PART XIII MISCELLANEOUS SPECIAL PROVISIONS
C1CHAPTER I INTELLECTUAL PROPERTY
Patents and know-how
520 Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure.
F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
521 Provisions supplementary to section 520.
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
522 Allowances for expenditure on purchase of patent rights: pre-1st April 1986 expenditure.
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
523 Lapses of patent rights, sales etc.
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
524 Taxation of receipts from sale of patent rights.
1
M7Subject to subsection (2) below, where a F177company resident in the United Kingdom sells all or any part of any patent rights and the net proceeds of the sale consist wholly or partly of a capital sum, F177the company shall, subject to the provisions of this Chapter, be charged to F178corporation tax under Case VI of Schedule D, for the F179accounting period in which the sum is received by F177it and successive F179accounting periods, being charged in each period on the same fraction of the sum as the period is of six years (or such less fraction as has not already been charged).
2
If the F180company by notice served on F174an officer of the Board within the period specified in subsection (2A) below, elects that the whole of the sum shall be charged to F181corporation tax for F175the F182accounting period in which it was received, it shall be charged to F181corporation tax accordingly.
F1762A
The period mentioned in subsection (2) above is—
a
F183. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
F184. . . the period of two years beginning at the end of the accounting period in which the sum was received.
3
F185M8Where a relevant non-resident company sells all or any part of any patent rights and the net proceeds of the sale consist wholly or partly of a capital sum, and the patent is a United Kingdom patent, then, subject to the provisions of this Chapter—
a
b
F194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
F194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F187. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1885
In subsection (3) above “relevant non-resident company” means a company not resident in the United Kingdom which would be within the charge to corporation tax in respect of any proceeds of the sale of the patent rights not consisting of a capital sum.
6
Where subsection (3) applies to charge a company to corporation tax in respect of a sum paid to it, F189. . . the company may, by notice given to the Board not later than two years after the end of the accounting period in which the sum is paid, elect that the sum shall be treated as arising rateably in the accounting periods ending not later than six years from the beginning of that in which the sum is paid (being accounting periods during which the company remains within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum), and there shall be made all such repayments of tax and assessments to tax as are necessary to give effect to any such election.
7
M9Subject to subsections (8) and (9) below, where the F190company selling all or any part of any patent rights (“the seller”) acquired the rights sold, or the rights out of which they were granted, by purchase and the price paid by F191it consisted wholly or partly of a capital sum, the preceding provisions of this section shall apply as if any capital sum received by F191it when F192it sells the rights were reduced by the amount of that sum.
8
Where between the purchase and the sale the seller has sold part of the rights acquired by F193it and the net proceeds of that sale consist wholly or partly of a capital sum, the amount of the reduction falling to be made under subsection (7) above in respect of the subsequent sale shall be itself reduced by the amount of that sum.
F1959
If a company is chargeable to corporation tax under subsection (3) above, nothing in subsections (7) and (8) above shall affect the sum representing income tax which is to be deducted under section 910 of ITA 2007 (payments to non-UK residents) from payments of, or of instalments of, the proceeds of the sale.
9A
If any sum representing income tax is deducted under section 910 of ITA 2007, any adjustment necessary to give effect to the provisions of subsection (9) above shall be made by way of repayment of tax.
10
M10A claim for relief under this section shall be made to the Board.
525 Capital sums: F5. . . winding up or partnership change.
F1981
Where a body corporate on which, by reason of the receipt of a capital sum, a charge falls or would otherwise fall to be made under section 524 commences to be wound up—
a
no sums shall be charged under that section on that body for any accounting period subsequent to that in which the winding up commences; and
b
the amount falling to be charged for the accounting period in which the winding up commences shall be increased by the total amounts which, but for the winding up, would have fallen to be charged for subsequent accounting periods.
2
F199. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
M11Where, under F197section 559 of the Capital Allowances Act (effect of successions) as applied by section 532, a charge under section 524 falls to be made on two or more persons jointly as being the persons for the time being carrying on a trade, and that trade is discontinued, subsection (1) above shall have effect in relation to the discontinuance as it has effect where a body corporate commences to be wound up.
4
Where subsection (3) above applies—
a
the additional sum which, under subsection (1) above, falls to be charged for the F200accounting period in which the discontinuance occurs shall be apportioned among the members of the partnership immediately before the discontinuance, according to their respective interests in the partnership profits before the discontinuance, and each partner F201. . . shall be charged separately for F202its proportion; F203. . .
b
F203. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F196. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
526 Relief for expenses.
M121
Where—
a
b
those fees or expenses would, if they had been paid or incurred for the purposes of a trade, have been allowable as a deduction in estimating the F204profits of that trade,
2
F209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
527 Spreading of royalties over several years.
F6M11
Where—
a
a royalty or other sum is paid to a company in respect of the user of a patent,
b
the user extended over a period of six complete years or more, and
c
the payment is one from which a sum representing income tax must be deducted under section 903 of ITA 2007,
the company may on the making of a claim require that the corporation tax payable by it by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of corporation tax which would have been payable by it if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.
2
Subsection (1) above shall apply in relation to a royalty or other sum where the period of the user is two complete years or more but less than six complete years as it applies to the royalties and sums mentioned in that subsection, but with the substitution for the reference to six equal instalments of a reference to so many equal instalments as there are complete years comprised in that period.
3
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
528 Manner of making allowances and charges.
M131
F210. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F213. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Where an allowance falls to be made to a company for any accounting period under F211section 526F214. . . , and is not to be made in taxing a trade—
a
the allowance shall, as far as may be, be given effect by deducting the amount of the allowance from the company’s income from patents of the accounting period;
b
where the allowance cannot be given full effect under paragraph (a) above in that period by reason of a want or deficiency of income from patents, then (so long as the company remains within the charge to corporation tax) the amount unallowed shall be carried forward to the succeeding accounting period, and shall be treated for the purposes of that paragraph, and of any further application of this paragraph, as the amount of a corresponding allowance for that period.
F2123A
4
F210. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
529 Patent income to be earned income in certain cases.
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
530 Disposal of know-how.
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
531 Provisions supplementary to section 530.
1
M14Subject to subsection (7) below, where, after 19th March 1968, F220a company disposes of know-how which has been used in a trade carried on by F221the company, and continues to carry on the trade after the disposal, the amount or value of any consideration received by F221the company for the disposal shall—
a
b
in any other case, so far as it is not chargeable to F222corporation tax as a revenue or income receipt,
be treated for F223the purposes of corporation tax as a trading receipt.
F2242
Subject to subsection (3) below, where—
a
a person carrying on a trade receives consideration for the disposal of know-how which has been used in the trade, and
b
the know-how is disposed of as part of the disposal of all or part of the trade,
the consideration shall for the purposes of corporation tax be treated as a payment for goodwill in relation both to the person making the disposal and to the person acquiring the know-how (if that person provided the consideration).
3
Subsection (2) above shall not apply—
a
F225if, in the case of the person disposing of the know-how being within the charge to corporation tax, that person and the person acquiring the know-how (whether or not within the charge to corporation tax) elect for that subsection not to apply by notice given jointly to the inspector within two years of the disposal, or
b
to the person acquiring the know-how if the trade in question was, before the acquisition, carried on wholly outside the United Kingdom;
F217. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2263A
If—
a
an election is made under section 194 of ITTOIA 2005 (provision corresponding to subsections (2) and (3) of this section for the purposes of income tax), and
b
the person making the acquisition mentioned in that section is within the charge to corporation tax,
the persons making the election under that section are treated as also making an election under subsection (3) of this section (even though the person disposing of the know-how is not within the charge to corporation tax).
4
M15Subject to subsections (5) and (7) below, any consideration received by a F227company for the disposal of know-how shall—
a
if it is received in respect of the disposal of know-how after 31st March 1986 and is not brought into account F218as a disposal value under section 462 of the Capital Allowances Act, or
b
be treated as a profit or gain chargeable to F228corporation tax under Case VI of Schedule D.
5
M16Where the F230company concerned has incurred expenditure wholly and exclusively in the acquisition or disposal of the know-how, the amount which would apart from this subsection be treated as a profit or gain chargeable to F231corporation tax under Case VI of Schedule D shall be reduced by the amount of that expenditure; but a deduction shall not be twice made in respect of the same expenditure, whether under this subsection or otherwise.
6
F232. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C167
Subsections (1) and (3) to F233(5) above F219. . . shall not apply on any sale of know-how where the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them; and subsection (2) above shall apply in any such case with the omission of the words “Subject to subsection (3) below”.
In this subsection references to a body of persons include references to a partnership.
8
M17Where in connection with any disposal of know-how a person gives an undertaking (whether absolute or qualified, and whether legally valid or not) the tenor or effect of which is to restrict his or another’s activities in any way, any consideration received in respect of the giving of the undertaking or its total or partial fulfilment shall be treated for the purposes of this section as consideration received for the disposal of the know-how.
532F234 Application of Capital Allowances Act
533 Interpretation of sections 520 to 532.
1
M18In F238sections 524 to F241528—
F242“income from patents” means—
- a
any royalty or other sum paid in respect of the use of a patent; and
- b
any amount on which tax is payable for any accounting period by virtue of section 524 or 525 above or section 472(5) of, or paragraph 100 of Schedule 3 to, the Capital Allowances Act,
but does not include any amount chargeable to income tax.
- a
F239. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“patent rights” means the right to do or authorise the doing of anything which would, but for that right, be an infringement of a patent;
“United Kingdom patent” means a patent granted under the laws of the United Kingdom.
2
Subject to subsection (3) below, in F238sections 524 to F243528 any reference to the sale of part of patent rights includes a reference to the grant of a licence in respect of the patent in question, and any reference to the purchase of patent rights includes a reference to the acquisition of a licence in respect of a patent.
3
If a licence granted by a person entitled to any patent rights is a licence to exercise those rights to the exclusion of the grantor and all other persons for the whole of the remainder of the term for which the right subsists, the grantor shall be treated for the purposes of F238sections 524 to F243528 as thereby selling the whole of the rights.
4
Where, under sections 46 to 49 of the Patents Act 1949 F237, sections 55 to 59 of the Patents Act 1977 or any corresponding provisions of the law of any country outside the United Kingdom, an invention which is the subject of a patent is made, used, or exercised or vended by or for the service of the Crown or the government of the country concerned, F238sections 524 to F243528 shall have effect as if the making, user, exercise or vending of the invention had taken place in pursuance of a licence, and any sums paid in respect thereof shall be treated accordingly.
5
Expenditure incurred in obtaining a right to acquire in the future patent rights as respects any invention in respect of which the patent has not yet been granted shall be deemed for all the purposes of F238sections 524 to F243528 to be expenditure on the purchase of patent rights, and if the patent rights are subsequently acquired the expenditure shall be deemed for those purposes to have been expenditure on the purchase of those rights.
6
Any sum received from a person which by virtue of subsection (5) above is deemed to be expenditure incurred by him on the purchase of patent rights shall be deemed to be proceeds of a sale of patent rights.
7
M19In F240section 531“know-how” means any industrial information and techniques likely to assist in the manufacture or processing of goods or materials, or in the working of a mine, oil-well or other source of mineral deposits (including the searching for, discovery or testing of deposits or the winning of access thereto), or in the carrying out of any agricultural, forestry or fishing operations.
Copyright and public lending right
534 Relief for copyright payments etc.
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
535 Relief where copyright sold after ten years or more.
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
536 Taxation of royalties where owner abroad.
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
537 Public lending right.
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F17 Designs
Ss. 537A, 537B and preceding cross-heading inserted (1.8.1989) by Intellectual Property Act 1988 (c. 48), Sch. 7 para. 36(6); S.I. 1989/816, art. 2
537A Relief for payments in respect of designs.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
537B Taxation of design royalties where owner abroad.
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Artists’ receipts
538 Relief for painters, sculptors and other artists.
F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C4C5C6C7C8C9C10C11CHAPTER II LIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES
Pt. 13 Ch. 2 restricted (with effect in accordance with s. 105(1) of the affecting Act) by Finance Act 1996 (c. 8), Sch. 13 para. 3(2) (with Sch. 13 para. 16)
Pt. 13 Ch. 2 applied (with modifications) (6.4.1999) by The Individual Savings Account Regulations 1998 (S.I. 1998/1870), regs. 35(7), 36(3)-(7) (as amended by The Individual Savings Account (Amendment) Regulations 1998 (S.I. 1998/3174), reg. 12)
Pt. 13 Ch. 2 applied (with modifications) (6.4.1999 with effect in accordance with reg. 1 of the affecting S.I.) by The Personal Portfolio Bonds (Tax) Regulations 1999 (S.I. 1999/1029), reg. 6(2)-(8) (as amended (6.4.2002) by The Personal Portfolio Bonds (Tax) (Amendment) Regulations 2002 (S.I. 2002/455), regs. 1, 2)
Pt. 13 Ch. 2 modified (9.4.2003) by Finance Act 2003 (c. 14), s. 171(1)(3), Sch. 34 para. 3
Pt. 13 Ch. 2 modified (9.4.2003) by Finance Act 2003 (c. 14), s. 171(1)(3), Sch. 34 para. 15
Pt. 13 Ch. 2 modified (6.4.2005) by The Child Trust Funds Regulations 2004 (S.I. 2004/1450), regs. 1, 2(1), 38(3)-(8); S.I. 2004/3369, art. 2(1)
Pt. 13 Ch. 2 modified (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 14(5)-(7)
Pt. 13 Ch. 2 modified (with effect in accordance with Sch. 13 para. 5 of the modifying Act) by Finance Act 2008 (c. 9), Sch. 13 para. 6
539 Introductory.
F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
539ZAF97Application of this Chapter etc. to policies and contracts in which persons other than companies are interested
F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
539AF98The conditions for being an excepted group life policy
F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
540 Life policies: chargeable events.
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
541 Life policies: computation of gain.
F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
542 Life annuity contracts: chargeable events.
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
543 Life annuity contracts: computation of gain.
F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
544 Second and subsequent assignment of life policies and contracts.
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
545 Capital redemption policies.
F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
546 Calculation of certain amounts for purposes of sections 540, 542 and 545.
F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
546AF99 Treatment of certain assignments etc involving co-ownership
F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
546BF100 Special provision in respect of certain section 546 excesses
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
546C Charging the section 546 excess to tax where section 546B applies
F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
546D Modifications of s.546C for final year ending with terminal chargeable event
F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
547 Method of charging gain to tax.
F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
547AF101 Method of charging gain to tax: multiple interests.
F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
548 Deemed surrender of certain loans.
F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
548AF102Effect of rebated or reinvested commission in certain cases
F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
548BSection 548A: further definitions
F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
549 Certain deficiencies allowable as deductions.
F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
550 Relief where gain charged at a higher rate.
F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
551 Right of individual to recover tax from trustees.
F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
551AF103 Right of company to recover tax from trustees.
F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
552F42 Information: duty of insurers.
1
Where a chargeable event F43. . . has happened in relation to any policy or contract, the body by or with whom the policy or contract was issued, entered into or effected shall—
a
unless satisfied that no gain is to be treated as arising by reason of the event, deliver to the appropriate policy holder before the end of the relevant three month period a certificate specifying the information described in subsection (5) below; and
b
if the condition in paragraph (a) or (b) of subsection (2) below is satisfied, deliver to the inspector before the end of the relevant three month period a certificate specifying the information described in subsection (5) below together with the name and address of the appropriate policy holder.
2
For the purposes of this section—
a
the condition in this paragraph is that the event is an assignment for money or money’s worth of the whole of the rights conferred by the policy or contract; or
b
the condition in this paragraph is that the amount of the gain, or the aggregate amount of the gain and any gains connected with it, exceeds one half of the basic rate limit for the relevant year of assessment.
3
If, in the case of every certificate which a body delivers under subsection (1)(a) above which relates to a gain attributable to a year of assessment F44. . . , the body also delivers to the inspector—
a
before the end of the relevant three month period for the purposes of subsection (1)(b) above,
b
by a means prescribed by the Board for the purposes of this subsection under section 552ZA(5), and
c
in a form so prescribed in the case of that means,
a certificate specifying the same information as the certificate under subsection (1)(a) together with the name and address of the appropriate policy holder, the body shall be taken to have complied with the requirements of subsection (1)(b) above in relation to that year of assessment F45. . . so far as relating to the chargeable events to which the certificates relate.
4
Where a certificate is not required to be delivered under subsection (1)(b) above in the case of any chargeable event—
a
the inspector may by notice require the body to deliver to him a copy of any certificate that the body was required to deliver under subsection (1)(a) above which relates to the chargeable event; and
b
it shall be the duty of the body to deliver such a copy within 30 days of receipt of the notice.
5
The information to be given to the appropriate policy holder pursuant to subsection (1)(a) above or the inspector pursuant to subsection (1)(b) above is—
a
any unique identifying designation given to the policy or contract;
b
the nature of the chargeable event and—
i
the date on which it happened; and
c
if the event is the assignment of all the rights conferred by the policy or contract, such of the following as may be required for computing the amount of the gain to be treated as arising by virtue of F49. . . F50Chapter 9 of Part 4 of ITTOIA 2005—
i
ii
the amounts previously paid under the policy or contract by way of premiums or otherwise by way of consideration for an annuity;
iii
iv
the value of any previously assigned parts of or shares in the rights conferred by the policy or contract;
d
except where paragraph (c) above applies, the amount of the gain treated as arising by reason of the event;
F57e
the number of years relevant for computing the annual equivalent of the amount of the gain for the purposes of subsection (1) of section 536 of ITTOIA 2005 (top slicing relieved liability: one chargeable event), apart from subsections (6) and (8) of that section;
F58f
on the assumption that section 465 of ITTOIA 2005 (person liable: individuals) has effect in relation to the gain —
i
whether an individual would fall to be treated as having paid income tax at the F59basic rate on the amount of the gain in accordance with section 530 of that Act; and
ii
if so, except in a case where paragraph (c) above applies, the amount of such tax that would fall to be so treated as paid.
C26
For the purposes of subsection (1)(a) above, the relevant three month period is whichever of the following periods ends the latest—
a
the period of three months following the happening of the chargeable event;
b
7
For the purposes of subsection (1)(b) above, the relevant three month period is whichever of the following periods ends the latest—
a
the period of three months following the end of the year of assessment F66. . . in which the event happened;
b
if the event is a surrender or assignment which is a chargeable event by virtue of F67section 514(1) of ITTOIA 2005, the period of three months following the end of the insurance year in which the event happens;
c
if the event is a death or an assignment, the period of three months beginning with receipt of written notification of the event;
d
if a certificate under subsection (1)(b) above would not be required in respect of the event apart from the happening of another event, and that other event is one of those mentioned in paragraph (c) above, the period of three months beginning with receipt of written notification of that other event.
8
For the purposes of this section the cases where a gain is connected with another gain are those cases where—
a
both gains arise in connection with policies or contracts containing obligations which, immediately before the chargeable event, were obligations of the same body;
b
the policy holder of those policies or contracts is the same;
c
both gains are attributable to the same year of assessment F68. . . ;
d
the terms of the policies or contracts are the same, apart from any difference in their maturity dates; and
e
the policies or contracts were issued in respect of insurances made, or were entered into or effected, on the same date.
9
For the purposes of this section, the year of assessment F69. . . to which a gain is attributable is—
a
in the case of a gain treated as arising by virtue of F70subsection (1) of section 514 of ITTOIA 2005, the year of assessment which includes the end of the insurance year mentioned in subsection (3) and (4) of that section; or
b
in any other case, the year of assessment F71. . . in which happens the chargeable event by reason of which the gain is treated as arising.
10
In this section—
“amount”, in relation to any gain, means the amount of the gain apart from F72. . . F73section 528 of ITTOIA 2005;
“appropriate policy holder” means—
- a
in relation to an assignment of part of or a share in the rights conferred by a policy or contract, any person who is both—
- i
the policy holder, or one of the policy holders, immediately before the assignment; and
- ii
the assignor or one of the assignors; and
- i
- b
in relation to any other chargeable event, the person who is the policy holder immediately before the happening of the event;
- a
F74“chargeable event” means an event which is a chargeable event within the meaning of F75. . . Chapter 9 of Part 4 of ITTOIA 2005;
F76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F77“insurance year” has the same meaning as in Chapter 9 of Part 4 of ITTOIA 2005 (see section 499 of that Act);
“the relevant year of assessment”, in the case of any gain, means—
F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
This section is supplemented by section 552ZA.
F8113
For the purposes of this section, no account is to be taken of the effect of F244. . . section 541A of ITTOIA 2005.
552ZAF104 Information: supplementary provisions
1
This section supplements section 552 and shall be construed as one with it.
2
Where the obligations under any policy or contract of the body that issued, entered into or effected it (“the original insurer”) are at any time the obligations of another body (“the transferee”) to whom there has been a transfer of the whole or any part of a business previously carried on by the original insurer, section 552 shall have effect in relation to that time, except where the chargeable event—
a
happened before the transfer, and
b
in the case of a death or an assignment, is an event of which the notification mentioned in subsection (6) or (7) of that section was given before the transfer,
as if the policy or contract had been issued, entered into or effected by the transferee.
3
Where, in consequence of F82. . . F83section 514(1) of ITTOIA 2005, paragraph (a) or (b) of section 552(1) requires certificates to be delivered in respect of two or more surrenders, happening in the same year, of part of or a share in the rights conferred by the policy or contract, a single certificate may be delivered under the paragraph in question in respect of all those surrenders (and may treat them as if they together constituted a single surrender) unless between the happening of the first and the happening of the last of them there has been—
a
an assignment of part of or a share in the rights conferred by the policy or contract; or
b
an assignment, otherwise than for money or money’s worth, of the whole of the rights conferred by the policy or contract.
4
Where the appropriate policy holder is two or more persons—
a
section 552(1)(a) requires a certificate to be delivered to each of them; but
b
nothing in section 552 or this section requires a body to deliver a certificate under subsection (1)(a) of that section to any person whose address has not been provided to the body (or to another body, at a time when the obligations under the policy or contract were obligations of that other body).
5
A certificate under section 552(1)(b) or (3)—
a
shall be in a form prescribed for the purpose by the Board; and
b
shall be delivered by any means prescribed for the purpose by the Board;
and different forms, or different means of delivery, may be prescribed for different cases or different purposes.
6
The Board may by regulations make such provision as they think fit for securing that they are able—
a
to ascertain whether there has been or is likely to be any contravention of the requirements of section 552 or this section; and
b
to verify any certificate under that section.
7
Regulations under subsection (6) above may include, in particular, provisions requiring persons to whom premiums under any policy are or have at any time been payable—
a
to supply information to the Board; and
b
to make available books, documents and other records for inspection on behalf of the Board.
8
Regulations under subsection (6) above may—
a
make different provision for different cases; and
b
contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
552ZBF105Regulations in relation to qualifying policies
1
The Commissioners for Her Majesty's Revenue and Customs may make regulations—
a
requiring relevant persons—
i
to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;
ii
to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;
b
making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—
i
to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;
ii
to verify any information provided to an officer of Revenue and Customs as required by the regulations.
2
The provision that may be made by virtue of subsection (1)(b) includes, in particular, provision requiring relevant persons to make available books, documents and other records for inspection by or on behalf of an officer of Revenue and Customs.
3
The regulations may—
a
make different provision for different cases or circumstances, and
b
contain incidental, supplementary, consequential, transitional, transitory or saving provision.
4
In this section—
“prescribed” means prescribed by the regulations,
“qualifying policy” includes a policy which would be a qualifying policy apart from—
- a
paragraph A1(2), B1(2), B2(2) or B3(3) of Schedule 15, or
- b
paragraph 17(2)(za) of that Schedule (including as applied by paragraph 18), and
- a
“relevant person” means a person—
- a
who issues, or has issued, qualifying policies, or
- b
who is, or has been, a relevant transferee in relation to qualifying policies.
- a
5
For the purposes of this section a person (“X”) is at any time a “relevant transferee” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.
F106C3552A Tax representatives.
1
This section has effect for the purpose of securing that, where it applies to an overseas insurer, another person is the overseas insurer’s tax representative.
2
In this section “overseas insurer” means a person who is not resident in the United Kingdom who carries on a business which consists of or includes the effecting and carrying out of—
a
policies of life insurance;
b
contracts for life annuities; or
c
capital redemption policies.
3
This section applies to an overseas insurer—
a
if the condition in subsection (4) below is satisfied on the designated day; or
b
where that condition is not satisfied on that day, if it has subsequently become satisfied.
4
The condition mentioned in subsection (3) above is that—
a
there are in force relevant insurances the obligations under which are obligations of the overseas insurer in question or of an overseas insurer connected with him; and
b
the total amount or value of the gross premiums paid under those relevant insurances is £1 million or more.
5
In this section “relevant insurance” means any policy of life insurance, contract for a life annuity or capital redemption policy F84. . . in the case of which—
a
the holder is resident in the United Kingdom;
b
the obligations of the insurer are obligations of a person not resident in the United Kingdom; and
c
those obligations are not attributable to a branch or agency of that person’s in the United Kingdom.
6
Before the expiration of the period of three months following the day on which this section first applies to an overseas insurer, the overseas insurer must nominate to the Board a person to be his tax representative.
7
A person shall not be a tax representative unless—
a
if he is an individual, he is resident in the United Kingdom and has a fixed place of residence there, or
b
if he is not an individual, he has a business establishment in the United Kingdom,
and, in either case, he satisfies such other requirements (if any) as are prescribed in regulations made for the purpose by the Board.
8
A person shall not be an overseas insurer’s tax representative unless—
a
his nomination by the overseas insurer has been approved by the Board; or
b
he has been appointed by the Board.
9
The Board may by regulations make provision supplementing this section; and the provision that may be made by any such regulations includes provision with respect to—
a
the making of a nomination by an overseas insurer of a person to be his tax representative;
b
the information which is to be provided in connection with such a nomination;
c
the form in which such a nomination is to be made;
d
the powers and duties of the Board in relation to such a nomination;
e
the procedure for approving, or refusing to approve, such a nomination, and any time limits applicable to doing so;
f
the termination, by the overseas insurer or the Board, of a person’s appointment as a tax representative;
g
the appointment by the Board of a person as the tax representative of an overseas insurer (including the circumstances in which such an appointment may be made);
h
the nomination by the overseas insurer, or the appointment by the Board, of a person to be the tax representative of an overseas insurer in place of a person ceasing to be his tax representative;
j
circumstances in which an overseas insurer to whom this section applies may, with the Board’s agreement, be released (subject to any conditions imposed by the Board) from the requirement that there must be a tax representative;
k
appeals to the Special Commissioners against decisions of the Board under this section or regulations under it.
10
The provision that may be made by regulations under subsection (9) above also includes provision for or in connection with the making of other arrangements between the Board and an overseas insurer for the purpose of securing the discharge by or on behalf of the overseas insurer of the relevant duties, within the meaning of section 552B.
11
Section 839 (connected persons) applies for the purposes of this section.
P112
In this section—
F85“capital redemption policy” means a capital redemption policy in relation to which F86. . . Chapter 9 of Part 4 of ITTOIA 2005 F87has effect;
F88“contract for a life annuity” means a contract for a life annuity in relation to which F86. . . Chapter 9 of Part 4 of ITTOIA 2005 F87has effect;
“the designated day” means such day as the Board may specify for the purpose in regulations;
F89“policy of life insurance” means a policy of life insurance in relation to which F86. . . Chapter 9 of Part 4 of ITTOIA 2005 F87has effect;
“tax representative” means a tax representative under this section.
F106552B Duties of overseas insurers’ tax representatives.
1
It shall be the duty of an overseas insurer’s tax representative to secure (where appropriate by acting on the overseas insurer’s behalf) that the relevant duties are discharged by or on behalf of the overseas insurer.
F902
For the purposes of this section “the relevant duties” are—
a
the duties imposed by section 552,
b
the duties imposed by section 552ZA(2), (4) or (5), and
c
any duties imposed by regulations made under subsection (6) of section 552ZA by virtue of subsection (7) of that section,
so far as relating to relevant insurances under which the overseas insurer in question has any obligations.
3
An overseas insurer’s tax representative shall be personally liable—
a
in respect of any failure to secure the discharge of the relevant duties, and
b
in respect of anything done for purposes connected with acting on the overseas insurer’s behalf,
as if the relevant duties were imposed jointly and severally on the tax representative and the overseas insurer.
4
In the application of this section in relation to any particular tax representative, it is immaterial whether any particular relevant duty arose before or after his appointment.
5
This section has effect in relation to relevant duties relating to chargeable events happening on or after the day by which section 552A(6) requires the nomination of the overseas insurer’s first tax representative to be made.
F915A
In subsection (5) “chargeable event” has the same meaning as in section 552 (see subsection (10) of that section).
6
Expressions used in this section and in section 552A have the same meaning in this section as they have in that section.
553 Non-resident policies and off-shore capital redemption policies.
F92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
553AF107 Overseas life assurance business: life policies.
F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
553BF108 Overseas life assurance business: capital redemption policies.
F94. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
553CF109 Personal portfolio bonds.
F95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
554 Borrowings on life policies to be treated as income in certain cases.
F96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER III ENTERTAINERS AND SPORTSMEN
555 Payment of tax.
F110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
556 Activity treated as trade etc. and attribution of income.
1
F245. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2462
If—
a
under section 13(5) of ITTOIA 2005 a payment made to a person is treated as made instead to the performer, and
b
the person to whom the payment is actually made is a company within the charge to corporation tax,
the company is treated for corporation tax purposes as if the payment had not been made to it.
C173
Regulations may provide—
a
F247. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
that any liability to F248corporation tax which would, apart from subsection (2) above, arise in relation to the payment shall not arise or shall arise only to a prescribed extent.
4
M20References in this section to a payment include references to a transfer.
F2494A
In this section “payment” and “transfer” have the same meanings as in section 13 of ITTOIA 2005.
5
557 Charge on F111profits.
F112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
558 Supplementary provisions.
1
F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
M22Regulations may make provision generally for giving effect to this Chapter, and may make different provision for different cases or descriptions of case.
C186
M23In this Chapter—
“regulations” means regulations made by the Treasury; and
“prescribed” means prescribed by regulations.
CHAPTER IV SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY
559 Deductions on account of tax etc. from payments to certain sub-contractors.
F114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
559AF124 Treatment of sums deducted under s.559
F115. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
560 Persons who are sub-contractors or contractors for purposes of Chapter IV.
F116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
561 Exceptions from section 559.
F117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
562 Conditions to be satisfied by individuals.
F118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
563 Conditions to be satisfied by partners who are individuals.
F119. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
564 Conditions to be satisfied by firms.
F120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
565 Conditions to be satisfied by companies.
F121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
566 General powers to make regulations under Chapter IV.
F122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
567 Meaning of “construction operations”.
F123. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER V SCHEMES FOR RATIONALIZING INDUSTRY
568 Deductions from profits of contributions paid under certified schemes.
M21
Notwithstanding anything contained in section 74 F125of this Act or section 33 of ITTOIA 2005 but subject to the following provisions of this Chapter, where a person pays, wholly and exclusively for the purposes of a trade in respect of which he is chargeable under Case I of Schedule D, F251or under Part 2 of ITTOIA 2005, a contribution in furtherance of a scheme which is for the time being certified by the Secretary of State under this section, the contribution shall, in so far as it is paid in furtherance of the primary object of the scheme, be allowed to be deducted as an expense in computing the F126profits of that trade.
2
The Secretary of State shall certify a scheme under this section if he is satisfied—
a
that the primary object of the scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom; and
b
that the scheme is in the national interest and in the interests of that industry as a whole; and
c
that such number of persons engaged in that industry as are substantially representative of the industry are liable to pay contributions in furtherance of the primary object of the scheme by agreement between them and the body of persons carrying out the scheme.
References in this subsection to an industry in the United Kingdom shall include references to the business carried on by owners of ships or of a particular class of ships, wherever that business is carried on, and, in relation to that business, references in this subsection to works or machinery or plant shall include references to ships.
3
The Secretary of State shall cancel any certificate granted under this section if he ceases to be satisfied as to any of the matters referred to in subsection (2) above.
4
The Secretary of State may at any time require the body of persons carrying out a scheme certified under this section to produce any books or documents of whatever nature relating to the scheme and, if the requirement is not complied with, he may cancel the certificate.
5
In this section and in section 569 “contribution”, in relation to a scheme, does not include a sum paid by a person by way of loan or subscription of share capital, or in consideration of the transfer of assets to him, or by way of a penalty for contravening or failing to comply with the scheme.
569 Repayment of contributions.
M31
In the event of the repayment, whether directly or by way of distribution of assets on a winding up or otherwise, of a contribution or any part of a contribution which has been allowed to be deducted under section 568, the deduction of the contribution, or so much of it as has been repaid, shall be deemed to be an unauthorised deduction in respect of which an assessment shall be made, and, notwithstanding the provisions of the Tax Acts requiring assessments to be made within six years after the end of the chargeable period to which they relate, any such assessment and any consequential assessment may be made at any time within three years after the end of the chargeable period in which the repayment was made.
2
For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.
570 Payments under certified schemes which are not repayments of contributions.
M41
Subject to the provisions of this section, where, under any scheme which is for the time being certified or has at any time been certified by the Secretary of State under section 568, any payment (not being a payment made by way of repayment of contributions) is made to a person carrying on a trade to which the scheme relates, that payment shall be treated for the purposes of the Tax Acts as a trading receipt of the trade, and shall accordingly be taken into account in computing the F127profits of the trade for those purposes.
2
Where F128. . . the payments which have been made under such a scheme in respect of a trade (not being payments made by way of repayment of contributions) have been made wholly or partly in respect of damage in respect of which no relief may be given under the Tax Acts, F129and a claim is made to that effect, then, subject to and in accordance with the provisions of F130Schedule 21—
a
relief shall be given in respect of those payments by reducing the amounts which are to be treated as trading receipts of the trade under subsection (1) above; but
b
where such relief is given, section 568 shall, in relation to contributions subsequently paid under the scheme in respect of the trade, have effect subject to the modifications specified in Part III of that Schedule,
F131and paragraph 6 of that Schedule applies for the purposes of this subsection as it applies for the purposes of that Schedule.
3
The provisions of this section and Schedule 21 shall apply in relation to any payment made to a person who has ceased to carry on a trade to which any such scheme as is mentioned in subsection (1) above relates as they apply in relation to payments made to a person carrying on such a trade, subject to the modification that so much of that payment as falls to be treated as a trading receipt by virtue of those provisions shall be deemed for the purposes of those provisions to have been made to him on the last day on which he was engaged in carrying on the trade.
4
In determining for the purposes of this section and of Schedule 21—
a
whether any trade has ceased to be carried on; or
b
whether any contribution is paid in respect of a trade in respect of which a payment has been made; or
c
whether any payment is made in respect of a trade in respect of which a contribution has been paid,
no regard shall be had to any event which, by virtue of F252section 337(1) above or section 18 of ITTOIA 2005 (companies beginning or ceasing to carry on trade), is to be treated as effecting a discontinuance of a trade.
571 Cancellation of certificates.
M51
Where any certificate granted with respect to a scheme under section 568 is cancelled by the Secretary of State, and any deductible contributions paid in furtherance of the scheme have not been repaid at the expiration of one year from the cancellation, the body of persons carrying out the scheme shall, for the chargeable period in which that year expires, be charged to tax F253(in the case of corporation tax, under Case VI of Schedule D) upon the aggregate amount of the deductible contributions which have not been repaid at that time.
F1321A
An amount charged to income tax under subsection (1) above is treated for income tax purposes as an amount of income.
2
The charge to tax under subsection (1) above shall not be made if the total amount of any contributions, other than deductible contributions, which have been paid under the scheme and have not been repaid before that time is greater than the available resources of the scheme, and shall not in any case be made upon an amount greater than the excess, if any, of those resources over that total amount.
3
In subsection (2) above “the available resources”, in relation to any scheme, means a sum representing the total funds held for the purposes of the scheme at the expiration of one year from the cancellation of the certificate plus a sum representing any funds held for the purposes of the scheme which, during that year, have been applied otherwise than in accordance with the provisions of the scheme as in force when the certificate was granted.
4
Where the body of persons carrying out a scheme are charged to tax by virtue of subsection (1) above, and, after the expiration of one year from the cancellation of the certificate, any deductible contribution paid in furtherance of the scheme is repaid, the amount upon which the charge is made shall on the making of a claim be reduced by the amount repaid, and all such repayments of tax shall be made as are necessary to give effect to the provisions of this subsection.
5
In this section “contribution” includes a part of a contribution, and “deductible contribution” means a contribution allowed to be deducted under section 568, any reduction under Part III of Schedule 21 being left out of account.
6
For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.
572 Application to statutory redundancy schemes.
M61
Sections 569 to 571 and Schedule 21 shall, subject to the adaptations specified in subsection (2) below, apply in relation to a statutory redundancy scheme as they apply in relation to a scheme certified under section 568.
2
The adaptations referred to above are as follows, that is to say—
a
for any reference to a contribution allowed to be deducted under section 568 there shall be substituted a reference to a contribution allowed to be deducted under any provision of the Tax Acts other than that section;
b
any provision that section 568 shall, in relation to contributions, have effect subject to modifications, shall be construed as a provision that so much of any provision of the Tax Acts other than that section as authorises the deduction of contributions shall, in relation to the contributions in question, have effect subject to the modifications in question;
c
for any reference to the cancellation of a certificate with respect to a scheme there shall be substituted a reference to the scheme ceasing to have effect; and
d
for any reference to the provisions of the scheme as in force when the certificate was granted there shall be substituted a reference to the provisions of the scheme as in force when the contributions were first paid thereunder.
3
In this section “statutory redundancy scheme” means a scheme for the elimination or reduction of redundant works, machinery or plant, or for other similar purposes, to which effect is given by or under any Act, whether passed before or after this Act.
F173Chapter 5AShare loss relief
Pt. 13 Ch. 5A created (6.4.2007 with effect in accordance with s. 1034(1) of the affecting Act) by virtue of Income Tax Act 2007 (c. 3), Sch. 1 para. 117(3) (with Sch. 2)
F144Qualifying trading companies: the requirements
S. 576B and preceding cross-heading inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 122 (with Sch. 2)
576BThe trading requirement
1
The trading requirement is that—
a
the company, disregarding any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, or
b
the company is a parent company and the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities.
2
If the company intends that one or more other companies should become its qualifying subsidiaries with a view to their carrying on one or more qualifying trades—
a
the company is treated as a parent company for the purposes of subsection (1)(b), and
b
the reference in subsection (1)(b) to the group includes the company and any existing or future company that will be its qualifying subsidiary after the intention in question is carried into effect.
This subsection does not apply at any time after the abandonment of that intention.
3
For the purpose of subsection (1)(b) the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
4
For the purpose of determining the business of a group, activities are disregarded to the extent that they are activities carried on by a mainly trading subsidiary otherwise than for its main purpose.
5
For the purposes of determining the business of a group, activities of a group company are disregarded to the extent that they consist in—
a
the holding of shares in or securities of a qualifying subsidiary of the parent company,
b
the making of loans to another group company,
c
the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by a group company, or
d
the holding and managing of property used by a group company for the purpose of research and development from which it is intended—
i
that a qualifying trade to be carried on by a group company will be derived, or
ii
that a qualifying trade carried on or to be carried on by a group company will benefit.
6
Any reference in subsection (5)(d)(i) or (ii) to a group company includes a reference to any existing or future company which will be a group company at any future time.
7
In this section—
“excluded activities” has the meaning given by section 192 of ITA 2007 read with sections 193 to 199 of that Act,
“group” means a parent company and all its qualifying subsidiaries,
“group company”, in relation to a group, means the parent company or any of its qualifying subsidiaries,
“incidental purposes” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question,
“mainly trading subsidiary” means a subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,
“non-qualifying activities” means—
- a
excluded activities, and
- b
activities (other than research and development) carried on otherwise than in the course of a trade,
- a
“parent company” means a company that has one or more qualifying subsidiaries,
“qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007,
“qualifying trade” has the meaning given by section 189 of that Act,
“research and development” has the meaning given by section 837A.
8
In sections 189(1)(b) and 194(4)(c) of ITA 2007 (as applied by subsection (7) for the purposes of the definitions of “excluded activities” and “qualifying trade”) “period B” means the continuous period that is relevant for the purposes of section 576A(3).
F4529
In section 195 of ITA 2007 as applied by subsection (7) for the purposes mentioned in subsection (8), references to the issuing company are to be read as references to the company mentioned in subsection (1).
F136576CCeasing to meet the trading requirement because of administration or receivership
1
A company is not regarded as ceasing to meet the trading requirement by reason only of anything done in consequence of the company or any of its subsidiaries being in administration or receivership.
This has effect subject to subsections (2) and (3).
2
Subsection (1) applies only if—
a
the entry into administration or receivership, and
b
everything done as a result of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
3
A company ceases to meet the trading requirement if before the time that is relevant for the purposes of section 576A(2)—
a
a resolution is passed, or an order is made, for the winding up of the company or any of its subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989, any other act is done for the like purpose), or
b
the company or any of its subsidiaries is dissolved without winding up.
This is subject to subsection (4).
4
Subsection (3) does not apply if —
a
the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
b
the company continues, during the winding up, to be a trading company.
5
References in this section to a company being “in administration” or “in receivership” are to be read in accordance with section 252 of ITA 2007.
F137576DThe control and independence requirement
1
The control element of the requirement is that—
a
the company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the company, and
b
no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
2
The independence element of the requirement is that—
a
the company must not—
i
be a 51% subsidiary of another company, or
ii
be under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
b
no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 576A(3) or otherwise).
3
This section is subject to section 576J(3).
F4533A
Section 839 (connected persons) applies for the purposes of this section.
4
In this section—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable,
“control” is to be read as follows—
- a
in subsection (1)(a), in accordance with section 416(2) to (6),
- b
in subsection (2)(a), in accordance with section 840,
- a
“qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007.
F138576EThe qualifying subsidiaries requirement
1
The qualifying subsidiaries requirement is that any subsidiary that the company has must be a qualifying subsidiary of the company.
2
In this section “qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007.
F139576FThe property managing subsidiaries requirement
1
The property managing subsidiaries requirement is that any property managing subsidiary that the company has must be a qualifying 90% subsidiary of the company.
2
In this section—
“property managing subsidiary” has the meaning given by section 188(2) of ITA 2007,
“qualifying 90% subsidiary” has the meaning given by section 190 of that Act.
F140576GThe gross assets requirement
1
The gross assets requirement in the case of a single company is that the value of the company's gross assets—
a
must not exceed £7 million immediately before the shares in respect of which the relief is claimed under this Chapter are issued, and
b
must not exceed £8 million immediately afterwards.
2
The gross assets requirement in the case of a parent company is that the value of the group assets—
a
must not exceed £7 million immediately before the shares in respect of which the relief is claimed under this Chapter are issued, and
b
must not exceed £8 million immediately afterwards.
3
The value of the group assets means the aggregate of the values of the gross assets of each of the members of the group, disregarding any that consist in rights against, or shares in or securities of, another member of the group.
4
In this section—
“group” means a parent company and its qualifying subsidiaries,
“parent company” means a company that has one or more qualifying subsidiaries,
“qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007, and
“single company” means a company that does not have one or more qualifying subsidiaries.
F141576HThe unquoted status requirement
1
The unquoted status requirement is that, at the time (“the relevant time”) at which the shares in respect of which the relief is claimed under this Chapter are issued—
a
the company must be an unquoted company,
b
there must be no arrangements in existence for the company to cease to be an unquoted company, and
c
there must be no arrangements in existence for the company to become a subsidiary of another company (“the new company”) by virtue of an exchange of shares, or shares and securities, if—
i
section 576J applies in relation to the exchange, and
ii
arrangements have been made with a view to the new company ceasing to be an unquoted company.
2
The arrangements referred to in subsection (1)(b) and (c)(ii) do not include arrangements in consequence of which any shares, stocks, debentures or other securities of the company or the new company are at any subsequent time—
a
listed on a stock exchange that is a recognised stock exchange by virtue of an order made under section F4541005(1)(b) of ITA 2007, or
b
listed on an exchange, or dealt in by any means, designated by an order made for the purposes of section 184(3)(b) or (c) of that Act,
if the order was made after the relevant time.
3
In this section—
“arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable,
F455“debenture” has the meaning given by section 738 of the Companies Act 2006,
“unquoted company” has the meaning given by section 184(2) of ITA 2007.
F142576IPower to amend requirements by Treasury order
The Treasury may by order make such amendments of sections 576B to 576H as they consider appropriate.
F145Qualifying trading companies: supplementary provisions
S. 576J and preceding cross-heading inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 130 (with Sch. 2)
576JRelief after an exchange of shares for shares in another company
1
This section and section 576K apply in relation to shares if—
a
a company (“the new company”) in which the only issued shares are subscriber shares acquires all the shares (“old shares”) in another company (“the old company”),
b
the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company,
c
the consideration for the new shares of each description consists wholly of old shares of the corresponding description,
d
new shares of each description are issued to the holders of old shares of the corresponding description in respect of and in proportion to their holdings, and
e
by virtue of section 127 of the 1992 Act as applied by section 135(3) of that Act (company reconstructions etc), the exchange of shares is not to be treated as involving a disposal of the old shares or an acquisition of the new shares.
In this subsection references to shares, except the first and that in the expression “subscriber shares”, include securities.
2
For the purposes of this Chapter the exchange of shares is not regarded as involving any disposal of the old shares or any acquisition of the new shares.
3
Nothing in section 576D (the control and independence requirement) applies in relation to such an exchange of shares, or shares and securities, as is mentioned in subsection (1), or arrangements with a view to such an exchange.
4
For the purposes of this section old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
5
References in section 576K to “old shares”, “new shares”, “the old company” and “the new company” are to be read in accordance with this section.
F143576KSubstitution of new shares for old shares
1
Subsection (2) applies if, in the case of any new shares held by a company or by a nominee for a company, the old shares for which they were exchanged were shares that had been subscribed for by the company (“the investor”).
2
This Chapter has effect as if—
a
the new shares had been subscribed for by the investor at the time when, and for the amount for which, the old shares were subscribed for by the investor,
b
the new shares had been issued by the new company at the time when the old shares were issued to the investor by the old company, and
c
any requirements of this Chapter which were met at any time before the exchange by the old company had been met at that time by the new company.
3
Section 573(6) applies for the purposes of this section.
F4564
Nothing in subsection (2) applies in relation to section 195(7) of ITA 2007 as applied by section 576B(7) above for the purposes mentioned in section 576B(8).
F146Supplemental
S. 576L and preceding cross-heading inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 132 (with Sch. 2)
576LInterpretation of Chapter
1
In this Chapter (subject to subsections (2) to (5))—
“excluded company” means a company which—
- a
has a trade which consists wholly or mainly of dealing in land, in commodities or futures or in shares, securities or other financial instruments,
- b
has a trade which is not carried on on a commercial basis and in such a way that profits in the trade can reasonably be expected to be realised,
- c
is a holding company of a group other than a trading group, or
- d
is a building society or a registered industrial and provident society,
- a
“group” (except in sections 576B and 576G) means a company which has one or more 51% subsidiaries together with that or those subsidiaries,
“holding company” means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 51% subsidiaries,
“investment company” has the meaning given by section 130 except that it does not include the holding company of a trading group,
“registered industrial and provident society” means a society registered or treated as registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) Act 1969,
“shares”—
- a
includes stock, but
- b
does not include shares or stock not forming part of a company's ordinary share capital,
- a
“trading company” means a company other than an excluded company which is—
- a
a company whose business consists wholly or mainly of the carrying on of a trade or trades, or
- b
the holding company of a trading group, and
- a
“trading group” means a group the business of whose members, when taken together, consists wholly or mainly in the carrying on of a trade or trades.
2
Except as provided by subsection (3), paragraph (b) of the definition of “shares” in subsection (1) does not apply in the definition of “excluded company” in subsection (1) or in section 576J(1) to (4).
3
Paragraph (b) of that definition applies in relation to the first reference to “shares” in section 576J(1).
4
The definition of “shares” in subsection (1) does not apply in sections 576B(5)(a), 576G(3) and 576H(1)(c) and (2).
5
For the purposes of the definition of “trading group” in subsection (1), any trade carried on by a subsidiary which is an excluded company is treated as not constituting a trade.
C15CHAPTER VI OTHER PROVISIONS
Pt 13 Ch. 6: ss. 573, 575 and 576 transposed to Pt. 13 Ch. 5A (6.4.2007 with effect in accordance with s. 1034(1) of the affecting Act) by Income Tax Act 2007 (c. 3), Sch. 1 paras. 117(3), 119(7), 120(7) (with Sch. 2)
Miscellaneous
577 Business entertaining expenses.
1
M24Subject to the provisions of this section—
a
no deduction shall be made in computing F255profits chargeable to F267corporation tax under F256. . . Schedule D for any expenses incurred in providing business entertainment, and such expenses—
F265i
b
F262. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
F263. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F254. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
The expenses to which paragraph (a) of subsection (1) above applies include, in the case of F269any company, any sums paid F270by the company to, or on behalf of, or placed F270by the company at the disposal of F271an employee of the company exclusively for the purpose of defraying expenses incurred or to be incurred by him in providing business entertainment F264. . . .
4
F254. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
For the purposes of this section “business entertainment” means entertainment (including hospitality of any kind) provided by F272a company, or by F273an employee of the company, in connection with a trade carried on by F274the company, but does not include anything provided by F275the company for bona fide F276employees of the company unless its provision for them is incidental to its provision also for others.
6
F254. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
In this section—
a
b
references to a trade include references to any business F277or profession; and
8
This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment, except that it shall not by virtue of this subsection apply in relation to the provision for any person of a gift consisting of an article incorporating a conspicuous advertisement for the donor, being an article—
a
which is not food, drink, tobacco or a token or voucher exchangeable for goods; and
F2618A
F283. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
M25Subsection (8) above shall not preclude the deduction, in computing F255profits under F256. . . Case I or II of Schedule D, of expenditure incurred in making a gift to a body of persons or trust established for charitable purposes only; and for the purposes of this subsection the Historic Buildings and Monuments Commission for England and the Trustees of the National Heritage Memorial Fund shall each be treated as such a body of persons.
10
M26Nothing in this section shall be taken as precluding the deduction of expenses incurred in F259. . . the provision by F284any company of anything which it is F285its trade to provide, and which is provided F286by the company in the ordinary course of that trade for payment or, with the object of advertising to the public generally, gratuitously.
577AF148 Expenditure involving crime.
1
In computing F354profits chargeable to F360corporation tax under F355. . . Schedule D, no deduction shall be made for any expenditure incurred —
F356a
in making a payment the making of which constitutes the commission of a criminal offenceF357, or
b
in making a payment outside the United Kingdom where the making of a corresponding payment in any part of the United Kingdom would constitute a criminal offence there.
F3521A
In computing F354profits chargeable to F360corporation tax under F355. . . Schedule D, no deduction shall be made for any expenditure incurred in making a payment induced by a demand constituting—
a
the commission in England or Wales of the offence of blackmail under section 21 of the Theft Act 1968,
b
the commission in Northern Ireland of the offence of blackmail under section 20 of the Theft Act (Northern Ireland) 1969, or
c
the commission in Scotland of the offence of extortion.
2
F353Any expenditure mentioned in subsection (1) or (1A) above—
F358a
b
shall not be brought into account under section 76 as expenses payable.
578 Housing grants.
M271
Where, under any enactment relating to the giving of financial assistance for the provision, maintenance or improvement of housing accommodation or other residential accommodation, a payment is made to a person by way of grant or other contribution towards expenses incurred, or to be incurred, by that or any other person, the payment shall not be treated as a receipt in computing income for F287corporation tax purposes.
2
Subsection (1) above shall not apply to a payment in so far as it is made in respect of an expense giving rise to a deduction in computing income for any tax purpose.
F166578A Expenditure on car hire
1
This section provides for a reduction in the amounts—
a
b
bb
which can be brought into account under section 76 as expenses payable,
c
F410. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
for expenditure on the hiring of a car to which this section applies.
C272
This section applies to the hiring of a car—
a
which is not a qualifying hire car, and
b
the retail price of which when new exceeds £12,000.
“Car” and “qualifying hire car” are defined by section 578B.
F4112A
This section does not apply to the hiring of a car, other than a motorcycle, if—
a
it is an electrically-propelled car, or
b
it is a car with low CO2 emissions.
2B
In subsection (2A) above—
“car” has the meaning given by section 578B;
“car with low CO2 emissions” has the meaning given by section 45D of the Capital Allowances Act 2001 (expenditure on cars with low CO2 emissions to be first-year qualifying expenditure);
“electrically-propelled car” has the meaning given by that section.
C273
The amount which would, apart from this section, be allowable or capable of being included must be reduced by multiplying it by the fraction—
where P is the retail price of the car when new.
4
If an amount has been reduced under subsection (3) and subsequently—
a
there is a rebate (however described) of the rentals, or
b
there occurs in connection with the rentals a transaction that falls within section 94 (debts deducted and subsequently released),
the amount otherwise taxable in respect of the rebate or transaction must be reduced by multiplying it by the fraction in subsection (3) above.
F166578B Expenditure on car hire: supplementary
1
In section 578A “car” means a mechanically propelled road vehicle other than one—
a
of a construction primarily suited for the conveyance of goods or burden of any description, or
b
of a type not commonly used as a private vehicle and unsuitable for such use.
References to a car accordingly include a motor cycle.
2
For the purposes of section 578A, a car is a qualifying hire car if—
a
it is hired under a hire-purchase agreement (within the meaning of section 784(6)) under which there is an option to purchase exercisable on the payment of a sum equal to not more than 1 per cent. of the retail price of the car when new, or
b
it is a qualifying hire car for the purposes of Part 2 of the Capital Allowances Act (under section 82 of that Act).
3
In section 578A and this section “new” means unused and not second-hand.
4
The power under section 74(4) of the Capital Allowances Act to increase or further increase the sums of money specified in Chapter 8 of Part 2 of that Act includes the power to increase or further increase the sum of money specified in section 578A(2)(b) or (3).
C19579 Statutory redundancy payments.
M281
F297. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Where a redundancy payment or other employer’s payment is made F299by a company in respect of employment wholly in a F300trade or profession carried on by F301the company, and within the charge to tax, the amount of the redundancy payment or the corresponding amount of the other employer’s payment shall (if not otherwise so allowable) be allowable as a deduction in computing for the purposes of Schedule D the F294profits or losses of the F300trade or profession, but—
a
F288. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2983
Where a redundancy payment or other employer’s payment is made F302by a company in respect of employment wholly in a business carried on by F303the company and—
a
expenses of management of the business are deductible under section 75, or
b
a deduction for expenses payable falls to be allowed in accordance with section 76 in computing profits of the business,
the amount of the redundancy payment, or the corresponding amount of the other employer’s payment, shall (to the extent that it would not otherwise fall to be so treated) be deductible under section 75 as expenses of management or as the case may be, be included at Step 1 in section 76(7).
3A
If in a case where subsection (3) above applies, the payment in question is for the purposes of section 75 or 76 referable to an accounting period beginning after discontinuance, it shall be treated as referable to the accounting period ending on the last day on which the business was carried on.
4
F295. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Relief shall not be given under F296subsections (2) and (3) above, or otherwise, more than once in respect of any employer’s payment, and if the employee was being employed in such a way that different parts of his remuneration fell for F304corporation tax purposes to be treated in different ways—
a
the amount F290of the redundancy payment or the corresponding amount of the other employer’s payment shall be apportioned to the different capacities in which the employee was employed; and
6
Where the Minister pays a sum under F292section 166 of the Employment Rights Act 1996 or F293Article 201 of the Employment Rights (Northern Ireland) Order 1996 in respect of an employer’s payment this section shall apply as if—
a
that sum had been paid on account of that redundancy or other employer’s payment, and
580 Provisions supplementary to section 579.
M291
In section 579—
a
b
references to the corresponding amount of an employer’s payment (other than a redundancy payment) are references to the amount of that employer’s payment so far as not in excess of the amount F307which would have been payable as a redundancy payment had one been payable;
2
F309. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F312. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
580AF167 Relief from tax on annual payments under certain insurance policies.
F149. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
580B Meaning of “self-contained” for the purposes of s.580A.
F150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
580CF168Relief from tax on annual payments under immediate needs annuities
F151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
581 Borrowing in foreign currency by local authorities and statutory corporations.
F152. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
581AF169Interest on foreign currency securities etc.
F153. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C20582 Funding bonds issued in respect of interest on certain debts.
M301
Where any funding bonds are issued to a creditor in respect of any liability to pay interest on any debt to which this section applies—
a
the issue of the bonds shall be treated for F314all the purposes of the Corporation Tax Acts as if it were the payment of an amount of that interest equal to the value of the bonds at the time of their issue, and
F3172
Subsection (2A) applies if an issue of funding bonds is treated as a payment of interest as mentioned in subsection (1)(a) and—
a
the person by or through whom the bonds are issued is required to retain bonds under section 939(2) of ITA 2007, but
b
it is impracticable for the person to do so.
2A
In that case, tax in respect of the amount of interest treated by virtue of subsection (1)(a) as having been paid by the issue of the bonds shall be charged under Case VI of Schedule D for the chargeable period in which the bonds are issued on the persons receiving or entitled to the bonds.
3
This section applies to any debt incurred, whether in respect of any money borrowed or otherwise, by any government, public authority or public institution whatsoever, or by any body corporate whatsoever.
F3133A
Chapter 2 of Part 4 of the Finance Act 1996 has effect subject to and in accordance with this section, notwithstanding anything in section 80(5) of that Act (matters to be brought into account in the case of loan relationships only under Chapter 2 of Part 4 of that Act).
4
For the purposes of this section “funding bonds” includes any bonds, stocks, shares, securities or certificates of indebtedness.
582AF154 Designated international organisations: miscellaneous exemptions.
F155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
583 Inter-American Development Bank.
F156. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
584 Relief for unremittable overseas income
C21P21
M31Where F323a company is chargeable to corporation tax by reference to the amount of any income arising in a territory outside the United Kingdom (“overseas income”), then F324for the purposes of corporation tax this section shall apply to the overseas income in so far as—
a
F325the company is prevented from transferring the amount of the overseas income to the United Kingdom, either by the laws of that territory or any executive action of its government or by the impossibility of obtaining foreign currency in that territory; and
Overseas income to which this section applies is referred to below as unremittable.
F3182
Subject to subsection (2A) below, where F326a company so chargeable makes a claim under this subsection in relation to any overseas income—
a
which is unremittable; and
b
to which subsection (1)(a) above will continue to apply notwithstanding any reasonable endeavours on F327its part,
then, in the first instance, account shall not be taken of that income, F328and corporation tax shall be assessable and shall be charged on all persons concerned and for all periods accordingly.
2A
If on any date paragraph (a) or (b) of subsection (2) above ceases to apply to any part of any overseas income in relation to which a claim has been made under that subsection—
a
that part of the income shall be treated as income arising on that date, and
b
account shall be taken of it, and of any tax payable in respect of it under the law of the territory where it arises, according to their value at that date.
4
P25
M32Where under an agreement entered into under arrangements made by the Secretary of State in pursuance of section 11 of the M33Export Guarantees and Overseas Investment Act 1978 any payment is made by the Export Credit Guarantee Department in respect of any income which cannot be transferred to the United Kingdom, then, to the extent of the payment, the income shall be treated as income F320to which paragraphs (a) and (b) of subsection (2) above do not apply (and accordingly cannot cease to apply).
F3216
A claim under subsection (2) above—
a
F330. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
for the purposes of corporation tax, shall be made no later than two years after the end of the accounting period in which the income arises.
P27
F330. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
P28
Subject to subsections (2) and F322(2A) above, the amount of any unremittable overseas income shall be determined by reference to the generally recognised market value in the United Kingdom (if any), or, in the absence of any such value, according to the official rate of exchange of the territory where the income arises.
P29
Any appeal against an assessment which involves a question as to the operation of this section shall be made to the Special Commissioners and not to the General Commissioners.
P210
M34This section shall have effect as respects any accounting period in which the conditions in subsection (2) above cease to be satisfied in relation to any income, being an accounting period ending on or before such day, not being earlier than 31st March 1992, as the Treasury may by order appoint for the purposes of this section, with the omission of subsections (3) and (4).
585 Relief from tax on delayed remittances.
F157. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
586 Disallowance of deductions for war risk premiums.
M351
In computing the amount of the profits or gains of any person for any F331corporation tax purpose, no sum shall be deducted in respect of any payment made by him to which this section applies.
2
No payment to which this section applies shall be included in computing the expenses of management in respect of which relief may be given under section 75 or 76.
3
Subject to subsections (4) and (5) below, this section applies to any payment made by any person under any contract or arrangement under which that person is, in the event of war damage, entitled or eligible, either absolutely or conditionally, to or for any form of indemnification, whether total or partial, and whether by way of a money payment or not, in respect of that war damage.
4
Where the payment is made in respect of the right or eligibility mentioned in subsection (3) above and also in respect of other matters, the deduction or inclusion of so much of the payment as is properly attributable to the other matters shall not be disallowed by virtue only of subsection (1) or (2) above.
5
This section shall not apply to any payment made under any contract of marine insurance, or any contract of insurance of an aircraft, or any contract of insurance of goods in transit.
6
In this section “war damage” means loss or damage arising from action taken by an enemy of Her Majesty, or action taken in combating such an enemy or in repelling an imagined attack by such an enemy, or action taken in anticipation of or in consequence of an attack by such an enemy.
587 Disallowance of certain payments in respect of war injuries to employees.
M361
2
No payment to which this section applies shall be included in computing—
a
the expenses of management in respect of which relief may be given under section 75 or 76; or
b
the expenses of management or supervision in respect of which relief may be given under F334section 121(3).
3
Subject to subsections (4) and (5) below, this section applies—
a
to any payments by way of benefit made by any person to, or to the personal representatives or dependants of, any employees of his on account of their incapacity, retirement or death owing to war injuries, whether sustained in the United Kingdom or elsewhere; and
b
to any payments made by any person by way of premium or contribution under any policy, agreement, scheme or arrangement providing for the payment of benefits to, or to the personal representatives or dependants of, any employees of his on account of their incapacity, retirement or death owing to such war injuries.
4
This section shall not apply to any payment (whether by way of benefit or by way of premium or contribution) which is payable under any policy, agreement, scheme or arrangement made before 3rd September 1939, except to the extent that the amount of the payment is increased by any variation of the terms of that policy, agreement, scheme or arrangement made on or after that date.
5
This section shall not apply to any payment by way of benefit if, in the opinion of the Board, that payment was made under an established practice which was such that the same or a greater payment would have been made if the incapacity, retirement or death had not been due to war injuries.
6
Where a person makes a payment by way of benefit to which this section applies and, in the opinion of the Board, there is an established practice under which a smaller payment would have been made if the incapacity, retirement or death had not been due to war injuries, the deduction or inclusion of an amount equal to that smaller payment shall not be disallowed by virtue only of subsection (1) or (2) above.
7
Where a person makes a payment to which this section applies by way of premium or contribution, and the policy, agreement, scheme or arrangement provides for the payment of any benefit in the event of incapacity, retirement or death not due to war injuries, the deduction or inclusion of so much of the payment of premium or contribution as, in the opinion of the Board, is properly attributable to benefit payable in the event of incapacity, retirement or death not due to war injuries shall not be disallowed by virtue only of subsection (1) or (2) above.
8
In this section “war injuries” means physical injuries—
a
caused by—
i
the discharge of any missile (including liquids and gas);
ii
the use of any weapon, explosive or other noxious thing; or
iii
the doing of any other injurious act,
either by the enemy or in combating the enemy or in repelling an imagined attack by the enemy; or
b
caused by the impact on any person or property of any enemy aircraft, or any aircraft belonging to, or held by any person on behalf of, or for the benefit of, Her Majesty or any allied power, or any part of, or anything dropped from, any such aircraft.
587AF158 New issues of securities: extra return.
F159. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F170C24C26587BF160Gifts of shares, securities and real property to charities etc
1
2
On a claim made in that behalf to an officer of the Board—
a
the relevant amount shall be allowed—
i
F385. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
F386. . . as a charge on income for the purposes of corporation tax for the accounting period in which the disposal is made; and
F388. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F389. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F3754
Subject to subsections (5) to (7) below, the relevant amount is an amount equal to—
a
where the disposal is a gift, the value of the net benefit to the charity at, or immediately after, the time when the disposal is made (whichever time gives the lower value);
b
where the disposal is at an undervalue, the amount by which—
i
the value described in paragraph (a) above, exceeds
ii
the amount or value of the consideration for the disposal,
or, if there is no such excess, nil.
5
Where there are one or more benefits received in consequence of making the disposal which are received by F390the company making the disposal or a person connected with F391it, the relevant amount shall be reduced by the value of that benefit or, as the case may be, the aggregate value of those benefits; and section 839 applies for the purposes of this subsection.
6
Where the disposal is a gift, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the F392company making it.
7
Where the disposal is at an undervalue—
a
to the extent that the consideration for the disposal is less than that for which the disposal is treated as made by virtue of section 257(2)(a) of the 1992 Act, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the F393company making it; and
b
section 48 of that Act (consideration due after time of disposal) shall apply in relation to the computation of the relevant amount as it applies in relation to the computation of a gain.
8
F405. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F3768A
The value of the net benefit to the charity is—
a
the market value of the qualifying investment, unless subsection (8B) below applies;
b
where that subsection applies, that market value reduced by the aggregate amount of the related liabilities of the charity (see subsections (8E) to (8G)).
8B
This subsection applies in any case where—
a
b
one or more of the conditions in subsection (8C) below is satisfied.
8C
For the purposes of subsection (8B) above—
a
condition 1 is that, taking into account all the circumstances (including, in particular, the difference in the value of the net benefit to the charity if subsection (8B) applies and if it does not), it is reasonable to suppose that the disposal of the qualifying investment to the charity would not have been made in the absence of the obligation;
b
condition 2 is that the obligation (whether in whole or in part) relates to, is framed by reference to, or is conditional on the charity receiving, the qualifying investment or a related investment (see subsection (8D)).
8D
In subsection (8C) above “related investment” means any of the following—
a
any asset of the same class or description as the qualifying investment (irrespective of size, quantity or amount);
b
any asset derived from, or representing, the qualifying investment whether in whole or in part and whether directly or indirectly;
c
any asset from which the qualifying investment is derived, or which the qualifying investment represents, whether in whole or in part and whether directly or indirectly.
8E
For the purposes of this section, the liabilities which are related liabilities in the case of any qualifying investment are the liabilities of the charity under each of the obligations that fall within subsection (8B) above (as read with subsection (8C) above) in relation to that investment.
8F
Where an obligation is contingent and the contingency occurs, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, under the obligation is the amount or value of the liability actually incurred in consequence of the occurrence of the contingency.
8G
Where an obligation is contingent and the contingency does not occur, the amount to be brought into account for the purposes of this section at any time in respect of the liability, so far as contingent, is nil.
9
In this section—
F396“authorised unit trust” has the meaning given by section 468;
“charity” has the same meaning as in section 506 and includes
- a
F397the Trustees of the National Heritage Memorial Fund;
- b
the Historic Buildings and Monuments Commission for England; and
- c
the National Endowment for Science, Technology and the Arts;
- a
“the incidental costs of making the disposal to the F398company making it” shall be construed in accordance with section 38(2) of the 1992 Act;
F406. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F377“obligation” includes a reference to each of the following—
- a
any scheme, arrangement or understanding of any kind, whether or not legally enforceable;
- b
a series of obligations (whether or not between the same parties);
- a
F378“offshore fund” has the same meaning as in Chapter 5 of Part 17;
F399“open-ended investment company” is to be read in accordance with section 468A(2) to (4);
“qualifying investment” means any of the following—
F379“related liabilities” shall be construed in accordance with subsection (8E) above;
F380“value of the net benefit to the charity” shall be construed in accordance with subsection (8A) above.
F4089ZA
In paragraph (a) of the definition of “qualifying investment” in subsection (9) above, “designated” means designated by an order made by the Commissioners for Her Majesty's Revenue and Customs for the purposes of that paragraph.
9ZB
An order under subsection (9ZA) above may—
a
designate a market by name or by reference to any class or description of market, and
b
vary or revoke a previous order under that subsection.
F3739A
In this section a “qualifying interest in land” means—
a
a freehold interest in land, or
b
a leasehold interest in land which is a term of years absolute,
where the land in question is in the United Kingdom.
This subsection is subject to subsections (9B) to (9D) below.
9B
Where a F400company makes a disposal to a charity of—
a
the whole of F401its beneficial interest in such freehold or leasehold interest in land as is described in subsection (9A)(a) or (b) above, and
b
any easement, servitude, right or privilege so far as benefiting that land,
9C
Where F402a company which has a freehold or leasehold interest in land in the United Kingdom grants a lease for a term of years absolute (or, in the case of land in Scotland, grants a lease) to a charity of the whole or part of that land, the grant of that lease is to be regarded for the purposes of this section as a disposal by F403the company of the whole of the beneficial interest in the leasehold interest so granted.
9D
For the purposes of subsection (9A) above, an agreement to acquire a freehold interest and an agreement for a lease are not qualifying interests in land.
9E
In the application of this section to Scotland—
C25a
references to a freehold interest in land are references to the interest of the owner,
b
references to a leasehold interest in land which is a term of years absolute are references to a tenant’s right over or interest in a property subject to a lease, and
c
references to an agreement for a lease do not include references to missives of let that constitute an actual lease.
10
Subject to subsection (11) below, the market value of any qualifying investment shall be determined for the purposes of this section as for the purposes of the 1992 Act.
F38110A
Section 839 (connected persons) applies for the purposes of this section.
11
In the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(5) of the 1992 Act (meaning of “market value” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this section.
F37412
This section is supplemented by F404sections 587BA and 587C below.
F171587BAQualifying interests in land held jointly
1
This section applies for the purposes of section 587B where a qualifying investment is a qualifying interest in land.
2
Where two or more persons (“the owners”)—
a
are jointly beneficially entitled to the qualifying interest in land, or
b
are, taken together, beneficially entitled in common to the qualifying interest in land,
relief under section 587B is available if at least one of the owners is a qualifying company and all the owners dispose of the whole of their beneficial interests in the qualifying interest in land to the charity.
3
Subsection (4) applies if one or more of the owners is not a company.
4
For the purpose of determining whether the owners' beneficial interests are disposed of as mentioned in subsection (2), section 587B(9B) and (9C) applies as if references to a company included a reference to a person who is not a company.
5
Relief under section 587B is available to each of the owners which is a qualifying company.
6
If one or more of the owners is an individual—
a
the relevant amount is taken to be the relievable amount calculated for the purposes of Chapter 3 of Part 8 of ITA 2007, and
b
the amount of relief under section 587B to be given to a qualifying company is such share of the relievable amount as is allocated to the company by the agreement mentioned in section 442(5) of ITA 2007.
7
Subsections (8) to (12) apply if none of the owners is an individual.
8
The amount of relief under section 587B to be given to a qualifying company is such share of the relevant amount as is allocated to the company by an agreement made between those owners which are qualifying companies.
9
Calculate the relevant amount as if—
a
the owners were a single qualifying company, and
b
the disposals of the owners' beneficial interests were a single disposal by that single company of the whole of the beneficial interest in the qualifying interest in land.
10
In particular, for the purposes of section 587B(7) calculate the consideration for which the disposal is made by virtue of section 257(2)(a) of the 1992 Act by—
a
calculating, for each owner, the consideration for which the disposal of the owner's beneficial interest is so made, and
b
adding together all the consideration calculated under paragraph (a).
11
If one or more of the owners is not a qualifying company, in calculating the relevant amount make just and reasonable adjustments to reduce the relevant amount to reflect the fact that relief under section 587B is not available to that owner or to those owners.
12
F424. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
A company is a qualifying company if—
a
it is not itself a charity, F425. . .
b
F425. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F172587C Supplementary provision for gifts of real property
1
This section applies for the purposes of section 587B where a qualifying investment is a qualifying interest in land.
2
F415. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F415. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
5
The certificate must—
a
specify the description of the qualifying interest in land which is the subject of the disposal,
b
specify the date of the disposal, and
c
contain a statement that the charity has acquired the qualifying interest in land.
6
If, in the case of a disposal of a qualifying interest in land, a disqualifying event occurs at any time in the relevant period, the F418following shall be treated as never having been entitled to relief under section 587B in respect of the disposal—
F419a
in a case to which section 587BA does not apply, the company which made the disposal, and
b
in a case to which section 587BA applies, each qualifying company which is an owner.
7
All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (6) above.
8
For the purposes of subsection (6) above a disqualifying event occurs if F420a person mentioned in subsection (8A)—
a
becomes entitled to an interest or right in relation to all or part of the land to which the disposal relates, or
b
becomes party to an arrangement under which he enjoys some right in relation to all or part of that land,
otherwise than for full consideration in money or money’s worth.
F4218A
The persons are—
a
in a case to which section 587BA does not apply—
i
the company which made the disposal, or
ii
a person connected with that company, and
b
in a case to which section 587BA applies—
i
a person who is an owner, or
ii
a person connected with such a person.
9
A disqualifying event does not occur, for the purposes of subsection (6) above, if a person becomes entitled to an interest or right as mentioned in subsection (8)(a) above as a result of a disposition of property on death, whether the disposition is effected by will, under the law relating to intestacy or otherwise.
10
For the purposes of subsection (6) above the relevant period is the period beginning with the date of the disposal of the qualifying interest in land and ending with—
a
F422. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
F423. . . the sixth anniversary of the end of the accounting period in which the disposal was made.
11
Section 839 (connected persons) applies for the purposes of this section.
12
This section shall be construed as one with section 587B.
C22588 Training courses for employees.
F337M371
This section applies where a F344company (“the employer”) incurs retraining course expenses within the meaning of section 311 of ITEPA 2003 (exemptions: retraining courses).
3
Subject to subsection (4) below, where—
F338a
an employer incurs expenditure in paying or reimbursing retraining course expenses as mentioned in subsection (1) above; and
b
by virtue of section 311 of ITEPA 2003, no liability to income tax arises in respect of the payment or reimbursement,
F3424
Where the employer is a company with investment business or a company carrying on life assurance business, subsection (3) above shall have effect with the substitution for the words following paragraph (b) of—
“then, if and so far as that expenditure would not, apart from this subsection, fall to be so deductible or brought into account, it shall—
- i
in a case where the employer is a company with investment business, be deductible as expenses of management under section 75, or
- ii
in a case where the employer is a company carrying on life assurances business, be brought into account under section 76 as expenses payable.”
.
5
In any case where—
a
F339. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
an employer’s liability to F346corporation tax for any F347accounting period is determined (by assessment or otherwise) on the assumption that, by virtue only of subsection (3) above (or subsections (3) and (4) above), F348it is entitled to a deduction on account of any expenditure and, subsequently, there is F340a failure to meet a condition of the kind mentioned in section 312(1)(b)(i) or (ii) of ITEPA 2003;
F3435A
The reference in subsection (5)(b) above to a deduction on account of any expenditure includes a reference to bringing an amount into account in determining the amount of the deduction to be made under section 76.
6
Where an event occurs by reason of which there is a failure to F341meet a condition in section 312(1)(b)(i) or (ii) of ITEPA 2003, the employer of the employee concerned shall within 60 days of coming to know of the event give a notice to the inspector containing particulars of the event.
7
If the inspector has reason to believe that an employer has not given a notice which F351it is required to give under subsection (6) above in respect of any event, the inspector may by notice require the employer to furnish him within such time (not less that 60 days) as may be specified in the notice with such information relating to the event as the inspector may reasonably require for the purposes of this section.
589 Qualifying courses of training etc.
F161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C23589AF162 Counselling services for employees.
F3631
This section applies where expenditure (“relevant expenditure”)—
a
is incurred in the provision of services to a person (“the employee”) in connection with the cessation of the person’s office or employment, or
b
is incurred in the payment or reimbursement of—
i
fees for such provision, or
ii
travelling expenses incurred in connection with such provision,
and (in either case) the relevant conditions are met.
1A
In subsection (1) above “the relevant conditions” means—
a
conditions A to D for the purposes of section 310 of ITEPA 2003 (exemptions: counselling and other outplacement services), and
b
in the case of travel expenses, condition E for those purposes.
2
F364. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F364. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F364. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F364. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
F364. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8
F3669
Where the employer is a company with investment business or a company carrying on life assurance business, subsection (8) above shall have effect as if for the words from “so deductible” onwards there were substituted—
so deductible or brought into account, it shall—
a
in a case where the employer is a company with investment business, be deductible as expenses of management under section 75, or
b
in case where the employer is a company carrying on life assurance business, be brought into account under section 76 as expenses payable.
10
F365. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
589BF163Qualifying counselling services etc.
1
F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1654
F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4A
F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Any reference in F370. . . section 589A to an employee being employed by an employer is a reference to the employee holding office or employment under the employer.
Pt. 13 Ch. 1 modified (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 20