Income Tax Act 2007 (c. 3)

Part 13 U.K. Tax avoidance

[F1 CHAPTER 5E U.K. Disguised investment management fees

Textual Amendments

F1 Pt. 13 Ch. 5E inserted (with effect in accordance with s. 21(4) of the amending Act) by Finance Act 2015 (c. 11), s. 21(1)

809EZE Interpretation of Chapter U.K.

(1) In this Chapter—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

• “collective investment scheme” has the meaning given by section 235 of FISMA 2000;

• “external investor”, in relation to an investment scheme and any arrangements, means a participant in the scheme other than—

  (a)

  an individual who [F2 at any time performs or is to perform] investment management services directly or indirectly in respect of the scheme, or

  (b)

  a person through whom sums are to, or may, arise directly or indirectly to such an individual from the scheme under the arrangements;

• “investment management services”, in relation to an investment scheme, includes—

  (a)

  seeking funds for the purposes of the scheme from participants or potential participants,

  (b)

  researching potential investments to be made for the purposes of the scheme,

  (c)

  acquiring, managing or disposing of property for the purposes of the scheme, and

  (d)

  acting for the purposes of the scheme with a view to assisting a body in which the scheme has made an investment to raise funds;

• “investment trust” means a company in relation to which conditions A to C in section 1158 of CTA 2010 are met (or treated as met); and for this purpose “company” has the meaning given by section 1121 of CTA 2010;

• “market value” has the same meaning as in TCGA 1992 (see sections 272 and 273 of that Act);

• “participant”—

  (a)

  in relation to a collective investment scheme, is construed in accordance with section 235 of FISMA 2000;

  (b)

  in relation to an investment trust, means a member of the investment trust;

• “profits”, in relation to an investment made for the purposes of an investment scheme, means profits (including unrealised profits) arising from the acquisition, holding, management or disposal of the investment (taking into account items of a revenue nature and items of a capital nature).

(2) In this Chapter a reference to an investment made by a person in an investment scheme is a reference to a contribution by the person (whether by way of capital, loan or otherwise) towards the property subject to the scheme (but does not include a sum committed but not yet invested).

(3) For the purposes of subsection (2) a person who holds a share in an investment scheme which is a company limited by shares and who acquired the share from a person other than the scheme is to be taken to have made a contribution towards the property subject to the scheme equal to—

(a) the consideration given by the person for the acquisition of the share, or

(b) if less, the market value of the share at the time of the acquisition.

(4) In this Chapter, in relation to an investment scheme which is a company limited by shares—

(a) references to a repayment of, or a return on, an investment in the scheme include a repayment of, or a return on, an investment represented by a share in the scheme resulting from—

(i) the purchase of the share by the scheme,

(ii) the redemption of the share by the scheme,

(iii) the distribution of assets in respect of the share on the winding up of the scheme, or

(iv) any similar process;

(b) references to a return on an investment in the scheme include a dividend or similar distribution in respect of a share in the scheme representing the investment.]

Textual Amendments

F2 Words in s. 809EZE(1) substituted (with effect in accordance with s. 36(5) of the amending Act) by Finance Act 2016 (c. 24), s. 36(4)