Income Tax Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Part 15 — Deduction of income tax at source
Chapter 19 — General
483

985
Meaning of “qualifying certificate of deposit”
(1)
In this Part “qualifying certificate of deposit” means a certificate of deposit
under which—
(a)
the amount payable is at least £50,000, exclusive of interest, and
(b)
that amount is payable at a specified time within 5 years beginning
5
with the date on which the deposit is made.
(2)
If an amount is denominated in a foreign currency, subsection (1)(a) has effect
as if it referred to an amount which is at least the equivalent in that currency of
£50,000 at the time the deposit is made.
(3)
For the meaning of “certificate of deposit”, see section 1019.
10
986
Meaning of “qualifying uncertificated eligible debt security unit”
(1)
In this Part “qualifying uncertificated eligible debt security unit” means an
uncertificated eligible debt security unit under which—
(a)
the amount payable is at least £50,000, exclusive of interest, and
(b)
that amount is payable at a specified time within 5 years beginning
15
with the date on which the deposit is made.
(2)
If an amount is denominated in a foreign currency, subsection (1)(a) has effect
as if it referred to an amount which is at least the equivalent in that currency of
£50,000 at the time the deposit is made.
(3)
In this section “uncertificated eligible debt security unit” means an
20
uncertificated unit of an eligible debt security where the issue of the unit
corresponds, in accordance with the current terms of issue of the eligible debt
security, to the issue of a certificate of deposit.
(4)
In subsection (3)—
(a)
“eligible debt security”,
25
(b)
“uncertificated” (in relation to a unit), and
(c)
“unit”,

have the meanings given by regulation 3(1) of the Uncertificated Securities
Regulations 2001 (S.I. 2001/3755).
(5)
For the meaning of “certificate of deposit”, see section 1019.
30
987
Meaning of “quoted Eurobond”
In this Part “quoted Eurobond” means a security, including a share (in
particular any permanent interest bearing share as defined in section 117 of
TCGA 1992), that—
(a)
is issued by a company,
35
(b)
is listed on a recognised stock exchange, and
(c)
carries a right to interest.

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
484

Part 16
Income Tax Acts definitions etc
Chapter 1
Definitions
988
Overview of Chapter
5
(1)
This Chapter contains definitions which apply for the purposes of the Income
Tax Acts, except where, in those Acts, the context otherwise requires.
(2)
To find a definition go first to section 989, which sets out some of the
definitions in full.
(3)
If a definition is not set out in full in section 989, the section indicates where it
10
is set out in full.
(4)
In some cases it is stated that a definition does not apply for the purposes of
specified provisions of the Income Tax Acts (see, for example, sections 990(2),
992(3) and 1007(4)).
(5)
And in some cases it is stated that a definition has effect only for the purposes
15
of specific provisions of the Income Tax Acts (see, for example, sections 991,
993, 995 and 1006).
989
The definitions
The following definitions apply for the purposes of the Income Tax Acts—
“Act” has the meaning given by section 990,
20
“authorised unit trust” is to be read in accordance with section 468(6) to
(9) of ICTA,
“bank” is to be read in accordance with section 991,
“basic rate” means the rate of income tax determined in pursuance of
section 6(2),
25
“basic rate limit” has the meaning given by section 20(2),
“body of persons” means any body politic, corporate or collegiate and any
company, fraternity, fellowship or society of persons whether
corporate or not corporate,
“building society” means a building society within the meaning of the
30
Building Societies Act 1986 (c. 53),
“capital allowance” means any allowance under CAA 2001,
“the Capital Allowances Act” means CAA 2001,
“chargeable gain” has the same meaning as in TCGA 1992,
“chargeable period” means an accounting period of a company or a tax
35
year,
“charity” means a body of persons or trust established for charitable
purposes only,
“close company” has the same meaning as in the Corporation Tax Acts
(see sections 414 and 415 of ICTA),
40
“company” has the meaning given by section 992,
“connected”, in relation to two persons being connected with one another,
is to be read in accordance with sections 993 and 994,

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
485

“control”, in relation to the control of a body corporate or a partnership, is
to be read in accordance with section 995,
“distribution” has the same meaning as in the Corporation Tax Acts (see
Part 6, and section 418, of ICTA),
“dividend income” has the meaning given by section 19,
5
“dividend ordinary rate” means the rate of income tax specified in section
8(1),
“dividend trust rate” means the rate of income tax specified in section 9(2),
“dividend upper rate” means the rate of income tax specified in section
8(2),
10
“farming” has the meaning given by section 996,
“for accounting purposes” has the meaning given by section 997(4),
“forestry” is to be read in accordance with section 996,
“generally accepted accounting practice” has the meaning given by
section 997(1) and (3),
15
“grossing up” is to be read in accordance with section 998,
“higher rate” means the rate of income tax determined in pursuance of
section 6(2),
“international accounting standards” has the meaning given by section
997(5),
20
“local authority” has the meaning given by section 999,
“local authority association” has the meaning given by section 1000,
“market gardening” has the meaning given by section 996,
“net income” has the meaning given by section 23 (see Step 2 in that
section),
25
“non-UK resident” means not resident in the United Kingdom (and
references to a non-UK resident or a non-UK resident person are to a
person who is not resident there),
“normal self-assessment filing date”, in relation to a tax year, means the 31
January following the tax year,
30
“notice” means notice in writing or in a form authorised (in relation to the
case in question) by directions under section 118 of FA 1998,
“offshore installation” has the meaning given by sections 1001 and 1002,
“oil and gas exploration and appraisal” has the meaning given by section
1003,
35
“ordinary share capital”, in relation to a company, means all the
company’s issued share capital (however described), other than capital
the holders of which have a right to a dividend at a fixed rate but have
no other right to share in the company’s profits,
“overseas property business” has the meaning given by Chapter 2 of Part
40
3 of ITTOIA 2005,
“period of account”—
(a)
in relation to a person, means any period for which the person
draws up accounts, and
(b)
in relation to a trade, profession, vocation or other business,
45
means any period for which the accounts of the business are
drawn up,
“permanent establishment”, in relation to a company, has the meaning
given by section 148 of FA 2003,
“personal representatives” in relation to a person who has died, means—
50

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
486

(a)
in the United Kingdom, persons responsible for administering
the estate of the deceased, and
(b)
in a territory outside the United Kingdom, those persons having
functions under its law equivalent to those of administering the
estate of the deceased,
5
“profits or gains” does not include chargeable gains,
“property investment LLP” has the meaning given by section 1004,
“qualifying distribution” has the meaning given by section 14(2) of ICTA,
“qualifying policy” means a policy of insurance which is a qualifying
policy for the purposes of Chapter 1 of Part 7 of ICTA,
10
“recognised stock exchange” has the meaning given by section 1005,
“registered pension scheme” has the meaning given by section 150(2) of
FA 2004,
“relevant foreign income” has the meaning given by section 830(1) to (3)
of ITTOIA 2005 but also includes, for any purpose mentioned in any
15
provision listed in section 830(4) of that Act, income treated as relevant
foreign income for that purpose by that provision,
“research and development” is to be read in accordance with section 1006,
“retail prices index” means—
(a)
the general index of retail prices (for all items) published by the
20
Office for National Statistics, or
(b)
if that index is not published for a relevant month, any
substituted index or index figures published by that Office,
“savings income” has the meaning given by section 18,
“savings rate” means the rate of income tax specified in section 7,
25
“Schedule A business” means any business the profits of which are
chargeable to corporation tax under Schedule A, including the business
in the course of which any transaction is (as a result of paragraph 1(2)
of that Schedule) to be treated as entered into,
“scheme administrator”, in relation to a pension scheme, has the meaning
30
given by section 270 of FA 2004 (but see also sections 271 to 274 of that
Act),
“settled property” (together with references to property comprised in a
settlement) is to be read in accordance with section 466,
“settlor” is to be read in accordance with sections 467 to 473,
35
“starting rate” means the rate of income tax determined in pursuance of
section 6(2),
“starting rate limit” has the meaning given by section 20(1),
“stepchild”, in relation to a civil partner, is to be read in accordance with
section 246 of the Civil Partnership Act 2004 (c. 33),
40
“51% subsidiary”, in relation to bodies corporate, has the same meaning
as in the Corporation Tax Acts (see section 838 of ICTA),
“75% subsidiary”, in relation to bodies corporate, has the same meaning
as in the Corporation Tax Acts (see section 838 of ICTA),
“tax” is to be read in accordance with section 832(3) of ICTA,
45
“tax credit” means a tax credit under section 397(1) of ITTOIA 2005,
“tax year” has the meaning given by section 4(2),
“the tax year 2007-08” (and any corresponding expression in which two
years are similarly mentioned) has the meaning given by section 4(4),

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
487

“total income” has the meaning given by section 23 (see Step 1 in that
section and also section 31),
“trade” includes any venture in the nature of trade,
“trust rate” means the rate of income tax specified in section 9(1),
“UK generally accepted accounting practice” has the meaning given by
5
section 997(2),
“UK property business” has the meaning given by Chapter 2 of Part 3 of
ITTOIA 2005,
“UK resident” means resident in the United Kingdom (and references to a
UK resident or a UK resident person are to a person who is resident
10
there),
“umbrella scheme” is to be read in accordance with section 468(6) to (9) of
ICTA,
“unauthorised unit trust” means a unit trust scheme which is neither an
authorised unit trust nor an umbrella scheme,
15
“unit holder” is to be read in accordance with section 468(6) to (9) of ICTA,
“unit trust scheme” has the meaning given by section 1007,
“venture capital trust” and “VCT” have the same meaning as in Part 6 (see
section 259(1)),
“woodlands” has the meaning given by section 996,
20
“year of assessment” means a tax year, and
“the year 1988-1989” means the tax year 1988-1989 (and any
corresponding expression in which two years are similarly mentioned
is to be read in the same way).
990
Meaning of “Act”
25
(1)
In the Income Tax Acts “Act” includes Northern Ireland legislation.
(2)
This section does not apply for the purposes of—
(a)
this Act (see instead section 1018), or
(b)
ITTOIA 2005 (see instead sections 879 and 880 of that Act).
991
Meaning of “bank”
30
(1)
This section has effect for the purposes of the provisions of the Income Tax Acts
which apply this section.
(2)
“Bank” means—
(a)
the Bank of England,
(b)
a person who has permission under Part 4 of FISMA 2000 to accept
35
deposits (but see subsection (3) for exclusions),
(c)
an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to
FISMA 2000 which has permission under paragraph 15 of that Schedule
to accept deposits (as a result of qualifying for authorisation under
paragraph 12(1) of that Schedule),
40
(d)
the European Investment Bank, and
(e)
an international organisation designated as a bank for the purposes of
this section by an order made by the Treasury.
(3)
The reference to a person who has permission under Part 4 of FISMA 2000 to
accept deposits does not include—
45

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
488

(a)
a building society,
(b)
a society registered within the meaning of the Friendly Societies Act
1974 (c. 46) or incorporated under the Friendly Societies Act 1992
(c. 40),
(c)
a society registered as a credit union under the Industrial and
5
Provident Societies Act 1965 (c. 12) or the Credit Unions (Northern
Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or
(d)
an insurance company within the meaning of section 275 of FA 2004.
(4)
The Treasury may designate an international organisation for the purposes of
this section only if the United Kingdom is a member of the organisation.
10
992
Meaning of “company”
(1)
In the Income Tax Acts “company” means any body corporate or
unincorporated association, but does not include a partnership, a local
authority or a local authority association.
(2)
Subsection (1) needs to be with read with section 468 of ICTA (authorised unit
15
trusts).
(3)
This section does not apply for the purposes of—
(a)
Part 6 (venture capital trusts),
(b)
Chapters 1, 3 and 4 of Part 13 (transactions in securities and land and
sales of income from occupation), and
20
(c)
sections 993 and 994 (meaning of “connected” persons).
993
Meaning of “connected” persons
(1)
This section has effect for the purposes of the provisions of the Income Tax Acts
which apply this section.
(2)
An individual (“A”) is connected with another individual (“B”) if—
25
(a)
A is B’s spouse or civil partner,
(b)
A is a relative of B,
(c)
A is the spouse or civil partner of a relative of B,
(d)
A is a relative of B’s spouse or civil partner, or
(e)
A is the spouse or civil partner of a relative of B’s spouse or civil
30
partner.
(3)
A person, in the capacity as trustee of a settlement, is connected with—
(a)
any individual who is a settlor in relation to the settlement,
(b)
any person connected with such an individual,
(c)
any close company whose participators include the trustees of the
35
settlement,
(d)
any non-UK resident company which, if it were UK resident, would be
a close company whose participators include the trustees of the
settlement,
(e)
any body corporate controlled (within the meaning of section 995) by a
40
company within paragraph (c) or (d),
(f)
if the settlement is the principal settlement in relation to one or more
sub-fund settlements, a person in the capacity as trustee of such a sub-
fund settlement, and

Income Tax Bill
Part 16 — Income Tax Acts definitions etc
Chapter 1 — Definitions
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(g)
if the settlement is a sub-fund settlement in relation to a principal
settlement, a person in the capacity as trustee of any other sub-fund
settlements in relation to the principal settlement.
(4)
A person who is a partner in a partnership is connected with—
(a)
any partner in the partnership,
5
(b)
the spouse or civil partner of any individual who is a partner in the
partnership, and
(c)
a relative of any individual who is a partner in the partnership.

But this subsection does not apply in relation to acquisitions or disposals of
assets of the partnership pursuant to genuine commercial arrangements.
10
(5)
A company is connected with another company if—
(a)
the same person has control of both companies,
(b)
a person (“A”) has control of one company and persons connected with
A have control of the other company,
(c)
A has control of one company and A together with persons connected
15
with A have control of the other company, or
(d)
a group of two or more persons has control of both companies and the
groups either consist of the same persons or could be so regarded if (in
one or more cases) a member of either group were replaced by a person
with whom the member is connected.
20
(6)
A company is connected with another person (“A”) if—
(a)
A has control of the company, or
(b)
A together with persons connected with A have control of the
company.
(7)
In relation to a company, any two or more persons acting together to secure or
25
exercise control of the company are connected with—
(a)
one another, and
(b)
any person acting on the directions of any of them to secure or exercise
control of the company.
994
Meaning of “connected” persons: supplementary
30
(1)
In section 993 and this section—
“company” includes any body corporate or unincorporated association,
but does not include a partnership (and see also subsection (2)),
“control” is to be read in accordance with section 416 of ICTA (except
where otherwise indicated),
35
“principal settlement” has the meaning given by paragraph 1 of Schedule
4ZA to TCGA 1992,
“relative” means brother, sister, ancestor or lineal descendant,
“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA
2005 (see section 620 of that Act), and
40
“sub-fund settlement” has the meaning given by paragraph 1 of Schedule
4ZA to TCGA 1992.
(2)
For the purposes of section 993—
(a)
a unit trust scheme is treated as if it were a company, and
(b)
the rights of the unit holders are treated as if they were shares in the
45
company.