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Finance Bill
Schedule 26 — Offshore funds

414

 

14    (1)  

In Schedule 27 to the Taxes Act 1988 (distributing funds), Part 2

(modifications of conditions for certification in certain cases) is amended as

follows.

      (2)  

In paragraph 6—

(a)   

in sub-paragraph (1)(b) for the words from the beginning to “section

5

760” substitute “those interests are such that, by virtue of section

760(3)(a)”;

(b)   

in the words following paragraph (c) of sub-paragraph (1), for

“section 760(3)(a) to (c)” substitute “section 760(3)(a)”;

(c)   

in sub-paragraph (3)(a) for “section 760(3)(a) to (c)” substitute

10

“section 760(3)(a)”.

      (3)  

In paragraph 7 for “section 760(3)(a) to (c)” (in both places) substitute

“section 760(3)(a)”.

      (4)  

Omit paragraph 10.

      (5)  

In paragraph 11—

15

(a)   

in sub-paragraphs (1) and (4), omit “section 760(3) and”, and

(b)   

in sub-paragraph (1) for “sub-paragraph (3)” substitute “sub-

paragraph (4)”.

      (6)  

Omit paragraphs 12 and 13.

      (7)  

In paragraph 14, for “any of the conditions in paragraphs (a) to (c) of section

20

760(3)” substitute “the condition in section 760(3)(a)”.

      (8)  

In paragraph 16(1), omit “by a trustee or officer thereof”.

Exchange of interests of different classes

15    (1)  

After section 762 of the Taxes Act 1988 insert—

“762A   Exchange of interests of different classes

25

(1)   

This section applies where—

(a)   

classes of interest in an offshore fund (the “main fund”) are

treated as separate offshore funds under section 756C; and

(b)   

as the result of—

(i)   

a reorganisation within the meaning of section 126 of

30

the 1992 Act, or

(ii)   

a conversion of securities within the meaning of

section 132 of that Act,

   

a person exchanges an interest of one class (A) in the main

fund for an interest of another class (B) in that fund.

35

(2)   

Where—

(a)   

the interest of class A—

(i)   

is at the time of the exchange an interest in a non-

qualifying offshore fund, or

(ii)   

has been an interest in such a fund at any material

40

time, and

(b)   

the interest of class B is at the time of the exchange an interest

in a fund which is certified by the Board as a distributing

offshore fund,

 

 

Finance Bill
Schedule 26 — Offshore funds

415

 

   

section 127 of the 1992 Act (equation of original shares and new

holding) shall not prevent the exchange constituting a disposal for

the purposes of this Chapter.

(3)   

Any such disposal shall be treated as a disposal for a consideration

equal to the market value of the rights at the time of the exchange.

5

(4)   

In this section—

   

“class of interest” has the same meaning as in section 756C(1);

   

“material time” has the same meaning as in section 757.”.

      (2)  

In section 763 of the Taxes Act 1988 (deduction of offshore income gain in

determining capital gain), after subsection (6) insert—

10

“(6A)   

Where the disposal to which this Chapter applies constitutes such a

disposal by virtue of section 762A (exchange of interests of different

classes), the 1992 Act shall have effect as if an amount equal to the

offshore income gain to which that disposal gives rise were given (by

the person making the exchange) as consideration for the new

15

holding (within the meaning of section 128 of that Act (consideration

given or received for new holding on a reorganisation)).”

Correction of cross-reference

16    (1)  

In section 763(6) of the Taxes Act 1988 (offshore income gain treated as

consideration given on certain disposals), for “section 757(6)” substitute

20

“section 757(5) or (6)”.

      (2)  

Sub-paragraph (1) has effect, and shall be deemed always to have had effect,

in relation to disposals on or after 17th April 2002.

Transitional provision

17    (1)  

This paragraph applies for the purposes of determining whether an offshore

25

fund that is—

(a)   

a part of an umbrella fund (which is treated as an offshore fund

under section 756B of that Act), or

(b)   

a class of interest in a part of an umbrella fund (which is treated as an

offshore fund under section 756C of that Act),

30

           

may be certified as a distributing fund under Chapter 5 of Part 17 of the

Taxes Act 1988 in respect of an account period ending on or after the day on

which this Act is passed and on or before 31st December 2005.

      (2)  

Where this paragraph applies—

(a)   

subsection (3) of section 760 of the Taxes Act 1988 shall not have

35

effect, and

(b)   

the fund shall not be certified as a distributing fund in respect of a

period if at any time in that period—

(i)   

more than 5 per cent by value of the assets of that offshore

fund consists of interests in other offshore funds, and

40

(ii)   

more than 5 per cent by value of the assets of the umbrella

fund consists of interests in other offshore funds.

      (3)  

Where this paragraph applies, references to subsection (3) of section 760 of

the Taxes Act 1988 shall have effect as references to sub-paragraph (2)(b)

above.

45

 

 

Finance Bill
Schedule 27 — Meaning of “offshore installation”
Part 1 — The new definition

416

 

      (4)  

Words used in Chapter 5 of Part 17 of the Taxes Act 1988 have the same

meaning in this paragraph as they have in that Chapter.

Schedule 27

Section 136

 

Meaning of “offshore installation”

Part 1

5

The new definition

1          

In Part 19 of the Taxes Act 1988 (supplemental provisions), after section 837B

insert—

“837C Meaning of “offshore installation”

(1)   

For the purposes of the Tax Acts, unless the context otherwise

10

requires, “offshore installation” means a structure which is, is to be,

or has been, put to a use specified in subsection (2) while—

(a)   

standing in any waters,

(b)   

stationed (by whatever means) in any waters, or

(c)   

standing on the foreshore or other land intermittently

15

covered with water.

(2)   

The uses are—

(a)   

use for the purposes of exploiting mineral resources by

means of a well;

(b)   

use for the purposes of exploration with a view to exploiting

20

mineral resources by means of a well;

(c)   

use for the storage of gas in or under the shore or the bed of

any waters;

(d)   

use for the recovery of gas so stored;

(e)   

use for the conveyance of things by means of a pipe;

25

(f)   

use mainly for the provision of accommodation for persons

who work on or from a structure which is, is to be, or has

been, put to a use specified in any of paragraphs (a) to (e)

while—

(i)   

standing in any waters,

30

(ii)   

stationed (by whatever means) in any waters, or

(iii)   

standing on the foreshore or other land intermittently

covered with water.

(3)   

But a structure is not an offshore installation if—

(a)   

it has ceased permanently to be put to a use specified in

35

subsection (2),

(b)   

it is not, and is not to be, put to any other use specified in

subsection (2), and

(c)   

since ceasing permanently to be put to a use specified in

subsection (2) it has been put to a use which is not so

40

specified.

(4)   

In this section “structure” includes a ship or other vessel.

 

 

Finance Bill
Schedule 27 — Meaning of “offshore installation”
Part 2 — Minor and consequential amendments

417

 

(5)   

The Treasury may make provision by regulations as to the meaning

of “offshore installation” for the purposes of the Tax Acts.

(6)   

The regulations may—

(a)   

add to, amend or repeal subsections (1) to (4) or any

provision of those subsections;

5

(b)   

make different provision for different purposes;

(c)   

include incidental, consequential, supplemental, saving or

transitional provisions.”

2          

In section 832(1) of the Taxes Act 1988 (interpretation of the Tax Acts) at the

appropriate place insert—

10

           

““offshore installation” has the meaning given by section 837C;”.

3          

Subject to the following provisions of this Schedule, paragraphs 1 and 2 have

effect—

(a)   

for the purposes of income tax and capital gains tax, for the year

2004-05 and subsequent years of assessment;

15

(b)   

for the purposes of corporation tax, for accounting periods ending on

or after 1st April 2004.

Part 2

Minor and consequential amendments

The Taxes Act 1988

20

4     (1)  

Chapter 3 of Part 7 of the Taxes Act 1988 (enterprise investment scheme) is

amended as set out in sub-paragraphs (2) to (4).

      (2)  

In section 293 (qualifying companies), in subsection (3C)(b) for “oil rigs”

substitute “offshore installations”.

      (3)  

In section 297 (qualifying trades), in subsection (6) for “oil rigs” substitute

25

“offshore installations”.

      (4)  

In section 298 (provisions supplementary to sections 293 and 297), in

subsection (5) omit the definition of “oil rig”.

      (5)  

This paragraph has effect in relation to shares issued on or after 6th April

2004.

30

      (6)  

Nothing in this paragraph affects the operation of any of the following

provisions in relation to shares issued before that date—

(a)   

Chapter 3 of Part 7 of the Taxes Act 1988 (enterprise investment

scheme);

(b)   

sections 573 and 574 of that Act (relief for losses on unlisted shares in

35

trading companies);

(c)   

Schedule 5B to the Taxation of Chargeable Gains Act 1992 (c. 12)

(enterprise investment scheme: re-investment).

5     (1)  

Schedule 28B to the Taxes Act 1988 (venture capital trusts) is amended as set

out in sub-paragraphs (2) to (4).

40

      (2)  

In paragraph 3 (requirements as to company’s business), in sub-paragraph

(8)(b) for “oil rigs” substitute “offshore installations”.

      (3)  

In paragraph 4 (qualifying trades), in sub-paragraph (7) for “oil rigs”

substitute “offshore installations”.

 

 

Finance Bill
Schedule 27 — Meaning of “offshore installation”
Part 2 — Minor and consequential amendments

418

 

      (4)  

In paragraph 5 (provisions supplemental to paragraph 4), in sub-paragraph

(1) omit the definition of “oil rig”.

      (5)  

This paragraph has effect for the purpose of determining whether shares or

securities issued on or after 6th April 2004 are, for the purposes of section

842AA of the Taxes Act 1988, to be regarded as comprised in a company’s

5

qualifying holdings.

      (6)  

Nothing in this paragraph affects the operation of Schedule 28B to the Taxes

Act 1988 as it has effect for the purpose of determining whether shares or

securities issued before that date are, for the purposes of section 842AA of

the Taxes Act 1988, to be regarded as comprised in a company’s qualifying

10

holdings.

Finance Act 2000 (c. 17)

6     (1)  

Schedule 15 to the Finance Act 2000 (the corporate venturing scheme) is

amended as set out in sub-paragraphs (2) to (4).

      (2)  

In paragraph 23 (the trading activities requirement), in sub-paragraph

15

(8)(a)(i) for “oil rigs” substitute “offshore installations”.

      (3)  

In paragraph 28 (excluded activities: leasing of ships), in sub-paragraph (1)

for “oil rigs” substitute “offshore installations”.

      (4)  

In paragraph 28(6) omit the definition of “oil rig”.

      (5)  

This paragraph has effect in relation to shares issued on or after 6th April

20

2004.

      (6)  

Nothing in this paragraph affects the operation of Schedule 15 to the Finance

Act 2000 in relation to shares issued before that date.

7     (1)  

In Schedule 22 to the Finance Act 2000 (tonnage tax), in paragraph 20

(vessels excluded from being qualifying ships) omit sub-paragraph (5).

25

      (2)  

This paragraph has effect for accounting periods ending on or after 1st April

2004.

Capital Allowances Act 2001 (c. 2)

8          

In section 94 of the Capital Allowances Act 2001 (expenditure on ships that

is not long-life asset expenditure) omit subsections (2)(b) and (3).

30

9     (1)  

Section 153 of the Capital Allowances Act 2001 (ships that are not qualifying

ships) is amended as follows.

      (2)  

For subsection (2) substitute—

“(2)   

A ship is not a qualifying ship at any time when it is an offshore

installation.”

35

      (3)  

Omit subsection (3).

10         

In Part 2 of Schedule 1 to the Capital Allowances Act 2001 (index of defined

expressions) at the appropriate place insert—

 

“offshore installation

section 837C of ICTA”

 
 

(except in Chapter 13 of

  

40

 

Part 2)

  
 

 

Finance Bill
Schedule 27 — Meaning of “offshore installation”
Part 2 — Minor and consequential amendments

419

 

11    (1)  

Paragraphs 8 to 10 have effect—

(a)   

for income tax purposes, as respects allowances and charges falling

to be made for chargeable periods ending on or after 6th April 2004;

(b)   

for corporation tax purposes, as respects allowances and charges

falling to be made for chargeable periods ending on or after 1st April

5

2004.

      (2)  

In this paragraph “chargeable period” has the meaning given by section 6 of

the Capital Allowances Act 2001.

Income Tax (Earnings and Pensions) Act 2003 (c. 1)

12         

In section 40 of the Income Tax (Earnings and Pensions) Act 2003 (duties on

10

board vessel or aircraft), in subsection (5) for paragraph (b) (meaning of

ship) substitute—

“(b)   

“ship” does not include an offshore installation;”.

13         

In section 305 of the Income Tax (Earnings and Pensions) Act 2003 (offshore

oil and gas workers: mainland transfers), in subsection (6) omit the

15

definition of “offshore installation”.

14         

For section 385 of the Income Tax (Earnings and Pensions) Act 2003

substitute—

“385 Meaning of “ship”

In this Chapter “ship” does not include an offshore installation.”

20

15         

In Part 2 of Schedule 1 to the Income Tax (Earnings and Pensions) Act 2003

(index of defined expressions) at the appropriate place insert—

 

“offshore installation

section 837C of ICTA”

 

16         

Paragraphs 12 to 15 have effect for the year 2004-05 and subsequent years of

assessment.

25

17    (1)  

Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (enterprise

management incentives) is amended as follows.

      (2)  

In paragraph 18 (excluded activities: leasing of certain ships), in sub-

paragraph (1) for “oil rigs” substitute “offshore installations”.

      (3)  

In paragraph 18(2) for “oil rig” substitute “offshore installation”.

30

      (4)  

In paragraph 18(8) omit the definition of “oil rig”.

      (5)  

In paragraph 59 (index of defined expressions) at the appropriate place

insert—

 

“offshore installation

section 837C of ICTA”

 

      (6)  

This paragraph has effect in relation to a right to acquire shares in a company

35

granted on or after 6th April 2004.

      (7)  

Nothing in this paragraph affects the operation of Schedule 5 to the Income

Tax (Earnings and Pensions) Act 2003 in relation to a right to acquire shares

in a company granted before that date.

 

 

 
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