|
| |
|
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”, |
| 5 |
(ii) | for “subsidiary” substitute “qualifying 90% subsidiary of that |
| |
| |
(b) | in sub-paragraphs (4)(b)(ii) and (5)(b), for “qualifying subsidiary” |
| |
substitute “qualifying 90% subsidiary”. |
| |
12 | In paragraph 40 (entitlement to claim)— |
| 10 |
(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 |
| |
| 15 |
(i) | any time spent preparing to carry on that |
| |
| |
(ii) | any person required to be disregarded in |
| |
accordance with sub-paragraph (2A) or |
| |
| 20 |
(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- |
| 25 |
paragraph (2)(a) any other members of the partnership at |
| |
| |
(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, |
| 30 |
there shall be disregarded for the purposes of sub- |
| |
paragraph (2)(a) any other parties to the joint venture at |
| |
| |
(c) | for sub-paragraph (5)(a) substitute— |
| |
“(a) | by reason only of the issuing company or any other |
| 35 |
company being wound up or dissolved without |
| |
winding up, the funded trade is carried on as |
| |
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”, |
| 40 |
(e) | for sub-paragraph (6)(a) substitute— |
| |
“(a) | by reason only of anything done as a consequence |
| |
of the issuing company or any other company |
| |
being in administration or receivership, the funded |
| |
trade is carried on as mentioned in sub-paragraph |
| 45 |
(2)(a) for a period shorter than four months, and”, |
| |
(f) | in sub-paragraph (6)(b), after “company” insert “concerned”. |
| |
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% |
| 50 |
|
| |
|
| |
|
subsidiary of the issuing company there shall be disregarded any |
| |
carrying on of the trade by it before it became such a subsidiary.”. |
| |
14 | In paragraph 103 (index of defined expressions), after the entry for |
| |
“qualifying subsidiary” insert— |
| |
| “qualifying 90% subsidiary |
| paragraph 23(10) and (11)”. |
| | 5 |
|
15 | The amendments made by this Schedule have effect in relation to shares |
| |
issued on or after 17th March 2004. |
| |
| |
| |
Chargeable gains: restriction of gifts relief etc |
| |
Penalties for failure to furnish particulars etc |
| 10 |
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— |
| |
| “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 |
| 15 |
| |
(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 |
| 20 |
sections 77, 78 and 79) for “inspector” substitute “officer of the Board”. |
| |
Relief for gifts of business assets |
| |
3 (1) | Section 165 of the Taxation of Chargeable Gains Act 1992 is amended as |
| |
| |
(2) | In subsection (1) (circumstances in which subsection (4) applies, subject to |
| 25 |
certain provisions) for “and 169” substitute “, 169, 169B and 169C”. |
| |
(3) | In subsection (3) (relief not to apply to disposal in certain cases) after |
| |
| |
“(ba) | in the case of a disposal of shares or securities, the transferee |
| |
| 30 |
(4) | In subsection (8) (definitions) for paragraph (aa) substitute— |
| |
“(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”. |
| 35 |
(5) | In subsection (10) (deduction to be allowed in computing chargeable gain on |
| |
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 |
| |
4 | After section 169A of the Taxation of Chargeable Gains Act 1992 (c. 12) |
| 5 |
| |
“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 |
| |
disposal (“the relevant disposal”)— |
| 10 |
(a) | made by a person (“the transferor”) to the trustees of a |
| |
| |
(b) | in respect of which Condition 1 or Condition 2 below is |
| |
| |
(2) | Condition 1 is that, immediately after the making of the relevant |
| 15 |
| |
(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 |
| |
an interest will or may be acquired by a settlor. |
| 20 |
| |
(a) | a chargeable gain would (assuming that neither section |
| |
165(4) nor section 260(3) applied in relation to the relevant |
| |
disposal) accrue to the transferor on that disposal, |
| |
(b) | in computing the gain, the allowable expenditure would to |
| 25 |
any extent fall to be reduced in consequence, directly or |
| |
indirectly, of a claim under section 165 or 260 in respect of an |
| |
earlier disposal made by an individual (whether or not to the |
| |
| |
(c) | immediately after the making of the relevant disposal,— |
| 30 |
(i) | that individual has an interest in the settlement, or |
| |
(ii) | an arrangement subsists under which such an interest |
| |
will or may be acquired by him. |
| |
(4) | This section is subject to section 169D (exception for maintenance |
| |
funds for historic buildings and certain settlements for disabled |
| 35 |
| |
169C | Clawback of relief if settlement becomes settlor-interested etc |
| |
(1) | This section applies in relation to a disposal (“the relevant |
| |
| |
(a) | made by a person (“the transferor”) to the trustees of a |
| 40 |
| |
(b) | in relation to which section 165(4) or 260(3) applies, or would |
| |
apart from this section apply, and |
| |
(c) | in respect of which Condition 1 or Condition 2 below is |
| |
| 45 |
|
| |
|
| |
|
(2) | Condition 1 is that, at any time during the clawback period,— |
| |
(a) | there is a settlor who has an interest in the settlement, or |
| |
(b) | an arrangement subsists under which such an interest will or |
| |
may be acquired by a settlor. |
| |
| 5 |
(a) | in computing the chargeable gain which would (assuming |
| |
that neither section 165(4) nor section 260(3) applied in |
| |
relation to the relevant disposal) accrue to the transferor on |
| |
that disposal, the allowable expenditure would fall to be |
| |
| 10 |
(b) | that reduction would to any extent fall to be made in |
| |
consequence, directly or indirectly, of a claim under section |
| |
165 or 260 in respect of an earlier disposal made by an |
| |
individual (whether or not to the transferor), and |
| |
(c) | at any time during the clawback period,— |
| 15 |
(i) | that individual has an interest in the settlement, or |
| |
(ii) | an arrangement subsists under which such an interest |
| |
will or may be acquired by him. |
| |
(4) | If no claim for relief under section 165 or 260 in respect of the relevant |
| |
disposal is made before the material time, neither section 165(4) nor |
| 20 |
section 260(3) shall apply in relation to that disposal. |
| |
(5) | Subsections (7) to (9) below apply if a claim for relief under section |
| |
165 or 260 in respect of the relevant disposal is made before the |
| |
| |
(6) | But those subsections do not apply if— |
| 25 |
(a) | the transferor is an individual, and |
| |
(b) | he dies before the material time. |
| |
(7) | A chargeable gain, of an amount equal to the amount of the held- |
| |
over gain (within the meaning of section 165 or 260) on the relevant |
| |
disposal, shall be treated for the purposes of tax in respect of |
| 30 |
chargeable gains as accruing to the transferor at the material time. |
| |
(8) | For any chargeable period ending after the making of the relevant |
| |
disposal, the chargeable gains and allowable losses of— |
| |
(a) | the trustees of the settlement, or |
| |
(b) | any person whose title to any property to any extent derives, |
| 35 |
directly or indirectly, from them, |
| |
| shall be determined on the assumption that neither section 165(4)(b) |
| |
nor section 260(3)(b) ever applied in relation to that disposal. |
| |
(9) | All such adjustments shall be made, whether by discharge or |
| |
repayment of tax, the making of assessments or otherwise, as are |
| 40 |
required to give effect to subsection (8) above (notwithstanding any |
| |
limitation on the time within which any adjustment may be made). |
| |
(10) | If a claim for relief under section 165 or 260 in respect of the relevant |
| |
disposal is revoked, this section shall apply as if the claim had never |
| |
| 45 |
(11) | In this section “the clawback period” means the period— |
| |
|
| |
|
| |
|
(a) | beginning immediately after the making of the relevant |
| |
| |
(b) | ending six years after the end of the year of assessment in |
| |
which that disposal was made. |
| |
(12) | In this section “the material time” means the time at which |
| 5 |
subsection (1)(c) above first becomes satisfied. |
| |
(13) | This section is subject to section 169D. |
| |
169D | Exceptions to sections 169B and 169C |
| |
(1) | Sections 169B and 169C shall not apply in relation to a disposal to the |
| |
trustees of a settlement in a year of assessment if the trustees have |
| 10 |
elected that section 691(2) of the Taxes Act (certain income of |
| |
maintenance funds for historic buildings not to be income of settlor |
| |
etc) shall have effect in the case of— |
| |
| |
(b) | any part of the settlement, |
| 15 |
| in relation to that year of assessment. |
| |
(2) | Sections 169B and 169C shall not apply in relation to a disposal to the |
| |
trustees of a settlement if the following conditions are satisfied. |
| |
(3) | The first condition is that, immediately after the making of the |
| |
| 20 |
(a) | the settled property is held on trusts which secure that, |
| |
during the lifetime of a disabled person, not less than half of |
| |
the property which is applied is applied for the benefit of that |
| |
| |
(b) | the settled property is held on trusts— |
| 25 |
(i) | which secure that, during his lifetime, he is entitled to |
| |
not less than half of the income arising from the |
| |
| |
(ii) | which secure that, during his lifetime, no such income |
| |
may be applied for the benefit of any other person, or |
| 30 |
(iii) | under which, during his lifetime, no interest in |
| |
possession in the settled property subsists. |
| |
(4) | The second condition is that if, immediately after the making of the |
| |
disposal, one or more settlors is an interested settlor, each such |
| |
settlor must at that time be a disabled beneficiary. |
| 35 |
(5) | For the purposes of subsection (4) above a settlor is an “interested |
| |
settlor” in relation to a settlement if— |
| |
(a) | he has an interest in the settlement, or |
| |
(b) | an arrangement subsists under which such an interest will or |
| |
| 40 |
| and for this purpose, the references to an individual’s spouse in |
| |
section 169F(2) and (3) shall be disregarded. |
| |
(6) | In subsection (4) above “disabled beneficiary”, in relation to a |
| |
settlement, means a disabled person who— |
| |
(a) | is a beneficiary under the settlement, or |
| 45 |
|
| |
|
| |
|
(b) | would be such a beneficiary if he had the interest in the |
| |
settlement by virtue of which subsection (5)(b) above applies |
| |
| |
(7) | In this section “disabled person” means— |
| |
(a) | a person who by reason of mental disorder within the |
| 5 |
meaning of the Mental Health Act 1983 is incapable of |
| |
administering his property or managing his affairs; or |
| |
(b) | a person in receipt of attendance allowance or of a disability |
| |
living allowance by virtue of entitlement to the care |
| |
component at the highest or middle rate. |
| 10 |
(8) | In this section “attendance allowance” means an allowance under— |
| |
(a) | section 64 of the Social Security Contributions and Benefits |
| |
| |
(b) | section 64 of the Social Security Contributions and Benefits |
| |
(Northern Ireland) Act 1992. |
| 15 |
(9) | In this section “disability living allowance” means a disability living |
| |
| |
(a) | section 71 of the Social Security Contributions and Benefits |
| |
| |
(b) | section 71 of the Social Security Contributions and Benefits |
| 20 |
(Northern Ireland) Act 1992. |
| |
(10) | The trusts on which settled property is held shall not be treated as |
| |
falling outside subsection (3) above by reason only of the powers |
| |
conferred on the trustees by— |
| |
(a) | section 32 of the Trustee Act 1925, or |
| 25 |
(b) | section 33 of the Trustee Act (Northern Ireland) 1958 (powers |
| |
| |
(11) | The references in subsection (3) above to the lifetime of a person |
| |
shall, where the income from the settled property is held for his |
| |
benefit on trusts of the kind described in section 33 of the Trustee Act |
| 30 |
1925 (protective trusts), be construed as references to the period |
| |
during which the income is held on trust for him. |
| |
169E | Meaning of “settlor” in sections 169B to 169D and 169G |
| |
(1) | For the purposes of this section, sections 169B to 169D and section |
| |
169G, a person is a settlor in relation to a settlement if— |
| 35 |
(a) | he is an individual, and |
| |
(b) | the settled property consists of, or includes, property |
| |
| |
(2) | In subsection (1) above, the reference to property originating from a |
| |
settlor is a reference to— |
| 40 |
(a) | property which that settlor has provided directly or |
| |
indirectly for the purposes of the settlement, and |
| |
(b) | property which wholly or partly represents that property or |
| |
| |
(3) | In subsection (2) above, the references to property which a settlor has |
| 45 |
provided directly or indirectly— |
| |
|
| |
|
| |
|
(a) | include references to property which has been provided |
| |
directly or indirectly by another person in pursuance of |
| |
reciprocal arrangements with that settlor, but |
| |
(b) | do not include references to property which that settlor has |
| |
provided directly or indirectly in pursuance of reciprocal |
| 5 |
arrangements with another person. |
| |
(4) | In subsection (2) above, the reference to property which represents |
| |
other property includes a reference to property which represents |
| |
accumulated income from that other property. |
| |
169F | Meaning of “interest in a settlement” in sections 169B to 169D |
| 10 |
(1) | For the purposes of this section and sections 169B to 169D, an |
| |
individual is to be regarded as having an interest in a settlement if |
| |
subsection (2) or (3) below applies. |
| |
(2) | This subsection applies if— |
| |
(a) | any property which may at any time be comprised in the |
| 15 |
| |
(b) | any derived property, |
| |
| is, or will or may become, payable to or applicable for the benefit of |
| |
the individual or his spouse in any circumstances whatsoever. |
| |
(3) | This subsection applies if the individual or his spouse enjoys a |
| 20 |
benefit deriving directly or indirectly from— |
| |
(a) | any property which is comprised in the settlement, or |
| |
(b) | any derived property. |
| |
(4) | The references in subsections (2) and (3) above to the spouse of the |
| |
individual do not include— |
| 25 |
(a) | a spouse from whom the individual is separated— |
| |
(i) | under an order of a court, |
| |
(ii) | under a separation agreement, or |
| |
(iii) | in such circumstances that the separation is likely to |
| |
| 30 |
(b) | the widow or widower of the individual. |
| |
(5) | An individual is not to be regarded as having an interest in a |
| |
settlement by virtue of subsection (2) above if and so long as none of |
| |
the property which may at any time be comprised in the settlement, |
| |
and no derived property, can become payable or applicable as |
| 35 |
mentioned in that provision except in the event of— |
| |
(a) | in the case of a marriage settlement, the death of both parties |
| |
to the marriage and of all or any of the children of the |
| |
| |
(b) | the death of a child of the individual where the child had |
| 40 |
become beneficially entitled to the property or any derived |
| |
property at an age not exceeding 25. |
| |
(6) | In this section “derived property”, in relation to any property, |
| |
| |
(a) | income from that property, |
| 45 |
(b) | property directly or indirectly representing— |
| |
(i) | proceeds of that property, or |
| |
|
| |
|