Income and Corporation Taxes Act 1988

307 Withdrawal of relief. U.K.

(1) M1 Where any relief has been given which is subsequently found not to have been due, it shall be withdrawn by the making of an assessment to tax under Case VI of Schedule D for the year of assessment for which the relief was given F1 . . . .

[F2 (1A) Relief may not be withdrawn, in relation to shares issued by a company on any date, on the ground that the company is not a qualifying company or that the requirements of [F3 section 289(1)(b), (ba), (c) or (d)] are not met unless—

(a) the company has given notice under section 310 [F4 or paragraph 16(2) or (4) of Schedule 5B to the 1992 Act], or

(b) an inspector has given notice to the company stating that, by reason of that ground, the whole or any part of the relief given to individuals to whom the shares were issued on that date was not, in his opinion, due.

(1B) The giving of notice by an inspector under subsection (1A) above shall be taken, for the purposes of the provisions of the Management Act relating to appeals against decisions on claims, to be a decision refusing a claim made by the company.

[F5 (1C) Where any issue has been determined on an appeal brought by virtue of paragraph 1A(6) of Schedule 5B to the 1992 Act (appeal against notice that shares never have been, or have ceased to be, eligible shares), the determination shall be conclusive for the purposes of any appeal brought by virtue of subsection (1B) above on which that issue arises.]

(2) Subject to subsections (3) to (7) below, no assessment for withdrawing relief may be made, and no notice may be given under subsection (1A) above, more than six years after the end of the year of assessment—

(a) in which the time mentioned in section 289(3) falls, or

(b) in which the event by reason of which the claimant ceases to be eligible for relief occurs,

whichever is the later]

(3) No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his death.

(4) Where a person has, by a disposal or disposals to which section 299(1)(b) applies, disposed of all the [F6 eligible shares] issued to him by a company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when he is connected with the company within the meaning of section 291.

(5) Subsection (2) above is without prejudice to section 36 of the Management Act ([F7 fraudulent or negligent conduct]).

(6) In its application to an assessment made by virtue of this section, section 86 of the Management Act (interest on overdue tax) shall have effect as if [F8 the relevant date] were—

(a) M2 in the case of relief withdrawn by virtue of section [F9 289(6)][F10 or 299B(1)]—

(i) so far as effect has been given to the relief in accordance with [F11 PAYE regulations], 5th April in the year of assessment in which effect was so given;

(ii) so far as effect has not been so given, the date on which the relief was granted.

[F12 (aa) in the case of relief withdrawn by virtue of [F13 section 289(1)(c) or (d)], the date on which the relief was granted]

(b) M3 in the case of relief withdrawn by virtue of [F14 section 289(1)(ba), 291], 293, 297, 302, 303(1) or 305 in consequence of any event after the grant of the relief, the date of that event;

(c) in the case of relief withdrawn by virtue of section 299(1) in consequence of a disposal after the grant of the relief, the date of the disposal;

[F15 (cca) in the case of relief withdrawn by virtue of section 299(5), the date on which the option was granted]

[F16 (ca) in the case of relief withdrawn by virtue of section 299A in consequence of the making of any loan after the grant of the relief, the date of the making of the loan;]

(d) in the case of relief withdrawn by virtue of section 300 in consequence of a receipt of value after the grant of the relief, the date of the receipt.

(7) M4 For the purposes of subsection (6) above the date on which the relief is granted is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the inspector issued a notice to the claimant showing the amount of tax payable after giving effect to the relief.

[F17 (8A) References in this section to the withdrawal of relief include its reduction]

(8) M5 Where a company has ceased to be a qualifying company in consequence of the operation of section 294, subsection (6) above shall apply as if the relief was withdrawn in consequence of an event which occurred at the time when the company so ceased to be a qualifying company.

(9) F18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in s. 307(1) repealed (with effect as mentioned in s. 137(1)(2), Sch. 26 Pt. 5(17) Note of the repealing Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(a), Sch. 26 Pt. 5(17)

F2 S. 307(1A)(1B)(2) substituted for s. 307(2) (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(b)

F3 Words in s. 307(1A) substituted (with effect as mentioned in Sch. 15 para. 40(2) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 7(a)

F4 Words in s. 307(1A) inserted (with effect as mentioned in s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 20(1)(b)

F5 S. 307(1C) inserted (with effect as mentioned in s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 20(2)

F6 Words in s. 307(4) substituted (with effect as mentioned in s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 20(3)

F7 1989 s.149(4)(b)but does not affect the making of assessments for years before 1983-84or for accounting periods ending before 1April 1983.Previously

“fraud and wilful default) and section 37 of that Act (neglect.”.

F8 Words in s. 307(6) substituted (with effect as mentioned in Sch. 18 para. 17(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 18 para. 5

F9 Words in s. 307(6)(a) substituted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(c)(i)

F10 Words in s. 307(6)(a) inserted (with effect as mentioned in s. 71(5) of the amending Act) by Finance Act 1998 (c. 36), s. 71(2)

F11 Words in s. 307(6)(a)(i) substituted (6.4.2003 with effect in accordance with s. 723(1) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 para. 38 (with Sch. 7)

F12 S. 307(6)(aa) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(c)(ii)

F13 Words in s. 307(6)(aa) substituted (with effect as mentioned in Sch. 15 para. 40(2) of the amending Act) by Finance Act 2001 (c. 9), Sch. 15 para. 7(b)

F14 Words in s. 307(6)(b) substituted (with effect as mentioned in s. 74(3) of the amending Act) by Finance Act 1998 (c. 36), Sch. 13 para. 20(4)

F15 S. 307(6)(cca) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(c)(iii)

F16 S. 307(6)(ca) inserted (27.7.1993 with application in relation to any case in which the claim for relief is made on or after 16.3.1993) by 1993 c. 34, s. 111(3)(4)

F17 S. 307(8A) inserted (with effect as mentioned in s. 137(1)(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(d)

F18 S. 307(9) repealed (with effect as mentioned in s. 137(1)(2), Sch. 26 Pt. 5(17) Note of the repealing Act) by Finance Act 1994 (c. 9), Sch. 15 para. 22(e), Sch. 26 Pt. 5(17)

Marginal Citations

M1 Source-1983 Sch.5 14(1), (1A); 1987 s.42(5)

M2 Source-1981 s.62(6)(d); 1983 Sch.5 14(2)

M3 Source-1981 s.62(6)(a)-(c); 1983 Sch.5 14(2); 1983 Sch.1 8; 1986 Sch.9 14

M4 Source-1981 s.62(7)

M5 Source-1983 Sch.5 5A(10); 1986 Sch.9 7