Income and Corporation Taxes Act 1988

CHAPTER I U.K. CANCELLATION OF [F1 CORPORATION TAX] ADVANTAGES FROM CERTAIN TRANSACTIONS IN SECURITIES

Textual Amendments

F1 Words in Pt. 17 Ch. 1 heading substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 153 (with Sch. 2)

703 Cancellation of [F2 corporation tax] advantage. U.K.

(1) M1 Where—

(a) in any such circumstances as are mentioned in section 704, and

(b) in consequence of a transaction in securities or of the combined effect of two or more such transactions,

a [F3 company] is in a position to obtain, or has obtained, a [F4 corporation tax] advantage, then unless [F5 it] shows that the transaction or transactions were carried out either for bona fide commercial reasons or in the ordinary course of making or managing investments, and that none of them had as their main object, or one of their main objects, to enable [F4 corporation tax] advantages to be obtained, this section shall apply to [F6 it] in respect of that transaction or those transactions.

(2) For the purposes of this Chapter a [F7 corporation tax] advantage obtained or obtainable by a [F8 company] shall be deemed to be obtained or obtainable by [F9 it] in consequence of a transaction in securities or of the combined effect of two or more such transactions, if it is obtained or obtainable in consequence of the combined effect of the transaction or transactions and the liquidation of a company.

(3) Where this section applies to a [F10 company] in respect of any transaction or transactions, the [F11 corporation tax advantage] obtained or obtainable by [F12 it] in consequence thereof shall be counteracted by such of the following adjustments, that is to say an assessment, the nullifying of a right to repayment or the requiring of the return of a repayment already made (the amount to be returned being chargeable F13 . . . under Case VI of Schedule D and recoverable accordingly), or the computation or recomputation of profits or gains, or [F14 liability to corporation tax], on such basis as the Board may specify by notice served on [F12 it] as being requisite for counteracting the [F11 corporation tax advantage] so obtained or obtainable.

[F15 (3A) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(4) F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) M2 In the case of a man and his wife living with him (whether or not she is separately assessed to tax), this Chapter shall, subject to subsection (8)below, be treated as applying to him in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the wife were his property, rights or liabilities in relation to which she had acted only as nominee for him, and shall be treated as applying to the wife in respect of any transaction or transactions as it would apply if any property, rights or liabilities of the man were her property, rights or liabilities in relation to which he had acted only as nominee for herF18 .

(8) No adjustment made under subsection (3)above by reference to any transaction or transactions to counteract any tax advantage shall by virtue of subsection (7)above be so made that a person bears more tax than if the transaction or transactions had not had as a consequence that any relief or increased relief from, or repayment or increased repayment of, income tax, or any deduction in computing profits or gains, was obtained or obtainable, or that the way in which receipts accrued was such that the recipient did not pay or bear tax on themF19 .

(9) The Board shall not give a notice under subsection (3) above until they have notified the [F20 company] in question that they have reason to believe that this section may apply to [F21 it] in respect of a transaction or transactions specified in the notification; and if within 30 days of the issue of the notification that [F20 company], being of opinion that this section does not so apply to [F21 it], makes a statutory declaration to that effect stating the facts and circumstances upon which [F22 its] opinion is based, and sends it to the Board, then subject to subsection (10) below, this section shall not apply to [F21 it] in respect of the transaction or transactions.

(10) If, when a statutory declaration has been sent to the Board under subsection (9) above, they see reason to take further action in the matter—

(a) the Board shall send to the tribunal a certificate to that effect, together with the statutory declaration, and may also send therewith a counter-statement with reference to the matter;

(b) the tribunal shall take into consideration the declaration and the certificate, and the counter-statement, if any, and shall determine whether there is or is not a prima facie case for proceeding in the matter, and if they determine that there is no such case this section shall not apply to the [F23 company] in question in respect of the transaction or transactions;

but any such determination shall not affect the operation of this section in respect of transactions which include that transaction or some or all of those transactions and also include another transaction or other transactions.

(11) F24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12) This section applies whether the [F25 corporation tax advantage] in question relates to a chargeable period ending before or after the commencement of this Act, but nothing in this section shall authorise the making of an assessment later than six years after the [F26 accounting period] to which the [F25 corporation tax advantage] relates; and no other provision contained in the [F27 Corporation Tax Acts] shall be construed as limiting the powers conferred by this section.

Textual Amendments

F2 Words in s. 703 sidenote substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(10) (with Sch. 2)

F3 Word in s. 703(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(2)(a) (with Sch. 2)

F4 Words in s. 703(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(2)(b) (with Sch. 2)

F5 Word in s. 703(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(2)(c) (with Sch. 2)

F6 Word in s. 703(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(2)(d) (with Sch. 2)

F7 Words in s. 703(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(3)(a) (with Sch. 2)

F8 Word in s. 703(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(3)(b) (with Sch. 2)

F9 Word in s. 703(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(3)(c) (with Sch. 2)

F10 Word in s. 703(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(4)(b) (with Sch. 2)

F11 Words in s. 703(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(4)(a) (with Sch. 2)

F12 Words in s. 703(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(4)(c) (with Sch. 2)

F13 Words in s. 703(3) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(4)(d), Sch. 3 Pt. 1 (with Sch. 2)

F14 Words in s. 703(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(4)(e) (with Sch. 2)

F15 S. 703(3A) inserted (with effect in accordance with Sch. 3 para. 32(4) of the amending Act) by Finance Act 1998 (c. 36), Sch. 3 para. 32(2)

F16 S. 703(3A) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(5), Sch. 3 Pt. 1 (with Sch. 2)

F17 S. 703(4)-(6) repealed (with effect in accordance with Sch. 3 para. 32(5) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 32(3), Sch. 27 Pt. 3(2), Note

F18 Repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

F19 Repealed by 1988(F) s.148and Sch.14 Part VIIIfor 1990-91and subsequent years.

F20 Words in s. 703(9) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(6)(a) (with Sch. 2)

F21 Words in s. 703(9) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(6)(b) (with Sch. 2)

F22 Word in s. 703(9) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(6)(c) (with Sch. 2)

F23 Word in s. 703(10) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(7) (with Sch. 2)

F24 S. 703(11) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(8), Sch. 3 Pt. 1 (with Sch. 2)

F25 Words in s. 703(12) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(9)(a) (with Sch. 2)

F26 Words in s. 703(12) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(9)(b) (with Sch. 2)

F27 Words in s. 703(12) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 154(9)(c) (with Sch. 2)

Marginal Citations

M1 Source—1970 s.460(1)-(3)

M2 Source—1970 s.460(5)-(9)

704 The prescribed circumstances. U.K.

M3 The circumstances mentioned in section 703(1) are [F28 as follows (and in this section references to “the section 703(1) company” are references to the company referred to in that section)]

A. That in connection with the distribution of profits of a company, or in connection with the sale or purchase of securities being a sale or purchase followed by the purchase or sale of the same or other securities, the [F29 section 703(1) company] receives an abnormal amount by way of dividend, and the amount so received is taken into account for any of the following purposes—

(a) any exemption from [F30 corporation tax], or

(b) the setting-off of losses against profits or income, or

(c) the giving of group relief, or

(d) F31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) F32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f) F33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g) F33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OR

B. F34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F34 . . .

C. (1) That the [F35 section 703(1) company] receives, in consequence of a transaction whereby any other person—

(a) subsequently receives, or has received, an abnormal amount by way of dividend; F36 . . .

(b) F36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C. (1) a consideration which either—

(i)

is, or represents the value of, assets which are (or apart from anything done by the company in question would have been) available for distribution by way of dividend, or

(ii)

is received in respect of future receipts of the company, or

(iii)

is, or represents the value of, trading stock of the company,

C. (1) and the [F35 section 703(1) company] so receives the consideration that [F37 it] does not pay or bear tax on it as income.

(2) The assets mentioned in sub-paragraph (1) above do not include assets which (while of a description which under the law of the country in which the company is incorporated is available for distribution by way of dividend) are shown to represent a return of sums paid by subscribers on the issue of securities.

OR

D. (1) That in connection with the distribution of profits of a company to which this paragraph applies, the [F38 section 703(1) company] so receives as is mentioned in paragraph C(1) above such a consideration as is therein mentioned.

(2) The companies to which this paragraph applies are—

(a) any company under the control of not more than five persons, and

(b) any other company which does not satisfy the condition that its shares or stocks or some class thereof (disregarding debenture stock, preferred shares or preferred stock), [F39 are [F40 included in the official UK list, and are dealt in on a recognised stock exchange in the United Kingdom] regularly or from time to time],

so, however, that this paragraph does not apply to a company under the control of one or more companies to which this paragraph does not apply.

(3) Subsections (2) to (6) of section 416 shall apply for the purposes of this paragraph.

OR

E. (1) That in connection with the transfer directly or indirectly of assets of a company to which paragraph D above applies to another such company, or in connection with any transaction in securities in which two or more companies to which paragraph D above applies are concerned, the [F41 section 703(1) company] receives non-taxable consideration which is or represents the value of assets available for distribution by such a company, and which consists of any share capital or any security (as defined by section 254(1)) issued by such a company.

(2) So far as sub-paragraph (1) above relates to share capital other than redeemable share capital, it shall not apply unless and except to the extent that the share capital is repaid (in a winding-up or otherwise), and, where section 703 applies to a [F42 company] by virtue of sub-paragraph (1) above on the repayment of any share capital, any assessment to [F43 corporation tax] under subsection (3) of that section shall be an assessment to [F43 corporation tax] for [F44 the accounting period] in which the share capital is repaid.

(3) In this paragraph—

• “assets available for distribution” means assets which are, or apart from anything done by the company in question would have been, available for distribution by way of dividend, or trading stock of the company;

• “non-taxable”, in relation to a [F45 section 703(1) company] receiving consideration, means that the recipient does not pay or bear [F46 corporation tax] on it as income (apart from the provisions of this Chapter);

• “share” includes stock and any other interest of a member in a company;

and the references in sub-paragraph (2) above to the repayment of share capital include references to any distribution made in respect of any shares in a winding-up or dissolution of the company.

Textual Amendments

F28 Words in s. 704 inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(2) (with Sch. 2)

F29 Words in s. 704 para. A substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(3)(a) (with Sch. 2)

F30 Words in s. 704 para. A(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(3)(b) (with Sch. 2)

F31 S. 704 para. A(d) repealed (with effect in accordance with Sch. 3 para. 33(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 33(2), Sch. 27 Pt. 3(2), Note

F32 S. 704 para. A(e) repealed (with effect in accordance with s. 20 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 8 Pt. 2(4), Note

F33 S. 704 para. A(f)(g) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by virtue of Income Tax Act 2007 (c. 3), Sch. 1 para. 155(3)(c), Sch. 3 Pt. 1 (with Sch. 2)

F34 S. 704 para. B and word omitted (with effect in accordance with s. 66(5) of the repealing Act) by virtue of Finance Act 2008 (c. 9), s. 66(1)(a)(i)

F35 Words in s. 704 para. C(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(6)(a) (with Sch. 2)

F36 S. 704 para. C(1)(b) and preceding word omitted (with effect in accordance with s. 66(5) of the repealing Act) by virtue of Finance Act 2008 (c. 9), s. 66(1)(a)(ii)

F37 Word in s. 704 para. C(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(6)(c) (with Sch. 2)

F38 Words in s. 704 para. D(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(7) (with Sch. 2)

F39 Words in s.704 para. D(2)(b) substituted (with effect in accordance with s.175(4) of the amending Act) by Finance Act 1996 (c. 8), s. 175(1)-(3)

F40 Words in s. 704 para. D(2)(b) substituted (19.7.2007) by Finance Act 2007 (c. 11), Sch. 26 para. 7(7)

F41 Words in s. 704 para. E(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(8)(a) (with Sch. 2)

F42 Word in s. 704 para. E(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(8)(b)(i) (with Sch. 2)

F43 Words in s. 704 para. E(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(8)(b)(ii) (with Sch. 2)

F44 Words in s. 704 para. E(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(8)(b)(iii) (with Sch. 2)

F45 Words in s. 704 para. E(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(8)(c)(i) (with Sch. 2)

F46 Words in s. 704 para. E(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 155(8)(c)(ii) (with Sch. 2)

Modifications etc. (not altering text)

C1 S. 704 modified (9.3.1999) by The Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) Regulations 1999 (S.I. 1999/358), regs. 1, 23

Marginal Citations

M3 Source—1970 s.461; 1973 s.54, Sch.11 2(a), (b)

705 Appeals against Board’s notices under section 703. U.K.

(1) M4 Any [F47 company to which] notice has been given under section 703(3) may within 30 days by notice to the Board appeal to the Special Commissioners on the grounds that section 703 does not apply to [F48 it] in respect of the transaction or transactions in question, or that the adjustments directed to be made are inappropriate.

(2) If [F49 the company] or the Board are dissatisfied with the determination of the Special Commissioners [F50 the company or the Board] may, on giving notice to the clerk to the Special Commissioners within 30 days after the determination, require the appeal to be re-heard by the tribunal, and the Special Commissioners shall transmit to the tribunal any document in their possession which was delivered to them for the purposes of the appeal.

(3) Where notice is given under subsection (2) above, the tribunal shall re-hear and determine the appeal and shall have and exercise the same powers and authorities in relation to the appeal as the Special Commissioners might have and exercise, and the determination of the tribunal thereon shall be final and conclusive.

(4) F51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) On an appeal under subsections (1) to (3) above the Special Commissioners or the tribunal shall have power to cancel or vary a notice under subsection (3) of section 703 or to vary or quash an assessment made in accordance with such a notice, but the bringing of an appeal or the statement of a case shall not affect the validity of a notice given or of any other thing done in pursuance of that subsection pending the determination of the proceedings.

(6) F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) F52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F47 Words in s. 705(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 156(2)(a) (with Sch. 2)

F48 Word in s. 705(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 156(2)(b) (with Sch. 2)

F49 Words in s. 705(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 156(3)(a) (with Sch. 2)

F50 Words in s. 705(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 156(3)(b) (with Sch. 2)

F51 S. 705(4) repealed (1.1.1994) by The General and Special Commissioners (Amendment of Enactments) Regulations 1994 (S.I. 1994/1813), reg. 1(1), Sch. 1 para. 23, Sch. 2 Pt. 1

F52 S. 705(6)-(8) repealed (with effect in accordance with Sch. 3 para. 34(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 3 para. 34(2), Sch. 27 Pt. 3(2), Note

Marginal Citations

M4 Source—1970 s.462

[F53 705A Statement of case by tribunal for opinion of High Court. U.K.

(1) Immediately after the determination by the tribunal of an appeal re-heard by them under section 705 of this Act, the appellant or the Board, if dissatisfied with the determination as being erroneous in point of law, may declare [F54 its] or their dissatisfaction to the tribunal.

(2) The appellant or the Board, as the case may be, having declared [F54 its] or their dissatisfaction, may, within thirty days after the determination, by notice in writing require the tribunal to state and sign a case for the opinion of the High Court.

(3) The party requiring the case shall pay to the tribunal a fee of £25 for and in respect of the same, before [F55 that party] is entitled to have the case stated.

(4) The case shall set forth the facts and the determination of the tribunal, and the party requiring it shall transmit the case, when stated and signed, to the High Court, within thirty days after receiving the same.

(5) At or before the time when [F56 that party] transmits the case to the High Court, [F56 that party] shall send notice in writing of the fact that the case has been stated on [F57 that party's] application, together with a copy of the case, to the other party.

(6) The High Court shall hear and determine any question of law arising on the case, and may reverse, affirm or amend the determination in respect of which the case has been stated, or remit the matter to the tribunal with the Court’s opinion on it, or make such other order in relation to the matter as the Court thinks fit.

(7) The High Court may cause the case to be sent back for amendment, and thereupon the case shall be amended accordingly, and judgment shall be delivered after it has been amended.

(8) Subject to subsection (9) below and to Part II of the Administration of Justice Act 1969 (appeal from High Court to House of Lords), an appeal shall, in England and Wales, lie from the decision of the High Court to the Court of Appeal and thence to the House of Lords.

(9) No appeal shall lie to the House of Lords from the Court of Appeal unless leave has been given under and in accordance with section 1 of the Administration of Justice (Appeals) Act 1934.

(10) Subject to subsection (11) below, where the determination of the tribunal is in respect of an assessment made in accordance with a notice under subsection (3) of section 703, then notwithstanding that a case has been required to be stated or is pending before the High Court in respect of the determination, [F58 corporation tax] shall be paid in accordance with the determination.

(11) If the amount charged by the assessment is altered by the order or judgment of the High Court, then—

(a) if too much [F58 corporation tax] has been paid the amount overpaid shall be refunded with such interest, if any, as the High Court may allow; or

(b) if too little [F58 corporation tax] has been charged, the amount undercharged shall be due and payable at the expiration of a period of thirty days beginning with the date on which the Board issue to the other party a notice of the total amount payable in accordance with the order or judgment of that Court.

(12) All matters within the jurisdiction of the High Court under this section shall be assigned in Scotland to the Court of Session sitting as the Court of Exchequer (references in this section to the High Court being construed accordingly); and an appeal shall lie from the decision under this section of the Court of Session, as the Court of Exchequer in Scotland, to the House of Lords.]

Textual Amendments

F53 Ss. 705A, 705B inserted (1.1.1994) by The General and Special Commissioners (Amendment of Enactments) Regulations 1994 (S.I. 1994/1813), reg. 1(1), Sch. 1 para. 24

F54 Words in s. 705A(1)(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 157(2) (with Sch. 2)

F55 Words in s. 705A(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 157(3) (with Sch. 2)

F56 Words in s. 705A(5) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 157(4)(a) (with Sch. 2)

F57 Words in s. 705A(5) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 157(4)(b) (with Sch. 2)

F58 Words in s. 705A(10)(11)(a)(b) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 157(5) (with Sch. 2)

[F53 705B Proceedings in Northern Ireland. U.K.

(1) A case which is stated by the tribunal under section 705A in proceedings in Northern Ireland shall be a case for the opinion of the Court of Appeal in Northern Ireland, and [F59 the Management Act and the Corporation Tax Acts shall have effect] as if that section applied in relation to such proceedings—

(a) with the substitution for references to the High Court of references to the Court of Appeal in Northern Ireland;

(b) with the omission of subsections (4), (5), (8) and (9) of that section.

(2) The procedure relating to the transmission of the case to, and the hearing and determination of the case by, the Court of Appeal in Northern Ireland shall be that for the time being in force in Northern Ireland as respects cases stated by a county court in exercise of its general jurisdiction, and an appeal shall lie from the Court of Appeal to the House of Lords in accordance with section 42 of the Judicature (Northern Ireland) Act 1978.

(3) Where in proceedings in Northern Ireland an application is made for a case to be stated by the tribunal under this section, the case must be settled and sent to the applicant as soon after the application as is reasonably practicable.

(4) For the purposes of this section “proceedings in Northern Ireland” means proceedings as respects which the place given by the rules in Schedule 3 to the Management Act is in Northern Ireland.]

Textual Amendments

F53 Ss. 705A, 705B inserted (1.1.1994) by The General and Special Commissioners (Amendment of Enactments) Regulations 1994 (S.I. 1994/1813), reg. 1(1), Sch. 1 para. 24

F59 Words in s. 705B(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 158 (with Sch. 2)

706 The tribunal. U.K.

[F60 (1)] M5 For the purposes of this Chapter the tribunal shall consist of—

(a) a chairman, appointed by the Lord Chancellor, and

(b) two or more persons appointed by the Lord Chancellor as having special knowledge of and experience in financial or commercial matters.

[F61 (2) A person appointed as chairman or other member of the tribunal shall vacate his office on the day on which he attains the age of 70; but this subsection is subject to section 26(4) to (6) of the Judicial Pensions and Retirement Act 1993 (power to authorise continuance in office up to the age of 75).]

Textual Amendments

F60 S. 706 renumbered as s. 706(1) (31.3.1995) by Judicial Pensions and Retirement Act 1993 (c. 8), ss. 26, 31(2), Sch. 6 para.44 (with Sch. 7 paras. 2(2), 3(2), 4); S.I. 1995/631, art. 2

F61 S. 706(2) added (31.3.1995) by Judicial Pensions and Retirement Act 1993 (c. 8), ss. 26, 31(2), Sch. 6 para.44 (with Sch. 7 paras. 2(2), 3(2), 4); S.I. 1995/631, art. 2

Modifications etc. (not altering text)

C2 See—1970(M) s.6(1)—declaration to be made by member of tribunal on appointment.1989 s.182—disclosure of information (in Part II Vol.5).

Marginal Citations

M5 Source—1970 s.463; 1982 Sch.21 3(1)

707 Procedure for clearance in advance. U.K.

M6 (1) The following provisions shall have effect where in pursuance of this section a [F62 company] furnishes to the Board particulars of a transaction or transactions effected or to be effected by [F63 it] , that is to say—

(a) if the Board are of opinion that the particulars, or any further information furnished in pursuance of this paragraph, are not sufficient for the purposes of this section, they shall within 30 days of the receipt thereof notify to that [F62 company] what further information they require for those purposes, and unless that further information is furnished to the Board within 30 days from the notification, or such further time as the Board may allow, they shall not be required to proceed further under this section;

(b) subject to paragraph (a) above, the Board shall within 30 days of the receipt of the particulars, or, where that paragraph has effect, of all further information required, notify that [F62 company] whether or not they are satisfied that the transaction or transactions as described in the particulars were or will be such that no notice under section 703(3) ought to be given in respect of it or them;

and, subject to the following provisions of this section, if the Board notify [F63 it] that they are so satisfied, section 703 shall not apply to [F63 it] in respect of that transaction or those transactions.

(2) If the particulars, and any further information given under this section with respect to any transaction or transactions, are not such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Board, any notification given by the Board under this section shall be void.

(3) In no event shall the giving of a notification under this section with respect to any transaction or transactions prevent section 703 applying to a [F64 company] in respect of transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.

Textual Amendments

F62 Words in s. 707(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 159(2)(a) (with Sch. 2)

F63 Words in s. 707(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 159(2)(b) (with Sch. 2)

F64 Word in s. 707(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 159(3) (with Sch. 2)

Marginal Citations

M6 Source—1970 s.464

708 Power to obtain information. U.K.

M7 Where it appears to the Board that by reason of any transaction or transactions a [F65 company] may be a [F65 company] to [F66 which] section 703 applies, the Board may by notice served on [F67 it] require [F67 it], within such time not less than 28 days as may be specified in the notice, to furnish information in [F68 its] possession with respect to the transaction or any of the transactions, being information as to matters, specified in the notice, which are relevant to the question whether a notice under section 703(3) should be given in respect of [F67 it].

Textual Amendments

F65 Words in s. 708 substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 160(a) (with Sch. 2)

F66 Word in s. 708 substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 160(b) (with Sch. 2)

F67 Words in s. 708 substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 160(c) (with Sch. 2)

F68 Word in s. 708 substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 160(d) (with Sch. 2)

Marginal Citations

M7 Source—1970 s.465

709 Meaning of [F69 “corporation tax advantage”] and other expressions. U.K.

(1) M8 In this Chapter “ [F70 corporation tax] advantage” means a relief or increased relief from, or repayment or increased repayment of, [F70 corporation tax], or the avoidance or reduction of a charge to [F70 corporation tax] or an assessment to [F70 corporation tax] or the avoidance of a possible assessment thereto, whether the avoidance or reduction is effected by receipts accruing in such a way that the recipient does not pay or bear [F70 corporation tax] on them, or by a deduction in computing profits or gains.

(2) M9 In this Chapter—

• “company” includes any body corporate,

• “securities”—

  (a)

  includes shares and stock, and

  (b)

  in relation to a company not limited by shares (whether or not it has a share capital) includes also a reference to the interest of a member of the company as such, whatever the form of that interest;

• “trading stock” has the same meaning as in section 100(1);

• “transaction in securities” includes transactions, of whatever description, relating to securities, and in particular—

  (i)

  the purchase, sale or exchange of securities;

  (ii)

  the issuing or securing the issue of, or applying or subscribing for, new securities;

  (iii)

  the altering, or securing the alteration of, the rights attached to securities;

  and references to dividends include references to other qualifying distributions and to interest.

[F71 (2A) F72 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3) In section 704—

(a) references to profits include references to income, reserves or other assets;

(b) references to distribution include references to transfer or realisation (including application in discharge of liabilities); and

(c) references to the receipt of consideration include references to the receipt of any money or money’s worth.

(4) For the purposes of section 704 an amount received by way of dividend shall be treated as abnormal if the Board, the Special Commissioners or the tribunal, as the case may be, are satisfied—

(a) in the case of a dividend at a fixed rate, that it substantially exceeds the amount which the recipient would have received if the dividend had accrued from day to day and [F73 the recipient] had been entitled only to so much of the dividend as accrued while [F73 the recipient] held the securities, so however that an amount shall not be treated as abnormal by virtue only of this paragraph if during the six months beginning with the purchase of the securities the recipient does not sell or otherwise dispose of, or acquire an option to sell, any of those securities or any securities similar to those securities; or

(b) in any case, that it substantially exceeds a normal return on the consideration provided by the recipient for the relevant securities, that is to say, the securities in respect of which the dividend was received and, if those securities are derived from securities previously acquired by the recipient, the securities which were previously acquired.

(5) For the purposes of subsection (4)(a) above securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred, and for those purposes rights guaranteed by the Treasury shall be treated as rights against the Treasury.

(6) For the purposes of subsection (4)(b) above—

(a) if the consideration provided by the recipient for any of the relevant securities was in excess of their market value at the time [F74 the recipient] acquired them, or if no consideration was provided by [F75 the recipient] for any of the relevant securities, the recipient shall be taken to have provided for those securities consideration equal to their market value at the time [F74 the recipient] acquired them; and

(b) in determining whether an amount received by way of dividend exceeds a normal return, regard shall be had to the length of time previous to the receipt of that amount that the recipient first acquired any of the relevant securities and to any dividends and other distributions made in respect of them during that time.

Textual Amendments

F69 Words in s. 709 sidenote substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 161(5) (with Sch. 2)

F70 Words in s. 709(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 161(2) (with Sch. 2)

F71 S. 709(2A) inserted (with effect in accordance with s. 73(2) of the amending Act) by Finance Act 1997 (c. 16), s. 73(1)

F72 S. 709(2A) omitted (with effect in accordance with s. 66(5) of the repealing Act) by virtue of Finance Act 2008 (c. 9), s. 66(1)(b)

F73 Words in s. 709(4)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 161(3) (with Sch. 2)

F74 Words in s. 709(6)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 161(4)(a) (with Sch. 2)

F75 Words in s. 709(6)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 161(4)(b) (with Sch. 2)

Modifications etc. (not altering text)

C3 Definition applied for purposes of 1990 Sch.10—convertible securities.

Marginal Citations

M8 Source—1970 s.466(1); 1973 Sch.11 4

M9 Source—1970 s.467; 1973 Sch.11 5