|
| |
|
Restriction on reliefs for non-active partners: pre-10 February 2004 events |
| |
32 | In Chapter 3 of Part 4 any reference to an early tax year in relation to an |
| |
individual carrying on a trade does not include a tax year the basis period |
| |
for which ends before 10 February 2004. |
| |
33 (1) | Sub-paragraphs (2) to (9) set out relief which is not covered by section 110(5) |
| 5 |
| |
(2) | Relief is not covered if it is given for a loss made in a trade in a tax year the |
| |
basis period for which ends before 10 February 2004. |
| |
(3) | Sub-paragraphs (4) to (9) apply if the individual carried on a trade in a tax |
| |
year the basis period for which includes 10 February 2004. |
| 10 |
(4) | Relief given for a loss made in the trade is not covered so far as the loss |
| |
derives from an allowance or deduction within sub-paragraph (5). |
| |
(5) | An allowance or deduction is within this sub-paragraph if it is— |
| |
(a) | a capital allowance in respect of expenditure incurred before 10 |
| |
February 2004 which is treated as an expense of the trade, or |
| 15 |
(b) | a deduction in respect of expenditure incurred before 10 February |
| |
2004 under section 42(1) of F(No.2)A 1992 or any of sections 138 to |
| |
| |
(6) | For the purposes of sub-paragraph (4) the amount of a loss that derives from |
| |
an allowance or deduction within sub-paragraph (5) is determined on a just |
| 20 |
| |
(7) | Relief given for a loss made in the trade is not covered so far as it is given for |
| |
the pre-announcement allowance in relation to the trade. |
| |
(8) | “Pre-announcement allowance” is to be read in accordance with section |
| |
118ZJ(4) and (6) to (8) of ICTA. |
| 25 |
(9) | For that purpose, references to the first restricted year are to be read as |
| |
references to the tax year mentioned in sub-paragraph (3). |
| |
| If sub-paragraph (3) covers more than one tax year, the first restricted year |
| |
is the first of the tax years covered. |
| |
(10) | Sub-paragraph (11) applies for the purpose of applying the restriction in |
| 30 |
section 110(4) (relevant relief not to exceed contribution to the firm) in |
| |
relation to an individual if before 10 February 2004 the individual |
| |
contributed an amount of capital to the firm. |
| |
(11) | That amount of capital is reduced (but not below nil)— |
| |
(a) | by the amount of relief (if any) to be left out of account for the |
| 35 |
purposes of section 110(5) as a result of paragraph 32 or this |
| |
paragraph (ignoring sub-paragraph (4)), and |
| |
(b) | by any pre-announcement allowance so far as— |
| |
(i) | relief has not been given for the allowance, and |
| |
(ii) | had relief been given for the allowance, the relief would have |
| 40 |
to be left out of account for the purposes of section 110(5)(b) |
| |
as mentioned in paragraph (a). |
| |
|
| |
|
| |
|
Regulations under section 114 |
| |
34 (1) | The provision which may be made in regulations under section 114 does not |
| |
include provision affecting the amount of relief that may be given for a loss |
| |
made in a trade that is not a post-1 December 2004 loss (as determined in |
| |
accordance with section 795). |
| 5 |
(2) | The repeal by this Act of sections 118ZN and 118ZO of ICTA (or any |
| |
provision inserting or amending, or affecting the application of, those |
| |
sections) does not affect the power of the Commissioners for Her Majesty’s |
| |
Revenue and Customs to make regulations under section 118ZN having |
| |
effect before the tax year 2007-08. |
| 10 |
Application of existing regulations under sections 114 and 802 |
| |
35 (1) | After the commencement of sections 114 and 802, the Partnerships |
| |
(Restrictions on Contributions to a Trade) Regulations 2005 (S.I. 2005/2017) |
| |
have effect as if made under those sections. |
| |
(2) | The Regulations so have effect subject to the following modifications. |
| 15 |
(3) | They have effect as if in regulation 2— |
| |
(a) | in the definition of “bank” for “section 840A of ICTA” there were |
| |
substituted “section 991 of ITA 2007”, |
| |
(b) | for the definition of “contribution to the relevant trade” there were |
| |
| 20 |
| |
(a) | for the purposes of section 114 of ITA 2007, |
| |
means the contribution to the firm for the |
| |
purposes of section 104 or 110 of that Act or |
| |
the contribution to the LLP for the purposes of |
| 25 |
section 107 of that Act, and |
| |
(b) | for the purposes of section 802 of ITA 2007, |
| |
has the meaning given by section 801(3) of |
| |
| |
(c) | for the definition of “ICTA” there were substituted— |
| 30 |
““ITA 2007” means the Income Tax Act 2007;”. |
| |
(4) | They have effect as if in regulations 3 to 6 for “contribution to the relevant |
| |
trade”, wherever occurring, there were substituted “capital contribution”. |
| |
(5) | They have effect as if— |
| |
(a) | in regulation 3(a) for “section 118ZN of ICTA” there were substituted |
| 35 |
“section 114(1)(a) and (b) of ITA 2007”, and |
| |
(b) | in regulation 3(b) for the words from “section 119” to the end there |
| |
were substituted “section 797 of ITA 2007 as mentioned in section |
| |
| |
(6) | They have effect as if in regulation 6(c) for “the trade” there were substituted |
| 40 |
| |
Losses in an employment or office |
| |
36 (1) | This paragraph applies for the purposes of section 128 if the loss is made in |
| |
| |
|
| |
|
| |
|
(2) | Relief for the loss can be given for the tax year 2006-07. |
| |
(3) | Sub-paragraphs (4) and (5) apply if relief for the loss is claimed for the tax |
| |
| |
(4) | If relief is to be given, the relief is given in the way it would have been given |
| |
had it been given under section 380(1)(b) of ICTA ignoring this Act (and |
| 5 |
section 129 of this Act is to be read accordingly). |
| |
(5) | Section 72 of FA 1991 applies as if the relief had been claimed under section |
| |
| |
Loss relief against miscellaneous income: Case VI losses |
| |
37 (1) | This paragraph applies if a person makes a loss in any transaction— |
| 10 |
(a) | which was of such a nature that, if any profits had arisen from it, the |
| |
person would have been liable to income tax under Case VI of |
| |
Schedule D for any tax year before the tax year 2005-06, and |
| |
(b) | which did not fall within section 34, 35 or 36 of ICTA. |
| |
(2) | So far as relief for the loss has not previously been given, the loss (or the |
| 15 |
unused part of it) is to be treated as a loss available for deduction in |
| |
accordance with section 153. |
| |
| |
Losses on disposal of shares |
| |
Qualifying trading companies |
| 20 |
38 (1) | In relation to shares issued before 17 March 2004, section 134(2)(a) applies |
| |
with the omission of sub-paragraph (iv) and the “and” immediately before |
| |
| |
(2) | In relation to shares issued before 6 April 1998, section 134 applies with the |
| |
substitution for subsections (2) to (5) of— |
| 25 |
“(2) | Condition A is that the company either— |
| |
(a) | is a trading company on the date of the disposal, or |
| |
(b) | has ceased to be a trading company at a time which is not |
| |
more than 3 years before that date and has not since that time |
| |
been an excluded company or an investment company. |
| 30 |
(3) | Condition B is that the company either— |
| |
(a) | has been a trading company for a continuous period of 6 |
| |
years ending on that date or at that time, or |
| |
(b) | has been a trading company for a shorter continuous period |
| |
ending on that date or at that time and has not since the |
| 35 |
beginning of that period been an excluded company or an |
| |
| |
(4) | Condition C is that none of the shares in the company has been listed |
| |
on a recognised stock exchange at any time in the period— |
| |
(a) | beginning with the incorporation of the company or, if later, |
| 40 |
12 months before the date on which the shares in question |
| |
| |
|
| |
|
| |
|
(b) | ending with the date on which the shares are disposed of. |
| |
(5) | Condition D is that the company has been UK resident throughout |
| |
the period from its incorporation until the date of the disposal.” |
| |
(3) | In relation to shares issued before 7 March 2001, section 134(4)(b) applies |
| |
with the substitution for “at the relevant time” of “throughout the relevant |
| 5 |
| |
(4) | For the purposes of sub-paragraph (3), shares that were issued— |
| |
(a) | on or after 5 April 1998, but |
| |
| |
| are treated as having been issued on or after 7 March 2001 in respect of any |
| 10 |
part of the relevant period which falls on or after that date. |
| |
(5) | Sub-paragraphs (1) to (4) apply in relation to section 576A of ICTA (which |
| |
makes corresponding provision for the purposes of corporation tax) as they |
| |
apply in relation to section 134. |
| |
| 15 |
39 (1) | In relation to new shares issued before 6 April 2007, section 136(2) applies |
| |
with the omission of “This is subject to section 145(3).” |
| |
(2) | In this paragraph “new shares” is to be read in accordance with section 145. |
| |
| |
40 (1) | In relation to shares issued before 6 April 2007, section 137 applies with the |
| 20 |
| |
(a) | the omission of subsection (2), |
| |
(b) | in subsection (5), the omission of paragraph (d)(ii) and the “or” |
| |
immediately before it, and |
| |
(c) | the omission of subsection (6). |
| 25 |
(2) | In relation to shares issued before 6 April 2000, section 137 applies with the |
| |
substitution for the definition of “research and development” in subsection |
| |
| |
““research and development” means any activity which is |
| |
intended to result in a patentable invention (within the |
| 30 |
meaning of the Patents Act 1977) or in a computer program.” |
| |
(3) | Section 137 does not apply in relation to shares issued before 6 April 1998. |
| |
(4) | Sub-paragraphs (1) to (3) apply in relation to section 576B of ICTA (which |
| |
makes corresponding provision for the purposes of corporation tax) as they |
| |
apply in relation to section 137. |
| 35 |
Ceasing to meet trading requirement because of administration or receivership |
| |
41 (1) | In relation to shares issued before 17 March 2004, section 138 applies with |
| |
the following modifications— |
| |
(a) | in subsection (1), the omission of “merely” and the substitution for |
| |
“the company or any of its subsidiaries” of “its”, |
| 40 |
(b) | in subsection (2)(b), the omission of “concerned”, |
| |
(c) | in subsection (3)(a), the omission of “or any of its subsidiaries”, |
| |
|
| |
|
| |
|
(d) | in subsection (3)(b), the omission of “or any of its subsidiaries”, and |
| |
(e) | in subsection (4), the omission of “is”, in the second place where it |
| |
| |
(2) | In relation to an administration order the petition for which was presented |
| |
before 15 September 2003, section 138(2) applies with the substitution for |
| 5 |
| |
“(a) | the making of the order in question, and”. |
| |
(3) | In relation to shares issued before 21 March 2000, section 138 applies with |
| |
the omission of subsections (1) and (2). |
| |
(4) | In the application of sub-paragraph (3) on or after 21 March 2000, shares— |
| 10 |
(a) | that were issued on or after 6 April 1998 but before 21 March 2000, |
| |
| |
(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. |
| 15 |
(5) | Section 138 does not apply in relation to shares issued before 6 April 1998. |
| |
(6) | Sub-paragraphs (1) to (5) apply in relation to section 576C of ICTA (which |
| |
makes corresponding provision for the purposes of corporation tax) as they |
| |
apply in relation to section 138. |
| |
The control and independence requirement |
| 20 |
42 (1) | In relation to shares issued before 6 April 2007, section 139(1)(a) applies with |
| |
the omission of “of the company”. |
| |
(2) | In relation to shares issued before 21 March 2000, section 139 applies with |
| |
the following modifications— |
| |
(a) | the substitution for subsections (1) to (3) of— |
| 25 |
“(1) | The control element of the requirement is that— |
| |
(a) | the company must not control (or together with any |
| |
person connected with it control) another company or |
| |
have a 51% subsidiary, and |
| |
(b) | no arrangements must be in existence by virtue of |
| 30 |
which the company could fail to meet paragraph (a). |
| |
(2) | The independence element of the requirement is that— |
| |
(a) | the company must not be under the control of another |
| |
company (or another company and any other person |
| |
connected with that company) or be a 51% subsidiary |
| 35 |
| |
(b) | no arrangements must be in existence by virtue of |
| |
which the company could fail to meet paragraph (a). |
| |
(3) | This section is subject to section 145(3); and nothing in |
| |
subsection (1) prevents the company having one or more |
| 40 |
qualifying subsidiaries.”, and |
| |
(b) | in subsection (4) the omission of the definition of “arrangements” |
| |
and, in the definition of “control”, the omission of “in subsection |
| |
| |
(3) | In the application of sub-paragraph (2) on or after 21 March 2000, shares— |
| 45 |
|
| |
|
| |
|
(a) | that were issued on or after 6 April 1998 but before 21 March 2000, |
| |
| |
(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. |
| 5 |
(4) | Section 139 does not apply in relation to shares issued before 6 April 1998. |
| |
(5) | Sub-paragraphs (1) to (4) apply in relation to section 576D of ICTA (which |
| |
makes corresponding provision for the purposes of corporation tax) as they |
| |
apply in relation to section 139. |
| |
(6) | For the purposes of sub-paragraph (5), sub-paragraph (2) applies with the |
| 10 |
| |
(a) | in paragraph (a), the substitution for “section 145(3)” of “section |
| |
| |
(b) | in paragraph (b), the insertion at the end of “and paragraph (b)”. |
| |
The qualifying subsidiaries requirement |
| 15 |
43 (1) | Section 140 does not apply in relation to shares issued before 6 April 1998. |
| |
(2) | Sub-paragraph (1) applies in relation to section 576E of ICTA (which makes |
| |
corresponding provision for the purposes of corporation tax) as it applies in |
| |
| |
The property managing subsidiaries requirement |
| 20 |
44 (1) | Section 141 does not apply in relation to shares issued before 17 March 2004. |
| |
(2) | Sub-paragraph (1) applies in relation to section 576F of ICTA (which makes |
| |
corresponding provision for the purposes of corporation tax) as it applies in |
| |
| |
The gross assets requirement |
| 25 |
45 (1) | In relation to shares issued before 6 April 2006, section 142 applies with the |
| |
substitution in subsections (1) and (2)— |
| |
(a) | of “£15 million” for “£7 million”, and |
| |
(b) | of “£16 million” for “£8 million”. |
| |
(2) | For the purposes of sub-paragraph (1) shares issued on or after 6 April 2006 |
| 30 |
to a person who subscribed for them before 22 March 2006 are treated as |
| |
having been issued before 6 April 2006. |
| |
(3) | Section 142 does not apply in relation to shares issued before 6 April 1998. |
| |
(4) | Sub-paragraphs (1) to (3) apply in relation to section 576G of ICTA (which |
| |
makes corresponding provision for the purposes of corporation tax) as they |
| 35 |
apply in relation to section 142. |
| |
The unquoted status requirement |
| |
46 (1) | In relation to shares issued before 7 March 2001, section 143 applies with the |
| |
| |
|
| |
|
| |
|
(a) | the substitution for subsection (1) of— |
| |
“(1) | The unquoted status requirement is that the company must |
| |
be an unquoted company throughout the relevant period.”, |
| |
(b) | the substitution for subsection (2) of— |
| |
“(2) | If the company is an unquoted company at the time when any |
| 5 |
shares are issued, it is not treated for the purposes of this |
| |
section as ceasing to be an unquoted company in relation to |
| |
those shares at any subsequent time merely because any |
| |
shares, stocks, debentures or other securities of the company |
| |
| 10 |
(a) | listed on an exchange designated by an order made |
| |
for the purposes of section 184(3)(b), or |
| |
(b) | dealt in by any means designated by an order made |
| |
for the purposes of section 184(3)(c), |
| |
| if the order was made after the shares were issued.”, and |
| 15 |
(c) | in subsection (3) the substitution for the definition of “arrangements” |
| |
| |
““the relevant period” means the period— |
| |
(a) | beginning with the incorporation of the |
| |
company or, if later, the date one year before |
| 20 |
the issue of the shares in question, and |
| |
(b) | ending with the date of the disposal.” |
| |
(2) | For the purposes of sub-paragraph (1)(a) and (c), shares that were issued— |
| |
(a) | on or after 5 April 1998, but |
| |
| 25 |
| are treated as having been issued on or after 7 March 2001 in respect of any |
| |
part of the relevant period which falls on or after that date. |
| |
(3) | In the application of sub-paragraph (1)(b) on or after 7 March 2001, shares— |
| |
(a) | that were issued on or after 5 April 1998 but before 7 March 2001, and |
| |
(b) | to which EIS relief or relief under Schedule 5B to TCGA 1992 was |
| 30 |
attributable immediately before 7 March 2001, |
| |
| are treated as having been issued on or after 7 March 2001. |
| |
(4) | Section 143 does not apply in relation to shares issued before 6 April 1998. |
| |
(5) | Sub-paragraphs (1) to (4) apply in relation to section 576H of ICTA (which |
| |
makes corresponding provision for the purposes of corporation tax) as they |
| 35 |
apply in relation to section 143. |
| |
(6) | For the purposes of sub-paragraph (5), sub-paragraph (1) applies with the |
| |
insertion after “section 184(3)(b)” and “section 184(3)(c)” of “of ITA 2007”. |
| |
Power to amend requirements by Treasury order |
| |
47 (1) | Section 144 does not apply in relation to shares issued before 6 April 1998. |
| 40 |
(2) | Sub-paragraph (1) applies in relation to section 576I of ICTA (which makes |
| |
corresponding provision for the purposes of corporation tax) as it applies in |
| |
| |
|
| |
|