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This amendment has effect on and after the commencement date.

(3)   The amendment made by subsection (1) has effect—

(a)   in the case of new arrangements, in relation to manufactured payments made, or deemed by or under any provision of the Tax Acts to be made, on or after the commencement date, and

(b)   in the case of old arrangements, in relation to manufactured payments made, or deemed by or under any provision of the Tax Acts to be made, on or after the day on which this Act is passed.

(4)   But where—

(a)   as a result of old arrangements, any income arose or accrued, or any gain accrued, to a company before the commencement date,

(b)   the income or gain is or was within the charge to corporation tax, and

(c)   a manufactured payment in pursuance of the arrangements is made, or deemed by or under any provision of the Tax Acts to be made, by the company on or after the day on which this Act is passed,
the amendment made by subsection (1) does not have effect in relation to so much of the manufactured payment as (on such just and reasonable apportionments as may be necessary) represents the income or gain.

(5)   For the purposes of subsection (4)—

(a)   "income" includes any income deemed by or under any provision of the Tax Acts to arise or accrue,

(b)   "gain" includes any gain deemed by or under any provision of the Tax Acts to accrue.

(6)   In this section—

"the commencement date" means 2nd July 2004;

"new arrangements" means any arrangements other than old arrangements;

"old arrangements" means arrangements which were, or some part of which was, entered into or acted upon before the commencement date.

 
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(7)   For the purposes of subsection (6), the cases where arrangements were, or some part of any arrangements was, acted upon before the commencement date are those cases where a transaction in pursuance of the arrangements, or of any part of the arrangements, has taken place before that date.'.—[Dawn Primarolo.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 11

Gifts of shares, securities and real property to charities etc

'(1)   Section 587B of the Taxes Act 1988 (gifts of shares, securities and real property to charities etc) is amended as follows.

(2)   For subsection (4) (the relevant amount) substitute—

"(4)   Subject to subsections (5) to (7) below, the relevant amount is an amount equal to—

(a)   where the disposal is a gift, the value of the net benefit to the charity at, or immediately after, the time when the disposal is made (whichever time gives the lower value);

(b)   where the disposal is at an undervalue, the amount by which—

(i)   the value described in paragraph (a) above, exceeds

(ii)   the amount or value of the consideration for the disposal,

or, if there is no such excess, nil.

(3)   After subsection (8) insert—

"(8A)   The value of the net benefit to the charity is—

(a)   the market value of the qualifying investment, unless subsection (8B) below applies;

(b)   where that subsection applies, that market value reduced by the aggregate amount of the related liabilities of the charity (see subsections (8E) to (8G)).

(8B)   This subsection applies in any case where—

(a)   the charity is, or becomes, subject to an obligation to any person (whether or not the person making the disposal or a person connected with him), and

(b)   one or more of the conditions in subsection (8C) below is satisfied.

(8C)   For the purposes of subsection (8B) above—

(a)   condition 1 is that, taking into account all the circumstances (including, in particular, the difference in the value of the net benefit to the charity if subsection (8B) applies and if it does not) it is reasonable to suppose that the disposal of the qualifying investment to the charity would not have been made in the absence of the obligation;

(b)   condition 2 is that the obligation (whether in whole or in part) relates to, is framed by reference to, or is conditional on the charity receiving, the qualifying investment or a related investment (see subsection (8D)).

(8D)   In subsection (8C) "related investment" means any of the following—

(a)   any asset of the same class or description as the qualifying investment (irrespective of size, quantity or amount);

(b)   any asset derived from, or representing, the qualifying investment whether in whole or in part and whether directly or indirectly;

(c)   any asset from which the qualifying investment is derived, or which the qualifying investment represents, whether in whole or in part and whether directly or indirectly.

 
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(8E)   For the purposes of this section, the liabilities which are related liabilities in the case of any qualifying investment are the liabilities of the charity under each of the obligations that fall within subsection (8B) above (as read with subsection (8C) above) in relation to that investment.

(8F)   Where an obligation is contingent and the contingency occurs, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, under the obligation is the amount or value of the liability actually incurred in consequence of the occurrence of the contingency.

(8G)   Where an obligation is contingent and the contingency does not occur, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, is nil.".

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