Finance (No.2) Act 1987

64 Limitation of other reliefs in dealings involving dual resident investing companies.

(1) In Schedule 7 to the [1968 c. 3.] Capital Allowances Act 1968 (special rules for sales of property between connected persons etc.) at the end of sub-paragraph (3) of paragraph 4 (which in certain cases excludes the right to elect to substitute a sale price or other sum for market value for the purposes of Parts I and II of that Act) there shall be added the words “nor may such an election be made if the buyer is a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987”.

(2) In section 252 of the Taxes Act (company reconstructions without change of ownership) at the beginning of subsection (2) (which, in relation to capital allowances, provides for continuity as between the successor and the predecessor) there shall be inserted the words “Subject to subsection (2A) below” and at the end of that subsection there shall be inserted the following subsection—

“(2A) Subsection (2) above does not apply if the successor is a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987.”

(3) In section 273 of the Taxes Act (disposals of assets within a group of companies to be on a no-gain/no-loss basis) in subsection (2) (exclusions) at the end of paragraph (c) there shall be inserted the words “or

(d) a disposal to a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987”.

(4) In section 276 of the Taxes Act (replacement of business assets by members of a group) at the beginning of subsection (1) there shall be inserted the words “Subject to subsection (1A) below” and at the end of that subsection there shall be inserted the following subsection—

“(1A) Subsection (1) above does not apply where so much of the consideration for the disposal of the old assets as is applied in acquiring the new assets or the interest in them is so applied by a member of the group which is a dual resident investing company; and in this subsection—

(a) “the old assets” and “the new assets” have the same meaning as in section 115 of the [1979 c. 14.] Capital Gains Tax Act 1979; and

(b) “dual resident investing company” has the same meaning as in section 63 of the Finance (No. 2) Act 1987.”

(5) In subsection (6) of section 44 of the [1971 c. 68.] Finance Act 1971 (disposal value of machinery or plant in relation to capital allowances) in paragraph (b) (if sale is at an undervalue, disposal value is equal to market value except where, among other matters, the buyer’s expenditure qualifies for capital allowances) in sub-paragraph (i) after the words “(scientific research allowances)” there shall be inserted “and the buyer is not a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987, which is connected with the seller within the terms of section 533 of the Taxes Act”.

(6) In paragraph 13 of Schedule 8 to the [1971 c. 68.] Finance Act 1971 (right of connected persons to elect, in relation to capital allowances, for continuity as between the successor and the predecessor) after the words “Taxes Act” there shall be inserted “and the successor is not a dual resident investing company, within the meaning of section 63 of the Finance (No. 2) Act 1987”.

(7) In this section—

(a) subsections (1) and (5) above apply in relation to sales on or after 1st April 1987;

(b) subsections (2) and (6) above apply where the successor in question begins to carry on the trade on or after that date;

(c) subsection (3) above applies in relation to disposals on or after that date; and

(d) subsection (4) above applies where the new assets (within the meaning of section 115 of the [1979 c. 14.] Capital Gains Tax Act 1979) are acquired on or after that date.