1U.K.Section 47 of the Taxes Act 1988 (FOTRA securities) shall cease to have effect.
2U.K.Section 474(2) of that Act (which prevents the deduction of expenses in respect of securities the income on which is exempt from tax) shall cease to have effect.
3(1)In section 475 of that Act (tax-free securities: exclusion of interest on borrowed money), for subsection (1) there shall be substituted the following subsection—U.K.
“(1)This section has effect where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities—
(a)is carried on in the United Kingdom by a person not ordinarily resident there; and
(b)in computing for any of the purposes of the Tax Acts the profits arising from, or loss sustained, in the business, any amount which would otherwise be brought into account is disregarded by virtue of a condition subject to which any 3½% War Loan 1952 or after was issued;
and for this purpose insurance business includes insurance business of any category.”
(2)In subsections (3) and (8) of that section for the words “tax-free Treasury securities”, in each place where they occur, there shall be substituted “ 3½% War Loan 1952 or after ”.
(3)Subsections (6) and (7) of that section shall cease to have effect.
F14U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Sch. 28 para. 4 repealed (1.9.2000 with effect in relation to accounting periods of a company beginning on or after 1.1.2000 and ending on or after 1.9.2000) by S.I. 2000/2188, arts. 1, 6(2)
5U.K.In paragraph 5C of Schedule 19AC to that Act (modification for overseas life insurance companies in relation to tax-free securities), for sub-paragraph (2) there shall be substituted the following sub-paragraphs—
“(2)Where, in computing the income to which this paragraph applies, any profits and gains arising from a FOTRA security, or from any loan relationship represented by it, are excluded by virtue of the tax exemption condition of that security, the amount which by virtue of section 76 is to be deductible by way of management expenses shall be reduced in accordance with sub-paragraph (3) below.
(3)That amount shall be reduced so that it bears to the amount which would be deductible apart from this sub-paragraph the same proportion as the amount of the income to which this paragraph applies (after applying the provisions of section 154(2) to (7) of the Finance Act 1996) bears to what would be the amount of that income if the tax exemption condition were disregarded.
(4)Subsection (8) of section 154 of the Finance Act 1996 (meaning of “FOTRA security” and “tax exemption condition”) shall apply for the purposes of this paragraph as it applies for the purposes of that section.”
6U.K.In paragraph 1(3) of Schedule 24 to that Act and in paragraph 5(5) of Schedule 27 to that Act (amount taken into account in computing tax of company on the assumption that it is resident in the United Kingdom), for “by virtue of section 47 or 48” there shall be substituted, in each case, “ and have been so received by virtue of section 154(2) of the Finance Act 1996 ”.