Part 6: Losses on disposal of shares
3355.The transitional provisions in this Part relate principally to the provisions of Chapter 3 of Part 7 of ICTA which are applied, with modifications, by cross-reference for the purpose of the definition of eligible trading company in section 576(4A) of that Act. Section 576(4A) of ICTA was introduced with effect from 6 April 1998 in relation to shares issued on or after that date. The majority of those provisions of Chapter 3 of Part 7 of ICTA, as modified, have been included in full in sections 137 to 146 of this Act for the purposes of share loss relief.
3356.Part 5 of this Act (Enterprise investment scheme), which is based on Chapter 3 of Part 7 of ICTA (other than section 305A of ICTA), has effect only in relation to shares issued on or after 6 April 2007. See the commentary on section 1034(3). One of the effects of section 1034(3) is that all Changes in Annex 1 relating to sections of Part 5 apply for the purposes of that Part only to shares issued on or after 6 April 2007.
3357.But Chapter 6 of Part 4 (losses on disposal of shares) applies to give share loss relief if the shares are disposed of on or after 6 April 2007, including cases where the shares were issued before that date.
3358.In determining whether the shares are shares in a qualifying trading company, the conditions applicable at the time of issue of the shares must be met. It is therefore necessary to include transitional provisions relating to sections 137 to 146, notwithstanding that no transitional provisions are required for the provisions of Part 5 to which they correspond.
3359.The transitional provisions in this Part, accordingly, reflect all the amendments made since 6 April 1998 to the provisions of Chapter 3 of Part 7 of ICTA which are the origins of sections 137 to 146 and of other sections of Part 5 of this Act which are applied for the purposes of sections 137 to 146, including the minor changes in the law made by this Act.
3360.In addition to those provisions, this Part contains transitional provisions relating to sections 134 and 151 necessary to provide for the conditions applicable if the shares were issued before 6 April 1998.
3361.The transitional provisions which relate to sections of this Act which are replicated for corporation tax purposes in the new sections 576A to 576L of ICTA also apply to those new sections.
Qualifying trading companies
3362.This transitional provision, together with that relating to section 151 (interpretation of Chapter), provides for the conditions which apply to determine whether shares issued before 6 April 1998 are shares in a qualifying trading company.
Disposals of new shares
3363.This transitional provision has the effect that Change 24 in Annex 1 applies only to “new shares” (as defined in section 145(1)(b)) issued on or after 6 April 2007. See the commentary on sections 136 and 145. This Change applies only for the purposes of share loss relief.
The trading requirement
3364.This transitional provision has the effect that, for the purposes of share loss relief as well as EIS relief, Changes 41 and 42 in Annex 1 apply only to shares issued on or after 6 April 2007. Those Changes apply to section 181 to which section 137 corresponds with modifications. See the commentary on section 1034(3) for the commencement of section 181 as it applies for the purposes of EIS relief.
The control and independence requirement
3365.This transitional provision has the effect that, for the purposes of share loss relief as well as EIS relief, Change 44 in Annex 1 applies only to shares issued on or after 6 April 2007. That Change applies to section 185 to which section 139 corresponds with modifications. See the commentary on section 1034(3) for the commencement of section 185 as it applies for the purposes of EIS relief.
Relief after an exchange of shares for shares in another company
3366.This transitional provision has the effect that Changes 24 and 25 in Annex 1 apply only to “new shares” (as defined in section 145(1)(b)) issued on or after 6 April 2007. See the commentary on section 145 and also on section 136 to which Change 24 also applies. Those Changes apply only for the purposes of share loss relief.
Excluded activities: wholesale and retail distribution
3367.This transitional provision has the effect that, for the purposes of share loss relief as well as EIS relief, Change 45 in Annex 1 applies only to shares issued on or after 6 April 2007. That Change applies to section 193(5)(b) which is applied by section 137(7). See the commentary on section 1034(3) for the commencement of section 193 as it applies for the purposes of EIS relief.
Excluded activities: leasing of ships
3368.This transitional provision has the effect that, for the purposes of share loss relief as well as EIS relief, Change 43 in Annex 1 applies only to shares issued on or after 6 April 2007. That Change applies to section 194 which is applied by section 137(7). See the commentary on section 1034(3) for the commencement of section 194 as it applies for the purposes of EIS relief.
Excluded activities: provision of services or facilities for another business
3369.This transitional provision has the effect that, for the purposes of share loss relief as well as EIS relief, Change 46 in Annex 1 applies only to shares issued on or after 6 April 2007. That Change applies to section 199 which is applied by section 137(7). See the commentary on section 1034(3) for the commencement of section 199 as it applies for the purposes of EIS relief.
Meaning of company being “in administration”
3370.This transitional provision has the effect that, for the purposes of share loss relief, Change 56 in Annex 1, relating to a company being in administration under the law of Northern Ireland, does not apply if a petition for an administration order was presented before 6 April 2007. The provision relates to section 252 only as it is applied by section 138(5) for the purposes of share loss relief. See the commentary on section 1034(3) for the commencement of section 252 as it applies for the purposes of EIS relief and also the consequential amendment to section 312(2A) of ICTA in Schedule 1.
