Finance (No. 2) Act 2005

18 Section 17(3): specific powers

(1) Regulations under section 17(3)(a) or (b) may make provision about distributions which may, in particular—

(a) require an authorised investment fund to comply with prescribed rules for determining (whether by reference to a formula or otherwise) what proportion of an amount shown in distribution accounts as available for distribution is to be distributed by way of dividends and what proportion is to be distributed by way of yearly interest;

(b) permit persons responsible for the management of an authorised investment fund to elect to distribute entirely by way of dividends;

(c) require distribution accounts to show the amount available for distribution—

(i) by way of dividends;

(ii) by way of yearly interest;

(d) allow a distribution of yearly interest for a distribution period to be deducted, in the prescribed manner, in computing the profits of the authorised investment fund for the accounting period in which the last day of that distribution period falls;

(e) make provision for determining the distribution date in relation to a distribution period of an authorised investment fund;

(f) permit distributions to be made, in prescribed circumstances, to or for the benefit of a person not ordinarily resident in the United Kingdom without deducting tax;

(g) permit distributions to be made without deducting tax, in prescribed circumstances, to a person ordinarily resident in the United Kingdom who is unlikely to be liable to pay an amount by way of income tax for the year of assessment in which the distribution is made;

(h) include provision, in respect of a unit holder or shareholder who is within the charge to corporation tax, about—

(i) the liability to corporation tax resulting from receipt of a distribution, and

(ii) the method of computing that liability.

(2) Regulations under section 17(3)(a) or (b) may, in particular—

(a) make special provision for loan relationships held by an authorised investment fund;

(b) make special provision for derivative contracts held by an authorised investment fund;

(c) modify the meaning of “relevant holding” for the purposes of—

(i) paragraph 4 of Schedule 10 to FA 1996 (loan relationships), and

(ii) paragraph 36 of Schedule 26 to FA 2002 (derivative contracts);

(d) make special provision in relation to the treatment of umbrella companies and umbrella schemes (or shareholders or unit holders in umbrella companies or umbrella schemes);

(e) prohibit action which favours a class of unit holders or shareholders.

(3) Regulations under section 17(3)(a) or (b) may, in particular—

(a) make special provision in relation to a person who, alone or together with associates or connected persons, owns (otherwise than as a nominee) units or shares, in a fund designated by the Financial Services Authority as a Qualified Investor Scheme, which represent 10% or more (or such other percentage as the regulations may specify) of the net asset value of the fund;

(b) include exceptions from provision made by virtue of paragraph (a) above including, in particular, an exception relating to units or shares held—

(i) by a charity (within the meaning of section 506(1) of ICTA),

(ii) by a registered pension scheme (within the meaning of section 150 of FA 2004),

(iii) by an insurance company (within the meaning of section 431(2) of ICTA) as assets of its long-term insurance fund (within the meaning of that section), or

(iv) by such other persons, in such circumstances, as the regulations may specify.

(4) Regulations under section 17(3)(c) may, in particular, require persons responsible for the management of an authorised investment fund to supply information to, and make available books, documents and other records for inspection by, the Commissioners for Her Majesty’s Revenue and Customs.

(5) Regulations under section 17(3) may, in particular—

(a) amend a reference in an enactment to a provision repealed by section 17(1);

(b) make different provision for different circumstances;

(c) make incidental, consequential, supplemental or transitional provision.