Income and Corporation Taxes Act 1988

[F1 591C Cessation of approval: tax on certain schemes. U.K.

(1) Where an approval of a scheme to which this section applies ceases to have effect [F2 otherwise than by virtue of paragraph 3(2)(a) of Schedule 23ZA], tax shall be charged in accordance with this section.

(2) The tax shall be charged under Case VI of Schedule D at the rate of 40 per cent. on an amount equal to the value of the assets which immediately before the date of the cessation of the approval of the scheme are held for the purposes of the scheme (taking that value as it stands immediately before that date).

(3) Subject to section 591D(4), the person liable for the tax shall be the administrator of the scheme F3 . . . .

(4) This section applies to a retirement benefits scheme in respect of which [F4 one or more] of the conditions set out below is satisfied.

(5) The first condition is satisfied in respect of a scheme if, immediately before the date of the cessation of the approval of the scheme, the number of individuals who are members of the scheme is less than twelve.

(6) The second condition is satisfied in respect of a scheme if at any time within the period of one year ending with the date of the cessation of the approval of the scheme, a person who is or has been a controlling director of a company which has contributed to the scheme is a member of the scheme.

[F5 (6A) The third condition is satisfied in respect of a scheme if—

(a) at any time within the period of three years ending with the date of the cessation of the approval of the scheme, the scheme has received a transfer value in respect of any person;

(b) contributions made by or in respect of that person to any approved pension arrangements (whether or not those from which the transfer value was received) were represented in the transfer value; and

(c) the contributions so represented were made by or in respect of that person by reference to—

(i) any service by him with a company of which he is or has at any time been a controlling director;

(ii) any remuneration in respect of any such service; or

(iii) any income chargeable to tax under Schedule D and immediately derived by him from the carrying on or exercise by him (whether as an individual or in partnership with others) of a trade, profession or vocation.]

(7) For the purposes of [F6 this section] a person is a controlling director of a company if he is a director of it and within section 417(5)(b) in relation to it.

[F7 (8) In subsection (6A) above—

(a) the references to the receipt of a transfer value by a scheme are references to the transfer, so as to become held for the purposes of the scheme, of any sum or asset held for the purposes of any other approved pension arrangements; and

(b) the references to contributions to approved pension arrangements include references to—

(i) any contributions made in accordance with, or for the purposes of, the arrangements; and

(ii) anything paid by way of premium or other consideration under an annuity contract for which the arrangements provide.

(9) In this section “approved pension arrangements” means—

(a) any scheme or arrangements approved for the purposes of this Chapter or Chapter IV of this Part or, in relation to a time before 6th April 1988, the corresponding provisions then in force;

(b) any scheme being considered for approval under this Chapter;

(c) any annuity contract entered into for the purposes of any scheme or arrangements falling within paragraph (a) or (b) above; or

(d) any contract or scheme approved for the purposes of Chapter III of this Part or, in relation to a time before 6th April 1988, the corresponding provisions then in force.]]

Textual Amendments

F1 Ss. 591C, 591D inserted (with effect in accordance with s. 61(3) of the amending Act) by Finance Act 1995 (c. 4), s. 61(1)

F2 Words in s. 591C(1) inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 13 para. 3(2) (with Sch. 13 Pt. 2)

F3 Words in s. 591C(3) repealed (31.7.1998) by Finance Act 1998 (c. 36), Sch. 27 Pt. 3(20)

F4 Words in s. 591C(4) substituted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para 1(2)

F5 S. 591C(6A) inserted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 1(3)

F6 Words in s. 591C(7) substituted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 1(4)

F7 S. 591C(8)(9) inserted (with effect in accordance with Sch. 15 para. 1(6) of the amending Act) by Finance Act 1998 (c. 36), Sch. 15 para. 1(5)

Modifications etc. (not altering text)

C1 S. 591C applied by Taxation of Chargeable Gains Act 1992 (c. 12), s. 239A (as inserted (with effect in accordance with s. 61(3) of the amending Act) by Finance Act 1995 (c. 4), s. 61(2))