|
| |
|
(9) | The market value of any plant or machinery at any time is to be determined on |
| |
the assumption of a disposal by an absolute owner free from— |
| |
(a) | all leases (including any agreement or arrangement which is or |
| |
includes a plant or machinery lease), and |
| |
| 5 |
| |
| |
| |
| |
| 10 |
(1) | Chapter 2 defines “close company” and other expressions used in this Part. |
| |
(2) | Chapter 3 imposes a charge to tax in connection with loans or advances by |
| |
close companies to participators. |
| |
(3) | Chapter 4 contains a power to obtain information in connection with close |
| |
| 15 |
(4) | For the meaning of “participator”, see section 454. |
| |
| |
| |
Meaning of “close company": general |
| |
| 20 |
(1) | For the purposes of the Corporation Tax Acts, a “close company” is a company |
| |
in relation to which condition A or B is met. |
| |
(2) | Condition A is that the company is under the control— |
| |
(a) | of 5 or fewer participators, or |
| |
(b) | of participators who are directors. |
| 25 |
(3) | Condition B is that 5 or fewer participators, or participators who are directors, |
| |
together possess or are entitled to acquire— |
| |
(a) | such rights as would, in the event of the winding up of the company |
| |
(“the relevant company”) on the basis set out in section 440, entitle them |
| |
to receive the greater part of the assets of the relevant company which |
| 30 |
would then be available for distribution among the participators, or |
| |
(b) | such rights as would, in that event, so entitle them if there were |
| |
disregarded any rights which any of them or any other person has as a |
| |
loan creditor (in relation to the relevant company or any other |
| |
| 35 |
(4) | For exceptions to this section, see sections 442 to 447 (companies which are not |
| |
| |
|
| |
|
| |
|
(5) | Section 451 (section 450: rights to be attributed etc) applies for the purposes of |
| |
subsection (3) and section 440 as it applies for the purposes of section 450. |
| |
(6) | See also section 441 (treatment of some persons as participators or directors for |
| |
the purposes of subsection (3)). |
| |
| 5 |
(a) | “control”, see sections 450 and 451, |
| |
(b) | “director”, see section 452, and |
| |
(c) | “loan creditor”, see section 453. |
| |
440 | Basis of winding up under section 439(3) |
| |
(1) | This section applies for the purposes of section 439(3). |
| 10 |
(2) | In the notional winding up of the relevant company, the part of the assets |
| |
available for distribution among the participators which any person is entitled |
| |
to receive is the aggregate of— |
| |
(a) | any part of those assets which the person would be entitled to receive |
| |
in the event of the winding up of the relevant company, and |
| 15 |
(b) | any part of those assets which the person would be entitled to receive |
| |
| |
(i) | any other company which is a participator in the relevant |
| |
company and is entitled to receive any assets in the notional |
| |
winding up were also wound up on the basis set out in this |
| 20 |
| |
(ii) | the part of the assets of the relevant company to which the other |
| |
company is entitled were distributed among the participators in |
| |
the other company in proportion to their respective entitlement |
| |
to the assets of the other company available for distribution |
| 25 |
| |
(3) | In the application of subsection (2)— |
| |
(a) | to the notional winding up of the other company mentioned in |
| |
paragraph (b) of that subsection, and |
| |
(b) | to any further notional winding up required by that paragraph (or by |
| 30 |
any further application of that paragraph), |
| |
| references to “the relevant company” are to be read as references to the |
| |
| |
441 | Treatment of some persons as participators or directors for the purposes of |
| |
| 35 |
(1) | The following provisions apply for the purpose of determining whether under |
| |
subsection (3) of section 439 five or fewer participators, or participators who |
| |
are directors, together possess or are entitled to acquire rights such as are |
| |
mentioned in paragraph (a) or (b) of that subsection. |
| |
(2) | A person is to be treated as a participator in or director of the relevant company |
| 40 |
if the person is a participator in or director of any other company which would |
| |
be entitled to receive assets in the notional winding up of the relevant company |
| |
on the basis set out in section 440. |
| |
|
| |
|
| |
|
(3) | No account is to be taken of a participator which is a company unless the |
| |
company possesses or is entitled to acquire the rights in a fiduciary or |
| |
| |
(4) | But subsection (3) does not apply for the purposes of section 440. |
| |
Companies which are not to be close companies |
| 5 |
442 | Particular types of company |
| |
A company is not to be treated as a close company if— |
| |
(a) | it is non-UK resident, |
| |
(b) | it is a registered industrial and provident society, or |
| |
(c) | it is a building society. |
| 10 |
443 | Companies controlled by or on behalf of Crown |
| |
(1) | A company is not to be treated as a close company as a result of section 439(2) |
| |
if it is controlled by or on behalf of the Crown. |
| |
(2) | A company is “controlled by or on behalf of the Crown”, for the purposes of |
| |
this section, if it is under the control of the Crown or of persons acting on behalf |
| 15 |
of the Crown, independently of any other person. |
| |
(3) | But a company is not controlled by or on behalf of the Crown, for the purposes |
| |
of this section, if it is a close company as a result of being under the control of |
| |
persons acting independently of the Crown. |
| |
444 | Companies involved with non-close companies |
| 20 |
(1) | A company is not to be treated as a close company if condition A or B is met. |
| |
(2) | Condition A is that the company— |
| |
(a) | is controlled by one or more companies none of which is a close |
| |
| |
(b) | cannot be treated as a close company except by taking, as one of the 5 |
| 25 |
or fewer participators requisite for its being so treated, a company |
| |
which is not a close company. |
| |
(3) | Condition B is that the company— |
| |
(a) | would not be a close company were it not for paragraph (a) of section |
| |
439(3) or paragraph (d) of section 450(3), and |
| 30 |
(b) | would not be a close company if the references in those paragraphs to |
| |
participators did not include loan creditors which are companies other |
| |
| |
(4) | References in subsections (2) and (3) to a close company include a company |
| |
which, if UK resident, would be a close company. |
| 35 |
445 | Section 444: registered pension schemes |
| |
(1) | If shares in a company (“C”) are held on trust for a registered pension scheme, |
| |
the persons holding the shares are to be treated, for the purposes of section |
| |
| |
(a) | as the beneficial owners of the shares, and |
| 40 |
|
| |
|
| |
|
(b) | in that capacity, as a company which is not a close company. |
| |
(2) | But subsection (1) does not apply if the scheme is established wholly or mainly |
| |
| |
(a) | directors, employees, past directors or past employees of a company |
| |
within subsection (3), or |
| 5 |
(b) | dependants of an individual within paragraph (a). |
| |
(3) | The companies within this subsection are— |
| |
| |
(b) | an associated company of C, |
| |
(c) | a company which is under the control of— |
| 10 |
| |
(ii) | an associate of a director of C, or |
| |
(iii) | two or more persons each of whom is such a director or |
| |
| |
| 15 |
| |
(a) | “associate”, see section 448, and |
| |
(b) | “associated company”, see section 449. |
| |
446 | Particular types of quoted company |
| |
(1) | A company is not to be treated as a close company at a particular time if— |
| 20 |
(a) | shares in the company carrying at least 35% of the voting power in the |
| |
company have been allotted unconditionally to, or acquired |
| |
unconditionally by, and are at that time beneficially held by, the public, |
| |
| |
(b) | any such shares have within the preceding 12 months been the subject |
| 25 |
of dealings on a recognised stock exchange, and the shares have within |
| |
those 12 months been listed on such an exchange. |
| |
(2) | But subsection (1) does not apply to a company at any time when the total |
| |
percentage of the voting power in the company possessed by all of the |
| |
company’s principal members exceeds 85%. |
| 30 |
(3) | For the purposes of this section, a person is a principal member of a company |
| |
if the person possesses a percentage of the voting power in the company of |
| |
more than 5% (but see subsection (4)). |
| |
(4) | If there are more than 5 persons within subsection (3), a person is a principal |
| |
member of the company only if— |
| 35 |
(a) | the person is one of the 5 persons who possess the greatest percentages, |
| |
| |
(b) | in a case where there are no such 5 persons because two or more |
| |
persons possess equal percentages of the voting power in the company, |
| |
the person is one of the 6 or more persons (including those two or more |
| 40 |
who possess equal percentages) who possess the greatest percentages. |
| |
(5) | In determining for the purposes of this section the voting power which a |
| |
person possesses, there is to be attributed to the person any voting power |
| |
which would be attributed to the person if section 451(3) to (6) applied for the |
| |
purposes of this section. |
| 45 |
|
| |
|
| |
|
(6) | In this section “shares”— |
| |
| |
(b) | do not include shares entitled to a fixed rate of dividend, whether with |
| |
or without a further right to participate in profits. |
| |
(7) | See also section 447 (section 446: meaning of “shares held beneficially by the |
| 5 |
| |
447 | Section 446: meaning of “shares beneficially held by the public” etc |
| |
(1) | For the purposes of section 446, shares in a company (C) are beneficially held |
| |
by the public if they are— |
| |
(a) | beneficially held by a UK resident company which is not a close |
| 10 |
company, or by a non-UK resident company which would not be a |
| |
close company if it were UK resident, |
| |
(b) | held on trust for a registered pension scheme, or |
| |
(c) | not comprised in a principal member’s holding. |
| |
(2) | But shares are not beneficially held by the public if they are held— |
| 15 |
| |
(b) | by an associate of such a director, |
| |
(c) | by a company which is under the control of one or more persons each |
| |
of whom is such a director or associate, |
| |
(d) | by an associated company of C, or |
| 20 |
(e) | as part of a fund the capital or income of which is applicable or applied |
| |
wholly or mainly for the benefit of any of individuals within subsection |
| |
| |
(3) | Those individuals are— |
| |
(a) | employees, directors, past employees or past directors of C or of any |
| 25 |
company within subsection (2)(c) or (d), and |
| |
(b) | dependants of any individuals within paragraph (a). |
| |
(4) | The reference in section 446(1) to shares which have been allotted |
| |
unconditionally to, or acquired unconditionally by, the public is to be read in |
| |
accordance with subsections (1) to (3). |
| 30 |
(5) | For the purposes of subsection (1), a principal member’s holding consists of the |
| |
shares which carry the voting power possessed by him. |
| |
(6) | The reference in subsection (2) to shares held by any person includes shares the |
| |
rights or powers attached to which would be attributed to the person if section |
| |
451(3) applied for the purposes of that subsection. |
| 35 |
(7) | Subsections (3) to (5) of section 446 (meaning of “principal member” and |
| |
determination of voting power possessed) apply for the purposes of this |
| |
section as they apply for the purposes of that section. |
| |
(8) | In this section, “shares” includes stock. |
| |
Meaning of other expressions in this Part |
| 40 |
| |
(1) | In this Part “associate”, in relation to a person (“P”), means— |
| |
|
| |
|
| |
|
(a) | any relative or partner of P, |
| |
(b) | the trustees of any settlement in relation to which P is a settlor, |
| |
(c) | the trustees of any settlement in relation to which any relative of P |
| |
(living or dead) is or was a settlor, |
| |
(d) | if P has an interest in any shares or obligations of a company which are |
| 5 |
subject to any trust, the trustees of any settlement concerned, |
| |
| |
| |
(ii) | has an interest in any shares or obligations of a company which |
| |
are subject to any trust, |
| 10 |
| any other company which has an interest in those shares or obligations, |
| |
(f) | if P has an interest in any shares or obligations of a company which are |
| |
part of the estate of a deceased person, the personal representatives of |
| |
| |
| 15 |
| |
(ii) | has an interest in any shares or obligations of a company which |
| |
are part of the estate of a deceased person, |
| |
| any other company which has an interest in those shares or obligations. |
| |
(2) | In this section, “relative” means— |
| 20 |
(a) | a spouse or civil partner, |
| |
(b) | a parent or remoter forebear, |
| |
(c) | a child or remoter issue, or |
| |
| |
| 25 |
For the purposes of this Part, a company is another’s “associated company” at |
| |
a particular time if, at that time or at any other time within the preceding 12 |
| |
| |
(a) | one of them has control of the other, or |
| |
(b) | both are under the control of the same person or persons. |
| 30 |
| |
(1) | This section applies for the purpose of this Part. |
| |
(2) | A person (“P”) is treated as having control of a company (“C”) if P— |
| |
| |
(b) | is able to exercise, or |
| 35 |
(c) | is entitled to acquire, |
| |
| direct or indirect control over C’s affairs. |
| |
(3) | In particular, P is treated as having control of C if P possesses or is entitled to |
| |
| |
(a) | the greater part of the share capital or issued share capital of C, |
| 40 |
(b) | the greater part of the voting power in C, |
| |
(c) | so much of the issued share capital of C as would, on the assumption |
| |
that the whole of the income of C were distributed among the |
| |
participators, entitle P to receive the greater part of the amount so |
| |
| 45 |
|
| |
|
| |
|
(d) | such rights as would entitle P, in the event of the winding up of C or in |
| |
any other circumstances, to receive the greater part of the assets of C |
| |
which would then be available for distribution among the |
| |
| |
(4) | Any rights that P or any other person has as a loan creditor are to be |
| 5 |
disregarded for the purposes of the assumption in subsection (3)(c). |
| |
(5) | If two or more persons together satisfy any of the conditions in subsections (2) |
| |
and (3), they are treated as having control of C. |
| |
(6) | See also section 451 (section 450: rights to be attributed etc). |
| |
451 | Section 450: rights to be attributed etc |
| 10 |
(1) | This section applies for the purposes of section 450. |
| |
(2) | A person is treated as entitled to acquire anything which the person— |
| |
(a) | is entitled to acquire at a future date, or |
| |
(b) | will at a future date be entitled to acquire. |
| |
| 15 |
(a) | possesses any rights or powers on behalf of another person (A), or |
| |
(b) | may be required to exercise any rights or powers on A’s direction or |
| |
| |
| those rights or powers are to be attributed to A. |
| |
(4) | There may also be attributed to a person all the rights and powers— |
| 20 |
(a) | of any company of which the person has, or the person and associates |
| |
of the person have, control, |
| |
(b) | of any two or more companies within paragraph (a), |
| |
(c) | of any associate of the person, or |
| |
(d) | of any two or more associates of the person. |
| 25 |
(5) | The rights and powers which may be attributed under subsection (4)— |
| |
(a) | include those attributed to a company or associate under subsection (3), |
| |
| |
(b) | do not include those attributed to an associate under subsection (4). |
| |
(6) | Such attributions are to be made under subsection (4) as will result in a |
| 30 |
company being treated as under the control of 5 or fewer participators if it can |
| |
| |
| |
(1) | In this Part, “director”, in relation to a company, includes— |
| |
(a) | a person occupying the position of director of the company, by |
| 35 |
| |
(b) | a person in accordance with whose directions or instructions the |
| |
directors of the company are accustomed to act, and |
| |
(c) | a person within subsection (2). |
| |
(2) | A person (P) is within this subsection if P— |
| 40 |
(a) | is a manager of the company or otherwise concerned in the |
| |
management of the company’s trade or business, and |
| |
|
| |
|