House of Commons portcullis
House of Commons
Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill


Income Tax Bill
Part 12 — Accrued income profits
Chapter 2 — Accrued income profits and losses

341

 

in section 660(1) also acquired the securities with the right to receive unrealised

interest.

(2)   

The amount of the reduction depends on whether subsection (3) applies.

(3)   

This subsection applies if—

(a)   

T has received, as transferee, some or all of that unrealised interest, and

5

(b)   

T is liable for income tax on it for the tax year in which it was received.

(4)   

If subsection (3) applies, the reduction is equal to the value on the day of the

transfer to T of the right to receive the unrealised interest (“the earlier value”)

less the total so received.

(5)   

If subsection (3) does not apply, the reduction is equal to the earlier value.

10

(6)   

But if the reduction under subsection (4) or (5) exceeds the amount mentioned

in subsection (1), that amount is treated as reduced to nil.

662     

New securities issued with extra return: special rules about payments

(1)   

In the case of a transfer treated as made under section 649 (new securities

issued with extra return), the amount of the payment treated as made under

15

section 632(1) (payment on transfer with accrued interest) is not determined

under section 632(2) to (5).

(2)   

Instead, that amount depends on whether under the issue arrangements the

person to whom the new securities are issued accounts to the issuer

separately—

20

(a)   

for the extra return, and

(b)   

for the rest of the issue price.

(3)   

If the person does account for them separately, the amount of the payment is

the amount of the extra return separately accounted for.

(4)   

If the person does not account for them separately, the amount of the payment

25

is an amount equal to—equation: cross[char[I],over[char[A],char[B]]]

   

where—

I is the interest payable on the new securities on the first interest payment

day after the new issue day (“the payment day”),

A is the number of days in the relevant period, and

30

B is the number of days in the period beginning with the first day of the

relevant period and ending with the payment day.

(5)   

Subsection (4) is subject to section 659 (transfers with or without accrued

interest: interest in default).

(6)   

In this section “the extra return”, “the new issue day”, “new securities” and “the

35

relevant period” have the same meaning as in section 649.

663     

Transfers without accrued interest to makers of manufactured payments

(1)   

This section applies if—

 
 

Income Tax Bill
Part 12 — Accrued income profits
Chapter 2 — Accrued income profits and losses

342

 

(a)   

the manufactured payments conditions are met (see section 647(2)),

and

(b)   

the nominal value of the securities subject to the seller’s contract is less

than that of the securities transferred to the seller.

(2)   

The amount of the payment treated as made to the seller under section 633 on

5

the transfer of the securities to the seller is reduced.

(3)   

The reduction is by so much of that amount as is attributable to securities (“the

matched securities”) of a nominal value equal to that of the securities subject to

the seller’s contract.

(4)   

If there is more than one transfer of securities to the seller, those transferred to

10

the seller earlier are treated as the matched securities before those transferred

later.

(5)   

In this section “the seller” and “the seller’s contract” have the same meaning as

in section 647.

(6)   

For cases where subsection (1)(b) does not apply, see section 647(3) (under

15

which the seller is treated as an excluded transferee).

664     

Foreign currency securities: sterling equivalent of payments on transfers

(1)   

The sterling equivalent of the amount of the payment treated as made on a

transfer of securities is determined in accordance with this section if interest on

the securities is payable in a currency other than sterling (“a foreign currency”).

20

(2)   

If the payment is determined under section 632(3), 633(3) or 662(3) (transfers

under an arrangement by which interest is accounted for separately), the

amount of the payment depends on whether the sterling equivalent of the

interest separately accounted for is shown in an agreement for transfer.

(3)   

If the sterling equivalent is so shown, the amount of the payment is taken to be

25

that sterling equivalent.

(4)   

If the sterling equivalent is not so shown, the amount is taken to be the sterling

equivalent on the settlement day of the interest separately accounted for.

(5)   

If the amount of the payment treated as made is determined under any other

provision (except section 660 (transfers with unrealised interest: interest in

30

default)), the amount is taken to be its sterling equivalent on the settlement

day.

(6)   

For the purposes of this section, the sterling equivalent of an amount or value

in a foreign currency is to be calculated by reference to the London closing rate

of exchange for the day concerned.

35

665     

Foreign currency securities: unrealised interest payable in foreign currency

(1)   

This section applies if unrealised interest is payable in a currency other than

sterling (“a foreign currency”).

(2)   

For the purposes of section 631(1) (amount of accrued income profits where

settlement day outside interest period) the amount of the unrealised interest is

40

taken to be its sterling equivalent on the settlement day.

(3)   

For the purposes of sections 660 (transfers with unrealised interest: interest in

default) and 661 (successive transfers with unrealised interest in default), the

 
 

Income Tax Bill
Part 12 — Accrued income profits
Chapter 2 — Accrued income profits and losses

343

 

value on any day of the right to receive unrealised interest is the sterling

equivalent on that day of that value in the foreign currency.

(4)   

For the purposes of those sections unrealised interest received in a foreign

currency is taken to be the sterling equivalent on the day of receipt of the

amount received.

5

(5)   

For the purposes of this section, the sterling equivalent of an amount or value

in a foreign currency is to be calculated by reference to the London closing rate

of exchange for the day concerned.

Nominees and trustees

666     

Certain transfers by or to nominees or trustees treated as made by or to others

10

(1)   

Transfers of securities by or to a person as nominee for another person (“A”)

are treated for the purposes of this Chapter as transfers by or to A.

(2)   

Transfers of securities by or to a person (“T”) as trustee for another person (“B”)

are treated for the purposes of this Chapter as transfers by or to B if B is

absolutely entitled as against T.

15

(3)   

For the purposes of subsection (2) where T is the transferor, B is absolutely

entitled as against T if immediately before the transfer B has the exclusive right

to direct how the securities are to be dealt with.

(4)   

For the purposes of subsection (2) where T is the transferee, B is absolutely

entitled as against T if immediately after the transfer B has that exclusive right.

20

(5)   

For the purposes of subsections (3) and (4), a right to direct how securities are

to be dealt with is treated as an exclusive right despite being subject to

satisfying any outstanding charge, lien or other right of the trustee to resort to

the securities for payment of duty, taxes, costs or other outgoings.

(6)   

Subsection (1) applies to a transfer of securities by or to a person as nominee

25

for two or more persons as it applies to a transfer of securities by or to a person

as nominee for one person, taking the references to A as references to the two

or more persons.

(7)   

This section applies to a transfer of securities by or to a person as trustee for

two or more persons as it applies to a transfer of securities as trustee for one

30

person, taking—

(a)   

the references to B as references to the two or more persons, and

(b)   

the references to B being absolutely entitled as references to the two or

more persons being jointly absolutely entitled.

(8)   

The fact that a person is an infant or otherwise lacks legal capacity is to be

35

disregarded in determining for the purposes of this section whether the person

is absolutely entitled as against T.

667     

Trustees’ accrued income profits treated as settlement income

(1)   

If the trustees of a settlement are treated as making qualifying accrued income

profits, those profits are to be taken to be income arising under the settlement

40

for the purposes of Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts

treated as income of settlor).

 
 

Income Tax Bill
Part 12 — Accrued income profits
Chapter 2 — Accrued income profits and losses

344

 

(2)   

Subsection (3) applies if the trustees of a settlement—

(a)   

are non-UK resident or domiciled outside the United Kingdom

throughout a tax year in which an interest period or part of an interest

period falls, and

(b)   

would have been treated as making an amount or an additional amount

5

of qualifying accrued income profits in the interest period if the trustees

had been UK resident or domiciled in the United Kingdom during a

part of each such tax year.

(3)   

The amount or additional amount of qualifying accrued income profits that the

trustees would have been treated as making is to be taken to be income arising

10

under the settlement for the purposes of Chapter 5 of Part 5 of ITTOIA 2005.

(4)   

In this section—

(a)   

“qualifying accrued income profits” means accrued income profits

which are treated as made—

(i)   

under section 628(5), or

15

(ii)   

under section 630(2) in respect of a transfer of variable rate

securities, and

(b)   

in any case where there are no trustees of a settlement, references to

such trustees are to any persons entitled to securities comprised in the

settlement.

20

(5)   

In the case of qualifying accrued income profits within subsection (4)(a)(ii)—

(a)   

the reference in subsection (2)(a) to an interest period is to the period—

(i)   

beginning with the day after the last day of the only or last

interest period of the securities, and

(ii)   

ending with the settlement day, and

25

(b)   

the reference in subsection (2)(b) to making qualifying accrued income

profits in the interest period is to be read as making them in the tax year

in which settlement day falls.

Relief where transfer proceeds unremittable

668     

Relief for unremittable transfer proceeds: general

30

(1)   

This section applies if—

(a)   

a person is liable for income tax on accrued income profits,

(b)   

the profits are calculated by reference to payments treated as made to

the person in an interest period,

(c)   

the payments are so treated as a result of the person making transfers

35

of foreign securities of a particular kind, and

(d)   

the proceeds of the transfers are unremittable in the tax year.

(2)   

If the person makes a claim for relief under this section—

(a)   

the profits are reduced by the amount of the payments treated as made

to the person, or

40

(b)   

if that amount exceeds the profits, the profits are reduced to nil.

(3)   

But see section 670 (withdrawal of relief).

(4)   

In this section and section 669 “foreign securities” means securities which are

situated outside the United Kingdom.

 
 

Income Tax Bill
Part 12 — Accrued income profits
Chapter 2 — Accrued income profits and losses

345

 

(5)   

For the purposes of this section and sections 669 and 670, proceeds of transfers

of foreign securities are unremittable in relation to a person if the person is

prevented from transferring them to the United Kingdom because of—

(a)   

the laws of the territory where the securities are situated,

(b)   

executive action of its government, or

5

(c)   

the impossibility of obtaining there currency that could be transferred

to the United Kingdom.

(6)   

For the purposes of this section the place where securities are situated is to be

determined in accordance with sections 275(1) and (2)(b) and 275C of TCGA

1992.

10

(7)   

Any claim under this section must be made on or before the fifth anniversary

of the normal self-assessment filing date for the tax year for which the profits

would be chargeable to tax if no claim were made.

(8)   

A person’s personal representatives may make any claim under this section

which the person might have made.

15

669     

Relief for unremittable transfer proceeds: section 630 profits

(1)   

This section applies if—

(a)   

a person is liable for income tax on accrued income profits within

section 630(2) (making accrued income profits: settlement day outside

interest period),

20

(b)   

the person is so liable as a result of making transfers of foreign

securities of a particular kind, and

(c)   

the proceeds of the transfers are unremittable in the tax year.

(2)   

If the person makes a claim for relief under this section the profits are reduced

to nil.

25

(3)   

But see section 670 (withdrawal of relief).

(4)   

Any claim under this section must be made on or before the fifth anniversary

of the normal self-assessment filing date for the tax year for which the profits

would be chargeable to tax if no claim were made.

(5)   

A person’s personal representatives may make any claim under this section

30

which the person might have made.

670     

Withdrawal of relief

(1)   

This section applies if—

(a)   

a claim under section 668(2) or 669(2) has been made in relation to

profits, and

35

(b)   

the proceeds of the transfers cease to be unremittable.

(2)   

The claimant is treated as making accrued income profits of an amount equal

to the reduction under that section.

(3)   

If the claimant has died, the claimant’s personal representatives are so treated.

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2007
Revised 5 February 2007