which is one year

20

before the issue of the relevant holding, with the relevant

company.

    (2AG)  

Sub-paragraph (2AF) above applies only if (as the case

may be)—

(a)   

the entry into administration or receivership and

25

everything done as a consequence of the company

concerned being in administration or receivership,

or

(b)   

the winding up or dissolution,

           

is for bona fide commercial reasons and is not part of a

30

scheme or arrangement the main purpose of which or one

of the main purposes of which is the avoidance of tax.

    (2AH)  

Sub-paragraph (2) of paragraph 11A below applies for the

purposes of sub-paragraphs (2AF) and (2AG) above as it

applies for the purpose of that paragraph.”,

35

(d)   

omit sub-paragraph (5).

12         

In paragraph 10 (meaning of “qualifying subsidiary”)—

(a)   

omit sub-paragraph (3)(a) to (c),

(b)   

before sub-paragraph (3)(d) insert—

“(ca)   

the subsidiary is a 51 per cent. subsidiary of the

40

relevant company;”,

(c)   

in sub-paragraph (3)(e), for “the relevant company could cease to fall

within this sub-paragraph” substitute “either of the conditions in

paragraphs (ca) and (d) above would cease to be met”,

(d)   

in sub-paragraph (4)—

45

(i)   

after “time when it” insert “or any other company”,

(ii)   

omit “it is shown”,

(iii)   

omit the first “that” in paragraph (a),

(iv)   

omit “that” in paragraph (b),

(v)   

for “and not” substitute “and is not”,

50

 

 

Finance Bill
Schedule 19 — Venture capital trusts
Part 3 — Miscellaneous

373

 

(e)   

after sub-paragraph (4) insert—

    “(4A)  

Sub-paragraph (4B) below applies at a time when the

subsidiary or any other company is in administration or

receivership.

     (4B)  

The subsidiary shall not be regarded, by reason only of

5

anything done as a consequence of the company

concerned being in administration or receivership, as

having ceased to be a company falling within sub-

paragraph (3) above if—

(a)   

the entry into administration or receivership, and

10

(b)   

everything done as a consequence of the company

concerned being in administration or receivership,

           

is for bona fide commercial reasons and is not part of a

scheme or arrangement the main purpose of which or one

of the main purposes of which is the avoidance of tax.

15

     (4C)  

Sub-paragraph (2) of paragraph 11A below applies for the

purposes of sub-paragraphs (4A) and (4B) above as it

applies for the purpose of that paragraph.”,

(f)   

in sub-paragraph (5)—

(i)   

omit the words “it is shown that”,

20

(ii)   

for “and not” substitute “and is not to be”,

(g)   

omit sub-paragraph (6).

13         

After paragraph 10 insert—

“Requirement as to property managing subsidiaries

10ZA  (1)  

The requirement of this paragraph is that the relevant company

25

must not have a property managing subsidiary which is not a

relevant qualifying subsidiary of the relevant company.

      (2)  

“Property managing subsidiary” means a qualifying subsidiary of

the relevant company whose business consists wholly or mainly in

the holding or managing of land or any property deriving its value

30

from land.

      (3)  

In sub-paragraph (2) above, “land” and “property deriving its

value from land” have the same meaning as in section 776.”.

14         

In paragraph 11 (winding up of the relevant company)—

(a)   

omit “it is shown”,

35

(b)   

omit the first “that” in paragraph (a),

(c)   

omit “that” in paragraph (b),

(d)   

in paragraph (b), for “and not” substitute “and is not”.

15         

In paragraph 11A (company in administration or receivership) in sub-

paragraph (1), after “by reason” insert “only”.

40

16         

The amendments made by this Part have effect for the purpose of

determining whether shares or securities issued on or after 17th March 2004

are, for the purposes of section 842AA of the Taxes Act 1988, to be regarded

as comprised in a company’s qualifying holdings.

 

 

Finance Bill
Schedule 20 — Corporate venturing scheme

374

 

Schedule 20

Section 90

 

Corporate venturing scheme

1          

Schedule 15 to the Finance Act 2000 (c. 17) (the corporate venturing scheme)

is amended as follows.

2          

In paragraph 3 (meaning of “the qualification period”)—

5

(a)   

in sub-paragraph (1)(b)(ii), and

(b)   

in sub-paragraph (2)(a) and (b),

           

for “qualifying subsidiaries” substitute “qualifying 90% subsidiaries”.

3          

In paragraph 15 (introduction) after paragraph (e) insert—

“(ea)   

property managing subsidiaries (see paragraph 21A);”.

10

4          

In paragraph 20 (the qualifying subsidiaries requirement) for sub-paragraph

(2) substitute—

     “(2)  

In this paragraph “subsidiary” means any company which the

company controls, either on its own or together with any person

connected with it.

15

      (3)  

For the purpose of sub-paragraph (2), the question whether a

person controls a company shall be determined in accordance

with section 416(2) to (6) of the Taxes Act 1988.”.

5     (1)  

Paragraph 21 (meaning of “qualifying subsidiary”) is amended as follows.

      (2)  

In sub-paragraph (2)—

20

(a)   

omit paragraphs (a) to (c),

(b)   

before paragraph (d) insert—

“(ca)   

the subsidiary is a 51% subsidiary of the relevant

company;”,

(c)   

in paragraph (e) for “the conditions in paragraphs (a) to” substitute

25

“either of the conditions in paragraphs (ca) and”.

      (3)  

In sub-paragraph (4)(a)(ii), after “company” insert “concerned”.

      (4)  

In sub-paragraph (5)—

(a)   

after “qualifying subsidiary” insert “of the relevant company”,

(b)   

for “and not part” substitute “and is not to be part”.

30

6          

After paragraph 21 insert—

“The property managing subsidiaries requirement

21A   (1)  

The issuing company is not a qualifying issuing company in

relation to the relevant shares if, at any time during the

qualification period relating to those shares, it has a property

35

managing subsidiary which is not a qualifying 90% subsidiary of

the issuing company (see paragraph 23(10) and (11)).

      (2)  

“Property managing subsidiary” means a qualifying subsidiary of

the issuing company whose business consists wholly or mainly in

the holding or managing of land or any property deriving its value

40

from land.

 

 

Finance Bill
Schedule 20 — Corporate venturing scheme

375

 

      (3)  

In sub-paragraph (2), “land” and “property deriving its value from

land” have the same meaning as in section 776 of the Taxes Act

1988.”.

7          

In paragraph 23 (the trading activities requirement)—

(a)   

in sub-paragraph (3)(b), for “at least one group company” substitute

5

“the issuing company or a qualifying 90% subsidiary of the issuing

company”,

(b)   

in sub-paragraph (5)—

(i)   

for “a subsidiary” substitute “a qualifying 90% subsidiary of

the issuing company”,

10

(ii)   

for “or subsidiary” substitute “or a qualifying 90% subsidiary

of the issuing company”,

(c)   

in sub-paragraph (6), for “the company”, in the first place, substitute

“a company”,

(d)   

after sub-paragraph (9) insert—

15

    “(10)  

For the purposes of this Schedule, a company (“the

subsidiary”) is a qualifying 90% subsidiary of the issuing

company if the following conditions are met—

(a)   

the issuing company possesses not less than 90% of

the issued share capital of, and not less than 90% of

20

the voting power in, the subsidiary;

(b)   

the issuing company would—

(i)   

in the event of a winding up of the

subsidiary, or

(ii)   

in any other circumstances,

25

   

be beneficially entitled to receive not less than 90%

of the assets of the subsidiary which would then be

available for distribution to the shareholders of the

subsidiary;

(c)   

the issuing company is beneficially entitled to not

30

less than 90% of any profits of the subsidiary which

are available for distribution to the shareholders of

the subsidiary;

(d)   

no person other than the issuing company has

control of the subsidiary within the meaning of

35

section 840 of the Taxes Act 1988; and

(e)   

no arrangements are in existence by virtue of which

any of the conditions in paragraphs (a) to (d) would

cease to be met.

     (11)  

For the purposes of sub-paragraph (10)—

40

(a)   

sub-paragraphs (3) and (4) of paragraph 21 apply

in relation to the conditions in sub-paragraph (10)

as they apply in relation to the conditions in

paragraph 21(2), and

(b)   

the subsidiary shall not be regarded, at any time

45

when arrangements are in existence for the

disposal by the issuing company of all its interest in

the subsidiary, as having ceased on that account to

be a qualifying 90% subsidiary of the issuing

company if the disposal is to be for commercial

50

reasons and is not to be part of a scheme or

 

 

Finance Bill
Schedule 20 — Corporate venturing scheme

376

 

arrangement the main purpose of which, or one of

the main purposes of which, is the avoidance of

tax.”.

8          

In paragraph 24 (ceasing to meet trading requirements by reason of

administration, receivership etc)—

5

(a)   

in sub-paragraph (1)—

(i)   

omit “which is in administration or receivership”,

(ii)   

after “by reason” insert “only”,

(b)   

in sub-paragraph (2)(b), after “company” insert “concerned”,

(c)   

in sub-paragraph (4)—

10

(i)   

in paragraph (a), for “of the company or any of its

subsidiaries” substitute “only of the company or any of its

qualifying subsidiaries”,

(ii)   

in paragraph (b), for “and not” substitute “and is not”.

9          

In paragraph 25 (meaning of “qualifying trade”) in sub-paragraph (3)(b), for

15

“any other group company” substitute “the issuing company or any of its

qualifying 90% subsidiaries”.

10         

In paragraph 35 (requirement as to the shares) in sub-paragraph (2), for “the

issuing company at a future date” substitute “any person at a future date in

respect of the acquisition of the shares”.

20

11         

In paragraph 36 (requirement as to money raised)—

(a)   

in sub-paragraph (1B)(b)—

(i)   

for “relevant trade was not being carried on” substitute

“issuing company or a qualifying 90% subsidiary of that

company had not begun to carry on the relevant trade”,

25

(ii)   

for “subsidiary” substitute “qualifying 90% subsidiary of that

company”,

(b)   

in sub-paragraphs (4)(b)(ii) and (5)(b), for “qualifying subsidiary”

substitute “qualifying 90% subsidiary”.

12         

In paragraph 40 (entitlement to claim)—

30

(a)   

in sub-paragraph (2), for paragraph (a) substitute—

“(a)   

the funded trade has been carried on for four

months by no person other than the issuing

company or a qualifying 90% subsidiary of that

company, disregarding—

35

(i)   

any time spent preparing to carry on that

trade, and

(ii)   

any person required to be disregarded in

accordance with sub-paragraph (2A) or

(2B), and”,

40

(b)   

after sub-paragraph (2) insert—

    “(2A)  

At any time when the funded trade is carried on by the

partners in a partnership of which the issuing company, or

a qualifying 90% subsidiary of that company, is a member,

there shall be disregarded for the purposes of sub-

45

paragraph (2)(a) any other members of the partnership at

that time.

 

 

Finance Bill
Schedule 21 — Chargeable gains: restriction of gifts relief etc

377

 

     (2B)  

At any time when the funded trade is carried on by the

parties to a joint venture to which the issuing company, or

a qualifying 90% subsidiary of that company, is a party,

there shall be disregarded for the purposes of sub-

paragraph (2)(a) any other parties to the joint venture at

5

that time.”,

(c)   

for sub-paragraph (5)(a) substitute—

“(a)   

by reason only of the issuing company or any other

company being wound up or dissolved without

winding up, the funded trade is carried on as

10

mentioned in sub-paragraph (2)(a) for a period

shorter than four months, and”,

(d)   

in sub-paragraph (5)(b), for “was”, in each place, substitute “is”,

(e)   

for sub-paragraph (6)(a) substitute—

“(a)   

by reason only of anything done as a consequence

15

of the issuing company or any other company

being in administration or receivership, the funded

trade is carried on as mentioned in sub-paragraph

(2)(a) for a period shorter than four months, and”,

(f)   

in sub-paragraph (6)(b), after “company” insert “concerned”.

20

13         

In paragraph 102 (minor definitions etc) after sub-paragraph (7) insert—

     “(8)  

In determining for the purposes of paragraph 3(2), 23(5) or 36(1B)

when a trade is begun to be carried on by a qualifying 90%

subsidiary of the issuing company there shall be disregarded any

carrying on of the trade by it before it became such a subsidiary.”.

25

14         

In paragraph 103 (index of defined expressions), after the entry for

“qualifying subsidiary” insert—

 

“qualifying 90% subsidiary

paragraph 23(10) and (11)”.

 

15         

The amendments made by this Schedule have effect in relation to shares

issued on or after 17th March 2004.

30

Schedule 21

Section 111

 

Chargeable gains: restriction of gifts relief etc

Penalties for failure to furnish particulars etc

1     (1)  

Section 98 of the Taxes Management Act 1970 (c. 9) is amended as follows.

      (2)  

In the first column of the Table, insert at the appropriate place—

35

“Section 169G(2) of the 1992 Act.”.

Charge on settlor with interest in settlement etc: supplementary provisions

2     (1)  

Section 79 of the Taxation of Chargeable Gains Act 1992 (c. 12) is amended

as follows.

 

 

Finance Bill
Schedule 21 — Chargeable gains: restriction of gifts relief etc

378

 

      (2)  

After subsection (5) insert—

“(5A)   

In subsection (5) above “arrangements” includes any scheme,

agreement or understanding, whether or not legally enforceable.”.

      (3)  

In subsection (6) (power of inspector to require information for purposes of

sections 77, 78 and 79) for “inspector” substitute “officer of the Board”.

5

Relief for gifts of business assets

3     (1)  

Section 165 of the Taxation of Chargeable Gains Act 1992 is amended as

follows.

      (2)  

In subsection (1) (circumstances in which subsection (4) applies, subject to

certain provisions) for “and 169” substitute “, 169, 169B and 169C”.

10

      (3)  

In subsection (3) (relief not to apply to disposal in certain cases) after

paragraph (b) insert—

“(ba)   

in the case of a disposal of shares or securities, the transferee

is a company,”.

      (4)  

In subsection (8) (definitions) for paragraph (aa) substitute—

15

“(aa)   

“holding company” has the meaning given by paragraph

22(1), “trading company” has the meaning given by

paragraph 22A, and “trading group” has the meaning given

by paragraph 22B, of Schedule A1; and”.

      (5)  

In subsection (10) (deduction to be allowed in computing chargeable gain on

20

subsequent disposal by transferee, where disposal by transferor is

chargeable transfer for inheritance tax purposes) for “after 13th March 1989,

in respect of which a claim is made under this section,” substitute “in

relation to which subsection (4) above applies”.

Gifts relief not to be available on certain transfers to settlor-interested settlements etc

25

4          

After section 169A of the Taxation of Chargeable Gains Act 1992 (c. 12)

insert—

“Gifts to settlor-interested settlements etc

169B    

Gifts to settlor-interested settlements etc

(1)   

Neither section 165(4) nor section 260(3) shall apply in relation to a

30

disposal (“the relevant disposal”)—

(a)   

made by a person (“the transferor”) to the trustees of a

settlement, and

(b)   

in respect of which Condition 1 or Condition 2 below is

satisfied.

35

(2)   

Condition 1 is that, immediately after the making of the relevant

disposal,—

(a)   

there is a settlor (see section 169E) who has an interest in the

settlement (see section 169F), or

(b)   

an arrangement (see section 169G) subsists under which such

40

an interest will or may be acquired by a settlor.

(3)   

Condition 2 is that—

 

 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2004
Revised 6 April 2004