Income Tax Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Part 7 — Community investment tax relief
Chapter 6 — Withdrawal or reduction of CITR
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(a)
if the value is received in the first year of the 6 year period, the amount
subscribed for the securities or shares, and
(b)
in any other case, the amount subscribed for such of the securities or
shares as—
(i)
are held by the investor at the time the value is received, and
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(ii)
have been held by the investor, as sole beneficial owner,
continuously since the investment was made.
369
Effect of receipt of value on future claims for CITR
(1)
This section applies if the investment consists of securities or shares and—
(a)
the investor receives any value (other than an amount of insignificant
10
value) from the CDFI during the 6 year period, and
(b)
the investment or a part of it is held by the investor at the time the value
is received and has been held by the investor, as sole beneficial owner,
continuously since the investment was made (“the continuing
investment”),
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but no CITR attributable to the continuing investment is withdrawn under
section 364 as a result of the receipt.
(2)
For the purposes of calculating any CITR in respect of any securities or shares
included in the continuing investment for any relevant tax year, the amount
subscribed for the securities or shares included in the continuing investment is
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treated as reduced by the amount of the value received.
(3)
For this purpose the “relevant” tax years are—
(a)
any tax year ending on or after the anniversary of the investment date
immediately before the receipt of value, or
(b)
if the value was received on an anniversary of the investment date, any
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tax year ending on or after that anniversary.
(4)
For the purposes of this section “an amount of insignificant value” means an
amount of value which—
(a)
is not more than £1,000, or
(b)
if it is more than £1,000, is insignificant in relation to the amount
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subscribed by the investor for the securities or shares included in the
continuing investment.
370
Receipts of value by or from connected persons
In sections 363 to 369, if the context permits, references to the investor or the
CDFI include references to any person who at any time in the 6 year period
35
relating to the investment is connected with the investor or, as the case may be,
the CDFI, whether or not the person is connected at the material time.
CITR not due
371
CITR subsequently found not to have been due
If any CITR has been obtained which is subsequently found not to have been
40
due, the CITR must be withdrawn.

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Part 7 — Community investment tax relief
Chapter 7 — Supplementary and general
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Manner of withdrawal or reduction
372
Manner of withdrawal or reduction of CITR
(1)
This section applies if any CITR has been obtained which falls to be withdrawn
or reduced under this Chapter.
(2)
The CITR must be withdrawn or reduced by making an assessment to income
5
tax for the tax year for which the CITR was obtained.
(3)
No assessment may be made under subsection (2) because of any event
occurring after the death of the investor.
Chapter 7
Supplementary and general
10
Miscellaneous
373
Information to be provided by the investor
(1)
If—
(a)
the investor has obtained CITR in respect of the investment, and
(b)
an event occurs because of which CITR attributable to the investment
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for any tax year falls to be withdrawn or reduced by virtue of section
360, 361, 362 or 364,

the investor must give an officer of Revenue and Customs a notice containing
particulars of the event.
(2)
Subject to subsection (3), a notice under subsection (1) must be given not later
20
than the normal self-assessment filing date for the tax year in which the event
occurred.
(3)
If—
(a)
the investor is required to give a notice as a result of the receipt of value
by a person connected with the investor (see section 370), and
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(b)
the end of the period of 60 days beginning when the investor comes to
know of that event is later than the final notice date under subsection
(2),

the notice must be given before the end of that 60 day period.
374
Disclosure
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(1)
No obligation as to secrecy or other restriction on the disclosure of information
imposed by statute or otherwise prevents the disclosure of information—
(a)
by the Secretary of State to an officer of Revenue and Customs for the
purpose of assisting Her Majesty’s Revenue and Customs to discharge
their functions under the Income Tax Acts so far as relating to matters
35
arising under this Part, or
(b)
by an officer of Revenue and Customs to the Secretary of State for the
purpose of assisting the Secretary of State to discharge the Secretary of
State’s functions under this Part.

Income Tax Bill
Part 7 — Community investment tax relief
Chapter 7 — Supplementary and general
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(2)
Information obtained by such disclosure is not to be further disclosed except
for the purposes of legal proceedings arising out of the functions referred to.
375
Nominees
(1)
For the purposes of this Part—
(a)
loans made by or to, or disposed of by, a nominee for a person are
5
treated as made by or to, or disposed of by, that person, and
(b)
securities or shares subscribed for by, issued to, acquired or held by or
disposed of by a nominee for a person are treated as subscribed for by,
issued to, acquired or held by or disposed of by that person.
(2)
For the purposes of subsection (1) references to things done by or to a nominee
10
for a person include things done by or to a bare trustee for a person.
376
Application for postponement of tax pending appeal
No application may be made under section 55(3) or (4) of TMA 1970
(application for postponement of payment of tax pending appeal) on the
ground that an individual is eligible for CITR unless a claim for the CITR has
15
been duly made by the individual under this Part.
377
Identification of securities or shares on a disposal
(1)
This section applies for the purpose of identifying the securities or shares
disposed of in any case where—
(a)
the investor disposes of part of a holding of securities or shares (“the
20
holding”), and
(b)
the holding includes securities or shares to which CITR is attributable
in respect of one or more tax years that have been held continuously by
the investor from the time they were issued until the disposal.
(2)
Any disposal by the investor of securities or shares included in the holding
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which have been acquired by the investor on different days is treated as
relating to those acquired on an earlier day rather than to those acquired on a
later day.
(3)
If there is a disposal by the investor of securities or shares included in the
holding which have been acquired by the investor on the same day, any of
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those securities or shares—
(a)
to which CITR is attributable, and
(b)
which have been held by the investor continuously from the time they
were issued until the time of disposal,

are treated as disposed of after any other securities or shares included in the
35
holding which were acquired by the investor on that day.
(4)
For the purposes of this section a holding of securities is any number of
securities of a company which—
(a)
carry the same rights,
(b)
were issued under the same terms, and
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(c)
are held by the investor in the same capacity.

It does not matter for this purpose that the number of the securities grows or
diminishes as securities carrying those rights and issued under those terms are
acquired or disposed of.

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Part 7 — Community investment tax relief
Chapter 7 — Supplementary and general
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(5)
For the purposes of this section a holding of shares is any number of shares in
a company which—
(a)
are of the same class, and
(b)
are held by the investor in the same capacity.

It does not matter for this purpose that the number of the shares grows or
5
diminishes as shares of that class are acquired or disposed of.
(6)
In a case to which section 127 of TCGA 1992 (equation of original shares and
new holding) applies, shares comprised in the new holding are to be treated for
the purposes of subsections (2) and (3) as acquired when the original shares
were acquired.
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(7)
In subsection (6)—
(a)
the reference to section 127 of TCGA 1992 includes a reference to that
section as it is applied by virtue of any enactment relating to chargeable
gains, and
(b)
“original shares” and “new holding” have the same meaning as in
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section 127 of TCGA 1992 or (as the case may be) that section as applied
by virtue of the enactment in question.
Definitions
378
Meaning of “issue of securities or shares”
(1)
In this Part—
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(a)
references (however expressed) to an issue of securities of any body are
to such securities of that body as carry the same rights and are issued
under the same terms and on the same day, and
(b)
references (however expressed) to an issue of shares in any body are to
such shares in that body as are of the same class and issued on the same
25
day.
(2)
In this Part references (however expressed) to an issue of securities of or shares
in a body to an individual are to such of the securities or shares in an issue of
securities of or shares in that body as are issued to that individual in one
capacity.
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379
Meaning of “disposal”
(1)
Subject to subsection (2), in this Part “disposal” is read in accordance with
TCGA 1992, and related expressions are read accordingly.
(2)
An investor is treated as disposing of any securities or shares which but for
section 151BC(1) of TCGA 1992 the investor—
35
(a)
would be treated as exchanging for other securities or shares by virtue
of section 136 of that Act, or
(b)
would be so treated but for section 137(1) of that Act (which restricts
section 136 to genuine reconstructions).
380
Construction of references to being “held continuously”
40
(1)
This section applies if for the purposes of this Part it becomes necessary to
determine whether the investor has held the investment (or any part of it)
continuously throughout any period.

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Part 7 — Community investment tax relief
Chapter 7 — Supplementary and general
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(2)
The investor is not treated as having held the investment (or any part of it)
continuously throughout a period if the investor—
(a)
is treated, under any provision of TCGA 1992, as having disposed of
and immediately re-acquired the investment (or part) at any time
during the period, or
5
(b)
is treated as having disposed of the investment (or part) at any such
time, by virtue of section 379(2).
381
Meaning of “associate”
(1)
In this Part “associate”, in relation to a person, means—
(a)
any relative or partner of that person,
10
(b)
the trustee or trustees of any settlement in relation to which that person,
or any relative of that person (living or dead), is or was a settlor, and
(c)
if that person has an interest in any shares or obligations of a company
which are subject to any trust or are part of the estate of a deceased
person—
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(i)
the trustee or trustees of the settlement concerned or, as the case
may be, the personal representatives of the deceased, and
(ii)
if that person is a company, any other company which has an
interest in those shares or obligations.
(2)
In subsection (1)(a) and (b) “relative” means spouse or civil partner, ancestor or
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lineal descendant.
(3)
In subsection (1)(b) “settlor” and “settlement” have the same meaning as in
Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act).
382
Minor definitions etc
(1)
In this Part—
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“body” includes an unincorporated association, and
“bonus shares” means shares which are issued otherwise than for
payment (whether in cash or otherwise).
(2)
For the purposes of this Part shares in a company are not treated as being of the
same class unless they would be so treated if dealt in on the Stock Exchange.
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(3)
For the purposes of this Part the market value at any time of any asset is the
price which it might reasonably be expected to fetch on a sale at that time in the
open market free from any interest or right which exists by way of security in
or over it.
(4)
In this Part—
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(a)
references to CITR obtained by the investor in respect of any
investment (or part of an investment) include references to CITR
obtained by the investor in respect of that investment (or part) at any
time after the investor has disposed of it, and
(b)
references to the withdrawal or reduction of CITR obtained by the
40
investor in respect of the investment (or any part of it) include
references to the withdrawal or reduction of CITR obtained in respect
of that investment (or part) at any such time.
(5)
In the case of any condition that cannot be met until a future date—

Income Tax Bill
Part 8 — Other reliefs
Chapter 1 — Interest payments
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(a)
references in this Part to a condition being met for the time being are to
nothing having occurred to prevent its being met, and
(b)
references to its continuing to be met are to nothing occurring to
prevent its being met.
Part 8
5
Other reliefs
Chapter 1
Interest payments
The relief: introduction
383
Relief for interest payments
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(1)
A person who pays interest in a tax year is entitled to relief for the tax year for
the interest if—
(a)
the loan on which the interest is payable is a loan to which a provision
specified in subsection (2) applies,
(b)
the interest is eligible for relief in accordance with this Chapter, and
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(c)
the person makes a claim.
(2)
The provisions are—
(a)
section 388 (loan to buy plant or machinery for partnership use),
(b)
section 390 (loan to buy plant or machinery for employment use),
(c)
section 392 (loan to buy interest in close company),
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(d)
section 396 (loan to buy interest in employee-controlled company),
(e)
section 398 (loan to invest in partnership),
(f)
section 401 (loan to invest in co-operative), and
(g)
section 403 (loan to pay inheritance tax).
(3)
The amount of the relief given under subsection (1) is equal to the amount of
25
the interest eligible for relief.
(4)
The relief is given by deducting that amount in calculating the person’s net
income for the tax year in which the interest is paid (see Step 2 of the calculation
in section 23).
(5)
This section is subject to—
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(a)
section 384 (general restrictions on relief under this Chapter),
(b)
section 385 (general provisions about loans),
(c)
section 386 (loans partly meeting requirements),
(d)
section 387 (exclusion of double relief etc), and
(e)
section 405 (carry back and forward of relief for interest on loans within
35
section 403).
(6)
See also section 51(2) of FA 2005 (under which this Chapter applies as if
arrangements falling within section 47 of that Act were loans and alternative
finance return were interest).