Finance Act 1989

Section 107.

SCHEDULE 12 U.K. Close Companies

Part I U.K. Administrative Provisions

Interpretation U.K.

1 U.K. In this Part of this Schedule “the relevant provisions”means—

(a) sections [F1 13, 13ZA, 13A] , 231 and 419 to 422 of the Taxes Act 1988, F2 ...

(b) Chapter III of Part XI of that Act (as it has effect in relation toaccounting periods beginning before 1st April 1989).

[F3 (c) section 397 of the Income Tax (Trading and Other Income) Act 2005, and

(d) Chapter 6 of Part 4 of that Act.]

Textual Amendments

F1 Words in Sch. 12 para. 1(a) substituted (with effect in accordance with s. 26(8)-(11) of the amending Act) by Finance Act 2006 (c. 25), s. 26(6)

F2 Word in Sch. 12 para. 1(a) repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 412(a), Sch. 3 (with Sch. 2)

F3 Sch. 12 para. 1(c)(d) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 412(b) (with Sch. 2)

Provision of information by company U.K.

2 U.K. The inspector may, by notice, require any company which is, or appears tohim to be, a close company to furnish him within such time (not being lessthan 30 days) as may be specified in the notice with such particulars as hethinks necessary for the purposes of the relevant provisions.

Provision of information by shareholders U.K.

3 (1) If for the purposes of the relevant provisions any person in whose nameany shares are registered is so required by notice by the inspector, he shallstate whether or not he is the beneficial owner of the shares and, if not thebeneficial owner of the shares, shall furnish the name and address of theperson or persons on whose behalf the shares are registered in his name. U.K.

(2) This paragraph shall apply in relation to loan capital as it applies inrelation to shares.

Information about bearer securities U.K.

4 (1) The inspector may, for the purposes of the relevant provisions, by noticerequire— U.K.

(a) any company which appears to him to be a close company to furnish him withparticulars of any bearer securities issued by the company, and the names andaddresses of the persons to whom the securities were issued and the respectiveamounts issued to each person, and

(b) any person to whom bearer securities were issued by the company, or to orthrough whom such securities were subsequently sold or transferred, to furnishhim with such further information as he may require with a view to enablinghim to ascertain the names and addresses of the persons beneficiallyinterested in the securities.

(2) In this paragraph—

• “loan creditor” has the same meaning as in Part XI of theTaxes Act 1988, and

• “securities” includes shares, stock, bonds, debentures anddebenture stock and also any promissory note or other instrument evidencingindebtedness to a loan creditor of the company.

Modifications etc. (not altering text)

C1 Sch. 12 para. 4 extended (24.6.2003) by The Uncertificated Securities (Amendment) (Eligible Debt Securities) Regulations 2003 (S.I. 2003/1633), reg. 1(1), Sch. 2 para. 13(c)

Part II U.K. Amendments Connected with Repeal of Chapter III of Part XI of Taxes Act1988

The Taxes Management Act 1970 (c.9) U.K.

5 U.K. In the first column of the Table in section 98 of the Taxes Management Act1970 (penalty for failure to give particulars etc.) there shall be added atthe end— “ Paragraphs 2 to 4 of Schedule 12 to the Finance Act 1989. ”

The Capital Gains Tax Act 1979 (c.14) U.K.

F4 6 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Sch. 12 para. 6 repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with ss. 201(3), Sch. 11 paras. 22, 26(2), 27)

The Income and Corporation Taxes Act 1988 (c.1) U.K.

7 U.K. In section 13 of the Taxes Act 1988 (small companies’ rate) in subsection(9) for the words “paragraph 17 of Schedule 19” there shall besubstituted the words “paragraphs 2 to 4 of Schedule 12 to the Finance Act1989”.

F5 8 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F5 Sch. 12 para. 8 repealed (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 8 Pt. 1 (with Sch. 7)

9 (1) In section 187(3) of the Taxes Act 1988 (cases in which a person has amaterial interest in a company for the purposes of sections 185 to 187 of, andSchedules 9 and 10 to, that Act) for the words from “in a company” to theend of paragraph (b) there shall be substituted— “in a company if he, either on his own or with one or more associates,or if any associate of his with or without such other associates,— U.K.

(a) is the beneficial owner of, or able, directly or through the medium ofother companies, or by any other indirect means to control, more than 25 percent., or in the case of a share option scheme which is not a savings-relatedshare option scheme more than 10 per cent., of the ordinary share capital ofthe company, or

(b) where the company is a close company, possesses, or is entitled toacquire, such rights as would, in the event of the winding-up of the companyor in any other circumstances, give an entitlement to receive more than 25 percent., or in the case of a share option scheme which is not a savings-relatedshare option scheme more than 10 per cent., of the assets which would then beavailable for distribution among the participators.”and at the end there shall be added the words “ and “participator” has the meaning given by section 417(1) ”.

(2) This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.

10 (1) In section 214 of the Taxes Act 1988 (chargeable payments connected withexempt distributions) in subsection (1)(c) for the words from “338(2)(a)”to “Schedule 19” there shall be substituted the words “and338(2)(a)”. U.K.

(2) This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989, except in any case where section 427(4) ofthe Taxes Act 1988 has effect by virtue of section 103(2) of this Act.

11 U.K. In section 234 of the Taxes Act 1988 (information relating todistributions) in subsection (9) for the words from “paragraph 17” to “that Schedule” there shall be substituted the words “paragraphs 2 to4 of Schedule 12 to the Finance Act 1989 for the purposes of the relevantprovisions (as defined in paragraph 1 of that Schedule)”.

12 (1) Section 360 of the Taxes Act 1988 (loan to buy interest in a closecompany) shall be amended in accordance with this paragraph. U.K.

(2) In subsection (1)(a) for the words from “satisfying” to “424(4)”there shall be substituted the words “complying with section 13A(2)”.

(3) In subsections (2)(a) and (3)(a) for the words “satisfy any of theconditions of section 424(4)” there shall be substituted the words “comply with section 13A(2)”.

(4) This paragraph shall have effect in relation to interest paid on or afterthe day on which this Act is passed (and, accordingly, the conditions ofsection 424(4) of the Taxes Act 1988 shall continue to have effect for thepurposes of section 360 of that Act in relation to interest paid before thatday).

13 (1) Section 360A of the Taxes Act 1988 (cases in which a person has a materialinterest in a company for the purposes of section 360(2)(a)) shall be amendedin accordance with this paragraph. U.K.

(2) In subsection (1) for the words from “in a company” onwards thereshall be substituted— “in a company if he, either on his own or with one or more associates,or if any associate of his with or without such other associates,—

(a) is the beneficial owner of, or able, directly or through the medium ofother companies, or by any other indirect means to control, more than 5 percent. of the ordinary share capital of the company, or

(b) possesses, or is entitled to acquire, such rights as would, in the eventof the winding-up of the company or in any other circumstances, give anentitlement to receive more than 5 per cent. of the assets which would thenbe available for distribution among the participators.”

(3) In subsection (10) after the word “section” there shall be insertedthe words “ “participator” has the meaning given by section 417(1)and”.

(4) This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.

14 (1) In section 576 of the Taxes Act 1988 (which relates to relief for losseson certain unquoted shares) in subsection (5), for paragraph (a) of thedefinition of “trading company” there shall be substituted— U.K.

“(a) a company whose business consists wholly or mainly of the carrying on ofa trade or trades”.

(2) This paragraph shall have effect in relation to disposals made after 31stMarch 1989.

F6 15 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F6 Sch. 12 para. 15 repealed (6.4.2006) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3 (with Sch. 36)

F7 16 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7 Sch. 12 para. 16 repealed (6.4.2006) by Finance Act 2004 (c. 12), Sch. 42 Pt. 3 (with Sch. 36)

17 U.K. In section 745 of the Taxes Act 1988 (power to obtain information for thepurposes of Chapter III of Part XVII of that Act) in subsection (4) for thewords from “trading” onwards there shall be substituted the words “companies whose business consists wholly or mainly of the carrying on ofa trade or trades.”

18 (1) Paragraph 7 of Schedule 8 to the Taxes Act 1988 (cases in which a personhas a material interest in a company for the purposes of a profit-related payscheme) shall be amended in accordance with this paragraph. U.K.

(2) In sub-paragraph (2) for the words from “in a company” onwards thereshall be substituted— “in a company if he, either on his own or with one or more associates,or if any associate of his with or without such other associates,—

(a) is the beneficial owner of, or able, directly or through the medium ofother companies, or by any other indirect means to control, more than 25 percent. of the ordinary share capital of the company, or

(b) in the case of a close company, possesses, or is entitled to acquire, suchrights as would, in the event of the winding-up of the company or in any othercircumstances, give an entitlement to receive more than 25 per cent. of theassets which would then be available for distribution among the participators”.

(3) In sub-paragraph (3) the second “and” shall be omitted and after thedefinition of “control” there shall be inserted “and

“participator” has the meaning given by section 417(1)”.

(4) This paragraph shall have effect in relation to accounting periodsbeginning after 31st March 1989.