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Income Tax Bill


Income Tax Bill
Schedule 2 — Transitionals and savings
Part 6 — Losses on disposal of shares

628

 

Meaning of a company being “in administration”

57    (1)  

Sub-paragraph (2) applies in relation to—

(a)   

an administration order under Part 3 of the Insolvency (Northern

Ireland) Order 1989 the petition for which was presented before 6

April 2007, or

5

(b)   

any corresponding order under the law of a country or territory

outside the United Kingdom the proceedings for which were

instituted before that date.

      (2)  

Section 252 (as it applies for the purposes of Chapter 6 of Part 4) applies with

the substitution for subsection (2) of—

10

“(2)   

A company is “in administration” if—

(a)   

it is in administration within the meaning of Schedule B1 to

the Insolvency Act 1986, or

(b)   

there is in force in relation to it—

(i)   

an administration order under Part 3 of the

15

Insolvency (Northern Ireland) Order 1989, or

(ii)   

any corresponding order under the law of a country

or territory outside the United Kingdom.”

      (3)  

For the purposes of sub-paragraph (2), section 252 applies for the purposes

of Chapter 6 of Part 4 in any case where—

20

(a)   

it is applied by section 138(5),

(b)   

it applies for the purposes of section 190 as applied by section 141(2),

or

(c)   

it applies for the purposes of section 191 as applied by section 137(7),

139(4), 140(2) or 142(4).

25

      (4)  

In relation to an administration order under Part 2 of the Insolvency Act 1986

the petition for which was presented before 15 September 2003, section 252

(as applied by section 138(5)) applies with the substitution for subsection (2)

of—

“(2)   

A company is “in administration” if there is in force in relation to it—

30

(a)   

an administration order under Part 2 of the Insolvency Act

1986 or Part 3 of the Insolvency (Northern Ireland) Order

1989, or

(b)   

any corresponding order under the law of a country or

territory outside the United Kingdom.”

35

      (5)  

Section 252 (as applied by section 138(5)) does not apply in relation to shares

issued before 21 March 2000.

      (6)  

In the application of sub-paragraph (5) on or after 21 March 2000, shares—

(a)   

that were issued on or after 6 April 1998 but before 21 March 2000,

and

40

(b)   

to which EIS relief or relief under Schedule 5B to TCGA 1992 was

attributable immediately before 21 March 2000,

           

are treated as having been issued on or after 21 March 2000.

      (7)  

Sub-paragraphs (1) to (6) apply in relation to Chapter 5A of Part 13 of ICTA

and section 576C(5) of that Act (which make corresponding provision for the

45

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

629

 

purposes of corporation tax) as they apply in relation to Chapter 6 of Part 4

and section 138(5).

      (8)  

For the purposes of sub-paragraph (7), section 252 applies for the purposes

of Chapter 5A of Part 13 of ICTA in any case where—

(a)   

it is applied by section 576C(5) of ICTA,

5

(b)   

it applies for the purposes of section 190 as applied by section 576F(2)

of ICTA, or

(c)   

it applies for the purposes of section 191 as applied by section

576B(7), 576D(4), 576E(2) or 576G(4) of ICTA.

Part 7

10

Enterprise investment scheme

The gross assets requirement

58    (1)  

In relation to shares to which sub-paragraph (2) or (3) applies, section 186

applies with the substitution in subsections (1) and (2)—

(a)   

of “£15 million” for “£7 million”, and

15

(b)   

of “£16 million” for “£8 million”.

      (2)  

This sub-paragraph applies to shares issued to a person who subscribed for

them before 22 March 2006.

      (3)  

This sub-paragraph applies to shares issued to the managers of an

investment fund approved for the purposes of section 251 by the

20

Commissioners for Her Majesty’s Revenue and Customs if—

(a)   

the fund was approved before 22 March 2006,

(b)   

investments in the fund have been accepted before 6 April 2006, and

(c)   

the shares are issued to the managers as nominee for an individual

who has (whether or not before 6 April 2006) invested in the fund.

25

Part 8

Venture capital trusts

Eligibility for relief

59         

Section 261(4) does not apply in relation to shares acquired by a company

before 1 December 2003.

30

Form and amount of relief

60    (1)  

In relation to shares issued before 6 April 2006, section 263(2) applies with

the substitution of “tax at the higher rate for the tax year on” for “30% of”.

      (2)  

In relation to shares issued before 6 April 2004, section 263(2) applies with

the substitution of “the savings rate” for “the higher rate”.

35

No entitlement to relief if there is a linked loan

61         

In relation to shares issued before 6 April 2006, section 264(3) applies with

the substitution, in paragraph (b) of the definition of “the relevant period”,

of “the third anniversary” for “the fifth anniversary”.

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

630

 

Loss of relief if shares disposed of within 5 years

62    (1)  

In relation to shares issued before 6 April 2006—

(a)   

subsection (1) of section 266 applies with the substitution of “3 years”

for “5 years”, and

(b)   

subsection (4) of that section applies with the omission of “30% of”

5

and the insertion at the end of “multiplied by the higher rate for the

tax year in which the shares were issued”.

      (2)  

In relation to shares issued before 6 April 2004, section 266(4) applies with

the substitution of “the savings rate” for “the higher rate”.

Interpretation of Chapter 2

10

63    (1)  

In relation to shares issued before 6 April 2007, section 273(1) applies as if it

gave “eligible shares” the same meaning as that given by paragraph 6(1) of

Schedule 15B to ICTA at the time of the issue of the shares.

      (2)  

In relation to shares issued before 6 April 2006, section 273(1) applies with

the substitution of “3 years” for “5 years”.

15

The 15% holding limit condition

64         

In relation to shares or securities issued before 17 April 2002, section 277(5)

applies with the following modifications—

(a)   

the insertion after “reconstruction”, in the first place where it occurs,

of “or amalgamation”, and

20

(b)   

the omission of the words from “In this subsection” to the end.

Conditions relating to value of investments

65    (1)  

Sub-paragraph (2) applies if any question arises which—

(a)   

would otherwise fall to be determined in accordance with section

278, and

25

(b)   

is a question whether, in a case where a company (“company A”)

holds investments in a company (“company B”) immediately before

6 April 2007, the 15% holding condition is met if there is an addition

to the holding on or after that date.

      (2)  

Any such question is to be determined in accordance with—

30

(a)   

section 842AA(11)(c) of ICTA, and

(b)   

section 842(3) and (4) of that Act as applied by that provision,

           

until such time as company A ceases to hold investments in company B.

      (3)  

Except in a case to which sub-paragraph (2) applies, section 278(5) applies in

relation to investments issued before 17 April 2002 with the following

35

modifications—

(a)   

the insertion after “reconstruction”, in the first place where it occurs,

of “or amalgamation”, and

(b)   

the omission of the words from “In this subsection” to the end.

Conditions relating to qualifying holdings and eligible shares: supplementary

40

66         

Section 280(3) does not apply in relation to shares issued before 17 April

2002.

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

631

 

Interpretation of Chapter 3

67         

Section 285 applies with the omission of subsections (4) to (6) for the

purposes of determining whether, at any time before 6 April 2007, the

conditions mentioned in section 274(2) are, will be or were met with respect

to a company.

5

The maximum qualifying investment requirement

68         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 287(3)(b)

does not apply in relation to shares or securities issued before 6 April 2007.

The no guaranteed loan requirement

10

69         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 288 does

not apply in relation to shares or securities acquired by a company by means

of the investment of—

(a)   

money raised by the issue before 2 July 1997 of shares in or securities

15

of the investing company, or

(b)   

money derived from the investment by that company of any such

money.

The proportion of eligible shares requirement

70    (1)  

If at any time the requirement of section 289

20

(a)   

would be met in relation to a relevant holding and a company if none

of the old investments were held by the investing company at that

time, but

(b)   

would not otherwise be met,

           

that section applies in relation to that holding as if the old investments were

25

not held by the investing company at that time.

      (2)  

In sub-paragraph (1) “old investments” means shares in or securities of the

relevant company acquired by means of the investment of—

(a)   

money raised by the issue before 2 July 1997 of shares in or securities

of the investing company, or

30

(b)   

money derived from the investment by that company of any such

money.

The trading requirement

71         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 290

35

applies in relation to shares or securities issued before 6 April 2007 with the

following modifications—

(a)   

the omission of subsections (2) and (6), and

(b)   

in subsection (5)(d), the omission of sub-paragraph (ii) and the “or”

immediately before it.

40

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

632

 

The carrying on of a qualifying activity requirement

72    (1)  

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 291

applies in relation to shares or securities issued before 7 April 2007 with the

omission of subsection (8).

5

      (2)  

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 291

applies in relation to shares or securities issued before 17 March 2004 with

the following modifications—

(a)   

in subsection (1), the substitution for “a qualifying company

10

(whether or not the same such company at every such time)” of “the

qualifying company”,

(b)   

in subsection (3), the substitution for “was intended to be carried on”

of “it intended to carry on” and the omission of “by a qualifying

company”,

15

(c)   

in subsection (4)(a), the substitution for “a qualifying company” of

“the qualifying company”,

(d)   

in subsection (4)(b), the substitution for “at all times since the end of

that period, a qualifying company (whether or not the same such

company at every such time) has” of “the qualifying company has at

20

all times since the end of that period”, and

(e)   

the omission of subsection (6).

Ceasing to meet the requirement because of administration or receivership

73         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 292(1)

25

applies in relation to shares or securities issued before 17 March 2004 with

the omission of “merely”.

The use of the money raised requirement

74         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 293

30

applies in relation to shares or securities issued before 17 March 2004 with

the following modifications—

(a)   

in subsection (2), the substitution for “has been or is intended to be

employed” of “is money which the qualifying company has

employed or intends to employ”, and

35

(b)   

in subsection (5)(b), the substitution for “a qualifying company” of

“the qualifying company”.

The relevant company to carry on the relevant qualifying activity requirement

75    (1)  

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 294

40

applies in relation to shares or securities issued before 6 April 2007 with the

following modifications—

(a)   

in subsections (1) and (6) the substitution for “relevant qualifying

activity” of “qualifying activity”,

(b)   

in subsection (1) the substitution for “section 293” of “section 291”,

45

and

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

633

 

(c)   

the omission of subsection (7).

      (2)  

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, Chapter 4 of

Part 6 of this Act applies in relation to shares or securities issued before 17

March 2004 with the substitution for section 294 of—

5

“294    

Further requirements as to the money raised by the investment in

question

(1)   

If—

(a)   

the relevant company is a parent company, and

(b)   

the business of the group does not consist wholly or as to a

10

substantial part in the carrying on of non-qualifying

activities,

   

the requirements of this section are not met unless one or more of the

following conditions is met.

(2)   

Condition A is that the trader company meets the requirement of

15

section 290(1)(a).

(3)   

Condition B is that the trader company would meet that requirement

if its purposes were ignored so far as they consist in the carrying on

of activities in section 290(5).

(4)   

Condition C is that the trader company is a qualifying 90% company

20

and—

(a)   

apart from incidental purposes, it exists wholly for the

purposes of carrying on activities such as those in section

290(5)(c) and (d), or

(b)   

it has no profits for the purposes of corporation tax and no

25

part of its business consists in the making of investments.

(5)   

In this section—

“the business of the group” has the same meaning as it has for

the purposes of subsection (1)(b) of section 290,

“incidental purposes” and “non-qualifying activities” have the

30

same meaning as in that section,

“the trader company” means the company (whether the

relevant company or a qualifying subsidiary of the relevant

company) carrying on the qualifying activity which meets the

requirement of section 291.”

35

The gross assets requirement

76    (1)  

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 297

applies in relation to shares or securities issued on or after 6 April 1998 and

before 6 April 2006 with the substitution in subsections (1) and (2)—

40

(a)   

of “£15 million” for “£7 million”, and

(b)   

of “£16 million” for “£8 million”.

      (2)  

For the purposes of sub-paragraph (1) any shares or securities acquired by a

company at any time by means of the investment of—

(a)   

money raised by the issue before 6 April 2006 of shares in or

45

securities of the investing company, or

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

634

 

(b)   

money derived from the investment by that company of any such

money,

           

are treated as having been issued before 6 April 2006.

      (3)  

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 297

5

applies in relation to shares or securities issued before 6 April 1998 with the

substitution in subsections (1) and (2)—

(a)   

of “£10 million” for “£7 million”, and

(b)   

of “£11 million” for “£8 million”.

The property managing subsidiaries requirement

10

77         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 299 does

not apply in relation to shares or securities issued before 17 March 2004.

Meaning of “qualifying trade”

78         

For the purpose of determining whether shares or securities are to be

15

regarded as comprised in a company’s qualifying holdings, section 300

applies in relation to shares or securities issued before 6 April 2007 with the

following modifications—

(a)   

in subsection (2), the omission of paragraph (b) and the “or”

immediately before it, and

20

(b)   

the omission of subsection (3).

Meaning of “qualifying 90% subsidiary”

79         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 301 does

not apply in relation to shares or securities issued before 17 March 2004.

25

Meaning of “qualifying subsidiary”

80         

For the purpose of determining whether shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 302

applies in relation to shares or securities issued before 17 March 2004 with

the following modifications—

30

(a)   

the substitution for subsection (2)(a) of—

“(a)   

the relevant company, or another of its subsidiaries,

possesses at least 75% of the issued capital of, and at

least 75% of the voting power in, the subsidiary,

(aa)   

the relevant company, or another of its subsidiaries,

35

would in the event of a winding up of the subsidiary,

or in any other circumstances, be beneficially entitled

to receive at least 75% of the assets of the subsidiary

which would then be available for distribution for the

equity holders of the subsidiary,

40

(ab)   

the relevant company, or another of its subsidiaries, is

beneficially entitled to at least 75% of any profits of

the subsidiary which are available for distribution for

the equity holders of the subsidiary,”,

 

 

 
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