|
| |
|
(b) | section 355 (securities or shares: no claim after disposal or excessive |
| |
| |
(c) | section 356 (no claim after loss of accreditation by CDFI). |
| |
| |
336 | Meaning of “making an investment” |
| 5 |
(1) | For the purposes of this Part, an individual makes an investment in a body at |
| |
| |
(a) | the individual makes a loan (whether secured or unsecured) to the |
| |
| |
(b) | an issue of securities of or shares in the body, for which the individual |
| 10 |
has subscribed, is made to the individual. |
| |
(2) | The following provisions of this section apply for the purposes of subsection |
| |
| |
(3) | An individual does not make a loan to a body if— |
| |
(a) | the body uses overdraft facilities provided by the individual, or |
| 15 |
(b) | the individual subscribes for or otherwise acquires securities of the |
| |
| |
(4) | If the loan agreement authorises the body to draw down amounts of the loan |
| |
over a period of time, the loan is treated as made at the time when the first |
| |
| 20 |
337 | Determination of “the invested amount” |
| |
(1) | This section applies for the purpose of determining “the invested amount” in |
| |
respect of any loan, securities or shares included in the investment. |
| |
| This is subject to sections 363(2) and 369 (which adjust “the invested amount” |
| |
in certain cases where value is received). |
| 25 |
(2) | In the case of a loan, the invested amount is— |
| |
(a) | for the tax year in which the investment date falls, the average capital |
| |
balance for the first year of the 5 year period, |
| |
(b) | for the next tax year, the average capital balance for the second year of |
| |
| 30 |
(c) | for any subsequent tax year— |
| |
(i) | the average capital balance for the period of 12 months |
| |
beginning with the anniversary of the investment date falling in |
| |
the tax year concerned, or |
| |
(ii) | if less, the average capital balance for the period of 6 months |
| 35 |
beginning 18 months after the investment date. |
| |
(3) | In the case of securities or shares, the invested amount for a tax year is the |
| |
amount subscribed by the investor for the securities or shares. |
| |
(4) | For the purposes of this section, the average capital balance of the loan for a |
| |
period is the mean of the daily balances of capital outstanding during the |
| 40 |
| |
|
| |
|
| |
|
338 | Meaning of “the 5 year period” and “the investment date” |
| |
| |
“the 5 year period” means the period of 5 years beginning with the |
| |
| |
“the investment date” means the day the investment is made. |
| 5 |
339 | Overview of other Chapters of Part |
| |
| |
(a) | Chapter 5 provides for the making of claims for CITR and the |
| |
attribution of CITR to investments, |
| |
(b) | Chapter 6 provides for CITR to be withdrawn or reduced in the |
| 10 |
circumstances mentioned in that Chapter, and |
| |
(c) | Chapter 7 contains supplementary and general provision. |
| |
| |
Accredited community development finance institutions |
| |
340 | Application and criteria for accreditation |
| 15 |
(1) | Applications for accreditation as a community development finance institution |
| |
must be made to the Secretary of State in the form and manner specified by the |
| |
| |
(2) | The Secretary of State is to accredit a body if (and only if) the Secretary of State |
| |
| 20 |
(a) | that the body’s principal objective is to provide (directly or |
| |
| |
| |
(ii) | finance and access to business advice, |
| |
| for enterprises for disadvantaged communities, and |
| 25 |
(b) | that the body meets any other criteria specified in regulations made by |
| |
| |
(3) | For the purposes of this section “enterprises for disadvantaged communities” |
| |
| |
(a) | enterprises located in disadvantaged areas, and |
| 30 |
(b) | enterprises owned or operated by, or designed to serve, members of |
| |
| |
(4) | The criteria mentioned in paragraph (b) of subsection (2) may include criteria |
| |
relating to the enterprises to which the body provides or proposes to provide |
| |
finance or access to business advice. |
| 35 |
(5) | Regulations under that paragraph may make the provision authorised by that |
| |
paragraph by reference to any material published by, or on behalf of, the |
| |
Secretary of State (whether before or after the coming into force of this section). |
| |
(6) | Regulations under that paragraph— |
| |
(a) | may make different provision for different cases or circumstances or in |
| 40 |
relation to different areas, and |
| |
|
| |
|
| |
|
(b) | may, in particular, make different provision in the case of bodies whose |
| |
principal objective in providing finance as mentioned in subsection |
| |
(2)(a) is to invest directly in enterprises that meet the conditions of |
| |
| |
(7) | An enterprise meets the conditions of this subsection if it uses the money |
| 5 |
invested in it for the purposes of its business and either— |
| |
(a) | that business does not include the provision of finance for other |
| |
| |
(b) | if it does, the nature and extent of such provision meets any conditions |
| |
prescribed by regulations made by the Treasury. |
| 10 |
(8) | If the Secretary of State accredits a body of a kind mentioned in subsection |
| |
(6)(b), the Secretary of State must specify in the accreditation that the body is |
| |
accredited as a retail community development finance institution. |
| |
341 | Terms and conditions of accreditation |
| |
(1) | An accreditation under this Chapter must— |
| 15 |
| |
(i) | any terms required by regulations, and |
| |
(ii) | any other terms the Secretary of State considers appropriate, |
| |
| |
(b) | be made conditional on compliance with— |
| 20 |
(i) | any requirements imposed by regulations, and |
| |
(ii) | any other requirements the Secretary of State considers |
| |
| |
(2) | The requirements that may be imposed by virtue of subsection (1)(b) include |
| |
requirements relating to the provision of information. |
| 25 |
| |
(a) | make provision for appeals to the Special Commissioners against |
| |
refusals to grant accreditation under this Chapter, |
| |
(b) | make provision about the consequences of a failure to comply with any |
| |
requirement of an accreditation, including— |
| 30 |
(i) | provision for the withdrawal of the accreditation with effect |
| |
from the time of the failure or a later time, and |
| |
(ii) | provision for the imposition of penalties, |
| |
(c) | make provision for the making of decisions by the Secretary of State as |
| |
to any matter required to be decided for the purposes of the |
| 35 |
| |
(d) | make different provision for different cases or circumstances or in |
| |
relation to different areas, and |
| |
(e) | contain incidental, supplemental, consequential and transitional |
| |
| 40 |
(4) | In this section “regulations” means regulations made by the Treasury. |
| |
342 | Period of accreditation |
| |
(1) | An accreditation has effect for a period (an “accreditation period”) of 3 years |
| |
beginning on the day specified in the accreditation. |
| |
|
| |
|
| |
|
(2) | Subject to subsection (4), the accreditation must not specify a day which is |
| |
| |
(a) | if the body is not accredited under this Chapter at the time the |
| |
application is made, the day the accreditation is granted, and |
| |
(b) | if the body is so accredited, the time the body’s current accreditation |
| 5 |
| |
(3) | Subsection (4) applies if— |
| |
(a) | the body is accredited at the time the application is made, and |
| |
(b) | it makes a request under this subsection. |
| |
(4) | The new accreditation may specify that the existing accreditation is to be |
| 10 |
treated for the purposes of this Part (including subsection (2)(b)) as expiring |
| |
immediately before the grant of the new accreditation (if it would otherwise |
| |
| |
(5) | This section has effect subject to section 341(3)(b) (power to provide for the |
| |
withdrawal of accreditation). |
| 15 |
343 | Delegation of Secretary of State’s functions |
| |
The Secretary of State may delegate any functions conferred on the Secretary |
| |
of State by or under this Chapter. |
| |
| |
| 20 |
344 | Qualifying investments: introduction |
| |
For the purposes of this Part the investment is a “qualifying investment” in the |
| |
| |
(a) | the investment consists of— |
| |
(i) | a loan in relation to which the conditions of section 345 are met, |
| 25 |
(ii) | securities in relation to which the conditions of section 346 are |
| |
| |
(iii) | shares in relation to which the conditions of section 347 are met, |
| |
(b) | the investor receives from the CDFI a valid tax relief certificate in |
| |
relation to the investment (see section 348), and |
| 30 |
(c) | the requirements of section 349 (no pre-arranged protection against |
| |
| |
345 | Conditions to be met in relation to loans |
| |
(1) | Condition A of this section is that either— |
| |
(a) | the CDFI receives from the investor, on the investment date, the full |
| 35 |
| |
(b) | if the loan agreement authorises the CDFI to draw down amounts of the |
| |
loan over a period of time, the end of that period is not later than 18 |
| |
months after the investment date. |
| |
|
| |
|
| |
|
(2) | Condition B is that the loan must not carry any present or future right to be |
| |
converted into or exchanged for a loan which is, or securities, shares or other |
| |
rights which are, redeemable within the 5 year period. |
| |
(3) | Condition C is that the loan must not have been made on terms that allow any |
| |
| 5 |
(a) | the repayment during the first two years of the 5 year period of any of |
| |
the loan capital advanced in those two years, |
| |
(b) | the repayment during the third year of that period of more than 25% of |
| |
the loan capital outstanding at the end of those two years, |
| |
(c) | the repayment before the end of the fourth year of that period of more |
| 10 |
than 50% of that loan capital, or |
| |
(d) | the repayment before the end of that period of more than 75% of that |
| |
| |
(4) | Subsection (3) does not apply if the CDFI is required to make the repayment as |
| |
a result of its failure to meet any obligation of the loan agreement which— |
| 15 |
(a) | is imposed merely because of the commercial risks to which the |
| |
investor is exposed as lender under that agreement, and |
| |
(b) | is no more likely to be breached than any obligation that might |
| |
reasonably have been agreed in respect of the loan in the absence of this |
| |
| 20 |
(5) | The Treasury may by order substitute any other percentage for any percentage |
| |
for the time being specified in subsection (3). |
| |
(6) | Any such substitution is to have effect in relation to loans made by an |
| |
individual on or after the date specified in the order. |
| |
346 | Conditions to be met in relation to securities |
| 25 |
(1) | Condition A of this section is that the securities must be— |
| |
(a) | subscribed for wholly in cash, and |
| |
(b) | fully paid for on the investment date. |
| |
(2) | Condition B is that the securities must not carry— |
| |
(a) | any present or future right to be redeemed within the 5 year period, or |
| 30 |
(b) | any present or future right to be converted into or exchanged for a loan |
| |
which is, or securities, shares or other rights which are, redeemable |
| |
| |
(3) | Securities are not fully paid for the purposes of subsection (1)(b) if there is any |
| |
undertaking to pay cash to the CDFI at a future date in connection with the |
| 35 |
acquisition of the securities. |
| |
347 | Conditions to be met in relation to shares |
| |
(1) | Condition A of this section is that the shares must be— |
| |
(a) | subscribed for wholly in cash, and |
| |
(b) | fully paid up on the investment date. |
| 40 |
(2) | Condition B is that the shares must not carry— |
| |
(a) | any present or future right to be redeemed during the 5 year period, or |
| |
|
| |
|
| |
|
(b) | any present or future right to be converted into or exchanged for a loan |
| |
which is, or securities, shares or other rights which are, redeemable |
| |
| |
(3) | Shares are not fully paid up for the purposes of subsection (1)(b) if there is any |
| |
undertaking to pay cash to the CDFI at a future date in connection with the |
| 5 |
acquisition of the shares. |
| |
348 | Tax relief certificates |
| |
(1) | A “tax relief certificate” means a certificate issued by the CDFI in respect of the |
| |
investment which is in the form specified by the Commissioners for Her |
| |
Majesty’s Revenue and Customs. |
| 10 |
(2) | The CDFI must not issue tax relief certificates under this section in respect of |
| |
investments made in the CDFI in an accreditation period if the total value of— |
| |
(a) | those investments, and |
| |
(b) | any investments to which subsection (3) applies, |
| |
| will exceed the limit for that period. |
| 15 |
(3) | This subsection applies to investments which— |
| |
(a) | have been made in the CDFI in the accreditation period, and |
| |
(b) | in respect of which the CDFI has issued tax relief certificates under |
| |
paragraph 12 of Schedule 16 to FA 2002 (which makes in relation to |
| |
corporation tax provision corresponding to that made by this section). |
| 20 |
(4) | The limit for an accreditation period is— |
| |
(a) | £10 million if the CDFI is accredited for the period as a retail |
| |
community development finance institution (see section 340(8)), and |
| |
(b) | £20 million in any other case. |
| |
(5) | For the purposes of subsection (2) the value of an investment made in the CDFI |
| 25 |
| |
(a) | if the investment consists of a loan— |
| |
(i) | the amount of the loan, or |
| |
(ii) | if the loan agreement authorises the CDFI to draw down |
| |
amounts of the loan over a period of time, the amount |
| 30 |
committed under the loan agreement, and |
| |
(b) | if the investment consists of securities or shares, the amount subscribed |
| |
| |
(6) | The Treasury may by order substitute any other amount for any amount for the |
| |
time being specified in subsection (4). |
| 35 |
(7) | Any such substitution is to have effect in relation to such accreditation periods |
| |
as may be specified in the order; and those periods may, if the substitution |
| |
increases the amount for the time being specified in subsection (4), include |
| |
periods beginning before the order takes effect. |
| |
(8) | Any tax relief certificate issued in contravention of subsection (2) is invalid. |
| 40 |
(9) | A body is liable to a penalty of not more than £3,000 if it issues a tax relief |
| |
certificate which is made fraudulently or negligently. |
| |
|
| |
|