Income and Corporation Taxes Act 1988

13 (1) In this Schedule—

• “debenture” has the meaning given by section 744 of the M1 Companies 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

F1 Sch. 28B para. 13(2)-(5) substituted for para. 13(2)(3) (retrospectively) by Finance Act 1996 (c. 8), s. 161(1)(3)

F2 Sch. 28B para. 13(5)(b) and preceding word repealed (2.7.1997) by Finance (No. 2) Act 1997 (c. 58), s. 25(3)(8), Sch. 8 Pt. 2(8), Note 3

F3 Sch. 28B para. 13(6) inserted (2.7.1997) by Finance (No. 2) Act 1997 (c. 58), s. 25(4)(8)

Marginal Citations

M1 1985 c. 6.