Finance Act 1996

[F1 91C Condition 1 for section 91B(6)(b) U.K.

(1) Condition 1 is that the assets of the issuing company are of such a nature that the fair value of the share—

(a) is likely to increase at a rate which represents a return on an investment of money at a commercial rate of interest, and

(b) is unlikely to deviate to a substantial extent from that rate of increase.

Fluctuations in value resulting from changes in exchange rates are to be left out of account for the purposes of paragraph (b) above.

(2) But Condition 1 is not satisfied if the whole or substantially the whole by fair value of the assets of the issuing company are income producing.

(3) The assets which, for the purposes of this section, are “income producing” are—

(a) any share as respects which the conditions in section 91A(1) above are satisfied;

(b) any share as respects which Condition 1 above is satisfied or would, apart from subsection (2) above, be satisfied;

(c) any share as respects which Condition 2 in section 91D below is satisfied or would, apart from subsection (1)(c) of that section (excepted shares), be satisfied;

(d) any share as respects which Condition 3 in section 91E below is satisfied;

(e) any asset of a description specified in any paragraph of paragraph 8(2) of Schedule 10 to this Act (qualifying investments in relation to a unit trust scheme or an offshore fund);

(f) rights under a repo in relation to which section 730A of the Taxes Act 1988 applies;

(g) any share in a company the whole or substantially the whole by fair value of whose assets are assets within paragraphs (a) to (f) above.

(4) The Treasury may by regulations amend this section for the purpose of adding to the assets which are income producing.

(5) The provision that may be made by regulations under this section includes provision for the regulations to have effect in relation to accounting periods (whenever beginning) which end on or after the day on which the regulations come into force.

(6) For the purposes of subsection (1) above, it shall be assumed that no transaction (or series of transactions) intended to cause the condition in paragraph (a) or (b) of that subsection not to be satisfied will be entered into by the investing company.

(7) This section shall be construed as one with section 91B above.]

Textual Amendments

F1 Ss. 91C-91E inserted (with effect in accordance with Sch. 7 para. 10(7) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 10(4)