Income and Corporation Taxes Act 1988

13(1)In this Schedule—

  • “debenture” has the meaning given by section 744 of the M1Companies Act 1985; and

  • “securities” has the same meaning as in section 842AA;

and references in this Schedule to the issue of any securities, in relation to any security consisting in a liability in respect of an unsecured loan, shall have effect as references to the making of the loan.

[F1(2)For the purposes of paragraphs 5(2) and 9 above, the question whether a person controls a company shall be determined in accordance with subsections (2) to (6) of section 416 with the modification given by sub-paragraph (3) below.

(3)The modification is that, in determining whether a person controls a company, there shall be disregarded—

(a)his or any other person’s possession of, or entitlement to acquire, relevant fixed-rate preference shares of the company; and

(b)his or any other person’s possession of, or entitlement to acquire, rights as a loan creditor of the company.

(4)Section 839 shall apply for the purposes of this Schedule, but as if the reference in subsection (8) to section 416 were a reference to subsections (2) to (6) of section 416 with the modification given by sub-paragraph (3) above.

(5)For the purposes of sub-paragraph (3) above—

(a)relevant fixed-rate preference shares are fixed-rate preference shares that do not for the time being carry voting rights; F2. . .

(b)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F3(6)In this paragraph “fixed-rate preference shares” means shares which—

(a)were issued wholly for new consideration;

(b)do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities; and

(c)do not carry any right to dividends other than dividends which—

(i)are of a fixed amount or at a fixed rate per cent. of the nominal value of the shares, and

(ii)together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued;

and in paragraph (a) above “new consideration” has the meaning given by section 254.]

Textual Amendments

F1Sch. 28B para. 13(2)-(5) substituted for para. 13(2)(3) (retrospectively) by Finance Act 1996 (c. 8), s. 161(1)(3)

Marginal Citations